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The Abortion Act 1967 provides a comprehensive code of the circumstances in which it is lawful to bring about the termination of a pregnancy in England, Wales and Scotland. It enlarged and replaced the limited circumstances in which this was recognised as lawful by the common law. It also regulated the procedure. Other than in an emergency, two doctors must be of the opinion that the grounds for bringing about a termination exist and the termination must take place either in a National Health Service Hospital or in a clinic approved for the purpose. While the Bill was going through Parliament, a clause protecting the right of conscientious objection to taking part in an abortion was introduced. This case is about the precise scope of that right. The relevant legislation As originally enacted, section 1 of the 1967 Act read thus: (1) Subject to the provisions of this section, a person shall not be guilty of an offence under the law relating to abortion when a pregnancy is terminated by a registered medical practitioner if two registered medical practitioners are of the opinion, formed in good faith (a) that the continuance of the pregnancy would involve risk to the life of the pregnant woman, or of injury to the physical or mental health of the pregnant woman or any existing children of her family, greater than if the pregnancy were terminated; or (b) that there is a substantial risk that if the child were born it would suffer from such physical or mental abnormalities as to be seriously handicapped. (2) In determining whether the continuance of a pregnancy would involve such risk of injury to health as is mentioned in paragraph (a) of subsection (1) of this section, account may be taken of the pregnant womans actual or reasonably foreseeable environment. (3) Except as provided by subsection (4) of this section, any treatment for the termination of pregnancy must be carried out in a hospital vested in the Minister of Health or the Secretary of State under the National Health Service Acts, or in a place for the time being approved for the purposes of this section by the said Minister or the Secretary of State. (4) Subsection (3) of this section, and so much of subsection (1) as relates to the opinion of two registered medical practitioners, shall not apply to the termination of a pregnancy by a registered medical practitioner in a case where he is of the opinion, formed in good faith, that the termination is immediately necessary to save the life or to prevent grave, permanent injury to the physical or mental health of the pregnant woman. Section 5 of the Act also provided: (1) Nothing in this Act shall affect the provisions of the Infant Life (Preservation) Act 1929 (protecting the life of the viable foetus). (2) For the purposes of the law relating to abortion, anything done with intent to procure the miscarriage of a woman is unlawfully done unless authorised by section 1 of this Act. The Human Fertilisation and Embryology Act 1990 modified the circumstances in which abortion is lawful in two ways. It substituted the following for paragraphs (a) and (b) of section 1(1) of the 1967 Act: (a) that the pregnancy has not exceeded its twenty fourth week and that the continuance of the pregnancy would involve risk, greater than if the pregnancy were terminated, of injury to the physical or mental health of the pregnant woman or any existing children of her family; or Section 5 was also amended to read as follows: (b) that the termination is necessary to prevent grave permanent injury to the physical or mental health of the pregnant woman; or (c) that the continuance of the pregnancy would involve risk to the life of the pregnant woman, greater than if the pregnancy were terminated; or (d) that there is a substantial risk that if the child were born it would suffer from such physical or mental abnormalities as to be seriously handicapped. (1) No offence under the Infant Life (Preservation) Act 1929 shall be committed by a registered medical practitioner who terminates a pregnancy in accordance with the provisions of this Act. (2) For the purpose of the law relating to abortion, anything done with intent to procure a womans miscarriage (or, in the case of a woman carrying more than one foetus, her miscarriage of any foetus) is unlawfully done unless authorised by section 1 of this Act and, in the case of a woman carrying more than one foetus, anything done with intent to procure her miscarriage of any foetus is authorised by that section if (a) the ground for termination of the pregnancy specified in subsection 1(d) of that section applies in relation to any foetus and the thing is done for the purpose of procuring the miscarriage of that foetus, or (b) any of the other grounds for termination of the pregnancy specified in that section applies. The broad effect, therefore, was to introduce a limit of twenty four weeks gestation for abortions carried out on ground (a), which is far and away the most common of the four grounds (see para 13 below), but to remove the limit provided by the Infant Life (Preservation) Act 1929 for abortions carried out on grounds (b), (c) or (d). It also introduced the possibility of selective abortion, where a woman is carrying more than one foetus, either in order to abort a foetus which may be seriously handicapped or because the reduction in the number of foetuses she is carrying is justified on one of the other grounds. Section 1(3) has also been amended, and a new section 1(3A) added, by the 1990 and other legislation and now reads as follows: (3) Except as provided by subsection (4) of this section, any treatment for the termination of pregnancy must be carried out in a hospital vested in the Secretary of State for the purposes of his functions under the National Health Service Act 2006 or the National Health Service (Scotland) Act 1978 or in a hospital vested in a Primary Care Trust or a National Health Service trust or an NHS foundation trust or in a place approved for the purposes of this section by the Secretary of State. (3A) The power under subsection (3) of this section to approve a place includes power, in relation to treatment consisting primarily in the use of such medication as may be specified in the approval and carried out in such manner as may be so specified, to approve a class of places. Section 1(3A) reflects a change in the methods by which abortions are generally performed. When the 1967 Act was passed, pregnancies were terminated by surgical procedures to remove the foetus from the uterus. Now they are mostly terminated by the administration of drugs which prematurely induce labour. Current practice is that a patient is given an anti progestogenic steroid in tablet form followed some 48 hours later by a prostaglandin in pessary form. The patient then undergoes a labour and delivers the foetus, placenta and membrane in the normal way unless surgical intervention is required. Selective reduction in the number of foetuses carried is performed by what is known as feticide, killing one of those foetuses in the womb. Feticide is also carried out where there is a risk of the foetus being born alive following the termination. The change from surgical operations to medical methods of induction of labour led to the first of two cases under the 1967 Act to reach the House of Lords. In Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800, the issue was pithily explained by Lord Denning MR in the Court of Appeal: when a pregnancy is terminated by medical induction, who should do the actual act of termination? Should it be done by a doctor? Or can he leave it to the nurses? The Royal College of Nursing say that a doctor should do the actual act himself and not leave it to the nurses. The Department of Health and Social Security take a different view. They say that the doctor can initiate the process and then go off and do other things, so long as he is on call. (p 802) The majority of the House of Lords (Lord Diplock, Lord Keith of Kinkel and Lord Roskill) held that when a pregnancy is terminated in section 1(1) of the 1967 Act meant the whole process of treatment designed to bring that about, and not just the actual ending of the pregnancy. Furthermore, that process was carried out by a registered medical practitioner when it was a team effort carried out under his direction, with the doctor performing those tasks that are reserved to a doctor and the nurses and others carrying out those tasks which they are qualified to perform. One reason for reaching that conclusion was that the Act uses the words termination and treatment apparently interchangeably. In particular, the conscience clause in section 4 is headed Conscientious objection to participation in treatment and reads: (1) Subject to subsection (2) of this section, no person shall be under any duty, whether by contract or by any statutory or other legal requirement, to participate in any treatment authorised by this Act to which he has a conscientious objection: Provided that in any legal proceedings the burden of proof of conscientious objection shall rest on the person claiming to rely on it. (2) Nothing in subsection (1) of this section shall affect any duty to participate in treatment which is necessary to save the life or to prevent grave permanent injury to the physical or mental health of a pregnant woman. (3) In any proceedings before a court in Scotland, a statement on oath by any person to the effect that he has a conscientious objection to participating in any treatment authorised by this Act shall be sufficient evidence for the purpose of discharging the burden of proof imposed upon him by subsection (1) of this section. It is common ground in this case that subsection (3) was enacted because of the requirement of corroboration in civil proceedings in Scotland which has since been abolished. It will immediately be apparent that the question in this case, and the only question, is the meaning of the words to participate in any treatment authorised by this Act to which he has a conscientious objection. That question was addressed by the House of Lords in R v Salford Health Authority, Ex p Janaway [1989] AC 537, a case which all parties accept was rightly decided. Mrs Janaway was a secretary and receptionist in a health centre, who objected to typing a letter from a GP at the health centre referring a patient to a hospital consultant with a view to a possible termination. It was held that any treatment authorised by this Act meant the process of treatment in hospital for the termination of pregnancy and participating meant actually taking part in that process. It did not have the extended meaning given to participation by the criminal law. The House was not concerned, as we are in this case, with what those words mean in the context of hospital treatment. How this claim came about The petitioners are both experienced midwives employed at the Southern General Hospital in Glasgow. The job which they both held now has the title Labour Ward Co ordinator. Miss Doogan has worked predominantly in the Labour Ward since 1988, but has been absent through ill health since March 2010. Mrs Wood worked in the Labour Ward from 1992 until March 2010 when she transferred to work in maternity assessment. Both are practising Roman Catholics who believe that human life is sacred from the moment of conception and that termination of pregnancy is a grave offence against human life. They also believe that any involvement in the process of termination renders them accomplices to and culpable for that grave offence. Each informed their employer, the Greater Glasgow Health Board, of their conscientious objection to taking part in the termination of pregnancy when they began work in the Labour Ward in 1988 and 1992 respectively. Maternity services in Glasgow used to be provided in three hospitals, but in 2004 it was decided to close one of them down. Maternity facilities at the remaining two hospitals, the Southern General Hospital and the Princess Royal Maternity Hospital, were extended and refurbished. The first babies were born in the new maternity unit at the Southern General Hospital in December 2009. The Fetal Medicine Unit at the closed hospital was transferred to the Southern General Hospital. The vast majority of abortions performed in the United Kingdom are performed on ground (a) (98% in England and Wales and 98.7% in Scotland in the year to 31st December 2012). All medical terminations of pregnancy on that ground at the Southern General Hospital (which by definition are now under 24 weeks gestation) take place in the Gynaecology Ward, not the Labour Ward. Medical terminations (after 12 weeks gestation) on the remaining grounds, that is on grounds (b), (c) and (d) in section 1(1) and in the emergencies provided for by section 1(4), take place in the Labour Ward. These are a tiny proportion of all terminations and a tiny proportion of the work of the Labour Ward. Since 2010, there have been about 6000 births a year at the Southern General Hospital and just under 60 terminations a year in the Labour Ward. The majority of these are because of foetal abnormalities (ground (d)) and are particularly distressing for everyone concerned, because these were often wanted babies who may have to be aborted at a late stage of gestation. The practice since 2010 has been that where a foetal abnormality is detected the patient will be transferred to the Fetal Medicine Unit, where she will be counselled about the test results and the options available to her. If she decides on termination, the Fetal Medicine Unit will liaise with the Labour Ward to decide upon a suitable time for her admission and will administer the first dose of medication to induce labour. She will return to the Fetal Medicine Unit 48 hours later. They will contact the Labour Ward to make sure that there is suitable accommodation available and escort her round to the Labour Ward where the remainder of the process will take place. The aim is for no more than one medical termination a day to be scheduled in the ward. Other scheduled work in the Labour Ward includes elective caesarean sections and inductions of labour. Unscheduled work includes normal spontaneous labours or foetal losses and emergency operations. Scheduling the Labour Ward workload is the job of the Labour Ward Co ordinator. When a patient undergoing a termination is admitted to the Labour Ward, a midwife will be assigned to give her one to one care. This will involve all the usual care of a patient in labour and giving birth monitoring her condition and stage of labour, pain relief, toileting, delivering the foetus and placenta, supporting the patient and her family through an emotional and upsetting experience, and making the arrangements for the baby once delivered. These will depend upon the familys wishes, but may include helping them with, for example, taking photographs and making funeral arrangements. Terminations where there are medical rather than foetal abnormality issues will generally only reach the Labour Ward because its high dependency care is required and this is rare. Between 2006 and 2010, feticide was carried out in the ultra sound department at Southern General Hospital and the Labour Ward Co ordinator would assign a midwife to take care of the patient there. Since 2010, feticide has been carried out in the Fetal Medicine Unit which has its own midwifery staff and the Labour Ward Co ordinator is no longer involved. The Labour Ward has midwifery staff in bands 5, 6 and 7. Midwives in each band may be assigned to looking after a particular patient. They have to update the Labour Ward Co ordinator and to seek her guidance, advice and support where appropriate. There is always a band 7 Labour Ward Co ordinator on duty. The parties have agreed a detailed list of 13 tasks included in her role, covering the management of resources within the ward, booking in patients from the Fetal Medicine Unit, allocating staff to patients, providing guidance, advice, and support to midwives, and on occasions taking a direct part in patient care. It will be helpful to return to that list after the applicable principles have been decided (see para 39 below). These proceedings came about because the petitioners became concerned that the reorganisation of maternity services would result in an increased number of abortions being carried out on the Labour Ward. Up until then it had been possible to work around their conscientious objections to playing any part at all in these procedures, by getting someone else to do the tasks which might otherwise have fallen to them. They sought assurances from management that their objections would continue to be respected and accommodated. Being dissatisfied with what they were told, they first raised an informal grievance in September 2009, which was completed in March 2010. They then began the formal grievance procedure, which went through three stages until their grievance was finally rejected at Board level in June 2011. By that stage the outstanding issue was their continued objection to delegating, supervising and/or supporting staff to participate in and provide care to patients throughout the termination process. The hospital took the view that this did not constitute providing one to one care to patients and that the petitioners could be required to do it. The petitioners then brought judicial review proceedings challenging the decision letters received as a result of the grievance procedure. They were unsuccessful before the Lord Ordinary, Lady Smith, but successful before an Extra Division of the Inner House (Lord Mackay of Drumadoon, Lady Dorrian, and Lord McEwan). The Inner House granted a declarator that: the petitioners entitlement to conscientious objection to participation in treatment for termination of pregnancy and feticide all in terms of section 4(1) of the Abortion Act 1967 includes the entitlement to refuse to delegate, supervise and/or support staff in the provision of care to patients undergoing termination of pregnancy or feticide throughout the termination process save as required of the petitioners in terms of section 4(2) of the said Act. The Opinion of the Court, delivered by Lady Dorrian, expanded upon this at para 38: The right is given because it is recognised that the process of abortion is felt by many people to be morally repugnant. As Lord Diplock observed in the RCN case, it is a matter on which many people have strong moral and religious convictions, and the right of conscientious objection is given out of respect for those convictions and not for any other reason. It is in keeping with the reason for the exemption that the wide interpretation which we favour should be given to it. It is consistent with the reasoning which allowed such an objection in the first place that it should extend to any involvement in the process of treatment, the object of which is to terminate a pregnancy. (emphasis supplied) The employers appeal to this Court. Two distractions There was some discussion, at an earlier stage in these proceedings, of the relevance of the petitioners rights under article 9 of the European Convention on Human Rights. This protects the right to freedom of thought, conscience and religion, including the freedom to manifest his religion or belief, in worship, teaching, practice and observance. It is our duty, under section 3(1) of the Human Rights Act 1998, to read and give effect to legislation, whenever it was passed, in a way which is compatible with the Convention rights, so far as it is possible to do so. However, the article 9 right is a qualified right, which may be subject to such limitations as are prescribed by law and necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedoms of others. Refusing for religious reasons to perform some of the duties of a job is likely (following the decision of the European Court of Human Rights in Eweida v United Kingdom (2013) 57 EHRR 213) to be held to be a manifestation of a religious belief. There would remain difficult questions of whether the restrictions placed by the employers upon the exercise of that right were a proportionate means of pursuing a legitimate aim. The answers would be context specific and would not necessarily point to either a wide or a narrow reading of section 4 of the 1967 Act. The better course, therefore, is for this court to decide what that section means according to the ordinary principles of statutory construction. That will then set a limit to what an employer may lawfully require of his employees. But a state employer has also to respect his employees Convention rights. And the Equality Act 2010 requires that any employer refrain from direct or unjustified indirect discrimination against his employees on the ground of their religion or belief. So, even if not protected by the conscience clause in section 4, the petitioners may still claim that, either under the Human Rights Act or under the Equality Act, their employers should have made reasonable adjustments to the requirements of the job in order to cater for their religious beliefs. This will, to some extent at least, depend upon issues of practicability which are much better suited to resolution in the employment tribunal proceedings (currently sisted pending the resolution of this case) than in judicial review proceedings such as these. It is also not for this court to speculate upon the broader consequences of taking a wide or a narrow view of the meaning of section 4. On the one hand, the interveners have argued that to give a broad scope to the right of conscientious objection will put at risk the provision of a safe and accessible abortion service, available to all pregnant women who need and want it, in accordance both with the purpose of the 1967 Act and with a number of international instruments dealing with womens reproductive rights. Furthermore, it may encourage other employers to adopt the policy adopted by the British Pregnancy Advisory Service, of refusing to employ anyone who has any conscientious objection to abortion (on the basis that the lack of such objection is a genuine occupational qualification for the jobs they offer).This reduces the job opportunities available to highly skilled and experienced midwives whose objections may not be as extensive as those of these petitioners. Coming as they do from the Royal College of Midwives and the British Pregnancy Advisory Service, such views are obviously worthy of respect. On the other hand, the petitioners argue that to adopt a narrow interpretation of their right of conscientious objection will unreasonably restrict, not only what they say is a fundamental right, but also the job opportunities which will be available to them. Both sides, in other words, argue that adopting a wide or a narrow interpretation of section 4 will restrict the job opportunities of qualified midwives and other health care professionals and workers and in doing so may put at risk the accessibility of the service. We do not have the evidence with which to resolve those arguments. We can agree with Lord Diplock, in the Royal College of Nursing case (p 827D), that the policy of the 1967 Act was clear. It was to broaden the grounds upon which an abortion might lawfully be obtained and to ensure that abortion was carried out with all proper skill and in hygienic conditions. For my part, I would agree with the interveners that the policy was also to provide such a service within the National Health Service, as well as in approved clinics in the private or voluntary sectors. The mischief, also acknowledged by Lord Diplock, was the unsatisfactory and uncertain state of the previous law, which led to many women seeking the services of back street abortionists, which were often unsafe and, whether safe or unsafe, were offered by people who were at constant risk of prosecution and, as Lord Diplock put it, figured so commonly in the calendars of assizes in the days when I was trying crime (p 825F). The conscience clause was the quid pro quo for a law designed to enable the health care profession to offer a lawful, safe and accessible service to women who would previously have had to go elsewhere. But we are not equipped to gauge what effect either a wide or a narrow construction of the conscience clause would have upon the delivery of that service, which may well differ from place to place. Our only safe course is to make the best sense we can of what the section actually says. The construction of section 4 We have been presented with a spectrum of constructions of participating in any treatment authorised by this Act to which he has a conscientious objection. This must be read together with section 1 of the Act, which prescribes the conditions under which a pregnancy may lawfully be terminated. As was pointed out in the Royal College of Nursing case, although section 1(1) does not use the term treatment at all, the termination of pregnancy must be the treatment referred to in section 4. However, no one suggests that the conscience clause is limited to the actual ending of the pregnancy, that is, when the pregnancy comes to an end because the woman has been delivered of the foetus. In a surgical termination of pregnancy, the events are simultaneous, but in a medical termination, they are not. In a medical termination, it would make no sense to make lawful the ending of the pregnancy without also making lawful the prescribing and administration of the drugs which bring that termination about. Rather, at one end of the spectrum, the Royal College of Midwives argue that the treatment authorised by this Act is limited to the treatment which actually causes the termination, that is, the administration of the drugs which induce premature labour. It does not extend to the care of the woman during labour, or to the delivery of the foetus, placenta and membrane, or to anything that happens after that. This may be a little narrower than the guidance given by the Royal College in their 1997 position paper on conscientious objection. This states that [t]he RCM believes that the interpretation of the conscientious objection clause should only include direct involvement in the procedure of terminating pregnancy and [t]he RCM is of the opinion that the conscientious objection clause solely covers being directly involved in the procedures a woman undergoes during the termination of pregnancy whether surgically or medically induced. At the other end of the spectrum, the petitioners argue that they have the right to object to any involvement with patients in connection with the termination of pregnancy to which they personally have a conscientious objection. The exercise of conscience is an internal matter which each person must work out for herself. It is bound to be subjective. In their case, as practising Roman Catholics, their objections extend to receiving and dealing with the initial telephone call booking the patient into the Labour Ward, to the admission of the patient, to assigning the midwife to look after the patient, to the supervision of the staff looking after the patient, both before and after the procedure, as well as to the direct provision of any care for those patients, apart from that which they are required to perform under section 4(2). The appellant employers argue for an interpretation in between the other two. Treatment authorised by this Act begins with the administration of the drugs and ends with the expulsion of the products of conception foetus, placenta and membrane, from the womb. So the conscience clause does not cover making bookings or aftercare for patients who have undergone a termination. Nor does it cover fetching the drug before it is administered. Participating is limited to direct participation in the treatment involved. It does not cover administrative and managerial tasks, such as allocating ward resources and assigning staff. Nor does it cover supervisory duties which are concerned with ensuring that general nursing care of an appropriate standard is provided to women undergoing a termination. Discussion This is, as already stated, a pure question of statutory construction. Section 4(1) of the 1967 Act refers to treatment authorised by this Act but section 1(1) does not in so many words refer to treatment at all. Nevertheless, the section is headed Medical termination of pregnancy. Section 1(1) makes lawful the termination of a pregnancy by a registered medical practitioner in certain circumstances. Section 1(4) also refers to the termination of a pregnancy by a registered medical practitioner and modifies the circumstances in which it is lawful. Section 1(3) refers to any treatment for the termination of a pregnancy. Hence, as the House of Lords decided in the Royal College of Nursing case, what is authorised by the Act is the whole course of medical treatment bringing about the ending of the pregnancy. By virtue of section 5(2), any other conduct which is prohibited by sections 58 and 59 of the Offences against the Persons Act 1861 in England and Wales or by any rule of law in Scotland remains a criminal offence. Thus I would agree with the appellants that the course of treatment to which the petitioners may object is the whole course of medical treatment bringing about the termination of the pregnancy. It begins with the administration of the drugs designed to induce labour and normally ends with the ending of the pregnancy by delivery of the foetus, placenta and membrane. It would also, in my view, include the medical and nursing care which is connected with the process of undergoing labour and giving birth, the monitoring of the progress of labour, the administration of pain relief, the giving of advice and support to the patient who is going through it all, the delivery of the foetus, which may require the assistance of forceps or an episiotomy, or in some cases an emergency Caesarian section, and the disposal of the foetus, placenta and membrane. In some cases, there may be specific aftercare which is required as a result of the process of giving birth, such as the repair of an episiotomy. But the ordinary nursing and pastoral care of a patient who has just given birth was not unlawful before the 1967 Act and thus was not made lawful by it. These conclusions are supported by the exception in section 4(2), which provides that the right of conscientious objection does not affect any duty to participate in treatment which is necessary to save the life or to prevent grave permanent injury to the physical or mental health of a pregnant woman. One would expect this duty to cover any medical and nursing care during the process of termination and delivery which was necessary for those purposes. In Janaway [1989] AC 537, 572 Lord Keith pointed out that such an interpretation would not cover the doctors forming the opinions required by 38. section 1 and signing the certificates to that effect (provided for in the Regulations made under section 2(1)(a) of the Act). These certificates have to be given before the treatment for the termination of pregnancy begins. It is in any event hard to see them as part of the treatment process. They are a necessary precondition to it. It follows that they are not covered by the conscience clause in section 4(1). Nevertheless, we understand that the contractual arrangements made by the NHS with GPs, and the employment contracts made with hospital doctors, do in practice contain such clauses. 39. of pregnancy; this is not covered by the conscience clause as interpreted above; (2) providing a detailed handover within the Labour Ward to the new Labour Ward Co ordinator coming on shift; this is not covered by the conscience clause as interpreted above (but a way round would be to refer to the allocated midwife for details); (3) appropriate allocation of staff to patients who are already on the ward at the start of the shift or who are admitted in the course of the shift; this is not covered by the conscience clause as interpreted above; (4) providing guidance, advice and support (including emotional support) to all midwives; this is only covered insofar as it relates to guidance, advice and support directly connected with the care of a particular patient undergoing a termination, such as whether to administer another round of drugs, as opposed to the ordinary monitoring of any patient on the ward; (5) accompanying the obstetricians on ward rounds; this would not be covered by the conscience clause as interpreted above, except to the patients undergoing terminations; but there would be little that a midwife with conscience objections could contribute to such a ward round for patients undergoing a termination; (6) responding to requests for assistance, including responding to the nurse call system and the emergency pull; responding by itself is not covered; it would depend upon the assistance requested whether it was part of the treatment for a termination; (7) acting as the midwifes first point of contact, if the midwife is concerned about how a patient is progressing; in itself, this is not covered; but the assistance required may be, depending upon what it is; and if assistance is required with the course of treatment leading to a termination, the Labour Ward Co ordinator should refer to someone else who does not share her conscientious objection to assisting; (8) ensuring that midwives on duty receive break relief, which may mean that the Labour Ward Co ordinator provides the break relief herself; ensuring break relief is not covered but providing it oneself is covered; (9) being present to support and assist if medical intervention is required, for example, instrumental delivery with forceps; this is covered by the conscience clause as interpreted above; (10) communicating with other professionals, eg paging anaesthetists; this is a managerial task which is not covered by the conscience clause as interpreted above; (11) monitoring the progress of patients to ensure that any deviations from normal are escalated to the appropriate staff level, eg an obstetrician; responding to and passing on the judgment of the treating midwife is an administrative task not covered by the conscience clause as interpreted above; however, forming the judgment personally would be taking part in the treatment; (12) directly providing care in emergency situations; this is covered by the conscience clause, unless falling within section 4(2) as it normally would; (13) ensuring that the family are provided with appropriate support; this is not covered by the conscience clause as interpreted above. It is not treatment authorised by the Act as it has never been unlawful. However, as with helping with arrangements after the baby is delivered, it may be reasonable to expect an employer to accommodate an employees objections, in the interests of providing the family with the most effective service. 40. Whatever the outcome of the objectors stance, it is a feature of conscience clauses generally within the health care profession that the conscientious objector be under an obligation to refer the case to a professional who does not share that objection. This is a necessary corollary of the professionals duty of care towards the patient. Once she has assumed care of the patient, she needs a good reason for failing to provide that care. But when conscientious objection is the reason, another health care professional should be found who does not share the objection. I would therefore allow this appeal and set aside the declarator made in the Inner House. I would invite further submissions on quite what, if any, order or declarator should replace it. 41. The more difficult question is what is meant by to participate in the course of treatment in question. The employers accept that it could have a broad or a narrow meaning. On any view, it would not cover things done before the course of treatment began, such as making the booking before the first drug is administered. But a broad meaning might cover things done in connection with that treatment after it had begun, such as assigning staff to work with the patient, supervising and supporting such staff, and keeping a managerial eye on all the patients in the ward, including any undergoing a termination. A narrow meaning would restrict it to actually taking part, that is actually performing the tasks involved in the course of treatment. In my view, the narrow meaning is more likely to have been in the contemplation of Parliament when the Act was passed. The focus of section 4 is on the acts made lawful by section 1. It is unlikely that, in enacting the conscience clause, Parliament had in mind the host of ancillary, administrative and managerial tasks that might be associated with those acts. Parliament will not have had in mind the hospital managers who decide to offer an abortion service, the administrators who decide how best that service can be organised within the hospital (for example, by assigning some terminations to the Labour Ward, some to the Fetal Medicine Unit and some to the Gynaecology Ward), the caterers who provide the patients with food, and the cleaners who provide them with a safe and hygienic environment. Yet all may be said in some way to be facilitating the carrying out of the treatment involved. The managerial and supervisory tasks carried out by the Labour Ward Co ordinators are closer to these roles than they are to the role of providing the treatment which brings about the termination of the pregnancy. Participate in my view means taking part in a hands on capacity. It is helpful to test these principles against the agreed list of the tasks included in the petitioners role as Labour Ward Co ordinators: (1) management of resources within the Labour Ward, including taking telephone calls from the Fetal Medicine Unit to arrange medical terminations |
William Leonard McMullan, known as Lenny McMullan, and Denise Brewster lived together for some ten years before December 2009. On Christmas Eve that year, they became engaged. Sadly, Lenny McMullan died two days later. His death was sudden and unexpected; he was only 43 years old. He was found dead in the home that he shared with Ms Brewster in Lilac Avenue, Coleraine, County Londonderry. The couple had bought the house together in April 2005. Mr McMullan died intestate. He had no children. At the time of his death, Mr McMullan was employed by Translink, the company which provides Northern Irelands public transport services. He had worked for that company for approximately 15 years. Throughout that time Mr McMullan was a member of and paid into the Local Government Pension Scheme Northern Ireland (the scheme). The first respondent, the Northern Ireland Local Government Officers Superannuation Committee (NILGOSC), is the statutory body responsible for administering the scheme. When Mr McMullan died, NILGOSC administered the scheme pursuant to the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations (Northern Ireland) 2009 (SI 2009/32) (the 2009 regulations). The second respondent, the Department of the Environment for Northern Ireland (DENI), made and was responsible for the 2009 regulations. Among other things, the 2009 regulations provide for the payment of retirement pensions to members of the scheme and for the payment of pensions and other benefits to certain survivors of members. In April 2009, on the coming into force of the 2009 regulations, a cohabiting surviving partner became eligible for the first time, for payment of a survivors pension. But, in order to qualify for payment of the pension, a cohabiting surviving partner had to be nominated by the member. Ms Brewster believes that Mr McMullan had completed a form in which he nominated her. NILGOSC says, however, that it did not receive the form and has refused to pay her a survivors pension. The appeal has proceeded on the basis that the nomination was not made. Ms Brewster applied for judicial review of NILGOSCs decision not to award her a survivors pension, arguing that the absolute requirement of nomination imposed on unmarried partners as a condition of eligibility for a survivors pension under the 2009 regulations constitutes unlawful discrimination contrary to article 14 of the European Convention on Human Rights and Fundamental Freedoms (ECHR), when read in conjunction with article 1 of the First Protocol (A1P1) to ECHR. In a judgment delivered on 9 November 2012, (neutral citation [2012] NIQB 85) Treacy J held that the nomination requirement was an instrument of disentitlement (para 59) in relation to unmarried partners and that whilst the impugned regulations pursued a legitimate aim, there was not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved. He therefore made an order declaring that the requirement of nomination of a cohabiting partner in the 2009 scheme was not compatible with article 14 ECHR read together with A1P1. He quashed the decision of NILGOSC dated 1 July 2011 by which it had declined to pay the appellant a survivors pension. NILGOSC and DENI appealed. On 1 October 2013, by a majority, Girvan LJ dissenting, the Court of Appeal (Higgins, Girvan and Coghlin LJJ, neutral citation [2013] NICA 54) allowed the appeal. Higgins LJ found that the nomination requirement was not unjustified or disproportionate; and Coghlin LJ also concluded that the requirement had not been shown to be manifestly without reasonable justification. Survivor benefit schemes for unmarried partners of public service employees In December 1998, the government in Westminster published a Green Paper on pension reform. It was entitled A new contract for welfare: partnership in pensions. The Green Paper stated that occupational pension schemes were one of the great welfare success stories of this country (para 1, p 65). It was observed that, [m]ost large occupational pension schemes in the private sector now provide survivors benefits for the unmarried partners of the opposite sex of scheme members, although in the overwhelming majority of cases this is at the discretion of the trustees (para 59, p 76). At the time of the publication of the Green Paper, in contrast to private sector schemes, public service schemes only provided survivors pensions to the spouse of a deceased member (para 60, p 76). The first public sector scheme to introduce survivors pensions for unmarried partners was the Civil Service Pension Scheme in 2002. It included a requirement to jointly [make] and [sign] a declaration in a form prescribed by the Minister. No evidence has been proffered as to why the requirement for such a declaration was included. In October 2004 a consultation exercise was conducted into the operation of the England and Wales Local Government Pension Scheme: Facing the Future - Principles and propositions for an affordable and sustainable Local Government Pension Scheme in England and Wales. This was carried out through the Office of the Deputy Prime Minister. It was proposed that survivors benefits be extended generally to cohabiting partners, provided that members of individual schemes wanted this and were prepared to meet the extra cost involved. The consultation paper suggested that certain considerations arose because of the different situations of, on the one hand, married or civil partners and, on the other, cohabiting unmarried couples but the only consideration referred to in the paper itself was the nature of proof required in the latter case to establish they were living together as if they were husband and wife or civil partners. Outlining the types of evidence that would be required to verify the authenticity of the relationship, the paper adumbrated a number of different requirements, including that there be a valid nomination of a partner with whom there would be no legal bar to marriage or civil registration - essentially an opt-in obligation: para B8.7. Once again, the consultation paper provided no explanation as to why it was thought that evidence of a valid nomination was needed in addition to objective evidence of the nature of the relationship. Moreover, there was no consultation question inviting response to the proposed evidence requirements. In June 2006 a further consultation paper was issued setting out four options, all of which proposed survivors pensions for cohabitants but none of which contained a nomination requirement: Where next? - Options for a new-look Local Government Pension Scheme in England and Wales. The consultation paper stated, however, that the Law Commission was conducting a project on cohabitation and that a final report was expected by August 2007. It was noted that the Law Commission was considering the case for allowing cohabiting couples to opt-in to a scheme imposing enforceable financial obligations in the event of their separation: paras 6.14-6.15. The Law Commissions inquiry into and subsequent report on cohabitation was, of course, conducted on a much wider plane than consideration of survivors benefits for unmarried partners of public service employees. The consultation paper published in advance of the commissions consideration ranged over all manner of financial protection for unmarried cohabiting couples: Cohabitation: The Financial Consequences of Relationship Breakdown (2006) (Consultation Paper No 179). A key element of the discussion was whether an opt-in provision was required in order to anchor financial security for cohabiting partners. In its consultation paper the commission adverted to the fact that opt-in schemes had been introduced in several European states and elsewhere but that the take-up for these schemes, even where open to both opposite-sex and same-sex couples, is generally low: para 5.45. The reasons for that were discussed in the consultation paper. It could be that one partner was unwilling to make the commitment or that the other, willing to make the commitment, was reluctant to raise it lest that jeopardise the relationship. As the consultation paper pointed out at para 5.28, it might be considered too harsh to deny all legal protection to the economically weaker party in the event of separation. Even if the failure to take that step were due to inertia, or a lack of proper appreciation of the legal significance of not taking that step, the harshness of the result in some cases could be regarded as a wholly disproportionate sanction for that inactivity. The commissions provisional view was set out in paras 5.53 and 5.54 of the consultation paper: 5.53 In our view, a scheme that applied by default to eligible cohabitants, subject to a right to opt out, would create an appropriate balance between affording scope for party autonomy and securing fairer outcomes for individuals at the end of cohabiting relationships. It would mean that inactivity would not, as it currently does, leave the more vulnerable party unprotected at the point of separation: the scheme would apply by default in the absence of a valid opt-out agreement. 5.54 Many other jurisdictions have adopted this approach, following the trend set in 1984 by New South Wales, the first jurisdiction to create a statutory scheme for financial relief between cohabitants. That pattern has been replicated across other jurisdictions, including the rest of Australia, most of the Canadian provinces, New Zealand, some parts of Spain, Sweden and, most recently, Scotland. After extensive consultation, the Law Commissions final report was duly published on 3 July 2007 (Cohabitation: The Financial Consequences of Relationship Breakdown (Law Com No 307) (Cm 7182)) and, having observed that most consultees had agreed with the commissions provisional view, it firmly rejected an opt-in requirement. The penalisation of cohabitants for their failure to subscribe to an opt-in scheme was discussed at para 2.88 of the report: research suggests that providing people with information about the law and what they should do to protect their legal position does not guarantee that they will take those steps, or even be able to do so. Indeed, while there was considerable support among respondents to the Living Together Campaign survey for opt-in regimes, the fact that so few of those individuals had taken action based on the information that they had obtained suggests that few would in practice register their relationship or be able to do so. A major underpinning of the commissions preference for the opt-out scheme was the protection of the vulnerable partner in the relationship and this might be considered to have more direct relevance to separation of cohabiting partners, rather than the death of one of them. The latter situation was discussed in the commissions report at para 6.13 where it was stated: It is important not to equate separation and death. Many consultees felt, and we agree, that there is a qualitative difference between a relationship cut short by death and a relationship terminated by separation. On separation, there has ordinarily been a failure of commitment by at least one of the parties. It is, therefore, legitimate when considering the eligibility of separating couples under our recommended scheme to ask whether the length of the relationship indicated that there was, at least at one time, sufficient commitment between the parties to justify bringing the relationship within the scheme. Where a relationship is terminated by death, however, the ending of the relationship does not of itself suggest that there was any lack of commitment on either side. This qualitative difference may well affect what should be regarded as reasonable financial provision on death and who should be eligible to make a claim under the 1975 [Inheritance (Provision for Family and Dependants)] Act. It is, of course, the case that these comments were made in the context of whether cohabitants should be included in the categories of person entitled to make an inheritance claim under the 1975 legislation. But important general considerations underlie the observations. In the first place, it will be more readily deducible that the requisite level of commitment existed between the parties where the ending of the relationship is brought about by death rather than separation. Secondly, notions of fairness have an obvious role to play when one is considering whether it is right to deny financial benefit to a surviving unmarried partner when a married partner would have an automatic right to that benefit. These considerations bear on the justification for the preservation of the requirement of nomination in the impugned regulations. The Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007 (SI 2007/1166) (which, of course, applied in England and Wales) were laid before Parliament in April 2007, three months before the Law Commissions report was published. Notwithstanding the fact that no proposal for a nomination requirement had been made in the consultation paper, such a requirement featured in regulations 24 and 25. The Explanatory Note to the regulations did not give a reason for the nomination requirement. The Local Government Pension Scheme in England and Wales was revised in 2013 with effect from 1 April 2014 for claims arising after that date: the Local Government Pension Scheme Regulations 2013 (SI 2013/2356). The revisions included the removal of the opt-in or nomination requirement for unmarried couples. The same change was made to the Scottish scheme by the Local Government Pension Scheme (Scotland) Regulations 2014 (SSI 2014/164). The circumstances in which these changes took place and why they were not introduced in Northern Ireland are discussed in paras 24-28 below. The background to the Northern Ireland scheme In an affidavit filed in these proceedings on behalf of DENI, Marie Cochrane, a deputy principal in the department, stated that the scheme in Northern Ireland had mirrored the scheme in Great Britain because it was considered to be generally desirable that local government employees should have equivalent pension benefits right across the UK. In August 2006, therefore, while the consultation in England and Wales was taking place, a separate consultation exercise was begun in Northern Ireland. Although the Northern Ireland exercise was separate from that which had started in England and Wales some two months before, the consultation paper for the latter formed the centrepiece of the documentation sent to consultees in Northern Ireland. Consultees were told that the Northern Irish scheme maintains parity with the scheme in Great Britain. As earlier noted, the consultation paper for England and Wales did not suggest a nomination requirement in any of the four proposals that it contained. Nor did the letter from Ms Cochrane which started the consultation process in Northern Ireland. Despite the absence of any reference to a nomination requirement, NILGOSC, in its response to the consultation letter, raised the issue. In its letter of 9 October 2006 to DENI, it pointed out that the Civil Service Pension scheme stipulated that there be a valid nomination of a cohabiting partner to receive a survivors pension. NILGOSC immediately referred to a number of inequalities that would arise from such a requirement and to the possibility of legal challenge if these were not addressed. These included:- 1. The fact that married or civil partners did not have to be living together in order to benefit from the scheme, whereas cohabiting unmarried partners did; 2. A married or civilly registered couple did not have to be in an exclusive, long term relationship established for a minimum of two years in order for a survivor pension to be paid; and 3. A survivor pension would automatically be paid to a married or civilly registered partner; no nomination was required in their case. The lack of a valid nomination form was likely to result in disputes where all the other criteria were met. Since neither the consultation paper for the England and Wales exercise nor the letter from Ms Cochrane which set the Northern Ireland consultation in train contained any reference to a nomination requirement, it is unsurprising that no policy objectives that might be achieved by such a requirement were identified by DENI when it set up the consultation process. But the letter from NILGOSC certainly brought the question of the need for such a requirement to centre stage. The appellant has pointed out that no evidence has been produced by DENI to show that the matter was considered at all, even after the letter from NILGOSC was received. Indeed, the only policy driver which emerges from a consideration of contemporary documents is the need to maintain parity with the rest of Great Britain. No independent assessment of the need for or the viability of a nomination requirement was undertaken. It appears that no attempt was made to address the possible difficulties that NILGOSCs letter had identified. The 2009 Regulations The 2009 Regulations were made under powers conferred by the Superannuation (Northern Ireland) Order 1972 (SI 1972/1073 (NI 10)). Article 9 of that Order allowed DENI to make regulations providing for pensions, allowances or gratuities to be paid to or in respect of such persons, or classes of persons, as were to be prescribed. In general, these were persons employed by local authorities and other public service employees. On 6 June 2008 DENI invited consultees to comment on the draft regulations. The draft regulations included the nomination requirement. The only reference to this in the 6 June letter was that survivor benefits would be payable to widows, widowers, civil partners and nominated cohabiting partners, but the letter did not provide any explanation for the reason for including a condition of nomination nor did it specifically invite comment on it. The 2009 Regulations were made on 25 February 2009 and the new Pension Scheme came into effect on 1 April 2009. The relevant provisions are contained in regulations 24 and 25. The material parts of those regulations are as follows: 24(1) If a member dies leaving a surviving spouse, nominated cohabiting partner or civil partner, that person is entitled to a pension payable from the day following the date of death 25(1) Nominated cohabiting partner means a person nominated by a member in accordance with the terms of this regulation. (2) A member (A) may nominate another person (B) to receive benefits under the Scheme by giving the Committee a declaration signed by both A and B that the condition in paragraph (3) has been satisfied for a continuous period of at least two years which includes the day on which the declaration is signed. (3) The condition is that - (a) A is able to marry, or form a civil partnership with, B; (b) A and B are living together as if they were husband and wife or as if they were civil partners; (c) neither A nor B is living with a third person as if they were husband and wife or as if they were civil partners; and (d) B are financially interdependent. either B is financially dependent on A or A and (4) But a nomination has no effect if the condition in paragraph (3) has not been satisfied for a continuous period of at least two years which includes the day on which the declaration is signed. (5) A nomination ceases to have effect if - either A or B gives written notice of revocation (a) to the Committee; (b) A makes a subsequent nomination under this regulation; (c) either A or B marries, forms a civil partnership or lives with a third person as if they were husband and wife or as if they were civil partners; or (d) B dies. (6) B is As surviving nominated partner if - the nomination has effect at the date of As death; (a) and (b) B satisfies the Committee that the condition in paragraph (3) was satisfied for a continuous period of at least two years immediately prior to As death. It is clear that mere nomination will not satisfy the requirements of regulation 25. By para (4) of the regulation, nomination has no effect if the condition specified in para (3) has not in fact been satisfied for the requisite period. And by para 6(b) the nominated partner is required to satisfy the committee that the condition in para (3) had indeed been fulfilled. So the applicant must show that she has been a cohabitant for two years before the date of declaration and been in that position for two years before the date of death. The provisions demand of the surviving cohabitant that she or he prove to the satisfaction of the committee that the stipulations in para (3) have been met. They are freestanding of the nominating procedure. The question therefore arises, what is the function of requiring nomination? The appellant says that it adds nothing to the process of establishing that the qualifying conditions have been met. The 2013 Regulations in England and Wales and the 2014 Regulations in Scotland The Local Government Pension Scheme in England and Wales was revised with effect from 1 April 2014 for claims arising after that date. The revisions included the removal of the opt-in requirement for unmarried couples. Survivors pensions are now available to cohabiting partners. They are defined in Schedule 1 to the Local Government Pension Scheme Regulations 2013 as follows: cohabiting partner means a person whom the appropriate administering authority is satisfied fulfils the following conditions - (a) the person (P) has fulfilled the condition in paragraph (b) for a continuous period of at least two years on the date the member (M) died, and (b) the condition is that - (i) M is able to marry, or form a civil partnership with P, (ii) M and P are living together as if they were husband and wife or as if they were civil partners, (iii) neither M nor P is living with a third person as if they were husband and wife or as if they were civil partners, and (iv) either P is financially dependent on M, or M and P are financially interdependent. As stated in para 16, the same change was made to the Scottish scheme by the Local Government Pension Scheme (Scotland) Regulations 2014. The circumstances in which the nomination requirement in the England and Wales scheme was removed were explained in an affidavit of Chris Megainey, the deputy director (Workforce, Pay and Pensions) in the Department for Communities and Local Government (DCLG). He explained that the first consultation document which was issued before the draft 2013 regulations were prepared had included a proposal that the nomination requirement be maintained but consultees were invited to address the question of the need for its retention in light of the decision of Treacy J in the present case. Seventeen of the responses which were received (a significant majority) expressed a wish that DCLG should explore the possibility of introducing a less onerous system for determining a cohabiting partners entitlement to a survivors pension. In response to these replies, further consultations took place and it was decided that the nomination requirement should be removed. In a second affidavit, Mr Megainey said that, to the best of his knowledge and belief, the nomination requirement was removed from the legislation because it was considered to be unnecessary. Kimberley Linge, Policy Manager in the Scottish Public Pensions Agency (SPPA), explained the reasons for the change in the Scottish regulations. She said that after the Court of Appeal had given its decision in the present case, SPPA had sought advice from the Scottish Government Legal Department about the nomination issue. The advice received was to the effect that the nomination requirement was an overly burdensome one for cohabitants when compared with the requirements imposed on married partners and civil partners. Initially, that advice was not acted upon but following discussion at the Scottish Local Government Pension Scheme Advisory Group (a tripartite group comprising the unions, the Convention of Scottish Local Authorities and the Scottish Government) it was agreed to dispense with the nomination requirement. The application to re-open the appeal When the appellants advisers became aware of the changes to the English 2013 and the Scottish 2014 regulations, they applied to the Court of Appeal for a re- opening of the appeal. This was against the background that in the draft amended regulations which had been proposed in Northern Ireland in 2014 the nomination requirement was to be retained. DENI opposed the application to re-open the appeal. In an affidavit filed to support DENIs opposition to the reopening of the appeal, Ms Cochrane stated: I can confirm that the Department was not aware, at the date of hearing of this Appeal, of the intention of DCLG to amend the specific provision on the nomination requirement for a cohabiting partner survivor benefit. The Department, which is not copied into consultations by DCLG, first became aware of the existence of the 20 June 2013 consultation document on or about 24 June 2013 through either the DCLG website or through a specialist pensions bulletin published by Pendragon. However, the Department did not become aware of the relevant part of the 20 June 2013 consultation until some point after 8 July 2013 Having become aware of the relevant part of the 20 June 2013 consultation document, I did not consider that this could have any bearing upon the Brewster case because the said case had already been heard on 8 and 9 May 2013 and because the proposed changes were prospective and related only to England & Wales. Also a separate process for the development of proposals for the reformed Local Government Pension Scheme in Northern Ireland was underway. I was not aware of the need to advise Departmental Solicitors Office of a prospective change in another jurisdiction and consequently did not do so. The application to re-open the appeal was refused on 22 May 2014 and the Northern Irish scheme was revised on 27 June 2014. The new scheme did not remove the nomination requirement for unmarried couples. No evidence has been offered of any contemporaneous consideration of the need to preserve this requirement or of the desirability of amending the Northern Irish scheme so as to bring it into line with the changes in the rest of the United Kingdom, notwithstanding that before Treacy J and the Court of Appeal, DENI had relied on the allegedly critical importance of parity with the England and Wales scheme. The policy behind the nomination requirement Ms Cochrane dealt with the policy objectives underlying the 2009 Regulations and, in particular, the procedural requirements for cohabitants claiming survivor benefit in para 13 of her first affirmation, dated 21 February 2012, where she said: the decision to introduce in Northern Ireland the same procedural requirements for claiming a survivors benefit was heavily influenced by the reforms already introduced in England & Wales. The policy objectives of those requirements were those identified in the 2004 consultation paper issued by the Office of the Deputy Prime Minister. They were designed to ensure that the existence of a cohabiting relationship, equivalent to marriage or civil partnership was established in an objective manner and also that the wishes of the scheme member had been identified through the execution of a valid nomination form during his lifetime. One can understand why the procedural requirements designed to establish that a genuine and subsisting relationship existed had been included in the regulations. But this does not explain why a nomination was required. If it was shown (as, for the reasons given in para 23 above, it had to be) that there was indeed a cohabiting relationship which satisfied the tests as to its genuineness and existence at the time of the death, why was a nomination process needed? This added nothing to the evidential hurdle which a surviving unmarried partner of a scheme member had to face. If the requirements in regulation 25(3) (other than the making of a nomination) are satisfied, the only conceivable object of the nomination requirement was to find out what the scheme member wanted. But what had those wishes to do with the question of entitlement? It is not enough simply to state that the procedural requirements were designed to ensure that the wishes of the scheme member had been ascertained, in order to invest that aim with the necessary attribute of legitimacy. The confirmation of those wishes does not have some intrinsic, undeniable value. The purpose behind the avowed need to ascertain them must be stated. It has been said that its purpose was not to permit a scheme member to prevent, for vindictive reasons, his cohabiting partner from receiving a survivors benefit, although, on its face, it certainly had that potential. If that was not its purpose, what then was it? DENI adopted Higgins LJs characterisation of the purpose of the scheme to be to permit some cohabitants in certain defined circumstances to obtain the same pension provision as those who are married or in a civil partnership - para 17 of his judgment. DENI expressly disavowed the legitimate aim of the regulations which Treacy J had identified viz to facilitate entitlement without discrimination on grounds of status. What the judge had said about the aim of the regulations appears at para 54 of his judgment: The aim or underlying objective of this aspect of the pension scheme is to place unmarried, stable, long-term partners in a similar position to married couples and those in a civil partnership to facilitate entitlement to a pension without discrimination on the grounds of status. DENIs repudiation of the judges description of the aim of the regulations (in so far as they relate to the treatment of surviving unmarried partners of scheme members) is, to say the least, surprising. It is especially so in light of DENIs proper - but inevitable - acceptance that the provision of a survivor benefit under the scheme engages A1P1 of ECHR and that the appellants status, as a person who was in a cohabiting relationship other than a marriage or a civil partnership at the time of her partners death, is a relevant status for the purposes of article 14 ECHR. The judge had been careful to couch his description of the aim of this aspect of the pension scheme in terms which reflected the stability and long term nature of the relationship. It surely must be the case that the regulations were geared to eliminate unwarranted differences of treatment between married or civil partner survivors on the one hand and, on the other hand, those unmarried long term partners who were in a stable relationship with the scheme member before death. Given DENIs acceptance that the provision of a survivor benefit engages A1P1 and that the appellant has the requisite status to rely on article 14, unwarranted (ie unjustified) difference of treatment (ie discrimination) would bring it into breach of its ECHR obligations if such unequal treatment was not eradicated. In my view, DENI simply cannot be heard to say that elimination of unjustified difference of treatment between, on the one hand, the survivor of a scheme member who establishes that they were in a stable long term relationship with that member and, on the other, a married or civil partner of a scheme member was not the aim of the inclusion of unmarried partners within the survivors entitlement. This must have been its objective and, expressed in that way, it is no more than a rephrasing of the judges formulation of the aim. The error of DENIs submission on this point and, with respect, Higgins LJs characterisation of the aim of the regulations on this aspect is to confuse the aim with the means employed to achieve it. Permitting some cohabitants in certain defined circumstances to obtain the same pension provision as married or civil partner survivors is the way in which unjustified discrimination is avoided. It is not an end in itself. The essential question, therefore, is whether imposing a nomination requirement in fact conduces to unwarranted difference of treatment or to its removal. It is for this reason that it is relevant to note that the wishes of a married scheme member did not have to be stated or ascertained. If nomination was not required of a married survivor of a scheme member and if the overall aim of the amended regulations was to place a surviving cohabitant who was in a stable, long term relationship with the deceased scheme member on an equal footing with a surviving spouse or civil partner, the need for a nomination procedure in the case of the cohabitant is difficult to find. If it was designed to test the truth of a claim that the relationship was stable and long-lasting, that would be one thing. But it was not. The obligation to establish those features of the relationship was entirely independent of the nomination procedure. Nothing in the contemporaneous documentation suggests that this consideration underlay its inclusion in the scheme. One must therefore look elsewhere to find out why the nomination procedure was considered to be needed. As to the averment in Ms Cochranes affirmation that the policy objectives of the procedural requirements were those identified in the 2004 consultation paper issued by the Office of the Deputy Prime Minister, Girvan LJ correctly pointed out at para 6 of his judgment in the Court of Appeal, that that consultation paper provides no explanation as to why nomination would or should be evidentially required. The 2004 paper is of no assistance, therefore, as to any objective which the nomination procedure might achieve. Moreover, as again Girvan LJ rightly observed in para 6, there was simply no evaluation of the pros and cons of having a nomination or opt-in procedure. The only discernible reason operating at the time the 2009 regulations were made was that it was considered necessary and/or desirable that they should mirror the provisions in England and Wales. Post hoc justification for the nomination requirement In para 15 of her first affirmation, Ms Cochrane alluded to the formal dimension that the nomination procedure brought to a claim for survivors pension. She said: It is the view of the Department that these [procedural] requirements are reasonable and proportionate measures designed to establish in a formal manner, the intentions of the deceased about a matter which has testamentary significance. Furthermore, cohabiting relationships are different from marriage and civil partnerships insofar as they may be commenced and ended without legal formality and do not involve a change of an individuals legal status. The Department is of the view that if a Scheme member chooses to have a cohabiting relationship which is neither marriage nor civil partnership, the requirements of the 2009 Regulations are an appropriate means by which to determine the existence, formality and status of the relationship in addition to obtaining independent verification of the deceaseds wishes. It has not been suggested by DENI that these considerations featured in its assessment of whether a nomination procedure was required before the 2009 Regulations were made. They must nevertheless be considered now in order to see whether they support the claim as to the reasonableness and proportionality of the measure. The value of formality in this setting is not explained. Since the regulations require a surviving cohabitant to establish that she or he had been in a long term relationship with the scheme member, it is difficult to see what formality adds to the question of entitlement. The same may be said of the circumstance that cohabitation does not involve a change in legal status. It is in the very nature of cohabitation that there is no legal formality or change of status involved. But there is no immediately obvious reason that some ersatz substitute for the legal formality of marriage or civil partnership would contribute to the assessment of a cohabitants entitlement to a survivors pension. That entitlement derives from the survivor having been in a longstanding relationship with the scheme member. In so far as the use of the word existence in the final sentence of the cited passage connotes some extra proof of the relationship, as I have already pointed out, the terms of regulation 25 require the survivor to establish by independent means that the relationship was of the nature and duration required to satisfy the schemes requirements. There was no further need of proof beyond this. On the question of the verification of the deceaseds wishes, I have already made clear in paras 31-36 above why I do not consider that this is a relevant consideration. Before the Court of Appeal, both respondents took up the theme of testamentary significance, which had been foreshadowed in Ms Cochranes affirmation. They submitted that by lodging a nomination form, the scheme member and her or his cohabitant were required to make a public affirmation akin to the formal and public commitment of marriage and that this added a necessary ingredient of correctness to the process. This argument found favour with the majority, Higgins LJ, describing it as crucial (para 19) and Coghlin LJ characterising the nomination form as a public statement from both participants equivalent to the production of a certificate of marriage or civil partnership (para 23). The need for a formal or public affirmation is not explained. Certainly, in this context, it has no inherent value. It does not, of and in itself, make the survivor any more deserving of the pension. The essence of entitlement is that the relevant parties have lived together for a sufficiently long period and that one is financially dependent on the other or that they are financially interdependent. Being required to make a public declaration that these conditions obtain adds nothing to the objective inquiry as to whether they in fact exist. Arguments were also advanced to the effect that administrative costs would increase if the nomination procedure was abandoned and that actuarial predictions were easier with that procedure in place. No evidence to support those claims was presented to the Court of Appeal and the arguments were not pursued before this court. Echoes of them might be found in the printed case of DENI to the effect that the nomination requirement is a bright-line inclusionary rule of general application directed to workability and legal certainty but again no material to establish the truth of these assertions was proffered. It is clear, therefore, that the making of a nomination adds nothing to the evidential demands made of a survivor to show that she or he was in a longstanding relationship with the deceased scheme member and that they were either financially dependent on or financially interdependent with the deceased. It is also evident that no intrinsic value attaches to the making of such a nomination. The areas of agreement of A1P1 which provides: It is not in dispute that the denial of a survivors pension falls within the ambit Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. Although the right to a pension might not be regarded, in conventional terms, as a possession, it is well settled that A1P1 protects possessions, which can be either existing possessions or assets, including claims, in respect of which the applicant can argue that he or she has at least a legitimate expectation of obtaining effective enjoyment of a property right. It does not, however, guarantee the right to acquire property (see Kopeck v Slovakia (2004) 41 EHRR 43, para 35 (GC) and J A Pye (Oxford) Ltd v United Kingdom (2007) 46 EHRR 45, para 61 (GC)). It is likewise not in dispute that the appellant, as a person who was in a cohabiting relationship other than a marriage or a civil partnership at the time of her partners death, enjoyed a relevant status for the purposes of article 14 ECHR (In re G (Adoption Unmarried Couple) [2008] UKHL 38; [2009] AC 173, paras 8, 107 and 132). Article 14 provides that the enjoyment of the rights and freedoms in ECHR shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. It was also agreed that a surviving unmarried partner falling within regulation 25(6)(b) of the 2009 Regulations is in an analogous situation to a surviving married partner or civil partner. The single area of dispute between the parties, therefore, is whether the interference with the appellants right to property has been objectively justified - see para 13 of Higgins LJs judgment. The starting point in the analysis of whether there is objective justification for interference with the appellants right to property must be the duty of the state to secure her entitlement to equal treatment. Unlike, for instance, the duty under article 8 of ECHR, which enjoins the state to respect the citizens right to a private life etc, article 14 requires of the state that it should ensure that her rights under ECHR are in place unless there is objective justification for denying them to her. The European Court of Human Rights (ECtHR) has been careful to question whether discrimination in the enjoyment of survivors rights based on some prior failure to regularise a relationship has been justified: Marckx v Belgium (1979) 2 EHRR 330. In that case ECtHR held that the limitations placed on the capacity of an unmarried mother to give and bequeath, and her child to take and inherit, property were discriminatory if they had no objective and reasonable justification in the sense that there was no reasonable relationship of proportionality between the means employed and the aim sought to be realised: para 33. The obligation to secure rights must require a greater level of vigilance on the part of the state authorities than is animated by a duty to have respect for a particular species of right. The duty to secure rights calls for a more proactive role than the requirement to respect rights. The question whether justification has been demonstrated must be assessed objectively - see R (SB) v Governors of Denbigh School [2006] UKHL 15; [2007] 1 AC 100, para 30, per Lord Bingham of Cornhill. That is not to say, however, that the court should substitute its view for that of the decision-maker. Indeed, it may be appropriate to accord a wide margin of discretionary judgment to the conclusion of a decision-maker, particularly where it is the legislature that makes the choice and where the conclusion lies within the field of socio-economic policy. Thus, for instance, in the case of Swift v Secretary of State for Justice [2013] EWCA Civ 193; [2014] QB 373, where a claim pursuant to section 1(3)(b) of the Fatal Accidents Act 1976 was dismissed because, although the claimant was a cohabiting partner of the deceased, she did not meet the condition of having lived in the same household for a period of two years immediately before the date of death, it was held that Parliament was better placed than the courts to appreciate what was in the public interest on an issue of socio-economic policy (para 24). But the margin of discretion may, of course, take on a rather different hue when, as here, it becomes clear that a particular measure is sought to be defended (at least in part) on grounds that were not present to the mind of the decision-maker at the time the decision was taken. In such circumstances, the courts role in conducting a scrupulous examination of the objective justification of the impugned measure becomes more pronounced. An example of this is to be found in the case of Belfast City Council v Miss Behavin Ltd [2007] UKHL 19; [2007] 1 WLR 1420, paras 46-47, where Lord Mance asked: what is the position if a decision-maker is not conscious of or does not address his or its mind at all to the existence of values or interests which are relevant under the Convention? The court is then deprived of the assistance and reassurance provided by the primary decision-makers considered opinion on Convention issues. The courts scrutiny is bound to be closer, and the court may have no alternative but to strike the balance for itself, giving due weight to such judgments as were made by the primary decision-maker on matters he or it did consider. The appellant has submitted that where the decision-maker has not made any judgment, in advance of its decision, about the factors which it later deploys in support of that decision, no institutional deference can be due to such post hoc logic. Ms Mountfield QC, who appeared for the appellant, has argued that those factors must be judged on their own terms. They should be given only such weight as their cogency and any supporting evidence warrant. While accepting that such factors could, in principle, attract weight as a result of the particular experience or expertise of the deciding body, she argues that the court should not exercise restraint by virtue of the bodys constitutional responsibility for taking the decision, because the factors advanced post hoc did not form any part of the reasoning behind the bodys discharge of its function. I am not prepared to accept this submission without qualification. Obviously, if reasons are proffered in defence of a decision which were not present to the mind of the decision-maker at the time that it was made, this will call for greater scrutiny than would be appropriate if they could be shown to have influenced the decision- maker when the particular scheme was devised. Even retrospective judgments, however, if made within the sphere of expertise of the decision-maker, are worthy of respect, provided that they are made bona fide. DENI has submitted that the correct legal test to be applied in determining whether the nomination requirement in the 2009 Regulations is justified and proportionate is that set out in Stec v United Kingdom (2006) 43 EHRR 47 at para 52: ... a wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the court will generally respect the legislatures policy choice unless it is manifestly without reasonable foundation. Mr McGleenan QC, who appeared for DENI, pointed out that the manifestly without reasonable foundation test was adopted and applied by this court in R (JS) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] UKSC 16; [2015] 1 WLR 1449 (also known as R (SG) v Secretary of State for Work and Pensions) where at para 11 Lord Reed, having cited the test enunciated in Carson v United Kingdom (2010) 51 EHRR para 13, stated: That approach was followed by this court in Humphreys v Revenue and Customs Comrs [2012] UKSC 18; [2012] 1 WLR 1545, where Lady Hale stated at para 19 that the normally strict test for justification of sex discrimination in the enjoyment of Convention rights gives way to the manifestly without reasonable foundation test in the context of welfare benefits. I am prepared to accept for the purpose of this appeal that the test to be applied is that of manifestly without reasonable foundation. Whether that test requires adjustment to cater for the situation where the proffered reasons are the result of deliberation after the decision under challenge has been made may call for future debate. Where the state authorities are seen to be applying their direct knowledge of their society and its needs on an ex post facto basis, a rather more inquiring eye may need to be cast on the soundness of the decision. Since it does not affect the outcome of this appeal, however, I am content that the without reasonable foundation formula should be taken to apply in this instance. Both DENI and NILGOSC drew heavily on the joint dissenting judgment of Lord Sumption and Lord Reed in R (Tigere) v Secretary of State for Business Innovation and Skills [2015] UKSC 57; [2015] 1 WLR 3820 in advancing the claim that where a persons status is not an immutable characteristic of the individual affected, the state should be accorded a correspondingly wide margin of appreciation when determining whether discrimination based on that status is justifiable and proportionate to its objective. The judgment was also cited in support of the bright- line rule that the nomination procedure is said to establish and in advancing the case that, in the socio-economic field, a broad area of discretionary judgment should be allowed to state authorities. These principles, well-recognised as they are, depend heavily on the context in which it is sought to apply them. As it happens, I have no difficulty in accepting that each is worthy of close consideration in this case. But whether they impel the outcome for which the respondents contend must be subject to careful examination of the particular aspects of the case which they are said to affect. To set the scene for that examination, it is necessary to look at some passages from Lord Sumption and Lord Reeds dissenting judgment. On the first of the arguments viz that where the status involved is not an immutable characteristic, there should be a commensurately broader discretion available to the decision-maker, it should, of course, be recalled that in Tigere the status concerned was one of immigration. But I accept that statements made concerning that status may apply to the present case where the status is one of cohabitant. At para 74 of the joint judgment, Lord Sumption and Lord Reed said: The Strasbourg court has accepted that a persons immigration status can be an other status for the purpose of article 14: Bah v United Kingdom (2011) 54 EHRR 773, paras 45-46. But it also made it clear that, because immigration status is not an immutable characteristic of the individual affected, the state should be accorded a correspondingly wide margin of appreciation when determining whether discrimination based on that status is justifiable and proportionate to its objective, at para 47: The nature of the status on which differential treatment is based weighs heavily in determining the scope of the margin of appreciation to be accorded to contracting states Immigration status is not an inherent or immutable personal characteristic such as sex or race, but is subject to an element of choice While differential treatment based on this ground must still be objectively and reasonably justified, the justification required will not be as weighty as in the case of a distinction based, for example, on nationality. It is relevant that the appellant and Mr McMullan had chosen not to marry for the ten years that they lived together (although, of course, they had clearly decided to change that situation shortly before he died). The appellants status is one which she chose and not one with which she was born or which she could not avoid. Unquestionably, that circumstance alters the approach that one takes to the difference in treatment to which she was subject vis--vis a married or civil partner. But should that bring about a markedly more benevolent review of the imposition of the nomination requirement? After all, the essential purpose of the change in the scheme brought about by the 2009 Regulations was to include persons such as the appellant. Moreover, it was necessary for the authorities to bring about that change in order to secure her entitlement to equal treatment and, incidentally, to comply with their obligations under ECHR and the Human Rights Act 1998. The reason that it was decided to include the nomination requirement was to make the scheme congruent with that in England and Wales. No independent evaluation of the need for this particular procedure was undertaken. It was not present to the mind of the decision-maker that a wider discretion was available because the status of those affected was not an inherent or immutable personal characteristic. For all these reasons, while this is a factor that should not be left out of account, it does not weigh heavily in the assessment as to whether the discrimination is justifiable and proportionate to its objective. On the bright-line rule argument, the respondents relied on para 91 of Lord Sumption and Lord Reeds judgment: The advantages of a clear rule in a case like this are significant. It can be applied accurately and consistently, and without the element of arbitrariness inherent in the discretionary decision of individual cases. By simplifying administration it enables speedy decisions to be made and a larger proportion of the available resources to be applied to supporting students. Young people considering applying to universities need to know whether they will get a student loan or not. The Student Loan Company, which administers the scheme, needs to process a very large number of applications for loans in the relatively short interval between the acceptance of a student by a university and the start of the academic year. The contrast between the situation in Tigere and the present case is immediately obvious. The authorities in Tigere had identified the difficulties in administration which they claimed would beset the student loan scheme if those whose immigration status was uncertain were included in it. That was central to the policy decision. The volume of applications for loans called for a clear rule, it was claimed, even though this might cause hardship in individual cases. This was a thought-through approach to what the authorities apprehended would be a considerable logistical problem. In the present case, no thought was given to possible difficulties with administration that might arise if the nomination procedure was not included in the new scheme which the 2009 Regulations introduced. Indeed, even after the appellants challenge was made, DENI has not been able to produce tangible evidence that there would be significant problems in administering the scheme if the nomination requirement was abandoned. Vague suggestions as to the workability of the scheme and the advantages of actuarial predictions were made but these were not supported by evidence. It is also significant that in England and Wales, where a significantly greater number of applications require to be transacted, it is considered that the nomination procedure is not necessary. I consider, therefore, that the desirability of a bright-line rule is, at most, of marginal significance in this case. On the argument that a broad margin of appreciation should be afforded to the decision to include the nomination procedure because it fell within the socio- economic sphere, the respondents relied on paras 75 and 76 of Lord Sumption and Lord Reeds judgment in Tigere, which quoted from a passage in Stec already referred to above at para 53. 75. Student loans are provided out of public funds on terms which are much more advantageous to students than any commercial alternative. They are a form of state benefit. Such benefits are almost invariably selective and the criteria for selection necessarily involve decisions about social and economic policy and the allocation of resources. For this reason, discrimination in their distribution gives rise to special considerations in the case law of the Strasbourg court. The test is to be found in the decision of the Grand Chamber of the European Court of Human Rights in Stec v United Kingdom, 43 EHRR 1017, para 52: 76. Commenting on this test in R (RJM) v Secretary of State for Work and Pensions [2009] AC 311, Lord Neuberger (with whom Lord Hope, Lord Walker and Lord Rodger agreed) remarked on its practical implications, observing that the fact that there are grounds for criticising, or disagreeing with, these views does not mean that they must be rejected. Equally, the fact that the line may have been drawn imperfectly does not mean that the policy cannot be justified. Of course, there will come a point where the justification for a policy is so weak, or the line has been drawn in such an arbitrary position, that, even with the broad margin of appreciation accorded to the state, the court will conclude that the policy is unjustifiable. The test was reviewed and reaffirmed by this court in Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545, paras 15-21 (Baroness Hale of Richmond JSC). It has recently been applied by this court in R (SG) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] 1 WLR 1449, paras 11, 69 (Lord Reed JSC). Where a conscious, deliberate decision by a government department is taken on the distribution of finite resources, the need for restraint on the part of a reviewing court is both obvious and principled. Decisions on social and economic policy are par excellence the stuff of government. But where the question of the impact of a particular measure on social and economic matters has not been addressed by the government department responsible for a particular policy choice, the imperative for reticence on the part of a court tasked with the duty of reviewing the decision is diminished. In this case, DENI was not concerned about socio-economic choices when it decided to mimic the nomination requirement that was in place in England and Wales. It was motivated solely by the desire to maintain consistency between the two schemes. Of course, after the appellants challenge materialised, the department addressed possible advantages that might accrue if the nomination requirement was maintained and, as I have said, these are not to be dismissed solely because they are the product of hindsight - nor even because they have been put forward post hoc as a possible justification for discrimination in reaction to the appellants claim. But the level of scrutiny of the validity of the claims must intensify to take account of the fact that the claims are made ex post facto and the claimed immunity from review on account of the decision falling within the socio- economic sphere must be more critically examined. A suggestion that any matter which comes within the realm of social or economic policy should on that account alone be immune from review by the courts cannot be accepted. It must be shown that a real policy choice was at stake. While it is not essential that the policy options were clearly in play at the time the choice was made, obviously, when they were, the cause for reluctance by courts to intervene is enhanced. In the present case, however, for the reasons earlier given, not only were socio-economic factors not at the forefront of the decision-making process at the time that the decision to include the nomination procedure was made, but the attempt to justify retention of the procedure on those grounds was characterised by general claims, unsupported by concrete evidence and disassociated from the particular circumstances of the appellants case. I do not consider, therefore, that this is a factor of any significance in this instance. The test for proportionality The test for the proportionality of interference with a Convention right or, as in this case, the claimed justification for a difference in treatment, is now well settled - see the judgments of Lord Wilson in R (Aguilar Quila) v Secretary of State for the Home Department [2011] UKSC 45; [2012] 1 AC 621 at para 45, Lord Sumption in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700 para 20 and Lord Reed in Bank Mellat at para 74. As Lord Reed said, it is necessary to determine (1) whether the objective of the measure is sufficiently important to justify the limitation of a protected right, (2) whether the measure is rationally connected to the objective, (3) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective, and (4) whether, balancing the severity of the measures effects on the rights of the persons to whom it applies against the importance of the objective, to the extent that the measure will contribute to its achievement, the former outweighs the latter. For the reasons earlier given, I consider that the objective of the particular provisions in the 2009 Regulations which are involved here must have been to remove the difference in treatment between a longstanding cohabitant and a married or civil partner of a scheme member. To suggest that, in furtherance of that objective, a requirement that the surviving cohabitant must be nominated by the scheme member justified the limitation of the appellants article 14 right is, at least, highly questionable. Be that as it may, I consider that there is no rational connection between the objective and the imposition of the nomination requirement and that this also fails to meet the third and fourth standards in Lord Reeds formulation. Conclusion I would allow the appeal; make a declaration that the requirement in the 2009 Regulations that the appellant and Mr McMullan should have made a nomination be disapplied; and that the appellant is entitled to receive a survivors pension under the scheme. I would allow the appeal; make a declaration that the requirement in the 2009 Regulations that the appellant and Mr McMullan should have made a nomination be disapplied; and that the appellant is entitled to receive a survivors pension under the scheme. |
On 26 October 2010 this Court issued its judgment in Cadder v HM Advocate [2010] UKSC 43, 2010 SLT 1125. It held that the Crowns reliance on admissions made by an accused who had no access to a lawyer while he was being questioned as a detainee under section 14 of the Criminal Procedure (Scotland) Act 1995 gave rise to a breach of his right to a fair trial, having regard to the decision of the European Court of Human Rights in Salduz v Turkey (2008) 49 EHRR 421. This was because the leading and relying on incriminating statements made by the appellant while being interviewed by the police in such circumstances was a violation of his rights under article 6(3)(c) read in conjunction with article 6(1) of the European Convention on Human Rights: see Cadder v HM Advocate, para 63. The evidence that was in question in Cadder consisted of incriminating statements that the appellant made when he was being questioned while in detention at a police station. The applicant in Salduz too had been taken into custody before he was interrogated during his detention by police officers of the anti terrorism branch of the Izmir Security Directorate. But the facts of those cases by no means exhaust the situations in which the Crown may seek to rely on answers to questions that have been put to the accused by the police. The Court now has before it four references by judges of the High Court of Justiciary which have been required by the Lord Advocate under paragraph 33 of Schedule 6 to the Scotland Act 1998. Three of them are cases where the evidence in question was obtained by the police otherwise than by questioning at a police station following detention under section 14 of the 1995 Act. The fourth is concerned with whether the ratio of the decision in Salduz extends to lines of enquiry which have been derived from answers that the accused gave to questions while he was being detained in the police station. Common to all four cases is the fact that incriminating answers were given to questions put by the police when the accused did not have access to legal advice. In each case this occurred before the judgment was given in Cadder. The issue that the first three references raise is whether the decision in Salduz to which Cadder gave effect has established that anyone who has been charged with an offence, so that article 6 is engaged, and is then questioned by the police is entitled to access to a lawyer at that stage; or whether the right of access to a lawyer applies only where the accused is being subjected to police questioning while in custody. These cases can be grouped together under the general heading pre detention questioning. I propose to deal with them in a separate judgment: Ambrose v HM Advocate [2011] UKSC 43. The issue in the fourth reference, which is the subject of this judgment, is whether the Salduz principle extends to the use of any evidence whatever, the existence of which was discovered as a result of answers given by the accused while in custody without access to legal advice; or whether the principle does not extend to evidence which, although its existence was derived from those answers, has an independent life of its own and does not require to be linked to those answers in order to support the Crowns case. Evidence of this kind has been referred to as the fruit of the poisonous tree: see Stephen C Thaman, Fruits of the Poisonous Tree in Comparative Law, (2010) 16 Southwestern Journal of International Law 333, 335, fn 5. The use of such evidence was at one time thought to have been excluded in the United States of America, but the doctrine has been relaxed in favour of admissibility by decisions of the US Supreme Court. In Murray v United States 487 US 533 (1988), paras 7 8, the test that was applied by Scalia J was whether the search pursuant to a warrant was a genuinely independent source of the information relied on by the prosecutor. The question which we have to decide depends on an analysis of the jurisprudence of the European Court of Human Rights at Strasbourg. The facts This is a case which has not yet gone to trial, so the names of those involved have been anonymised. The reference has been made at the request of the Lord Advocate by the trial judge, Lord Bracadale. The accused, referred to as P, has been indicted in the High Court of Justiciary on a charge of assault and rape which was alleged to have taken place on 10 and 11 October 2009. On 11 October 2009 he was detained under section 14 of the 1995 Act in connection with the allegation which had been made against him by the complainer. He was taken to a police station where he was interviewed. He was not given access to legal advice prior to or during the interview. He was asked where he had been on the date of the alleged rape. The locus of the complaint was a short walking distance from a pub where he and the complainer met. He said that, prior to the alleged assault and rape, he had taken a powdered substance at another pub that had provoked an adverse reaction. His interview then continued in these terms: Q Are there people that you, you could say that would back up how you were reacting to that? A Erm, yeah, yeah, there would be yeah. Q Who are they? A Erm could say my best mate I suppose Q Whos that? He then gave his friends name and address to the police and added that his friend would be able to back him up. The police subsequently took a statement from his friend in which he spoke to the accuseds reaction after he had taken a drug and provided support for what the accused had said about this. But he also described having a telephone conversation with the accused on the morning of 11 October 2009 in which the accused described meeting a woman the previous night and having consensual sexual intercourse with her. The accused lodged a devolution minute in which he submitted that his rights under article 6(3) would be contravened if the Crown were permitted to elicit evidence of his police interview, and that the evidence of his friend about the telephone conversation was incriminatory evidence which had been obtained as a direct result of his replies during the police interview and that the Crown should not be permitted to lead this evidence. A diet of debate was then fixed, prior to which written submissions were lodged on behalf of the Crown and the accused. In its written submissions the Crown accepted that any incriminatory statements that the accused made during his police interview without having had access to legal advice were inadmissible. But it indicated that it proposed to lead the friends evidence at the trial, and in particular to elicit from him evidence of what the accused said to him during his telephone conversation with the accused. At the diet of debate, prior to any argument, the then Lord Advocate intimated that she required the court to make a reference to this court. The questions that were then referred by the trial judge are in these terms: (i) Whether the act of the Lord Advocate in leading and relying on evidence obtained from information disclosed during the course of a police interview with an accused person conducted in accordance with section 14 of the Criminal Procedure (Scotland) Act 1995 without the accused person having had access to legal advice would be incompatible with the accused persons rights under article 6(1) and 6(3)(c) of the European Convention on Human Rights, having regard in particular to the decision of the Supreme Court of the United Kingdom in Cadder v HM Advocate 2010 SLT 1125. (ii) Whether the act of the Lord Advocate in leading and relying on evidence in these proceedings from Crown witness number 13 [SF] (whose identity was disclosed to the police, and thereby the Crown, during the course of a police interview with the accused conducted in accordance with section 14 of the Criminal Procedure (Scotland) Act 1995 on 11 October 2009 without the accused having had access to legal advice), would be incompatible with the accuseds rights under article 6(1) and 6(3)(c) of the European Convention on Human Rights. In Cadder v HM Advocate 2010 SLT 1125, para 48 I said that, although it was held in Gfgen v Germany (2010) 52 EHRR 1 that there had been no violation of articles 6(1) and 6(3) as the evidence that had been secured as a result of interrogation in that case did not have bearing on the applicants conviction and sentence, the decision served a warning that the Salduz principle could not be confined to admissions made without access to legal advice during police questioning. In para 50 I said that the guarantees that are otherwise available under the Scottish system were incapable of removing the disadvantage that a detainee will suffer if he says something which enables the police to obtain incriminating evidence from other sources which is then used against him at his trial. The question that this reference raises is whether the Convention jurisprudence shows that there is an exclusionary rule to this effect of the kind described in Salduz as my observations in these paragraphs might be taken to have suggested, or whether evidence which was obtained because of things learned because of what the detainee said during such police questioning but exists independently of it will normally be admissible. Does the rule extend to evidence derived from his answers but which can speak for itself, without it being necessary to refer for support or explanation to anything the detainee said in the course of his police interview? As this is a devolution issue, guidance as to how these questions should be answered must be found in the jurisprudence of the European Court of Human Rights at Strasbourg. The position as regards evidence obtained from the accused which is not derived from anything that the accused said to the police at his interview is not in doubt. As the court is primarily concerned with the right to remain silent, the right not to incriminate oneself does not extend to incriminating evidence that has been obtained from him other than by reference to what he has said. In Saunders v United Kingdom (1996) 23 EHRR 313, para 69 the Court observed that, as commonly understood in the legal systems of the contracting parties to the Convention and elsewhere the right not to incriminate oneself does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which has an existence independent of the will of the suspect such as, inter alia, documents acquired pursuant to a warrant, breath, blood and urine samples and bodily tissue for DNA testing. It returned to the point in Jalloh v Germany (2006) 44 EHRR 667, para 102 where it said: The Court has consistently held, however, that the right not to incriminate oneself is primarily concerned with respecting the will of an accused person to remain silent. As commonly understood in the legal systems of the contacting parties to the Convention and elsewhere, it does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which has an existence independent of the will of the suspect such as, inter alia, documents acquired pursuant to a warrant, breath, blood, urine, hair or voice samples and bodily tissue for the purpose of DNA testing. The court said in Jalloh, para 101 that in examining whether a procedure has extinguished the very essence of the privilege against self incrimination, it will have regard, in particular, to the nature and degree of the compulsion, the existence of any relevant safeguards in the procedures and the use to which any material so obtained is put. But the question whether respecting the will of an accused person to remain silent means that anything that is derived from what he said at a police interview which was incompatible with his rights under articles 6(1) and 6(3)(c) must always be excluded was not resolved by that statement. Where the only reason why the answers that he gave at his interview are inadmissible is that he did not have access to a lawyer when he was being interviewed, the decision in Salduz must be the starting point. But it is only the starting point, as it will be necessary to look at what can be derived from what the Strasbourg court has said since judgment in that case was given. The Advocate Depute submitted that, as Strasbourg has not spoken, evidence of this kind should be regarded prima facie as admissible. For the accused Mr Auchincloss said that he was not contending for an absolute exclusionary rule. He directed his argument instead to the particular circumstances of this case. His point was that, but for what the accused told the police when he was interviewed, the police would not have gone to his friend at all. The effect of imparting this information to the police was that he had incriminated himself. That was enough for the friends evidence about the telephone conversation to be inadmissible. Background The general rule, so far as Strasbourg is concerned, is that the rules about the admissibility of evidence are for the contracting states. In Schenk v Switzerland (1988) 13 EHRR 242, which was a case about unlawful telephone tapping, the court said in para 46: While article 6 of the Convention guarantees the right to a fair trial, it does not lay down any rules on the admissibility of evidence as such, which is therefore primarily a matter for regulation under national law. The court therefore cannot exclude as a matter of principle and in the abstract that unlawfully obtained evidence of the present kind may be admissible. It has only to ascertain whether Mr Schenks trial as a whole was fair. The same approach to cases raising questions about article 6 rights generally is to be found in a great many cases. In Gfgen v Germany (2010) 52 EHRR 1, paras 162 163 the court said: 162. While article 6 guarantees the right to a fair hearing, it does not lay down any rules on the admissibility of evidence as such, which is primarily a matter for regulation under national law. 163. It is, therefore, not the role of the court to determine, as matter of principle, whether particular types of evidence for example, evidence obtained unlawfully in terms of domestic law may be admissible. The question which must be answered is whether the proceedings as a whole, including the way in which the evidence was obtained, were fair. This involves an examination of the unlawfulness in question and, where the violation of another Convention right is concerned, the nature of the violation found. As Lord Bingham of Cornhill said in Brown v Stott 2001 SC (PC) 43, 50, what a fair trial requires cannot be the subject of a single, unvarying rule or collection of rules. Article 6(1) has been interpreted broadly by reading into it a number of other rights to which the accused person is entitled. Their purpose is to give effect, in a practical way, to the fundamental and absolute right to a fair trial. This approach is to be found also in Salduz, para 52, where the court took the following propositions as its starting point for the issue it was addressing in that case: National laws may attach consequences to the attitude of an accused at the initial stages of police interrogation which are decisive for the prospects of the defence in any subsequent criminal proceedings. In such circumstances, article 6 will normally require that the accused be allowed to benefit from the assistance of a lawyer already at the initial stages of police interrogation. However, this right has so far been considered capable of being subject to restrictions for good cause. The question, in each case, has therefore been whether the restriction was justified and, if so, whether, in the light of the entirety of the proceedings, it has not deprived the accused of a fair hearing, for even a justified restriction is capable of doing so in certain circumstances. It is not for this court to say how the matter should be dealt with in domestic Scots law: see Fraser v HM Advocate [2011] UKSC 24, 2011 SLT 515, para 11. But it is proper for it to take note of how the law stands on this issue as part of the background because the domestic requirement of fairness will need to be satisfied in any event for such evidence to be admissible. As Lord Justice Clerk Thomson said in Chalmers v HM Advocate 1954 JC 66, 81, the law has to reconcile two principles: (1) that no accused person is bound to incriminate himself, and (2) that what an accused person says is admissible evidence against him, provided he says it freely and voluntarily. There is no reason to think that what the accuseds friend says the accused said to him in the telephone conversation was not said freely and voluntarily. It was, in part at least, incriminatory, as the accused is said to have admitted to having had sexual intercourse with the complainer at the locus, albeit consensually. But this, of itself, does not make it inadmissible. The assumption is, however, that the police would not have obtained this evidence but for what the accused told the police when he was interviewed. The question is whether, if the Crown cannot show that the assumption is incorrect, the fact that the source of their information was the accused himself renders the friends evidence inadmissible. The Advocate Depute submitted that no clear answer to this question emerges from the Scottish case law. There is no doubt as to where the law stands if, as in Chalmers, the evidence which the police discovered as a result of what they were told by the accused when he was interviewed would not have been relevant without linking it to what was said by the accused. Lord Justice General Cooper said that he regarded the appellants visit under the surveillance of the police to the cornfield where the purse was found as part and parcel of the same transaction as the interrogation: 1954 JC 66, 76: if the interrogation and the statement which emerged from it are inadmissible as unfair, the same criticism must attach to the conducted visit to the cornfield. He returned to the point later on the same page, when he said: The significance of the episode is plain, for it showed that the appellant knew where the purse was. If the police had simply produced, and proved the finding of, the purse, that evidence would have carried them little or no distance in this case towards implicating the appellant. It was essential that the appellant should be linked up with the purse, either by oral confession or by its equivalent tacit admission of knowledge of its whereabouts as a sequel to the interrogation. The effect of the decision in Salduz, as explained in Cadder, is that evidence of that kind, which must inevitably be linked to what the detainee said to the police without access to a lawyer while he was being interviewed if it is to be used to incriminate him, will always be inadmissible. That is what I had in mind when I drew attention in Cadder, paras 48 and 50, to the fact that exclusion of evidence on the Salduz principle could not be confined to the admissions made during police questioning. As for the position where the evidence that has been discovered as a result of what was said at the police interview can speak for itself, the guiding principle in Scots law is to be found in Lawrie v Muir 1950 JC 19. It was laid down by a full bench in that case that an irregularity in the method by which evidence has been obtained does not necessarily make that evidence inadmissible in a criminal prosecution. Lord Justice General Cooper explained the basis for this approach at p 26: From the standpoint of principle it seems to me that the law must strive to reconcile two highly important interests which are liable to come into conflict (a) the interest of the citizen to be protected from illegal or irregular invasions of his liberties by the authorities, and (b) the interest of the State to secure that evidence bearing upon the commission of crime and necessary to enable justice to be done shall not be withheld from Courts of law on any merely formal or technical ground. Neither of these objects can be insisted upon to the uttermost. He went on at p 27 to approve Lord Justice Clerk Aitchisons statement in HM Advocate v McGuigan 1936 JC 16 at p 18, that an irregularity in the obtaining of evidence does not necessarily make that evidence inadmissible. The irregularity in Lawrie was that the inspectors had conducted a search of the appellants premises which they had no right to carry out. But the decision has a much wider application. It was referred to by the Scottish Law Commission in their Research Paper on the Law of Evidence of Scotland, written by I D Macphail, later the Hon Lord Macphail, (1979, reissued and updated 1987) when it was considering the effect of the decision in Chalmers. They took from what Lord Justice General Cooper said at p 76 that the evidence of the finding of the purse by the police would not have been treated as inadmissible if it had been capable of being led as relevant evidence without reference to the appellants confession. In para 21.04 they concluded that, while logic might demand that such evidence should, together with the confession, be inadmissible, logic must yield in favour of a flexible rule which was consistent with the modern Scottish decisions on illegal searches and seizures in criminal cases. It is no doubt true, as the Advocate Depute said, that no clear answer emerges from the Scottish case law. But there is good reason to think that the approach laid down in Lawrie v Muir, which is entirely consistent with the approach of the Strasbourg court to national rules as to the admissibility of evidence, would be adopted. The law of England and Wales is to the same effect. Section 58 of the Police and Criminal Evidence Act 1984 provides that a person arrested and held in custody in a police station or other premises shall be entitled, if he so requests, to consult a solicitor privately at any time. Section 76(4) provides that a confession that is wholly or partly excluded does not affect the admissibility of any facts discovered as a result of the confession. Under section 78(1) of that Act a breach of section 58 may lead to the exclusion of evidence as to what the person said under police questioning, including any evidence that has been derived from it. But evidence improperly obtained in this way is not invariably inadmissible, as section 78(1) requires the court to have regard to all the circumstances. Ultimately the question is whether it would or would not be fair to admit the evidence: R v Looseley [2001] UKHL 53, [2001] 1 WLR 2060 (a case of entrapment), per Lord Nicholls of Birkenhead at para 19. The question that the reference raises, therefore, is whether there is anything in the Strasbourg jurisprudence which lays down that any evidence discovered as a result of what a detainee who was without access to a lawyer said during his police interview must always, as a rule, be held to be inadmissible in the absence of compelling circumstances to restrict the right of access. If that were so, it would be a considerable innovation on what, so far, has been thought to be the position in Scots law. Discussion Nothing that was said in Salduz offers any guidance as to how this question should be answered. The point was not in issue in that case. In para 54 the court said that the assistance of a lawyer to ensure respect of the right of an accused not to incriminate himself presupposed that the prosecution in a criminal case will seek to prove their case without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused. Reference was made in a footnote to Jalloh v Germany (2006) 44 EHRR 667, para 100 and to Kolu v Turkey, application no 35811/97, para 51. Neither of these cases was concerned with evidence that was derived from what was said during interrogation by the police. But Gfgen v Germany (2010) 52 EHRR 1 was a case of that kind. The applicant abducted and killed a child and then demanded a ransom from his family. He was arrested by the police, who had kept him under surveillance after he collected the ransom payment. Hoping that the child was still alive, the police questioned him about the childs whereabouts. In reply to their questions the applicant said that the child was being held by another kidnapper. He was then allowed to consult a lawyer. Under later questioning he indicated that the boy had been kidnapped by two other people who had hidden him in a hut by a lake. Early the next day he was subjected to threats of extreme violence if he did not tell the police where the child was. For fear of being exposed to the measures he was threatened with he disclosed the whereabouts of the childs body. He was then taken to the place which he had indicated and, while being filmed, pointed out its precise location. In para 173 the court noted that it was being called upon to examine the consequences for a trials fairness of the admission of real evidence obtained as a result of an act which qualified as inhuman treatment in breach of article 3, but falling short of torture. It referred to what it had said in paras 166 167 in its review of the relevant principles, where it stated that incriminating real evidence obtained as a result of acts of violence should never be relied on as proof of a victims guilt, irrespective of its probative value. The court went on in para 173 to observe that, in its case law to date, it had not yet settled the question whether the use of such evidence will always render a trial unfair, irrespective of other circumstances of the case. It had however found that the use of statements obtained as a result of a persons treatment in breach of article 3, and the use of real evidence obtained as a direct result of acts of torture, made the proceedings as a whole automatically unfair, in breach of article 6: Gmen v Turkey (application no 72000/01) (unreported) given on 17 October 2006, paras 73 74. There then followed this important paragraph, in which the court picked up a point that it had already noted in para 69: 174. The Court notes that there is no clear consensus among the contracting states to the Convention, the courts of other states and other human rights monitoring institutions about the exact scope of application of the exclusionary rule. In particular, factors such as whether the impugned evidence would, in any event, have been found at a later stage, independently of the prohibited method of investigation, may have an influence on the admissibility of such evidence. In para 73 the court referred to indications in the case law of the United States that the exclusionary rule does not apply where the connection between the illegal police conduct and the discovery of the evidence was so remote as to dissipate the taint, as where the police relied on an independent source to find the evidence or where it would ultimately have been discovered even had no violation of any constitutional provision taken place. In para 74 it referred to the judgment of the Supreme Court of Appeal in South Africa in Mthembu v The State (379/2007) [2008] ZASCA 51, where the impugned evidence was excluded because there was an inextricable link between the accuseds torture and the nature of the evidence that was produced. In para 33 of its judgment the court said that there was no suggestion that the discoveries would have been made in any event and that, if they had, the outcome might have been different. There is an obvious link between the situation that was before the court in Gfgen and that in Chalmers. Under the law as set out in Chalmers, the evidence that the accused pointed out the precise location of the body to the police would have been held to have been inadmissible. It was part and parcel of the same transaction as the interrogation. But that is not this case. The court in Gfgen, which was primarily concerned with the consequences of a violation of article 3, did not find it necessary to resolve this issue to which it drew attention in para 174. It held that, having regard to the particular circumstances of that case, the failure to exclude the impugned evidence did not have a bearing on the applicants conviction and sentence, so there had been no violation of articles 6(1) and 6(3): paras 187 188. In a joint partly dissenting opinion Judges Rozakis, Tlkens, Jebens, Ziemele, Bianku and Power said that in their view there had been a violation of those articles, but this was because the evidence had been obtained as a direct result of a violation of article 3. Where the boundary lies between what the Convention requires to be automatically excluded because it is derived from what the person has said and what is not remains unclear. There have been no other cases that deal with the issue since Gfgen to which we can look for guidance. But at least it can be said that the Strasbourg court has not suggested that leading evidence of the fruits of questioning that is inadmissible because the accused did not have access to a lawyer when he was being interviewed will always and automatically violate the accuseds rights under article 6(1) and 6(3)(c). In Salduz para 53 the court said that the principles which it had outlined in para 52 (see para 14, above) were in line with the generally recognised international standards. The same point emerges from the passages in Gfgen to which I have just referred: see para 22, above. So I think that regard can be had to the position in England and Wales which is dealt with in section 76 of the Police and Criminal Evidence Act 1984, as Lord Brown has explained: see para 32, below. Subject to the courts discretionary power to exclude it under section 78(1), evidence derived from an involuntary statement which can be adduced without having to rely on that statement is admissible. And further assistance may be found in the approach which was taken to this issue in the Supreme Court of Canada in Thomson Newspapers Ltd v Canada (Director of Investigation and Research) [1990] 1 SCR 425, to which the Courts attention does not appear to have been drawn in Gfgen. Among the issues that were before the court in that case was the question whether section 17 of the Combines Investigation Act 1970, which provides that the Restrictive Trade Practices Commission may order that a person be examined on oath and make production of books, papers, records or other documents, was inconsistent with the provisions of sections 7 and 8 of the Canadian Charter of Rights and Freedoms. Section 7 includes among its provisions the right not to be deprived of liberty except in accordance with the principles of fundamental justice. It was argued that section 17 was contrary to two principles of fundamental justice, namely the right against self incrimination and the right to remain silent. One of the questions in the case was whether the protection of article 7 extended to derivative evidence. Two other provisions of the Charter were relevant to this issue: section 11(c), which provides that a person is protected against being compelled to give evidence in proceedings that have been brought against him, and section 13, which provides the person with a limited right against self incrimination. The court was divided on the question whether the use of derivative evidence, which fell outside the protections of articles 11(c) and 13, was nevertheless contrary to the principles of fundamental justice. Wilson J, in a dissenting opinion said that because there was a direct causal relationship between the compelled testimony and the derivative evidence the privilege against self incrimination, if it was to be meaningful, requires that neither the testimony nor the evidence derived from it should be used against him: para 69. Lamer J, declined to pronounce on this issue: para 5. But La Forest, LHeureux Dub and Sopinka JJ said that, to the extent that it authorised an order to compel the production of documents, section 17 did not contravene section 7 of the Charter: paras 225, 270, 327. The reasons that La Forest J gave for holding that there was no breach of the principles of fundamental justice are particularly instructive. He said that there were serious grounds on which objection can be raised to an absolute rule that testimonial immunity must always extend to evidence derived from compelled testimony: 199. While allowing the Crown to use such evidence in criminal proceedings may in a formal sense be equivalent to permitting direct reliance on the compelled testimony itself, there is an important difference between the type of prejudice that will be suffered in the two cases. It is only when the testimony itself has to be relied on that the accused can be said to have been forced to actually create self incriminatory evidence in his or her own trial. The compelled testimony is evidence that simply would not have existed independently of the exercise of the power to compel it; it is in this sense evidence that could have been obtained only from the accused. 200. By contrast, evidence derived from compelled testimony is, by definition, evidence that existed independently of the compelled testimony. This follows logically from the fact that it was evidence which was found, identified or understood as a result of the clues provided by the compelled testimony. Although such evidence may have gone undetected or unappreciated in the absence of the compelled clues, going undetected or unappreciated is not the same thing as non existence. The mere fact that the derivative evidence existed independently of the compelled testimony means that it could have been found by some other means, however low the probability of such discovery may have been. He went on to say in para 202 that the fact that the derivative evidence exists independently of the compelled testimony also means that its quality as evidence and its relevance to the issues in the trial do not depend on its past connection with the compelled testimony. These are matters which can be determined independently of any consideration of its connection with the testimony of the accused. One must, of course, be careful about drawing conclusions from a Canadian case, as the provisions of the Charter differ both in their structure and their wording from those of the Convention. But the concept of fundamental justice is by no means alien to the European concept of a fair trial, which lies at the heart of article 6(1). So I think that the reasoning which La Forest J set out in these paragraphs can be regarded as providing support for the conclusion that I would draw from what Strasbourg has said so far on this issue. This is that there is no absolute rule that the fruits of questioning of an accused without access to a lawyer must always be held to be a violation of his rights under article 6(1) and 6(3)(c) of the Convention. It is one thing if the impugned evidence was created by answers given in reply to such impermissible questioning. The leading of such evidence will be a breach of the accuseds Convention rights unless there are compelling reasons to restrict the right of access: Cadder, para 55. It is another thing if the evidence existed independently of those answers, so that those answers do not have to be relied upon to show how it bears upon the question whether the accused is guilty of the offence with which he has been charged. So far as the accuseds Convention rights are concerned, there is no rule that declares that evidence of that kind must always be held to be inadmissible. The question whether it should be admitted has to be tested, as in domestic law, by considering whether the accuseds right to a fair trial would be violated by the leading of the evidence. Conclusion I would answer question (i) of the questions referred, which is addressed to the issue of principle, in the negative. There is no absolute rule to this effect, as the wording of the question suggests. I would decline to answer question (ii), as it raises a question for determination by the trial judge. The question for him will be whether, if the Crown were to lead and rely on the friends evidence about the telephone conversation, the accused would, in all the circumstances, be deprived of his fundamental right under article 6(1) to a fair trial. LORD BROWN I have had the advantage of reading Lord Hopes judgment in draft and am in full agreement with all that he says and with the way in which he proposes we should deal with the two questions raised by this Reference. The conclusion he arrives at is, to my mind, entirely consistent with the position which I believe to be clearly established under English law and, I hope we may all agree, none the worse for that. Although Lord Hope (at para 18) has already referred to section 78(1) of the Police and Criminal Evidence Act 1984 (PACE) and noted its obvious relevance in the context of any breach of section 58 of PACE, it is, I think, worth setting out its terms verbatim and briefly then looking also at section 76 of PACE. Section 78(1) of PACE is a general provision under the heading Exclusion of unfair evidence and provides: In any proceedings the court may refuse to allow evidence on which the prosecution proposes to rely to be given if it appears to the court that, having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it. Section 76, under the heading Confessions, provides (I summarise) that, notwithstanding that it may be true, a disputed confession shall not be admissible in evidence unless the prosecution prove it not to have been obtained by oppression or in consequence of anything said or done which was likely, in the circumstances existing at the time, to render unreliable any confession which might be made by him in consequence thereof. Particularly noteworthy for present purposes, however, is section 76(4): The fact that a confession is wholly or partly excluded in pursuance of this section shall not affect the admissibility in evidence (a) of any facts discovered as a result of the confession; or (b) where the confession is relevant as showing that the accused speaks, writes or expresses himself in a particular way, of so much of the confession as is necessary to show that he does so. As Lord Bingham of Cornhill observed in A v Home Secretary (No 2) [2006] 2 AC 221, 249 (at para 16): [T]here is an obvious anomaly in treating an involuntary statement as inadmissible while treating as admissible evidence which would never have come to light but for the involuntary statement. But this is an anomaly which the English common law has accepted, no doubt regarding it as a pragmatic compromise between the rejection of the involuntary statement and the practical desirability of relying on probative evidence which can be adduced without the need to rely on the involuntary statement. I too sought to deal with the point at para 161: Several of your Lordships have remarked on the tensions in play and have noted the balances struck by the law, different balances according to whether one is focusing on the executive or the judicial arm of the state. Essentially it comes to this. Two types of information are involved: first, the actual statement extracted from the detainee under torture (the coerced statement); second, the further information to which the coerced statement, if followed up, may lead (the fruit of the poisoned tree as it is sometimes called). Generally speaking it is accepted that the executive may make use of all information it acquires: both coerced statements and whatever fruits they are found to bear. So far as the courts are concerned, however, the position is different. Generally speaking the court will shut its face against the admission in evidence of any coerced statement (that of a third party is, of course, in any event inadmissible as hearsay); it will, however, admit in evidence the fruit of the poisoned tree. The balance struck here (a pragmatic compromise as . [Lord Bingham describes it]) appears plainly from section 76 of the Police and Criminal Evidence Act 1984. There is, moreover, this too to be said: whereas coerced statements may be intrinsically unreliable, the fruits they yield will have independent evidential value. If, then, as I believe, the position is that the facts discovered as a result even of a coerced confession are (subject always to the courts discretionary power under section 78(1) to exclude evidence) admissible in evidence although not, of course, evidence that it was the accuseds statement that led to the discovery of the fact, ie the situation in Chalmers v HM Advocate [1954] JC 66 itself (see section 76(5) and (6) of PACE) the position cannot be different (and certainly the prosecution cannot be under greater inhibition) with regard to facts discovered (as here) as a result of a police interview notwithstanding the wrongful failure to provide the accused with legal assistance. If there would be a discretion in the court to admit evidence of, say, a bomb found with the accuseds fingerprints all over it discovered by the police as a result of a confession extracted from him by torture, it surely must be in the courts discretion to admit oral evidence from the friend in the particular circumstances of the present appeal. |
The appeals now before the Supreme Court in Belhaj and Boudchar v Straw and Ministry of Defence v Rahmatullah concern the alleged complicity of United Kingdom authorities and officials in various torts, allegedly committed by various other states in various overseas jurisdictions. The torts alleged include unlawful detention and rendition, torture or cruel and inhuman treatment and assault. The defences include in both appeals state immunity and the doctrine of foreign act of state. The case of Rahmatullah also raises for consideration the inter relationship of these concepts with article 6 of the European Convention on Human Rights. The meticulous but differing analyses of the Court of Appeal (Lord Dyson MR and Sharp and Lloyd Jones LJJ) in Belhaj and Leggatt J in Rahmatullah underline the difficulties. The Supreme Court has nonetheless benefitted greatly from their analyses, as well as that of a previous Court of Appeal (Rix, Longmore and Davis LJJ) in Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2) [2012] EWCA Civ 855; [2014] QB 458 (Yukos v Rosneft). The issues come before the courts by way of challenges under CPR rule 11.1 to the existence or exercise by the court of jurisdiction over the appellants (the defendants in the proceedings), combined with applications for dismissal of the relevant claims under CPR rule 3.1. The issues have, necessarily, to be determined by reference to allegations contained in the respondents (the claimants) pleadings which have not been investigated or tested. One of the appellants objections to their adjudication is indeed that it is impermissible or inappropriate for a domestic court to investigate allegations of the type advanced. The claimants allegations Both cases originate with events in February/March 2004. In Belhaj, Mr Belhaj, a Libyan national and opponent of Colonel Gaddafi, and his wife, Mrs Boudchar, a Moroccan national, attempted (under, it seems likely, other names) to take a commercial flight from Beijing to London, but were instead and for whatever reason deported by the Chinese authorities to Kuala Lumpur. There they were detained. MI6 is alleged to have become aware of their detention and on 1 March 2004 to have sent the Libyan intelligence services a facsimile reporting their whereabouts. This is said to have led to a plan being developed to render them against their will to Libya. Thereafter, they allege, they were unlawfully detained first by Malaysian officials in Kuala Lumpur and then by Thai officials and United States agents in Bangkok, before being put on board a US airplane which took them to Libya. There they were further detained, in the case of Mrs Boudchar until 21 June 2004, in the case of Mr Belhaj until 23 March 2010. Mr Belhaj and Mrs Boudchar allege that the United Kingdom procured this detention in all these places by common design with the Libyan and US authorities. They allege that they suffered mistreatment amounting to torture at the hands of US agents in Bangkok and in the airplane and at the hands of Libyan officials in Libya. They allege that the United Kingdom by common design arranged, assisted and encouraged [their] unlawful rendition to Libya. They rely in this connection upon a letter dated 18 March 2004 alleged to have been written by the second appellant, Sir Mark Allen, allegedly a senior official of the Secret Intelligence Service (SIS) to Mr Moussa Koussa, Head of the Libyan External Security Organisation. The letter congratulated Mr Moussa Koussa on the safe arrival of [Mr Belhaj]. It said that This was the least we could do for you and for Libya to demonstrate the remarkable relationship we have built over recent years. It indicated that British intelligence had led to Mr Belhajs transfer to Libya, although the British services did not pay for the air cargo. Mr Belhaj and Mrs Boudchar further allege that the United Kingdom conspired in, assisted and acquiesced in torture, inhumane and degrading treatment, batteries and assaults inflicted upon [them] by the US and Libyan authorities. Again, it should be stressed that these are allegations, based inter alia on alleged awareness of the risks of torture of detainees in United States and/or Libyan hands. It is also pleaded that the renditions took place as part of a co ordinated strategy designed to secure diplomatic and intelligence advantages from Colonel Gaddafi. The claims are framed as claims for false imprisonment, trespass to the person, conspiracy to injure or to use unlawful means, misfeasance in public office and negligence. They are brought against Mr Jack Straw as Foreign Secretary, Sir Mark Allen, the SIS, the Security Service, the Attorney General, the Foreign and Commonwealth Office and the Home Office, all of whom are the appellants in Belhaj. The first and second appellants, Mr Straw and Sir Mark Allen, state that the Official Secrets Act makes it impossible for them to advance any positive case in response to the allegations against them. The remaining appellants state that it is the position of Her Majestys Government that it would be damaging to the public interest for them to plead to such allegations. Upholding Simon J on the point, the Court of Appeal held, and it is now accepted, that all the claims depend upon proof that torts such as those alleged existed under the laws of the places where they were allegedly committed (subject only to any countervailing considerations of, in particular, public policy under section 14 of the Private International Law (Miscellaneous Provisions) Act 1995). The issues now before the Court relate to all the claims, save for three negligence claims which are independent of the alleged facilitation of and acquiescence in rendition to and detention in Libya and which arise from alleged failure by the appellants to take protective steps after they became aware that Mr Belhaj and Mrs Boudchar were in Libya. In Rahmatullah, Mr Rahmatullah, a Pakistani citizen, was on 28 February 2004 detained by British forces in Iraq on suspicion of being a member of Lashkar e Taiba, a proscribed organisation with links to Al Qaeda. The UK and the USA were at the time occupying forces in Iraq, where there was a situation of international armed conflict. Shortly after his original detention, within a matter of days at most, Mr Rahmatullah was transferred into the custody of US forces, and by the end of March 2004 they had transferred him to Bagram Airbase in Afghanistan, where he was detained for over ten years without charge or trial, until released on 15 May 2014. He alleges that he was subjected to severe mistreatment in both British and United States detention. His claims are put under the like heads to Mr Belhajs and Mrs Boudchars, with assault and torture as additions. Again, the claims allege in various terms that the relevant appellants acted in concert or combination with the United States authorities, or assisted, encouraged or were complicit in relation to the alleged unlawful detention and mistreatment by the United States authorities. Again, the tenor of the allegations is that the United States authorities were the actors, even if they were being encouraged or engaged, procured, or utilised by the appellants to do as they allegedly did. Leggatt J regarded the claims relating to Mr Rahmatullahs detention by British forces and transfer into the custody of US forces as barred by the defence of Crown act of state, assuming that arrest and detention were authorised pursuant to lawful United Kingdom policy. The appeal from that aspect of his judgment was joined with the appeal in Mohammed (Serdar) v Ministry of Defence [2015] EWCA Civ 843; [2016] 2 WLR 247. The Court of Appeal allowed the appeal on the basis that Crown act of state is a nuanced defence, applicable only where there are compelling considerations of public policy which require the court to deny a claim founded on an act of the Executive performed abroad (para 359), with the result that there must be a trial on the facts on the issue of Crown act of state. In its separate judgment of todays date from that decision of the Court of Appeal, the Supreme Court restores (though for different reasons) Leggatt Js conclusions that Crown act of state is in principle available in respect of the United Kingdoms detention and transfer to US custody of Mr Rahmatullah. The issues now before the Supreme Court relate solely to Mr Rahmatullahs claims in tort in respect of alleged acts or omissions of US personnel while he was in US detention. The claims are brought against the Ministry of Defence and the Foreign and Commonwealth Office, both of which are the appellants in Rahmatullah. The appellants case in both proceedings is that the issues now before the Supreme Court are inadmissible or non justiciable on their merits by reason of principles governing state immunity and/or foreign act of state. More specifically, the appellants submit that the claims are based on conduct where the prime actors were foreign state officials, and they either implead the foreign states or would require the English courts to adjudicate upon foreign acts of state. I use the phrase foreign act of state loosely at this point to cover various bases on which it is submitted that the English court cannot or should not adjudicate upon proceedings against the United Kingdom, its authorities or officials when the proceedings would also involve adjudicating upon the conduct of a foreign state, even though state immunity is not established on the part of the United Kingdom and the relevant foreign state is not impleaded in the proceedings. The appellants submit that the principles governing foreign act of state dovetail naturally with those governing state immunity, and that underpinning both are conceptions of mutual international respect and comity. That said, there are, as will appear, also differences, not least that state immunity is firmly based on customary international law, whereas foreign act of state in most if not all of its strands has been developed doctrinally in domestic law. State immunity qualifies the jurisdiction of domestic courts. Foreign act of state in one sense requires a domestic court to accept without challenge the validity of certain foreign state acts, but in another sense it is a broader principle of non justiciability, whereby the domestic court must simply declare itself incompetent to adjudicate. The difficulties which exist in separating or aligning these strands are considerable. I note at this point that the appellants do not suggest that the tortious claims against them which are in issue on these appeals can or do attract a defence of Crown act of state. The leading authorities on Crown act of state are now Nissan v Attorney General [1970] AC 179 and the Supreme Courts separate judgment, delivered today in the cases of Rahmatullah and Serdar Mohammed (para 6 above). In Nissan, Lord Pearson said (at p 237F G) that: it is necessary to consider what is meant by the expression act of state, even if it is not expedient to attempt a definition. It is an exercise of sovereign power. Obvious examples are making war and peace, making treaties with foreign sovereigns, and annexations and cessations of territory. Apart from these obvious examples, an act of state must be something exceptional. Any ordinary governmental act is cognisable by an ordinary court of law (municipal not international): if a subject alleges that the governmental act was wrongful and claims damages or other relief in respect of it, his claim will be entertained and heard and determined by the court. Nissan concerned the Crowns occupation of a hotel while assisting to maintain peace under an agreement made between the United Kingdom and Cyprus. The doctrine of Crown act of state was held not to bar a claim for compensation. Lord Morris said (at p 217D) that the acts in question in that case (of feeding and housing troops in the hotel) were far removed from the category of transactions which by reason of being a part of or in performance of an agreement between states are withdrawn from the jurisdiction of the municipal courts. And Lord Wilberforce indicated (pp 235H 236A) that between the acts complained of and the pleaded agreement with the Government of Cyprus, the link was altogether too tenuous for the Crown to be able to invoke Crown act of state if accepted as sufficient to attract the description of act of state it would cover with immunity an endless and indefinite series of acts, judged by the officers in command of the troops to be necessary, or desirable, in their interest. On the other hand, in our concurrently delivered judgment, we have accepted that the doctrine of Crown act of state is available in respect of the United Kingdoms detention and transfer to United States custody of Mr Rahmatullah. In these circumstances, two questions arise as to how that fits with the absence of any suggestion that Crown act of state is or could be a defence in respect of the United Kingdoms alleged involvement in the wrongful detention, combined with mistreatment, by various foreign states of Mr Belhaj, Mrs Boudchar and Mr Rahmatullah. First, one can understand why there is no plea of Crown act of state in respect of the allegations of severe mistreatment inflicted on the various respondents by various foreign state authorities. Further, in the cases of Mr Belhaj and Mrs Boudchar, the allegations of wrongful detention and mistreatment might well be regarded as inseparable. However, in the case of Mr Rahmatullah, the appellants deny the allegations of mistreatment, while admitting that he remained in United States custody for more than ten years. There has been no plea of Crown act of state in respect of any period of this detention, which is not necessarily linked with any mistreatment. If Crown act of state is available, as the court holds, in respect of detention by the United Kingdom, then one might have thought that it would logically be available in respect of detention by a third state in respect of which the Crown is alleged to have been complicit. The explanation may, however, lie in the length of the period of Mr Rahmatullahs detention and the considerations that he was never charged or tried, was deprived of any access to a lawyer for the first six years and was unable to speak freely for the remainder of the period. A plea of Crown act of state in respect of detention of this nature might well have been considered unrealistic. Second, however, this leaves a tension between, on the one hand, apparent recognition that the nature of the acts is not such as to justify a plea of Crown act of state in respect of the United Kingdoms alleged complicity in such acts and, on the other hand, the case now advanced that the alleged involvement of other states in such acts precludes any claim against the United Kingdom in respect of them on the grounds of foreign act of state. As I have said in my separate concurrent judgment (para 4), it is likely to be easier to establish that a domestic court should abstain from adjudicating on the basis of Crown act of state than on the basis of foreign act of state. Summary of conclusions For the reasons which I shall set out, I have reached the following conclusions: State immunity (paras 12 to 31): (i) The appellants pleas of state immunity fail because the various foreign states (Malaysia, Thailand, the United States and Libya) are not impleaded, and their legal position is not affected, either directly or indirectly by the claims in tort advanced by the respondents solely against the appellants: para 31. Foreign act of state (paras 32 to107): (ii) The concept of foreign act of state needs to be disaggregated, or broken down, and approached at a more particular level of enquiry: para 34. (iii) Three types of foreign act of state can be identified under current English authority: a) The first is the rule of private international law, whereby a foreign states legislation will normally be recognised and treated as valid, so far as it affects movable or immovable property within the foreign states jurisdiction: para 35. b) The second is that a domestic court will not normally question the validity of any sovereign act in respect of property within the foreign states jurisdiction, at least in times of civil disorder: para 38. c) The third is that a domestic court will treat as non justiciable or, to use language perhaps less open to misinterpretation, abstain or refrain from adjudicating upon or questioning certain categories of sovereign act by a foreign state abroad, even if they occur outside the foreign states jurisdiction: para 40. (iv) The appellants case, to the effect that the second and/or third types should be expanded or combined so as to cover all sovereign (jure imperii) acts by a foreign state anywhere abroad outside the jurisdiction of the domestic court whose jurisdiction is in issue, should be rejected: a) To the extent that it exists at all, the second type of foreign act of state is and should be limited to acts relating to property within the jurisdiction of the foreign state: para 74 to 78. b) If (contrary to a), the second type were to be viewed as covering acts directed against the person, it would be subject to a public policy exception, which would enable at least the allegations of complicity in torture, unlawful detention, enforced rendition and disappearance made in these cases to be pursued in the English courts: para 80. c) The third type of foreign act of state is not limited territorially. Whether an issue is non justiciable falls to be considered on a case by case basis. Considerations both of separation of powers and of the sovereign nature of foreign state or inter state activities may lead to a conclusion that an issue is non justiciable in a domestic court: paras 90 to 95. But in deciding whether an issue is non justiciable, English law will have regard to the extent to which the fundamental rights of liberty, access to justice and freedom from torture are engaged by the issues raised: paras 98 and 101. d) I see little attraction in and no basis for accepting a yet further doctrine whereby United Kingdom courts might be precluded from investigating acts of a foreign state, if the Foreign Office communicated to it the Governments view that this would embarrass the United Kingdom in its international relations (though I accept that consequences for international relations may feed into the question of justiciability or abstention under the third type of foreign act of state): para 41. e) In the present case, the circumstances as they are presently before the Supreme Court do not lead to a conclusion that the issues are non justiciable in a domestic court: paras 96 to 105. f) Had a contrary conclusion been reached, the result would have been that, although the relevant foreign states could, at least in theory, have been sued within their own jurisdictions for the torts alleged to have been directly committed by their own officers, the appellants could not have been sued anywhere for their alleged complicity in such torts, since they would be entitled to invoke state immunity in any foreign jurisdiction: para 102. Miscellaneous points (paras 108 to 110): (v) It is unnecessary to reach any final determination of the respondents case: a) that, in so far as what is alleged amounts to complicity in torture, the United Nations Convention against Torture (Treaty Series No 107 (1991)) obliges states to provide a universal civil remedy in respect of torture wherever committed in the world, at least when (allegedly) committed by or with the connivance of United Kingdom citizens, and that any otherwise applicable type of foreign act of state should be modified accordingly. It suffices to say that I would as at present advised see no basis for differing from the rejection of this argument in Jones v Ministry of the Interior of the Kingdom of Saudi Arabia (Secretary of State for Constitution Affairs intervening) (Jones v Saudi Arabia) [2006] UKHL 26; [2007] 1 AC 270. b) that article 6 of the Convention rights scheduled to the Human Rights Act 1998 is engaged by and renders impermissible in the present circumstances any reliance by the appellants on either state immunity or foreign act of state. Again, this would face a difficulty raised by the House of Lords conclusions in Holland v Lampen Wolfe [2000] 1 WLR 1573 and Jones v Saudi Arabia, paras 14 and 64, that article 6 is not engaged by a plea of state immunity. The European Court of Human Rights has reached a contrary conclusion (see eg Al Adsani v United Kingdom (2001) 34 EHRR 11; Sabeh El Leil v France (2011) 54 EHRR 14), and it would have been necessary to consider this disagreement. Foreign act of state, on the other hand, operates, even under the case law of the European Court of Human Rights, as a substantive bar to liability or adjudication (see Roche v United Kingdom (2005) 42 EHRR 30; Markovic v Italy (2006) 44 EHRR 52), and so would not, if applicable, engage article 6. Further, even if article 6 were engaged, the question would then have arisen whether it rendered impermissible any reliance on either state immunity or foreign act of state. But, since I would hold that the appellants cannot rely on either in any event, it is unnecessary to go further into this. Conclusion: (vi) These conclusions lead to the conclusion that the appellants are not entitled to rely on state immunity or the doctrine of foreign act of state to defeat the present proceedings, and the appeals must accordingly be dismissed and the cases proceed to trial. The detailed reasoning supporting them follows. State immunity State immunity is, as indicated, a principle of customary international law recognised at common law, but now provided for by the State Immunity Act 1978. The International Court of Justice has described state immunity as occupying an important place in international law and international relations and as deriving from the principle of sovereign equality of states, which, as article 2, para 1 of the United Nations Charter makes clear, is one of the fundamental principles of the international legal order: Jurisdictional Immunities of the State, Germany v Italy, judgment of 3 February 2012 [2012] ICJ Rep, p 99. The absolute independence of every sovereign authority and the international comity which induces every sovereign state to respect the independence and dignity of every other sovereign state were similarly identified as the bases of state immunity by Brett LJ in the seminal common law case of The Parlement Belge (1880) 5 PD 197, 214 215. Section 1 of the 1978 Act provides: General immunity from jurisdiction. (1) A state is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act. (2) A court shall give effect to the immunity conferred by this section even though the state does not appear in the proceedings in question. The Act specifies various exceptions to state immunity, including, but not limited to, submission to the jurisdiction (section 2), commercial contracts and contracts to be performed in the United Kingdom (section 3), personal injuries and damage to property (section 5) and ownership, possession and use of property (section 6). Sections 5 and 6 read: 5. Personal injuries and damage to property. A state is not immune as respects proceedings in respect of (a) death or personal injury; or (b) damage to or loss of tangible property, caused by an act or omission in the United Kingdom. 6. Ownership, possession and use of property. (1) A State is not immune as respects proceedings relating to any interest of the state in, or its possession or use (a) of, immovable property in the United Kingdom; or (b) in, or its possession or use of, any such property. any obligation of the state arising out of its interest (2) A state is not immune as respects proceedings relating to any interest of the state in movable or immovable property, being an interest arising by way of succession, gift or bona vacantia. (3) The fact that a state has or claims an interest in any property shall not preclude any court from exercising in respect of it any jurisdiction relating to the estates of deceased persons or persons of unsound mind or to insolvency, the winding up of companies or the administration of trusts. (4) A court may entertain proceedings against a person other than a State notwithstanding that the proceedings relate to property (a) which is in the possession or control of a state; or (b) in which a state claims an interest, if the state would not have been immune had the proceedings been brought against it or, in a case within para (b) above, if the claim is neither admitted nor supported by prima facie evidence. It follows that state immunity is a personal immunity, ratione personae, possessed by the state in respect of its sovereign activities (acta jure imperii) so far as these do not fall within any of the exceptions. When state immunity exists, the nature and gravity of the alleged misconduct are irrelevant. Even the admitted illegality of the acts complained of does not alter the characterisation of those acts as acta jure imperii: Jurisdictional Immunities, para 60; see also Jones v Saudi Arabia [2007] 1 AC 270, where the House rejected the argument that torture or some other contravention of a jus cogens cannot attract immunity rationae materiae because it cannot be an official act: per Lord Hoffmann at para 85. The classification does not appear in the 1978 Act, but the situations in which state immunity applies are commonly described as involving either direct or indirect impleading of the state. A state is (directly) impleaded by legal proceedings taken against it without its consent: Cia Naviera Vascongado v SS Cristina (The Cristina) [1938] AC 485, 490, per Lord Atkin. Lord Atkin also identified a second situation of immunity in which, even though the state may not be a party, the proceedings relate to state property. In so far as the state is put in a position where it must either forego or appear to defend its property interest, this situation can readily be described as one of indirect impleading: see eg The Parlement Belge (1880) 5 PD 197, 217 219, where the Court of Appeal did just that. On the other hand, immunity exists, as will appear, in some situations where a states property interests are affected in ways which it may not be so natural to identify as indirect impleading, and these are sometimes therefore treated separately: see eg United States of America v Dollfus Mieg et Cie SA [1952] AC 582, where Lord Porter at pp 612 and 614 referred to an action impleading the two governments or affecting their rights and to the foreign governments being implicated or their rights invaded, while Lord Radcliffe in contrast at p 616 treated it as a suit which might affect a sovereigns interest in property under the head of proceedings which amount in one way or another to a suit against the sovereign; and see recently in Canada Khadr v The Queen 2014 FC 1001, para 35 per Mosley J. The appellants submit that the immunity is wide enough to cover cases such as the present where it is integral to the claims made that foreign states or their officials must be proved to have acted contrary to their own laws, before any claim against the United Kingdom authorities and individuals sued can get off the ground. The respondents submit the contrary, on the basis that nothing in the present proceedings can or would involve any form of judgment against, or in any way affect any legal interests of, the relevant foreign states or their officials. Some uncertainty exists about the appropriate classification of the undoubted immunity which exists in relation to proceedings directed against state officials for acts done in their official capacity, in circumstances where the state itself would if sued have had state immunity. That immunity is firmly established: see Propend Finance Pty v Sing (1997) 111 ILR 611 and Jones v Saudi Arabia, cited above. But the two leading speeches in Jones v Saudi Arabia, with both of which all other members of the House expressed their agreement, explain it on differing bases. Lord Bingham in para 31 said: It is, however, clear that a civil action against individual torturers based on acts of official torture does indirectly implead the state since their acts are attributable to it. Were these claims against the individual defendants to proceed and be upheld, the interests of the Kingdom would be obviously affected, even though it is not a named party. In contrast, Lord Hoffmann at para 69 said that: state in section 1(1) of the [State Immunity Act] and government, which the term state is said by section 14(1)(b) to include, must be construed to include any individual representative of the state acting in that capacity, as it is by article 2(1)(b)(iv) of the Immunity Convention. The official acting in that capacity is entitled to the same immunity as the state itself. It is unnecessary to consider which of these two formulations may be preferable, although Lord Hoffmanns should not be misunderstood as suggesting that a state official possesses his own personal immunity which he can waive. His immunity depends upon the states, and can only be waived by the state. The immunity in respect of acts done in the course of their office extends to state officials ratione materiae even after they have left office (as well as to heads of state, who enjoy an additional immunity ratione personae while in office): see eg R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 3) [2000] 1 AC 147, 202G H, 269F and 281C G, per Lords Browne Wilkinson, Millett and Phillips, citing Hatch v Baez (1876) 7 Hun 596. Whatever classification be adopted, the property cases are instructive as to the boundaries of state immunity. They originate in the context of admiralty proceedings in rem: see eg The Parlement Belge, an action in rem against a mail ship belonging to the King of the Belgians in his public capacity, and The Cristina itself. In the light of modern understanding of the nature of an action in rem, it might be argued that such an action involves from the outset direct impleading: see Republic of India v India Steamship Co Ltd (The Indian Grace) [1997] UKHL 40; [1998] AC 878. Be that as it may be, the House in The Cristina approved a number of previous authorities indicating that a state might be impleaded by proceedings against a vessel of which it had de facto possession, or such rights of direction and control, without possession, as arise from requisitioning (referring to The Broadmayne [1916] P 64), when those proceedings would, if successful result in an order of the court affecting that possession or those other rights: see United States of America v Dollfus Mieg et Cie SA [1952] AC 582, 617, per Lord Radcliffe. United States of America v Dollfus Mieg et Cie SA was concerned with property, but in a very different context. The Bank of England held for safe custody 64 numbered bars of gold which had in 1944 been forcibly and wrongfully removed by German troops from a French bank holding them on behalf of Dollfus Mieg. The bars were recovered from Germany by Allied forces and lodged with the Bank of England, to be held to the order of a Tripartite Commission for the Restitution of Monetary Gold established by the American, British and French governments to deal on their behalf with gold taken from Germany. The Commission was no more than three sovereigns joined in a particular relation: p 615, per Lord Radcliffe. The Bank of England by mistake sold 13 of the bars, retaining 51. Dollfus Mieg claimed delivery up alternatively damages against the Bank of England. The action was stayed at the instance of the United States and France as regards the 51 bars, on the basis that the claim indirectly impleaded the three states as bailors in respect of their immediate possessory rights as against the Bank. It was allowed to continue as regards the 13 bars, on the basis that the Bank had terminated any bailment by their sale. Lord Radcliffe faced squarely the problem that title was what was in issue, saying: But certainly a special difficulty begins when he [the sovereign] is not actually named but the suit is one which may result in a judgment or order that will affect his interest in some piece of property. Even to say that much begs one important question, for it assumes that he has a valid interest in that property: whereas a stay of proceedings on the ground of immunity has normally to be granted or refused at a stage in the action when interests are claimed but not established, and indeed to require him to establish his interest before the court (which may involve the courts denial of his claim) is to do the very thing which the general principle requires that our courts should not do. Lord Radcliffe resolved the problem by reference to the three states possessory rights as bailors of the goods to the Bank of England, concluding at pp 618 619 that: The property of a sovereign state, which is an abstraction, must be in the physical possession of some actual person, and I do not see any distinction of substance in a matter of this kind between the possession of a servant of the state and the possession of its bailee when the bailment is of such a nature as that of the bank in this case. Indeed, I think that the Commissions possession and control of the gold bars in the hands of the bank amounted to a form of property more substantial than that which HM Government acquired by requisitioning the Broadmayne. The suit began as a claim in detinue. That means that the court was going to be asked or at any rate could be asked to make an order upon the bank to hand over the bars to the plaintiffs. Such an order would unquestionably interfere with the Commissions possession of them and compel the Commission, if they wished to recover possession, to come to court and try to get them back from the plaintiffs. I cannot feel any doubt that such a suit offends against the principle of sovereign immunity. In short, the Commission would no longer be entitled to look to the Bank as bailees, but would have as owners to establish title by proceedings against Dollfus Mieg. Addressing an argument that Dollfus Mieg could avoid the problem by limiting itself to a claim in conversion for damages, Lord Radcliffe found the point one of considerable difficulty, but in the end concluded that a claim on this basis was also precluded by state immunity: when I consider the real nature of a claim for damages for conversion I come to the same conclusion. Subject to the payment of costs and special damages (if there are any) an action for damages for conversion can always be stayed if the defendant offers to hand over the property in dispute. In that sense a suit for damages for conversion is an attempt to use the courts process to interfere with the existing possession of the chattel the title to which is in dispute. If the defendant continues to resist and damages are awarded against him he may keep the chattel and pay the damages; but if he does he becomes entitled, if he is a bailee, to set up the plaintiffs title to the goods, which he has thus paid for, against his own bailor. In other words the courts judgment in the personal action against him would materially affect the existing right of his bailor in respect of the possession and disposal of the chattel. The result of a judgment in damages has thus some analogy to a sale by the court of a chattel which is in the possession or under the requisition of a foreign sovereign: if the sale cannot be ordered in the one case because to order it would be to use the courts process against the sovereign, then the judgment cannot be rendered in the other. Again, the Commission would no longer be able to look to the Bank of England as simple bailees, but would face the issue that the Bank now stood, at least in theory, in the same position as Dollfus Mieg. It seems clear that Lord Radcliffe viewed the facts in Dollfus Mieg as close to the outer parameters of state immunity. Ultimately, the decision focused on the existence of a bailment, and on the second order consequences for the three States and the Bank of Englands legal positions as bailors and bailee if Dollfus Miegs claim could be pursued and was successful. Five years later the House confirmed in Rahimtoola v Nizam of Hyderabad [1958] AC 379 that a similar position applied where the issue was title to a chose in action, consisting of monies transferred without authority from an account of the Nizam and his government at the Westminster Bank Ltd to an account opened by that bank in the name of Mr Rahimtoola, the High Commissioner for Pakistan, in his capacity (as the House held) as agent for the state of Pakistan. The Nizams suit was barred by state immunity. Viscount Simonds put the matter as follows at p 395: A suit by a third party, the Nizam, is calculated and intended to interfere with the title of Rahimtoola and his principals, the Government of Pakistan, and with their possession or control of their property. It can only be maintained if the Government of Pakistan take a course which their sovereign dignity entitles them to reject and descend into the arena. The appellants argue on the present appeals that state immunity was recognised as existing in Rahimtoola, although the State of Pakistan would not have been bound by a judgment in proceedings involving a third party. But that was not how Viscount Simonds saw the matter unsurprisingly since Mr Rahimtoola was acting in his official capacity and proceedings against him therefore involved, on their face, state property. The special treatment in section 6(4) of the State Immunity Act 1978 of claims against third parties in respect of property cases also suggests that such cases represent a particular head of immunity, based on a states possession or control of or claim to some (legal) interest in the property in question. However, the appellants rely upon the United Nations Convention on Jurisdictional Immunities of States and Their Property (2004) as being based on a broader conception of interests, which, they submit, should inform the domestic understanding of indirect impleading. Articles 5 and 6 provide: Article 5 State immunity A state enjoys immunity, in respect of itself and its property, from the jurisdiction of the courts of another state subject to the provisions of the present Convention. Article 6 Modalities for giving effect to state immunity 1. A state shall give effect to state immunity under article 5 by refraining from exercising jurisdiction in a proceeding before its courts against another state and to that end shall ensure that its courts determine on their own initiative that the immunity of that other state under article 5 is respected. A proceeding before a court of a state shall be considered to have been instituted against another state if that other state: a. is named as a party to that proceeding; or b. is not named as a party to the proceeding but the proceeding in effect seeks to affect the property, rights, interests or activities of that other state. By article 2(1)(b), State is defined in broad terms, as meaning: (i) the State and its various organs of government; (ii) constituent units of a federal State or political subdivisions of the State, which are entitled to perform acts in the exercise of sovereign authority, and are acting in that capacity; (iii) agencies or instrumentalities of the State or other entities, to the extent that they are entitled to perform and are actually performing acts in the exercise of sovereign authority of the State; and (iv) representatives of the State acting in that capacity. The appellants rely on the words interests or activities in article 6(2)(b) which, they submit, indicate that state immunity should be understood as extending beyond claims affecting property or other rights. The Convention is not yet in force, lacking a sufficient number of ratifications, including any from the United Kingdom. But in Jones v Saudi Arabia, at para 26, Lord Bingham referred to the Convention as being, [d]espite its embryonic status, the most authoritative statement available on the current international understanding of the limits of state immunity in civil cases, going on to say that the absence of a torture or jus cogens exception [in it was] wholly inimical to the claimants contention. This was a statement made expressly about the limits of state immunity in the context of an issue whether the legal liability of a state official for torture fell outside the scope of such immunity. That was a fundamental question which the Convention, however embryonic, could be expected to cover. To attach equivalent relevance to the use in a Convention with no binding international status of the ambiguous terminology of article 6(2)(b) is to take Lord Binghams words out of context. The appellants reliance on the further passage in Lord Binghams speech quoted at para 17 above, with its adoption of the word interests is open to the same objection. The appellants note that the International Court of Justice has referred to the adoption of the Convention (see eg Jurisdictional Immunities, paras 77 and 89). Again, this was in the context of the issue, very different from the present, whether state immunity was subject to any exception in the case of violations of human rights, the law of armed conflict or jus cogens. The drafting history locates article 6 firmly in the context of the case law concerning the arrest of vessels, such as The Parlement Belge, and property in which states claim an interest, such as Dollfus Mieg: see eg the Report of the International Law Commission (Yearbook 1991, Vol II, (2), pp 23 25). The Report also explains the focus of article 6 as avoiding the exercise of State jurisdiction in a way which would put any foreign sovereign in the position of having to choose between being deprived of property or otherwise submitting to the jurisdiction; and it explains the words to affect as having been introduced to replace the prior draft wording to bear the consequences of a determination by the court which may affect, in order to avoid unduly broad interpretations of article 6(2)(b). Even so, concerns were expressed at the drafting stage by both Australia and the United States about the potential width of article 6(2)(b): see the Report of the Secretary General of the United Nations A/47/326 of 4 August 1992. But academic commentators have concluded that any uncertainty in its scope should be addressed by recognising that interests should be limited to a claim for which there is some legal foundation and not merely to some political or moral concern of the State in the proceedings: Fox and Webb, The Law of State Immunity, 3rd ed (2015 revision), p 307; and OKeefe, Tams (eds), The United Nations Convention on Jurisdictional Immunities of States and Their Property (2013), pp 110 111, indicating that some specifically legal effect should be required as distinct from a social, economic or political effect. Reliance was also placed by the appellants on two decisions of the International Court of Justice, the first the Case of The Monetary Gold removed from Rome in 1943 (judgment of 15 June 1954) ICJ Reports 1954, P19 and the second the Case concerning East Timor (Portugal v Australia) (judgment of 30 June 1995) ICJ Reports 1995, P90. In Monetary Gold an arbitrator had held that certain gold removed from Rome by the Germans had belonged to Albania, but France, the United Kingdom and the United States agreed that it would be delivered up to the United Kingdom in partial settlement of the International Courts judgment of 15 December 1949 against Albania in the Corfu Channel case [1949] ICJ Rep, p 244, unless either Albania or Italy applied to establish a claim. Albania did not so apply. Italy did, but objected to the courts jurisdiction in the absence of Albania. The court held that, since Italys claim would involve determining the legal position as between Albania and Italy, it could not adjudicate without Albanias consent. It said, inter alia, that Albanias legal interests would not only be affected by a decision, but would form the subject matter of the decision (p 32). Addressing an argument that, as a third party, Albania would not under the courts rules be bound, the court responded: This rule, however, rests on the assumption that the court is at least able to render a binding decision. Where, as in the present case, the vital issue to be settled concerns the international responsibility of a third state, the court cannot, without the consent of that third state, give a decision on that issue binding upon any state, either the third state, or any of the parties before it. The case is distinct from the present. The International Court was, above all and as in the domestic case of Dollfus Mieg, being asked to determine the immediate destination of specific property. In the courts below, Leggatt J at para 78 distinguished East Timor and the Court of Appeal at para 42 distinguished Monetary Gold as cases about international jurisdiction, required in the case of the International Court to be based upon consent, in contrast with which domestic courts exercise compulsory jurisdiction over those within their reach. That is correct as far as it goes, but states domestic jurisdiction also depends on consent in contexts where state immunity otherwise exists. The situation is therefore nuanced. Nevertheless, Monetary Gold is not about state immunity, and does not on its facts assist on the issue now before the court, even by way of analogy. The same applies to the East Timor case. By United Nations Resolution 1514 of 15 December 1960, East Timor was under Portuguese administration as a non self governing territory. Following internal disturbances in 1975, the Portuguese authorities withdrew to an island, and the armed forces of Indonesia intervened, after which the Portuguese withdrew entirely. In 1978 Australia recognised the fact that East Timor was part of Indonesia but not the means by which this was brought about, and in 1989 Australia negotiated a Treaty with Indonesia, to create a Zone of Cooperation in an area between the Indonesian Province of East Timor and Northern Australia. Portugal claimed that, in entering into this Treaty, Australia had acted unlawfully and in violation of the obligation to respect the status both of Portugal as the administering power and of East Timor as an area under such administration. The court accepted the erga omnes character of this obligation, but declined jurisdiction to rule on the lawfulness of Australias conduct, when any judgment would imply an evaluation of the lawfulness of the conduct of another State [viz Indonesia] which is not a party to the case (p 102). It stressed that, as in Monetary Gold, Indonesias rights and obligations would constitute the very subject matter of such a judgment made in the absence of that partys consent, contrary to the well established principle that the Court can only exercise jurisdiction over a state with its consent. The subject matter of any judgment would have been, in essence, whether Portugal or Indonesia had the right to administer, and so enter into treaties relating to, East Timor, an issue about territorial title. The present appeals involve no issues of proprietary or possessory title. All that can be said is that establishing the appellants liability in tort would involve establishing that various foreign states through their officials were the prime actors in respect of the alleged torts. But, unlike the position in Dollfus Mieg, that would have no second order legal consequences for the relationship between the respondents and the foreign states in question or their officials. None of the above domestic and international cases carries the concept of interests so far as to cover any reputational or like disadvantage that could result to foreign states or their officials from findings as between the appellants and respondents. On the contrary, the pains which the House of Lords took in Dollfus Mieg and Rahimtoola to identify a potential legal effect of the litigation on the relevant state rights point against any broader conception of interest. Some consequences of the appellants case are also worthy of note. The present proceedings in which they are sued as ancillary parties would be incapable of being maintained in this jurisdiction against them or against the states (Malaysia, Thailand, Libya and the United States) alleged to be primarily responsible for the physical conduct complained of by the respondents. Each such other state would, on conventional principles governing state immunity, be capable of being pursued in its own courts in respect of the particular conduct complained of in its case. But the claims could also not be pursued against the appellants in the courts of any of such other states, since the appellants would there enjoy state immunity against any direct impleading. The appellants case on state immunity in this jurisdiction would preclude suit against them anywhere. For the reasons given, I consider that the issues now before the Supreme Court do not attract state immunity, because the legal position of the foreign states, the conduct of whose officials is alleged to have been tortious in the places where such conduct occurred, will not be affected in any legal sense by proceedings to which they are not party. The decisions reached by the Court of Appeal in Belhaj and by Leggatt J in Rahmatullah were correct and the appeals should be dismissed on the issue of state immunity. The starting point of the appellants case is that adjudication of the issues now before the court in favour of the claimants would necessarily involve a finding by the English courts that foreign states had acted illegally under the laws of the places where the conduct complained of occurred. With regard to Mr Belhajs and Mrs Boudchars alleged detention and mistreatment, that would mean in Kuala Lumpur by Malaysian officials, in Bangkok by Thai officials as well as United States officials, in the airplane by United States officials and in Libya by Libyan and United States officials. With regard to Mr Rahmatullahs detention and alleged mistreatment, that would mean by Foreign act of state United States officials in Iraq and Afghanistan. So much can be accepted as the premise to what follows. In the opening words of his introduction to the chapter entitled The Foreign Act of State in his book Foreign Affairs in English Courts (1986), Dr Francis Mann wrote that: Public policy dominates one of the most difficult and most perplexing topics which, in the field of foreign affairs, may face the municipal judge in England: the doctrine of the foreign act of State displays in every respect such uncertainty and confusion and rests on so slippery a basis that its application becomes a matter of speculation. In Yukos v Rosneft the Court of Appeal suggested (para 115) that, in view of the limitations on foreign act of state recognised in the case law: The important thing is to recognise that increasingly in the modern world the doctrine is being defined, like a silhouette, by its limitations, rather than to regard it as occupying the whole ground save to the extent that an exception can be imposed. Leggatt J observed (para 134) that, when a rule is said to be defined by its absence, there is reason to wonder whether there is in fact such a rule. That aphorism goes too far. As Dr Francis Mann has suggested, quoting Cardozo J (Mann, Conflict of Laws and Public Law [1971] 1 Recueil des Cours 107, pp 148 149, 151 156 and Foreign Affairs in English Courts (1986) p 164), what is required is to approach the concept of foreign act of state at a more particular level of enquiry, by enunciating principles rather than maxims which, starting as devices to liberate thought, often end by enslaving it. Or, to adopt a phrase from Professor Campbell McLachlans Foreign Relations Law (CUP, 2014), para 12.129, what is required is a much more fine grained approach disaggregating the general category in order to achieve the specialization of the principle in its application to particular classes of case. Happily, there is a very substantial measure of common ground within the Supreme Court about the broad framework or structure of the relevant principles. Addressing briefly at this point such differences as there are between Lord Sumption and myself, Lord Sumption in para 227 distinguishes between (i) cases concerned with the applicability or examinability of foreign municipal legislation within a states own territory (which he calls municipal law act of state) and (ii) cases concerning the transactions of foreign states (which he calls international law act of state). This distinction corresponds generally with the distinction which I have identified in para 11(iii) above between the first type of foreign act of state (which I consider is better viewed as a rule of private international law, a view with which Lord Sumption expresses sympathy in the first four sentences of his para 229) and the third type of foreign act of state (which I describe as a rule of non justiciability or judicial abstention). What Lord Sumption does in para 228 is enlarge the first of his two categories, to embrace the second potential type of foreign act of state identified in para 11(iii) above), that is executive acts by a foreign state within its own territory. Apart from differences in the terminology we prefer, the differences between us lie in the ambit assigned to the second and third type of foreign act of state. Lord Sumption includes within the second acts against the person as well as property, and he gives the third type of foreign act of state (non justiciability or judicial abstention, or in his terminology international law act of state) a wider scope than I do, but then cuts that back by a domestic public policy qualification drawing inter alia on the international law concept of jus cogens. VI Three types of foreign act of state Three types of foreign act of state are in my opinion identifiable under current English authority. First, there is a well established rule of private international law, according to which a foreign states legislation will be recognised and normally accepted as valid, in so far as it affects property, whether movable or immovable, situated within that state when the legislation takes effect: Dicey, Morris and Collins, The Conflict of Laws, 15th ed (2012), rule 137; and see Carr v Fracis Times & Co [1902] AC 176 (seizure of ammunition by British officers in Muscat under the authority of a proclamation of the absolute ruler, the Sultan of Muscat, whose word was law), Luther v Sagor [1921] 23 KB 532 (seizure by decree of Russian revolutionaries later recognised as the government), Princess Paley Olga v Weisz [1929] 1 KB 718 (seizure by similar decrees) and Williams & Humbert Ltd v W & H Trade Marks (Jersey) Ltd [1986] AC 368 (compulsory purchase of shares in Spain). Movable and immovable property is thus subject to a territorial principle. So too is domestic trade mark protection based on a reputation acquired domestically, which cannot therefore be affected by foreign legislation: Lecouturier v Rey [1910] AC 262, cited by Warrington LJ in Luther v Sagor, pp 548 549. Under familiar conflict of laws principles, different connecting factors govern the recognition of foreign state legislation in other spheres. For example, foreign legislation affecting contractual rights will be recognised if enacted by the state whose law governs the contract: Dicey, Morris and Collins, op cit, rule 227(1); and see eg In re Helbert Wagg & Co Ltds Claim [1956] Ch 323 and Adams v National Bank of Greece and Athens [1961] AC 255. And, if one moves away from state legislation to adjudication by state courts, yet further connecting factors govern the recognition of foreign judgments. Leaving aside treaty arrangements and the European regime of the Brussels Regulation and Lugano Convention, the recognition of foreign judgments depends upon the foreign court having had jurisdiction in the limited international sense recognised by English courts and examined in Dicey, Morris & Collins, op cit, rules 43 to 47. However recognition will, exceptionally, be refused, when recognition would conflict with a fundamental principle of domestic public policy. The classic authorities in respect of legislation affecting property or contracts are Oppenheimer v Cattermole [1976] AC 249 (non recognition of Nazi laws discriminating against Jews) and Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 883 (non recognition of an Iraqi law confiscating the Kuwait Airways fleet, which was in Iraq, and giving it to Iraqi Airways in undeniable breach of Security Council Resolutions). Similarly, recognition may be denied to foreign judgments where this would be contrary to public policy: Dicey, Morris & Collins, rule 51; see also Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804 (Altimo) and Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2) [2014] QB 458. Second, it has been held that a rule exists whereby an English court will not question a foreign governmental act in respect of property situated within the jurisdiction of the foreign government in question. The Court of Appeal in Princess Paley Olga upheld the judgment against the claimant Princess on this (its third) ground, as well as two others in the case, stating that: This court will not inquire into the legality of acts done by a foreign Government against its own subjects in respect of property situate in its own territory (per Russell LJ at p 736) See also per Scrutton LJ at pp 723 724 and Sankey LJ at pp 726 730. Similar reasoning, derived from United States authority including Oetjen v Central Leather Co (1918) 246 US 297 (para 51 below), had appeared in AOAM v James Sagor & Co [1920] 3 KB 532, in particular in the judgment of Warrington LJ at p 549. The issue there was however whether to recognise a confiscatory decree, which was treated by the other members of the court simply as Russian legislation. Other direct authority on this type of foreign act of state is limited, though there are some general dicta wide enough to embrace it as well as the third type of foreign act of state: see eg Lord Sumners statement in Johnstone v Pedlar [1921] 2 AC 262, 290 that Municipal Courts do not take it upon themselves to review of the dealings of State with State or of Sovereign with Sovereign. They do not control the acts of a foreign state done within its own territory, in the execution of sovereign powers, so as to criticise their legality or to require their justification; See also Lord Wilberforces dicta in Buttes Gas, to which reference is made in para 59 below. The existence of this second type of act of state has not in fact been challenged on this appeal. However, assuming (as I am prepared for present purposes to do without deciding) that it exists, it will be necessary to examine more closely its scope and rationale. It may be regarded, like the first type of act of state, as a rule of private international law though this can hardly be in a literal conflicts of laws sense since the effect of the relevant act is determined not by law, but regardless of law. Perram J called it in Habib v Commonwealth [2010] FCAFC 12; (2010) 265 ALR 50 at paras 38 and 43 a super choice of law rule. In these circumstances, it can, so far as it exists, just as well be understood as a special rule of abstention: witness Scrutton LJs reference to an act of state into the validity of which this Court would not enquire in Princess Paley Olga v Weisz [1929] 1 KB 718, 723 724. In Empresa Exportadora de Azucar v Industria Azucarera Nacional SA (The Playa Larga and Marble Islands) [1983] 2 Lloyds Rep 171, the Court of Appeal was concerned with unlawful conduct involving theft by Cuban sellers of one cargo of sugar, property in which had already passed to the buyers, and non delivery of a second combined with trickery whereby the intended buyers were nonetheless induced to pay its price. The first cargo was on a vessel which was discharging at its Chilean discharge port, when the vessel was withdrawn by the sellers. The second cargo was on the high seas en route to Chile when withdrawn. The Court rejected any defence of foreign act of state for a series of reasons, primarily because there was no such plea and no proof that the acts were acts of the Chilean government, but secondarily also because, if they were, there seems no compelling reason for judicial restraint or abstention in a case where it is clear that the acts relied on were carried out outside the sovereigns own territory. Whether that reasoning was correct in respect of the second type of foreign act of state arises for consideration on these appeals. Whether any like doctrine extends to sovereign acts in respect of persons, rather than property, also requires determination. Third, it is established at the highest level that there are issues which domestic courts should treat as non justiciable or should abstain from addressing. The Court of Appeal in Yukos v Rosneft understood this principle as not so much a separate principle as a more general and fundamental principle, which had to a large extent subsumed [the first and second types of act of state] as the paradigm restatement of that principle (paras 48 and 66). That, in my view, plays into the problem identified by Dr Mann and Professor McLachlan (see para 33 above). It blurs the distinctions between different types of foreign act of state to which I have referred in para 11 above. It impedes the important task of identifying the scope and characteristics of each type of foreign act of state. The Court of Appeal in Yukos v Rosneft suggested at para 65 that the third type might be allied with a yet further doctrine, precluding United Kingdom courts from investigating any acts of a foreign state when and if the Foreign Office communicated the Governments view that such investigation would embarrass the United Kingdom in its international relations. I see little attraction in and no basis for giving the Government so blanket a power over court proceedings, although I accept and recognise that the consequences for foreign relations can well be an element feeding into the question of justiciability. I consider in paras 100 to 102 below the reliance placed by the appellants on adverse effects of these proceedings on international relations. Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888 is the leading English authority on the third type. It was recently considered by this Court in dicta in Shergill v Khaira [2014] UKSC 33; [2015] AC 359. In Buttes Gas, the claimant Buttes Gas sued Dr Hammer and Occidental Oil Company for slander, eliciting a counterclaim for an alleged conspiracy between Buttes Gas, the Ruler of Sharjah and others to cheat and defraud, and to procure the British government and others to act unlawfully to the detriment of, Dr Hammer and Occidental Oil. The counterclaim related to oil exploration rights off the island of Abu Musa in the Persian Gulf, and raised a whole series of boundary and other international and inter state law issues, set out by Lord Wilberforce on p 937 of the report. The claimant applied to strike out the counterclaim. Lord Wilberforce, giving the sole reasoned speech concluded at p 938A C: It would not be difficult to elaborate on these considerations, or to perceive other important inter state issues and/or issues of international law which would face the court. They have only to be stated to compel the conclusion that these are not issues upon which a municipal court can pass. Leaving aside all possibility of embarrassment in our foreign relations (which it can be said not to have been drawn to the attention of the court by the executive) there are to follow the Fifth Circuit Court of Appeals no judicial or manageable standards by which to judge these issues, or to adopt another phrase (from a passage not quoted), the court would be in a judicial no mans land: the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force, and to say that at least part of these were unlawful under international law. I would just add, in answer to one of the respondents arguments, that it is not to be assumed that these matters have now passed into history, so that they now can be examined with safe detachment. Having concluded that the counterclaim was non justiciable, the House noted the injustice which could follow if the claim alone proceeded. In the event, the House was able, without more, to take advantage of the claimants offer to submit to a stay of the claim as a term of dismissal of the counterclaim. In Shergill v Khaira [2015] AC 359 this Court referred to the third type of foreign act of state under the head of non justiciability which it said (para 41) refers to a case where an issue is said to be inherently unsuitable for judicial determination by reason only of its subject matter (even though it would otherwise be within the English courts jurisdiction under, for example, the Brussels Regulation and Lugano Convention or the rules of court). The court went on (paras 41 43) to say that such cases generally fall into one of two categories: (i) The first was where the issue was beyond the constitutional competence assigned to the courts under our conception of the separation of powers, of which the paradigm cases are the non justiciability of certain transactions of foreign states and of proceedings in Parliament. The distinctive feature of such cases was that once the forbidden area is identified, the court may not adjudicate on the matters within it, even if it is necessary to do so in order to decide some other issue which is itself unquestionably justiciable. Buttes Gas falls into this category. (ii) The second category was of cases not involving private legal rights or obligations or reviewable matters of public policy, and included issues of international law which engage no private right of the claimant or reviewable question of public law. Such issues were not justiciable in the abstract, but must nevertheless be resolved if their resolution is necessary in order to decide some other issue which is in itself justiciable. Examples of this second category, where no private right or reviewable question of public law was engaged, are Nabob of the Carnatic v East India Co (1793) 2 Ves Jun 56, where the Nabob was seeking to sue for an account due under an international treaty, and JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, where the House of Lords stated that it is axiomatic that municipal courts have not and cannot have the competence to adjudicate upon or to enforce the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law (p 499F G per Lord Oliver of Aylmerton). The appellants propose a different categorisation, pursuing a theme pointed up by Rix LJ in Yukos v Rosneft (No 2) and by the Court of Appeal in Belhaj. According to this categorisation, a domestic court will not adjudicate upon any sovereign or jure imperii act committed by a foreign state anywhere abroad. Analytically, this can be viewed either as expanding the scope of the second type of foreign act of state and treating the third type as a particular instance, or (following Rix LJ) as expanding the scope of the third type to subsume and treat as non justiciable not merely special circumstances comparable with, even if not identical to, those involved in Buttes Gas, but any sovereign or jure imperii act committed by a foreign state anywhere outside the domestic jurisdiction invoked in the relevant proceedings. Whichever view is taken, there is a tension between the proposed categorisation, on the one hand, and Lord Wilberforces cautious references to the second and third types of foreign act of state in Buttes Gas, followed up by Rix LJs emphasis in Yukos v Rosneft (No 2) on the limited, or silhouette like, nature of the doctrine, to which reference has already been made: para 33 above. The appellants categorisation would lead to a dramatic expansion of the scope of foreign governmental act of state as a bar to domestic adjudication against defendants otherwise amenable to the English jurisdiction. Whatever typology be adopted, the appellants submit that both cases now before the Supreme Court fall into one or both of the second and third types of foreign act of state, properly understood, and that, in so far as they fall within the third type, they belong within the first sub category. The second type, they submit, should be understood as covering acts relating to the person as well as property. On this basis, the second type would cover, at least, the governmental acts of Malaysian, Thai and Libyan officials within their own jurisdictions. The acts of United States officials on United States aircraft in Belhaj or in Iraq where the United States was an occupying power or Afghanistan where it was present by consent should, the appellants submit, likewise be regarded as occurring within United States jurisdiction. But, in any event, they submit that the second type should not be limited territorially, any more than the third. As to the third type, the issues before the Court concern alleged or actual detention and interrogation allegedly agreed between, and involving transfers of the relevant individuals between, states in the context of arrangements made for political or security reasons. This category cannot, the appellants submit, be limited territorially. VII Analysis of the case law (i) Carr v Fracis Times & Co Carr v Fracis Times & Co falls squarely within the first type of foreign act of state. The seizure of ammunition was lawful because the Sultan of Muscat was an absolute ruler whose word and proclamation were law in that state. The only possible hint of the second type of act of state appears in a dictum near the end of the Earl of Halsbury LCs speech, saying that the lawfulness of what happened rests, and must rest, upon the authority of the sovereign of Muscat; and it appears to me that any other decision would be open to very serious questions of policy if, in every case where the lord of a country has declared what the law of his own country is, it were open to an English tribunal to enter into the question and to determine, as against him, what was the law of his country. The judgment can, on the other hand, also be read as positively emphasising the significance of establishing a legal base for an act such as expropriation. The same may be said of the earlier authority of Dobree v Napier (1836) 2 Bing (NC) 781, where (it appears from the fourth declaration) a vessel supplying the revolutionary Don Miguel of Portugal was seized in the Portuguese port of St Martinho by Sir Charles Napier as admiral in the service of the Queen of Portugal lawfully under Portuguese law (p 796). (Today, the action against Sir Charles Napier would also be expected to fail on grounds of sovereign immunity, wherever the seizure took place. The fact that the seizure occurred in the context of a civil war might also bring into play the third type of act of state.) (ii) The United States authorities In relation to the first and second types of foreign act of state, the Court of Appeal in Luther v Sagor and Princess Paley Olga drew heavily on United States authority, particularly Underhill v Hernandez 168 US 250 (1896) and Oetjen v Central Leather Co 246 US 297 (1918). As with Luther v Sagor and Princess Paley Olga, these were cases concerning the acts of revolutionaries who were ultimately successful and became recognised governments. It is, as Dr Mann wrote in The Sacrosanctity of the Foreign Act of State in Studies in International Law (1973), referring to Williams v Bruffy 96 US 176 (1877) and other authority, well established that recognition has retroactive effect. But one difference between the issues in the two United States and the two English cases appears to have passed unmarked in the latter. In both the United States cases, the issue considered by the court was not whether state conduct fell to be regarded as lawful or valid though unlawful under ordinary domestic law. It was whether state conduct should be regarded as unlawful because it was contrary to international law governing armed conflict. Admittedly, in Underhill v Hernandez the plaintiffs case appears to have been that the law of nations was under the Constitution of Venezuela to be enforced in cases of civil war and the defendant was ready to assume that international law was part of the law of the land where any question arises which is properly the subject of its jurisdiction (plaintiffs brief pp 27 28 and defendants brief p 29). But reliance in a domestic court on the law of war to establish the wrongfulness of a revolutionary governmental act is self evidently more ambitious than reliance on unlawfulness under ordinary domestic law. A precursor of Underhill v Hernandez is Hatch v Baez (1876) 7 Hun 596, where the claimant sought to sue a former president of the Dominican Republic, now resident in New York, for injuries allegedly suffered as a result of acts done by the former president as president. Gilbert Js judgment contains a sentence in terms echoed in later case law: We think that, by the universal comity of nations and the established rules of international law, the courts of one country are bound to abstain from sitting in judgment on the acts of another government done within its own territory. But, for the rest and on its facts, Hatch v Baez can be seen as a clear case of sovereign immunity, enjoyed, and not so far as appears waived, by the Dominican Republic, as well as a case dating (like the Duke of Brunswicks case, which Gilbert J cited) from a time when the strands of state immunity and foreign act of state were not distinctly separated. Similarly, one would today expect the claim in Underhill v Hernandez to have been met by a plea of state immunity. In Underhill v Hernandez, Underhill, a US citizen, had constructed a waterworks in Bolivar for the government which was eventually overthrown by revolutionary forces, one of whose generals was Hernandez. After Hernandez had captured Bolivar, Underhill sought to leave. Hernandez refused the request and confined Underhill to his house, in order to coerce Underhill into continuing to operate his waterworks and repair works for the benefit of the revolutionary forces. Underhills claim for damages was dismissed. In Underhill v Hernandez Fuller CJ opened his judgment with another broad statement along the same lines as Gilbert Js (p 252): Every sovereign State is bound to respect the independence of every other sovereign State, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves. Throughout much of the rest of his short judgment the focus was on the existence of civil war, and it is relevant to note that he went on (p 254): The decisions cited on plaintiff's behalf are not in point. Cases respecting arrests by military authority in the absence of the prevalence of war; or the validity of contracts between individuals entered into in aid of insurrection; or the right of revolutionary bodies to vex the commerce of the world on its common highway without incurring the penalties denounced on piracy; and the like, do not involve the questions presented here. (italics added) The words which I have italicised open the possibility that the ratio of Underhill v Hernandez may be limited to state detention in war time situations. The recognition in that context by United States courts of what was effectively a right to detain would not necessarily have been a radical step, in view of international humanitarian legal considerations subsequently enshrined in the Geneva Conventions of 1949. For example, the Fourth Convention relative to the Protection of Civilian Persons in Time of War entitles civilians to leave the territory unless their departure is contrary to the interests of the State (article 35) and authorises the confinement to residence of a civilian if necessary for security reasons (articles 42 and 78). Hernandezs acts were, in the light of his success, the acts of the government of Venezuela (p 254). True, this was a civil war, but article 3 of the Third Convention itself contemplates that the parties to a non international armed conflict will endeavour to agree to bring its other provisions into force. It is, at the least, an open question what the attitude of the Supreme Court would have been to a case such as the present where there is no suggestion of any war, international or civil, to serve as the context for the detention or rendition. In Oetjen, animal hides were seized and sold to satisfy a monetary assessment to support the revolution, and there was an issue of title between an assignee from the original owner and a person deriving his claim to title from the purchaser from the revolutionary forces. This was resolved by application of Fuller CJs opening words, with the unsurprising conclusion that the assignee of the former owner failed in its claim. Subsequent consideration of these and other similar cases by the United States Supreme Court in Ricaud v American Metal Co Ltd 246 US 304 and Banco Nacional de Cuba v Sabbatino 376 US 398 (1964) evidences a shift in their rationalisation. Like Oetjen, Sabbatino concerned competing claims to property (sugar) which had been disposed of in two inconsistent directions as a result of its revolutionary expropriation. The Court cited with approval (p 418) reasoning from Ricaud to the effect that act of state: does not deprive the courts of jurisdiction once acquired over a case. It requires only that, when it is made to appear that the foreign government has acted in a given way on the subject matter of the litigation, the details of such action or the merit of the result cannot be questioned but must be accepted by our courts as a rule for their decision. Discussing the conceptual basis for this rule of decision, the court went on (pp 421 422): We do not believe that this doctrine is compelled either by the inherent nature of sovereign authority, as some of the earlier decisions seem to imply, see Underhill, supra; American Banana, supra; Oetjen, supra, at 303, or by some principle of international law. That international law does not require application of the doctrine is evidenced by the practice of nations. Most of the countries rendering decisions on the subject fail to follow the rule rigidly If international law does not prescribe use of the doctrine, neither does it forbid application of the rule even if it is claimed that the act of state in question violated international law. A footnote to the second sentence recorded that a doctrine in similar terms had been articulated in England in Luther v Sagor and Princess Paley Olga, with which the US Supreme Court compared Anglo Iranian Oil Co v Jaffrate (The Rose Mary) [1953] 1 WLR 246, [1953] Intl L Rep 316 (Aden Sup. Ct) as endorsing an exception to the doctrine if the foreign act violated international law. The Supreme Court cannot have been informed of Upjohn Js disapproval of that general exception in In re Helbert Wagg & Co Ltds Claim [1956] 1 Ch 323, 346 349. The footnote went on to observe that Civil law countries, however, which apply the rule make exceptions for acts contrary to their sense of public order. The Court explained its own view of act of state as follows (p 423): The act of state doctrine does, however, have constitutional underpinnings. It arises out of the basic relationships between branches of government in a system of separation of powers. It concerns the competency of dissimilar institutions to make and implement particular kinds of decisions in the area of international relations. The doctrine as formulated in past decisions expresses the strong sense of the Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may hinder rather than further this countrys pursuit of goals both for itself and for the community of nations as a whole in the international sphere. Subsequent to Sabbatino, Congress passed the Hickenlooper amendment, providing that no United States court should in future decline, on the ground of the act of state doctrine, to give effect to the principles of international law, including the principles of compensation, except in any case where the President determined application of that doctrine to be required by the foreign policy interests of the United States. At least at this point, therefore, United States law departed significantly from any principle in English common law. Still more recently, the Supreme Court in WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn, International (1990) 493 US 400 endorsed the basis of the doctrine explained in Sabbatino (p 404), underlining that it is not some vague doctrine of abstention but a principle of decision binding on federal and state courts alike. It endorsed the statement in Ricaud that the act within its own boundaries of one sovereign state becomes a rule of decision for the courts of this country (p 406). However, it went on: Act of state issues only arise when a court must decide that is, when the outcome of the case turns upon the effect of official action by a foreign sovereign. The issues in Kirkpatrick were held not to turn upon the effect of official action by a foreign sovereign (p 406). An unsuccessful under bidder sued the successful bidder for a Nigerian construction contract under United States anti racketeering statutes, on the basis that the contract had been won by bribing officials of the Nigerian Government. Although it was clear that the bribery would have been illegal under Nigerian law, the court held that Regardless of what the courts factual findings may suggest as to the legality of the Nigerian contract, its legality is simply not a question to be decided in the present suit, and there is thus no occasion to apply the rule of decision that the act of state doctrine requires. The Supreme Court also addressed instructively the relationship between the considerations underlying the doctrine of foreign act of state and its application: Petitioners insist, however, that the policies underlying our act of state cases international comity, respect for the sovereignty of foreign nations on their own territory, and the avoidance of embarrassment to the Executive Branch in its conduct of foreign relations are implicated in the present case because, as the District Court found, a determination that Nigerian officials demanded and accepted a bribe would impugn or question the nobility of a foreign nations motivations, and would result in embarrassment to the sovereign or constitute interference in the conduct of foreign policy of the United States. These urgings are deceptively similar to what we said in Sabbatino, where we observed that sometimes, even though the validity of the act of a foreign sovereign within its own territory is called into question, the policies underlying the act of state doctrine may not justify its application. We suggested that a sort of balancing approach could be applied the balance shifting against application of the doctrine, for example, if the government that committed the challenged act of state is no longer in existence. 376 US, at 428. But what is appropriate in order to avoid unquestioning judicial acceptance of the acts of foreign sovereigns is not similarly appropriate for the quite opposite purpose of expanding judicial incapacities where such acts are not directly (or even indirectly) involved. It is one thing to suggest, as we have, that the policies underlying the act of state doctrine should be considered in deciding whether, despite the doctrines technical availability, it should nonetheless not be invoked; it is something quite different to suggest that those underlying policies are a doctrine unto themselves, justifying expansion of the act of state doctrine (or, as the United States puts it, unspecified related principles of abstention) into new and uncharted fields. This passage bears out an earlier observation by Lord Wilberforce in Buttes Gas (p 934C) that United States courts have moved towards a flexible use of the doctrine [of act of state] on a case to case basis: see para 57 below. (iii) Buttes Gas v Hammer The reasoning and nuances of United States law have not been constant and are not necessarily transposable to English law. This was also expressly recognised by Lord Wilberforce in Buttes Gas at p 936F G. However, he drew support from reasoning in the United States case law for his conclusion that there was room for a principle, in suitable cases, of judicial restraint or abstention: p 934C, and see pp 936H 937A. After noting the statement in Sabbatino that international law does not require application of the doctrine of act of state, he went on (p 934): Granted this, and granted also, as the respondents argue, that United States courts have moved towards a flexible use of the doctrine on a case to case basis, there is room for a principle, in suitable cases, of judicial restraint or abstention. Lord Wilberforce then examined where this approach had led the United States courts in litigation on the very same situation as that before the House. He quoted in extenso from a letter written by the Legal Adviser to the US Department of State, discounting any suggestion that issues relating to disputed territorial jurisdiction should be analysed by reference to the so called Act of State doctrine which is traditionally limited to governmental action within the territory of the respective state, and arguing that judicial self restraint rather follows from the general notion that national courts should not assume the functions of arbiters of territorial conflicts between third powers even in the context of a dispute between private parties (p 936B C). In essence, this was the argument that Lord Wilberforce accepted. He summarised the approach he took in relation to the United States case law as follows (pp 936F 937A): The constitutional position and the relationship between the executive and the judiciary in the United States is neither identical with our own nor in itself constant. Moreover, the passages which I have cited lay emphasis upon the foreign relations aspect of the matter which appeared important to the United States at the time. These matters I have no wish to overlook or minimise. I appreciate also Mr Littmans argument that no indication has been given that Her Majestys Government would be embarrassed by the court entering upon these issues. But, the ultimate question what issues are capable, and what are incapable, of judicial determination must be answered in closely similar terms in whatever country they arise, depending, as they must, upon an appreciation of the nature and limits of the judicial function. This has clearly received the consideration of the United States courts. When the judicial approach to an identical problem between the same parties has been spelt out with such articulation in a country, one not only so closely akin to ours in legal approach, the fabric of whose legal doctrine in this area is so closely interwoven with ours, but that to which all the parties before us belong, spelt out moreover in convincing language and reasoning, we should be unwise not to take the benefit of it. This led on pp 937 938 to Lord Wilberforces summary of the complex inter state issues and to his conclusion, based on a principle of judicial abstention and non justiciability, set out in para 42 above. Lord Wilberforces treatment earlier in his speech of foreign act of state in the more limited senses of the first and second types is instructive. Speaking of the category of cases exemplified by Carr v Fracis Times & Co, Luther v Sagor and Princess Paley Olga, he described them (p 931A B) as: cases which are concerned with the applicability of foreign municipal legislation within its own territory, and with the examinability of such legislation often, but not invariably, arising in cases of confiscation of property. He said that Mr Littman (counsel for Dr Hammer and Occidental) had given the House a valuable analysis of such cases , suggesting that these are cases within the area of the conflict of laws, concerned essentially with the choice of the proper law to be applied. Without more, Lord Wilberforce then simply identified two suggested limitations, one that foreign legislation can be called in question where it is seen to be contrary to international law or to public policy, the other that foreign legislation is only recognised territorially ie within the limits of the authority of the state concerned. He dismissed their relevance not by questioning the existence of the suggested limitations, but on the contrary on the basis, as to the first, that It is one thing to assert that effect will not be given, to a foreign municipal law or executive act if it is contrary to public policy, or to international law (cf In re Helbert Wagg & Co Ltds Claim [1956] Ch 323) and quite another to claim that the courts may examine the validity, under international law, or some doctrine of public policy, of an act or acts operating in the area of transactions between states. and, as to the second, that The second argument seems to me to be no more valid. To attack the decree of 1969/70 extending Sharjahs territorial waters, ie its territory, upon the ground that the decree is extra territorial seems to me to be circular or at least question begging. There is here, in the reference to an executive act, a possible passing reference, though no more, to the second type of foreign act of state. Lord Wilberforce did not regard this as covering the circumstances before him, because he went on to make clear that he did not regard the case against justiciability of the instant dispute as validated by the rule [ie the rule governing the second type of foreign act of state] itself and that any conclusion in favour of non justiciability would have to be upon some wider principle: p 931F. A further reference to the first and/or second types of foreign act of state appears in Lord Wilberforces reference at p 934B to Sabbatino as a case of act of state in the normal meaning, viz, action taken by a foreign sovereign state within its own territory. In Sabbatino, the United States courts had declined to determine whether the Cuban expropriation decree complied with the requirements of Cuban law: 376 US 398 (1964); 416 FN 17. What is clear, therefore, is that Lord Wilberforces reliance on reasoning in the United States authorities of Underhill v Hernandez, Oetjen and Sabbatino as well as on the judgments delivered in the United States in parallel litigation between Buttes Gas and Occidental led on his analysis not to an expanded principle of the second type I have identified; rather, it led to a principle of self restraint or abstention in suitable cases (p 934C), which he described as inherent in the very nature of the judicial process and which constitutes the third type of foreign act of state. Similarly, Lord Wilberforce treated the older English cases of Blad v Bamfield (1674) 3 Swans 603 607 (App) 607 and Duke of Brunswick v King of Hanover (1844) 6 Beav 1; (1848) 2 HL Cas 1 as precursors of these United States cases. Indeed, he referred (p 933C D) to Underhill v Hernandez (933C D) as following the Duke of Brunswicks case, which, although not mentioned expressly by Fuller CJ, had been referred to in the Circuit Court of Appeals and certainly finds echoes in Fuller CJs language in Underhill v Hernandez. Blad v Bamfield is sometimes treated, on the basis of the report of the first hearing of the case (p 603), as a claim by English traders, Bamfield and others, against Peter Blad, a Dane, for wrongful seizure of their goods in Iceland for allegedly fishing contrary to letters patent granted to the defendant by the King of Denmark, as ruler of Iceland. Blad sought an injunction to restrain the proceedings. Bamfield and others claim was seen by the Privy Council at that point as a question of private injury which would depend upon Danish law, for whatever was law in Denmark, would be law in England in this case but if the wrong were done without colour of authority, it was fit to be questioned (p 604). On that basis, the claim was at Lord Nottingham LCs instance allowed to proceed, and the case stood over. However, a different picture emerges from the report of the second hearing before Lord Nottingham a year later in chancery. It then became clear, first, that the claim relates to a trespass done upon the high sea (p 605), and second that the very manner of the defence [to the injunction] offered by [Bamfield and others] had made it directly a case of state; for they insist upon the articles of peace to justify their commerce, which is of vast consequence to the public; for every misinterpretation of an article may be the unhappy occasion of a war; and if it had been known at Board that this would have been the main part of their case, doubtless the Council would not have suffered it to depend in Westminster Hall. On that basis, Lord Nottingham decreed a permanent stay since it would be monstrous and absurd to send it to a trial at law, where either the court must pretend to judge of the validity of the kings letters patent in Denmark, or of the exposition and meaning of the articles of peace; or that a common jury should try whether the English have a right to trade in Iceland, is monstrous and absurd. The House in Buttes Gas understandably saw this reasoning as an early precursor of a concept of non justiciability. The actual decision can also be seen as an example of the second category of case identified in Shergill v Khaira [2015] AC 359, paras 41 42, in so far as Bamfield was attempting to derive private rights from an unincorporated treaty (see para 43(ii) above), and perhaps also as an example of the second type of act of state, if and so far as Bamfield was attempting to challenge the validity of the kings letters patent in Denmark, granted in favour of Blad for the sole trade of Iceland. In Duke of Brunswick, the King of Hanover was sued for sovereign acts in respect of which it is clear that he had sovereign immunity (once the submission was rejected that he was acting in his private capacity as an English subject). But, drawing directly on words used by Lord Cottenham LC, Lord Wilberforce saw the case also as recognising a general principle of restraint or immunity ratione materiae, to the effect that the courts in England will not adjudicate or sit in judgment upon acts done abroad by virtue of sovereign authority (p 932E F). At p 932F G, he identified this point in Lord Cottenhams further words: It is true, the bill states that the instrument was contrary to the laws of Hanover and Brunswick, but, notwithstanding that it is so stated, still if it is a sovereign act, then, whether it be according to law or not according to law, we cannot inquire into it. Lord Wilberforce thus derived from his examination of the Duke of Brunswicks case support, no doubt by reference to the issue in dispute, for a principle of non justiciability by the English courts of a certain class of sovereign acts (p 933C). Lord Wilberforce viewed the relevant acts in that case as having been performed within the territory of the sovereign concerned (p 933B). But he did not suggest that this limited the principle of self restraint, and the decision in Buttes Gas itself indicates that there can be no such absolute limitation. Lord Wilberforces view as to where the acts were committed is in fact questionable. The plea was that the King of Hanover had, after succeeding HM William IV in 1837, taken possession of the Dukes personal property in Brunswick and elsewhere (p 5). Further, the instrument directly challenged by the claim, under which the King of Hanover claimed to be the lawful guardian of the Dukes personal property, was signed by HM William IV at St Jamess on 6 February 1833 and by the claimants brother in Brunswick on 14 March 1833. The Lord Chancellor also observed (pp 19 21) that the challenge to that instrument was itself a challenge to acts of persons claiming to have the right so to act by virtue of their sovereign authority. That referred to authority claimed under a decree of the Germanic Diet of Confederation, which was established by the Treaty of Vienna 1815 and sat in Frankfurt under Austrian presidency. The Diet had on 2 September 1830 purported to depose the Duke and declare that the throne of Brunswick had passed to his brother. As the Lord Chancellor said, whether the constitution of Germany authorized it or not, is a question we have no power to interfere with, or to inquire into. The case can be seen on this basis as falling, like Buttes Gas itself, into the first category in Shergill v Khaira, ie as non justiciable or requiring judicial abstention. VIII Application of the first and second types of foreign act of state The appellants can gain no assistance from the first type of act of state. That depends upon establishing the legality of what occurred in the relevant foreign state. They do however invoke the second type of foreign act of state, or the generalised doctrine which they submit underlies this and the third type of foreign act of state. Leaving aside for the moment any issue as to whether the second type of act of state or any such generalised doctrine can cover acts against the person or acts committed outside the jurisdiction of the state committing them, it is convenient to deal at the outset with the respondents submission that the respondents are not inviting the English court to adjudicate upon the validity of the conduct of the foreign states allegedly involved, but are only asking the court to find that such conduct occurred as a matter of fact. The respondents rely in this context on the United States authorities of Kirkpatrick and Sharon v Time, Inc 599 F Supp 538, 546 (SDNY 1984). But in my view validity in the Kirkpatrick sense encompasses legality. To that extent, I do not agree with one part of the reasoning of Perram J in The Federal Court of Australia in Habib v Commonwealth of Australia [2010] FCAFC 12; (2010) 265 ALR 50, at para 44. On these appeals the respondents cases on the issues before the Supreme Court depend upon showing illegal conduct by the various States allegedly implicated as well as by the appellants as accomplices. I turn therefore to consider the second type of foreign act of state. This has direct support at Court of Appeal level: para 38 above. But other support for it in English law is noticeably limited, and it is in my opinion unnecessary on this appeal for this Court to reach or endorse a conclusion that it exists in any form at all. Rule 137 of Dicey, Morris and Collins makes no reference to it, but, on the contrary, reads: A governmental act affecting any private proprietary right in any movable or immovable thing will be recognised as valid and effective in England if the act was valid by the law of the country where the thing was situated (lex situs) at the moment when the act takes effect, and not otherwise. The qualifications if the act was valid by the law of the country and the final phrase and not otherwise confine the scope of rule 137 to the first type of foreign act of state. They might, by themselves, be read as inconsistent with the existence of any second type of foreign act of state. But rule 3 in Dicey, Morris and Collins is in terms which it is possible to read widely enough to cover the second type of foreign act of state. It reads: English courts have no jurisdiction to entertain an action: (1) For the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign state; or (2) founded upon an act of state. The commentary to rule 3 in Dicey, Morris and Collins approves the suggestion made by Lord Keith of Avonholm in Government of India v Taylor [1955] AC 491, 511, that enforcement of claims of the sort identified would amount to an extension of the sovereign power which imposed the taxes or law, or as an assertion of sovereign authority by one state within the territory of another. On that basis, sub rule (2) may be seen inversely as a recognition of the sovereign authority of a foreign state within its own foreign jurisdiction. But a potential problem about such a reading is that it equates sovereignty with executive activity. In states subject to the rule of law, a states sovereignty may be manifest through its legislative, executive or judicial branches acting within their respective spheres. Any excess of executive power will or may be expected to be corrected by the judicial arm. A rule of recognition which treats any executive act by the government of a foreign state as valid, irrespective of its legality under the law of the foreign state (and logically, it would seem, irrespective of whether the seizure was being challenged before the domestic courts of the state in question), could mean ignoring, rather than giving effect to, the way in which a states sovereignty is expressed. The position is different in successful revolutionary or totalitarian situations, where the acts in question will in practice never be challenged. It is probably unsurprising that the cases relied upon as showing the second kind of foreign act of state are typically concerned with revolutionary situations or totalitarian states of this kind. The commentary in Dicey, Morris and Collins goes on to indicate that sub rule (2) covers both Crown act of state and foreign act of state. In relation to Crown act of state, Dicey, Morris and Collins makes clear that it contemplates acts against person as well as property. In relation to foreign act of state, the text is less specific. At para 5 047 Dicey picks up the citation from Underhill v Hernandez quoted in para 49 above and its deployment in Luther v Sagor and in Princess Paley Olga and then focuses on cases of property seizure: Thus the executive seizure of property by a foreign sovereign within its territory will not give rise to an action in tort in England, either on the basis of this general principle, or because the act was lawful by the law of the place where it was committed. Nor can a former owner challenge title to property acquired from a foreign government which had been confiscated within its own territory, again either on the basis of the general principle or on the basis of the rule that the validity of a confiscatory transfer of title depends on the lex situs. In discussing these cases in Foreign Affairs in English Courts (1986) p 179, Dr Francis Mann also says pertinently in my view that it is clear in English law that the doctrine of act of state is limited to action taken by a foreign state within its own territory or, perhaps one should say, in respect of property situate in its territory. (italics added for emphasis) In its judgment in Sabbatino, the United States Supreme Court laid some stress on the fact that it was limiting itself to a property context. It said at p 428: Therefore, rather than laying down or reaffirming an inflexible and all encompassing rule in this case, we decide only that the Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government, extant and recognized by this country at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint alleges that the taking violates customary international law. The Court went on to underline what is special about property when addressing the suggested violation of customary international law at p 433: Another serious consequence of the exception pressed by respondents would be to render uncertain titles in foreign commerce, with the possible consequence of altering the flow of international trade. If the attitude of the United States courts were unclear, one buying expropriated goods would not know if he could safely import them into this country. Even were takings known to be invalid, one would have difficulty determining after goods had changed hands several times whether the particular articles in question were the product of an ineffective state act. As I have already observed, the United States authorities of Hatch v Baez and Underhill v Hernandez, which might on their facts be taken to be authorities extending the second type of foreign act of state to acts affecting persons as well as property, were both cases which could and would now be seen as involving a straightforward defence of state immunity. Looking elsewhere abroad for assistance on this aspect, German law treats foreign confiscatory acts of state as falling outside normal conflicts principles and subject to special rules. Based on the territorial principle (Territorialittsprinzip) such foreign confiscatory acts fall to be recognised, so long as the confiscated property was at the time of its confiscation within the jurisdiction of the confiscating state. This is subject only to considerations of ordre public, according to which the Rechtsnorm (legal norm or rule) of another state will not be applied, if it leads to a result inconsistent with fundamental principles of international law, as opposed to purely domestic constitutional provisions, regarding confiscation. The following two cases illustrate the position. First, in a judgment with wide significance delivered on 23 April 1991, the principles stated in the previous paragraph were held by the German Federal Constitutional Court (Bundesverfassungsgericht or BVerfG) to be consistent with fundamental principles of the German Federal Constitution (Grundgesetz). The issue was the constitutionality of provisions in the Agreement dated 15 June 1990 and Treaty of 31 August 1990 (incorporating such Agreement) between the Federal Republic and the German Democratic Republic (DDR) providing for the reunification of Germany. These provided that confiscations of property effected in the years 1945 to 1949 (the period of Russian occupation before the founding of the DDR) by virtue of the law governing such occupation or act of state were not to be reversed. The Constitutional Court at paras 132 133 explained the principles of what it described as German international confiscation law in the terms identified in para 67 above. It made clear that these principles applied, even if such a confiscation would (for lack of compensation or any other reason) be illegitimate in a domestic context. It regarded the Territorialittsprinzip governing international confiscatory measures as internationally recognised, and, on this basis, it accepted that the confiscatory measures effected in the DDR without compensation both in the immediate post war period by Russian occupying forces and later during the years 1945 1949 with a view to the establishment of a new socialist order were constitutional in terms of the Federal German Constitution. Second, in an impressively reasoned judgment of 7 January 2005 (1 W 78/04), the Hanseatisches Oberlandesgericht Hamburg elaborated the conceptual basis of the same principles. The claim was by a Zimbabwean farmer, whose harvest had allegedly been illegally expropriated by state officials. He claimed elements of that harvest which he alleged had, as a result of a chain of sales, arrived in Hamburg harbour. The Hamburg Court of Appeal rejected the claim, holding inter alia, in translation (para 7): In the context of worldwide trade, goods arrive daily in Germany from across the whole world for the purpose of further processing, onward sale or end use. Not a few come from states, which do not provide the legal protection which is among the fundamental principles of German law. It is demanding too much of the domestic jurisdiction to give it the task, in the case of a foreign act of state taking place abroad, of offering the legal protection which the foreign state is not ready to provide its own citizens, simply because a chain of sales leads through Germany. Conduct contrary to international law falls to be addressed in other ways, such as through political influence, through the conclusion of treaties between individual states and through the development of the protective legal system of international tribunals. I note in parenthesis that the Hamburg Court recognised that, in certain situations, this principle might have to give way to considerations of ordre public, if the application of the foreign norm led to a result which was inconsistent with fundamental principles of German law (para 6). But it made clear that, for this to be the case, the subject matter would have to involve a substantial German connection, which did not exist in a case of Zimbabwean expropriation. While the principle applied in this case parallels the second type of foreign act of state in a property context, there does not appear to be any authority accepting a similar principle of foreign act of state in German law outside a property context. Two authorities suggest that it is no bar to a claim against the German Federal Republic that it involves determining the lawfulness under international law of the conduct of a third state or an international organisation outside the jurisdiction of any such third state: see the judgments in the Vavarin Bridge case, of the Oberlandesgericht Kln: Az 7 U 8/04, (28.07.2005) paras 73 to 74 (decided on different grounds on appeal to the Bundesgerichtshof (the BGH or German Supreme Court): III ZR 190/05) and in separate proceedings before the BVerfG (the Federal Constitutional Court): 2 BvR 2660/06; 2 BvR 487/07; and the judgment in the Kunduz Road Tankers case of the Oberlandesgericht Kln: Az 7 U 4/14 (30.04.2015). Both the Vavarin Bridge and the Kunduz Road Tankers cases were however concerned with activities of the German armed forces outside Germany (in respectively Kosovo and Afghanistan). So they fall outside the scope of the second type of foreign act of state, as I have defined this, and are better read as authority indicating that a need to adjudicate upon the conduct of a foreign state was not seen in the German courts as a basis for any abstention on the lines of the third type of foreign act of state. For completeness, both cases are also of interest as indicating the existence under German law of a doctrine along the lines of Crown act of state. Thus in the Vavarin Bridge case, the BVerfG acknowledged that certain foreign and defence policy decisions were non justiciable under German law, but confined these within narrow limits by reference to the high complexity or particular dynamics of the relevant material and the difficulty of implementing any decision with regard to it under domestic law: section IV, para 3(aa); and in the Kunduz Road Tankers case the German Supreme Court, overruling the Oberlandesgericht, has recently held, firstly, that an individual foreign victim has no international law right to pursue in a domestic court a claim for alleged violation of international humanitarian law (the law of armed conflict) by the state of that domestic court rather, any remedy in international law lay through invoking the protection of his own state and, secondly, that such a victim also has no claim under German domestic law; in the latter connection, the BGH said that the responsibility of state officers under para 839 of the Brgerliches Gesetzbuch (the BGB or German civil code) for intentionally or negligently causing harm to third parties could not be extended to injuries caused by the armed intervention of German forces since this was essentially an international law matter and any such extension would impact on the area of German foreign policy: II ZR 140/15 (06.10.2016). Lord Sumption refers briefly in para 201 of his judgment to dicta in French and Dutch authority as suggesting a principle very similar to his view of the English act of state doctrine. It is, however, necessary to put such authority in context. All but one of the French cases cited by Lord Sumption were property cases falling within the first or second type of foreign act of state (and the one possible exception, considered in para 72(vi) below, is inconsistent with established United Kingdom case law). Thus: (i) In Socit Cementos Rezola v Larrasquitu et tat espanol (Cour dappel de Poitiers) [1938] Sirey Rec Gen iii, 68, the issue before the French courts was whether to recognise the requisitioning by the Republican Government of Spain of a vessel registered in Spain but evidently outside the Spanish jurisdiction at the time of her requisition. In accordance with the Spanish decree ordering the requisition, notice had been placed in the vessels register by the Spanish consul at Bordeaux. The French Court of Appeal accepted the requisition as effective, thereby, in effect, applying a rule whereby the transfer of merchant vessels depends not on their physical situs, but on the legal position under the law of their registry: compare Dicey, Morris & Collins, The Conflict of Laws (15th ed) para 22E 057 for a discussion of the common law position. It is worth noting that the Poitiers Court of Appeal referred to the requisitioning as an exercise of full sovereignty by the Spanish state qui na port aucune atteinte lordre public de ltat franais. The inference is that there could be some circumstances in which a foreign act of state of this nature might be refused recognition, as being contrary to the public policy of the forum state. (ii) This inference is supported by a decision of the Cour de cassation, Companie Algrienne de Transit et dAffrtement Serres et Pilaire (la SATA) v Socit Nationale des Transport Routiers (la SNTR) (10 mars 1979 (No de pourvoi: 77 13943), in which the Chambre commerciale refused to recognise un acte de puissance public of the State of Algeria, transferring the property of SATA to SNTR, because it constituted expropriation by a foreign state without payment of appropriate compensation (une dpossession opre par un tat tranger sans quune indemnit quitable ait t pralablement verse). (For a sharp critique of this decision, advocating an approach to property cases similar in fact to the German, see a note by Paul Lagarde in Revue critique de droit international priv 1981, pp 527 525.) (iii) Martin v Bank of Spain [1952] ILR 202 involved a refusal by the Bank of Spain as agent of the Spanish state to issue in Spain new notes in exchange for old notes which were no longer legal tender. In holding that the acts in question were, even apart from the principle of immunity, public acts which are not subject to judicial control in France, the Cour de cassation was doing no more, at most, than recognise the second type of act of state, that is the right of a state to deal with property within its own jurisdiction. (iv) Similarly, in poux Reynolds v Ministre des Affaires trangres (1965) 47 ILR 53, the Tribunal de Grande Instance de la Seine was being asked by a buildings former owners to adjudicate upon the validity of a confiscation of property by the Hungarian State, and its subsequent assignment to the French Legation in Hungary said to have taken place under an international agreement. Again, the confiscation falls directly within the second type of act of state. The court also said that the French courts were not competent to interpret the provisions of the international agreement (which it was said did not cover the assignment to the French Legation), but, in the light of the confiscation, the claimants can have had no sustainable rights in any event. (v) Bank Indonesia v Senembah Maatschappij and Twentsche Bank (1959) 30 ILR 28 is another case regarding seizure by the Indonesian State in Indonesia of property which was then, apparently, put into the hand of Bank Indonesia acting in a private law capacity, not as a state organ. It was therefore within the second type of act of state. The case is also of particular interest for the Court of Appeal of Amsterdams statement that the Act of State doctrine relied on by the Bank Indonesia was not a generally accepted rule of international law, and did not apply when the relevant measures were in conflict with international law. On that basis, although the court said that as a rule, a court will not, and should not, sit in judgment on the lawfulness of acts jure imperii performed by, or on behalf of, a foreign Government, this rule must be subject to an exception when the acts in question can be deemed to be in flagrant conflict with international law. This, the Court went on to hold, they were, because they were unmistakably discriminatory and also because they were being used as a means to exert pressure in a political dispute over Netherlands New Guinea. (vi) The Cour de cassation concluded in the case of Ramirez Sanchez Illich, alias Carlos (ECLI:FR:CCASS: 1995:CR06093) that Carloss arrest in Khartoum by Sudan authorities with a view to his return to France for trial constituted an act of sovereignty and that domestic jurisdictions were incompetent to adjudicate upon the conditions under which such authorities had effected such arrest and handed Carlos over to French police in Khartoum to be transported back to France for trial without any arrest warrant or legal procedures. French civil law and common law therefore diverge in this area: see para 73(v) below. Thus it can be said that, even in relation to property, the general picture is that French and Netherlands case law is not unqualified in accepting the validity of foreign acts of state. That the second type of foreign act of state is, assuming that it exists, subject to significant limitations under English law has become increasingly clear over recent years. The Court of Appeal was on any view correct in Yukos v Rosneft to identify the importance of these limitations. Thus: (i) The second type of foreign act of state is, by definition, limited to sovereign or jure imperii acts, excluding in other words commercial or other private acts. (ii) It has been held inapplicable to judicial acts, even though such acts can engage the states responsibility in human rights or international law: Yukos v Rosneft, paras 73 91, citing Altimo (above). In Altimo, the Privy Council held (para 101) that: The true position is that there is no rule that the English court (or Manx court) will not examine the question whether the foreign court or the foreign court system is corrupt or lacking in independence. The rule is that considerations of international comity will militate against any such finding in the absence of cogent evidence. On that basis, the Court of Appeal in Yukos v Rosneft held justiciable the issue whether judicial acts had been part of a campaign waged by the Russian state for political reasons against the Yukos group and its former CEO (para 29), where it was alleged that the courts were in a position of systematic dependency on the dictates or interference of the domestic government (para 90). Another possible explanation of these cases is, however, that they do not illustrate an exception from the second type of foreign act of state, but reflect the public policy exception to the recognition of foreign judicial acts which exists as a matter of conflicts of law in respect of the first type of foreign act of state: see para 37 above. In an English (or English law based) court, it is not surprising if public policy has a fairly expansive role in relation to foreign judicial acts. If one believes in justice, it is on the basis that all courts will or should subscribe to and exhibit similar standards of independence, objectivity and due process to those with which English courts identify. Given the evidence, a domestic court should be able to detect, and it would be surprising if it were obliged to overlook, accept or endorse, any significant shortfall in this respect. (iii) The English courts are entitled to determine whether a foreign law is legal, for example under the local constitution; the foreign law will not be regarded as an act of state which cannot be challenged: Buck v Attorney General [1965] Ch 745, 770; Al Jedda v Secretary of State for Defence [2010] EWCA Civ 758, [2011] QB 773, para 74, per Arden LJ and para 189 per Lord Dyson MR; and see McLachlan, Foreign Relations Law, para 12 129; Dicey, Morris and Collins para 5 048. (iv) Acts of officials granting or registering intellectual property rights have been held to be outside any doctrine of foreign act of state: Lucasfilm Ltd v Ainsworth [2011] UKSC 39; [2012] 1 AC 208. (v) In a criminal law context, English courts have had no hesitation (a) about investigating and adjudicating upon the wrongful detention and rendition of individuals by foreign states in conjunction with United Kingdom authorities, in breach of a foreign law. In R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42, the House held that kidnapping and abduction from South Africa of a person wanted for trial in England in violations of international law and of the laws of another state [ie South Africa] required recognition by the court in order to uphold the rule of law, with the result that the trial was stayed: see eg pages 62G, 67G and 73G. In R v Mullen [2000] QB 520, the Court of Appeal Criminal Division followed Ex p Bennett, setting aside the conviction of Mr Mullen, who had been deported from Zimbabwe to the United Kingdom as a result of a plan concocted between the United Kingdom and Zimbabwean authorities which involved breaching Zimbabwean extradition law. The Australian High Court decision in Moti v The Queen [2011] HCA 50, 245 CLR 456, discussed in para 82 below, has adopted the same approach after expressly considering and rejecting a Crown submission that foreign act of state precluded its adoption. (b) Lord Sumption suggests (para 246) that Mullen, Bennett and Moti can all be explained on the basis that any unlawfulness in the conduct of the foreign officials was incidental, that the unlawfulness of the Australian officials conduct was enough to justify staying the proceedings against Mr Moti and that the unlawfulness of the acts of their foreign collaborators was irrelevant. This in my opinion misreads all three cases; it inverts their significance. It was an essential step in the reasoning of each that the foreign officials (the primary actors in the illegal deportation in each case) had acted illegally. Far from being incidental or irrelevant, the foreign officials illegal conduct was in each case the key to the scheme of deportation. Without it, there would have been no illegal deportation at all. If the second type of foreign act of state had any application to personal wrongs of this nature, investigation and condemnation of the British authorities conduct should have been precluded on the grounds that the direct actors in the illegality were foreign state officials, acting within their own territory, whose conduct was immune from investigation or criticism. In neither of the first two cases did anyone conceive of such an argument, and in the third, where it was raised, it was categorically, and rightly, dismissed. In so far as the present appeals relate to alleged complicity by British officials in illegal conduct by foreign officials within their own foreign jurisdictions, they present exact parallels in a civil context to these three deportation cases in a criminal context. It is no answer to this that, on a hypothesis contrary to the actual facts, the British or Australian authorities in these cases might (possibly) have been able to kidnap the wanted individuals from the foreign jurisdictions by themselves without the relevant local authorities involvement. The doctrine of foreign act of state must depend on the actual facts, not on inapplicable counter factuals. Indeed, if counter factuals of this nature were relevant at all, they could presumably also be advanced in the current cases of Belhaj and Rahmatullah. All this suggests caution in todays world about recognising the application of the second type of foreign act of state in areas where it has hitherto had no discernible domestic role. The recognition by the Court of Appeal in (in particular) Princess Paley Olga of the second type of foreign act of state was not challenged on the present appeal, and I am, as I have said, content for present purposes to proceed on that basis, because of the special characteristics of property, and the special considerations applying to it, in particular the need for security of title and of international trade. Similar characteristics and considerations do not apply to individuals who have been the victim of personal torts, and who can found jurisdiction against a relevant non state actor outside the territory of any foreign state also implicated in the tortious acts. Recognising title to property is different from refusing to inquire into the justification for the infliction of personal injury. The second type of foreign act of state can and should, in my view, be limited as a matter of principle to sovereign acts seizing or affecting (i) property which is (ii) within the jurisdiction of the state in question at the time when the act takes effect. It is for the common law to define to what extent, if at all, it is prepared to refrain from adjudicating upon an issue involving a foreign states conduct, when the foreign state is not impleaded and the actual defendant has him or itself no immunity. I see no reason in this context to go any further than I have indicated by giving the doctrine any wider effect. In the United States, as I have noted, Hatch v Baez was and Underhill v Hernandez could have been, and would today certainly be, resolved by reference to state immunity. Whether, even in the United States, the reasoning in Underhill v Hernandez should be limited to contexts where a plea of state immunity would also be possible, or, as may even be (see paras 49 and 50 above), to situations of detention by the military in times of war, is unnecessary for decision here. On any view, movable property presents special considerations because of its marketability, as all the decided cases on movables (Oetjen, Luther v Sagor, Princess Paley Olga and Sabbatino) illustrate. Personal injury or detention does not present these considerations. Crown act of state also presents different considerations, since the Crown cannot claim state immunity in its own courts. In contrast, any proceedings against a foreign state or its officials in the English courts will be barred by state immunity. It is only in particular situations, like the present, that foreign act of state of the second type could conceivably be relevant. I see no reason to extend the doctrine (assuming the second type to exist at all) to cover such situations. On the contrary, to do so would, once again, be on the face of it to render the appellants immune from suit both in their own jurisdiction and anywhere else, while leaving the foreign states at least vulnerable to suit in their own jurisdictions. The appellants submit in response to this last point that foreign act of state would cease to be an objection to English proceedings against the appellants as secondary parties, if and when the respondents had successfully established the relevant facts and the liability of each of the relevant foreign states by proceedings in those states domestic courts. It is true that General Assembly Resolution 56/83 on Responsibility of States for internationally wrongful acts deals in turn with a state which breaches an international obligation (articles 12 15), before dealing with the responsibility of a state in connection with the act of another state. In the latter connection, it addresses situations of aid or assistance (article 16), direction and control (article 17) and coercion (article 18). A rgime which insisted on the actual actor being sued first would attach jurisdictional significance to a factor which would not normally have this significance and which might distort the natural course of events: a state aiding or assisting, and certainly a state procuring, directing, controlling or coercing, might be the more culpable party and natural target than the actual actor. There could also be two main actors, or it could be uncertain which state was a main actor and which a secondary participant; eg in the present case, take for example the alleged wrongful rendition from Malaysia by collaboration between Malaysian and United States authorities. So it could be uncertain which should be sued first. It would on any view be optimistic to view the proposed course as a light task. It would make recourse against the appellants dependent upon the operation, in the present case, of up to four separate foreign court systems. In their joint intervention before the Supreme Court, the International Commission of Jurists, JUSTICE, Amnesty International and Redress (the NGO Interveners) make the point that No rendition to torture case against US officials has, to the knowledge of the NGO Interveners, ever succeeded in a US court since September 11. Such actions are commonly blocked by various other US doctrines to which the appellants refer in their written case, in particular the political questions doctrine and the state secrets doctrine. As Professor Jonathan Hafetz has observed [in Recapitualising Federal Courts in the War on Terror, St Louis University Law Journal, Vol 56, 2012, p 21]: Federal courts have repeatedly dismissed actions by noncitizens against US officials seeking damages for arbitrary detention, torture, and other mistreatments. The dismissals, which rest on various grounds, including the state secrets privilege, Bivens special factors, and qualified immunity, typically cite the twin concerns of separation of powers and limited judicial capacity as reasons for denying litigants a federal forum. The decisions portray federal courts as unable to provide remedies for even the most egregious rights violations In the upshot, therefore, in relation to the second type of foreign act of state, I consider that Leggatt J was correct in paras 115 and 177 of his judgment in Rahmatullah to treat the traditional foreign act of state doctrine, by which I understand he meant to cover the first and second types of foreign act of state, as limited to acts done within the foreign states jurisdiction as well as subject to a potential public policy exception. But Leggatt J was, in my view, on less certain ground in so far as he held that the second type of act of state could not apply to acts of the United States in Iraq and Afghanistan, because these were not acts done within US territory where the laws of the United States applied. He did not address, and may not have been asked to address, the basis on which the United States was present in those countries. In the case of Iraq, it was, together with the United Kingdom, an occupying power acting pursuant to Security Council Resolution 1483 (2003) dated 22 May 2003. As such, it had the duty under article 43 of the Geneva Convention IV dated 18 October 1907 to respect unless absolutely prevented, the laws in force in the country. Nonetheless, it was the relevant state power, and it is certainly arguable that, within the ambit of the second type of foreign act of state, its acts should be recognised. As to Afghanistan, the United States was present there by consent of the Afghan Transitional Authority as part of the International Security Assistance Force: see Security Council Resolution 1510 (2003) dated 13 October 2003. No doubt, it had considerable powers, but it appears much less possible to argue that its acts in that capacity should be regarded as within the ambit of the second type of foreign act of state. Whatever answer is given to these points, however, I would reach the same conclusion as Leggatt J with regard to the second type of act of state, on the basis that (assuming it to exist at all) it is and should be confined to acts affecting property. The second type of foreign act of state therefore has no application in Rahmatullah. Similar reasoning applies in Belhaj, with regard to any reliance on the second type of foreign act of state. The claims are all for physical detention or rendition or mistreatment and so, I would hold, outside the second type. Those for mistreatment by the United States officials in Thailand and (if such mistreatment be alleged there, which is unclear) Libya also relate to conduct on any view outside United States jurisdiction. In contrast, those for mistreatment on a United States airplane in transit between Thailand and Libya, at least while over areas like the high seas not under the sovereignty of any state, can and should be probably regarded as occurring within United States jurisdiction, assuming the aircraft to have been registered there: see Dicey, Morris and Collins, rule 129 exception 2 and compare also the (Chicago) Convention on International Civil Aviation, article 17. The Court of Appeal in Belhaj dealt with the issues before it on a different basis, by recognising a public policy exception unrestricted by any need for the facts relied upon to be indisputable or undisputed. Had I regarded the second type of foreign act of state as applicable to personal wrongs, I would have concluded that the Court of Appeal was right in Belhaj to recognise such an exception or, as I would prefer to see it, qualification. Lord Wilberforce in Buttes Gas recognised in general terms that public policy could constitute a valid basis for refusal to recognise a foreign act of state of either the first or second type: see the quotation from his speech cited in para 59 above. The appellants submit that to recognise such an exception or qualification, when its application would involve investigating disputed facts, goes beyond anything contemplated or decided in the Kuwait Airways case. I do not accept that submission. In Kuwait Airways, Iraqi Airways was raising a conventional defence by relying on the Iraqi law by which the Kuwait Airways fleet, then in Iraq, was transferred to it. To take itself outside the scope of the first type of foreign act of state, Kuwait Airways had in response to invoke the public policy exception, by relying on matters happening at an international level and involving hostilities between states and the reactions and resolutions of the Security Council. That response raised immediate problems of justiciability, which could however be overcome by pointing to the clarity, indisputability and seriousness of the violations of the United Nations Charter and Security Council Resolutions. Unless a claim for detention or mistreatment by United Kingdom officers in conjunction with foreign state authorities can be regarded as non justiciable within the third type of foreign act of state, no such considerations arise. Were it (contrary to my view) necessary to identify the scope of such a qualification, it would at least be as extensive as that discussed later in this judgment in the context of non justiciability or judicial abstention. The Court of Appeal in Belhaj found (in paras 96 102) assistance and support for its conclusion in the Federal Court of Australia decision in Habib v Commonwealth [2010] FCACA 12; (2010) 265 ALR 50. It saw this, rightly in my view, as based on two distinct lines of reasoning. One, not directly relevant here, was the Australian constitutional position, which was viewed as requiring a remedy. The other was a more general conclusion regarding the scope of the second type of foreign act of state. The Federal Court treated this type as potentially applicable to claims relating to person as well as property. The claim was that Australian officials had aided, abetted and counselled torture of an Australian citizen by foreign officials while he was detained in Pakistan, Egypt and Afghanistan and in Guantanamo Bay. Contrary to the appellants case, the relevant facts were neither clear nor accepted: see eg paras 58 67 per Perram J and para 110 per Jagot J. Black CJ saw public policy as an answer to any defence of act of state in relation to the claim (paras 7 and 13). Perram J saw the defence of foreign act of state being advanced as a rule of validity (not a rule of abstention or deference), and therefore as one on which a human rights exception might be hung: see paras 43 and 45. Jagot J accepted that there was a public policy exception, and explicitly rejected any distinction between known and alleged violations, as without support in the authorities or in principle. She added that there were legal parameters in international and Australian law enabling judicial determination of the claims and meaning that this was no judicial no mans land: paras 107 110. The case is also of particular interest, because the claim was, as it is in the issues now before the Supreme Court, for secondary responsibility arising from alleged aid, abetting or counselling by Commonwealth officials in relation to conduct allegedly committed by foreign officials. The Australian High Court returned to this theme in Moti v The Queen 245 CLR 456 in a context which has resonance in the present appeals. Mr Moti claimed that he had been deported by officials of the Solomon Islands Government from the Solomon Islands to Australia, where he was wanted for trial. The deportation occurred after the High Commissioner had issued a travel document for Mr Moti and visas for the Solomon Islands officials who were to accompany him on the aircraft bound for Australia, knowing that Solomon Islands law was going to be breached by deporting Mr Moti on the same day without giving him a seven day opportunity to challenge deportation. The majority judgment, given by French CJ for six out of the seven members of the High Court, held that there was no general and universally applicable rule that Australian courts may not be required (or do not have or may not exercise jurisdiction) to form a view about the lawfulness of conduct that occurred outside Australia by reference to foreign law (para 50) and that Here, the question of the lawfulness of the appellants removal from Solomon Islands, although effected by the Solomon Islands Government, was a preliminary to the decision whether a stay should be granted. The primary judge was not right to conclude that [i]t is not for this court to express an opinion on these decisions made by the Solomon Islands government. The appellants submit that this decision falls within the Kirkpatrick exception, as a case where all that mattered was the facts about what happened in the Solomon Islands, not whether these facts involved illegality. I reject that analysis, basically for reasons already given in para 73(v)(b) above. It was critical to establish that there was illegality under Solomon Islands law, with which the Australian High Commissioner had at the least gone along. In the present appeals, the issue whether there was illegal conduct by foreign state officials under their own laws is also a preliminary to a decision on whether the appellants arranged, assisted or encouraged or otherwise connived or joined in such conduct, but that is no reason for an English court to refuse to determine it. There remains the question what considerations could as a matter of public policy require the English court to investigate and adjudicate upon an issue if and to the extent that this would otherwise be impermissible on the ground that it constituted a foreign act of state of the second type. In the property context, to which I consider the second type of foreign act of state should be confined, the relevant considerations are likely to be extreme. In Luther v Sagor the Court of Appeal rejected roundly submissions that the confiscatory decree was so immoral and so contrary to the principles of justice recognised in the United Kingdom that no attention should be paid to it. In relation to the second type of foreign act of state, considered in Princess Paley Olga, the arbitrariness of a governmental seizure of property without any legislative footing was even more evident. On the other hand, the Hamburg Court of Appeal case mentioned in para 69 above and the Amsterdam Court of Appeal case of Bank Indonesia v Senembah Maatschappij and Twentsche Bank (1959) 30 ILR 28, mentioned in para 72(v) above, both suggest that, even in relation to property, there may be some public policy limits in terms of arbitrariness and discrimination to the foreign state acts which a domestic court should recognise. On the hypothesis, contrary to my conclusion, that the second type of foreign act of state should be seen as extending to sovereign acts against the person, the case for recognising some public policy limits would seem, if anything, even stronger. However, since I do not consider that the second type of foreign act of state has any application to sovereign conduct against the person within the relevant foreign state, it is unnecessary and I think undesirable on these appeals to attempt to be more specific about the circumstances in which public policy could and should entitle a domestic court to adjudicate upon any such conduct. For these reasons, I do not consider that the issues now before the Supreme Court fall within the second type of foreign act of state, assuming this to exist in any form, or that it should not proceed to trial for that reason. IX Application of third type of foreign act of state In the light of the above, the critical issue becomes the scope of the third type of foreign act of state. On this, the Courts below adopted different approaches. The Court of Appeal in Belhaj, paras 53 55, drawing on the analysis of the Court of Appeal in Yukos v Rosneft (No 2), paras 66 67, approached foreign act of state as an over arching principle of non justiciability, subject to limitations. It saw it as founded on the principle of sovereign equality of states identified in the Duke of Brunswicks case (see para 63 above) and by Fuller CJs statement in Underhill v Hernandez (para 49 above). It coupled this with considerations of comity, with the caveat that this should not be confused with the avoidance of embarrassment (para 66). The Court of Appeal noted correctly (paras 65 66) that both these bases for an over arching principle of non justiciability had been cited, with approval, by Lord Wilberforce in Buttes Gas. It did not accept that this Courts judgment in Shergill v Khaira should be read as suggesting that the third type of act of state is limited to situations of lack of judicial competence arising from the principle of separation of powers (para 67). The critical limitation identified by the Court of Appeal in Belhaj at paras 83 87 and 114 (and in Yukos v Rosneft at para 69) was the public policy limitation identified in Oppenheimer v Cattermole and the Kuwait Airways case. Those were both cases involving the first type of foreign act of state the requirement under ordinary conflicts principles for domestic recognition of foreign legislation affecting movable or immovable property within the foreign jurisdiction: see, in relation to Kuwait Airways, para 80 above. As explained in para 80 above, the third type of foreign act of state only arose for consideration in Kuwait Airways, because the public policy, on which Kuwait Airways relied in response to prevent the recognition of the Iraqi law, concerned inter state hostilities and the Security Councils intervention under Chapter VII of the UN Charter. The clarity and seriousness of the breaches of international law involved enabled the House to conclude that Kuwait Airways response was justiciable. The facts in Belhaj are in dispute. They are neither indisputable nor obvious. On its approach to foreign act of state and to the Kuwait Airways case, the Court of Appeal in Belhaj saw itself as faced with an exception to the foreign act of state doctrine, which had hitherto only been recognised in cases of indisputable and obvious violations of fundamental rights, and which would need to be understood in a wider sense if the claims by Mr Belhaj and Mrs Boudchar were to proceed. It concluded that the limitation was indeed to be understood more widely, drawing on various considerations set out at paras 114 121. They were, in summary, that (i) international law has moved from regulating state to state conduct, to regulating human rights for the benefit of individuals, (ii) the allegations in Belhaj are of particularly grave violations of human rights, (iii) the respondents are either current or former officials of state in the United Kingdom or government departments or agencies, whose conduct would not normally be exempt from an investigation, in which there is a compelling public interest, and who are only suggested to be exempt because of the alleged involvement of other states and their officials, (iv) there is no lack of judicial or manageable standards, (v) unless the English courts exercise jurisdiction, the allegations will never be subject to judicial investigation and (vi) the risk of displeasing allies or offending other states cannot outweigh the need to exercise jurisdiction. Leggatt J in contrast understood the third type of foreign act of state as a principle of non justiciability limited to cases where the issues were genuinely political in one of the two senses mentioned in Shergill v Khaira. I understand by this that he meant that either (i) the court was being asked to adjudicate upon the legality of decisions and acts of sovereign states on the international political stage governed by power politics, or in relation to which there were no manageable or judicial standards, or (ii) the court was being asked to adjudicate in the abstract on international legal issues without there being any domestic foothold in the form of a relevant enforceable legal right requiring this to be done. He held that neither was the case: paras 141 and 163. In my view, Leggatt J was correct in Rahmatullah to approach the claims on the basis that the question is whether the principle of non justiciability constituting the third type of foreign act of state applies at all, rather than whether any exception to it exists or should be grafted onto it. The third type of foreign act of state is a principle of non justiciability or abstention. The Court of Appeal explained the principle as founded on the sovereign equality of states and comity. There is force in the appellants submission that, if this is the basis of the principle and if it is otherwise engaged by the issues or subject matter, then a public policy exception to its application is difficult to rationalise. The graver the alleged violations by foreign state officials, the greater would then be the infringement of the principles of sovereign equality of states and comity if domestic courts were to investigate and adjudicate upon the allegations. For this reason, I prefer to put the focus on the ambit of the third type of foreign act of state. However, I agree with Lord Sumption (para 248) that this difference between us cannot be critical. What matters is how one defines the ambit or any exceptions. It is clear from Buttes Gas that the application of the third type of foreign act of state is fact and issue sensitive; it needs to be considered on a case by case basis in the light of the issues involved. There is, in this context, no reason why the third type of foreign act of state should be limited territorially. Further, in Buttes Gas the House was concerned with a highly unusual situation, and I accept the appellants submission that it does not follow that the principle is limited to analogous situations. In particular, Lord Wilberforces reference to an absence of judicial or manageable standards (para 42 above) was directed very specifically to the circumstances before him. If and when it is the case that there are no judicial or manageable standards by which to determine an issue, then the case will no doubt be non justiciable. But an absence of such standards should not be seen as a generalised or exclusive test. In Shergill v Khaira, the Supreme Court was concerned with a very different factual situation to the present and it did not have the benefit of the extensive citation of authority and submissions which we have had on the present appeals. The categorisation advanced in paras 41 43 of the Supreme Courts judgment in that case was deliberately not exhaustive (vide, the word generally), and neither were the examples given of cases within the two identified sub categories intended to be exhaustive. As to the Court of Appeals conclusion (paras 67 68) that this Courts judgment in Shergill v Khaira should not be understood as limiting the third type of act of state to situations of lack of judicial competence arising from the separation of powers, I agree that lack of judicial competence is not a helpful qualification. Judicial abstention is in contrast a helpful term, and preferable in my view to non justiciability. This third type of act of state (described explicitly by Lord Sumption as international law act of state) has on any view a broad international basis. This was, in Shergill v Khaira, identified briefly by the reference in para 40 to the dispute in Buttes Gas as trespassing on the proper province of the executive, as the organ of the state charged with the conduct of foreign relations, and developed more fully in para 42 in Shergill v Khaira. Considerations of separation of powers and of the sovereign nature of foreign sovereign or inter state activities may both lead to a conclusion that an issue is non justiciable in a domestic court. The problem is to identify more precisely in relation to what issues and when such adjudication is inappropriate. The appellants submit that Leggatt J took too large a view of the issues properly justiciable in a domestic court. In particular, having held that there were judicial and manageable standards to resolve the issues in Rahmahtullah, and dismissed in this context any difficulties which might arise if the United States did not cooperate with evidence or documents, he considered that justiciability depended upon whether examination of the acts of United States officials was necessary in order to decide a question of domestic legal right: paras 153 and 163. In short he circumscribed the circumstances capable of being embraced by the first sub category, and too readily assumed that, because a claim of right was made, the case fell within the second sub category, in Shergill v Khaira (see para 43 above). In this connection, Leggatt J also treated the previous Court of Appeal decision in R (Noor Khan) v Secretary of State for Foreign and Commonwealth Affairs [2014] 1 WLR 872 as falling within the second sub category, and explained the Court of Appeals refusal there to grant relief on the basis that no claim of right was involved. The claimant in Noor Khan was seeking no more than a public declaration that a GCHQ officer or other Crown agent who passes locational intelligence to an agent of the US may commit an offence of encouraging or assisting in a crime under sections 44 46 of the Serious Crime Act 2007 (para 150). The claimant in Noor Khan was the son of a tribal elder killed in a US drone strike in Pakistan pursuant, allegedly, to locational intelligence supplied by GCHQ to the CIA. He maintained that there could be no defence of combat immunity to a charge of murder: GCHQ and CIA officials were not members of the US and UK armed forces and could not be combatants, there was no armed conflict in Pakistan and Al Qaeda was too incoherent and sporadic in its actions for it to be shown that there was an armed conflict even in Afghanistan. In any event, if there was an armed conflict, it was non international in nature. Leggatt J explained this case as one where the claimant was not claiming that he had any legal right which the defendant had violated. The relief sought was, in effect, an advisory opinion on the criminal law. The case, he said, fell therefore into the second sub category identified in Shergill v Khaira (para 43 above). It would seem to follow from this and from para 163 of Leggatt Js judgment that, if the claimant had had some substantive claim (eg for damages in his fathers or his own right), the claim would, in Leggatt Js view, have been justiciable. In my opinion, that is unlikely to be correct, though it is unnecessary to reach any firm conclusions in this area. Noor Khan was a very particular case: it proceeded on an assumption that, under sections 44 46 of the Serious Crime Act 2007, the liability of UK nationals should be determined not by reference to whether the United States agents whose conduct was said to have been assisted by UK nationals were actually guilty of any offence within the jurisdiction of the UK courts, but by considering whether the conduct so assisted would have constituted an offence within the jurisdiction of the UK courts, if committed by a UK national. Lord Dyson MR, giving the sole reasoned judgment, regarded the claim as non justiciable, because, quoting (at paras 34 and 35) from and agreeing with Moses LJs analysis below: The proposition, even if it is right, that a person may be guilty of secondary liability for murder under sections 44 46, although the principal could not, is no answer to the fundamental objection to Lord Dyson went on to say (para 37): the grant of a declaration: that it involves, and would be regarded around the world as an exorbitant arrogation of adjudicative power in relation to the legality and acceptability of another sovereign power. Even if the argument focused on the status of the attacks in North Waziristan (international armed conflict, armed conflict not of an international nature, pre emptive self defence) for the purposes of considering whether the United Kingdom employee might have a defence of combatant immunity, it would give the impression that this court was presuming to judge the activities of the United States. In my view, a finding by our court that the notional UK operator of a drone bomb which caused a death was guilty of murder would inevitably be understood (and rightly understood) by the US as a condemnation of the US. In reality, it would be understood as a finding that (i) the US official who operated the drone was guilty of murder and (ii) the US policy of using drone bombs in Pakistan and other countries was unlawful. The fact that our courts have no jurisdiction to make findings on either of these issues is beside the point. What matters is that the findings would be understood by the US authorities as critical of them. Although the findings would have no legal effect, they would be seen as a serious condemnation of the US by a court of this country. In substance, therefore, Lord Dyson saw the issue as one of the lawfulness of the use of drones and as non justiciable, because its resolution would depend upon determining whether there was an armed conflict in Pakistan and/or Afghanistan, whether any such conflict was international or non international in nature and what rights of action or self defence existed. All those are issues on which the policy and judgment of the executive and armed forces might be expected to prevail: compare the Court of Appeal Criminal Divisions provisional view to that effect in R v Gul (Mohammed) [2012] 1 WLR 3432, paras 20 to 23. (The decision in Gul was upheld on grounds not referring to this point at [2014] UKSC 64; [2014] AC 1260). It is true that the common law develops and responds to changing times and attitudes, and that a sharp division between the domestic and international legal sphere is less visible today than in the past. The case of Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 is an example of this development. I also note encouragement given by distinguished international lawyers in article 2 of the Institut de Droit internationals resolution The Activities of National Judges and the International Relations of their State (Milan, 1993), to the effect that: National courts, when called upon to adjudicate a question relating to the exercise of political power, should not decline competence on the basis of the political nature of the question if such exercise of power is subject to a rule of international law. Some matters are however better addressed at the international legal level, rather than in domestic courts. In civil as well as common law, it appears unsurprising under present conditions that domestic courts should treat acts of government consisting of an act of war or of alleged self defence at the international level as non justiciable and should abstain from adjudicating upon them: see the concurrently issued judgment in the cases of Rahmatullah and Serdar Mohammed to which reference is made in paras 6 and 8 above; see also para 71 above and the remarks of the majority and of Judge Costa in his concurring judgment in Markovic v Italy (2006) 44 EHRR 52, paras 113 116. Whether, at least apart from the special statutory provisions in Noor Khan, there might also have been issues of non justiciability under the principle of Crown act of state does not require further examination here. However, even if Leggatt J took too limited a view in this respect of the circumstances in which domestic courts should exercise self restraint and abstain, I have little difficulty with the result he reached on the facts as alleged and assumed for present purposes before him. What is alleged in Rahmatullah is wrongful detention combined with severe mistreatment over a period of years by United States authorities, in circumstances for which the United Kingdom is alleged to have secondary responsibility. Whether that case can be made out will depend on identifying the relevant laws in force at the relevant times, whether they be the domestic laws in force in Iraq and Afghanistan or international law, as well as upon investigation of the relevant facts. Apart from the mere fact that the primary actor was the United States, I do not on present material see a basis for concluding that the issues will involve sovereign, international or inter state considerations of such a nature that a domestic court cannot or should not appropriately adjudicate upon them. The mere fact that Mr Rahmatullah was handed over to the United States under an agreement cannot, I think, suffice to make the claims for alleged wrongful detention combined with severe mistreatment by the United States non justiciable in respect of either the United States primary, or the United Kingdoms ancillary, involvement. I would accept that detention overseas as a matter of considered policy during or in consequence of an armed conflict and to prevent further participation in an insurgency could in some circumstances constitute a foreign act of state, just as it may constitute Crown act of state when undertaken by the United Kingdom: see our concurrent judgment in Rahmatullah and Serdar Mohammed. But here we are concerned, in Belhaj, with allegations of apparently arbitrary rendition with a view to forcible handing over to an arbitrary ruler and, in Rahmatullah, with allegations of what again appears to have been arbitrary detention without any of the usual forms of legal or procedural protection accompanied by severe mistreatment. Even if one could say that such treatment reflects some policy of the various foreign states involved, or indeed of the United Kingdom, it goes far beyond any conduct previously recognised as requiring judicial abstention. There is certainly also no lack of judicial and manageable standards by which to judge it. The critical point in my view is the nature and seriousness of the misconduct alleged in both cases before the Supreme Court, at however high a level it may have been authorised. Act of state is and remains essentially a domestic law doctrine, and it is English law which sets its limits. English law recognises the existence of fundamental rights, some long standing, others more recently developed. Among the most long standing and fundamental are those represented in Magna Carta 1225, article 29, which reads: No free man shall be taken, or imprisoned, or dispossessed, of his Liberties, , or be outlawed, or exiled, or in any way destroyed; nor will we condemn him, nor will we commit him to prison, excepting by the legal judgment of his peers, or by the laws of the land. To none will we sell, to none will we deny, to none will we delay right or justice. Further, torture has long been regarded as abhorrent by English law: see eg A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221, para 11, per Lord Bingham, and individuals are unquestionably entitled to be free of deliberate physical mistreatment while in the custody of state authorities. Sovereign states who without justification and without permitting access to justice detain or mistreat individuals in the course or in relation to their conduct of foreign relations or affairs have sovereign immunity in foreign domestic courts. But I see no reason why English law should refrain from scrutinising their conduct in the course of adjudicating upon claims against other parties involved who enjoy no such immunity here, where the alleged conduct involves almost indefinite detention, combined with deprivation of any form of access to justice and, for good measure, torture or persistent ill treatment of an individual. This is consistent with the reasoning in R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1598, where, in the context of a claim judicially to review the Secretary of State for alleged inaction in respect of the plight of a British citizen detained in Guantanamo, the Court of Appeal said that where fundamental human rights are in play, the courts of this country will not abstain from reviewing the legitimacy of the actions of a foreign sovereign state (para 53) and that it was not possible to approach this claim for judicial review other than on the basis that, in apparent contravention of fundamental principles recognised by both jurisdictions and by international law, Mr Abbasi is at present arbitrarily detained in a legal black hole (para 64). These observations are together sufficient to support a conclusion that Mr Rahmatullahs claims against the Ministry of Defence and the Foreign and Commonwealth Office are not, as presented, barred by reason of the doctrine of foreign act of state. I recognise of course that the whole factual position may appear differently if and when the case is tried on the basis of actual, rather than assumed facts. There will or may then be evidence as to what actually happened and what really motivated those holding and treating Mr Rahmatullah. I also recognise, as Leggatt J did, that there may be practical evidential difficulties in disputing the accounts of what happened to Mr Rahmatullah in US custody. That assumes that the United States will not cooperate with information and evidence. But, even if the United States do not cooperate, evidential difficulties of this nature are, I think, far from what was in mind in Buttes Gas or any other of the relevant authorities and are not a basis for concluding that a claim is non justiciable. Turning to Belhaj, on the assumed facts, this appeal too cannot in my view be regarded as raising any issues of a sovereign, international or inter state nature upon which a domestic court cannot or should not appropriately adjudicate. Simon J at first instance concluded with hesitation that there were no clear and incontrovertible standards for deciding both whether the actions of the Chinese state were unlawful by the standards of Chinese law (para 146) and whether the conduct of US authorities outside the United States was unlawful (para 150). The respondents have since made clear that they do not rely on any act or conduct committed by or in conjunction with the Chinese authorities. A hint of the underlying reasons why the United Kingdom may have been willing to supply information to Libya about Mr Belhaj is present in the alleged letter reference to demonstrating the remarkable relationship we have built over the years, and the respondents themselves add to this an allegation that the renditions took place as part of a co ordinated strategy designed to secure diplomatic and intelligence advantages from Colonel Gaddafi. As to this, there is, as I have noted (paras 8 to 10 above) no suggestion that general foreign policy advantages of this nature could justify a plea of Crown act of state. Any attempt to rely on them to support a plea of foreign act of state in respect of the present claims against the United Kingdom for collaboration or connivance in the alleged false imprisonment, rendition from one country to another or mistreatment of individuals such as Mr Belhaj and Mrs Boudchar would at once meet the difficulty that the United Kingdom would be advancing its own breaches of the fundamental rights of those individuals. The letter reference and the respondents allegation do not therefore represent any basis for regarding the claims as non justiciable. Essentially, what is relied upon by the appellants is the fact that they were not, while various foreign states were, the prime actors in the alleged false imprisonment, rendition or mistreatment. Bearing in mind the nature and seriousness of the infringements of individual fundamental rights involved, this constitutes no basis for a domestic court to abstain or refrain from adjudicating upon the claims made. I note, once again, that a contrary conclusion would have meant that the claims against the appellants could not be pursued anywhere in the world, in contrast with the claims against the alleged prime actors. In circumstances, where the alleged letter might, on one reading, suggest that one or more of the appellants in Belhaj was aware that the intelligence supplied to Libya about Mr Belhaj would be used to effect his rendition to Libya, even though the United Kingdom did not actually pay for the air cargo, a distinction between those primarily and secondarily responsible may also prove to be unpersuasive. A similar point applies in Rahmatullah where some of the pleaded allegations appear to assert that, even though United States authorities were the actors, the prime instigator was the appellants. Again, the evidential difficulties on which Mr James Eadie QC relied, on the basis that cooperation is unlikely to be forthcoming from the Malaysian, Thai, Libyan and United States authorities or their states, cannot in my view make the claims against the appellants non justiciable or require judicial abstention. Some reliance has been placed in both sets of proceedings on evidence about the effect on international relations of investigation in English courts of the issues which they raise. The appellants have relied in both sets of proceedings on evidence from Dr Laurie Bristow, a senior diplomat, currently National Security Director in the Foreign and Commonwealth Office. He considered it highly unlikely that the foreign states involved would supply evidence to enable the appellants to defend themselves. He reminded the court of the policy of successive governments to neither confirm nor deny allegations in relation to the intelligence services. Although he had not consulted any of the relevant foreign governments, he considered that there was a real risk that the trial of the proposed proceedings would cause serious harm to, and that findings of the nature sought in respect of United States officials would have a seriously damaging impact on, the United Kingdoms relationship with the United States, and could well lead to a restriction of the unparalleled access and the historic intelligence sharing relationship and national security cooperation which the United Kingdom currently enjoys. He accepted that, given the change in regime in Libya, it is unlikely that the findings sought in respect of Libya would damage relations with Libya, but considered that the allegations in respect of Malaysia and Thailand were highly politically sensitive, and that findings would probably be interpreted as interference or give rise to a strongly negative reaction. In Rahmatullah this evidence was countered by the respondent with evidence from a former US diplomat Mr Thomas Pickering, and a former US government official adviser, then director of American Studies at the Department of Politics and International Studies at Cambridge University who expressed the firm belief that adjudicating on Mr Rahmatullahs case was highly unlikely to cause damage to the relations or national security cooperation between the US and UK and that to assert that the US would be offended was to misunderstand the value the United States places on the rule of law and an unbiased and open judicial system. Leggatt J in Rahmatullah thought it wrong for a court to become involved in attempting to resolve this sort of issue, and declined to attach weight to the evidence. Simon J in Belhaj reached with hesitation his conclusion that foreign act of state applied in reliance both on his view (with which I have already expressed disagreement) that there were no clear and incontrovertible standards for deciding whether United States officials had acted unlawfully and on the fact that there is incontestable evidence that such an inquiry would be damaging to the national interest (para 150). The Court of Appeal noted that, although deference to executive suggestion as to the likely consequences for foreign relations may well be suited to the very different constitutional arrangements in the United States, it has played no part in the development of the act of state doctrine in this jurisdiction, and that in Buttes Gas Lord Wilberforce expressly left aside all possibility of embarrassment in our foreign relations in coming to the conclusion that the issues raised were not justiciable. As to this last point, however, Lord Wilberforce did this at pp 936G and 938A B, expressly noting by way of explanation that no indication of any embarrassment had been drawn to the Houses attention by Her Majestys Government. The inference is, if anything, that it might have been a relevant factor, had it been shown. The courts are placed in a difficult situation when asked to feed into a judgment about justiciability an assessment of the likely prejudice to the United Kingdoms good relations and security interests with a foreign state, if serious allegations of misconduct involving misconduct by that foreign state are ventilated in the English courts. Such an assessment might also be easier to take into account if the issue was whether a prima facie defence of foreign act of state of the second type was outweighed by public policy considerations, rather than where, as here, the issue is whether a foreign act of state of the third type has been shown, making the case non justiciable. That said, I would not exclude the relevance to justiciability of a clear governmental indication as to real and likely damage to United Kingdom foreign policy or security interests. But little emphasis was in fact placed before the Supreme Court on such considerations as a relevant, still less a decisive factor. Viewing the appeals together, it can also be seen that Dr Bristows forcefully expressed views are not unchallenged. Finally, as Dr Bristow recognised, the governmental position in Libya has changed radically, even if not very happily. One might even also add that a different administration holds office in the United States. On the present appeals, I do not consider that the evidence available can lead to a conclusion that the cases should be regarded as non justiciable or require judicial abstention. Lord Sumption takes a more general view of the third type of foreign act of state (non justiciability or abstention or, in his terminology, international law act of state). But in paras 249 280 he argues in favour of the recognition in English domestic law of a public policy qualification. He finds it helpful in this connection to consider the scope of certain international law rules with jus cogens force, though he does not suggest that domestic public policy in all cases necessarily reflects or corresponds with international law rules having jus cogens force: see para 257. On this basis, he concludes that, so far as the allegations made in these proceedings amount to allegations of complicity in torture or of arbitrary detention without any legal ground or recourse to the courts, including enforced disappearance and rendition, a domestic court should not abstain from adjudicating upon them. Not every unlawful detention would, in his view, fall into this category, and nor would the allegations made of other cruel, inhuman or degrading treatment, but the position on the facts is not at this stage clear to the point where any of the allegations made should be struck out (see paras 278 280). Such difference in approach as there is between Lord Sumption and myself in this area makes no difference to the outcome of these appeals, and seems unlikely to make much if any difference to the outcome of any trial. But I prefer to analyse the qualifications to the concept of foreign act of state by reference to individual rights recognised as fundamental by English statute and common law, rather than to tie them too closely to the concept of jus cogens: (i) The analogy of jus cogens would suggest that a domestic court would be able to adjudicate upon an allegation that its national government connived in a serious violation of the claimants rights by a foreign government, but would be required to abstain from adjudicating upon a less serious violation, such as mere unlawful detention or cruel or inhuman treatment not amounting to torture. (ii) Jus cogens is a developing concept notoriously difficult to define, and capable of giving rise to considerable argument. Oppenheims International Law (9th ed) (1995) Vol 1, para 2 said: Such a category of rules of ius cogens is a comparatively recent development and there is no general agreement as to which rules have this character, citing a wealth of authority in a footnote. Brownlies Principles of International Law (8th ed) (2000) notes that during the 1960s scholarly opinion came to support the view that there can exist overriding norms of international law, referred to as peremptory norms (ius cogens), identified in article 53 of the Vienna Convention on the Law of Treaties as comprising any norm accepted and recognized by the international community of States as a whole as a norm from which no derogation is permitted and which can be modified only by a subsequent norm of general international law having the same character. Brownlies Principles says that The least controversial of this class are the prohibition of the use of force in article 2(4) of the [United Nations] charter, of genocide, of crimes against humanity (including systematic forms of racial discrimination), and the rules prohibiting trade in slaves. It goes on to cite the International Law Commissions synopsis in Fragmentation of International Law: Difficulties arising from the Diversification and Expansion of International Law (A/CN.4/L.702, 18 July 2006), which lists the prohibition of aggression, slavery and the slave trade, genocide, racial discrimination apartheid and torture, as well as basic rules of international humanitarian law applicable in armed conflict, and the right to self determination. Similarly, Harris and Sivakumarans Cases and Materials on International Law (8th ed) (2015), para 2 033 footnote 68, gives the prohibitions on the use of armed force, torture and genocide as prime examples of jus cogens rules. The Report of the United Nations Working Group on Arbitrary Detention, A/HRC/22/44, 24 December 2012), to which Lord Sumption refers in paras 269 271 is clearly a most valuable and important soft law pronouncement, which is likely to influence the development of generally accepted and recognised norms. But the scope for argument about the precise parameters of even such norms as the Working Group suggests in this area is evident from a full reading of para 38, reading: The Working Group regards cases of deprivation of liberty as arbitrary under customary international law in cases where: (a) When it is clearly impossible to invoke any legal basis justifying the deprivation of liberty; (b) the deprivation of liberty results from the exercise of the rights or freedoms guaranteed by articles 7, 13, 14, 18, 19, 20 and 21 of the Universal Declaration of Human Rights; (c) The total or partial non observance of the international norms relating to the right to a fair trial established in the Universal Declaration of Human Rights and in the relevant international instruments is of such gravity as to give the deprivation of liberty an arbitrary character; (d) Asylum seekers, immigrants or refugees are subjected to prolonged administrative custody without the possibility of administrative or judicial review of remedy; (e) The deprivation of liberty constitutes a violation of the international law for reasons of discrimination based on birth; national, ethnic or social origin; language; religion; economic condition; political or other opinion; gender; sexual orientation; disability or other status, and which aims towards or can result in ignoring the equality of human rights. (iii) If violation of a jus cogens were a primary test of whether a domestic court could adjudicate upon an issue which was otherwise non justiciable and upon which it would otherwise have to abstain from adjudicating, central areas of abstention identified by Lord Sumption would become potentially amenable to adjudication. The prohibition on the use of armed force and on aggression are core examples of jus cogens. Yet these are, rightly as would be my present view, treated by Lord Sumption himself as giving rise to core examples of issues upon which domestic courts should refrain from adjudicating: see eg Lord Sumptions paras 223 224, with references to Noor Khan; and see paras 93 95 above. (iv) If, as Lord Sumption indicates is his view (para 257), not every violation of a peremptory norm of international law is an exception to the foreign act of state doctrine, then it is not clear how one determines when or why ius cogens is an appropriate basis for any exception in any particular case. (v) Ultimately, in an area of judicial abstention, a case by case approach, along lines to which Lord Wilberforce referred, is in my opinion always likely to be necessary. Nothing I have said should be taken to mean that the existence of relevant jus cogens principles may not be a stimulus to considering whether judicial abstention is really called for in a particular situation. But the doctrine of abstention rests on underlying principles relating to the role of a domestic judge and the existence of alternative means of redress at an international level, which make it difficult to tie too closely to particular rules of international law, however basic and binding at that level. X Miscellaneous points It follows from my above conclusions that it is unnecessary to reach any final determination upon the respondents case that, in so far as what is alleged amounts to complicity in torture, the United Nations Convention against Torture (Treaty Series No 107 (1991)) obliges states to provide a universal civil remedy in respect of torture wherever committed in the world, at least when (allegedly) committed by or with the connivance of United Kingdom citizens such as the appellants, and that any otherwise applicable type of foreign act of state should be modified to enable this. The argument turns on the scope of article 14 of the Convention. As the Court of Appeal observed, Lord Bingham in Jones v Saudi Arabia, para 25, expressed the clear conclusion, after looking at the drafting history and other background material, that this article does not provide for universal civil jurisdiction, and that it requires a private right of action for damages only for acts of torture committed in territory under the jurisdiction of the forum state. As at present advised, I see no basis for reaching a contrary conclusion, or indeed for treating the concept of jurisdiction in this context in an expanded sense, such as the European Court of Human Rights has been prepared to attach to it in the specific context of article 1 of the European Convention on Human Rights. But it is unnecessary to express any concluded view on this, any more than it was for the Court of Appeal to do so. Another point which can strictly remain undecided is whether article 6 of the Convention rights scheduled to the Human Rights Act 1998 is engaged by and renders impermissible in the present circumstances any reliance by the appellants on either state immunity or foreign act of state. As regards state immunity, Mr Belhaj and Mrs Boudchar would have faced the initial difficulty of trying to persuade the Supreme Court in the light of the European Court of Human Rights judgments in Al Adsani v United Kingdom (2001) 34 EHRR 11 and Jones v United Kingdom (2014) 59 EHRR 1 to overrule Holland v Lampen Wolfe [2000] 1 WLR 1573, in which a majority of the House of Lords held that article 6 is not even engaged by a plea of state immunity: see also Jones v Saudi Arabia at paras 14 and 64 per Lord Bingham and Lord Hoffmann. As regards foreign act of state, the question would have been whether for similar reasons article 6 was or was not engaged. Foreign act of state, on the other hand, operates, even under the case law of the European Court of Human Rights, as a substantive bar to liability or adjudication: see Roche v United Kingdom (2005) 42 EHRR 30; Markovic v Italy (2006) 44 EHRR 52). On this basis, foreign act of state, even if it had been otherwise applicable, would not engage article 6. In either case, if article 6 was engaged, the question would then have arisen whether it rendered impermissible any reliance on either state immunity or foreign act of state. But, in view of what I have already decided, it is unnecessary to go further into this. XI Overall Conclusion As indicated in para 11(vi) above, it follows from the reasoning and conclusions on the issues of state immunity and foreign act of state set out above, that the appeals in both Belhaj and Rahmatullah should in principle be dismissed although by reasoning differing in some significant respects from that of both courts below thus enabling both sets of claims to be further pursued. The Supreme Court will however invite written submissions as to the precise form of order and of any declarations that may be appropriate as well as on costs within 28 days of the handing down of this judgment. LORD NEUBERGER: (with whom Lord Wilson agrees) Introductory These two appeals involve allegations that the defendants, in their capacity as officials or emanations of the executive arm of the government of the United Kingdom, facilitated the claimants unlawful detention, and ill treatment (and, in the cases of Mr Belhaj and Mrs Boudchar, their kidnapping and rendition), and should pay the claimants compensation accordingly. Mr Belhaj and Mrs Boudchar allege that the defendants assisted United States and Libyan officials in their unlawful kidnapping and detention, their unlawful rendition (accompanied by ill treatment), and their subsequent incarceration and torture in Libya. Mr Rahmatullah alleges that, following his capture by UK troops in Iraq (and his unlawful detention and ill treatment), he was handed over to US officials pursuant to a memorandum of understanding (MoU) between the UK and US Governments, and that US officials then unlawfully detained him for ten years and ill treated and tortured him, and that the defendants facilitated that detention, ill treatment and torture. As the two claims are against UK government officials and entities, and not against any foreign government officials or entities, there is no question of any relief being sought other than against domestic defendants. Nonetheless, various points of principle have been raised by those defendants as to why the claims cannot or should not be entertained by the courts of England and Wales. Those points of principle must be determined on the assumption that the facts as pleaded by the claimants are true. The points to be determined at this stage are whether the defendants can rely on (a) the doctrine of state immunity or (b) the doctrine of foreign act of state, as defences to the claims. So far as the doctrine of state immunity is concerned, I agree that it cannot assist the defendants for the reasons given by Lord Mance in paras 12 31 above and by Lord Sumption in paras 181 197 below. There is nothing that I can usefully add to their impressive analyses of this issue. The doctrine of foreign act of state (the Doctrine) raises more troubling issues. The nature of the Doctrine In summary terms, the Doctrine amounts to this, that the courts of the United Kingdom will not readily adjudicate upon the lawfulness or validity of sovereign acts of foreign states, and it applies to claims which, while not made against the foreign state concerned, involve an allegation that a foreign state has acted unlawfully. In so far as it is relied on in these proceedings, the Doctrine is purely one of domestic common law, and it has all the advantages and disadvantages of a principle that has been developed on a case by case basis by judges over the centuries. Thus, while it is pragmatic and adaptable to changing norms (as Lord Wilberforce pointed out in Blathwayt v Baron Cawley [1976] AC 397, 426), it is a principle whose precise scope is not always easy to identify. Another problem of relying on what was said in most of the earlier cases which have been cited to us in relation to the Doctrine is that the legal basis for a judicial decision that a claim could or would not be resolved by a court was not expanded on in any detail, and was not characterised by an expression such as act of state at least as a term of article Many of the judgments do not distinguish between what are now treated as three separate doctrines, namely Crown act of state, foreign act of state, and state immunity. The rules identified in the cases It appears to me that the domestic cases, to which we have been referred, suggest that there may be four possible rules which have been treated as aspects of the Doctrine, although there is a strong argument for saying that the first rule is not part of the Doctrine at all, or at least is a free standing aspect of the Doctrine effectively franked by international law. The first rule is that the courts of this country will recognise, and will not question, the effect of a foreign states legislation or other laws in relation to any acts which take place or take effect within the territory of that state. The second rule is that the courts of this country will recognise, and will not question, the effect of an act of a foreign states executive in relation to any acts which take place or take effect within the territory of that state. The third rule has more than one component, but each component involves issues which are inappropriate for the courts of the United Kingdom to resolve because they involve a challenge to the lawfulness of the act of a foreign state which is of such a nature that a municipal judge cannot or ought not rule on it. Thus, the courts of this country will not interpret or question dealings between sovereign states; [o]bvious examples are making war and peace, making treaties with foreign sovereigns, and annexations and cessions of territory per Lord Pearson in Nissan v Attorney General [1970] AC 179, 237. Nissan was a case concerned with Crown act of state, which is, of course, a different doctrine and is considered in Rahmatullah v Ministry of Defence 2017 UKSC 1, but the remark is none the less equally apposite to the foreign act of state doctrine. Similarly, the courts of this country will not, as a matter of judicial policy, determine the legality of acts of a foreign government in the conduct of foreign affairs. It is also part of this third rule that international treaties and conventions, which have not become incorporated into domestic law by the legislature, cannot be the source of domestic rights or duties and will not be interpreted by our courts. This third rule is justified on the ground that domestic courts should not normally determine issues which are only really appropriate for diplomatic or similar channels (see Shergill v Khaira [2015] AC 359, paras 40 and 42). A possible fourth rule was described by Rix LJ in a judgment on behalf of the Court of Appeal in Yukos Capital SARL v OJSC Rosneft Oil Co (No 2) [2014] QB 458, para 65, as being that the courts will not investigate acts of a foreign state where such an investigation would embarrass the government of our own country: but that this doctrine only arises as a result of a communication from our own Foreign Office. The cases where the rules have been applied The first rule appears to me to be well established and supported by a number of cases, at least in relation to property. It was applied in Duke of Brunswick v King of Hanover (1848) 2 HLC 1, where Lord Cottenham LC rejected a challenge to the validity of a Hanoverian bill deposing and replacing the Duke of Brunswick, on the ground that a foreign sovereign cannot be made responsible here for an act done in his sovereign character in his own country. It was also relied on in Carr v Fracis Times & Co [1902] AC 176, where seizure of ammunition within Muscat territorial waters was effected by a British officer pursuant to a proclamation issued by the Sultan of Muscat, and the validity of the proclamation could not be challenged as, per Lord Halsbury LC at p 179, the Sultans authority there [sc Muscat] is supreme, and what he says is law for the purpose of governing all acts which take place within his territory. Another example of the first rule is Aksionairnoye Obschestvo AM Luther v James Sagor & Co [1921] 3 KB 532, where at p 549 Warrington LJ said that the English courts could not ignore and override legislative and executive acts of the Government of Russia and its agents affecting the title to property in that country (and see Bankes LJ to the same effect at p 545). The first rule was also applied in Princess Paley Olga v Weisz [1929] 1 KB 718 see Scrutton LJs first two reasons at pp 722 723, reflected also in the judgments of Sankey and Russell LJJ at pp 730 732 and 732 736 respectively). The first rule was also invoked in Buttes Gas and Oil Co v Hammer (Nos 2 and 3) [1982] AC 888, 937, where Lord Wilberforce said that an inquiry into the motives of the then ruler of Sharjah in making [a] decree was non justiciable, because the decree applied within the territory of Sharjah. The second rule also has significant judicial support, but again only in relation to property. Thus, it appears to have been applied in Blad v Bamfield (1673) 3 Swans 604, in the light of Lord Nottinghams point that the validity of the Kings letters patent in Denmark was non justiciable in English courts (emphasis added). Another example is Dobree v Napier (1836) 2 Bing NC 781, where Tindal CJ stated that no one can dispute the right of the Queen of Portugal to appoint in her own dominions the defendant as her officer to seize a vessel which is afterwards condemned as a prize (emphasis added). The second rule was also relied on in Luther v Sagor (in the passages in the judgments of Warrington and Bankes LJJ cited above), and in Princess Paley Olga (see Scrutton LJs third reason at pp 722 724, reflected in the judgments of Sankey and Russell LJJ at pp 726 730 and 736 respectively). The third rule has been applied in a number of cases, again in relation to property. Examples of the third rule involving transactions between states include Blad in the light of Lord Nottinghams view that a trial about the exposition and meaning of the articles of peace between two states would be monstrous and absurd. It also was applied in Nabob of the Carnatic v East India Co (1793) 2 Ves Jun 56, which was expressly treated as a case of mutual treaty between persons acting as states independent of each other so that it consequently not a subject of private, municipal jurisdiction. The third rule is also apparent from Lord Kingsdowns dictum in Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22 (a decision based on Crown act of state) that [t]he transactions of independent States between each other are governed by other laws than those which Municipal Courts administer. That point was repeated by Lord Halsbury LC in Cook v Sprigg [1899] AC 572. Most of the issues held to be such that the court would not adjudicate upon them in Buttes Gas by Lord Wilberforce at pp 937 938 seem to me to be examples of the third rule eg what was the boundary of the continental shelf between (i) Sharjah and UAQ, (ii) Abu Musa and UAQ, (iii) Iran and both Emirates. As the Court of Appeal said in Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, para 287, at the heart of the dispute in that case was a boundary dispute between states which made it impossible to say what the territorial limitations of those states were. And, as it was put in this Court in Shergill, para 40, the dispute arose out of the way in which the four states concerned had settled the issue of international law by a mixture of diplomacy, political pressure and force. A more recent example of the application of the third rule, and this time in relation to injury to the person, is in R (Noor Khan) v Secretary of State for Foreign Affairs [2014] 1 WLR 872, where the Court of Appeal refused the applicant permission to seek judicial review of the provision of information by the UK intelligence services to the US government to assist it in targeting drone strikes in Pakistan. The argument was that the provision of information for this purpose was unlawful, as it involved requiring GCHQ officers to encourage and/or assist the commission of murder (para 7). At para 29 Lord Dyson MR, giving the judgment of the Court of Appeal, said that the court will also usually not sit in judgment on the acts of a sovereign state as a matter of discretion. In expressing that view, he was following some remarks of Simon Brown LJ in R (Campaign for Nuclear Disarmament) v Prime Minister of the United Kingdom (2002) 126 ILR 727, para 47(ii). As to the supposed fourth rule, it derives support from the United States, whose jurisprudence was said by Lord Wilberforce to be helpful in Buttes Gas at pp 936 937. After initially suggesting in Oetjen v Central Leather Co 246 US 297, 303 304 (1918) that the Doctrine was based on the highest considerations of international comity and expediency, the US Supreme Court preferred to explain it by reference to the strong sense of the Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may hinder the conduct of foreign affairs per Harlan J in Banco Nacional de Cuba v Sabbatino 376 US 398, 423 (1964), cited with apparent approval by Scalia J in WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn, International 493 US 400, 406 (1990). There is little authority to support the notion that the fourth rule is part of the law of this country, save that, as discussed in the Court of Appeals judgment in Kuwait Airways, paras 340 350, there are certain areas (such as the recognition of foreign governments, and the extent of a foreign governments territory) in which a certificate from the Foreign Office is regarded by the courts of this country as conclusive see Luther v Sagor. But that is rather a different point. However, there is a trace of the fourth rule in the Court of Appeals reasoning that the application in Noor Khan was not to be entertained because, if it succeeded, it would be understood as a finding that (i) the US official who operated the drone was guilty of murder and (ii) the US policy of using drone bombs in Pakistan and other countries was unlawful, which would be seen as a serious condemnation of the US by a court of this country (para 37). If the fourth rule exists, which I doubt (see para 150 below), it would require exceptional circumstances before it could be invoked. Decisions of foreign courts While other jurisdictions may have developed analogous principles to some or all of the four rules, it seems to me that courts in this jurisdiction should exercise great caution before relying on, let alone adopting, the reasoning of foreign courts in connection with the Doctrine. Decisions of courts in states with a civil law system and with a coherent written constitution seem to me to be as likely to mislead as to help when it comes to analysing the boundaries of a common law rule developed on a case by case basis over the years. However, I accept that any practical explanation by a court for or against judicial abstention is worth considering. In this case, for example, Lord Mance and Lord Sumption have referred to decisions of courts in France, the Netherlands and Germany. In each of those three countries, the courts appear to have developed some legal rules in this area which, while differing from each other (not much in the cases of France and the Netherlands), are, unsurprisingly, comprehensible and principled. Deciding which of those rules would be most appropriate for the courts of this country seems an unnecessarily cumbersome way, and indeed an unnecessarily constraining way, of resolving the question we have to decide. While they were cited with approval in this jurisdiction (most notably by Bankes, Warrington and Scrutton LJJ in Luther v Sagor at pp 541 542, 550 551 and 557, by Scrutton and Sankey LJJ in Princess Paley Olga at pp 724 725 and 728 729 and by Lord Wilberforce in Buttes Gas at pp 933 937), decisions of courts of the United States, which have purported to adopt the Doctrine as initially developed in this jurisdiction, appear to me to be of very limited assistance. This is for three reasons. First, the constitutional arrangements and conventions in the USA are very different from those in the UK. Secondly, much of the reasoning in the cases where act of state was first referred to as a principle (Hatch v Baez (1876) 7 Hun 596 and Underhill v Hernandez 168 US 250 (1897)) was really directed to the different doctrine of state immunity. And, thirdly, the justification for the doctrine of act of state has been recast by the US Supreme Court as summarised in para 131 above, which ties in very well with the first reason. The validity of the first rule in relation to property and property rights There is no doubt but the first rule exists and is good law in relation to property (whether immovable, movable, or intellectual) situated within the territory of that state concerned. Sovereignty, which founds the basis of the Doctrine, denotes the legal competence which a state enjoys in respect of its territory (Brownlies Principles of Public International Law, 8th ed, (2012), p 211), and there is no more fundamental competence than the power to make laws. There is no doubt, however, that the first rule only applies to acts which take effect within the territory of the state concerned see eg Peer International Corpn v Termidor Music Publishers Ltd [2004] Ch 212. The validity of the second rule in relation to property and property rights I find aspects of the second rule in relation to property and property rights more problematical. In so far as the executive act of a state confiscating or transferring property, or controlling or confiscating property rights, within its territory is lawful, or (which may amount to the same thing) not unlawful, according to the law of that territory, I accept that the rule is valid and well established. However, in so far as the executive act is unlawful according to the law of the territory concerned, I am not convinced, at least in terms of principle, why it should not be treated as unlawful by a court in the United Kingdom. Indeed, if it were not so treated, there would appear something of a conflict with the first rule. None the less, I accept that there are dicta which can be fairly said to support the existence of the rule even where the act is unlawful by the laws of the state concerned (see para 127 above). However, I am not persuaded that there is any judicial decision in this jurisdiction whose ratio is based on the proposition that the second rule applies to a case where the states executive act was unlawful by the laws of the state concerned. Thus, the Duke of Brunswick, Carr v Fracis, Luther v Sagor and Princess Paley Olga cases all involved acts which were apparently lawful according to the laws of the state concerned (being pursuant to a bill or decree), and there is no suggestion of unlawfulness in relation to the acts in Blad or Dobree. Similarly, there is nothing to suggest that, when Lord Wilberforce suggested in Buttes Gas at p 931 that an act of state extended to a foreign municipal law or executive act, he intended to refer to an executive act which was unlawful by the laws of the state concerned, let alone, where the act took place in the territory of another state, by the laws of that state. At best, therefore, there are simply some obiter dicta which support the notion that the second rule can apply to executive acts which are unlawful by the laws of the state concerned. There is support for the notion that the second rule does not apply to executive acts which are not lawful by the laws of the state concerned in Dicey, Morris and Collins on The Conflict of Laws, (15th ed (2012)) which at p 1380 sets out Rule 137 in these terms: A governmental act affecting any private proprietary right in any movable or immovable thing will be recognised as valid and effective in England if the act was valid by the law of the country where the thing was situated (lex situs) at the moment when the act takes effect, and not otherwise. Further, it does not appear to me that the common law regards it as inappropriate for an English court to decide whether a foreign states executive action infringed the law of that state, at least where that is not the purpose of the proceedings. Support for that view is to be found in the judgment of Diplock LJ in Buck v Attorney General [1965] Ch 745, 770, and of Arden and Elias LJJ in Al Jedda v Secretary of State for Defence [2011] QB 773; [2010] EWCA Civ 758 at paras 74 and 189 respectively. However, I am unconvinced that cases such as R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42 assist on this point. In that case, the assumed facts (which subsequently turned out to be inaccurate: see 1995 SLT 510) were that the applicant had been kidnapped and brought to this country from South Africa in a joint exercise involving the police of the UK and of South Africa. Accordingly, even if the second rule would otherwise have applied, the courts of this country had jurisdiction to rule on the apparent unlawfulness of the applicants treatment because of the public policy exception (considered in paras [153ff] below). Having said that, there is pragmatic attraction in the argument that an executive act within the state, even if unlawful by the laws of that state, should be treated as effective in the interest of certainty and clarity, at least in so far as it relates to property and property rights. In relation to immovable property within the jurisdiction of the state concerned, there appear to be good practical reasons for a foreign court recognising what may amount to a de facto, albeit unlawful, transfer of, or other exercise of power over, such property. So far as movable property or other property rights are concerned, if by an executive, but unlawful act, the state confiscates such property within its territory, the same point applies so long as the property remains within the territory of that state. And there is practical sense, at any rate at first sight, if when the property is transferred to another territory following a sale or other transfer by the state, the transferee is treated as the lawful owner by the law of the other territory. However, there are potential difficulties: if the original confiscation was unlawful under the laws of the originating state, and the courts of that state were so to hold, or even should so hold, it is by no means obvious to me that it would be, or have been, appropriate for the courts of the subsequent state to treat, or have treated, the confiscation as valid. The question whether the second rule exists in relation to executive acts which interfere with property or property rights within the jurisdiction of the state concerned, and which are unlawful by the laws of that state, is not a point which needs to be decided on the present appeal. Property rights do not come into this appeal, and no doubt for that very reason, the point was not debated very fully before us. Accordingly, it seems to me that it is right to keep the point open. The validity of the third rule in relation to property and property rights There is no doubt as to the existence of the third rule in relation to property and property rights. Where the Doctrine applies, it serves to defeat what would otherwise be a perfectly valid private law claim, and, where it does not apply, the court is not required to make any finding which is binding on a foreign state. Accordingly, it seems to me that there is force in the argument that, bearing in mind the importance which both the common law and the Human Rights Convention attach to the right of access to the courts, judges should not be enthusiastic in declining to determine a claim under the third rule. On the other hand, even following the growth of judicial review and the enactment of the Human Rights Act 1998, judges should be wary of accepting an invitation to determine an issue which is, on analysis, not appropriate for judicial assessment. I believe that this is reflected in observations of Lord Pearson in Nissan. Immediately after the passage quoted in para 123 above, he said Apart from these obvious examples, an act of state must be something exceptional. Any ordinary governmental act is cognisable by an ordinary court of law (municipal not international): if a subject alleges that the governmental act was wrongful and claims damages or other relief in respect of it, his claim will be entertained and heard and determined by the court. A little later, he explained that where the Doctrine applied the court does not come to any decision as to the rightness or wrongness of the act complained of: the decision is that because it was an act of state the court has no jurisdiction to entertain a claim in respect of it, and added that [t]his is a very unusual situation and strong evidence is required to prove that it exists in a particular case. In Yukos v Rosneft, para 66, Rix LJ suggested that Lord Wilberforces principle of non justiciability has to a large extent subsumed [the act of state Doctrine] as the paradigm restatement of that principle. If the foreign act of state principle is treated as including what I have called the first and second rules, then I do not agree. The third rule is based on judicial self restraint and is, at least in part, concerned with arrangements between states and is not limited to acts within the territory of the state in question, whereas the first and second rules are of a more hard edged nature and are almost always concerned with acts of a single state, normally within its own territory. Having said that, I accept that it will not always be easy to decide whether a particular claim is potentially subject to the second or third rule. The third rule may be engaged by unilateral sovereign acts (eg annexation of another state) but, in practice, it almost always only will apply to actions involving more than one state (as indeed does annexation). However, the fact that more than one sovereign state is involved in an action does not by any means justify the view that the third rule, rather than the second, is potentially engaged. The fact that the executives of two different states are involved in a particular action does not, in my view at any rate, automatically mean that the third rule is engaged. In my view, the third rule will normally involve some sort of comparatively formal, relatively high level arrangement, but, bearing in mind the nature of the third rule, it would be unwise to be too prescriptive about its ambit. The validity of the fourth rule As already mentioned, there will be issues on which the position adopted by the executive, almost always the Foreign Office, will be conclusive so far as the courts are concerned for instance, the recognition of a foreign state, also the territorial limits of a foreign state and whether a state of war exists. However, apart from those types of cases, the fourth rule has no clear basis in any judicial decisions in this jurisdiction, although, at least on one reading, the Court of Appeal in R (Khan) v Secretary of State for Foreign and Commonwealth Affairs [2014] 1 WLR 872 seem to have accepted that it existed. If a member of the executive was to say formally to a court that the judicial determination of an issue raised in certain legal proceedings could embarrass the Governments relations with another state, I do not consider that the court could be bound to refuse to determine that issue. That would involve the executive dictating to the judiciary, which would be quite unacceptable at least in the absence of clear legislative sanction. However, there is a more powerful argument for saying that such a statement should be a factor which the court should be entitled to take into account when deciding whether to refuse to determine an issue. Some indirect support for such an argument is to be found in In re Westinghouse Electric Corpn Uranium Contract Litigation MDL Docket No 235 [1978] AC 547, 616 617 and 639 640, and in Adams v Adams [1971] P 188, 198. Again, it is a point which does not have to be decided in this case, and was not argued. In fairness to the defendants, there was some evidence to support such an argument, but it was answered in some detail, and in any event it was, rightly in my view, not pressed on their behalf in relation to the application of the Doctrine in these two cases. Characterisation of the Doctrine: Having discussed the four possible rules which may be said to fall under the umbrella of the Doctrine, it is appropriate briefly to identify the characterisation of the various rules. I agree with Lord Mance that the first rule is a general principle of private international law. The rule was characterised by Upjohn J in In re Helbert Wagg & Co Ltds Claim [1956] Ch 323, 344 345 as: the elementary proposition that it is part of the law of England, and of most nations, that in general every civilized state must be recognized as having power to legislate in respect of movables situate within that state and in respect of contracts governed by the law of that state, and that such legislation must be recognized by other states as valid and effectual to alter title to such movables. (Emphasis added) To the extent that it exists, the second rule also seems to me to be a general principle, and, at least to some extent, it may be close to being a general principle of private international law. The third rule is based on judicial self restraint, in that it applies to issues which judges decide that they should abstain from resolving, as discussed by Lord Mance in paras 40 45 and by Lord Sumption in paras 234 239 and 244. It is purely based on common law, and therefore has no international law basis, although, as discussed below, its application (unsurprisingly) can be heavily influenced by international law. I turn now to discuss the limitations of, and exceptions to, the Doctrine. The cases establish that there are limitations and exceptions, each of which apply to some or all of these three or four rules. Many of those limitations and exceptions were fully examined by the Court of Appeal in Yukos v Rosneft, paras 68 to 115. But only three are relevant for present purposes. Limits and exceptions to the Doctrine: Public Policy It is well established that the first rule, namely that the effect of a foreign states legislation within the territory of that state will not be questioned, is subject to an exception that such legislation will not be recognised if it is inconsistent with what are currently regarded as fundamental principles of public policy see Oppenheimer v Cattermole [1976] AC 249, 277 278, per Lord Cross of Chelsea. This exception also applies where the legislation in question is a serious violation of international law see Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, para 29, per Lord Nicholls of Birkenhead. The circumstances in which this exception to the Doctrine should apply appear to me to depend ultimately on domestic law considerations, although generally accepted norms of international law are plainly capable of playing a decisive role. In his opinion in Kuwait Airways, paras 28 and 29, Lord Nicholls emphasised the need to recognise and adhere to standards of conduct set by international law and held that recognition of the fundamental breach of international law manifested by the Iraqi decree in that case would be manifestly contrary to the public policy of English law, like the Nazi German confiscatory decree in Oppenheimer. However, there is nothing in what Lord Nicholls said which suggests that it is only breaches of international law norms which would justify disapplication of the Doctrine. On the contrary: his reference to the public policy of English law supports the notion that the issue is ultimately to be judged by domestic rule of law considerations. The point is also apparent from the opinion of Lord Hope. At para 139, he said that the public policy exception is not limited to cases where there is a grave infringement of human rights, but is founded upon the public policy of this country plainly a domestic standard. The exception to the Doctrine based on public policy has only been considered by the courts in relation to the first of the four rules set out above. However, I cannot see grounds for saying that it does not apply similarly to the second rule, executive acts within the territory of the state concerned. As to the third rule, dealings between states, (as well as the fourth rule if it exists) it appears to me that in many types of case this exception may be applicable, but in some it may not. In the course of its judgment in R (Abbasi) v Secretary of State for Foreign & Commonwealth Affairs and Secretary of State for the Home Department [2003] UKHRR 76, the Court of Appeal effectively suggested that the exception could be applied to the third rule. In paras 32 and 33, they said that the English court will not adjudicate upon the legality of a foreign States transactions in the sphere of international relations in the exercise of sovereign authority, but that this was subject to exceptions, as Oppenheimer and Kuwait Airways demonstrated. The Court was accordingly prepared to hold that the detention of a UK citizen in Guantanamo Bay subject to indefinite detention in territory over which the United States has exclusive control with no opportunity to challenge the legitimacy of his detention before any court or tribunal was unlawful, despite his detention being an act of state on the part of the US see paras 64, 66 and 107. (It is fair to add that, although expressed as if it involved transactions in the field of international relations, it is arguable that the issue before the Court of Appeal in Abbasi was not in fact concerned with the third rule, but the second). Limits and exceptions to the Doctrine: Injury to the person None of the English cases discussed so far (save Noor Khan [2014] 1 WLR 872) involved alleged wrongs or acts in relation to the person, as opposed to alleged wrongs or acts in relation to property. As to that, it appears to me to be a very powerful argument for saying that the first rule must apply equally to injuries to the person as it applies to the taking of property. The notion that English courts will respect a sovereign states right to legislate as it sees fit in relation to the taking of property within its territory (subject always to the exception of legislation which conflicts with public policy) appears to me to be based on the principle that the law in a given territory should generally be treated as being that laid down by the legislature of that territory. In other words, it is either based on, or at least is close to, the choice of law, or proper law, principle which applies in private law conflict cases. That seems to derive support from what Lord Wilberforce said in Buttes Gas at p 931, and indeed from the reasoning of Lord Bingham in R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2008] AC 332, paras 40 43, approving the reasoning and decision of the Court of Appeal at [2007] QB 621, paras 105 107. Assuming that the second rule can apply to executive acts in relation to property which are unlawful by the laws of the state in which it occurred, I am unconvinced that it would apply in such a case in so far as the act resulted in injuries to the person. In no English case has it been held, or even suggested, that an executive act, unlawful by the laws of the state in which it occurred, can be subject to the Doctrine in a case where the cause of action is personal injury or death. As discussed in paras 143 144 above, there is a serious practical argument in favour of the second rule applying to unlawful executive acts in so far as they relate to interference with property and property rights, but that argument does not apply to personal harm whether physical or mental. Bearing in mind that (i) the Doctrine is not concerned with claims against a foreign state, (ii) there is no good practical reason for the second rule to apply to cases of unlawfully causing harm to the person, (iii) there are no judicial decisions or even judicial observations where it has been held so to apply, and (iv) there will be cases of personal harm where the third rule can be invoked, I consider that we should hold that the second rule does not apply to cases where a foreign state executive has caused physical or mental harm to a claimant through an act in the territory of that state which was unlawful under the laws of that state. Further, such recent authority as there is in this jurisdiction tends to support a limited interpretation of the second rule. In Lucasfilm Ltd v Ainsworth [2012] 1 AC 208, para 86, Lord Walker and Lord Collins said that in England the foreign act of state doctrine has not been applied to any acts other than foreign legislation or governmental acts of officials such as requisition, and so refused to apply it to the grant of a patent. The notion that the second rule only applies to executive acts in relation to property within the jurisdiction of the state concerned is also supported by the editors of Dicey, Morris and Collins in the passage cited in para 139 above. In a case where neither the first nor the third rule applies, it seems to me that there is force in the point that, as a matter of elementary justice, if a member of the executive of a foreign state injures a claimant physically in the territory of that state, and the injury was not authorised by the law of that state, a third party who is properly sued in this country on the ground that he was in some way also responsible for the injury should not normally be allowed to rely on the Doctrine as a defence. (I say normally, because, as already indicated, there will be occasions where the third rule may apply). In other words, the onus seems to me to be very much on those who wish to justify the extension of the second rule to unlawful acts which cause physical or mental damage, and I can see no good reason for doing so. Limits and exceptions to the Doctrine: Territoriality So far as the cases are concerned, the first, second and third rules have only been applied in relation to acts within the territory of the state concerned. I find it hard to see how it could be argued that the first rule, which is concerned with legislation, could apply to acts which take effect in a location outside the territory of the state concerned. The same applies to the second rule, which is concerned with executive acts. The older cases indicate that both rules are based on sovereign power, and, as mentioned in para 136 above, the nature of sovereign power is that it is limited to territory over which the power exists. Further, a location outside the relevant territory would be in the territory of another state, and normal principles, including the first rule, would indicate that the laws of that other state will normally apply. It is therefore hard to see how the law of the state which committed the act could apply so far as the first rule is concerned. As to the second rule, in the absence of any judicial decision to the contrary, I cannot see any good reason why, if the act in question was unlawful pursuant to the laws of the location in which it occurred, the act of state doctrine should assist a defendant simply because the act was carried out by the executive of another state. The position with regard to territoriality seems to me to be less clear so far as the third rule is concerned. As Rix LJ observed in Yukos at para 49, [i]t is not entirely clear from what Lord Wilberforce actually said in Buttes Gas whether what I have called the third rule is confined to what transpires territorially within a foreign sovereign state. However, I also agree with Rix LJ that, at least in some circumstances it could do so, as it is inherent in the nature of the rule that it may apply to actions outside the territory of the state concerned. The application of these principles to these cases Mr Belhaj and Mrs Boudchar contend that the defendants assisted US officials to kidnap, detain and torture them in Malaysia and Thailand, and to take them to Libya, in order for them to be detained and tortured there by Libyan officials. It is not suggested (at least at this stage of the proceedings) that the alleged detention, kidnapping and torture in Malaysia or Thailand or the alleged rendition to Libya were lawful in Malay or Thai law, or that the alleged rendition was lawful in US law, or that the subsequent detention and torture in Libya were lawful in Libyan law. They were executive actions by members of the executive of the governments of the US and Libya, and it appears, to some extent, members of the executive of the governments of Malaysia and of Thailand. In my view, at least on the evidence available so far, and in agreement with Lord Mance and Lord Sumption, the acts complained of by Mr Belhaj and Mrs Boudchar do not fall within the third rule. There is no suggestion that there was some sort of formal or high level agreement or treaty between any of the states involved which governed the cooperation between the executives of the various countries concerned. As already mentioned, the mere fact that officials of more than one country cooperate to carry out an operation does not mean that the third rule can be invoked if that operation is said to give rise to a claim in domestic law. It would be positively inimical to the rule of law if it were otherwise. Having said that, even if the third rule otherwise applied, I would still hold that this was a case where, assuming that the claimants were detained, kidnapped and tortured as they allege, the public policy exception would apply. In that connection, Lord Sumptions impressive analysis of the relevant international law is important in the present context because I consider that any treatment which amounts to a breach of jus cogens or peremptory norms would almost always fall within the public policy exception. However, as explained above, because the Doctrine is domestic in nature, and in agreement with Lord Mance and Lord Sumption, I do not consider that it is necessary for a claimant to establish that the treatment of which he complains crosses the international law hurdle before he can defeat a contention that the third rule applies. Given that the third rule does not apply, I consider that it is clear that the Doctrine cannot be relied on as against Mr Belhaj and Mrs Boudchar, and the first rule plainly does not apply. As to the second rule, I consider that it cannot be relied on because (i) the alleged wrong doing involves harm to individuals and not property, and (ii) the public policy exception would anyway apply, as it would in relation to the third rule. The position of Mr Rahmatullah is arguably a little more nuanced. Although I accept that there is an argument to the contrary, at the moment it does not seem to me that his treatment by the US authorities should be treated as having taken place within the US jurisdiction, because it was within the Afghan jurisdiction. Quite apart from this, Mr Rahmatullahs allegations involve physical and mental harm. Accordingly, for each of those two reasons, the second rule is not engaged. However, because the defendants were apparently acting pursuant to the MoU between the UK and US governments, there is an argument that, unlike in the case of Mr Belhaj and Mrs Boudchar, the third rule is engaged. I was initially inclined to think that that argument may be a good one. However, I have come to the conclusion that the third rule does not apply in relation to Mr Rahmatullah. As Lord Mance says, the existence and terms of the MoU do not bear on the allegations which are of complicity in unlawful detention and ill treatment. In any event, even if that is wrong and the third rule was engaged, I consider that Mr Rahmatullah could rely on the public policy exception, essentially for the reasons given by Lord Sumption. To be held without charge or trial for ten years, particularly when coupled with significant mistreatment (even if it did not amount to torture) is sufficient to take Mr Rahmatullahs case into the public policy exception, bearing in mind the severity and flagrancy of the alleged interference with his rights, and the length of time for which it allegedly lasted. Conclusion Accordingly, I would dismiss the defendants appeals in so far as they contend that the courts below held that their defences of state immunity and foreign act of state in each of the two actions must be rejected. LADY HALE AND LORD CLARKE: We agree with the reasoning and conclusion in the judgment of Lord Neuberger. The defences of state immunity and foreign act of state do not apply at all in the two cases before us. This is also the conclusion reached by Lord Mance for essentially the same reasons. It is not necessary for us to express a view on other issues which do not strictly arise for decision in these cases. LORD SUMPTION: (with whom Lord Hughes agrees) Introduction These appeals raise questions of some constitutional importance concerning the ambit of the act of state rule. They arise from allegations that British officials were complicit in acts of foreign states constituting civil wrongs and in some cases crimes and breaches of international law. Yunus Rahmatullah is a national of Pakistan. He was detained in Baghdad in February 2004 by British forces, on suspicion of being a member of Lashkar e Taiba, a terrorist organisation based in Pakistan with links to Al Qaeda. At the time of his detention, the United Kingdom and the United States were occupying powers in Iraq. British forces were part of a multinational force responsible for the security and stabilisation of the country under Resolution 1511/2002 of the Security Council of the United Nations. They were deployed primarily in a designated area of south eastern Iraq, but Mr Rahmatullah was detained outside that area in a sector under the control of the United States. Accordingly, on the day after his detention he was transferred to United States custody under the terms of a Memorandum of Understanding concerning the custody of detainees, which had been agreed between the two occupying powers. The United States removed him shortly afterwards to Bagram airbase in Afghanistan, where he was detained for more than ten years without charge or trial, before he was finally released in May 2014. Mr Rahmatullah alleges that while in the custody of British and American forces he was subjected to torture and other serious mistreatment. The present appeal is not concerned with any mistreatment that may have occurred while Mr Rahmatullah was in British custody. It is concerned only with his case that the United Kingdom is responsible for the acts of United States personnel during the period when he was in their custody. He claims damages from the British government on the ground (i) that his treatment by US personnel was part of a common design or concerted course of action between Britain and the United States, (ii) that United States personnel were in the relevant respects agents of the United Kingdom, and (iii) that the United Kingdom knew or should have known that if delivered into the custody of United States forces he was liable to be unlawfully rendered to other countries, and unlawfully detained, tortured and otherwise mistreated. We are told that Rahmatullah is representative of many hundreds of claims in the High Court in which the same legal issues arise. Mr Belhaj is a Libyan national. In 2004 he was the leader of the Libyan Islamic Fighting Group, an organisation opposed to the government of Colonel Gaddafi, which is alleged to have been a terrorist organisation at the relevant time. He led an attempted uprising against the Gaddafi regime in 1998, and fled the country when it was suppressed. Mrs Boudchar, his wife, is a Moroccan national. In February 2004 Mr Belhaj and Mrs Boudchar were living in China but wished to come to the United Kingdom to claim asylum. They allege that Chinese officials detained them at Beijing airport as they were about to board a flight to London, and later put them on a flight to Kuala Lumpur in Malaysia. There, they were held for two weeks by the Malaysian authorities. They were then allowed to leave for the United Kingdom but were required to go via Bangkok. On 7 March 2004 they were put on a commercial flight to London via Bangkok. At Bangkok they were taken off the aircraft by Thai officials and delivered to agents of the United States. At some time in the next two days they were flown to Libya in a US registered aircraft said to have been owned by a CIA front company. In Libya, they were taken to Tajoura prison. Mrs Boudchar was released in June 2004 after being held there for rather more than three months. Mr Belhaj was held successively at Tajoura and Abu Salim prisons for six years before being released in March 2010. It is alleged that they were tortured and subjected to other serious mistreatment by US officials in Bangkok and in the aircraft carrying them to Libya, and by Libyan officials in Libya. The claimants at one stage relied upon mistreatment by the Chinese authorities, but they no longer do so. The present proceedings are brought in support of a claim for damages against a number of departments and officials of the British government who are said to have been complicit in what happened to them. The defendants include the intelligence services, the departments of state responsible for them, the then Foreign Secretary Mr Straw, and Sir Mark Allen, who is said to have been a senior official of the Secret Intelligence Service. The case against them is that the SIS, having learned that Mr Belhaj and Mrs Boudchar were being detained in Malaysia, passed the information to the Libyan intelligence services and assisted the rendition flight with transit facilities at the British owned but American operated base at Diego Garcia in the Indian Ocean. It is not alleged that British officials were directly involved in the rendition, torture or mistreatment of the claimants. But it is said that they enabled it to happen, knowing of the risk that the defendants would be unlawfully detained, tortured and otherwise mistreated by the Americans and the Libyans. It is also alleged that British officials took advantage of Mr Belhajs detention in Libya by interrogating him there at least twice. The defendants, it is said, thereby incurred liability in tort. Both claims were pleaded by reference to English law. But it is now common ground that any liability in tort is governed by the law of the countries where they occurred, ie successively Malaysia, Thailand and Libya, and (in respect of what happened outside those countries on a US registered aircraft), the United States. It is important to draw attention to the limited character of the issues presently before the Court. The allegations of fact summarised in the two preceding paragraphs are taken from the pleadings. They are no more than allegations. None of them has been proved. The present appeals are concerned with the question whether they would give rise to a cause of action if they were true. That turns on three issues: (i) whether the claims against the British government and its officials indirectly implead Malaysia, Thailand, Libya and the United States, so as to be barred by state immunity; (ii) whether the tortious acts alleged are non justiciable or non actionable as acts of state of those countries; and (iii) if the claim is barred or non justiciable as a matter of domestic law, whether that is consistent with article 6 of the European Convention on Human Rights. In Belhaj, Simon J held that there was no state immunity but that the claims were barred as being based on foreign acts of state. He rejected the argument that this outcome was inconsistent with article 6 of the Convention. The Court of Appeal affirmed the judgment on state immunity and accepted that the act of state doctrine was engaged. But it allowed the appeal on the ground that the act of state doctrine was subject to (i) a limitation to acts of state occurring within the jurisdiction of the state in question, and (ii) an exception on the ground of public policy for grave violations of human rights. In Rahmatullah, Leggatt J also rejected the argument based on state immunity. He, however, took a more radical approach to the foreign act of state doctrine, holding that it was not engaged at all. He then made a leap frog order with a view to enabling the case to be considered by this court together with Belhaj. State Immunity State immunity is a rule of customary international law which requires states to accord each other immunity from the jurisdiction of their domestic courts in respect of their sovereign acts (acts jure imperii). In Jurisdictional Immunities of the State (Germany v Italy, Greece intervening) [2012] ICJ Rep 99, the International Court of Justice held that the rule derived from the principle of the sovereign equality of states, which was one of the fundamental principles of the international legal order (para 57). In the United Kingdom, effect was given to the rule of international law by the common law for some three centuries before it became statutory with the enactment of the State Immunity Act 1978. Section 1(1) of that Act provides that a state is immune from the jurisdiction of the courts except in cases specified by the Act. For this purpose, a state includes the sovereign or other head of state in his public capacity, the government of that state and any department of that government: see section 14(1). The same immunity is conferred on a separate entity, in respect of anything which it does in the exercise of sovereign authority, if the circumstances are such that a state would have been immune: section 14(2). The statutory exceptions are for proceedings relating to private, as opposed to sovereign or public acts. They relate broadly to commercial transactions, and other transactions in which a state engages otherwise than in the exercise of sovereign authority: sections 3 11. All of these exceptions depend for their application on the nature or subject matter of the action. To that extent it may be described as a subject matter immunity. But the basic rule, subject to the exceptions, is that state immunity is a personal immunity from the exercise of jurisdiction, which depends upon the identity of the person sued. As a matter of both international and domestic law, the categorisation of an act as sovereign depends on its character, not its purpose or underlying motive: see Playa Larga (Owners of Cargo lately laden on board) v I Congreso del Partido (Owners) [1983] AC 244, 262 267 (Lord Wilberforce), where the national and international authorities are reviewed. Lord Wilberforce formulated the test as follows, at p 267: in considering under the restrictive theory whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant act(s) upon which the claim is based, should, in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity. By this standard there can be no real doubt that the acts alleged against the relevant foreign governments in these cases were sovereign acts, whether they were lawful or not. If Malaysia, Thailand, Libya and the United States had been sued, they would have been immune. However, they have not been sued. Only the government and agents of the United Kingdom have been. They accept that state immunity is not available to them, but none the less invoke it on the basis that the issues engage the interests of the other states. Their argument is based on the very limited categories of cases in which state immunity may apply notwithstanding that the relevant foreign state is not itself a party. Two such categories are well established in English law. The first, which does not arise in these appeals, is the case of a civil claim against an employee or other agent of a state in respect of acts which are attributable in international law to that state. In Jones v Ministry of the Interior of the Kingdom of Saudi Arabia (Secretary of State for Constitutional Affairs intervening) [2007] 1 AC 270, the House of Lords held that the agent was entitled to immunity on the same basis as his principal. This is because so far as the agents of a state act in their public capacities, they are identified with the state in international law, so that references in the Act to a state must be construed to include any individual representative of the state acting in that capacity: para 69 (Lord Hoffmann), cf para 10 (Lord Bingham). The second case comprises actions in which a state, without being a party, is said to be indirectly impleaded because some relevant interest of that state is directly engaged. In England, the only cases in which a foreign state has been held to be indirectly impleaded in this way are those involving the assertion of some right over property of that state situated within the jurisdiction of the English courts. The paradigm case of indirect impleader, and the earliest to be considered by the English courts, is an Admiralty action in rem against a state owned ship. During the period when the United Kingdom applied the absolute doctrine of state immunity it was established that an action in rem against a state owned ship was barred by state immunity. The principle, adapted to reflect the restricted doctrine of state immunity, is now embodied in section 10 of the State Immunity Act. The reason is that an action in rem is in reality an action against the ships owner, although the owner is not named. Thus the action may be brought only if at the time when the cause of action arose the owner would have been liable in personam; in current practice it may be brought against a ship in respect of a liability arising in connection with another ship under the same ownership. A defendant who appears to the writ in rem thereby becomes liable in personam even if he would not otherwise have been. In The Parlement Belge (1880) 5 PD 197, Brett LJ, delivering the judgment of the court, said at pp 218 219: In a claim made in respect of a collision the property is not treated as the delinquent per se. Though the ship has been in collision and has caused injury by reason of the negligence or want of skill of those in charge of her, yet she cannot be made the means of compensation if those in charge of her were not the servants of her then owner, as if she was in charge of a compulsory pilot. This is conclusive to shew that the liability to compensate must be fixed not merely on the property but also on the owner through the property. If so, the owner is at least indirectly impleaded to answer to, that is to say, to be affected by, the judgment of the court To implead an independent sovereign in such a way is to call upon him to sacrifice either his property or his independence. To place him in that position is a breach of the principle upon which his immunity from jurisdiction rests. We think that he cannot be so indirectly impleaded, any more than he could be directly impleaded. The case is, upon this consideration of it, brought within the general rule that a sovereign authority cannot be personally impleaded in any court. Although the expression indirect impleader has passed into common usage, the truth is that proceedings in rem against property are a form of direct impleader, as Lord Wright pointed out in The Cristina [1938] AC 485, at p 505. The principle that a state is impleaded by proceedings against its property is, however, based on more than the technicalities of Admiralty procedure. It reflects the broader rule that if the relief claimed would directly affect a foreign states interest in property, it makes no difference whether the action is framed in rem or in personam, and no difference whether it is brought against the state or someone else who is in possession or control of the property. In United States of America v Dollfus Mieg et Cie SA [1952] AC 582, gold bars had been looted by German troops in 1944 from a French bank which was holding them for Dollfus Mieg & Cie. They were recovered by allied forces in Germany and lodged with the Bank of England by a Tripartite Commission comprising the governments of Britain, France and the United States to await the Commissions decision upon their ultimate disposal. Accordingly the allied governments had no beneficial interest in the gold but an immediate right to possession as against the Bank. Dollfus Mieg brought a personal action against the Bank, claiming delivery of the bars still in its possession or damages for the Banks act in converting the bars by refusing delivery. The House of Lords held that the action against the Bank for specific delivery of the gold was barred by state immunity. Earl Jowitt considered (p 604) that the two foreign states were neither directly nor indirectly impleaded, but that state immunity should be extended to apply to actions against a states bailee. He did not expand on the reasons for that extension, but appears to have regarded it as a principle sui generis rather than an illustration of some broader rule. It is, however, clear that this was not the view taken by his colleagues. Lord Porter pointed out (p 612) that chattels and other personal property must necessarily be held by states through servants or agents and that bailees were on the same footing as agents. In other words, the Bank was to be identified with the three governments so far as it acted as their bailee. Lord Oaksey (p 614) agreed with Lord Porter. Lord Tucker (pp 621 622) took the same view. Lord Radcliffe, whose analysis is the most complete, approved the statement in the then current edition of Diceys Conflict of Laws that any action or proceeding against the property of [a foreign sovereign] is an action or proceeding against such person (p 616). In his view the merit of the rule thus stated was that it does make it clear that the property of a sovereign enjoys no immunity in legal proceedings except in so far as those proceedings amount in one way or another to a suit against a sovereign. This left unresolved the alternative claim against the Bank in its own right for damages for conversion. Lord Radcliffe rejected that claim also, on the ground that upon discharging any liability for conversion, the Bank would become entitled to set up the plaintiffs title against his bailor. In other words the courts judgment would materially affect the existing right of his bailor in respect of the possession and disposal of the chattel: pp 619 620. Similar issues arose in Rahimtoola v Nizam of Hyderabad [1958] AC 379. The Nizam sued the former High Commissioner of Pakistan in the United Kingdom, who had received a sum of money paid out of the Nizams account by a signatory during the Indian invasion of Hyderabad. It was held that the action was barred. The critical point was the capacity in which the High Commissioner had acted. The Court of Appeal had decided that no question of state immunity arose because the High Commissioner was only an agent of the state of Pakistan. In the House of Lords that decision was reversed, but there are some differences in the reasoning of the appellate committee. In my view, the correct analysis was that of Viscount Simonds, who thought that as an agent of Pakistan for the purpose of receiving the money, the High Commissioner was in the relevant respect to be identified with Pakistan. Like Lord Radcliffe in Dollfus Mieg, he approved the rule stated in Dicey (pp 393 394), observing: No doubt, if a defendant, by whatever name he is called, can be identified with the sovereign state, his task is easy: he need prove no more in order to stay the action against him. But, as soon as it is proved that quoad the subject matter of the action the defendant is the agent of a sovereign state, that, in other words, the interests or property of the state are to be the subject of adjudication, the same result is reached. Accordingly, he treated an action to assert a proprietary right in assets under the control of a state as a mode of impleading that state. Addressing an argument that Pakistan held the money in trust for the Nizam or as money had and received to his use, he added at p 397 These are matters which directly concern the principal on whose behalf Rahimtoola received the money. They cannot be determined without impleading him. Therefore they cannot be determined at all. This principle is now implicitly reflected in section 6(4) of the State Immunity Act, which provides that a court may entertain proceedings against a person other than a state relating to property in the possession or control of a state, or in which a state claims an interest, if the state would not have been immune had the proceedings been brought against it. In these cases, English and international law treated a claim against a states property as tantamount to a claim against the state. The appellants argue that the true rationale of this rule is broader than this. It is, they submit, that a state is to be treated as indirectly impleaded in any case where the issues would require the court to adjudicate on its legal rights or liabilities, albeit as between other parties. Two matters in particular are urged in support of this argument. The first is that it is said that an analogous principle is applied as a matter of international law by tribunals of international jurisdiction. The second is that the extension for which they contend is recognised in the current draft convention adopted by the United Nations for codifying the international law of state immunity. In both cases, the argument is that English law should conform to the principles of international law which underlie the domestic doctrine of state immunity. In support of the first point, the appellants rely on two decisions of the International Court of Justice, Monetary Gold Removed from Rome (1954) ICJ Rep, p 19 and East Timor (Portugal v Australia) (1995) ICJ Rep, p 90. The jurisdiction of the International Court over states is founded on their agreement to submit, either specifically in relation to a particular dispute or generally in relation to certain categories of dispute. In both of these cases the Court declined to decide an issue as between the parties because it affected the rights of a non party state. Monetary Gold concerned a claim by the United Kingdom to apply Albanian gold stored at the Bank of England towards satisfaction of a judgment which it had previously obtained from the Court against Albania. A competing claim had been made by Italy to apply the same gold in satisfaction of its own claims against Albania. Italy, however, had no judgment. The court declined to decide the issue as between the United Kingdom and Italy because it could not do so without deciding whether Italys claims against Albania were well founded, something that it could not do in litigation to which Albania was not a party. Giving its reasons at pp 32 33, the court observed: In the present case, Albanias legal interests would not only be affected by a decision, but would form the very subject matter of the decision. It is true that, under article 59 of the Statute, the decision of the court in a given case only binds the parties to it and in respect of that particular case. This rule, however, rests on the assumption that the court is at least able to render a binding decision. Where, as in the present case, the vital issue to be settled concerns the international responsibility of a third state, the court cannot, without the consent of that third state, give a decision on that issue binding upon any state, either the third state, or any of the parties before it. East Timor concerned a claim by Portugal that Australia had not been entitled to conclude a treaty with Indonesia relating to the exploitation of certain natural resources of East Timor, a Portuguese territory which had been occupied by Indonesia since 1975. Indonesia was not a party. The Court applied the Monetary Gold principle. It declined to entertain the dispute because it could not do so without adjudicating in the absence of Indonesia on the lawfulness of its occupation and its right to make treaties concerning the natural resources of East Timor. As the Court pointed out in Monetary Gold (p 32), the underlying principle is that a court can only exercise jurisdiction over a state with its consent. But the point about both of these cases was that the decision would have involved an exercise of jurisdiction over a non party state without its consent. This was because the resolution of the dispute as between the parties might have conferred upon at least one of them an international right at the expense of the non party. In Monetary Gold, the resolution of the issue in favour of Italy would have enabled Italy to satisfy its claim against Albanias gold, leaving Albania to satisfy the United Kingdoms judgment from other assets. In East Timor, the resolution of the issue in favour of Portugal, by binding Australia, would have prevented Australia from implementing its treaty with Indonesia and Indonesia from concluding any other treaty with Australia in right of East Timor. Both cases had two features which in combination account for the outcome. First, the rights or liabilities of the non party state were the very subject matter of the dispute between the parties. Secondly, although the judgment would have bound only the parties, each of the parties would have been bound to deal with the non party in accordance with it. Even on the assumption (and it is a large one) that the principle applied in these cases can readily be transposed to the domestic law plane, the mere fact that the rights or liabilities of the non party were in issue would not be enough. Turning to the appellants second argument, the United Nations Convention on Jurisdictional Immunities of States and their Property (2004) is an attempt to codify the international law of state immunity. It was drafted by the International Law Commission of the United Nations between 1977 and 2004. The final document was adopted by the General Assembly of the United Nations in December 2004. It will enter into force when 30 states have ratified it. As yet, however, it has been signed by only 31 states and ratified by only 19, not including the United Kingdom. Notwithstanding its uncertain status as a treaty, it has been regarded as an authoritative statement of customary international law. In Jones v Ministry of the Interior of the Kingdom of Saudi Arabia, supra, at para 8, Lord Bingham endorsed the view expressed by Aikens J in AIG Capital Partners Inc v Republic of Kazakhstan [2006] 1 WLR 1420 (para 80) that the Convention powerfully demonstrates international thinking. Article 1 of the Convention recites that it applies to the immunity of a state and its property from the jurisdiction of the courts of another state. Article 6 of the Immunities Convention provides: 1. A State shall give effect to State immunity under article 5 by refraining from exercising jurisdiction in a proceeding before its courts against another State and to that end shall ensure that its courts determine on their own initiative that the immunity of that other State under article 5 is respected. 2. A proceeding before a court of a State shall be considered to have been instituted against another State if that other State: is named as a party to that proceeding; or (a) (b) is not named as a party to the proceeding but the proceeding in effect seeks to affect the property, rights, interests or activities of that other State. Article 6(2)(b) incorporates the concept of indirect impleader. The appellants rely for their case on the breadth of the concluding words of paragraph (2)(b), and notably the extension of the concept beyond a states property or rights, to its interests and activities. There was an issue before us about how far these expressions can be said to represent the current consensus of nations. Certainly, comments in the course of the drafting suggest that some states considered the final words to be too broad. It is, however, unnecessary to resolve this question, because the scope of the final words of article 6(2)(b) are plainly limited by their context. Article 6(2)(b) is concerned only with cases where the proceedings seek to affect the property, rights, interests or activities of a state. It is difficult to envisage a case where this would be true, unless it related to property within the jurisdiction of the domestic forum in which the foreign state had an interest, especially in the context of a Convention which is expressly concerned only with the immunity of the state eo nomine and its property (see article 1). An examination of the travaux confirms this. The most illuminating document is the International Law Commissions report to the General Assembly of 1991, which includes a commentary on article 6: see Yearbook of the International Law Commission, 1991, ii(2), 23 25. This describes the genesis of article 6(2)(b) in domestic court decisions about state owned property. It records that the word affect was used in order to avoid appearing to create too loose a relationship between the proceedings and their consequences. And the discussion of its meaning relates wholly to actions involving seizure or attachment of public properties or properties belonging to a foreign state or in its possession or control: see paras 11 13 of the commentary under article 6. The essential point about the property cases is that they have the potential directly to affect the legal interests of states notwithstanding that they are not formally parties. In the case of an action in rem, this is obvious. The courts decision binds all the world. But although perhaps less obvious it is equally true of an action in personam, where the court is asked to recognise an adverse title to property in someone else or award possession of property as of right to another. As Lord Porter and Lord Radcliffe put it in Dollfus Mieg (pp 613, 616) the law cannot consistently with the immunity of states require a state to appear before a domestic court as the price of defending its legal interests. None of this reasoning, however, applies in a case where the foreign state has no legal interest to defend because the courts decision in its absence cannot directly affect its legal interests. I would not altogether rule out the possibility that litigation between other parties might directly affect interests of a foreign state other than interests in property. But, as I have observed, it is not easy to imagine such a case. The appellants argument is in reality an attempt to transform a personal immunity of states into a broader subject matter immunity, ie, one which bars the judicial resolution of certain issues even where they cannot affect the existence or exercise of a states legal rights. No decision in the present cases would affect any rights or liabilities of the four foreign states in whose alleged misdeeds the United Kingdom is said to have been complicit. The foreign states are not parties. Their property is not at risk. The courts decision on the issues raised would not bind them. The relief sought, namely declarations and damages against the United Kingdom, would have no impact on their legal rights, whether in form or substance, and would in no way constrict the exercise of those rights. It follows that the claim to state immunity fails. Act of state: foundations In Nissan v Attorney General [1970] AC 179, 211 212, Lord Reid observed: I think that a good deal of the trouble has been caused by using the loose phrase act of state without making clear what is meant. Sometimes it seems to be used to denote any act of sovereign power or of high policy or any act done in the execution of a treaty. That is a possible definition, but then it must be observed that there are many such acts which can be the subject of an action in court if they infringe the rights of British subjects. Sometimes it seems to be used to denote acts which cannot be made the subject of inquiry in a British court. But that does not tell us how to distinguish such acts: it is only a name for a class which has still to be defined. The first task of a court dealing with a contention that the act of state doctrine applies is to clarify what is meant by an act of state, and what legal consequences follow from this categorisation. The act of state doctrine comprises two principles. The first can conveniently be called Crown act of state and does not arise in the present cases. It is that in an action based on a tort committed abroad, it is in some circumstances a defence that it was done on the orders or with the subsequent approval of the Crown in the course of its relations with a foreign state. The second, commonly called foreign act of state, is that the courts will not adjudicate upon the lawfulness or validity of certain sovereign acts of foreign states. For this purpose a sovereign act means the same as it does in the law of state immunity. It is an act done jure imperii, as opposed to a commercial transaction or other act of a private law character. These are distinct principles, although they are based on certain common legal instincts. Unlike state immunity, act of state is not a personal but a subject matter immunity. It proceeds from the same premise as state immunity, namely mutual respect for the equality of sovereign states. But it is wholly the creation of the common law. Although international law requires states to respect the immunity of other states from their domestic jurisdiction, it does not require them to apply any particular limitation on their subject matter jurisdiction in litigation to which foreign states are not parties and in which they are not indirectly impleaded. The foreign act of state doctrine is at best permitted by international law. It is not based upon it: see Carreau & Marrella, Droit International, 11th ed (2012), 701; Weil, Le controle par les tribunaux nationaux de la licit des actes des gouvernements trangers, Annuaire franais de droit international, 23 (1977), 16, 30. The policy which the foreign act of state doctrine reflects does, however, have partial analogues in the municipal law of a number of civil law jurisdictions, subject in some cases to extensive public policy exceptions. The question has generally arisen in the context of foreign legislative expropriations. These might have been recognised in other countries on the basis that the passing of property is governed by the lex situs. In fact, however, they are recognised in some civil law countries on the basis that they are acts of state beyond challenge in the domestic courts of another country. The French courts in particular have proceeded in these cases upon a principle based on a lack of competence or jurisdiction to rule on the legality of foreign acts of state, which is quite distinct from the corresponding principle (acte de gouvernement) relating to acts of the French government in the conduct of its foreign relations: see Larrasquitu et l'Etat Espagnol v Socit Cementos Rezola (Cour dAppel de Poitiers, 20 December 1937), (1938) 8 ILR 196 (the French jurisdiction is incompetent to consider the regularity of the act of a foreign sovereign, for that would be to judge that act); Martin v Banque d'Espagne (Cour de Cassation, 3 November 1952) (1952) ILR 202 (the acts in question, even apart from the principle of immunity from jurisdiction, were public acts which are not subject to judicial control in France); Epoux Reynolds v Ministre des Affaires Etrangres (Tribunal de Grande Instance de la Seine, 30 June 1965) (1965) 47 ILR 53 (a French court has no jurisdiction to adjudicate on the legality of that measure). The principle is thus expressed in terms which are not confined to expropriation cases, and it has in fact been applied more widely, notably in a well known decision of the Cour de Cassation in a case involving the lawfulness of the act of a foreign state in deporting a criminal suspect to France: In re Illich Ramirez Sanchez (Cour de Cassation, 21 February 1995) ECLI:FR:CCASS:1995:CR06093). So also the courts of the Netherlands: Petroservice & Credit Minier Franco Roumain v El Aguila (Ct App, The Hague, 4 December 1939), (1939) 11 ILR 17 (A Dutch Court is obliged to refrain from entering into an independent examination of the validity or invalidity of public acts of a foreign government); Bank Indonesia v Senembah Maatschappij and Twentsche Bank NV (1959) 30 ILR 28 (Court of Appeal of Amsterdam, 4 June 1959) (as a rule, a Court will not, and should not, sit in judgment on the lawfulness of acts jure imperii performed by, or on behalf of, a foreign Government, except in cases of flagrant conflict with international law). Like the French courts, the Dutch courts have applied the same principle in contexts other than expropriation, for example in addressing allegations of complicity by Dutch companies in the military operations of a foreign state: Republic of South Moluccas v Royal Packet Shipping Co (Amsterdam Court of Appeal, 8 February 1951) (1951) 17 ILR 150. German law, on the other hand, arrives at a similar result, by reference to a special rule based on the autonomy of states acting within their own territory: Unification Treaty Constitutionality Case, Bundesverfassungsgericht, judgment of 23 April 1991, 94 ILR 42. The German courts appear to have rejected any more general principle limiting the subject matter jurisdiction of the courts over issues incidentally requiring a determination of the lawfulness or validity of a foreign states sovereign acts: Kunduz, Oberlandsgericht Kln, judgment of 30 April 2015, AZ 7 U 4/14, para 17. In none of these jurisdictions does the question appear to be governed by ordinary principles of the choice of law. Differences between major civil law jurisdictions means that one cannot attach too much weight to the case law of any one of them. None the less, I find the approach of the French and Dutch courts instructive. It reflects a strong juridical instinct in two jurisdictions with a long standing engagement with international relations, which has an obvious relevance for the United Kingdom. In England, the origin of the foreign act of state doctrine is commonly thought to be the decision of Lord Chancellor Nottingham in Blad v Bamfield (1673) 3 Swan 603; (1674) 3 Swan 604, although this view turns more on his expansive turns of phrase than on anything that he actually decided. The dispute arose out of the volatile relations between England and Denmark in the second half of the 17th century. Peter Blad appears to have been the holder of a patent of monopoly from the King of Denmark to trade in Iceland, then a Danish possession. Bamfield was an Englishman whose property was seized on the high seas in 1668 by the authority of the Danish Crown and forfeited by the Danish courts, on the ground that he had been fishing off Iceland in breach of the monopoly. Some years later, Blad made the mistake of visiting England. Bamfield sued him at law, contending that the monopoly was illegal and invalid since it was contrary to a right to trade which had in practice been recognised by Denmark for 50 years before the seizure. Blad contended that he could not be liable because the seizure was an act of state. He initially complained to the Privy Council on the ground that as an act of state it was susceptible of relief only by diplomatic means. Lord Nottingham, who was sitting on the Council, stood up and said this was not a question of state, but of private injury, and suggested that the matter should properly be brought before the Court of Chancery. But when the case came before him in chancery, Lord Nottingham changed his mind. This was because Bamfield was now contending that reliance on the Danish letters patent was precluded by the terms of the Anglo Danish commercial treaty of 1670. This, he said, made all the difference: it is very true that this cause was dismissed from the council board being not looked on there as a case of state, because for aught appeared to them, it might be a private injury, and unwarrantable, and so fit to be left to a legal discussion. But now the very manner of the defence offered by the defendant had made it directly a case of state; for they insist upon the articles of peace to justify their commerce, which is of vast consequence to the public; for every misinterpretation of an article may be the unhappy occasion of a war. Nottingham restrained Bamfields action at law on the ground that to send it to a trial at law, where either the court must pretend to judge of the validity of the Kings letters patent in Denmark or of the exposition and meaning of the articles of peace; or that a common jury should try whether the English have a right to trade in Iceland, is monstrous and absurd. What barred Bamfields case was his reliance on a treaty as invalidating a legal instrument of the Danish Crown relating to commercial operations in a Danish possession. In a later age it would have been held that a treaty operated only on the plane of international law, and could not give rise to private rights in a citizen. But Lord Nottinghams concern was a different one. He was simply expressing the view, which was still commonly expressed long after his day, that a domestic court was incompetent to construe a treaty. Nabob of the Carnatic v East India Co (1793) 2 Ves Jun 56 arose out of the East India Companys controversial relations with the Nabob at a stage when the courts had not yet learned to identify the East India Company with the British government. The companys dealings with the Nabob are the subject of some of Edmund Burkes most famous Parliamentary orations. The facts, in summary, were that the Company had assisted the Nabob, a sovereign ruler, in his wars against neighbouring princes. The Nabob had thereby incurred large debts to them, secured on his public revenues and on part of his territory. The Nabob alleged that they had taken more than he owed them, and sued for an account. The company, although a private person in respect of its trading activities, was treated as a sovereign in relation to its operations as the ruler of a large part of India. The commissioners discharging the office of Chancellor dismissed the claim (p 60): It is a case of mutual treaty between persons acting in that instance as states independent of each other; and the circumstance, that the East India Company are mere subjects with relation to this country, has nothing to do with that. That treaty was entered into with them, not as subjects, but as a neighbouring independent state, and is the same, as if it was a treaty between two sovereigns; and consequently is not a subject of private, municipal, jurisdiction. Dobree v Napier (1836) 2 Bing NC 781 marked an important development of the law. It arose out of the civil wars of Portugal in the 1830s. The plaintiffs steamship Lord of the Isles was captured on the high seas in 1833 while trying to run warlike stores through a blockade of the Portuguese coast maintained by warships loyal to Queen Maria II. The ship was subsequently forfeited by a Portuguese prize court. The Queens admiral happened to be a British subject, the adventurer Sir Charles Napier (not to be trusted except in the hour of danger), and upon his return home he was sued in the Kings Bench for trespass. Tindal CJ dismissed the action. The main reason was that the decree of the prize court was a judgment in rem and conclusive. But he went on to reject an argument to the effect that having entered Portuguese service in breach of the Foreign Enlistment Act 1819, Napier was disabled from relying on the authority of the Queen of Portugal or the decision of her prize courts. He did so on the ground that a breach of the Act could not render the acts of the Portuguese state justiciable: no one can dispute the right of the Queen of Portugal, to appoint in her own dominions, the defendant or any other person she may think proper to select, as her officer or servant, to seize a vessel which is afterwards condemned as a prize; or can deny, that the relation of lord and servant, de facto, subsists between the queen and the defendant Napier. For the Queen of Portugal cannot be bound to take any notice of, much less owe any obedience to, the municipal laws of this country For as we hold that the authority of the Queen of Portugal to be a justification of the seizure as prize, there is as little doubt but that she might direct a neutral vessel to be seized when in the act of breaking a blockade by her established, which is the substance of the first special plea, or of supplying warlike stores to her enemies, which is the substance of the second. (pp 796 798) The decision on this last point was approved by the House of Lords in Carr v Fracis Times & Co [1902] AC 176. Lord Halsbury LC analysed the case as follows, at pp 179 180: There, it was an act of state done by command of the Portuguese Crown and done by an English subject. It was an a fortiori case; the act done by the English subject was an act which he was by English law prohibited from doing; to the plea that it was done by the authority of the Portuguese Crown, there was a replication that he was forbidden by the Foreign Enlistment Act to take that part in the proceedings which he was proved to have taken; nevertheless, the judgment of the Court held that that was a perfectly lawful proceeding, that it was an act of State, that it was authorized by the Portuguese Crown, and no action would lie in this country against an English subject who participated in it. The essential point was that the blockade was, as a matter of international law, a sovereign act of Portugal in the conduct of its relations with the rest of the world, in particular those nations who might, or whose subjects might, seek to run the blockade in support of the Queen of Portugals domestic enemies. Duke of Brunswick v King of Hanover (1848) 2 HLC 1 marked another milestone in the development of this area of the law, not only in England but in the United States, where it would later serve as the point of departure for adoption of the foreign act of state doctrine into their law. The background to this celebrated decision was a revolution in the German state of Brunswick which overthrew the government of the feckless and despotic Duke Charles in 1830. In accordance with a power conferred on them by the Diet of the German Confederation, HM William IV of England, in his separate capacity as King of Hanover, and the deposed Dukes brother William, subsequently joined in two public instruments. The first, of 1831, purported to depose Charles in favour of William. The second, of 1833, purported to deprive him of his assets in Brunswick, France, England and elsewhere for his own protection and vest them in the Duke of Cambridge as guardian. In 1843 Charles brought an action in Chancery against the current guardian, who was HM William IVs successor as King of Hanover, for an account of his dealings with the property on the footing that these transactions were contrary to the law of Hanover and void. The bill was dismissed by Lord Langdale MR for want of equity. His decision was affirmed on different grounds by the House of Lords. The defendant was entitled to state immunity, and parts of the reasoning appear to be based on that ground. But as Lord Wilberforce later observed in Buttes Gas & Oil Co v Hammer [1982] AC 888, 932E F, it also stands as authority for the foreign act of state doctrine, because the ground of the decision was that the decree of the Diet and the two public instruments could not be challenged in an English court. The Lord Chancellor (Cottenham) said, at pp 21 22: If it were a private transaction , then the law on which the rights of individuals may depend might have been a matter of fact to be inquired into, and for the court to adjudicate upon, not as a matter of law, but as a matter of fact. If it be a matter of sovereign authority, we cannot try the fact whether it be right or wrong: The allegation that it is contrary to the laws of Hanover, taken in conjunction with the allegation of the authority under which the defendant had acted, must be conceded to be an allegation, not that it was contrary to the existing laws as regulating the right of individuals, but that it was contrary to the laws and duties and rights and powers of a Sovereign exercising sovereign authority. If that be so, it does not require another observation to shew, because it has not been doubted, that no court in this country can entertain questions to bring Sovereigns to account for their acts done in their sovereign capacities abroad. The rest of the House agreed, Lord Campbell observing at p 26 that even if the Duke of Cambridge, who was not a sovereign, had been sued it would equally have been a matter of state, and at p 27 that the Court of Chancery I presume would not grant an injunction against the French Republic marching an army across the Rhine or the Alps. Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22 was a case of Crown act of state. The question at issue was the lawfulness of the annexation of the princely state of Tanjore by the East India Company on behalf of the British Crown. However, the Privy Council made no distinction between Crown and foreign act of state for this purpose. Lord Kingsdown, delivering the advice of the Board, formulated the issue (p 77) as being whether the annexation was done under colour of legal right, in which case the existence of that right was a justiciable question, or as an exercise of power, an act not affecting to justify itself on grounds of municipal law, in which case it was an act of state. Holding that it was the latter, Lord Kingsdown said (p 86): Of the propriety or justice of that act, neither the court below/or the Judicial Committee have the means of forming, or the right of expressing if they had formed, any opinion. It may have been just or unjust, politic or impolitic, beneficial or injurious, taken as a whole, to those whose interests are affected. These are considerations into which their Lordships cannot enter. It is sufficient to say that, even if a wrong has been done, it is a wrong for which no municipal court of justice can afford a remedy. In Cook v Sprigg [1899] AC 572 another case of colonial annexation, Lord Halsbury LC expressed the same principle in terms which would subsequently be taken up by Lord Wilberforce in Buttes Gas & Oil Co v Hammer [1982] AC 888, 933F G: It is a well established principle of law that the transactions of independent states between each other are governed by other laws than those which municipal courts administer. In Carr v Fracis Times [1902] AC 176, the captain of HMS Lapwing, acting on the authority of the Sultan of Muscat, seized a cargo of ammunition within the territorial waters of Muscat. The proclamation which authorised the seizure was lawful by the law of Muscat. The case might have been decided on ordinary choice of law grounds. But the Sultans proclamation was challenged on the ground that he had made it under a mistake as to the destination of the cargo. This argument was rejected because, mistaken or not, the proclamation was an act of state. Lord Halsbury LC said, at p 179: It is not an act as between person and person; it is an act of state which the Sultan says authoritatively is lawful; and I cannot doubt that under such circumstances the act done is an act which is done with complete authority and cannot be made the subject of an action here. He went on to say (pp 179 80) that it made no difference that the seizure was carried out by a British naval officer. This was the state of English authority at the time when the foreign act of state doctrine was considered by the courts of the United States in a number of decisions which have proved influential on both sides of the Atlantic. United States cases Although there are, as always, precursors in earlier dicta about related issues, the foreign act of state doctrine in the United States really begins with the decision of the Supreme Court of New York in Hatch v Baez 7 Hun 596 (1876). The issue arose out of a coup d'tat in the Dominican Republic in 1868, which resulted in the deposition of the then President and his replacement by Buonaventura Baez. Hatch, who was living at the time in Dominica, was believed to have supported the old regime. As a result, he was arrested and imprisoned and his goods seized by Baezs soldiery. Some years later, after Baez had left office, he settled in New York and Hatch sued him there for trespass to his person and goods on the footing that these things had been done on his orders. Before the New York Supreme Court, Baez admitted that the New York courts had jurisdiction over him, but pleaded act of state, relying on Duke of Brunswick v King of Hanover. The court dismissed the claim. It observed, at pp 599 600: We think that, by the universal comity of nations and the established rules of international law, the courts of one country are bound to abstain from sitting in judgment on the acts of another government done within its own territory. Each state is sovereign throughout its domain. The acts of the defendant for which he is sued were done by him in the exercise of that part of the sovereignty of St Domingo which belongs to the executive department of that government. To make him amenable to a foreign jurisdiction for such acts, would be a direct assault upon the sovereignty and independence of his country. The only remedy for such wrongs must be sought through the intervention of the government of the person injured. The issue first came before the Supreme Court in Underhill v Hernandez 168 US 250 (1897). This case arose out of another civil war, in Venezuela. General Hernandez had been the local commander of the revolutionary army which enabled Joaquin Crespo to seize power in 1892. Crespos government was subsequently recognised by the United States as the legitimate government of Venezuela. In November 1893, Hernandez was arrested at a New York hotel and required to post a bond to secure damages for false imprisonment, assault and battery, claimed against him in a civil suit brought by Underhill, an American businessman who lived in Venezuela and owned a commercial waterworks in Bolivar. Underhill alleged that Hernandez had refused him a passport to leave the city and had ordered him to be confined to his house, and that his soldiers had assaulted and abused him, all in order to force him to operate his waterworks in the interest of the new regime. The New York judge directed a verdict for Hernandez, on the ground that he had been a military commander representing a de facto government in the prosecution of a war. The case was then removed to the Federal Courts, and the judges decision was upheld by the Second Circuit Court of Appeals, on the ground that the acts of the defendant were the acts of the government of Venezuela, and as such, are not properly the subject of adjudication in the courts of another government. The Supreme Court granted a petition to review the decision and upheld it. The judgment of Chief Justice Fuller began (p 252) by rationalising the act of state doctrine on the same basis as the Supreme Court of New York in Hatch v Baez: Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves. Where a civil war prevails, that is, where the people of a country are divided into two hostile parties, who take up arms and oppose one another by military force, generally speaking foreign nations do not assume to judge of the merits of the quarrel. It is clear that for the court the critical factor was the subsistence of armed hostilities. Hernandez was a military commander representing the authority of the revolutionary party as a government, which afterwards succeeded and was recognized by the United States. In both of these cases, state immunity might have been raised, on the footing that Baez was a former head of state and Hernandez had been acting as an agent of the (subsequently) recognised government of Venezuela. But in both cases, the defendant submitted to the jurisdiction and the matter was dealt with after a trial. Any right to raise state immunity was therefore lost, and foreign act of state was the sole relevant ground of appeal. On the other hand, in Oetjen v Central Leather Co 246 US 297 (1918), state immunity never could have been raised. The case arose out of the Mexican civil war of the early 20th century. In 1914, forces loyal to Venustiano Carranza occupied the town of Torreon and seized a large quantity of hides belonging to one Martinez. Subsequently, after the United States had recognised Carranzas government, Martinezs assignee sued a Texan company to whom the hides had been sold, alleging that the title of the original owner subsisted because the hides had been taken contrary to the Hague Convention respecting the Laws and Customs of War on Land (1907). The court dismissed the suit. It doubted whether the Convention applied to a civil war or whether it prohibited seizures in these circumstances. But in order to provide guidance in similar cases, it preferred to base its decision on the fact that the seizure was an act of state. Having held that the recognition of the Carranza government by the United States meant that it fell to be treated as the government of the state of Mexico, the Court continued at pp 303 304: The principle that the conduct of one independent government cannot be successfully questioned in the courts of another is as applicable to a case involving the title to property brought within the custody of a court, such as we have here, as it was held to be to the cases cited, in which claims for damages were based upon acts done in a foreign country, for it rests at last upon the highest considerations of international comity and expediency. To permit the validity of the acts of one sovereign state to be re examined and perhaps condemned by the courts of another would very certainly imperil the amicable relations between governments and vex the peace of nations. It is not necessary to consider, as the New Jersey court did, the validity of the levy of the contribution made by the Mexican commanding general, under rules of international law applicable to the situation, since the subject is not open to re examination by this or any other American court. The remedy of the former owner, or of the purchaser from him, of the property in controversy, if either has any remedy, must be found in the courts of Mexico or through the diplomatic agencies of the political department of our Government. These cases were decided at a time when the courts of the United States adopted an approach to foreign sovereign acts which was very similar to that adopted in England, and largely influenced by it. They proceed on the footing that the act of state doctrine is based on the same concept as state immunity, viz the equality and autonomy of sovereign states. Like Lord Cottenham in Duke of Brunswick v King of Hanover, the US Supreme Court objected to the concept of a domestic court sitting in judgment upon the acts of another sovereign, even in his absence. More recently, the US Supreme Court in Banco Nacional de Cuba v Sabbatino 376 US 398 (1964), has viewed the act of state doctrine primarily as an aspect of the constitutional separation of powers under the US Constitution and has closely associated it with the political question rule. This has led it to attach greater significance to the views of the executive about the impact that different outcomes would have on US foreign policy, and to adopt a flexible approach to the act of state doctrine depending mainly on the degree of embarrassment that would be caused to the State Department in each case. This development would not be consistent with the accepted principles governing the relations between the courts and the executive in England. English law has continued to act on the original rationale of the US doctrine, and Underhill v Hernandez continues to be cited on this side of the Atlantic as a correct statement of the principle. England: the Russian Revolution cases Johnstone v Pedlar [1921] 2 AC 262 did not involve a foreign act of state. It is the leading modern authority for the proposition that Crown act of state is not a plea available to a defendant in relation to acts done in the United Kingdom, even against aliens. But in the course of distinguishing between Crown and foreign acts of state, Lord Sumner summarised the effect of the latter doctrine as follows, at p 290: Municipal Courts do not take it upon themselves to review the dealings of State with State or of Sovereign with Sovereign. They do not control the acts of a foreign state done within its own territory, in the execution of sovereign powers, so as to criticise their legality or to require their justification. Shortly after this statement was made, the principle stated was applied in a series of cases heard after the United Kingdoms recognition of the Soviet government, which arose from the confiscation of private property in Russia in the aftermath of the Russian Revolution. These raised questions very similar to those which had been considered by the courts of the United States. In Aksionernoye Obschestvo AM Luther v James Sagor & Co [1921] 3 KB 532, the stock of the plaintiffs timber mill had been confiscated by a decree of the Russian Republic in June 1918 and sold to the defendants, who subsequently imported it into England. The plaintiffs sued them there for a declaration that the timber remained their property and damages for its conversion. They contended that no effect should be given to the decree of June 1918 because (among other reasons) it was immoral. In the Court of Appeal, all three judges rejected the argument that the decree was immoral. Bankes LJ did so on straightforward choice of law grounds. The passing of property was governed by the lex situs, and the decree was part of that law. No question of its morality arose. But Warrington and Scrutton LJJ rejected it on the ground the decree was an act of state. Warrington LJ thought (pp 548 549) that the decree was entitled to the respect due to the acts of an independent sovereign state, and added that the acts of an independent sovereign government in relation to property and persons within its jurisdiction cannot be questioned in the Courts of this country, citing Oetjen v Central Leather Co. Scrutton LJ thought (pp 558 559) that any criticism of the morality of the decree was the proper function of the executive, not the judiciary. In Princess Paley Olga v Weisz [1929] 1 KB 718, the facts were similar except that the goods in question were works of art forcibly removed from the plaintiffs palace at Tsarskoye Selo. The Court of Appeal again dismissed the claim. All three members of the Court held that effect fell to be given to the decree as part of the lex situs. But they also upheld a distinct argument that even if, as the plaintiff alleged, the decree did not justify the seizure, it was an act of state into the validity of which this Court would not inquire: see pp 723 724 (Scrutton LJ); cf pp 729 730 (Sankey LJ), and 723 724. Scrutton LJ (pp 724 725) adopted the statement of principle in Oetjen v Central Leather Co on this point as corresponding to the law of England. Buttes Gas In Regazzoni v KC Sethia (1944) Ltd [1958] AC 301, a contract for the sale of jute was held to be unenforceable because it involved the shipment of the cargo from India in breach of an Indian prohibition of exports to South Africa. The House of Lords rejected an argument that the Indian law should be disregarded on the ground that it was contrary to international law because it is a hostile act directed against a friendly state, and as such contrary to English public policy (see p 307). Commenting on this argument at pp 325 326, Lord Reid said: It was argued that this prohibition of exports to South Africa was a hostile act against a Commonwealth country with which we have close relations, that such a prohibition is contrary to international usage, and that we cannot recognize it without taking sides in the dispute between India and South Africa. My Lords, it is quite impossible for a court in this country to set itself up as a judge of the rights and wrongs of a controversy between two friendly countries, we cannot judge the motives or the justifications of governments of other countries in these matters and, if we tried to do so, the consequences might seriously prejudice international relations. By recognizing this Indian law so that an agreement which involves a breach of that law within Indian territory is unenforceable we express no opinion whatever, either favourable or adverse, as to the policy which caused its enactment. Lord Keith of Avonholm, concurring, said at p 327: The English courts cannot be called on to adjudicate upon political issues between India and South Africa. Regazzoni v Sethia marked a return to concepts of non justiciability canvassed a century before in the colonial annexation cases. The principal modern landmark in this area of the law is the important and much debated decision of the House of Lords in Buttes Gas & Oil Co v Hammer [1982] AC 888. This was ostensibly an action for slander with a counterclaim for common law conspiracy to defraud. But it was actually a dispute about the extent of the territorial waters of the emirate of Sharjah around the island of Abu Musa in the Persian Gulf. Buttes Gas sued Dr Hammer and Occidental Petroleum for alleging in a press release that it had procured the Ruler of Sharjah to backdate a decree extending the territorial waters of the emirate. Their object was said to be to obtain for themselves the benefit of oil bearing deposits in the extended area, at the expense of Occidental which claimed to hold a concession for the same area from the neighbouring Ruler of Umm al Qywain. Occidental alleged that the extension of Sharjahs territorial waters was contrary to international law, and counterclaimed damages for an alleged conspiracy to defraud them, to which the Ruler and the United Kingdom were parties. According to the counterclaim the United Kingdom, which was responsible for the foreign relations and defence of both emirates, intervened politically with the Ruler of Umm al Qywain to forbid Occidentals drilling operations there and deployed a warship to turn back the companys drilling platform. Buttes applied to have the counterclaim struck out, principally on the ground that it was based on acts of state by the Ruler of Sharjah and the government of the United Kingdom. The House struck out the proceedings. The leading speech was delivered by Lord Wilberforce, with whom the rest of the Appellate Committee agreed. After rejecting the argument that the counterclaim was barred as being based on a claim to title to foreign land, and putting to one side the case law about Crown act of state, he continued, at p 931: A second version of act of state consists of those cases which are concerned with the applicability of foreign municipal legislation within its own territory, and with the examinability of such legislation often, but not invariably, arising in cases of confiscation of property. Mr Littman gave us a valuable analysis of such cases as Carr v Fracis Times & Co [1902] AC 176; Aksionairnoye Obschestvo AM Luther v James Sagor & Co [1921] 3 KB 532 and Princess Paley Olga v Weisz [1929] 1 KB 718, suggesting that these are cases within the area of the conflict of laws, concerned essentially with the choice of the proper law to be applied. Two points were taken as regards the applicability of this line of authority. First, it was said that foreign legislation can be called in question where it is seen to be contrary to international law or to public policy; the decree of 1969/70 was so contrary. Secondly, it was contended that foreign legislation is only recognised territorially ie within the limits of the authority of the state concerned. In my opinion these arguments do not help the respondents. As to the first, it is true, as I have pointed out, that the attack on Sharjahs decree of 1969/70 is not upon its validity under the law of Sharjah, but upon its efficacy in international law. But this brings it at once into the area of international dispute. It is one thing to assert that effect will not be given to a foreign municipal law or executive act if it is contrary to public policy or to international law (cf In re Helbert Wagg & Co Ltds Claim [1956] Ch 323) and quite another to claim that the courts may examine the validity, under international law or some doctrine of public policy, of an act or acts, operating in the area of transactions between states. The second argument seems to me to be no more valid. To attack the decree of 1969/70 extending Sharjahs territorial waters, ie its territory, upon the ground that the decree is extra territorial seems to me to be circular or at least question begging. Lord Wilberforce went on, at pp 931 932, to dismiss Occidentals counterclaim as raising matters which were non justiciable on wider grounds: the essential question is whether there exists in English law a more general principle that the courts will not adjudicate upon the transactions of foreign sovereign states. Though I would prefer to avoid argument on terminology, it seems desirable to consider this principle, if existing, not as a variety of act of state but one for judicial restraint or abstention. In my opinion there is, and for long has been, such a general principle, starting in English law, adopted and generalised in the law of the United States of America which is effective and compelling in English courts. This principle is not one of discretion, but is inherent in the very nature of the judicial process. Lord Wilberforce regarded the general principle as being derived from a wider principle concerning the transactions of sovereign states, of which the cases about the expropriation of property under municipal law were no more than a part. While eschewing arguments about terminology, he appears in this passage to have regarded the general principle as something different from the act of state doctrine. It is unquestionably different from the rule about the application to a sovereign act of the sovereigns municipal law, which was I think the only point that he was making. There is much to be said for the view of Rix LJ, delivering the judgment of the Court of Appeal in Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2) [2014] QB 458, para 66, that Lord Wilberforces principle of non justiciability has, on the whole, not come through as a doctrine separate from the act of state principle itself, but rather has to a large extent subsumed it as the paradigm restatement of that principle. It would seem that, generally speaking, the doctrine is confined to acts of state. However, I do not believe, any more than Lord Wilberforce did, that anything is gained by arguments about labels. He proceeded to make good his general principle by reference to the decisions in Blad v Bamfield and Duke of Brunswick v King of Hanover. The latter case, which Lord Wilberforce regarded as still authoritative, has generally been cited both in England and the United States as turning on the act of state doctrine. Lord Wilberforce regarded it as authority for the proposition that the courts will not adjudicate upon acts done abroad by virtue of sovereign authority. He considered that it was the basis of the US Supreme Courts decisions in Underhill v Hernandez and Oetjen v Central Leather Co, the cases which provided the foundation for the act of state doctrine in the United States, and which he had cited with approval at pp 933 934. In applying this wider principle to the particular facts before him, Lord Wilberforce emphasised (p 938) that the issue before the House turned on questions of international law arising between states: It would not be difficult to elaborate on these considerations, or to perceive other important inter state issues and for issues of international law which would face the court. They have only to be stated to compel the conclusion that these are not issues upon which a municipal court can pass. Leaving aside all possibility of embarrassment in our foreign relations (which it can be said not to have been drawn to the attention of the court by the executive), there are no judicial or manageable standards by which to judge these issues, or to adopt another phrase (from a passage not quoted), the court would be in a judicial no mans land: the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force, and to say that at least part of these were unlawful under international law. Recent decisions The detailed application of the principle formulated by Lord Wilberforce in Buttes Gas has often been disputed but the principle itself has not. It was restated by Lord Oliver in JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry (the Tin Council case) [1990] 2 AC 418, in a speech with which Lord Keith of Kinkel, Lord Brandon and Lord Griffiths agreed. Rejecting an argument that the treaty creating the International Tin Council could give rise to justiciable private law rights, he held at p 499 that it was axiomatic that municipal courts have not and cannot have the competence to adjudicate upon or to enforce the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law. In R (Abbasi) v Secretary of State for Foreign Affairs [2002] EWCA Civ 1598; [2003] UKHRR 76 the Court of Appeal declined to decide that the detention of prisoners in Guantanamo Bay was contrary to the obligations of the Unites States under the 3rd Geneva Convention. At para 32, the court accepted the following statement by Counsel of the general rule: It is well established that the English court will not adjudicate upon the legality of a foreign states transactions in the sphere of international relations in the exercise of sovereign authority, citing Buttes Gas and Oil v Hammer [1982] AC 888 at 932 (per Lord Wilberforce); Westland Helicopters Ltd v AOI [1995] QB 282. To do so would involve a serious breach of comity: see Buck v Attorney General [1965] 1 Ch 745 at 770 771 (per Lord Diplock) and R v Secretary of State, Ex p British Council of Turkish Cypriot Associations 112 ILR 735 at 740 (per Sedley J). [Counsel] observed that the relief sought by the claimants was founded on the assertion that the United States government was acting unlawfully. For the court to rule on that assertion would be contrary to comity and to the principle of state immunity. Apart from the decisions in the present case, the most recent discussion of the principles underlying the foreign act of state doctrine is the decision of the Court of Appeal in R (Noor Khan) v Secretary of State for Foreign Affairs [2014] 1 WLR 872. The case raised issues in some ways similar to the present ones. The claimants father had been killed in Pakistan by a missile fired from an American drone. He applied for judicial review of the decision of the Foreign Secretary to supply intelligence to the United States for use in targeting drone strikes and sought various declarations as to the lawfulness of supplying locational intelligence for this purpose. His case was that an official passing intelligence in these circumstances committed an offence by encouraging or assisting an act by the American operators of the drone which would, if committed by a British subject, amount to murder, contrary to sections 44 to 46 of the Serious Crimes Act 2007. The Court of Appeal dismissed the application on grounds of both principle and discretion. Addressing the point of principle, it adopted the following statement of Moses LJ in the Divisional Court as a correct statement of principle: It is necessary to explain why the courts would not even consider, let alone resolve, the question of the legality of United States drone strikes. The principle was expressed by Fuller CJ in the United States Supreme Court in Underhill v Hernandez (1897) 168 US 250, 252: Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves (cited with approval in Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888, 933, and R v Jones (Margaret) [2007] 1 AC 136, 163). The principle that the courts will not sit in judgment on the sovereign acts of a foreign state includes a prohibition against adjudication on the legality, validity or acceptability of such acts, either under domestic law or international law: Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, 1080, para 24. The rationale for this principle, is, in part, founded on the proposition that the attitude and approach of one country to the acts and conduct of another is a matter of high policy, crucially connected to the conduct of the relations between the two sovereign powers. To examine and sit in judgment on the conduct of another state would imperil relations between the states: Buttes Gas case [1982] AC 888, 933. Turning to the question of discretion, the Court of Appeal accepted that arguably the offences created by sections 44 to 46 of the 2007 Act did not require a finding that the US operators of the drone had committed murder, but only a finding that they would have done so if they had been British citizens. However, they declined (paras 36 37) to determine the question because the public, especially in the United States, would be unlikely to make or understand that distinction: But none of this can disguise the fact that in reality the court will be asked to condemn the acts of the persons who operate the drone bombs. Whilst for the purposes of the 2007 Act these persons are to be treated as if they are UK nationals, everyone knows that this is a legal fiction devised by Parliament in order to found secondary liability under sections 44 to 46. In reality, the persons who operate the drones are CIA officials and in doing so they are implementing the policy of the US Government. In my view, a finding by our court that the notional UK operator of a drone bomb which caused a death was guilty of murder would inevitably be understood (and rightly understood) by the US as a condemnation of the US. In reality, it would be understood as a finding that (i) the US official who operated the drone was guilty of murder and (ii) the US policy of using drone bombs in Pakistan and other countries was unlawful. The fact that our courts have no jurisdiction to make findings on either of these issues is beside the point. What matters is that the findings would be understood by the US authorities as critical of them. Although the findings would have no legal effect, they would be seen as a serious condemnation of the US by a court of this country. Remedies by way of judicial review are of course discretionary. But the only relevance of the discretion to this decision was that it enabled the court to ignore any difference that there might be between the legal analysis and the public perception, and to reject the claim on the ground that it would embarrass Anglo American relations, a consideration that would be irrelevant to a claim of right. For present purposes, the point is that the claimants allegations involved a challenge to the lawfulness under English law of the acts of British officials, who were said to have incurred an accessory liability for murder by US forces. If Mr Khan, instead of applying for judicial review, had claimed damages in tort for personal injury, in his own right or on behalf of his fathers estate, no discretion would have been involved. But he would still have lost, on the point of principle identified by Moses LJ and approved in the Court of Appeal. It should be noted that the principle stated by Moses LJ and approved by the Court of Appeal was founded on the rule formulated by Fuller CJ in Underhill v Hernandez. The search for general principle The English decisions have rarely tried to articulate the policy on which the foreign act of state doctrine is based and have never done so comprehensively. But it is I think possible to discern two main considerations underlying the doctrine. There is, first and foremost, what is commonly called comity but I would prefer to call an awareness that the courts of the United Kingdom are an organ of the United Kingdom. In the eyes of other states, the United Kingdom is a unitary body. International law, as Lord Hoffmann observed in R v Lyons [2003] 1 AC 976 at para 40, does not normally take account of the internal distribution of powers within a state. Like any other organ of the United Kingdom, the courts must respect the sovereignty and autonomy of other states. This marks the adoption by the common law of the same policy which underlies the doctrine of state immunity. Secondly, the act of state doctrine is influenced by the constitutional separation of powers, which assigns the conduct of foreign affairs to the executive. This is why the court does not conduct its own examination of the sovereign status of a foreign state or government but treats the Secretary of States certificate as conclusive: Government of the Republic of Spain v SS Arantzazu Mendi [1939] AC 256, 264 (Lord Atkin). It is why Lord Templeman graphically described the submissions of the claimants in the Tin Council case as involving a breach of the British constitution and an invasion by the judiciary of the functions of the Government and of Parliament: see p 476. To that extent the rationale of the foreign act of state doctrine is similar to that of the corresponding doctrine applicable to acts of the Crown, as Elias LJ observed in Al Jedda v Secretary of State for Defence [2011] QB 773, paras 209 212. When one turns to the ambit of the doctrine, the first point to be made is that there are many cases involving the sovereign acts of states, whether British or foreign, in which the action fails, not on account of any immunity of the subject matter from judicial scrutiny, but because the acts in question are legally irrelevant. They give rise to no rights as a matter of private law and no reviewable questions of public law. It is on this ground that the court will not entertain an action to determine that Her Majestys government is acting or proposes to act in breach of international law in circumstances where no private law status, right or obligation depends on it: R (Campaign for Nuclear Disarmament) v Prime Minister [2001] EWHC 1777 (Admin); R (Al Haq) v Secretary of State for Foreign and Commonwealth Affairs [2009] EWHC 1910 (Admin). Unlike Mr Khan, who contended that his father had been killed as a result of breaches of English domestic law, the claimants had, as Cranston J put it in the latter case, at para 60, no domestic foothold; cf Shergill v Khaira [2015] AC 359 at para 43. By comparison Mr Khan did have a domestic foothold. He had standing to apply for judicial review, and he contended that his father had been killed because of a breach by British officials of English law, but the court declined to treat the matter as governed by ordinary principles of English law because of its subject matter. The same is true of the present cases. They are concerned with the effect of a foreign act of state in a case where private law rights are engaged, because the claimants rely on the acts of the relevant states as ordinary torts under the municipal law of the countries in which they were committed. The question that we have to decide on this appeal is whether they can do so consistently with the law relating to foreign acts of state. As Lord Wilberforce observed in Buttes Gas, at p 930F G, the main difficulty in identifying a principle underlying that law arises from the indiscriminate use of act of state to cover situations which are quite distinct and different in law. It is always possible to break down the cases into different factual categories, and deconstruct the law into a fissiparous bundle of distinct rules. But the process is apt to make it look more arbitrary and incoherent than it really is. I think that it is more productive to distinguish between the decisions according to the underlying principle that the court is applying. The essential distinction which Lord Wilberforce was making in Buttes Gas was between (i) those cases which are concerned with the applicability of foreign municipal legislation within its own territory and with the examinability of such legislation (p 931A B), and (ii) cases concerning the transactions of sovereign states (p 931G H). This distinction is supported by the case law extending over more than three centuries which I have reviewed above. It is possible to extract two related principles from it. The first is concerned with the application to a state of its own municipal law, and the second with the application of international law to that states dealings with other states. Municipal law act of state The first principle can conveniently be called municipal law act of state. It comprises the two varieties of foreign act of state identified in the judgment of Lord Mance at paras 11(iii)(a) and (b) of his judgment, although he would limit it to legislative or executive acts against property. The principle is that the English courts will not adjudicate on the lawfulness or validity of a states sovereign acts under its own law. Municipal courts, as Lord Sumner put it in Johnstone v Pedlar [1921] 2 AC 262, 290, do not control the acts of a foreign State done within its own territory, in the execution of sovereign powers, so as to criticise their legality or to require their justification. In Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2), supra, at para 110, Rix LJ formulated the principle as involving a distinction between referring to acts of state (or proving them if their occurrence is disputed) as an existential matter, and on the other hand asking the court to inquire into them for the purpose of adjudicating upon their legal effectiveness, including for these purposes their legal effectiveness as recognised in the country of the forum. It is the difference between citing a foreign statute (an act of state) for what it says (or even for what it is disputed as saying) on the one hand, something which of course happens all the time, and on the other hand challenging the effectiveness of that statute on the ground, for instance, that it was not properly enacted, or had been procured by corruption, or should not be recognised because it was unfair or expropriatory or discriminatory. Municipal law act of state is by definition confined to sovereign acts done within the territory of the state concerned, since as a general rule neither public nor private international law recognises the application of a states municipal law beyond its own territory. It has commonly been applied to legislative acts expropriating property: examples include Carr v Fracis Times, Luther v Sagor and the general principle which served as the starting point of the House of Lords in Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 (see paras 257 258 below). In these cases, title will have passed under the lex situs and the expropriation will be recognised in England on ordinary choice of law grounds unless, exceptionally, its recognition would be contrary to public policy. In this context, it is difficult to see that anything is added by calling the expropriation an act of state. However, the fact that the act of state doctrine and ordinary choice of law principles lead to the same result in the case of the legislative expropriations of property, does not entitle one to press the analogy any further. In particular, it cannot follow that municipal law act of state is limited to legislative acts expropriating property. Property is of course special for some purposes. It is likely to be under the exclusive jurisdiction of the state where it is located. It is marketable and may be tradeable internationally. It gives rise to policies favouring certainty of title. Considerations like these go some way to explaining why the lex situs of property is generally regarded as the law with the closest connection to an issue about title, and is for that reason designated as the proper law. But it is difficult to see that they have any bearing on the very different problems with which the act of state doctrine is concerned. The rules governing the choice of law are concerned with the law to be applied in determining an issue assumed to be justiciable, while the act of state doctrine in all its forms is concerned with the proper limits of the English courts right to determine certain kinds of issue at all. Thus it is well established that municipal law act of state applies not just to legislative expropriations of property, but to expropriations by executive acts with no legal basis at all. Examples include Duke of Brunswick v King of Hanover and Princess Paley Olga v Weisz, and the United States decisions in Hatch v Baez, Underhill v Hernandez, and Oetjen v Central Leather Co. These transactions are recognised in England not because they are valid by the relevant foreign law, but because they are acts of state which an English court cannot question. Strictly speaking, on the footing that the decree authorising the seizure of Princess Paley Olgas palace did not extend to her chattels, the acts of the revolutionary authorities in seizing them were Russian law torts. But once the revolutionary government was recognised by the United Kingdom, it would have been contrary to principle for an English court to say so. Once it is accepted that executive acts may be acts of state, there is no rational reason why the principle should be limited to executive seizures of property, as opposed to injury to other interests equally protected by the municipal law of the place where they occurred. I can see no rational ground for distinguishing between the expropriation of property by executive act and its physical destruction by executive act, and no sensible basis on which the former is to be treated as an act of state and the latter not. For the same reasons, I think that personal injury and other wrongs against the person inflicted by the agents of a foreign state are as much capable of being acts of state as the destruction or detention of property. No such limitation applies to extraterritorial exercises of sovereign authority, whether by the British Crown or by a foreign state. No such limitation was recognised by Lord Wilberforce in Buttes Gas, who included executive acts as potentially relevant acts of state (p 931D E). In Hatch v Baez, the plaintiffs main complaint was that he had been imprisoned and assaulted. In Underhill v Hernandez the plaintiff claimed to have been imprisoned and intimidated. The decisions in these cases were in terms justified by reference to the act of state doctrine. State immunity not having been claimed, they could not have been decided on any other basis. One might ask why an English court should shrink from determining the legality of the executive acts of a foreign state by its own municipal law, when it routinely adjudicates on foreign torts and foreign breaches of contract. The answer is that the law distinguishes between exercises of sovereign authority and acts of a private law character. It is fair to say that the decided cases on this point generally involved internal revolutions or civil wars leading to a breakdown of law of a kind which could ultimately be resolved only by force. Other countries implicitly recognise the outcome diplomatically with retrospective effect, and their courts follow suit. Similar problems can arise in relation to the acts of totalitarian states where there may be no rule of law even in normal times. But I do not think that the act of state doctrine can be limited to cases involving a general breakdown of civil society or states without law. Quite apart from the formidable definitional problems to which such an approach would give rise, the basis of the doctrine is not the absence of a relevant legal standard but the existence of recognised limits on the subject matter jurisdiction of the English courts. It is this principle which applies to the alleged act of Malaysia in deporting Mr Belhaj and Mrs Boudchar, and Thailands act in detaining them and delivering them to the Americans. They were domestic exercises of governmental authority by those two countries. So was the detention and torture of Mr Belhaj and Mrs Boudchar by Libya in Libyan prisons. International law act of state The second principle, which can conveniently be called international law act of state, corresponds to the variety of foreign act of state identified in the judgment of Lord Mance at para 11(iii)(c). It is that the English courts will not adjudicate on the lawfulness of the extraterritorial acts of foreign states in their dealings with other states or the subjects of other states: see Blad v Bamfield, Nabob of the Carnatic v East India Co, Dobree v Napier, Secretary of State in Council of India v Kamachee Boye Sahaba, Cook v Sprigg, Buttes Gas & Oil Co v Hammer, R (Abbasi) v Secretary of State for Foreign Affairs, and R (Noor Khan) v Secretary of State for Foreign Affairs. This is because once such acts are classified as acts of state, an English court regards them as being done on the plane of international law, and their lawfulness can be judged only by that law. It is not for an English domestic court to apply international law to the relations between states, since it cannot give rise to private rights or obligations. Nor may it subject the sovereign acts of a foreign state to its own rules of municipal law or (by the same token) to the municipal law of a third country. In all of the cases cited, the claimant relied on a recognised private law cause of action, and pleaded facts which disclosed a justiciable claim of right. But the private law cause of action failed because, once the cause of action was seen to depend on the dealings between sovereign states, the court declined to treat it as being governed by private law at all. As Tindal CJ observed in Dobree v Napier, the English courts could not apply English law to the sovereign acts of the Queen of Portugal on the high seas. Nor, on the same principle, could they have applied the municipal law of some third country. This, as it seems to me, is as true of private law causes of action based on wrongs against the person (as in Hatch v Baez and Noor Khan) as it is of those based on wrongs against property (as in Dobree v Napier). If a foreign state deploys force in international space or on the territory of another state, it would be extraordinary for an English court to treat these operations as mere private law torts giving rise to civil liabilities for personal injury, trespass, conversion, and the like. This is not for reasons peculiar to armed conflict, which is no more than an ill defined extreme of inter state relations. The rule is altogether more general, as was pointed out by Lord Wilberforce in Buttes Gas (p 931D E). Once the acts alleged are such as to bring the issues into the area of international dispute the act of state doctrine is engaged. Dicey, Morris & Collins on the Conflict of Laws, 15th ed (2012) write at para 5 049: The act of state doctrine has no application when it is clear that the relevant acts were done outside the sovereigns territory. The authority cited for this statement is the decision of the Court of Appeal in Empresa Exportadora de Azucar v Industria Azucarera Nacional CA (The Playa Larga and the Marble Islands) [1983] 2 Lloyds Rep 171, 194. The facts of that case were that a Cuban state owned trading enterprise had sold two cargoes of sugar for delivery at a Chilean port. President Allendes government in Chile was overthrown while one of the ships, the Playa Larga, was discharging at Valparaiso and the other, the Marble Islands, was on its way. Both vessels were operated by another Cuban state enterprise. The Cuban government arranged for the Playa Larga to leave Chile with part of its cargo still on board and for the Marble Islands to be diverted elsewhere. In an arbitration under the contract of sale, the tribunal awarded the Chilean buyers damages for non delivery and conversion of the undelivered part of the cargo of the Playa Larga, together with the restitution of the purchase price of the cargo of the Marble Islands. Act of state was not raised before the arbitrators, but was said to be available on their findings of fact. It was rejected by the judge and the Court of Appeal on the ground that it was not open to the sellers, and was in any event unsound because there was no act of state. The claim arose from a commercial transaction, not a sovereign act: p 193. But the court went on to deal briefly with other points, including the argument that the act of state doctrine was limited to acts done within the territory of the foreign state, which they accepted: p 194. For this, they relied mainly on statements in Duke of Brunswick v King of Hanover, Underhill v Hernandez and Buttes Gas. In my opinion the statement in Dicey, Morris & Collins is applicable to what I have called municipal law act of state but not to international law act of state. As I have observed, where the issue is whether the legislative or executive acts of a foreign sovereign are valid or lawful under its own municipal law, a limit to the sovereigns territory follows as a matter of course from the rule itself. This is because, with limited exceptions, generally governed by treaty, international law does not recognise the right of states to apply its domestic public laws extra territorially: France v Turkey (Affaire du Lotus) PCIJ, Series A, No 10, at pp 18 19. This limitation is recognised in the municipal law of most states, and is a fundamental principle of English private international law: see Government of India v Taylor [1955] AC 491, 511 (Lord Keith of Avonholm); Ortiz v Attorney General of New Zealand [1984] AC 1, 21 (Lord Denning MR); Williams & Humbert Ltd v W & H Trade Marks (Jersey) Ltd [1986] AC 368, 428, 430 3; In re State of Norways Application [1990] AC 723, 808 (Lord Goff). All of the judicial observations supporting the territorial limitation of the foreign act of state doctrine, including those on which the Court of Appeal relied in the Playa Larga, have been made in the context of challenges to the recognition of foreign municipal legislation or to the lawfulness of an executive act of state under the foreign states municipal law: see Duke of Brunswick v King of Hanover, supra, at 17; Hatch v Baez, supra, at p 599; Underhill v Hernandez, supra, at p 252; Buttes Gas, at p 931A B; WS. Kirkpatrick & Co Inc v Environmental Tectonics Corporation International, 493 US 400 (1900) 400, 405; Kuwait Airways Corpn v Iraqi Airways Co (Nos 4&5), at para 135 (Lord Hope); A Ltd v B Bank [1997] FSR 165, at para 13. Turning to international law act of state, the position is different. Where the question is the lawfulness of a states acts in its dealings with other states and their subjects, the act of state doctrine applies wherever the relevant act of the foreign state occurs (save, arguably, if it occurred in the United Kingdom: see A Ltd v B Bank [1997] FSR 165 at para 13). The reason is, again, inherent in the principle itself. It is not concerned with the lawfulness of the states acts under municipal systems of law whose operation, in the eyes of other states, is by definition territorial, but with acts whose lawfulness can be determined only by reference to international law, which has no territorial bounds. In the nature of things a sovereign act done by a state in the course of its relations with other states will commonly occur outside its territorial jurisdiction. States maintain embassies and military bases abroad. They conduct military operations outside their own territory. They engage in intelligence gathering. They operate military ships and aircraft. All of these are sovereign acts. The paradigm cases are acts of force in international space or on the territory of another state. Obvious examples, as Lord Pearson observed in Nissan v Attorney General [1970] AC 179, 237, are making war and peace, making treaties with foreign sovereigns, and annexations and cessions of territory. In my opinion, subject to the important public policy exception to which I shall come, it is not open to an English court to apply the ordinary law of tort, whether English or foreign, to acts of this kind committed by foreign sovereign states. Thus if, in the Playa Larga, the Cuban mode of prosecuting its dispute with General Pinochets government in Chile had been an act of state, it would have been contrary to principle for an English court to judge its lawfulness according to English (or any other) municipal law, whether it happened in Cuba, Chile or on the high seas. In Dobree v Napier the relevant acts occurred on the high seas, but their inherently governmental character made it impossible to treat it as a tortious conversion of goods under English municipal law. In Buttes Gas, it was impossible to know in whose territory they had occurred, since that begged the question at issue, but Lord Wilberforces wider principle was applied regardless of the answer to that question. The Court of Appeal proceeded on the same basis in R (Noor Khan) v Secretary of State for Foreign and Commonwealth Affairs, where the relevant acts occurred in Pakistan. I think that they were right to do so. Subject to any public policy exception, it is this principle which applies to the acts alleged against United States officials in the present cases. In Rahmatullah, they were exercises of governmental authority by the armed forces and officials of the United States, acting as an occupying power in Iraq and a mandatory power in Afghanistan. In Belhaj, the claimants rendition from Thailand to Libya and their mistreatment in the process was also an exercise by the United States of governmental authority. It involved the application of force by United States officials in the course of their governments campaign against international terrorism and in the conduct of their relations with Malaysia, Thailand and Libya. Whatever one may think of the lawfulness or morality of these acts, they were acts of state performed outside the territorial jurisdiction of the United States, which cannot be treated by an English court as mere private law torts, any more than drone strikes by US armed forces can. Juridical basis The foreign act of state doctrine has commonly been described as a principle of non justiciability. The label is unavoidable, but it is fundamentally unhelpful because it is applied to a number of quite different concepts which rest on different principles. One, comparatively rare, case in which an issue may be non justiciable is that although it is legally relevant, the courts are incompetent to pronounce upon it or disabled by some rule of law from doing so. Leaving aside cases in which the issue is assigned to the executive or the legislature under our conception of the separation of powers, most cases of this kind involve issues which are not susceptible to the application of legal standards. The most famous example is Buttes Gas, where Lord Wilberforce declined to resolve the issue because there were no judicial or manageable standards by which to do so. The court was therefore incompetent to adjudicate upon it at all. As this court pointed out in Shergill v Khaira [2015] AC 359 at para 40, this was because the issue was political. But there is another sense in which an issue may be non justiciable, which is also illustrated by the facts of Buttes Gas. It may be non justiciable because the English court ought not to adjudicate upon it even though it can, because it is not a matter which can properly be resolved by reference to the domestic law of the state. Occidentals contention in Buttes Gas was that the mixture of diplomacy and power politics by which the four states involved had eventually resolved the border dispute in a manner unsatisfactory to them, could be characterised as an unlawful conspiracy for the purposes of domestic law. An unlawful conspiracy is in itself justiciable. It is a recognised cause of action in English law. But an English court could not adjudicate upon it because it was parasitic upon a finding that the foreign states involved had acted in breach of international law, being the only law relevant to their acts. This too can fairly be called a principle of non justiciability, because its effect is that it is not the proper function of the English courts to resolve the issue. But Buttes Gas has been widely misunderstood as suggesting that an absence of judicial or manageable standards is the juridical basis of the foreign act of state doctrine in all cases where it is applied to the transactions of sovereign states. It is not. The absence of judicial or manageable standards was simply the reason why the House declined to review the particular facts alleged in that case. Incidental unlawfulness The act of state doctrine does not apply, in either form, simply by reason of the fact that the subject matter may incidentally disclose that a state has acted unlawfully. It applies only where the invalidity or unlawfulness of the states sovereign acts is part of the very subject matter of the action in the sense that the issue cannot be resolved without determining it. There is no real difference between the parties on this point, but it is worth emphasising none the less, for it is of some importance. Some such distinction is essential if the act of state doctrine is not to degenerate into a mere immunity against international embarrassment. The principle is implicit in many of the English cases, but it can best be illustrated by the decision of the US Supreme Court in WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn International, 493 US 400 (1990), which is also the case in which it was first clearly articulated. Environmental Tectonics had succeeded in a competitive tender for a construction contract with the government of Nigeria. The plaintiff, an unsuccessful bidder, alleged that the company had bribed Nigerian government officials, and claimed damages under various US federal statutes. The receipt of bribes was illegal under Nigerian law, but the Supreme Court held that the act of state doctrine did not apply because the legal implications of bribery in Nigerian law were not a necessary part of the plaintiffs case. He had only to prove that the bribes had been paid, and that Environmental Tectonics had thereby committed an act unlawful under US law. That the facts would incidentally disclose offences by the bribed officials was irrelevant. Scalia J, delivering the judgment of the Court held (p 406) that act of state issues only arise when a court must decide that is, when the outcome of the case turns upon the effect of official action by a foreign sovereign. There are many circumstances in which an English court may have occasion to express critical views about the public institutions of another country, without offending against the foreign act of state doctrine or any analogous rule of law. In deportation and extradition cases, for example, it may be necessary to review the evidence disclosing that the person concerned would be tortured or otherwise ill treated by the authorities in the country to which he would be sent. In forum non conveniens cases the court may have to conclude that in some countries the courts are corrupt or controlled by the state. When evidence is said to have been obtained by torture at the hands of officials of a foreign state, a court which is invited to exclude it cannot avoid investigating the allegation and upholding it if the evidence bears it out. I do not regard this as undermining the foreign act of state doctrine, because that doctrine proceeds on a different basis. The foreign act of state doctrine has never been directed to the avoidance of embarrassment, either to foreign states or to the United Kingdom government in its dealings with them. But neither is it concerned with incidental illegality. Where an English court makes findings in a deportation case about, say, the use of torture in a foreign jurisdiction it is not concerned with its lawfulness or unlawfulness, either under the law of the foreign jurisdiction or in international law. It is simply applying its own standards to an exercise of its own jurisdiction. In the present cases the question whether the acts alleged against the relevant foreign states were unlawful is not incidental. It is essential to the pleaded causes of action against the defendants in both actions. This is because the various civil wrongs which are alleged to have caused damage to the claimants are not said to have been committed directly by the defendants. They were committed by the foreign states. If the conduct of the foreign states was lawful, it cannot be tortious for the defendants to have assisted in their commission. The Court of Appeal analysed the various causes of action against the defendants in order to demonstrate that each of them depended on establishing that the conduct of the foreign states was unlawful. I think that their analysis is unanswerable. The judgment of Leggatt J In his judgment in Rahmatullah, Leggatt J accepted that there was a difference between cases which turned on the application to a states sovereign acts of its own municipal law, and cases concerning transactions between states. Indeed, he regarded them as juridically wholly distinct. Borrowing a concept from the decisions of the United States Supreme Court in Ricaud v American Metal Co Ltd 246 US 304 (1918) and WS Kirkpatrick & Co Inc v Environmental Tectonics Corpn International, 493 US 400 (1990), 406, he described what he called the traditional act of state doctrine as a rule of decision applicable to challenges to the lawfulness of an act of state under the states municipal law. By this he meant that it requires the court to decide the case on the footing that the relevant acts of a foreign state were valid under its own law (para 123). By comparison, in cases concerning the transactions of foreign sovereign states, the rule was one of judicial restraint or abstention. It prevents a court from deciding or adjudicating upon a case on the ground that its subject matter is not suitable for judicial determination. He regarded judicial restraint or abstention as being required only when there were no judicial or manageable standards, and that, he thought, could never be the case if a municipal law right was engaged. For this last point, he relied mainly on the decision of this court in Shergill v Khaira [2015] AC 359. It will be apparent from what I have already said that I cannot accept this analysis. In the first place, I doubt whether the act of state doctrine, as applied to the sovereign acts of a foreign state, is helpfully described as a rule of decision. The principle, at any rate in the English case law, is one of non justiciability. It is that the court will decline to determine the lawfulness of an act of state, not that it will determine its lawfulness on some assumption about the content of the foreign law. Secondly, not all cases in which the foreign act of state doctrine is applied to transactions between states lack judicial or manageable standards for their decision. The courts are, for example, perfectly competent to construe treaties, and regularly do so when municipal law rights depend on it: Republic of Ecuador v Occidental Exploration and Petroleum Co [2006] QB 432. As Lord Wilberforce pointed out in Buttes Gas (p 926F), they are competent to determine the international boundaries of sovereign states and have done so without difficulty in proper cases. On the facts of R (Noor Khan) v Secretary of State for Foreign Affairs, the courts would have been competent to apply English criminal law to the operators of drones over Pakistan. If the courts, in appropriate cases, decline to do these things, it is usually not because of any lack of legal standards, but because it would be contrary to principle. Shergill v Khaira was not an act of state case. The question was whether the court could entertain a claim to enforce the trusts of a religious charity, if that would require it to decide religious issues. It was argued that it could not do so, because such issues were non justiciable for want of judicial or manageable standards by which to assess them. Lord Neuberger, Lord Sumption and Lord Hodge, in a joint judgment with which Lord Mance and Lord Clarke agreed, distinguished (para 41) between (i) rules of law such as state immunity which confer immunity from jurisdiction, or rules like the act of state doctrine which protected certain acts from challenge; and (ii) cases where an issue is said to be inherently unsuitable for judicial decision by reason only of its subject matter. Where a legal right of the citizen or a reviewable question of public law arose, the case could not be regarded as inherently unsuitable for judicial decision. But the case is not authority for the proposition that the application of the foreign act of state doctrine to transactions between states depends on the absence of any municipal law right, nor that it was coterminous with the class of cases in which there were no judicial or manageable standards. Leggatt Js analysis derives some support from the decision of the High Court of Australia in Moti v The Queen 245 CLR 456. The facts of this case were somewhat similar to those of the English cases of R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42 and R v Mullen [2000] QB 520. In these cases, it had been held that the involuntary deportation of an accused person from a foreign country by British officials to face trial in England, otherwise than by way of lawful extradition, was an abuse of process in English criminal proceedings. In each case, the deportation had been carried out with the co operation of the police in the foreign country. What made this an abuse of process was the breach of the domestic law of the foreign country and of international law by the British prosecuting authorities or British officials acting in support of them: see Bennett, at pp 62G (Lord Griffiths), 67G (Lord Bridge); and Mullen, at p 535F. The assumed facts suggested that the local police must also have acted in breach of their own law, but I cannot accept Lord Mances view that this was critical to the analysis. The removal of the victim to the jurisdiction in which he was brought to trial would have been as much an abuse of process and for exactly the same reasons if the prosecutors had simply kidnapped him with no assistance from local officials. Any unlawfulness in the conduct of the foreign officials was incidental. That was presumably why no point was taken on the foreign act of state doctrine in either of the English cases. Mr Motis position was exactly the same. He had been illegally deported from the Solomon Islands by a process in which Australian officials in the Islands were involved. His case was that the criminal proceedings should be stayed because of what Australian officials did in connection with his deportation (para 9). On this occasion the foreign act of state doctrine was raised. The short answer to this would have been that the unlawfulness of the Australian officials conduct was enough to justify staying the proceedings against Mr Moti. The unlawfulness of the acts of their foreign collaborators was incidental and irrelevant. But in rejecting the argument, the Court adopted the view of Dr F A Mann, a long standing critic of the act of state doctrine, that there was no bar to adjudication of the lawfulness of a foreign governmental act if it was necessary to the resolution of an issue within the jurisdiction and competence of the forum: see paras 50 52. In my view this was too wide and certainly wider than anything that was required for the decision of the case. The proposition which the High Court of Australia accepted from Dr Mann is tantamount to the abolition of the foreign act of state doctrine. This was indeed a consummation devoutly wished by that great scholar. He regarded the whole doctrine as incoherent. Properly understood, I do not think that it is incoherent. What is clear, however, is that to arrive at the view held by Dr Mann it would be necessary to throw over a substantial body of jurisprudence, much of it recent and much of it not considered by the High Court of Australia, including Lord Wilberforces analysis in Buttes Gas. The judgment of the Court of Appeal The Court of Appeal took a different approach. They considered that while the facts of Buttes Gas might be analysed in terms of lack of judicial competence the act of state doctrine was not limited to such situations, even as applied to the transactions of sovereign states. I agree with this. The Court of Appeal accepted that the act of state doctrine was engaged by the claimants allegations in Belhaj, and that it barred the claim unless those allegations fell within one of the recognised exceptions to the doctrine. The exceptions which they regarded as relevant were (i) an exception for cases where the unlawful character of the foreign states acts was merely incidental to the allegations; (ii) an exception for acts done outside the territory of the foreign state; and (iii) a public policy exception for violations of international law or fundamental human rights. The Court of Appeal held that the second and third exceptions applied. I have already dealt with exception (i), which is uncontentious, and exception (ii), which I consider inapplicable to the kind of act of state relied upon here. The critical point, to my mind, is exception (iii). Violations of international law or fundamental human rights The Court of Appeal described this as an exception to the ordinary immunity of foreign acts of state. It might equally have been described, as Lord Mance does, as a category of case to which the principle does not apply to begin with. The difference, if there is one, does not seem to me to matter. What matters, on either analysis, is that the principle which underlies this category should be sufficiently clear to make the law coherent and as clear as is consistent with the difficulty of the subject. To say of a rule of law or an exception to that rule that it is based on public policy does not mean that its application is discretionary according to the courts instinct about the value of the policy in each particular case. But rules of judge made law are rarely absolute, and this one like any other falls to be reviewed as the underlying policy considerations change or become redundant, or as it encounters conflicting policy considerations which may not have arisen or had the same significance before. Conceptions of public policy, as Lord Wilberforce observed in Blathwayt v Baron Cawley [1976] AC 397, 426, should move with the times and that widely accepted treaties and statutes may point the direction in which such conceptions, as applied by the courts, ought to move. The acceptability of a foreign law must be judged by contemporary standards, Lord Nicholls added in adopting that statement in Kuwait Airways, at para 28. The standards which public policy applies in cases with an international dimension have changed a great deal in the past half century. In Hatch v Baez, Underhill v Hernandez and Oetjen v Central Leather Co the US Supreme Court declined to consider whether the arbitrary detention of the plaintiff and the expropriation of his property were breaches of international law. In all three cases, this was said to be because any such breach would have been a matter for diplomatic resolution between the United States and the foreign states involved and not for domestic litigation. The courts view on this point reflected the then state of customary international law, which recognised only limited obligations owed by states with regard to the treatment of aliens within their territory. These were generally based on discrimination or denial of justice, as they had been since the middle ages. They were not based on the acceptance of minimum standards for the content of a states municipal law. A comparison between the first edition of Oppenheims International Law (1905), paras 320 321, and the ninth edition (1992) edited by Sir Robert Jennings and Sir Arthur Watts, paras 404 405, 407, 409, will make the point. Since the Second World War there has been a considerable expansion of the range of matters with which international law is concerned, which now extends to many aspects of the relations between states on the one hand and their subjects or residents on the other. The growing importance of the international protection of human rights is one aspect of this change, but not the only one. International law increasingly places limits on the permissible content of municipal law and on the means available to states for achieving even their legitimate policy objectives. At the same time, the relationship between English law and international law has changed. It used to be said that customary international law is part of the common law. The sentiment dates back to Lord Mansfield in Triquet v Bath (1764) 3 Burr 1478, 1481 and Blackstones Commentaries, Bk IV, Chapter 5. The classic example in their day was the recognition at common law of the immunities of states and diplomatic agents. At a time when there was very little overlap between international and municipal law, the assumption of Mansfield and Blackstone had much to be said for it. Today it would be truer to say, as Lord Bingham was inclined to think in R v Jones (Margaret) [2007] 1 AC 136 (para 11), that international law is not a part of but is one of the sources of the common law. The same view has been expressed by Professor Brierly, International Law in England (1935) 51 LQR 24, 31, and by the editors of Brownlies Public International Law, 8th ed (2012), 68. English law has always held to the dualist theory of international law. In principle, judges applying the common law are not at liberty to create, abrogate or modify municipal law rights or obligations in accordance with unincorporated norms derived from international law, whether customary or treaty based. But, as Lord Bingham pointed out in R v Lyons [2003] 1 AC 976, at para 13, international law may none the less affect the interpretation of ambiguous statutory provisions, guide the exercise of judicial or executive discretions and influence the development of the common law. Although the courts are not bound, even in these contexts, to take account of international law, they are entitled to do so if it is appropriate and relevant: see, in the context of discretions R (Hurst) v London Northern District Coroner [2007] 2 AC 189, paras 53 59 (Lord Brown), and R (Wang Yam) v Central Criminal Court [2015] UKSC 76, at paras 35 36 (Lord Mance). In those areas which depend on public policy, the content of that policy may be and in practice often is influenced by international law. These observations are especially pertinent when public policies conflict, as they inevitably do when one seeks to fix limits to a principle of law such as the foreign act of state doctrine. There is a danger that retaining the doctrine while recognising exceptions, will result either in the exception consuming the rule or in the rule becoming incoherent. This concern lies behind the refusal of the US Supreme Court to treat a violation of international law as such as being an exception to the foreign act of state doctrine: see Banco Nacional de Cuba v Sabbatino, supra, at p 431. Any exception must be limited to violations of international law which can be distinguished on rational grounds from the rest. This was the question with which the House of Lords had to contend in the milestone decisions in Oppenheimer v Cattermole [1976] AC 249 and Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883. The question in Oppenheimer v Cattermole was whether the English courts should recognise a Nazi decree law of 1941 which deprived Jews of their German nationality and confiscated their property if they were ordinarily resident outside Germany at the date of the decree. If regard was had to the decree, Mr Oppenheimer lost his German nationality upon its publication, with the result that his pension from the German Federal Republic did not qualify for exemption from income tax in the United Kingdom. The basic rule, at any rate before the Universal Declaration of Human Rights (1948), was not in doubt. In both public and private international law, each state was exclusively entitled to determine who its nationals were in accordance with its own law, subject to limits upon its right to impose its own nationality extra territorially. The Court of Appeal had held that a relevant foreign law regulating nationality had to be recognised however inequitable, oppressive or objectionable it may be: [1973] Ch 264, 273 (Buckley LJ). The House of Lords dismissed his appeal on other grounds, without finding it necessary to decide this point. But Lord Cross, with whom Lord Hodson and Lord Salmon agreed, held that had the point arisen the decree would have been disregarded. His analysis includes extensive reference to international law. But the real ground of his decision was not that the decree was itself a violation of international law. It was that the principle of international law which left each state free to determine who were its nationals could not require the courts of other states to recognise determinations repugnant to their own public policy. That raised the question how effect could be given to English public policy. The decree of 1941 could not be regarded as invalid under German law. Nor could the subsistence of German nationality be determined according to some law other than German law. The solution adopted by Lord Cross was that as a matter of English public policy a law of this sort constitutes so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all (p 278). In Kuwait Airways, the House of Lords went further than Lord Cross had done. It held by a majority (Lord Scott dissenting) that in certain circumstances the municipal law of a state could be disregarded, even in its application to matters within its own territory and notwithstanding the act of state doctrine, on the ground that it constituted a sufficiently serious violation of international law. The issue was whether an English court should recognise a decree law of the Iraqi government (Resolution 369) extinguishing the existence of Kuwait as an independent state and expropriating its assets, including aircraft belonging to Kuwait Airways Corporation which were then located in Iraq. Iraqi law was the lex situs. As such, it was the law designated by ordinary principles of private international law. The argument (summarised by Lord Nicholls at para 24) was that it could not be disregarded as a violation of the law of nations consistently with the foreign act of state doctrine. The violation itself was admitted, and in any event incontestable. Resolution 369 was, in Lord Nicholls words, part and parcel of the Iraqi seizure of Kuwait. The seizure had been a flagrant breach of article 2(4) of the United Nations Charter by which states renounce the threat or use of force as an instrument of international policy, a provision which as Lord Steyn (para 115) pointed out had the character of jus cogens. The annexation and the seizure of the assets of Kuwaiti nationals had been specifically condemned by successive resolutions of the UN Security Council. Further Security Council resolutions had called on all states to take all necessary measures to protect the assets of the legitimate government of Kuwait and its agencies and to refrain from any action that might be regarded as recognising the seizures. These resolutions were binding in international law on all states, including the United Kingdom. The House declined to give effect to Resolution 369. The leading speech was delivered by Lord Nicholls. Lord Steyn and Lord Hope agreed with Lord Nicholls, adding observations of their own on the exclusion of Resolution 369. Lord Hoffmann also agreed, adding observations on another point. Lord Nicholls starting point (para 16) was that the rejection of an otherwise applicable foreign law was justified in cases where its application would be wholly alien to fundamental requirements of justice as administered by an English court. In particular (para 26) the rule that the transactions of sovereign states were not justiciable could not prevent the court from examining them in a case where, because the violation of international law was incontestable, the adjudication problems confronting the English court in the Buttes litigation do not arise. That being so, the court was at liberty to refuse to recognise a foreign law which offended against English public policy. The next question was whether it did. Lord Nicholls regarded Resolution 369 as contrary to public policy for three related reasons, which are summarised at para 29 of his speech. First, it was a gross violation of established rules of international law of fundamental importance, as repugnant to English public policy as the Nazi decree considered in Oppenheimer v Cattermole. Secondly (for good measure), the enforcement or recognition of Resolution 369 would be contrary to the obligations of the United Kingdom under the UN Charter (para 29). Third, it would sit uneasily with the almost universal condemnation of Iraqs behaviour and with the military action, in which this country participated, taken against Iraq to compel its withdrawal from Kuwait. Lord Steyn, while warning (para 114) that not every breach of international law will trigger the public policy exception, gave his own reasons in terms similar to Lord Nicholls. So did Lord Hope. He identified the relevant public policy as being that our courts should give effect to clearly established principles of international law (para 139). But he thought it clear that very narrow limits must be placed on any exception to the act of state rule (para 138). He concluded, at para 149: Respect for the act of state doctrine and the care that must be taken not to undermine it do not preclude this approach. The facts are clear, and the declarations by the Security Council were universal and unequivocal. If the court may have regard to grave infringements of human rights law on grounds of public policy, it ought not to decline to take account of the principles of international law when the act amounts as I would hold that it clearly does in this case to a flagrant breach of these principles. As Lord Upjohn indicated in In re Claim by Helbert Wagg Co Ltd [1956] Ch 313, 334, public policy is determined by the conceptions of law, justice and morality as understood in the courts. I would hold that the effectiveness of Resolution 369 as vesting title in IAC to KACs aircraft is justiciable in these proceedings, and that such a flagrant international wrong should be deemed to be so grave a matter that it would be contrary to the public policy of this country to give effect to it. The principle which the Appellate Committee applied in Kuwait Airways was that the English courts were not precluded from questioning the propriety or otherwise of a foreign legislative act and declining to recognise it, if it offended a fundamental requirement of justice as administered by an English court. It is the same as the principle which allows an English court to decline to apply a rule of an otherwise applicable foreign law which is contrary to public policy: see, now, section 14(3)(a)(i) of the Private International Law (Miscellaneous Provisions) Act 1995. This is a principle of English public policy. But in an international context, it is informed by any relevant norms of international law binding on the United Kingdom as it was in Kuwait Airways. Recognition of the influence of international law does not mean that every rule of international law must be adopted as a principle of English public policy, even if it is acknowledged as a peremptory norm (jus cogens) at an international level. For my part, I would adopt the cautious observations of Le Bel J, delivering the judgment of the Supreme Court of Canada in Kazemi Estate v Islamic Republic of Iran [2014] SCC 62; [2014] 3 SCR 176 at paras 150 151. The issue before the court in that case was whether to recognise a public policy exception to state immunity in cases where this would conflict with the values protected by the Canadian Charter of Rights and Freedoms. Le Bel J pointed out that not all commitments in international agreements amount to principles of fundamental justice. Their nature is very diverse. International law is ever changing. The interaction between domestic and international law must be managed carefully in light of the principles governing what remains a dualist system of application of international law and a constitutional and parliamentary democracy. The mere existence of an international obligation is not sufficient to establish a principle of fundamental justice. Were we to equate all the protections or commitments in international human rights documents with principles of fundamental justice, we might in effect be destroying Canadas dualist system of reception of international law and casting aside the principles of parliamentary sovereignty and democracy. The role of international law in this field, as he went on to point out, is to influence the process by which judges identify a domestic principle as representing a sufficiently fundamental legal policy: 151. That being said, I am prepared to accept that jus cogens norms can generally be equated with principles of fundamental justice and that they are particularly helpful to look to in the context of issues pertaining to international law. Just as principles of fundamental justice are the basic tenets of our legal system . , jus cogens norms are a higher form of customary international law. In the same manner that principles of fundamental justice are principles upon which there is some consensus that they are vital or fundamental to our societal notion of justice, jus cogens norms are customs accepted and recognized by the international community of states from which no derogation is permitted Torture The legal implications of torture in English and international law have been considered by the House of Lords on a number of occasions: R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 3) [2000] 1 AC 147, A v Secretary of State for the Home Department (No 2) [2006] 2 AC 221, Jones v Ministry of the Interior of the Kingdom of Saudi Arabia [2007] 1 AC 270. Torture is unconditionally prohibited by article 3 of the European Convention on Human Rights and by the UN Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1984). The United Kingdom is a party to these instruments and has given effect to them by statute. The prohibition has the status of jus cogens erga omnes. That is to say that it is a peremptory norm of international law which gives rise to obligations owed by each state to all other states and from which no derogation can be justified by any countervailing public interest. In the words of article 2.1 of the UN Torture Convention, no exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification of torture. In A v Secretary of State for the Home Department (No 2), supra, at para 33, Lord Bingham, said: There can be few issues on which international legal opinion is more clear than on the condemnation of torture. Offenders have been recognised as the common enemies of mankind (Demjanjuk v Petrovsky (1985) 612 F Supp 544, 566, Lord Cooke of Thorndon has described the right not to be subjected to inhuman treatment as a right inherent in the concept of civilisation (Higgs v Minister of National Security [2000] 2 AC 228, 260), the Ninth Circuit Court of Appeals has described the right to be free from torture as fundamental and universal (Siderman de Blake v Argentina (1991) 965 F 2d 699, 717) and the UN Special Rapporteur On Torture (Mr Peter Koojimans) has said that If ever a phenomenon was outlawed unreservedly and unequivocally it is torture (Report of the Special Rapporteur on Torture, E/CN 4/1986/15, para 3). In Jones v Ministry of the Interior of the Kingdom of Saudi Arabia, the House of Lords held that notwithstanding the status of the prohibition of torture as jus cogens in international law, the United Kingdom was under no international law obligation to make a civil remedy available for torture committed outside its territorial jurisdiction. There were two reasons for this. The main reason was that as a matter of customary international law breach of a jus cogens norm does not itself require civil jurisdiction to be assumed by states. Lord Bingham, with whom the rest of the Appellate Committee agreed, expressed this (para 24) in terms taken from the first edition of Fox, The Law of State Immunity: State immunity is a procedural rule going to the jurisdiction of a national court. It does not go to substantive law; it does not contradict a prohibition contained in a jus cogens norm but merely diverts any breach of it to a different method of settlement. Lord Hoffmann, concurring, said, at para 45: To produce a conflict with state immunity, it is therefore necessary to show that the prohibition on torture has generated an ancillary procedural rule which, by way of exception to state immunity, entitles or perhaps requires states to assume civil jurisdiction over other states in cases in which torture is alleged. Such a rule may be desirable and, since international law changes, may have developed. But it is not entailed by the prohibition of torture. Lord Bingham and Lord Hoffmann went on to consider whether an obligation to make a civil remedy available could be derived from the Torture Convention. They concluded that it could not. Article 14 of the Torture Convention, which dealt with the states obligations in respect of civil remedies, dealt only with remedies for torture committed within the states territorial jurisdiction. These conclusions have provoked some academic controversy and have been criticised by the respondents on these appeals. But they were supported by the decision of the International Court of Justice in Democratic Republic of Congo v Belgium (case concerning arrest warrant of 11 April 2000) (2002) ICJ Rep 3, in which state immunity was held to be available in proceedings based on breach of another peremptory norm of international law, namely the prohibition of war crimes and crimes against humanity. More recently, in Jurisdictional Immunities of the State (Germany v Italy, Greece Intervening) [2012] ICJ Rep 99, the International Court of Justice reaffirmed its decision in Arrest Warrant and held that Italy and Greece were in breach of customary international law in rejecting claims by Germany to state immunity in respect of massacres and deportations of civilians by German armed forces in Italy and Greece during the Second World War. The Court specifically endorsed the decision of the House of Lords in Jones v Saudi Arabia: see paras 85, 87, 96. In its reasoning, the International Court adopted the same distinction between procedure and substance as Lord Bingham at para 24 of his speech in that case: To the extent that it is argued that no rule which is not of the status of jus cogens may be applied if to do so would hinder the enforcement of a jus cogens rule, even in the absence of a direct conflict, the Court sees no basis for such a proposition. A jus cogens rule is one from which no derogation is permitted but the rules which determine the scope and extent of jurisdiction and when that jurisdiction may be exercised do not derogate from those substantive rules which possess jus cogens status, nor is there anything inherent in the concept of jus cogens which would require their modification or would displace their application. (para 95) Since that decision, the European Court of Human Rights in Jones v United Kingdom (2014) 59 EHRR 1, at para 198 and the Supreme Court of Canada in Kazemi Estate v Islamic Republic of Iran [2014] SCC 62; [2014] 3 SCR 176 at paras 102 105, 141 167, have both conducted a careful review of the international material and the decisions of national courts, and arrived at the same conclusion on this point as the House of Lords did in Jones. I do not propose to re examine that material once more, because the present question is not the correctness of the decision in Jones, but its relevance in the rather different context of the foreign act of state doctrine. In Jones, the absence of any international law obligation to make a civil remedy available for torture abroad mattered. This was because states unquestionably have an international law obligation to recognise the forensic immunity in their own courts of other states and their agents. The International Court of Justice held as much in Arrest Warrant and again in Jurisdictional Immunities. That international law obligation might have been displaced if there had been a countervailing international law obligation to provide a civil remedy for torture wherever committed. The act of state doctrine, by comparison, does not reflect any obligation of states in international law. It follows that an exception to it does not need to be based on a countervailing international law obligation in order to accord with principle. It is enough that the proposed exception reflects a sufficiently fundamental rule of English public policy. In my opinion, it would be contrary to the fundamental requirements of justice administered by an English court to apply the foreign act of state doctrine to an allegation of civil liability for complicity in acts of torture by foreign states. Respect for the autonomy of foreign sovereign states, which is the chief rationale of the foreign act of state doctrine, cannot extend to their involvement in torture, because each of them is bound erga omnes and along with the United Kingdom to renounce it as an instrument of national or international policy and to participate in its suppression. In those circumstances, the only point of treating torture by foreign states as an act of state would be to exonerate the defendants from liability for complicity. The defendants are not foreign states. Nor are they the agents of foreign states. They are or were at the relevant time officials and departments of the British government. They would have no right of their own to claim immunity in English legal proceedings, whether ratione personae or ratione materiae. On the other hand, they would be protected by state immunity in any other jurisdiction, with the result that unless answerable here they would be in the unique position of being immune everywhere in the world. Their exoneration under the foreign act of state doctrine would serve no interest which it is the purpose of the doctrine to protect. This is not a point which has arisen in any English case apart from R (Noor Khan) v Secretary of State for Foreign Affairs. But it was considered by the Supreme Court of Canada in Omar Ahmed Khadr v Canada [2008] 2 SCR 125 and by the Federal Court of Australia in Habib v Commonwealth (2010) 265 ALR 50. Khadr was not a case of torture. The plaintiff had been captured by US forces in Afghanistan and transferred to Guantanamo Bay. The allegation was that Canadian officials had connived in his unlawful detention there by the United States government. The Supreme Court of Canada held that the foreign act of state doctrine had no application for two reasons. First, the US Supreme Court in Rasul v Bush (2004) 542 US 466 had held that the indefinite detention without access to a court of persons captured in military operations was a violation of the Geneva Conventions: paras 21 24. That constituted an admission by the United States and made a finding of violation uncontentious. The court declined to consider what the position would have been in the absence of that decision. Secondly, the considerations of comity which underlay the foreign act of state doctrine cannot be used to justify Canadian participation in activities of a foreign state or its agents that are contrary to Canadas international obligations: para 18.This was because (i) Canada was itself party to the Geneva Convention, and under an international law obligation not to countenance the violations in question, and (ii) the right to apply for habeas corpus was a fundamental human right recognised by Canadian law also: paras 25 26. In Habib, the plaintiff had been arrested in Pakistan and successively detained there, in Egypt and at Guantanamo Bay. The allegation was that Australian officials aided and abetted officials of the various foreign states involved to torture him. Jagot J, delivering the leading judgment in the Federal Court of Australia, held, at para 114, that the modern cases on the foreign act of state doctrine do not support a conclusion that the act of state doctrine prevents an Australian court from scrutinising the alleged acts of Australian officials overseas in breach of peremptory norms of international law to which effect has been given by Australian laws having extra territorial application. She went on to point out that the public policy considerations which justified both the act of state doctrine and the exceptions to it had to be considered in a context where the prohibition on torture forms part of customary international law and those partners themselves are signatories to an international treaty denouncing torture. The purpose of the foreign act of state doctrine is to preclude challenges to the legality or validity of the sovereign acts of foreign states. It is not to protect English parties from liability for their role in it. In itself, that would not prevent them from taking incidental advantage of the foreign act of state doctrine. In R (Noor Khan) v Secretary of State for Foreign Affairs, British officials were entitled to take advantage of the doctrine in a case where they were said to have assisted in military action overseas by a foreign sovereign. I think that that decision was correct. But torture is different. It is by definition an act of a public official or a person acting in an official capacity: see article 1 of the Torture Convention. Article 4 of the Convention requires the United Kingdom to criminalise not only torture (as defined) but acts constituting complicity in torture. Article 5 requires the United Kingdom to establish criminal jurisdiction over offences referred to in article 4 wherever in the world they are committed, if they are committed by its nationals or by persons present in its territory. It is no answer to these points to say that these treaty provisions are concerned with criminal law and jurisdiction. So they are. But the criminal law reflects the moral values of our society and may inform the content of its public policy. Torture is contrary to both a peremptory norm of international law and a fundamental value of domestic law. Indeed, it was contrary to domestic public policy in England long before the development of any peremptory norm of international law. It derives its force chiefly from Englands long domestic tradition of abhorrence of torture, even in a period when it was commonplace in other jurisdictions. As Lord Bingham observed in A v Secretary of State for the Home Department (No 2), supra, at para 12, the condemnation of torture is not simply an exclusionary rule of evidence. It is more aptly categorised as a constitutional principle than as a rule of evidence: cf para 51. The Secretary of State submits that unless the facts are undisputed or indisputable, as they were in Kuwait Airways, the foreign act of state doctrine precludes any examination of the facts. In my view this submission fails to distinguish between two different inquiries: (i) an enquiry into the lawfulness or validity of the alleged act of state, and (ii) an inquiry into the question whether there is any factual foundation for applying the foreign act of state doctrine at all. Whenever the foreign act of state doctrine is invoked, the court must decide whether it applies. If it cannot do it by reference to the pleadings or admissions, it must examine the evidence. This may involve examining what the state has done, for example where there is an issue as to its responsibility for the acts of its alleged agents. Thus in Underhill v Hernandez the application of the foreign act of state doctrine came before the Supreme Court on an appeal from the decision at a trial. The trial court had made findings of fact about the responsibility of the government of Venezuela. The Supreme Court relied on these findings (p 254) without any suggestion that in making them the lower court had been sitting in judgment on that government. The same point could be made about Hatch v Baez and Oetjen v Central Leather Co. The need to establish a factual foundation for the application of the doctrine must equally apply where the issue concerns not the character of the act but the availability of an exception. I conclude that it would not be consistent with English public policy to apply the foreign act of state doctrine so as to prevent the court from determining the allegations of torture or assisting or conniving in torture made against these defendants. Unlawful detention, enforced disappearance and rendition Article 9 of the Universal Declaration of Human Rights (1948) provides that no one shall be subjected to arbitrary arrest, detention or exile. The prohibition of arbitrary detention gives rise to problems of definition far more complex than those associated with the prohibition of torture. Torture is always contrary to international law, but not all detention is arbitrary. On the question what makes it arbitrary, there is as yet no clear consensus. The editors of the American Law Institutes authoritative Restatement (3rd) of the Foreign Relations Law of the United States (1987) express the view that arbitrary detention violates customary international law if it is prolonged and practiced as state policy: see para 702(e) and Comment (h). More recently, in December 2012, the UN Working Group on Arbitrary Detention, after canvassing states on the question what factors qualified detention as arbitrary in their domestic law, concluded that detention might be regarded as arbitrary in customary international law if it lacked any legal basis, but also in some circumstances even if it did have a legal basis, depending on the reason for the detention and in some cases on its duration: UN A/HRC/22/44, at para 38. These more or less speculative suggestions may indicate that the boundaries of arbitrary detention in international human rights law are not yet fixed. But it is clear that the irreducible core of the international obligation, on which there is almost complete consensus, is that detention is unlawful if it is without any legal basis or recourse to the courts. The consensus on that point is reflected in the terms of the International Covenant on Civil and Political Rights (1966), an expansion in treaty form of the Universal Declaration of 1948, which provides by article 9: 1. Everyone has the right to liberty and security of person. No one shall be subjected to arbitrary arrest or detention. No one shall be deprived of his liberty except on such grounds and in accordance with such procedures as are established by law. 3. Anyone arrested or detained on a criminal charge shall be brought promptly before a judge or other officer authorized by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release 4. Anyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings before a court in order that that court may decide without delay on the lawfulness of his detention and order his release if the detention is not lawful. 5. Anyone who has been the victim of unlawful arrest or detention shall have an enforceable right to compensation. The Covenant has been ratified by 167 states to date, including the United Kingdom, the United States, Thailand and Libya. Malaysia is one of a handful of states which are not a party, but it has declared that it adheres to its principles. The UN Working Group regarded this irreducible core as jus cogens: loc cit, para 49. In my opinion they were right to do so. It is fair to say that article 4 of the Covenant does recognise a limited right to derogate from its terms in time of public emergency which threatens the life of the nation to the extent strictly required by the exigencies of the situation, with certain exceptions such as torture, arbitrary killing and slavery. The existence of a right to derogate is normally regarded as inconsistent with the status of jus cogens: see article 53 of the Vienna Convention on the Law of Treaties. But this difficulty is more apparent than real. Although expressed as a right of derogation, the exception for public emergencies corresponds to the general exception from state responsibility which international law recognises in cases where an act prohibited by international law is shown to be the only way for a state to safeguard an essential interest against a grave and imminent peril: see the International Law Commissions Draft Articles on Responsibility of States for Internationally Wrongful Acts, article 25, and the extensive review of judicial decisions and state practice cited in the associated commentary. For this reason the UN Working Group considered that non derogability in an emergency was consistent with the prohibition being a peremptory norm: UN A/HRC/22/44, at paras 50 51. The same view is expressed in the Reporters Notes to para 702 of the American Restatement: see Note 11. The significant point for present purposes is that the core prohibition in international law of detention without legal basis or recourse to the courts corresponds to a fundamental principle of English public policy. Like English laws rejection of torture it is an essential feature of our constitutional order. It has traditionally been traced, at any rate since the time of Sir Edward Coke, to the 29th article of Magna Carta. Charles James Fox is not always a useful source of constitutional principle, but most lawyers would agree with his famous description of the writ of habeas corpus as the great palladium of the liberties of the subject. The principle underlying the writ is that the availability of recourse to a court to test the legality of detention is the hallmark of its constitutionality. Indeed, although the position has in some respects been modified by statute, at common law the reach of the writ of habeas corpus has even been held to extend to anywhere in the world where a servant of the Crown or any other person amenable to the personal jurisdiction of the court has detained a person: Ex p Anderson (1861) 3 El & El 487. Or appears to be in a position to procure his production: Rahmatullah v Secretary of State for Defence [2013] AC 614. I turn to rendition and enforced disappearance, both of which are aggravated forms of arbitrary detention. Rendition is an archaic expression which was once more or less synonymous with extradition. The Oxford English Dictionary, in its Supplement for September 2006, defines extraordinary rendition as the seizure and transportation by authorities of a criminal suspect from one country to another without the formal process of extradition. Sometimes used spec with reference to moving a terrorist suspect for interrogation in a country considered to have less rigorous regulations for the humane treatment of prisoners. I shall take it to have the meaning given to it by the Belhaj claimants in their Particulars of Claim, namely a euphemism commonly used since about 2001 to describe covert unlawful abduction organised and carried out by state agents, across international borders, for the purpose of unlawful detention, interrogation and/or torture. The context of Mr Rahmatullahs pleading shows that he is using it in the same sense. Enforced disappearance was described by Leggatt J in R (Al Saadoon) v Secretary of State for Defence [2015] EWHC 715 (Admin); [2015] 3 WLR 503, para 209, as a concept recognised in international law and a practice which is internationally condemned. It involves detention outside the protection of the law where there is a refusal by the state to acknowledge the detention or disclose the fate of the person who has been detained. Its cruelty and vice lie in the facts that the disappeared person is completely isolated from the outside world and at the mercy of their captors and that the persons family is denied knowledge of what has happened to them. Enforced disappearance is a violation of article 5 of the European Human Rights Convention in the case of persons within the jurisdiction of a Convention state: Kurt v Turkey (1998) 27 EHRR 373. In December 2006 the United Nations adopted a draft Convention for the Protection of all Persons from Enforced Disappearance, which seeks to provide more generally for enforced disappearance. The Convention came into force in December 2010. It has to date been signed by 94 states and ratified by 45. But the parties do not include the United Kingdom, the United States, Malaysia or Libya. Thailand is a signatory, but has not ratified. In these circumstances I consider that the Convention has nothing to contribute to the issues on this appeal. However, even in the absence of specific rules of international law relating to rendition and enforced disappearance, a prohibition of these practices is necessarily comprised in the more general prohibition of arbitrary detention by other international instruments, notably article 9 of the International Covenant on Civil and Political Rights. The UN Working Group on Arbitrary Detention was surely right to say (loc cit, para 60) that secret and/or incommunicado detention constitutes the most heinous violation of the norm protecting the right to liberty of human beings under customary international law. The arbitrariness is inherent in these forms of deprivation of liberty as the individual is left outside the cloak of any legal protection. Likewise, the European Court of Human Rights has had no difficulty in dealing with rendition cases within the jurisdiction of a Convention state under the broader heading of the right to liberty and security of the person protected by article 5: see El Masri v Macedonia (2013) 57 EHRR 25; Al Nashiri v Poland & Husayn v Poland (2015) 60 EHRR 16. Historically, rendition is not a complete stranger to English practice. As Lord Hope pointed out in A v Secretary of State for the Home Department (No 2) [2006] 2 AC 221, at paras 106 10, in the second half of the 17th century, persons accused of treason were occasionally deported by administrative decision to Scotland, where confessions could lawfully be extracted from them by torture. More recently, administrative deportation of British subjects was practised by British colonial administrations: M Lobban, Habeas Corpus, Imperial Rendition and the Rule of Law, Current Legal Problems, (2015) 68, 27 84. But renditions to Scotland were probably always contrary to the law of England, and colonial renditions were only ever accepted by the courts on the basis that the Crown had power to legislate for the colonies in a manner contrary to fundamental principles of English law: see R v Earl of Crewe, Ex p Sekgome [1910] 2 KB 576, 607, 609 610 (Vaughan Williams LJ), 615 617 (Farwell LJ), 627 629 (Kennedy LJ). This digression into history serves mainly to show how much has changed as a result of the adoption of fundamental human rights by English law and, more broadly, its recognition of the broader implications of the rule of law. In the rare modern instances of rendition to the United Kingdom by or with the complicity of British officials, the courts have not been willing to tolerate the consequences. The difference, as Lord Griffiths put it in R v Horseferry Road Magistrates Court, Ex p Bennett, at p 62A, is that the judiciary accept a responsibility for the maintenance of the rule of law that embraces a willingness to oversee executive action and to refuse to countenance behaviour that threatens either basic human rights or the rule of law. In my opinion the foreign act of state doctrine cannot be applied to the detention alleged to have been inflicted on these claimants by US and Libyan officials, for substantially the same reasons as it cannot be applied to the allegations of torture. They exhibit the same combination of violation of peremptory norms of international law and inconsistency with principles of the administration of justice in England which have been regarded as fundamental since the 17th century. The fact that if the pleaded allegations are correct the claimants were forcibly transported across international borders without any lawful process of extradition is a significant aggravating factor engaging the same considerations of public policy. The position is less clear in relation to the relatively brief periods of detention said to have been inflicted on Mr Belhaj and Mrs Boudchar by the authorities in Malaysia and Thailand, in respect of which the pleaded allegations are thinner. But there can be no justification for striking out that part of the Particulars of Claim in the absence of a trial of the facts. Other cruel, inhuman or degrading treatment The Torture Convention applies to both torture and other cruel, inhuman or degrading treatment, but it distinguishes between them. Article 1.1 of the Convention defines torture properly so called. Article 2.2, which precludes derogations in any circumstances, applies only to torture as defined. The international obligation of states in relation to other cruel, inhuman or degrading treatment is defined by article 16. It is to prevent such acts within its jurisdiction. The Convention also imposes on states the ancillary administrative and investigatory obligations laid down by articles 10, 11, 12 and 13 of the Convention. The international obligation upon states to assume universal criminal jurisdiction over torture does not apply to the lesser forms of ill treatment. In A v Secretary of State for the Home Department (No 2), supra, at para 53, Lord Bingham acknowledged the significance of these differences: Ill treatment falling short of torture may invite exclusion of evidence as adversely affecting the fairness of a proceeding under section 78 of the 1984 Act, where that section applies. But I do not think the authorities on the Torture Convention justify the assimilation of these two kinds of abusive conduct. Special rules have always been thought to apply to torture, and for the present at least must continue to do so. In these circumstances, it is difficult to regard the prohibition of ill treatment falling short of torture as jus cogens. Nor does it engage the same fundamental considerations of English public policy which justify treating torture as an exception to the foreign act of state doctrine. The practical consequences of this difference in cases like the present are, however, limited. Like torture, other cruel, inhuman or degrading treatment must by definition be committed or authorised by a public official: article 16. It may fall short of torture, either because it is insufficiently severe or because it is not committed for one of the purposes specified in article 1 (obtaining information or a confession, punishment, intimidation, coercion, or other reasons based on discrimination). Given the breadth of the definition of torture, which extends to any intentional infliction of severe pain and suffering, whether physical or mental, and the wide range of motives which may lead to ill treatment being classified as torture, the residual category of other cruel, inhuman or degrading treatment is in practice likely to be a very narrow one. Article 6 of the European Convention on Human Rights The conclusion that I have reached on the ambit of the exceptions to the act of state doctrine means that article 6 is only marginally relevant to the present appeals. It could not apply to the detentions themselves. It could apply only so far as the treatment of the claimants while they were detained amounted to cruel, inhuman or degrading treatment but fell short of torture. I will therefore deal with it briefly. Article 6 might in principle apply so far as the application of the foreign act of state doctrine would constitute a denial of the claimants right to a court: Golder v United Kingdom (1975) 1 EHRR 524. There are circumstances in which an immunity from liability or adjudication will engage article 6. In these cases, it must be justified by reference to the legitimacy of the objective and the proportionality of the means. State immunity is a controversial but well established example in the jurisprudence of the Strasbourg Court: Fogarty v United Kingdom (2002) 34 EHRR 12; Al Adsani v United Kingdom (2002) 34 EHRR 11; Cudak v Lithuania (2010) 51 EHRR 15; Sabeh El Leil v France (2012) 54 EHRR 14. But, except in rare cases where there are no judicial or manageable standards by which to determine an issue, the foreign act of state doctrine is not an immunity. It is a rule of substantive law which operates as a limitation on the subject matter jurisdiction of the English court. In Roche v United Kingdom (2005) 42 EHRR 30 the European Court of Human Rights held that the right to a court protected by article 6 was not engaged by a substantive rule of domestic law excluding liability, but only by a bar which was procedural in nature. The most pertinent illustration is Markovic v Italy (2006) 44 EHRR 52. The applicants in this case were relatives of persons who had been killed in the NATO air raid on Belgrade in 1999. The raid was said to be an act of war in violation of international law. It had been launched from bases in Italy. The Corte de Cassazione had held that by a rule of substantive law the Italian courts had no jurisdiction over acts of war or indeed over any acts of the Italian state which were impugned on the sole ground that they violated international law. The Strasbourg court applied the distinction between substance and procedure that they had formulated in Roche. They agreed that the limitation on the jurisdiction of the Italian court was substantive. It followed (para 114) that the decision of the Corte de Cassazione, does not amount to recognition of an immunity but is merely indicative of the extent of the courts powers of review of acts of foreign policy such as acts of war. To the limited extent that the foreign act of state doctrine might apply in these cases, it does not in my opinion engage article 6. Disposition For these reasons I would declare (i) that the claimants claims are not barred by state immunity, and (ii) that on the facts pleaded the claimants claims are not barred by the foreign act of state doctrine so far as they are based on allegations of complicity or participation in torture or in detention or rendition otherwise than by legal authority. I would affirm the decision of the Court of Appeal in Belhaj that no part of the claim is struck out. |
The appellant, Paul Macklin, was convicted after trial on 26 September 2003 of a charge of possession of a handgun in contravention of section 17 of the Firearms Act 1968, and a further charge of assaulting two police officers by repeatedly presenting the handgun at them. The only issue in dispute at his trial was whether he was the person who had been pursued by the officers after an incident to which they had been called, and during that pursuit had turned repeatedly and pointed the gun at them. At the trial, the appellant was identified by both of the officers. One gave evidence implying that he recognised the appellant at the time of the incident. The other had identified the appellant from a selection of photographs shown to him after the incident. Their evidence was challenged at the trial in cross examination by counsel for the appellant, and in counsels address to the jury. In his directions to the jury, the judge warned them about the risk that visual identification evidence might be unreliable. In accordance with the practice at the time, he gave no directions specifically concerning the risks which might be associated with the identification of an accused person in court. Some years later, following developments in practice in relation to the disclosure of unused material, the Crown disclosed to the appellant a quantity of material which had not been disclosed at the time of the trial. This included statements given to the police by a number of witnesses who had seen part of the pursuit of the gunman by the officers, or had seen the car in which he escaped. One of those witnesses was recorded as giving a description of the gunman which was inconsistent with the appearance of the appellant. Two other witnesses were recorded as having failed to identify the appellant when shown his photograph. It was also disclosed that the police had found fingerprints belonging to someone other than the appellant inside the car, and that the person identified by the fingerprints had a criminal record. In the light of these disclosures, in 2012 the appellant was granted leave to appeal against his conviction on three grounds. The first ground was based on the Crowns failure to disclose material evidence to the defence. The second ground was based on the Crowns leading and relying on the evidence of dock identifications by the police officers, without the other material evidence having been disclosed, and without the officers having previously participated in an identification parade. The third ground was based on a contention that the judge had misdirected the jury in relation to the identification evidence, in that he had failed to warn the jury in relation to the dangers of dock identification evidence, particularly where no identification parade had been held. The first and second of these grounds of appeal raised devolution issues, as defined in paragraph 1 of Schedule 6 to the Scotland Act 1998 (the 1998 Act). In other words, it was contended that, in the respects identified in those grounds of appeal, the Lord Advocate, who was a member of the Scottish Government and the person responsible for the conduct of the prosecution, had acted in a manner which was incompatible with the appellants Convention rights under article 6(1) of the European Convention on Human Rights. On 11 September 2013 the High Court of Justiciary refused the appeal, for reasons which were explained in an opinion delivered by Lord Mackay of Drumadoon: [2013] HCJAC 80; 2013 SCCR 616. The appellant was subsequently granted permission to appeal to this court under section 288AA of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act), inserted by section 36 of the Scotland Act 2012 (the 2012 Act). The jurisdiction of this court It is important to understand the nature of the jurisdiction exercised by this court under section 288AA of the 1995 Act. The court does not sit as a criminal appeal court exercising a general power of review. Subject to a small number of specified exceptions, every interlocutor and sentence pronounced by the High Court in appeals in solemn proceedings is, by statute, final and conclusive and not subject to review by any court whatsoever: 1995 Act, section 124(2). One exception enables the High Court to review its own decisions on references by the Scottish Criminal Cases Review Commission. The other exceptions enable this court to determine compatibility issues (an expression which I shall explain shortly) on references under section 288ZB of the 1995 Act (inserted by section 35 of the 2012 Act) and appeals under section 288AA, and to determine devolution issues on appeals under paragraph 13(a) of Schedule 6 to the 1998 Act. The concept of a compatibility issue was introduced by section 34 of the 2012 Act, which inserted a new section 288ZA into the 1995 Act. That section defines a compatibility issue as a question arising in criminal proceedings as to whether a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) of the Human Rights Act 1998, or in a way which is incompatible with EU law, or whether an Act of the Scottish Parliament or any provision of such an Act is incompatible with any of the Convention rights or with EU law. Section 36(4) of the 2012 Act amended the definition of devolution issues in paragraph 1 of Schedule 6 to the 1998 Act so as to exclude compatibility issues from its scope. One consequence of these provisions is that some questions which fell within the definition of devolution issues before the 2012 Act came into force no longer fall within that definition, but fall instead within the definition of compatibility issues. Another consequence is that some questions which, before the 2012 Act came into force, did not fall within the definition of devolution issues, now fall within the definition of compatibility issues. The present case illustrates the point. As I have explained, the first and second grounds of appeal before the High Court raised questions as to the compatibility of the conduct of the prosecution with the appellants Convention rights. Under the 1998 Act as it stood prior to amendment by the 2012 Act, those questions constituted devolution issues. Under section 288ZA of the 1995 Act, on the other hand, those questions would be classified as compatibility issues. The appellants third ground of appeal, concerning an alleged misdirection by the trial judge, did not raise a devolution issue, since the trial judge was not a member of the Scottish Government. Under the provisions introduced by the 2012 Act, on the other hand, a direction by a judge may raise a compatibility issue, if there is a question whether the judge has acted in a way which was incompatible with the appellants Convention rights. In order to address potential problems arising from the differences between the system operating before the 2012 Act came into force and the system operating afterwards, transitional provisions were introduced by the Scotland Act 2012 (Transitional and Consequential Provisions) Order 2013 (SSI 2013/7). Article 2 of the Order introduced the concept of a convertible devolution issue, defined as a question arising in criminal proceedings before the relevant date which (a) is a devolution issue, (b) would have been a compatibility issue had it arisen on or after that date and (c) had not been finally determined before the relevant date. The relevant date was 22 April 2013, when the relevant provisions of the 2012 Act came into force. As at that date, the devolution issues raised by the appellants first and second grounds of appeal had not been finally determined. As I have explained, those issues would have been compatibility issues had they arisen on or after that date. It follows that those questions are convertible devolution issues. By virtue of article 3 of the order, convertible devolution issue became compatibility issues on the relevant date (subject to exceptions which do not apply in the present case). The questions raised by the appellant as to the compatibility of the conduct of the prosecution with his Convention rights are therefore compatibility issues. No compatibility issue arises, however, in relation to the directions given by the trial judge, since his directions did not give rise to a devolution issue, and therefore did not give rise to a convertible devolution issue. Finally, in relation to jurisdiction, it is important to understand the limited nature of this courts powers on an appeal for the purpose of determining a compatibility issue. In terms of section 288AA(2) of the 1995 Act, the powers of the Supreme Court are exercisable only for the purpose of determining the compatibility issue, that is to say, in the present case, the question whether the Lord Advocate has acted in a way which is made unlawful by section 6(1) of the Human Rights Act. When it has determined the compatibility issue, the Supreme Court must remit the proceedings to the High Court: section 288AA(3). The present appeal The compatibility issue raised in the present appeal concerns the question whether the Crown acted incompatibly with the appellants Convention rights under article 6(1) by failing to disclose material evidence to the defence and by leading and relying on the evidence of identification by the police officers, without the other material evidence having been disclosed, and without the officers having previously participated in an identification parade. Counsel for the appellant emphasised in his submissions that these were not two separate complaints, about non disclosure on the one hand, and dock identification on the other hand. He was not arguing that the appellants Convention rights had been violated by the dock identification or the judges directions. His submission was that these aspects of the proceedings had cumulatively resulted in a violation by the prosecution of article 6(1). The Crowns reliance on identification of the appellant in court, without an earlier identification parade, formed part of the context in which the significance of the non disclosure of the other material bearing on identification had to be assessed. As the European Court of Human Rights explained in Edwards v United Kingdom (1992) 15 EHRR 417, the question whether a failure of disclosure has resulted in a breach of article 6(1) has to be considered in the light of the proceedings as a whole, including the decisions of appellate courts. This means that the question has to be approached in two stages. First, it is necessary to decide whether the prosecution authorities failed to disclose to the defence all material evidence for or against the accused, in circumstances in which a failure to do so would result in a violation of article 6(1). If so, the question which then arises is whether the defect in the trial proceedings was remedied by the subsequent procedure before the appellate court. That was held to have occurred in Edwards, where the Court of Appeal had considered in detail the impact of the new information on the conviction. The European court observed that it was not within its province to substitute its own assessment of the facts for that of the domestic courts, and, as a general rule, that it was for those courts to assess the evidence before them. Those observations were repeated in Mansell v United Kingdom (2003) 36 EHRR CD 221, where the non disclosure of material evidence in the trial proceedings was again held to have been remedied by the Court of Appeals examination of the impact of the non disclosure upon the safety of the conviction. That approach was translated into a domestic context in the case of McInnes v HM Advocate [2010] UKSC 7; 2010 SC (UKSC) 28. As Lord Hope explained at paras 19 and 20, two questions arise in a case of this kind to which a test must be applied. The first question is whether the material which has been withheld from the defence was material which ought to have been disclosed. The test here is whether the material might have materially weakened the Crown case or materially strengthened the case for the defence. If that test is satisfied, the question then arises as to the consequences of the non disclosure. The test here is whether, taking all the circumstances of the trial into account, there is a real possibility that the jury would have arrived at a different verdict. In the present case, it was conceded by the Crown before the High Court that the statement given by the witness who had given a description inconsistent with the appellants appearance, and the statements given by the two witnesses who had failed to identify the appellant from a photograph, ought to have been disclosed. In concluding that the Crown had not been under a duty to disclose the remainder of the undisclosed statements, the court stated that, in their opinion, there was nothing in any of the statements in question that would either have weakened the Crown case or strengthened the defence case. Similarly, in concluding that the Crown had not been under a duty to disclose the fingerprint evidence, the court stated that, in their opinion, it did not constitute evidence which materially weakened the Crown case or materially strengthened the defence case. Those conclusions reflected the terms of the first test in McInnes. The court explained in detail their reasons for reaching those conclusions on the facts of the case. The High Court then considered the significance of the failure to disclose the statements which should have been disclosed. In relation to the statement given by the witness whose description of the gunman was inconsistent with the appellants appearance, they stated that they were not persuaded that leading the evidence of that witness would have given rise to a real possibility that the jury would have returned a different verdict. In relation to the statements given by the two witnesses who had failed to identify the appellant from a photograph, they concluded that, in the context of the evidence as whole, there was no real possibility that the evidence of the witnesses in question would have caused the jury to come to a different view as to the identity of the gunman. Those conclusion reflected the terms of the second test in McInnes. Detailed reasons were given for reaching those conclusions. They were based on a review of the entirety of the evidence, including the identification evidence given in court by the police officers. The court also considered separately the question whether the Crowns leading of the identification evidence from the police officers had in itself resulted in the Lord Advocates acting incompatibly with article 6(1), that question having been raised before them as a distinct ground of appeal. After reviewing the relevant circumstances, the court concluded that the leading of the evidence had not been a violation of article 6(1). Before this court, counsel for the appellant challenged the High Courts conclusion that some of the undisclosed material did not require to be disclosed under article 6(1). In that connection, he submitted that, under current Crown practice, all of the material would have been disclosed. The practice of the Crown, whether past or present, is not however the measure of the requirements of article 6(1). To say, as counsel submitted, that if material would be disclosed now, it should have been disclosed then, is a non sequitur. The question is to be determined by applying the first test laid down in McInnes. The High Court applied that test. Counsel also challenged the High Courts conclusion as to the significance of the admitted failures in disclosure. He submitted that, although the High Court had framed their analysis and their conclusions in terms of the second test laid down in McInnes, their conclusions were so manifestly wrong that they had not in reality applied that test. Counsel accepted, as a general proposition, that this court had no jurisdiction to review how the High Court applied the test, but submitted that the position was otherwise where the High Court had merely paid lip service to the test, and had reached so absurd a conclusion that the test could not in reality have been applied. In that connection, he submitted that, comparing the facts of the present case with those of the case of Holland v HM Advocate [2005] UKPC D 1; 2005 SC (PC) 3, the non disclosure had been of less significance in Holland, but a violation of article 6(1) had nevertheless been found by the Judicial Committee in that case. In McInnes, Lord Hope explained at para 18 that the question for the Supreme Court, where there has been a failure in the duty of disclosure, is to determine the correct test for the determination of the appeal. It does not, he said, extend to the question whether the test, once it has been identified, was applied correctly. Lord Hope explained that that followed from the statutory finality of the High Courts decision under section 124(2) of the 1995 Act, subject to an appeal against a determination of a devolution issue. The question as to what was the correct test formed part of the devolution issue, but The application of the test to the facts of the case was a matter that lay exclusively within the jurisdiction of the appeal court. Lord Brown similarly stated at para 34 that this court could decide whether the High Court adopted the correct legal test but not whether it then applied that test correctly on the facts. The other members of the court agreed. Mutatis mutandis, those dicta apply equally to the determination of a compatibility issue. by Lord Hope later in his judgment, at para 25: In the present case, counsel for the appellant relied on an observation made As I have already observed, it is not for this court to say whether the test was applied correctly. But it is open to it to examine the reasons given by the appeal court for concluding that there had not been a miscarriage of justice to see whether they show that it applied the correct test. In that passage, Lord Hope was not qualifying what he had earlier said in para 18. As the earlier part of para 25 makes clear, he was addressing the fact that the High Court had not, in that case, purported to apply the test subsequently laid down in McInnes, but had instead applied the test, applicable generally in solemn appeals, of whether there had been a miscarriage of justice. In applying that test, the High Court had asked itself whether there was a real risk of prejudice to the defence (see McInnes at para 16). The question which Lord Hope was addressing in para 25 was whether, in formulating the test in that way, the High Court had asked itself the wrong question. Lord Hope answered the question by examining the High Courts reasoning, from which it appeared that, although the courts description of the test was incomplete, the test that it applied was the correct one. Counsel for the Crown conceded that this court might have jurisdiction to intervene if the High Court merely purported to apply the McInnes test but did not actually apply it. Short of some exceptional case, however, it is difficult to envisage circumstances in which an argument that the High Court had identified the correct test, but had failed to apply it, would be distinguishable from an argument that the test had not been applied correctly. The latter argument is one that this court cannot entertain. It is important that that principle, which gives effect to the finality accorded to the High Courts decisions, should not be undermined by permitting challenges to the correctness of the High Courts application of the McInnes test to be dressed up in the guise of arguments that it identified the test but failed to apply it. In the present case, it is clear from its reasoning that the High Court not only identified the correct test but also applied it to the circumstances of the case. The suggested comparison with the decision in Holland is of no assistance. In the first place, the Judicial Committee was not in that case performing the same exercise as this court in the present appeal. The High Court had not in that case applied the McInnes test: the case preceded McInnes by several years. Furthermore, the Judicial Committee proceeded in that case on the basis that the High Court, in considering the impact of non disclosure and dock identification separately at different hearings before differently constituted courts, had failed to consider the cumulative impact of both aspects of the trial upon the fairness of the proceedings, and that that question must therefore be considered for the first time by the Committee itself: see para 43. The approach adopted by the Judicial Committee reflected those circumstances, neither of which is present in this appeal. Moreover, and in any event, contrasting the conclusions reached by different panels of judges as to the significance of failures to disclose different evidence in the circumstances of different cases tells one nothing about the correctness of either decision, even if that were a matter which this court could properly assess. I would dismiss the appeal. LORD GILL: (with whom Lord Neuberger, Lady Hale, Lord Sumption, Lord Hughes and Lord Toulson agree) The conviction On 26 September 2003 the appellant was convicted at Aberdeen High Court of a contravention of section 17 of the Firearms Act 1968 and of assault on two police officers by repeatedly presenting a handgun at them. The evidence of identification The agreed facts were that the police officers, Sergeant Henry Ferguson and Constable Simon Reid, chased a suspect on foot from Printfield Terrace to Hilton Terrace, Aberdeen. Three times during the chase the suspect confronted them and pointed a handgun at them. The incident occurred in broad daylight just after midday in the month of May. The suspect had not disguised his face in any way. The suspect escaped in a black Ford Sierra. It was abandoned nearby. At the trial the stark issue was the identification of the gunman. Sergeant Ferguson identified the appellant in the dock. He said that at the time of the incident he thought that the suspects face was familiar, but he could not say who he was. When he returned to Police Headquarters he made enquiries about the suspects identity. He had a conversation with a colleague to prod his memory. In cross examination he was asked if he had any doubt about his identification. He replied No doubt whatsoever. Constable Reid too made a dock identification. He confirmed that about two hours after the incident at Police Headquarters he had been shown photographs and had identified the person that he thought had been the gunman. In cross examination he was asked if there was any possibility that he had identified the wrong person in court. He replied no. He was asked if he was sure about that. He replied Yes. Two witnesses said that the man in the dock was not the gunman. The first, Michael Reid, was said by the trial judge in his report to have been nervous. The second, John Ronald, was a criminal with a serious record of crimes of dishonesty. He prevaricated in evidence as to whether he knew the appellant. There were various discrepancies in his three police statements. The appellant himself said that at the material tine he had been at the home of Adrian Martin and his mother, neither of whom were cited by the defence. He agreed that on the morning after the incident he had checked in at a hotel in Aberdeen under a false name and was arrested there on the following day. One witness, Ian Whyte, supported the alibi. His credibility was undermined by his criminal record and by his having visited the appellant in prison twice before he gave his evidence. Subsequent disclosure In 2005 the Judicial Committee of the Privy Council allowed two appeals from the High Court in which the question of non disclosure of evidence by the Crown was a material issue (Holland v HM Advocate 2005 SC (PC) 3; Sinclair v HM Advocate 2005 SC (PC) 28. In consequence of those decisions and the change in Crown practice to which they led, the Crown disclosed the fact that a fingerprint of Thomas Pirie, a criminal with a serious record, had been found on the internal rear view mirror of the abandoned Sierra. The Crown also disclosed the statements of six individuals who had seen the incident or the abandonment of the car. The decision of the High Court The appellant appealed on the grounds inter alia that the Crown had failed to disclose material evidence; and that by leading and relying on the evidence of the dock identifications without having disclosed that evidence and without having held an identification parade, the Lord Advocate had infringed the appellants rights under article 6. The High Court held that the fingerprint evidence and three of the now disclosed statements neither materially weakened the Crown case nor materially strengthened the defence case. It accepted that the other three statements should have been disclosed, but held that disclosure of them would not have given rise to a real possibility of a different verdict. It concluded that the act of the Lord Advocate in leading dock identifications from the two police officers without there having been an identification parade did not infringe article 6. The present appeal The issues raised in this appeal were raised before the High Court as devolution issues (Scotland Act 1998, section 57(2); Schedule 6, paragraph 13(a)). On 22 April 2013 when the relevant provisions of the Scotland Act 2012 came into force, those issues were still unresolved. They therefore became convertible devolution issues (Scotland Act 2012 (Transitional and Consequential Provisions) Order 2013 (SSI 2013/7)) and by virtue of section 36(6) of the 2012 Act, which added section 288AA to the Criminal Procedure (Scotland) Act 1995 (the 1995 Act), fell to be dealt with as compatibility issues as defined in section 288ZA of the 1995 Act (1995 Act, sections 288AA(1), (2) and (4)). As such, they are within the jurisdiction of this court, which can be exercised only on compatibility issues (1995 Act, section 288AA). Non disclosure It was for the High Court to assess whether all or any of the undisclosed evidence might materially have weakened the Crown case or materially have strengthened the defence case (McDonald v HM Advocate 2010 SC (PC) 1, at para 50). The High Court held, as the Crown had conceded, that the evidence in three of the statements met that test. The next question was whether the effect of the non disclosure of those statements had been to deprive the appellant of a fair trial. It was for the High Court to decide, on a consideration of all of the circumstances of the trial, whether there was a real possibility that the jury would have arrived at a different verdict if the undisclosed evidence had been before it. It decided that there was no such possibility. On the face of it, therefore the High Court applied both parts of the test set by this court in McInnes v HM Advocate 2010 SC (UKSC) 28. On the first part of the McInnes test counsel for the appellant submitted that since in current Crown Office practice all of the undisclosed evidence would be disclosed, that was proof that the appellants article 6 rights had been infringed. That argument is specious. The current practice of the Crown is to make an extensive disclosure of evidence, some of which may be of little assistance to either prosecution or defence. The fact that any piece of evidence is disclosed does not mean that its non disclosure would be a breach of article 6. As to the consequences of non disclosure, counsel submitted that the High Court had failed to apply the second part of the McInnes test. I do not agree. The Crowns submission to the High Court on this point was founded expressly on the McInnes test (Macklin v HM Advocate 2013 SCCR 616, at paras 24 and 25). The High Court considered the case in that context and, reciting the words of the test, made clear that it had applied it (at paras 33, 36 and 37). We therefore have to consider the scope of this courts jurisdiction in this appeal. Every interlocutor and sentence pronounced by the High Court under Part VIII of the Criminal Procedure (Scotland) Act 1995 is final and conclusive and is not subject to review in any court whatsoever, save for certain exceptional cases, one of which is the taking of an appeal of this nature (1995 Act, section 124(2)). The question whether the High Court applied the correct test is a proper question for the consideration of this court, being a compatibility issue; but the question whether the High Court applied the test correctly is not. That is now settled law (McInnes, at paras 18 and 25). Nevertheless, counsel for the appellant submitted that in McInnes Lord Hope of Craighead had qualified his general statement of the law to that effect by the following words: it is not for this court to say whether the test was applied correctly. But it is open to it to examine the reasons given by the appeal court for concluding that there had not been a miscarriage of justice to see whether they show that it applied the correct test. (para 25) Counsel wrested these words from Lord Hopes opinion to support the proposition that even if the High Court says that it has applied the McInnes test, this court can examine exactly how it did so and may decide that it paid only lip service to it if its conclusions on the evidence are manifestly wrong. I do not accept that proposition. The meaning of Lord Hopes dictum, to my mind, is perfectly clear. Lord Hope was referring only to this courts exercise of its limited jurisdiction in a question under paragraph 13(a); that is to say its decision, from an examination of the High Courts reasons, whether the High Court identified and applied the correct test. In this case I am in no doubt that it did. On that view, the High Courts conclusions on the significance of the non disclosure in relation to the verdict do not arise for our consideration. Counsel for the Crown conceded that this court would have jurisdiction if the High Court had failed to apply the McInnes test despite having said that it had applied it. That concession, in my view, does not open the door to appeals based on the contention that the High Court failed to apply the McInnes test correctly. I agree with Lord Reed (para 22) that the finality of the decisions of the High Court would be undermined if challenges to the correctness of its application of the McInnes test were to be dressed up in the guise of arguments that it had identified the test but failed to apply it. Dock identification Counsel accepted that dock identification is not per se incompatible with article 6. He did not put dock identification forward as a free standing compatibility issue. He submitted that the fact that the police officers had not taken part in an identification parade, taken together with the undisclosed evidence, led to the inevitable conclusion that, looked at as a whole, the trial was unfair. For this submission counsel for the appellant took as his template the exercise in evidential review carried out by Lord Rodger of Earlsferry in Holland v HM Advocate (supra). In Holland both non disclosure and dock identification were in issue. There were two points on which the Crown had withheld disclosure of material evidence. In Holland the two issues in the case had been dealt with in separate hearings by differently constituted divisions of the High Court. In Lord Rodgers view the question was whether, looked at as a whole, the appellants trial was fair in terms of article 6 (at para 77). On that view, he considered that it was necessary for the Judicial Committee to assess the evidence overall. In the result, the Judicial Committee held that there had been a breach of article 6. Counsel compared the evidence in Holland with the evidence in this case and, taking Lord Rodgers approach, submitted that we too should look at the entirety of the evidence and should conclude from it that the appellant had not had a fair trial. In considering two specific aspects of the evidence in Holland Lord Rodger said that since counsel for the defence had been unaware of the undisclosed evidence, he could not say that counsels inability to refer to it in cross examination might not possibly have affected the jurys verdict (paras 82 and 83). Views differ on the interpretation of those words. They seem clear to me. But that point is now history. Whatever the Judicial Committee considered to be the test in Holland, this court has drawn a line under the matter by fixing the test of real possibility, a test with which Lord Rodger himself came to agree (McInnes, at para 30). I conclude therefore that counsels reliance on Holland is misconceived. I reject the case for the appellant on this issue. Conclusion I agree that the appeal should be refused. |
In this case, Virgin Atlantic Airways Ltd wishes to recover damages exceeding 49,000,000 for the infringement of a European Patent which does not exist in the form said to have been infringed. The Technical Board of Appeal (TBA) of the European Patent Office (EPO) has retrospectively amended it so as to remove with effect from the date of grant all the claims said to have been infringed. The TBA found that in the form in which the patent was originally granted the relevant claims were invalid because they had been anticipated by prior article Virgin says that it is nevertheless entitled to recover damages for infringement because before the TBA had issued its decision, the English courts had held the patent to be valid and specifically rejected the objection based on prior article Their case is that this conclusion and the finding of validity on which it is based are res judicata notwithstanding the later but retrospective decision of the TBA. A similar argument had succeeded before the Court of Appeal in very similar circumstances in Coflexip SA v Stolt Offshore MS Ltd (No 2) [2004] FSR 708 and Unilin Beheer BV v Berry Floor NV [2007] FSR 635. The Court of Appeal, conceiving itself to be bound by these decisions and regarding them as correct in principle, arrived at the same conclusion. The statutory framework The appeal perfectly illustrates the problems arising from the system of parallel jurisdiction for determining the validity of European patents. Part II of the Patents Act 1977 gives effect to the principal provisions of the European Patent Convention. Section 77(1) of the Act provides that a European Patent (UK), i.e. one which is granted for the United Kingdom or for states including the United Kingdom, is to be treated as if it were a patent granted under the Act, and that the proprietor of a European Patent (UK) shall accordingly as respects the United Kingdom have the same rights and remedies, subject to the same conditions, as the proprietor of a patent under this Act. Section 77(2) (4A) deal with the revocation or amendment of a European Patent by the EPO (EPO): 77 Effect of European Patent (UK) . (2) Subsection (1) above shall not affect the operation in relation to a European patent (UK) of any provisions of the European Patent Convention relating to the amendment or revocation of such a patent in proceedings before the EPO. (3) Where in the case of a European patent (UK) (a) proceedings for infringement, or proceedings under section 58 above, have been commenced before the court or the comptroller and have not been finally disposed of, and (b) that the patent is only partially valid, it is established in proceedings before the EPO the provisions of section 63. apply as they apply to proceedings in which the validity of a patent is put in issue and in which it is found that the patent is only partially valid. (4) Where a European patent (UK) is amended in accordance with the European Patent Convention, the amendment shall have effect for the purposes of Parts I and III of this Act as if the specification of the patent had been amended under this Act; but subject to subsection (6)(b) below. (4A) Where a European patent (UK) is revoked in accordance with the European Patent Convention, the patent shall be treated for the purposes of Parts I and III of this Act as having been revoked under this Act. The provisions of section 63 to which section 77(3) refers deal with the power of the Comptroller in a case where a patent is found to be only partially valid to grant relief in respect of that part which is found to be valid and infringed. Section 77(2) of the Act refers to the provisions of the European Patent Convention relating to the amendment or revocation. This is a reference to article 68 of the Convention, and indirectly to article 64. They provide: Article 64 Rights conferred by a European patent (1) A European patent shall, subject to the provisions of paragraph 2, confer on its proprietor from the date [of publication of the mention of its grant], in each Contracting State in respect of which it is granted, the same rights as would be conferred by a national patent granted in that State. (2) If the subject matter of the European patent is a process, the protection conferred by the patent shall extend to the products directly obtained by such process. (3) Any infringement of a European patent shall be dealt with by national law. Article 68 Effect of revocation or limitation of the European patent The European patent application and the resulting European patent shall be deemed not to have had, from the outset, the effects specified in articles 64 and 67, to the extent that the patent has been revoked or limited in opposition, limitation or revocation proceedings. Part V of the Convention provides for opposition procedure before the Opposition Division of the EPO and on appeal from them to the TBA. A European patent may be opposed on the ground (among others) that the invention is not patentable by reason of lack of novelty. The procedure is available to any one affected, provided that it is initiated within nine months of the grant. Under articles 101 and 111 of the Convention, the Opposition Division and the TBA are empowered to revoke a patent found to be invalid or to accept an amendment proposed by the patentee which will cause the patent to satisfy the requirements of the Convention. The effect of these provisions is that the English courts have the same jurisdiction to determine questions of validity and infringement in the case of a European patent as they have for domestic patents, but that concurrent jurisdiction over questions of validity is exercisable by the EPO. There is, however, an important difference between the legal effect of a decision in the two jurisdictions. Both are decisions in rem. They determine the validity of the patent not only as between the parties to the proceedings, but generally. But the English courts jurisdiction over the question of validity is purely national. A decision of an English court declaring a patent invalid, or (which will normally follow) revoking it, will have effect in the United Kingdom only, whereas a corresponding decision of the EPO, which was the authority by which the patent was granted, will have effect in all the states for which the patent was granted. These considerations make it highly desirable to avoid inconsistent decisions if it can be done. National procedures for achieving this differ from one contracting state to another. In England, there are established procedures for staying English proceedings in which the validity of a European patent is in issue, if there are concurrent opposition procedures in the EPO. However the value of these procedures is somewhat diminished by the current practice of the High Court, which is based on dicta of Jacob LJ in Unilin Beheer BV v Berry Floor NV [2007] FSR 635, at para 25 and on the subsequent decision of the Court of Appeal in Glaxo Group Ltd v Genentech Inc (Practice Note) [2008] Bus LR 888. Their effect is that the primary consideration on an application for a stay is the probable duration of the proceedings before the two tribunals. If the question of validity would be likely to be resolved quicker in the English court than in the EPO, it would normally be appropriate not to stay the English proceedings. The consequences of this practice are particularly serious in a case where the English courts win the race to judgment if, as the Court of Appeal decided in Unilin, the effect is to bind the parties to a decision of the English court that the patent is valid notwithstanding that the EPO which granted it subsequently decides that it should be revoked or amended ab initio. In Glaxo Group Ltd v Genentech Inc, at para 83 Mummery LJ, delivering the judgment of the court thought that this consequence was inherent in the existence of concurrent systems of adjudication: . the possibility of the duplication of proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the Convention. In practice national courts exercise exclusive jurisdiction on infringement issues and they have concurrent jurisdiction with the EPO on validity issues. As Mr Daniel Alexander appearing for the claimant said, the contracting states and the UK Parliament contemplated that the national patents courts should be able to determine the same issues of patentability as the EPO. The resultant legislation allowed the determination by the national court and the EPO at the same time. Indeed, there is nothing in the Convention or the 1977 Act to prevent the commencement of revocation proceedings in the Patents Court on the very date of the grant of the patent by the EPO. It is undoubtedly right that the draftsmen of both the Convention and the Patents Act 1977 envisaged concurrent jurisdiction over questions of validity, but it may be doubted whether they envisaged anything like the consequence which has come about in this case. The facts The patent in suit is a European patent for a seating system and passenger accommodation unit for a vehicle, granted to Virgin and published on 30 May 2007. The seat, which was designed in about 2005, reclines to provide a flat bed. It is commonly used in long haul aircraft. Zodiac Seats UK Ltd (as it is now called) manufactures a seating unit called the Solar Eclipse in the United Kingdom. It has been supplied to a number of international airlines. On 30 July 2007, two months after the grant of the patent, Virgin began proceedings against Zodiac in the High Court claiming an injunction and damages on the footing that its seats infringed the patent. Zodiac defended the action on the ground that its seats did not fall within the claims of the patent. But, they said, if the claims were wide enough to cover their seats, then the patent was invalid on account of prior art and for added matter. They also, on 29 February 2008, opposed the validity of the patent in the EPO, along with a number of airlines who had bought their seats and were at risk of infringement proceedings if the patent was valid. Initially, no application was made for a stay of the English proceedings. There was a certain amount of argument before us about the significance of this fact, if any. For present purposes, however, it is enough to say that under the Glaxo v Genentech guidelines, an application for a stay would not necessarily have succeeded. The English action was heard by Lewison J. He gave judgment in January 2009, holding that Zodiacs Solar Eclipse seats did not infringe the patent. He recorded that if the claims of the patent had been wide enough to cover Zodiacs seating system, he would have held it to be invalid for added matter. But he rejected every other ground of invalidity advanced. Virgin appealed against the decision on infringement, and Zodiac cross appealed on validity. On 31 March 2009, some two months after Lewison Js judgment, the Opposition Division of the EPO upheld the patent subject to minor amendments which are agreed to be immaterial to the present dispute. Zodiac and other opponents of the patent immediately indicated their intention to appeal to the TBA. This gave rise to a brief correspondence between the parties solicitors about what would happen if the English Court of Appeal held the patent to be valid but the TBA later held it to be invalid in some relevant respect. Zodiacs solicitors proposed that if the appeal on validity succeeded in England, the making of any final order by the Court of Appeal should be stayed until the final determination of the opposition proceedings in the EPO. Virgins solicitors refused, on their clients behalf, to agree. They then wrote on the same day to the Court of Appeal informing them of the progress and likely course of the opposition proceedings, and summarising their correspondence with Zodiacs solicitors. On 12 May 2009, the Civil Appeals Office replied that Lord Justice Jacob has directed that he will not grant a stay of proceedings at present, however, parties can apply for a stay following judgment in the Court of Appeal if it is still possibly relevant. That direction was given without prior notice to either party and without inviting any observations from those acting for Zodiac. The Appeal was heard in October 2009 by Jacob and Patten LJJ and Kitchin J. On 22 October, they gave judgment reversing Lewison Js decision on validity and holding the patent to have been valid and infringed. They specifically rejected the argument based on prior article Zodiac then made the application for a stay of the order apparently envisaged in Jacob LJs direction of 12 May 2009, pending an application for permission to appeal to the Supreme Court and the conclusion of the opposition proceedings in the EPO. In a further judgment handed down on 21 December 2009 the Court of Appeal refused the application. The main ground on which they refused it was that it was pointless to stay the order on the appeal, because the effect of the decision in Unilin was that any later decision of the TBA revoking the patent would make no difference. This was because the decision of the Court of Appeal would bind the parties per rem judicatam. On 12 January 2010 the Court of Appeal sealed an order making a declaration that the patent was valid and infringed, together with an injunction and an enquiry as to damages. The injunction was qualified so as to allow the delivery of seats to Delta under an existing contract, upon Zodiac undertaking to pay 10,000 to Virgin for each seat delivered, but otherwise covered all future infringements. At this stage, the decision of the TBA on the opposition proceedings was due to be given on 20 April 2010. In the event, however, this was postponed to 9 September 2010 as a result of the disruption of flights following the eruption of the Eyjafjalajkull volcano in Iceland. When the adjourned date came, the TBA varied the decision of the Opposition Division. They held that all the claims found in England to have been infringed were invalid by reason of prior art, and accepted amendments proposed by Virgin removing them from the patent. By that time, however, the appeal proceedings had been completed and permission to appeal on the merits of the Court of Appeals findings had been refused by the Supreme Court. As a result of this decision, further applications were made by Zodiac to the Court of Appeal to vary the Court of Appeals order and to discharge the injunction. The injunction was discharged by consent on 1 December 2010. The application to vary the courts order was heard by the Court of Appeal (Smith, Jacob and Patten LJJ) in February 2011. So far as relevant to this appeal, the variations actually sought were (i) the replacement of the declarations made by new declarations making it clear that the patent held to be valid was the unamended patent; (ii) the discharge of the order for delivery up of the allegedly infringing articles; (iii) the discharge of the order for an enquiry as to damages; and (iv) the release of Zodiac from its undertaking to pay 10,000 per seat delivered to Delta and the repayment of the 3,600,000 already paid under it. Judgment was given on 23 February 2011. The Court of Appeal held (following the same numbering) (i) that the declaration would not be varied; (ii) that the order for delivery up would be discharged because it was redundant in the light of the amendment of the patent; (iii) that the order for an enquiry as to damages would stand, because it was no more than the mechanism for working out the effect of the Court of Appeals decision that the patent was valid, and that decision was res judicata; and (iv) that the 3,600,000 was not repayable because it was an advance referable to (among other things) the damages to be assessed in the enquiry. To complete the story, on 27 July 2012 Floyd J gave judgment in three actions against customers who had bought and were using Zodiacs seating units; actions to which Zodiac were also joined. They had been sued by Virgin on the footing that the Solar Eclipse seating units infringed the amended patent. Floyd J held that they did not. His judgment confirms that Zodiacs seating units do not infringe the patent in the form which it is now deemed to have taken from the moment it was granted. The issue The order of the Court of Appeal of 12 January 2010 upholding the validity of the patent and directing an enquiry as to damages can now be varied only by way of appeal, and no further avenues of appeal are open. It is therefore right to start by pointing out that this is not an appeal against that order. The fundamental question is whether Zodiac is entitled to contend upon the enquiry as to damages that there have been no damages because the patent has been retrospectively amended so as to remove the claims held to have been infringed. This depends on whether the Court of Appeal was right to say that its order declaring the patent to be valid continued to bind the parties per rem judicatam notwithstanding that the patent was later amended on the footing that it was not valid in the relevant respects. Res judicata: general principles Res judicata is a portmanteau term which is used to describe a number of different legal principles with different juridical origins. As with other such expressions, the label tends to distract attention from the contents of the bottle. The first principle is that once a cause of action has been held to exist or not to exist, that outcome may not be challenged by either party in subsequent proceedings. This is cause of action estoppel. It is properly described as a form of estoppel precluding a party from challenging the same cause of action in subsequent proceedings. Secondly, there is the principle, which is not easily described as a species of estoppel, that where the claimant succeeded in the first action and does not challenge the outcome, he may not bring a second action on the same cause of action, for example to recover further damages: see Conquer v Boot [1928] 2 KB 336. Third, there is the doctrine of merger, which treats a cause of action as extinguished once judgment has been given upon it, and the claimants sole right as being a right upon the judgment. Although this produces the same effect as the second principle, it is in reality a substantive rule about the legal effect of an English judgment, which is regarded as of a higher nature and therefore as superseding the underlying cause of action: see King v Hoare (1844) 13 M & W 494, 504 (Parke B). At common law, it did not apply to foreign judgments, although every other principle of res judicata does. However, a corresponding rule has applied by statute to foreign judgments since 1982: see Civil Jurisdiction and Judgments Act 1982, section 34. Fourth, there is the principle that even where the cause of action is not the same in the later action as it was in the earlier one, some issue which is necessarily common to both was decided on the earlier occasion and is binding on the parties: Duchess of Kingstons Case (1776) 20 St Tr 355. Issue estoppel was the expression devised to describe this principle by Higgins J in Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537, 561 and adopted by Diplock LJ in Thoday v Thoday [1964] P 181, 197 198. Fifth, there is the principle first formulated by Wigram V C in Henderson v Henderson (1843) 3 Hare 100, 115, which precludes a party from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones. Finally, there is the more general procedural rule against abusive proceedings, which may be regarded as the policy underlying all of the above principles with the possible exception of the doctrine of merger. It is only in relatively recent times that the courts have endeavoured to impose some coherent scheme on these disparate areas of law. The starting point is the statement of principle of Wigram V C in Henderson v Henderson (1843) 3 Hare 100, 115. This was an action by the former business partner of a deceased for an account of sums due to him by the estate. There had previously been similar proceedings between the same parties in Newfoundland in which an account had been ordered and taken, and judgment given for sums found due to the estate. The personal representative and the next of kin applied for an injunction to restrain the proceedings, raising what would now be called cause of action estoppel. The issue was whether the partner could reopen the matter in England by proving transactions not before the Newfoundland court when it took its own account. The Vice Chancellor said: In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. Now, undoubtedly the whole of the case made by this bill might have been adjudicated upon in the suit in Newfoundland, for it was of the very substance of the case there, and prima facie, therefore, the whole is settled. The question then is whether the special circumstances appearing upon the face of this bill are sufficient to take the case out of the operation of the general rule. Wigram V Cs statement of the law is now justly celebrated. The principle which he articulated is probably the commonest form of res judicata to come before the English courts. For many years, however, it was rarely invoked. The modern law on the subject really begins with the adoption of Wigram V Cs statement of principle by the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581. Yat Tung was an appeal from Hong Kong, in which the appellant sought to unsuccessfully avoid the exercise by a mortgagee of a power of sale in two successive actions, contending on the first occasion that the sale was a sham and that there was no real sale, and on the second that the sale was fraudulent. Lord Kilbrandon, giving the advice of the Board, distinguished at 589 590 between res judicata and abuse of process: The second question depends on the application of a doctrine of estoppel, namely res judicata. Their Lordships agree with the view expressed by McMullin J that the true doctrine in its narrower sense cannot be discerned in the present series of actions, since there has not been, in the decision in no. 969, any formal repudiation of the pleas raised by the appellant in no. 534. Nor was Choi Kee, a party to no. 534, a party to no. 969. But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings. Lord Kilbrandon referred to the statement of Wigram V C in Henderson v Henderson as the authority for the wider sense of res judicata, classifying it as part of the law relating to abuse of process. The implications of the principle stated in Henderson v Henderson were more fully examined by the House of Lords in Arnold v National Westminster Bank plc [1991] 2 AC 93. The question at issue in that case was whether in operating a rent review clause under a lease, the tenants were bound by the construction given to the very same clause by Walton J in earlier litigation between the same parties over the previous rent review. The Court of Appeal had subsequently, in other cases, cast doubt on Walton Js construction, and the House approached the matter on the footing that the law (or perhaps, strictly speaking, the perception of the law) had changed since the earlier litigation. Lord Keith of Kinkel began his analysis by restating the classic distinction between cause of action estoppel and issue estoppel: Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be re opened. (104D E) Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re open that issue. (105E) The case before the committee was treated as one of issue estoppel, because the cause of action was concerned with a different rent review from the one considered by Walton J. But it is important to appreciate that the critical distinction in Arnold was not between issue estoppel and cause of action estoppel, but between a case where the relevant point had been considered and decided in the earlier occasion and a case where it had not been considered and decided but arguably should have been. The tenant in Arnold had not failed to bring his whole case forward before Walton J. On the contrary, he had argued the very point which he now wished to reopen and had lost. It was not therefore a Henderson v Henderson case. The real issue was whether the flexibility in the doctrine of res judicata which was implicit in Wigram V Cs statement extended to an attempt to reopen the very same point in materially altered circumstances. Lord Keith of Kinkel, with whom the rest of the Committee agreed, held that it did. Lord Keith first considered the principle stated by Wigram V C that res judicata extended to every point which properly belonged to the subject of litigation and which the parties exercising reasonable diligence might have brought forward at the time. He regarded this principle as applying to both cause of action estoppel and issue estoppel. Cause of action estoppel, as he had pointed out, was absolute in relation to all points decided unless fraud or collusion is alleged. But in relation to points not decided in the earlier litigation, Henderson v Henderson opened up the possibility that cause of action estoppel may not apply in its full rigour where the earlier decision did not in terms decide, because they were not raised, points which might have been vital to the existence or non existence of a cause of action (105B). He considered that in a case where the earlier decision had decided the relevant point, the result differed as between cause of action estoppel and issue estoppel: There is room for the view that the underlying principles upon which estoppel is based, public policy and justice, have greater force in cause of action estoppel, the subject matter of the two proceedings being identical, than they do in issue estoppel, where the subject matter is different. (108G H) The relevant difference between the two was that in the case of cause of action estoppel it was in principle possible to challenge the previous decision as to the existence or non existence of the cause of action by taking a new point which could not reasonably have been taken on the earlier occasion; whereas in the case of issue estoppel it was in principle possible to challenge the previous decision on the relevant issue not just by taking a new point which could not reasonably have been taken on the earlier occasion but to reargue in materially altered circumstances an old point which had previously been rejected. He formulated the latter exception at 109B as follows: In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result. This enabled the House to conclude that the rejection of Walton Js construction of the rent review clause in the subsequent case law was a materially altered circumstance which warranted rearguing the very point that he had rejected. Arnold is accordingly authority for the following propositions: (1) Cause of action estoppel is absolute in relation to all points which had to be and were decided in order to establish the existence or non existence of a cause of action. (2) Cause of action estoppel also bars the raising in subsequent proceedings of points essential to the existence or non existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised. (3) Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised. It was submitted to us on behalf of Virgin that recent case law has re categorised the principle in Henderson v Henderson so as to treat it as being concerned with abuse of process and to take it out of the domain of res judicata altogether. In these circumstances, it is said, the basis on which Lord Keith qualified the absolute character of res judicata in Arnold v National Westminster Bank by reference to that principle is no longer available, and his conclusions can no longer be said to represent the law. I do not accept this. The principle in Henderson v Henderson has always been thought to be directed against the abuse of process involved in seeking to raise in subsequent litigation points which could and should have been raised before. There was nothing controversial or new about this notion when it was expressed by Lord Kilbrandon in Yat Tung. The point has been taken up in a large number of subsequent decisions, but for present purposes it is enough to refer to the most important of them, Johnson v Gore Wood & Co [2002] 2 AC 1, in which the House of Lords considered their effect. This appeal arose out of an application to strike out proceedings on the ground that the plaintiffs claim should have been made in an earlier action on the same subject matter brought by a company under his control. Lord Bingham took up the earlier suggestion of Lord Hailsham of St. Marylebone LC in Vervaeke v Smith [1983] 1 AC 145, 157 that that the principle in Henderson v Henderson was both a rule of public policy and an application of the law of res judicata. He expressed his own view of the relationship between the two at p 31 as follows: Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. The rest of the Committee, apart from Lord Millett, agreed in terms with Lord Binghams speech on this issue. Lord Millett agreed in substance in a concurring speech. He dealt with the relationship between res judicata and the Henderson v Henderson principle at pp 58H 59B as follows: Later decisions have doubted the correctness of treating the principle as an application of the doctrine of res judicata, while describing it as an extension of the doctrine or analogous to it. In Barrow v Bankside Members Agency Ltd [1996] 1 WLR 257, Sir Thomas Bingham MR explained that it is not based on the doctrine in a narrow sense, nor on the strict doctrines of issue or cause of action estoppel. As May LJ observed in Manson v Vooght [1999] BPIR 376, 387, it is not concerned with cases where a court has decided the matter, but rather cases where the court has not decided the matter. But these various defences are all designed to serve the same purpose: to bring finality to litigation and avoid the oppression of subjecting a defendant unnecessarily to successive actions. While the exact relationship between the principle expounded by Sir James Wigram V C and the defences of res judicata and cause of action and issue estoppel may be obscure, I am inclined to regard it as primarily an ancillary and salutary principle necessary to protect the integrity of those defences and prevent them from being deliberately or inadvertently circumvented. It was clearly not the view of Lord Millett in Johnson v Gore Wood that because the principle in Henderson v Henderson was concerned with abuse of process it could not also be part of the law of res judicata. Nor is there anything to support that idea in the speech of Lord Bingham. The focus in Johnson v Gore Wood was inevitably on abuse of process because the parties to the two actions were different, and neither issue estoppel nor cause of action estoppel could therefore run (Mr Johnsons counsel conceded that he and his company were privies, but Lord Millett seems to have doubted the correctness of the concession at p 60D E, and so do I). Res judicata and abuse of process are juridically very different. Res judicata is a rule of substantive law, while abuse of process is a concept which informs the exercise of the courts procedural powers. In my view, they are distinct although overlapping legal principles with the common underlying purpose of limiting abusive and duplicative litigation. That purpose makes it necessary to qualify the absolute character of both cause of action estoppel and issue estoppel where the conduct is not abusive. As Lord Keith put it in Arnold v National Westminster Bank at p 110G, estoppel per rem judicatam, whether cause of action estoppel, or issue estoppel is essentially concerned with preventing abuse of process. It may be said that if this is the principle it should apply equally to the one area hitherto regarded as absolute, namely cases of cause of action estoppel where it is sought to reargue a point which was raised and rejected on the earlier occasion. But this point was addressed in Arnold, and to my mind the distinction made by Lord Keith remains a compelling one. Where the existence or non existence of a cause of action has been decided in earlier proceedings, to allow a direct challenge to the outcome, even in changed circumstances and with material not available before, offends the core policy against the re litigation of identical claims. Application to the present case If this case is to be determined according to these general principles of the modern law, there can, I think, be little doubt about the answer. The Court of Appeal decided, before the result of the opposition proceedings in the EPO, that in its unamended form the patent was valid and infringed. It follows that Zodiac are estopped from asserting on the enquiry as to damages that in its unamended form the patent was invalid or was not infringed. This estoppel is a true cause of action estoppel. The Court of Appeal has determined in favour of Virgin issues essential to the existence of the cause of action for infringement of the unamended patent, which are the basis of the claim for damages. However, the point which Zodiac seek to make on the enquiry is that the unamended patent has been retrospectively amended. It no longer exists, and is deemed never to have existed, in the form on which these issues were adjudicated by the Court of Appeal. Zodiacs reliance on the retrospective amendment is a new point which was not raised before. It could not have been raised before, because the decision of the TBA retrospectively amending the patent was made after the order giving effect to the judgment of the Court of Appeal. There are two related reasons why Zodiac cannot be precluded from relying on the decision of the TBA on the enquiry as to damages. One is that they are relying on the more limited terms of a different patent which, by virtue of the decision of the TBA, must at the time of the enquiry be treated as the only one that has ever existed. The other is that Zodiac are not seeking to reopen the question of validity determined by the Court of Appeal. The invalidity of the patent may be the reason why the TBA amended the patent, but the defendant is relying on the mere fact of amendment, not on the reasons why it happened. The patent cases How then did the Court of Appeal come to a different conclusion? The answer is that they followed a line of cases culminating in the decision of the Court of Appeal in Unilin Beheer BV v Berry Floor NV [2007] FSR 635, which had held that a patentee whose patent has been held to be valid is entitled to claim damages for its infringement without regard to a subsequent revocation of the patent. This has been held to be so, even though it has always been the law in England (as it is under the European Patent Convention) that the revocation of a patent for invalidity relates back to the date of grant: see, currently, section 75(3) of the Patents Act 1977. The decisions which support the Court of Appeals conclusion are Poulton v Adjustable Cover and Boiler Block Co [1908] 2 Ch 430, Coflexip SA v Stolt Offshore MS Ltd (No 2) [2004] FSR 708 and Unilin itself. The facts in Poulton were that the court had held the patent to be valid and infringed and had ordered an enquiry as to damages. An attempt to have the patent declared invalid for prior use had been rejected. After the judgment, the defendant found a further and better instance of prior use on the basis of which he successfully petitioned for the revocation of the patent. He then sought to rely on the revocation on the enquiry as to damages. The question presently before this court was not argued. The defendants case was that the revocation of the patent was a decision in rem which itself gave rise to an estoppel against the world. There was therefore, it was said, an estoppel against an estoppel. Parker J rejected this argument. The Court of Appeal (Vaughan Williams, Fletcher Moulton and Buckley LJJ) also rejected it in an extempore judgment delivered on a Friday afternoon after an argument in which no authority was cited on the ambit of the law of res judicata other than the Duchess of Kingstons Case (1776) 20 St Tr 355. Vaughan Williams LJ appears to have thought that the revocation of the patent operated only from the date it occurred, but he held that it did not matter whether the patent was valid or not, nor whether the revocation was retrospective. This was because the Court having declared it to be valid, it must be treated as valid as between the same parties notwithstanding its subsequent revocation. Fletcher Moulton LJ considered that it was enough that the patent had been declared to be a valid patent at the time of the judgment. That was determinative on an enquiry as to damages in the same proceedings. Buckley LJ did not feel so clear on this point as my learned brothers, but considered that their view could be justified on the footing that the enquiry as to damages was no more than the working out of the effect of the judgment on liability. The decision may have been in accord with the law of res judicata as it was then thought to be, before the implications of Henderson v Henderson were appreciated or the doctrine had acquired its modern flexibility. What is clear is that without special facts the grounds on which Poulton was decided cannot be reconciled with the modern law on the subject. The real origin of the principle applied by the Court of Appeal in the present case was a much more recent case, namely the decision of the Court of Appeal in Coflexip SA v Stolt Offshore MS Ltd (No 2) [2004] FSR 708. The patent in this case related to a system for laying flexible flowlines in the seabed in subsea oil installations. The facts were substantially the same as in Poulton. The court had rejected a challenge to the validity of the patent based on prior art, and had held that the only infringement alleged in the pleadings (relating to the performance of a contract for the Magnus Swift field) was made out. The court gave judgment for the patentee, ordering an enquiry as to damages. In accordance with the ordinary practice, the enquiry as to damages extended not just to the Magnus Swift field infringement but to fourteen other similar infringements. While it was in progress a third party, relying upon different prior art in parallel proceedings, succeeded in having the patent revoked. The majority of the Court of Appeal (Peter Gibson LJ and Sir Martin Nourse) held that they were bound by Poulton and that the defendant was estopped. They rejected the submission that it was no longer good law, for two reasons. The first was based on Lord Keiths distinction in Arnold between cause of action estoppel and issue estoppel. The second was that unless the defendant was estopped, the patentee would be harassed by two successive proceedings in which he would be required to defend the validity of the patent. Neuberger LJ dissented. He distinguished between strict cause of action estoppel (i.e. where the same issue had been decided in the earlier proceedings) and abuse of process cause of action estoppel (where the unsuccessful party wishes to reargue the point by reference to new material or a new argument not put before the court before). Neuberger LJ assigned the Magnus Swift field infringement to the second category of cause of action estoppel, because the defendant was seeking to rely not on the prior art which had led to the revocation of the patent in the parallel proceedings, but on the mere fact of revocation, which was a decision in rem, and decisive irrespective of the ground for it. He regarded the fourteen other alleged infringements raised only on the enquiry as being governed by the principles relating to issue estoppel. He considered that the estoppel was not absolute in either case. In my opinion the majority in Coflexip were mistaken on both of the points which they made, for substantially the reasons given by Neuberger LJ in his dissenting judgment. The point can best be tested by reference to the Magnus Swift field infringement, which unquestionably turned on cause of action estoppel. I would for my part leave open the question whether the same applied to the other fourteen infringements, which has given rise to a certain amount of controversy since: see Hormel Foods Corp v Antilles Landscape Investments NV [2005] RPC 657, Unilin Beheer BV v Berry Floor NV [2007] FSR 635 at paras 47 48. The essential fallacy in the majoritys reasoning in Coflexip lay in their view that Lord Keith in Arnold had held that cause of action estoppel was always absolute. He did not. He held that it was absolute only in relation to points actually decided on the earlier occasion. Because of this mistake, the majority had no regard to the fact that the consequences of the patents revocation had not been decided on the earlier occasion, and could not have been because it had not happened. As for the policy considerations, they were also wrong, as it seems to me, to suppose that the court would be rehearing on the enquiry the question of validity decided by the judgment on liability. The revocation of the patent was an act in rem which determined the status of the patent as against the world. It had been revoked by the authority which had granted it and must be treated as never having existed. Although the patent had been revoked on the ground of invalidity, the issue which the defendant wished to raise on the enquiry was not invalidity but revocation. The revocation would be decisive regardless of the ground on which it was ordered. In Unilin Beheer BV v Berry Floor NV [2007] FSR 635 the Court of Appeal reached the same conclusion. The facts were in some ways an even more exacting test of the principle, because the policy considerations invoked in Coflexip could not possibly have justified the outcome in Unilin. This was because, as in the present case, the patent was retrospectively amended by the EPO to limit its scope to valid claims, after the English court had given judgment in favour of the patentee. The vexation associated with the pursuit of two proceedings challenging the validity of the patent was an inescapable feature of the statutory scheme which conferred concurrent jurisdiction on questions of validity on both the English court and the EPO. It can hardly be said that the vexation inherent in there being two perfectly proper proceedings concurrently is made more tolerable by ignoring the outcome of one of them. It was common ground in Unilin that the court was bound by Coflexip, and there was therefore only limited consideration of the merits of the principle decided in that case. The argument was directed to a different issue, namely whether the law stated in Coflexip was inconsistent with the scheme of the legislation relating to European patents, and therefore impliedly excluded where such a patent was revoked or amended by the EPO. In his judgment in Unilin, Jacob LJ said that he was not sorry to reach the conclusion that he did: (i) it was conducive to certainty because it enabled the parties to get a final decision on validity from an English court without waiting to find out who has won until the slowest horse in the race gets there; and (ii) any injunction against future infringements will be discharged if the EPO subsequently revokes or amends the patent. I have to say that I do not find either of these considerations convincing. Jacob LJ plainly assumed that the slowest horse would usually be the EPO. That assumption was not necessarily correct, especially in the light of the availability of at least one and potentially two tiers of appeal in England. The truth is that the effect of the decision in Coflexip is not to introduce certainty in this field but to make the outcome dependent on the wholly adventitious question which of two concurrently competent jurisdictions completes its procedures first. In the present case, the Court of Appeal may have reached a different conclusion if the Opposition Division of the EPO had reached the conclusion subsequently reached by the TBA. Permission to appeal the decision on validity to this court might well have been granted if the eruption of the Icelandic volcano had not deferred the decision of the TBA to a date after the application for permission had been resolved. The fate of 49m must surely depend on more substantial and predictable considerations than these. As for the discharge of any injunction restraining future infringements, this was a point also made by the majority in Coflexip (see para 137), but to my mind it simply underlines the irrationality of their conclusion. Logically, if the defendant is bound by the courts declaration that the patent is valid although it has been revoked or amended, he should be equally bound whether the remedy sought is damages or an injunction. The distinction between past and future infringements makes no sense in a case where a single cause of action embraces both and the revocation or amendment is by statute effective ab initio. In my opinion Poulton is no longer good law, and Coflexip was wrongly decided. It follows that Unilin was also wrongly decided because it proceeded on the premise of the law stated in Coflexip. The point with which Unilin was actually concerned, namely whether there is a different rule for European patents arising from the scheme of the relevant legislation, has been argued before us but it does not arise, because the anomaly in English law to which that point is directed does not exist. Accordingly, where judgment is given in an English court that a patent (whether English or European) is valid and infringed, and the patent is subsequently retrospectively revoked or amended (whether in England or at the EPO), the defendant is entitled to rely on the revocation or amendment on the enquiry as to damages. Once the enquiry is concluded, different considerations will arise. There will then be a final judgment for a liquidated sum. At common law, that judgment could be challenged on the ground that the patent had later been revoked or amended only by way of appeal, and then only if an appeal is still open. I doubt whether an implied statutory right to reopen it could be derived from the scheme of the Patents Act 1977, but that is a question which will have to await a case in which it arises. Disposal I would allow the appeal and declare that Zodiac are entitled to rely on the amendment of Virgins patent in answer to their claim for damages on the enquiry. The Glaxo v Genentech guidelines I add a brief observation on the procedural implications. If I had concluded that the defendant was estopped from relying on the revocation or amendment of the patent once the court had adjudged it to be valid, that would have had important implications for the question whether English proceedings should be stayed pending a decision in concurrent opposition proceedings in the EPO. On that footing, it would in my opinion have been essential to stay the English proceedings so that the decision of the EPO would not be rendered nugatory by the operation of the law of res judicata. On that hypothesis, it would have been difficult to defend the guidance given by the Court of Appeal in Glaxo Group Ltd v Genentech Inc [2008] Bus LR 888 to the effect that the English court should normally refuse a stay of its own proceedings if it would be likely to resolve the question of validity significantly earlier. The effect of that guidance is to put more litigants in the impossible situation in which successive decisions of the Court of Appeal placed the parties in this case. As it is, the problem has not gone away, even on the footing that those decisions are overruled. In the first place, a similar problem may well arise if the patent is revoked by the EPO after a judgment has been given for a liquidated sum. Second, that problem is aggravated by the fact that a decision of the English court on validity is directly effective only in the United Kingdom, whereas the EPOs decision, being the decision of the authority which granted the patent, is directly effective in every country for which the patent was granted. Third, even if the EPO opposition proceedings are concluded in time to affect the English proceedings, the uncertainty and waste of costs involved do little credit to our procedures. This is not a suitable occasion, nor is the Supreme Court the appropriate tribunal to review the guidelines, but I think that they should be re examined by the Patents Court and the Court of Appeal. LORD NEUBERGER (with whom Lady Hale, Lord Clarke and Lord Carnwath agree) The factual background The facts of this case are fully set out by Lord Sumption in paras 8 15 of his judgment, but it is worth summarising them. Virgin was the registered proprietor of a European patent (UK) (the Patent) granted out of the European Patent Office (EPO). They began infringement proceedings (the English proceedings) in the High Court against Zodiac, who were manufacturing and selling an allegedly infringing product. Zodiac denied infringement, and counterclaimed for revocation of the Patent on the grounds, inter alia, that it was invalid in the light of prior article Those proceedings resulted in a hearing in front of the Court of Appeal, which (i) decided that the Patent was valid, (ii) declared that Zodiacs product infringed it, and (iii) ordered an assessment of damages (the assessment) [2009] EWCA Civ 1062 and 1513. Meanwhile, opposition proceedings in the EPO had been initiated by Zodiac in respect of the Patent. Following the decision of the Court of Appeal in the English proceedings, the opposition proceedings came before the Technical Board of Appeal (TBA). During the course of the hearing before the TBA, Virgin abandoned the claims which Zodiac had been held to infringe, and the Patent was amended accordingly. Virgin then contended that Zodiacs product infringed one or more of the surviving claims of the Patent, as amended, but Floyd J concluded that the amendment limited the scope of the Patent so as to render Zodiacs product no longer infringing [2012] EWHC 2153 (Pat). It is common ground that the consequence of this is that the Patent is to be treated as limited in its scope pursuant to the amendment, with retrospective effect from its priority date. Virgin contend that, because the English proceedings have been finally determined in their favour on validity and infringement, it is not now open to Zodiac to rely in the assessment on the subsequent amendment of the Patent, by virtue of res judicata. In other words, Virgins contention is that the assessment should proceed on the basis that Zodiac are precluded from contending that they are not liable for any damages for infringement in the light of the amendment of the Patent. If that contention is right, then it seems likely that Virgin will recover damages probably running to tens of millions of pounds, whereas if it is wrong, they will presumably recover nothing. Res judicata and the authorities on the point in this appeal relation to res judicata, and I agree with his exposition. Virgins contention is that res judicata compels the conclusion that, where a patent has been held by a court to be valid and infringed as between the patentee and an alleged infringer, but it is subsequently revoked (or amended so that the alleged infringer would no longer be held to infringe), the patentee is nonetheless entitled to damages from the alleged infringer as if the patent had not been revoked (or relevantly amended). This contention receives support from three previous decisions of the Court of Appeal, which were followed by the Court of Appeal in this case. Those decisions are Poulton v Adjustable Cover and Boiler Block Co [1908] 2 Ch 430, Coflexip SA v Stolt Offshore MS Ltd (No 2) [2004] FSR 708, and Unilin Beheer BV v Berry Floor NV [2007] FSR 635. Poulton and Coflexip both involved an assessment of damages following a hearing at which the alleged infringer had unsuccessfully challenged the patentee on the validity and infringement of a purely British patent, in the English courts, but, before the assessment of damages had taken place, the patent had been revoked in other proceedings which were also in the English courts. The present case, like Unilin, is concerned with a European patent, in respect of which issues of validity and infringement have been determined by the English courts, but, before the assessment of damages has taken place, validity is being, or has been, considered by the EPO in opposition proceedings. In paras 17 26 of his judgment, Lord Sumption summarises the law in In Poulton [1908] 2 Ch 430, 437, Vaughan Williams LJ explained that the judgment obtained by the patentee made the question whether there had been an infringement of a patent then valid res judicata as between the parties to the action, and operated as a complete estoppel between them. On the following page, he said that the subsequent order of revocation could not affect the already existing estoppel, by virtue of which the defendants were prevented from denying that which had been finally determined to be the truth of the matter as between [the] parties involved in [the] action, and he therefore concluded that the alleged infringer could not rely on the subsequent revocation of the patent on the assessment of damages. At first sight, one can see the force of that reasoning. It is well established that the fact that an identical issue is determined differently in two different sets of proceedings is irrelevant to the rights of the parties to each set of proceedings inter se. Thus, in the normal run of things, where A has lost against B on an issue in one case, it is simply irrelevant to As legal obligations and rights as against B if C subsequently defeats B on the very same issue (except it may help A to obtain permission to appeal out of time see Arnold v National Westminster Bank plc [1991] 2 AC 93, 109F 110C but that is rather a different matter). That is because the determination of most issues in litigation can only bind the parties to the litigation (and their privies). The point is starkly illustrated by In re Waring, Westminster Bank v Burton Butler [1948] Ch 221. In that case, Jenkins J held that (i) an annuitant under a will was bound by a decision of the Court of Appeal in earlier litigation, where the will trustees and he were parties, as to the effect of tax legislation on his rights, but (ii) another annuitant was entitled to rely on a subsequent, more favourable, decision of the House of Lords on the point in a different case, because he had not been a party to the earlier litigation. Whilst Jenkins J acknowledged that the result may appear to be anomalous, in reality it was a clear and principled application of the fundamental rule. Discussion In my view, however, the same cannot be said of the reasoning of the Court of Appeal in Poulton [1908] 2 Ch 430, and in the three cases which followed it (including this case). It seems to me that the mistake of the courts in those four decisions was attributable to the fact that they did not have appropriate regard to the statutory provisions relating to patents, which reflect the nature of a patent and the effect of its revocation. They therefore treated the subsequent decision to revoke the patent as no more than a later determination by another court in other proceedings between different parties. The essential point is that, although the decision to revoke the patent was indeed made in proceedings involving different parties, the effect of the Patents Act 1977 (and its statutory predecessors) (the Patents Act) and the European Patent Convention (the EPC) whose relevant provisions are set out in paras 3 7 of Lord Sumptions judgment, was that the revocation did not just have effect between those parties. The revocation of the patent deprived the patentee of the rights which the patent had bestowed on him as against the world; furthermore, it did so retrospectively. In other words, the effect of the revocation was that everyone was entitled to conduct their affairs as if the patent had never existed. The failure to consider the nature of a patent and the effect of its revocation led the Court of Appeal into error, as it failed to take into account the fact that the issue of res judicata was being raised by the (former) patentee in connection with a particular statutory right. In this connection, it is worth referring to an observation of Lord Bridge in Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273, 289C D: In relation to adjudications subject to a comprehensive self contained statutory code, the presumption must be that where the statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right, the principle of res judicata applies to give finality to that determination unless an intention to exclude the principle can properly be inferred as a matter of construction of the relevant statutory provisions. I do not suggest that the Patents Act or the EPC created a specific jurisdiction, but the observation emphasises that an issue of res judicata in connection with a patent case cannot be considered correctly without proper regard to the effect of that Act and the EPC. In Poulton [1908] 2 Ch 430 and the cases which followed it, the Court of Appeal failed to focus on the point that the effect of the Patents Act was that the revocation meant that, as against the world, the patentee had never had a valid patent. They wrongly concluded that cause of action estoppel applied so as to preclude the alleged infringer from relying on the revocation of the patent in the assessment, because they failed correctly to formulate the point which the alleged infringer wished to take on the assessment. The alleged infringer was bound by strict cause of action estoppel from running any argument that it had run on validity or infringement, but there was no such strict rule to prevent it from contending that the patent had, as a matter of fact, been revoked. Not merely was that an argument which had not been run in the earlier proceedings: it was an argument which, ex hypothesi, could not have been run in the earlier proceedings. Accordingly, following the reasoning in Arnold, it was a fact which the court could at least have contemplated permitting the alleged infringer to rely on in the assessment. In my view, however, it goes further than that. Absent special factors, principle, fairness and commercial sense support the view that the fact that the patent in issue had been revoked was a point which the alleged infringer should have been entitled to rely on in the assessment. It was a new, centrally important, uncontroversial fact, and to deny the alleged infringer the ability to raise it would be to give effect to a monopoly right which the patentee never should have had. Further, while not enough of a point on its own, it can fairly be said that, far from increasing litigation, permitting Zodiac to rely on the amendment of the Patent, would serve to put an end to the assessment. On the facts of this case, Zodiac are not seeking to challenge any of the conclusions reached by the Court of Appeal in the English proceedings. They accept that they cannot say that the Patent, in its unamended form, is susceptible to attack on the grounds raised in the English proceedings, or that Zodiacs product did not infringe the Patent in that form, or that Virgin is not entitled to an assessment of damages. All that Zodiac are seeking to do is to contend that the damages on the assessment should be assessed at nil (or, perhaps, a nominal figure), because, as the Patent has been amended in the course of the EPO proceedings, it is now retrospectively to be treated as amended, so that Zodiacs product does not infringe, and so Virgin have suffered no damage. Further, Zodiac are not seeking to relitigate or raise a point which was determined by the Court of Appeal in the English proceedings. Indeed, they could not have raised the point that the Patent had been amended during those proceedings, for the very good reason that it had not been revoked. Zodiac are simply seeking to rely on a highly relevant event which occurred after the determination of those proceedings, and which self evidently would have a very significant effect on the assessment. It is true that the grounds upon which the TBA concluded that the Patent in its original form had to be amended were grounds on which Zodiac had unsuccessfully relied before the Court of Appeal, namely invalidity over the prior article However, Zodiac are not seeking to rely on those grounds in the assessment: they are simply seeking to rely on the fact that the Patent has been amended. The position would be the same if validity had not been in issue in the English proceedings. The purpose of res judicata is not to punish a party for failing to take a point, or for failing to take a point properly, any more than to punish a party because the court which tried its case may have gone wrong. It is, as explained above, to support the good administration of justice, in the public interest in general and in the parties interest in particular. Assessed from either perspective, it seems to me wrong to prevent a person who has been held to infringe a patent from invoking in proceedings thereafter a subsequent revocation or amendment of the patent, in order to avoid liability for infringement (at least in the absence of exceptional facts). The inappropriateness of relying, as the Court of Appeal did, on the approach in the normal run of cases is highlighted by the fact that the decision between the will trustees and one annuitant in Waring [1948] Ch 221 was not binding as between the will trustees and another annuitant. On the other hand, the decision to revoke the patent in a case such as this and Poulton [1908] 2 Ch 430 can be relied on by everyone, even though the decision may have been reached in proceedings in which only one person and the patentee (or its privy) was involved. The point may also be made by considering a hypothetical case, instanced in argument by Lord Sumption, where, after the Court of Appeal found for Virgin on validity and infringement, another court decided that Xs product, which was identical to that of Zodiac, did not infringe the Patent. That would not have been a decision which would have assisted Zodiac in any way, as the position of Zodiac and X would have been analogous to that of the two annuitants in Waring. A decision on infringement is in personam, so it only binds the parties to the action (and their privies), whereas a decision that a patent is invalid (or must be amended) is in rem, so it binds the world, just as the patent, so long as it is in force, can be enforced against the world. The policy of the Patents Act is that valid patents are enforceable against the world, even if an infringer is honestly and reasonably unaware of the existence of the patent. Equally, if a patent is revoked (or amended), the policy is that the revocation (or amendment) takes effect retrospectively, and that this can be relied on by the world. I find it hard to see why someone who has failed in an attack on the patent should not be entitled, like anyone else, to rely on the points that the patent has been revoked (or amended), and that the revocation (or amendment) is retrospective in its effect, whether in legal proceedings or in another context. This conclusion is supported by another point. As Virgin accept, any injunction restraining Zodiac from infringing the Patent granted at the end of the English proceedings either became ineffective or would have to be discharged, following the amendment of the Patent in the EPO proceedings. In my view, there is a logical difficulty with the notion that Zodiac cannot rely on the fact that the Patent was retrospectively amended when it comes to the assessment, if they can rely on the amendment in order to discharge or to ignore the injunction. It is true that the injunction is prospective and the assessment retrospective, but the amendment is both prospective and retrospective in its effect. Fletcher Moulton LJ rightly said in Poulton [1908] 2 Ch 430, 439, that [t]he order of revocation is in the nature of a judgment in rem which terminates the res, and he was also right when he added that [i]t has no further effect so far as estoppel is concerned. However, where he went wrong was to conclude that this meant that the fact and consequences of the revocation could not be relied on by a person who had previously been held to be an infringer, for instance when damages come to be assessed. He acknowledged that [a]s regards the world at large, every one is bound by the fact that the patent ceased to exist, and, as a matter of legal principle and consistency, as well as a matter of common sense and fairness, I consider that every one includes a party who has previously been held to infringe it. So far as the interests of patentees are concerned, it is inherent in the grant of a patent under the Patents Act that, however often its validity may be unsuccessfully challenged in earlier litigation, it may none the less be revoked (or amended), and with retrospective effect, at some point by a court or by the EPO. A patentee therefore must appreciate that it can never be sure that a decision of a court that the patent is valid will settle the question for good. It is true that an unsuccessful challenge to the validity of a patent by a particular person will normally give rise to a res judicata to prevent that person raising another challenge, but, as is common ground, it would not enable the patentee to rely on the patent against that person once the patent had been revoked, at least in respect of what would be infringements after its revocation. Other matters When seeking to justify a conclusion that, though it applies, res judicata does not preclude a point being taken, it can be dangerous to invoke the observation of Lord Keith in Arnold [1991] 2 AC 93, 109B, that estoppel is intended to work justice between the parties, because it is only too easy to fall back on it as an excuse for an unprincipled departure from, or an unprincipled exception to, the rule. However, in a case where the rule has been relied on, I consider that it is helpful for a court which is inclined to accept the argument that it does not prevent a point being taken, to consider whether that outcome would work justice between the parties. In this case, as in cases such as Poulton, it seems to me that it would be positively unjust, as between the parties, for a (former) patentee to recover damages for infringement of a patent after the patent has been irrevocably and retrospectively revoked (or, as in this case, relevantly amended). And I can see no public interest in such an outcome. There is no question of extra further litigation, as it is undeniable that the Patent has been revoked (or amended); indeed, further litigation will be avoided as the assessment need not proceed. In the course of his submissions on behalf of Virgin, Mr Crow QC relied on the doctrine of merger, viz the principle whereby whatever rights a claimant has against a defendant are treated as merged into the order made in the proceedings. I do not think that that aspect takes the point at issue on this appeal any further. Mr Crow realistically did not suggest that it would cause any problems if we were to overturn a decision which had stood for over a hundred years and had been followed and applied in the last ten years. We therefore do not have to address the problem which was faced by the House of Lords in Hindcastle Ltd v Barbara Attenborough Associates Ltd [1997] AC 70, when they decided to overturn an early twentieth century decision of the Court of Appeal which had stood for around a century. We were taken to some articles on the attitude of the courts of Germany, France and the Netherlands to the point raised in these proceedings. I am not confident that we have a full and accurate picture of the position in those three jurisdictions, but it seems clear that, to put it at its very lowest, there is not a consistent approach which could be said to reflect Virgins contention in this case. Indeed, my strong impression is that Zodiacs contention is closer to the practice in those three countries. However, as Mr Crow submits, that is of little weight, as this is the sort of issue which has to be resolved by reference to domestic law, and is not the subject of any attempt to harmonise practices across the EPC territories. As to the temporal limit of Zodiacs right to rely on the amendment of the Patent in the assessment of damages, I have no doubt that they could raise the amendment until judgment for the assessed damages had been drawn up, or passed and entered to use the time honoured legal expression. While the court would, I think, have power to refuse to do so, I would expect it normally to agree to reopen such a judgment if any revocation or amendment was raised before the assessed damages had been paid. If the Patent had been amended after the order had been formally passed and entered, but before the damages had been paid, I suspect that the only course open to Zodiac would have been to seek to appeal against the award of damages, relying on the amendment as new evidence, as strict cause of action estoppel (indeed merger) would apply. Once the damages had been paid, it seems to me that an alleged infringer would have to try and raise a restitutionary claim if it wished to recover the damages on the ground that the patent had been revoked or varied. I express no view on the strength of such a claim, which may well be highly dependent on the facts of the particular case. This conclusion renders it unnecessary to consider whether, if Poulton was rightly decided, it would none the less be open to Zodiac to rely on the amendment of the Patent in the assessment, because the amendment was effected in the EPO rather than in a domestic court. I find it slightly difficult to consider that hypothetical question, not merely because I would be proceeding on an artificial hypothesis, but also because my reasons for concluding that Poulton was wrongly decided in relation to a UK patent apply a fortiori to a European patent. Conclusion Genentech Inc (Practice Note) [2008] Bus LR 888. Accordingly, for these reasons, which follow those of Lord Sumption, and with whose reasoning I agree, I would allow Zodiacs appeal, and overrule the decisions in Poulton and Coflexip. It also follows that I disagree with the reasoning of the Court of Appeal in Unilin. I also agree with what Lord Sumption says in para 38 about the guidance given by the Court of Appeal in Glaxo Group Ltd v |
This appeal concerns the liability of employers in the knitting industry of Derbyshire and Nottingham for hearing loss shown by employees to have been suffered during the years prior to 1 January 1990, the date when the Noise at Work Regulations 1989 (SI 1989/1790) came into force. The central issue is whether liability exists at common law and/or under section 29(1) of the Factories Act 1961, towards an employee who can establish noise induced hearing loss resulting from exposure to noise levels between 85 and 90dB(A)lepd. Noise is generated by pressure levels in the air. The loudness of a noise depends on the sound pressure level of the energy producing it, measured in decibels (dB). The decibel scale is logarithmic, so that each 3dB increase involves a doubling of the sound energy, even though a hearer will not actually perceive a doubled sound pressure as involving much, if any, increase in sound. Noise is rarely pure, it usually consists of a broadband combination of sounds at different frequencies, and the human ear is more sensitive to noise at some (particularly middle) frequencies than at others. The sound pressure level across a range of frequencies is in a general industrial context commonly expressed by a weighted measurement described as dB(A). Apart from very loud, immediately damaging noise, with which this case is not concerned, damage to the human ear by noise exposure depends upon both the sound pressure level from time to time and the length of exposure, as well the individual susceptibility of the particular individual. Sound pressure level averaged over a period is described as dB(A)leq. Exposure at a given dB(A)leq for 8 hours is described as dB(A)lepd. Exposure at a given dB(A)lepd for a year gives a Noise Immission Level (NIL), which will build up slowly with further years exposure. Sound is perceived by the hearer as a result of the conversion by the ear drum of the sound pressure variations in the air into mechanical vibrations. These are conveyed by the middle ear to the cochlea, which, by a process of analysis and amplification, translates these vibrations into nerve impulses which are then transmitted to the brains auditory nerve. Hair cells in the cochlea play a vital part in the process, and noise induced hearing loss (described as sensorineural) is the result of damage to such hair cells resulting from exposure to noise over time. Other causes of hearing loss include decline in the conductive function of the outer and/or inner ear, due for example to disease, infection, excess wax or very loud traumatic noise, as well as loss due to simple ageing (presbyacusis). Hearing loss is commonly measured by ascertaining the average threshold below which hearing is affected and comparing it with a normal threshold. Both the rate at which any individual will suffer ageing loss and the susceptibility of any individual to damage as a result of noise exposure are, as between different individuals, very variable as well as unpredictable. Statistics, produced as will appear in the 1970s, do no more than attempt to indicate what percentage of a particular population may be predicted to suffer a particular level of hearing loss by a particular time in their lives by these different causes depending upon their circumstances. In 1971 a Code of Practice was prepared by the Industrial Health Advisory Committees Sub Committee on Noise, and in 1972 it was published by the Department of Employment as a blueprint for action. This Code remained in issue at the material times thereafter, and it said that a level of 90dB(A) should not be exceeded [i]f exposure is continued for eight hours in any one day, and is to a reasonably steady sound (para 4.3.1). On 14 February 2007, His Honour Judge Inglis decided test cases, involving seven claims against four different companies: Taymil Ltd (successors to the liabilities of several employing companies and now known as Quantum Clothing Group Ltd), Meridian Ltd, Pretty Polly Ltd and Guy Warwick Ltd. The cases were all brought on the basis that there had been exposure to noise levels between 80 and 90dB(A)lepd. Mrs Bakers claim was against Taymil. She had worked in Simpson Wright & Lowes factory in Huthwaite Road, Sutton in Ashfield from 1971 (when she was 15) to 2001. The judge found that for 18 years, from 1971 to 1989, she is likely to have been exposed to a noise level that attained 85dB(A)lepd, but did not at any time substantially exceed that level by more than 1db (para 182). He also found that some other condition was affecting her left ear, but that her years of exposure at or slightly above 85dB(A)lepd had led to her sustaining a degree of noise induced hearing loss and had played a small part in her suffering tinnitus. But Mrs Bakers claim failed on the ground that her employers had not committed any breach of common law or statutory duty. Had liability been established, the judge would have awarded her 5,000 for this slight hearing loss and slight contribution to the tinnitus (paras 192 193). All the other employees claims failed. In none of their cases was any noise induced hearing loss shown to have occurred due to the relevant employment. Only for a few months in the 1960s in the case of Mrs Moss claiming against Taymil and for about two years (1985 1986) in the case of Mrs Grabowski claiming against Pretty Polly was there shown to have been any exposure to noise levels of or over 85dB(A)lepd in the relevant defendants employment. However, in the case of Meridian (employers of Mr Parkes and Mrs Baxter and a subsidiary of Courtaulds plc) and Pretty Polly (employers of Mrs Grabowski and a subsidiary of Thomas Tilling Ltd until 1982 and of BTR plc until 1994) the judge would have held liability to exist from the beginning of 1985, had noise induced hearing loss been shown to have been incurred due to exposure to noise exceeding 85dB(A) in such defendants employment. Mrs Baker appealed to the Court of Appeal as against Quantum, and Meridian and Pretty Polly were joined to enable issue to be taken with certain of the judges conclusions potentially affecting other claims. Guy Warwick was a respondent to an appeal brought only on costs. The Court of Appeal (Sedley, Smith and Jacob LJJ) allowed Mrs Bakers appeal on 22 May 2009, and reached conclusions less favourable to all four employers than those arrived at by the judge. The present appeal is brought by Quantum, Meridian and Pretty Polly, with Guy Warwick intervening by permission of the Supreme Court given on 30 June 2010. The test of an employers liability for common law negligence is common ground. In Stokes v Guest, Keen and Nettlefold (Bolts and Nuts) Ltd [1968] 1 WLR 1776, 1783, Swanwick J described the position as follows: From these authorities I deduce the principles, that the overall test is still the conduct of the reasonable and prudent employer, taking positive thought for the safety of his workers in the light of what he knows or ought to know; where there is a recognised and general practice which has been followed for a substantial period in similar circumstances without mishap, he is entitled to follow it, unless in the light of common sense or newer knowledge it is clearly bad; but, where there is developing knowledge, he must keep reasonably abreast of it and not be too slow to apply it; and where he has in fact greater than average knowledge of the risks, he may be thereby obliged to take more than the average or standard precautions. He must weigh up the risk in terms of the likelihood of injury occurring and the potential consequences if it does; and he must balance against this the probable effectiveness of the precautions that can be taken to meet it and the expense and inconvenience they involve. If he is found to have fallen below the standard to be properly expected of a reasonable and prudent employer in these respects, he is negligent. Mustill J adopted and developed this statement in another well known judgment in Thompson v Smiths Shiprepairers (North Shields) Ltd [1984] QB 405, when he said (at pp 415F 416C): I shall direct myself in accordance with this succinct and helpful statement of the law, and will make only one additional comment. In the passage just cited, Swanwick J drew a distinction between a recognised practice followed without mishap, and one which in the light of common sense or increased knowledge is clearly bad. The distinction is indeed valid and sufficient for many cases. The two categories are not, however, exhaustive: as the present actions demonstrate. The practice of leaving employees unprotected against excessive noise had never been followed without mishap. Yet even the plaintiffs have not suggested that it was clearly bad, in the sense of creating a potential liability in negligence, at any time before the mid 1930s. Between the two extremes is a type of risk which is regarded at any given time (although not necessarily later) as an inescapable feature of the industry. The employer is not liable for the consequences of such risks, although subsequent changes in social awareness, or improvements in knowledge and technology, may transfer the risk into the category of those against which the employer can and should take care. It is unnecessary, and perhaps impossible, to give a comprehensive formula for identifying the line between the acceptable and the unacceptable. Nevertheless, the line does exist, and was clearly recognised in Morris v West Hartlepool Steam Navigation Co Ltd [1956] AC 552. The speeches in that case show, not that one employer is exonerated simply by proving that other employers are just as negligent, but that the standard of what is negligent is influenced, although not decisively, by the practice in the industry as a whole. In my judgment, this principle applies not only where the breach of duty is said to consist of a failure to take precautions known to be available as a means of combating a known danger, but also where the omission involves an absence of initiative in seeking out knowledge of facts which are not in themselves obvious. The employer must keep up to date, but the court must be slow to blame him for not ploughing a lone furrow. An employer following generally accepted practice will not therefore necessarily be liable for common law negligence, even if the practice involves an identifiable risk of leading to noise induced hearing loss. There is, as Hale LJ also said succinctly in Doherty v Rugby Joinery (UK) Ltd [2004] EWCA Civ 147; [2004] ICR 1272, para 44, a distinction between holding that a reasonable employer should have been aware of the risks and holding that certain steps should have been taken to meet that risk. Section 29 of the Factories Act 1961 provides: (1) There shall, so far as is reasonably practicable, be provided and maintained safe means of access to every place at which any person has at any time to work, and every such place shall, so far as is reasonably practicable, be made and kept safe for any person working there. (2) Where any person has to work at a place from which he will be liable to fall a distance more than six feet six inches, then, unless the place is one which affords secure foothold and, where necessary, secure hand hold, means shall be provided, so far as is reasonably practicable, by fencing or otherwise, for ensuring his safety. The judgments below In his clear and comprehensive judgment, His Honour Judge Inglis followed the authority of Taylor v Fazakerley Engineering Co (Rose J, 26 May 1989) in concluding that the standard of safety required under section 29(1) is governed by the general standard which ought reasonably to have been adopted by employers at the relevant time, and therefore that the section did not add materially to the common law duty in that respect (para 99). He held (para 87), in the light of the Code of Practice 1972 and extensive oral evidence called before him, that neither Taymil nor Guy Warwick as reasonable and prudent employers could be said to have been in breach of duty at common law or under section 29(1) during the 1970s and 1980s, certainly until the time when the terms of [European Economic Community Directive 86/188/EEC of 12 May 1986] became generally known in the consultative document. The consultative document in question was Prevention of damage to hearing from noise at work, Draft proposals for Regulations and Guidance, issued by the Health and Safety Commission in 1987. The document invited comments by 30 June 1988 and led to the Noise at Work Regulations 1989 (SI 1989/1790) which took effect from 1 January 1990. In the case of Meridian and Pretty Polly, the judge held that they had a greater understanding of the risks of noise by the beginning of 1983, that this required them to put in place a conservation programme accompanied by information and instruction, and that they were potentially liable from the beginning of 1985. The judge thus allowed a two year period for action from the date when there was or should have been appreciation that action was necessary. However, it is in issue whether, in the case of Taymil and Guy Warwick, he was treating the two year period as expiring at some undefined time during 1989 or as expiring on 1 January 1990, the same date as the 1989 Regulations came into force. In the Court of Appeal, the main judgment was given by Smith LJ, with whom the two other members of the court agreed. Sedley LJ gave some short additional concurring reasons. The court differed from the judge. It held section 29 of the Factories Act 1961 to involve a more stringent liability than liability for negligence at common law, and it held further that, were it material, it would have concluded that liability for negligence at common law arose at earlier dates than the judge had adopted. With regard to section 29, Smith LJ concluded that the court was bound by the previous authority of Larner v British Steel [1993] ICR 551, with which she anyway agreed, to hold that whether a place was safe involved applying [an] objective test without reference to reasonable foresight and that what is objectively safe cannot change with time (paras 77 and 78). In the alternative, if foresight was relevant, she would have held that by the early 1970s, any employer who kept abreast of developing knowledge would have known that prolonged exposure to 85dB(A)lepd was harmful to some people, making the workplace unsafe for an undefined section of his workforce, and, so, that he must do what was reasonably practicable to make and keep it safe. She concluded that having regard to a method available in a British Standard BS 5330 published in July 1976 which could be used by anyone with a modest degree of mathematical skill the position was that by late 1976 or early 1977, the average sized employer in the knitting industry could and should have been able to make an informed assessment of the quantum of risk arising from the below 90dB(A)lepd noise in his workshops. She then allowed, instead of the judges two year period, about six to nine months for the provision of ear protectors once the decision had been taken that they should be provided and, for the sake of simplicity fixed the date, by which action should have been taken and as from which liability arose under section 29(1), as January 1978 (paras 101 102). On this basis, Mrs Baker was awarded, for breach of statutory duty, 66.67% of 5,000 in respect of the 12 years of noise exposure which she suffered from January 1978. With regard to the common law claim, Smith LJ concluded that HHJ Ingliss holding in para 87 of his judgment (para 16 below) cannot be faulted, and upheld his view that there was no breach of the duty at common law during the period for which a responsible body of opinion regarded it as acceptable to expose employees to noise in the 85 89dB(A)lepd range (para 105). While indicating her personal inclination towards an earlier date (based on the publication in 1982 by the European Commission of a first draft directive, later withdrawn), she also agreed with the judges conclusion that for the employer with the ordinary, or average degree of knowledge, that period came to an end in 1987, following publication of the second draft Directive (para 105). In this connection, she again held that to allow longer than six to nine months was over generous, and so fixed the date of any breach of common law duty by the average employer at January 1988 (para 106). She agreed that Meridian and Pretty Polly should have known by early 1983 which of their workers required protection and should within six to nine months thereafter have provided such protection (paras 107 108); and she regarded it as irrational to treat Quantum any differently, merely because it was part of a smaller group and operated as an individual company without the benefit of the central advice on health and safety issues enjoyed by the Courtaulds group and Pretty Polly. So Quantum would, in the Court of Appeals view, have been liable at common law, like Meridian and Pretty Polly, from late 1983 (para 109). The history The judge set out in paras 29 to 45 the history of investigation and awareness regarding the risks of occupational exposure to noise from the early 1960s to date. The Court of Appeal helpfully summarised the historical background in terms which I quote, interposing a number of observations of my own. Historical Background 2. For well over a hundred years, it has been known that prolonged exposure to loud noise causes deafness. Such deafness was long regarded as an unavoidable occupational hazard. In the early 20th century, ear protectors were developed and were supplied to some members of the armed forces during both world wars. But it was not until the second half of the century that any real interest was taken in preventing noise induced deafness in industrial workers. 3. In April 1960, the government of the day instructed Sir Richard Wilson to chair a committee to report on the problems of noise. The committee's first report was published in 1963. In the same year, in reliance on that report, a Ministry of Labour publication entitled 'Noise and the Worker' drew the attention of employers to the need to protect their workers from excessive noise. At that time, scientific knowledge was not such that it could be said with confidence at what noise level harm was likely to occur. A rough guide was given that workers who were regularly exposed to noise of 85 decibels (dB) at any frequency for eight hours a day should be protected. I interpose that the author of the report was in fact Sir Alan Wilson FRS. An interim report was published in March and the final report in July. Noise and the Worker was published in the light of the interim report. 4. Further research was carried out during the 1960s, in particular by a team led by Professor W Burns, Professor of Physiology at the University of London and Dr D W Robinson, then head of the acoustics section of the National Physical Laboratory. In 1970, the result of their work was published as 'Hearing and Noise in Industry'. By that time, a method had been developed of measuring noise levels by reference to the weighted average for all frequencies (expressed as dB(A)) and for assessing the equivalent noise exposure over an eight hour working day (expressed as dB(A)leq or more recently dB(A)lepd). Burns and Robinson explained that they were now in a position to predict the degree of risk of hearing loss to groups of an exposed population of varying susceptibility from various levels of noise exposure. Their work would make it possible to prepare a code of practice for employers. They discussed the possibility of establishing a limit of maximum exposure as follows: The limit can be set at a variety of levels according to the ultimate risk judged to be acceptable and we suggest that it should not be set higher than 90dB(A) for normal continuous daily exposure which is likely to persist for many years. 5. In 1968 and 1971 two further editions of 'Noise and the Worker' were published. The gist of the advice given in the third edition was that, if employees were exposed to noise in excess of 90dB(A), there should be a programme of noise reduction or hearing conservation. That level of noise exposure corresponded approximately to the 85dB which had been the level at which action was recommended in the first edition of 'Noise and the Worker'. The third edition encouraged employers to reduce noise exposure below the maximum permitted level in order to avoid risk to the hearing of 'the minority of people who are exceptionally susceptible to hearing damage. The guidance given in the third edition to help to protect most people against serious hearing loss was that they should not be exposed to levels of noise exceeding maximum sound levels specified in table 1 by reference to duration of exposure. In the case of an exposure duration of eight hours a day (the longest covered), the maximum sound level specified was 90dB(A). The encouragement given to reduce noise exposure below the maximum was to reduce noise exposure if possible and was expressed to be in order to avoid risk to the hearing of the minority of people who are exceptionally susceptible to hearing damage, and for reasons of general welfare. In the foreword to impressions published after April 1972, two of them by 1976, the third edition also said: This booklet has been overtaken by the publication in April 1972 of the Code of Practice . However it is a useful introduction to the subject and should be read as a supplement to the Code. The third edition referred under the head Monitoring Audiometry to the possibility of monitoring checks, but did not repeat the suggestion in the second edition that monitoring should take place in respect of noise levels approaching those set out in table 1. 6. A Code of Practice, based on the work of Burns and Robinson was published by the Department of Employment in 1972. Its main messages were that employers must measure the noise in their premises and, if the noise level was 90dB(A)leq or above, must take steps to reduce the noise at source and, if that was not practicable, to provide ear protectors. The Code of Practice also explained that protection from noise of 90dB(A)leq would not protect all workers from hearing damage; some harm was likely to be caused to some susceptible workers by noise below that level. The Court of Appeal was not justified in using the word likely. What the relevant paragraph (1.1.2) in fact said was: The Code sets out recommended limits to noise exposure. It should be noted that, on account of the large inherent variations of susceptibility between individuals, these limitations are not in themselves guaranteed to remove all risk of noise induced hearing loss. 7. A set of tables first published in 1973 by the National Physical Laboratory (the NPL tables) showed the relationship between noise dose and the expected extent of hearing loss of persons with different degrees of susceptibility. Noise dose was based upon the daily exposure adjusted for the number of days' exposure in the year and the number of years' exposure. These tables were based on the work of Burns and Robinson. They were republished in 1977 in a more user friendly form but the underlying science was the same as before and indeed it remains valid today. The tables demonstrated the harmful effect of prolonged exposure to noise below 90dB(A)leq but, because they were based on empirical data and because the data available for these lower noise levels was limited, there was some dependence on extrapolation. The degree of predicted risk arising from exposure to these lower levels of noise is therefore less certain than that caused by noise over 90dB(A)leq. That is of significance in the context of this appeal which raises the issue of when employers ought to have taken steps to protect their employees from exposure to such lower levels of noise. These tables consisted of some 15 pages of introductory material and 149 pages of tables. The latter would require expert advice to interpret, but, even with such advice, they did no more than indicate in detailed statistical terms the risk to susceptible employees identified by the Code of Practice. The judge recorded (para 23) the expert evidence that the NPL tables were (as distinct from the ISO1999 tables mentioned in point 10 below) less accurate below 90dB(A), though reasonably accurate above that level. They tend at lower levels to exaggerate the effect of noise. Some of the NPL tables were used in BS 5330: 1976 mentioned in point 11, below. 8. Until 1989, the Government of the United Kingdom made no attempt of general application to regulate noise exposure in industry. In 1974, regulations were made to control noise in the woodworking industry and in tractor cabs. The regulations required employers to reduce noise to the greatest extent practicable and to provide ear protectors where persons were likely to be exposed to noise at or above 90dB(A)leq, 9. In 1975, a sub committee of the Industrial Health Advisory Committee, set up after publication of the Code of Practice in 1972, reported on the problems of framing protective legislation. The gist of this report was that the noise limit recommended by the 1972 Code had widespread acceptance although it did not eliminate all risk of harm. 90dB(A)leq was the most practicable standard although a lower limit should be considered at regular intervals. More particularly, para 19 of the report, Framing Noise Legislation, read: The Codes noise limit of 90dB(A)leq has widespread international acceptance, and although it does not eliminate all risk of hearing damage, we feel it continues to be the most practicable standard, in recognition of the necessity of concentrating limited resources on workers subject to the most significant risks and of eliminating these risks as a first priority. Prediction of risks of hearing damage at these levels, based on a lifetimes exposure of 30 or 40 years, indicates that the proportion of an exposed population likely to suffer unacceptable degrees of impairment falls off rapidly below 90dB(A). The specification of a daily dose introduces a further margin of safety since it is unlikely that a large number of workers would receive the full daily limit throughout their entire working lifetimes. Similar conclusions have been reached in other major industrial countries, and none of those examined in our survey has introduced a generally applicable environmental limit lower than 90dB(A). Nevertheless, the question of a lower limit should be reconsidered at regular intervals. A level of 90dB(A) is by no means ideal, and the aim should be to ensure a progressive reduction. 10. In 1975 an international standard was published (ISO1999). This proposed a formula by which hearing loss could be predicted from various levels of noise exposure. It was not easy for a lay person to use. IS01999 did not suggest limits of tolerable exposure. It said that that was the province of 'competent authorities' who would demand the institution of hearing conservation programmes if limits were exceeded. It mentioned that 'in many cases', 85 to 90dB(A) equivalent continuous sound level had been chosen. 11. In 1976, a British Standard was published (BS 5330: 1976). This was based on the work of Burns and Robinson and explained the relationship between noise exposure and the expected incidence of hearing disability. The foreword stated that determination of a maximum tolerable noise exposure was outside the scope of the standard and referred the reader to the 1972 Code of Practice. More particularly, BS 5330 said: Determination of a maximum tolerable noise exposure is outside the scope of this standard; it involves consideration of risk in relation to other factors. For occupational noise exposure such a limit is specified in the Department of Employment (HMSO, 1972) Code of Practice for Reducing Exposure of Employed Persons to Noise. 12. In 1981, the Health and Safety Executive (HSE) issued a consultative document 'Protection of Hearing at Work' which included draft regulations and a draft approved code of practice. The proposed level of protection was at or above 90dB(A)lepd. These draft regulations were not promulgated. 13. In 1982, a draft directive was published by the European Commission, proposing a general limit of 85dB(A)lepd with ear protection to be provided at or above that level with medical surveillance and routine audiometry for all employees exposed at or above that level. This was greeted with some dismay by industry and was withdrawn in 1984. A further draft directive was published and was promulgated in 1986. This required member states to enact legislation which would, inter alia, require employers to provide ear protectors and information as to risks where employees were exposed to noise likely to exceed 85dB(A)lepd. Medical surveillance was to be made available to all exposed employees by means of access to a doctor. Thus, the only change of significance between the 1982 draft and the 1986 directive was that responsibility for medical surveillance would not fall on the employer but (at any rate in this country) would be satisfied through the provisions of the National Health Service. The Noise at Work Regulations 1989 (SI 1989/1790) implementing the directive came into effect on 1 January 1990. The directive promulgated in (May) 1986 was Council Directive 86/188/EEC. It required member states to enact and to bring into force the relevant legislation by 1 January 1990. The Court of Appeal was not accurate in stating that the only difference between the 1982 draft and the actual directive in 1986 related to responsibility for medical surveillance. As the judge noted (para 39), the directive replaced the earlier withdrawn draft with less stringent proposals: in short, where daily personal noise exposure of a worker exceeded 90dB(A), the directive required the use by the worker of personal ear protectors (article 6(1)), but where such exposure was likely to exceed 85dB(A), it only required such protectors to be made available to workers (article 6(2)). 14. For the sake of completeness, although not relevant to this appeal, I mention that, in 2003, the European Commission issued a further directive imposing more stringent requirements. The Control of Noise at Work Regulations 2005 (SI 2005/1643) gave effect to that directive. Inter alia, they introduced a maximum permitted noise level of 87dB(A) and required employers to provide ear protectors to workers exposed to 85dB(A) and to make them available on request to workers exposed to 80dB(A). The judge in paras 46 to 48 also set out the general approach to noise in industry until the end of the 1980s, based on the oral evidence called before him. Paras 46 to 48 of HHJ Ingliss judgment led him to reach the following conclusions on liability in para 87: 87. There is no doubt that research into the question of what risks to the hearing of employees exposure below 90dB(A)leq posed would have yielded the answer that 90dB(A) was not a natural cut off point, and that there were risks to susceptible individuals below that level. Indeed, the 1972 Guidelines themselves made that clear. From the early 1970s, certainly by 1976 with the publication of BS 5330 and of IS0 1999 in the previous year, the information was available if researched to give an indication of the level of the risk. It was a level of risk that came by the end of the 1980s to be seen as unacceptable if not accompanied by at least voluntary protection, though the 90dB(A) limit had remained, both in 1975 and in 1981, the proposed regulatory standard in England. In the end though I am not persuaded that employers in industry who conformed to the maximum acceptable level of exposure in the 1972 Guidelines were in breach of their duty of care to their employees who were exposed over 80dB(A)lepd. In rejecting the primary case for the claimants I acknowledge that I do not see the issue as only one of foreseeability. It would in my judgment be futile to hide behind the 1972 Guidelines for that purpose, or behind the third edition of Noise and the Worker, when the documents themselves proclaim that the level proposed will not be safe for all workers. But good practice as informed by official guidance has in my view to be taken into account as well. The guidance as to the maximum acceptable level was official and clear. It would in my view be setting too high a standard to say that it was incumbent on employers to ignore it, and to reach and act, even as early as the 1960s, on a view that the standard set was inadequate to discharge their duty to their employees. To put it in the context of Swanwick J's judgment, complying with 90dB(A)lepd as the highest acceptable level was, I think, meeting the standards of the reasonable and prudent employer during the 1970s and 1980s, certainly until the time when the terms of the 1986 directive became generally known in the consultative document of 1987. I accept that this means that employers were not bound in the discharge of their duty to ask the question Who are those at risk in my factory, and how big is the risk. It is a question that none of them in this case asked. But the effect of the maximum acceptable level in the Guidelines means in my judgment, that they were not in breach of their duty for not asking it. The judge then distinguished the position of Meridian (Courtaulds) and Pretty Polly: 88. There is room, however, for greater than average knowledge as Swanwick J put it, to inform the steps that individual employers should have taken at an earlier time than the late 1980s. At first sight it is not attractive that those who have a safety department and medical officers and take the matter of noise seriously should be worse off than those who wallow in relative ignorance, but it is an inevitable consequence of a test that depends on what an individual employer understood. On that basis, I have found that by the beginning of 1983 management both at Courtaulds and at Pretty Polly had sufficient understanding of the risks to hearing below 90dB(A)lepd to require them to take action. Both in fact say that they did so. Plainly putting a conservation programme into action, accompanied by information and instruction is not to be done in an instant, as Mustill J recognised in the passage in Thompson that I have set out above. In the case of those two employers, because of the particular state of their knowledge, I would say that they were in breach of their duty to employees who suffered damage through exposure at 85dB(A)lepd and over, without having the opportunity of using hearing protection, from the beginning of 1985. Earlier in his judgment, HHJ Inglis had made detailed factual findings about the conduct and understanding of each of the relevant employers with regard to the risks of noise induced hearing loss. I summarise these in the appendix to this judgment. Smith LJ addressed the judges conclusions on liability at common law as follows: 105. I consider that the opinion, implied by the Code of Practice, that exposure to noise below 90dB(A)lepd was 'acceptable' was a factor which could properly be taken into account when an employer considered what it was reasonable for him to do in respect of the health and safety of his employees. In short, I take the view that Judge Inglis's holding which I quoted at paragraph 46 cannot be faulted. I would uphold his view that there was no breach of the duty at common law during the period for which a responsible body of opinion regarded it as 'acceptable' to expose employees to noise in the 85 89dB(A)lepd range. I consider that, for the employer with the ordinary or average degree of knowledge, the judge's conclusion that that period came to an end in 1987, following publication of the second European draft directive, was a reasonable conclusion, although, left to myself, I would have said that the publication of the first draft directive in 1982 would have put all employers on notice that it could no longer be regarded as acceptable or reasonable to leave this group of employees exposed. 107. The judge imposed different dates of common law liability on Courtaulds and Pretty Polly from that of Quantum and Guy Warwick which he regarded as having only an average degree of knowledge. It is clear that from 1972 all employers should have been aware of the risk to some of their employees from exposure to 85 89dB(A)lepd. The question at common law was when they should have realised that it was no longer to be regarded as acceptable to disregard that risk. The judge's conclusion in respect of Courtaulds was plainly justified. They actively opposed the proposal in the first draft directive, not on the ground that the risk was minimal but on the ground that the cost to them would be too great. By early 1983, they could no longer have thought that a responsible body of opinion took the view that it was acceptable to ignore the risks of harm below 90dB(A)lepd. They should by that time have known which of their workers required protection and only a further six to nine months should be allowed for provision. 108. Pretty Polly was in a different position in that there was no direct evidence that it knew of the first draft directive. However, in my view the judge was entitled to hold that it must have done. In any event, there was other evidence that it had been advised of the need to take action in respect of the lower levels of noise. In my view, the judge's holding was justified, subject to the reduction in the period allowed for provision. 109. As a fall back submission, Mr Hendy argued that the judge had been wrong to reach a different conclusion in respect of Quantum. There was evidence that it was aware of the first draft directive and Mr Hendy submitted that, given that knowledge, it was irrational to say that, because the group was smaller than Pretty Polly or Courtaulds and operated as individual companies without the benefit of central advice on health and safety issues, they should be treated differently from the other two employers. I would accept that submission and would hold that, if it were to become material, Quantum would have been in breach of its common law duty at the same date as Courtaulds. The judge and the Court of Appeal therefore accepted the Code of Practice as the generally appropriate standard for employers with average knowledge during the 1970s and early 1980s, differing only as to the date in the 1980s when it ceased to be so. The judge and, ostensibly at least, the Court of Appeal also distinguished between average employers and other employers, described by the judge as having greater than average knowledge, differing however as to which employers fell into the latter category. The parties respective cases on common law liability The respondent challenges the conclusion reached by both courts below that the Code of Practice represented a generally appropriate standard; she submits that it ceased to be such from at least 1976, though she does not in this case ask for that date to be substituted for the dates found by the Court of Appeal. For opposite reasons, the distinction drawn by the judge between employers with average and greater than average knowledge finds little support in any sides submissions. Mr Hendy positively asserts that all three appellant employers and the interveners were in the same position; that they should all be treated as having the same constructive knowledge (based on the generally available published provisions and materials); and that neither court below based its decision upon specific evidence of knowledge of incidence of hearing problems in particular workforces, or technical or operational knowledge specific to the particular defendants (respondents case, para 202). So, on his submission, it was not appropriate to regard Quantum and Guy Warwick, or any employer, as any less liable than the judge held Meridian and Pretty Polly to be. The Court of Appeal, by putting Quantum into the same category as Meridian and Pretty Polly, went some, though not the whole, way towards accepting this submission. The appellants, on the other hand, support the concurrent conclusion below that the Code of Practice constituted an appropriate standard for employers with average knowledge, submit that it continued to be so, as the judge held, until the late 1980s, but also submit that the judge failed to provide any satisfactory analysis of what he meant by greater than average knowledge in para 88, and that he had no basis for treating Meridian and Pretty Polly as liable by reference to any date other than that which he held applicable to the reasonable and prudent employer during the 1970s and 1980s of whom he spoke in para 87. Analysis of common law position: (a) Greater than average knowledge? At the level of principle, the parties submissions take one back to Swanwick and Mustill JJs classic statements regarding the test of negligence at common law (paras 9 and 10 above). These statements identify two qualifications on the extent to which an employer can rely upon a recognised and established practice to exonerate itself from liability in negligence for failing to take further steps: one where the practice is clearly bad, the other where, in the light of developing knowledge about the risks involved in some location or operation, a particular employer has acquired greater than average knowledge of the risks. The question is not whether the employer owes any duty of care; that he (or it) certainly does. It is what performance discharges that duty of care. For that reason, I find difficult to accept as appropriate in principle some of the reasoning in another, more recent Court of Appeal authority, Harris v BRB (Residuary) Ltd [2005] EWCA Civ 900; [2005] ICR 1680 (Neuberger and Rix LJJ). In Harris, the issue was whether regular exposure of train locomotive drivers between 1974 and 2000 to noise levels between 85dB(A) and 90dB(A) gave rise to liability for any noise induced hearing loss shown to have resulted. Neuberger LJ gave the sole reasoned judgment. He accepted on the evidence before the court that, at least until the 1989 Regulations came into force, an employer would not normally be expected to be liable to an employee who was exposed to a level of sound lower than 90dB(A)leq, but said that this evidence cannot go so far as to negative in all circumstances liability to employees whose health is impaired as a result of exposure to sound below that level (para 39). After quoting Swanwick J, Neuberger LJ suggested that a good working approach might be to treat 90dB(A) as giving rise to a presumption, with the effect that, below 90dB(A), it was for the employee to show why a duty should be imposed at all (paras 40 41). The reference to a duty being imposed derives from the way in which the defendants case was presented: the submission was that the mere fact that a particular level of sound is potentially injurious does not of itself give rise to a duty of care. the existence of a duty of care depends not merely on foreseeability of injury but whether it is just and equitable to impose the duty (para 36). On this basis, Neuberger LJ said that, while not intending to call into question the applicability in the general run of cases of the 90dB(A)leq threshold each case must turn very much on its facts, not least because of the just and equitable test accepted, indeed advanced on behalf of the defendant (para 38). In my opinion, however, the adoption of such a test would import an extraneous concept. The primary inquiry, when considering whether an employer has acted with due care to avoid injury from noise induced hearing loss, is whether there is a recognised and established practice to that end; if there is, the next question is whether the employer knows or ought to know that the practice is clearly bad, or, alternatively, if the area is one where there is developing knowledge about the risks involved in some location or operation, whether the employer has acquired greater than average knowledge of the risks. Considerations of justice and equity no doubt underlie both Swanwick and Mustill JJs statements of principle. But to ignore the statements and to restate the inquiry in simple terms of justice and equity opens a wide and uncertain prospect, despite the courts attempts in Harris to emphasise that it was not departing from a position whereby an employer would not normally be expected to be liable for a level of sound lower than 90dB(A). That prospect has a present resonance, although HHJ Inglis did not base himself on the reasoning in Harris, but used language picking up the more conventional statements of principle. Nonetheless, I consider that he did not apply those statements in the sense in which they were meant. He did not consider the practice represented in the Code to be clearly bad during the 1970s or until the end of the 1980s; and it is common ground that the general state of knowledge about the risks involved in the knitting industry remained essentially static throughout this period (see also the first seven sentences of para 87 of the judges judgment). As Mr Hendy made clear in the Court of Appeal (Core II, pp.749 750), no question of special resources arises, since no amount of research would have led to further knowledge, or indeed to different conclusions about the level of risk than those indicated in the Code of Practice. Mr Hendy is in my opinion also correct in saying that the judge based his conclusions, including those relating to Courtaulds and Pretty Polly, on generally available published provisions and materials, rather than on any specific knowledge. That is particularly apparent from the final sentences of paras 56 and 66 of his judgment (cited in the appendix) as well as in paras 87 and 88. It might perhaps have been suggested, in relation to Courtaulds, that the rising incidence of claims which they experienced in the early 1980s gave rise to some degree of special knowledge, but that is not how the matter has been put. It follows that, on the judges approach, the only real difference between employers lay in the degree of their consideration of and reaction to such risks. In these circumstances, the judges conclusions in relation to Meridian (Courtaulds) and Pretty Polly amount in substance to saying that, because these companies focused more closely on the potential risk below 90dB(A) and displayed greater than average social awareness (to use Mustill Js words in Thompson at p 415H) by resolving that some action should probably be taken at times before ordinary, reasonable employers arrived at any such conclusion, they incurred greater liability than such employers. The judge himself recognised here a paradox (para 88). Those who have a safety department and medical officers and take noise more seriously than the ordinary reasonable employer are liable, while others are not. That is appropriate if extra resources or diligence lead to relevant fresh knowledge. But here they have led simply to the formation or inception of a different view to that generally accepted about what precautions to take. In such a case, the effect of the judges approach is not to blame employers for not ploughing a lone furrow; rather, it positively blames them for ploughing a lone furrow but not doing so deeply enough. When Mustill J spoke of changes in social awareness (p 415H), he was referring to changes leading to a general raising of the standard which average employers were expected to observe, not of individual employers spear heading such changes by forming the view that the standard should be raised. In my view, therefore, no real basis was shown for treating Courtaulds and Pretty Polly differently. On this aspect of the appeal, I would only add two points: first, had I considered there to be a sound basis for treating Courtaulds and Pretty Polly as having relevantly different and greater knowledge than average employers, I would see no basis for the Court of Appeals addition of Quantum into the same special category; Lord Dyson and Lord Saville agree, I understand, that there was no such basis; secondly, since Lord Dyson does not share the view that the judge should not have treated even Courtaulds and Pretty Polly as falling into a special category (see para 104 below), it follows that there is no majority in favour of this view and that (in reflection of the common ground between Lord Dyson, Lord Saville and myself), the appeal should be allowed only to the extent of restoring the judges decision in this regard. (b) Was the Code of Conduct an acceptable standard for average employers? In my opinion, the respondent is correct in submitting that the real question is the sustainability of the judges conclusion that the Code of Practice constituted an acceptable standard for average employers to adhere to during the 1970s and 1980s. The Court of Appeal expressed agreement with the judges conclusion that the Code of Practice remained a generally acceptable standard. Smith LJ stated that this conclusion cannot be faulted and that I would uphold his view that there was no breach of the duty at common law during the period for which a responsible body of opinion regarded it as acceptable to expose employees to noise in the 85 89dB(A)lepd range (para 105). Endorsing, in effect, the judges approach of distinguishing between employers with average and greater than average knowledge, she concluded para 105 by saying: I consider that, for the employer with the ordinary or average degree of knowledge, the judge's conclusion that that period came to an end in 1987, following publication of the second European draft directive, was a reasonable conclusion, although, left to myself, I would have said that the publication of the first draft directive in 1982 would have put all employers on notice that it could no longer be regarded as acceptable or reasonable to leave this group of employees exposed. Turning to examine the different dates of common law liability which the judge had imposed, Smith LJ identified the issue as being when employers should have realised that it was no longer to be regarded as acceptable to disregard the risk to some of their employees from exposure to 85 89dB(A)lepd, of which they should, because of the Code of Practice, have been aware from 1972 (para 107). As regards Courtaulds, she regarded the judges conclusion as plainly justified, saying that By 1983, they could no longer have thought that a responsible body of opinion took the view that it was acceptable to ignore the risks of harm below 90dB(A)lepd (para 107). However, that appears to say that from 1983 there was no responsible body of opinion in favour of relying on the Code of Practice, and, if so, it should on its face have led automatically to a conclusion that no reasonable employer could do so. Nonetheless, Smith LJ went on to consider the state of Pretty Pollys awareness about the need to take action and the 1982 draft directive and of Quantums awareness of the draft directive. After noting Quantums awareness of the draft directive, she accepted Mr Hendys submission that it was irrational to say that, because the group was smaller than Pretty Polly or Courtaulds and operated as individual companies without the benefit of central advice on health and safety issues, they should be treated differently from the other two employers (para 109). While Smith LJ ostensibly viewed the issue (as the judge did) as depending upon analysis of each individual employers position, in reality her approach seems to suggest a conclusion that the Code of Practice ceased to be an acceptable standard for any responsible employer in 1982. In effect, the Court of Appeal appears to have disagreed with HHJ Ingliss conclusion that the period during which a reasonable employer could rely upon the Code of Practice continued until 1987. The basis for this, despite the passage concluding para 105 of Smith LJs judgment, quoted above, appears to have been the publication in 1982 of the first draft directive. The judges conclusion in para 87 was the product of a lengthy trial, and was based on extensive expert evidence. The Code of Practice itself repeatedly refers to a limit defined in section 4.3.1 in relation to continuous noise exposure as 90dB(A)lepd: see e.g. sections 2.2.1, 3.1.2, 4.1.1, 4.2.1, 5.1.1, 6.1.3, 6.7.1 and 7.1.1. It also says that Where it is reasonably practicable to do so it is desirable for the sound to be reduced to lower levels (section 4.1.1), but this has to be read with section 6.1.3, which states: Reduction of noise is always desirable, whether or not it is practicable to reduce the sound level to the limit set out in section 4, and whether or not it is also necessary for people to use ear protectors. Reduction below the limit in section 4 is desirable in order to reduce noise nuisance. When addressing section 29(1) of the Factories Act 1961, the Court of Appeal said (para 101) that, although the Code of Practice was not irrelevant, it was, in itself, plainly inadequate as an assessment tool, in that it advised only that there was some risk to susceptible individuals from exposure below 90dB(A)lepd; and it went on to conclude that the publication of BS 5330 in July 1976 could and should have enabled any average sized employer in the knitting industry, with the assistance of anyone with a modest degree of mathematical skill or any consultant acoustic engineer, to make an informed assessment of the quantum of risk arising from noise below 90dB(A)lepd. These statements are not on their face easy to reconcile with the judges findings (in particular in paras 46 48 and 87). However, they were made in the course of considering the issue of reasonable practicability under section 29, and on the basis that it was irrelevant in that context whether a reasonable employer could reasonably rely upon the Code of Practice as setting an acceptable standard of conduct in relation to exposure of employees to noise: see paras 89 and 100 (quoted in para 75 below). Even if regarded as consistent with the judges findings, they do not therefore bear on the question whether the Code of Practice provided such a standard. In any event, however, I do not consider that examination of the underlying statistical material undermines either the appropriateness or relevance of the Code of Practice as a guide to acceptable practice. Both the Code of Practice and BS 5330 were based on the research and statistics developed through the work of Burns and Robinson. BS 5330 itself stated that determination of a maximum tolerable noise exposure was outside its scope, that it involved consideration of risk in relation to other factors, and that for occupational exposure a limit was specified by the Code of Practice (para 15, above). The respondent in fact accepted in the Court of Appeal that there was no basis in this case for going behind the Code of Practice, while submitting that the Code was enough for her purposes (Core II, pp 749 750). If general standards of, or attitudes to, acceptable risk are left out of account, the statistical tables contained in the NPL tables, BS 5330 and ISO1999 could be used to suggest that no reasonable employer could from the early or mid 1970s expose his employees to noise exceeding 80dB(A)lepd. This would not be consistent with the contemporary recognition of the Code of Practice as setting a generally appropriate standard in BS 5330 itself as well as in other documents such as Noise and the Worker and the Industrial Health Advisory Committee report of 1975 (see para 15 above). The statistically identified risks at levels between 80dB(A)lepd (currently, at least, identified with no risk) and 90dB(A)lepd do not enable any easy distinction to be drawn within that bracket, if the elimination of all statistical risk is taken as a criterion. This is highlighted by consideration of the tables in BS 5330: 1976 upon which the respondent and the Court of Appeal (para 101) have relied to show the risk attaching at levels of exposure between 85 and 90dB(A) lepd. The same tables can be used to demonstrate the existence of risks (in terms of the percentage of persons exposed attaining or exceeding a mean hearing level of 30dB) arising below noise levels of 85dB(A)lepd. Caution is necessary because of the inherent inaccuracy, and tendency to exaggerate, of the NPL tables, and to the extent that they were based on them, the BS 5330: 1976 tables at all levels below 90dB(A) (para 15 above). But another, separate problem, which also applies to the ISO1999 tables, is that reliance on such tables as demonstrating the existence of a risk which needed counter acting makes it necessary to confront the question on what basis any distinction exists between say an increase by an additional 6% in the level of risk for 60 year old persons who have been exposed for 40 years at 86dB(A)lepd and by 5% for such a person so exposed at 85dB(A)lepd or by 4% for such a person so exposed at 84dB(A)lepd. The equivalent increases for 60 year olds so exposed for 30 years would be 52, 42, and 32%, and for 60 year olds exposed for 20 years, 4, 3 and 2%. Consistently with this, the respondent did argue before the judge that 80dB(A)lepd was the only acceptable limit. But, despite this, the judge concluded that any risk below 85dB(A)lepd was minimal (para 26), and that the risk between 85dB(A)lepd and 90dB(A)lepd was at the relevant times an acceptable risk for reasonable employers without greater than average knowledge to take. The judge, correctly, did not resolve the issues before him by considering statistical extrapolations at low levels of exposure, but by forming a judgment on the whole of the expert, documentary and factual evidence adduced before him. On the issue whether there was an acceptable contemporary standard to which reasonable employers could adhere, in the light of the terms of the Code of Practice and on the basis of the expert evidence, HHJ Inglis held (para 48) that the 90dB(A)lepd level was regarded . as the touchstone of reasonable standards that should be attained. Confirmation existed in notes published by the Wolfson Unit for Noise and Vibration Control in the University of Southampton. These were intended to supplement a series of seminars held round the country in the autumn of 1976 on the theme "Industrial Noise The Conduct of the Reasonable and Prudent Employer". The seminars were intended "primarily for company lawyers, solicitors, insurance claims and risk assessors, safety officers, medical officers and others with interests in occupational hearing loss". The notes were, the judge said, strong evidence of the prevailing advice being given to people in industry concerned with noise at that time. They described the 1972 Guidelines as establishing a comprehensive "damage risk criterion" based on 90dB(A)lepd, and said that they had been actively promulgated by the Factory Inspectorate. In discussing the emerging principles of legal liability for noise induced hearing loss, the authors said: Over the last 15 years knowledge as to the relationship between noise and deafness has grown and become more precise . Today a reasonable employer ought to know that to expose an employee to noise in excess of 90dB(A) for eight hours or its equivalent is potentially hazardous. It also seems a fair assumption that the reasonable employer should have known of the criteria set out in "Noise in Factories" and "Noise and the Worker" by the mid 1960s." The introduction in 1974 and continuance in force at all times thereafter of woodworking and tractor regulations based on maximum exposures of 90dB(A) reinforce this comment (para 15, above, and para 56, below). At least until the mid 1980s, there were still many people employed in industry exposed to over 90dB(A)lepd, and the approach of enforcement agencies and others was to concentrate on them (HHJ Inglis, para 48). The expert evidence before the judge also included the following, summarised by him in paras 46 48: 46. There was evidence given by the expert witness engineers for Courtaulds (Mr Bramer and Mr Currie) about the approach to control of noise in the period from the 1970s in industry. The report of Mr Worthington for Pretty Polly and Guy Warwick is also in evidence. To Mr Bramer, the guidance in Noise and the Worker and the 1972 Guidelines provided a clear and consistent recommendation to employers as to how they ought to deal with noise in the workplace. The result was that in his practice, his invariable advice until the late 1980s, was that the relevant level was a daily personal noise exposure of 90dB(A). This approach, he said, was standard during the period up to 1989 among noise professionals, and taught at training courses. In the mid 1980s, when it appeared that EEC regulation would involve a first action level of 85dB(A) his advice changed to reflect that. He was not aware of the NPL tables before the 1980s when he found that they were being used by medical experts writing reports for the purpose of deafness claims. He has never come across them being used in any part of industry. In evidence Mr Bramer said that he gave advice to employers in terms of complying with the 1972 Code. He was speaking to the 90dB(A) level, as were all his colleagues. He agreed that the advice would be to answer the question Tell us how to comply with legislation and the Code of Practice, rather than Tell me how to avoid reasonably foreseeable risk to my workforce. He would have recommended 90dB(A) as the cut off point, but would also have said that does not actually stop some more susceptible people from having some small noise induced hearing loss. If asked about risk, he would have had some difficulty, and regarded the question as more one for medical people. 47. Mr Currie said that the Health and Safety Executive and factory inspectors after the Health and Safety at Work etc Act 1974 concentrated their advice and enforcement on the 90dB(A) level. He was not aware of any instance in which the NPL tables had been used by employers to predict the level of risk for their workforce. In evidence Mr Currie said that good practice won't necessarily remove all risk. He agreed that there has been no very different understanding about noise induced hearing loss since the 1970s. The first thing to look at when deciding on practices, which is what employers have to do, is to look at the guidance available. Mr Worthington's report is to the effect that employers looked to the 90dB(A) limit in the Code of Practice as the maximum acceptable limit, and that the Factory Inspectorate and HSE did not refer employers to the risks below that limit as risks about which they should take action. That was the practice of the day, and employers taking advice, if they did, would be referred to the standard in the Code as being what had to be observed. 48. It is clear from some of the documents referred to above that by the beginning of the 1980s there were still many people employed in industry exposed over 90dB(A)lepd, and that the approach of enforcement agencies was to concentrate on those people. The evidence of the engineers referred to above suggests that that was a common approach until at least into the mid 1980s. That the 90dB(A)lepd level was regarded, as is the effect of the evidence of the engineers referred to above, in industry as the touchstone of reasonable standards that should be attained is evidenced by notes published by the Wolfson Unit for Noise and Vibration Control in the University of Southampton in 1976. Mr Bramer and Mr Currie were independent engineers called as witnesses at trial. There is no suggestion that they were employed by or advisers to Courtaulds or any of the other employers involved in this case at any date relevant to liability in this litigation. The judge was clearly impressed by their evidence. Whatever critique might, with hindsight, be directed at the advice or approach they said was being given or taken in respect of employers does not alter the fact that this was the contemporaneous advice and approach, upon which the judge found that reasonable employers could generally rely, unless they fell into his category of employers with greater than average knowledge. The Court of Appeal attached considerable relevance to employers awareness of the first draft directive prepared by the Commission in October 1982. As I have observed, the court did not accurately place the position of this directive in the development of legislation at the European level (para 15 above). More importantly, a Commission draft is only a proposal for legislation by the Council of Ministers, and no reliance was or is placed on any underlying material which may, or may not, have been produced in its preparation or support. The first draft directive was proposed by the Commission as a basis for legislation in 1982, proved controversial, and was withdrawn in 1984. It was superseded by a differently framed legislative proposal, agreed by the Council of Ministers in May 1986, which gave member states until 1 January 1990 to bring into force provisions complying with the directive. In the light of the above, there is, in my opinion, no basis for the court to disturb the judges conclusion in para 87 that the Code of Practice was an official and clear guidance which set an appropriate standard upon which a reasonable and prudent employer could legitimately rely in conducting his business until the late 1980s. Before leaving this aspect, it is also worth noting one further small indication of the consistency of the judges conclusion with informed contemporary attitudes. The relevant level of noise exposure above which a reasonable employer should take protective steps was of direct relevance in the early case of noise induced hearing loss, Kellett v British Rail Engineering Ltd (Popplewell J, 3 May 1984). The strength of the representation attests to the importance attached to the issues. On the facts and in the light of agreed expert evidence, Popplewell J recorded that there had been exposure for long periods initially in the period 1946 to 1955 below 90dB(A) and then in the period 1955 to 1979 above 90dB(A), and proceeded on the basis that The level of 90 is generally recognised as being a figure above which it is necessary for precautions to be taken. That was the basis on which it was accepted that the defendants, who had taken no precautions until 1979, were negligent. (c) What period should be allowed for implementation of any different standard? It follows, in relation to all the employers before the court, that the date when they should have been aware that it was no longer acceptable simply to comply with the Code of Practice was the date identified by the judge as applicable to Quantum and Guy Warwick, that is the time when the terms of the 1986 directive became generally known in the consultative document of 1987 (para 87). Dealing with this point, Smith LJ said (para 105): I consider that, for the employer with the ordinary or average degree of knowledge, the judge's conclusion that that period came to an end in 1987, following publication of the second European draft directive, was a reasonable conclusion Adding a further six to nine months for implementing protective measures (instead of the judges period of two years), she went on to conclude (para 106) that: In case it should ever become material, I would fix the date for breach of common law duty for the average employer at January 1988. Leaving aside for the moment the difference in the period allowed for protective measures, that approach does not reflect the nuances of the judges finding. The consultative document was issued in 1987, but seeking responses no later than 30 June 1988. Its terms would have become generally known during the period of consultation, which was to last to 30 June 1988. The judge was prepared to add a period of two years for putting a conservation programme into action, accompanied by information and instruction (para 88). This would bring the period before ear protection would have to be made available to those exposed to noise levels over 85dB(A)lepd to 1 January 1990, the date when the Directive and Regulations under it anyway required such protection to be made available to them. I therefore understand the judge as having held that Quantum and Guy Warwick had no potential common law liability in negligence before 1 January 1990. The judge, in taking two years as the appropriate period for putting a conservation programme into action, accompanied by information and instruction, referred to a further passage in Thompson. Mustill J there said (pp 423 424): From what date would a reasonable employer, with proper but not extraordinary solicitude for the welfare of his workers, have identified the problem of excessive noise in his yard, recognised that it was capable of solution, found a possible solution, weighed up the potential advantages and disadvantages of that solution, decided to adopt it, acquired a supply of the protectors, set in train the programme of education necessary to persuade the men and their representatives that the system was useful and not potentially deleterious, experimented with the system, and finally put it into full effect? This question is not capable of an accurate answer: and indeed none is needed, as will appear when the scientific aspects of the case are considered. Various years were selected as rough markers, for the purpose of argument. I reject without hesitation the notion that the date lay somewhere in the years immediately preceding and following the Second World War. It was not until 1951, with the inconspicuous entry of the V 51R into the United Kingdom market that even a really enlightened employer would have started to ask himself whether something could be done. Even then, I consider that it pitches the standard of care too high to say that an employer would have been negligent, from that date, in failing to find, decide upon, and put into effect a system of using the protectors then available. At the other extreme, I consider that the choice of a date as late as 1973 cannot be sustained. The problem, and the existence of different ways in which it might have been combated, had been well known for years; there had been devices which were both reasonably effective, and reasonably easy to wear; and if the employers did not know precisely what they were they would have had no difficulty in finding out. All this being so, I conclude that the year 1963 marked the dividing line between a reasonable (if not consciously adopted) policy of following the same line of inaction as other employers in the trade, and a failure to be sufficiently alert and active to measure up to the standards laid down in the reported cases. After the publication of Noise and the Worker there was no excuse for ignorance. Given the availability of Billesholm wool and reasonably effective ear muffs, there was no lack of a remedy. From that point, the defendants, by offering their employees nothing, were in breach of duty at common law. The Court of Appeal disagreed with HHJ Ingliss period of two years on the basis that he was allowing time not merely for the provision of ear protectors but also for the noise measurement and policy decisions which preceded the actual provision of protection and that, by the time when employers should have appreciated the need for noise protection below 90dB(A), they must be taken to have known already to which workshops that applied (para 106). In paras 32 and 48 of her judgment, Smith LJ also noted that Courtaulds noise committee had over a period of a year (between March 1983 and March 1984: see para 52 of HHJ Ingliss judgment) identified areas of over 90dB(A)lepd and areas of 85 to 90dB(A)lepd. There is a paucity of evidence in this area of the case. It is common ground that some period should be allowed, and the period chosen by the judge fits with periods chosen by courts in other contexts see e.g. Armstrong v British Coal Corporation [1998] CLY 975, para 2842, Smith v Wright & Beyer Ltd [2001] EWCA Civ 1069, para 6, and Brookes v South Yorkshire Passenger Transport Executive [2005] EWCA Civ 452, paras 22 23 (and, less clearly on this point, Doherty v Rugby Joinery (UK) Ltd [2004] EWCA Civ 147; [2004] ICR 1272, paras 21 and 33 35) as well as with periods commonly allowed for the implementation of new health or safety measures, e.g. under Directive 86/188/EEC and the Noise at Work Regulations 1989 which gave effect to it domestically. I do not see how it can be said that all employers who exposed their employees to noise levels between 85 and 90dB(A)lepd up to the end of 1987 must, Smith LJs words (para 106) by that time be taken to have known already to which workshops the provisions of the Directive and Regulations would apply. An employers duty towards a particular employee depends upon the circumstances of that particular employees employment. Smith LJ appears to have derived the duty to have measured noise levels from the fact or likelihood that there were other employees exposed elsewhere by the relevant employers to noise levels exceeding 90dB(A)lepd (paras 92 93). But the relevant circumstance is that none of the employees to whom this case relates were employed in circumstances where they were exposed to noise levels exceeding 90dB(A)lepd. Accordingly, the relevant employers were not, on the judges findings, under any duty to take further steps. The Code of Practice only stipulated that All places where it is considered the limit in section 4 may be exceeded should be surveyed (section 5.1.1). The limit referred to in section 4 for continuous exposure was that If exposure is continued for eight hours in any one day, and is to a reasonably steady sound, the sound level should not exceed 90dB(A) (section 4.3.1). I do not therefore consider that the basis on which the Court of Appeal interfered with the judges conclusion on this point was justified. Had my view prevailed that Courtaulds were in no significantly different position from Quantum and Guy Warwick as regards the date when they should have taken further steps to protect employees against the risk of hearing loss, I would still have held Courtaulds position to differ in one material respect. At this point it would have been relevant that they were to some extent already ploughing a lone furrow. By mid 1984 they had in fact undertaken the relevant noise surveys and they already knew to which workshops the issue of exposure between 85 and 90dB(A)lepd applied. Accordingly, in relation to Courtaulds alone, I would have seen force in the view that a period of no more than nine months was long enough to perfect such steps as they were already contemplating. Bearing in mind that the consultation paper, on which the judge based the date by reference to which employers generally should have begun to take action, was open for responses until mid 1988, I would have taken the end of 1988 as the latest date by when Courtaulds should have had full and effective protective measures in place for employees exposed to noise between 85 and 90dB(A)lepd. But since (as stated in paragraph 25 above) the judges view will prevail that Courtaulds were (along with Pretty Polly) in a special position, and should have acted to take further steps from the start of 1983, they too must in my view be entitled to the two years allowed by the judge for the actual implementation of such steps, making them liable as the judge held from the start of 1985. The Factories Act 1961 In relation to the scope and application of section 29(1) (set out in para 11 above), the Court of Appeal disagreed substantially from the judge, holding that the section involves a significantly more stringent standard of liability than any arising at common law. Several important issues arise on which there is no prior authority at the highest level: whether section 29(1) applies at all, where the claim relates not simply to the workplace, but to activities carried on at it; whether it applies to risks of noise induced hearing loss arising from such activities in relation to long term employees working in the place; whether the safety of a place is an absolute and unchanging concept or a relative concept, the practical implications of which may change with time; and what is meant by so far as is reasonably practicable and how it relates to the concept of safety. (i) Lack of safety arising from activities The first issue concerns the extent to which a place can be rendered unsafe by activities carried on at it. The appellants rely on the background to section 29(1) to argue that it cannot. Section 29 re enacts section 26 of the Factories Act 1937, as amended by section 5 of the Factories Act 1959. Section 26, as originally enacted, did not have wording corresponding with the second part of section 29(1). The words and every such place shall, so far as is reasonably practicable, be made and kept safe for any person working there were added by section 5 of the 1959 Act. The amendment adding them was proposed late in the passage of the bill. It was felt to be a real fault and a gap in the existing legislation that it covered only the means of access to, and not the safety of, the place of work. The Minister, Mr Macleod, accepted the idea, and, ultimately accepted in substance the whole amendment (House of Commons Standing Committee B, 12 March 1959, 17th Sitting, cols 747 752). There had been a series of prior cases in which courts had had to distinguish, less than happily, between the place of work and means of access to it, and to reject claims on, for example, the ground that the employee was injured at his workplace on his way to the lavatory, rather than on his way to his workplace: see Davies v de Havilland Aircraft Co Ltd [1951] 1 KB 50; Rose v Colvilles Ltd 1950 SLT (Notes) 72; Dorman Long & Co Ltd v Hillier [1951] 1All ER 357 and Prince v Carrier Engineering Co Ltd [1955] 1 Lloyds Rep 401. Looking at the matter today, one might perhaps have expected responsibility for the safety of the workplace to be a subject for legislative attention even before responsibility for the means of access to it. But, for whatever reason, that was not the original statutory scheme. The gap was filled by the 1959 amendment. In considering the scope of the words added, Mr Beloff QC, on behalf of the first appellant, submits that the means of access looks to physical dangers or obstructions, that section 29(2) is likewise clearly focused on the physical risks inherent in working at height, and that the whole section is part of a scheme of criminal liability, from which any civil liability only follows by judicial interpretation (Taylor v Coalite Oils & Chemicals Ltd (1967) 3 KIR 315, 318, per Diplock LJ). This last point has some, though only limited, force, for two reasons. First, the criminal liability is under the Act imposed on the occupier or, in certain cases not presently relevant, on the owner of the factory. That to my mind suggests that responsibility under section 29 is likely to attach to matters over which an occupier (typically of course the employer him or itself) would be expected to have control. But such matters would include not merely the physical state of the premises, but also, at least, the carrying on there of regular activities. Secondly, a person is not to be put in peril upon an ambiguity, however much the purpose of the Act appeals to the predilection of the court (London and North Eastern Railway Co v Berriman [1946] AC 278, 313 314, per Lord Simonds). However, it is only if the section is ambiguous, unclear or open to two reasonable interpretations that its penal effect may indicate the narrower construction (Franklin v Gramophone Co Ltd [1948] 1 KB 542, 557, per Somervell LJ), and courts should remember that the Factories Act is a remedial measure passed for the protection of the workmen [which] must, therefore, be read so as to effect its object so far as the wording fairly and reasonably permits (Harrison v National Coal Board [1951] AC 639, 650, per Lord Porter; McCarthy v Coldair Ltd [1951] 2 TLR 1226, per Denning LJ). Mr Beloff is however also right to remind the Court that it is always necessary to consider in what respects and to what extent the Act involves remedial measures. Mr Beloff QC submits that there are three possible interpretations of section 29(1): a minimalist, a maximalist and a middle way. The minimalist would involve treating the section as confined to intrinsic aspects of the physical place, ignoring any activities carried on there. With the possible exception of the Delphic rejection of the claim under section 29 by Mustill J in Thompson at p 449C D, there appears to be no reported case rejecting a claim under that section on this basis. Reference was made to the interpretation given to section 25(1) and by extension section 26(1) of the 1937 Act: in Latimer v AEC Ltd [1953] AC 643, the House held that section 25(1), which in its then form provided: All floors, steps, stairs, passages and gangways shall be of sound construction and properly maintained, was not breached when a structurally sound factory floor became wet and oily after a flood due to an unusually heavy rainstorm; and that approach was then applied under section 26(1) in Levesley v Thomas Firth & John Brown Ltd [1953] 1 WLR 1206 (CA), where in the course of some loading operations a block of iron was left temporarily protruding three inches out into a gangway, used as a means of access. This restriction of the word maintained in relation to the means of access has been strongly criticised in successive editions of Munkmans Employers Liability at Common Law, and there is no reason to extend it to the words be made and kept safe which govern the duty, first introduced in 1959, in relation to the safety of the workplace. Indeed, it is clear from the Parliamentary materials that the words and kept were introduced specifically with the Latimer case in mind, and to make clear that employers should so conduct their business as to see that a workplace did not become unsafe. The examples were given of overstocking or slippery substances left on the floor (Factories Bill, Standing Committee B, 12 March 1959, cols 749 750). A workplace may therefore be unsafe because of some feature which is neither structural nor permanent. But this does not determine whether a workplace may be unsafe by reason of operations carried on in or at it. Mr Beloff submits that the law took a wrong turn in Evans v Sant [1975] QB 626, when the Divisional Court initiated what he described as a middle approach which was later followed by the Court of Appeal in Wilson v Wallpaper Manufacturers [1982] CLY para 1364 and Homer v Sandwell Castings Ltd [1995] PIQR P318. In Evans v Sant, the Divisional Court (Lord Widgery CJ, Bridge and Shaw JJ), on a case stated by magistrates after conviction, said that the guiding light in their approach was that in deciding whether the place of work was made safe, it is the place qua place that we look at, and not the place qua operation carried on upon the place (p 635G H). But Lord Widgery CJ then went on (pp 635H 636B) That does not mean of course that in deciding whether the place is made safe one has total disregard for the activities which go on in the place itself. The safety of the place depends not simply on the construction of the floor or the solidity of the walls, but it also depends in some degree upon the nature of the operations carried on therein. In so far as there is permanent equipment in the place, then its safety can in my judgment reflect on the safety of the place. In so far as there are activities carried on in the place which are constant, regular and recurring, I can well see that they may have their impact on the question of whether the place has been made safe. In Evans v Sant, even this relaxed or middle approach did not enable the prosecution to succeed. The facts were that, in the course of laying a water main, a test head was attached between the pipe and a pump to test the water pressure, but it was insecurely fitted and, as pressure built up, it blew off, causing the death of a workman who ran into the path of a passing car. In allowing the defendants appeal against conviction, Widgery CJ said, at p 636, that: where, as in the present case, you start with a place safe in every degree, and the only thing which renders it unsafe is the fact that equipment brought upon it for a particular operation, and being used for a particular operation on a particular day, produces an element of danger, it seems to me that that is not enough to justify the allegation, certainly in criminal proceedings, that the place itself has not been made safe. In Homer v Sandwell Castings Ltd, a civil claim failed because the danger did not arise from any static condition of the place of work, but arose from the operation upon which the plaintiff was engaged (p 320, per Russell LJ). The employee had noticed a slight leak through sand paste, which he had himself introduced to seal a gap, but had carried on working, with the result that an eruption of molten metal through the seal fell onto his foot. The appellants support their case on section 29(1) by reference to the layout as well as other specific sections of the 1961 Act. These, they submit, are only consistent with a limited interpretation, confining it to physical dangers inherent in the structure. They point out that section 55 addresses any process or work carried on or to be carried on in any premises used or intended to be used as a factory; it gives a magistrates court power, if satisfied that such process or work cannot be so carried on with due regard to the safety, health and welfare of the persons employed, to prohibit the use of the premises for that process or work. They also point to various other sections designed to address problems arising from operations carried on in premises. For example section 4 requires suitable and effective provision for circulation of fresh air, and for rendering harmless, so far as practicable, all such fumes, dust and other impurities generated in the course of any process or work carried on in the factory as may be injurious to health; section 14 requires (with immaterial exceptions) Every dangerous part of any machinery [to] be securely fenced unless it is in such a position or of such construction as to be as safe to every person employed or working on the premises as it would be if securely fenced; and section 27 requires all parts and working gear to be of good construction, sound material, adequate strength and free from patent defect, and properly maintained. However, the sections of the Act are not exclusive codes in relation to their particular subject matters (see e.g. Liptrot v British Railways Board [1969] 1 AC 136), and it is not axiomatic that there cannot be overlap between the application of two different sections. It seems to me good sense to describe a workplace as unsafe, if operations constantly and regularly carried on in it make it so. It is unnecessary to comment on the decisions on particular facts, but section 29(1) cannot in my opinion have a narrower meaning than that given it in Evans v Sant and the later cases following Evans v Sant. To take another example, a place may well, as it seems to me, be unsafe by reason of activities carried on in it, e.g. if a shop floor were to be constantly crossed by fork lift trucks passing from a store on one side to somewhere else on the other side of it. In the present case, the noise generated by knitting and other machines was a permanent feature of the operations which were intrinsic to the workplace. If the section is directed to noise at all, then such noise must, on the approach taken in Evans v Sant, make the place unsafe. It is unnecessary to say more on the facts of this case. (ii) Lack of safety arising from noise The second issue is whether section 29 is directed to noise. This is more open to question. There is much to suggest that noise was not in the legislatures mind at all, when section 26(1) of the 1937 Act was expanded to cover the safety of the workplace in 1959 and later re enacted as section 29(1) of the 1961 Act. Further, the relevant noise is not noise of a literally deafening nature, causing immediate injury. It is noise which would only injure some people and then only if they were exposed to it for continuous periods lasting many years. The appellants submit that a requirement that the workplace be made and kept safe for any person working there is inapt to cover a situation where many or all of the persons working there may never be at any risk, because they have not been there long enough and may never be, or because they may not be susceptible to suffering such noise induced hearing loss. The appellants further submit that the fact that the principal protective measure suggested consists in the provision of ear protectors, rather than any corrective measures affecting the workplace itself or any regular feature of it, indicates or suggests that section 29(1) is inapplicable. I am not impressed by this point. If a workplace can be unsafe for employees by reason of constant and regular activities carried on at it, I do not see why it should not be rendered safe by counter acting measures of an equally constant and regular nature relating to the clothes or equipment worn by employees. On the other hand, the scheme of the 1961 Act does indicate that, even though section 29(1) is to be read as indicated in Evans v Sant, it is essentially dealing with safety, rather than health. Safety typically covers accidents. Health covers longer term and more insidious disease, infirmity or injury to well being suffered by an employee. Hearing loss, at least of the nature presently in issue, falls most naturally into this latter category. The 1961 Act is divided into Parts, the first four being headed (I) Health (General Provisions), (II) Safety (General Provisions), (III) Welfare (General Provisions) and (IV) Health, Safety and Welfare (Special Provisions and Regulations). Part I comprising sections 1 to 11 deals with cleanliness, overcrowding, temperature, ventilation, lighting, drainage of floors, sanitary conveniences, and enforcement powers; while Part II contains, in addition to section 29, a wide variety of sections covering inter alia machinery, dangerous substances, hoists, lifts, openings and doorways, chains, ropes, lifting apparatus, floors, passages and stairs, fumes and lack of oxygen in confined spaces, explosive or inflammable dust, vapour or substance, boilers, means of escape and fire. The general distinction between health and safety provisions was also present in the 1937 Act, and significance was attached to it in Clifford v Charles H Challen & Son Ltd [1951] 1 KB 495, 498, per Denning LJ and Ebbs v James Whitson & Co Ltd [1952] 2 QB 877, 886, per Hodson LJ. As to the legislative mind set in 1959 and 1961, the government promoting the 1959 Act made no mention of noise. The only relevant reference to noise by any MP in debate concerned the possibility that the minister might take advice on and look more closely at noise, with a view to making regulations under section 60 of the 1937 Act as amended (later section 76 of the 1961 Act), enabling the minister to make regulations where satisfied that, inter alia, any process was of such a nature as to cause risk of bodily injury. Likewise, when the Offices, Shops and Railways Premises Bill came before Parliament in November 1962 and March 1963, comments were made on the absence of any provision dealing with noise. Initially, the minister directed attention to the general power to make regulations for securing health and safety, but ultimately section 21 was included, specifically permitting regulations to protect from risks of bodily injury or injury to health arising from noise or vibrations. The minister in the House of Lords commented on section 21: This is a new subject, on which we still have much to learn (House of Commons, 2nd reading, 15 November 1962, Hansard cols 615, 618 619 and House of Lords 2nd reading, 18 March 1963, Hansard, col 948). It was not until April 1960 that Sir Alan Wilsons committee was set up to report on noise, and only in March and July 1963 that it issued interim and final reports. The main focus was on ambient noise and, in discussing the general effects of noise in chapter II, the report said, in relation to noise in a working environment, merely that it may disturb concentration, and perhaps affect the efficiency of someone working at a difficult or skilful task; it may affect personal safety. In outlining the law relating to noise in chapter III, the report identified the common law of nuisance and the Noise Abatement Act 1960. However, chapter XIII addressed occupational exposure to high levels of noise. It noted that it had been established that a permanent reduction of hearing sensitivity can occur in people who are exposed for long periods to noisy environments, such as are found in some industries (para 513). But it made clear the understanding that there was no existing legislation applicable to such noise and no sufficient basis for introducing any without further research. It said (para 534): Although voluntary action is now possible and, indeed, essential, we do not consider that the present knowledge of this complex problem provides a sufficient basis for legislation. Although the levels of continuous, broadband noise which represent a hazard to the hearing of people who are exposed to them for long, unbroken periods have been established within certain margins of error, many uncertainties remain. There is no satisfactory means of predicting the susceptibility of individuals to hearing loss, nor is the distribution of susceptibility known; the comparative danger of noises in which energy is concentrated in narrow frequency bands is not determined; nor is the influence on hearing loss of impulsive noises, which are common in industry. Neither is there much information on the physical properties of industrial noise, the distribution of noise of any given type in industry and the practicability of minimising those properties which are found to be dangerous to hearing. If early legislation were introduced it could do no more than lay down general standards, the effect and cost of which cannot at present be estimated. If the standards adopted proved to be too severe in some respects the industries affected might be exposed to heavy unnecessary expenditure; on the other hand if minimum standards were adopted, these would tend to suggest that compliance with these standards was all that was needed even in parts of industry where there were important hazards at lower sound pressure levels or with shorter exposure. Legislative insistence on the wearing of ear protectors would be particularly difficult to introduce until there is a wider recognition of the need for them in noisy industries. Early legislation would, therefore, have to be very general in its terms and it would be impossible to enforce effectively. We think that, at present, it would not achieve as much as vigorous voluntary action. In our view, before practical legislation could be considered, it would be necessary to establish the extent of the risk to average people of exposure to industrial noise, and the cost and possibility of measures which would effectively reduce this risk to the point which, on balance, was regarded as acceptable. In paras 535 536, the report suggested a further research programme, to be followed by more detailed surveys of individual industries and processes, and then, when the results of such surveys were available, consideration by government whether the time has not then come to lay down by legislation minimum standards to protect workers against damaging noise exposure in industry. The Annual Report of HM Chief Inspector of Factories on Industrial Health for 1965 (Cmnd. 3081) also stated at p 79 that At present there is no legislation requiring the control of noise in factories, nor is occupational deafness prescribed under the National Insurance (Industrial Injuries) Act 1965. The problem was examined in detail by the Wilson Committee, whose report was published in 1963. They concluded that the knowledge then existing was insufficient to enable legislation to be made. They advocated research and indicated some of the lines this should take. At present a very great deal of research is being conducted by various bodies. The Report of a Committee chaired by Lord Robens in 1970 72 (Cmnd 5034) referred to the Wilson Committees words (para 341), but went on to record the research recorded in Prof Burnss and Dr Robinsons 1970 report, Hearing and Noise in Industry. The research had established a system of predicting on a statistical basis the hearing deterioration to be expected for specified exposures within a wide range of industrial noise and the report had amongst other things suggested that workers should not be consistently exposed over long periods to a noise emission level higher than 90dB(A) (para 342). Robens then mentioned that industrial noise had now become a live issue in the field of compensation claims, referring to a case where a court awarded damages for the first time (para 344). This must have been Berry v Stone Manganese and Marine Ltd [1972] 1 Lloyds Rep 182, where a claim for common law negligence succeeded in respect of noise which amounted to about 115 to 120 decibels, whereas the tolerable noise is about 90 and no ear muffs had been provided (p 184). A claim under section 29(1) was in fact also introduced by amendment at trial. It was not argued on the basis of failure to provide ear muffs, but of alleged failure to reduce the actual noise level as far as reasonably practicable, and it failed on the facts. Robens continued that, since the relationship between exposure to certain levels of noise and hearing loss [was] now recognised the time was ripe to include basic requirements on noise control in occupational safety and health legislation (para 345). Lord Robenss recommendation stimulated the inclusion of regulation 44 in the Woodworking Machines Regulations 1974 (SI 1974/903) made under section 76 of the 1961 Act. In relation to factories using woodworking machines, regulation 44 requires that, where on any day any person employed is likely to be exposed continuously for eight hours to a sound level of 90dB(A) or equivalent or greater, then (i) such measures as are reasonably practicable shall be taken to reduce noise to the greatest extent which is reasonably practicable; and (ii) suitable ear protectors shall be provided and made readily available for the use of every such person. Later in 1974, there were also made, under agricultural health and safety legislation, the Agriculture (Tractor Cabs) Regulations 1974 (SI 1974/2034), regulation 3(3) of which provided that ministerial approval of safety cabs required ministers to be satisfied that the noise levels inside would not be more than 90dB(A). The existence of specific regulations under section 76 is not necessarily inconsistent with a more general duty of safety existing in respect of noise under section 29(1), though the inter relationship could give rise to problems and one might have expected or at least hoped that it would be clarified. HM Chief Inspector of Factories report for 1974 (Cmnd 6322) referred to the Woodworking Machines Regulations 1974 as the first British regulations to contain a legal requirement specifically intended to protect factory workers against the effects of noise (p 73). Under the heading of Noise and Vibration, it also noted (p 71) that The Inspectorate has been mainly concerned with protection of workers against levels of noise exposure likely to cause permanent hearing damage. To this end continuing efforts have been made to encourage voluntary compliance with the Code of Practice , which recommends that where people are likely to be exposed to sound levels over 90dB(A) for eight hours per day (or to suffer an equivalent exposure) action should be taken to reduce the noise exposure, and ensure that ear protection is provided and used. The position is therefore that section 29(1) is part of the statutory provisions dealing with safety, and it was enacted without any appreciation that it could cover noise or noise induced hearing loss. Noise induced hearing loss was not a newly discovered phenomenon, at least in heavy industry, where it was evidently regarded as an inescapable fact of life (see e.g. Thompson, p 409A, per Mustill J). An immediately injuring noise (like that which punctured the Duke of Wellingtons ear drum when he stood too close to the firing of a battery in his honour) could probably only occur as a result of some one off error or break down in the workplace, which would not reflect on its safety, although it could give rise to common law liability in negligence. None of the contemporary reports or documents suggests that the possibility of noise was in anyones mind or would have been conceived of as an element of safety of the workplace in 1959 or 1961. It follows that there is considerable force in the appellants submission that section 29(1) does not refer to safety in a sense depending not upon the current condition of the workplace with its noisy machinery, but upon the periods for which employees have worked, or are likely to continue to work in that, or another, workplace with equivalent or greater noise levels and upon their particular susceptibility to noise. Ultimately, however, I have come to the conclusion that it is not possible to be so categorical, and that the answer to the present issue links up with the next issue, that is how far responsibility under section 29(1) is absolute or relative. If section 29(1) imposes absolute liability, irrespective in particular of current attitudes or standards from time to time, then noise induced loss appears so far outside the thinking behind and aim of section 29(1) that I doubt whether it would be right to construe the section as covering it. But if liability under section 29(1) is relative, depending in particular on knowledge about and attitudes to safety from time to time, then, as thinking develops, the safety of a workplace may embrace matters which were previously disregarded, but have now become central or relevant to reasonable employers and employees view of safety. (iii) The absolute or relative nature of safety The third issue is whether the requirements regarding safety in section 29(1) are absolute or relative. In the respondents submission, they are absolute: what is safe is objective, unchanging and independent of any foresight of injury; the only qualification on an employers liability, where a workplace is unsafe because of employees exposure to noise, is if the employer can show that it was not reasonably practicable to reduce or avoid the exposure, e.g. by providing ear protectors. The House of Lords, by a majority, held in Nimmo v Alexander Cowan & Sons Ltd [1968] AC 107 that the onus lies on the employer to plead and prove under section 29(1) that it was not reasonably practicable to make and keep a place safe. Smith LJ accepted the submission that safety is an absolute. She said that what is objectively unsafe cannot change with time (para 78). She also associated lack of safety with the occurrence of injury to a single person, for she continued: If 85dB(A)lepd causes deafness to a particular claimant, that claimants place of work was not safe for him or her. It might have been safe for another person working alongside. But for the susceptible worker who has in fact been damaged, it can be demonstrated, without more, that his or her place of work was not safe. Looking at matters from the point of view of the work force generally, it is known that a minority of people will suffer appreciable harm as the result of prolonged exposure to 85dB(A)lepd. Therefore, it can be said that the place of work is not safe for the workforce because there is a risk of injury to all of them. I do not accept this approach. Whether a place is safe involves a judgment, one which is objectively assessed of course, but by reference to the knowledge and standards of the time. There is no such thing as an unchanging concept of safety. The Court of Appeals approach means in reality that any court determining an issue of safety would be applying (retrospectively) whatever happened to be the view of safety current at the time the matter came before it. Further, the fact that a single person has suffered injury due to some feature of the workplace is not, without more, proof that the workplace was unsafe. As Lord Upjohn (one of the majority) said in Nimmo (p 126C D), the section requires the occupier to make it [the workplace] 100 per cent safe (judged of course by a reasonable standard of care) if that is reasonably practicable and, if it is not, to make it as safe so far as is reasonably practicable to a lower percentage. Prior to the 1959 and 1961 Acts, the requirement, under regulation 5 of the Building (Safety, Health and Welfare) Regulations 1948 (SI 1948/1145), that sufficient safe means of access shall so far as is reasonably practicable be provided, had been considered in Sheppey v Matthew T Shaw & Co Ltd [1952] 1 TLR 1272 and Trott v WE Smith (Erectors) Ltd [1957] 1 WLR 1154 (CA). There it was said, by respectively Parker J at p 1274 and Jenkins LJ at p 1159, that safe cannot mean absolutely safe, although it must take account of circumstances likely to occur, including the fact that employees do not always behave with reasonable care for their own safety. I also note that in Trott, Jenkins LJ after suggesting that the statutory obligation was stricter than the general duty of reasonable care at common law and anticipating Nimmo by identifying the qualification so far as is reasonably practicable as involving a shift of the burden of proof (pp 1158 59), ended his judgment by saying that to regard the standard of care prescribed by regulation 5 and at common law as approximating to each other was if not absolutely right . at all events not very far wrong (p 1162). Likewise, in relation to a similar requirement under the Shipbuilding and Ship repairing Regulations 1960 (SI 1960/1932), it was argued in Paramor v Dover Harbour Board [1967] 2 Lloyds Rep 107 that if the bare possibility of injury and accident could reasonably be foreseen, then the means of access is not safe. In response, Salmon LJ said (p 109) that there is, of course, a risk of injury and accident inherent in every human operation but that whether a means of access was safe involved assessing the risk in all the circumstances of the case and must be a question of fact and degree in each case. The successor legislation to the 1961 Act, the Health and Safety at Work Act etc 1974 was differently, and on its face more broadly, formulated. It required every employer by section 2(1) to ensure, so far as is reasonably practicable, the health, safety and welfare of all his employees, and by section 3(1) to conduct his undertaking in such a way that other persons were not thereby exposed to risks to their health or safety. The concept of safety was considered in this context in R v Chargot Ltd (trading as Contract Services) [2008] UKHL 73 [2009] 1 WLR 1. Lord Hope, with whose speech all other members of the House agreed, said that the legislation was not contemplating risks that are trivial or fanciful, that the statutory framework was intended to be a constructive one, not excessively burdensome, that the law does not aim to create an environment that is entirely risk free and that the word risk which the statute uses is directed at situations where there is a material risk to health and safety, which any reasonable person would appreciate and take steps to guard against (para 27). It would be strange if the earlier, narrower formulation in section 29(1) had a more stringent effect. Similar comments to Lord Hopes had also been made in the earlier case of R (Junttan Oy) v Bristol Magistrates Court [2003] UKHL 55; [2003] ICR 1475, in relation to regulations requiring machinery to be in fact safe, safe being defined to mean giving rise to no risk (apart from one reduced to a minimum) of its endangering the health of or of its being the cause or occasion of death or injury to persons. Lords Nicholls and Hobhouse (both dissenting on presently immaterial points) made clear in that context that safe is not an absolute standard. Lord Nicholls said (para 22): There may be differences of view on whether the degree of safety of a particular piece of machinery is acceptable. Lord Hobhouse said (para 103) that: to describe questions of safety as simple questions of fact, just as if one was asking whether a given bird is a sparrow or a sparrowhawk, is to make a fundamental and elementary mistake. Safety is a question of opinion. There is no such thing as absolute safety. All safety is relative. Two men can legitimately hold different opinions [as to] whether a machine is safe or unsafe. Different assessments can be and are made of the safety of a particular machine by the authorities in different countries. If safety is a relative concept, then foreseeability must play a part in determining whether a place is or was safe. Mr Hendy submits that foresight has no such role; it can come in, if at all, only at the second stage, when considering whether it was reasonably practicable to make and keep the place safe. He also notes that there was in any event, on the judges findings, foresight in the present case of some statistical risk of injury. On the role of foresight, there are differing strands of authority. Not long before the 1959 Act, the House had in John Summers & Sons Ltd v Frost [1955] AC 740 considered the requirement under section 14(1) of the 1937 Act that Every dangerous part of any machinery shall be securely fenced unless it is in such a position or of such construction as to be as safe to every person employed or working on the premises as it would be if securely fenced, and had applied to the concept of dangerousness an approach dating back to Hindle v Birtwhistle [1897] 1 QB 192, namely that a machine or part is dangerous if in the ordinary course of human affairs danger may reasonably be anticipated from the use of them without protection, and that it was impossible to say that because an accident had happened once therefore the machine was dangerous. Lords Reid and Keith at pp 765 766 and 774 expressly endorsed the relevance of determining whether the degree of danger was such that there was a reasonably foreseeable cause of injury. The same approach, again based on Hindle v Birtwhistle, was followed under section 14 in Close v Steel Co of Wales Ltd [1962] AC 367. The claim there failed because in the ordinary course of human affairs danger could not reasonably be anticipated from the use of the drill unfenced (p 382, per Lord Denning, with whom Lord Morton agreed on this point at p 398); the risk of injury, serious and regrettable as it proved to be, was not reasonably foreseeable (p 389, per Lord Goddard); and No reasonable employer could have been expected to anticipate any risk of significant injury (p 412, per Lord Guest). Close proved controversial on another, presently irrelevant, aspect (whether the duty to fence extended to preventing fragments flying out of a machine) on which it was criticised in paragraph 7 of Appendix 7 to the Robens Report. But the endorsement in Close of the concept of foreseeability taken from Hindle v Birtwhistle was noted without criticism in paragraph 5 of Appendix 7 to the Robens Report and was regarded as correct by contemporaneous commentators in The Solicitors Journal (The Duty to fence dangerous machinery: (1961) 105 Sol J 997) and The Modern Law Review (New Wave of Interpretation of the Factories Acts: (1962) 25 MLR 98, commending the broad common sense view of danger taken in Hindle v Birtwhistle), though it was regretted by John Munkman, writing in The Law Journal (The Fencing of Machinery: (1962) LJ 761). The concept of foreseeability continued to be adopted by courts, most notably, in Taylor v Coalite Oils & Chemicals Ltd (1967) 3 KIR 315. In Allen v Avon Rubber Co Ltd [1986] ICR 695, the Court of Appeal also endorsed it under section 29(1) of the 1961 Act. In Taylor, Diplock LJ said, obiter (pp 319 320): Safe is the converse of dangerous. A working place is safe if there is nothing there which might be a reasonably foreseeable cause of injury to anyone working there, acting in a way in which a human being may reasonably be expected to act, in circumstances which may reasonably be expected to occur: see John Summers & Sons Ltd v Frost [1955] AC 740, per Lord Reid at p 766. In determining, therefore, whether the occupier was under a duty to take any measures to prevent an accident which was caused by the presence at a working place of a particular object, it is necessary to ask, first, whether the possibility of an object of that kind being at that particular place was reasonably foreseeable, and, if so, secondly, whether it was reasonably foreseeable that it would be a cause of injury to a person working there. It is only if both those questions are answered affirmatively that it becomes necessary to consider whether it was reasonably practicable to avert the danger. More recently, in Robb v Salamis (M & I) Ltd [2006] UKHL 56; [2007] ICR 175, Lord Hope confirmed the relevance of reasonable foreseeability to article 5(1) of the Framework Directive 89/391/EEC (imposing on employers the duty to ensure the safety and health of workers in every aspect related to the work) and article 3(1) of the Work Equipment Directive 89/655/EEC (requiring employers to take the measures necessary to ensure that the work equipment made available to workers is suitable for the work to be carried out), stating that The obligation is to anticipate situations which may give rise to accidents (para 24). The respondent relies on a different stream of authority, consisting of Robertson v RB Cowe & Co 1970 SLT 122, Larner v British Steel plc [1993] ICR 551, Neill v Greater Glasgow Health Board [1994] SLR 673, [1996] SC 185 and Mains v Uniroyal Englebert Tyres Ltd [1995] SC 518. The Court of Appeal in the present case held that it was bound by Larner, as well as expressing agreement with it. Robertson concerned a trestle erected on a marine slipway which moved causing a workman to fall. Lord Guthrie concluded from the whole circumstances elicited as to the position of the staging, the way in which the pursuer worked, the outward movement of the trestle, and where the pursuer fell that on a balance of probabilities the erection was insecure and unsafe (p 129). Lord Migdale treated the fact that the trestle fell over as proof that it was not safe, and both he and, with hesitation, Lord President Clyde concluded that the decision in Nimmo meant that breach of section 29(1) was established once it was proved that the trestle was not sufficiently stable to support a workman doing his job there normally. There was no plea that it was not reasonably practicable to make or keep the trestle safe, and Lord Guthrie noted the obvious difficulty that such a plea would have faced. Lords Guthrie and Migdale rejected a submission based on the line of authority including John Summers and Close, that the employee had to prove that the accident was reasonably foreseeable. The basic issue was whether the trestle was insecure as erected, or whether it fell because the pursuer over reached (pp 128 129). Larner concerned an undetected crack which caused a structure to fall on the plaintiff. The Court of Appeal preferred the reasoning in Robertson to Diplock LJs dicta in Taylor and rejected foreseeability as a test of safety. In Mains the injury arose when a piece of machinery made an involuntary and unexpected movement, the cause of which was never ascertained, and so trapped the workmans hand; and it was common ground that the circumstances of the accident and its cause were not reasonably foreseeable. The Inner House took the same view as in, and followed, Larner. In so far as Robertson, Larner and Mains stand for a proposition accepted by the Court of Appeal in the present case, that safety is an eternal absolute independent of any judgment based on current standards and attitudes, then I do not accept their correctness. One factor in the decisions in both Larner and Robertson was that the introduction of foreseeability would reduce the utility of the section, by frequently limiting success under it to circumstances in which a common law claim for negligence would succeed (Larner, p 560A, per Hirst LJ, and p 562C D, per Peter Gibson J; Mains, p 531D E, per Lord Sutherland and p 535G H and 536H 537B, per Lord Johnston). This begs the question as to the intended scope and effect of the section. Not only does the section introduce criminal sanctions, but, as established in Nimmo, if the workplace is unsafe, then the burden shifts to the employer to show that it was not reasonably practicable to make and keep it safe. It was in this connection that in Nimmo Lord Guest said that he could not think that the section was intended to place such a limited obligation on employers as they would have at common law (where it would be for an injured employee to plead and prove failure to take reasonably practicable steps) (p 122F G), and that Lord Upjohn (whose view that safety is judged of course by a reasonable standard I have already quoted in paragraph 64 above) added that it is not in doubt that the whole object of the Factories Act is to reinforce the common law obligation of the employer to take care for the safety of his workmen (p 125B). Further, section 29(1) imposes a non delegable duty, so that an employer is responsible for achieving or for the taking all reasonably practicable measures to achieve the requisite safety irrespective of whether he chooses to set about doing this through himself, his servants or independent contractors. There is nothing to show that section 29(1) was intended to go further, and there is no assumption (or, in my opinion, likelihood) that it was intended to. The standard of reasonableness expressed in the qualification so far as is reasonably practicable (in respect of which the onus of proof is on the employer) makes it more, rather than less, likely in my view that the concept of safety is itself to be judged, as Lord Upjohn thought obvious in Nimmo, by reference to what would, according to the knowledge and standards of the relevant time, have been regarded as safe (see further paragraph 79 et seq. below). Peter Gibson J (at p 562G H) regarded it as surprising that the approach in John Summers, based on section 14(1) of the 1937 Act containing no qualification of reasonable practicability, should have been regarded as relevant under section 29(1) of the 1961 Act which does contain such a qualification. The same point was made in Mains (pp 527A D and 531D F, per Lord Sutherland and p 536A, per Lord Johnston). But there was authority pre dating 1959 which took the same approach to safety where there was such a qualification: see Sheppey v Matthew T Shaw & Co Ltd and Trott v W E Smith (Erectors) Ltd (para 65 above). The force of the point depends in any event upon the effect of the qualification. In Mains it was contemplated that the qualification might enable a defender to say it was not reasonably practicable to make this place safe, because this particular mishap was not reasonably foreseeable (p 527C D, per Lord Sutherland) and that The unforeseeable accident occurring in an unforeseeable way may well give the defenders a defence under the qualification (p 637E, per Lord Johnston). Likewise, in the present case the Court of Appeal considered as a matter of common sense that if, the employer does not know of the risk and cannot reasonably have been expected to know of it, it cannot be reasonably practicable for him to take any steps at all (paras 83 and 91). On that basis, foresight can be very relevant under section 29(1). But, if this is so, then section 29(1) is to that extent merely shifting the onus of proof, which weakens the argument that it must be seen as departing substantially from conceptions of common law negligence. In summary, safety must, in my view, be judged according to the general knowledge and standards of the times. The onus is on the employee to show that the workplace was unsafe in this basic sense. (iv) Reasonably practicable Since it took the view that safety is absolute and unchanging, the Court of Appeal had to consider whether the qualification so far as is reasonably practicable enabled the employers to exonerate themselves by showing that reasonable employers would not have considered that there was cause to reduce noise exposure in the workplace below 90dB(A). The Court of Appeal held that the qualification gave no scope for such a defence. It said (para 89): Under the statute, the employer must first consider whether the employee's place of work is safe. If the place of work is not safe (even though the danger is not of grave injury or the risk very likely to occur) the employer's duty is to do what is reasonably practicable to eliminate it. Thus, once any risk has been identified, the approach must be to ask whether it is practicable to eliminate it and then, if it is, to consider whether, in the light of the quantum of the risk and the cost and difficulty of the steps to be taken to eliminate it, the employer can show that the cost and difficulty of the steps substantially outweigh the quantum of risk involved. I cannot see how or where the concept of an acceptable risk comes into the equation or balancing exercise. I cannot see why the fact that a responsible or official body has suggested that a particular level of risk is 'acceptable' should be relevant to what is reasonably practicable. In that respect, it appears to me that there is a significant difference between common law liability where a risk might reasonably be regarded as acceptable and statutory liability where the duty is to avoid any risk within the limits of reasonable practicability. Smith LJ reiterated the point at the end of para 100, when rejecting the relevance of the Code of Practice to the question whether it was reasonably practicable to provide protection. In the light of my conclusion that safety is a relative concept, the correctness of these passages does not strictly arise for consideration in this case. Had it arisen, I would have regarded the qualification as wide enough to allow current general knowledge and standards to be taken into account. Even the Court of Appeal in its formulation acknowledged the quantum of risk involved as material in the balancing exercise. But this can only mean that some degree of risk may be acceptable, and what degree can only depend on current standards. The criteria relevant to reasonable practicability must on any view very largely reflect the criteria relevant to satisfaction of the common law duty to take care. Both require consideration of the nature, gravity and imminence of the risk and its consequences, as well as of the nature and proportionality of the steps by which it might be addressed, and a balancing of the one against the other. Respectable general practice is no more than a factor, having more or less weight according to the circumstances, which may, on any view at common law, guide the court when performing this balancing exercise: see Swanwick and Mustill JJs statements of principle, set out earlier in this judgment, and also Charlesworth on Negligence (12th ed) (2010), chapter 7, The Standard of Care, both generally and especially at para 7.38. It would be strange if the Court of Appeal was right in suggesting that, under the statutory formulation, this one factor is irrelevant, when the whole aim of the balancing exercise must, in reality, be to identify what is or is not acceptable at a particular time. That the qualification so far as may be reasonably practicable may, if necessary, receive a broad interpretation is also indicated by the reasoning of the House in Marshall v Gotham Co Ltd [1954] AC 360. Under the Metalliferous Mines General Regulations 1938 (SR & O No 630) the roof and sides of every travelling road in a mine were required to be made secure. An employee was killed by a fall of roof, due to the presence of an unusual geological condition known as slickenside, which there was no known means of detecting prior to a fall. It was argued that the mine owner could have propped all roofs, and that reasonably practicable meant no more than practicable (p 364). The argument was rejected. Lord Oaksey at p 370 agreed with Jenkins LJs statement, [1953] 1 WB 167, 179, that what is reasonably practicable in this context is no more nor less than what is capable of being done to make roofs and sides secure within the limits of what it is reasonable to do; and it cannot be reasonable to do for this purpose anything more than that which it appears necessary and sufficient to do according to the best assessment of what is necessary and sufficient that can be made at the relevant time, that is, in the present instance a point of time immediately prior to the accident. Lord Reid at p 373 said that if a precaution is practicable it must be taken unless in the whole circumstances that would be unreasonable and took into account that the danger was a very rare one, that the trouble and expense involved in the use of the precautions, while not prohibitive, would have been considerable, that the precautions would not have afforded anything like complete protection against the danger, and that their adoption would have had the disadvantage of giving a false sense of security. Lord Keith considered at p 378 that there was no general rule or test that can safely be relied on for measuring the discharge of such a duty, but that he could not, as at present advised, accept that the measure of an employers liability can satisfactorily be determined by having regard solely to the proportion which the risk to be apprehended bears to the sacrifice in money, time or trouble involved in meeting the risk. Lord Tucker (with whom Lord Cohen agreed at p 377) said at pp 374 375 that the word secure does not involve security from the effects of earthquake or an atom bomb, but added that it must include security from all the known geological hazards inherent in mining operations. At p 376 he echoed the list of factors which Lord Reid had identified in support of his conclusion that the precautions were not reasonably practicable. A further aspect of para 84 in Smith LJs judgment is the suggestion that there must be at least a substantial disproportion before the desirability of taking precautions can be outweighed by other considerations. This theme was developed in paras 82 to 84 of her judgment, on the basis of dicta in two cases prior to Marshall v Gotham. But it represents, in my view, an unjustified gloss on statutory wording which requires the employer simply to show that he did all that was reasonably practicable. In deciding the appeal in favour of the respondent, the Court of Appeal relied upon HHJ Ingliss estimation of the quantum of risk below 90dB(A). HHJ Inglis said that the description given to the risk to hearing of exposure below 85dB(A) as minimal is one that I accept and adopt. Above 85dB(A) the risk accelerates up to 90dB(A). In the high 80s, given long enough exposure, significant hearing loss may be expected in at least a substantial minority of individuals. On that basis, Smith LJ said that, assuming (as she did) that the employers well knew that some of their workforce stayed in their employment over many years, they would, if they had asked a suitably qualified expert, have received advice conveying to them that a substantial minority of their workforce in the relevant departments were likely to suffer significant hearing loss, and could not then have hoped to establish that the burden of providing ear protectors was substantially disproportionate to the quantum of risk to their employees (para 98). Advice of this nature as to the quantum of the risk should have been received by late 1976 or early 1977 (para 101). To this, Smith LJ added six to nine months, for reasons already discussed, putting Quantum in breach of its statutory duty under section 29(1) from 1 January 1978. Neither Quantum nor any other of the employers before the court exposed their workforce to noise levels in the high 80s. The exposure found was in the case of Mrs Baker to levels of 86dB(A). As I have already stated, every 3dB(A) represents a doubling of the sound pressure level of the energy involved in the noise, even though it will not be appreciated as such by the hearer. More importantly, the approach taken by the Court of Appeal requires employers to take expert advice and to identify the quantum of risk in circumstances in which current standards and thinking did not expect any such steps. And if risks which are not currently regarded by responsible employers as calling for any action are required to be addressed, then, despite Smith LJs references to the balancing of the quantum of risk against other factors, any employer who was or should have been aware of any risk at all greater than de minimis would be obliged to address it unless the trouble and cost involved were prohibitive. This is highlighted by consideration of the arguments which can be made if one has regard simply to the statistical tables in BS 5330: 1976 upon which the respondent and the Court of Appeal have relied to show the risk attaching at levels of exposure between 85 and 90dB(A) lepd: see para 31 above. The respondent, as I understand, accepts that the logic of her case is that the risks below 85dB(A) cannot and should not have been regarded as immaterial. But this highlights how independent her case on section 29(1) is of contemporary standards of behaviour or thought. Only since 2005 have employers been obliged to require ear protectors to be worn by workers exposed to 85dB(A) and obliged to make them available on request to workers exposed to 80dB(A) (see para 14 of the Court of Appeals judgment, quoted in para 15, above). There is nothing in the history of section 29(1) or the mischief to which it was addressed to suggest that the legislature in 1959 or 1961 intended in this way to detach the penal liability which it then introduced in respect of the workplace from the ordinary understanding of reasonable employers. Contrary to the Court of Appeals view, I consider that HHJ Inglis was correct in the approach he took to section 29(1), which followed that taken by Rose J in Fazakerley. Conclusion I would allow the appellants appeals both at common law and under section 29(1). At common law, Quantum, and other employers in a similar position such as Guy Warwick, were not in breach of their duty of care or of their duty under section 29(1) in not implementing measures to protect their employees in respect of noise exposure at levels below 90dB(A) prior to 1 January 1990. As regards Meridian and Pretty Polly, in reflection of the common ground between Lord Dyson, Lord Saville and myself (paragraphs 25 and 43 above), the appeal will be allowed by restoring the judges decision that they were in breach of duty in not having implemented such measures as from 1 January 1985. APPENDIX (para 18) This Appendix indicates the factual position as found by the judge in relation to each employer. Meridian (Courtaulds) 1. Taking the Courtaulds group of which Meridian was part, the judge found that the group had spinning and weaving divisions with high noise levels, that in the early 1980s the issue of noise began to be widely discussed, that claims for industrial deafness were emerging by 1983 and at the end of 1982 a Dr Cooper was asked to form and chair a noise committee. This committee met on 17 March 1983, and considered a paper indicating that a number of other countries had set a maximum exposure level of 85dB(A)lepd. It set companies in the division the task of surveying noise levels in all the factories. Also in the first half of 1983, Courtaulds legal department and medical officer circulated a memorandum, containing this passage: It has been suggested that some impairment may be caused by noise levels in the range of 85 90dB(A) . We strongly recommend that hearing protectors be provided for all those who may be exposed to noise within the range 85 90dB(A)leq. 2. Factory surveys were completed by the committee meeting in March 1984. They identified areas above 90dB(A), as well as between 85dB(A) and 90dB(A), and in relation to the latter a 75% aim of acceptance of hearing protection by mid 1985 was suggested. At a further meeting in October 1984 the difficulties of obtaining compliance without Code of Practice backing were discussed, but the target was increased to 80% by the end of 1985, and the need for information, instruction and encouragement was recognised. By the meeting of 12 March 1986, Directive 86/188/EEC was imminent, and the committee noted that their policies already complied with the directive. The evidence showed that the drivers for the activity from the early 1980s were proposed legislation, and the rising incidence of claims. Courtaulds were active in the debate stimulated by the consultation in 1981 and in opposing on economic and competition grounds the European proposal for legislation from 1982 (judgment, para 53). The judge also said that Courtaulds had the resources to look beyond the 1972 Guidelines and reach their own conclusion about the nature and extent of the risks posed to the hearing of their employees exposed below 90dB(A), but 56 nobody actually considered or sought to answer the question What are the actual risks to members of the workforce exposed to different levels of noise? The 90dB(A) standard from 1972 was considered to be the standard that the law and good practice required. There was a clear awareness by the early 1980s that exposure to levels of noise between 85 and 90dB(A) could be expected to damage the hearing of some workers to the extent that action was desirable at those levels. No large company who responded to the consultation document or read the background document and was aware of the EEC proposals in 1982, and one that then took part in the debates trying to fend off compulsory protection at 85dB(A) on economic grounds, but not on grounds that such levels of exposure were not harmful, could be said to be ignorant of the facts by the beginning of 1983 at the latest. Pretty Polly 3. This company disclosed a substantial quantity of material consisting of or based on documents in the public domain. In 1975 a Factory Inspector found noise levels of 89dB(A) and did not recommend any steps. Further, as the judge found (para 63): The internal documents include a Guide to Preparing a Noise Control Policy from Midland Insurance, undated but probably from the late 1970s or early 1980s, in which it is said that [on] exposure to 90dB(A)lepd over a long period there is a possibility of damage to hearing, so that adequate steps should be taken to prevent this; also that a noise reduction programme should aim at reducing noise to 84dB(A) or less if practicable; a Commercial Union Risk Management Ltd paper from 1977 saying that research has shown that few industrial workers will suffer serious hearing loss if the intensity and duration of exposure is controlled to allow a maximum of 90db(A) and, later, that the exposure standard of [90dB(A) lepd] is based on the prediction that not more than 1 % of those exposed to this level over a 30 year working lifetime will suffer social handicap as a result. Levels should thus be reduced whenever possible and 90dB(A) regarded as a ceiling rather than a safe level. 4. In December 1982 Pretty Pollys work studies department produced a memorandum, probably written by a Mr John Butler, later manager of the department, stating that 90dB(A) was the maximum level, that noise at that level involved accepting a certain risk of hearing damage and that: if we as a company feel that we require a zero risk of hearing damage for our employees, then no person should be exposed to a noise level of more than 80dB(A) for an eight hour day. There followed a table of percentage risk of hearing damage (such damage not being defined) showing 0% at 80dB(A), and at 85dB(A) 1, 3, 5, 6, 7, 8, 9 and 10% for 5, 10, 15, 20, 25, 30, 35 and 40 years of exposure respectively. The percentages for the same periods at 90dB(A) were said to be 4, 10, 14, 16, 16, 18, 20 and 21 %. These figures came in fact from ISO: 1999 of 1975, and some, but not all of this information about low level exposure, was in the 1981 consultative document. 5. In 1985 Mr Butler distributed an assessment with essentially the same table, noting that with one exception all machinery areas in the company were in excess of 85dB(A) and that: Even at this level we are accepting a certain risk of damage for our employees. If a zero risk of hearing damage is required, then no employee should be exposed to a noise level of more than 80dB(A) for more than eight hours a day. The judge found (para 66) that: There is no evidence that anyone at Pretty Polly turned their mind towards any evaluation of the risks below 90dB(A) before 1982. It is not really likely that they did so. It is plain from Mr Butler's documents that by that year he had done so. Indeed, it is unlikely that a company of that size where there had been some collection of materials, and where they cannot have been unaware of the EEC proposals and the very public debate that followed, could not have known that there was a real case to be made that exposure below 90dB(A) could cause levels of hearing damage that should be guarded against. I would put actual awareness of the nature of the real risk below 90dB(A), as with Courtaulds, as having arisen by the beginning of 1983. Taymil (now Quantum) and its subsidiaries 6. employers, the judge found: In relation to the subsidiaries of Taymil, which included Mrs Bakers 60. The factories in the group seem to have run largely independently, with factory management being responsible for health and safety, reflecting the origins of each factory in a separate business. There was no central health and safety function. Mr Jones said that he thought that in 1977 or thereabouts a Health and Safety policy document had been produced. He said it would probably have been destroyed when the company folded. There is no reason to think that such a policy, if it did in fact exist, would on noise have done anything but refer to the limit of 90dB(A). The knitting shops were recognised as being the areas with possibly dangerous levels of noise, not making up areas. Of the documents referred to the first is a noise survey and accompanying documents done for Huthwaite Avenue by Midland Insurance in June 1983. Mr Watson had discussed the conclusions of it with Midland Insurance, as appears on the face of the document, though he said in evidence that he could not remember it. The survey refers to the 90dB(A) limit and suggests that all areas in the survey above 87dB(A) should be areas where ear protection is worn until the noise is reduced by engineering methods. A number of areas were identified as having noise over that level. Proper training and instruction of staff is advised; and appended is a guide to preparing a noise control policy, in which it is suggested that any noise reduction programme should aim at reducing noise to 84dB(A) or less if practicable. There is a noise survey of Botany Avenue by Mr Graham Allin, an engineer working to Mr Gage in August 1984 in which Mr Allin refers to company policy taking 85dB(A) as the exposure threshold level. I am satisfied that there was no such policy. Mr Gage, who was a good witness was quite clear about that, and explained how Mr Allin may have got that idea from Mr Gage's view about a margin of safety below 90dB(A) so as to ensure the 90dB(A) level was achieved. Moreover, in a draft survey of the Ollerton factory written after June 1984 when the EEC proposals were changed there is no mention of such a policy. The quality of their evidence was not as good as that of Mr Gage, but both Mr Watson and Mr Ivan Jones said that the limit to be worked to was 90dB(A). There is no evidence of any steps towards protection being taken in the Nottingham Manufacturing years aimed at conservation over 85dB(A). Mr Watson said in evidence that he was aware of the EEC proposal in 1982 to reduce the exposure level to 85dB(A). He was aware of the existence of the debate about that proposal, from discussions with insurers: It was viewed with some scepticism, I think. Coats was a large organisation. By the time they came on the scene attention, if any, must have been focused on the EEC proposals that led to the 1989 regulations. 61. There is therefore no evidence that anyone in Nottingham Manufacturing or its subsidiaries with which this case is concerned turned their mind towards the level of risk about possible harm below 90dB(A)leq, except that Mr Watson was aware after 1982 of a debate going on about what levels would ultimately be imposed, and by the summer of 1984 it was known that though the compulsory level would remain at 90, some measures, possibly audiometry, would be imposed at 85dB(A). The 1983 Midland Insurance document is an important document, with its plain implication that the 90dB(A) Code of Practice level did not provide protection to everyone, and that a noise conservation policy should do better, but it does not provide the information that means that management at Nottingham Manufacturing were in a position of knowledge and understanding that set them apart from what I take to be the understanding of the great majority of employers, that 90dB(A)lepd was the official limit that had to be worked to. I do not think it is shown that Nottingham Manufacturing had a greater than average degree of knowledge. Guy Warwick 7. The judge said that, by comparison with other defendants, they were a very small company, engaged in making up operations, with at their height four factories and under 400 employees, and (para 68) that There is no evidence that anyone at Guy Warwick knew about the 1972 Code of Practice, or even about the Noise at Work Regulations 1989, which were in force for the last two years of the company's life. Mr Kettle was involved in health and safety and set up the health and safety committee. There were committee meetings at which he said in his statement the question of noise was never raised. The factory inspectors who came round periodically and the insurance representatives never raised it. No surveys were ever done. In my opinion said Mr Kettle, the industry was not renowned for excessive noise. Whether, on the facts of actual noise to which Mrs Hooley was exposed, Guy Warwick were in breach of any duty to her, has to be judged on the basis that they had no actual knowledge of the relevance of noise to their operation. LORD DYSON Common law negligence The decisions below The history of investigation and awareness of the risks of occupational exposure to noise is fully set out by Lord Mance at para 15 of his judgment. On the basis of this material, the judge applied the well known test enunciated by Swanwick J in Stokes v Guest, Keen and Nettleford (Bolts and Nuts) Ltd [1968] 1 WLR 1776, and held at para 87 that complying with 90dB(A) lepd as the highest acceptable limit met the standards of the reasonable and prudent employer during the 1970s and 1980s certainly until the time when the terms of the 1986 directive became generally known in the consultative document of 1987. He concluded, therefore, that the average employer was not in breach of its common law duty of care to its employees in failing to provide ear protectors before about the beginning of 1990. At para 88, however, he held that by the beginning of 1983 Courtaulds and Pretty Polly had sufficient understanding of the risks to hearing below 90dB(A) lepd to require them to take action. He then considered what was a reasonable period to allow for these two companies to take action and held that they should have done so by the beginning of 1985. Accordingly, from that date they were in breach of duty to employees who suffered damage through exposure at 85dB(A) lepd and above without having the opportunity of using hearing protection. He must also have held that the other (average) employer defendants were entitled to a period of about two years to take action. Although the judge gave no precise dates, it is for this reason that he dismissed the claim by Mrs Baker. Smith LJ (with whom Sedley and Jacob LJJ agreed) said at para 105 that the judges conclusion at para 87 of his judgment cannot be faulted. She said that she would uphold his view that there was no breach of duty at common law during the period for which a responsible body of opinion regarded it as acceptable to expose employees to noise in the 85 89dB(A) lepd range. For the employer with the ordinary or average degree of knowledge, the judges conclusion that this period came to an end in 1987 following the publication of the consultation paper on the 1986 draft directive was a reasonable conclusion. She differed from the judge only in that she considered that the average employer should have needed no more than six to nine months from the date of the publication of the consultation paper. For that reason, in respect of the average employer she fixed the date for breach of the common law duty of care at January 1988. As for Courtaulds and Pretty Polly, she upheld the judges conclusion that these companies had the requisite knowledge in early 1983. But, differing from the judge, she allowed them only six to nine months to provide ear protection. Finally, at para 109 she explained why Quantum should not be treated as an average employer and why its position should be assimilated to that of Courtaulds and Pretty Polly. The judge had found that the group insurance and risk manager of Quantum admitted that he was aware of the first draft EEC directive in 1982. Having reviewed the evidence, the judge said at para 61 that the company management were not in a position of knowledge and understanding that set them apart from what I take to be the understanding of the great majority of employers that 90dB(A) lepd was the official limit that had to be worked to. Smith LJ accepted the submission of Mr Hendy QC that, since there was evidence that Quantum was aware of the first draft directive, it was irrational to treat Quantum differently from Courtaulds and Pretty Polly, who also had such knowledge. Is compliance with the 1972 Code of Practice a defence for the average employer? On this appeal, Mr Hendy challenges the decision of the judge (upheld by the Court of Appeal) that the 1972 Code of Practice constituted an acceptable standard for average employers to adhere to until the late 1980s. I shall deal first with this challenge before coming to the question whether there was any basis for the judge to treat Courtaulds and Pretty Polly (and the Court of Appeal additionally to treat Quantum) differently. I agree for the reasons given by Lord Mance at paras 28 to 37 of his judgment that there is no basis for interfering with the judges finding at para 87 that until the late 1980s the Code of Practice set the standard for the reasonable and prudent employer without specialist knowledge. The avowed purpose of the Code was to set standards to protect loss of hearing due to noise at work. The Foreword by the Rt Hon Robert Carr MP, Secretary of State for Employment, states that until the pioneering work of Professor Burns and Dr Robinson (both members of the committee that prepared the Code of Practice) we lacked the necessary scientific knowledge of the precise levels of noise, and the duration of exposure to them, which can cause damage. Mr Carr wrote that he regarded the publication of the Code as the first important step in the prevention of loss of hearing due to noise at work. It should be considered as a blueprint for action. Section 1.1.2 stated: The Code sets out recommended limits to noise exposure. It went on to say: It should be noted that, on account of the large inherent variations of susceptibility between individuals, these limitations are not in themselves guaranteed to remove all risk of noise induced hearing loss. At section 4.3.1, the Code defines the limit in these terms: If exposure is continued for eight hours in any one day, and is to a reasonably steady sound, the sound level should not exceed 90dB(A). It is this limit which the Code specifies [as] a limit for exposure to noise (section 2.1.1); which if not achieved triggered the obligation to provide ear protectors and ensure their use (sections 3.1.2 and 7.1.1); which should be regarded as maximum acceptable levels and not as desirable levels (section 4.1.1); and which if it was considered that it may be exceeded dictated the obligation to carry out a survey (section 5.1.1). On a fair reading of the Code, this blueprint for action provided that, although it was desirable to reduce levels where reasonably practicable to below the 90dB(A) level, continuous exposure for eight hours in any one day to a reasonably steady sound below 90dB(A) was acceptable and did not require the provision of ear protectors. It was made clear that, having regard to the large inherent variations of susceptibility between individuals, exposure below 90dB(A) could not guarantee to remove all risk of noise induced hearing loss. But the clear message of the document, based on the latest scientific knowledge, was that ear protectors were not required if the noise levels were below 90dB(A) and that at levels below 90dB(A) the risk to particularly susceptible people was sufficiently small, both in terms of the numbers who might be affected and the seriousness of any damage that might result, to be acceptable. That is how I would interpret the document. That is also how the document was interpreted by those in the industry. Lord Mance has referred at paras 32 and 34 of his judgment to the evidence on this point summarised by the judge at paras 46 to 48 of his judgment and his findings at para 48. In summary, the judge found that the 90dB(A) limit was regarded by everyone in the industry, the Health and Safety Executive and factory inspectors as the touchstone of reasonable standards that should be attained. This finding was supported by the notes published by the Wolfson Unit for Noise and Vibration Control in the University of Southampton in 1976. As the judge said, with the publication of BS 5330 in 1976, there was information available which, if researched, would give an indication of the level of risk below 90dB(A). But in the light of the terms of the Code itself and all the evidence summarised at paras 46 to 48, I agree with the Court of Appeal that the judge was entitled to hold that an average reasonable and prudent employer was not in breach of its duty of care to its employees in simply relying on the 90dB(A) limit as an acceptable limit. There is no rule of law that a relevant code of practice or other official or regulatory instrument necessarily sets the standard of care for the purpose of the tort of negligence. The classic statements by Swanwick J in Stokes and Mustill J in Thompson v Smiths Shiprepairers (North Shields) Ltd [1984] QB 405 which have been quoted by Lord Mance at paras 9 and 10 of his judgment remain good law. What they say about the relevance of the reasonable and prudent employer following a recognised and general practice applies equally to following a code of practice which sets out practice that is officially required or recommended. Thus to follow a relevant code of practice or regulatory instrument will often afford a defence to a claim in negligence. But there are circumstances where it does not do so. For example, it may be shown that the code of practice or regulatory instrument is compromised because the standards that it requires have been lowered as a result of heavy lobbying by interested parties; or because it covers a field in which apathy and fatalism has prevailed amongst workers, trade unions, employers and legislators (see per Mustill J in Thompson at pp 419 420); or because the instrument has failed to keep abreast of the latest technology and scientific understanding. But no such circumstances exist here. The Code was the result of careful work by an expert committee. As the judge said, at para 87, the guidance as to the maximum acceptable level was official and clear. He was entitled to accept the evidence which led him to conclude that it remained the touchstone of reasonable standards for the average reasonable and prudent employer at least until the publication of the consultation paper on the 1986 draft Directive (para 48). Remaining questions There remain three questions in relation to the issue of common law negligence. First, was the judge right to treat Courtaulds and Pretty Polly as different from the average employer? Secondly, was the Court of Appeal right to hold that employers should have provided ear protectors within six to nine months of the publication in 1987 of the consultation paper on the draft second EEC Directive (and not two years as held by the judge)? Thirdly, was the Court of Appeal right to hold that Quantum was not an average employer, but had particular knowledge, which assimilated its position to that of Courtaulds and Pretty Polly as it was found by the judge to be? As regards the first question, the judge held that by the beginning of 1983 Courtaulds and Pretty Polly had an understanding of the risk that some workers would suffer damage at exposure between 85 and 90dB(A)lepd which led him to distinguish their position from that of the average prudent employer. Lord Mance (paras 21 to 25) says that neither Courtaulds nor Pretty Polly had acquired any new knowledge by this time. All that had happened was that they had formed a different view from that generally accepted about what precautions to take. He says that the failure to give effect to that different view does not amount to a breach of the duty of care. I would not interfere with the judges assessment on this point. The position of the average employer was that, until about 1987, it knew or should have known that there was a risk at below 90dB(A), but that it was officially regarded as so small as to be acceptable. But as the judge said at para 56 in relation to Courtaulds, that company had the resources to look beyond the 1972 Guidelines and reach their own conclusion about the nature and extent of the risks posed to the hearing of their employees exposed below 90dB(A). It is true that they did not seek to assess the actual risks to members of the workforce exposed to different levels of noise. But the judge found that the company had a clear awareness by the early 1980s that exposure to noise between 85 and 90dB(A) could be expected to damage the hearing of some workers to the extent that action was desirable at those levels. So too as regards Pretty Polly. Thus, on the basis of their own research into the problem and the discussion generated in the industry by the EEC proposals, by early 1983 large employers such as Courtaulds and Pretty Polly had come to the conclusion that the 90 limit was no longer acceptable. Unlike Lord Mance, I would not characterise the decision of the two companies that some action should probably be taken as a display of greater than average social awareness. As responsible employers, they understood that they owed a duty of care to their employees and were keeping the content of that duty under review. But even if the decision that action was desirable was a display of social awareness, I do not see how that would necessarily afford a defence. On the finding by the judge, their appreciation that the Code limit was no longer acceptable was sufficient to found liability. I note, in any event, that Mustill J in Thompson said that changes in social awareness may transfer the risk into the category against which the employer can and should take care (pp 415 416). As regards the second question, in my view the Court of Appeal was not entitled to interfere with the judges assessment of what was a reasonable lead in time for the average employer. A period of two years from the publication of the consultation paper takes one to the end of 1989, which was effectively the date when the 1989 Regulations came into force. The judge was entitled to hold that it was reasonable not to require the average employer to implement protective measures before the impending regulations came into force. As regards the third question, the judge carefully considered all the evidence about the knowledge and understanding of Quantum at paras 57 to 61 of his judgment. He concluded that it did not show that the management were in a position of knowledge and understanding that set them apart from what I take to be the understanding of the great majority of employers, that 90dB(A) lepd was the official limit that had to be worked to. In my view, this assessment of the facts was reasonably open to the judge. The Court of Appeal should not have interfered with it. Section 29(1) of the Factories Act 1961 I agree with and do not wish to add anything to what Lord Mance has said on the issue of whether section 29 applies to operations carried out within the place of work. I also agree that the section applies to noise. Like Lord Mance, I recognise the force of the arguments to the contrary. Noise was clearly not in the contemplation of Parliament when section 29 or its predecessors were enacted. But the language of section 29(1) (every such place shall, so far as is reasonably practicable, be made and kept safe for any person working there) is general and always speaking. Thus it can accommodate working methods and technological developments that were not foreseeable (and attitudes to safety that were not held) at the time when the statute was enacted. I would hold that section 29 applies to noise for the simple reason that excessive noise can cause injury by damaging a persons hearing thereby rendering a place of work unsafe for those who are working there. For my part, I would reach this conclusion regardless of whether section 29(1) imposes absolute liability in the sense to which Lord Mance refers at para 61. Meaning of safe The judge held that what was safe within the meaning of section 29(1) was not to be judged objectively, but was really a jury question, to be answered in the light of all the circumstances prevailing at the time, including what might reasonably have been foreseen by an employer (para 97). And again at para 99: as contemplated by Rose J in Taylor v Fazakerley, the standard of safety in the section is governed by the general standard which ought reasonably to have been adopted by employers at the relevant time. Having reviewed the facts in detail, he concluded that the standard of safety was determined by the 1972 Code until the coming into force of the Noise at Work Regulations 1989 and that, judged by the standard of the 1972 Code, Mrs Bakers place of work was safe. Having reached this conclusion, he did not go on to consider whether her employers had discharged the burden of proving that they had done all that was reasonably practicable to make and keep the place safe for any person working there. Smith LJ agreed with and applied the Court of Appeal decision in Larner v British Steel plc [1993] ICR 551 (which was followed by the Inner House of the Court of Session in Scotland in Mains v Uniroyal Englebert Tyres Ltd [1995] IRLR 544) and held (para 76) that the safety of a place of work within the meaning of section 29 was to be judged objectively without reference to reasonable foresight of injury. She said that what is objectively safe cannot change with time. On the evidence before the judge, she held that the places of work where the ambient noise levels were 85dB(A) lepd or above were not safe (para 78). In the alternative, if reasonable foresight was relevant, she said that by the early 1970s any employer who kept abreast of developing knowledge would have known that prolonged exposure to 85dB(A) lepd was harmful to some people (para 79). On that basis, by the early 1970s there would have been liability for breach of section 29, subject to the reasonable practicability defence. Like Lord Mance, I prefer the approach of the judge, with the qualification that what is safe is an objective question in the sense that safety must be judged by reference to what might reasonably be foreseen by a reasonable and prudent employer. The concept of what is safe is not, however, absolute. As Lord Nicholls and Lord Hobhouse said in R (Junttan Oy) v Bristol Magistrates Court [2003] UKHL 55, [2003] ICR 1475, safety is a relative concept. People can legitimately hold different opinions as to what is safe. Opinions as to what is safe may vary over time as, with developing knowledge, changes occur to the standards that are reasonably expected to be followed. I do not, therefore, agree with Smith LJ (para 78) that what is objectively safe cannot change with time. Standards of safety are influenced by the opinion of the reasonable person and foreseeability of risk plays a part in the forming of that opinion. If reasonable foreseeability is not imported into the concept of safety, then unless the Court of Appeal are right in holding that it is relevant to reasonable practicability, section 29(1) imposes an obligation on employers to guard against dangers of which they cannot reasonably be aware (in so far as it is reasonably practicable to do so). Breach of that obligation exposes the employer to potential criminal liability: see section 155 of the 1961 Act. That is an unreasonable interpretation to place on the statute, which I would not adopt unless compelled to do so by clear words, whether express or necessarily to be implied. In my view, there are no such words. As Lord Mance points out, there are two strands of authority on the meaning of safe in section 29(1). Before I come to these, I should refer to section 14(1) of the 1961 Act which provides: (1) Every dangerous part of any machinery.shall be securely fenced unless it is in such a position or of such construction as to be as safe to every person employed or working on the premises as it would be if securely fenced. It will be seen that section 14(1) does not include a reasonable practicability qualification. There is a line of authority to the effect that reasonable foreseeability is a component of the meaning of dangerous in section 14(1) and its predecessors: see, for example, cases such as Hindle v Birtwhistle [1897] 1 QB 192, John Summers & Sons Ltd v Frost [1955] AC 740 and Close v Steel Company of Wales Ltd [1962] AC 367. In Close, Lord Denning referred with approval to Hindle, a case involving a shuttle which flew out and injured a weaver. He said at pp 380 381: The Divisional Court held that it was capable of being a dangerous part of the machinery. It depended on the frequency with which shuttles were likely to fly out. If it was so frequent as to be a reasonably foreseeable cause of injury, it was dangerous. But if it was so rare as to be a minimal risk, it was not dangerous. Wills J gave a definition which has been repeatedly approved: It seems to me that machinery or parts of machinery is and are dangerous if in the ordinary course of human affairs danger may be reasonably anticipated from the use of them without protection . Lord Denning added: My Lords, anyone who has practised in the Queens Bench Division knows that the case of Hindle v Birtwhistle has been cited very, very many times. Du Parcq LJ vouched for it up to 1940 in Stimpson v Standard Telephones and Cables Ltd [1940] 1 KB 342 and I can vouch for it since. The first strand of authority on section 29(1) imports the concept of reasonable foreseeability into the meaning of safe. Lord Mance has mentioned two of the cases at para 71 above. There are others including a number of Scottish cases and the unreported decision of Rose J in Taylor v Fazakerley Engineering Co (26 May 1989), which I mention only because he was a judge who had great experience of personal injury litigation. The second strand includes the cases mentioned by Lord Mance at para 73. In Larner v British Steel plc [1993] ICR 551, Hirst LJ approved a passage in Munkman, Employers Liability, 11th ed (1990) p 292, where the author expressed the view that safe was a simple English word and there was no reason why the safety of a place of work should not be decided as a pure question of fact. Hirst LJ regretted the introduction of the vague and uncertain notion of foreseeability. Peter Gibson J said that it was not unfair on employers to impose a strict duty, because the duty was qualified by the defence of reasonable practicability. To introduce the concept of reasonable foreseeability into the question of safety was effectively to equate the duty under the section with the duty at common law. Mr Hendy QC seeks to uphold this reasoning. He submits that the word safe is a plain English word. It is not qualified. In this respect, it may be contrasted with, for example, reg 4 of the Provision and Use of Work Equipment Regulations 1998 by which the duty to ensure that work equipment is suitable for its purpose is conditioned by reg 4(4), which provides that the word suitable means suitable in any respect which it is reasonably foreseeable will affect the health or safety of any person. Mr Hendy has referred to a number of decisions on other health and safety provisions in which the court held that the duty on the employer was absolute and did not import any element of reasonable foreseeability. In my view, the meaning of section 14(1) is highly relevant. As a matter of ordinary English, the word dangerous is an antonym of safe. The text of section 14(1) suggests that it is being so used in the subsection. The subsection provides that every dangerous part of any machinery shall be securely fenced unless it is in such a position or of such construction as to be as safe to every person employed or working on the premises as it would be if securely fenced (emphasis added). The contrast between dangerous and safe is striking. As I have said, the meaning of section 14(1) is long established: there can be no liability for dangerous parts of machinery unless the danger is reasonably foreseeable. In these circumstances, it would be surprising if Parliament had intended to impose liability under section 29(1) for a danger (or lack of safety) which is not reasonably foreseeable. The only justification for interpreting safe in section 29(1) as not importing the concept of reasonable foreseeability is that it is unnecessary to do so because reasonable foreseeability is imported into the reasonable practicability qualification. I accept that, if it is imported into the reasonable practicability qualification, there is no need to interpret safe as importing reasonable foreseeability in order to avoid an inexplicable mismatch between sections 14(1) and 29(1). Smith LJ accepted (and Mr Hendy QC accepts) that reasonable foreseeability is relevant to reasonable practicability: As a matter of common sense, if the employer does not know of the risk and cannot reasonably have been expected to know of it, it cannot be reasonably practicable for him to take any steps at all (para 83). That was also the view of the courts in Larner and Mains. But in my view, the foreseeability of a risk is distinct from the question whether it was reasonably practicable to avoid it. Diplock LJ explained the point in Taylor v Coalite at pp 319 320 in the passage quoted by Lord Mance at para 71 above. It is only if a risk is reasonably foreseeable and it was reasonably foreseeable that an injury would be caused that it becomes necessary to consider whether it was reasonably practicable to avert the risk. Thus, for the purpose of deciding the issue of reasonable practicability, it is assumed that the risk was reasonably foreseeable. The importance of the section 14(1) line of cases is that they recognise that the mere fact that a risk of injury is foreseeable as a possibility is not necessarily sufficient to make the machinery dangerous. It is dangerous only if the risk of injury is sufficiently likely to make it more than a minimal risk: see, for example, the passage in Lord Dennings judgment in Close which I have quoted at para 113 above. I would apply that approach in the present case. The 1972 Code specified a limit of 90dB(A)lepd. As the HSE report Framing Noise Legislation published in 1975 made clear, this noise limit has widespread international acceptance, and although it does not eliminate all risk of hearing damage, we feel it continues to be the most practicable standard (para 19). The Code itself stated that exposure below 90dB(A) lepd could not guarantee to remove all risk of noise induced hearing loss. But the implication was that the risk was very small and acceptable in the view of the Government Department responsible for issues of health and safety and the experts who were advising them. I would agree, however, that if the concept of reasonable foreseeability is not imported into safe in section 29(1), then it is imported into reasonable practicability for the reasons given by Smith LJ. This is the position for which Mr Hendy contends. In agreement with the Court of Appeal in Larner, there is more than a hint in the reasoning of Smith LJ as to the meaning of safe in section 29(1) that it is influenced by the idea that it is necessary to interpret the subsection as imposing a greater obligation than would be imposed at common law. In this respect, at paras 59 and 60, she criticises Rose J in Taylor v Fazakerley for doing no more than formulating the common law test. At para 67, she refers with approval to Peter Gibson Js statement in Larner that to introduce the concept of reasonable foreseeability into the question of safety was effectively to equate the duty under the section with the duty at common law. At para 70, she refers to a similar observation by Lord Sutherland in Mains. Finally, when discussing the issue of reasonable practicability at paras 87 to 89, she draws a distinction between section 29(1) and the common law. The critical passage is quoted by Lord Mance at para 81. She says that at common law a risk might be regarded as acceptable, whereas under the statute the duty is to avoid any risk within the limits of reasonable practicability. There is a similar passage at para 100 of her judgment. I assume that the justification for saying that the statutory duty must differ from the common law duty is that the statutory provisions would otherwise be otiose. But there is no principle of law that a statutory obligation cannot be interpreted as being co terminous with a common law duty. As Stephenson LJ said in Bux v Slough Metals Ltd [1973] 1 WLR 1358, 1369 1370: The statutory obligation may exceed the duty at common law or it may fall short of it or it may equal it. Sometimes Parliament may decide that, in the interests of clarity and certainty, there is advantage in providing a detailed all embracing set of rules. The merit in setting these out in a single authoritative document, such as a statute, is not undermined even if they do no more than reflect what the courts would be likely to decide when applying the common law. There are, in any event, two important respects in which section 29(1) clearly does not reflect the common law. First, if a defendant wishes to say that it was not reasonably practicable to make or keep a place of work safe, the burden is on him to do so; it is not on the claimant to prove that it was reasonably practicable. I accept that few cases of this kind are likely to be decided on an application of the burden of proof. Nevertheless, in this respect there is a legal difference between the statutory and common law positions. Secondly, the fact that breaches are offences is a very significant difference. The fact that, as we were told, there have been few (if any) prosecutions is immaterial. Parliament considered that a breach of section 29(1) was sufficiently serious to attract potential liability to criminal sanctions. Were the places of work safe? Safety must be judged by the understanding and standards of the times. Where these are set out in a clear and official publication such as a Code of Practice issued by a relevant government department based on the most up to date expert advice, they are likely to set the bounds of what risks are reasonably foreseeable and acceptable and what is reasonably to be expected of an employer. If the guidance given in such a publication becomes out of date and a reasonable and prudent employer becomes aware of this (or ought reasonably to do so), then it can no longer rely on the publication to meet an allegation that its place of work is no longer safe. And employers with special expertise fall into a special category, as the positions of Courtaulds and Pretty Polly demonstrate. I see no reason to disturb the judges conclusion on the issue of safety. He was entitled to conclude that the standard of safety was determined by the 1972 Code until the coming into force of the 1989 Regulations and that, judged by the standard of the 1972 Code, Mrs Bakers place of work was safe. Reasonably practicable In view of the conclusion I have reached on the meaning of safe the question of reasonable practicability does not arise. But as I have said, if reasonable foreseeability is not imported into the meaning of safe, I would agree with the Court of Appeal that it is imported into reasonable practicability. On this hypothesis, however, I do not agree with the Court of Appeal that the acceptability of risk is irrelevant to reasonable practicability. I would adopt what Lord Mance says at paras 82 and 83. Smith LJ refers to the quantum of the risk as being relevant to whether it is reasonably practicable to eliminate it. I agree. But if the quantum of the risk is relevant to that question, how can the fact that a Code of Practice says that a risk is acceptable not be relevant? As Smith LJ said, the classic exposition of reasonable practicability is to be found in Edwards v National Coal Board [1949] 1 KB 704. Tucker LJ said at p 710: in every case it is the risk that has to be weighed against the measures necessary to eliminate the risk. The greater the risk, no doubt, the less will be the weight to be given to the factor of cost. If, to use the words of Smith LJ, a responsible or official body has suggested that a particular level of risk is acceptable, that is likely to be cogent evidence that this level of risk is minimal and one that can reasonably be disregarded. Smith LJ acknowledged that an official view as to the acceptability of a risk might well have a role to play in the determination of common law liability. Having said at paras 89 and 100 that it had no part to play in the determination of whether it was reasonably practicable to make a place of work safe, she acknowledged at para 101 (rightly in my view) that the 1972 Code was relevant to the employers assessment of the quantum of the risk, although it was inadequate as an assessment tool. In my view, the 1972 Code was plainly relevant to an employers assessment of the risk. The central question is whether, and during what period, it was reasonable for an employer to rely on the 1972 Code for the assessment of the risk and whether in all the circumstances it was reasonable for an employer not to provide ear protectors. At para 101, Smith LJ gave her reasons for holding that by late 1976 or early 1977 the average sized employer in the knitting industry could and should have been able to make an informed assessment of the quantum of risk arising from noise in the range of 85 to 90dB(A) lepd and that this assessment would have led the employer to the conclusion that ear protectors should be provided. It is true that the judge did not deal with the issue of reasonable practicability since, on his view as to the meaning of safe, it did not arise. But he did deal with the issue of the appreciation of risk by a reasonable employer when he addressed the issue of common law negligence: see paras 69 to 89. This section of his judgment must be considered against the background of his earlier findings of fact at paras 46 48 to which I have earlier made reference. The critical paragraph in the judgment of the judge is para 87 which Lord Mance has set out at para 16. It can be seen that para 101 of the judgment of Smith LJ is at variance with para 87 of the judges judgment. The judge said that the guidance given as to the maximum acceptable level by the 1972 Code was official and clear. His assessment was that complying with the 90dB(A) lepd as the highest acceptable level was meeting the standards of the reasonable and prudent employer during the 1970s and 1980s, certainly until the time when the terms of the 1986 Directive became generally known in the consultative document of 1987. They were not in breach of duty for not asking the question who is at risk in my factory and how big is the risk? In my judgment, the Court of Appeal should not have interfered with this assessment of the standards of the reasonable and prudent employer during the 1970s and 1980s. For the purpose of the reasonable practicability issue, Smith LJ accepted that an employer was entitled to rely on the 1972 Code until the publication of BS 5330 in July 1976. She said that the significance of that document was that it now became possible for anyone with a modest degree of mathematical skill to assess the quantum of risk from noise in the range 85 to 90dB(A) lepd. But in expressing this view, Smith LJ must have overlooked paras 46 to 48 of the judges judgment. In the light of that evidence (which was accepted by the judge), he was entitled to hold that a reasonable and prudent employer would not have sought advice from an acoustic engineer on the basis of BS 5330. All the evidence was that nobody used the tables to do the kind of calculation that Smith LJ said should have been carried out. The evidence was that the 90dB(A) lepd limit stated in the 1972 Code was regarded as the touchstone of reasonable standards at least until the mid 1980s. In my judgment, there was no basis for the Court of Appeal to interfere with that assessment either in relation to the issue of reasonable practicability or the standard to be expected of the reasonable prudent employer. Conclusion It follows that I would allow the appeals both at common law and on the section 29(1) issue. For the reasons that I have given, I agree with the conclusions reached by Judge Inglis (to whose judgment I would pay tribute). LORD SAVILLE For the reasons given by Lord Mance and Lord Dyson, I would allow this appeal to the extent proposed by those Justices. To my mind the contrary views depend to a significant degree on hindsight and consequently place an undue burden on employers. LORD KERR Liability at common law The report of the Committee under the chairmanship of Sir Alan Wilson on the Problem of Noise (the Wilson Committee) of March 1963 was presented to Parliament in July 1963. It contained the following observations: 508 Permanent reductions in sensitivity of hearing can be caused by damage to the inner ear, resulting from exposure over a considerable period to certain types of noise. The existence of this damage, which is irreversible, has been demonstrated in people who work in noisy industrial environments. 509. Though the existence of these temporary and permanent reductions is well established, as this chapter shows, our knowledge is very inadequate. 518. Different individuals vary considerably in the amount of hearing loss produced in them by a given noise exposure. 521. (b) the British Medical Association stated in their evidence that they believed that there is general acceptance of the view that working conditions involving continuous exposure throughout working hours for a prolonged period to noise whose intensity exceeds 85 dB [approx 90dB(A)] in any octave band in the speech frequency range (250 4,000 cycles per second) may cause permanent damage to hearing; 533. Much could be done voluntarily within industry, and, indeed, we know that some firms already have well established hearing conservation programmes. There is, however, a need for a wider and more urgent interest in the problem. We recommend, as immediate steps, that the Ministry of Labour should: (a) disseminate as widely as possible existing knowledge of the hazard of noise to hearing; (b) impress on industry the need to take action to reduce the hazard as it is at present recognised; and (c) advise industry on practical measures to this end. 534. Although voluntary action is now possible and, indeed, essential, we do not consider that the present knowledge of this complex problem provides a sufficient basis for legislation. Acting on the advice contained in para 533 of the Wilson Report, in June 1963 the first edition of a Ministry of Labour publication entitled Noise and the Worker made the following recommendations: The first steps in the programme [i.e. a Noise Reduction and Hearing Conservation Programme] are to carry out a noise survey and to obtain specialist advice. (page 5) Our knowledge of the relation of noise to hearing loss is as yet too limited for it to be possible to say with certainty what amount of exposure is safe partly because people vary greatly in their susceptibility to noise. It is generally agreed, however, that if workers are exposed for eight hours a day, five days a week, to a continuous steady noise of 85 dB or more in any octave band, in the speech range of frequency (500 to 4,000 cycles per second), it is desirable to introduce a programme of noise reduction or hearing conservation. (page 7) Where it is not possible, by environmental control, to reduce noise to sufficiently safe levels, workers should be protected by ear defenders. (page 14) The second edition of Noise and the Worker was published in June 1968. In a section entitled Monitoring Workers Hearing it stated that workers exposed to levels of noise at or approaching those set out in a table should have their hearing tested periodically. The table contained a range of decibel levels from 80 to 100 with corresponding frequency bands of 1200 4800 (in relation to 80 decibels) up to 37.5 150 (in the case of 100 decibels). The third edition of Noise and the Worker was prepared by the Health and Safety Executive in 1971. It gave the following warning: Because some people are more liable to hearing loss than others and because our knowledge of the effects of noise exposure, especially exposure to intensive noise of short duration, is still incomplete it is not possible to set out a simple table of permissible limits for all types of noise. The publication nevertheless contained a table which set out levels of noise which indicated a serious hazard to hearing. Eight hours exposure to noise levels of 90 dBA was stated to constitute such a serious hazard. This can only be taken to mean that there was a distinct, albeit less serious, hazard to hearing at lower levels. That conclusion is confirmed by the injunction that appears later in the text (page 9) to the effect that damage risk criteria should be regarded as maximum permissible levels and not as desirable levels. If possible the noise should be reduced to levels lower than the danger levels set out in the table. This was particularly required in order to avoid risk to the minority of people who are exceptionally susceptible to hearing damage, and for reasons of general welfare. Two salient conclusions can be drawn from these statements. Employers should have been aware that damage to hearing could occur at levels less than 90 dBA. They ought also to have realised that there may well be vulnerable individuals within the workforce whose hearing was particularly at risk at those lower levels. Other material was available about the risk of noise induced damage to hearing, most notably Hearing and Noise in Industry detailing the research carried out by Burns and Robinson in 1970. Together with the publications that I have so far reviewed, this provided the essential setting in which the seminal Code of Practice for reducing the exposure of employed persons to noise was published in 1972. The gradually evolving state of knowledge that emerges from the earlier documents is manifest from the Code of Practice itself. In a foreword, the Secretary of State for Employment, Rt Hon Robert Carr MP, said: It has been common knowledge for many years that high levels of noise at work can cause impairment of hearing. In a few firms where there is this danger, good work has been done in suppressing noise, but in many others the problem has not been recognised, or has been under estimated. In those firms, the tragedy is that all too often the workers are accustomed to the noise and do not notice the gradual deterioration of their hearing until it is too late. For hearing lost in this way cannot be recovered. The general solution to this problem, which is a complex one, has been hampered more by ignorance than by neglect. Until the pioneer work of Professor Burns and Dr. Robinson was published in March 1970, we lacked the necessary scientific knowledge of the precise levels of noise, and the duration of exposure to them, which can cause damage. It is largely due to their work that this Code of Practice has been made possible. The provisions in the code, and its publication, have been recommended by my Industrial Health Advisory Committee on which both sides of industry are represented. It is the outcome of 12 months' work by a sub committee. I regard the publication of the Code as the first important step in the prevention of loss of hearing due to noise at work. It should be considered as a blueprint for action. The Code was at pains to reinforce the message that had been conveyed by earlier publications to the effect that recommended limits on noise exposure could not be taken as eliminating all risk of noise induced hearing loss. Prominently, at para 1.1.2, it stated: The Code sets out recommended limits to noise exposure. It should be noted that, on account of the large inherent variations of susceptibility between individuals, these limitations are not in themselves guaranteed to remove all risk of noise induced hearing loss. Section 4 of the Code, dealing with limits on sound levels, reiterated the need to regard these as maximum levels which ought not to be exceeded. It was desirable that levels of noise be reduced below those specified. Para 4.3.1 provided that if exposure was continued for eight hours in any single day, and was to a reasonably steady sound, the sound level should not exceed 90 dB(A). In her judgment in the Court of Appeal Smith LJ had said at para 6 that the Code of Practice, having explained that protection from noise of 90dB(A)leq would not protect all workers from hearing damage, had indicated that some harm was likely to be caused to some susceptible workers by noise below that level. Lord Mance has observed that the use of the word likely in this context was not justified because the Code had in fact stated that the limitations which it specified were not in themselves guaranteed to remove all risk of noise induced hearing loss. It may well be that the particular formulation chosen by Smith LJ was not strictly justified but by 1972 it was recognised that a minority of workers would suffer hearing loss if exposed to noise levels of less than 90 dB(A) see the third edition of Noise and the Worker (referred to in para 5 above). Lord Mance and Lord Dyson have concluded that the Code of Practice set an appropriate standard on which a reasonable and prudent employer could legitimately rely. In Lord Mances view, it was acceptable for such an employer to continue to rely on the Code for this purpose until the late 1980s. Lord Dyson agreed with the trial judge, His Honour Judge Inglis, that the Code remained the touchstone of reasonable standards for the average reasonable and prudent employer at least until the publication in 1986 of the draft proposal for a Council directive on the protection of workers from the risks related to exposure to noise. The Court of Appeal, although expressing a preference for an earlier date, felt that the trial judge was entitled to reach the conclusion on this issue that he expressed in para 87 of his judgment. I shall consider this paragraph in a little detail presently. Before examining the question of how long an employer might reasonably rely on the Code, it is, I believe, necessary to look at what a reasonable employer would have taken from the information contained not only in the Code but also in the earlier publications that I have discussed. True it is that 90 dBA was the stipulated danger level. But employers were not told that lower levels were safe. On the contrary, they were told that certain employees could well suffer a hearing loss if exposed to noise at lower levels. That risk had been clearly signalled. Employers had also been told that too little was known about the relationship of noise to hearing loss to say with certainty what amount of exposure was safe. What ought to have been the reaction of a prudent and reasonable employer to that information? It seems to me that adopting a passive, sanguine attitude to the risk of hearing loss in workers exposed to noise of less than 90 dBA was not an available option. The Code was described as a blueprint for action. It was certainly not a blueprint for inaction. In Doherty v Rugby Joinery (UK) Ltd [2004] ICR 1272 Hale LJ stressed that the duty on the employer was to consider those within the workforce who (although not identifiable in advance) would be particularly susceptible to vibration injury. This seems to me to be an important argument against passivity on the part of employers following the publication of the 1972 Code. A prudent employer should have concluded that the health of a minority was at risk when exposed to noise levels below 90dB(A). The law should not, and in other areas does not, deny protection to a minority simply because they are a minority. An employers duty extends to the protection of those of his employees who are, by dint of their susceptibility to injury, more likely to sustain it. Whatever may have been the position immediately after the Code was published, treating it as an enduring touchstone was no longer possible after 1976, in my opinion. The effect of ISO 1999, published in 1975 and BS 5330 in 1976 was described by Judge Inglis in para 87 of his judgment in the following passage: There is no doubt that research into the question of what risks to the hearing of employees exposure below 90dB(A)leq posed would have yielded the answer that 90dB(A) was not a natural cut off point, and that there were risks to susceptible individuals below that level. Indeed, the 1972 Guidelines themselves made that clear. From the early 1970s, certainly by 1976 with the publication of BS5330 and of lS0 1999 in the previous year, the information was available if researched to give an indication of the level of the risk. Judge Inglis considered that research was required to unearth the information that there was a risk to the hearing loss of some employees who were exposed to noise at a lesser level than 90 dB(A). There appears to me to be an inherent contradiction in play here. The Code has been hailed as the basis on which a reasonable and prudent employer might determine that protection was required. This obviously presupposes that the reasonable and prudent employer was aware of the contents of the Code. But within the very Code that provided the basis for the defence that an employer might deploy was the cautionary admonition that some workers would suffer some damage if exposed to noise levels of less than 90 dB(A). In this connection, Lord Dyson has said that the clear message of the Code was that the risk to particularly susceptible people was sufficiently small, both in terms of the numbers who might be affected and the seriousness of any damage that might result, to be acceptable. With respect, I cannot agree. Nowhere in the Code is any estimate made of the numbers who might constitute this exceptional category. Nor is there any assessment offered of the degree of disability that might accrue to those who were affected. What the 1972 Code should have conveyed to employers (especially those who sought subsequently to rely on it for the defence of noise induced hearing loss claims) was that an unquantified minority of their workforce would suffer hearing loss if exposed to noise levels at less than 90 dB(A). As a minimum, this should have made them alert to further information from public authority sources that might emerge in coming years. By contrast with the Code, ISO 1999 and BS 5330 did permit an estimate to be made of the number of workers who would be affected by exposure to various levels of noise below 90 dB(A). Thus, in para 13 of his judgment the judge, by reference to a table produced by Professor Lutman, was able to calculate that noise exposure of 85 dB(A)lepd over 40 years would cause 8.5dB hearing loss at 4khz. At para 14 the judge reproduced a table from a paper by Professor Robinson which showed that 10% of a typical population exposed for 30 years to 85dB(A)lepd will have a hearing loss of 35dB. This can be compared to a non noise exposed population, 10% of whom at age 48 would have a hearing loss of 31.5. It was thus possible to show that noise exposure added a further 3.5dBs of hearing loss in this percentile. And at para 21 the judge reproduced a further table from Professor Lutman which showed a 9dB threshold loss at 4 kHz in 5% of men exposed to 85 dB(A)lepd for 45 years. Now it is true, as Lord Mance has pointed out, that neither ISO 1999 nor BS 5330 purported to identify a maximum tolerable noise exposure. Indeed, both documents disavowed any attempt to do so. But that, as it seems to me, is neither here nor there. What is important in this context is that employers who exposed their employees to noise had been alerted in 1972 to the fact that some employees who were exposed to noise levels of less than 90 dB(A) would suffer hearing loss and in 1976 a means of calculating what percentage of their workforce would be affected was available to them. From 1976 onwards, therefore, employers, who should since 1972 have been alive to the dangers of noise induced hearing loss in a percentage of their employees exposed to levels of noise in excess of 85 dB(A), could estimate what the percentage was likely to be. All that was unknown was which particular workers would fall into that category. What was certain was that, if they were exposed over a sufficiently long period, some at least of their workforce would suffer permanent, irremediable damage to their hearing. Although that hearing loss would not be substantial, its impact on those who were affected by it is not to be underestimated. As the respondent submitted, it diminishes the lives of those who suffer from it in a real and significant way. The appellants have argued that a reasonable employer could not have been expected to read, absorb and apply ISO 1999 and BS 5330. I do not accept that argument. The cornerstone of the appellants defence is the Code of Practice of 1972. If this is proffered as the reason that it was acceptable for employers not to supply ear defenders to employees unless they were exposed to noise levels of 90 dB(A) and greater, it must also be acknowledged as the source of warning that noise levels less than that would damage some workers hearing. Thus alerted, it seems to me that an employers obligation to remain abreast of information that would allow him to know what percentage of his workforce was likely to be affected was plain. This conclusion does not conflict with the classic statement of principle by Swanwick J in Stokes v Guest, Keen and Nettlefold (Bolts and Nuts) Ltd [1968] 1 WLR 1776, 1783: the overall test is still the conduct of the reasonable and prudent employer, taking positive thought for the safety of his workers in the light of what he knows or ought to know; where there is a recognised and general practice which has been followed for a substantial period in similar circumstances without mishap, he is entitled to follow it, unless in the light of common sense or newer knowledge it is clearly bad; but, where there is developing knowledge, he must keep reasonably abreast of it and not be too slow to apply it He must weigh up the risk in terms of the likelihood of injury occurring and the potential consequences if it does; and he must balance against this the probable effectiveness of the precautions that can be taken to meet it and the expense and inconvenience they involve. If he is found to have fallen below the standard to be properly expected of a reasonable and prudent employer in these respects, he is negligent. While, for reasons that I shall discuss below, it could be concluded that a practice of recommending protection for those exposed to 90 dB(A) and above had grown up, so far from there being a recognised and general practice which had been followed for a substantial period in similar circumstances without mishap, as I have sought to demonstrate in the review of the various government publications on this subject, thinking on the problems of noise at work was characterised by uncertainty and qualification until 1972 and beyond. In the 1970s knowledge was developing and conclusions, albeit qualified conclusions, were emerging. There was a clear duty on the part of employers to keep abreast of these, a duty made all the more acute by the uncertainty of the past. The information that became available in 1975 and 1976 would have led to the conclusion that a sufficiently significant percentage of a workforce exposed to noise at levels greater than 85dB(A) would suffer a hearing loss. I therefore agree with Smith LJs analysis on this issue, although not with her conclusion on liability at common law. At para 101 of her judgment, Smith LJ said this: from July 1976, there was a method available which could be used by anyone with a modest degree of mathematical skill. Certainly any consultant acoustic engineer could have used the British Standard method. Accordingly, I conclude that by late 1976 or early 1977, the average sized employer in the knitting industry could and should have been able to make an informed assessment of the quantum of risk arising from the below 90dB(A)lepd noise in his workshops. As I have said above, this assessment would have led the employer to broadly the same conclusion as was reached by Judge Inglis. Once that assessment had been made, it could not in my judgment be said that it was not reasonably practicable to provide ear protectors. The conclusion reached by Judge Inglis referred to in this passage was that when exposed to noise above the level of 85dB(A) the risk of suffering hearing loss accelerates up to 90dB(A) and in the high 80s, given long enough exposure, significant hearing loss may be expected in at least a substantial minority of individuals. That important finding was not challenged either in the Court of Appeal or in this court. It appears to me to lie at the heart of the issue of the liability of the appellants at common law. The finding was complemented by another important conclusion reached by the judge, a conclusion which again no one has sought to challenge. At para 73 of his judgment he said: The evidence does not show that at any time the cost of implementing a policy of voluntary hearing protection at levels below 90dB(A) was such that a reasonable employer could use cost or difficulty as a valid reason for not having such a policy. Shortly put, therefore, from 1977 onwards an employer in the knitting industry should have known that a percentage of his workforce would suffer hearing loss if they were exposed to and remained unprotected from noise levels of more than 85dB(A). Such an employer should also have known that he could provide ear protection that would have reduced the risk of that hearing loss occurring at not inordinate cost. Both Judge Inglis and Smith LJ appear to have absolved employers of liability at common law because, until the late 1980s, advice was not given to them that ear protection was required for noise levels below 90 dB(A). The failure to give this advice seems to have been due to the manner in which the experts addressed the question. Thus in paras 46 and 47 of Judge Ingliss judgment the following appears: There was evidence given by the expert witness engineers for Courtaulds (Mr Bramer and Mr Currie) about the approach to control of noise in the period from the 1970s in industry. The report of Mr Worthington for Pretty Polly and Guy Warwick is also in evidence. To Mr Bramer, the guidance in Noise and the Worker and the 1972 Guidelines provided a "clear and consistent recommendation to employers as to how they ought to deal with noise in the workplace". The result was that in his practice, his invariable advice until the late 1980s, was that "the relevant level was a daily personal noise exposure of 90dB(A)". This approach, he said, was standard during the period up to 1989 among noise professionals, and taught at training courses. In the mid 1980s, when it appeared that EEC regulation would involve a first action level of 85dB(A) his advice changed to reflect that. He was not aware of the NPL tables before the 1980s when he found that they were being used by medical experts writing reports for the purpose of deafness claims. He has never come across them being used in any part of industry. In evidence Mr Bramer said that he gave advice to employers in terms of complying with the 1972 Code. He was speaking to the 90dB(A) level, as were all his colleagues. He agreed that the advice would be to answer the question "Tell us how to comply with legislation and the Code of Practice", rather than "Tell me how to avoid reasonably foreseeable risk to my workforce". He would have recommended 90dB(A) as the cut off point, but would also have said "that does not actually stop some more susceptible people from having some small noise induced hearing loss". If asked about risk, he would have had some difficulty, and regarded the question as more one for medical people. 47. Mr Currie said that the Health and Safety Executive and factory inspectors after the 1974 Act concentrated their advice and enforcement on the 90dB(A) level. He was not aware of any instance in which the NPL tables had been used by employers to predict the level of risk for their workforce. In evidence Mr Currie said that good practice won't necessarily remove all risk. He agreed that there has been no very different understanding about noise induced hearing loss since the 1970s. The first thing to look at when deciding on practices, which is what employers have to do, is to look at the guidance available. Mr Worthington's report is to the effect that employers looked to the 90dB(A) limit in the Code of Practice as the maximum acceptable limit, and that the Factory Inspectorate and HSE did not refer employers to the risks below that limit as risks about which they should take action. That was the practice of the day, and employers taking advice, if they did, would be referred to the standard in the Code as being what had to be observed. Mr Bramers evidence, recorded uncritically by Judge Inglis, so far from bolstering the case for the appellants, seems to me to have exposed critical weaknesses in it. To deliver invariable advice that the relevant level was a daily personal noise exposure of 90dB(A) (by which, one presumes, he means that it was acceptable to ignore dangers arising from noise exposure below that level) crucially fails to take account of the unambiguous evidence that risks to a percentage of employees from exposure to noise of over 85 dB(A) had been recognised. What was to become of this group in Mr Bramers equation? Were they to be discounted as an insignificant minority? If so, on what basis did he assess their significance? And on what basis did he conclude (if indeed he did conclude) that the hearing loss that they would sustain could be overlooked? Of course, Mr Bramer sidestepped most of these difficult issues by saying that he tailored his advice to address the question how would the legislation and the Code of Practice be complied with, rather than how could the employer comply with his elementary duty of avoiding foreseeable risk to his employees. Judge Inglis appears again not to have cast a critical eye on this aspect of Mr Bramers testimony and the Court of Appeal was likewise silent as to its reaction to it. But the fundamental duty of an employer is that he should ascertain by whatever reasonable means are at his disposal, what are the likely dangers to his employees from the work that he asks them to do and that he should then do what he reasonably can to avoid those dangers. Mr Bramer gave evidence that if he had been asked what appears to me to be not only the right, but also the obvious, question of how to avoid reasonably foreseeable risk to employees, he would have adverted to the fact that some risk to susceptible employees of small noise induced hearing loss would arise. But he would not have been able to assess what that risk was, how many employees would be affected nor the level of disability that it would give rise to, these matters lying more in the province of medical people. Of course he was not asked the right and obvious question. He ought to have been. But if he had been asked that question, he could not have given any meaningful reply. It seems to me remarkable that an employer who should have asked, in light of what the Code of Practice had said, what were the dangers to the minority of his workforce who would suffer damage to their hearing by exposure to levels of noise that were current in his factory and what he could do about those dangers, can be relieved of liability because he did not ask the right question and because his expert did not direct him to the right issue. The evidence of Mr Currie and Mr Worthington is open to the same criticisms which attach to that of Mr Bramer. The fact that after the 1974 Act the Health and Safety Executive and factory inspectors concentrated their advice and enforcement on the 90dB(A) level does not relieve employers of the duty to inform themselves of the true purport of the available evidence. After all, Judge Inglis was able to calculate without difficulty what percentage of workers would be likely to suffer hearing loss on the basis of data that were available to any employer from 1977 onwards. He may have been directed to those data by reports of the experts produced at trial but the data existed in the 1970s. Employers and those who advised them ought to have considered those data shortly after they became available in 1976; they should have made the calculation that Judge Inglis was able to make many years later; they ought to have concluded, as he did, that a significant minority would suffer hearing loss if exposed to noise levels exceeding 85 dB(A) over a prolonged period; they should have discovered that this could be avoided by the provision of ear defenders at not unreasonable cost; and they should have provided their workers with those ear defenders. Because of their failure to do so, they were, in my opinion, guilty of negligence. In reaching this conclusion I have kept in mind the salutary warning of Mustill J in Thompson v Smith Shiprepairers [1984] QB 405, 422 where he said: One must be careful, when considering documents culled for the purpose of a trial, and studied by reference to a single isolated issue, not to forget that they once formed part of a flood of print on numerous aspects of industrial life, in which many items were bound to be overlooked. However conscientious the employer, he cannot read every textbook and periodical, attend every exhibition and conference, on every technical issue which might arise in the course of his business; nor can he necessarily be expected to grasp the importance of every single item which he comes across. The employers in this appeal and their advisers were not required to immerse themselves in esoterica in order to understand what I believe to be the clear and simple import of the material that confronted them. The evidence that some of their employees were at risk was unmistakable. Hindsight is not required in order to see that clearly. The means of mitigating that risk were also clear. The need to take the necessary steps cannot plausibly be challenged. It is not only unnecessary, in light of my view about the common law liability of the appellants from the late 1970s onwards, for me to embark on any exegesis about how soon employers should have been alerted by the imminence of European legislation to the need to protect workers from noise levels of 85dB(A), it would be inappropriate for me to do so on what would be an academic basis. In my view, their liability arose much earlier. The employers liability under statute As Lord Mance has said, several issues arise in addressing the questions whether section 29 of the Factories Act 1961 covers exposure to noise in the workplace, and, if so, what standards it sets. It seems to me that these can be grouped in four categories. First whether the section is designed to cover only the physical fabric and structure of the workplace. Second, are the duties imposed applicable only to occupiers as opposed to employers? (This issue was raised for the first time on the hearing of the appeal to this court). Thirdly, even if activity within the workplace is covered, does it apply to environmental conditions which may only have a deleterious effect over a long period of time? Finally, what does safe mean? Does it mean what can be reasonably foreseen or does it set an absolute standard? On the first of these issues, for the reasons given by Lord Mance, with which I agree, the answer must surely be that activities carried on in the workplace which render it unsafe, come clearly within the embrace of the section. The context of the provision is the protection of workers in factories. The nature of factories is that employees will carry on working activities, some at least of which will carry potential, inherent dangers. When an employer is enjoined to provide a safe place of work, it can only be for the purpose of ensuring that the work that is carried on in the place where it occurs does not jeopardise the employees safety. The work activity cannot be divorced from the physical location where it takes place. On the second question, it is, I think, significant that neither employer nor occupier is defined in the legislation and the terms, I am satisfied, are used interchangeably throughout the Act. Employers duties are imposed and require to be discharged in the factory setting. It would thwart the entire purpose of the legislation to confine the discharge of those duties artificially to occupiers and to exempt employers from their reach. I have concluded that the duties arising under the Factories legislation were intended to be imposed on employers, whether they be occupiers or not. The third question does not admit of quite such an easy answer as the first two. It is, I believe, helpful to have regard to the general character or nature of the provision and the timing of its enactment. It is a provision which imposes a general requirement and it can be assumed, I think, that Parliament realised that it would be impossible, at the moment of its enactment, to prescribe comprehensively all the ways in which a place of work might become dangerous. This was therefore a catch all provision designed to ensure that workplaces be kept safe in any and all of the myriad ways that danger might arise in the future. One rather prosaic way of considering the question might be to imagine what the response of the enactors of the legislation might be if they had been asked in 1961, whether, if in 20 years time it proved that a workroom where women were required to operate knitting machines at a level of noise that would irreversibly damage their hearing, they intended that the requirement that employers maintain a safe place of work should apply to that situation. I believe that their answer would unquestionably be yes. A rather more principled way of addressing the question can be found in Bennions treatment of the subject of the presumption that an updating construction is to be given to an enactment. At section 288 of the fifth edition (2008) of his work on Statutory Interpretation, he says this: Section 288. Presumption that updating construction to be given (1) With regard to the question of an updating construction, Acts can be divided into two categories, namely the usual case of the Act that is intended to develop in meaning with developing circumstances (in this Code called an ongoing Act) and the comparatively rare case of the Act that is intended to be of unchanging effect (a fixed time Act). (2) It is presumed that Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wording to allow for changes since the Act was initially framed (an updating construction). While it remains law, it is to be treated as always speaking. This means that in its application on any date, the language of the Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law. (3) A fixed time Act is intended to be applied in the same way whatever changes might occur after its passing. Updating construction is not therefore applied to it. (4) Where, owing to developments occurring since the original passing of an enactment, a counter mischief comes into existence or increases, it is presumed that Parliament intends the court so to construe the enactment as to minimise the adverse effects of the counter mischief. This appears to me to be a classic case of the mischief of noise induced hearing loss from exposure to 85 dB(A) becoming recognised during the lifetime of the relevant legislation. An updating construction is clearly called for and should be applied to the updated mischief. The always speaking principle is well established. Its clearest exposition remains that of Lord Wilberforce in Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800, 822: In interpreting an Act of Parliament it is proper, and indeed necessary, to have regard to the state of affairs existing, and known by Parliament to be existing, at the time. It is a fair presumption that Parliament's policy or intention is directed to that state of affairs. Leaving aside cases of omission by inadvertence, this being not such a case, when a new state of affairs, or a fresh set of facts bearing on policy, comes into existence, the courts have to consider whether they fall within the parliamentary intention. They may be held to do so, if they fall within the same genus of facts as those to which the expressed policy has been formulated. They may also be held to do so if there can be detected a clear purpose in the legislation which can only be fulfilled if the extension is made. How liberally these principles may be applied must depend upon the nature of the enactment, and the strictness or otherwise of the words in which it has been expressed. The discernible policy of section 29 was to ensure that the place at which employees had to work was safe and since, for the reasons given, this aspiration was directed not only at the fabric and structure of the place but also at the working activities within it, the fresh set of facts represented by the risks of hearing loss from exposure to noise must be taken to fall within the parliamentary intention. Indeed, to exclude noise as a possible means by which a place of work might be rendered unsafe would run directly counter to the parliamentary intention that places of work were generally rendered into a safe condition. Now that it is well known that exposure to loud noise in a working environment without protection will bring about irreversible hearing loss, it is inconceivable that noise should not be accommodated within the reach of the section. The final question is perhaps the most difficult. Must safety be seen as an objective standard or is it a relative concept? The straightforward answer is that a place is safe or it is not. A place which is not safe cannot be said to be safe merely because it is believed to be, however justified the belief. Lord Mance has said that there is no such thing as an unchanging concept of safety. I agree, but as he has also observed, safety must be assessed objectively. It appears to me that the truly critical question is to which point in time should the assessment relate. Lord Mances view is that what he describes as a retrospective assessment based on knowledge current at the time that the court is considering the matter is impermissible. I am afraid that I cannot agree with that view. I do agree, however, that safety, in the context of section 29, does not connote absolute safety in the sense of the elimination of every conceivable risk. As was said in Sheppey v Matthew T Shaw & Co Ltd [1952] 1 TLR 1272 and Trott v WE Smith (Erectors) Ltd [1957] 1 WLR 1154 (CA) (to which Lord Mance has referred) a safe means of access does not mean absolutely safe so that no accident could possibly occur. But as Parker J in Sheppey pointed out, simply because safe does not mean absolutely safe, it does not follow that it means reasonably safe. A means of access is unsafe if it is a possible cause of injury to anybody acting in a way a human being may be reasonably be expected to act. There is nothing in Sheppey or Trott which suggests that the court in either case considered that safety had to be judged solely according to the state of knowledge at the time that the injury was sustained. Of course, neither case involved a re evaluation of what constituted safe in the light of evolving knowledge. As I have said, both cases are authority for the proposition that safe does not mean absolutely safe but I do not consider that this provides the answer to the question whether safety is to be judged by reference to what was believed to be safe at the time that the damage occurred. Therefore, when Lord Hope in R v Chargot Ltd (trading as Contract Services) [2008] UKHL 73; [2009] 1 WLR 1, 12 13 said that the Health and Safety at Work etc Act 1974 was not contemplating risks which are trivial or fanciful, and that the statutory framework was intended to be a constructive one, not excessively burdensome, and that the law does not aim to create an environment that is entirely risk free, he should not, in my opinion, be taken as suggesting that a state of affairs which is undoubtedly unsafe should be held not to have been unsafe for the purposes of the legislation simply because, at the time that injury was suffered, it was believed to be safe. Since safety is not an absolute, immutable concept, forseeability may play a part in the assessment whether a place was safe but I do not believe that this must necessarily be rooted in perceptions of what was historically considered to be safe. There is nothing wrong in principle in recognising that a place of work was unsafe based on contemporary knowledge. Forseeability of risk based on current information is relevant to the judgment whether a place of work was in fact safe. Thus, since it is now indisputable that a substantial minority of employees will develop hearing loss if exposed to noise levels of more than 85 dB(A) over a prolonged period, it is possible to recognise that the place at which the respondent was required to work was unsafe within the meaning of section 29. The role played by forseeability in this context is necessarily limited. It is confined to the judgment as to what is necessary, in light of all currently available information, to render a workplace free from such risks as might befall anybody acting in a way a human being may be reasonably be expected to act. By contrast, however, reasonable practicability does import consideration of what was known at the time that the injury was sustained. By definition it cannot be reasonable to put in place measures that are not known to be necessary. It may be practicable to do so but it cannot be said to be reasonably practicable. As the Court of Appeal in the present case said at para 83 of Smith LJs judgment, it is a matter of common sense [that], if the employer does not know of the risk and cannot reasonably have been expected to know of it, it cannot be reasonably practicable for him to take any steps at all. Once it is clear that the employer knew or should have known that there was a risk, an evaluation of the chances of the risk materialising is relevant to an examination of what it is reasonably practicable for an employer to do as Lord Goff put it in Austin Rover Group Ltd v HM Inspector of Factories [1990] 1 AC 619, 626 627: for the purpose of considering whether the defendant has discharged the onus which rests upon him to establish that it was not reasonably practicable for him, in the circumstances, to eliminate the relevant risk, there has to be taken into account (inter alia) the likelihood of that risk eventuating. The degree of likelihood is an important element in the equation. It follows that the effect is to bring into play forseeability in the sense of likelihood of the incidence of the relevant risk, and that the likelihood of such risk eventuating has to be weighed against the means, including cost, necessary to eliminate it. I agree with Smith LJ in her conclusion (at para 84 of her judgment) that for the defence to succeed, the employer must establish a gross disproportion between the risk and the measures necessary to eliminate it. In the words of Asquith LJ in Edwards v National Coal Board [1949] 1 KB 704, 712, the risk [must be] insignificant in relation to the sacrifice. In the present case, the provision of ear defenders at relatively modest cost was entirely practicable. For that reason, and since I have concluded that the employers ought to have been aware of the risk of noise induced hearing loss to the respondent, I do not consider that the defence of reasonable practicability was available to them. Conclusions Although the respondent has chosen, for what her counsel described as pragmatic reasons, not to challenge the findings of the Court of Appeal as to the date on which the appellants could have been said to be negligent for failing to recognise the risk of noise induced hearing loss, I have concluded that this was much earlier than was found by Smith LJ. Since the Court of Appeals findings on this issue were not challenged by the respondent, however, and since I have found that the statutory defence was not available to the appellants, I must content myself with saying that I would dismiss the appeal. LORD CLARKE Introduction As Lord Dyson observes, the history and awareness of the risks of occupational exposure to noise have been fully set out by Lord Mance. In addition, the issues have been discussed in considerable detail by Lord Mance, Lord Kerr and Lord Dyson. I shall therefore try not to repeat what they say, save in so far as it is necessary to explain the conclusions which I have reached. One of the striking features of the issues in this case, at any rate as it seems to me, is that the science upon which decisions as to what precautions employers should take to protect their employees from hearing loss caused by noise in the workplace had scarcely changed since the research carried out by Burns and Robinson in 1970, which led to the Code of Practice in 1972. All that has changed is the formation of a different view on the part of industry and the regulators as to the level of risk that it is acceptable to disregard. In these cases the claimants allege breaches by the employers of their duty under section 29(1) of the Factories Act 1961 (the 1961 Act), so far as reasonably practicable, to make and keep their place of work safe for them. If there is a breach of this duty, the question whether they were also in breach of their duty of care at common law becomes irrelevant because, so far as I am aware, nobody suggests that the claimants could recover more or different damages at common law from those recoverable for breach of statutory duty. I shall therefore consider first the issues under section 29. It is important to keep the questions relevant to the two bases of claim separate because the issues are different. If section 29 applies, the approach to the question whether there was a breach of duty under that section is materially different from the approach to the question whether there was a breach of duty at common law. Lord Wright made this clear in Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152, 178 and London Passenger Transport Board v Upson [1949] AC 155, 168. Section 29 the principles Section 29(1) of the 1961 Act provided: There shall, so far as is reasonably practicable, be provided and maintained safe means of access to every place at which any person has at any time to work, and every such place shall, so far as is reasonably practicable, be made and kept safe for any person working there. The first question that arises is whether section 29(1) applies in this class of case. Lord Mance discusses this question in detail. He asks three questions. They are whether section 29(1) applies to activities carried on in the workplace, whether it applies to risks of noise induced hearing loss arising from such activities in relation to long term employees working in the workplace and what is the meaning of safe. He answers the first two questions in the affirmative. Both Lord Kerr and Lord Dyson agree with him, essentially for the reasons he gives. So do I. In particular, I agree with Lord Kerr and Lord Dyson that, for the reasons they give, the language of the section is always speaking. I agree with Lord Kerr that in this context safety cannot connote absolute safety: Sheppey v Matthew T Shaw & Co Ltd [1952] 1 TLR 1272 and Trott v WE Smith (Erectors) Ltd [1957] 1 WLR 1154. In Sheppey Parker J said that it cannot mean absolutely safe in the sense that no accident could possibly occur. Trott was concerned with regulation 5 of the Building (Safety, Health and Welfare) Regulations 1948 (SI 1948/1145), which included a provision that: . sufficient safe means of access shall so far as is reasonably practicable be provided to every place at which any person has at any time to work. The Court of Appeal accepted that the regulation did not require absolute safety. Parker J was by now Parker LJ. He said at p 1162 that a means of access was not safe within regulation 5 if it was a possible means of injury to someone acting in a way that a human being might reasonably be expected to act in circumstances that might reasonably be expected to occur. I would accept that approach. The section does not say reasonably safe. Nor does it say that the workplace is safe if it is believed to be safe. The question remains simply whether the workplace was, at the relevant time, safe. I note in passing that Jenkins LJ said at p 1158 that the obligation to provide a safe means of access so far as reasonably practicable placed a stricter obligation on the employer than is placed upon him in the discharge of the general duty of reasonable care at common law. I agree. The word safe in section 29(1) is not limited by the concept of reasonable foreseeability. However, as Lord Mance and Lord Dyson have explained, there is a line of authority that it should be construed as if it were, by reference to the meaning of dangerous in section 14(1) of the 1961 Act and its predecessors. See eg Hindle v Birtwhistle [1897] 1 QB 192, John Summers & Sons Ltd v Frost [1955] AC 740, Close v Steel Co of Wales Ltd [1962] AC 367 and, to similar effect, the unreported decision of Rose J in Taylor v Fazakerley Engineering Co, 26 May 1989. This line of authority imports the concept of reasonable foreseeability into the meaning of safe on the basis that safe is the converse of dangerous: see to this effect the judgment of Diplock LJ in Taylor v Coalite Oils & Chemicals Ltd [1967] 3 KIR 315 and Allen v Avon Rubber Co Ltd [1986] ICR 695. There is, however, a second line of authority in which the Court of Appeal and the Extra Division of the Inner House of the Court of Session concluded that it is inappropriate to equiparate section 14 with section 29 of the 1961 Act: see Larner v British Steel plc [1993] ICR 551, Neil v Greater Glasgow Health Board [1994] SLR 673, Mains v Uniroyal Engelbert Tyres Ltd [1995] SC 518 and Robertson v RB Cowe & Co [1970] SLT 122. I do not think there is any basis on which it is possible to distinguish this second line of authority. The question then arises which line of authority to follow. I see the force of the approach of Lord Mance and Lord Dyson, which is to prefer the first strand of authority: see Lord Mance at para 71 and Lord Dyson at para 118. For my part I prefer the second. I do so for these reasons. The reasoning in the second line of cases is to my mind compelling. In particular, it is supported by the language of section 29(1), which is not reflected in section 14(1). This is emphasised by the reasoning of both Hirst LJ and Peter Gibson J in the Court of Appeal in Larner. At p 559 Hirst LJ quoted from the 11th edition of Munkmans Employers Liability (1990), pp 292 293: (v) When is access or place unsafe? Safe is, however, a simple English word and there is no reason why it should not be decided as a pure question of fact whether a place is safe or not. Unfortunately, the vague and uncertain notion of foreseeability has been introduced as a test. Hirst LJ added at pp 559 560 This view seems to me to have considerable force in the light of the very clear wording of section 29(1), which contains no reference to foreseeability, and seeing that, if [counsels] argument is correct, the distinction between the common law duty of care and the statutory duty will be virtually obliterated. Peter Gibson J said at pp 560 561 that the way in which the duty in section 29(1) was framed made it clear that to make good a claim for breach of statutory duty under section 29(1) the plaintiff had to allege and prove injury while and in consequence of working at a place at which he had to work and that such place was not made or kept safe for him. It was then for the employer to establish that it was not reasonably practicable to make and keep such place safe. It was common ground in the present appeal that in this last respect the burden was on the employer: Nimmo v Alexander Cowan & Sons Ltd [1968] AC 107, Gibson v British Insulated Callenders Construction Co Ltd 1973 SLT 2 and Bowes v Sedgefield District Council [1981] ICR 234. In Larner the employer had not sought to discharge that burden; so the critical issue was whether the workplace was safe. This raised two questions. The first was whether the word safe meant safe from a reasonably foreseeable danger, so that a workman injured at his place of work by an accident which the employer could not reasonably foresee was unable to succeed in a claim for breach of statutory duty. The second question was whether, if so, the danger was reasonably foreseeable on the facts. Peter Gibson J answered the first question no. He did so convincingly and with clarity, by reference both to the language of section 29 and to the authorities. He said this at p 562: I start by considering the words of section 29(1) apart from authority. They contain no express reference to foreseeability, reasonable or otherwise. Safe is an ordinary English word and I cannot see any reason why the question whether a place of work is safe should not be decided purely as a question of fact, without putting any gloss on the word: see Munkman, Employer's Liability, p 292. Further, to imply words in the section so as to introduce a test of reasonable foreseeability is to reduce the protection afforded by the Act of 1961 for the workman, the plain object of the section being to provide for a safe working place: see Nimmo v Alexander Cowan & Sons Ltd [1968] AC 107, 122, per Lord Guest. On principle and on authority that is impermissible: see John Summers & Sons Ltd v Frost [1955] AC 740, 751, per Viscount Simonds. This is not unfair on the employer whose duty to make and keep the working place safe is qualified by so far as is reasonably practicable, and I see no necessity to imply any other qualification. It would also seem wrong to me to imply a requirement of foreseeability, as the result will frequently be to limit success in a claim for breach of statutory duty to circumstances where the workman will also succeed in a parallel claim for negligence; thus it reduces the utility of the section. [Counsel] accepted that there was no authority that compels us to conclude that section 29 requires such a test and in Robertson v RB Cowe & Co, 1970 SLT 122 an argument that the test of reasonable foreseeability applied to section 29(1) was specifically rejected by the First Division of the Inner House of the Court of Session. However, [counsel] referred us to a number of other authorities in which the reference to safety in section 29 and other similar statutory provisions has been construed as importing the test of reasonable foreseeability. These authorities are based on certain comments by Lord Reid in the John Summers case [1955] AC 740 on the meaning of dangerous in section 14(1) of the Factories Act 1937. That subsection imposed the duty that Every dangerous part of any machinery shall be fenced. Lord Reid referred, at pp 765766, to what du Parcq J said in Walker v Bletchley Flettons Ltd [1937] 1 All ER 170, 175: a part of machinery is dangerous if it is a possible cause of injury to anybody acting in a way in which a human being may be reasonably expected to act in circumstances which may be reasonably expected to occur and queried the word possible, adding If the question of degree of danger has to be considered it might perhaps be better to say a reasonably foreseeable cause of injury. These comments on the meaning of dangerous in that provision which contains no qualification of reasonable practicability have, surprisingly, been relied on in obiter comments on the meaning of its antonym safe in section 29 of the Act of 1961 and other similar provisions notwithstanding that they do contain such a qualification. Peter Gibson J then noted that the views to the contrary by Diplock LJ in Taylor v Coalite were obiter and expressed before the decision in Nimmo, where Lord Guest said this at p 122: To treat the onus as being on the pursuer seems to equiparate the duty under the statute to the duty under common law, namely, to take such steps as are reasonably practicable to keep the working place safe. I cannot think that the section was intended to place such a limited obligation on employers. Peter Gibson J referred to three conflicting Scottish cases, namely Keenan v Rolls Royce Ltd 1970 SLT 90, Robertson v RB Crowe & Co 1970 SLT 122 and Morrow v Enterprise Sheet Metal Works (Aberdeen) Ltd 1986 SLT 697. He concluded that on the then state of the authorities the court was free to choose whether to apply the test of reasonable foreseeability. In agreement with Hirst LJ he said that he preferred to read the section without implying any such test. I entirely agree with both the approach of Peter Gibson J and with his reasons, which he put very clearly. Section 14 was in significantly different terms from section 29(1). It provided, so far as relevant: (1) Every dangerous part of any machinery shall be securely fenced unless it is in such a position or of such construction as to be as safe to every person employed or working on the premises as it would be if securely fenced. It is noteworthy that there was no reference in section 14 either to reasonable foreseeability or to reasonable practicability. In Mains v Englebert Tyres, which was a decision of the Inner House, both Lord Sutherland and Lord Johnston convincingly rejected the suggestion that section 29 should be construed by reference to the construction of section 14. The Lord Ordinary had rejected the pursuers case on the basis that the accident had not been reasonably foreseeable. The Inner House, comprising Lord Sutherland, Lord Johnston and Lord Wylie allowed the pursuers appeal. They rejected the argument that reasonable foreseeability was a necessary prerequisite in the determination of whether or not a place of work was made and kept safe within the meaning of section 29(1). Lord Sutherland, with whom Lord Wylie agreed, analysed the authorities in some detail at pp 521 to 530. He agreed with the decision in Larner. At pp 530 to 531 he expressed his reasons, both as to the meaning of safe and as to the scope of the defence of reasonable practicability. In short, he concluded that reasonable foreseeability was not relevant to the question whether the workplace was safe but was relevant to the question whether it was reasonably practicable for them to prevent the breach. He said this: In my opinion, the construction of section 29(1) must depend upon the wording of that section itself. Since Nimmo the obligation under the section must be read as being that every working place shall be made and kept safe. If that obligation has not been met then it may be open to the employers to invoke the qualification that it was not reasonably practicable for them to prevent the breach and it may well be that reasonable foreseeability has a part to play in that. As considerations of reasonable practicability involve weighing the degree and extent of risk on the one hand against the time, trouble and expense of preventing it on the other, quite clearly foreseeability comes into the matter as it is impossible to assess the degree of risk in any other way. To that extent I agree that reasonable foreseeability can play its part in a consideration of section 29(1) but only at the later stage of considering whether the employers have discharged the onus upon them of showing that there were no reasonably practicable precautions which could have been taken. The initial part of the section is, in my view, clear. The duty is to make the working place safe. That means that there is a duty to prevent any risk of injury arising from the state or condition of the working place. There is nothing whatever in the section to suggest that the obligation is only to prevent any risk arising if that risk is of a reasonably foreseeable nature. Had that been the intention of Parliament it would have been perfectly simple for Parliament to have said so. If the duty had only been to take reasonably practicable precautions against reasonably foreseeable risks it is difficult to see how this section would have added anything of substance to the common law. Where the statute is designed to protect the safety of workmen it is, in my view, not appropriate to read into the statute qualifications which derogate from that purpose. It cannot be said that this reading of section 29 imposes an intolerable or impossible burden upon employers. They have the opportunity of establishing that there were no practicable precautions which could have been taken to prevent their breach of obligation. If they can do so they have a complete answer both to civil and criminal liability even though they are prima facie in breach of their obligation. This puts section 29 into an entirely different category from section 14 and I see no legitimate reason for forcing a construction upon section 29 which its plain words will not bear just because in the different context of section 14 the word dangerous has been construed in a particular way. Lord Johnston said this at pp 535 to 536, with particular reference to the relationship between sections 14 and 29: I do not consider that it is appropriate to equiparate section 14 with section 29, with particular reference to the line of authority construing the word dangerous in section 14. In my opinion that issue arises under that section in order to determine the scope of the section in the particular instance and indeed whether it applies at all. Whether rightly or wrongly, accordingly, the fact that the courts have interpreted dangerous under reference to reasonable foreseeability does not mean that necessarily the same criteria should apply when considering a different provision raising the questions of safety, particularly where that latter provision is qualified by a so called escape clause, viz reasonable practicability, and section 14, when it comes to breach, is absolute. I do not consider that it is appropriate to apply the law which limits or determines the scope of section 14 before considering a breach of it, to what constitutes a breach of section 29(1) under reference to safety or lack of it. I therefore consider that section 29(1) stands on its own and authorities relating to section 14 fall to be ignored. While, as a matter of English language, safe may be the converse of dangerous, in my opinion section 29 has to stand on its own and be construed as such. I entirely agree with the reasoning of Lord Sutherland and Lord Johnston in those passages. In doing so, I do not conclude that safe is not the antonym of dangerous in the two sections, only that there is nothing in section 29 to introduce the principle of reasonable foreseeability into the meaning of safe. I note in passing that, as Lord Mance says at para 67, the Close line of case law has received mixed academic commentary. It was criticised by Munkman in his article The Fencing of Machinery 1962 LJ 761, where he said at p 761 that foreseeability is not to be found in the Factories Act, that it is an alien importation from the law of negligence and that, since negligence is a lower standard of liability, to import its concepts would necessarily reduce liability under the statute. Close was also criticised by the authors of the 1970 72 Safety and Health at Work Report of the Committee chaired by Lord Robens. Appendix 7 reviewed the case law on statutory safety provisions. At para 7 on p 186, the authors criticised the Close line of case law as contrary to the interests of accident prevention. In my opinion, given that the section 14(1) cases are susceptible to criticism, even on their own terms, we should be cautious about transferring the rationale to other provisions, particularly when so many cases have decided that it is inappropriate to do so. The language of section 29(1) to my mind shows that it is a results provision. That it provides that, subject to the defence of reasonable practicability, it requires that the workplace be and remain safe. Lord Johnston put it thus in Mains at p 536: The obvious starting point in my opinion is that the wording of the section, putting aside the qualification, does not admit immediately any reference to reasonable foreseeability. The verb shall is relentless and the phrase made and kept safe, if looked at on the basis of made and kept accident free, would immediately admit a construction so far as these words go that if an accident occurs within the workplace and related to it the pursuer need prove no more. The defender then can raise the issue of reasonable practicability on any basis that he thinks fit. Some reference has been made to sections 2 and 3 of the Health and Safety at Work etc Act 1974. Section 2(1) provides that it is the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees and section 3(1) provides that it is the duty of every employer to conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, that persons not in his employment who may be affected thereby are not thereby exposed to risks to their health or safety. In para 63 Lord Mance has made some reference to the decision of the House of Lords and to the speech of Lord Hope, with whom the other members of the House agreed, in R v Chargot Ltd (trading as Contract Services) [2008] UKHL 73, [2009] 1 WLR 1. As I read Lord Hopes judgment in that case, the central issue was whether in prosecutions for breaches of those duties it was for the prosecution to prove the acts and omissions by which it was alleged there had been a breach of duty and, in particular, whether it was enough for it simply to assert that a state of affairs existed which gave rise to risk to health or safety: see the statement of the issues at para 15. This involved a consideration of the scope of the duties in paras 17 to 21. In para 17 Lord Hope noted that both sections provided for a duty to ensure certain things. He then asked what the employer must ensure and concluded: The answer is that he is to ensure the health and safety at work of all his employees, and that persons not in his employment are not exposed to risks to their health and safety. These duties are expressed in general terms, as the heading to this group of sections indicates. They are designed to achieve the purposes described in section 1(1)(a) and (b). The description in section 2(2) of the matters to which the duty in section 2(1) extends does not detract from the generality of that duty. They describe a result which the employer must achieve or prevent. These duties are not, of course, absolute. They are qualified by the words so far as is reasonably practicable. If that result is not achieved the employer will be in breach of his statutory duty, unless he can show that it was not reasonably practicable for him to do more than was done to satisfy it. The same is true of section 29(1), as Lord Hope explained in para 18, by reference to Nimmo, to which I have already referred. He said that this method of prescribing a statutory duty was not new. As Lord Reid explained in the opening paragraphs of his speech in Nimmo, the steps which an employer must take to promote the safety of persons working in factories, mines and other premises are prescribed by a considerable number of statutes and regulations. Sometimes the duty imposed is absolute. In such a case the step that the statutory provision prescribes must be taken, and it is no defence to say that it was impossible to achieve it because there was a latent defect or that its achievement was not reasonably practicable. In others it is qualified so that no offence is committed if it was not reasonably practicable to comply with the duty. Sometimes the form that this qualified duty takes is that the employer shall do certain things, of which Lord Hope gave a number of examples. He added that sometimes the statute provides that the employer must achieve or prevent a certain result. He concluded thus: Section 29(1) of the Factories Act 1961, which was considered in Nimmo, took that form. So too do sections 2(1) and 3(1) of the 1974 Act. It is the result that these duties prescribe, not any particular means of achieving it. So the House of Lords recognised in Chargot that section 29(1) prescribed a certain result, namely that the workplace must be kept safe, subject of course to the employer showing that it was not reasonably practicable to do so. Lord Mance, however, relies upon para 27 of Lord Hopes speech, where he said this: The framework which the statute creates is intended to be a constructive one, not excessively burdensome. The law does not aim to create an environment that is entirely risk free. It concerns itself with risks that are material. That, in effect, is what the word risk which the statute uses means. It is directed at situations where there is a material risk to health and safety, which any reasonable person would appreciate and take steps to guard against. It is important to note that there is a distinction between the language of sections 2 and 3 of the 1974 Act on the one hand and section 29 of the 1961 Act on the other. As I read it, para 27 does not detract from Lord Hopes previous statement at para 17 that the obligation to achieve the statutorily prescribed result is absolute. Rather, it is by analysing the result prescribed by sections 2 and 3 of the 1974 Act by reference to the use of the word risk that he imports the notion of relativity, namely that the result is to protect against material risks. Given the difference between the wording of the sections, I am not persuaded that the reasoning in para 27 is applicable to section 29(1) of the 1961 Act. Both Lord Mance and Lord Dyson (at paras 64 and 111 respectively) refer to passages from the speeches of Lord Nicholls and Lord Hobhouse in R (Junttan Oy) v Bristol Magistrates Court [2003] UKHL 55, [2003] ICR 1475, again to the effect that safety is a relative concept. The issue was whether there was any difference between the standards set by the Machinery Directive 98/37/EC and those set by the 1974 Act. Both require machinery to be safe. It was in the context of the discussion of that issue that Lord Nicholls said at para 22: Section 6(1)(a) of the 1974 Act imposes a duty to ensure, so far as is reasonably practicable, that machinery is so designed and constructed that it will be safe. The effect of regulations 11 and 12(1)(e) of the 1992 Regulations is to prohibit the supply of machinery which is not in fact safe. So far there is no difficulty. But safe is not an absolute standard. There may be differences of view on whether the degree of safety of a particular piece of machinery is acceptable. Unlike the 1974 Act, the 1992 Regulations define what is meant by safe. At once there may be room for argument that the standards set by the Act and the Regulations are not necessarily the same. This in itself is not satisfactory. As already noted, the inhibiting effect of differently worded provisions having much the same result was one of the matters the Machinery Directive was specifically intended to eradicate: see recital 6 in the preamble. To my mind, that statement reads as an acknowledgment that the use of the word safe in different statutory contexts can mean different things, not, as Lord Mance suggests at para 64, that safety is always a relative concept, at any rate if so to construe it is to import the notion of reasonable foreseeability. Finally, Lord Mance refers at para 68 to Robb v Salamis (M&I) Ltd [2006] UKHL 56, [2007] ICR 175 in support of the proposition that reasonable foreseeability is generally accepted to be relevant to determining the standard of safety required across the health and safety legislation. In that case, Lord Hope confirmed the relevance of reasonable foreseeability to regulations 4 and 20 of the Provision and Use of Work Equipment Regulations 1998 (SI 1998/2306). However, as Lord Hope makes clear at para 3 of his judgment, the starting point for his analysis is the words of the regulations. Regulation 4(1) requires the work equipment to be suitable and regulation 4(4) provides that suitable in that regulation means suitable in any respect which it is reasonably foreseeable will affect the health and safety of any person. It thus contains an express reference to reasonable foreseeability. So it must be queried how far, if at all, this case supports the general argument that reasonable foreseeability is relevant in health and safety legislation in the absence of express words used in the statute. I agree with Lord Mance and Lord Dyson (at paras 60 61 and 111 respectively) that, given the divergent strands of authority and the differences of opinion identified in the cases, it is relevant to have regard to considerations of policy in construing section 29(1). Such considerations seem to me to point away from importing the concept of reasonable foreseeability into the meaning of safe. The critical first question in every case under section 29(1) is whether the workplace was in fact safe for the employee. The purpose of the section is to protect the employee not the employer. This is plain from the unqualified use of the word safe. Moreover it makes sense. First, the employer is in a much better position to obtain insurance against unforeseeable risks than the employee. Secondly, the employer, and industry more broadly, are better placed to investigate and identify risks to health and safety. As I see it, one of the purposes of such legislation is to provide every incentive for employers to do precisely that. Thirdly, in section 29, the balance between the employer and the employee is struck by the reasonable practicability defence, which itself imports considerations of reasonable foreseeability. Fourthly, it is no doubt for these reasons that, when commenting on the distinction between breach of statutory duty and negligence, the editors of the 14th edition of Munkman say at para 33 that it is not generally necessary to establish foresight of harm or fault on the employers part to establish breach of statutory duty. These are essentially the considerations that Peter Gibson J had in mind in the passage from his judgment in Larner at p 562 quoted above. Finally, I note that at para 61 Lord Mance expresses doubt as to whether section 29 can apply to a case of this kind if it imposes absolute liability. For my part I do not agree. Once it is accepted, as it is by Lord Mance at para 48, that a workplace can be rendered unsafe by operations constantly and regularly carried on in it, it would seem to me to follow that section 29(1) will cover any hazards created by such operations. The requirement is to achieve the result of safety, as opposed to safety from a particular hazard. It seems contrary to the clear wording of the statute to exclude from the scope of section 29 a category of hazard on the basis that the particular hazard was not in the mind of the draftsman. If noise can cause injury by damaging a persons hearing, then that workplace is unsafe for those who are working there. It does not matter that the hazard that renders a working environment unsafe was not contemplated at the time of the Act. In any event, as explained above, section 29 does not impose absolute liability because the employer has a defence if he can establish that he took all reasonably practical precautions, which involves a consideration of what risks are reasonably foreseeable. As stated above, the first question in each case is whether the workplace was safe. If the claimant proves that it was not, the second question arises, namely whether the employer has shown that, so far as reasonably practicable, it was safe for those working there. I agree with the reasoning in Larner and Mains that, in considering whether the employer has shown that, so far as reasonably practicable, it was safe it is relevant to consider whether it was reasonably foreseeable that it was unsafe. While (as demonstrated by Lord Dyson at para 125) the language could be construed more narrowly, I agree with Lord Sutherlands opinion expressed in the passage quoted above that, as considerations of reasonable practicability involve weighing the degree and extent of risk on the one hand against the time, trouble and expense of preventing it on the other, quite clearly foreseeability comes into the matter because it is impossible to assess the degree of risk in any other way. I also agree with Peter Gibson J to the same effect in the passage from Larner quoted above. Those conclusions are consistent with the view expressed in the 14th edition of Munkman at para 5.89: In considering what is practicable, account must be taken of the state of knowledge at the time. A defendant cannot be held liable for failing to use a method which, at the material time, had not been invented: Adsett v K and L Steelfounders and Engineers Ltd [1953] 2 All ER 320; nor for failing to take measures against a danger which was not known to exist: Richards v Highway Ironfounders (West Bromwich) Ltd [1955] 3 All ER 205. That view is consistent with the view expressed by Smith LJ in the Court of Appeal at para 83 (and quoted by Lord Kerr at para 182 above) that it is a matter of common sense [that], if the employer does not know of the risk and cannot reasonably have been expected to know of it, it cannot be reasonably practicable for him to take any steps at all. Section 29 the facts I turn to the facts. Although I have discussed the meaning of safe in some detail because I regard it as a point of some general importance, I have reached the conclusion that the employers were liable on the facts, whatever the true meaning of safe. I agree with Lord Kerrs analysis of the facts. I agree with him (at para 155) that the Code of Practice of 1972 was the source of warning that noise levels of less than 90 dB(A) would damage some workers hearing and that, thus alerted, an employers obligation to remain abreast of information that would allow him to know what percentage of his workforce was likely to be affected was plain. In these circumstances there was a clear duty to keep abreast of developments, which included giving consideration to the information that became available in 1975 and 1976. That information would have led to the conclusion that a significant percentage of a workforce exposed to noise at levels greater than 85dB(A) would suffer a hearing loss. The judge made two unchallenged findings of fact of some importance: (1) that the information would have revealed that, when exposed to noise above the level of 85dB(A), the risk of suffering hearing loss accelerates up to 90dB(A) and in the high 80s, given long enough exposure, significant hearing loss may be expected in at least a substantial minority of individuals; and (2) that the evidence did not show that the cost of implementing a policy of voluntary hearing protection at levels below 90dB(A) was such that a reasonable employer could use cost or difficulty as a valid reason for not having such a policy. See Lord Kerr above at paras 157 to 159. At paras 161 to 168 Lord Kerr considers in some detail the practice of employers of taking no steps in respect of levels below 90dB(A) in the light of the Code of Practice of 1972. I agree with his critique of the evidence of Mr Bramer, Mr Currie and Mr Worthington. I agree with his conclusion at para 165 that employers should have considered the data shortly after it became available in 1976 and, if they had, that they would have concluded that a significant minority would suffer hearing loss if exposed to noise levels exceeding 85dB(A) over a prolonged period. They would have discovered that this could be avoided by the provision of ear defenders at not unreasonable cost and that they would or should have provided their employees with ear defenders. On the construction of section 29 preferred by Lord Mance and Lord Dyson, the correct conclusion on those facts is that it was reasonably foreseeable that if nothing was done a substantial minority of employees would suffer from significant hearing loss and that the workplace was therefore unsafe, from which it follows that the employers had not procured that it was safe. That conclusion is inconsistent with the conclusion both that the risk of sustaining damage was minimal and that the number of those affected was minimal. This is not a case of de minimis non curat lex. Nor is it a case in which the employers can rely upon the practice in industry, for the reasons given by Lord Kerr. It is clear that in these circumstances the employers could not successfully rely upon the defence that they had done what was reasonably practicable: see per Lord Kerr at paras 182 to 184 above. On my construction of the meaning of safe, on the judges findings of fact there can be no doubt that the workplace was unsafe and the employers cannot rely upon the defence. They cannot show that it was not reasonably foreseeable that the workplace was unsafe and, for the reasons already given, they cannot show that they took all reasonably practicable steps to make it safe. For these reasons, like Lord Kerr, I would dismiss the appeal on the basis that the employers were liable for breach of the duty contained in section 29 of the 1961 Act. Liability at common law The above conclusion makes it unnecessary to express a concluded view under this head. I was initially attracted by the employers case that they were not in breach of duty having regard to the fact that they complied with the practice in the industry as set out in the 1972 Code. However, on reflection I am persuaded by the reasons in Lord Kerrs judgment. In doing so, I do not intend to depart from the principles stated by Swanwick J in Stokes v Guest, Keen and Nettlefold (Bolts and Nuts) Ltd [1968] 1 WLR 1776, 1783 and by Mustill J in Thompson v Smith Shiprepairers (North Shields) Ltd [1984] QB 405, 422, quoted by Lord Kerr at paras 156 and 166 respectively. It is appropriate for an employer to have regard to any relevant industry code, but, as Swanwick J put it, employers must give positive thought to the safety of their workers in the light of what they know or ought to know. I agree with Lord Kerr that an application of that approach would have led employers to take action long before they did. In this regard (as stated earlier) I agree in particular with Lord Kerrs critique of the expert evidence at paras 162 to 166 and with his conclusions at paras 166 to 168. In short, the employers should have given consideration to the risks posed to those exposed to levels of noise between 85 and 90dB(A). If they had they would have appreciated that a significant number of their employees would be exposed to significant hearing loss, which should (and perhaps would) have led to their making ear protectors available to their workforce. Conclusion For the reasons I have given I would dismiss the appeal. |
Mr Swift owns a removal business. On 27 July 2011 he received a telephone call from Dr Toby Robertson, the appellant in this appeal. Dr Robertson asked for a quotation for moving his furniture and effects from Weybridge to his new home in Exmouth. The following day Mr Swift visited Dr Robertsons home and inspected the items to be moved. He proposed a price of 6,000. This did not compare well with other quotations that Dr Robertson had received. These had ranged between 3,000 and 4,000 but the firms that had quoted these figures had been unable to move Dr Robertsons furniture etc at a time that suited his plans. Dr Robertson explained the position to Mr Swift. The latter responded that the quotes Dr Robertson had been given were not typical and that his was a standard price. So, after some discussion, the two men agreed a price of 5,750 plus extended liability insurance cover and VAT, making a total of 7,595.40. Mr Swift prepared a removal acceptance document which he sent by email to Dr Robertson. He also sent a copy of his standard conditions. These included the following: 7.1 If you postpone or cancel this agreement, we will charge you according to how much notice is given. Working days refer to the normal working days of Monday to Friday and excludes weekends and public holidays. 7.1.1: More than 10 working days before the removal was due to start no charge; 7.1.2: Between 5 and 10 working days inclusive before the move was due to start not more than 50 percent of the removal charge; 7.1.3: Less than 5 working days before the removal was due to start not more than 80 percent of the removal charge On the evening of 28 July Mr Swift made a second visit to Dr Robertson's home. On this occasion he delivered some boxes to be used for packing. At the same time Dr Robertson signed the acceptance document and gave it to Mr Swift. It was agreed that the removal operation would begin on Tuesday 2 August and Dr Robertson paid a deposit of 1,000. Over the following days, Dr Robertson reflected on what had been agreed and made further inquiries of other removal firms. These led him to believe that the price which Mr Swift had quoted was well above the average cost of removal. After further research, he found a firm that was prepared to undertake the work for 3,490. On 30 July 2011 he telephoned Mr Swift and told him that he wished to cancel the contract. Mr Swift reminded Dr Robertson that there were cancellation charges; he said that the normal charge was 60% of the contract price but that he would accept 50% and, at this stage, Dr Robertson agreed to pay that. On 1 August he wrote to Mr Swift confirming his decision to cancel the contract, posting the letter on the day that it was written. It appears that Mr Swift did not receive the letter but, for reasons that will become clear, this is of no importance. In due course Mr Swift demanded payment of the cancellation charges. Dr Robertson, having conducted some research in the meantime, decided that he had no liability for the charges and he refused to pay. Mr Swift duly issued proceedings and Dr Robertson counterclaimed for the return of his deposit. The proceedings The case was heard as a small claim by Deputy District Judge Batstone at Exeter County Court on 5 January 2012. Dr Robertson argued that he was entitled to cancel the contract by virtue of The Cancellation of Contracts made in a Consumers Home, or Place of Work etc Regulations 2008. The deputy district judge held that these regulations did not apply because the contract had not been concluded during a single visit to Dr Robertsons home. That decision was upheld by His Honour Judge Tyzack QC in the Torquay and Newton Abbot County Court on 27 April 2012. Dr Robertson appealed. The Court of Appeal (Mummery, Jackson and Lewison LJJ) allowed his appeal in part. Jackson LJ, delivering the principal judgment, held that the 2008 Regulations applied if the consumers home was where the contract was concluded, irrespective of whether there had been earlier negotiations between the parties. He also held, however, that although, by virtue of regulation 7(6), the contract was unenforceable as against Dr Robertson, it remained alive and the deposit could not be recovered. This was because Mr Swift had not given Dr Robertson notice of his right to cancel the contract as required by regulation 7(2) of the 2008 Regulations and Dr Robertson was therefore not entitled to cancel under regulation 7(1). Dr Robertson appeals that decision to this court. The Consumer Protection Directive Council Directive (85/577/EEC) was the genesis for the 2008 Regulations (and their predecessor, The Consumer Protection (The Cancellation of Contracts concluded away from Business Premises) Regulations 1987). The preamble to the Directive contains the following recitals: Whereas the special feature of contracts concluded away from the business premises of the trader is that as a rule it is the trader who initiates the contract negotiations, for which the consumer is unprepared or which he does not [expect]; Whereas the consumer is often unable to compare the quality and price of the offer with other offers; Whereas this surprise element generally exists not only in contracts made at the doorstep but also in other forms of contract concluded by the trader away from his business premises; Whereas the consumer should be given a right of cancellation over a period of at least seven days in order to enable him to assess the obligations arising under the contract; Whereas appropriate measures should be taken to ensure that the consumer is informed in writing of this period for reflection In Case C 227/08 MARTN MARTN v EDP Editores SL [2010] 2 CMLR 27 CJEU in para 22 explained the importance of the first two of the recitals cited above: In that regard, it should be noted that the Directive, as is apparent from recitals 4 and 5, is designed to protect consumers against the risks inherent in the conclusion of contracts away from business premises (Hamilton v Volksbank Filder eG (C 412/06) [2008] E.C.R. I 2383; [2008] 2 C.M.L.R. 46 at [32]), as the special feature of those contracts is that as a rule it is the trader who initiates the contract negotiations, and the consumer has not prepared for such door to door selling by, inter alia, comparing the price and quality of the different offers available. Article 1(1)(i) of the Directive provides that it is to apply to contracts under which a trader supplies goods or services to a consumer and which are concluded during a visit to the consumers home. Article 4 requires traders to give consumers written notice of their right to cancel the contract within a period stipulated in article 5. In the case of article 1(1) transactions (such as involved in this case) the notice is to be given at the time the contract was concluded. Significantly, article 4 also requires member states to ensure that their national legislation prescribes appropriate consumer protection measures in cases where the information about cancelling the contract has not been supplied by the trader. Article 5 gives the consumer the right to renounce the effects of his undertaking by sending notice within 7 days of receiving the notice provided for in article 4. It is sufficient if the notice is dispatched before the end of the period and the giving of notice has the effect of releasing the consumer from any obligations under the cancelled contract. Article 7 provides that if the consumer exercises his right of renunciation, the legal effects of that are to be governed by national laws, particularly regarding the reimbursement of payment for goods or services. The 2008 Regulations Regulation 2 defines cancellation notice as a notice in writing given by the consumer that he wishes to cancel the contract. Cancellation period is defined as the period of 7 days starting with the date of receipt by the consumer of a notice of the right to cancel. Regulation 5 deals with the scope of application of the regulations. By regulation 5(a) they are said to apply to a contract for the supply of services by a trader to a consumer which is made during a visit by the trader to the consumers home or place of work, or to the home of another individual. Regulation 7(1) gives the consumer the right to cancel a relevant contract within the cancellation period and regulation 7(2) requires the trader to give the consumer written notice of his right to cancel. In the case of a contract such as was made between Mr Swift and Dr Robertson that notice is required to be given at the time the offer was made. Regulation 7(3) requires the notice to be dated and to indicate the consumers right to cancel the contract within the cancellation period. Regulation 7(6) provides: A contract to which these Regulations apply shall not be enforceable against the consumer unless the trader has given the consumer a notice of the right to cancel and the information is in accordance with this regulation. Regulation 8(1) provides that if the consumer serves a cancellation notice within the cancellation period, the contract is cancelled and regulation 8(5) provides that a cancellation notice sent by post is taken to have been served at the time of posting, whether or not it is actually received. The deputy district judge in this case accepted that Dr Robertson had, as he claimed, sent the letter in which he purported to cancel the contract on 1 August 2011. He also accepted Mr Swifts evidence that he had not received it. If the cancellation notice contained in the letter was effective, by virtue of regulation 8(5), it is irrelevant that Mr Swift did not receive it. Regulation 10 deals with recovery of money paid by the consumer. Paragraph (1) provides that on the cancellation of a contract under regulation 8, any sum paid by the consumer in respect of the contract shall become repayable except where the regulations provide otherwise. The latter provision does not arise in the present case. The decision of the Court of Appeal In para 40 of his judgment Jackson LJ adumbrated two possible interpretations of regulation 5(a). The first was that the regulation only applied where the contract was negotiated and concluded during a single visit to the consumers home. The second was that it applied if the consumers home was where the contract was concluded, whether or not earlier negotiations had taken place there. For a number of reasons, which need not be repeated, he concluded that the second of these was to be preferred. This was plainly right. To have the important protection of these regulations depend on the adventitious circumstance that negotiations were confined to a single occasion would be distinctly out of keeping with their intended breadth of application. Jackson LJ acknowledged that a consequence of the finding that the contract was governed by the 2008 Regulations was that Mr Swift was obliged to give Dr Robertson written notice of his right to cancel whereupon the latter would have the right to do just that during the cancellation period. He found force in Mr Swifts submission that this was absurd because, among other things, Dr Robertson had invited Mr Swift to his home; Mr Swift had had to turn away other work in order to carry out this commission; and Dr Robertson was able to cancel the contract at one days notice. In making these observations, Jackson LJ noted that the Directive did not apply if the trader visits the consumers home at his express request and this prompted him to consider whether the 2008 Regulations were ultra vires their enabling provisions, section 59 of the Consumers, Estate Agents and Redress Act 2007 and s.2(2) off the European Communities Act 1972. He concluded that they were not, particularly having regard to article 8 of the Directive which makes it clear that member states should feel free to adopt provisions which are more favourable to consumers than those required by the Directive. Again, this conclusion was plainly correct. Since the contract was unenforceable against Dr Robertson, by virtue of regulation 7(6), Jackson LJ held that Mr Swift was unable to make any charge for cancellation under clause 7 of his standard conditions. He found, however, that because no written notice had been given as required by regulation 7(2), there was no cancellation period as defined in regulation 2(1). On that account he decided that Dr Robertson was not entitled to cancel the contract. He therefore dismissed the counterclaim. The correct approach to interpretation of the regulations A national court must interpret domestic legislation, so far as possible, in the light of the wording and purpose of the Directive which it seeks to implement. This is now well settled. Thus in Case C 350/03 Schulte v Deutsche Bausparkasse Badenia AG [2006] 1 CMLR 11, the Court of Justice of the European Union said at para 71: when hearing a case between individuals, the national court is required, when applying the provisions of domestic law adopted for the purpose of transposing obligations laid down by a directive, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive (see Pfeiffer and others, [2005] 1 CMLR 44] paragraph 120) The breadth and importance of this principle was authoritatively set out in Vodafone 2 v Commissioners for Her Majestys Revenue and Customs [2010] Ch 77, where, at paras 37 and 38, after listing the authorities to which the court had been referred, Sir Andrew Morritt, C said: 37 The principles which those cases established or illustrated were helpfully summarised by counsel for HMRC in terms from which counsel for V2 did not dissent. Such principles are that: In summary, the obligation on the English courts to legislation consistently with construe domestic Community law obligations is both broad and far reaching. In particular: (a) it is not constrained by conventional rules of construction ( per Lord Oliver of Aylmerton in the Pickstone case, at p 126B); (b) it does not require ambiguity in the legislative language (per Lord Oliver in the Pickstone case, at p 126B and per Lord Nicholls of Birkenhead in Ghaidans case, at para 32); (c) it is not an exercise in semantics or linguistics (per Lord Nicholls in Ghaidans case, at paras 31 and 35; per Lord Steyn, at paras 4849; per Lord Rodger of Earlsferry, at paras 110115); (d) it permits departure from the strict and literal application of the words which the legislature has elected to use (per Lord Oliver in the Litster case, at p 577A; per Lord Nicholls in Ghaidans case, at para 31); (e) it permits the implication of words necessary to comply with Community law obligations ( per Lord Templeman in the Pickstone case, at pp 120H121A; per Lord Oliver in the Litster case, at p 577A); and (f) the precise form of the words to be implied does not matter (per Lord Keith of Kinkel in the Pickstone case, at p 112D; per Lord Rodger in Ghaidans case, at para 122; per Arden LJ in the IDT Card Services case, at para 114). 38. Counsel for HMRC went on to point out, again without dissent from counsel for V2, that: The only constraints on the broad and far reaching nature of the interpretative obligation are that: (a) the meaning should go with the grain of the legislation and be compatible with the underlying thrust of the legislation being construed: see per Lord Nicholls in Ghaidan v Godin Mendoza [2004] 2 AC 557, para 33; Dyson LJ in Revenue and Customs Comrs v EB Central Services Ltd [2008] STC 2209, para 81 It is important to note that, in order to observe the imperative that this guidance contains, the court must not only keep faith with the wording of the Directive but must have closely in mind its purpose. Since the overall purpose of the Directive is to enhance consumer protection, that overarching principle must guide interpretation of the relevant national legislation. The wording and purpose of the Directive The centrality of the right to cancel a contract as a feature of the protection which the Directive is designed to afford to the consumer was emphasised by CJEU in the MARTN case cited above. At paras 23 et seq CJEU dealt with that issue in this way: 23. the directive ensures consumer protection by granting, first of all, a right of cancellation to the consumer. Such a right seeks specifically to offset the disadvantage, for the consumer, of sales which take place away from business premises, to enable him over a period of at least seven days to assess the obligations arising under the contract (see, to that effect, Hamilton [2008] 2 C.M.L.R. 46 at [33]). 24 In order to strengthen consumer protection in situations where consumers find themselves caught unawares, art 4 of the Directive also requires traders to give consumers written notice of their right to cancel the contract and the conditions for and means of exercising such a right. 25 Lastly, it is apparent from art 5(1) of the Directive that the minimum period of seven days must be calculated from the date of receipt of that notice from the trader. That provision is explained, as the Court has previously indicated, by the fact that if the consumer is not aware of the existence of the right of cancellation, he will not be able to exercise that right (Heininger v Bayerische Hypo und Vereinsbank AG (C 481/99) [2001] E.C.R. I 9945; [2003] 2 C.M.L.R. 42 at [45]). 26 In other words, the system of protection established by the Directive assumes not only that the consumer, as the weaker party, has the right to cancel the contract, but also that he is made aware of his rights by being specifically informed of them in writing. 27 It must therefore be held that the obligation to give notice of the right of cancellation laid down in art.4 of the Directive plays a central role in the overall scheme of that directive, as an essential guarantee, as the Advocate General stated in [AG55] and [AG56] of her Opinion, for the effective exercise of that right and, therefore, for the effectiveness of consumer protection sought by the Community legislature. The requirement to give notice of the right to cancel should not therefore be seen as a technical prerequisite to the arousal of the right but as a means of ensuring that the consumer is made aware that he is entitled to cancel the contract after a period of reflection. That this is its essential purpose is underscored by the provision in article 4 of the Directive that national legislation should lay down appropriate consumer protection measures where a trader fails to give written notice of the right to cancel. Although this gives national authorities a discretion as to the consequences that should follow a failure to give notice, the discretion must be exercised in a way that will promote the overall purpose of the Directive. This is clear from para 32 of CJEUs judgment in MARTN: it must be pointed out, first, that the concept of appropriate consumer protection measures in the third paragraph of art.4 of the Directive, affords to the national authorities a discretion in determining the consequences which should follow a failure to give notice, provided that that discretion is exercised in conformity with the Directives aim of safeguarding the protection granted to consumers under appropriate conditions with regard to the particular circumstances of the case. To hold that the consumer did not have the right to cancel because the trader had not served written notice of the right to cancel would run directly counter to the overall purpose of the Directive in ensuring that a consumer has the opportunity to withdraw from a contract without suffering significant adverse consequences. The circumstances in which the particular contract in this appeal was made and in which Dr Robertson sought to cancel it may be out of the ordinary. There may even be reason to suppose that Mr Swift, the owner of a small business, fared rather badly out of this transaction. But if the right to cancel could be effectively nullified by a failure (or refusal) of a trader to give written notice of the right to the consumer, this would create a considerable gap in the level of protection that the Directive sought to provide. Although Dr Robertson invited Mr Swift to his home and was clearly a man of intelligence, well able, as the Court of Appeal found, to conduct negotiations, it is clearly the intention of both the Directive and the regulations that those less well equipped than Dr Robertson should have what is considered to be the necessary protection. Moreover, although the Directive did not cover solicited visits, it is clear that Parliament intended that a consistent approach to solicited and unsolicited visits was appropriate. At para 7.7 of the Explanatory Memorandum to the regulations states: The government believes that these regulations will make the law simpler and clearer for consumers, businesses and enforcement agencies. Consumers will be less at risk from disreputable traders exploiting the different treatment of solicited and unsolicited visits; businesses will, in general, be able to work with one contract for both unsolicited and solicited visits, reducing ongoing costs in training sales staff; and enforcers will not have to use valuable resources determining whether a visit was solicited or not as the same rules will apply. The question of entitlement to cancel in the absence of a written notice has been authoritatively settled by CJEU in Case 481/99 Heininger [2003] 2 CMLR 42 at para 45 and Case C 215/08 E Friz GmbH v Carsten von der Heyden [2010] 3 CMLR 23 paras 37 39 as follows: 37 art.5 (2) of the Directive provides that notification by the consumer of the renunciation of the effects of his undertaking has the effect of releasing him from any obligations under the cancelled contract. 38 It follows that, if the consumer has been properly informed of his right of renunciation, he may be released from his contractual obligations by exercising his right of renunciation within the period provided for in art.5(1) of the Directive, in accordance with the procedure laid down by national law. 39 On the other hand, as the Court has already held, where he did not receive that information, that period of not less than seven days does not start to run, so that the consumer can exercise his right of renunciation under art.5 (1) of the Directive at any time (see, to that effect, Heininger [2003] 2 C.M.L.R. 42 at [45]). In fairness, it should be said that these authorities were not drawn to the attention of the Court of Appeal. But it is clear from the decisions in these cases that the objective of the Directive where a contract is cancelled is that the consumer should not suffer adverse consequences; that, in effect, he should be placed in the position that he would have been in if he had not entered the agreement in the first place. That the achievement of this objective should be dependent on whether the trader has given written notice to the consumer of his right to cancel would be incongruous, to say the least. Again, there is authoritative guidance from CJEU on the point. In Schulte (cited above at para 20) the consumers had not been informed of their right to cancel a contract made with a bank for the purchase of an apartment. The court dealt with the consequence of that in paras 97 101 as follows: 97 If the Bank had informed Mr and Mrs Schulte of their right of cancellation under the HWiG at the correct time, they would have had seven days to change their minds about concluding the loan agreement. If they had chosen then to cancel it, it is common ground that, given the link between the loan agreement and the purchase contract, the latter would not have been concluded. 98 In a situation where the Bank has not complied with the obligation to inform the consumer incumbent on it under Art.4 of the Directive, if the consumer must repay the loan under German law as construed in the case law of the Bundesgerichtshof, he bears the risks entailed by financial investments such as those at issue in the main proceedings 99 However, in a situation such as that in the main proceedings, the consumer could have avoided exposure to those risks if he had been informed in time of his right of cancellation. 100 In those circumstances, the Directive requires Member States to adopt appropriate measures so that the consumer does not have to bear the consequences of the materialisation of those risks. The Member States must therefore ensure that, in those circumstances, a bank which has not complied with its obligation to inform the consumer bears the consequences of the materialisation of those risks so that the obligation to protect consumers is safeguarded. 101 Accordingly, in a situation where, if the Bank had informed the consumer of his right of cancellation, the consumer would have been able to avoid exposure to the risks inherent in investments such as those at issue in the main proceedings, Art.4 requires Member States to ensure that their legislation protects consumers who have been unable to avoid exposure to such risks, by adopting suitable measures to allow them to avoid bearing the consequences of the materialisation of those risks. (emphasis added) By analogy, where Mr Swift had failed to inform Dr Robertson of his right to cancel the contract, national law, in the form of the 2008 Regulations should have ensured that he (Mr Swift) bore the consequences of that failure and that Dr Robertson was allowed to avoid the forfeit of his deposit. The question therefore arises whether the 2008 Regulations can be interpreted in a way to achieve this result. Purposive construction of the regulations The 2008 Regulations can, and should, be given a purposive construction under both EU and domestic law. A purposive construction is one which eschews a narrow literal interpretation in favour of one which is consonant with the purpose of the relevant legislation, in this case, the comprehensive protection of the consumer in the event of the cancellation of the contract. As Lord Bingham observed in R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687 at para 8, The courts task, within the permissible bounds of interpretation, is to give effect to Parliaments purpose. Parliaments purpose was plain. As the Explanatory Memorandum makes clear, it was to ensure that all consumers should have the safety net of a cooling off period. The efficiency of that safety net would be significantly compromised if a deposit paid was not recoverable because the trader had not given written notice of a right to cancel. On behalf of the intervener, the Office of Fair Trading, Ms Ford suggested that there were two possible means of achieving a conforming/purposive construction of the regulations which would fulfil the Directives objective. The first would be to read the word within where it appears in regulation 7(1) and regulation 8(1) as meaning at any time prior to the expiration of. This, she submitted, would have the effect that a consumer would have the right to cancel at any time before the end of the cancellation period which would either expire 7 days after the consumer received notice of the right to cancel or, in the event that no such notice was served, would not expire at all so that the consumer could cancel at any time. The second possibility advanced by Ms Ford was to interpret cancellation period in regulation 2(1) so as to permit the words, the period of 7 days starting with the date of receipt by the consumer of a notice of the right to cancel as meaning, the period commencing from when the trader is required to give the consumer a written notice of his right to cancel pursuant to regulation 7(2) and expiring 7 days after the date of receipt by the consumer of a notice of the right to cancel. Either of these interpretations is feasible and both would achieve the object of advancing and being in conformity with the obvious purpose of the Directive. But the first interpretation has much to commend it, not least because it is a simple and tenable reading of the actual wording of the 2008 Regulations. I would therefore hold that this is the interpretation to be preferred. Conclusion deprive a consumer of the statutory right to cancel under regulation 7(1) of the 2008 Regulations. Dr Robertson was therefore entitled to cancel the contract as he did by his letter of 1 August 2011. He is therefore entitled to recover his deposit of 1000. I would allow the appeal. A failure by a trader to give written notice of the right to cancel does not |
This appeal raises a question about the boundary between the jurisdiction of the First tier Tribunal (Tax Chamber) and that of the county court or the High Court. Underlying that issue is a question of the legality of the approach which Her Majestys Commissioners of Revenue and Customs (the Revenue) have taken to entries which a taxpayer, Mr Cotter, made in a tax return. This is a test case as we have been told that about 200 taxpayers have used the tax scheme which Mr Cotter has used. The case turns on the proper interpretation of provisions in the Taxes Management Act 1970 (TMA). The facts Mr Cotter filed his tax return for the 2007/08 year of assessment on 31 October 2008. In his return he made no claim for loss relief. As he is entitled to do, he left it to the Revenue to calculate the tax due for that tax year. On 24 December 2008 the Revenue produced a tax calculation based on Mr Cotters return. It showed income and capital gains tax due of 211,927.77. On 29 January 2009 Mr Cotters accountants wrote to the Revenue and enclosed a provisional 2007/08 loss relief claim and amendments to his 2007/08 tax return. The amendments added various entries to boxes in the tax return intimating that Mr Cotter had sustained an employment related loss of 710,000 in the tax year 2008/09 for which he claimed relief under sections 128 and 130 of the Income Tax Act 2007 (ITA). In particular, the claim for relief was made in: (i) the main tax return in box 19 on page TR6 under Any other information; (ii) the capital gains summary in box 14 on page CG1 in which the figure of 314,583 was inserted, and under Any other information in box 35 on page CG2; and (iii) the Additional Information pages. In the Additional Information pages, Mr Cotter inserted 395,417 in Box 3 on page Ai3 (Relief now for 2008 09 trading, or certain capital, losses) and 2007 08 in box 4 on that page (and the tax year for which you are claiming relief). On page Ai4, box 17 (Additional Information) he explained, as he had done on box 19 on page TR6 and in box 35 on page CG2, that his claim was made under sections 128 and 130 of ITA for an employment related loss which he had sustained in the tax year 2008/09. The provisional loss relief claim ended with these words: I acknowledge that my interpretation of the tax law applicable to the above transactions and the loss (and the manner in which I have reported them) may be at variance with that of [the Revenue]. Further please note that although I have reported (and hereby claim the loss pursuant to section 128 ITA 2007) in box 3 above I wish to make it clear that the deduction I am claiming on my return is not necessarily what you may regard as relief now for 2008 09 trading, and certain capital losses for these reasons I assume you will open an enquiry. On 30 January 2009 the accountants sent a copy of the loss relief claim to the Revenues West Cheshire recovery office. They stated: As a result of this claim no further 2007/08 taxes will be payable by Mr Cotter. After sending a holding reply, the Revenue responded on 5 March 2009 to confirm that the tax return had been amended and to state that enquiries would be opened into the claim and the tax return. The letter stated that the Revenue did not intend to give effect to any credit for the loss until those enquiries were complete. On the same date the Revenue issued a fresh tax calculation which again stated Mr Cotters liability for the tax year 2007/08 at 211,927.77. On 11 March 2009 the Revenue wrote to Mr Cotter to intimate that it was enquiring into the amendment and the 2008/09 loss claim under Schedule 1A to TMA. In a further letter on the same date the Revenue asked Mr Cotter to provide specified information and documents. On 24 March 2009 Mr Cotters accountants wrote to the Revenues recovery office to inform it that they had asked the Revenue to amend the self assessment calculation and that as a result no further 2007/08 taxes will be payable by Mr Cotter. Mr Cotters accountants asserted in correspondence (i) that no further taxes were payable for 2007/08 because of the loss claim which was the subject of enquiry and (ii) that if tax were due as a result of an enquiry under section 9A of TMA, that tax was not payable until the enquiry had been completed. Mr Cotter also instructed NT Advisors LLP (NT) to respond to the Revenues recovery unit and to the threat of legal proceedings. In an undated letter which that unit received on 14 May 2009, NT contended that legal proceedings would be unlawful because (i) Mr Cotters self assessment showed that no tax was payable as at 31 January 2009 and (ii) the Revenue had not amended the self assessment return. After further correspondence about, among other things, the tax avoidance scheme which had been used to generate the loss claim, the Revenue issued legal proceedings in St Helens County Court on 22 June 2009. Its claim was for the income tax and capital gains tax for 2007/08 and the first payment to account for the year of assessment 2008/09 in the sum of 203,342, together with statutory interest. In his defence Mr Cotter argued (a) that he was entitled to use his loss claim to reduce to nil the tax otherwise payable for 2007/08 and (b) that the Tax Chamber of the First tier Tribunal had exclusive jurisdiction to determine whether he could make the loss claim in his 2007/08 tax return and thereby reduce the tax payable for that year. On 12 February 2010 the proceedings were transferred to the Chancery Division of the High Court, Manchester District Registry to determine the issue of jurisdiction. In a judgment handed down on 14 April 2011, David Richards J, the Vice Chancellor of the County Palatine of Lancaster, held (a) that the court had jurisdiction to determine in collection proceedings whether the taxpayer was entitled to rely on the claim for relief as a defence to a demand by the Revenue for immediate payment and (b) that Mr Cotter was not entitled to rely on his claim for loss relief as a defence to the Revenues demand for payment of the tax due in respect of 2007/08. The Vice Chancellor granted Mr Cotter permission to appeal. On 8 February 2012, the Court of Appeal (Arden, Richards and Patten LJJ) allowed Mr Cotters appeal. In their judgment, the Court of Appeal analysed the self assessment procedure and held that if the Revenue wished to dispute an item contained in a tax return, it had to follow the enquiry procedure set out in section 9A of TMA which would have given Mr Cotter a right of appeal to the First tier Tribunal. Neither the county court nor the High Court had jurisdiction to determine whether the taxpayer was entitled to make his claim in his tax return for 2007/08 for an income loss incurred in 2008/09. The Revenue appealed to this court. The tax provisions governing employment loss relief Section 128 of ITA provides for employment loss relief. It provides: 128 Employment loss relief against general income (1) A person may make a claim for employment loss relief against general income if the person (a) is in employment or holds an office in a tax year, and (b) makes a loss in the employment or office in the tax year (the loss making year). (2) The claim is for the loss to be deducted in calculating the persons net income (a) for the loss making year, (b) for the previous tax year, or (c) for both tax years. (See Step 2 of the calculation in section 23.) Sub section (7) provides: This Chapter is subject to paragraph 2 of Schedule 1B to TMA 1970 (claims for loss relief involving two or more years). Section 42(11A) of TMA provides the same: Schedule 1B to TMA has effect in respect of claims for relief involving two or more years of assessment. It is not disputed that Schedule 1B applies to Mr Cotters claim for relief. Paragraph 2 of Schedule 1B to TMA provides: (1)This paragraph applies where a person makes a claim requiring relief for a loss incurred or treated as incurred, or a payment made, in one year of assessment (the later year) to be given in an earlier year of assessment (the earlier year). (2) Section 42(2) of this Act shall not apply in relation to the claim. (3)The claim shall relate to the later year. (4) Subject to sub paragraph (5) below, the claim shall be for an amount equal to the difference between (a) the amount in which the person is chargeable to tax for the earlier year (amount A); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (amount B). (5)Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year. (6)Effect shall be given to the claim in relation to the later year, whether by repayment or set off, or by an increase in the aggregate amount given by section 59B(1)(b) of this Act, or otherwise. . In my view it is clear, in particular from paragraphs 2(3) and (6), that the scheme in Schedule 1B allows a taxpayer, who has suffered a loss in a later year (year 2) and seeks to attribute the loss to an earlier year of assessment (year 1), to obtain his relief by reducing his liability to pay tax in respect of year 2 or by obtaining a repayment of tax in year 2. It does not countenance by virtue of the relief any alteration of the tax chargeable and payable in respect of year 1. On the contrary, the sum for which the taxpayer receives relief in year 2 is the difference between what was chargeable in year 1 and what would have been chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (paragraph 2(4)). In other words, the relief is quantified on the basis that the tax liability in year 1 has already been assessed. Income tax is an annual tax, and liability to such tax is calculated in relation to a particular tax year: sections 4 and 23 of ITA. Mr Gordon, who appeared for Mr Cotter, did not argue in this court that he was entitled to deduct the relief against income and gains in 2007/08. He accepted that paragraph 2(6) of Schedule 1B to TMA provides that effect is to be given to the claim in year 2. He was correct to make that concession. Accordingly, the claim did not affect the amount of tax which was chargeable or payable in relation to 2007/08. There was therefore no issue between the parties as to the correct assessment to tax in that year. The Revenues use of the taxpayers income tax liability in 2007/08 in quantifying his obligation to make payments to account for 2008/09 on 31 January and 31 July 2009 (section 59A(1) and (2) of TMA) does not affect the finality of the 2007/08 assessment. Whatever rights the claim for relief might have given the taxpayer in relation to a payment to account for 2008/09, if the Revenue had accepted its validity, it did not affect his obligation to pay the tax payable for 2007/08. Whether the Revenue acted legally by instituting an enquiry under Schedule 1A The conclusion that the relief could not diminish the tax chargeable and payable for 2007/08 is central to the Revenues contention that it was entitled to initiate an enquiry under Schedule 1A to TMA, which allowed the postponement of relief until the completion of the enquiry (Schedule 1A, paragraph 4(3)). But Mr Gordon submitted that the Revenue might enquire only under section 9A of TMA, which allows an officer to enquire into a return or an amendment of the return (section 9A(1) and (5)). That enquiry extends to: anything contained in the return, or required to be contained in the return, including any claim or election included in the return, (Schedule 9A, paragraph (4)). He argued that section 42(11) excluded the possibility of a Schedule 1A enquiry. That sub section provides: Schedule 1A to this Act shall apply as respects any claim which (a) is made otherwise than by being included in a return under section 8, 8A or 12AA of this Act. Mr Gordons submission was attractive in its simplicity. The word return in the TMA should be given its ordinary meaning. It was defined in section 118 (unless the context otherwise required) as including any statement or declaration under the Taxes Acts. The claim was made in Mr Cotters tax return and so Schedule 1A could not apply. The Revenue could enquire only under section 9A and it had not done so. I recognise the force of that submission, which found favour in the Court of Appeal. Treating everything in the tax return form as the tax return has the benefit of keeping simple both the process of self assessment and the jurisdictional boundary between the specialist tax tribunal and the courts. But, as Ms Simler explained on behalf of the Revenue, it exposes the Revenue to irrelevant claims made in the tax return form which have no merit and which serve only to postpone the payment of tax which is payable. There was, she suggested, a risk that the Court of Appeals decision would encourage marketed tax avoidance schemes which would give a cash flow advantage to taxpayers, even if the schemes were ultimately found to be ineffective. The Revenues argument was that a claim was included in a return for the purposes of sections 8(1), 9, 9A and 42 of TMA only if it affected or as Ms Simler put it, could feed into, the calculation of tax payable in respect of the particular year of assessment. In judging the rival contentions it is in my view important to recall the sequence of events which I set out in paragraphs 2 7 above. First, Mr Cotter gave information relating to his tax affairs in his initial return form. But he did not carry out the calculation of the tax which he was due to pay for 2007/08. Secondly, the Revenue made that calculation. Thirdly, Mr Cotter then provided the information about his provisional loss relief claim in his amendment of the tax return. Fourthly, the Revenue reviewed the return and confirmed its assessment of the tax due for 2007/08, treating the claimed relief as irrelevant to that assessment. Finally, Mr Cotters advisers disagreed with the Revenues view but did not seek to amend the tax return (under section 9ZA of TMA) by carrying out their own calculation of tax. In particular, I do not construe the letter of 30 January 2009 from Mr Cotters accountants as an amendment of his tax return. The accountants did not purport to produce a self assessment calculation. Their amendment of the return was confined to the intimation of the claim. The statement in the letter of 30 January 2009 that no further 2007/08 taxes would be payable was merely an assertion in a covering letter. Where, as in this case, the taxpayer has included information in his tax return but has left it to the Revenue to calculate the tax which he is due to pay, I think that the Revenue is entitled to treat as irrelevant to that calculation information and claims, which clearly do not as a matter of law affect the tax chargeable and payable in the relevant year of assessment. It is clear from sections 8(1) and 8(1AA) of TMA that the purpose of a tax return is to establish the amounts of income tax and capital gains tax chargeable for a year of assessment and the amount of income tax payable for that year. The Revenues calculation of the tax due is made on behalf of the taxpayer and is treated as the taxpayers self assessment (section 9(3) and (3A) of TMA). The tax return form contains other requests, such as information about student loan repayments (page TR2), the transfer of the unused part of a taxpayers blind persons allowance (page TR3) or claims for losses in the following tax year (box 3 on page Ai3) which do not affect the income tax chargeable in the tax year which the return form addresses. The word return may have a wider meaning in other contexts within TMA. But, in my view, in the context of sections 8(1), 9, 9A and 42(11)(a) of the TMA, a return refers to the information in the tax return form which is submitted for the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for the relevant year of assessment and the amount payable by him by way of income tax for that year (section 8(1) TMA). In this case, the figures in box 14 on page CG1 and in box 3 on page Ai3 were supplemented by the explanations which Mr Cotter gave of his claim in the boxes requesting any other information and additional information in the tax return. Those explanations alerted the Revenue to the nature of the claim for relief. It concluded, correctly, that the claim under section 128 of ITA in respect of losses incurred in 2008/09 did not alter the tax chargeable or payable in relation to 2007/08. The Revenue was accordingly entitled and indeed obliged to use Schedule 1A of TMA as the vehicle for its enquiry into the claim (section 42(11)(a)). Matters would have been different if the taxpayer had calculated his liability to income and capital gains tax by requesting and completing the tax calculation summary pages of the tax return. In such circumstances the Revenue would have his assessment that, as a result of the claim, specific sums or no sums were due as the tax chargeable and payable for 2007/08. Such information and self assessment would in my view fall within a return under section 9A of TMA as it would be the taxpayers assessment of his liability in respect of the relevant tax year. The Revenue could not go behind the taxpayers self assessment without either amending the tax return (section 9ZB of TMA) or instituting an enquiry under section 9A of TMA. It follows that a taxpayer may be able to delay the payment of tax by claims which turn out to be unfounded if he completes the assessment by calculating the tax which he is due to pay. Accordingly, the Revenues interpretation of the expression return may not save it from tax avoidance schemes. But what persuades me that the Revenue is right in its interpretation of return is that income tax is an annual tax and that disputes about matters which are not relevant to a taxpayers liability in a particular year should not postpone the finality of that years assessment. Jurisdiction The First tier Tribunal (the tribunal), as the successor of the general and special commissioners, has exclusive jurisdiction to hear taxpayers appeals against assessments to tax (Autologic Holdings plc v Inland Revenue Commissioners [2006] 1 AC 118, Lord Nicholls of Birkenhead at paras 12 15, Lord Millett at para 62 and Lord Walker of Gestingthorpe at para 84). But, as explained below, we are not dealing in the present case with an assessment to tax in respect of a particular year of assessment, but how the Revenue has dealt with a loss relief claim relating to a later year. The Revenue did not need to amend Mr Cotters return form (under section 9ZB of TMA) in order to calculate the tax which it assessed as payable for 2007/08. There was therefore no rejection by Mr Cotter of a Revenue correction (under section 9ZB(4) of TMA). There was no section 9A enquiry. The Revenue did not have to amend the self assessment under section 9C of TMA during such an enquiry and there was no appeal against such an amendment of the return by the Revenue (under section 31 of TMA). The only appeal which Mr Cotters accountants made was an appeal by letter of 17 April 2009 against a late payment surcharge (under section 59C(7) of TMA), because he claimed that his losses meant that no tax was due. As a result, the only issue for the tribunal was the late payment surcharge. Nothing else occurred to engage the jurisdiction of the tribunal. The Revenues position was simple: its calculation, based on the information which Mr Cotter had included in his tax return form, showed that he was due to pay tax in the sum it assessed on his behalf for 2007/08. The tax return form for 2007/08 did not show a loss claim which reduced Mr Cotters liability to tax in respect of that tax year. As the Revenue lawfully commenced an enquiry under Schedule 1A of TMA and elected (under paragraph 4(3)(a) of that Schedule) not to give effect to the claim until the end of the enquiry, there was no postponement of payment of the tax due on 31 January 2009 by giving effect to the claim in the interim. The taxpayer was obliged to pay the amount of tax which had been assessed less any payment to account (section 59B of TMA) and the Revenue was entitled to raise collection proceedings in the county court (section 66 of TMA). I agree with that position. In this case, the county court was not asked to rule on the validity of the claim for loss relief. Nor was it concerned with any appeal against the assessment to tax. It was asked to determine in collection proceedings whether the taxpayers claim for relief for losses incurred in 2008/09, which he had made in his tax return form for 2007/08, constituted a defence to the Revenues claim for immediate payment of the tax which it had calculated as payable in respect of 2007/08. In my view, the county court and the High Court had jurisdiction to determine that issue which did not trench upon the tribunals exclusive jurisdiction. How the system works The Court of Appeal expressed concern about the risk of satellite litigation and delays in tax collection if the Revenue were correct in its submission on the meaning of return in the relevant provisions. For that reason, it is appropriate that I should say something about how, as I see it, the system works. Where a taxpayer makes a claim for relief in a tax return form which is on its face relevant to the year of assessment (as, for example, when he claims employment loss relief in year 2) or where the taxpayer chooses under section 9(1) of TMA to calculate the amount of tax that he is due to pay, and allows for the relief in his calculation, the Revenue, if it disagrees, will have the option of correcting the return under section 9ZB of TMA, which extends to errors of principle. If the taxpayer rejects the correction (under section 9ZB(4)), that correction has no effect. The Revenue may give notice of an enquiry under section 9A. When the Revenue completes the enquiry by issuing a closure notice under section 28A, the taxpayer may appeal a conclusion stated or amendment made in the closure notice (under section 31(1)(b) of TMA). Similarly if the Revenue amends the self assessment during the enquiry under section 9C to prevent loss of tax, the taxpayer may appeal to the tribunal (section 31(1)(a)). Until this procedure is complete, effect is given to the claim, unless it results in a repayment (section 59B(4A) of TMA). Where the taxpayer chooses to let the Revenue calculate the tax due but includes a claim for relief in a tax return form (whether from the outset or by amendment) which is clearly not relevant to the calculation of tax for the particular year of assessment, the Revenue may ignore the claim in its calculation of the tax under section 9(3) of TMA. It treats it as a claim made otherwise than in a return and Schedule 1A to TMA applies (section 42(11)(a) of TMA). In the procedure under that Schedule, if the Revenue considers that the claim contains obvious errors, it can amend the claim (paragraph 3). If satisfied that the claim is valid, the Revenue is to give effect to the claim promptly (paragraph 4). If not so satisfied, the Revenue may enquire into the claim and not give effect to it until the enquiry is completed (paragraphs 4(3) and 5). Thus the Revenue may collect the tax due for a year of assessment on the basis that the claim is not effective. On completion of the enquiry (paragraph 7), the taxpayer can notify the Revenue of an appeal (paragraph 9) and thus place the dispute before the tribunal. The Revenues submission, which I have accepted, that some entries in a tax return form are not part of the tax return for the purposes of, among others, sections 9 and 9A of TMA, may create avoidable uncertainty to taxpayers and their advisers. But that uncertainty could be removed if the return form which the Revenue prescribes (section 113 TMA) were to make clear which boxes requesting information were not relevant to the calculation of tax due in the particular year of assessment. In particular, the Revenue could make this clear where the form provides for the intimation of stand alone claims which relate to another tax year. Conclusion As I have concluded that the Revenue did not have to give effect to the claim for relief before the conclusion of the enquiry, I do not need to consider a submission, which the Revenue sought to raise late in the day, that section 35 of the Crown Proceedings Act 1947 and CPR Rule 66.4 prevent a taxpayer from pleading set off against the Crown. The claim for relief based on an employment related loss in 2008/09 did not provide a defence to the Revenues demand for the payment of the tax assessed for 2007/08. I would therefore allow the appeal so as to restore paragraphs 1 and 2 of David Richards Js order of 5 May 2011. |
Imprisonment for public protection (IPP) is a sentence which condemns a defendant to indeterminate detention. Section 225(3) of the Criminal Justice Act 2003 (the 2003 Act), as substituted by section 13(1) of the Criminal Justice and Immigration Act 2008, permits a judge to impose a sentence of IPP on a defendant who has been convicted of a serious offence where the judge finds that there is a significant risk that he will commit further offences that will cause serious harm to members of the public. Can or should a judge impose a sentence of IPP on a defendant who is already serving a sentence of life imprisonment under which he will not be released from prison until he can satisfy the Parole Board that he no longer poses a danger to the public? Although this question has been certified by the Court of Appeal as being a point of general public importance, its significance lies in the issue of law, rather than the practical implications of imposing a sentence of IPP in place of a determinate sentence in such circumstances. An indeterminate sentence is one designed not merely to imprison a defendant for a minimum period that properly reflects the gravity of his offence, but to ensure that he is not released thereafter unless and until he has ceased to be a danger to the public. There are two types of indeterminate sentence. One is a sentence of life imprisonment, for a prisoner sentenced to life imprisonment is entitled to be considered by the Parole Board for release on licence once he has served a fixed term of imprisonment specified by the sentencing judge. The other indeterminate sentence is the IPP. Once again the sentencing judge will specify a minimum term to be served after which the prisoner will be entitled to be considered by the Parole Board for release on licence. The test applied by the Parole Board is the same, whether the defendant has been sentenced to life imprisonment or to IPP. Release will be ordered if, but only if, the Parole Board is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined see sections 28(6)(b) and 34(2) of the Crime (Sentences) Act 1997, as amended by section 230 of, and Schedule 18 to, the 2003 Act. The 2003 Act makes the following provisions in relation to the imposition of indeterminate sentences: 225. (1) This section applies where (a) (b) 2) (c) (d) 3) after a person aged 18 or over is convicted of a serious offence the committed commencement of this section, and the court is of the opinion that there is a significant risk to members of the public of serious harm occasioned by the commission by him of further specified offences. If the offence is one in respect of which the offender would apart from this section be liable to imprisonment for life, and the court considers that the seriousness of the offence, or of the offence and one or more offences associated with it, is such as to justify the imposition of a sentence of imprisonment for life, the court must impose a sentence of imprisonment for life. In a case not falling within subsection (2), the court may impose a sentence of imprisonment for public protection if the condition in subsection (3A) or the condition in subsection (3B) is met. (3A) The condition in this subsection is that, at the time the offence was committed, the offender had been convicted of an offence specified in Schedule 15A. (3B) The condition in this subsection is that the notional minimum term is at least two years. The word may which I have emphasised was substituted for must by the Criminal Justice and Immigration Act 2008. The Facts The appellant was born on 25 February 1950. He has been in and out of prison all his adult life much more in than out, for on each release from prison he has almost immediately returned to crime and been fairly swiftly apprehended and re convicted. His more recent convictions prior to that which resulted in the sentence which is the subject of the present appeal were as follows: (i) On 21 November 1975, at the Central Criminal Court, he was sentenced to a total of ten years imprisonment for two offences of robbery, contrary to section 8 of the Theft Act 1968, two offences of conspiracy to rob contrary to section 1(1) of the Criminal Law Act 1977 and one offence of wounding with intent to cause grievous bodily harm, contrary to section 18 of the Offences Against the Person Act 1861. (ii) On 29 September 1982, at the Central Criminal Court, he was sentenced to a total of 12 years imprisonment for one offence of conspiracy to rob contrary to section 1(1) of the Criminal Law Act 1977, one offence of having an imitation firearm with intent to commit an indictable offence contrary to section 18 of the Firearms Act 1968, one offence of taking a conveyance without authority contrary to section 12 of the Theft Act 1968 and one offence of criminal damage contrary to section 1(1) of the Criminal Damage Act 1971. (iii) On 28 October 1994, at the Central Criminal Court, he was sentenced to a total of nine years imprisonment for three offences of robbery, contrary to section 8 of the Theft Act 1968 and three associated offences of carrying a firearm with intent to commit an indictable offence contrary to section 18 of the Firearms Act 1968. (iv) On 24 January 2000, in the Crown Court at Kingston, he was sentenced to imprisonment for life for one offence of attempted robbery, contrary to section 1(1) of the Criminal Attempts Act 1981 and one offence of having a firearm with intent, contrary to section 18 of the Firearms Act 1968. The minimum term to be served prior to consideration of release was fixed at four years. The life sentence was mandatory by reason of the appellants previous convictions and the provisions of section 2 of the Crime (Sentences) Act 1997. Having served the minimum term under the sentence passed on 24 January 2000, the appellant persuaded the Parole Board that he qualified for release on licence and was released on 25 September 2004. On 11 January 2008 he was arrested again on this occasion on suspicion of having committed eight armed robberies of bookmakers premises between 4 March 2006 and 28 May 2007. In accordance with the provisions of section 32 of the Crime (Sentences) Act 1997 his arrest resulted in his recall under life sentence for breach of the terms of the licence under which he had been released. On 2 September 2008 in the Crown Court at Harrow he pleaded guilty to eight offences of robbery, contrary to section 8 of the Theft Act 1968 and eight linked offences of possession of a firearm at the time of committing a specified offence, contrary to section 17(2) of the Firearms Act 1968. The Sentence The appellant was sentenced on 10 October 2008 by His Honour Judge Greenwood. In the course of passing sentence the judge made the following remarks: Nicholas Smith, I have to sentence you for a total of eight offences of robbery and eight offences of possessing a firearm at the time of committing robberies. What you did was to select premises where you expected large sums of money to be kept. You were armed with an imitation firearm and disguised and you threatened members of staff with that imitation firearm. I have no doubt at all that on each occasion those threatened were terrified and it was for this reason that you managed to rob the victims of a total of 13,338.74; none of which has been recovered. As I discussed earlier with your counsel, there are a number of aggravating features in cases such as this. There is the pre planning; the disguise; the targeting of large sums and, of course, the fact that the victims are vulnerable for that very reason; that they have to look after large sums of money. You have a dreadful record which includes robberies; an offence of wounding with intent to cause grievous bodily harm, and the use on a previous occasion of a real firearm. I agree with the conclusion expressed in the pre sentence report that you are a career criminal. You present without any doubt a significant risk to the public of serious personal injury caused by your committing further specified offences. I have taken into account everything that I have heard and read about you. But, in the result, I have no alternative whatsoever but to pass upon you a sentence of imprisonment for public protection. That is because the offences for which you are now to be sentenced are offences specified in Schedule 15 to the Criminal Justice Act 2003. Your offences; the offences to which you have pleaded guilty, are punishable by a life sentence, but I do not consider these matters sufficiently serious to justify such a sentence. On the other hand, in my opinion, there is a significant risk to the public of serious personal injury caused by your committing further offences specified in Schedule 15. I reach that conclusion, having taken into account the nature and circumstances of your current offences; the pattern of behaviour of which your current offences form a part, and everything else that I know about you from what I have heard and read. In these circumstances, as I have said already, I will impose a sentence of imprisonment for public protection, which will be concurrent on each of the counts that you face. The judge went on to specify a minimum term to be served of six years on the basis that, had he not imposed a sentence of IPP, he would have imposed a determinate sentence of 12 years imprisonment, of which the appellant would have had to serve at least half. Mr Tim Barnes QC for the appellant has submitted that the sentencing remarks suggest that the judge was unaware of the amendment of must to may to which I have referred at para 3 above. I am not persuaded that this is so. What does seem clear is that the objections of principle to the sentence imposed which were raised on appeal and which have been pursued before this court were not raised before the judge. The Appellants Case Mr Barnes advanced the appellants grounds of appeal with admirable clarity, and they can be shortly summarised. They were advanced on an alternative basis. The primary submission was that the imposition of a sentence of IPP was unlawful because the requirement of section 225(1) (b) of the 2003 Act was not satisfied. Judge Greenwood could not properly have formed the opinion that there was a significant risk to members of the public of serious harm occasioned by the commission by [the appellant] of further specified offences. This was because the appellant had been recalled to prison under his life sentence. He would not be released unless and until the Parole Board was satisfied that it was no longer necessary for the protection of the public that he should be confined. It followed that the significant risk specified in section 225(1)(b) did not exist. In the alternative, Mr Barnes submitted that Judge Greenwood had erred in principle in imposing a sentence of IPP. By amending must to may Parliament had conferred a discretion on the sentencing judge, even though the statutory criteria for the imposition of IPP were satisfied. Where a defendant was already serving a life sentence, nothing was achieved by an additional sentence of IPP, rather than a determinate sentence, and it was wrong to impose one. The Decision of the Court of Appeal Counsel who represented the appellant in the Court of Appeal did not submit that it was unlawful to impose a sentence of IPP on a prisoner who was already serving a life sentence. He simply submitted that it was wrong in principle to do so advancing Mr Barnes alternative case. Giving the judgment of the Court [2010] EWCA Crim 246 Maurice Kay LJ rejected this submission. He observed, at paras 8 9: The discretion conferred by the statute was not expressly constrained in a case such as this where there is an existing indeterminate sentence. It was for the judge to decide upon the punishment for these robberies and associated firearms offences, having regard to the provisions of the 2003 Act. Moreover, there is nothing anomalous or unusual about two indeterminate sentences being imposed on different occasions, or even in different forms. Section 34 of the Crime (Sentences) Act 1997 expressly addresses the position of a life prisoner, which expression means, a person serving one or more life sentences. For this purpose, life sentence is defined in section 34(2) as embracing both a sentence of imprisonment for life and a sentence of imprisonment for public protection. Section 34(4) then provides: Where a person has been sentenced to one or more life sentences and to one or more terms of imprisonment, nothing in this Chapter shall require the Secretary of State to release the person in respect of any of the life sentence unless and until the Secretary of State is required to release him in respect of each of the terms. It seems to us that that is a statutory provision designed to ensure that, where more than one indeterminate sentence exists, release is not required until the last of the minimum terms has been completed. Discussion: The Lawfulness Issue It is true that section 34 of the Crime (Sentences) Act 1997 expressly contemplates that two indeterminate sentences may be imposed on a defendant, but that is not, of itself, fatal to Mr Barnes primary submission. Section 34 might simply be addressing the case of a defendant convicted of two murders, each carrying a mandatory life sentence. Mr Jafferjee QC for the Crown referred the court to a number of cases where the Court of Appeal had considered the problems associated with the imposition of a sentence of IPP together with another determinate or indeterminate sentence. The most pertinent was R v Delucca [2010] EWCA Crim 710; [2011] 1 WLR 1148, where Thomas LJ, in giving the judgment of the court, referred to the earlier decision of R v OBrien (Practice Note) [2007] 1 WLR 833. He approved, at para 11, the practice of imposing two concurrent sentences of IPP, one having a longer minimum term than the other. If Mr Barnes primary submission were sound, this practice would not be lawful, for the imposition of the sentence with the longer minimum term would have the effect that the requirement of section 225(1)(b) could not be satisfied in relation to the other sentence. Once again, however, the argument relied upon by Mr Barnes in this court does not appear to have been advanced. Section 225(1)(b) is in the present tense. The sentencing judge is permitted to impose a sentence of IPP if there is a significant risk that members of the public will suffer serious harm as a result of the commission by the defendant of further offences. The construction for which Mr Barnes contends requires the sentencing judge to factor in, when considering the question of risk, the fact that the defendant is and will remain detained in prison for a significant period, regardless of the type of sentence imposed. Plainly the defendant will pose no risk to the public so long as he remains in custody. Mr Barnes submits that the judge must consider whether he will pose a significant risk when he has served his sentence. If this is the correct construction of section 225(1)(b) it places an unrealistic burden on the sentencing judge. Imagine, as in this case, that the defendants conduct calls for a determinate sentence of 12 years. It is asking a lot of a judge to expect him to form a view as to whether the defendant will pose a significant risk to the public when he has served six years. We do not consider that section 225(1)(b) requires such an exercise. Rather it is implicit that the question posed by section 225(1)(b) must be answered on the premise that the defendant is at large. It is at the moment that he imposes the sentence that the judge must decide whether, on that premise, the defendant poses a significant risk of causing serious harm to members of the public. For those reasons we reject the primary case advanced by Mr Barnes on behalf of the appellant. Discretion It was originally the appellants case that to impose an IPP sentence on a prisoner who was already serving a life sentence would not merely have no benefit, but would have adverse procedural consequences. These would result from a perceived conflict between, or overlap of, the Parole Boards review requirements in respect of a life sentence and in respect of an IPP. Mr Barnes now accepts that there will be no such conflict or overlap as a result of the sentence imposed on the appellant. The procedural position is exactly the same as if the appellant had been given a determinate sentence of 12 years imprisonment. He will have to serve a minimum term of six years and, thereafter, will have to satisfy the Parole Board that he does not pose a risk to the public in order to secure his release from prison. In these circumstances Mr Barnes case on discretion is simply that the IPP sentence achieved no benefit. The result is the same as if a determinate sentence of 12 years had been imposed. There was thus no point in exercising the power to impose a sentence of IPP and, as a matter of good sentencing practice, a determinate sentence should have been imposed. We have some sympathy with this submission. It is not sensible to impose a sentence of IPP in circumstances where it will achieve no benefit. We would not, however, condemn the sentence imposed in this case. Maurice Kay LJ remarked at para 11 of his judgment that a determinate sentence would not contain within its terms the finding of the sentencing judge on the most recent occasion, that the appellant does in fact satisfy the dangerousness provisions of the 2003 Act as at 10 October 2008. The Parole Board had released the appellant on licence having been persuaded that he did not pose a risk of serious harm to the public. The judge cannot be criticised for imposing a sentence that demonstrated that the contrary was the case. For these reasons we would dismiss this appeal. |
This appeal from the Court of Session arises from an accident of an everyday kind, but raises a number of issues of practical importance relating to the Personal Protective Equipment at Work Regulations 1992 (the PPE Regulations) (SI 1992/2966) and the Management of Health and Safety at Work Regulations 1999 (the Management Regulations) (SI 1999/3242), to employers liability at common law, and to expert evidence in this field. The accident The appellant, Miss Kennedy, was employed by the respondents, Cordia (Services) LLP (Cordia), as a home carer in Glasgow. Cordia are wholly owned by Glasgow City Council, and provide home care services on its behalf. Those services were previously provided by the Council itself. Miss Kennedys principal duty was to visit individuals in their homes and to provide them with personal care. At about 8 pm on 18 December 2010 Miss Kennedy was required to visit an elderly lady, Mrs Craig, who was terminally ill and incontinent, at her home in order to provide her with palliative and personal care. The visit was one of a series of visits carried out by Miss Kennedy during her shift. She travelled to Mrs Craigs house after visiting another client. There had been severe wintry conditions in central Scotland for a number of weeks prior to that date, with snow and ice lying on the ground. Miss Kennedy was driven to the house by a colleague, who parked her car close to a public footpath leading to the house. The footpath was on a slope, and was covered in fresh snow overlying ice. It had not been gritted or salted. Miss Kennedy was wearing flat boots with ridged soles. After taking a few steps along the footpath, she slipped and fell to the ground, injuring her wrist. Risk assessments and precautions Cordia were aware of the risk that their home carers might slip and fall on snow and ice when travelling to and from clients houses in winter. On average, four such accidents had been reported to them, or to their predecessors the Council, during each year since 2005. During 2010 there were 16 such accidents. Cordia were also aware of the snowy and icy conditions on the night in question, as those conditions had persisted for weeks. In 2005 the Council carried out a risk assessment in relation to home care services and client care. It covered risks involved in travelling to and from work locations. The assessment noted the risk of sprains, cuts, broken limbs, fractures and head injuries from slips and falls in inclement weather. The current preventive and protective measures were noted as being the provision of a hazard awareness booklet and instruction on appropriate footwear. The risk was assessed, using the risk rating scale appended to the guidance document Guide to Occupational Health and Safety Management Systems published by the British Standards Institution (BS 8800:2004). The resultant assessment was that the risk was tolerable, on the basis that the severity of harm, and its likelihood, were respectively categorised under the scale as harmful and highly unlikely. The assessment of the risk as tolerable, in terms of the British Standard, implied that it had been reduced to the lowest level that was reasonably practicable, and that no additional controls were required. A further risk assessment was carried out by Cordia in July 2010. It did not expressly consider the risk of injury from slips and falls in inclement weather, but was otherwise in similar terms to the 2005 assessment. Neither assessment considered the possible provision of personal protective equipment (PPE), such as non slip attachments for footwear. Miss Kennedy underwent an induction programme of a kind which usually included a discussion of slips and falls on ice in winter, and the importance of wearing appropriate footwear. A hazard awareness booklet provided to employees stated that extra care should be taken when walking to and from work locations in inclement weather, and that staff should ensure that safe adequate footwear was worn. What constituted safe adequate footwear was left to the judgment of the individual employee. The evidence of the expert witnesses Evidence was led on behalf of Miss Kennedy, under objection, from a consulting engineer, Mr Lenford Greasly. His qualifications included a degree in engineering and a diploma in safety and hygiene. He was a chartered member of the Institute of Safety and Health, and an associate member of the UK Slip Resistance Group. He was a former member of the Health and Safety Executive, in which he had worked as an Inspector of Factories. He had held senior management positions in industry, in areas including health and safety. He had worked for many years as an engineering consultant advising companies on health and safety, including carrying out slip testing and advising on the adequacy of risk assessments. He had carried out or revised between 50 and 100 risk assessments. In a report which he had prepared, Mr Greasly referred to the relevant legislation and to advice published by the HSE, including advice concerning reducing the risk of slips on ice and snow by providing anti slip footwear. In that regard, there was advice to consider finding out what footwear other similar businesses were using and whether it worked. Mr Greaslys report described various types of anti slip attachment which had been available for some years at a modest cost, and which were said to increase grip in icy conditions. He cited several published papers reporting on research into the slipperiness of footwear on icy and other surfaces, and the effect on slip resistance of using different types of sole and different types of attachment. These included an American study which showed a reduction in falls of 90% among elderly people who wore attachments sold under the trade name Yaktrax. He described his own experience of using Yaktrax, and said that he had found them helpful in increasing traction in icy conditions. His report also included evidence that a number of employers whose staff had to work outdoors in snow and ice had provided them with anti slip attachments. They included Royal Mail and a number of local authorities. He concluded that such attachments reduced the risk of slipping on snow or ice, and that Cordia could have investigated the adequacy of such devices and provided Miss Kennedy with them. At para 4.9, he stated: [Cordia] made a risk assessment but the identified preventative measures relied exclusively on the employee, via information and instruction, when dealing with inclement conditions. In a supplementary report, Mr Greasly noted the information which had been provided by Cordia about the number of home carers who slipped and fell on snow and ice each year. In the light of that information, he referred to the PPE Regulations, stating at paras 3.11 3.12: 3.11. The Personal Protective Equipment at Work Regulations 1992 address the supply and use of PPE. At regulation 4(1) it states Every employer shall ensure that suitable personal protective equipment is provided to his employees who may be exposed to a risk to their health or safety while at work except where and to the extent that such risk has been adequately controlled by other means which are equally or more effective. 3.12. The risk of slipping on ice and snow was not controlled by other means, the controls that [Cordia] indicate were undertaken were informative; the risk of slipping on slippery surfaces (as identified by [Cordia]) remained. Mr Greasly also referred to further published research. He concluded that the research showed that the use of appropriate anti slip devices would help to avoid slips and falls. He expressed the opinion that, had Miss Kennedy worn such devices then, on the balance of probabilities, the risk of her falling on ice and snow would have been reduced and might have been eliminated. He also included information that at least six Scottish local authorities (including one to which he had referred in his earlier report) provided their home carers with anti slip attachments, although in two cases the practice had been introduced after 2010. Mr Greasly expanded upon his reports in his oral evidence. He explained how, in engineering terms, anti slip attachments reduced the risk of slipping. Asked whether the wearing of such attachments would have any effect in the conditions experienced by Miss Kennedy, he replied that it ought to, as it would increase grip. In cross examination, he is recorded as having assented to the suggestion that he could not say whether Yaktrax would have made any difference to Miss Kennedy on the occasion in question. In re examination, however, he expressed puzzlement at that answer, and said that it was likely to have reduced and maybe eliminated the risk. More generally, he accepted that different types of device were more or less effective in different conditions. The provision of such equipment would however reduce the risk. It was for the employer to determine the particular device which was most suitable. Mr Greasly was critical of the omission from the 2010 risk assessment of a consideration of slips and falls in inclement weather. He was also critical of the categorisation of the risk of slipping and falling as tolerable. Evidence was led on behalf of Cordia from their health and safety manager, Miss Rodger, who had prepared the 2005 risk assessment on the basis of the British Standard and had been responsible for the preparation of its 2010 successor. She was questioned, in particular, about the categorisation of the risk of slipping and falling as tolerable rather than substantial. In terms of the British Standard, the latter categorisation would have led to the conclusion that work should not be started until the risk had been reduced, and that considerable resources might have to be allocated to reduce the risk. Miss Rodger accepted that a slip could produce injuries which were properly categorised as harmful, such as fractures and head injuries, and also accepted, in the light of the annual statistics referred to in para 5 above, that it was a dead cert that someone was going to fall on snow and ice. She accepted that the risk involved in the activity being carried out by Miss Kennedy on the occasion in question was therefore substantial, in the absence of measures to control the risk. She also accepted that it would be apparent to any employer, applying his mind to this activity on the day in question, that there was a substantial risk of injury, in the absence of controls. She nevertheless maintained that the advice to wear safe and adequate footwear reduced the risk as far as was reasonably practicable. She confirmed that Cordia had not given any consideration to the provision of footwear or attachments. The proceedings in the Outer House Miss Kennedy commenced proceedings in the Court of Session, and the case proceeded to a proof restricted to the issue of liability. The Lord Ordinary, Lord McEwan, found Cordia liable under the PPE Regulations, the Management Regulations, and the common law: [2013] CSOH 130. The Lord Ordinary accepted Miss Kennedys evidence, including her evidence that, if provided with attachments for her boots, she would have worn them on the night in question. He commented that it was of some importance that she and her colleague were under an urgent and important duty to an elderly sick lady. He also accepted the evidence of Mr Greasly, which he regarded as consistent: in particular, he did not consider that what he said in cross examination had departed from his evidence in chief or in re examination. His summary of Mr Greaslys evidence included the following passages: 16. He then looked at the risk assessments. Agreeing in general with the later evidence of Miss Rodger, he said account had to be taken of controls to overcome hazards before any rating could be arrived at. However, he said that in his opinion the measures specified did not reduce the risk. Personal Protective Equipment (PPE) should have been provided. He was critical of the omission of inclement weather in [the 2010 risk assessment]. Such weather did not cease to be a hazard and simply to rate the risk as tolerable did not take account of changes in the risk when seriously adverse weather could and did occur that winter. This risk could be eliminated altogether by not going to the house, but accepting the need to go, the employer (his emphasis) should choose and supply the correct footwear which was available at that time. That was not done. Being asked again about research papers he said some were surveys and some were lists. He agreed that icy and snowy surfaces varied and shoe attachments varied in their reaction to these. He described in detail how Yaktrax performed and how he had used his own set for 18 months in snow and ice. He said that they reduced the risk although there was no one answer to the problem. Everyone still had to take care. Had he done a risk assessment for Miss Kennedys job he would have assessed the risk as likely and the severity as harmful. It was for the employer to find out what PPE was best and in his opinion they should have provided Yaktrax or some other type of fitting. . under reference to the [British Standard], he said that the assessment of the risk should have been substantial. Slipping and falling could give a variety of serious injuries. What the employer had to do was reduce or eliminate the risk. That would have been done if Yaktrax had been provided. 20. The Lord Ordinary repelled an objection which had been made to Mr Greaslys evidence on the ground that he did not have any relevant special skill, experience or learning. In that regard, the Lord Ordinary had earlier commented that Mr Greasly had detailed knowledge of the correct approach to compiling risk assessments, and was justified in the conclusion he drew from the published papers. In dealing with the objection, he stated at para 43: His [Mr Greaslys] many general qualifications are listed in his two reports . He has given evidence on many occasions. He is a member of a group with particular interests in slipping at work. He demonstrated a detailed knowledge of a number of international papers on the subject of slipping and personal protective equipment relating to footwear. The real issue is whether he was in a position to provide expertise in areas of health and safety at work which would not be within the knowledge of the court. In my view he clearly has the qualifications and gives such evidence here. He will be treated therefore as an expert witness. 21. Having dealt with objections to the evidence, the Lord Ordinary then stated his findings on the evidence. In the light of the evidence of Mr Greasly, he made the following findings: 47. The following emerges. He had been to the locus. The conditions required some form of shoe add on. Yaktrax was but one model available on the market at the time (it should be noted that Miss Kennedys case does not depend solely on Yaktrax. She said she would have worn an add on if she had been given one). 48. Importantly I accept his criticism of the risk assessments given in his evidence (see para 4.9 of [the first report, quoted in para 10 above]) and he was clear in his evidence and reports that regulation 4 [of the PPE Regulations] was also breached (see eg paras 3.11 and 3.12 in [the supplementary report, quoted in para 11 above]). He spoke to the availability of a number of devices to fit to footwear at the relevant time. It is not necessary to dwell at any length on the various studies or indeed to express my own view of them. In my opinion they present a consistent picture with the American one being particularly helpful. The Lord Ordinary was critical of the reliability of Miss Rodgers evidence. He stated that her evidence lacked a clear explanation of her conclusion that the risk of home carers slipping was tolerable rather than substantial. He commented that her failure to consider the provision of PPE had resulted in the breach of duty in all areas. Considering first the Management Regulations, on the basis that a risk assessment was logically anterior to the taking of safety precautions, the Lord Ordinary concluded that both assessments had been unsatisfactory. Given Miss Rodgers acceptance that a fall on ice was likely and that any resultant injury could be harmful, the risk should have been assessed as substantial rather than tolerable. The precautions in place, in the form of advice to wear safe and adequate footwear, were inadequate. There was no specific advice as to what might constitute such footwear, and no checking or assessment of what was worn. In those circumstances, the risk assessment had not been suitable and sufficient, as required by regulation 3(1). Considering next the PPE Regulations, the Lord Ordinary concluded that in the light of Mr Greaslys evidence about the availability of relatively simple precautions to reduce the risk, and the absence of any consideration of PPE by Cordia, it could not be said that the risk had been adequately controlled by other means which were equally or more effective. There was therefore a breach of regulation 4(1). Considering next the common law, the Lord Ordinary stated: 72. For the same reasons I find [Cordia] also liable at common law. In the face of an obvious and continuing risk they provided no safe footwear. There is no evidence they checked what was being worn. There was no evidence of any system of working or reporting in when staff had to go out in the extreme weather and walk on snow and ice. The proceedings in the Inner House The Lord Ordinarys decision was reversed by an Extra Division of the Inner House (Lady Smith, Lord Brodie and Lord Clarke): [2014] CSIH 76; 2015 SC 154. The Extra Division considered that the Lord Ordinary had erred in five respects. First, in relation to Mr Greaslys evidence, Lord Brodie, giving the leading judgment, stated that he should not have been allowed to give the evidence summarised by the Lord Ordinary at paras 16, 20, 21, 47 and 48 of his opinion, quoted at paras 19 and 21 above. The Lord Ordinary abdicated his role as decision maker. The dispute that had to be resolved was something the Lord Ordinary was fully equipped to do without any instruction or advice; it was squarely within his province as judicial decision maker. No additional expertise was required. Health and safety was not an area of expertise, since it was not a recognised body of science or experience. The other members of the court agreed. Lord Clarke commented that the Lord Ordinarys approach was simply to accept that the evidence of Mr Greasly determined the question for him. Paragraph 43 of the Lord Ordinarys opinion (quoted at para 20 above) demonstrated a shifting of his responsibility for deciding the issues before him to Mr Greasly. Secondly, a failure to comply with the Management Regulations could not be a direct cause of injury. The regulations did not impose any duty to take precautions. Lady Smith considered that Cordias risk assessment had in any event complied with the regulations, but did not explain her reasons for reaching that conclusion. The other members of the Extra Division did not express any opinion on the question. Thirdly, regulation 4(1) of the PPE Regulations did not apply to the circumstances of the accident. The regulations were concerned with risks to which workers were exposed which were created or increased by the nature of their work. But the risk to which Miss Kennedy was exposed was not of that kind. This point was explained most clearly by Lord Clarke. Like Lord Brodie and Lady Smith, he construed the regulations as being concerned with risks caused by the nature of the task performed by the employee. He regarded that task, in the case of Miss Kennedy, as being confined to the administration of care to her clients, and not as encompassing her journeys to their homes. On that basis, he considered that the carrying out of Miss Kennedys duties as a home carer did not create the risk of her slipping somewhere en route to carrying out those duties because of ice or snow on that route. The regulations were in his view designed to deal with risks in circumstances where the employer had a degree of control over the employee, the place of work and the performance of the task which had to be carried out. The risk of Miss Kennedys slipping on ice and snow, on the other hand, was not materially different from that to which any member of the public was exposed when making their way around Glasgow for whatever reason at the relevant time. In any event, as it appeared to the Extra Division, on the Lord Ordinarys findings the risk of slipping was adequately controlled. There was little evidence as to the likely efficacy of unspecified attachments over the range of underfoot conditions that Miss Kennedy could have been expected to encounter. It could not even be said on the evidence that wearing attachments would have made any material difference on the pathway on which Miss Kennedy fell. The Extra Division were also critical of the Lord Ordinarys statement that the direction of the law was to level safety upwards. Lord Brodie remarked that the Lord Ordinary had cited no authority for his observation, while Lord Clarke asked whether the Lord Ordinarys words were meant to reflect an aspect of public policy or some supposed legal principle, and commented that they betrayed a failure to recognise that the law did not impose on an employer a generalised duty to ensure the safety of his employees. Fourthly, in relation to the common law case, it was said that the Lord Ordinary had failed to address the necessary basic questions identified by Lord President Dunedin in Morton v William Dixon Ltd 1909 SC 807, 809: Where the negligence of the employer consists of what I may call a fault of omission, I think it is absolutely necessary that the proof of that fault of omission should be one of two kinds, either to shew that the thing which he did not do was a thing which was commonly done by other persons in like circumstances, or to shew that it was a thing which was so obviously wanted that it would be folly in anyone to neglect to provide it. It could not be said that either requirement of Lord Dunedins formula was satisfied. The Lord Ordinary had also failed to consider whether it would be fair, just and reasonable to find there to be a duty of care of the scope contended for, in accordance with Caparo Industries plc v Dickman [1990] 2 AC 605, 617 618. Had he done so, he could not have failed to reject the contention that Cordia were under a common law duty to determine what their competent adult employees should wear on their feet when negotiating the streets of Glasgow. Fifthly, it was said that the Lord Ordinary was not entitled to find Cordia liable, in any event, because he had made no finding that the wearing of attachments would necessarily have prevented Miss Kennedys fall. He had, it was said, not taken a view on the passages in the cross examination of Mr Greasly in which he conceded that he could not say that Yaktrax would have made any difference. Mr Greaslys evidence We shall begin by considering the issues arising in relation to Mr Greaslys evidence. The use of expert witnesses, who in Scottish practice have traditionally been described as skilled witnesses, can provide significant benefits to the court in determining legal disputes. There is a degree of commonality of approach between jurisdictions which adopt similar methods of fact finding. Thus Scots law has drawn on the experience of other jurisdictions both as to the admissibility of skilled evidence and in relation to the duties of expert witnesses. There are also concerns about the use of skilled witnesses, some of which may have lain behind the Extra Divisions approach in this case. Walker and Walker, in The Law of Evidence in Scotland, 4th ed (2015) (at para 16.3.11), record concerns about the excessive use of experts in litigation in other jurisdictions, and refer to Lord Cullens proposal to restrict the number of skilled witnesses in his Review of Outer House Business in 1995. More recently, the Law Commission of England and Wales in its report, Expert evidence in criminal proceedings in England and Wales, Law Com No 325 (2011), has recorded concerns (i) that an expert witness might have an excessive influence on lay fact finders, (ii) whether in criminal cases the defence will have the resources to test the underlying basis of an experts evidence and (iii) that experts may not achieve the impartiality for which their role calls. In our view, judges who frequently decide civil cases should through their experience be less likely than juries to be unduly influenced by skilled witnesses, but an advocate in a civil case may face difficulties in testing the evidence of an expert unless assisted by expert advice. The need to regulate such evidence remains. In this case, the Extra Divisions principal concerns about Mr Greaslys evidence were that he had expressed opinions on what Cordia should have done that involved questions of law, which it was the task of the court to decide and that, in any event, most of his evidence was unnecessary: see para 27 above. Lord Clarke in his concurring opinion expressed concerns, more generally, about the unnecessary proliferation of allegedly expert reports in personal injury cases. The Extra Division articulated their more general concern in their finding (in para 4 of Lady Smiths opinion, paras 15 and 16 of Lord Brodies opinion and para 40 of Lord Clarkes opinion) that the health and safety practice of employers could not be the subject matter of expert evidence, either because it was a legal question within the knowledge of the court or because it was not a recognised body of science or experience, which was suitably acknowledged as being useful and reliable, and which could properly form the basis of opinions capable of being subjected to forensic evaluation. Counsel for Cordia conceded at the outset of this appeal that so general an assertion was not correct and accepted that health and safety practice could properly be the subject of expert evidence. We think that that concession was correctly made. Before expressing our views on Mr Greaslys evidence in this appeal, we look at expert evidence more generally to provide the context for our conclusions. The case law on the Scots law of evidence to which counsel referred included both civil and criminal cases. We refer to both in this judgment but are mindful that the Scots law of criminal evidence, including expert evidence in criminal trials, lies within the competence of the High Court of Justiciary and not this court. In this judgment therefore the criminal cases only provide context for our consideration of the law of evidence in civil cases. The evidence of skilled witnesses In our view four matters fall to be addressed in the use of expert evidence. They are (i) the admissibility of such evidence, (ii) the responsibility of a partys legal team to make sure that the expert keeps to his or her role of giving the court useful information, (iii) the courts policing of the performance of the experts duties, and (iv) economy in litigation. The first is the most directly relevant in this appeal. But the others also arise out of either the parties submissions or the Extra Divisions concerns and we address them briefly. (i) Admissibility Skilled witnesses, unlike other witnesses, can give evidence of their opinions to assist the court. This gives rise to threshold questions of the admissibility of expert evidence. An example of opinion evidence is whether Miss Kennedy would have been less likely to fall if she had been wearing anti slip attachments on her footwear. Experts can and often do give evidence of fact as well as opinion evidence. A skilled witness, like any non expert witness, can give evidence of what he or she has observed if it is relevant to a fact in issue. An example of such evidence in this case is Mr Greaslys evidence of the slope of the pavement on which Miss Kennedy lost her footing. There are no special rules governing the admissibility of such factual evidence from a skilled witness. Unlike other witnesses, a skilled witness may also give evidence based on his or her knowledge and experience of a subject matter, drawing on the work of others, such as the findings of published research or the pooled knowledge of a team of people with whom he or she works. Such evidence also gives rise to threshold questions of admissibility, and the special rules that govern the admissibility of expert opinion evidence also cover such expert evidence of fact. There are many examples of skilled witnesses giving evidence of fact of that nature. Thus Dickson on Evidence, Griersons ed (1887) at section 397 referred to Gibson v Pollock (1848) 11 D 343, a case in which the court admitted evidence of practice in dog coursing to determine whether the owner or nominator of a dog was entitled to a prize on its success. Similarly, when an engineer describes how a machine is configured and works or how a motorway is built, he is giving skilled evidence of factual matters, in which he or she draws on knowledge that is not derived solely from personal observation or its equivalent. An expert in the social and political conditions in a foreign country who gives evidence to an immigration judge also gives skilled evidence of fact. It is common in Scottish criminal trials for the misuse of drugs for the Crown to adduce the evidence of a policeman who has the experience and knowledge to describe the quantities of drugs that people tend to keep for personal use rather than for supply to others. Recently, in Myers, Brangman and Cox v The Queen [2015] UKPC 40; [2015] 3 WLR 1145, the Judicial Committee of the Privy Council approved of the use of police officers, who had special training and considerable experience of the practices of criminal gangs, to give evidence on the culture of gangs, their places of association and the signs that gang members used to associate themselves with particular gangs. In giving such factual evidence a skilled witness can draw on the general body of knowledge and understanding in which he or she is skilled, including the work and literature of others. But Lord Hughes, in delivering the advice of the Board at para 58, warned that care must be taken that simple, and not necessarily balanced, anecdotal evidence is not permitted to assume the robe of expertise. To avoid this, the skilled witness must set out his or her qualifications, by training and experience, to give expert evidence and also say from where he or she has obtained information, if it is not based on his or her own observations and experience. Counsel agreed that the South Australian case of R v Bonython (1984) 38 SASR 45 gave relevant guidance on admissibility of expert opinion evidence. We agree. In that case King CJ at pp 46 47 stated: Before admitting the opinion of a witness into evidence as expert testimony, the judge must consider and decide two questions. The first is whether the subject matter of the opinion falls within the class of subjects upon which expert testimony is permissible. This first question may be divided into two parts: (a) whether the subject matter of the opinion is such that a person without instruction or experience in the area of knowledge or human experience would be able to form a sound judgment on the matter without the assistance of witnesses possessing special knowledge or experience in the area, and (b) whether the subject matter of the opinion forms part of a body of knowledge or experience which is sufficiently organized or recognized to be accepted as a reliable body of knowledge or experience, a special acquaintance with which by the witness would render his opinion of assistance to the court. The second question is whether the witness has acquired by study or experience sufficient knowledge of the subject to render his opinion of value in resolving the issues before the court. In Bonython the court was addressing opinion evidence. As we have said, a skilled person can give expert factual evidence either by itself or in combination with opinion evidence. There are in our view four considerations which govern the admissibility of skilled evidence: (i) whether the proposed skilled evidence will assist the court in its task; (ii) whether the witness has the necessary knowledge and experience; (iii) whether the witness is impartial in his or her presentation and assessment of the evidence; and (iv) whether there is a reliable body of knowledge or experience to underpin the experts evidence. All four considerations apply to opinion evidence, although, as we state below, when the first consideration is applied to opinion evidence the threshold is the necessity of such evidence. The four considerations also apply to skilled evidence of fact, where the skilled witness draws on the knowledge and experience of others rather than or in addition to personal observation or its equivalent. We examine each consideration in turn. Assisting the court: It is for the court to decide whether expert evidence is needed, when the admissibility of that evidence is challenged. In R v Turner [1975] QB 834, a case which concerned the admissibility of opinion evidence, which Professor Davidson cites in his textbook on Evidence (2007) at para 11.04, Lawton LJ stated at p 841: If on the proven facts a judge or jury can form their own conclusions without help, then the opinion of an expert is unnecessary. In Wilson v Her Majestys Advocate 2009 JC 336, which also concerned opinion evidence, the High Court of Justiciary, in an opinion delivered by Lord Wheatley, stated the test thus (at para 58): [T]he subject matter under discussion must be necessary for the proper resolution of the dispute, and be such that a judge or jury without instruction or advice in the particular area of knowledge or experience would be unable to reach a sound conclusion without the help of a witness who had such specialised knowledge or experience. Most of the Scottish case law on, and academic discussion of, expert evidence has focused on opinion evidence to the exclusion of skilled evidence of fact. In our view, the test for the admissibility of the latter form of evidence cannot be strict necessity as, otherwise, the court could be deprived of the benefit of a skilled witness who collates and presents to the court in an efficient manner the knowledge of others in his or her field of expertise. There may be circumstances in which a court could determine a fact in issue without an expert collation of relevant facts if the parties called many factual witnesses at great expense and thus a strict necessity test would not be met. In Daubert v Merrell Dow Pharmaceuticals Inc (1993) 509 US 579, the United States Supreme Court referred to rule 702 of the Federal Rules of Evidence, which in our view is consistent with the approach of Scots law in relation to skilled evidence of fact. The rule, which Justice Blackmun quoted at p 588, states: If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise. The advantage of the formula in this rule is that it avoids an over rigid interpretation of necessity, where a skilled witness is put forward to present relevant factual evidence in an efficient manner rather than to give an opinion explaining the factual evidence of others. If skilled evidence of fact would be likely to assist the efficient determination of the case, the judge should admit it. An expert must explain the basis of his or her evidence when it is not personal observation or sensation; mere assertion or bare ipse dixit carries little weight, as the Lord President (Cooper) famously stated in Davie v Magistrates of Edinburgh 1953 SC 34, 40. If anything, the suggestion that an unsubstantiated ipse dixit carries little weight is understated; in our view such evidence is worthless. Wessels JA stated the matter well in the Supreme Court of South Africa (Appellate Division) in Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft fr Schdlingsbekmpfung mbH 1976 (3) SA 352, 371: [A]n experts opinion represents his reasoned conclusion based on certain facts or data, which are either common cause, or established by his own evidence or that of some other competent witness. Except possibly where it is not controverted, an experts bald statement of his opinion is not of any real assistance. Proper evaluation of the opinion can only be undertaken if the process of reasoning which led to the conclusion, including the premises from which the reasoning proceeds, are disclosed by the expert. As Lord Prosser pithily stated in Dingley v Chief Constable, Strathclyde Police 1998 SC 548, 604: As with judicial or other opinions, what carries weight is the reasoning, not the conclusion. In Davie the Lord President at p 40 observed that expert witnesses cannot usurp the functions of the jury or judge sitting as a jury. Recently, in Pora v The Queen [2015] UKPC 9; [2016] 1 Cr App R 3, para 24, the Judicial Committee of the Privy Council in an appeal from New Zealand, stated: It is the duty of an expert witness to provide material on which a court can form its own conclusions on relevant issues. On occasions that may involve the witness expressing an opinion about whether, for instance, an individual suffered from a particular condition or vulnerability. The expert witness should be careful to recognise, however, the need to avoid supplanting the courts role as the ultimate decision maker on matters that are central to the outcome of the case. Thus, while on occasion in order to avoid elusive language the skilled witness may have to express his or her views in a way that addresses the ultimate issue before the court, expert assistance does not extend to supplanting the court as the decision maker. The fact finding judge cannot delegate the decision making role to the expert. The witnesss knowledge and expertise: The skilled witness must demonstrate to the court that he or she has relevant knowledge and experience to give either factual evidence, which is not based exclusively on personal observation or sensation, or opinion evidence. Where the skilled witness establishes such knowledge and experience, he or she can draw on the general body of knowledge and understanding of the relevant expertise: Myers, Brangman and Cox (above) at para 63. Impartiality and other duties: If a party proffers an expert report which on its face does not comply with the recognised duties of a skilled witness to be independent and impartial, the court may exclude the evidence as inadmissible: Toth v Jarman [2006] EWCA Civ 1028; [2006] 4 All ER 1276, paras 100 102. In Field v Leeds City Council [2000] 1 EGLR 54, the Court of Appeal upheld the decision of a district judge, who, having ordered the Council to provide an independent surveyors report, excluded at an interim hearing the evidence of a surveyor whom the Council proposed to lead in evidence on the ground that his impartiality had not been demonstrated. It is unlikely that the court could make such a prior ruling on admissibility in those Scottish procedures in which there is as yet no judicial case management. But the requirement of independence and impartiality is in our view one of admissibility rather than merely the weight of the evidence. The Scottish courts have adopted the guidance of Cresswell J on an experts duties in The Ikarian Reefer [1993] 2 Lloyds Rep 68 in both civil and criminal matters: see Lord Caplan in Elf Caledonia Ltd v London Bridge Engineering Ltd September 2, 1997 (unreported) at pp 225 227 and Wilson v Her Majestys Advocate (above) at paras 59 and 60. We quote Cresswell Js summary (at pp 81 82) omitting only case citations: The duties and responsibilities of expert witnesses in civil cases include the following: 1. Expert evidence presented to the court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation. 2. An expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise. An expert witness in the High Court should never assume the role of an advocate. 3. An expert witness should state the facts or assumption on which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinion. 4. An expert witness should make it clear when a particular question or issue falls outside his expertise. 5. If an experts opinion is not properly researched because he considers that insufficient data is available, then this must be stated with an indication that the opinion is no more than a provisional one. In cases where an expert witness who has prepared a report could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated in the report. 6. If, after exchange of reports, an expert witness changes his view on a material matter having read the other sides experts report or for any other reason, such change of view should be communicated (through legal representatives) to the other side without delay and when appropriate to the court. 7. Where expert evidence refers to photographs, plans, calculations, analyses, measurements, survey reports or other similar documents, these must be provided to the opposite party at the same time as the exchange of reports. In Wilson v Her Majestys Advocate (at paras 59 and 60) the High Court of Justiciary quoted the first four duties and added the requirement that an expert witness should in particular explain why any material relevant to his conclusions is ignored or regarded as unimportant. In Elf Caledonia Ltd, Lord Caplan quoted Cresswell Js guidance more fully. In our view, Cresswell Js guidance should be applied in the Scottish courts in civil cases, making such allowance as is necessary to accommodate different procedures. It is implicit that the seventh duty applies only in relation to items to which the opposite party does not already have access. Reliable body of knowledge or experience: What amounts to a reliable body of knowledge or experience depends on the subject matter of the proposed skilled evidence. In Davie v Magistrates of Edinburgh the question for the court was whether blasting operations in the construction of a sewer had damaged the pursuers building and the relevant expertise included civil engineering and mining engineering. In Myers, Brangman and Cox, as we have said, the subject matter was the activities of criminal gangs; a policemans evidence, which was the product of training courses and long term personal experience as an officer serving with a body of officers who had built up a body of learning, was admitted as factual evidence of the practices of such gangs. In many cases where the subject matter of the proposed expert evidence is within a recognised scientific discipline, it will be easy for the court to be satisfied about the reliability of the relevant body of knowledge. There is more difficulty where the science or body of knowledge is not widely recognised. Walker and Walker at para 16.3.5 refer to an obiter dictum in Lord Eassies opinion in Mearns v Smedvig Ltd 1999 SC 243 in support of their proposition that: A party seeking to lead a witness with purported knowledge or experience outwith generally recognised fields would need to set up by investigation and evidence not only the qualifications and expertise of the individual skilled witness, but the methodology and validity of that field of knowledge or science. We agree with that proposition, which is supported in Scotland and in other jurisdictions by the courts refusal to accept the evidence of an expert whose methodology is not based on any established body of knowledge. Thus in Young v Her Majestys Advocate 2014 SLT 21, the High Court refused to admit evidence of case linkage analysis because it was the subject of only relatively recent academic research and a methodology which was not yet sufficiently developed that it could be treated as reliable. See also, for example, R v Gilfoyle [2001] 2 Cr App R 5, in which the English Court of Appeal (Criminal Division) refused to admit expert evidence on psychological autopsy for several reasons, including that the expert had not embarked on the exercise in question before and also that there were no criteria by reference to which the court could test the quality of his opinions and no substantial body of academic writing approving his methodology. The court also observed that the psychologists views were based on one sided information and doubted that the assessment of levels of happiness or unhappiness was a task for an expert rather than jurors. (ii) Making sure that the expert performs his or her role It falls in the first instance to counsel and solicitors who propose to adduce the evidence of a skilled witness to assess whether the proposed witness has the necessary expertise and whether his or her evidence is otherwise admissible. It is also their role to make sure that the proposed witness is aware of the duties imposed on an expert witness. The legal team also should disclose to the expert all of the relevant factual material which they intend should contribute to the experts evidence in addition to his or her own pre existing knowledge. That should include not only material which supports their clients case but also material, of which they are aware, that points in the other direction, viz the courts concerns about one sided information in R v Gilfoyle. The skilled witness should take into account and disclose in the written report the relevant factual evidence so provided. (iii) Policing the performance of an experts duties It is not the normal practice of the Scottish courts to hold preliminary hearings or proofs on the admissibility of the evidence of skilled witnesses. Considerations of cost and practicability may often make such a course unattractive. Where the court has significant powers of case management, as in certain actions based on clinical negligence or relating to catastrophic injuries (Rules of the Court of Session 1994 as amended (RCS) Chapter 42A), commercial actions (RCS Chapter 47), and intellectual property actions (RCS Chapter 55), a judge can address concerns about the evidence in the report by a skilled witness at a case management hearing and discuss with counsel how they are to be resolved. Wider opportunities for such case management in personal injury actions are likely to result from the implementation of Lord Gills Civil Courts Review. In many cases it may not be possible to iron out all difficulties before the proof. A party may object to part or all of a skilled witnesss evidence at the start and during the course of a proof, as occurred in this case. In the absence of objection, the judge should, when assessing whether and to what extent to give weight to the evidence, test the evidence to ascertain that it complies with the four considerations which we have set out in para 38 above and is otherwise sound. In McTear v Imperial Tobacco Ltd 2005 2 SC 1, para 5.17 Lord Nimmo Smith usefully described the judges role in these terms: [I]t is necessary to consider with care, in respect of each of the expert witnesses, to what extent he was aware of and observed his function. I must decide what did or did not lie within his field of expertise, and not have regard to any expression of opinion on a matter which lay outwith that field. Where published literature was put to a witness, I can only have regard to such of it as lay within his field of expertise, and then only to such passages as were expressly referred to. Above all, the purpose of leading the evidence of any of the expert witnesses should have been to impart to me special knowledge of subject matter, including published material, lying within the witnesss field of expertise, so as to enable me to form my own judgment about that subject matter and the conclusions to be drawn from it. Lord Brodie referred to this passage in his opinion at para 11. It is not necessary in this appeal to determine how far a court should have regard to published material put to or cited by a skilled witness which is not within his or her core expertise. Much may depend on the nature of the experts area of practice, which may or may not involve some working knowledge of related disciplines, and on the centrality of the published material to the matter which the court has to decide: see, for example, Main v McAndrew Wormald Ltd 1988 SLT 141 and, on the analogous question of a medical practitioner consulting another specialist, M v Kennedy 1993 SC 115. (iv) Economy in litigation In recent years there have been many statements of concern in many jurisdictions about the disproportionate cost of civil litigation. Scotland is no exception. Those concerns include the use of expert witnesses. In the responses to consultation in the Scottish Civil Courts Review some respondents, including the Scottish Legal Aid Board, expressed their concern about the increased reliance on experts in litigation and the consequent cost (Report of the Scottish Civil Courts Review (2009) vol 1, chapter 9, para 64). The latter concern was also discussed in the Taylor Review of Expenses and Funding of Civil Litigation in Scotland (2013), chapter 3, paras 59 95. Cordia in this case challenge what they describe in their written case as the largely uncontrolled proliferation of experts. Case management offers a means by which the court can encourage parties to avoid leading evidence on matters which are not contentious, for example by agreeing a statement of fact which explains background matters, which are not the subject of written pleadings, to the court. There may be matters which can readily be agreed, thereby allowing parties experts to concentrate on contentious matters. Solicitors with expertise in personal injury actions may use such statements as the basis for agreed evidence in other actions and thereby save expense. Where that is not possible, a court which has case management powers may require experts to exchange opinions, confer and prepare a report which identifies matters of agreement and reasons for any continued disagreement. It can also ascertain the scope for joint instruction of a single expert, and (where it possesses the necessary powers) can exclude expert reports and evidence. Courts also possess powers in relation to expenses which can be used to discourage the excessive use of expert evidence. Nothing that we say in this judgment questions the legitimacy of the underlying concern about reducing the expense of litigation. Expert evidence in this case With those general comments we turn to Mr Greaslys evidence in this case. We have summarised his qualifications and his evidence in paras 9 to 14 above. There were matters in Mr Greaslys reports to which Cordia did not take exception. Lord Brodie acknowledged that there were matters of fact which were admissible, such as his description of the locus, including his measurements of the gradients, and his evidence of availability on the market of anti slip attachments to footwear. But there were other factual matters which were admissible because they were relevant and might assist a judge, and against which Cordia did not persist in their challenge in this court. They included: (i) information on the prevention or reduction of risks of tripping and slipping from publications by the Construction Industry Research and Information Association, by the HSE and from the HSE website; (ii) research literature on the effectiveness of different types of footwear and devices to resist slipping and on the circumstances in which people suffer falls; (iii) HSE guidance on the PPE Regulations which provided evidence of good health and safety practice in relation to dangers posed by the weather when people have to work out of doors; and (iv) working out of doors with anti slip devices. the practices of named public bodies in providing their employees Cordia maintained their challenge to his evidence of the effect of Yaktrax, based on his own use of them, and his oral explanation of how anti slip attachments reduced the risk of slipping, which was based on his knowledge of engineering. But these were also factual matters, which he had the experience and qualifications to describe. In our view, the Lord Ordinary did not err in admitting all of this factual evidence. Similarly, it was relevant to the courts task to hear evidence on health and safety practice in complying with the Management Regulations and the PPE Regulations. The expansion of the statutory duties imposed on employers in the field of health and safety has given rise to a body of knowledge and experience in this field, which, as we explain later in this judgment, creates the context in which the court has to assess an employers performance of its common law duty of care. The Lord Ordinary was entitled to accept Mr Greaslys experience in carrying out and advising his clients on risk assessments as a proper basis for his giving of such evidence. The Extra Division had two other major criticisms of Mr Greaslys evidence. One was that he was inadmissibly giving his opinion on matters of law. The other, which was based on the well known dictum of Oliver J in Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384, 402, a case of solicitors negligence, was that an experts opinion of what he would have done in the circumstances did not assist the court, and was therefore inadmissible. The former objection may properly be made to Mr Greaslys statements that it was for Cordia to consider the range of footwear and attachments that were available (main report para 3.74) and that it was for Cordia to take steps to reduce the risk as far as was reasonably practicable (main report para 4.11). They appear at first sight to be statements of opinion on Cordias legal duty, which would not be admissible before lay fact finders and should be avoided. An experienced judge however could readily treat the statements as the opinions of a skilled witness as to health and safety practice, based on the Management Regulations and the PPE Regulations and on HSE guidance, and make up his own mind on the legal question. The Lord Ordinary (at para 48 of his opinion) interpreted passages in Mr Greaslys supplementary report as expressing an opinion that Cordia had breached their statutory duty. If that were a correct interpretation of what Mr Greasly had said, those passages of his evidence were not admissible. But, as we shall explain, that does not undermine the Lord Ordinarys decision, because he applied his own mind to the central legal issues. We are not persuaded by the latter objection. There may be cases where the opinion of a professional as to what he or she would have done in a given circumstance is of only limited weight in the courts assessment of a claim for professional negligence, as in Hett, Stubbs. But we see no reason why the Lord Ordinary should not have found helpful the reasoned view of a person experienced in carrying out risk assessments on the rating of risks within a risk assessment. Cordia assessed the risk of injury such as sprains or fractures when travelling to and from work locations to be tolerable, applying a British Standard with which a judge might not be familiar but which was relevant to a consideration of proper practice. Mr Greasly opined that in wintry conditions the risk should have been assessed as substantial. His evidence provided a basis for the Lord Ordinary to weigh up the opposing views when deciding whether Cordia had suitably and sufficiently evaluated the risks and identified the measures needed to protect health and safety. We have difficulty in seeing how Miss Kennedys counsel could have presented her case on these matters by legal submissions alone. Mr Greasly not only collated the factual material to which we have referred but also gave opinion evidence on how the relevant risk assessment should have been carried out. The Lord Ordinary held (in para 43 of his opinion) that Mr Greasly had the necessary experience to give such evidence about health and safety at work. In our view the circumstances of this case are therefore materially different from Hawkes v Southwark London Borough Council (unreported) 20 February 1998 in which Aldous LJ was critical of the plaintiff for calling an expert engineering witness unnecessarily. When Cordia responded to an invitation from this court to submit a note identifying the specific passages in Mr Greaslys reports to which they objected, they identified passages which raised the issues which we have discussed above. They also objected to several statements of the obvious, such as that anti slip attachments with spiked steel projections must help increase traction in snow and ice and so reduce the risk of slipping. But these statements were a small part of Mr Greaslys narrative and are not objectionable. It would be different if the sum and substance of an experts report were blindingly obvious. Such a report would be inadmissible because it would not assist the court. In summary, the Extra Division erred in treating much of the factual material in Mr Greaslys report as inadmissible on the basis that it was not skilled evidence that assisted the court. The Extra Division also erred in excluding his evidence on how he would have carried out the risk assessment. As we have said, his expressions of opinion as to what Cordia should have done were capable of being interpreted as legal opinions that Cordia had breached statutory regulations and thus objectionable. But the Lord Ordinary applied his own mind to the legal questions which he had to decide: see our discussion of this part of his opinion in paras 21 25 above. As in this case, it may on occasion be expedient to instruct a witness with general health and safety experience to give skilled evidence on a specific question of health and safety practice which he or she may not have encountered in the past. Such a witness may have to conduct research into how the particular risk might have been reduced or avoided. Whether or not the witness has sufficient experience and knowledge to give skilled evidence is a matter which can be explored either through case management or in cross examination. In this case Mr Greasly included in his evidence material, which his instructing solicitors had provided to him, relating to the practices of other employers obtained from freedom of information requests. The solicitors themselves did not give evidence. In such circumstances, it is, as a matter of fairness, incumbent on the solicitors to disclose to the skilled witness and to the other parties in the litigation the relevant material which they have assembled, whether or not it supports their case. It is not clear in this case whether there was any undisclosed material. We observe that in this case there was no suggestion that Miss Kennedys advisers had adopted an uneconomic approach to the litigation. Her proof consisted of two witnesses: herself and Mr Greasly. The Framework Directive We turn next to the issues of substantive law which are raised in the appeal. Before considering the regulations which were relied upon, it is helpful to consider their background in EU law, partly because the regulations have to be construed as far as possible so as to give effect to EU law, and also in view of the Extra Divisions criticism of the Lord Ordinarys remarks about the direction of the law being to level safety upwards. Article 153 of the Treaty on the Functioning of the European Union requires the EU to support and complement the activities of the member states in a number of fields, including improvement in particular of the working environment to protect workers health and safety, and permits the European Parliament and Council to adopt Directives for that purpose. It is clear from the case law of the Court of Justice that article 153, and in particular the concepts of working environment, safety and health, are not to be interpreted restrictively: see, for example, United Kingdom v Council of the European Union (Case C 84/94) [1996] ECR I 5755, para 15. It was under the predecessor of article 153, namely article 118a of the EEC Treaty, that the Council adopted Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work (the Framework Directive). In the preamble, the recitals refer repeatedly to improving safety and health in the working environment, and to harmonising the relevant national laws, so that competition is not at the expense of safety and health. As the Lord Ordinary correctly stated, safety is to be levelled upwards. As we shall explain, the Framework Directive provides a basis for daughter Directives addressing particular aspects of health and safety at work. It is necessary to refer to only a few of the articles of the Framework Directive itself. Article 1(1) states that the object of the Directive is to introduce measures to encourage improvements in the safety and health of workers at work. To that end, according to article 1(2), it contains general principles and general guidelines for the implementation of those principles. Article 1(3) provides that the Directive is without prejudice to existing or future national and Community provisions which are more favourable to protection of the safety and health of workers at work. Under article 4(1), member states are required to take the necessary steps to ensure that employers and others are subject to the legal provisions necessary for the implementation of the Directive. Article 5(1) provides that the employer shall have a duty to ensure the safety and health of workers in every aspect related to the work. Article 5(4) permits member states to provide for the exclusion or limitation of employers responsibility where occurrences are due to unusual and unforeseeable circumstances, beyond the employers control, or to exceptional events, the consequences of which could not have been avoided despite the exercise of all due care. Article 6(1) provides that, within the context of his responsibilities, the employer shall take the measures necessary for the safety and health protection of workers, and shall aim to improve existing situations. Article 6(2) sets out the general principles of prevention which are to form the basis of the measures taken under paragraph 1. They include: evaluating the risks which cannot be avoided; (a) avoiding risks; (b) . (h) giving collective protective measures priority over individual protective measures; and (i) giving appropriate instructions to the workers. These principles are fundamental to the panoply of daughter Directives, and to the legislation transposing them into domestic law. Where possible, risk is to be avoided rather than reduced; means of collective protection are to be preferred to means of individual protection (such as PPE); and merely giving instructions to the workers is to be the last resort. Another fundamental principle is the assessment of risk. That principle is set out in article 6(3)(a), and is especially relevant to the present case. It requires the employer to evaluate the risks to the safety and health of workers, and provides that Subsequent to this evaluation and as necessary, the preventive measures and the working and production methods implemented by the employer must: assure an improvement in the level of protection afforded to workers with regard to safety and health. Finally, in relation to the Framework Directive, article 16(1) requires the Council to adopt individual Directives in the areas listed in the annex, including personal protective equipment. In terms of article 16(3), the provisions of the Framework Directive are to apply in full to all the areas covered by the individual Directives, without prejudice to more stringent or specific provisions contained in those Directives. The PPE Directive One of the individual Directives, within the meaning of article 16 of the Framework Directive, is Directive 89/656/EEC of 30 November 1989 on the minimum health and safety requirements for the use by workers of personal protective equipment at the workplace (the PPE Directive). It again has its legal basis in article 118a of the EEC Treaty. Article 1 explains that the Directive lays down minimum requirements for PPE used by workers at work. PPE is defined by article 2(1) as meaning all equipment designed to be worn or held by the worker to protect him against one or more hazards likely to endanger his safety and health at work, and any addition or accessory designed to meet this objective. Article 3 lays down a general rule that Personal protective equipment shall be used when the risks cannot be avoided or sufficiently limited by technical means of collective protection or by measures, methods or procedures of work organization. Article 6(1) requires member states to ensure that rules are established for the use of PPE, and refers to the annexes to the Directive as a guide. Annex I includes the risk of slipping, falling over in a specimen risk survey table for the use of PPE. Annex II sets out a non exhaustive guide list of items of PPE, including Removable spikes for ice, snow or slippery flooring. Annex III sets out a non exhaustive guide list of activities and sectors of activity which may require the provision of PPE, including, under the category of weatherproof clothing, Work in the open air in rain and cold weather. The Management Regulations The Management Regulations are intended primarily to implement the Framework Directive. Regulation 3(1) provides: Every employer shall make a suitable and sufficient assessment of (a) the risks to the health and safety of his employees to which they are exposed whilst they are at work; for the purpose of identifying the measures he needs to take to comply with the requirements and prohibitions imposed upon him by or under the relevant statutory provisions The statutory provisions referred to in regulation 3(1) are those contained in Part I of the Health and Safety at Work etc Act 1974 (the 1974 Act) and regulations made under section 15 of that Act: see section 53(1). Both the Management Regulations and the PPE Regulations were made under section 15 of the 1974 Act. Regulation 4 of the Management Regulations provides that where an employer implements any preventive and protective measures, he shall do so on the basis of the principles specified in Schedule 1 to the Regulations. Those principles are derived from article 6(2) of the Framework Directive and are in almost identical terms. In relation to civil liability, section 47(2) of the 1974 Act provided at the relevant time, prior to its amendment by section 69 of the Enterprise and Regulatory Reform Act 2013, that breach of a duty imposed by health and safety regulations (ie regulations made under section 15) shall, so far as it causes damage, be actionable except in so far as the regulations provide otherwise. Regulation 22 of the Management Regulations, as it stood at the relevant time, provided that breach of a duty imposed on an employer by the Regulations did not confer a right of action in any civil proceedings in so far as the duty applied for the protection of a third party (ie someone other than an employee). The Regulations therefore contained no bar to liability towards an employee, subject to the requirement imposed by section 47(2) that the breach of duty causes damage. The importance of a suitable and sufficient risk assessment was explained by the Court of Appeal in the case of Allison v London Underground Ltd [2008] EWCA Civ 71; [2008] ICR 719. Smith LJ observed at para 58 that insufficient judicial attention had been given to risk assessments in the years since the duty to conduct them was first introduced. She suggested that that was because judges recognised that a failure to carry out a sufficient and suitable risk assessment was never the direct cause of an injury: the inadequacy of a risk assessment could only ever be an indirect cause. Judicial decisions had tended to focus on the breach of duty which led directly to the injury. But to focus on the adequacy of the precautions actually taken without first considering the adequacy of the risk assessment was, she suggested, putting the cart before the horse. Risk assessments were meant to be an exercise by which the employer examined and evaluated all the risks entailed in his operations and took steps to remove or minimise those risks. They should, she said, be a blueprint for action. She added at para 59, cited by the Lord Ordinary in the present case, that the most logical way to approach a question as to the adequacy of the precautions taken by an employer was through a consideration of the suitability and sufficiency of the risk assessment. We respectfully agree. The application of the Management Regulations in the present case As we have explained, the Extra Division did not consider closely whether Cordia had complied with their duties under the Management Regulations, or reach any conclusion on that question. This court should however do so. It is clear from the evidence that Miss Kennedy was exposed to a risk to her health and safety whilst she was at work, namely the risk of slipping and falling on snow and ice while travelling between clients houses. That risk was obvious as a matter of common sense, and was in any event within Cordias knowledge, given their previous experience of the incidence of home carers suffering such accidents each year. The risk was identified, in general terms, in the 2005 risk assessment. Although it was not explicitly addressed in the 2010 risk assessment, risks of that general nature were again identified. Considering the risk of slipping in accordance with the general principles set out in Schedule 1 to the Regulations, and adopted from article 6(2) of the Framework Directive, it could not be avoided: for wholly understandable reasons, it was Cordias position that the individuals who were dependent on the services of the home carers had to be visited if at all possible. The risk therefore had to be evaluated and addressed in accordance with those principles, which set out a hierarchical order in which the measures necessary to protect health and safety should be considered. Was there, then, a sufficient evaluation of the risk, and of the necessary measures? In relation to these matters, the Lord Ordinarys conclusion was based on findings which he was entitled to make on the evidence, and on a proper understanding of the law. As he noted, the risk of a home carer slipping on snow or ice while at work, on the way to a clients home, was accepted to be likely a dead cert, as Miss Rodger put it. It was also accepted that the injuries which might be sustained included fractures and head injuries, and were therefore potentially serious. No consideration, however, was given to the possibility of individual protective measures, before relying on the measure of last resort, namely giving appropriate instructions to employees. Even then, the instructions given, in the form of advice to wear appropriate footwear, provided no specification of what might be appropriate. In these circumstances, the Lord Ordinary was entitled to conclude that there had been a breach of regulation 3(1). The PPE Regulations The PPE Regulations are intended to implement the PPE Directive. Regulation 2(1) defines personal protective equipment (PPE) as meaning all equipment (including clothing affording protection against the weather) which is intended to be worn or held by a person at work and which protects him against one or more risks to his health or safety, and any addition or accessory designed to meet that objective. We should record that no reliance has been placed in these proceedings on regulation 3(2), which excludes the application of the regulations in respect of PPE which is (d) personal protective equipment used for protection while travelling on a road within the meaning (in England and Wales) of section 192(1) of the Road Traffic Act 1988, and (in Scotland) of section 151 of the Roads (Scotland) Act 1984. Regulation 4(1) is particularly relevant to the present case. It provides: Every employer shall ensure that suitable personal protective equipment is provided to his employees who may be exposed to a risk to their health or safety while at work except where and to the extent that such risk has been adequately controlled by other means which are equally or more effective. In terms of regulation 4(3), as amended, PPE is not suitable unless, amongst other things, (a) it is appropriate for the risk or risks involved, the conditions at the place where exposure to the risk may occur, and the period for which it is worn, and (d) so far as is practicable, it is effective to prevent or adequately control the risk or risks involved without increasing overall risk. Regulation 6 imposes a further duty to carry out a risk assessment. In terms of regulation 6(1), before choosing any PPE which by virtue of regulation 4 he is required to ensure is provided, an employer must ensure that an assessment is made to determine whether the PPE he intends will be provided is suitable. In terms of article 6(2), the assessment must include, among other things: (a) an assessment of any risk or risks to health or safety which have not been avoided by other means; (b) the definition of the characteristics which personal protective equipment must have in order to be effective against the risks referred to in sub paragraph (a) of this paragraph, taking into account any risks which the equipment itself may create; (c) comparison of the characteristics of the personal protective equipment available with the characteristics referred to in sub paragraph (b) of this paragraph. Finally, in relation to the provisions of the PPE Regulations, the Extra Division considered the Lord Ordinarys approach to be inconsistent with regulations 8 and 10. Regulation 8 provides: Where an employer or self employed person is required, by virtue of regulation 4, to ensure personal protective equipment is provided, he shall also ensure that appropriate accommodation is provided for that personal protective equipment when it is not being used. Regulation 10 provides, so far as material: (1) Every employer shall take all reasonable steps to ensure that any personal protective equipment provided to his employees by virtue of regulation 4(1) is properly used. (4) Every employee and self employed person who has been provided with personal protective equipment by virtue of regulation 4 shall take all reasonable steps to ensure that it is returned to the accommodation provided for it after use. The application of the PPE Regulations in the present case As we have explained, the Lord Ordinary was entitled to find that there had been a failure to carry out a suitable and sufficient risk assessment. Such an assessment would have involved specific consideration of the possibility of individual protective measures to reduce the risk of home carers slipping and falling on snow and ice. Had that possibility been considered, the Lord Ordinary found that a number of devices were available which would have been suitable to reduce the risk. Since none was provided, it followed that there was a breach of regulation 4(1) of the PPE Regulations. The Extra Division put forward a number of arguments in support of their conclusion that the Regulations had no application in the circumstances of the present case. First, they pointed out that regulation 4(1) is concerned with risks to which employees are exposed while at work. They inferred that the risks in question must be created or increased by the nature of the work. Lord Brodie considered that this construction was consistent with article 1(1) of the Framework Directive, which described the object of the Directive as being to introduce measures to encourage improvements in the safety and health of workers at work. Similarly, article 1(1) of the PPE Directive stated that the Directive laid down minimum requirements for PPE used by workers at work. Reliance was also placed on the reference in article 2(1) to hazards likely to endanger his safety and health at work, and to the general rule set out in article 3, quoted in para 84 above. Lord Brodie said that he took from this language that the concern of the PPE Regulations was the risks to which the worker was exposed at work which arose specifically from that work, as opposed to risks to which a worker might be exposed in the same way as members of the public. It was in the former circumstances that the employer might be supposed to have the requisite knowledge and means to control the risk through the hierarchy of measures set out in article 6(2) of the Framework Directive and Schedule 1 to the Management Regulations. We do not find these arguments persuasive. An employee is at work, for the purposes of both the Management Regulations and the PPE Regulations, throughout the time when she is in the course of her employment: section 52(1)(b) of the 1974 Act. The point is illustrated by the facts of Robb v Salamis (M & I) Ltd [2006] UKHL 56; 2007 SC (HL) 71; [2007] ICR 175. Miss Kennedy in particular, as a home carer, was at work when she was travelling between the home of one client and that of another in order to provide them with care. Indeed, travelling from one clients home to anothers was an integral part of her work. The meaning of the words while at work in regulation 4(1) of the PPE Regulations (and of the equivalent words, whilst they are at work, in regulation 3(1) of the Management Regulations) is plain. They mean that the employee must be exposed to the risk during the time when she is at work, that is to say, during the time when she is in the course of her employment. They refer to the time when she is exposed to the risk, not to the cause of the risk. That conclusion as to the construction of the Regulations would not be affected even if, as the Extra Division considered, the Directives were to be construed as having a narrower application. As article 1(3) of the Framework Directive makes clear, the Directives do not exclude the adoption of national measures which provide greater protection. The PPE Directive in particular lays down minimum requirements: article 1(1). It has been noted in earlier cases that the domestic Regulations are in some respects of wider scope than the Directives (see, for example, Hide v The Steeplechase Co (Cheltenham) Ltd [2013] EWCA Civ 545; [2014] ICR 326). But the Directives are not in any case confined to risks arising specifically from the nature of the activities which the worker carries out, as opposed to risks arising from the natural environment to which the worker is exposed while at work. Article 5(1) of the Framework Directive requires the employer to ensure the safety and health of workers in every aspect related to the work. Article 5(4) makes it clear that the employers obligations are not confined to risks arising from matters within his control: member states are permitted to exclude or limit employers responsibility only where occurrences are due to unusual and unforeseeable circumstances, beyond the employers control, or to exceptional events, the consequences of which could not have been avoided despite the exercise of all due care. The obligation imposed by article 6(3)(a) applies to all risks to the safety and health of workers: Commission of the European Communities v Italian Republic (Case C 49/00) [2001] ECR I 8575, para 12. As we have explained, Annex II to the PPE Directive includes Removable spikes for ice, snow in its non exhaustive guide list of items of PPE, while Annex III includes Work in the open air in rain and cold weather in its non exhaustive guide list of activities and sectors of activity which may require the provision of PPE. As we have explained, the Extra Division also considered the Lord Ordinarys approach to be inconsistent with regulations 8 and 10 of the PPE Regulations. We do not agree. Regulation 8 requires the employer to ensure that appropriate accommodation is provided for the PPE when it is not being used. Lord Brodie reasoned that, since the employer could only make accommodation available in places or situations where he could exercise control, regulation 8 suggested that the risks with which the Regulations were concerned were similarly confined. With respect, that does not follow. Protective clothing, for example, often has to be provided precisely because the employer cannot control the places or situations in which the clothing is to be worn (as, for example, in Henser Leather v Securicor Cash Services Ltd [2002] EWCA Civ 816 and Taylor v Chief Constable of Hampshire Police [2013] EWCA Civ 496; [2013] ICR 1150). It also has to be borne in mind that there may be situations in which the most appropriate place for PPE to be accommodated when it is not in use will be in the employees home or vehicle. In such a situation, the employer might fulfil its duty under regulation 8 by arranging with the employee for the PPE to be accommodated there. So far as regulation 10 is concerned, it requires the employer to take all reasonable steps to ensure that any PPE provided to his employees is properly used, and is returned to the accommodation provided for it after use. The Extra Division appear to have considered that it would be difficult to apply or enforce those obligations in situations where the risk was not created by the nature of the task carried out by the employee. We do not share that concern. Evidently, the implications of a duty to take all reasonable steps depend on the circumstances. Where, for example, the PPE is intended to be used in situations where the employee cannot reasonably be subject to immediate supervision, the duty to take all reasonable steps will not require such supervision, but may be satisfied by less onerous measures, such as adequate training and instruction. There remains the Extra Divisions conclusion that there was in any event no obligation to provide PPE in the present case, since on the Lord Ordinarys findings the risk of slipping was adequately controlled by other means which were equally or more effective, as required by regulation 4(1) of the PPE Regulations. In that regard, the Extra Division considered that there was little evidence as to the likely efficacy of attachments over the range of underfoot conditions that Miss Kennedy could have been expected to encounter. We are unable to reconcile the Extra Divisions conclusion with the Lord Ordinarys findings. In relation to the exception to regulation 4(1), he noted that the onus was on the employer to establish that the exception was made out. He found, in the first place, that the evidence about the precautions in place, in the form of training, was vague and unsatisfactory. As he commented, that in itself showed that the precautions taken could not be regarded as adequate control by other means. Furthermore, he accepted Mr Greaslys evidence about the availability of PPE which would reduce the risk. His reasoning reflects the evidence and a proper understanding of the law. The evidence established that anti slipping attachments were available at a modest cost; that they were used by other employers to address the risk of their employees slipping and falling on footpaths covered in snow and ice; that there was a body of research demonstrating that their use reduced the risk of slipping in wintry conditions; and that Mr Greaslys own experience was that the attachments which he had used had made a difference. His evidence, which the Lord Ordinary accepted, was that, had Miss Kennedy worn such devices, on a balance of probabilities the risk of her falling on ice and snow would have been reduced and might have been eliminated. As against that, Cordia had given no consideration to the matter. In those circumstances, we can see no basis in the Lord Ordinarys findings, or in the evidence, for finding that the exception in regulation 4(1) had been made out. Common law liability It may be helpful at the outset to address a general point arising from the opinions of the Extra Division. They contain numerous comments to the effect that it is unreasonable to suggest that Miss Kennedys employer should have provided her with special footwear designed to reduce the risk of her slipping and falling, since she was in the same position as any other member of the public travelling on foot in wintry conditions. It was in that context that the Extra Division stressed the necessary basic questions identified by Lord President Dunedin in Morton v William Dixon Ltd, and referred to the Caparo test: see para 32 above. One can understand the Extra Divisions concern that the law should not be excessively paternalistic. Miss Kennedy was not, however, in the same position as an ordinary member of the public going about her own affairs. It was her duty, as someone employed by Cordia as a home carer, to visit clients in their homes in different parts of the city on a freezing winters evening despite the hazardous conditions underfoot. Unlike an ordinary member of the public, she could not choose to stay indoors and avoid the risk of slipping and falling on the snow and ice. Unlike an ordinary member of the public, she could not choose where or when she went. She could not keep to roads and pavements which had been cleared or treated. She could not decide to avoid the untreated footpath leading to Mrs Craigs door. Unlike an ordinary member of the public, she was obliged to act in accordance with the instructions given to her by her employers: employers who were able, and indeed obliged under statute, to consider the risks to her safety while she was at work and the means by which those risks might be reduced. In those circumstances, to base ones view of the common law on the premise that Miss Kennedy was in all relevant respects in the same position as an ordinary member of the public is a mistake. Furthermore, the common law relating to employers liability was not definitively stated by Lord Dunedin in Morton v William Dixon Ltd. As long ago as 1959, Lord Keith of Avonholm devoted his speech in Cavanagh v Ulster Weaving Co Ltd [1960] AC 145 to the clarification of Lord Dunedins dictum. He observed that the ruling principle was that an employer was bound to take reasonable care for the safety of his workmen, and all other rules or formulas must be taken subject to that principle (a point which had earlier been made, in relation to Lord Dunedins dictum, by Lord Normand in Paris v Stepney Borough Council [1951] AC 367, 382 and by Lord Reid in Morris v West Hartlepool Steam Navigation Co Ltd [1956] AC 552, 571, amongst others). He added that Lord Dunedin could not have intended to depart from or modify that fundamental principle. Both in that case and in Brown v Rolls Royce Ltd 1960 SC (HL) 22; [1960] 1 WLR 210 Lord Keith emphasised that Lord Dunedin was laying down no proposition of law. The context in which the common law of employers liability has to be applied has changed since 1909, when Morton v William Dixon Ltd was decided. As Smith LJ observed in Threlfall v Kingston upon Hull City Council [2010] EWCA Civ 1147; [2011] ICR 209, para 35 (quoted by the Lord Ordinary in the present case), in more recent times it has become generally recognised that a reasonably prudent employer will conduct a risk assessment in connection with its operations so that it can take suitable precautions to avoid injury to its employees. In many circumstances, as in those of the present case, a statutory duty to conduct such an assessment has been imposed. The requirement to carry out such an assessment, whether statutory or not, forms the context in which the employer has to take precautions in the exercise of reasonable care for the safety of its employees. That is because the whole point of a risk assessment is to identify whether the particular operation gives rise to any risk to safety and, if so, what is the extent of that risk, and what can and should be done to minimise or eradicate the risk. The duty to carry out such an assessment is therefore, as Lord Walker of Gestingthorpe said in Fytche v Wincanton Logistics plc [2004] UKHL 31; [2004] ICR 975, para 49, logically anterior to determining what precautions a reasonable employer would have taken in order to fulfil his common law duty of care. It follows that the employers duty is no longer confined to taking such precautions as are commonly taken or, as Lord Dunedin put it, such other precautions as are so obviously wanted that it would be folly in anyone to neglect to provide them. A negligent omission can result from a failure to seek out knowledge of risks which are not in themselves obvious. A less outdated formulation of the employers common law duty of care can be found in Baker v Quantum Clothing Group Ltd [2011] UKSC 17; [2011] 1 WLR 1003, para 9. In the present case, Cordia were aware of a history of accidents each year due to their home carers slipping on snow and ice, and they were aware that the consequences of such accidents were potentially serious. Quite apart from the duty to carry out a risk assessment, those circumstances were themselves sufficient to lead an employer taking reasonable care for the safety of its employees to inquire into possible means of reducing that risk. Had such inquiries been made, or a proper risk assessment carried out, the implication of the evidence accepted by the Lord Ordinary is that Cordia would have learned that attachments were available, at a modest cost, which had been found to be effective in reducing the risk, and had been provided by a number of other employers to employees in a similar position. In those circumstances, the Lord Ordinary was entitled to conclude that Cordia were negligent in failing to provide Miss Kennedy with such attachments. It is necessary only to add that the familiar threefold test set out by Lord Bridge of Harwich in Caparo is not relevant in this context, as counsel for Cordia acknowledged. That test is concerned with the imposition of a duty of care in novel circumstances. There is no doubt that an employer owes a duty of care towards its employees. The question in the present case is not whether a duty of care existed, but whether it was fulfilled. Causation It remains to consider the Extra Divisions conclusion that the Lord Ordinary was not entitled to find Cordia liable in the absence of any explicit finding that Miss Kennedys injury had been caused by any breach of duty on their part. The question is not, of course, whether Miss Kennedys injury would necessarily have been prevented: as in other civil contexts, the matter has to be decided on a balance of probabilities. The Lord Ordinary made no express findings in relation to causation, other than that he accepted Miss Kennedys evidence that she would have used anti slip attachments if they had been provided to her. The question therefore is whether, in the light of the other findings which were made, the only reasonable inference which could be drawn was that Cordias breach of their duties caused or made a material contribution to Miss Kennedys accident. So far as the Management Regulations are concerned, the breach of regulation 3(1) resulted in a failure to provide protective equipment, in breach of the PPE Regulations. The issue of causation therefore turns on the consequences of the latter breach. So far as the PPE Regulations are concerned, the finding that there was a breach of regulation 4(1) implies that there was a failure to ensure that suitable equipment was provided. As we have explained, equipment is suitable only if so far as is practicable, it is effective to prevent or adequately control the risk or risks involved: regulation 4(3)(d). It follows from that definition that the equipment need not necessarily prevent the risk, but it must, as a minimum, adequately control the risk so far as is practicable. The concept of suitability thus contains a causal component. The Regulations do not define adequately, but it can be inferred from the EU legislation (including the requirement under article 5(1) of the Framework Directive that the employer shall have a duty to ensure the safety and health of workers) that a risk will not be adequately controlled unless injury is highly unlikely. Bearing in mind that the PPE Regulations should not be construed in such a way as to reduce pre existing levels of protection, that conclusion is also supported by case law on the previous domestic law. For example, in the case of Rogers v George Blair & Co Ltd (1971) 11 KIR 391, which concerned the duty to provide suitable goggles under section 65 of the Factories Act 1965, Salmon LJ stated at p 395: The protection, to be suitable, need not make it impossible for the accident to happen, but it must make it highly unlikely. It follows that where an employee has been injured as a result of being exposed to a risk against which she should have been protected by the provision of PPE, and it is established that she would have used PPE if it had been provided, it will normally be reasonable to infer that the failure to provide the PPE made a material contribution to the causation of the injury. Such an inference is reasonable because the PPE which the employer failed to provide would, by definition, have prevented the risk or rendered injury highly unlikely, so far as practicable. Such an inference would not, of course, be appropriate if the cause of the accident was unconnected with the risk against which the employee should have been protected. In the present case, there was no suggestion that it would not have been practicable to provide equipment which was effective to prevent or adequately control the risk or risks involved, and the evidence of Mr Greasly was to the contrary effect. In the circumstances, the only inference which could reasonably have been drawn was that the breach of regulation 4(1) had caused or materially contributed to the accident, and that Cordia were therefore liable to Miss Kennedy under the PPE Regulations. If, on the other hand, the Lord Ordinarys finding of a breach of regulation 4(1) of the PPE Regulations is left out of account, and one focuses solely upon his finding of a breach of a common law duty of care, then the position in relation to causation is more problematical. Given that the Lord Ordinary accepted Mr Greaslys evidence about the slip resistance of the attachments which he had experienced using, it might perhaps have been inferred as a matter of common sense that Cordias failure to provide such attachments was a material cause of Miss Kennedys accident (cf Drake v Harbour [2008] EWCA Civ 25, para 28). It cannot, however, be said that the Lord Ordinary would necessarily have reached that conclusion. His opinion does not contain any explicit consideration of the matter, or articulate any conclusion. In those circumstances, it is difficult to maintain that there was a proper foundation for his decision that Cordia were liable in damages at common law. That conclusion is however of no practical significance, given that Cordia are liable in any event under the 1992 Regulations. Conclusion For these reasons, we would allow the appeal. |
The issue in this appeal is whether fees imposed by the Lord Chancellor in respect of proceedings in employment tribunals (ETs) and the employment appeal tribunal (EAT) are unlawful because of their effects on access to justice. ETs have jurisdiction to determine numerous employment related claims, most of which are based on rights created by or under Acts of Parliament, sometimes giving effect to EU law. They are the only forum in which most such claims may be brought. The EAT hears appeals from ETs on points of law. Until the coming into force of the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013, SI 2013/1893 (the Fees Order), a claimant could bring and pursue proceedings in an ET and appeal to the EAT without paying any fee. The Fees Order prescribes various fees, as will be explained. In these proceedings for judicial review, the trade union UNISON (the appellant), supported by the Equality and Human Rights Commission and the Independent Workers Union of Great Britain as interveners, challenges the lawfulness of the Fees Order, which was made by the Lord Chancellor in the exercise of statutory powers. It is argued that the making of the Fees Order was not a lawful exercise of those powers, because the prescribed fees interfere unjustifiably with the right of access to justice under both the common law and EU law, frustrate the operation of Parliamentary legislation granting employment rights, and discriminate unlawfully against women and other protected groups. The issues relating to discrimination are addressed in the judgment of Lady Hale, with which I respectfully agree. The present judgment deals with the remaining issues. The statutory basis of the Fees Order Section 42 (1) of the Tribunals, Courts and Enforcement Act 2007 (the 2007 Act) provides that the Lord Chancellor may by order prescribe fees payable in respect of anything dealt with by the First tier and Upper Tribunals or by an added tribunal. Section 42(3) defines an added tribunal as a tribunal specified in an order made by the Lord Chancellor. The ET and the EAT were so specified by the Added Tribunals (Employment Tribunals and Employment Appeal Tribunal) Order 2013 (SI 2013/1892). The background to the Fees Order Relationships between employers and employees are generally characterised by an imbalance of economic power. Recognising the vulnerability of employees to exploitation, discrimination, and other undesirable practices, and the social problems which can result, Parliament has long intervened in those relationships so as to confer statutory rights on employees, rather than leaving their rights to be determined by freedom of contract. In more recent times, further measures have also been adopted under legislation giving effect to EU law. In order for the rights conferred on employees to be effective, and to achieve the social benefits which Parliament intended, they must be enforceable in practice. In 1968 the Donovan Report (the Report of the Royal Commission on Trade Unions and Employers Associations, Cmnd 3623) recommended that labour tribunals should be established to provide an easily accessible, speedy, informal and inexpensive procedure for the settlement of employment disputes (para 578). As a result, the jurisdiction of industrial tribunals, originally established by the Industrial Training Act 1964 to hear appeals concerning training levies, was extended to include jurisdiction over a wide range of employment rights. In 1998, they were renamed employment tribunals. ETs are intended to provide a forum for the enforcement of employment rights by employees and workers, including the low paid, those who have recently lost their jobs, and those who are vulnerable to long term unemployment. They are designed to deal with issues which are often of modest financial value, or of no financial value at all, but are nonetheless of social importance. Their procedural rules, which include short limitation periods and generous rights of audience, reflect that intention. It is also reflected in the fact that, unlike claims in the ordinary courts, claims in ETs could until recently be presented without the payment of any fee. The Leggatt Report (the Report of the Review of Tribunals, 2001) identified the absence of fees as one of the three elements which had rendered ETs successful. In January 2011 the Government published a paper entitled Resolving Workplace Disputes: A Consultation, in which it announced its intention to introduce fee charging into ETs and the EAT. Charging fees was considered to be desirable for three reasons. First, and most importantly, fees would help to transfer some of the cost burden from general taxpayers to those that used the system, or caused the system to be used. Secondly, a price mechanism could incentivise earlier settlements. Thirdly, it could dis incentivise unreasonable behaviour, such as pursuing weak or vexatious claims. Detailed proposals were published in December 2011 in a consultation paper issued by the Ministry of Justice entitled Charging Fees in the Employment Tribunals and the Employment Appeal Tribunal. Two alternative options for ETs were discussed, one of which went on to form the basis of the system set out in the Fees Order. The option which was ultimately preferred (Option 1) based the fee on the subject matter of the claim (since the level of tribunal resources used generally depends on the complexity of the issues raised by the claim) and on the number of claimants (since claims brought by two or more people that arise from the same circumstances are processed together as multiple claims). It was proposed that an issue fee should be paid at the time of lodging the claim, and that a further hearing fee should be paid in advance of a final hearing. The paper explained that the main purpose of a fee structure was to transfer part of the cost burden from the taxpayer to the users of the service, since a significant majority of the population would never use ETs but all taxpayers were being asked to provide financial support for this service. However, fees must not prevent claims from being brought by making it unaffordable for those with limited means. A fee remission system would therefore be a key component of the fee structure. The other issues taken into account were the importance of having a fee structure which was simple to understand and administer, and the importance of encouraging parties to think more carefully about alternative options before making a claim. The paper noted that the impact of fees on the number of claims was difficult to forecast, in the absence of research concerned specifically with ET users. Research into the impact of fee charging in the civil courts suggested that tribunal users required to pay a fee would not be especially price sensitive. The charging of fees in two stages, at the commencement of the proceedings and prior to a final hearing, was intended to reflect the cost of the services provided at each stage, and to encourage users to consider settlement during as well as before the tribunal process. An impact assessment was published in May 2012. It concluded that it was not possible to predict how claimants would respond to the introduction of fee charging. Two alternative assumptions were therefore made for modelling purposes. On the low response scenario, demand was assumed to decrease by 1% for every 100 of fee. On the high response scenario, demand was assumed to decrease by 5% for every 100 of fee. The methodology was then to place an economic value on the costs and benefits of implementing Option 1. One of the non monetised benefits was identified as being reduced deadweight loss to society as consumption of ET/EAT services is currently higher than would be the case under full cost recovery. In that regard, the analysis proceeded on the basis that the consumption of ET and EAT services without full cost recovery resulted in a deadweight loss to society. As was stated: This assumes that there are no positive externalities from consumption. In other words, ET and EAT use does not lead to gains to society that exceed the sum of the gains to consumers and producers of these services. (p 38) Under the heading Justice Impact Test, the document adverted only to the financial impact on HM Courts and Tribunals Service (HMCTS). A response to the consultation and an equality impact assessment were published in July 2012. The response announced that the Government had decided to implement Option 1 with some amendments. Access to justice would be maintained by ensuring via the remissions scheme that those who could not afford to pay fees were not financially prevented from making a claim. Suggestions that the deterrence of individual claims would have wider societal impacts were rejected. On 25 April 2013 a draft of the Fees Order was laid before Parliament. It was debated and approved by both Houses under the affirmative resolution procedure. It was made on 28 July 2013 and came into force on the following day. The Fees The Fees Order makes provision for fees to be payable in respect of any claim presented to an ET and any appeal to the EAT. So far as the ET is concerned, article 4 provides that an issue fee is payable when a claim form is presented, and a hearing fee is payable on a date specified in a notice accompanying the notification of the listing of a final hearing of the claim. Fees are also chargeable on the making of various kinds of application. The amounts of the issue fee and hearing fee vary depending on whether the claim is brought by a single claimant or by a group, and also depending on whether the claim is classified as type A or type B. There are over 60 types of claim which are defined as type A. All other types of claim are type B. Type A claims were described in the consultation documents as claims which generally take little or no pre hearing work and usually require approximately one hour to resolve at hearing. Unfair dismissal claims, equal pay claims and discrimination claims are classified as type B. Type B claims generally require more judicial case management, more pre hearings, and longer final hearings, because of their greater legal and factual complexity. The fees for a single claimant bringing a type A claim total 390, payable in two stages: an issue fee of 160 and a hearing fee of 230. For a type B claim the fees for a single claimant total 1,200, comprising an issue fee of 250 and a hearing fee of 950. The fees payable by groups vary according to the type of claim and the number of claimants in the group. For the smallest groups, of between two and ten claimants, the fees total 780 for type A claims and 2,400 for type B claims. For the largest groups, of over 200 claimants, the fees total 2,340 for type A claims and 7,200 for type B claims. Counsel for the Lord Chancellor were unable to explain how any of the fees had been arrived at. In the EAT, fees of 1,600 are payable, again in two stages: 400 on the date specified in a notice issued by the Lord Chancellor following the EATs receipt of a notice of appeal, and 1,200 on the date specified in a notice issued by the Lord Chancellor following a direction by the EAT that a matter proceed to a final oral hearing. There is no distinction between different types of appeal or between single and group appellants. Comparison with court fees Many claims which can be brought in ETs are for modest financial amounts. The fee structure is however very different from that applied to small claims in the County Court. ET fees for single claimants are set at one of two fixed rates: 390 for type A claims, and 1,200 for type B claims. The difference reflects the tribunal time which the claims are expected to require, and therefore has the effect of penalising claimants according to the complexity of their claims. Although most claims of a kind attracting low monetary awards tend to be classified as type A, the fees prescribed by the Fees Order bear no direct relation to the amount sought, and can therefore be expected to act as a deterrent to claims for small amounts and non monetary claims. In the County Court, on the other hand, fees for small claims are graduated according to the value of the claim. For claims issued online, they begin at 50 for claims up to 300, and rise in stages to 745 for claims between 5,000 and 10,000. The fee structure has thus been designed in a way which is likely to have a less deterrent effect on the bringing of small claims. There is also no penalty for bringing a complex claim rather than a simple one. It is only once a claim exceeds 3,000 that the fees payable in the County Court exceed the ET fees for a type A claim. Even the highest fees in the County Court for small claims are well below the ET fees for type B claims. Remission Article 17 of the Fees Order makes provision for the remission of fees in accordance with Schedule 3. As substituted by the Courts and Tribunals Fee Remissions Order 2013 (SI 2013/2302), with effect from 7 October 2013, Schedule 3 provides that claimants and appellants are not entitled to remission unless they satisfy the disposable capital test: that is to say, their disposable capital must be less than a specified amount, which varies according to the amount of the fee. Disposable capital is the value of every resource of a capital nature belonging to the party on the date on which the application for remission is made, subject to certain exclusions. For these purposes, the disposable capital of a claimants partner is treated as the claimants disposable capital, unless the partner has a contrary interest in the matter to which the fee relates. In respect of any fee up to and including 1,000 (which includes all the fees payable by single claimants, except for the 1,200 hearing fee in the EAT), no remission is available if the claimant is treated as having 3,000 or more in disposable capital. There is no explanation of how that figure, or any of the other figures relating to remission, were arrived at. Where the fee is between 1,001 and 1,335 (including the EAT hearing fee of 1,200), no remission is available if the claimant is treated as having disposable capital of 4,000 or more. Thus, if a claimant and his or her partner have savings of 3,000, the claimant will have to pay the full 390 for a type A claim in the ET and the full 1,200 for a type B claim, regardless of their income. It has to be borne in mind that some potential claimants may have temporarily inflated capital balances, due for example to payments received on the termination of their employment or to savings made in anticipation of childbirth. So, for example, if a woman has been selected for redundancy on a discriminatory basis, she will be disqualified from receiving any remission in proceedings to challenge the discrimination if the redundancy payment amounts to 3,000 or more. If the disposable capital test is satisfied, then the amount of any remission is calculated by applying the gross monthly income test. To qualify for full remission, the gross monthly income (which includes any partners income as well as the claimants own, unless they have contrary interests in relation to the matter in dispute) must be below a specified amount, which varies depending on whether the claimant is single and whether he or she has children. The specified amount for a single person without children is 1,085 per month. That figure rises by 245 per month for each child. The specified amount for a couple without children is 1,245 per month. That figure also rises by 245 per month for each child. For example, for a couple with two children, the specified amount is 1,735 per month. Partial remission is available on the basis that, for every 10 of gross monthly income above the specified amount, the claimant must pay 5 towards the fee. For example, a claimant with a partner and no children has to pay a full issue fee for a type A claim once her and her partners gross monthly income exceeds 1,565, and a full hearing fee once it exceeds 1,705. A couple with two children have to pay the full issue fee for a type A claim once their gross monthly income exceeds 2,055, and the full hearing fee once their gross monthly income exceeds 2,195. So far as type B claims are concerned, a claimant with a partner and no children has to pay the full issue fee once her and her partners gross monthly income exceeds 1,745, and the full hearing fee once their gross monthly income exceeds 3,145. To put the figures discussed in the preceding paragraphs into perspective, the national minimum wage of 7.50 per hour produces an income of 1,300 per month, assuming a 40 hour week. That is before taking account of any benefits and tax credits (which, subject to specified exceptions, are included in the calculation of income under the remissions scheme). A couple each earning the national minimum wage would therefore have an income of 2,600 per month, before benefits and tax credits were taken into account. Such a couple would not normally qualify for any remission of fees for a type A claim, but might qualify for partial remission of the hearing fee for a type B claim. Exceptional circumstances Paragraph 16 of Schedule 3 to the Fees Order provides that a fee may be remitted where the Lord Chancellor is satisfied that there are exceptional circumstances which justify doing so. Non statutory guidance as to what are regarded as exceptional circumstances is published by HMCTS. The guidance has been amended on a number of occasions, but all versions indicate that remission under this head is confined to persons facing exceptional hardship. Unpublished guidance to HMCTS staff states: In considering whether an applicant cannot realistically afford to pay, it is not enough that it may be difficult for a claimant to pay the fee. It is reasonable that a person might need to forego (sic) other spending in order to pay the fee. Instead, in order to be entitled to remission, a person must be in a position where, realistically, they simply cannot afford the fee. The effect of non payment of fees Under the rules of procedure of the ET, a claim must be rejected unless it is accompanied by an issue fee or a remission application, and must be dismissed if a hearing fee (or other relevant fee) has not been paid and no remission application has been presented. Similar rules apply in the EAT: an appeal must be struck out if the appellant has not paid a fee or presented a remission application. The recovery of fees by successful parties The traditional view that ETs should be an inexpensive forum is reflected in the fact that the usual rule on costs which applies elsewhere in the civil justice system that costs follow success has never applied in ETs. In general, a party to ET proceedings is only required to pay costs where he has acted vexatiously, abusively, disruptively or otherwise unreasonably in either bringing or conducting the proceedings. The rules of procedure of the ET and the EAT were however amended, when the Fees Order came into force, so as to give them a discretionary power to make an order that one party should pay the other the amount of any fees paid under the Order. A series of decisions in the EAT have held that such an order should normally be made in favour of a successful party, although it will not be appropriate in every case (for example, where their success was only partial, or where the respondent is unable to pay the sums in question). Although it is therefore possible to recover fees in the event that a claim is successful, it is necessary to bear in mind that it is generally difficult to predict with confidence that a claim will succeed. That is so for a number of reasons. One is that estimating prospects of success is not an exact science, especially before proceedings have been initiated. Depending on the nature of the case, initial estimates can often change during the course of proceedings as new information comes to light. In that regard, it is relevant to note that the pre claim questionnaire procedure, under which an employer could be required to provide an explanation for a difference in treatment in advance of a claim being issued, was abolished in 2013. Secondly, a reliable estimate depends on legal judgment and experience, which may not be available to an employee contemplating bringing a claim in an ET: employment disputes generally fall outside the scope of legal aid. Thirdly, employment law is characterised by a relatively high level of complexity and technicality. It is also important to bear in mind that, even if an order is made for the reimbursement of fees, there is a significant possibility that the order will not be obeyed. This will be discussed shortly. More fundamentally, the right of access to justice, both under domestic law and under EU law, is not restricted to the ability to bring claims which are successful. Many people, even if their claims ultimately fail, nevertheless have arguable claims which they have a right to present for adjudication. The claims brought before ETs The majority of successful ET claims result in modest financial awards. For example, it appears from statistics published by the Ministry of Justice that in 2012/13 (pre fees), 34% of successful race discrimination claims resulted in awards of less than 3,000. 52% resulted in awards of less than 5,000. The corresponding figures for religious discrimination claims, and claims of unfair dismissal, were similar. Some types of claim generally result in much lower awards. Statistics published by the Department for Business, Innovation and Skills in June 2014 indicated, for example, that the median award in successful claims for unlawful deductions from wages in 2013 was 900, and that 25% of successful claimants were awarded less than 500 (Findings from the Survey of Employment Tribunal Applications, Research Series No 177). Some claims are for even smaller amounts: for example, claims for time off for ante natal care under sections 55 57 of the Employment Rights Act 1996 (implementing Directive 92/85/EEC), where the award is the amount of remuneration to which the employee would have been entitled had she been granted the time off; claims for a statement of reasons for dismissal, under sections 92 and 93 of the 1996 Act, where the award is of two weeks pay; and claims for unauthorised deductions of trade union subscriptions under sections 68 and 68A of the Trade Union and Labour Relations (Consolidation) Act 1992, where the award is the amount deducted. Leaving aside claims for unfair dismissal, breach of contract, unlawful deductions from wages, redundancy pay and discrimination, the median award in all other types of claim in 2013 was 1,000. Some important types of claim before ETs do not involve monetary awards. An example is a claim for a written statement of particulars of employment. The particulars set out important information about such matters as working time, pay and holidays, which is vital to the enforcement of other employment rights. Employers are required to provide employees with such particulars by section 1 of the Employment Rights Act 1996. Where an employer fails to provide a statement, or there is a question as to whether all the necessary particulars have been included, the employee is entitled to refer the matter to an ET under section 11. These provisions give effect to Directive 91/533/EEC. Article 2 of the Directive imposes an obligation to provide the particulars, and article 8 provides: 1. Member states shall introduce into their national legal systems such measures as are necessary to enable all employees who consider themselves wronged by failure to comply with the obligations arising from this Directive to pursue their claims by judicial process after possible recourse to other competent authorities. As the words consider themselves wronged make clear, the obligation imposed by article 8 is not confined to employees whose claims turn out to be well founded. A reference of this kind is classified as a type A claim. Some other claims in which no compensation is payable are classified as type B, with the consequence that fees of 1,200 are payable in order to proceed to a hearing. An example is the right of fixed term workers to obtain a declaration that they are permanent employees, under regulation 9(5) of the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034), implementing clause 5 of the Framework Agreement on Fixed Term Work annexed to Directive 99/70/EC. Other claims may also result in no award of compensation, even if successful. An example is a claim by an employee that he has not been permitted to take rest breaks as required by the Working Time Regulations 1998 (SI 1998/1833). The employee is entitled to bring such a claim before an ET under regulation 30 of those regulations, implementing the Working Time Directive 2003/88/EC. Compensation may be awarded, but the ET is required to take into account whether the employee has sustained any loss. Such a claim is classified as type B. The enforcement of ET awards ET awards are enforceable in England and Wales by execution issued from a county court or otherwise as if they were payable under a county court order. An applicant has to pay a further fee of 44. A similar regime applies in the sheriff courts in Scotland. Many ET awards go unmet, even if enforcement proceedings are taken. A study carried out by the Department of Business, Innovation and Skills, shortly before the introduction of fees, found that only 53% of claimants who were successful before the ET were paid even part of the award prior to taking enforcement action (Payment of Tribunal Awards, 2013). Even after enforcement action, only 49% of claimants were paid in full, with a further 16% being paid in part, and 35% receiving no money at all. This was noted to be of particular concern in the light of the forthcoming introduction of fees. Although new provisions were brought into force in 2016 in order to enable the Department for Business, Energy and Industrial Strategy to enforce unpaid awards, under sections 37A to 37Q of the Employment Tribunals Act 1996 (as amended by section 150 of the Small Business, Enterprise and Employment Act 2015), they do not appear to have made a significant difference. Between 6 April 2016 and 20 January 2017 the new procedures resulted in the recovery of 31 unpaid awards, which is likely to have been a very small fraction of the total number. The effect of the Fees Order Impact on the number of claims (i) Information about the effect of the Fees Order on the number of claims can be derived from two sources. The first, relied on by the appellant, comprises the tribunal statistics published by the Ministry of Justice under the title Tribunals and Gender Recognition Certificate Statistics Quarterly. The court was referred to the statistics published in December 2016, which were not available to the courts below. The second source, relied on by the Lord Chancellor, is a consultation paper published by the Ministry of Justice in January 2017, entitled Review of the introduction of fees in the Employment Tribunals: Consultation on proposals for reform (Cm 9373) (the Review Report). It too was not available to the courts below. Both sources present a similar picture, although the figures are slightly different (those in the Review Report are not taken from the Ministrys published tribunal statistics, but are based on HMCTS management information for different periods). Although there are differences between the figures given in the different sources, the general picture is plain. Since the Fees Order came into force on 29 July 2013 there has been a dramatic and persistent fall in the number of claims brought in ETs. Comparing the figures preceding the introduction of fees with more recent periods, there has been a long term reduction in claims accepted by ETs of the order of 66 70%. The Review Report considered possible explanations, besides the introduction of the fees, and suggested that improvements in the economy would have been expected to result in a fall in single claims of about 8%. It concluded: The actual fall since fees were introduced has been much greater and we have therefore concluded that it is clear that there has been a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of fees. (para 105) The Report concluded that the overall scale of the fall . is troubling (para 336). (ii) Impact on the value of claims The Review Report referred to evidence submitted by the Council of Employment Judges, and by the Presidents of the ETs, that there had been a greater fall in lower value claims, such as claims for unpaid wages and unpaid annual leave, and in claims in which a financial remedy was not sought, such as claims to entitlement to breaks. They argued that this suggested that, at least for some types of case, the fees were disproportionate to what was at stake in the proceedings, and people were deciding that they were not economically worthwhile. The Review also reported a greater fall in type A claims, which tend to be of lower value, than in type B claims. These findings are consistent with research published by the Department for Business, Innovation and Skills prior to the introduction of fees (Findings from the Survey of Employment Tribunal Applications 2008, 2010), which found in surveys that those whose decision whether to bring an ET claim was most likely to be influenced by the payment of a 250 fee included the low paid (whose claims tend to be less valuable in so far as awards are related to earnings), and those with claims for unlawful deductions from wages (which, as explained earlier, tend to be for modest amounts). According to the published tribunal statistics, the proportion of successful claims receiving low awards has markedly decreased. For example, the proportion of successful race discrimination claims resulting in awards of less than 3,000 is recorded as having fallen from 34% in 2012/13 to 8% in 2015/16. For awards of less than 5,000, the fall was from 52% to 19%. There were corresponding falls (some larger in amount, some smaller) for all other categories of discrimination claim, and also for unfair dismissal claims. This change is also reflected in a marked rise in median awards in all categories of discrimination claim, and also in unfair dismissal claims. For example, the median award in race discrimination claims is reported to have risen over the same period from 4,831 to 13,760. (iii) The impact of remission The impact assessment published in May 2012 estimated that at least 24% of the pre fees population of claimants would receive full remission, and that a further 53% would receive partial remission on fees up to 950. In the event, the Review Report found that the proportion of the post fees population of claimants receiving full or partial remission was initially very low, but had increased by 2016 to about 29%. The proportion of claimants receiving remission is therefore far lower than had been anticipated. The actual number is even lower, compared with what had been anticipated, given the difference between the number of claimants before and after the introduction of fees. So far as concerns the Lord Chancellors discretionary power to remit fees in exceptional circumstances, in practice this power to remit has rarely been exercised. It was exercised 31 times during the period between 1 July 2015 and 30 June 2016: a period during which 86,130 individual claims were presented. It was exercised 20 times during the period between 14 July and 22 December 2016. (iv) Survey evidence In 2015 Acas published research carried out on its behalf, based on a survey of a representative survey of claimants (Evaluation of Acas Early Conciliation 2015). It included figures relating to claimants who were unable to resolve employment disputes through conciliation but who did not go on to issue ET proceedings. The most frequently mentioned reason for not submitting an ET claim was that the fees were off putting. More than two thirds of the claimants who gave that reason said that they could not afford the fees. Others said that the fee was more than they were prepared to pay, or that the value of the fee equalled the money they were owed. On the basis of that research, and additional management information, the Review Report concluded that, of the 83,000 claimants who had notified Acas of their claims during 2014/15, we estimate that the potential size of the group of people who said that the affordability of fees was the reason why they did not pursue a claim to the ETs would be around 8,000 (para 164). This estimate leaves out of consideration the claimants, identified in the Acas research, who gave as their reason for not bringing proceedings in the ET that the value of the fee equalled the money they were owed. It also leaves out of consideration the possibility that claimants who settled may have done so at a level which undervalued their claim, because they did not feel that they could afford the alternative of bringing proceedings in the ET. Nevertheless, in the Review Report the Ministry of Justice state that while there is clear evidence that ET fees have discouraged people from bringing claims, there is no conclusive evidence that they have been prevented from doing so (p 6). In relation to the survey of claimants, the Review states that it is not clear what respondents may have meant when they suggested that there were unable to afford to pay (sic), and refuses to accept that such persons cannot realistically afford to pay. It is suggested that they may have meant that affording the fees meant reducing some other areas of non essential spending in order to save the money, or that they may be unaware of, or believe that they would not qualify for, a fee remission, or that they may have been unaware of the Lord Chancellors power to remit fees in exceptional circumstances. That is also the position adopted by the Lord Chancellor in these proceedings. In relation to the first of these suggestions, a distinction was drawn in the responses to the survey between those who said that they could not afford to pay the fees and those who said that they were unwilling to do so, for one reason or another. In relation to the second and third suggestions, as explained earlier, the remission scheme is of very limited scope except in relation to type B hearing fees, and the Lord Chancellors power to remit in exceptional circumstances is exercised only in cases of exceptional hardship. More fundamentally, the implicit premise of all three suggestions is that anyone who does not qualify for full remission will, in all but exceptional cases (which can be addressed by the discretion to remit in exceptional circumstances), have non essential income or capital which can be used to pay the fees. It is on that basis that the Lord Chancellor argues that legal requirements as to access to justice are satisfied. It will be necessary to return to these issues. (v) Hypothetical claimants In addition to the tribunal statistics, the Review Report and the Acas research, the appellant has also produced details of the effect of the fees on a number of hypothetical claimants in low to middle income households. Two examples may be given. The first hypothetical claimant is a single mother with one child, working full time as a secretary in a university. She has a gross income from all sources of 27,264 per annum. Her liability to any issue or hearing fee is capped under the remission scheme at 470 per fee. She therefore has to pay the full fees (390) in order to pursue a type A claim to a hearing, and fees totalling 720 in order to pursue a type B claim. The net monthly income which she requires in order to achieve acceptable living standards for herself and her child, as assessed by the Joseph Rowntree Foundation in its report, Minimum Income Standards for the UK in 2013, is 2,273: an amount which exceeds her actual net monthly income of 2,041. On that footing, in order to pursue a claim she has to suffer a substantial shortfall from what she needs in order to provide an acceptable living standard for herself and her child. The Lord Chancellor disputes the use made of the Joseph Rowntree Foundations minimum income standards. On the Lord Chancellors approach, no provision should be made for any expenditure on clothing (for which 10 per week had been allowed), personal goods and services (12 per week), social and cultural participation (48 per week), or alcohol (5 per week), on the basis that all spending of these kinds can be stopped for a period of time in order to save the amount required to bring a claim. On that basis, the amount of the claimants net monthly income, after minimum living standards are met, is 202 per month. In order to meet the fees, she therefore has to sacrifice all other spending, beyond the matters accepted by the Lord Chancellor to be necessities, for a period of two months, in order to bring a type A claim, and for three and a half months, in order to bring a type B claim. The second hypothetical claimant has a partner and two children. She and her partner both work full time and are paid the national minimum wage. They have a gross income, when benefits and tax credits are also taken into account, of 33,380 per annum. The claimants liability to fees is capped under the remission scheme at 520. She therefore has to pay the full fees of 390 in order to pursue a type A claim, and fees totalling 770 in order to bring a type B claim. The net monthly income the family require in order to achieve an acceptable living standard, as assessed by the Joseph Rowntree Foundation, is 3,097: an amount which exceeds their actual net monthly income of 2,866. They therefore have to make further inroads into living standards which are already below an acceptable level if a claim is to be brought. On the Lord Chancellors approach, the family have a net monthly income available, after excluding all expenditure on clothing, personal goods and services and so forth, of 593 per month. On that basis, a claim can be brought if spending is restricted to items accepted by the Lord Chancellor to be necessities for a period of about a month. One problem with the Lord Chancellors approach to these calculations is that some of the expenditure which he excludes, such as spending on clothing, may not in fact be saved, but is simply postponed. For example, if the children need new clothes because they have outgrown their old ones, replacements have to be purchased sooner or later. The impact of the fees on the familys ability to enjoy acceptable living standards is not avoided merely by postponing necessary expenditure. A second problem is that claimants may not have prolonged periods of time available to them during which to save the amount required to pay the fees. Claimants are expected to bring their claims promptly, in keeping with the intention that the process should be speedy. The usual time limit for bringing a claim in the ET is three months, starting from the date of the event giving rise to the claim. The issue fee must be paid then, although more time is available before the hearing fee will be due. More fundamentally, the question arises whether the sacrifice of ordinary and reasonable expenditure can properly be the price of access to ones rights. (vi) Transferring the cost burden to users of the tribunals As explained earlier, the principal aim of the introduction of fees was to transfer part of the cost burden of the tribunals from taxpayers to users of their services. The Review Report states: Our original impact assessment estimated that the introduction of fees would achieve a cost recovery rate of around a third, taking into account fee remissions. The actual recovery rate has been much lower: 17% in 2014/15 and 19% in 2015/16. (para 140) (The recovery rates of 17% and 19% have been calculated without taking into account fee remissions. Once they are taken into account, the recovery rate in each of those years, on the figures given in the Review Report, was 13%.) Fees are thus making a much less significant contribution to costs recovery than had been expected. The Review Report attributes the difference to the fact that the actual fall [in the number of claims] since fees were introduced has been much greater [than predicted] (para 105). However, notwithstanding the evidence that the price elasticity of demand for ET and EAT services is much greater than had been estimated when the fees were fixed, the Review Report does not consider the possibility that reducing the fees might result in an increase in the number of claims, and consequently in an increase in fee income. (vii) The deterrence of unmeritorious claims A secondary objective of the introduction of fees was to deter the bringing of unmeritorious claims. The Review Report analysed the outcomes of single claims which had been presented after fees were introduced, and compared them with the outcome of cases during the three quarters preceding the introduction of fees. The results show that the proportion of successful claims has been consistently lower since fees were introduced, while the proportion of unsuccessful claims has been consistently higher. The tribunal statistics, which record the figures for all claims, show the same trend. The Lord Chancellor accepts that there is no basis for concluding that only stronger cases are being litigated. (viii) Encouraging earlier settlements A further aim of the introduction of fees (described in more recent documents as a hope) was to encourage the earlier settlement of disputes. The Review Report contains information about the number of people who contacted Acas and did not proceed to make an ET claim. That number, expressed as a proportion of the total number of employment disputes notified either to Acas or to ETs, has increased greatly since fees were introduced: from 22% in 2012/13 to 78% in 2014/15 and 80% in 2015/16. In the light of those figures, the Review Report claims that conciliation has helped more people to avoid the need to go to ETs. However, those figures include cases where no settlement was reached, but where for other reasons (including the persons view of the affordability of fees) the claim was not pursued. According to the tribunal statistics, in 2011/12 33% of claims were settled through Acas. The following year, the proportion was again 33%. In 2014/15, following the introduction of fees, 8% of claims settled through Acas. In 2015/16, the figure rose again to 31%. Even ignoring the exceptional figure for 2014/15, it appears that the proportion of cases settled through Acas has slightly decreased since fees were introduced. That is consistent with the view of commentators, noted in the Review Report, that some employers were delaying negotiations to see whether the claimant would be prepared to pay the fee. The history of the proceedings On 28 June 2013 the appellant issued a claim for judicial review (the First JR) in which it sought to have the Fees Order quashed on the grounds that it breached the EU principles of effectiveness and equivalence, was brought into force in breach of the Public Sector Equality Duty imposed by the Equality Act 2010, and was indirectly discriminatory. The Divisional Court (Moses LJ and Irwin J) dismissed the claim, holding that the proceedings were premature and that the evidence was insufficiently robust to sustain the grounds of challenge: [2014] EWHC 218 (Admin); [2014] ICR 498. The appellant was initially granted permission to appeal only on the effectiveness ground and to adduce fresh evidence showing the fall in the number of ET claims instituted. The appellant renewed its application for permission on the remaining grounds of challenge, and the respondent applied to set aside the order in so far as it granted permission to adduce fresh evidence. These applications were adjourned by consent to permit fresh judicial review proceedings to be commenced, taking into account the new evidence. On 23 September 2014 the appellant issued a second claim for judicial review (the Second JR) in which it sought to have the Fees Order quashed on two grounds, namely the effectiveness ground and the discrimination ground. The Divisional Court (Elias LJ and Foskett J) dismissed the claim: [2014] EWHC 4198 (Admin); [2015] ICR 390, citing with approval the conclusion in the First JR that the principle of effectiveness was not violated unless the fees were so high that the prospective litigant was clearly unable to pay them. It granted permission to appeal on both grounds of challenge. The Court of Appeal subsequently gave permission to appeal on the remaining grounds in the First JR, and the two appeals were joined. In the event, the equivalence ground in the First JR was not pursued. The Court of Appeal (Moore Bick, Davis and Underhill LJJ) dismissed the appeals: [2015] EWCA Civ 935; [2016] ICR 1. Underhill LJ, with whose judgment Moore Bick and Davis LJJ agreed, considered that the imposition of a fee would not constitute an interference with the right of effective access to a tribunal under EU law unless it made it impossible in practice to access the tribunal. That depended on whether the fee was unaffordable (para 41), and not on whether the payment of the fee would be a sensible use of money (para 45). In applying the affordability test to the evidence, Underhill LJ saw no safe basis for an inference that the decline [in the number of claims] cannot consist entirely of cases where potential claimants could realistically have afforded to bring proceedings but have made a choice not to (para 68: emphasis in the original). Only evidence of the actual affordability of the fees in the financial circumstances of typical individuals could enable the court to reach a reliable conclusion that the fees were realistically unaffordable in some cases (ibid). Underhill LJ also rejected the arguments based on the Public Sector Equality Duty and the discrimination ground. The issue concerning the effect of the Fees Order on access to justice was argued before the courts below on the basis of EU law, although some domestic authorities and judgments of the European Court of Human Rights were also cited. Before this court, it has been recognised that the right of access to justice is not an idea recently imported from the continent of Europe, but has long been deeply embedded in our constitutional law. The case has therefore been argued primarily on the basis of the common law right of access to justice, although arguments have also been presented on the basis of EU law and the European Convention on Human Rights. The appellant has also argued the discrimination ground, and has been permitted to advance a new ground of challenge, namely that the Fees Order is ultra vires because it frustrates the operation of a variety of statutory provisions. The argument advanced below on the basis of the Public Sector Equality Duty has not been pursued. Is the Fees Order unlawful under English law? In determining the extent of the power conferred on the Lord Chancellor by section 42(1) of the 2007 Act, the court must consider not only the text of that provision, but also the constitutional principles which underlie the text, and the principles of statutory interpretation which give effect to those principles. In that regard, there are two principles which are of particular importance in this case. One is the constitutional right of access to justice: that is to say, access to the courts (and tribunals: R v Secretary of State for the Home Department, Ex p Saleem [2001] 1 WLR 443). The other is the rule that specific statutory rights are not to be cut down by subordinate legislation passed under the vires of a different Act (R v Secretary of State for Social Security, Ex p Joint Council for the Welfare of Immigrants [1997] 1 WLR 275, 290 per Simon Brown LJ). In the context of the present case, there is a considerable degree of overlap between these two principles. For the sake of clarity, however, each of these principles will be considered in turn. The constitutional right of access to the courts The constitutional right of access to the courts is inherent in the rule of law. The importance of the rule of law is not always understood. Indications of a lack of understanding include the assumption that the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the users who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings. The extent to which that viewpoint has gained currency in recent times is apparent from the consultation papers and reports discussed earlier. It is epitomised in the assumption that the consumption of ET and EAT services without full cost recovery results in a loss to society, since ET and EAT use does not lead to gains to society that exceed the sum of the gains to consumers and producers of these services. It may be helpful to begin by explaining briefly the importance of the rule of law, and the role of access to the courts in maintaining the rule of law. It may also be helpful to explain why the idea that bringing a claim before a court or a tribunal is a purely private activity, and the related idea that such claims provide no broader social benefit, are demonstrably untenable. At the heart of the concept of the rule of law is the idea that society is governed by law. Parliament exists primarily in order to make laws for society in this country. Democratic procedures exist primarily in order to ensure that the Parliament which makes those laws includes Members of Parliament who are chosen by the people of this country and are accountable to them. Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade. That is why the courts do not merely provide a public service like any other. Access to the courts is not, therefore, of value only to the particular individuals involved. That is most obviously true of cases which establish principles of general importance. When, for example, Mrs Donoghue won her appeal to the House of Lords (Donoghue v Stevenson [1932] AC 562), the decision established that producers of consumer goods are under a duty to take care for the health and safety of the consumers of those goods: one of the most important developments in the law of this country in the 20th century. To say that it was of no value to anyone other than Mrs Donoghue and the lawyers and judges involved in the case would be absurd. The same is true of cases before ETs. For example, the case of Dumfries and Galloway Council v North [2013] UKSC 45; [2013] ICR 993, concerned with the comparability for equal pay purposes of classroom assistants and nursery nurses with male manual workers such as road workers and refuse collectors, had implications well beyond the particular claimants and the respondent local authority. The case also illustrates the fact that it is not always desirable that claims should be settled: it resolved a point of genuine uncertainty as to the interpretation of the legislation governing equal pay, which was of general importance, and on which an authoritative ruling was required. Every day in the courts and tribunals of this country, the names of people who brought cases in the past live on as shorthand for the legal rules and principles which their cases established. Their cases form the basis of the advice given to those whose cases are now before the courts, or who need to be advised as to the basis on which their claim might fairly be settled, or who need to be advised that their case is hopeless. The written case lodged on behalf of the Lord Chancellor in this appeal itself cites over 60 cases, each of which bears the name of the individual involved, and each of which is relied on as establishing a legal proposition. The Lord Chancellors own use of these materials refutes the idea that taxpayers derive no benefit from the cases brought by other people. But the value to society of the right of access to the courts is not confined to cases in which the courts decide questions of general importance. People and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and, on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them. It is that knowledge which underpins everyday economic and social relations. That is so, notwithstanding that judicial enforcement of the law is not usually necessary, and notwithstanding that the resolution of disputes by other methods is often desirable. When Parliament passes laws creating employment rights, for example, it does so not merely in order to confer benefits on individual employees, but because it has decided that it is in the public interest that those rights should be given effect. It does not envisage that every case of a breach of those rights will result in a claim before an ET. But the possibility of claims being brought by employees whose rights are infringed must exist, if employment relationships are to be based on respect for those rights. Equally, although it is often desirable that claims arising out of alleged breaches of employment rights should be resolved by negotiation or mediation, those procedures can only work fairly and properly if they are backed up by the knowledge on both sides that a fair and just system of adjudication will be available if they fail. Otherwise, the party in the stronger bargaining position will always prevail. It is thus the claims which are brought before an ET which enable legislation to have the deterrent and other effects which Parliament intended, provide authoritative guidance as to its meaning and application, and underpin alternative methods of dispute resolution. A Lord Chancellor of a previous generation put the point in a nutshell, in a letter to the Treasury: (i) Justice in this country is something in which all the Queens subjects have an interest, whether it be criminal or civil. (ii) The courts are for the benefit of all, whether the individual resorts to them or not. (iii) In the case of the civil courts the citizen benefits from the interpretation of the law by the Judges and from the resolution of disputes, whether between the state and the individual or between individuals. (Genn, Judging Civil Justice (2010), p 46, quoting a letter written by Lord Gardiner in 1965) In English law, the right of access to the courts has long been recognised. The central idea is expressed in chapter 40 of the Magna Carta of 1215 (Nulli vendemus, nulli negabimus aut differemus rectum aut justiciam), which remains on the statute book in the closing words of chapter 29 of the version issued by Edward I in 1297: We will sell to no man, we will not deny or defer to any man either Justice or Right. Those words are not a prohibition on the charging of court fees, but they are a guarantee of access to courts which administer justice promptly and fairly. The significance of that guarantee was emphasised by Sir Edward Coke in Part 2 of his Institutes of the Laws of England (written in the 1620s, but published posthumously in 1642). Citing chapter 29 of the 1297 charter, he commented: And therefore, every Subject of this Realme, for injury done to him in bonis, terris, vel persona [in goods, in lands, or in person], by any other Subject . may take his remedy by the course of the Law, and have justice, and right for the injury done to him, freely without sale, fully without any deniall, and speedily without delay. Hereby it appeareth, that Justice must have three qualities, it must be Libera, quia nihil iniquius venali Justitia; Plena, quia Justitia non debet claudicare; & Celeris, quia dilatio est quaedam negatio [Free, because nothing is more iniquitous than saleable justice; full, because justice ought not to limp; and speedy, because delay is in effect a denial]; and then it is both Justice and Right. (1809 ed, pp 55 56) More than a century later, Blackstone cited Coke in his Commentaries on the Laws of England (1765 1769), and stated: A right of every [man] is that of applying to the courts of justice for redress of injuries. Since the law is in England the supreme arbiter of every mans life, liberty, and property, courts of justice must at all times be open to the subject, and the law be duly administered therein. (Book I, Chapter 1, Absolute Rights of Individuals) In more modern times, many examples can be found of judicial recognition of the constitutional right of unimpeded access to the courts (as Lord Diplock described it in Attorney General v Times Newspapers Ltd [1974] AC 273, 310, and again in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corpn Ltd [1981] AC 909, 977), which can only be curtailed by clear statutory enactment. Thus, in In re Boaler [1915] 1 KB 21, where the question was whether a statutory prohibition on vexatious litigants instituting legal proceedings extended to criminal proceedings, the Court of Appeal held that it did not. Scrutton J said at p 36 that although a statute might deprive a subject of the right to appeal to the courts, the language of any such statute should be jealously watched by the courts, and should not be extended beyond its least onerous meaning unless clear words are used to justify such extension. Similarly, in Chester v Bateson [1920] 1 KB 829, where delegated legislation prohibited the bringing of certain legal proceedings without a ministers consent, the Divisional Court held that the regulation was invalid. Avory J stated that nothing less than express words in the statute taking away the right of the Kings subjects of access to the courts of justice would authorize or justify it (p 836). To similar effect was the decision of the House of Lords in R & W Paul Ltd v The Wheat Commission [1937] AC 139, where an arbitration scheme established by delegated legislation disapplied the Arbitration Act 1889, under which arbitrators could state a special case for the opinion of the court on a point of law. That element of the scheme had not been expressly authorised by the enabling legislation, and was held to be ultra vires. As Viscount Simonds observed in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1960] AC 260, 286: It is a principle not by any means to be whittled down that the subjects recourse to Her Majestys courts for the determination of his rights is not to be excluded except by clear words. Another important general statement was made by Lord Diplock in Attorney General v Times Newspapers Ltd at p 309: The due administration of justice requires first that all citizens should have unhindered access to the constitutionally established courts of criminal or civil jurisdiction for the determination of disputes as to their legal rights and liabilities; secondly, that they should be able to rely upon obtaining in the courts the arbitrament of a tribunal which is free from bias against any party and whose decision will be based upon those facts only that have been proved in evidence adduced before it in accordance with the procedure adopted in courts of law; and thirdly that, once the dispute has been submitted to a court of law, they should be able to rely upon there being no usurpation by any other person of the function of that court to decide it according to law. Most of the cases so far mentioned were concerned with barriers to the bringing of proceedings. But impediments to the right of access to the courts can constitute a serious hindrance even if they do not make access completely impossible. More recent authorities make it clear that any hindrance or impediment by the executive requires clear authorisation by Parliament. Examples include Raymond v Honey [1983] 1 AC 1, where prison rules requiring a prison governor to delay forwarding a prisoners application to the courts, until the matter complained of had been the subject of an internal investigation, were held to be ultra vires; and R v Secretary of State for the Home Department, Ex p Anderson [1984] QB 778, where rules which prevented a prisoner from obtaining legal advice in connection with proceedings that he wished to undertake, until he had raised his complaint internally, were also held to be ultra vires. The courts approach in these cases was to ask itself whether the impediment or hindrance in question had been clearly authorised by primary legislation. In Raymond v Honey, for example, Lord Wilberforce stated at p 13 that the statutory power relied on (a power to make rules for the management of prisons) was quite insufficient to authorise hindrance or interference with so basic a right as the right to have unimpeded access to a court. Lord Bridge of Harwich added at p 14 that a citizens right to unimpeded access to the courts can only be taken away by express enactment. Even where a statutory power authorises an intrusion upon the right of access to the courts, it is interpreted as authorising only such a degree of intrusion as is reasonably necessary to fulfil the objective of the provision in question. This principle was developed in a series of cases concerned with prisoners. The first was R v Secretary of State for the Home Department, Ex p Leech [1994] QB 198, which concerned a prison rule under which letters between a prisoner and a solicitor could be read, and stopped if they were of inordinate length or otherwise objectionable. The rule did not apply where the letter related to proceedings already commenced, but the Court of Appeal accepted that it nevertheless created an impediment to the exercise of the right of access to justice in so far as it applied to prisoners who were seeking legal advice in connection with possible future proceedings. The question was whether the rule was authorised by a statutory power to make rules for the regulation of prisons. That depended on whether an objective need for such a rule, in the interests of the regulation of prisons, could be demonstrated. As Steyn LJ, giving the judgment of the court, stated at p 212: The question is whether there is a self evident and pressing need for an unrestricted power to read letters between a prisoner and a solicitor and a power to stop such letters on the ground of prolixity and objectionability. The evidence established merely a need to check that the correspondence was bona fide legal correspondence. Steyn LJ concluded: By way of summary, we accept that [the statutory provision] by necessary implication authorises some screening of correspondence passing between a prisoner and a solicitor. The authorised intrusion must, however, be the minimum necessary to ensure that the correspondence is in truth bona fide legal correspondence. (p 217) The decision in Leech was endorsed and approved by the House of Lords in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, which arose from a prohibition on visits to serving prisoners by journalists seeking to investigate whether the prisoners had, as they claimed, been wrongly convicted, except on terms which precluded the journalists from making professional use of the material obtained during such visits. The House considered whether the Home Secretarys evidence showed a pressing need for a measure which restricted prisoners attempts to gain access to justice, and found none. A similar approach was adopted in R (Daly) v Secretary of State for the Home Department [2001] UKHL 26; [2001] 2 AC 532, which concerned a policy that prisoners must be absent from their cells when legal correspondence kept there was examined. Lord Bingham of Cornhill, with whose speech the other members of the House agreed, summarised the effect of the earlier authorities concerning prisoners, including Raymond v Honey, Ex p Anderson, and Ex p Leech: Among the rights which, in part at least, survive [imprisonment] are three important rights, closely related but free standing, each of them calling for appropriate legal protection: the right of access to a court; the right of access to legal advice; and the right to communicate confidentially with a legal adviser under the seal of legal professional privilege. Such rights may be curtailed only by clear and express words, and then only to the extent reasonably necessary to meet the ends which justify the curtailment. (pp 537 538) After an examination of the evidence, Lord Bingham concluded that the policy provides for a degree of intrusion into the privileged legal correspondence of prisoners which is greater than is justified by the objectives the policy is intended to serve, and so violates the common law rights of prisoners (para 21). Since that degree of intrusion was not expressly authorised by the relevant statutory provision, it followed that the Secretary of State had no power to lay down the policy. Finally, in this overview of the common law authorities, it is necessary to note two cases concerned with court fees. First, the case of R v Lord Chancellor, Ex p Witham [1998] QB 575 concerned court fees prescribed by the Lord Chancellor under a statutory power. The order in question repealed a power to reduce or remit the fees on grounds of undue financial hardship in exceptional circumstances. The order had been made with the concurrence of all four Heads of Division, as well as the Treasury. It had also been laid before Parliament. The applicant was in receipt of income support of 58 per week, and wished to bring proceedings. The prescribed fee was either 120 or 500, depending on the amount claimed. The applicant said that he could not afford to pay a fee of either amount. There was also evidence that a person on income support could not afford the 10 fee to set aside a default judgment in debt proceedings, and that another person on income support who was facing eviction could not afford the 20 fee to be joined in possession proceedings. Laws J, with whom Rose LJ agreed, said that he saw no reason not to accept what was said, and concluded that there was a variety of situations in which persons on very low incomes were in practice denied access to the courts. Laws J accepted that, notwithstanding the wide discretion seemingly conferred on the Lord Chancellor by the relevant statutory provision, there were implied limitations upon his powers: the relevant provision did not permit him to exercise the power in such a way as to deprive the citizen of what has been called his constitutional right of access to the courts (p 580). The rule making power in the primary legislation contained nothing to alert the reader to any possibility that fees might be imposed in circumstances such as to deny absolutely the citizens right of access to the Queens courts (p 586). Since that was the practical effect of the fees, the order was declared unlawful. The second case is the decision of the Divisional Court in R (Hillingdon London Borough Council) v Lord Chancellor (Law Society intervening) [2008] EWHC 2683 (Admin); [2009] 1 FLR 39. The case concerned fees payable by local authorities in connection with applications made in public law family cases. The court rejected the Governments argument that the lawfulness of the fees orders depended on whether local authorities would (or there was a real risk that they would) be required to act inappropriately by failing to make applications which objectively should be made. Dyson LJ stated that the impact of the fees orders must be considered in the real world (para 61). The relevant question was therefore whether there was a real risk that the increase in fees will cause local authorities not to make applications which objectively should be made (ibid). The right of access to justice in the present case The 2007 Act does not state the purposes for which the power conferred by section 42(1) to prescribe fees may be exercised. There is however no dispute that the purposes which underlay the making of the Fees Order are legitimate. Fees paid by litigants can, in principle, reasonably be considered to be a justifiable way of making resources available for the justice system and so securing access to justice. Measures that deter the bringing of frivolous and vexatious cases can also increase the efficiency of the justice system and overall access to justice. The Lord Chancellor cannot, however, lawfully impose whatever fees he chooses in order to achieve those purposes. It follows from the authorities cited that the Fees Order will be ultra vires if there is a real risk that persons will effectively be prevented from having access to justice. That will be so because section 42 of the 2007 Act contains no words authorising the prevention of access to the relevant tribunals. That is indeed accepted by the Lord Chancellor. But a situation in which some persons are effectively prevented from having access to justice is not the only situation in which the Fees Order might be regarded as ultra vires. As appears from such cases as Leech and Daly, even where primary legislation authorises the imposition of an intrusion on the right of access to justice, it is presumed to be subject to an implied limitation. As it was put by Lord Bingham in Daly, the degree of intrusion must not be greater than is justified by the objectives which the measure is intended to serve. There is an analogy between the latter principle and the principle of proportionality, as developed in the case law of the European Court of Human Rights. These proceedings are not based on the Human Rights Act 1998, since the appellant is not a victim within the meaning of section 7(1) of that Act. Nevertheless, the case law of the Strasbourg court concerning the right of access to justice is relevant to the development of the common law. It will be considered in the context of the case based on EU law, on which it also has a bearing. To anticipate that discussion, however, it is clear that the ability of litigants to pay a fee is not determinative of its proportionality under the Convention. That conclusion supports the view, already arrived at by the common law, that even an interference with access to the courts which is not insurmountable will be unlawful unless it can be justified as reasonably necessary to meet a legitimate objective. Does the Fees Order effectively prevent access to justice? It is therefore necessary to consider, first, whether the Fees Order effectively prevents some persons from having access to justice. It is argued on behalf of the Lord Chancellor that the fees cannot be unlawful unless it is proved that they have prevented access to justice in specific cases. No one, however, has given evidence in these proceedings that they were unable to bring a claim because they could not afford the fees. Further, it is argued, the poorest people qualify for full remission. Those who do not so qualify have some income over and above the minimum necessary to meet the essentials of life, and can therefore save the amount needed to pay the fees if they choose to do so. In exceptional cases, the Lord Chancellor can exercise his discretionary power to remit the fees. Access to justice is not prevented where the decision on whether to make a claim is the result of making a choice between paying the fee and spending ones income in some other way. In order for the fees to be lawful, they have to be set at a level that everyone can afford, taking into account the availability of full or partial remission. The evidence now before the court, considered realistically and as a whole, leads to the conclusion that that requirement is not met. In the first place, as the Review Report concludes, it is clear that there has been a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of fees. While the Review Report fairly states that there is no conclusive evidence that the fees have prevented people from bringing claims, the court does not require conclusive evidence: as the Hillingdon case indicates, it is sufficient in this context if a real risk is demonstrated. The fall in the number of claims has in any event been so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable. In that regard, it is necessary to bear in mind that the use which people make of ETs is governed more by circumstances than by choice. Every individual who is in employment may require to have resort to an ET, usually unexpectedly: for example, if they find themselves unfairly dismissed or the victim of discrimination. Persons whose employment rights have been breached, or who believe them to have been breached, are often under a practical compulsion to apply to an ET for redress. Conciliation can be a valuable alternative in some circumstances, but as explained earlier the ability to obtain a fair settlement is itself dependent on the possibility that, in the absence of such a settlement, a claim will be presented to the ET. It is the practical compulsion which many potential claimants are under, which makes the fall in the number of claims indicative of something more than a change in consumer behaviour. Secondly, as explained earlier, the Review Report itself estimated that around 10% of the claimants, whose claims were notified to Acas but did not result either in a settlement or in a claim before an ET, said that they did not bring proceedings because they could not afford the fees. The Review Report suggests that they may merely have meant that affording the fees meant reducing other areas of non essential spending in order to save the money. It is not obvious why the explanation given by the claimants should not be accepted. But even if the suggestion in the Review Report is correct, it is not a complete answer. The question whether fees effectively prevent access to justice must be decided according to the likely impact of the fees on behaviour in the real world. Fees must therefore be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded. Where households on low to middle incomes can only afford fees by sacrificing the ordinary and reasonable expenditure required to maintain what would generally be regarded as an acceptable standard of living, the fees cannot be regarded as affordable. Thirdly, that conclusion is strengthened by consideration of the hypothetical examples, which provide some indication of the impact of the fees on claimants in low to middle income households. It is common ground that payment of the fees would result in the hypothetical households having less income than is estimated by the Joseph Rowntree Foundation as being necessary to meet acceptable living standards. The Lord Chancellor argues that, if the households sacrifice all spending on clothing, personal goods and services, social and cultural participation, and alcohol, the necessary savings can be made to enable the fees to be paid. As was explained earlier, the time required to make the necessary savings varies, in the examples, between about one month and three and a half months. Leaving aside the other difficulties with the Lord Chancellors argument discussed earlier, the fundamental problem is the assumption that the right of access to courts and tribunals can lawfully be made subject to impositions which low to middle income households can only meet by sacrificing ordinary and reasonable expenditure for substantial periods of time. The court cannot be deflected from that conclusion by the existence of the Lord Chancellors discretionary power of remission. The statutory scheme of remission is of very restricted scope, as explained earlier. The effects of the Fees Order have occurred notwithstanding the existence of that scheme. The discretionary power of remission may be capable of greater use than has been the case in the past, but it can only be exercised where the Lord Chancellor is satisfied that there are exceptional circumstances which justify doing so. The problems which have been identified in these proceedings are not confined to exceptional circumstances: they are systemic. Furthermore, it is not only where fees are unaffordable that they can prevent access to justice. They can equally have that effect if they render it futile or irrational to bring a claim. As explained earlier, many claims which can be brought in ETs do not seek any financial award: for example, claims to enforce the right to regular work breaks or to written particulars of employment. Many claims which do seek a financial award are for modest amounts, as explained earlier. If, for example, fees of 390 have to be paid in order to pursue a claim worth 500 (such as the median award in claims for unlawful deductions from wages), no sensible person will pursue the claim unless he can be virtually certain that he will succeed in his claim, that the award will include the reimbursement of the fees, and that the award will be satisfied in full. If those conditions are not met, the fee will in reality prevent the claim from being pursued, whether or not it can be afforded. In practice, however, success can rarely be guaranteed. In addition, on the evidence before the court, only half of the claimants who succeed in obtaining an award receive payment in full, and around a third of them receive nothing at all. As explained earlier, the statistical evidence relating to the impact of the Fees Order on the value of awards, the evidence of the Council of Employment Judges and the Presidents of the ETs, the evidence collected by the Department of Business, Innovation and Skills, and the survey evidence collected by Acas, establishes that in practice the Fees Order has had a particularly deterrent effect on the bringing of claims of low monetary value. That is as one would expect, given the futility of bringing many such claims, in view of the level of the fees and the prospects of recovering them. For all these reasons, the Fees Order effectively prevents access to justice, and is therefore unlawful. Given that conclusion, the other issues arising in the appeal can be dealt with very briefly. Can the Fees Order be justified as a necessary intrusion on the right of access to justice? The primary aim of the Fees Order was to transfer some of the cost burden of the ET and EAT system from general taxpayers to users of the system. That objective has been achieved to some extent, but it does not follow that fees which intruded to a lesser extent upon the right of access to justice would have been any less effective. In that regard, it is necessary to point out an error in the Review Report, repeated in the Lord Chancellors submissions. The Review Report states that the Ministry of Justice have considered whether it would be more proportionate to charge lower fees, but that the result of reducing fees would reduce the income generated by fees, and thereby reduce the proportion of cost transferred to users from the taxpayer (para 307). That statement is unsupported by any evidence, and appears to be regarded as axiomatic. Similarly, in his written case, the Lord Chancellor states that, in pursuing the aim of transferring the costs of the tribunals from taxpayers to users, the higher the fees are, patently the more effective they are in doing so. This idea is repeated: in recovering the cost from users, it is said, the higher the fee, the more effective it is. However, it is elementary economics, and plain common sense, that the revenue derived from the supply of services is not maximised by maximising the price. In order to obtain the maximum revenue, it is necessary to identify the optimal price, which depends on the price elasticity of demand. In the present case, it is clear that the fees were not set at the optimal price: the price elasticity of demand was greatly underestimated. It has not been shown that less onerous fees, or a more generous system of remission, would have been any less effective in meeting the objective of transferring the cost burden to users. Nor, on the evidence before the court, have fees at the level set in the Fees Order been shown to be necessary in order to achieve its secondary aims: namely, to incentivise earlier settlements and to disincentivise the pursuit of weak or vexatious claims. These issues were discussed at paras 57 59 above. There is a further matter, which was not relied on as a separate ground of challenge, but should not be overlooked. That is the failure, in setting the fees, to consider the public benefits flowing from the enforcement of rights which Parliament had conferred, either by direct enactment, or indirectly via the European Communities Act 1972. Fundamentally, it was because of that failure that the system of fees introduced in 2013 was, from the outset, destined to infringe constitutional rights. Does the Fees Order cut down statutory rights? As explained earlier, the lawfulness of the Fees Order is also challenged on the basis that it contravenes the rule that specific statutory rights are not to be cut down by subordinate legislation passed under the vires of a different Act: R v Secretary of State for Social Security, Ex p Joint Council for the Welfare of Immigrants [1997] 1 WLR 275, 290. That case was concerned with subordinate legislation which deprived asylum seekers of income related benefits if they appealed against the Home Secretarys refusal of their claim. The Court of Appeal found that, if deprived of benefits, some asylum seekers with genuine claims would be driven by penury to forfeit them, either by leaving the country before their determination or through an inability to prosecute them effectively. That being so, the legislation was held to be unlawful. Simon Brown LJ stated at p 292 that these Regulations for some genuine asylum seekers at least must now be regarded as rendering these rights [of appeal] nugatory. In the circumstances of the present case, this ground of appeal does not add anything to the ground based on the common law right of access to justice. In so far as the Fees Order has the practical effect of making it unaffordable for persons to exercise rights conferred on them by Parliament, or of rendering the bringing of claims to enforce such rights a futile or irrational exercise, it must be regarded as rendering those rights nugatory. EU law The Court of Appeal identified 24 of the rights enforceable in ETs as having their source in EU law. They include, for example, the right to equal pay, the rights to equal treatment and maternity leave, and the various rights granted under the Working Time Directive. Subject to the exceptions discussed earlier, the ET is the only forum in which those rights can be enforced. It follows that, so far as applicable to these rights, restrictions on the right of access to ETs and the EAT fall within the scope of EU law. EU law has long recognised the principle of effectiveness: that is to say, that the procedural requirements for domestic actions must not be liable to render practically impossible or excessively difficult the exercise of rights conferred by EU law: see, for example, Impact v Minister for Agriculture and Food (Case C 268/06) [2008] ECR I 2483, para 46. It has also recognised the principle of effective judicial protection as a general principle of EU law, stemming from the constitutional traditions common to the member states, which has been enshrined in articles 6 and 13 of the European Convention on Human Rights and which has also been reaffirmed by article 47 of the Charter of Fundamental Rights of the European Union. Article 47 guarantees in its first paragraph that everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal. In terms of article 52(1): Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. In that regard, the court has said that although the interest of the proper administration of justice may justify the imposition of a financial restriction on access to a remedy, that restriction must retain a reasonable relationship of proportionality between the means employed and the legitimate aim sought to be achieved: see, for example, SC Star Storage SA v ICI (Joined Cases C 439/14 and C 488/14), judgment given 15 September 2016, para 55; DEB Deutsche Energiehandels und Beratungsgesellschaft mbH v Bundesrepublik Deutschland (Case C 279/09) [2010] ECR I 13849, paras 47 and 60. The burden lies on the state to establish the proportionality of restrictions where, as in the present case, they are liable to jeopardise the implementation of the aims pursued by EU directives. Article 52(3) of the Charter provides that in so far as the Charter contains rights which correspond to rights guaranteed by the European Convention on Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the Convention. In considering the application of the first paragraph of article 47 of the Charter, it is therefore necessary to consider the case law of the European Court of Human Rights on the corresponding guarantee in article 6(1) of the Convention: see DEB, para 35. In that regard, one general point to note is the emphasis placed by the Strasbourg court on the protection of rights which are not theoretical and illusory, but practical and effective. That is consistent with the recognition in domestic law that the impact of restrictions must be considered in the real world. The Strasbourg court has accepted that various limitations, including financial ones, may be placed on the right of access to a court or tribunal. In particular, the requirement to pay fees to civil courts in connection with claims or appeals is not in itself incompatible with the Convention. However, such limitations must pursue a legitimate aim and there must be a reasonable relationship of proportionality between the means employed and the legitimate aim sought to be achieved: Teltronic CATV v Poland, Application No 48140/99, judgment given 10 January 2006, para 47. That is consistent with the principle of domestic law that such rights may be curtailed only to the extent reasonably necessary to meet the ends which justify the curtailment. In the present proceedings, the Court of Appeal recognised that the fees payable in proceedings brought for the enforcement of rights conferred by EU law must be proportionate, but construed that requirement as meaning that the basic question is whether the fee payable is such that the claimant cannot realistically afford to pay it, or whether the difficulty of paying the fee was such as to make the payment of the fee impossible in practice (paras 41 and 43). Although the court accepted that the introduction of fees had the effect of deterring a very large number of potential claimants who might otherwise have brought proceedings to enforce rights conferred by EU law, it felt unable to infer that the decline [in the number of claims] cannot consist entirely of cases where potential claimants could realistically have afforded to bring proceedings but have made a choice not to (para 68: original emphasis). Since, in its view, it had not been shown that payment of the fees was impossible, it concluded that the requirement to pay them was proportionate. However, under the Convention, and under EU law, the ability to pay fees is not determinative of their proportionality: it is merely one among a number of relevant factors. As the Strasbourg court has repeatedly stated, the amount of the fees assessed in the light of the particular circumstances of a given case, including the applicant's ability to pay them, and the phase of the proceedings at which that restriction has been imposed, are factors which are material in determining whether or not a person enjoyed the right of access to a court: Teltronic CATV, para 48. It has emphasised that financial restrictions on access to a court which are unrelated to the merits of a claim or its prospects of success should be subject to particularly rigorous scrutiny: Teltronic CATV, para 61. In relation to the phase of the proceedings at which the restriction has been imposed, the court regards it as significant if non payment of a fee may result in a claims never being examined on its merits: Teltronic CATV, para 61. The fact that proportionality is not determined by ability to pay, and also the importance of a practical approach to the assessment of whether there has been an interference with the right, are illustrated by the case of Stankov v Bulgaria (2009) 49 EHRR 7. The case is particularly relevant to the present proceedings as it demonstrates that even a fee which the litigant can afford can violate the right of access to justice. The applicant in that case was required to pay, at the conclusion of the domestic proceedings, a fee equivalent to 90% of the compensation which had been awarded to him. The fee was held to violate article 6(1), although the applicant was able to pay it, and despite the fact that his case had been heard. Although the aims pursued by the imposition of the fee were compatible with the administration of justice, the fee was disproportionate in view of the difficulty of assessing the likely award in advance (which had led the applicant to overstate the amount of his claim, leading to liability to a higher fee), taken together with the relatively high and totally inflexible rate of court fees (para 67). The Lord Chancellor argues that that case should be distinguished from the present case, on the basis that it concerned domestic proceedings in which the state was the defendant. Certainly, that feature made the violation of article 6(1) particularly egregious: the state was taking away with one hand the compensation which it had been ordered to pay with the other. Nevertheless, the same principles would have equally applied in proceedings between private parties. As the court stated: In practical terms, the imposition of a considerable financial burden due after the conclusion of the proceedings may well act as a restriction on the right to a court. The costs order against the applicant constituted such a restriction. (para 54) That would be so because of the size of the financial burden, regardless of the identity of the defendant. That is illustrated by the case of Kniat v Poland, Application No 71731/01, judgment given 26 July 2005, which concerned fees payable in divorce proceedings. At the conclusion of the proceedings, the applicant was ordered to pay a court fee of 10,000 PLN. She was able to pay it, having received a share of the matrimonial property amounting to 300,000 PLN. Nonetheless, the imposition of the fee was held to violate article 6(1), since the 300,000 PLN constituted apparently her only asset, and it did not seem reasonable to demand that she spend part of it on court fees, rather than build her future and secure her and her childrens basic needs after the divorce (para 44). A further illustration is the case of Kordos v Poland, Application No 26397/02, judgment given 26 May 2009, which concerned fees payable in an action of damages between private parties. The applicant was awarded damages of 20,000 PLN and was required to pay a court fee of 3,726 PLN. The imposition of the fee was held to violate article 6(1), on the basis that the sum awarded was apparently her only asset, and it did not seem reasonable to demand that she spend it on the payment of the court fees rather than on securing her basic living needs. These judgments provide further support for the view that, particularly in cases involving modest financial awards (or none at all), the fees imposed by the Fees Order cannot be justified. Returning to the application of article 47 of the Charter, it follows that the proportionality of the Fees Order in issue in the present proceedings is not determined solely by the affordability of the fees (although if they are unaffordable by some people, then the Order is unlawful under EU law in so far as it applies to claims based on rights derived from EU law). Proportionality also requires other factors to be considered, including the stage of the proceedings at which the fees must be paid, and whether non payment may result in the claims never being examined on its merits. They also include a factor which is of particular importance in the present case, namely whether the fees are proportionate in amount to the sums being claimed in the proceedings. Ultimately, the question is whether the limitation of the right to an effective remedy resulting from the Fees Order respects the essence of that right and is a proportionate means of achieving the legitimate aims pursued, or has led to an excessive burden being placed on individuals who seek to enforce their rights. Given the conclusion that the fees imposed by the Fees Order are in practice unaffordable by some people, and that they are so high as in practice to prevent even people who can afford them from pursuing claims for small amounts and non monetary claims, it follows that the Fees Order imposes limitations on the exercise of EU rights which are disproportionate, and that it is therefore unlawful under EU law. Remedies It is argued on behalf of the Lord Chancellor that the evidence about the impact of the fees which is now available was not available at the time when the Fees Order was made. If the original decision to make the Fees Order was lawful, but the Lord Chancellor acted unreasonably in subsequently failing to decide that it should no longer be maintained in force, then it is argued that the appropriate form of relief is a declaration to that effect. That argument mistakes the nature of the illegality with which we are concerned. This is not a case in which an administrative decision is being challenged on the basis that relevant considerations were not taken into account, or on the basis that the decision was unreasonable. The Fees Order is unlawful under both domestic and EU law because it has the effect of preventing access to justice. Since it had that effect as soon as it was made, it was therefore unlawful ab initio, and must be quashed. The parties are invited to make written submissions on any consequential relief which may be appropriate in these circumstances. LADY HALE: (with whom Lord Neuberger, Lord Mance, Lord Kerr, Lord Wilson, Lord Reed and Lord Hughes agree) Lord Reed, with whose judgment I entirely agree, has dealt with all the issues raised in argument, save that of discrimination. As he has held that the Fees Order was unlawful ab initio, both at common law and under EU law (to the extent that the rights asserted before the Employment Tribunals are rights contained in EU law), it is unnecessary to reach a final conclusion on the discrimination issues. However, as the existing Fees Order is unlawful, the Lord Chancellor will no doubt wish to avoid any potentially unlawful discrimination in any replacement Order. Not all discrimination is unlawful. It is helpful, therefore, first to consider what prohibition the alleged discrimination might contravene. Most straightforward is that in section 29 of the Equality Act 2010. As relevant, this provides: (1) A person (a service provider) concerned with the provision of a service to the public or a section of the public (for payment or not) must not discriminate against a person requiring the service by not providing the person with the service. (2) A service provider (A) must not, in providing the service, discriminate against a person (B) as to the terms on which A provides the service (a) to B; (b) by terminating the provision of the service to B; (c) by subjecting B to any other detriment. (6) A person must not, in the exercise of a public function that is not the provision of a service to the public or a section of the public, do anything that constitutes discrimination, harassment or victimisation. This prohibition applies as much to public sector providers of services to the public as it does to the private sector. The Government clearly sees the provision of Employment Tribunals as a service to the public, to which the prohibition in section 29(2) would apply, as that is why it has chosen to charge the users for that service. But even if it were not seen as the provision of a service, it would clearly be the exercise of a public function, to which the prohibition in section 29(6) applies. Furthermore, to the extent that in providing for the claims which may be brought before an Employment Tribunal, the United Kingdom is implementing EU law, the United Kingdom must respect the Charter of Fundamental Rights of the European Union (article 51). Article 21.1 provides that: Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited. It is not suggested that the Fees Order is directly discriminatory on any of the grounds prohibited either under the Charter or the 2010 Act. Rather, it is suggested that the Order is indirectly discriminatory within the meaning of section 19 of the 2010 Act, which is itself based on the concept of indirect discrimination in EU law: (1) A person (A) discriminates against another (B) if A applies to B a provision, criterion or practice which is discriminatory in relation to a relevant protected characteristic of Bs. (2) For the purposes of subsection (1), a provision, criterion or practice is discriminatory in relation to a relevant protected characteristic of Bs if (a) A applies, or would apply, it to persons with whom B does not share the characteristic, (b) it puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it, it puts, or would put, B at that disadvantage, and (c) (d) A cannot show it to be a proportionate means of achieving a legitimate aim. (3) The relevant protected characteristics are age; disability; gender reassignment; marriage and civil partnership; race; religion or belief; sex; sexual orientation. It is not suggested that the whole of the Fees Order amounts to a discriminatory provision, criterion or practice (PCP) for this purpose. Rather, it is suggested that the higher fees payable, either for Type B claims in general or for discrimination claims in particular, are indirectly discriminatory against women (and others with protected characteristics too). In relation to Type B claims in general, this is because a higher proportion of women bring Type B claims than bring Type A claims. Before the Court of Appeal, UNISON suggested that 54% of Type B claimants were women, whereas only 37% of Type A claimants were women. However, the Lord Chancellor put in figures suggesting that 45% of Type B claimants were women. The Court of Appeal accepted that this was still a disparate impact (para 85). This meant that the higher fees for Type B claims might put women at a particular disadvantage when compared with men. Both the Court of Appeal and the Divisional Court therefore proceeded on the basis that the situation had to be justified and this has not been challenged by the Lord Chancellor. Under section 19(2)(d), a PCP which puts or would put people with a protected characteristic at a particular disadvantage when compared with people who do not share that characteristic is not discriminatory if the person who applies it can show that the PCP is a proportionate means of achieving a legitimate aim. In other words, unlike the case of direct discrimination, it is the PCP itself which requires to be justified, rather than its discriminatory effect. So can the higher fees for Type B claims be justified? Given that we have already held that the whole Fees Order cannot be justified, this is a somewhat artificial exercise. The Divisional Court and Court of Appeal held that it was legitimate to charge more for what was assumed to be the more costly service. In fact, while that may be so of some kinds of Type B claim, UNISON suggests that it has not been shown to be true of them all working time claims and pregnancy dismissal claims, for example, do not take up much time. In the Divisional Court, Elias LJ accepted that some Type A claims might take longer than some Type B claims (para 69). Nevertheless, a rough and ready classification such as this was held acceptable if any distinction was to be made between different types of claim. The question, however, is not whether linking the level of fees to the assumed cost of providing the service is a legitimate aim: the question is whether charging higher fees for Type B claims is consistent with the aims of the Fees Order as a whole. Linking price to cost is not an end in itself, but one means of achieving the various stated aims: of transferring the cost of tribunals from the taxpayer to the users; deterring unmeritorious claims; and encouraging earlier settlements. The method chosen has to be a proportionate means of achieving those aims. In this connection, it may be relevant to consider several factors. Even if there is a correlation between the type of claim and the cost to the tribunal, there is no correlation between the higher fee charged for Type B claims and the merits of the case or the conduct of the proceedings by the claimant or the incentives to good litigation and settlement behaviour on each side. A Type B claimant with a good case is just as likely to be deterred from bringing it by the higher fee as is the claimant with a bad case. The case may have been conducted as efficiently as it possibly could be by the claimant. Alternatively, the respondent or the tribunal itself may be responsible for the length and cost of the proceedings. The fees may incentivise the claimant to settle but they may have the reverse effect upon the respondent, who may calculate that the claimant will be deterred from carrying on and thus refuse to settle when he should. In the great majority of cases, the respondent is already in much the more powerful position and the higher fees simply exacerbate that. It has simply not been shown that the higher fee charged for Type B claims is more effective in transferring the cost of the service from taxpayers to users. As Lord Reed has explained (para 100, above), the revenue derived from the supply of services is not maximised by maximising the price. Revenue is maximised by charging the right price, the price which potential claimants will see as constituting reasonable value for money. It might be thought, therefore, that the higher the price, the greater the deterrent effect. However, the evidence suggests that there has been a greater fall in Type A than in Type B claims (para 40, above). Nevertheless, there has been a dramatic fall in both types of claim, which suggests that neither has been priced correctly to maximise revenue. Hence, these factors combine to the conclusion that charging higher fees for Type B claims has not been shown to be a proportionate means of achieving the stated aims of the fees regime. The alternative way in which the discrimination case is put is that charging higher fees for discrimination claims is indirectly discriminatory against women, who bring the majority of such claims, and others with protected characteristics who also bring them. There is a superficial attraction to this argument. It is now clear that setting the fees at the rate they have been set has had a deterrent effect upon discrimination claims, among others. It is also now clear that it has deterred meritorious claims at least as much as, if not more than, unmeritorious claims (see para 57 above). This has put the people who bring such claims at a particular disadvantage. Deterring discrimination claims is thus in itself discrimination against the people, by definition people with protected characteristics, who bring them; and, it might be thought, even harder to justify than is charging higher fees for Type B cases generally, given the importance which has always been attached in EU law to the goal of achieving equality of treatment in the workplace and to gender equality in particular. The Divisional Court and Court of Appeal thought it impermissible to narrow down the PCP to one sub group of the people who were affected by the higher fees, namely discrimination claimants, for the purpose of making it easier to show that the PCP had a disparate impact upon people with a particular protected characteristic. The PCP in question should be the higher fees for all Type B claims, not just for discrimination claims. Section 19(2)(a) provides that the PCP must apply to everyone, whether or not they share a particular protected characteristic, so in this case to everyone who brings a Type B claim. Section 19(2)(b) then requires that the PCP put a sub group of those people, who have a particular protected characteristic, at a particular disadvantage when compared with others who do not share that characteristic. It is at this point, rather than the earlier point, that a sub group is carved out. Even if, for the sake of argument, we concentrate on the sub group of women who bring discrimination claims, it is difficult to see how they are put at any greater disadvantage by the higher fees than are all the other Type B claimants. They are all in the same boat, the women who bring discrimination claims and the men who bring unfair dismissal claims. There is no greater or different need to justify the higher fees in discrimination claims than there is in any other sort of Type B claim. It is not necessary finally to resolve this question in these proceedings, but I am inclined to accept that this is correct. If the fee charged for unfair dismissal claims had been lower than the fee charged for discrimination claims, then it might well have been necessary (and very difficult) to demonstrate that the higher fee for discrimination claims was a proportionate means of achieving a legitimate aim. But that is not this case. And in any event, it is accepted that the higher fees generally have a disparate impact and in my view it has not been shown that they are justified. |
Despite the significance of her name in Cartesian philosophy, the vessel Res Cogitans depends on bunkers. The parties submissions have in compensation lent a degree of metaphysical complexity to commonplace facts. We are told that many similar cases worldwide await our decision with interest. The essential problem arises from the insolvency of the OW Bunker Group and the concerns of vessel owners that they may be exposed to paying twice over, once to their immediate bunker supply group now insolvent, and again to the ultimate source of the bunkers who may claim rights under a reservation of title or maritime lien. The concerns stem from what are understood to be fairly typical conditions on which bunkers are supplied worldwide. The bunkers in this case were supplied to the vessel in the Russian port of Tuapse in the Black Sea on 4 November 2014. They were ordered on 31 October 2014 by the appellants, who are respectively owners and managers of the vessel and can be treated as one and referred to simply as the Owners. The immediate bunker supplier was the first respondent, OW Bunker Malta Ltd (OWBM), which obtained the bunkers under a contract with its parent company, OW Bunker & Trading A/S (OWBAS), another member of the OW Bunker Group, which was at the time the worlds largest bunker supplier and is now insolvent. OWBAS in turn obtained them from Rosneft Marine (UK) Ltd (RMUK), which itself obtained them from an associate, RN Bunker Ltd (RNB), which had facilities in Tuapse and made the actual delivery. On 6 November 2014, OWBAS announced that it was applying to the court in Aalborg for restructuring. The second respondent, ING Bank NV (ING) financed the OW Bunker Group and claims as assignees of any claim which OWBM has against the Owners. OWBMs contract with the Owners OWBMs supply contract with the Owners described itself as being for sale and delivery ex barge of 110 mt of gasoil at a price of USD 848 per mt and 1000 mt of fueloil at a price of USD 359 per mt (a total of USD 443,800), with Payment within 60 days from date of delivery upon presentation of invoice. But it was expressly subject to the OW Bunker Groups general terms (said in OWBMs printed Sales Order Confirmation to be well known to you and to be published on OWBMs website). The general terms start with the following General Introduction: A.1 This is a statement of the terms and conditions according to which the International OW Bunker Group (hereinafter called OWB) will sell marine bunkers. A.2 These conditions apply to all offers, quotations, orders, agreements, services and all subsequent contracts of whatever nature, except where otherwise is expressly agreed in writing by OWB. Clause P.1 provides for the agreement to be governed by English law and for arbitration in London of all disputes arising in connection with it. Clause G.12 under the heading Delivery provides: Delivery shall be deemed completed and all risk and liabilities, loss, damage, deterioration, depreciation, including contamination, evaporation or shrinkage to the Bunkers delivered and responsibility for loss, damage and harm caused by pollution or in any other manner to third parties shall pass to the Buyer from the time the Bunkers reach the flange/connecting pipe line(s)/delivery hoses provided by the Seller on the barge/tank truck/shore tank. Clauses H.1 and H.2 provide in summary that until full payment of all amounts due to OWBM, title and property rights were reserved to OWBM and the Buyer was in possession of the bunkers solely as Bailee for the Seller, and shall not be entitled to use the Bunkers other than for the propulsion of the Vessel. The full wording of clauses H.1 and H.2 is as follows: H.1 Title in and to the Bunkers delivered and/or property rights in and to such Bunkers shall remain vested in the Seller until full payment has been received by the Seller of all amounts due in connection with the respective delivery. H.2 Until full payment of the full amount due to the Seller has been made and subject to article G.14 hereof, the Buyer agreed [sic] that it is in possession of the Bunkers solely as Bailee for the Seller, and shall not be entitled to use the Bunkers other than for the propulsion of the Vessel, nor mix, blend, sell, encumber, pledge, alienate, or surrender the Bunkers to any third party or other Vessel. The Vessel is defined by clause B.1 of the terms as meaning the Buyers Vessel, Ship, Barge or Off shore Unit that receives the supply/bunkers; either as end user or as transfer unit to a third party. It is unnecessary to consider whether the recognition in clause B.1 that the vessel might serve as a transfer unit to a third party fits with the prohibition in clause H.2 of sale, alienation or surrender of the bunkers to any third party or other vessel. That situation is not in question here. What is clear is that the Owners accepted that, until full payment to OWBM, they would not acquire title or property rights in the bunkers, but would hold them as bailees for OWBM, subject only to a right to use them for the propulsion of the vessel Res Cogitans herself. RMUKs contract with OWBAS OWBASs purchase from RMUK priced the gasoil and fueloil at respectively USD 333 per mt and USD 830 per mt (a total of USD 416,000), and required payment within 30 days from date of delivery against hard copy of invoice. The purchase was subject to RMUKs terms and conditions, clause 10 of which provided, inter alia: Until such time as payment is made, on behalf of themselves and the Vessel, the Buyer agrees that they are in possession of the Marine Fuels solely as Bailee for the Seller. If, prior to payment, the Sellers Marine Fuels are commingled with other Marine Fuels on board the Vessel, title to the Marine Fuels shall remain with the Seller corresponding to the quantity of the Marine Fuels delivered. There was no express provision regarding consumption, but on the facts being assumed for the purposes of this case, RMUK was aware that the bunkers were being purchased for resale at a profit, that the OW Bunker Groups terms would be likely to include provisions to like effect to clauses H.1 and H.2 set out in para 6 above and that the bunkers were being purchased for immediate use and might be wholly or partly consumed within both the 30 day credit period allowed by RMUK and the 60 day credit period allowed by OWBM. Having contracted to supply the bunkers to OWBAS, RMUK then entered into a contract with RNB, under which RNB agreed to sell the bunkers to RMUK for delivery in accordance with the contract between RMUK and OWBAS. The assumed facts On the assumed facts, the Owners availed themselves of the right to consume the bunkers in the vessels propulsion and did so both within and, quite probably after, the 30 and 60 day periods allowed for payment under the contracts between respectively RMUK and OWBAS and OWBM and the Owners. The bunkers were in the event totally consumed without any payment ever being made by OWBM or OWBAS to RMUK. RMUK on the other hand paid RNB in accordance with its contract with RNB on 18 November 2014. On the day before doing so, RMUK, having become aware that it might not receive payment from OWBAS, sent a Demand of Payment to the Owners, asserting that it remained the owner of the bunkers and requesting immediate payment from the Owners of USD 416,000, the amount which it had invoiced to OWBAS. The Supreme Court was given no indication that RMUK has since then taken any formal steps to pursue this claim against the Owners. The proceedings to date By the end of November 2014, the Owners had commenced arbitration proceedings claiming a declaration that they had no liability to pay OWBM and/or ING for the bunkers. The parties agreed to submit a raft of detailed preliminary issues to the arbitrators (David Farrington, Ian Kinnell QC and Bruce Harris), and for the purposes of such issues agreed a series of assumed facts. The arbitrators, after a four day hearing, wrote an admirably analytical award dated 16 April 2015, giving their reasons for answers to each of such issues set out in its appendix 1 and holding inter alia that, on the assumed facts, OWBM/ING would be entitled to payment. The parties having agreed that this award on preliminary issues should be the subject of appeals on both sides without leave pursuant to section 69(2)(a) of the Arbitration Act 1996, Flaux J gave directions accordingly on 8 May 2015, and the matter came on 7 to 9 July 2015 before Males J, who with notable speed produced his judgment on 14 July 2015. He dismissed the Owners appeal, but went on, obiter, to express his opinion on an appeal by OWBM/ING, which would only have arisen for decision had the Owners appeal succeeded. Males J then gave the Owners permission to appeal to the Court of Appeal, while refusing OWBM/ING permission to go to the Court of Appeal on their cross appeal. The Court of Appeal (Moore Bick V P, Longmore and McCombe LJJ) on 22 October 2015 dismissed the Owners appeal. The Supreme Court granted permission to appeal on 11 February 2016. The issues and the award in more detail The arbitrators were evidently invited to treat the assumed facts as accepting that all the bunkers were used within the 60 day credit period allowed by OWBM to the Owners (see para 42 and footnote 18 to their award). But their reasoning was wide enough to cover what the Supreme Court has been told may be the actual position, which is that at most that part of the bunkers were so used, with any remainder being used later. Addressing OWBMs cross claim for the price, the arbitrators noted that section 2(1) of the Sale of Goods Act 1979 provides that: A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. Further, section 49 provides that: (1) Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods. (2) Where, under a contract of sale, the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed and the goods have not been appropriated to the contract. The arbitrators noted in footnote 7 to para 31 of their award that, if the contract was one of sale, then, according to authority binding on them, section 49(1) precluded recovery of the price of goods in circumstances where the property in goods had not passed to the buyer. The authority to which they were referring is F G Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd (often referred to as Caterpillar) [2014] 1 WLR 2365. This is an authority the correctness of which OWBM/ING would, if necessary, wish to challenge in the Supreme Court on this appeal. It is in dispute whether it is open to them to do so, in the light of the issues as addressed to and answered by the arbitrators as well as in the light of Males Js refusal of permission to OWBM/ING to cross appeal from his judgment to the Court of Appeal. Because of this dispute, it will be necessary to give an account of the arbitrators reasoning, award and answers to the preliminary issues which is fuller than it would otherwise have been. Having rejected section 49(1) as a basis for recovery of the price, the arbitrators considered and rejected three other ways in which OWBM suggested that it could recover the price of the bunkers if treated as sold within the Sale of Goods Act: (i) under section 49(2), as being payable on a day certain irrespective of delivery; (ii) under section 50, as damages for non acceptance; and (iii) on the basis that property passed for or in a nanosecond, as and when the bunkers went up in smoke. These being points raised by OWBMs cross claim, for which permission to appeal was refused by Males J, none of them is before the Supreme Court. Taking stock, the arbitrators considered that they could now answer certain of the agreed preliminary issues. They could answer issues 1, 2 and 3 to the effect that, on the assumed facts, OWBM never had property in the bunkers at any material time, and that the retention of title clause in its terms (in any event) prevented property passing to the Owners. On that basis, issue 4 then required the arbitrators to determine for the price under section 49 or section 50 of SOGA what is the consequence in respect of any claim that OWBM may seek to assert: (a) 1979; or (b) otherwise under the Contract; or (c) (d) (e) in bailment; or in restitution; or in tort? They held that they could answer issue 4(a) to the effect that No such claim could succeed, and issue 8, asking whether section 49(2) applied, with a simple no. On that basis, the arbitrators said (para 45) that it was now convenient to turn attention to issue 4(b). This, they said, concerns the possibility that [OWBM/ING] have a contractual claim falling outside constraints of [the Sale of Goods Act], and involves looking again at the contractual relationships between the parties, and in particular at that between OWBM and the Owners. In answering this issue, the arbitrators said (para 46): If, as we believe we must, we accept that section 49 of SOGA rules out the possibility of a claim against the Owners for the price of the bunkers supplied to the Vessel, and, as seems more obviously the case, that section 50 offers no alternative, does this also rule out the possibility of there being some other contractual remedy against the Owners arising out of their failure to pay OWBMs invoice? The Owners have suggested that the answer to this question is Yes. We do not agree. Whether or not one chooses to describe the contract between these two parties as a hybrid contract is, we consider, probably neither here nor there (although we would prefer to describe it and no doubt others like it as sui generis), but to suggest that the remedies that may follow from the failure to comply with its terms are solely and irrevocably those within the gift of SOGA appears to us to be unacceptable and quite unreal. In the next para (para 47), they continued: If all had gone in accordance with the parties expectations (and, of course, the Owners had had previous dealings with OWB Group companies), the Owners would have paid OWBMs invoice within the 60 days credit period. We are quite confident, that, when they did so, it would not have crossed anyones mind to enquire what bunkers had been consumed meanwhile in order to determine whether the invoice was being paid wholly or in part under a contract of sale (in respect of unconsumed bunkers), or otherwise (in respect of consumed bunkers). Regardless of the situation on board the Vessel, both parties would in our opinion understand that payment was being made simply in accordance with the express terms of the contract, which would have been the case. There is in our view no challenge to the provisions of SOGA or their effect in reaching the conclusion that we have unhesitatingly reached that, on the assumed facts, once the 60 days period of credit had elapsed the Owners were in breach of contract, the remedy for which was a claim in debt. We have seen nothing in the authorities to suggest that this simple and straightforward conclusion is incorrect. The arbitrators concluded that this reasoning enabled them to answer issues 4(b) and 6(a). Issue 6(a) was whether to the extent not resolved by the determination of issue 4 OWBM/ING had a claim under the contract. However, they added we have to say that we find the relationship (if any) between issues 4 and 6 somewhat unclear (para 48). They went on to say that we believe that we can at this point also tackle issue 9. Before doing so they addressed issue 5, rejecting OWBMs case that their supply to the Owners contained various implied terms, now no longer relied on. Turning to issue 9, this asks: Did [the Sale of Goods Act] apply to the Contract between the Owners/OWBM in any event and if not what is the effect on the parties respective claims? The arbitrators gave the straightforward answer: No, and none. shortly with issues 10 to 13, saying (para 53): In the light of this answer, the arbitrators concluded that they could deal As to Issue 10, OWBM was not required to own or to have property in the bunkers at the time of delivery because the contract between OWBM and the Owners did not require this. There was no modification of the requirements of SOGA because SOGA did not apply and its terms were not engaged. As to Issue 11, there was no such requirement. As to Issue 12, no terms were implied into the contract by virtue of section 12 of SOGA. And, finally, as to Issue 13, in so far as there were no such implied terms as suggested, there were none to be breached. It is unclear what, if any, other breaches of contract by OWBM are alleged, but none appears to have been established. Issues 10 to 13 and the answers given read as follows: 10. Do the OWBM T&Cs, on a true and proper construction, modify the requirements of section 12 of SOGA 1979 such that OWBM was required to own or have property in the Bunkers at the point of delivery? ANSWER: The OWBM T&Cs did not modify section 12 of SOGA 1979, but, under the Contract between the Owners and OWBM, OWBM was not required to own or have property in the Bunkers at the point of delivery, and section 12 did not apply. If not, what is the requirement imposed by the Contract, 11. on a true and proper construction, regarding the title OWBM is required to pass to the Owners? ANSWER: There was no such requirement. 12. What terms were implied into the Contract by virtue of section 12 SOGA? ANSWER: None, because section 12 did not apply. 13. Is OWBM in breach of Contract, and in particular the implied terms referred to at Issue 12 above (or any of them) and if so in what way? ANSWER: As there were no terms implied into the Contract by virtue of section 12 SOGA, there were none to be breached. No other breaches were specified, and on the basis of the Assumed Facts, none appears to have been established. The proceedings in court in more detail Males J in dismissing the Owners appeal held that OWBMs contract to supply bunkers to the Owners was not a contract to which the Sale of Goods Act applied, but was a contract containing a condition whereby OWBM undertook that the Owners would have the lawful right to use any bunkers which they in fact used pursuant to the liberty they were given by its terms (paras 48 and 52). He held that it was not subject to any further condition as regards the passing of property in any bunkers used. OWBM/INGs cross appeal, to recover the price under section 49 of an equivalent sum by way of damages, did not on this basis arise, but Males J nonetheless expressed some views on it, obiter. He thought (paras 66 and 74) that if the Act applied, that could only be because OWBM undertook, in the terms of section 2(1), to transfer the property in goods to the buyer, that it had failed to do so and was therefore (subject to two now immaterial arguments) in breach of the implied term contained in section 12(1), and that that would represent a total failure of consideration which, applying Rowland v Divall [1923] 2 KB 500, would provide the Owners with a defence to a claim for the price. Apart from this problem, he said that he would, however, have disagreed with the arbitrators on one point relating to the cross claim, in that in his view the credit terms would have satisfied the language of section 49(2). Having expressed these views, he refused permission, as already stated, in respect of the Owners cross appeal. The issues argued before the Court of Appeal were thus effectively limited to two: (1) Was the contract a contract of sale within the meaning of section 2(1) of the Sale of Goods Act? (2) If not, was it subject to any implied term that OWBM would perform or had performed its obligations to its supplier, in particular by paying for the bunkers timeously? Like the judge, the Court of Appeal was bound by the Caterpillar decision, so that it could have done no more than hold that section 49 of the Sale of Goods Act barred any claim to the price by OWBM if the contract was subject to the Act, even if that point was open and had arisen, for consideration. The Court of Appeal agreed substantially with the judge in answering the two main questions before it in OWBM/INGs favour. However, as appears from the following key passage in its reasoning, it also contemplated that the contract would or might be a contract of sale pro tanto to the extent that payment was made at a time when any part of the bunkers remained unconsumed. Moore Bick V P, giving the main judgment, with which the other members of the court agreed, said: 33. Whatever label one attaches to the contract (and I see nothing incongruous in describing it in commercial terms as a contract for the sale of goods), its essential nature is in my view reasonably clear. It is a contract under which goods are to be delivered to the owners as bailees with a licence to consume them for the propulsion of the vessel, coupled with an agreement to sell any quantity remaining at the date of payment, in return for a money consideration which in commercial terms can properly be described as the price. That may not satisfy the definition of a contract of sale of goods in section 2(1) of the 1979 Act, but there is no reason why the incidents of a contract of sale of goods for which the Act provides should not apply equally to such a contract at common law, save to the extent that they are inconsistent with the parties agreement. The difficulties in the present case stem entirely from the owners attempt to establish that the consideration for the payment of the price was the transfer of property in the whole of the goods to which the contract related, despite the fact that that does not correspond to the express terms of the contract relating to the use of the goods and the passing of title. The commercial background and the terms of the contract make it clear that what the owners contracted for was not the transfer of property in the whole of the bunkers, but the delivery of a quantity of bunkers which they had an immediate right to use but for which they would not have to pay until the period of credit expired. From the suppliers point of view the retention of title clause provided an ever diminishing degree of security for the payment of what was due to them. Since the contract provided for the transfer to the owners of property in any part of the bunkers remaining at the time of payment, it was to that extent a contract for the sale of goods to which the Act, including the implied condition in section 12, applied. A failure to pass title to any residue remaining at the time of payment would therefore involve a breach of contract, but it would not be one which entitled the owners to treat the contract as a whole as discharged, unless (contrary to all expectations) it represented such a large proportion of the quantity originally delivered that there could be said to have been a total failure of consideration. 34. For these reasons I agree with the judge that the transfer of property in the bunkers from OWBM to the owners was not the essential subject matter of the contract and that a failure to transfer property in the bunkers, all of which had been consumed when the period of credit expired, did not relieve the owners of the obligation to pay for them. The issues before the Supreme Court The issues on the Owners appeal to the Supreme Court remain as argued before the Court of Appeal and set out in para 22 above. But, in seeking to uphold the decisions of the courts below, Mr Robert Bright QC for OWBM/ING submits that it is open to OWBM/ING to rely on a point which was not open to his clients in those courts. That is that the decision of the Court of Appeal in the Caterpillar case, mentioned in para 13 above, was wrong and should be overruled. The correct position is, he submits, that, even though a contract is categorised as one of sale within the Sale of Goods Act, section 49 should not be read as excluding all possibility of claims to the price of goods sold, if the contract so provides, even though the circumstances cannot be brought within either of subsections (1) and (2). Whether this submission is open to OWBM/ING is, as I have stated in para 13 above, in dispute. For the Owners, Mr Jonathan Crow QC makes five basic, though over lapping, submissions about the nature of the contract. This, he submits, is a matter of substance, not form. Second, it must be determined at the date when the contract is made. Third, it depends on what the parties then agreed, not what happened subsequently or what they expected they might do subsequently. Fourth, the question must be answered once and for all, and fifthly it must be answered by reference to the statutory test set out in section 2(1) of the Act, not by reverse engineering, by which Mr Crow meant: not because the consequences of recognising the contract as one of sale within the statutory definition might seem unpalatable. Analysis of the nature of the contract Mr Crows first proposition is well established and needs no great elaboration: see eg Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537 (CA). An agreement may also be in substance a contract of sale, even though it has ancillary aspects, eg for after sales services, which do not involve the passing of property and are not by themselves sale. Here, Mr Crow is able to point out that the basic form and language of the contract is that of sale. That is true, as far as it goes. But clauses A.1 and A.2 make clear that sale may here be used in an expanded sense, since the general terms are to apply to all agreements and services and all subsequent contracts of whatever nature, and Buyer is under clause B.1 a defined term which includes any party requesting offers or quotations for or ordering Bunkers and/or Services (emphasis added). Even apart from that, however, clauses H.1 and H.2 make clear that the contract has special features. First, they expressly provide not only for retention of title pending payment, but also expressly that, until such payment, the Buyer is to be in possession of the bunkers solely as Bailee for the Seller. After going on to provide that the Buyer shall not be entitled to use the bunkers, the terms introduce the qualification other than for the propulsion of the Vessel. The qualification clearly reflects a reality. Bunker suppliers know that bunkers are for use. If they grant relatively long credit periods combined with a reservation of title pending payment in full, it is unsurprising that they do so combined with an express qualification authorising use in propulsion, since standard terms prohibiting any use would be uncommercial or in practice, no doubt, simply ignored. Mr Crow vigorously resisted the introduction of any such considerations, on the basis that they are speculative and that the nature of a contract cannot change according to the level of certainty with which parties are to be taken to have expected that bunkers supplied might or might not be used in propulsion before payment for them was made. But OWBMs (and RMUKs) contractual terms and the assumed facts (particularly paras 13, 20 and 30) together with an admissible modicum of commercial awareness on the courts part about how ships operate (and in particular how owners strive to keep them operating) and about the value of credit and the likelihood that full advantage of it will be taken all point in one direction. They demonstrate that the liberty to use the bunkers for propulsion prior to payment is a vital and essential feature of the bunker supply business. In these circumstances, OWBMs contract with the Owners cannot be regarded as a straightforward agreement to transfer the property in the bunkers to the Owners for a price. It was in substance an agreement with two aspects: first, to permit consumption prior to any payment and (once the theory of a nanosecond transfer of property is, rightly, rejected) without any property ever passing in the bunkers consumed; and, second, but only if and so far as bunkers remained unconsumed, to transfer the property in the bunkers so remaining to the Owners in return for the Owners paying the price. But in this latter connection it is to be noted that the price does not here refer to the price of the bunkers in respect of which property was passing, it refers to the price payable for all the bunkers, whether consumed before or remaining at the time of its payment. A contract of sale may under section 2(3) of the Act be either absolute or conditional; and under section 2(6) An agreement to sell becomes a sale when the conditions are fulfilled subject to which the property in the goods is to be transferred. Mr Crow submits on this basis that the contract can be regarded as an agreement to transfer property, conditional on the bunkers remaining unburned when payment is made. The difficulties with this submission are that: i) it categorises the whole agreement by reference to only one possibility relating to only one part of the bunkers covered by the agreement, namely the possibility of at least some bunkers surviving unused, after 60 days or whenever payment is made. Sections 2(3) and (6) can readily be applied where there is a condition regarding the passing of property to which all the goods covered by an agreement are subject, but that is not the case here; ii) it ignores the fact that there is no condition governing the transfer of property in the bunkers used before payment the property in bunkers consumed never passes and is never agreed to be passed; and iii) it focuses on the agreement to pass property in the bunkers surviving at the time of payment, when the agreement was a single contract to pay a single price for all the bunkers sold not later than 60 days after delivery, whatever had happened to such bunkers in the meantime; the agreement is a single agreement which cannot sensibly be treated as divisible. As the arbitrators said, aptly, in para 47 of their award quoted in para 17 above, in the ordinary course when Owners paid OWBMs invoice after 60 days: it would not have crossed anyones mind to enquire what bunkers had been consumed meanwhile in order to determine whether the invoice was being paid wholly or in part under a of sale (in respect of unconsumed bunkers), or otherwise (in respect of consumed bunkers). Mr Crow sought to avoid some of these difficulties by submitting at one point that the agreement could be analysed as one of sale, under which OWBM undertook that at the date of payment they would transfer property in any bunkers then remaining and that they could and would also have transferred property in any bunkers already consumed, had they not been consumed. That submission certainly has a metaphysical aspect. But it makes in my view neither legal nor commercial sense. All that mattered for the Owners was that they should have and had the right to consume the bunkers in the vessels propulsion as and when they did so prior to payment, and that upon payment they would acquire the property in, and thereby an absolute right to dispose of or use as they wished, any remaining bunkers. For similar reasons to those given in the preceding three paragraphs, I would also reject the Court of Appeals suggestion in para 33 of its judgment, quoted in para 23 above, that the contract can be analysed as a contract of sale to the extent that it provided for the transfer of property in any part of the bunkers remaining at the time of payment. That is again to divide up a single agreement covering the supply of all the bunkers (gasoil and fueloil) at a single price for each, irrespective of what had happened to them. However, I fully accept that, viewing in isolation the position of any bunkers remaining at the time of payment, the transaction relating to them is closely analogous to a sale. I also accept that, both as regards bunkers consumed and as regards any bunkers remaining at the time of payment, the contract, although not one of sale, would contain similar implied terms as to description, quality, etc to those implied in any conventional sale. The above analysis is consistent with the approach taken by the Court of Appeal in the somewhat complicated case of Harry & Garry Ltd v Jariwalla [1988] WL 1608652. The English buyers, Harry & Garry, had under contracts of sale received a quantity of sarees which they found defective and in respect of which they had not yet accepted the relevant bills of exchange, by reference to which, it appeared, the Indian sellers, the Jariwallas, had however already succeeded in raising some monies in India. In these circumstances, Harry & Garry agreed to accept the bills, so acquiring property in the sarees, while the Jariwallas agreed either to arrange the cancellation of the bills or to take back and pay for the sarees. Under this agreement, 2,494 sarees were then selected as sarees which the Jariwallas would, as they did, take back physically, and it was agreed that the Jariwallas would pay 46,763.45 for such sarees, with property being retained by Harry & Garry until this full amount was paid. Through a Mr Shah, the Jariwallas sold some 411 of these sarees, evidently with the consent of Harry & Garry despite the reservation of title. Harry & Garry sued for the full 46,763.45 agreed to be paid. In the court below, Judge Harris had seen the contract as being one of sale, and on that basis held that, since the circumstances did not fall within section 49(2), a claim for the price was precluded. In the Court of Appeal, Harry & Garrys appeal was allowed. Kerr LJ, giving the main judgment, noted that section 49(1) was in terms inapplicable, because of the reservation of title. But he went on to say of the judges approach that: It would be ironical if that were the correct analysis. One would be driven to the conclusion that although these goods had been delivered and had been accepted, the only remedy open to the plaintiffs, if indeed they were sellers of these goods, would apparently have been a claim for damages for non acceptance under section 50, there being no other provision of the Act which would have given the plaintiffs any remedy. With all due respect to the judge, no doubt influenced as he was by the complexity of this case and the arguments which were addressed to him, I cannot agree with that analysis for two reasons. First, in my view this was not a contract for the sale of goods within the terms of the 1979 Act. It was not, to quote section 2(1) of the Act, a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. Like many other contracts in complex situations, this was a sui generis transaction. In effect, what the Jariwallas agreed was that if the bills of exchange were accepted, which was their great concern, they would either have them cancelled or they would take the goods back and pay for them. When it then came to the specific agreement about the 2,494 selected sarees, I think the nature of the agreement was that in consideration of the plaintiffs allowing them to take that consignment away and seeking to dispose of it as agents for the plaintiffs, who remained the owners of it, they agreed again either to perform the first part of the option, to have the bills of exchange cancelled at any rate to the extent of the value of those selected goods, or to pay the sum of 46,763.45p. That was the nature of the agreement. Taking it on its own or taking it, as I think one should, as part of the agreement made on 23 December, I do not think it was a contract for the sale of goods to which the Act applied. As with the buy back contract in Harry & Garry, so here, in my opinion, the relevant agreement is, in Kerr LJs words, Like many other contracts in complex situations, a sui generis transaction, not a contract of sale. As I have already indicated, that does not mean that its terms, as regards undertakings as to description and quality, would not be modelled on those applying in the sale of goods. But, in its essential nature, it offered a feature quite different from a contract of sale of goods the liberty to consume all or any part of the bunkers supplied without acquiring property in them or having paid for them. The obligation on the part of OWBM to be able to pass the property in respect of any bunkers not so consumed against payment of the price for all the bunkers cannot make the agreement as a whole a contract of sale. Mr Crow drew our attention to first instance cases where the relationship between the suppliers of bunkers and charterer customers under a reservation of title was assumed to fall within the Sale of Goods Act, for the purposes of analysing whether, on the termination of the charter, the vessels owners had acquired title under section 25(1) of that Act: Forsythe International (UK) Ltd v Silver Shipping Co Ltd [1994] 1 WLR 1334, Angara Maritime Ltd v Oceanconnect UK Ltd [2010] EWHC 619 (QB); [2011] 1 Lloyds Rep 61. In neither case was the nature of the contract or the present issue questioned or directly addressed. Similarly, it was simply assumed that the transaction was one of sale within the Act in the appellate authorities of Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25 (CA) and Armour v Thyssen Edelstahlwerke AG [1991] 2 AC 339 the former case concerning an unsuccessful attempt to trace title reserved in resin into chipboard manufactured using it, the latter concerning a successful attempt to reclaim steel supplied subject to a reservation of title. I add that, even if on analysis these two cases could and should have been analysed as sui generis, like the present, it is difficult to think that could have had any effect on their outcome. None of these cases therefore really assists the resolution of the present appeal. I also add (with further reference to the Court of Appeals suggestion mentioned in para 31 above) that, even if the contract were (contrary to my above analysis) to be analysed as a contract of sale when made in that it contemplated the transfer of property in any bunkers unused at the date of payment, I do not see how this could assist the Owners. OWBM could not owe any obligation to transfer property in bunkers consumed before payment. The contract would be subject to a resolutive condition subsequent whereby it would cease to be a contract of sale as and to the extent that the Owners exercised their contractual right to consume the bunkers in the vessels propulsion, and would cease entirely to be a contract of sale if and when all such bunkers were consumed before payment. For the reasons I have given, the arbitrators were correct, in my opinion, in concluding that the contract was not one of sale within section 2 of the Sale of Goods Act, with the result that the Owners could have no possible defence under section 49 to the claim for the price. The Owners alternative ground of appeal I turn in this light to the Owners alternative ground of appeal, which is that there must, as a matter of obviousness and necessity, have been an implied term of the contract relating to performance of obligations in the contractual chain above OWBM, by virtue of which OWBM obtained the bunkers it supplied to the Owners. In the Court of Appeal at least initially and in the written case, this is put extremely briefly as an implied duty on OWBM to perform its obligations by making timeous payment to its supplier. The real reason why OWBM could not have passed any title to the Owners appears, however, to have been that OWBAS became insolvent and never paid RMUK. The Owners formulation of an implied term in their case would not address this. Not surprisingly, the matter was therefore put differently and more widely in the Court of Appeal, which was however left in the end in understandable uncertainty about the precise content of the alleged implied duty. For similar reasons to those given by Moore Bick LJ in para 36, I share the Court of Appeals conclusion that there is no basis or need for any such implied duty, however it is put. In short, the essential nature of the bargain is as I have stated in para 28 of this judgment. As a result, OWBMs only implied undertaking as regards the bunkers which it permitted to be used and which were used by the Owners in propulsion prior to payment was that OWBM had the legal entitlement to give such permission. In order to be so entitled, OWBM did not need to have or acquire title to the bunkers. It merely needed to have acquired the right to authorise such use under the chain of contracts by virtue of which it had obtained the bunkers. As regards bunkers in existence at the time of any payment, OWBM would of course have to have had or at least be able to pass title. Had they been unable to do so, then, maybe, the Owners could have treated OWBM as in breach of condition and terminated the contract, though they would at the same time have had to refrain from further use of the bunkers. OWBM would then have been unable to maintain a claim for the whole price, and would have had to assert either a contractual or a restitutionary claim (it is unnecessary to consider which) to pro rata payment for the bunkers consumed. But none of this is relevant, and for that reason it was not explored in submissions. What happened was quite different. No payment was ever tendered by the Owners. The Owners simply continued to use the bunkers under the contractual liberty until they were all consumed. So far as material, no basis appears for treating the contractual liberty as ending with the 60 day period for payment, if payment was not then made; so long as the contract remained in force, the liberty would continue on its face until payment or complete consumption of all the bunkers supplied. The issues before the court do not involve any claim that OWBM had no right to permit such use, or that the Owners are or may be exposed to any risk of double exposure, either by reason of RMUKs claim (never so far as appears formally pursued) or on any other basis. On the presently assumed facts, therefore the Owners are simply liable for the price, albeit under a contract sui generis, which is not one of sale. The position if the contract had been one of sale In view of the above conclusions, the position if the contract had been classified as a contract of sale within section 2 of the Sale of Goods Act cannot and does not arise. The Owners case was that, if the contract was one of sale, then section 49 would preclude any claim by OWBM/ING for the price of the bunkers used. OWBM/ING challenge this analysis and the Court of Appeal decision in Caterpillar which currently supports it. Since the point was fully argued and has general significance, I propose to say something on it. First, however, I should briefly address the preliminary question, very specific to this particular case, whether it would, if necessary, even have been open to OWBM to challenge the correctness of the Court of Appeals decision in Caterpillar. Not without some doubt, I conclude that it would have been. This is because of the way in which the arbitrators addressed issue 4(b), as set out in paras 16 18 above. They answered it in their reasons before and on the face of it independently of their conclusion under issue 9 that the Sale of Goods Act did not apply to the contract. Further, their reasons appear to postulate that the Sale of Goods Act could apply but that a contractual claim for payment (albeit not for a price) could still be maintained otherwise why the references to section 49 ruling out a claim for the price, to section 50 offering no alternative, and to their conclusion presenting no challenge to the Sale of Goods Act? On that basis, was the Court of Appeal correct in Caterpillar to conclude that, where goods are delivered under a contract of sale, but title is reserved pending payment of the price, the seller cannot enforce payment of the price by an action? In Caterpillar the goods had been agreed to be sold and were delivered by F G Wilson to John Holt & Co (Liverpool) Ltd (Holt Liverpool) which it was known would on deliver them to its subsidiary, John Holt plc (Holt Nigeria), a Nigerian company. The majority (Patten and Floyd LJJ) held that, under the relevant terms, Holt Liverpool (not having paid the price to F G Wilson) had delivered the goods to Holt Nigeria as fiduciary agents for F G Wilson, and that property had in this situation continued in law to reside in Holt Liverpool until such delivery, whereupon it had passed directly from F G Wilson to Holt Nigeria without Holt Liverpool ever acquiring it. Longmore LJ, although he had dissented on the passing of property, gave the principal reasoned judgment on the question which arose from the majoritys conclusion that property had not passed. This was whether F G Wilson could sue Holt Liverpool for the price. He concluded, after reviewing the authorities, that section 49 constituted a code, which precluded any action for the price outside its terms. The authorities included what Longmore LJ saw as two inconsistent previous Court of Appeal decisions, one Otis Vehicle Rentals Ltd v Cicely Commercials Ltd [2002] EWCA Civ 1064, the other the case of Harry & Garry, discussed above on another aspect and which Longmore LJs judgment records was unearthed by the industry of counsel appearing in Caterpillar. Section 49(1) enables an action for the price where the seller has transferred property, with or without delivery, and the buyer has failed to pay the price due. Conversely, the authorities cited by Longmore LJ establish that, where property has not passed, a seller cannot sue for the price of goods, delivery of which the buyer has refused to accept either physically (Atkinson v Bell (1828) 8 B & C 277; Otis Vehicle Rentals, cited above) or by refusing to take up the shipping documents (Stein Forbes & Co v County Tailoring Co (1916) 115 LT 215; Muller, Maclean & Co v Leslie & Anderson (1921) 8 Lloyds List Law Rep 328; Plaimar Ltd v Waters Trading Co Ltd (1945) 72 CLR 304) or by failing or refusing to make the necessary shipping arrangements (Colley v Overseas Exporters [1921] 3 KB 302). An established common law exception (see Dunlop v Grote (1845) 2 C & K 153) now reflected in section 49(2) of the Act exists where the price is payable on a day certain, in which case the seller may enforce its payment, provided that he is ready and able at the same time to deliver to the buyer the goods and property in them: Otis Vehicle Rentals, para 16 per Potter LJ. In Caterpillar, Longmore LJ expressed the view that a price payable on a day certain would embrace a situation where the price was expressed to be payable within 30 days of the date of the invoice. If so, it would embrace the situation under RMUKs contract with OWBAS or OWBMs contract with the Owners, whereby the price was payable within respectively 30 or 60 days of delivery. This was also Males Js view, differing on the point from the arbitrators. Leaving section 49(2) aside, the question of principle is whether section 49 excludes any claim to recovery of a price outside its express terms. The majority of the High Court of Australia in Minister for Supply and Development v Servicemens Co operative Joinery Manufacturers Ltd (1951) 82 CLR 621 can be read as accepting that similar statutory language did not exclude all such claims. However, whilst Latham CJ, one of the majority, made no express reference to section 49(2), he did refer to Dunlop v Grote, cited above, and to Benjamin on Sale, 7th ed (1931), p 861, which both deal with a price payable on a day certain. It is not clear that he necessarily intended to go further. In Colley v Overseas Exporters, cited above, McCardie J undertook a detailed examination of the pre 1893 Sale of Goods Act position at common law, concluding that there had been only two established counts available for recovery of the price of goods sold, both dependant on property passing and so falling within what became section 49(1). Section 49(2) was a limited exception. Support for this can be found in the illuminating discussion and judgments in Laird v Pim (1841) 7 M & W 474, to which McCardie J also referred. In that case, the defendant, having contracted to purchase and having been given possession of a plot of land, had refused to complete a conveyance or pay for it. During the proceedings, the analogy with the non acceptance of goods was drawn, and at one point Parke B pointed out that, since the land was still the plaintiffs at law, the plaintiff might bring ejectment. The plaintiff made clear however that it was not claiming the price of the whole purchase money, but only for the damages sustained by the non performance of the contract (p 479). To this counsel for the defendant responded (p 483) that Unless the defendants are bound to pay the purchase money, no damages can be recovered for the non payment of it: the plaintiff, therefore, must shew not only that the defendants did not pay, but also that they were bound to pay. But this argument failed. Parke B said (p 485) that the plaintiff was substantially in the same situation, for the purpose of recovering the money, as if all had been done on his part which he engaged to do. It does not follow that he shall recover the whole purchase money, but he is in the same situation for the purpose of recovering damages for the non payment of the price, as if all had been done by him. That approach, if adopted, at least answers the problem which Longmore LJ found in paras 55 56 in Caterpillar about accepting a claim for damages for non payment of money or seeing any remedy whatever open to the seller. I add three observations. First, it would seem to me that the non performance in a case like Laird v Pim could just as well be described in terms of failure to accept a transfer of the title to property, as failure to pay its price. Second, if described as a claim for failure to pay the price, the judgments in Sempra Metals Ltd v Inland Revenue Comrs [2008] AC 561 mean, I believe, that a claim for damages for non payment of money could quite readily be accommodated in the modern law. Third, in Laird v Pim, the damages might have had to be reduced to take account of the prospect of recovery of the property the law report does not address their measure more precisely than I have already indicated. In the present case, bearing in mind the complete consumption of the bunkers, there would be no difference between the agreed price and the damages for non payment of the price that would follow on the approach taken in Laird v Pim. Nonetheless, there is artificiality about treating the sellers claim as being for damages, after delivery was made albeit under retention of title, and particularly so where the buyer is authorised to consume the goods as here. Part of the thinking behind the rule in section 49(1) is no doubt, as Longmore LJ observed (para 43), that It would have been thought unfair to a buyer if, before delivery had occurred, the goods had perished or been damaged and yet the price was payable, unless the goods were actually his property, see Simmons v Swift (1826) 5 B & C 857. It would also be odd if a sellers creditors on bankruptcy could both seize goods still on his premises and sue the buyer for the price. However, it will be noted that both these rationales focus on situations where delivery has not been made, and, as appears from the judgments in Simmons v Swift, the real significance attached by the court to the fact that property had not passed in Simmons v Swift was that it meant that the goods were still at the risk of the sellers. The oddity mentioned by Longmore LJ would not have existed, if the goods had been at the buyers risk. Section 49(2) relaxes only partially the strictness of section 49(1), and it depends on the price being payable on a day certain. These are words which can no doubt be construed liberally, as Longmore LJ was minded to, but are not of indefinite expansion. Further, the main focus of section 49(2) may well have been on cases where delivery has not been made hence the phrase irrespective of delivery. Section 49 does not focus on the position existing where delivery is made, title is reserved but the price is agreed to be paid, albeit not on a particular day certain. Even less does it focus on the position where all these features are present and the buyer is permitted to dispose of or consume the goods or they are at the buyers risk and are destroyed or damaged. The question is whether in all these cases an action for the price is excluded, and the seller is forced to look around for other means of redress. The Court of Appeal, in an alternative reason for its judgment in Harry & Garry, did not think so. Kerr LJ, now approaching the case on the hypothesis that the buy back contract was subject to the Sale of Goods Act, said this: In any event, however and this is the second reason why I differ from the judge it is clear from the authorities to which we were referred that even in the realm of contracts for the sale of goods there can be situations in which a seller may be entitled, under the particular terms of the contract, to claim a sum which is in effect the price of the goods, even though he cannot bring himself within the terms of section 49. In that connection we were helpfully referred by Mr Bartlett to another section of the Act and a number of authorities. I can deal with them quite shortly. First, section 55 of the Act makes it clear that the provisions of the Act are not exhaustive, but that the parties may enter into agreements which negative or vary the rights, duties or liabilities which would otherwise arise under a contract of sale by virtue of the Act. Secondly, Mr Bartlett referred to a part of the speech of Lord Diplock in Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441, 501, in which he points out that the Sale of Goods Act is not an exhaustive code within which every transaction of the nature of a sale of goods must necessarily be brought, but that it is open to parties, if they have done so by the terms of their agreement, to create situations which, while being contracts for the sale of goods, are not governed exclusively by the terms of the Act. It is true that in Colley v Overseas Exporters [1921] 3 KB 302, 310, McCardie J expressed the obiter view that section 49(2) was an exhaustive statement (together with subsection (1)) of situations in which a seller is entitled to sue for the price. But that was clearly not the view of Wright J as expressed in Shell Mex Ltd v Elton Cop Dyeing Co Ltd (1928) 34 Commercial Cases at p 39, where he referred to what is now section 55 of the 1979 Act and the particular terms of the contract. He concluded that on its true construction the sellers were not entitled to recover the price, but without regard to the fact that on no view could the case have been brought within section 49. Kerr LJ went on to state that that had been the view of the majority of the High Court of Australia, in Minister for Supply and Development v Servicemens Co operative Joinery Manufacturers Ltd, before concluding: If, contrary to the primary view which I have expressed, this transaction recorded in the form of the document of 31 December 1982 was indeed a sale by the plaintiffs to the Jariwallas, then in my view, having regard to the agreement as a whole which the judge has found, it would still be open to the plaintiffs to sue for the 46,000 odd once a reasonable time had elapsed and it had become clear all of which has now happened that they were not going to be relieved from the bills of exchange. Accordingly, I would allow this appeal to the extent of judgment for the plaintiffs for 46,763.45p, with the appropriate interest. Like Longmore LJ in Caterpillar (para 53), I am unconvinced that the solution to the present problems is found in section 55 or in Lord Diplocks dicta in Ashington Piggeries. Both concern the negativing or variation of any right, duty or liability [which] would arise under a contract of sale of goods by implication of law, into which category it is difficult to fit the statutory provisions of section 49. I am also unconvinced that Wright Js judgment in Shell Mex is of present assistance, and I have already questioned whether both members of the majority in the High Court of Australia in the Minister of Supply case were necessarily speaking of situations outside section 49(2). Nevertheless, the 1893 Act was rooted in and intended to reflect common law authority, developed in an era when freedom of contract and trade were axiomatically accepted as beneficial. Certainly, a court could not now recognise a claim for the price in a case falling squarely within section 50, and it should be cautious about recognising claims to the price of goods in cases not falling within section 49. But I consider that this leaves at least some room for claims for the price in other circumstances than those covered by section 49. Harry & Garry is on its facts such a case. Title being reserved to Harry & Garry, the Jariwallas were nonetheless permitted to take possession under the buy back contract, and to dispose of some of the sarees of which possession was taken back. It seems entirely natural and appropriate that Harry & Garry should be entitled to recover for the price of all the sarees so taken back, on condition of course that they were ready and willing to transfer title in the remaining sarees to the Jariwallas in return. Another case covered by authority is that where the goods are at the buyers risk, but property has not passed. This situation was addressed in two successive cases in 1872: Castle v Playford (1872) LR 7 Ex 98 and Martineau v Kitching (1872) LR 7 QB 436. In the former, the contract for the sale of ice was for cash on delivery at the rate of 20s a ton as weighed on arrival and delivery in the United Kingdom, but it was agreed that the buyer should take upon himself all risks and dangers of the seas. The vessel was lost. The court (Cockburn CJ, Willes, Blackburn, Mellor, Brett and Grove JJ) found it unnecessary to decide whether property had passed. Whether or not it had, the true construction of the contract was from the buyers viewpoint, in Cockburn CJs words, at p 99: I will engage, when it arrives, to pay you according to what may be its value; and if, in the meantime, while it is upon the seas, it shall perish through the perils of the seas, I will undertake to pay you for it according to what may be estimated to have been its fair value at the time of going down. Blackburn J giving the other reasoned judgment said, at p 100: Now here, the ship and cargo have gone to the bottom of the sea; but in the cases of Alexander v Gardner (1835) 1 Bing NC 671, and Fragano v Long (1825) 4 B & C 219, it was held, that if the property did perish before the time for payment came, the time being dependent upon delivery, and if the delivery was prevented by the destruction of the property, the purchaser was to pay an equivalent sum. In the present case, when the ship went down there would be so much ice on board, and, in all probability, upon an ordinary voyage so much would have melted; and what the defendant has taken upon himself to pay is the amount which, in all probability, would have been payable for the ice. The two judgments define the sum payable in very slightly different ways, but both treat it as a sum payable for the goods under the contract terms. Three months later the second case came before Cockburn CJ, Blackburn, Lush and Quain JJ in the Queens Bench Division. Sugar was agreed to be sold, with the price payable Prompt at one month; goods at sellers risk for two months, to be kept at the sellers premises and drawn down by the buyers as wanted. After two months and after only some of the sugar had been drawn down by the buyers, a fire destroyed the rest. The buyer having disputed his liability to pay for the undelivered sugar which had been burned in the fire, the seller brought an action to recover the price of [the] sugars sold and the question was whether the sellers were so entitled (see pp 436, 441, para 21; and p 445). The court held that they were. Cockburn CJ did so on the basis that property had passed. But Blackburn, Lush and Quain JJ found it unnecessary to decide this, and they all decided the case on the basis that after two months the risk had passed. Blackburn J put the matter thus, at p 455: [A]ssume that [property] had not passed. If the agreement between the parties was, I contract that when you pay the price I will deliver the goods to you, but the property shall not be yours, they shall still be my property so that I may have dominion over them; but though they shall not be yours, I stipulate and agree that if I keep them beyond the month the risk shall be upon you; and then the goods perish; to say that the buyer could then set up this defence and say, Although I stipulated that the risk should be mine, yet, inasmuch as an accident has happened which has destroyed them, I will have no part of that risk, but will throw it entirely upon you because the property did not pass to me, is a proposition which, stated in that way, appears to be absolutely a reductio ad absurdum; and that is really what the argument amounts to. If the parties have stipulated that, if after the two months the goods remain in the sellers warehouse, they shall, nevertheless, remain there at the buyers risk, it would be a manifest absurdity to say that he is not to pay for them; and I think the case of Castle v Playford is a clear authority of the Court of Exchequer Chamber, that where the parties have stipulated that the risk shall be on one side, it matters not whether the property had passed or not. The parties here have by their express stipulation impliedly said, after the two months the goods shall be at the risk of the buyer, consequently it is the buyer who must bear the loss. The price may therefore be recovered in respect of goods undelivered which remain the sellers property but are at the buyers risk and are destroyed by perils of the seas or by fire. The present situation is in my opinion a fortiori. The price of bunkers, which remain the sellers property but which are both (i) at the buyers risk as regards damage or destruction (clause G.12) and (ii) also permitted by the express terms of the contract to be destroyed by use for the Owners commercial benefit, must be equally recoverable. I add that I do not suggest that this is the limit of the circumstances outside section 49 in which the price may be recoverable. The decision in Harry & Garry itself was that the price was recoverable for all the 2,494 sarees agreed to be bought back, although only 411 of them had been disposed of by the buyers with the sellers permission. The precise limits of such circumstances and the significance which may in particular attach to the use of retention of title clauses in combination with physical delivery of the goods and the transfer of risk must be left for determination on some future occasion. I would only add that, when that occasion arises, much benefit will be obtained (as I have done in writing this judgment) from the perceptive discussion by Professor Louise Gullifer in her article The interpretation of retention of title clauses: some difficulties (2014) LMCLQ 564. She also addresses some critical remarks to the other issue in the Caterpillar case, that is the interpretation of Holt Liverpools role as one of agency on behalf of F G Wilson in parting with the goods to Holt Nigeria. That issue does not arise here, but may well merit further consideration in another case in this court. It follows from what I have said that, had the contract been one of sale, I would have held, over ruling the Caterpillar case on this point, that section 49 is not a complete code of situations in which the price may be recoverable under a contract of sale, and that, in the present case, the price was recoverable by virtue of its express terms in the event which has occurred, namely the complete consumption of the bunkers supplied. Conclusion the contract between OWBM and the Owners was not one of sale, but In the result, I conclude that, on the assumed facts: (i) sui generis; (ii) that it was not subject to any such implied term or terms, regarding performance by OWBM (or OWBAS) of any supply contract higher up the chain, as the Owners have alleged though it was no doubt subject to an implied promise by OWBM that OWBM was entitled (in consequence of whatever were the arrangements under which the bunkers had been obtained directly or indirectly from whoever was interested in them) to supply them to the Owners on terms permitting their use for the propulsion of the vessel before payment; and (iii) price. that the Owners have no defence to OWBMs claim to the agreed Had I concluded on the other hand that the contract was one of sale, I would, again on the assumed facts, have held that section 49 of the Sale of Goods Act was also no bar to a claim by OWBM to payment of the agreed price. |
This appeal concerns the proper ambit of the offence of aggravated trespass contrary to section 68 of the Criminal Justice and Public Order Act 1994 (the 1994 Act). That section provides, so far as material: (1) A person commits the offence of aggravated trespass if he trespasses on land and, in relation to any lawful activity which persons are engaging in or are about to engage in on that or adjoining land, does there anything which is intended by him to have the effect (a) of intimidating those persons or any of them so as to deter them or any of them from engaging in that activity, (b) of obstructing that activity, or (c) of disrupting that activity (2) Activity on any occasion on the part of a person or persons on land is lawful for the purposes of this section if he or they may engage in the activity on the land on that occasion without committing an offence or trespassing on the land The present case concerns trespassers who wished to make a protest, as do some other reported cases upon this section. But the offence is not limited to such people. Those who trespass and obstruct the activity of others might include many in different situations, such as for example business rivals or those engaged in a personal dispute, as maybe between neighbours. By definition, trespass is unlawful independently of the 1994 Act. It is a tort and committing it exposes the trespasser to a civil action for an injunction and/or damages. The trespasser has no right to be where he is. Section 68 is not concerned with the rights of the trespasser, whether protester or otherwise. References in the course of argument to the rights of free expression conferred by article 10 of the European Convention on Human Rights were misplaced. Of course a person minded to protest about something has such rights. But the ordinary civil law of trespass constitutes a limitation on the exercise of this right which is according to law and unchallengeably proportionate. Put shortly, article 10 does not confer a licence to trespass on other peoples property in order to give voice to ones views. Like adjoining sections in Part V of the 1994 Act, section 68 is concerned with a limited class of trespass where the additional sanction of the criminal law has been held by Parliament to be justified. The issue in this case concerns its reach. It must be construed in accordance with normal rules relating to statutes creating criminal offences. Under the section there are four elements to this offence: i) the defendant must be a trespasser on the land; ii) there must be a person or persons lawfully on the land (that is to say not themselves trespassing), who are either engaged in or about to engage in some lawful activity; iii) iv) which is intended by him to intimidate all or some of the persons on the land out of that activity, or to obstruct or disrupt it. the defendant must do an act on the land; The present case concerns the second element and in particular the meaning of any lawful activity. Given that by subsection (2) an activity is lawful if those on the land may engage in it without committing a criminal offence, what connection if any is required between any offence which may be committed and the activity which the defendant is said to have intentionally disrupted (etc)? Is any offence committed on the land, however remote from or incidental to the occupants activity, or however technical, a bar to the conviction of the invading trespasser? The defendants mounted a non violent but determined protest in a London shop. They objected to the shop because its wares were connected with an Israeli owned business in the West Bank. The shop specialised in selling beauty products derived from Dead Sea mineral material. Not all the products sold in the shop originated from the Dead Sea but the vast majority did. The defendants objection was grounded in the facts that (i) those products were produced by an Israeli company, in an Israeli settlement adjacent to the Dead Sea in the West Bank, that is to say in the Occupied Palestinian Territory (OPT) and (ii) the factory was said to be staffed by Israeli people who had been encouraged by the Government of Israel to settle there. The defendants arrived at the shop on a trading day, equipped with a heavy concrete tube. With the help of colleagues they connected their arms through the tube anchored by a chain secured by a padlock to which they said they had no key. The district judge found that they had no intention of buying anything; rather, their intention was to disrupt the shops trading. When asked to leave they failed to do so. They succeeded in their aim because the manager concluded that trading was impossible and closed the shop. She called the police. The police found the defendants polite and co operative except in refusing to free themselves. It was necessary for tools to be used to break through the concrete. When the defendants had thus been released, they were arrested and in due course charged with the offence contrary to section 68. The Crown case was that the lawful activity which they had intentionally disrupted was retail selling. The defendants had no defence to elements (i), (iii) and (iv) of the offence. They contested the charge on the basis that the activity being carried on in the shop was not lawful. They asserted that it involved the commission of criminal offences for one or more of four reasons. i) The company running the shop was guilty of aiding and abetting the transfer by the Israeli authorities of Israeli citizens to a territory (the OPT) under belligerent occupation; the transfer was said to be contrary to article 49 of the Fourth Geneva Convention of August 1949, and aiding and abetting it to be an act ancillary to a war crime, made a criminal offence in England and Wales by sections 51 and 52 of the International Criminal Court Act 2001. ii) The products sold in the shop were criminal property, as the product of this offence of aiding and abetting a war crime; accordingly the company running the shop, which at least suspected this, was guilty of the offence of using or possessing criminal property, contrary to section 329 of the Proceeds of Crime Act 2002. iii) The products had been imported into the UK as if covered by an EC Israeli Association Agreement, which conferred certain tax or excise advantages. But the European Court of Justice has ruled that products originating in the OPT do not qualify for this treatment. Accordingly, it was said, the company running the shop was guilty of the offence of cheating the Revenue. iv) The products sold in the shop were labelled Made by Dead Sea Laboratories Ltd, Dead Sea, Israel. This was said to be false or misleading labelling because the OPT is not recognised internationally or in the UK as part of Israel. Accordingly the company running the shop was guilty of one or both of two labelling offences, contrary to the Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277) or the Cosmetic Products (Safety) Regulations 2008 (SI 2008/1284). The district judge convicted the defendants in the magistrates court. Their appeal by case stated was dismissed by the Divisional Court of Queens Bench. One part of the district judges reasoning was not upheld by the Divisional Court, for he had held that only the activity of a natural person fell within section 68, and that neither the shop manageress nor the sales assistants were even arguably guilty of any offence. The Divisional Court rightly held that section 68 plainly included a company within the expression person engaging in (lawful activity). Its conclusions on that issue are not challenged and no more need be said about it. The live issue relates to the meaning of the expression lawful activity and in particular to when the commission of a criminal offence by the occupant whose activity is targeted by the trespasser has the effect of making unlawful the occupants activity. The question certified by the Divisional Court was: Should the words lawful activity in section 68 Criminal Justice and Public Order Act 1994 be limited to acts or events that are integral to the activities at the premises in question? Lawful activity The meaning of the expression lawful activity in section 68(2) has received some previous attention from the courts. Three propositions were not in dispute in argument in the present case. i) Section 68 is concerned only with a criminal offence against the law of England and Wales. The House of Lords so held in R v Jones (Margaret) [2006] UKHL 16, [2007] 1 AC 136. Thus a defendant trespassing at a military base was not entitled to assert that the ordinary activities of the base were unlawful because the UK Government was, or might be, committing an act of international aggression in preparing to despatch military hardware to Iraq. ii) In a prosecution under section 68 the Crown is not required to disprove the commission of every criminal offence which could conceivably be committed by the occupant(s) of the land. A specific offence or offences must be identified by the defendant and properly raised on the evidence. The Divisional Court so held in Ayliffe v Director of Public Prosecutions [2005] EWHC 684 (Admin), [2006] QB 227, see particularly para 50. Thus a bare assertion by trespassers at military bases that the Government may have aided and abetted a war crime did not raise the issue. iii) Where, however, the issue of a relevant specific criminal offence by the occupant(s) of the land is fairly raised by evidence, the onus lies upon the Crown to disprove it to the criminal standard of proof, in order for it to prove, to that standard, that the defendant trespasser has committed the offence contrary to section 68. This follows from Ayliffe and from the language of the statute. Two other cases give some assistance on the question of whether any criminal offence committed by the occupants has the effect of making the activity unlawful. In Hibberd v Director of Public Prosecutions (unreported) 27 November 1996 the Divisional Court was concerned with a trespasser who set out to stop the clearance of land for the construction of a new by pass. He gave evidence that one or more of the tree fellers was using a chainsaw but not wearing gloves and suggested that that raised the real possibility that he was committing an offence contrary to the Management of Health and Safety at Work Regulations 1992 (SI 1992/2051) in not using equipment provided for him by his employers. Without investigating whether any such offence was or was not made out, the Divisional Court held that even if it had been it could not affect the lawful nature of the activity which the defendant had disrupted, namely the clearance of the site. That was lawful in the sense that it was properly authorised. The activity of the occupants could not be defined simply to extend to the actions of the particular chainsaw operator(s) spotted. Two years later in Nelder v Director of Public Prosecutions The Times, 11 June 1998 a different Divisional Court considered the case of hunt saboteurs who set out to disrupt a hunt. They adduced evidence that at the outset of the hunt, two whippers in had strayed from the land over which the hunt had permission to ride and had taken the hounds onto adjacent land where they had no such permission. The trespassing defendants had actively disrupted the actions of all the hunt, not confined to the strayers, and had continued to do so after the latter had rejoined the main body of hunters. In this case the relevant part of section 68 was the concluding words of section 68(2), trespassing occupants rather than occupants committing a criminal offence, but the two limitations upon the concept of lawful activity are clearly in similar case. The court held that the fact that some few members of the hunt had acted unlawfully by trespassing on adjoining land did not affect the lawfulness of the activity which the defendants had disrupted. Simon Brown LJ offered the suggestion that it might have been otherwise if either the hunts central objective had been to hunt over land where it had no authority to be, or the defendants had confined their disruption to activity by the strayers. Each of those cases illustrates the problem posed by the wording of section 68(2). Part of the difficulty arises from the use of the word may in the definition of lawful activity: Activityis lawfulif he or they may engage in the activitywithout committing an offence or trespassing on the land. For the Crown, Mr Penny revived, although not at the heart of his submissions, the argument previously ventilated in Ayliffe, that this means that an activity remains lawful even if an offence is committed, providing that the activity could have been accomplished without the offence. It may be noted that if that were the correct construction it would have provided a complete answer to the appeals in both Hibberd and Nelder. Although this might on the face of the statutory language be a possible construction, it would deprive the defence of most of its force; it would mean that even if the occupants were engaged in a thorough going criminal act which represented their central purpose in being on the land, the defence would not operate if they could have altered the way they did things so as to do them lawfully. It would have the effect of treating as lawful something which was anything but lawful, and of examining not the activity which was actually carried out, but an activity which was not. That construction was rejected by the Divisional Court in Ayliffe at para 52, and also by the Divisional Court in the present case, at para 29. The true meaning of section 68 must be found despite the use of the word may, which was perhaps employed because the section has to apply to activity by the occupant which has not yet commenced. The true meaning lies in examining the activity which was (or was to be) carried out on the land. In argument in the present case, neither side contended that every criminal offence committed on the land provides the defendant with an escape from the section. For the appellants, Mr Southey QC accepted that if, for example, it had turned out that in the present case there was an employee in the shop who was paid something less than the national minimum wage, that would not render the activity of the shop unlawful for the purposes of section 68. Such a merely collateral offence would not provide the defendants with a fortuitous defence. His proposed solution to the problem was that the section defines activity by reference to the particular feature of the occupants acts against which the defendant was protesting or objecting. So, he contended, if the defendant made his objection to low wages, the fact that the whole of the rest of the shops activity was entirely lawful would matter not, but unless this was the defendants focus, the collateral offence against wage regulation would be irrelevant. That, however, is to turn section 68 upside down. True it is that section 68(1) requires the defendants act to be done with the intention of disrupting (etc) the lawful activity of the occupant, but it calls first for a finding as to the lawful activity, and only then asks whether that is what the defendant intended to disrupt (etc). The section cannot be read in the way suggested. Mr Southeys contention suggests an enquiry not into what the defendant intends, for he clearly intends to disrupt the whole activity, but rather into his motive or ulterior purpose for intending it. Moreover, this suggested construction is open to an objection similar to that lying against the one rejected in Ayliffe (para 11 above); it would direct the court away from the activity actually carried out by the occupants, in this case into the mind of the defendant. Just as the argument rejected in Ayliffe would enable the Crown or the occupant to choose which activity to rely upon, however remote from what he was actually doing, so this construction would bestow a similar bounty upon the defendant. The intention of the section is plainly to add the sanction of the criminal law to a trespass where, in addition to the defendant invading the property of someone else where he is not entitled to be, he there disrupts an activity which the occupant is entitled to pursue. Section 68(2) therefore must mean that the additional criminal sanction is removed when the activity which is disrupted is, in itself, unlawful, which may be either because the occupant is himself trespassing, or because his activity is criminal. Mr Southeys realistic concession is correct, for not every incidental or collateral criminal offence can properly be said to affect the lawfulness of the activity, nor to render it criminal. It will do so only when the criminal offence is integral to the core activity carried on. It will not do so when there is some incidental or collateral offence, which is remote from the activity. The decisions in Hibberd and Nelder are both consistent with this approach. The certified question ought thus to be answered Yes. This was the general approach of the Divisional Court in this case, as the terms of the certified question show. However, as may occur in an extempore judgment, some of its language ranged more widely than required. To the extent that it spoke in para 29 of the defence being confined to the case where the activity is patently unlawful, that latter expression needs to be understood to mean that the criminal offence must be integral to the core activity of the occupant and not collateral to or remote from it. It does not mean that the illegality must be so obvious as not to call for more than the barest enquiry. The Divisional Court was also concerned at the potential breadth of enquiry which might be required of the court of trial, usually the magistrates court, especially where, as here, the defence raises potentially far reaching questions concerning international political events. That found expression in para 27 as follows: As Waller LJ said in Ayliffeit is enough for the prosecution to show that the activity in question is apparently lawful. If then the defendant seeks to raise an issue to the contrary within the section 68 proceedings he mustdo so by reference to facts or events inherent in the activity itself. He cannot rely on the assertion of extraneous facts whose effective investigation would travel into contexts and controversies which are markedly remote from what is actually being done by way of the activities in question. It is correct that section 68(2) does not arise in the case of an apparently lawful activity unless and until it is raised on the evidence (Ayliffe). It is also correct that a criminal offence, if raised on the evidence, will be relevant to section 68(2) only if it is integral to the core activity in question. But if it is, it may yet involve investigation of extraneous events. The Divisional Court expressly, and correctly, accepted at para 30 that guilt of a war crime might in theory at least qualify. Other less grave alleged offending may also involve investigation of the assertion that it has occurred. It does sometimes fall to magistrates to examine matters of complexity and occasionally of international import; so long as the issue is not a non justiciable one such as the nations foreign policy as in Jones, there is no inhibition on their doing so and they will no doubt constitute themselves appropriately if necessary. Nor should the court of trial be inhibited from doing so, if the case requires it, by consideration of the fact that a finding may be made against the occupant of the land, such as the shopkeeper here, who is not a party to the trial. The only finding that might be made is that the Crown has not made out its case because there appears to have been an activity on the land which is not proved to have been lawful. That is not a conviction of the absent shopkeeper, nor in any sense a finding binding upon him. Decisions may sometimes have to be made in all manner of criminal proceedings which involve consideration of the actions of non parties an obvious case is where the defendant blames a third party for the offence. The application of these principles to the present case demonstrates that the conclusions of both the district judge and the Divisional Court were correct and that the defendants were rightly convicted. The war crime argument Section 51 of the International Criminal Court Act 2001 renders genocide, a war crime and a crime against humanity domestic offences against the criminal law of England and Wales. It applies wherever the offence was committed if the offender was resident in the UK. Section 52 of the same Act does the same for conduct ancillary to such a crime, and such conduct includes, via section 55, aiding, abetting, counselling or procuring the commission of the principal offence. A war crime is defined in article 8(2)(b) of Schedule 8 to the Act to include: (viii) the transfer, directly or indirectly, by the Occupying Power of parts of its own civilian population into the territory it occupies That offence derives, as the defendants said, from the Fourth Geneva Convention of August 1949 relating to the protection of civilians in time of war. If therefore a person, including the shopkeeper company, had aided and abetted the transfer of Israeli civilians into the OPT, it might have committed an offence against these provisions. There was, however, no evidence beyond that a different company, namely the manufacturing company, had employed Israeli citizens at a factory in the West Bank and that the local community, which held a minority shareholding in that manufacturing company, had advertised its locality to prospective Israeli settlers. It is very doubtful that to employ such people could amount to counselling or procuring or aiding or abetting the Government of Israel in any unlawful transfer of population. Such an employer might be taking advantage of such a transfer, but that is not the same as encouraging or assisting it. Even if that company could have been aiding and abetting such transfer, that cannot amount to an offence by the separate retailing company, whatever the corporate links between the two companies. And even if the companies had been the same, such a crime of assistance was not an integral part of the activity carried on at the shop, which was retail selling. On the contrary, it was antecedent to, and remote from, the selling. The selling was perfectly lawful. The defendants, for their own reasons, elected to trespass and to stage a sit in which was intended to (and did) stop that lawful activity in its tracks. They thereby committed the offence under section 68. The supplemental contention that the shopkeeper company was committing a money laundering offence fails for the same reasons. The suggested money laundering is the possession and use (by selling) of the products of the West Bank factory. Those products were said to be criminal property because they were the benefit of the criminal conduct of the factory owning company and thus within section 326(4) of the Proceeds of Crime Act 2002. If, however, there was no aiding and abetting of the unlawful movement of population, the products of the factory could not be property obtained by or in return for criminal conduct (section 242 of the Proceeds of Crime Act 2002). Even if there had been aiding and abetting, and assuming that it could properly be said that the shopkeeping company suspected this to be the case, the criminal property offence could not be said to be integral to the activity of selling; it was on any view a collateral matter which did not render selling unlawful. The cheating the Revenue argument For similar reasons it is clear that even if the shops stock had been imported into the UK under favourable terms reserved for goods properly deriving from Israel as distinct from those produced in the OPT (as to which there is no evidence), this could not render their subsequent sale in the shop unlawful. At most, it means that the importer is liable to repay the Revenue any duty which ought to have been paid but was not. This is a classic example of a collateral, and in this case an antecedent and remote, offence which does not affect the lawfulness of the core activity of the shop, namely retail selling. On the assumption that it was committed by the shop company, it would provide the defendants with no defence to the offence under section 68. The argument from labelling offences The principal offence relied upon was one contrary to the Consumer Protection from Unfair Trading Regulations 2008. These were made to transpose the EU Unfair Commercial Practices Directive 2005/29/EC. The relevant offence is under regulation 9, and consists of engaging in a commercial practice which is a misleading action as defined by regulation 5. In its turn, regulation 5 provides that a commercial practice is a misleading action if (inter alia): (2)(a) it contains false information and is therefore untruthful in relation to any of the matters in paragraph (4) or if it or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the matters in that paragraph, even if the information is factually correct; and (b) it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise. The paragraph 4 relevant matters include the geographical or commercial origin of the product. Thus the argument before the district judge was that the products sold in the shop were mislabelled as to geographical origin in that they were labelled as Made by Dead Sea Laboratories Ltd, Dead Sea, Israel. That amounted, it was said, to representing that they came from Israel when they did not, because they came from the OPT. This regulation does not, it should be observed, make the selling of mislabelled goods an offence. If the offence is committed, the seller is guilty, but the sale is not itself an offence; rather it is the application of the misleading description. That suggests that the offence is collateral to the activity of selling, rather than integral to it. However, of the offences postulated by the defendants, this one comes closest to the core activity of selling undertaken by the shop on the occasion of the defendants trespass. In the event, it is not necessary to resolve the question whether this offence is integral to the activity of selling or not. The district judge found that even if the other elements of the offence were made out the additional condition required by regulation 5(2)(b) could not be established. There was no basis for saying that the average consumer would be misled into making a transactional decision (ie into buying the product) when otherwise she would not have done, simply because the source was described as being constitutionally or politically Israel when actually it was the OPT: the source was after all correctly labelled as the Dead Sea. The district judge found that: Whether or not the information given is falseI consider that the number of people whose decision whether or not to buy a supposedly Israeli product would be influenced by knowledge of its true provenance would fall far below the number required for them to be considered as the average consumer. If a potential purchaser is someone who is willing to buy Israeli goods at all, he or she would be in a very small category if that decision were different because the goods came from illegally occupied territory. That finding was clearly open to the district judge on the evidence and is fatal to the contention that the offence was committed. The Cosmetic Products (Safety) Regulations 2008 were made to transpose a different EU Directive (76/768/EEC as amended). Regulation 12(1)(a) provides that no person shall supply a cosmetic product unless the following information is displayed in indelible and legible lettering: the name or style and the address or registered office of the manufacturer or the person responsible for marketing the cosmetic product who is established within the EEA. Where the cosmetic product is manufactured outside the EEA, the country of origin must also be specified. As the district judge found, the objective of these Regulations is clearly safety of the consumer. They require the provision of information about the manufacturer, so that the consumer knows whom to pursue in the event of complaint. Within the EEA the name of the manufacturer is enough. If the manufacturer is outside the EEA, then the country must also be identified. These products were accurately labelled as coming from the Dead Sea and it is not suggested that the manufacturer was not identified. The alleged inaccuracy relates to the political status of the Dead Sea area from which they are identified as coming. As the district judge rightly said, the Regulations are not directed at disputed issues of territoriality, however important those may be in other contexts. It is doubtful that any offence under these Regulations was shown, but if it was, there can be no doubt that it was not integral to the activity of the shop in selling the products, but at most collateral to it. Conclusion Should the words lawful activity in section 68 Criminal Justice and Public Order Act 1994 be limited to acts or events that are integral to the activities at the premises in question? It should be answered yes. The appeal must in consequence be dismissed. It follows that of the postulated offences all were either not demonstrated to have been committed by the occupants of the shop at the time of the defendants trespass or were at most collateral to the core activity of selling rather than integral to that activity. The occupants of the shop were, accordingly, engaged in the lawful activity of retail selling at the time and section 68(2) provided no defence to the defendants. The certified question was as follows: |
The Proceeds of Crime Act 2002 (POCA), as amended by the Serious Organised Crime and Police Act 2005, is designed to prevent the enjoyment of the fruits of criminal activity. Part 2 focuses on the criminal. To the extent that it is proved, in the manner prescribed, that a criminal has benefitted from criminal conduct, a levy can be made upon his assets, whether or not those assets are themselves the product of his criminal conduct, by a process inaccurately described as confiscation. A conviction of the criminal is a precondition to the power to confiscate. Part 5 concentrates on the fruits of crime themselves. The Serious Organised Crime Agency (SOCA) is given the task of tracking down and recovering the fruits of criminal activity, whether they remain in the hands of the criminal or have been passed on to someone else subject to exceptions for which POCA makes provision. The fruits of criminal activity can be recovered under Part 5 whether or not anyone has been convicted of the crime or crimes that have produced them. This appeal is concerned with Part 5 proceedings. SOCA has obtained an order for the recovery of property to the value of some 2m (the property) held by the appellants, David Gale and his former wife Teresa Gale. SOCA did so by persuading Griffith Williams J, sitting in the High Court, that the property was derived from criminal activity on the part of one or other or both of the appellants, in the form of drug trafficking, money laundering and tax evasion in the United Kingdom, Spain, Portugal and other jurisdictions. The judge so found notwithstanding that David Gale had never been convicted of drug trafficking albeit that in Portugal he was prosecuted and acquitted of drug trafficking and in Spain criminal proceedings against him for drug trafficking were brought but discontinued. In order to recover property under Part 5 SOCA has to prove that it was obtained by unlawful conduct, or that it is property obtained in place of such property. Section 241 defines unlawful conduct as being conduct which is unlawful under the criminal law of the country in which it occurs, whether this is the United Kingdom or elsewhere. The section requires the court to decide on a balance of probabilities whether it is proved that any of the matters alleged to constitute unlawful conduct occurred. Section 242 provides that in deciding whether property was obtained through unlawful conduct it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct. Thus it is not necessary to prove that individual items of property were derived from specific offences. Balance of probabilities is the standard of proof applied in civil proceedings under English law (the civil standard of proof). In criminal proceedings guilt has to be proved beyond reasonable doubt (the criminal standard of proof). In concluding that the property recovered was the product of criminal conduct on the part of the appellants, Griffith Williams J applied the civil standard of proof, albeit that he used language that suggested that the criminal standard might well have been satisfied. It is the appellants case, advanced without success in the Court of Appeal, that this was contrary to the Human Rights Act 1998 in that it infringed their right to a fair trial under article 6 of the European Convention on Human Rights (the Convention). They urge that, despite the language of section 241(3), we should read down the subsection so as to accord to it the meaning that the court must decide whether it is proved beyond reasonable doubt that matters alleged to constitute unlawful conduct occurred. Alternatively, they submit that the Court should declare the subsection to be incompatible with the Convention pursuant to section 4 of the Human Rights Act. This is the only issue concerning the recovery order that arises with regard to the recovery order; other issues that were raised below have not been pursued. There is a second issue. On 28 July 2005 Collins J made an Interim Receiving Order pursuant to section 246 of POCA. The findings of the Interim Receivers report formed the basis for commencing the proceedings for civil recovery. At the end of those proceedings the judge made an order for costs against the appellants. He refused, however, to direct that those costs should include the costs of the Interim Receivers investigation and report. SOCA cross appealed successfully against that refusal. The appellants seek to reverse the Court of Appeal on this issue and to restore the order of the judge. Is there scope for reading down? The Secretary of State, represented by Mr Eadie QC, has intervened because of the possibility of a declaration of incompatibility. The Secretary of State has supported the respondent, SOCA, in relation to the first issue. Mr Eadie has submitted, however, that regardless of the merits of the human rights challenge there can be no question of reading down section 241(3). This is because it represents a clear, advised expression of Parliamentary intent lying at the heart of the statutory scheme. This submission runs counter to an obiter view that I expressed at para 24 in R v Briggs Price [2009] UKHL 19; [2009] AC 1026, when dealing with analogous provisions of the Drug Trafficking Act 1994. Lord Rodger of Earlsferry expressed the same view at para 79. I see the force in Mr Eadies argument and, if necessary, it will be necessary to reconsider the views that I and Lord Rodger expressed. The first issue is, however, whether section 241(3), if given its natural and very clear meaning, is compatible with the Convention. Section 241(3) forms part of a statutory code of some complexity. I do not believe that for the purposes of resolving the issue raised on this appeal it is necessary to give a more detailed explanation of the legislation than that which I have given. A summary of the relevant provisions of POCA can, however, be found in paras 5 to 11 of the judgment of Carnwath LJ in the Court of Appeal [2010] EWCA Civ 759, [2010] 1 WLR 2881. The judgment of Griffith Williams J The judgment of Griffith Williams J [2009] EWHC 1015 (QB) runs to nearly 60 closely printed pages. I would endorse the commendation of Carnwath LJ of this meticulous and comprehensive judgment. The judge started by quoting from the Executive Summary of the Report of the Interim Receiver to the effect that there was no documentary evidence that supported the appellants assertion that their assets had been derived from legitimate activities but, on the contrary, evidence of unlawful conduct and complex financial dealings indicative of money laundering and concealment. The judge then addressed the burden and standard of proof. He held: 9. The burden of proof is on the claimant and the standard of proof they must satisfy is the balance of probabilities. While the claimant alleged serious criminal conduct, the criminal standard of proof does not apply, although cogent evidence is generally required to satisfy a civil tribunal that a person has been fraudulent or behaved in some other reprehensible manner. But the question is always whether the tribunal thinks it more probable than not see Secretary of State for the Home Department v Rehman [2003] 1 AC 153 at para 55, per Lord Hoffmann. The judge went on to quote from Lord Carswells elaboration of this approach, in which the other members of the House concurred, in In re D (Secretary of State for Northern Ireland intervening) [2008] UKHL 33, [2008] 1 WLR 1499. In para 18 of his judgment the judge set out his approach to the evidence, in the context of the question of the attitude that he should take to the acquittal of David Gale by the Portuguese Court: It is not contended that the doctrine of issue estoppel applies and clearly the criminal law principle of autrefois acquit has no application in civil proceedings. On behalf of DG, it was submitted that the Portuguese charges cannot be re litigated without hearing from all the relevant witnesses or considering a full transcript which is not available. However, I do not accept this contention. To consider the evidence adduced in the Portuguese proceedings is not to re litigate because what is in issue in these proceedings is not the commission of the specific offences alleged against DG in Portugal but whether on the evidence before this court of the material considered by the Portuguese Court, together with the evidence available to the Spanish Courts and other material not considered by the courts in either jurisdiction, the claimant has proved on the balance of probabilities that DGs wealth was obtained through unlawful conduct of a particular kind or of one of a number of kinds, each of which would have been unlawful conduct: see section 242(2)(b) of POCA that is to say drug trafficking, money laundering and tax evasion. The judge gave detailed consideration to the acquisition of numerous assets by the appellants and the explanations, or lack of explanations, proffered to explain how these were funded. He examined the evidence that had led to the Portuguese prosecution and the commencement of criminal proceedings in Spain, which were subsequently discontinued on account of prescription. His conclusions were summarised in the following passage from para 140 of his judgment: I am in no doubt that DG and TG engaged in unlawful conduct in DGs case, money laundering and drug trafficking, in TGs case money laundering. There is also evidence of tax evasion in four jurisdictions. They have acquired capital and various assets as a direct consequence of the money laundering and/or drug trafficking, but it is not possible to quantify the extent of the tax evasion or to estimate the extent, if at all, that it contributed to their capital wealth. For reasons given during the course of the judgment and below, I am satisfied the Receiver has correctly identified recoverable property. I found DG a witness whose evidence, on the central issues, was wholly unreliable. He was so often demonstrably lying. I am not prepared to believe the evidence of TG insofar as she purported to confirm his account or to explain her involvement; she too was shown to be a liar about matters of real moment. While I am prepared to accept that DG was the moving force behind all criminal conduct, she was hardly ignorant of what he was doing and played her full part in the money laundering. The judge then summarised the facts that he had found earlier in his judgment, which formed the basis for his conclusions. They ranged more widely than the facts that formed the basis of the criminal proceedings in Portugal and Spain. The appellants case Article 6 of the Convention provides: 1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing 2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. Article 6(3) lays down a number of procedural minimum rights to be accorded to a person charged with a criminal offence. Mr Mitchell QCs submissions on behalf of the appellants founded upon the fact that an essential stepping stone toward proving that the property owned by the appellants was the product of crime was proof that the appellants had been guilty of criminal conduct, in the form of drug trafficking and money laundering. He submitted that in these circumstances article 6(2) applied. The appellants were entitled to the presumption of innocence afforded by that article. Rebuttal of the presumption of innocence required proof of guilt to the criminal standard, this being implicit in the words according to law. He added to this the submission that once David Gale had been acquitted of drug trafficking by the Portuguese Court no adverse finding could be made that implicated him in the conduct of which he had been acquitted. As the legal basis for these submissions Mr Mitchell relied first on a considerable body of Strasbourg jurisprudence and secondly on the analysis of this jurisprudence of the House of Lords in R v Briggs Price. In considering the jurisprudence I acknowledge the assistance that I have derived from Mr Eadies printed case. He has there propounded a number of principles to be derived from the Strasbourg cases, which were not challenged by Mr Mitchell and which I have found to be both well founded and helpful. The Strasbourg jurisprudence Charged with a criminal offence has an autonomous meaning see Engel v The Netherlands (No 1) (1976) 1 EHRR 647. Thus the fact that POCA unequivocally designates recovery proceedings as civil recovery does not establish conclusively that they do not involve the charge of a criminal offence. None the less, the classification of proceedings under national law is one of three relevant considerations (the three factors) to which the ECtHR always has regard when deciding whether or not article 6(2) is engaged. The second is the essential nature of the proceedings and the third is the type and severity of the consequence that may flow from the proceedings, usually described by the ECtHR as the penalty that the applicant risked incurring. These three factors, and some of the jurisprudence in which they feature, were identified by Kerr LCJ in Walsh v Director of the Assets Recovery Agency [2005] NICA 6, [2005] NI 383, at para 20, where he observed that they tend to blend into each other. If the proceedings are properly analysed as civil rather than criminal, article 6(1) applies, but not article 6(2) or (3). There is a possibility, however, that the requirements of article 6(2) and (3) may creep in by the back door on the basis that the notion of a fair trial demands that they be applied see Bochan v Ukraine (Application No 7577/02) (unreported) 3 May 2007. I now come to a series of cases dealing with the application of article 6(2) after a person has been acquitted in criminal proceedings. These are of relevance in the present case having regard to Mr Mitchells contention that the Portuguese acquittal posed a bar to reliance in these proceedings on the alleged conduct which formed the basis of the Portuguese proceedings. Some of these decisions are mutually inconsistent and it is not easy to identify the principle underlying others. Before looking at these cases it may be helpful to make some preliminary observations. Many signatories to the Convention require guilt in criminal proceedings to be established according to an enhanced standard of proof in comparison to civil or disciplinary proceedings. In this jurisdiction the standard is proof beyond reasonable doubt. In such circumstances it is perfectly obvious that failure to establish guilt according to the required standard does not demonstrate that the defendant did not commit the criminal act. It demonstrates simply that the evidence adduced against him was insufficient to discharge the enhanced burden of proof. After acquittal, the possibility exists that claims for relief by, or against, the defendant may be brought that are based upon, or involve consideration of, the evidence that was inadequate to establish the defendants criminal guilt. The resolution of those claims may turn on lesser standards of proof, or different criteria, from those which governed the criminal proceedings. Examples are a claim by the defendant in respect of his legal costs, a claim by the defendant for compensation for time spent remanded in custody, disciplinary proceedings brought against the defendant in respect of the alleged conduct that formed the subject of the criminal charge, or a claim for damages by an alleged victim of that conduct. The Strasbourg Court has never suggested that it is unlawful to require a defendant who has been acquitted to satisfy some additional criterion in order to qualify for reimbursement of his costs, or for compensation for time spent on remand: see for instance Leutscher v The Netherlands (1996) 24 EHRR 181. The Strasbourg Court has also recognised that it is legitimate for a victim to bring a civil claim for compensation in proceedings that apply a lesser burden of proof to the issue of whether the defendant committed the acts that had formed the basis of the criminal charge on which he was acquitted see for instance Ringvold v Norway (Application No 34964/97) (unreported) 11 February 2003. And the Strasbourg Court has recognised that, after acquittal, it may still be legitimate to bring disciplinary proceedings or care proceedings under which a lesser standard of proof may be applied to the question of whether the defendant committed the conduct that had formed the basis of the criminal charge of which he was acquitted: see for example Moullet v France (Application No 27521/04) (unreported) 13 September 2007; HK v Finland (Application No 36065/97) (unreported) 27 September 2005. Most of the cases to which I have just referred involved discrete proceedings after the defendants acquittal in the criminal trial. There are a number of cases, however, where the Strasbourg Court has held that the presumption of innocence in article 6(2) was infringed by findings in subsequent proceedings that cast doubt on the validity of a prior acquittal in criminal proceedings. The common factor in these cases has been a procedural connection between the criminal trial and the subsequent proceedings the mantra oft repeated has been that the latter proceedings were a consequence and the concomitant of the criminal proceedings. The Court has also condemned as infringing article 6(2) statements by public authorities suggesting that a person acquitted might none the less have been guilty. This line of authority starts with Sekanina v Austria (1993) 17 EHRR 221. The applicant was tried and acquitted of a charge of murder. The jury gave as their reason that there was no conclusive evidence on which to convict him. He then claimed compensation for a year during which he was remanded in custody. Under the relevant statute a defendant was entitled to compensation if he was acquitted and the suspicion that he committed the offence is dispelled. He was refused compensation by the court which had presided over the trial on the ground that, having regard to the evidence, his acquittal did not dispel suspicion of his guilt. He alleged violation of article 6(2). The Commission in ruling the application admissible adopted the following passage from X v Austria (1982) 30 DR 227: No authority may treat a person as guilty of a criminal offence unless he has been convicted by the competent court and in the case of an acquittal the authorities may not continue to rely on the charges which have been raised before that court but which have been proved to be unfounded. This rule also applies to courts which have to deal with non criminal consequences of behaviour which has been subject to criminal proceedings. They must be bound by the criminal courts finding according to which there is no criminal responsibility for the acts in question although this naturally does not prevent them to establish, eg a civil responsibility arising out of the same facts. The ECtHR agreed that article 6(2) applied. In doing so it relied on a link between the criminal proceedings and the compensation proceedings. It held at para 22: Admittedly, the Linz Regional Court gave its decision rejecting the claim on 10 December 1986, several months after the judgment acquitting the applicant on 30 July 1986. In the Courts opinion, Austrian legislation and practice nevertheless link the two questions the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue can be regarded as a consequence and, to some extent, the concomitant of the decision on the former. Moreover, as is the case under the legislation of several other European countries in which a right to compensation in respect of detention on remand is recognised in the event of acquittal, the criminal court which tries the case on its merits, in this instance the Linz Landesgericht, albeit composed differently, in principle has jurisdiction in the matter. Finally, the Austrian courts relied heavily on the evidence from the Assize Courts case file in order to justify their decision rejecting the applicants claims, thus demonstrating that, in their opinion, there was indeed a link between the two sets of proceedings. The applicant can therefore invoke article 6(2) in relation to the impugned decision. Subsequently, at para 30, the ECtHR made the following comment on the Austrian courts affirmations that there were still grounds for suspicion of the applicants guilt: Such affirmations not corroborated by the judgment acquitting the applicant or by the record of the jurys deliberations left open a doubt both as to the applicants innocence and as to the correctness of the Assize Courts verdict. Despite the fact that there had been a final decision acquitting Mr Sekanina, the courts which had to rule on the claim for compensation undertook an assessment of the applicants guilt on the basis of the contents of the Assize Court file. The voicing of suspicions regarding an accuseds innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits of the accusation. However, it is no longer admissible to rely on such suspicions once an acquittal has become final. Consequently, the reasoning of the Linz Regional Court and the Linz Court of Appeal is incompatible with the presumption of innocence. Sekanina was followed in Rushiti v Austria (2000) 33 EHRR 1331, a case of essentially similar facts. The Court stated at para 31: In any case, the Court is not convinced by the Governments principal argument, namely that a voicing of suspicions is acceptable under article 6(2) if those suspicions have already been expressed in the reasons for the acquittal. The Court finds that this is an artificial interpretation of the Sekanina judgment, which would moreover not be in line with the general aim of the presumption of innocence which is to protect the accused against any judicial decision or other statements by state officials amounting to an assessment of the applicants guilt without him having previously been proved guilty according to law (see Allenet de Ribemont v France (1995) 20 EHRR 557, para 35, with further references). The Court cannot but affirm the general rule stated in the Sekanina judgment that, following a final acquittal, even the voicing of suspicions regarding an accuseds innocence is no longer admissible. The Court, thus, considers that once an acquittal has become final be it an acquittal giving the accused the benefit of the doubt in accordance with article 6(2) the voicing of any suspicions of guilt, including those expressed in the reasons for the acquittal, is incompatible with the presumption of innocence. Taken at face value these decisions seem to convert a presumption of innocence prior to conviction which is rebuttable into an irrebuttable presumption of innocence after acquittal. Two matters demonstrate that this is not the case. The first is the relief granted, or more significantly denied, to the applicants. Each of the applicants sought damages by way of compensation for his detention on remand ie the relief he had sought in the domestic proceedings, to which he was entitled under domestic law if suspicion of his guilt had been dispelled. This was denied on the ground that there was no connection between the violation of article 6(2) and the damage in question. If, however, the acquittals had been conclusive of the applicants innocence his right to compensation would logically have followed. The other matter is the reasoning of the ECtHR in a number of subsequent applications against Norway, which were heard together. Ringvold v Norway (Application No 34964/97) (unreported) 11 February 2003 and Y v Norway (2003) 41 EHRR 87 each concerned a case where the victim of conduct that had been the subject of an unsuccessful criminal prosecution was awarded compensation. Under Norwegian criminal law guilt of an accused must be proved beyond reasonable doubt. Under the Code of Criminal Procedure 1981 the civil claim of a victim may be determined in connection with a criminal case provided that the claim arises from the same act that forms the basis of the prosecution. Under the Damage Compensation Act 1969 a purported victim is entitled to claim damages for personal injury caused with intent or by gross negligence regardless of the outcome of criminal proceedings. The standard of proof in respect of such a claim is balance of probabilities. In Y v Norway the applicant was charged with sexual assault and homicide of his cousin. He was convicted and sentenced to 14 years imprisonment. In linked civil proceedings he was ordered to pay compensation to the victims parents. He appealed to the High Court, where the hearing was before three professional judges and a jury. The jury acquitted the applicant. The next day the three professional judges sat to consider the compensation order on the basis of the evidence that they had heard. They upheld the order for compensation. The applicant claimed violation of article 6(2) but did not claim pecuniary damages. The ECtHR considered the three relevant factors to which I have referred in para 16 above. It held at para 40 that the compensation proceedings were classified as civil under Norwegian domestic law. As to the second factor the Court held at para 41 that, notwithstanding that the compensation claim was based on the same evidence and involved the same constitutive elements as the criminal offence, it could not properly be said to render the defendant charged with a criminal offence. The Court continued: Thus, the Court considers that, while the acquittal from criminal liability ought to be maintained in the compensation proceedings, it should not preclude the establishment of civil liability to pay compensation arising out of the same facts on the basis of a less strict burden of proof (see, mutatis mutandis, X v Austria (1982) 30 DR 227; MC v United Kingdom (1987) 54 DR 162). 42. However, if the national decision on compensation contains a statement imputing the criminal liability of the respondent party, this could raise an issue falling within the ambit of article 6(2) of the Convention. 43. The Court will therefore examine the question whether the domestic courts acted in such a way or used such language in their reasoning as to create a clear link between the criminal case and the ensuing compensation proceedings as to justify extending the scope of the application of article 6(2) to the latter. 44. The Court notes that the High Court opened its judgment with the following finding (para 13 above): Considering the evidence adduced in the case as a whole, the High Court finds it clearly probable that [the applicant] has committed the offences against Ms T with which he was charged and that an award of compensation to her parents should be made under article 3 5 (2) of the Damage Compensation Act. (Emphasis added) 45. This judgment was upheld by the majority of the Supreme Court (para 16 above), albeit using more careful language. However, that judgment, by not quashing the former, did not rectify the issue, which in the Courts opinion, thereby arises. 46. The Court is mindful of the fact that the domestic courts took note that the applicant had been acquitted of the criminal charges. However, in seeking to protect the legitimate interests of the purported victim, the Court considers that the language employed by the High Court, upheld by the Supreme Court, overstepped the bounds of the civil forum, thereby casting doubt on the correctness of that acquittal. Accordingly, there was a sufficient link to the earlier criminal proceedings which was incompatible with the presumption of innocence. 47. In the light of these considerations, the Court concludes that article 6(2) was applicable to the proceedings relating to the compensation claim against the present applicant and that this provision was violated in the instant case. The Court awarded 20,000 Euros by way of non pecuniary damages. In Ringvold v Norway the applicant was charged with sexual abuse of a minor, G, on whose behalf a claim was submitted for civil compensation. He was acquitted and the claim for compensation dismissed. G appealed to the Supreme Court against the failure to award compensation. The Supreme Court heard fresh evidence but also had regard to the evidence given in the criminal proceedings. The ECtHR considered the usual three factors and concluded that the compensation claim did not amount to the bringing of another criminal charge. It observed, however, that had the national decision on compensation contained a statement imputing criminal liability to the applicant this would have raised an issue falling within the ambit of article 6(2). following manner: The Court then went on to distinguish Sekanina and Rushiti in the 41. The question remains whether there were such links between the criminal proceedings and the ensuing compensation proceedings as to justify extending the scope of article 6(2) to cover the latter. The Court reiterates that the outcome of the criminal proceedings was not decisive for the issue of compensation. In this particular case, the situation was reversed: despite the applicants acquittal it was legally feasible to award compensation. Regardless of the conclusion reached in the criminal proceedings against the applicant, the compensation case was thus not a direct sequel to the former. In this respect, the present case is clearly distinguishable from those referred to above, where the Court found that the proceedings concerned were a consequence and the concomitant of the criminal proceedings, and that article 6(2) was applicable to the former. Sekanina and Rushiti were, however applied, and Ringvold distinguished, in Hammern v Norway (Application No 30287/96) (unreported) 11 February 2003. The applicant in that case had been acquitted on charges of sexual abuse of minors. He then sought compensation in respect of time during which he had been remanded in custody. Under article 444 of the Code of Criminal Procedure he was entitled to this if it is shown to be probable that he did not carry out the act that formed the basis for the charge. The ECtHR held at para 42 that the compensation proceedings did not give rise to a criminal charge against the applicant, but went on to hold that the linkage between the compensation proceedings and the criminal proceedings had the consequence of bringing the former within the scope of article 6(2). At para 44 the Court held that it was significant that the proceedings engaged the responsibility of the state, not a private party. It went on to give the following reasons for holding article 6(2) to be applicable: 45. Moreover, unlike in criminal proceedings where it was for the prosecution to prove beyond reasonable doubt that the defendant had committed the incriminated act in a compensation case of the present kind it was for the acquitted person to show that, on the balance of probabilities, it was more than 50% probable that he or she did not carry out the act grounding the charge. Leaving aside this difference in evidentiary standards, the latter issue overlapped to a very large extent with that decided in the applicant's criminal trial. It was determined on the basis of evidence from that trial by the same court, sitting largely in the same formation, in accordance with the requirements of article 447 of the Code. 46. Thus, the compensation claim not only followed the criminal proceedings in time, but was also tied to those proceedings in legislation and practice, with regard to both jurisdiction and subject matter. Its object was, put simply, to establish whether the state should have a financial obligation to compensate the burden it had created for the acquitted person by the prosecution it had engaged against him. Although the applicant was not charged with a criminal offence, the Court considers that, in the circumstances, the conditions for obtaining compensation were linked to the issue of criminal responsibility in such a manner as to bring the proceedings within the scope of article 6(2), which accordingly is applicable. Ringvold and Y were applied by the ECtHR when ruling inadmissible the application in Lundkvist v Sweden (Application No 48518/99) (unreported) 13 November 2003. The applicant was charged with setting his house on fire after a row with his wife. He was acquitted on the grounds that, while there was a strong inferential case against him, it did not establish his guilt beyond reasonable doubt. He then brought a civil claim against his insurers for the loss of his house. Evidence was adduced, which included evidence that had been adduced at the criminal trial. The court dismissed his claim, holding that the insurance company had proved, on balance of probabilities that he was responsible for the fire. Considering the three factors the Court held that the civil proceedings did not involve bringing a criminal charge against the applicant. It went on to hold: As to the further question of whether there were links between the criminal case and the ensuing compensation case such as to justify extending the scope of the application of article 6(2) to the latter, the Court reiterates that the outcome of the criminal proceedings was not decisive for the compensation issue. In this particular case, the situation was reversed: despite the applicants acquittal it was legally feasible to deny him insurance compensation for the destroyed house. Regardless of the conclusion reached in the criminal trial against the applicant, the compensation case was therefore not a direct sequel to the former or a consequence and concomitant of it. Discussion With respect, I find unconvincing the attempts of the Strasbourg Court to distinguish between claims for compensation by an acquitted defendant and claims for compensation by a third party against an acquitted defendant. As the cases to which I have just referred show, the link between the criminal proceedings and the subsequent proceedings can be close in either case. The evidence may be common to both proceedings, as may the judges who have to consider it. In each case the compensation proceedings can put in issue the facts that were alleged as the foundation of the criminal charges. In each case facts were held proved according to the civil standard of proof which had not been established according to the criminal standard in the earlier proceedings. How can it credibly be said that the claim for compensation by the defendant is consequential and concomitant to the criminal proceedings but not the claim by a third party? May it not be that the Strasbourg Court took a wrong turn in Sekanina and Rushiti? It might be thought that the judges who sat on the criminal proceedings will be well placed to determine the outcome of issues that depend upon the application of a lesser standard of proof to the same factual evidence; the Norwegian procedure, illustrated in Y, proceeded on that basis. Yet this is something that the Strasbourg jurisprudence appears to discourage. This confusing area of Strasbourg law would benefit from consideration by the Grand Chamber. What follows from the findings of the Strasbourg Court that claims for compensation by acquitted defendants fall within the scope of article 6(2)? This is a question to which I drew attention in para 25 above. It was considered in a concurring opinion by Judge Greve in Hammern. The judges conclusion was that the test laid down by the Norwegian Code of Criminal Procedure for recovering compensation could the defendant show that on balance of probabilities he did not carry out the act that formed the basis of the charge was simply not viable because it violated article 6(2). The focus had to be on whether the prosecution had been warranted on the facts known at the time. I comment that if this were correct the effect of article 6(2) was to prejudice the rights of the defendant that it was designed to protect. An alternative view is that all that the cases establish is that article 6(2) prohibits a public authority from suggesting that an acquitted defendant should have been convicted on the application of the criminal standard of proof and that to infringe article 6(2) in this way entitles an applicant to compensation for damage to reputation or injury to feelings. I am inclined to this view, albeit that it involves a remarkable extension of a provision that on its face is concerned with the fairness of the criminal trial see my comment on Taliadorou and Stylianou v Cyprus (Application Nos 39627/05 and 39631/05) (unreported) 16 October 2008) in R (Adams) v Secretary of State for Justice [2011] UKSC 18, [2011] 2 WLR 1180. On no view does this jurisprudence support Mr Mitchells submission that the appellants acquittal in Portugal precludes the English court in proceedings under POCA from considering the evidence that formed the basis of the charges in Portugal. The link between the Portuguese criminal proceedings and the English civil proceedings, which Strasbourg would appear to consider so critical, is not there. Nor does this jurisprudence lend any support to the proposition that the criminal standard must be applied to proof of criminal conduct in proceedings under POCA. That proposition requires further consideration of Strasbourg authority. Consideration of Strasbourg jurisprudence resumed Before the decision of the ECtHR in Geerings v The Netherlands (2007) 46 EHRR 1222 and the decision of the House of Lords in R v Briggs Price [2009] AC 1026 the law was not in doubt. Confiscation proceedings that proceed on the basis that property in the hands of a convicted criminal was derived from other criminal activity did not involve the defendant being charged with a criminal offence in relation to the other offending, or engage article 6(2). The cases supporting this proposition, and applying them to the United Kingdom confiscation legislation, are analysed in detail in Briggs Price and I do not propose to repeat that exercise. I should record, however, that Mr Eadie referred the Court to two lines of Strasbourg authority, not considered in Briggs Price, that supported this proposition. The first involved admissibility decisions in relation to proceedings in Italy to seize and confiscate the assets of those associated with Mafia activities: M v Italy (1991) 70 DR 59, Raimondo v Italy (1994) 18 EHRR 237; Arcuri v Italy (Application No 52024/99) (unreported) 5 July 2001. M v Italy was a decision of the Commission. The application related to confiscation of property on the ground that there was circumstantial evidence that the property was derived from unlawful activities. The Commission considered the usual three factors and concluded that the proceedings did not involve a criminal charge so as to engage article 6(2). Rather they were preventative in character. In Raimondo v Italy the ECtHR made a similar finding at para 43, although article 6(2) itself was not invoked. The position was the same in Arcuri v Italy. The other authorities were two admissibility decisions in relation to seizure and confiscation of cash on the ground that it was the proceeds of, or intended to be used for, drug trafficking, pursuant to sections 42 43 of the Drug Trafficking Act 1994: Butler v United Kingdom (Application No 41661/98) (unreported) 27 June 2002 and Webb v United Kingdom (Application No 56054/00) (unreported) 10 February 2004. In each case the ECtHR rejected the contention that the proceedings involved a criminal charge and resulted in the imposition of a penalty or punishment. It held that forfeiture was preventative and not a penal sanction. Accordingly it was permissible that, pursuant to section 43(3), the standard of proof required to justify forfeiture was that applicable to civil proceedings. Geerings and Briggs Price Mr Mitchell did not deal in detail with earlier authority. Rather he founded his argument on the decision of the Strasbourg Court in Geerings, as applied by the House of Lords in Briggs Price. I do not propose to repeat the review of the earlier authorities that is to be found in the speeches in that case. The relevant background to Geerings was the decision of the ECtHR in Phillips v United Kingdom (2001) 11 BHRC 280 and in van Offeren v The Netherlands (Application No 19581/04) (unreported) 5 July 2005. In each case the Court held that confiscation proceedings in relation to the benefits of drug trafficking did not involve charging the defendant with a criminal offence so as to bring them within the scope of article 6(2). In each case the applicant had been convicted of drug offences and the confiscation proceedings related to property held by him. The issue was whether article 6(2) was infringed by a presumption that this property was derived from similar offences. In holding that it was not the Court treated the confiscation procedure as analogous to the sentencing process. It does not seem to me that the analogy is very precise. The important point is, however, that the ECtHR approved of the confiscation of property on the basis that it was derived from drug trafficking without treating the proof that it was so derived as involving criminal charges and thus involving the application of article 6(2). Geerings v The Netherlands The position in Geerings 46 EHRR 1222 was very different. The applicant had been charged with a number of specific offences of theft and handling stolen goods and initially convicted of these. On appeal most, but not all, the convictions were quashed on the ground that the evidence did not satisfy the criminal standard of proof. None the less the Public Prosecutions Department sought a confiscation order for payment by the defendant of a sum equivalent to the benefit that he had derived from not merely the offences of which he had been convicted, but also from the offences of which he had been acquitted. The Supreme Court held that the Department was entitled to this order on the basis that, for the purposes of the confiscation proceedings, the standard of proof that he had benefited from the offences in question was less stringent than the standard of proof that had been required to procure his conviction of them. Thus the fact that he had been acquitted of the offences was no bar to the claims in respect of them in the confiscation proceedings. As a matter of strict logic I am in sympathy with the reasoning of the Supreme Court. None the less there is something unattractive about a prosecuting authority, which has failed to procure a conviction, proceeding to seek a confiscation order on the basis that the defendant committed the specific crimes of which he was acquitted. The ECtHR declined to accept this situation. The following passage from the judgment of the Court sets out the basis upon which it avoided doing so: 44. The Court has in a number of cases been prepared to consider confiscation proceedings following on from a conviction as part of the sentencing process and therefore beyond the scope of article 6(2) (see, in particular, Phillips, cited above, para 34; van Offeren v The Netherlands (Application No 19581/04), 5 July 2005). The features which these cases had in common are that the applicant was convicted of drugs offences; that the applicant continued to be suspected of additional drugs offences; that the applicant demonstrably held assets whose provenance could not be established; that these assets were reasonably presumed to have been obtained through illegal activity; and that the applicant had failed to provide a satisfactory alternative explanation. 45. The present case has additional features which distinguish it from Phillips and van Offeren. 46. First, the Court of Appeal found that the applicant had obtained unlawful benefits from the crimes in question although the applicant in the present case was never shown to hold any assets for whose provenance he could not give an adequate explanation. The Court of Appeal reached this finding by accepting a conjectural extrapolation based on a mixture of fact and estimate contained in a police report. 47. The Court considers that confiscation following on from a conviction or, to use the same expression as the Netherlands Criminal Code, deprivation of illegally obtained advantage is a measure (maatregel) inappropriate to assets which are not known to have been in the possession of the person affected, the more so if the measure concerned relates to a criminal act of which the person affected has not actually been found guilty. If it is not found beyond a reasonable doubt that the person affected has actually committed the crime, and if it cannot be established as fact that any advantage, illegal or otherwise, was actually obtained, such a measure can only be based on a presumption of guilt. This can hardly be considered compatible with article 6(2) (compare, mutatis mutandis, Salabiaku v France (1988) 13 EHRR 379, para 28). 48. Secondly, unlike in the Phillips and van Offeren cases, the impugned order related to the very crimes of which the applicant had in fact been acquitted. 49. In the Rushiti judgment (cited above, para 31), the Court emphasised that article 6(2) embodies a general rule that, following a final acquittal, even the voicing of suspicions regarding an accuseds innocence is no longer admissible. 50. The Court of Appeal's finding, however, goes further than the voicing of mere suspicions. It amounts to a determination of the applicants guilt without the applicant having been found guilty according to law (compare Baars v The Netherlands, (2003) 39 EHRR 538, para 31). 51. There has accordingly been a violation of article 6(2). This passage might be read as supporting one or more of the following propositions in relation to confiscation proceedings, by which I mean proceedings that require payment by a defendant of a sum equivalent to the value of property derived directly or indirectly from crime: i) Where a defendant has been tried and acquitted of an offence no claim can be based upon an assertion that he committed that offence. ii) In no case can confiscation be ordered unless it is proved to the criminal standard that the defendant committed the offences from which the property is alleged to have been derived. iii) Where it is not proved by independent evidence that the defendant possesses or possessed property for which there is no innocent explanation, but asserted that this is to be inferred from the fact that he committed a crime or crimes, the latter fact must be proved according to the criminal standard of proof. The first proposition can readily be deduced from paras 48, 49 and 50. None the less, as I have already indicated, I believe that this proposition is contrary to principle. If confiscation proceedings do not involve a criminal charge, but are subject to the civil standard of proof, I see no reason in principle why confiscation should not be based on evidence that satisfies the civil standard, notwithstanding that it has proved insufficiently compelling to found a conviction on application of the criminal standard. At all events, insofar as other Strasbourg jurisprudence supports the first proposition, it is only in circumstances where there is a procedural link between the criminal prosecution and the subsequent confiscation proceedings. There was no such link in the present case. The acquittal was in Portugal and the recovery proceedings here in England. Furthermore, the evidence in the latter ranged much wider than the evidence that was relied upon in the Portuguese prosecution. The third proposition is also one that can readily be derived from the passages cited in para 44. That proposition would not, however, put the decision of Griffith Williams J in doubt, for that decision was founded on property in the hands of the appellant whose provenance had not been sufficiently explained. The second proposition is the critical one in the present case. If it is sound this appeal must be allowed, for Griffith Williams J applied the civil, not the criminal standard of proof. In Briggs Price I held that the proposition could not properly be derived from Geerings. I remain of that view. The second proposition is inconsistent with the decisions in Phillips and van Offeren. The ECtHR in Geerings did not purport to depart from those decisions. On the contrary, in para 45 it expressly distinguished those cases on the basis that there were additional features in Geerings. Briggs Price The procedural position in Briggs Price was, happily, unusual. It is summarised in paras 8 to 15 of my speech in that case. To summarise that summary, the appellant had been convicted of conspiring to import heroin. The conspiracy was, however, never implemented, so it produced no benefit. Evidence was adduced at the trial, however, that the appellant had carried on substantial dealings in cannabis. After his conviction the trial judge embarked on confiscation proceedings under the Drug Trafficking Act 1994. He held, on the basis of the evidence that he had heard about the appellants cannabis dealing that he was satisfied that the appellant had benefited from such dealing to the extent of at least 2,628,490 and made a confiscation order in that sum. The judge made it clear that he was satisfied that the appellants involvement in dealing in cannabis had been proved to the criminal standard. The House was unanimous in finding that the judge had been satisfied on the evidence to the criminal standard of proof that the appellant had benefited from cannabis dealing to the extent found. Thus, even if article 6(2) applied to the confiscation exercise, its requirement that the appellants criminal behaviour should be established according to the criminal standard of proof had been satisfied. The House gave, however, lengthy obiter consideration to the question of whether, taking due account of the decision in Geerings, the confiscation order could only be made if the judge was satisfied to the criminal standard of proof that the appellant had committed the cannabis offences in respect of which evidence had been led at his trial. At paras 38 to 41 in Briggs Price I gave my reasons for concluding that Geerings did not support the proposition that, in confiscation proceedings, the commission by the defendant of the offences from which benefit had been derived had to be proved to the criminal, rather than the civil, standard of proof. At paras 112 to 132 Lord Mance carried out a detailed analysis of the Strasbourg jurisprudence, culminating in Geerings. He also decided that this did not justify the conclusion that article 6(2) applied to the confiscation order procedure, nor to proving the commission of criminal offences as part of that procedure. Lord Rodger expressed a contrary view at para 79. He concluded that in confiscation proceedings the commission of the criminal offences from which the relevant benefit was derived had to be proved to the criminal standard of proof, although the derivation of the benefit could be proved to the civil standard. In para 77 he summarised his reason for so concluding: Although I do not share his view that article 6(2) applies, I have none the less reached the same conclusion as Lord Brown on the standard of proof. If a presumption of innocence is implied into article 6(1), then it, too, must require that the person be proved guilty according to law. In the context of a criminal trial, the standard of proof, according to our law, is beyond reasonable doubt. Indeed, if that were not the position, the Crown could ask the court to make a confiscation order on the basis of an alleged benefit from a specific offence of which the defendant would have been acquitted if he had been prosecuted for it. Lord Neuberger of Abbotsbury at para 152 agreed with Lord Rodgers conclusions on standard of proof. Lord Brown of Eaton under Heywood concluded that Geerings established the third of the propositions that I have set out at para 45 above. His reasoning is set out in the following passage from his opinion: 94. I understand the Court's reasoning in paras 46 and 47 to amount to this: the prosecution must either demonstrate that the defendant holds or has held assets the provenance of which he cannot satisfactorily explain (as in Phillips and van Offeren: see para 44), or must establish beyond reasonable doubt that the defendant has committed some other offence (or offences) from which it can be presumed that he obtained advantage. In the latter case, of course, article 6(2) applies but is satisfied. Conclusions The views on standard of proof expressed in Briggs Price by members of the House were obiter but the application of the common ground in the views of Lord Phillips, Lord Brown and Lord Mance leads to the following conclusion. The commission by the appellants in the present case of criminal conduct from which the property that they held was derived had to be established according to the civil and not the criminal standard of proof. For the reasons that I have given that remains my conclusion. It is a conclusion which, prior to Geerings, appeared to be firmly founded on the decision of the Privy Council in McIntosh v Lord Advocate [2001] UKPC D1; [2003] 1 AC 1078. In my view that foundation is unshaken. The starting point in this case is the possession of property by the appellants for whose provenance they were unable to provide a legitimate explanation. There was an abundance of evidence, set out at length by the judge with great care, which implicated them in criminal activity that provided the explanation for the property that they owned. The judge rightly applied the civil standard of proof, but on my reading of his judgment he would have been satisfied to the criminal standard of the appellants wrongdoing. For the reasons that I have given I would dismiss the appeal in relation to the first issue. LORD CLARKE (WITH WHOM LORD PHILLIPS, LORD MANCE, LORD JUDGE AND LORD REED AGREE) The first issue Lord Phillips and Lord Dyson and, to a lesser extent, Lord Brown have discussed the Strasbourg jurisprudence at some length. As I read their judgments, however, their view that the appeal should be dismissed on the first issue does not depend upon that analysis. I agree with Lord Phillips opinion expressed at para 35 (and those of Lord Brown at para 111 and Lord Dyson at para 133) that on no view of the Strasbourg jurisprudence does it support the submission that Mr Gales acquittal in Portugal precludes the English court in proceedings under POCA from considering the evidence that formed the basis of the charges in Portugal. There is here no procedural link between the two sets of proceedings. As to the standard of proof, I agree with Lord Phillips that the Strasbourg jurisprudence does not support the proposition (ie the second proposition in para 43 above) that in no case can confiscation be ordered unless it is proved to the criminal standard that the defendant committed the offences from which the property is said to have been derived. I agree with his conclusion and reasons summarised in para 54 to the effect that the commission of criminal conduct from which the property the appellants held was derived had to be established according to the civil and not the criminal standard of proof. I also agree with his conclusion in para 55 that there was ample evidence upon which the judge could find that the civil standard of proof was satisfied. Lord Dyson concludes at paras 141 and 142 that the judge did not impute criminal liability to the appellants and that the judges approach to the evidence was correct. I agree. For these reasons I too would dismiss the appeal on the first issue. This conclusion does not involve a detailed consideration of the issues raised by the Strasbourg jurisprudence or a resolution of the issues or potential issue identified by Lord Phillips and Lord Dyson. I would prefer to defer reaching definitive conclusions on them until they require a decision on specific facts. I would only add two points. First, I agree with Lord Brown that it is highly desirable that these issues should be considered by the Grand Chamber in Strasbourg in order to clarify and rationalise what he aptly calls this whole confusing area. Secondly, I note that in the recent case of R (Adams) v Secretary of State for Justice (JUSTICE intervening) [2011] UKSC 18; [2011] 2 WLR 1180, where some of these issues were touched on, Lord Hope said at para 111 that the principle that is applied in Strasbourg is that it is not open to a state to undermine the effect of an acquittal. It appears to me that that is indeed the underlying principle and that if, as here and indeed in Adams, the effect of the acquittal is not undermined there should be no question of holding that there is any conflict with the presumption of innocence enshrined in article 6(2) of the European Convention on Human Rights. Issue 2 Introduction The second issue in this appeal relates to costs. It raises a single question of principle. That question is whether an order for costs made in favour of SOCA against a person against whom a recovery order has been made under section 266 of the Proceeds of Crime Act 2002 (the 2002 Act) can include the investigation costs incurred by an interim receiver (the receiver) appointed under section 246 of the 2002 Act. Griffith Williams J (the judge) made a recovery order against the appellants on 2 June 2009. By a later order of 6 July 2009, the judge ordered the appellants to pay SOCAs costs but refused an application that those costs should include the remuneration of the interim receiver in respect of his investigation. The application for costs was made pursuant to the jurisdiction conferred on the court by section 51(1) of the Senior Courts Act 1981 (the SCA). In refusing to make the part of the order relating to the costs of the investigation, the judge followed the decision of the Northern Ireland Court of Appeal in SOCA v Wilson [2009] NICA 20; [2009] NI 28. In the instant case the Court of Appeal allowed an appeal against that refusal. In doing so, it declined to follow SOCA v Wilson. On 29 July 2010 it ordered that the appellants pay SOCAs legal costs of and occasioned by the proceedings against them on an indemnity basis and that they pay to SOCA the receivers remuneration for his investigative function on the standard basis. It directed that in each case the costs should be subject to detailed assessment. No such assessment has yet taken place. The question in this part of the appeal is whether the Court of Appeal erred in principle in ordering the appellants to pay to SOCA the costs of the receivers investigation. The appointment of the receiver and his powers and duties On 28 July 2005, on the application of the Director of the Assets Recovery Agency (the functions of which were transferred to SOCA on 1 April 2008), Collins J made an interim receiving order and appointed Mr James Earp as the receiver. The order was made under section 246 of the 2002 Act, which is contained in Part 5. Paras 2 to 4 of the order, which appear under the heading detention, custody, preservation and custody of property, provided inter alia that the appellants must not remove the property identified in a schedule from England and Wales or in any way dispose of or deal with the property and that they must transfer monies to an account specified by the receiver and deliver certain property into his possession. Under the heading of disclosure, paras 5 to 8 made detailed provision for disclosure of the existence and whereabouts of the appellants assets. Para 9 set out the powers of the receiver, which were stated to be in accordance with Schedule 6 to the 2002 Act and to be without prejudice to any existing powers that the receiver might have whether by statute or otherwise. It included powers to seize property, to take possession of property and to manage it, to enter and search premises, to execute all such documents on behalf of the appellants as might be necessary to manage the property, to require the appellants and others to take such steps as may be required to enable the receivership to be conducted and to obtain information from the appellants and others. In addition it included a power to appoint lawyers, accountants and others to advise and/or act on behalf of the receiver and a power to bring proceedings in the name of or on behalf of the appellants against any person having possession of relevant property. In short the powers were very extensive indeed. Paras 11 to 14 of the order set out the duties of the receiver. By para 11 it provided that, pursuant to section 247(2)(a) of the 2002 Act, the receiver must consider such information and documents as were obtained by him in pursuance of the order to establish whether or not the property in the schedule was recoverable property or associated property and, if the latter, to what extent. By para 12, it provided that, pursuant to section 247(2)(b), the receiver must take all reasonable and necessary steps to establish whether or not any other property was recoverable property (in relation to the same unlawful conduct) and, if so, who was holding it. The order also provided by paras 13 and 14 that the receiver must provide certain information to SOCA and to the court and make a report to SOCA under section 255(1) and (2) respectively. It can thus be seen that the receiver had both extensive powers and duties of investigation under the order. He also had powers of management of the relevant property. The order further provided, in para 26, that the receiver could charge for his services and that he must prepare and serve on SOCA accounts in accordance with terms set out in a letter dated 19 July 2005 inviting him to accept nomination as an interim receiver. The letter enclosed a draft Memorandum of Understanding (MOU) and a draft of the proposed order. It also described the property in some detail. It made it clear that the terms of the MOU formed part of the terms upon which the receiver was to proceed. Although the MOU states that it was not (and was not intended to be) a binding contract, it was a detailed document which provided for the assessment that the receiver was to carry out and made provision for the fees to be charged and the accounts to be kept. For example, it provided for bills to be submitted and for them to be paid by SOCA within 28 days. The MOU was signed by the receiver on 25 July 2005. As stated above, the order was made under section 246 of the 2002 Act. By section 246(2), an interim receiving order is an order for (a) the detention, custody or preservation of property, and (b) the appointment of an interim receiver. By section 246(7) SOCA may not nominate an interim receiver who is a member of its staff. Section 247 defines the functions of the interim receiver, so far as relevant, as follows: (1) An interim receiving order may authorise or require the interim receiver (a) to exercise any of the powers mentioned in Schedule 6, (b) to take any other steps the court thinks appropriate, for the purpose of securing the detention, custody or preservation of the property to which the order applies or of taking any steps under subsection (2). (2) An interim receiving order must require the interim receiver to take any steps which the court thinks necessary to establish (a) whether or not the property to which the order applies is recoverable property or associated property, (b) whether or not any other property is recoverable property (in relation to the same unlawful conduct) and, if it is, who holds it. Section 255 provides that an interim receiving order must require the receiver to report his findings to the court. The combined effect of section 246(7) and section 247(2) is that the interim receiving order must provide that the interim receiver will conduct the investigation. Schedule 6 provides for an interim receiver to have powers ancillary to those contained in section 247. They include a power to seize property to which the order applies; a power (subject to certain safeguards) to obtain information or to require a person to answer any question; and powers of entry and search. They also include in paragraph 5(1) a power to manage any property to which the order applies. By sub paragraph (2), managing property includes (a) selling or otherwise disposing of assets comprised in the property which are perishable or which ought to be disposed of before their value diminishes, (b) where the property comprises assets of a trade or business, carrying on, or arranging for another to carry on, the trade or business, and (c) incurring capital expenditure in respect of the property. The provision that there is a power to sell only where assets are perishable or diminishing in value is consistent with the fact that the receiver is only an interim receiver and that the order is intended to hold the ring until the question whether a recovery order should be made is resolved. It may be noted that these powers are different both from the powers of a trustee appointed under a recovery order (see below) and the powers of a receiver appointed under section 48, which is in Part 2 of the 2002 Act and applies where the court makes a restraint order. Those powers are set out in section 49. By section 49(2)(d) the court may confer on such a receiver the power to realise so much of the property as is necessary to meet the receivers remuneration and expenses. Moreover, by contrast with the position of an interim receiver set out in paragraph 5(2), as explained above, where the power to sell property is limited to perishable property or property of diminishing value, section 49(10) provides that the power of managing or otherwise dealing in property referred to in section 49(2)(b) includes selling the property or any part of it. The investigation The receivers investigation took over three years, culminating in a final report of over 400 pages. That was at least in part because of the failure on the part of Mr Gale to co operate with the receiver. Toulson LJ summarised the position at [2010] 1 WLR 2881, paras 90 92 as follows: 90. Obtaining the information ultimately set out in the receiver's report, which led to the judge making the recovery order, proved to be a lengthy, complicated and expensive process, because of the deliberately obscure way in which Mr Gale had conducted his financial affairs and his persistent and deliberate failure to cooperate with the receiver's investigation. 91. 4. It is alleged that the overall evidence establishes that DG has been leading a life of serial drug trafficking, money laundering In his judgment the judge said, at paras 4 and 5: and tax evasion; it is alleged that he went to extreme lengths to avoid detection by using: (i) a web of lies, false names, multiple passports, nominees and offshore corporate fronts; (ii) at least 68 bank accounts both on and off shore and in a number of different jurisdictions which together have received millions of pounds from unidentified sources; (iii) needlessly complicated bank transfers and (iv) fleeing his country of residence (from the United Kingdom to Spain, from Spain to the United States of America and from the United States of America to Portugal via the Bahamas) when he feared the authorities were or may be interested in his criminal activities 5. It is alleged that the absence in large part due to his deliberate failure to co operate with the receiver's investigation of any paper trail of records, financial documents, accounts, invoices, receipts, bank statements and tax returns and any details of business transactions, customers, suppliers and profits establishes that the millions of pounds he acquired could not have been acquired through a legitimate business or businesses. 92. It is clear from the details set out in the judge's comprehensive judgment that he accepted the allegations that Mr Gale had gone to extreme lengths to avoid detection, by the methods identified by the receiver, and had deliberately failed to co operate with the receiver's investigation. The material assembled by the receiver was therefore a painstaking task and one which was necessary in order for the agency to succeed in the civil recovery proceedings brought by it against Mr Gale. SOCA has paid the interim receiver in respect of investigation costs said to have totalled some 1m. It seeks to recover those costs from the appellants. The recovery order As already stated, on 2 June 2009, the judge made a recovery order under section 266 of the 2002 Act against the appellants in respect of assets valued at some 2m. By the same order, Mr James Earp was appointed trustee for civil recovery pursuant to section 267(1) of the 2002 Act and the property was vested in him. The functions of the trustee for civil recovery are set out in section 267. They are of course much greater than the powers of an interim receiver because they extend to realising the value of the assets for the benefit of SOCA. Unlike an interim receiving order, the purpose of a recovery order and the appointment of a trustee for civil recovery is not merely to hold the ring but to sell the assets and pay the proceeds of sale to SOCA. Jurisdiction to award costs The courts jurisdiction to award costs in civil proceedings is governed by section 51 of the SCA, which provides: (1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal, the High Court and any county court (a) (b) (c) shall be in the discretion of the court. (2) Without prejudice to any general power to make rules of court, such rules may make provisions for regulating matters relating to the costs of those proceedings, including, in particular, prescribing scales of costs to be paid to legal or other representatives or for securing that the amount awarded to a party in respect of the costs to be paid by him to such representatives is not limited to what would have been payable by him to them if he had not been awarded costs. (3) The court shall have full power to determine by whom and to what extent the costs are to be paid. As I read that section, costs are in principle recoverable if they are either costs of or incidental to the relevant proceedings. That is because both the costs of and incidental to the proceedings are in the discretion of the court. As stated by Aikens LJ at para 134 by reference to the judgment of Lord Goff in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, section 51 of the SCA 1981 confers a wide jurisdiction on the courts to make orders as to costs. That is so but, as Lord Goff also observed, at p 975, the exercise of this jurisdiction may be limited: It is, I consider, important to remember that section 51(1) of the Act of 1981 is concerned with the jurisdiction of the court to make orders as to costs. Furthermore, it is not to be forgotten that the jurisdiction conferred by the subsection is expressed to be subject to rules of court, as was the power conferred by section 5 of the Act of 1890. It is therefore open to the rule making authority (now the Supreme Court Rule Committee) to make rules which control the exercise of the courts jurisdiction under section 51(1). In these circumstances, it is not surprising to find the jurisdiction conferred under section 51(1), like its predecessors, to be expressed in wide terms. The subsection simply provides that the court shall have full power to determine by whomthe costs are to be paid. Such a provision is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. It follows that, as Aikens LJ correctly stated at para 133, the legal framework yields two questions: first, are the expenses of the interim receiver costs of and incidental to the civil recovery proceedings so that they can be the subject of a costs order in the proceedings; and, secondly, if they are, is there any statutory rule or provision or authority that prevents the court from having jurisdiction to order that the appellants bear the costs of the receiver? It is in my opinion appropriate to pose these two questions. It is important to note that the question in this appeal is not what powers an interim receiver has to charge for his services or how those powers may be enforced and against what or whom. The receivers right to recover his remuneration is entirely contained in the order of the court and the MOU. He is entitled to recover his reasonable remuneration from SOCA. The question here is whether SOCA is in principle entitled to claim against the appellants by way of costs the reasonable sums it has paid or is liable to pay to the receiver in respect of his investigation carried out pursuant to the interim receiving order. It is therefore appropriate to consider first whether those costs are in principle costs of and incidental to the civil recovery proceedings within the meaning of section 51 of the SCA and, if so, whether there is a statutory rule or provision or authority that prevents the court from having jurisdiction. Are the expenses of the interim receiver costs of and incidental to the civil recovery proceedings? SOCA submits that the investigation costs which it has reasonably paid to the receiver are part of the costs of or incidental to the civil recovery proceedings. The essence of its argument is that the investigatory work carried out by the receiver had to be done in order to bring the civil recovery claim and so the costs of the investigation are properly costs of or incidental to the civil recovery proceedings. The appellants submit, by contrast, that the receivers remuneration is an expense of the receivership and not a cost of or incidental to the proceedings in which he is appointed. In support of this submission they rely on the judgment of the Northern Ireland Court of Appeal in SOCA v Wilson, as well as the decisions in Capewell v Revenue and Customs Comrs [2007] UKHL 2, [2007] 1 WLR 386, Boehm v Goodall [1911] 1 Ch 155, Hughes v Customs and Excise Comrs [2002] EWCA Civ 734, [2003] 1 WLR 177, In re Andrews [1999] 1 WLR 1236 and Evans v Clayhope Properties Ltd [1988] 1 WLR 358. Before discussing the cases, it is convenient to consider the position as a matter of principle without reference to the authorities. The statutory question is clearly identified. It is whether the particular costs claimed are costs of or incidental to the proceedings. In the case of the investigative costs incurred by the receiver and reimbursed by SOCA under the MOU (including the reasonable remuneration of the receiver) the answer to the question is in my opinion plainly in the affirmative. The position was succinctly put by Toulson LJ at para 93, after paras 90 to 92 quoted above. He said this: Unless compelled by authority to hold otherwise, I would regard the costs incurred by the agency in paying the receiver to investigate Mr Gale's finances and assemble that material as costs of the litigation, which Mr Gale ought justly to pay, and I would not see such an order as inconsistent with the statutory scheme. I entirely agree. I also agree with Aikens LJs conclusion to much the same effect at para 134. This can be seen clearly from both the powers and the duties of an interim receiver under the order. In particular, it can be seen from the duties of such a receiver set out above, namely (a) to consider the information and documents obtained by him under the order in order to establish whether or not the property in the schedule was recoverable property or associated property and (b) to take all reasonable and necessary steps to establish whether or not any other property was recoverable property (in relation to the same unlawful conduct) and, if so, who was holding it. His duty was then to report to both SOCA and the court. In order to bring a claim for civil recovery under Part 5 of the 2002 Act, SOCA had to obtain sufficient information to demonstrate that property in the hands of the appellants was recoverable property within the meaning of sections 304 310 of the 2002 Act. This required investigative work to be done. It was entirely reasonable to appoint an interim receiver in order to carry out the investigation and to hold the ring in the meantime. Indeed, it is difficult to see how SOCA could in practice proceed without the appointment of an interim receiver and, as stated above, section 246(7) provides that it could not nominate a member of its staff to be the interim receiver appointed. In these circumstances, it seems to me that the investigation was an essential part of the civil recovery proceedings. I can see no reason in principle why these costs of the receivership cannot at the same time be costs of or incidental to the civil recovery proceedings. Is there any statutory rule or provision or authority that prevents the court from having jurisdiction to order that the appellants bear the investigation costs? This is the second question posed by Aikens LJ. There is to my mind no statutory rule or provision that leads to the conclusion that these costs are not costs of or incidental to the civil recovery proceedings. The powers of the receiver, which are contained in section 247 of and Schedule 6 to the 2002 Act, are described above. They do not include a lien on the property in respect of his fees and do not entitle him to sell the property or part of it in order to meet his fees. Nor does the order appointing the receiver in this case. As between SOCA and the receiver, the latters right to remuneration is contained solely in the interim receiving order and the MOU. Some reference was made to section 280(3) of the 2002 Act, which provides that SOCA may apply moneys received by it under a recovery order in making payment of the remuneration and expenses of (a) the trustee or (b) any interim receiver appointed in, or in anticipation of, the proceedings for the recovery order. That subsection must be set in its context. Section 266(2) provides that any recovery order made by the court must vest the recoverable property in the trustee for civil recovery. There is nothing to prevent the interim receiver being appointed also as trustee, as occurred in this case, but the powers and duties of a trustee are entirely distinct from those of an interim receiver and the fact that they were the same person is irrelevant for the purposes of the issues in this appeal. Section 267 states that in performing his functions the trustee acts on behalf of the enforcement authority and must comply with any direction given by the authority. The sums paid to SOCA by the trustee will be or include the net proceeds of sale of the appellants property after the trustee has first made the payments identified by section 280(2). I agree with the view expressed by Aikens LJ at para 135 that there is nothing in section 280(3), or any other provision of the 2002 Act, to prevent the cost to SOCA of paying an interim receiver from being part of the costs of or incidental to the civil recovery proceedings. As Aikens LJ put it, the subsection simply grants SOCA the power to pay the interim receiver out of sums it receives from the trustee for civil recovery, who is the person identified in the legislation who will give effect to a recovery order made by the court. The fact that SOCA has a discretion to use those sums to pay the interim receiver does not seem to me to be relevant to the question whether the costs were costs of and incidental to the proceedings. As I see it, the liability, if ordered, to pay the costs of the proceedings is distinct from, but ancillary to, the liability in the civil recovery order itself. I also agree with Aikens LJ at para 136 that there is nothing in CPR Pt 44 or Pt 69 which precludes the court from making an order that a party to civil recovery proceedings must pay as costs the remuneration of a court appointed receiver. CPR Pt 44 contains general rules about costs. It is to be noted that by CPR r 44.4(1) costs will not be allowed which have been unreasonably incurred or are unreasonable in amount. CPR Pt 69 contains general rules about the courts power to appoint a receiver. CPR r 69.7 provides: (1) A receiver may only charge for his services if the court (a) so directs; and (b) specifies the basis on which the receiver is to be remunerated. (2) The court may specify (a) who is to be responsible for paying the receiver; and (b) the fund or property from which the receiver is to recover his remuneration. Under CPR r 69.7 the court has a discretion to specify who is to be responsible for paying the receiver appointed by court order. It does not follow from the terms of that provision, or by necessary implication, that the court may not make an order that a party to civil proceedings pay to the other party costs which include the remuneration of the interim receiver. CPR r 69.7 regulates the position as between the receiver and others, whereas section 51 of the SCA 1981 and CPR Pt 44 regulate the position as between the parties to the litigation. What then of the authorities? First, there is no question but that costs incurred prior to proceedings, such as investigation costs, are capable in principle of being recoverable as costs of or incidental to proceedings. This principle was summarised by Lord Hanworth MR in Socit Anonyme Pcheries Ostendaises v Merchants Marine Insurance Co [1928] 1 KB 750 at p 757: There is power in the master to allow costs incurred before action brought, and if the costs are in respect of materials ultimately proving of use and service in the action, the master has a discretion to allow these costs. It is on the basis of this general principle that costs of attending an inquest have been held to be recoverable as costs of related civil proceedings where evidence referable to attendance at the inquest was potentially relevant to those proceedings: see Ross v Bowbelle (Owners) (Note) [1997] 1 WLR 1159 and Roach v Home Office [2009] EWHC 312, [2010] QB 256. It is commonplace for parties to proceedings to instruct experts of all kinds in connection with litigation. They include forensic accountants in a fraud case and consultants of all kinds in the investigation of, say, a maritime casualty or a death in a hospital. The reasonable amounts paid to such experts are treated as the costs of and incidental to the proceedings. In my opinion reasonable sums paid by SOCA to an interim receiver, at least in respect of his investigation should in principle be regarded in the same way. The appellants rely upon the cases referred to in para 78 above as support for the general proposition that remuneration of a receiver is not a cost of or incidental to civil recovery proceedings. It is convenient to begin with the decision of the Northern Ireland Court of Appeal in SOCA v Wilson, which raised the very question arising in this appeal. As in the instant case, SOCA sought to recover expenses and remuneration paid to an interim receiver appointed under Part 5 of the 2002 Act as costs of the civil recovery proceedings. Girvan LJ, giving the judgment of the court, held that such expenses and remuneration were not costs of or relating to the civil recovery proceedings. Girvan LJ began his analysis by observing at para 11, by reference to Hopkins v Worcester and Birmingham Canal Proprietors (1868) LR 6 Eq 437, that the equitable jurisdiction to appoint a receiver is of ancient origin. He stated the principle as being that the receiver, being appointed by the court, is an officer of the court, and his duty is to act impartially in administering the property to which the receivership extends and to do so under the direction and supervision of the court. He referred to the statement by Lord Walker in Capewell v Revenue and Customs Comrs [2007] UKHL 2, [2007] 1 WLR 386, at para 21 that it has always been a basic principle of receivership that the receiver is entitled to be indemnified in respect of his costs and expenses, and his remuneration if he is entitled to be remunerated, out of the assets in his hands as receiver. Lord Walker approved the principle stated by Warrington J in Boehm v Goodall [1911] 1 Ch 155 at 161 as follows: Such a receiver and manager [that is one appointed by the court] is not the agent of the parties, he is not a trustee for them, and they cannot control him. He may as far as they are concerned, incur expenses or liabilities without their having a say in the matter. I think it is of the utmost importance that receivers and managers in this position should know that they must look for their indemnity to the assets which are under the control of the court. The court itself cannot indemnify receivers but it can, and will, do so out of the assets so far as they extend, for expenses properly incurred; but it cannot go further. It would be an extreme hardship in most cases to parties to an action if they were to be held personally liable for expenses incurred by receivers and managers over which they have no control. Lord Walker noted that some doubts had subsequently been expressed as to whether a receivers remuneration could be recovered as litigation costs. Lord Walker further approved the statement by Simon Brown LJ in Hughes v Customs and Excise Comrs [2003] 1 WLR 177 at para 50 that statutory receivers are to be treated precisely as their common law counterparts save to the extent that the legislation otherwise provides. At para 23 Lord Walker set out this passage from para 45 of the judgment of Simon Brown LJ, saying that it sets out the argument accepted by the Court of Appeal: Mr Mitchell's central argument to the contrary focuses, first, on the use of the word 'receiver' to describe the person being appointed under this legislation to conserve, manage and realise assets. A receiver is a recognisable creature of the common law, an officer of the court, someone whose essential rights, powers and duties have been established down the years. It is not apparently disputed that a receiver appointed under the CJA despite the statute's silence on the matter will have the right, for example, to bring an action or to sell property. Why then, unless the statute expressly so provides, should he be denied the other ordinary consequences of his receivership, including not least the right (indeed the requirement) to recover the costs of the receivership from the assets under his control? Girvan LJ regarded those principles as applicable here, that is under Part 5 of the 2002 Act. He noted at para 12 that, under Part 2 of the 2002 Act dealing with confiscation proceedings, management receivers may be appointed in England under section 48 and enforcement receivers under section 50 and that in Northern Ireland the equivalent provisions are sections 196 and 198. Similar provisions apply in Part 3 in relation to confiscation proceedings in Scotland, the equivalent of a receiver there being called an administrator. Under the earlier confiscatory statutory provisions in the Criminal Justice Act 1988 (the CJA 1988) and the Drug Trafficking Act 1994 statutory powers had also been introduced for the appointment of receivers. I return below to the question whether the principles in those cases apply to the investigation costs of an interim receiver. Girvan LJ further referred to the decision in In re Andrews [1999] 1 WLR 1236. In that case the defendant was acquitted of the offence in respect of which a receivership order had been made. He was awarded his costs out of central funds but the taxing master held that these costs did not include the costs of the receivership proceedings. The receiver deducted her expenses out of the property released in consequence of the discharge of the order. The defendant applied for an order that the prosecution pay his costs of the receivership proceedings. The court concluded that the receiver was entitled to recover her remuneration and expenses from the assets under the court's control. A party seeking appointment of a receiver is not thereby liable for his remuneration. A receiver had a lien for his costs and remuneration against the assets which gave him a continuing right to possession of the assets even after discharge of the receivership order. The receiver's remuneration was an expense of the receivership and not a cost of or an incidental to the proceedings and thus not within the courts discretionary jurisdiction to award costs. As Aldous LJ put it succinctly at [1999] 1 WLR 1236, 1248F G: The remuneration of a receiver is an expense of the receivership, not costs incidental to the proceedings in which he is appointed. Girvan LJ also relied upon the principle stated by Longmore LJ in Sinclair v Glatt [2009] EWCA Civ 176, [2009] 1 WLR 1845, at para 1: It is now settled that such a receiver [appointed pursuant to section 77 of the Criminal Justice Act 1988], like a receiver at common law, is entitled to recover his remuneration, costs and expenses from the assets which he has been appointed to receive ('the receivership assets'). That is so whether or not he ought to have been appointed in the first place or the order appointing him has been discharged, see Mellor v Mellor [1992] 1 WLR 517. Even if the defendant, whose assets have been caught by the order appointing the receiver is subsequently acquitted or has his conviction quashed, the receivership assets must bear the costs of the receivership; this is also the position if, as in the present case, confiscation orders are made but subsequently quashed, Hughes v Customs and Excise Comrs . Even if the receiver carries on his receivership unnecessarily and should have agreed that his receivership should have been discharged at a time before a court application is made to terminate his receivership, the receivership assets bear those costs reasonably incurred up to the date he is actually discharged: see Capewell v Revenue and Customs Comrs Girvan LJ noted that in In re Andrews and Sinclair v Glatt the Court of Appeal held that the expense of a receiver appointed under the confiscatory regime in Part 6 of the CJA 1988 was an expense of the receivership which should be met out of the assets in the receivership. He rejected the submission made on behalf of SOCA that the position of interim receivers appointed under Part 5 of the 2002 Act could be distinguished from other statutory receivers on account of the wide ranging investigatory powers given to interim receivers in Part 5 cases. He observed that receivers appointed by way of equitable relief or under confiscatory statutory provisions frequently have to carry out extensive investigations to enable them to get in and protect the assets and that it had never been suggested that such investigation costs fell to be treated differently from other management costs. Girvan LJ further noted that Part 5 of the 2002 Act had been enacted following case law such as In re Andrews. In the light of that case law it was to be inferred that in England and Wales and Northern Ireland express provision for the costs of interim receivers was considered unnecessary because of the standard receivership lien on the assets for the receivers costs. I respectfully disagree. In my opinion the regime set out in Part 5 of the 2002 Act is distinguishable in important respects from that in the other legislation discussed in the cases. As paras 79 to 86 show, Carnwath LJ was initially inclined to follow the decision in SOCA v Wilson. However he was persuaded by the analysis of Toulson and Aikens LJJ that the cases relied upon by the appellants are distinguishable from this on the ground that the scheme under Part 5 is significantly different from those discussed in them. I am also persuaded by the reasoning of Toulson and Aikens LJJ for these short reasons. The critical feature of the other cases is that the receiver was left to look for his indemnity to the assets in his hands which are under the control of the court, as it was put in Boehm v Goodall in the passage quoted in para 89 above. Then in the passage quoted at para 90 Simon Brown LJ described the receiver in Hughes as being the person appointed to conserve, manage and realise assets with the right to sell property. He asked why, unless the statute expressly so provides, the receiver should be denied the other ordinary consequences of his receivership, including the right (and requirement) to recover the costs of the receivership from the assets under his control. Similar principles were stated by Longmore LJ in Sinclair v Glatt. The position of an interim receiver appointed under Part 5 of the 2002 Act is significantly different. He has no power to sell the assets unless they are perishable or diminishing in value and he has no lien on the assets. He is however entitled to recover his costs and remuneration from SOCA. The power to sell is vested in the trustee, not in the interim receiver, and then only once a civil recovery order has been made. Moreover the powers of the interim receiver are not merely to take possession of and to conserve the assets but to carry out an investigation into the question whether or not the assets are the proper subject of a recovery order. More generally, I agree with the analysis of Aikens LJ at paras 137 to 140. It was further said in the passage from Boehm v Goodall that it would be a hardship for parties to be held liable for the remuneration of receivers over whom they have no control. However, that does not apply to these facts. There is a much closer relationship between the parties and an interim receiver appointed under Part 5 of the 2002 Act than there was in the cases referred to. The 2002 Act draws a clear distinction between a receiver appointed under Part 2, as for example under section 49 which, as already noted, by section 49(2)(d) expressly provides for payment of the costs of receivers appointed under Part 2 of the 2002 Act out of receivership assets and an interim receiver appointed under Part 5. I would infer that the draftsman made an express decision not so to provide in the case of interim receivers appointed under Part 5. I agree with Toulson LJ that, as he put it at para 104, there will be no extreme hardship if Mr Gale is ordered to pay the costs of investigating facts which he tried so hard to conceal and the costs of assembling the evidence which proved the case against him. Although In re Andrews did involve a consideration of section 51 of the SCA, it was a very different case from this under a very different statute: see per Toulson LJ at paras 106 to 113. In particular, he quoted a passage from the judgment of Ward LJ in which he said that it appeared to him that the true position was that the investigation of whether or not the defendant has suffered loss by reason of the receivership is an investigation which should be and ordinarily would be conducted in deciding whether or not damages should be awarded against the claimant for breach of the usual undertaking as to damages he would normally be required to give. Under the Criminal Justice Act 1988 (the CJA 1988), compensation for loss resulting from a receivership was not to be ordered unless the court was satisfied that there had been some serious default on the part of a person concerned in the investigation or prosecution of the offence concerned. As Toulson LJ said at para 111, in those circumstances Ward LJ concluded, with reluctance, that the expenses of the receivership were not to be regarded as costs of and incidental to the proceedings within the meaning of section 51 of the SCA. I should however refer to the statement of Aldous LJ in In re Andrews quoted in para 92 above that the remuneration of a receiver is an expense of the receivership, not costs incidental to the proceedings in which he is appointed. Taken at face value, that might suggest that the remuneration of a receiver can never be recoverable as costs of or incidental to litigation under section 51 of the SCA. If Aldous LJ intended to state such a broad proposition, I respectfully differ from him. I do not however think that he did. As Toulson LJ observed at para 112, he was concerned with the problem which would result if the receiver's remuneration for running the company were to be treated as a cost of the proceedings recoverable by the successful appellant in circumstances where the company would not have traded as profitably as it did without the accountancy advice of the receiver. He considered (like Ward LJ) that the application was really a claim for compensation dressed up as an application for an award of costs, and it was therefore very significant that by section 89 of the CJA 1988 Parliament had laid down a carefully regulated code for such a claim. He concluded that section 89 was the proper avenue for a compensation claim of the kind being made by the appellant. That is not to say that a claim by a party to proceedings who has obtained an order for the appointment of a receiver in respect of costs or remuneration which he has paid to a receiver can never be recovered from the other party to the proceedings under section 51 of the SCA. All will depend upon the circumstances. As Toulson LJ observed at para 113, this is a very different case from In re Andrews under a very different statutory scheme. By contrast with the position in In re Andrews, SOCAs claim is not a concealed claim for a form of compensation for which the statute provides a regulated code. It is a genuine claim for litigation costs and not a dressed up claim for something else. Moreover, SOCA is not seeking to recover that part of the receivers costs or remuneration which relates to the costs of managing Mr Gale's assets. It only seeks the costs of the investigation. I agree with Toulson LJ that those costs would undoubtedly have been recoverable in principle as costs of the proceedings if the work had been done by anyone other than the receiver. I also agree with him that the costs in their essential nature were not merely incidental but integral to the prosecution of the claim made by the agency against the appellants. Finally, I agree with Aikens LJs approach to In re Andrews at paras 141 to 144. The decisions in Hughes and in Capewell are also distinguishable on much the same basis. Again I agree with the approach of Toulson LJ to both cases at paras 114 to 116 and 117 to 120 respectively and with the approach of Aikens LJ at para 146. I note in passing that section 283 of the 2002 Act contains detailed provisions for compensation but there is, as I see it, no conflict between those provisions and the conclusion that the costs claimed here are within section 51 of the SCA. Finally, I should refer to three further points made by Girvan LJ in SOCA v Wilson. First, he noted that section 284(1) of the 2002 Act provides that Scottish Ministers are to reimburse an interim administrator or trustee for civil recovery appointed under Part 5 of the 2002 Act. He expressed the view at para 17 that it is inherently unlikely that Parliament intended to confer protections on defendants in relation to administrators fees and costs in Scotland and not in England and Wales and Northern Ireland in relation to receivers fees and costs. The problem with this reasoning is that it ignores the clear differences between section 284(1), which makes special provision for Scotland in order to meet the requirements of the Scotland Act 1998, and section 280(3), which (as stated above) gives the enforcement authority in England and Wales the power to apply any sum received by it from the trustee for civil recovery to make payments of the remuneration and expenses of a interim receiver appointed in the proceedings for the recovery order. As Aikens LJ points out at para 147, neither provision prevents the enforcement authority from seeking to recover those sums as costs of and incidental to the recovery proceedings. Secondly, Girvan LJ states, at para 18, that the policy behind civil recovery proceedings is to strip the defendant of criminal assets. He points out that this objective is achieved by the recovery order even if part of the defendants assets go to the receiver. Requiring them to meet the costs of the interim receivers investigation work would strip them of further assets and clear statutory wording would be needed to establish the states right to do so. It is correct that clear statutory language is needed in order to require a party to meet such costs, but, in my opinion, for the reasons given above, such language is found in section 51 of the SCA 1981. Thirdly, Girvan LJ makes the point that the costs and fees of the interim receiver cannot sensibly be considered as costs of SOCA since the interim receiver is independent and separate from SOCA so that his costs cannot be considered as costs incurred by SOCA as part of its costs of and incidental to the proceedings. I respectfully disagree. On the facts here SOCA had to bear the costs of the interim receiver in order to pursue the civil recovery proceedings and in order to obtain a recovery order. In these circumstances, as I said earlier, they seem to me to be costs borne by SOCA in much the same way as other costs of instructing an expert would be. Finally, it is important to note that this appeal is only concerned with the recovery by way of costs of investigation costs incurred by SOCA as a result of liability to the interim receiver. It is not concerned with management costs. I would leave open the question whether management costs could be treated as costs of or incidental to civil recovery proceedings until it arises for decision in a particular case. CONCLUSION For these reasons, which are largely the reasons they gave, I agree with Toulson and Aikens LJJ that the Court of Appeal in Northern Ireland reached the wrong conclusion in SOCA v Wilson. The costs which SOCA was or is liable to pay to the receiver in respect of his investigation were costs of or incidental to the civil recovery proceedings and are in principle recoverable from the appellants. I would therefore dismiss the appeal on this issue. I would only add that by CPR r 44.4(1) costs will not be allowed which have been unreasonably incurred or are unreasonable in amount. It follows that whether a particular item of costs claimed is recoverable in whole or in part will of course be a matter for the costs judge. LORD BROWN I too would dismiss both limbs of this appeal for the reasons given respectively by Lord Phillips and Lord Clarke with whose judgments I agree. As will readily be appreciated, the conclusion arrived at by Lord Phillips on the standard of proof issue is in no way dependent on the view one takes with regard to the Sekanina v Austria (1993) 17 EHRR 221/ Ringvold v Norway (Application No 34964/97) (unreported) 11 February 2003) line of Strasbourg authority. As Lord Phillips observes (para 35): On no view does this jurisprudence support Mr Mitchells submission that the appellants acquittal in Portugal precludes the English court in proceedings under POCA from considering the evidence that formed the basis of the charges in Portugal. None the less however, it has been necessary to consider this jurisprudence in some detail and there appears to be some difference of opinion between us as to how logical and satisfactory it is. Lord Phillips in the Discussion section of his judgment (para 32) find[s] unconvincing the attempts of the Strasbourg Court to distinguish between claims for compensation by an acquitted defendant and claims for compensation by a third party against an acquitted defendant and concludes that: this confusing area of Strasbourg law would benefit from consideration by the Grand Chamber. Lord Dyson by contrast (para 131) would be less critical of the Strasbourg jurisprudence although he does not indicate whether he would exempt it from all criticism and, if not, what concerns he has about it. I have to say that for my part I share Lord Phillips views on this matter. Of course, as Lord Dyson more than once points out, judgments which determine an acquitted defendants entitlement to costs and/or compensation for detention on remand are in one sense closely linked to the criminal trial itself: but for the defendants acquittal these issues as to costs and compensation would simply not arise. But it by no means follows from this that the criminal standard of proof (presumably with the burden still on the state) should apply equally to these linked claims, consequential and concomitant though clearly they can be characterised. Lord Dyson suggests (para 132): If the outcome of the criminal proceedings is decisive for the civil proceedings, then there is a sufficiently close connection for article 6(2) to apply. That assertion, however, to my mind begs the very question it purports to answer. As already explained, the outcome of the criminal proceedings is only decisive for the civil proceedings in the sense that, but for the acquittal, these civil proceedings would not arise. Unless, however, Strasbourg is really saying that a state has no option but to compensate an acquitted defendant for his costs incurred in securing his acquittal and his detention in custody meantime for which article 6 appears to me to provide no warrant whatsoever I cannot for the life of me see why the state should not decline to reimburse legal costs and withhold compensation for detention on remand unless the defendant can show on the balance of probabilities that he was in fact innocent. Take a case where, following a defendants acquittal for rape, at one and the same time he is seeking compensation for his detention on remand and his victim is seeking compensation for his violation of her. Is it really to be said that his claim falls to be determined on the criminal standard of proof (and must, therefore, be met); hers on the civil standard (and so may also be found established)? That seems to me nonsensical. Obviously, in all proceedings following an acquittal the court should be astute to ensure that nothing that it says or decides is calculated to cast the least doubt upon the correctness of the acquittal. But the point to be emphasised is that the acquittal is correct because, and only because, the prosecution failed in the criminal proceedings to establish beyond reasonable doubt that the defendant was guilty. Not having been proved guilty to the criminal standard, the defendant is not thereafter to be branded a criminal and no criminal penalty can properly be exacted from him. But, contrary to widespread popular misconception, acquittal does not prove the defendant innocent. In the result, I too incline to the view expressed by Lord Phillips (para 34) that perhaps the only logical explanation of the Strasbourg case law is that applicants are being compensated for reputational damage when by a courts judgments or statements subsequent to an acquittal it appears nevertheless to be suggesting that the defendant should after all have been found guilty to the criminal standard. I repeat, however, that what surely is now required is an authoritative Grand Chamber decision clarifying and rationalising this whole confusing area of the Courts jurisprudence. LORD DYSON The Proceeds of Crime Act 2002 (POCA) provides for two distinct mechanisms for the recovery of proceeds of crime: (i) confiscation by the Crown Court following conviction (Part 2); and (ii) civil recovery proceedings in the High Court, which may be instituted by the enforcement authority (The Serious Organised Crime Agency) to recover property which is, or represents, property obtained through unlawful conduct (recoverable property) (Part 5). Section 241(1) provides that conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part. Section 241(3)(a) provides that the court must decide on a balance of probabilities whether it is proved that any matters alleged to constitute unlawful conduct have occurred. I substantially agree with the reasons given by Lord Phillips (as well as those given by the Court of Appeal) for deciding the first issue in favour of SOCA and concluding that article 6(2) of the European Convention on Human Rights (the Convention) does not apply to civil recovery proceedings under Part 5 of POCA. Because of the general importance of the issue, I wish to say in my own words why I have reached this conclusion. Article 6(2) provides: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. The question raised by the first issue is whether proving unlawful conduct in civil recovery proceedings amounts to the bringing of a criminal charge so as to engage article 6(2). The criminal procedural guarantees in article 6 apply to proceedings in which a person is, within the autonomous ECHR meaning, charged with a criminal offence. Three criteria are taken into account when deciding whether a person is charged with a criminal offence, namely (i) the classification of the proceedings under national law, (ii) their essential nature and (iii) the type and severity of penalty to which the person is potentially exposed (see Engel v The Netherlands (No 1) (1976) 1 EHRR 647 at para 82) as applied in many decisions of the ECtHR such as, for example, Ringvold v Norway (Application No 34964/97) (unreported) 11 February 2003, at para 36. These criteria are not hermetically sealed from each other. As is made clear at para 82 of Engel, the classification under national law is only a starting point and the essential nature of the proceedings is of greater importance. Application of the Engel criteria There can be no doubt that, on the basis of an application of these three criteria, recovery proceedings under Part 5 of POCA are properly to be characterised as civil for article 6 purposes. They are classified as civil under our domestic law: section 240(1)(a) of POCA provides that Part 5 has effect for the purposes of enabling the enforcement authority to recover, in civil proceedings property which is, or represents, property obtained through unlawful conduct (emphasis added). The essential nature of the proceedings is civil. The respondent to the proceedings is not charged with any offence. He does not acquire a criminal conviction if he is required to deliver up property at the conclusion of the Part 5 proceedings. None of the domestic criminal processes are in play. On the contrary, as Kerr LCJ put it in Walsh v Director of the Assets Recovery Agency [2005] NICA 6, [2005] NI 383, at para 23: all the trappings of the proceedings are those normally associated with a civil claim. These include the express provision that the standard of proof is on the balance of probabilities. The nature of the proceedings is essentially different from that of criminal proceedings. The claim can be brought whether a respondent has been convicted or acquitted, and irrespective of whether any criminal proceedings have been brought at all. This was a factor which weighed with the ECtHR in Ringvold v Norway at para 38 when the court was considering whether article 6(2) applied to a claim for compensation by the alleged victim of a sexual offence against the alleged perpetrator. The purpose of Part 5 proceedings is not to determine or punish for any particular offence. Rather it is to ensure that property derived from criminal conduct is taken out of circulation. It is also of importance that Part 5 proceedings operate in rem. The governing concept is that of recoverable property which represents both property obtained directly by unlawful conduct and also property which represents the original property. But the fact that, on an application of the Engel criteria, it is plain beyond argument that Part 5 proceedings are properly to be characterised as civil proceedings for the purposes of article 6 is not determinative of the question whether article 6(2) applies. There is a line of Strasbourg decisions which show that, even if proceedings are properly characterised as civil on the basis of the Engel criteria, article 6(2) may nevertheless apply if the links between the proceedings and criminal proceedings are sufficiently close. Sufficiently close link between criminal proceedings and civil proceedings to engage article 6(2). It is explained in Ringvold at para 36 and the cases cited there that, in certain circumstances article 6(2) may apply to proceedings instituted after the discontinuation of criminal proceedings or following an acquittal, even if on an application of the Engel criteria those proceedings would be characterised as civil. As the court said: Those judgments concerned proceedings relating to such matters as an accuseds obligation to bear court costs and prosecution expenses, a claim for reimbursement of his (or his heirs) necessary costs, or compensation for detention on remand, matters which were found to constitute a consequence and the concomitant of the criminal proceedings. The focus of the inquiry is on whether the proceedings were the direct sequel or a consequence and the concomitant of the criminal proceedings (ibid at para 41). Claims by an accused person following a discontinuation or acquittal for costs incurred as a result of the criminal proceedings and claims for compensation for detention are paradigm examples of such proceedings. The link between such claims and the criminal proceedings is so close that article 6(2) applies to both of them. The claims for compensation flow from the criminal proceedings. But for these proceedings, there would be no claims. As will become clear, the link was absent in Ringvold because, despite the applicants acquittal, the victims claim for compensation could succeed. The compensation case was, therefore, not a direct sequel of the criminal proceedings. Put another way, the outcome of the criminal proceedings was not decisive for the compensation case (Ringvold para 38). There are several reported decisions of the ECtHR where an applicant, acquitted of a criminal charge offence, complained that his claim for compensation for detention and reimbursement of costs had been rejected in violation of article 6(2). In Sekanina v Austria (1993) 17 EHRR 221, the relevant legislation gave a right to compensation to a person who (i) had been remanded in custody or placed in detention on suspicion of having committed a criminal offence and (ii) was subsequently acquitted or otherwise freed from prosecution, where (iii) the suspicion that he had committed the offence was dispelled or prosecution was excluded on other grounds. It was held by the ECtHR that the relevant Austrian legislation and practice linked the question of the accuseds criminal responsibility and the right to compensation to such a degree that the decision on the latter issue can be regarded as a consequence and, to some extent, the concomitant of the decision on the former (para 22). Accordingly, article 6(2) applied to the compensation proceedings. As regards the question whether there had been a breach of article 6(2), the Austrian court rejected the applicants claim for compensation saying that, in acquitting him, the jury took the view that the suspicion was not sufficient to reach a guilty verdict, but there was, however, no question of that suspicions being dispelled (para 29). The ECtHR said at para 30 that this left open a doubt as to the correctness of the acquittal and: The voicing of suspicions regarding an accuseds innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits of the accusation. However, it is no longer admissible to rely on such suspicions once an acquittal has become final. Consequently, the reasoning of the Linz Regional Court and the Linz Court of Appeal is incompatible with the presumption of innocence. Accordingly, there had been a violation of article 6(2). The same approach to the application and violation of article 6(2) was taken in the similar case of Rushiti v Austria (2000) 33 EHRR 1331. The rationale for these decisions appears to be that voicing any suspicions of guilt in proceedings following an acquittal is incompatible with the presumption of innocence. The general aim of the presumption of innocence is to protect the accused against any judicial decision or other statements by state officials amounting to an assessment of the applicants guilt without him having previously been proved guilty according to law (para 31). The same reasoning was adopted, with the same result, in Hammern v Norway (Application No 30287/96) (unreported) 11 February 2003, paras 47 to 49. In Hammern, an acquitted person brought proceedings for compensation for damage suffered as a result of the prosecution. The relevant legislation provided for compensation where a person had been acquitted if it was shown to be probable that he did not carry out the act that formed the basis for the charge. The link between the compensation proceedings and the prosecution was sufficiently strong for article 6(2) to apply. The ECtHR emphasised the following points: (a) the decisions on compensation were taken under domestic criminal law provisions pursuant to which a person who had been charged could seek compensation with respect to matters directly linked to the criminal proceedings against him; (b) time limits for bringing the claim were directly linked to the conclusion of the criminal proceedings; (c) if possible the composition of the court had to be the same; (d) the damage engaged the responsibility of the state, not of a private party; (e) the outcome of the criminal proceedings was a decisive factor, it being a prerequisite that the person charged had been acquitted. ; and (f) there was a very large extent of overlap between the issues in the criminal trial and those in the compensation proceedings, the latter being determined on the basis of the evidence from the [criminal] trial. On the other hand, in Ringvold the applicant faced a criminal charge of a sexual offence against a young person (G) and a claim for compensation by G. Both proceedings were heard before the same jury at the same time. The jury acquitted the applicant of the offence and rejected Gs claim for compensation. The Supreme Court allowed Gs appeal and awarded her compensation. The ECtHR decided that article 6(2) did not apply to the compensation proceedings. The court held (para 38) that the second and third of the Engel criteria did not point to the compensation proceedings being a criminal charge. In particular, the civil claim was to be determined on the basis of principles that were proper to the civil law of tort. The outcome of the criminal proceedings was not decisive for the compensation case. The victim had a right to claim compensation regardless of whether the defendant was convicted or acquitted and the compensation issue was to be the subject of a separate legal assessment based on criteria and evidentiary standards which in several important respects differed from those that applied to criminal liability. At para 41, the court dealt explicitly with the question whether the links between the criminal proceedings and the compensation proceedings were sufficient to justify extending article 6(2) to apply to the latter. It concluded that the compensation case was not a direct sequel to the criminal proceedings because it was legally feasible to award G compensation despite the applicants acquittal. Lord Phillips says at para 32 that the distinction between claims for compensation by an acquitted defendant and claims for compensation by an alleged victim of an acquitted defendant is unconvincing and that it is not credible to say that the claim for compensation by the acquitted defendant is consequential and concomitant to the criminal proceedings but the claim by the victim is not. I would be less critical of the Strasbourg jurisprudence. In the view of the ECtHR, the crucial question is whether the subject matter of the civil proceedings is so closely connected with some criminal proceedings that the Convention protections available in the criminal proceedings should also be available in the civil proceedings. If the outcome of the criminal proceedings is decisive for the civil proceedings, then there is a sufficiently close connection for article 6(2) to apply. This will occur, for example, where an acquitted defendant claims compensation for his detention on remand and the costs he incurred in the criminal proceedings. The defendant would not have been detained or incurred the costs which he claims in the civil proceedings but for the criminal proceedings. The position of the person who claims damages as the victim of the defendant is different. As was said in Ringvold, the victim of the alleged crime has a right to claim damages regardless of whether the defendant has been convicted or acquitted. The victims claim is not even dependent on the defendant being prosecuted at all. There is, therefore, no link between the civil proceedings and any criminal proceedings that may have been instituted. The court held that the fact that an act may give rise to a civil claim in damages and also constitute a crime is not sufficient. There is also the point that, as was pointed out by the court in Ringvold, if the position were otherwise, article 6(2) would have the undesirable effect of pre empting the victims possibilities of claiming compensation under the civil law of tort, entailing an arbitrary and disproportionate limitation on his or her right of access to a court under article 6(1) of the Convention. This is a further indication that there is a real distinction between claims for compensation by an acquitted defendant and claims by an alleged victim of an acquitted defendant. To return to the present case and applying the Strasbourg jurisprudence, I would hold that there is no sufficient link between civil recovery proceedings under Part 5 of SOCA and any criminal proceedings to justify the application of article 6(2) to the Part 5 proceedings. Indeed, there is no link at all. The Part 5 proceedings are not a direct sequel or a consequence and the concomitant of any criminal proceedings. They are free standing proceedings instituted whether or not there have been criminal proceedings against the respondent or indeed anyone at all. The link with criminal proceedings is created by language used by the court in the civil proceedings But the Strasbourg jurisprudence shows that there may be a yet further route by which article 6(2) may apply to proceedings which (i) are not civil on an application of the Engel criteria and (ii) do not objectively have the necessary close link with criminal proceedings. There is a principle that, if in the civil proceedings, the courts decision contains a statement imputing the criminal liability of the [applicant], that of itself will be sufficient to create the necessary link for article 6(2) to apply in those proceedings. The clearest statement of this principle is to be found in Y v Norway (2005) 41 EHRR 87. The applicant was convicted of sexual assault and homicide. In linked civil proceedings he was ordered to pay compensation to the victims parents. On appeal, he was acquitted of the criminal charges, but the lower courts compensation order was upheld. His appeal against the compensation order was dismissed by the Supreme Court. Before the ECtHR, he complained that the award of compensation, despite the acquittal, violated article 6(2). Applying the approach to which I have referred at para 132 above, the court held that the acquittal did not in principle preclude the establishment of civil liability to pay compensation arising out of the same set of facts on the basis of a less strict standard of proof. If, however the national decision on compensation contains a statement imputing the criminal liability of the respondent party, this could raise an issue falling within the ambit of article 6(2) of the Convention (para 42). The court continued: 43. The Court will therefore examine the question whether the domestic courts acted in such a way or used such language in their reasoning as to create a clear link between the criminal case and the ensuing compensation proceedings as to justify extending the scope of the application of article 6(2) to the latter (emphasis added). 44. The Court notes that the High Court opened its judgment with the following finding: Considering the evidence adduced in the case as a whole, the High Court finds it clearly probable that [the applicant] has committed the offences against Ms T with which he was charged and that an award of compensation to her parents should be made under article 3 5 (2) of the Damage Compensation Act.(emphasis added) 45. This judgment was upheld by the majority of the Supreme Court, albeit using more careful language. However, that judgment, by not quashing the former, did not rectify the issue which in the Courts opinion thereby arises. 46. The Court is mindful of the fact that the domestic courts took note that the applicant had been acquitted of the criminal charges. However, in seeking to protect the legitimate interests of the purported victim, the Court considers that the language employed by the High Court, upheld by the Supreme Court, overstepped the bounds of the civil forum, thereby casting doubt on the correctness of that acquittal. Accordingly, there was a sufficient link to the earlier criminal proceedings which was incompatible with the presumption of innocence. 47. In the light of these considerations, the Court concludes that article 6(2) was applicable to the proceedings relating to the compensation claim against the present applicant and that this provision was violated in the instant case. Thus, the court has held that the necessary link between the criminal case and the civil proceedings can be created by the language in which the decision in the civil proceedings is expressed. In Y v Norway, the ECtHR held that the court had overstepped the bounds of the civil forum by deciding that the applicant had committed the criminal offences. It is worth considering two cases where this principle was applied to reach the opposite conclusion. The first is Moullet v France (Application No 27521/04) (unreported) 13 September 2007. The applicant was a former manager of the transport, workshop and warehouse department of Marseilles. He was charged with accepting bribes and aiding and abetting fraud. He was discharged by the criminal court and the proceedings terminated on the grounds that they were time barred. The Mayor of Marseilles then ordered the applicants compulsory retirement on the grounds that the evidence showed that the applicant had received bribes and that, although the criminal court had found the proceedings to be time barred, disciplinary action by the local authority was not subject to any time limitation. The Mayors decision was the subject of challenge in administrative court proceedings. The Conseil dEtat upheld the Mayors decision on the grounds that the disciplinary board and the disciplinary appeals board had based their findings on accurate facts and the reasoning behind the impugned sanction was not faulty and the reasons on which the decision was based were not materially or factually incorrect. The applicant complained to the ECtHR that there had been a violation of the presumption of innocence in breach of article 6(2). He contended that the Conseil dEtat should not have relied on the facts which formed the basis of the criminal charges. The court considered whether the Conseil dEtat used such language in its reasoning as to create a clear link between the criminal case and the ensuing administrative proceedings and thus to justify extending the scope of article 6(2) to cover the latter. The court noted that the applicant was not formally declared guilty of the criminal offence of accepting bribes by the Conseil dEtat. The Conseil dEtat had confined itself to determining the facts without suggesting any criminal characterisation whatsoever. It had confined itself to assessing the impact of the alleged facts on the duties and obligations of probity incumbent on all local and regional government staff. In other words, the domestic authorities managed in the instant case to keep their decision within a purely administrative sphere, where the presumption of innocence the applicant relied on did not obtain. The second example is Ringvold where the ECtHR said at para 38 that the impugned national ruling awarding compensation to the alleged victim of sexual abuse following the defendants acquittal did not state, either expressly or in substance, that all the conditions were fulfilled for holding the applicant criminally liable with respect to the charges of which he had been acquitted. The Supreme Court acknowledged that the standard of proof was stricter than the balance of probabilities, but less strict than that applied to establish criminal liability. It emphasised that its decision was taken independently of the decision in the criminal case and did not undermine the acquittal. It seems, therefore, that the necessary link can be created by this route only if the court in the civil proceedings bases its decision adverse to the defendant using language which casts doubt on the correctness of an acquittal. The rationale must be that in such a case the court has chosen to reach its decision by explicitly finding that a criminal charge has been committed. If it chooses to reach its decision in that way, then the protections afforded by article 6(2) should be available as if the civil proceedings were criminal proceedings. But if the decision in the civil proceedings is based on reasoning and language which goes no further than is necessary for the purpose of determining the issue before that court and without making imputations of criminal liability, then the necessary link will not have been created. The distinction can be illustrated by reference to the common example of the case where A is acquitted of assaulting B, but B brings a claim for damages in tort. The ECtHR recognises in principle that article 6(2) does not apply to the claim for damages: see, for example, Ringvold para 38. Thus the acquittal ought to stand in the compensation proceedings, but it does not preclude the establishment of civil liability to pay compensation arising out of the same facts on the basis of a less strict burden of proof. The fact that the findings of fact in the compensation proceedings may implicitly cast doubt on the acquittal is not enough to import article 6(2). What is required is that the decision in the compensation proceedings contains a statement imputing criminal liability (emphasis added) (Y v Norway para 42) for article 6(2) to be imported. The idea seems to be that article 6(2) applies if the court treats the compensation proceedings as if they are proceedings in which the issue of criminal liability falls to be determined. The most obvious way of doing this is to state expressly or, perhaps by necessary implication, that the defendant was wrongly acquitted. There is, of course, no need for the court to create the link with the criminal proceedings in this way because, as the ECtHR explains in Ringvold, the compensation proceedings are not directly concerned with the outcome of the criminal proceedings. It will be seen that the circumstances in which the necessary link can be created when otherwise it would not exist echo the circumstances in which article 6(2) may be violated where the link is otherwise sufficiently close. In practice, therefore, if the court imputes criminal liability to an individual, article 6(2) will apply whether or not the link between the two proceedings is otherwise sufficiently close. But the analysis adopted by the ECtHR suggests that the issue should be addressed sequentially in the way that I have described. I can now turn to consider whether Griffith Williams J did impute criminal liability to the appellants or cast doubt on their acquittal. SOCAs case is that the wealth of Mr and Mrs Gale has been acquired through money laundering and tax evasion in the United Kingdom, Spain, Portugal and elsewhere. Criminal proceedings for drug trafficking offences were started against Mr Gale in Spain, but these were discontinued because the relevant time limits had been exceeded. He was acquitted of drug trafficking offences in Portugal after a trial. At para 18 of his judgment, Griffith Willams J said that what was in issue before him was not the commission of the specific offences alleged against DG in Portugal but whether on all the evidence (including but not limited to the evidence considered by the Portuguese Court and that which was available to the Spanish Courts) SOCA had proved that the wealth of Mr and Mrs Gale had been obtained through unlawful conduct. Nowhere in his judgment does the judge depart from this view of the case. I accept the submission of Mr Peto QC that none of the judges findings specifically calls into question the correctness of Mr Gales acquittal in Portugal. As for the drug trafficking proceedings in Spain, these were discontinued. Even if (contrary to my view) the judge had made specific findings that Mr Gale was guilty of the Spanish offences, these findings could not be relied on by Mr Mitchell QC. That is because article 6(2) would only apply if there had been an acquittal on the merits and not one solely based on a time bar (as the discontinuance in the Spanish proceedings was): see Leutscher v The Netherlands (1996) 24 EHRR 181 and R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1 para 10. For these reasons, I would dismiss the appeal on the first issue. I should add that I do not find it necessary to express any view on the application of Geerings v The Netherlands (2007) 46 EHRR 1222 or R v Briggs Price [2009] AC 1026 to the present case. On the second issue, I agree with the judgment of Lord Clarke. |
This case concerns a challenge by the respondent (Mr Wright) to the grant of planning permission by the local planning authority (the second appellant: the Council) for the change of use of land at Severndale Farm, Tidenham, Gloucestershire from agriculture to the erection of a single community scale 500kW wind turbine for the generation of electricity (the development). Mr Wright is a local resident. The first appellant (Resilient Severndale) was the successful applicant for the planning permission. In its application for planning permission, Resilient Severndale proposed that the wind turbine would be erected and run by a community benefit society. The application included a promise that an annual donation would be made to a local community fund, based on 4% of the societys turnover from the operation of the turbine over its projected life of 25 years (the community fund donation). In deciding to grant planning permission for the development the Council expressly took into account the community fund donation. The Council imposed a condition (condition 28) that the development be undertaken by a community benefit society with the community fund donation as part of the scheme. Mr Wright challenged the grant of planning permission on the grounds that the promised community fund donation was not a material planning consideration and the Council had acted unlawfully by taking it into account. Mr Wright succeeded in his challenge before Dove J at first instance. The Court of Appeal dismissed an appeal by Resilient Severndale and the Council. They now appeal to this court. The issue on the appeal is whether the promise to provide a community fund donation qualifies as a material consideration for the purposes of section 70(2) of the Town and Country Planning Act 1990 as amended (the 1990 Act) and section 38(6) of the Planning and Compulsory Purchase Act 2004 (the 2004 Act). These are very familiar provisions in planning law. There is also a subsidiary issue whether the Council was entitled to include condition 28 in the planning permission. Section 70(1) of the 1990 Act provides in relevant part: Where an application is made to a local planning authority for planning permission they may grant planning permission, either unconditionally or subject to such conditions as they think fit Section 70(2) of the 1990 Act provides: In dealing with an application for planning permission or permission in principle the authority shall have regard to the provisions of the development plan, so far as (a) material to the application, (aza) a post examination draft neighbourhood development plan, so far as material to the application, (aa) any considerations relating to the use of the Welsh language, so far as material to the application; (b) any local finance considerations, so far as material to the application, and (c) any other material considerations. Section 38(6) of the 2004 Act provides: If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise. Policy background The land in question is agricultural and is not designated for development in the development plan for the area. The proposed development is not in accordance with the development plan. force at the relevant time (NPPF) states: Paragraph 97 of the National Planning Policy Framework (March 2012) in To help increase the use and supply of renewable and low carbon energy, local planning authorities should recognise the responsibility on all communities to contribute to energy generation from renewable or low carbon sources. They should: Have a positive strategy to promote energy from renewable and low carbon sources; Design their policies to maximise renewable and low carbon energy development while ensuring that adverse impacts are addressed satisfactorily, including cumulative landscape and visual impacts; Consider identifying suitable areas for renewable and low carbon energy sources, and supporting infrastructure, where this would help secure the development of such sources; Support community led initiatives for renewable and low carbon energy, including developments outside such areas being taken forward through neighbourhood planning Planning Policy Guidance has been issued to expand upon the guidance in the NPPF regarding renewable and low carbon energy (reference ID: 5 004 20140306, revision date 6 March 2014 the PPG) as follows: What is the role for community led renewable energy initiatives? Community initiatives are likely to play an increasingly important role and should be encouraged as a way of providing positive local benefit from renewable energy development. Further information for communities interested in developing their own initiatives is provided by the Department of Energy and Climate Change. Local planning authorities may wish to establish policies which give positive weight to renewable and low carbon energy initiatives which have clear evidence of local community involvement and leadership. Neighbourhood plans are an opportunity for communities to plan for community led renewable energy developments. Neighbourhood Development Orders and Community Right to Build Orders can be used to grant planning permission for renewable energy development. To support community based initiatives a local planning authority should set out clearly any strategic policies that those producing neighbourhood plans or Orders will need to consider when developing proposals that address renewable energy development. Local planning authorities should also share relevant evidence that may assist those producing a neighbourhood plan or Order, as part of their duty to advise or assist. As part of a neighbourhood plan, communities can also look at developing a community energy plan to underpin the neighbourhood plan. In October 2014, the Department of Energy and Climate Change published a document containing general guidance with the title, Community Benefits from Onshore Wind Developments: Best Practice Guidance for England (the DECC Guidance). The object of the DECC Guidance was to set out principles of good practice applicable through the preparation and planning phases and on to the operational phase for onshore wind energy developments, with the aim of securing local community acceptance and support for such developments. It was published alongside a document entitled Best Practice Guidance on Community Engagement. The Ministerial foreword to the DECC Guidance included the following: Communities hosting renewable energy play a vital role in meeting our national need for secure, clean energy and it is absolutely right that they should be recognised and rewarded for their contribution. The Introduction stated: Communities have a unique and exciting opportunity to share in the benefits that their local wind energy resources can bring through effective partnerships with those developing wind energy projects. Under the heading What are community benefits?, the Introduction continued as follows: Community benefits can bring tangible rewards to communities which host wind projects, over and above the wider economic, energy security and environmental benefits that arise from those developments. They are an important way of sharing the value that wind energy can bring with the local community. Community benefits include: 1. Community benefit funds voluntary monetary payments from an onshore wind developer to the community, usually provided via an annual cash sum, and 2. Benefits in kind other voluntary benefits which the developer provides to the community, such as in kind works, direct funding of projects, one off funding, local energy discount scheme or any other non necessary site specific benefits. In addition to the above, there can also be: 3. Community investment (Shared ownership) this is where a community has a financial stake, or investment in a scheme. This can include co operative schemes and online investment platforms. 4. Socio economic community benefits job creation, skills training, apprenticeships, opportunities for educational visits and raising awareness of climate change. 5. Material benefits derived from actions taken directly related to the development such as improved infrastructure. This document contains guidance on community benefit funds and benefits in kind (points 1 and 2). The provision of these community benefits is an entirely voluntary undertaking by wind farm developers. They are not compensation payments. Material and socio economic benefits will be considered as part of any planning application for the development and will be determined by local planning authorities. They are not covered by this guidance Prior to October 2014, many onshore wind developers already provided voluntary contributions in various forms over the lifetime of their projects. The DECC Guidance stated: The wind industry through RenewableUK has consolidated this voluntary approach by coming together to produce a protocol which commits developers of onshore wind projects above 5MW (megawatts) in England to provide a community benefit package to the value of at least 5,000 per MW of installed capacity per year, index linked for the operational lifetime of the project. Community benefits offer a rare opportunity for the local community to access resources, including long term, reliable and flexible funding to directly enhance their local economy, society and environment The best outcomes tend to be achieved when benefits are tailored to the needs of the local community It referred to a number of case studies where community benefit funds have been set up by wind farm developers, eg by RWE Innogy UK in respect of the Farr Wind Farm in Scotland (3.5m over the lifetime of the wind farm). However, the DECC Guidance makes clear the relationship between the guidance it gives in the context of renewable energy policy, and the planning regime. Under the heading Preparation phase guidance: Background to community benefits, it states: This document contains guidance on community benefit funds and benefits in kind. The provision of these community benefits are entirely voluntary undertakings by wind farm developers and should be related to the needs of the local community. These community benefits are separate from the planning process and are not relevant to the decision as to whether the planning application for a wind farm should be approved or not ie they are not material to the planning process. This means they should generally not be taken into account by local planning authorities when deciding the outcome of a planning application for a wind [farm] development. Currently the only situation in which financial arrangements are considered material to planning is under the Localism Act as amended (2011), which allows a local planning authority to take into account financial benefits where there is a direct connection between the intended use of the funds and the development. And Planning Practice Guidance [the PPG] states that, Local planning authorities may wish to establish policies which give positive weight to renewable and low carbon energy initiatives which have clear evidence of local community involvement and leadership. Socio economic and material benefits from onshore wind developments are types of benefit that can be taken into consideration when a planning application is determined by the local planning authority and are not covered by this Guidance. This explanation is in accordance with the general object of the DECC Guidance, which is to set out ways in which the support of local communities for wind energy development in their area might be promoted, rather than to provide policy guidance regarding the operation of the planning system. The distinction was emphasised again later in the document, under the heading Planning phase guidance: Planning and the role of local authorities: Local authorities can play an important role in supporting community benefit negotiations by supporting the development of neighbourhood, community or parish plans and having positive local plan policies. Community benefits should be considered separately from any actions or contributions required to make a development acceptable in planning terms. The primary role of the local planning authority in relation to community benefits is to support the sustainable development of communities within their jurisdiction and to ensure that community benefits negotiations do not unduly influence the determination of the planning application. There is a strict principle in the English planning system that a planning proposal should be determined based on planning issues, as defined in law. Planning legislation prevents local planning authorities from specifically seeking developer contributions where they are not considered necessary to make the development acceptable in planning terms. Within this context, community benefits are not seen as relevant to deciding whether a development is granted planning permission. As will be seen below, I consider that this is an accurate statement of the conventional and well established rule of planning law, which stems from the interpretation of the relevant planning statutes. Factual background The Resilience Centre Ltd (Resilience Centre) was established in 2009 to focus on the provision and use of capital to generate social benefits as well as financial returns. It aims to help build resilience in society in the context of climate change and limited natural resources, with a view to improving local economies. To these ends, the Resilience Centre has developed a model for investment in community energy projects. This involves the Resilience Centre and the landowner obtaining planning permission for a project, in this case the erection of a wind turbine to generate electricity, but with a commitment to open up the project to individual investors from the local community once permission has been obtained. However, according to the proposal in the present case, there would still be a commercial return for the Resilience Centre and the landowner. Since the Cooperative and Community Benefit Societies Act 2014 came into force on 1 August 2014, the Resilience Centres legal structure of choice has been to involve a community benefit society registered under that Act. This has tax advantages. By section 2(2)(a)(ii) of that Act, it is a condition of registration of such a society that its business is conducted for the benefit of the community. In the present case, the Resilience Centre says that the development will provide various benefits for the local community. These include the opportunity for individuals in the community to invest in the project by subscribing for shares in the proposed community benefit society, with estimated returns of 7% pa, and the community fund donation. The money donated is to be allocated to community causes by a panel of local people. On 29 January 2015 Resilient Severndale, using the Resilience Centre as its agent, applied to the Council for planning permission for the development, relying amongst other things on these benefits for the local community. The application focused on the benefits of renewable wind energy and the policy emphasis, including in the DECC Guidance, on the engagement of local people in the energy process. An officers report dated 7 July 2015 advised the Councils Planning Committee (the Committee) that the community benefit fund was not a material consideration that could be taken into account when considering the planning application, because (i) there were no clear controls and/or enforcement measures that could ensure the benefit was delivered, and in any event, (ii) the fund could be used to finance projects that were unconnected to low carbon energy generation. Resilient Severndale submitted further observations to the Council, which resulted in consideration of the application being deferred. Further submissions were then made, to the effect that the project would commit up to 1.1m in direct community benefits (ie 4% of turnover, together with 600,000 that it was estimated would be earned by the turbine over and above the community benefit societys commitments which, under the terms of the society, would also be dedicated to the community), and referring to a successful appeal to an inspector in relation to Alvington Wind Farm. Further officer reports were then produced. The final report dated 11 August 2015 concluded that the community benefit fund was a material consideration in favour of the development. The same day, 11 August 2015, the Committee resolved to approve the application. It is common ground that its members had included the local community donation fund as a material consideration in favour of the proposals as part and parcel of the basket of socio economic benefits which were relied upon by Resilient Severndale. On 30 September 2015, the planning application was granted subject to a number of conditions, including condition 28, as follows: The development is to be undertaken via a Community Benefit Society set up for the benefit of the community and registered with the Financial Conduct Authority under the Co Operative and Community Benefit Societies Act 2014. Details of the Society number to be provided to the local planning authority prior to commencement of construction. Reason: to ensure the project delivers social, environmental and economic benefits for the communities of Tidenham and the broader Forest of Dean. The fund, once set up, was to be allocated by a panel of local individuals established for that task. The objects of the fund would include any community project. Evidence in the proceedings indicates that a similar fund in relation to a wind turbine at St Briavels had been distributed for (amongst other things) the creation of a village handyman service, the maintenance of publicly accessible defibrillators in the village, the purchase of waterproof clothing to enable young members of the community to participate in scheduled outdoor activities in inclement weather, and to provide a meal at a local public house for the members of a lunch club for older people in the village and club volunteers. Mr Wright challenged the decision to grant planning permission by way of judicial review, on the ground that the community benefit fund donation was not a material consideration for planning purposes. He submitted that it did not serve a planning purpose, it was not related to land use, and it had no real connection to the proposed development. At first instance Dove J accepted those submissions and made an order quashing the permission. He applied what he took to be settled law regarding what constitutes a material consideration for the purposes of the planning statutes derived from a series of authorities, in particular Newbury District Council v Secretary of State for the Environment [1981] AC 578 (Newbury), Westminster City Council v Great Portland Estates Plc [1985] AC 661 (Westminster), R v Plymouth City Council, Ex p Plymouth and South Devon Co operative Society Ltd (1993) 67 P & CR 78 (Plymouth), Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759 (Tesco) and R (Sainsburys Supermarkets Ltd) v Wolverhampton City Council [2010] UKSC 20; [2011] 1 AC 437. The Council and Resilient Severndale appealed. Their appeal was dismissed by the Court of Appeal in a judgment by Hickinbottom LJ, with which McFarlane and Davis LJJ agreed. Hickinbottom LJ agreed with the reasons given by Dove J. He relied on the same case law and also on Elsick Development Co Ltd v Aberdeen City and Shire Strategic Development Planning Authority [2017] UKSC 66; [2017] PTSR 1413 (Aberdeen), a decision which post dated Dove Js judgment but which, in the view of Hickinbottom LJ, confirmed that the judges approach was correct. Davis LJ gave a short concurring judgment to emphasise that the question was not whether the proffered benefits were desirable, but whether in planning terms they were material and whether they satisfied the criteria of materiality set out in the speech of Viscount Dilhorne in Newbury at p 599H (the Newbury criteria). Davis LJ also expressed agreement with the judgment of Dove J. The Council and Resilient Severndale now appeal to this court. They contend that Dove J and the Court of Appeal erred in their approach to the question of what counts as a material consideration for the purpose of section 70(2) of the 1990 Act and section 38(6) of the 2004 Act and that they should have found that the community benefits to be derived from the development constitute a material consideration which the Committee was entitled to take into account when it decided to grant planning permission for the development. The main burden of presenting the oral argument for the appellants was assumed by Mr Martin Kingston QC, for Resilient Severndale. The Secretary of State for Housing, Communities and Local Government was given permission to intervene orally and in writing. He was represented by Mr Richard Kimblin QC. Mr Kimblin made submissions which were supportive of the arguments for the appellants. He invited the court to update Newbury to a modern and expanded understanding of planning purposes. Discussion Planning permission is required for the carrying out of any development of land: section 57(1) of the 1990 Act. So far as is relevant, development is defined in section 55(1) to mean the making of any material change in the use of any buildings or other land. Section 70(2) of the 1990 Act requires a planning authority to have regard to the development plan and certain other matters so far as material to the application and to any other material considerations: that is to say, material to the change of use which is proposed. Similarly, in relation to an application for planning permission, the material considerations referred to in section 38(6) of the 2004 Act are considerations material to the change of use which is proposed. In Newbury at pp 599 601 Viscount Dilhorne treated the scope of the concept of material considerations in section 29(1) of the Town and Country Planning Act 1971 (which corresponds to what is now section 70(2) of the 1990 Act) as the same as the ambit of the power of a local planning authority (in what is now section 70(1)(a) of the 1990 Act) to impose such conditions as they think fit on the grant of planning permission. It had been established in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554 (Pyx Granite), Fawcett Properties Ltd v Buckingham County Council [1961] AC 636 (Fawcett Properties) and Mixnams Properties Ltd v Chertsey Urban District Council [1965] AC 735 (Mixnams Properties) that the power to impose conditions was not unlimited. Viscount Dilhorne referred to the following statement by Lord Denning in Pyx Granite at p 572, approved in Fawcett Properties and Mixnams Properties: the law says that those conditions, to be valid, must fairly and reasonably relate to the permitted development. The planning authority are not at liberty to use their powers for an ulterior object, however desirable that object may seem to them to be in the public interest. Viscount Dilhorne referred to other authority as well and set out the Newbury criteria at p 599H as follows: the conditions imposed must be for a planning purpose and not for any ulterior one, and they must fairly and reasonably relate to the development permitted. Also they must not be so unreasonable that no reasonable planning authority could have imposed them Lord Edmund Davies agreed with the speech of Viscount Dilhorne. Lord Fraser of Tullybelton approved the same three fold test in his speech at pp 607 608, as did Lord Scarman at pp 618 619 and Lord Lane at p 627. The view of the law lords was that a condition attached to the grant of planning permission for the change of use of two hangars to use as warehouses on condition that they were removed at the end of a specified period of time did not fairly or reasonably relate to the permitted development and was therefore void. The equation of the ambit of material considerations with the ambit of the power to impose planning conditions is logical, because if a local planning authority has power to impose a particular planning condition as the basis for its grant of permission it would follow that it could treat the imposition of that condition as a material factor in favour of granting permission. The relevance of the Newbury criteria to determine the ambit of material considerations in what is now section 70(2) of the 1990 Act and section 38(6) of the 2004 Act is well established and is not in contention on this appeal. The Westminster case was concerned with the lawfulness of a policy adopted by the City of Westminster as part of its local plan to promote and preserve certain long established industries in central London and to limit the grant of planning permission for office development to exceptional cases. The House of Lords applied the same test for whether a matter was a material consideration in the preparation of a local plan as in relation to the grant or refusal of planning permission (under provisions of the Town and Country Planning Act 1971 which have been re enacted in the 1990 Act), and held that the policy was concerned with a genuine planning purpose, namely the continuation of industrial use important to the character and functioning of the city, and hence was lawful. Lord Scarman gave the sole substantive speech, with which the other members of the appellate committee agreed. He referred at p 669 to the statement by Lord Parker CJ in East Barnet Urban District Council v British Transport Commission [1962] 2 QB 484, at p 491, that when considering whether there has been a change of use of land what is really to be considered is the character of the use of the land, not the particular purpose of a particular occupier. Lord Scarman pointed out (p 670) that development plans are concerned with development, a term of art in the planning legislation which includes now, and has always included, the making of a material change in the use of land. He held that Lord Parkers dictum applies to the grant or refusal of planning permission, to the imposition of conditions and also to the formulation of planning policies and proposals, and said (p 670): The test, therefore, of what is a material consideration in the preparation of plans or in the control of development is whether it serves a planning purpose: see [Newbury], 599 per Viscount Dilhorne. And a planning purpose is one which relates to the character of the use of land. It has long been recognised that a consequence of this approach of relying on the Newbury criteria to identify material considerations is that planning permission cannot be bought or sold. In City of Bradford Metropolitan Councils v Secretary of State for the Environment (1986) 53 P & CR 55, at 64, Lloyd LJ said that this was axiomatic. In Plymouth this was taken to be a correct statement of the law (at p 83, per Russell LJ; p 84, per Evans LJ; and p 90, per Hoffmann LJ). Plymouth was concerned with whether a developers agreement to provide certain off site benefits could properly be regarded as fairly and reasonably related to the development for which permission was sought, so as to constitute a material consideration which the local planning authority was entitled to take into account when granting permission. The Newbury criteria were applied in order to answer that question. On the facts, a sufficient connection with the proposed development was found to exist. That was also the case in relation to certain off site benefits taken into account in Tesco: see pp 782 783 per Lord Hoffmann, as he had become. In both cases, there was a sufficiently close nexus between the off site benefits to be provided and the proposed change in the character of the use of the land involved in the proposed development. However, in Plymouth Hoffmann LJ made reference at p 90 to a general principle that planning control should restrict the rights of landowners only so far as may be necessary to prevent harm to community interests and referred to the concept of materiality in that regard, because there is a public interest in not allowing planning permissions to be sold in exchange for benefits which are not planning considerations or do not relate to the proposed development. This statement was not qualified in Tesco. Therefore, a condition or undertaking that a landowner pay money to a fund to provide for general community benefits unrelated to the proposed change in the character of the use of the development land does not have a sufficient connection with the proposed development as to qualify as a material consideration in relation to it. A principled approach to identifying material considerations in line with the Newbury criteria is important both as a protection for landowners and as a protection for the public interest. It prevents a planning authority from extracting money or other benefits from a landowner as a condition for granting permission to develop its land, when such payment or the provision of such benefits has no sufficient connection with the proposed use of the land. It also prevents a developer from offering to make payments or provide benefits which have no sufficient connection with the proposed use of the land, as a way of buying a planning permission which it would be contrary to the public interest to grant according to the merits of the development itself. In this court in Aberdeen these points were emphasised by Lord Hodge (with whom the other members of the court agreed) at paras 43 46. In that case, planning obligations imposed on developers to make contributions to assist with development of infrastructure around Aberdeen were found to be unlawful because they were not related to the use of the land for which the developers sought planning permission. At para 43, Lord Hodge cited with approval a passage from the judgment of Beldam LJ in Tesco Stores Ltd v Secretary of State for the Environment (1994) 68 P & CR 219, at 234 235, including the following: Against the background that it is a fundamental principle that planning permission cannot be bought or sold, it does not seem unreasonable to interpret [subsection 106(1)(d) of the 1990 Act] so that a planning obligation requiring a sum or sums to be paid to the planning authority should be for a planning purpose or objective which should be in some way connected with or relate to the land in which the person entering into the obligation is interested. At para 44 Lord Hodge continued: A planning obligation, which required as a pre condition for commencing development that a developer pay a financial contribution for a purpose which did not relate to the burdened land, could be said to restrict the development of the site, but it would also be unlawful. Were such a restriction lawful, a planning authority could use a planning obligation in the context of an application for planning permission to extract from a developer benefits for the community which were wholly unconnected with the proposed development, thereby undermining the obligation on the planning authority to determine the application on its merits. Similarly, a developer could seek to obtain a planning permission by unilaterally undertaking a planning obligation not to develop its site until it had funded extraneous infrastructure or other community facilities unconnected with its development. This could amount to the buying and selling of a planning permission. Section 75, when interpreted in its statutory context, contains an implicit limitation on the purposes of a negative suspensive planning obligation, namely that the restriction must serve a purpose in relation to the development or use of the burdened site. An ulterior purpose, even if it could be categorised as a planning purpose in a broad sense, will not suffice. It is that implicit restriction which makes it both ultra vires and also unreasonable in the Wednesbury sense for a planning authority to use planning obligations for such an ulterior purpose. The protection for landowners on the one hand and for the public interest on the other has been held to be established by Parliament through statute, as interpreted by the courts. Parliament has itself in this way underwritten the integrity of the planning system. In Tesco Lord Hoffmann pointed out that the question of whether something is a material consideration is a question of law: p 780. Statute cannot be overridden or diluted by general policies laid down by central government (whether in the form of the NPPF or otherwise), nor by policies adopted by local planning authorities. As Lord Hodge said in Aberdeen at para 51, The inclusion of a policy in the development plan, that the planning authority will seek a planning obligation from developers [to contribute money for purposes unconnected with the use of the land], would not make relevant what otherwise would be irrelevant. The same point can be made about the policy statements in the DECC Guidance. In any event, as set out above, that document itself explains that the guidance it contains has to be read subject to the established legal position regarding what qualifies as a material consideration for the purposes of the grant of planning permission. In the present case, the community benefits promised by Resilient Severndale did not satisfy the Newbury criteria and hence did not qualify as a material consideration within the meaning of that term in section 70(2) of the 1990 Act and section 38(6) of the 2004 Act. Dove J and the Court of Appeal were right so to hold. The benefits were not proposed as a means of pursuing any proper planning purpose, but for the ulterior purpose of providing general benefits to the community. Moreover, they did not fairly and reasonably relate to the development for which permission was sought. Resilient Severndale required planning permission for the carrying out of development of the land in question, as that term is defined in section 55(1) of the 1990 Act. The community benefits to be provided by Resilient Severndale did not affect the use of the land. Instead, they were proffered as a general inducement to the Council to grant planning permission and constituted a method of seeking to buy the permission sought, in breach of the principle that planning permission cannot be bought or sold. This is so whether the development scheme is regarded as commercial and profit making in nature, as Hickinbottom LJ thought it was (para 39), or as a purely community run scheme to create community benefits. For the appellants, Mr Kingston submitted that the planning statutes had to be regarded as always speaking so far as concerns what counts as a material consideration, and that this meant that the meaning of this concept should be updated in line with changing government policy. I do not agree. The meaning of the term material consideration in section 70(2) of the 1990 Act and section 38(6) of the 2004 Act is not in doubt and updating the established meaning of the term is neither required nor appropriate. To say that the meaning of the term changes according to what is said by Ministers in policy statements would undermine the position, as explained above, that what qualifies as a material consideration is a question of law on which the courts have already provided authoritative rulings. The interpretation given to that statutory term by the courts provides a clear meaning which is principled and stable over time. I note that Parliament has considered it necessary to amend section 70(2) when it wishes to expand the range of factors which may be treated as material for the purposes of that provision, for instance in relation to the Welsh language: subparagraph (aa). Mr Kingston relied on statements in Fawcett Properties which he maintained showed that policies do inform the meaning of the statutory term material consideration, and suggested that since this authority was referred to and relied upon by the House of Lords in Newbury the interpretation of material consideration taken from the latter case had to be read as subject to what was said about this in Fawcett Properties. However, in my view, nothing said in Fawcett Properties supports Mr Kingstons submission. In that case, a local planning authority had granted permission for the building of two cottages on green belt land subject to a condition that their occupation was limited to persons whose employment is or was in agriculture, forestry or an industry related to agriculture, and their dependants. At the time of imposing the condition the local planning authority had issued a draft outline development plan which indicated that its object in relation to the area where the cottages were to be built was to maintain the normal life of an agricultural district. When imposing the condition the authority stated that the reason for doing so was that it would not be prepared to permit the erection of dwelling houses on this site unconnected with the use of the adjoining land for agriculture or similar purposes. The appellants later acquired the freehold and brought proceedings to challenge the validity of the condition on various grounds, including that (i) the imposition of a condition according to the personality of the occupier rather than with reference to the user of the premises was outside the power of the local planning authority to impose such conditions as it thought fit and (ii) the condition bore no reasonable relation to the policy in the outline plan or to any other sensible planning policy. Lord Jenkins described the first challenge as the broad ultra vires claim and the second as the narrow ultra vires claim: pp 683 684. The nature of these challenges was explained clearly by Romer LJ in the Court of Appeal ([1959] Ch 543 at 572 573 and 568 572, respectively), in a judgment approved by the House of Lords on these points. The House of Lords dismissed the challenge and upheld the condition. It is ground (i) which is relevant for present purposes. On that, Romer LJ held that a condition framed with reference to the occupation of the inhabitants of the cottages was sufficiently linked to the user of the land in question as to be permissible: [1959] Ch 543, 572 573; and to similar effect see 558 559 per Lord Evershed MR and 578 579 per Pearce LJ. This reasoning was upheld in the House of Lords: p 659 (Lord Cohen), p 667 (Lord Morton of Henryton), p 675 (Lord Keith of Avonholm), p 679 (Lord Denning) and pp 683 684 (Lord Jenkins). The reasoning in the Court of Appeal and in the House of Lords on this point is fully in line with Viscount Dilhornes statement of the first two of the Newbury criteria. It offers no support for the submission that the statutory concept of a material consideration varies according to the content of planning policy documents. Mr Kingston, however, in seeking to advance that submission, sought to rely on passages in the speeches in the House of Lords which were directed not to ground (i) and the question whether the condition related to the development permitted, in the sense of being sufficiently connected with the proposed change in use of the land, but rather to ground (ii): pp 660 661 (Lord Cohen), 674 675 (Lord Keith), 679 (Lord Denning) and 684 685 (Lord Jenkins). Ground (ii) was concerned with a different question, arising under the third of what were later called the Newbury criteria, namely whether the condition was rationally connected, not with the proposed change in use of the land, but with the policy in the outline plan or any other sensible planning policy (pp 660 661 per Lord Cohen). The Court of Appeal dismissed this challenge, on the basis that there was a sufficient rational connection between the condition and the policy in the outline plan. All members of the appellate committee of the House of Lords came to the same conclusion. Contrary to the submission of Mr Kingston, their reasoning in that regard does not indicate that the statutory concept of a material consideration varies according to the content of planning policy documents. Mr Kingston also sought to gain support for his argument from a series of cases in which policy was relied upon in order to justify the imposition of conditions or, he submitted, to identify material considerations for the purposes of the planning statutes. Again, however, on proper analysis these authorities do not help him. In R (Copeland) v London Borough of Tower Hamlets [2010] EWHC 1845 (Admin) a local planning authority had to consider whether to grant planning permission for a fast food outlet near a school, which was said to conflict with government policy on healthy eating for children. The authority proceeded on the footing that this was not capable of being a material consideration. However, at the hearing the authoritys counsel accepted that whether the site was used for a fast food outlet was a matter which relates to the use of land and is thus capable of being a planning consideration (para 25) and the decision was quashed, because the planning committee had not appreciated, as they should have done, that this was a matter capable of being a material consideration to which they could give consideration. The concession made by counsel was clearly correct: whether or not the property was used as a fast food outlet was very directly a matter concerning its use. The policy did not affect that one way or the other. It was relevant to a different question, whether in policy terms the grant of planning permission would be justified or not. The same analysis applies in relation to the other authorities on which Mr Kingston relied. In each case, a condition was imposed or planning permission was refused on the basis of a consideration which directly related to the use of the land in question and hence which satisfied the second of the Newbury criteria. The policy justification for the condition or for treating the consideration as having significant weight was a distinct matter, as in Fawcett Properties, and it was in relation to this that reference to policy guidance was significant. Contrary to the submission of Mr Kingston, the policy guidance did not affect the meaning of the term material consideration in the planning statutes. In R v Hillingdon London Borough Council, Ex p Royco Homes Ltd [1974] QB 720 the Court of Appeal held in relation to the grant of planning permission for a residential development that the imposition of conditions that the houses built should be occupied by persons on the planning authoritys housing waiting list was ultra vires, on the basis that the conditions were a fundamental departure from the rights of ownership and were so unreasonable that no local planning authority, appreciating its duty and properly applying itself to the facts, could have imposed them: the imposition was found to be Wednesbury unreasonable (see pp 731 732 per Lord Widgery CJ, referring to Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). The result was that the planning permission was quashed. Mr Kingston rightly points out that later national planning policy guidance contemplated that use of land for the provision of affordable housing would be a desirable policy objective and that conditions in relation to residential developments requiring a proportion of dwellings to be made available for affordable housing are now accepted as lawful and are very common. However, this is because the alteration in national policy has made it clear that a reasonable local planning authority, acting within the parameters of the Wednesbury decision, can properly find such a condition to be justified in terms of planning policy. Contrary to Mr Kingstons submission, the change in the legal position has not occurred because the meaning of the statutory term material consideration has been altered by reason of the promulgation of new national planning policy. Mr Kingstons submission again confuses two different questions. This point is borne out by the decision of the Court of Appeal in Mitchell v Secretary of State for the Environment (1995) 69 P & CR 60, on which Mr Kingston also relied. In that case, a developer applied for planning permission to convert a building from use for multiple occupation by way of bedsitting rooms to a small number of self contained flats. There was a draft development plan of the local planning authority which set out a policy to resist such changes of use, on grounds of the local need for affordable housing in the authoritys area. The authority refused permission for the development, relying on the policy in the draft plan as a material consideration. The developer appealed to the Secretary of State. The Secretary of State dismissed the appeal and refused planning permission, treating the need for affordable housing as a material consideration as the authority had done. The developer challenged the Secretary of States decision, contending that the policy of the authority was not a material consideration, and was successful at first instance in having the decision quashed. The Court of Appeal allowed the Secretary of States appeal. Saville LJ (with whom the other members of the court agreed) observed at p 62 that the proposed change from multiple occupation to self contained flats was a change in the character of the use of the land within the guidance given by Lord Scarman in Westminster at p 670 (see above). He held that the need for affordable housing in a particular area was a relevant policy consideration which justified the Secretary of State in deciding to refuse to grant permission for the development in question. Balcombe LJ gave a short concurring judgment, referring to planning policy guidance regarding the desirability of provision of affordable housing. There was no question in the case as to whether what was in issue sufficiently related to the proposed use of the land itself: clearly, the configuration of the accommodation in the property directly related to the use of the land. The question was whether there was sufficient policy justification for insisting that the use of the land should be consistent with the draft development plan policy to promote affordable housing, and it was held that there was. Balcombe LJ regarded it as material to that question that national planning policy guidance had been issued stating that this should be treated as a material planning consideration. R (Welcome Break Group Ltd) v Stroud District Council [2012] EWHC 140 (Admin) concerned the grant of planning permission to develop land as a motorway service area upon condition of the acceptance of obligations by the developer and site owner in an agreement made under section 106 of the 1990 Act which included that a local employment and training policy should be submitted for the approval of the local planning authority and that reasonable endeavours would be used to stock goods and produce from local producers for sale at the site. A challenge to quash the grant of planning permission, including on the ground that the condition and obligations were immaterial to the merits of the proposed development, was dismissed. The judge implicitly found at paras 50 and 53 that there was a sufficient connection between the obligations and the proposed development (that is to say, the proposed use of the land) so that these were matters capable of falling within the statutory concept of material considerations, and separately held that there was sufficient policy justification for the authority to be entitled to impose the condition as a matter of planning judgment (paras 49 53). It was in relation to this latter issue that he took into account national planning policy guidance and the relevant regional policy dealing with support for the sustainable development of the regional economy. So, again, this authority provides no support for Mr Kingstons submission. The same points apply as regards Verdin (t/a The Darnhall Estate) v Secretary of State for Communities and Local Government [2017] EWHC 2079 (Admin). The case concerned a challenge to a decision of the Secretary of State refusing planning permission for residential development. The claimant was successful on a number of grounds, including that the Secretary of State had wrongly rejected, without giving adequate reasons, a proposed condition requiring local firms to be used for the development and a proposed condition requiring local procurement as part of the proposed development. However, there was no issue regarding whether these conditions sufficiently related to the proposed use of the land. It seems to have been common ground that they did. Rather, the grounds of challenge were analysed in relation to the distinct question whether there was a sufficient policy basis on which these conditions could be said to be material considerations. It was in relation to that question that the judge had regard to national policy in the NPPF and the development plan regarding sustainable economic development: see paras 92 98 and 108 114, respectively. The two conditions were potentially material in terms of policy, and the Secretary of State had not given adequate reasons to explain why he had rejected them. Finally, Mr Kingston relied on R (Working Title Films Ltd) v Westminster City Council [2016] EWHC 1855 (Admin). This concerned a challenge to the grant of planning permission for erection of a building for mixed uses, including the provision within it of a community hall in accordance with a planning obligation undertaken by the developer. A ground of challenge relied on was that the local planning authority was wrong to have had regard to the community benefit from provision of the community hall as something which compensated for under provision of affordable housing in the residential part of the development. The judge rejected the challenge, holding that this was a planning judgment which the authority was entitled to make: para 25. Again, the case provides no support for Mr Kingstons submission. The planning obligation clearly related to the use of the land, and this was not in issue. The discussion related to the policy justification for accepting such a planning obligation. Conclusion For the reasons given above, I would dismiss this appeal. I would resist Mr Kimblins invitation on behalf of the Secretary of State that we should update Newbury. In deciding to grant planning permission for the development, the Council relied on matters which do not qualify as material considerations for the purposes of section 70(2) of the 1990 Act and section 38(6) of the 2004 Act. That means that the grant of planning permission has rightly been quashed. It is unnecessary to give separate consideration to condition 28. The imposition of that condition cannot make an immaterial consideration into a material consideration within the meaning of the statutory provisions. |
These two cases raise a number of important issues in relation to the detention pending deportation of foreign national prisoners (FNPs) following the completion of their sentences of imprisonment. Section 3(5)(a) of the Immigration Act 1971 (the 1971 Act) provides that a person who is not a British citizen is liable to deportation from the United Kingdom if the Secretary of State deems his deportation to be conducive to the public good. Schedule 3 to the 1971 Act provides in certain specified circumstances for the detention of such a person pending his deportation. Walumba Lumba is a citizen of the Democratic Republic of Congo (DRC) who entered the UK on 10 April 1994. He was convicted of a number of offences culminating in an offence of wounding with intent for which he was sentenced to 4 years imprisonment on 12 January 2004. On 3 April 2006, the Secretary of State informed Mr Lumba of his intention to deport him under section 3(5)(a) of the 1971 Act. He was due to be released from prison on 23 June 2006, but by letter dated 22 June 2006 was notified that he was to be detained pending deportation. He left the United Kingdom voluntarily on 13 February 2011. Kadian Mighty is a citizen of Jamaica. He arrived in the United Kingdom on 4 December 1992 and was given 6 months leave to enter as a visitor. Thereafter, he made various unsuccessful applications for leave to remain. On 10 February 2003, however, he was granted indefinite leave to remain. He had been convicted of a number of offences, including possession of a Class A drug with intent to supply, for which on 27 June 2003, he was sentenced to 42 months imprisonment. Following his release on licence, he committed a driving offence and was recalled to prison. He was finally released on 31 March 2006. On 10 May 2006, the Secretary of State informed Mr Mighty of his intention to deport him under section 3(5)(a) of the 1971 Act. On 19 May 2006, he was detained pending deportation because he was likely to abscond and his release was not conducive to the public good. He was released on bail on 28 July 2008. Schedule 3 of the 1971 Act provides, so far as material: 2. (1) Where a recommendation for deportation made by a court is in force in respect of any person, and that person is not detained in pursuance of the sentence or order of any court, he shall, unless the court by which the recommendation is made otherwise directs, or a direction is given under sub paragraph (1A) below, be detained pending the making of a deportation order in pursuance of the recommendation, unless the Secretary of State directs him to be released pending further consideration of his case or he is released on bail. (1A) Where (a) a recommendation for deportation made by a court on conviction of a person is in force in respect of him; and (b) he appeals against his conviction or against that recommendation, the powers that the court determining the appeal may exercise include power to direct him to be released without setting aside the recommendation. (2) Where notice has been given to a person in accordance with regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 (notice of decision) of a decision to make a deportation order against him, and he is not detained in pursuance of the sentence or order of a court, he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise). Between April 2006 and 9 September 2008, the Secretary of States published policy on detention of FNPs under her immigration powers was that there was a presumption in favour of release, although detention could be justified in some circumstances. In fact, during this period the Secretary of State applied a quite different unpublished policy which was described as a near blanket ban by the Secretary of State, Ms Jacqui Smith, to the Prime Minister, Gordon Brown, on 19 September 2007 in a document entitled Bail Proposal for Foreign National Prisoners in which she said: Since April 2006, the BIA [(the Border and Immigration Agency)] has been applying a near blanket ban on release, regardless of whether removal can be achieved and the level of risk to the public linked to the nature of the FNPs original offence. By currently having no discretion to grant bail, the BIA has to regularly transfer FNPs around the Estate. On 9 September 2008, the Secretary of State published a policy which included a presumption of detention and withdrew all references to a presumption of release. On 22 January 2009, following the decision of Davis J in the current proceedings, this policy was amended again to omit the reference to a presumption of detention and substitute a policy in favour of release from detention. It will be necessary to describe the policies and practices adopted from time to time in more detail later in this judgment. The proceedings Mr Lumba issued proceedings on 18 October 2007. He challenged the lawfulness of his detention on the grounds that he was no longer being detained pending deportation and that his continued detention was in breach of the principles stated by Woolf J in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704 (the Hardial Singh principles). He also claimed a declaration that his detention was unlawful, a mandatory order that he be released and damages. On 4 July 2008, Collins J gave an interlocutory judgment on part of the claim: [2008] EWHC 2090 (Admin). He did not make a decision in relation to Mr Lumbas past detention and reserved for a further hearing inter alia the questions of whether the operation of an unpublished policy had been unlawful and the past detention had been unlawful as a consequence. On 28 July 2008, Mr Lumbas claim was joined to four other cases in which the same points arose. One of these was the claim of Mr Mighty which had been issued on 29 May 2008. The five cases were heard by Davis J on 11 14 November 2008. In an impressive judgment given on 19 December 2008 [2008] EWHC 3166 (Admin), he granted the claimants declarations that (i) paragraph 2 of Schedule 3 to the 1971 Act prohibits the Secretary of State from operating any policy in relation to the detention of FNPs which contains a presumption in favour of detention and (ii) it was unlawful for the Secretary of State to operate the policy introduced in April 2006 in that it was not sufficiently published or accessible until its publication on 9 September 2008. He dismissed the other claims, in particular the claims for damages for unlawful detention. The appellants appealed and the Secretary of State cross appealed against the first declaration. In a judgment of the court delivered by Stanley Burnton LJ, the Court of Appeal (Lord Neuberger MR, Carnwath and Stanley Burnton LJJ) ([2010] 1 WLR 2168) allowed the cross appeal and set aside the first declaration. They also varied the second declaration. Otherwise the appeals were dismissed. The issues The principal issues are as follows. (i) Were the detention policies that were applied to the appellants after April 2006 unlawful because (a) they were blanket policies (para 21 below) and/or (b) they were inconsistent with the published policies (para 26 below) and/or (c) they were not published policies (paras 27 38 below) and/or (d) they contained a presumption in favour of detention (paras 40 55 below)? (ii) If unlawful policies were applied to the appellants, was their detention unlawful in consequence (paras 56 89)? (iii) If their detention was unlawful, are the appellants entitled to more than nominal damages (paras 90 101 below)? (iv) Is Mr Lumba entitled to damages for unlawful detention on the grounds that, in his case, there has been a breach of the Hardial Singh principles? (paras 102 148 below) (v) Are the appellants entitled to an award of exemplary damages (paras 150 168 below)? The policies in more detail The published policies The presumption of release had been entrenched in the Secretary of States published policies since at least 1991. It appeared in the White Paper Fairer, Faster and Firmer: a Modern Approach to Immigration and Asylum (1998) (Cm 4018), which was published in 1998 and again in 2002 in the White Paper Secure Borders, Safe Haven: Integration Diversity in Modern Britain (2002) (Cm 5387) which stated at para 4.76: Our 1998 White paper set out the criteria by which Immigration Act powers of detention were exercised and confirmed that the starting point in all cases was a presumption in favour of granting temporary admission or release. The criteria were modified in March 2000 to include detention at Oakington Reception Centre if it appeared that a claimants asylum application could be decided quickly. The modified criteria and the general presumption remain in place. Chapter 38 of the Operational Enforcement Manual (OEM), which was a published document in force until April 2008, stated in its introductory section that the 1998 White Paper confirmed that there was a presumption in favour of temporary admission or release and that, whenever possible, we would use alternatives to detention. Para 38.3 stated: 1. There is a presumption in favour of temporary admission or temporary release. 2. There must be strong grounds for believing that a person will not comply with conditions of temporary admission or temporary release for detention to be justified. 3. All reasonable alternatives to detention must be considered before detention is authorised. Identical wording was contained in Chapter 55 of the Enforcement Instructions and Guidance (EIG) which replaced Chapter 38 of the OEM and came into force on 19 June 2008. On 9 September 2008, Chapter 55 of the EIG was amended. With regard to FNPs, para 55.1.2 stated: Due to the clear imperative to protect the public from harm and the particular risk of absconding in these cases, the presumption in favour of temporary admission or temporary release does not apply where the deportation criteria are met. Instead the person will normally be detained, provided detention is, and continues to be lawful. The EIG then gave guidance to caseworkers as to the factors which might make further detention unlawful. In particular, it stated that the presumption of detention will be displaced where legally the person cannot or can no longer be detained because detention would exceed the period reasonably necessary for the purpose of removal. Following the decision of Davis J in the current proceedings, on 22 January 2009 this policy was changed again so as to replace a presumption in favour of detention with a presumption in favour of release from detention. The unpublished policies The true picture during the period from April 2006 until September 2008 was very different. Following the public disclosure on 25 April 2006 that 1,013 FNPs had been released from prison before consideration had been given to the question of whether they should have been deported, the Secretary of State adopted a new policy which he did not publish. I have already referred at para 5 above to the description of it contained in the 19 September 2007 Bail Proposal as a near blanket ban. The policy of blanket detention admitted of exceptions only on compassionate grounds. No formal guidance was given to caseworkers to give effect to this policy until on 8 November 2007 they were issued with a document (known as Cullen 1) which set out criteria and guidance for the identification and release of FNPs who were considered to pose the lowest risks to the public and the lowest risks of absconding. Cullen 1 was not published to the outside world. It led at most to the release of a handful of FNPs. In March 2008, an amended guidance document (known as Cullen 2) was issued to the caseworkers. It too was not published to the outside world. Attached to Cullen 1 and Cullen 2 was an extensive list of offences entitled List of recorded crimes where release from immigration detention or at the end of custody will not be appropriate. In practice, almost all FNPs who had been sentenced to imprisonment were likely to have committed one or more of such offences. Both Mr Lumba and Mr Mighty had done so. The evidence of David Wood, Strategic Director of the Criminality and Detention Group, was that between December 2006 and July 2008, 15 FNPs were released from detention. On 22 May 2008, the existence of an unpublished policy or practice was belatedly disclosed by the Secretary of State to Mitting J after he had given judgment in the case of R (Ashori) v Secretary of State for the Home Department [2008] EWHC 1460 (Admin). More detail as to the circumstances in which the policy came to be disclosed is given by Davis J at paras 21 to 26 of his judgment. The unpublished policies were applied to Mr Lumba and Mr Mighty It is now common ground that the unpublished policies were applied to the two appellants throughout their detention. It is, therefore, unnecessary to consider para 203 of the judgment of Davis J (where the judge stated that there was nothing to show that Mr Lumba was detained by application of the unpublished policy) or para 100 of the judgment of the Court of Appeal which upheld Davis J on this point. Were these policies unlawful? Here too, there is little dispute between the parties. Mr Beloff QC rightly accepts as correct three propositions in relation to a policy. First, it must not be a blanket policy admitting of no possibility of exceptions. Secondly, if unpublished, it must not be inconsistent with any published policy. Thirdly, it should be published if it will inform discretionary decisions in respect of which the potential object of those decisions has a right to make representations. As regards the first of these propositions, it is a well established principle of public law that a policy should not be so rigid as to amount to a fetter on the discretion of decision makers. Davis J held that the unpublished policy was not a blanket policy. The Court of Appeal disagreed. Basing themselves on the review by David Wood of the failure to publish a revised FNP detention policy following the April 2006 crisis approved on 3 August 2009, the Court of Appeal concluded that the policy, as applied at least from the time of Cullen 1 in November 2007, effectively operated on a blanket basis rather than (as held by the judge) one of presumption. I agree with this assessment by the Court of Appeal but would go further. It seems clear to me that a blanket policy was also applied from April 2006 until the introduction of Cullen 1 in November 2007. During this earlier period, the only exceptions made to the policy of universal detention were on compassionate grounds and these were few and far between. Importantly, there were no releases on the basis of Hardial Singh principles. Indeed, Cullen 1 represented a modest relaxation of the previous position. It is convenient to introduce the Hardial Singh principles at this stage, since they infuse much of the debate on the issues that arise on this appeal. It is common ground that my statement in R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888, [2003] INLR 196 para 46 correctly encapsulates the principles as follows: (i) The Secretary of State must intend to deport the person and can only use the power to detain for that purpose; (ii) The deportee may only be detained for a period that is reasonable in all the circumstances; (iii) If, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within a reasonable period, he should not seek to exercise the power of detention; (iv) The Secretary of State should act with reasonable diligence and expedition to effect removal. Lord Phillips says that the first two of these principles cannot properly be derived from Hardial Singh. Since their correctness has not been put in issue by the parties to these appeals, I propose to deal with the points shortly. As regards the first principle, I consider that Woolf J was saying unambiguously that the detention must be for the purpose of facilitating the deportation. The passage quoted by Lord Phillips includes the following: as the power is given in order to enable the machinery of deportation to be carried out I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose(emphasis added). The first principle is plainly derived from what Woolf J said. As for the second principle, in my view this too is properly derived from Hardial Singh. Woolf J said that (i) the power of detention is limited to a period reasonably necessary for the purpose (as I would say) of facilitating deportation; (ii) what is reasonable depends on the circumstances of the particular case; and (iii) the power to detain ceases where it is apparent that deportation will not be possible within a reasonable period. It is clear at least from (iii) that Woolf J was not saying that a person can be detained indefinitely provided that the Secretary of State is doing all she reasonably can to effect the deportation. It seems to me that, in relation to both the first and second principles, Lord Phillips is suggesting a different interpretation of paragraph 2(3) of Schedule 3 to the 1971 Act from that enunciated by Woolf J. I do not agree with this interpretation. But what is perhaps of more importance in the context of these appeals is that in my view it is not appropriate to depart from a decision which has been followed repeatedly for almost 30 years unless it is obviously wrong (which I do not believe to be the case), still less to do so without the benefit of adversarial argument. As regards the second proposition accepted by Mr Beloff, a decision maker must follow his published policy (and not some different unpublished policy) unless there are good reasons for not doing so. The principle that policy must be consistently applied is not in doubt: see Wade and Forsyth Administrative Law, 10th ed (2009) p 316. As it is put in De Smiths Judicial Review, 6th ed (2007) at para 12 039: there is an independent duty of consistent application of policies, which is based on the principle of equal implementation of laws, non discrimination and the lack of arbitrariness. The decision of the Court of Appeal in R (Nadarajah) v Secretary of State for the Home Department [2003] EWCA Civ 1768, [2004] INLR 139 is a good illustration of the principle. At para 68, Lord Phillips MR, giving the judgment of the court, said that the Secretary of State could not rely on an aspect of his unpublished policy to render lawful that which was at odds with his published policy. As for the third proposition, the Court of Appeal dealt with the issue of whether there is a general rule of law that policies must be published at paras 70 to 79 of their judgment. Disagreeing with Davis J, they concluded that there is no such general rule and said that the fact that the appellants were detained pursuant to unpublished policies was not in itself a reason for holding that the decisions to detain them were unlawful. Mr Beloff did not feel able to support this conclusion. It is unfortunate that the Court of Appeal embarked on this topic at all, since it was not before them and was not, therefore, the subject of argument or citation of authority. As the point is of general importance, I need to say why in my view the judge was right and the Court of Appeal were wrong on this issue both as a matter of common law and ECHR law. The Court of Appeal referred to a statement of Sedley LJ in R v Secretary of State for Education and Employment Ex P Begbie [2000] 1 WLR 1115, 1132C that there were cogent objections to the operation of undisclosed policies affecting individuals entitlements or expectations and said at para 72 that they had no difficulty in accepting this as (no more than) a statement of good administrative practice. They also said that the judge was wrong to rely on Sunday Times v United Kingdom (1979) 2 EHRR 245 and criticised the reasoning in Nadarajah at paras 64 67 which relied on the Sunday Times case in support of the proposition that a relevant policy is part of the law that must be accessible, so as to enable those affected by it reasonably to foresee the consequences of their actions. At para 73, they said that the relevant passage in the judgment of the ECtHR at para 49 of the judgment in the Sunday Times case is not, as we read it, about policy as such, but is rather directed to the need for accessibility and precision, as requirements of law in the strict sense. They went on to say that, in the present context, the requirement for an accessible and precise statement of the relevant law is satisfied by paragraph 2 of Schedule 3 to the 1971 Act, taken with the Hardial Singh guidelines. In short, policy is not the same as law (para 57). In support for their conclusion, they referred to what Laws LJ said in R (SK Zimbabwe) v Secretary of State for the Home Department [2008] EWCA Civ 1204; [2009] 1 WLR 1527, para 33. In that case, the Secretary of State had failed to carry out regular reviews following detention, as required by the Detention Centre Rules. As regards the requirement that any deprivation of liberty be in accordance with a procedure prescribed by law in article 5(1) of the ECHR, Laws LJ said that this was to ensure that any interference is not random and arbitrary, but governed by clear pre existing rules. He continued: Here the rules are the Hardial Singh principles. Their fulfilment in any given case saves a detention from the vice of arbitrariness. A system of regular monitoring is, no doubt, a highly desirable means of seeing that the principles are indeed fulfilled. But it is not itself one of those principles. But all that the Hardial Singh principles do is that which article 5(1)(f) does: they require that the power to detain be exercised reasonably and for the prescribed purpose of facilitating deportation. The requirements of the 1971 Act and the Hardial Singh principles are not the only applicable law. Indeed, as Mr Fordham QC points out, the Hardial Singh principles reflect the basic public law duties to act consistently with the statutory purpose (Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997, 1030B D) and reasonably in the Wednesbury sense (Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223). But they are not exhaustive. If they were exhaustive, there could be no room for the public law duty of adherence to published policy, which was rightly acknowledged by the Court of Appeal at paras 51, 52 and 58 of their judgment. I therefore accept the submission of Mr Husain QC and Mr Fordham that the Court of Appeals criticisms of Nadarajah were misplaced. I should interpolate that there is in any event an obvious difference between rules which require the review of a detention to be undertaken at prescribed intervals and rules which prescribe the criteria by which a person is to be released or to be subjected to continuing detention. The fact that a policy states that only persons of a specified category will be considered for release is at least as substantively important as the Hardial Singh principles which determine, for example, that a person may not be detained for an unreasonable period. There is further support in the ECtHR jurisprudence for the proposition that paragraph 2 of Schedule 3 to the 1971 Act and the Hardial Singh principles are not exhaustive of the law. In Medvedyev v France (Appln no 3394/03, 29 March 2010), the Grand Chamber said at para 80: where deprivation of liberty is concerned it is particularly important that the general principle of legal certainty be satisfied. It is therefore essential that the conditions for deprivation of liberty under domestic and/or international law be clearly defined. The case of Gillan v United Kingdom (2010) 50 EHRR 45 concerned the stop and search powers conferred on the police by the Terrorism Act 2000. For present purposes, the relevant issue was whether the powers were in accordance with the law within the meaning of article 8(2) of the ECHR. A Code of Practice was issued by the Secretary of State to guide police officers in the exercise of their powers of stop and search. The ECtHR said: 77Consequently, the law must indicate with sufficient clarity the scope of any such discretion conferred on the competent authorities and the manner of its exercise. The level of precision required of domestic legislation which cannot in any case provide for every eventuality depends to a considerable degree on the content of the instrument in question, the field it is designed to cover and the number and status of those to whom it is addressed. The ECtHR noted at para 83 that the Code of Practice governs essentially the mode in which the stop and search is carried out, rather than providing any restriction on the officers decision to stop and search. That decision is, as the House of Lords made clear, one based exclusively on the hunch or professional intuition of the officer concerned. In the opinion of the court, there was a clear risk of arbitrariness in the grant of such a broad discretion to the police officer. At para 87, they concluded that, despite the existence of the Code of Practice, the statutory powers were not in accordance with the law because they were neither sufficiently circumscribed nor subject to adequate legal safeguards against abuse. The rule of law calls for a transparent statement by the executive of the circumstances in which the broad statutory criteria will be exercised. Just as arrest and surveillance powers need to be transparently identified through codes of practice and immigration powers need to be transparently identified through the immigration rules, so too the immigration detention powers need to be transparently identified through formulated policy statements. The individual has a basic public law right to have his or her case considered under whatever policy the executive sees fit to adopt provided that the adopted policy is a lawful exercise of the discretion conferred by the statute: see In re Findlay [1985] AC 318, 338E. There is a correlative right to know what that currently existing policy is, so that the individual can make relevant representations in relation to it. In R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36, [2004] 1 AC 604, para 26 Lord Steyn said: Notice of a decision is required before it can have the character of a determination with legal effect because the individual concerned must be in a position to challenge the decision in the courts if he or she wishes to do so. This is not a technical rule. It is simply an application of the right of access to justice. Precisely the same is true of a detention policy. Notice is required so that the individual knows the criteria that are being applied and is able to challenge an adverse decision. I would endorse the statement made by Stanley Burnton J in R (Salih) v Secretary of State for the Home Department [2003] EWHC 2273 at para 52 that it is in general inconsistent with the constitutional imperative that statute law be made known for the government to withhold information about its policy relating to the exercise of a power conferred by statute. At para 72 of the judgment of the Court of Appeal in the present case, this statement was distinguished on the basis that it was made in the quite different context of the Secretary of States decision to withhold from the individuals concerned an internal policy relating to a statutory scheme designed for their benefit. This is not a satisfactory ground of distinction. The terms of a scheme which imposes penalties or other detriments are at least as important as one which confers benefits. As Mr Fordham puts it: why should it be impermissible to keep secret a policy of compensating those who have been unlawfully detained, but permissible to keep secret a policy which prescribes the criteria for their detention in the first place? There was a real need to publish the detention policies in the present context. As Mr Husain points out, the Cullen policies provided that certain non serious offenders could be considered for release. The failure to publish these policies meant that individuals who may have been wrongly assessed as having committed a crime that rendered them ineligible for release would remain detained, when in fact, had the policy been published, representations could have been made that they had a case for release. The precise extent of how much detail of a policy is required to be disclosed was the subject of some debate before us. It is not practicable to attempt an exhaustive definition. It is common ground that there is no obligation to publish drafts when a policy is evolving and that there might be compelling reasons not to publish some policies, for example, where national security issues are in play. Nor is it necessary to publish details which are irrelevant to the substance of decisions made pursuant to the policy. What must, however, be published is that which a person who is affected by the operation of the policy needs to know in order to make informed and meaningful representations to the decision maker before a decision is made. For all these reasons, the policies which were applied to Mr Lumba and Mr Mighty were unlawful. But Mr Husain submits (with the support of Mr Rabinder Singh QC and Mr Fordham) that the policies were also unlawful because they included a presumption of detention. Presumption of detention Davis J held at paras 114 to 116 of his judgment that the provisions of paragraph 2 of Schedule 3 to the 1971 Act operate to prevent the Secretary of State from operating a policy of a presumption in favour of detention of FNPs pending deportation. He applied R (Sedrati) v Secretary of State for the Home Department [2001] EWHC 210 (Admin) in which, by consent, Moses J had granted a declaration that the terms of paragraph 2 of Schedule 3 do not create a presumption in favour of detention upon completion of the sentence. On the Secretary of States cross appeal against the declaration, the Court of Appeal said at para 65: . . there is no reason in principle why paragraph 2.1 of Schedule 3 to the 1971 Act, which clearly does require continued detention unless the Secretary of State otherwise orders (i.e. a presumption of detention), should not be construed as a presumption of detention pending deportation. Equally, the Secretary of State may lawfully adopt a policy for the purposes of paragraph 2(2) or (3) that involves a presumption. A presumption that those who have committed serious crimes (e.g. most of those listed in Cullen 1 and 2) should be detained is unobjectionable. They went on at para 66 to say that for these reasons the declaration granted by Moses J was wrong and allowed the Secretary of States cross appeal. Mr Husain, supported by Mr Singh and Mr Fordham, say that the judge was right and the Court of Appeal wrong on this issue. The primary case advanced by Mr Husain is that the policy that was applied between April 2006 and September 2008 was not properly described as a presumptive policy at all, but rather was a blanket policy. But whether that is right or not, Mr Lumba continued to be detained between September 2008 (when the Secretary of State published a policy in favour of detention) and 22 January 2009 (when the order of Davis J was implemented). It follows that even if, as I have accepted, the Court of Appeal was justified in holding that the policy was a blanket policy until September 2008, the presumption of liberty issue is of more than academic interest in this appeal. It is important at the outset to define clearly what a presumption means in this context. It is the Secretary of States case that paragraph 2 of Schedule 3 to the 1971 Act permits the operation of a policy in which she states that a FNP will normally be detained in certain prescribed circumstances. Such a policy serves as a guide to the caseworkers who make the decisions on the ground and as an indication to the FNPs of what they can normally expect in the circumstances specified in the policy. I shall refer to such a policy as normal practice. It need not, and usually does not say anything about the burden of proof. Normal practice is to be distinguished from presumptions in the strict sense. Phipson on Evidence 17th ed (2009) at 6 16 to 6 31 categorises presumptions in this sense into rebuttable presumptions of law, irrebuttable presumptions of law and rebuttable presumptions of fact. Such a presumption usually regulates the burden of proof in legal proceedings. Thus, a presumption that a deprivation of liberty is unlawful regulates the burden of proof in relation to that issue: the burden is on the detainer to show that there was a power to detain. I shall refer to a presumption in the strict sense as a legal presumption. The distinction between normal practice and a legal presumption is fundamental to the present issue. The fact that in legal proceedings the burden of proving a certain issue is allocated to one party rather than the other does not assist in deciding whether the Secretary of State may, in principle, lawfully give guidance that when certain factors are present, the decision should normally be to detain. This distinction was not articulated in the courts below. A further preliminary point needs to be made. The legality of a decision may be considered at two stages: first at the administrative stage when the decision is taken and secondly, if the decision is challenged, at the stage of legal proceedings. At the administrative stage, the individual against whom the decision is taken often plays no part. It is not appropriate to talk of a burden of proof at this stage: see, for example, R v Lichniak [2003] 1 AC 903 at para 16 per Lord Bingham. At the stage of legal proceedings, the Secretary of State rightly accepts that the burden of proof is on her to justify the detention. This has long been established: Allen v Wright (1838) 8 C & P 522 and Lord Atkins dissenting speech in Liversidge v Anderson [1942] AC 206, 245 every detention is prima facie unlawful and that it is for a person directing imprisonment to justify his act. Mr Husain submits that there is a presumption of liberty both under the jurisprudence of the ECtHR or at common law. I shall start with the jurisprudence on article 5 of the ECHR which Mr Husain submits establishes that there is such a presumption. He refers to Ilijkov v Bulgaria (Application No 33977/96) (unreported) 26 July 2001 where the ECtHR said: 84. The court reiterates that continued detention can be justified in a given case only if there are specific indications of a genuine requirement of public interest which, notwithstanding the presumption of innocence, outweighs the rule of respect for individual liberty. Any system of mandatory detention on remand is per se incompatible with article 5(3) of the Convention. Where the law provides for a presumption in respect of factors relevant to the grounds for continued detention. the existence of the concrete facts outweighing the rule of respect for individual liberty must be nevertheless convincingly demonstrated. 85. Moreover, the court considers that it was incumbent on the authorities to establish those relevant facts. Shifting the burden of proof to the detained person in such matters is tantamount to overturning the rule of article 5 of the Convention, a provision which makes detention an exceptional departure from the right to liberty and one that is only permissible in exhaustively enumerated and strictly defined cases. This was a decision in relation to an alleged violation of article 5(3) which provides: Everyone arrested or detained in accordance with the provisions of paragraph 1(c) of this article shall be brought promptly before a judge or other officer authorised by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release pending trial. Mr Husain submits that, although these principles were articulated in the context of detention pending trial, they are more widely applicable as expressions of the right to liberty protected by article 5: see also Bykov v Russia (Application No 4378/02, 10 March 2009) at para 61 and Bordikov v Russia (Application no 921/03, 9 October 2009) at para 88. However, these cases only concern legal presumptions that regulate burdens of proof in legal proceedings. They are not concerned with normal practice contained in a policy of the kind with which these appeals are concerned. In Ilijkov, the national courts rejected a series of applications for bail pending trial. They did so relying on the Bulgarian Code of Criminal Procedure, which provided that, for certain crimes, detention on remand was mandatory in the absence of exceptional circumstances. The ECtHR held that the initial decision to detain was lawful, but that the continuing application of the presumption of detention by the national judicial authorities was unlawful (paras 78 9 and 87). The case was not concerned with the lawfulness of any decision to detain taken at an administrative stage. It is clear from para 84 of the judgment that the court held that there was a breach of article 5(3). There is, however, no provision in article 5(1)(f) corresponding with article 5(3) and there is nothing to indicate that the court intended its ruling in relation to article 5(1)(c) and 5(3) to apply to article 5(1)(f). The decisions in Bykov and Bordikov do not advance the argument. Para 61 of the judgment in Bykov merely reiterates what the court has repeatedly said in relation to article 5(3). The reference to the presumption of release under article 5 is a reference to the second limb of article 5(3). The case is concerned with the decisions of judicial authorities and not administrative decision makers. Similarly, para 88 of the judgment in Bordikov makes it clear that the court in that case too was only concerned with the decisions of the courts. The principal ECtHR authority on article 5(1)(f) is Saadi v UK (2008) 47 EHRR 427. The applicant sought judicial review of the decision to detain him for a short period while his asylum claim was being subject to fast track processing. The decision was made pursuant to a policy under which all asylum claimants falling within defined criteria (usually by nationality) were normally detained at Oakington while their claims were determined in an accelerated process. This was a normal practice case and not a case about legal presumptions. The ECtHR held inter alia that deprivation of liberty must not be arbitrary. It must comply with the substantive and procedural rules of national law and the detention must be in good faith. At para 69, the court said: The condition that there be no arbitrariness further demands that both the order to detain and the execution of the detention must genuinely conform with the purpose of the restrictions permitted by the relevant sub paragraph of article 5(1). There must in addition be some relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention. And at para 72: Similarly, where a person has been detained under article 5(1)(f), the Grand Chamber, interpreting the second limb of this sub paragraph, held that, as long as a person was being detained with a view to deportation, that is, as long as action [was] being taken with a view to deportation, there was no requirement that the detention be reasonably considered necessary, for example, to prevent the person concerned from committing an offence or fleeing. The Grand Chamber further held in Chahal (1997) 23 EHRR 413 that the principle of proportionality applied to detention under article 5(1)(f) only to the extent that the detention should not continue for an unreasonable length of time It was this statement which led the Court of Appeal to conclude at para 62 that a national law that authorises detention with a view to deportation may be compatible with article 5 even if it imposes a presumption of detention pending deportation. It is not clear in what sense the Court of Appeal was using the phrase presumption of detention in this passage. But if it is construed as a reference to normal practice, I agree with it, provided that it requires the Government to justify the detention with reasons that are closely connected to the statutory purpose of effecting deportation. I turn to the position at common law. It is not in dispute that the right to liberty is of fundamental importance and that the courts should strictly and narrowly construe general statutory powers whose exercise restricts fundamental common law rights and/or constitutes the commission of a tort. The Court of Appeal said at para 63 that there is no rule of our domestic law that precludes the application of a presumption in favour of detention pending deportation, subject, of course, to the limitations in Ex P Hardial Singh [1984] 1 WLR 704, none of which involves consideration of risk of reoffending or absconding. Such risks, they said, are relevant to the reasonableness of the period during which it is lawful to detain a FNP, but the absence of such a risk does not of itself render detention unlawful. If by presumption in favour of detention the Court of Appeal meant the normal practice as to the circumstances in which a FNP will be detained, then I would agree with them, provided that it is understood that (i) the Hardial Singh principles are observed and (ii) each case is considered individually. The Court of Appeal set aside the declaration granted by Davis J. They were right to do so. For the reasons I have given, it is lawful for the Secretary of State to operate a policy which sets out the practice that she will normally follow in deciding whether or not to detain FNPs pending their deportation provided that the criteria that I have set out at para 53 above are satisfied. Such a policy is not prohibited by paragraph 2 of Schedule 3 to the 1971 Act. The Court of Appeal also held at para 66 that the declaration granted by Moses J in Sedrati [2001] EWHC Admin 418 was wrong in law. I find this somewhat puzzling. The declaration stated that the terms of paragraph 2 of Schedule 3 do not create a presumption in favour of detention. Whatever the position may be in relation to paragraph 2(1) and the parenthesis in paragraph 2(3), paragraph 2(2) and the remainder of paragraph 2(3) do not create any presumption at all. They simply give the Secretary of State a discretion to detain. In relation to paragraph 2(2) and (3), therefore, so far as it goes, the declaration granted by Moses J is correct. Were the detentions unlawful? In summary, the appellants case is that their claims in false imprisonment should have succeeded: the Secretary of States unlawful unpublished policy which operated between April 2006 and September 2008 influenced the initial decisions to detain them and the subsequent decisions to continue to detain them. Davis J accepted the argument advanced on behalf of the Secretary of State that, where the unlawful policy was of no causative effect because the claimants could and would have been lawfully detained if the published policy had been applied, their detention was not unlawful. The Court of Appeal agreed. They distinguished Christie v Leachinsky [1947] AC 573 and Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 on the footing that in those cases there was no lawful authority to detain the plaintiff. In the present case, however, they said at para 87: there is no doubt that the statutory powers relied on by the Secretary of State were apt for the purpose, and the case is not based on the breach of any specific regulation on which the legality of detention was dependent. Rather it is about the manner in which the power was exercised. And at para 89: The mere existence of an internal, unpublished policy or practice at variance with, and more disadvantageous to the FNP than, the published policy will not render a decision to detain unlawful. It must be shown that the unpublished policy was applied to him. Even then, it must be shown that the application of the policy was material to the decision. If the decision to detain him was inevitable, the application of the policy is immaterial, and the decision is not liable to be set aside as unlawful. In short, since Mr Lumba and Mr Mighty would inevitably have been detained even if the published policy had been applied to them, their detentions were lawful. The court therefore applied what it is convenient to call the causation test. Davis J and the Court of Appeal were right to hold that the detention of the appellants would have been inevitable in the light of the risk of absconding and re offending that they both posed. This appeal therefore raises the important question of whether it was right to apply the causation test and for that reason to hold that the detentions were lawful. A somewhat similar problem arose in R (SK Zimbabwe) v Secretary of State for the Home Department. In that case the unlawfulness lay in the failure of the Secretary of State to comply with her policy which prescribed the procedural requirements for reviews of FNPs who are already in detention. The present case concerns the substantive requirements for the initial detention of FNPs as well as their continued detention. What follows is to a considerable extent based on the submissions of Mr Husain. The introduction of a causation test in the tort of false imprisonment is contrary to principle both as a matter of the law of trespass to the person and as a matter of administrative law. Neither body of law recognises any defence of causation so as to render lawful what is in fact an unlawful authority to detain, by reference to how the executive could and would have acted if it had acted lawfully, as opposed to how it did in fact act. The causation test entails the surprising proposition that the detention of a person pursuant to a decision which is vitiated by a public law error is nevertheless to be regarded as having been lawfully authorised because a decision to detain could have been made which was not so vitiated. In my view, the law of false imprisonment does not permit history to be rewritten in this way. The Court of Appeal were right to say at para 89 that the mere existence of an unlawful policy is not sufficient to establish that any particular exercise of a statutory discretion is unlawful. The decision to detain and/or continue detention will not be vitiated on the grounds of an unlawful policy unless the policy has been applied or at least taken into account by the decision maker. But this does not shed any light on the correctness of the causation test. Trespassory torts (such as false imprisonment) are actionable per se regardless of whether the victim suffers any harm. An action lies even if the victim does not know that he was imprisoned: see, for example, Murray v Ministry of Defence [1988] 1 WLR 692, 703A where Lord Griffiths refused to redefine the tort of false imprisonment so as to require knowledge of the confinement or harm because The law attaches supreme importance to the liberty of the individual and if he suffers a wrongful interference with that liberty it should remain actionable even without proof of special damage. By contrast, an action on the case (of which a claim in negligence is the paradigm example) regards damage as the essence of the wrong. All this is elementary, but it needs to be articulated since it demonstrates that there is no place for a causation test here. All that a claimant has to prove in order to establish false imprisonment is that he was directly and intentionally imprisoned by the defendant, whereupon the burden shifts to the defendant to show that there was lawful justification for doing so. As Lord Bridge said in R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58, 162C D: The tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it. The causation test shifts the focus of the tort on to the question of how the defendant would have acted on the hypothesis of a lawful self direction, rather than on the claimants right not in fact to be unlawfully detained. There is no warrant for this. A purported lawful authority to detain may be impugned either because the defendant acted in excess of jurisdiction (in the narrow sense of jurisdiction) or because such jurisdiction was wrongly exercised. Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 established that both species of error render an executive act ultra vires, unlawful and a nullity. In the present context, there is in principle no difference between (i) a detention which is unlawful because there was no statutory power to detain and (ii) a detention which is unlawful because the decision to detain, although authorised by statute, was made in breach of a rule of public law. For example, if the decision to detain is unreasonable in the Wednesbury sense, it is unlawful and a nullity. The importance of Anisminic is that it established that there was a single category of errors of law, all of which rendered a decision ultra vires: see Boddington v British Transport Police [1999] 2 AC 143, 158D E. Mr Beloff submits that there are inherent problems in what I consider to be the correct and principled approach. First, it fails to take account of the nature or extent of the public law error. For example, he suggests that it treats for the purposes of liability as equally unlawful a decision to detain made by an official one grade lower than that specified in the detention policy (but which is otherwise unimpeachable) and a decision to detain for which there is no statutory authority at all. Secondly, it allows what is in essence a public law challenge to be made under the guise of a private law action without any of the procedural safeguards which apply in a judicial review application. In particular, the normal time limits for judicial review proceedings are circumvented. Thirdly, judicial review is a discretionary remedy. A minor public law error may result in no substantive relief being granted at all in judicial review proceedings, whereas a claimant can bring proceedings for false imprisonment as of right. I do not consider that these arguments undermine what I have referred to as the correct and principled approach. As regards Mr Beloffs first point, the error must be one which is material in public law terms. It is not every breach of public law that is sufficient to give rise to a cause of action in false imprisonment. In the present context, the breach of public law must bear on and be relevant to the decision to detain. Thus, for example, a decision to detain made by an official of a different grade from that specified in a detention policy would not found a claim in false imprisonment. Nor too would a decision to detain a person under conditions different from those described in the policy. Errors of this kind do not bear on the decision to detain. They are not capable of affecting the decision to detain or not to detain. Lord Walker and Lord Hope would prefer the more demanding test of the wrongful use of a statutory power amounting to an abuse of power. It is true that the phrase abuse of power is used in certain contexts in public law. For example, it has been held that the court will in a proper case decide whether to frustrate the legitimate expectation of a substantial benefit is so unfair that to take a different course will amount to an abuse of power: see R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213 para 57. In that context, the phrase abuse of power denotes a degree of unfairness. It is not clear to me in what sense the phrase abuse of power is being suggested in the present context. Suppose that a detention policy states that no FNP who has been sentenced to less than 12 months imprisonment is to remain in detention pending deportation for more than 6 months. Suppose further that, by an administrative oversight, a FNP who has been sentenced to 9 months imprisonment is detained for 12 months. There can be little doubt that the FNP would have a good claim for substantial damages for false imprisonment in respect of the period of 6 months when he should not have been detained. It would be odd to say that his detention during that period was the result of an abuse of power. I would say that the FNP would be the victim of a material public law error. The error was one which was relevant to the decision to detain him. It was capable of affecting the decision to continue to detain him and did in fact do so. As for Mr. Beloffs other points, such force as they have derives from the fact that the detention in these cases is unlawful because it is vitiated by a public law error. The significance and effect of that error cannot be affected by the fortuity that it is also possible for a victim to challenge the decision by judicial review proceedings (which are subject to tighter time limits than private law causes of action) and that judicial review is a discretionary remedy. It is well established that a defendant can rely on a public law error as a defence to civil proceedings and that he does not need to obtain judicial review as a condition for defending the proceedings: see, for example, Wandsworth London Borough Council v Winder [1985] AC 461. The same applies in the context of criminal proceedings: see Boddington v British Transport Police [1999] 2 AC 143. Mr Beloff submits that the position of a claimant who relies on a public law error to found his cause of action and a defendant can sensibly be differentiated. But it is difficult to see how or why. I can see that at first sight it might seem counter intuitive to hold that the tort of false imprisonment is committed by the unlawful exercise of the power to detain in circumstances where it is certain that the claimant could and would have been detained if the power had been exercised lawfully. But the ingredients of the tort are clear. There must be a detention and the absence of lawful authority to justify it. Where the detainer is a public authority, it must have the power to detain and the power must be lawfully exercised. Where the power has not been lawfully exercised, it is nothing to the point that it could have been lawfully exercised. If the power could and would have been lawfully exercised, that is a powerful reason for concluding that the detainee has suffered no loss and is entitled to no more than nominal damages. But that is not a reason for holding that the tort has not been committed. Both Mr Husain and Mr Beloff have referred to much authority. I shall refer to some of it. But there is nothing in the cases which shows that the conclusion which I consider is dictated by principle is questionable, still less that it is wrong. Mr Husain relies on dicta of Lord Diplock in Holgate Mohamed v Duke [1984] AC 437. Lord Diplock recognised that a claim for false imprisonment may be made out where police powers of arrest are unlawfully exercised by reference to common law principles. The statutory power for an arrest without warrant (section 2(4) of the Criminal Law Act 1967)) made it a condition precedent that the constable should have reasonable cause to suspect the person to be guilty of the arrestable offence in respect of which the arrest was being made. On the facts, the condition precedent was made out. Lord Diplock said at p 443B that this left the officer with an executive discretion whether to arrest or not. The lawfulness of the way in which the discretion had been exercised could not be challenged except on Wednesbury grounds. He then continued: The Wednesbury principlesare applicable to determining the lawfulness of the exercise of the statutory discretion of a constable under section 2(4) of the Criminal Law Act 1967, not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for damages for that species of trespass to the person known as false imprisonment, for which the action in the instant case is brought. (emphasis added) Lord Diplock then applied the Wednesbury principles and concluded that the officers action was not unlawful. It follows that his comments about false imprisonment were obiter dicta. Nevertheless, it is clear that, if he had concluded that the officer had exercised his statutory discretion unlawfully, Lord Diplock would have held that he was liable in tort for false imprisonment. I accept, however, that these are no more than dicta, albeit from a source of high authority, and that the issue does not seem to have been the subject of much if any argument in the House of Lords. Other authorities relied on by Mr Husain as rejecting the causation test include Christie v Leachinsky [1947] AC 573, Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 and Langley v Liverpool City Council [2006] 1 WLR 375. In addition, Mr Singh relies on Cooper v The Board of Works for the Wandsworth District (1863) 14 C.B. (N.S) 180. In Christie v Leachinsky, Viscount Simon explained that where an arrest was unlawful because it did not comply with the procedural requirements imposed by the common lawcommunication of the true and good ground of arrest to the detaineethere would be a false imprisonment notwithstanding that the arrest could have been effected in a proper manner. At p 588H he said: I entertain no doubt that in the present case the appellants are not exonerated from liability for false imprisonment by satisfying the judge that they had a reasonable suspicion that the respondent had been guilty of theft or of receiving stolen goods knowing they had been stolen, when they never told the respondent that this was the ground of his arrest. Instead of doing so, they gave a different ground which, as Christie admitted, was not a good excuse for arresting him at all. Mr Beloff submits that this case should be distinguished on the basis that it concerned the giving of reasons for detention which was a condition precedent to a lawful arrest. He argues that it says nothing about the causation test in cases where the alleged error is not a failure to satisfy a condition precedent. I do not see why the failure to provide a detainee with the reasons for the arrest should be regarded as a failure to satisfy a condition precedent to lawful arrest rather than an unlawful exercise of the power to arrest. In any event, it would be remarkable if the question whether a cause of action in false imprisonment exists should depend on such fine distinctions of classification. More fundamentally, such distinctions have no justification in the light of Anisminic. In Roberts v Chief Constable of the Cheshire Constabulary, the Court of Appeal held that a failure by the custody officer to conduct a review as required by section 40 of the Police and Criminal Evidence Act 1984 rendered the plaintiffs continued detention unlawful until the next review. The defence was raised that the plaintiff could only prove false imprisonment if he could show that, if the review had been carried out at the appropriate time, he would have been released. This causation defence was rejected by Clarke LJ (with whom Stuart Smith and Schiemann LJJ agreed) at p 667B as being nothing to the point. Mr Beloff emphasises the fact that the plaintiff was not being detained in accordance with the relevant statutory provisions and that the statute stipulated an express condition precedent to the lawful continuation of the detention, namely a review of detention, and that condition was not satisfied. This argument has no more force than Mr Beloffs corresponding argument in relation to Christie. Langley v Liverpool City Council [2006] 1 WLR 375 concerned child protection. The Court of Appeal held that a constable who had wrongfully removed a child under section 46 of the Children Act 1989 was liable in false imprisonment. He should instead have facilitated the exercise of a different power of removal through the execution of an emergency protection order (EPO) obtained by the local authority under section 44 of the 1989 Act. I gave the main judgment (with which Thorpe and Lloyd LJJ agreed). I held (para 32) that the power to remove a child under section 46 can be exercised even where an EPO is in force. I said (para 36) that where a police officer knows that an EPO is in force, he should not exercise the power of removing a child under section 46 unless there are compelling reasons to do so. On the facts of the case, there were no compelling reasons for the constable to exercise the section 46 power. The constable was in error in failing to ask himself whether there were compelling reasons why he should invoke section 46 rather than leave it to the council to execute the EPO. I held, therefore, that the removal of the child was unlawful. It was not in issue that, if the removal of the child was unlawful, the Chief Constable was liable to the child in false imprisonment. Mr Beloff submits that the effect of my reasoning was that the constable had no jurisdiction (in the narrow pre Anisminic sense) to do what he did. As an EPO was in force, it was in effect mandatory to invoke section 44 rather than section 46. I do not accept this analysis. I drew a clear distinction between the existence of the statutory authority to use the section 46 powers (which the constable had) and the exercise of those powers (which was wrongful on the facts of that case). In Cooper v The Board of Works for the Wandsworth District 14 CB (NS) 180, the defendant board had the statutory power to demolish a house that was in the course of construction. It was held that this power was subject to the common law qualification that it should not be exercised without giving the builder notice and an opportunity to be heard. It was held that the board had exercised its statutory power unlawfully and that the builder was entitled to damages for trespass to property. But I agree with Mr Beloff that this decision does not shed any light on the question whether detention pursuant to an unlawful exercise of a power to detain is itself unlawful. As Byles J put it at p 195, the board contravened the words of the statute. In effect, therefore, the court held that the decision to demolish the house was one which the board had no jurisdiction to make in the narrow pre Anisminic sense. I should deal with the authorities relied on by Mr Beloff. In R (Saadi) v Secretary of State for the Home Department [2002] 1 WLR 3131 as I have set out at para 50 above, the issue was whether the policy of detaining certain categories of asylum seekers whose claims could be processed quickly at the Oakington detention centre was lawful. The House of Lords held that it was. At first instance, Collins J had also considered the fact that when detaining the claimants the Home Office had used standard forms which did not reflect the new policy, and that therefore the true reasons for the detention had not been given. Collins J said that this did not affect the lawfulness of the detention. Lord Slynn at para 48 agreed that the failure to give the right reason for detention and the giving of no or wrong reasons did not in the end affect the legality of the detention. But para 48 is not part of the ratio of the decision of the House. In any event, in so far as it was argued at all that the giving of untrue reasons for the detention rendered the detention unlawful, the Secretary of State did not advance a causation defence and contend that the giving of untrue reasons was immaterial because the true reasons were lawful. In Nadarajah v Secretary of State for the Home Department [2004] INLR 139, the Secretary of States published policy was that, if legal proceedings were initiated, removal would not be treated as imminent even if it otherwise was. The Secretary of State also had an unpublished policy, namely that information that proceedings were about to be initiated would be disregarded, however credible that information might be. At paras 68 and 69 of the judgment of Lord Phillips MR, the Court of Appeal said that the Secretary of State could not rely on the unpublished policy as rendering lawful that which was, on the face of it, at odds with his policy, as made public and for that reason the detention of N was unlawful. There is no hint of the causation test here. But the court went on to say that, if Ns solicitors had been aware of the unpublished policy, they would have instituted proceedings sooner. N therefore suffered because his solicitor could not foresee the consequences of her conduct and his detention did not satisfy the requirement of lawfulness imposed by article 5(1)(f) of the ECHR. I accept that this was a causation point. But it was unnecessary for the court to adopt this additional reason for holding that the detention was unlawful. Further, it requires a huge leap to argue from this that the causation test must be satisfied as an element of the tort of false imprisonment. In short, neither Saadi nor Nadarajah bears the weight that Mr Beloff seeks to place on them. Recognising that the court might reject the causation test, Mr Beloff suggested a number of alternative approaches. The first is that false imprisonment should be confined to no authority cases ie cases in which there was in fact no authority to detain, without recourse to the legal fiction that, because of a public law error, an authority to detain which was in fact given should be treated as if it had no legal effect because it was ultra vires. The second is that detention should be vitiated only by pre Anisminic error of law. The third is that vitiating circumstances should be restricted to bad faith and improper purpose. The fourth is that authority to detain should be vitiated only by failure to have regard to a material consideration which had an effect on the detention. The fifth is that it should be a requirement that the claimant shall have successfully applied in judicial review proceedings for the decision to detain to be quashed. The first two of these suggestions seek to put the clock back to the pre Anisminic era. For reasons given earlier, this is unwarranted. As regards the third and fourth suggestions, I have accepted at paras 68 and 69 above that the detention must be vitiated by an error which is material in public law terms and have attempted to explain there what I mean by that. The fifth seeks unjustifiably to impose a procedural hurdle where none currently exists either at common law or in statute. To accede to this suggestion would be to engage in an unacceptable exercise of judicial legislation. To summarise, therefore, in cases such as these, all that the claimant has to do is to prove that he was detained. The Secretary of State must prove that the detention was justified in law. She cannot do this by showing that, although the decision to detain was tainted by public law error in the sense that I have described, a decision to detain free from error could and would have been made. Overall conclusion on liability on the basis that the policies applied were unlawful I conclude, therefore, that since it is common ground that the unlawful policies in force between April 2006 and September 2008 were applied to Mr Lumba and Mr Mighty, they were unlawfully detained and their claims in false imprisonment must succeed. I turn to consider the assessment of damages. Compensatory or nominal damages? Having found that there was no liability in false imprisonment, the Court of Appeal did not need to decide whether the claimants were entitled to damages. They did, however, say at para 96: If, on the evidence, it was clear that, even assuming a lawful consideration, there was no realistic possibility of a different decision having been reached, and no realistic possibility of earlier release, then we do not see why that should not be reflected in an award of nominal damages only. Mr Husain and Mr Westgate submit that, even if it was inevitable that the appellants would have been detained if the statutory power to detain had been lawfully exercised, they are nevertheless entitled to substantial and not merely nominal damages. They emphasise that false imprisonment is a tort of strict liability which is actionable without proof of special damage. The focus is on the claimants right rather than the culpability of the defendants conduct. They rely on two authorities in support of their argument. The first is Roberts v Chief Constable of the Cheshire Constabulary to which I have already referred at para 75 above. The plaintiff issued proceedings for false imprisonment arising from his detention by the police between 5.25 a.m. (when his detention should have been reviewed as required by statute) and 7.45 a.m. the same morning when it was reviewed and his continued detention authorised. It was found by the judge that the detention between 5.25 a.m. and 7.45 a.m. was unlawful, but that, if a review had taken place at 5.25 a.m., his continued detention would have been authorised. The judge awarded the plaintiff 500. The defendants appeal on both liability and damages was dismissed by the Court of Appeal. Clarke LJ gave the leading judgment. He said at p 668 D that there was an infringement of the plaintiffs legitimate right to have his case reviewed and that, although the outcome may not have been affected by the failure to review in time, this infringement cannot be regarded as a purely nominal matter or a matter compensatable by entirely nominal damages. There are rules, the police must stick to them. He added at p 668G: As a matter of general principle such a plaintiff is entitled to be put into the position in which he would have been if the tort had not been committed. It is therefore important to analyse what the tort is. The plaintiffs claim was not for damages for breach of duty to carry out a review at 5.25 a.m. but for false imprisonment. As I tried to explain earlier, the reason why the continued detention was unlawful was that no review was carried out. The wrong was not, however, the failure to carry out the review but the continued detention. If the wrong had not been committed the plaintiff would not have been detained between 5.25 a.m. and 7.45 a.m. I do not consider that this case was correctly decided on the issue of damages. I agree that the plaintiff was entitled to be put into the position in which he would have been if the tort of false imprisonment had not been committed. But I do not agree that, if the tort had not been committed, the plaintiff would not have been detained between 5.25 a.m. and 7.45 a.m. On the judges findings, if the tort had not been committed, he would have been detained during this period. It seems to me that the fallacy in the analysis in Roberts is that it draws no distinction between a detainee who would have remained in detention if the review had been carried out (and therefore no tort committed) and a detainee who would not have remained in detention if the review had been carried out. But the position of the two detainees is fundamentally different. The first has suffered no loss because he would have remained in detention whether the tort was committed or not. The second has suffered real loss because, if the tort had not been committed, he would not have remained in detention. The second authority relied on in support of the appellants case is Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19, [2002] 2 AC 883. It was held there that it is no answer to a claim in conversion of goods for a defendant to say that the goods were or would have been subsequently converted by a third party: see the discussion by Lord Nicholls at paras 81 to 84 of his speech. But questions of causation in relation to cases of successive conversion by different tortfeasors have no application in the present context. The question here is simply whether, on the hypothesis under consideration, the victims of the false imprisonment have suffered any loss which should be compensated in more than nominal damages. Exemplary damages apart, the purpose of damages is to compensate the victims of civil wrongs for the loss and damage that the wrongs have caused. If the power to detain had been exercised by the application of lawful policies, and on the assumption that the Hardial Singh principles had been properly applied (an issue which I discuss at paras 129 148 below), it is inevitable that the appellants would have been detained. In short, they suffered no loss or damage as a result of the unlawful exercise of the power to detain. They should receive no more than nominal damages. I should add that this approach is consistent with the observation by Lord Griffiths in Murray v Ministry of Defence [1988] 1WLR 692, 703A B: if a person is unaware that he has been falsely imprisoned and has suffered no harm, he can normally expect to recover no more than nominal damages. Vindicatory damages Mr Westgate submits that, if the appellants are entitled to no more than nominal damages, then they should also be awarded vindicatory damages. It has been said that the award of compensatory damages can serve a vindicatory purpose: see, for example, Ashley v Chief Constable of Sussex Police [2008] UKHL 25, [2008] AC 962 per Lord Scott at para 22 and Lord Rodger at para 60. But vindicatory damages serve a wider purpose than simply to compensate a successful claimant. The phrase vindicatory damages seems to have been coined by Sharma CJ in the Court of Appeal of Trinidad and Tobago in Attorney General of Trinidad and Tobago v Ramanoop as a head of loss in claims for breach of constitutionally protected rights and freedoms: see address given by the President of the Caribbean Court of Justice to a Symposium entitled Current Developments in Caribbean Community Law in Port of Spain on 9 November 2009. Lord Collins has traced the history of the use of the phrase in other contexts. The concept of vindicatory damages was explained and endorsed by the Privy Council in the appeal in the Ramanoop case [2005] UKPC 15, [2006] 1 AC 328. Lord Nicholls said: 18. When exercising this constitutional jurisdiction the court is concerned to uphold, or vindicate, the constitutional right which has been contravened. A declaration by the court will articulate the fact of the violation, but in most cases more will be required than words. If the person wronged has suffered damage, the court may award him compensation. The comparable common law measure of damages will often be a useful guide in assessing the amount of this compensation. But this measure is no more than a guide because the award of compensation under section 14 is discretionary and, moreover, the violation of constitutional right will not always be coterminous with the cause of action at law. 19. An award of compensation will go some distance towards vindicating the infringed constitutional right. How far it goes will depend on the circumstances, but in principle it may well not suffice. The fact that the right violated was a constitutional right adds an extra dimension to the wrong. An additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach, and deter further breaches. All these elements had a place in this additional award. Redress in section 14 is apt to encompass such an award if the court considers it is required having regard to all the circumstances. Although such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object. Accordingly, the expressions punitive damages or exemplary damages are better avoided as descriptions of this type of additional award. It will be seen, therefore, that the Privy Council endorsed the principle of vindicatory damages for violation of constitutional rights. Should this principle be extended further? In Ashley at para 22 Lord Scott obiter said that vindicatory damages might be awarded for the tort of battery or trespass to the person by the police resulting in the death of the victim. But the issue in that case was whether a claimant should be allowed to continue with an action in order to establish whether an assault had been committed, where there could be no award of further compensatory damages because these had already been paid in full as a result of a concession by the police. Lord Scotts view that vindicatory damages have a role in the compensation for civil wrongs and the breach of ECHR rights was endorsed, at least to some extent, in Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB). In awarding damages for breach of the claimants right to privacy, after recognising the compensatory nature of damages for infringements of privacy, Eady J said at paras 216 7 that there was another factor which probably had to be taken into account, namely vindication to mark the infringement of the right. It is one thing to say that the award of compensatory damages, whether substantial or nominal, serves a vindicatory purpose: in addition to compensating a claimants loss, it vindicates the right that has been infringed. It is another to award a claimant an additional award, not in order to punish the wrongdoer, but to reflect the special nature of the wrong. As Lord Nicholls made clear in Ramanoop, discretionary vindicatory damages may be awarded for breach of the Constitution of Trinidad and Tobago in order to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach and deter further breaches. It is a big leap to apply this reasoning to any private claim against the executive. McGregor on Damages 18th ed (2009) states at para 42 009 that It cannot be said to be established that the infringement of a right can in our law lead to an award of vindicatory damages. After referring in particular to the appeals to the Privy Council from Caribbean countries, the paragraph continues: the cases are therefore far removed from tortious claims at home under the common law. I agree with these observations. I should add that the reference by Lord Nicholls to reflecting public outrage shows how closely linked vindicatory damages are to punitive and exemplary damages. The implications of awarding vindicatory damages in the present case would be far reaching. Undesirable uncertainty would result. If they were awarded here, then they could in principle be awarded in any case involving a battery or false imprisonment by an arm of the state. Indeed, why limit it to such torts? And why limit it to torts committed by the state? I see no justification for letting such an unruly horse loose on our law. In my view, the purpose of vindicating a claimants common law rights is sufficiently met by (i) an award of compensatory damages, including (in the case of strict liability torts) nominal damages where no substantial loss is proved, (ii) where appropriate, a declaration in suitable terms and (iii) again, where appropriate, an award of exemplary damages. There is no justification for awarding vindicatory damages for false imprisonment to any of the FNPs. Application of Hardial Singh principles to the appeal of Mr Lumba In addition to the issues that are raised which are common to both appeals, it is submitted on behalf of Mr Lumba (but not Mr Mighty) that his detention is unlawful on the grounds that there has been a breach of the Hardial Singh principles. This part of the appeal raises a number of points about the reach of those principles. I refer to the encapsulation of the principles set out in my judgment in R (I) [2003] INLR 196 at para 22 above. A convenient starting point is to determine whether, and if so when, there is a realistic prospect that deportation will take place. As I said at para 47 of my judgment in R (I), there may be situations where, although a reasonable period has not yet expired, it becomes clear that the Secretary of State will not be able to deport the detained person within a period that is reasonable in all the circumstances, having regard in particular to time that the person has already spent in detention. I deal below with the factors which are relevant to a determination of a reasonable period. But if there is no realistic prospect that deportation will take place within a reasonable time, then continued detention is unlawful. How long is a reasonable period? At para 48 of my judgment in R (I), I said: It is not possible or desirable to produce an exhaustive list of all the circumstances that are, or may be, relevant to the question of how long it is reasonable for the Secretary of State to detain a person pending deportation pursuant to paragraph 2(3) of Schedule 3 to the Immigration Act 1971. But in my view, they include at least: the length of the period of detention; the nature of the obstacles which stand in the path of the Secretary of State preventing a deportation; the diligence, speed and effectiveness of the steps taken by the Secretary of State to surmount such obstacles; the conditions in which the detained person is being kept; the effect of detention on him and his family; the risk that if he is released from detention he will abscond; and the danger that, if released, he will commit criminal offences. So far as I am aware, subject to the following qualifications, the relevance of these factors has not been questioned. The qualifications are first that the relevance of the risk of offending on release is challenged on behalf of the appellants in the present case. Secondly, the nature of the obstacles begs two questions that have been raised on this appeal, namely what is the relevance, if any, of delays attributable to the fact that a detained person (i) is challenging the decision to deport him by appeal or judicial review and will generally not be deported until his challenges have been determined; and (ii) has refused to return voluntarily to his country of origin? Risk of re offending Mr Husain accepts that, where there is a risk that the detained person will abscond, the risk of re offending is relevant to the assessment of the duration of detention that is reasonably necessary to effect deportation. But he submits that, where there is no real risk of absconding, the risk of re offending cannot of itself justify detention. Where there is no such risk, detention is not necessary to facilitate deportation, because it will be possible to effect the deportation without the need for detention. The underlying purpose of the power to detain is not to prevent the commission of criminal offences, but to facilitate the implementation of a deportation order. I have some difficulty in understanding why the risk of re offending is a relevant factor in a case where there is a risk of absconding, but not otherwise. It seems to me that it is possible to construe the power to detain either (more narrowly) as a power which may only be exercised to further the object of facilitating a deportation, or (more broadly) as a power which may also be exercised to further the object which it is sought to achieve by a deportation, namely, in the present case, that of removing an offender whose presence is not conducive to the public good. The distinction between these two objects was clearly drawn by the Court of Appeal in R (A) v Secretary of State for the Home Department [2007] EWCA Civ 804. Toulson LJ said at para 55: A risk of offending if the person is not detained is an additional relevant factor, the strength of which would depend on the magnitude of the risk, by which I include both the likelihood of it occurring and the potential gravity of the consequences. Mr Drabble submitted that the purpose of the power of detention was not for the protection of public safety. In my view, that is over simplistic. The purpose of the power of deportation is to remove a person who is not entitled to be in the United Kingdom and whose continued presence would not be conducive to the public good. If the reason why his presence would not be conducive to the public good is because he has a propensity to commit serious offences, protection of the public from that risk is the purpose of the deportation order and must be a relevant consideration when determining the reasonableness of detaining him pending his removal or departure. Para 78 of Keene LJs judgment is to similar effect. I acknowledge that the principle that statutory powers should be interpreted in a way which is least restrictive of liberty if that is possible would tend to support the narrower interpretation. But I think that the Court of Appeal was right in R (A) to adopt the interpretation which gives effect to the purpose underlying the power to deport and which the power to detain is intended to facilitate. Perhaps a simpler way of reaching the same conclusion is to say, as Simon Brown LJ said in R (I) at para 29, that the period which is reasonable will depend on the circumstances of the particular case and the likelihood or otherwise of the detainee re offending is an obviously relevant circumstance. But the risk of re offending is a relevant factor even if the appellants are right in saying that it is relevant only when there is also a risk of absconding. As Lord Rodger pointed out in argument, if a person re offends there is a risk that he will abscond so as to evade arrest or if he is arrested that he will be prosecuted and receive a custodial sentence. Either way, his re offending will impede his deportation. The risk of re offending is, therefore, a relevant factor. Delay attributable to challenges to deportation Mr Beloff submits that the time taken to resolve legal challenges brought by an individual against deportation should generally be left out of account in considering whether a reasonable period of detention has elapsed. He concedes that this general rule should be subject to two qualifications: (i) if the Secretary of State has caused delay in the resolution of the legal challenge, then that time may be taken into account; and (ii) the time during which a legal challenge is being resolved should be taken into account if removal is not possible for reasons unrelated to the legal challenge. I shall call this general rule the exclusionary rule. In support of this submission, Mr Beloff makes the following points. First, it is the individuals choice to challenge the removal and, if the time taken to resolve legal challenges were taken into account, the length of detention would be outside the control of the Secretary of State and would be entirely within the control of the detained person. Secondly, if the position were otherwise, those who (if at large) would be a danger to the public or who would be likely to thwart a deportation order by absconding, would be able to increase their prospects of release by pursuing every conceivable point by way of legal challenges and by doing everything possible to delay the legal process. Thirdly, if the legality of detention is capable of depending on the merits of a challenge to the decision to deport, it will be necessary for the High Court to decide for itself the merits of the underlying challenge, in advance of consideration of the case by the specialist tribunal appointed by Parliament to undertake that task. That is undesirable. At para 102 of their judgment, the Court of Appeal said: In our judgment, the fact that a FNP is refusing to return voluntarily, or is refusing to cooperate in his return (for example, by refusing to apply for an emergency travel document, as initially did WL) is relevant to the assessment of the legality of his continued detention: see R (A) v Secretary of State for the Home Department [2007] EWCA Civ 804. So is the fact that the period of his detention had been increased, and his deportation postponed by his pursuit of appeals and judicial review proceedings seeking to challenge his deportation order or his application for asylum or leave to remain, particularly if his applications and appeals are obviously unmeritorious. In our judgment, as a matter of principle, a FNP cannot complain of the prolongation of his detention if it is caused by his own conduct. It is not clear whether the Court of Appeal were accepting the exclusionary rule in its entirety. To say that the fact that the length of the detention is attributable to the pursuit of legal proceedings is relevant to the assessment of the legality of the detention suggests a rejection of the exclusionary rule. But to say that FNPs cannot complain of the prolongation of their detention caused by their own conduct suggests an acceptance of it. The question of the relevance of the pursuit of legal proceedings has been considered in a number of authorities. I do not propose to analyse them. None is binding on this court. The discussion of the issue which I have found most helpful is that of Davis J in R (Abdi) v Secretary of State for the Home Department [2009] EWHC 1324 (Admin). In that case, the exclusionary rule (with the same two exceptions) was urged on the court on behalf of the Secretary of State. In rejecting it, Davis J pointed out at para 25 of his judgment, that it was undesirable, where the core question is an assessment of what is reasonable in all the circumstances, to be astute to look for mandatory restrictions or rules in what ought to be a fact specific exercise. I agree. The Hardial Singh principles should not be applied rigidly or mechanically. There are several problems with the exclusionary rule. First, it seems to require the exclusion of consideration of the individual circumstances of an applicant pending what may be a long appellate process. Suppose two FNPs who both embark on a meritorious appeal process which takes a number of years. The only difference between them is that A poses a very high risk of absconding and re offending and B poses a very low risk. If the exclusionary rule is applied, no difference can be drawn between them from the time proceedings are commenced. In both cases, the several years during which they are detained while the appeal process is continuing are to be disregarded in assessing whether the period of detention is reasonable. Or suppose that the effect of detention on A is to cause serious damage to his health or that of members of his family, whereas there is no such effect in the case of B. I can see no warrant for such a mechanistic approach to the determination of what is reasonable in all the circumstances. Secondly, the exclusionary rule seems to involve the exclusion from consideration of any delays occurring within the appeal process which are not the fault of the applicant or (as is conceded by Mr Beloff) the Secretary of State. I see no reason why such delays, for example, delays on the part of the tribunal or court, should be disregarded in a determination of whether the period of detention is reasonable. Thirdly, the consequence of the exclusionary rule is that a person can be detained for many years while pursuing a prima facie meritorious appeal but he cannot by judicial review or habeas corpus challenge his detention on Hardial Singh or related article 5(1)(f) of the ECHR principles. It precludes such judicial scrutiny (i) however long the detention and appeals have lasted and (ii) regardless of the effects of prolonged detention on the detainee, provided that (iii) the appeals are being diligently pursued and there is no concurrent independent reason why deportation cannot be effected. I accept the submission of Mr Husain that bail is not a sufficient answer to the fundamental objection that the exclusionary rule constitutes an impermissible restriction on judicial oversight of the legality of administrative detention. Paragraph 29 of Schedule 2 to the 1971 Act gives the First Tier Tribunal power to grant bail pending an appeal, but this is subject to the restrictions stated in paragraph 30. Paragraph 30(1) provides that an appellant shall not be released under paragraph 29 without the consent of the Secretary of State if removal directions are currently in force. There is nothing in the schedule which requires the tribunal to apply the Hardial Singh principles in deciding whether or not to grant bail and, in particular, to have regard to the past and likely future length of a detention. Bail is not a determination of the legality of detention, whether at common law or for article 5(4) purposes. Fourthly, the exclusionary rule is inconsistent with the decision of the ECtHR in Chahal v United Kingdom (1996) 23 EHRR 413. In deciding whether the detention complied with the requirements of article 5(1)(f), the court had regard to the length of the detention, including the time taken for the various domestic proceedings to be completed: see paras 114, 115 and 123 of the judgment of the court. There is a close analogy between the Hardial Singh principles and the article 5 requirement that detention for the purposes of deportation must not be of excessive duration. I would reject Mr Beloffs in terrorem argument that, unless the exclusionary rule applies, detained FNPs will be able to procure their release from detention by the simple expedient of pursuing hopeless legal challenges. Time taken in the pursuit of hopeless challenges should be given minimal weight in the computation of a reasonable period of detention. Nor do I accept that it is undesirable (or indeed unduly difficult) to identify hopeless or abusive challenges. There exist statutory mechanisms to curb unmeritorious appeals. If a claim is clearly unfounded, certification under section 94(2) of the Nationality, Immigration and Asylum Act 2002 precludes an in country appeal. If a claim relies on a matter which could have been raised earlier in response to an earlier immigration decision or in response to a one stop notice, certification under section 96 of the 2002 Act precludes any appeal at all. In any event, a court considering the legality of a detention will often be able to assess the prima facie merits of an appeal. Where, as in the case of Mr Lumba, there have been orders for reconsideration, or where there has been a grant of permission to appeal to the Court of Appeal, the court will easily recognise that the challenge has some merit. Conversely, there may be one or more determinations from immigration judges dismissing claims as wholly lacking in credibility. To summarise, I would reject the exclusionary rule. If a detained person is pursuing a hopeless legal challenge and that is the only reason why he is not being deported, his detention during the challenge should be given minimal weight in assessing what is a reasonable period of detention in all the circumstances. On the other hand, the fact that a meritorious appeal is being pursued does not mean that the period of detention during the appeal should necessarily be taken into account in its entirety for the benefit of the detained person. Indeed, Mr Husain does not go so far as to submit that there is any automatic rule, regardless of the risks of absconding and/or re offending, which would compel an appellants release if the appeals process lasted a very long time through no fault of the appellant. He submits that the weight to be given to time spent detained during appeals is fact sensitive. This accords with the approach of Davis J in Abdi and I agree with it. The risks of absconding and re offending are always of paramount importance, since if a person absconds, he will frustrate the deportation for which purpose he was detained in the first place. But it is clearly right that, in determining whether a period of detention has become unreasonable in all the circumstances, much more weight should be given to detention during a period when the detained person is pursuing a meritorious appeal than to detention during a period when he is pursuing a hopeless one. Non cooperation with return The most common examples of non cooperation are (i) a refusal by a person who does not have a valid passport to cooperate with the obtaining of travel documents to enable him to return and (ii) a persons refusal to avail himself of one of the Home Office schemes by which he may leave the United Kingdom voluntarily. Most of the discussion in the cases has centred on (ii). It is common ground that a refusal to return voluntarily is relevant to an assessment of what is a reasonable period of detention if a risk of absconding can properly be inferred from the refusal. But I would warn against the danger of drawing an inference of risk of absconding in every case. It is always necessary to have regard to the history and particular circumstances of the detained person. What is, however, in issue is whether a failure to return voluntarily can of itself justify a period of detention which would otherwise be unreasonable and therefore unlawful. In R (I), I said in the Court of Appeal: 50. As regards the significance of the appellants refusal of voluntary repatriation, there appears to be agreement between Simon Brown LJ and Mummery LJ that this is a relevant circumstance, but Mummery LJ considers that it is decisively adverse to the appellant, whereas Simon Brown LJ considers that it is of relatively limited relevance on the facts of the present case. I too consider that it is a relevant circumstance, but in my judgment it is of little weight. [Counsel for the Secretary of State] submits that a refusal to leave voluntarily is relevant for two reasons. First, the detained person has control over the fact of his detention: if he decided to leave voluntarily, he would not be detained. Secondly, the refusal indicates that he would abscond if released from detention. It is this second feature which has weighed heavily with Mummery LJ. 51. I cannot accept that the first of [the Secretary of States] reasons is relevant. Of course, if the appellant were to leave voluntarily, he would cease to be detained. But in my judgment, the mere fact (without more) that a detained person refuses the offer of voluntary repatriation cannot make reasonable a period of detention which would otherwise be unreasonable. If [the Secretary of State] were right, the refusal of an offer of voluntary repatriation would justify as reasonable any period of detention, no matter how long, provided that the Secretary of State was doing his best to effect the deportation. 52. I turn to [the Secretary of States] second reason. I accept that if it is right to infer from the refusal of an offer of voluntary repatriation that a detained person is likely to abscond when released from detention, then the refusal of voluntary repatriation is relevant to the reasonableness of the duration of a detention. In that event, the refusal of voluntary repatriation is no more than evidence of a relevant circumstance namely the likelihood that the detained person will abscond if released. 53. But there are two important points to be made. First, the relevance of the likelihood of absconding, if proved, should not be overstated. Carried to its logical conclusion, it could become a trump card that carried the day for the Secretary of State in every case where such a risk was made out regardless of all other considerations, not least the length of the period of detention. That would be a wholly unacceptable outcome where human liberty is at stake. 54. Secondly, it is for the Secretary of State to satisfy the court that it is right to infer from the refusal by a detained person of an offer of voluntary repatriation that, if released, he will abscond. There will no doubt be many cases where the court will be persuaded to draw such an inference. I am not, however, satisfied that this is such a case. It is not at all surprising that this appellant has refused voluntary repatriation. He has not yet exhausted the asylum process, which, if successful, would permit him to remain in the United Kingdom. In these circumstances, why should one infer from the refusal of voluntary repatriation that, if released, he would abscond? In my judgment, the most that can be said is that there is a risk that if he is released the appellant will abscond. But that can be said of most cases. I do not consider that the fact that he has refused the offer of voluntary repatriation adds materially to the evidence that such risk is present in the instance case. Simon Brown LJ adopted a somewhat different approach at para 31. He said that, since in Hardial Singh Woolf J had regarded it as a factor in the applicants favour that he was quite prepared to go to India, he could not see why the converse should not be relevant. The court should not ignore entirely the applicants ability to end his detention by returning home voluntarily. The point was considered again by the Court of Appeal in R (A) Somalia v Secretary of State for the Home Department [2007] EWCA Civ 804 Toulson LJ (with whom Longmore LJ agreed) said: 54. I accept the submission on behalf of the Home Secretary that where there is a risk of absconding and a refusal to accept voluntary repatriation, those are bound to be very important factors, and likely often to be decisive factors, in determining the reasonableness of a persons detention, provided that deportation is the genuine purpose of the detention. The risk of absconding is important because it threatens to defeat the purpose for which the deportation order was made. The refusal of voluntary repatriation is important not only as evidence of the risk of absconding, but also because there is a big difference between administrative detention in circumstances where there is no immediate prospect of the detainee being able to return to his country of origin and detention in circumstances where he could return there at once. In the latter case the loss of liberty involved in the individuals continued detention is a product of his own making. Keene LJ said at para 79: I am not persuaded by Mr Giffin that the refusal by this detainee to return to Somalia voluntarily when it was possible to do so is some sort of trump card. On this I see the force of what was said by Dyson LJ in R (I) at paragraph 52, namely that the main significance of such a refusal may often lie in the evidence it provides of a likelihood of the individual absconding if released. After all, if there is in a particular case no real risk of his absconding, how could detention be justified in order to achieve deportation, just because he has refused voluntary return? The Home Office in such a case, ex hypothesi, would be able to lay hands on him whenever it wished to put the deportation order into effect. Detention would not be necessary in order to fulfil the deportation order. Having said that, I do not regard such a refusal to return as wholly irrelevant in its own right or as having a relevance solely in terms of the risk of absconding. It is relevant that the individual could avoid detention by his voluntary act. But I do not accept that such a refusal is of the fundamental importance contended for by the Secretary of State It is necessary to distinguish between cases where return to the country of origin is possible and those where it is not. Where return is not possible for reasons which are extraneous to the person detained, the fact that he is not willing to return voluntarily cannot be held against him since his refusal has no causal effect. But what if return would be possible, but the detained person is not willing to go? Here it is necessary to consider whether the detained person has issued proceedings challenging his deportation. If he has done so, then it is entirely reasonable that he should remain in the United Kingdom pending the determination of those proceedings (unless the proceedings are an abuse). In those circumstances his refusal to accept an offer of voluntary return is irrelevant. The purpose of voluntary return is not to encourage foreign nationals to return to their countries of origin where, if their legal challenges succeed, it is likely to have been demonstrated that they would face a risk of persecution within the meaning of the Convention and Protocol relating to the Status of Refugees (1951) (Cmd 9171) and (1967) (Cmnd 3906) or treatment contrary to article 3 of the ECHR. Rather, it is to facilitate removal where that is justified because the FNPs have not proved that they would face the relevant risk on return. In accepting voluntary return, the individual forfeits all legal rights to remain in the United Kingdom. He should not be penalised for seeking to vindicate his ECHR or Refugee Convention rights and be faced with the choice of abandoning those rights or facing a longer detention than he would face if he had not been offered voluntary return. What about those who have no outstanding legal challenges? Here, the fact that the detained person has refused voluntary return should not be regarded as a trump card which enables the Secretary of State to continue to detain until deportation can be effected, whenever that may be. That is because otherwise, as I said at para 51 of my judgment in R (I), the refusal of an offer of voluntary repatriation would justify as reasonable any period of detention, no matter how long, provided that the Secretary of State was doing his best to effect the deportation. If the refusal of voluntary return has any relevance in such cases even if a risk of absconding cannot be inferred from the refusal, it must be limited. That was the view of Simon Brown LJ in R (I) and Keene LJ in R (A) and I agree with them. The appeal of Mr Lumba I can now turn to the particular case of Mr Lumba. He entered the United Kingdom unlawfully on 10 April 1994 and claimed asylum on the same day. His claim was refused on 20 February 2000. He was, however, granted exceptional leave to remain until 20 February 2004. He has a bad criminal record which includes convictions for assault occasioning actual bodily harm (six months imprisonment); two offences of using threatening and abusive behaviour (twelve months probation); two offences of shoplifting (non custodial sentences); assault occasioning actual bodily harm (six months imprisonment); assaulting a constable (four months imprisonment); and wounding with intent contrary to section 18 of the Offences Against the Person Act 1861 (4 years imprisonment). He married MP, another national of the Democratic Republic of Congo (DRC). Their son, PAS, was born on 5 July 2003. As I have already said, on 3 April 2006, the Secretary of State decided to deport Mr Lumba. Notwithstanding that his son is a British citizen, the Secretary of State also decided to deport his wife and son, although the orders against them were subsequently revoked. He was notified of the decision to detain him under the 1971 Act on 22 June 2006, the day before his release date. His first detention review was in February 2007. He appealed against the decision to deport him. On 7 September 2006, while the appeal was still pending, he refused to attend a travel document interview with the immigration authorities to facilitate his return to the DRC. His appeal against deportation was dismissed by the Asylum and Immigration Tribunal (AIT) on 15 December 2006. In about January 2007, he was transferred from prison to Dover Immigration Removal Centre, since when he remained in detention. On 1 March 2007, he attended an interview with an immigration officer at which he explained that his passport was missing. He was asked to complete an application for an Emergency Travel Document (ETD) but refused to do so, stating that he did not wish to be returned to the DRC because the problem which formed the initial basis of his asylum claim is still true. By 20 March 2007, the Secretary of States caseworkers had discovered that they had a copy of Mr Lumbas passport on file. His indefinite leave to remain was terminated only after service on him of the signed deportation order on 21 March 2007. The discovery of the copy of his passport on file obviated the need for his cooperation in completing a travel document application. On 29 March, a completed application for an ETD, accompanied by copies of his passport and identity card, was sent to the Embassy of the DRC. The Embassy claimed to have lost the initial application and the application for an ETD was resubmitted on 26 April 2007. The application was granted by the DRC Embassy on 25 July 2007 and on the following day directions were set for Mr Lumbas removal from the United Kingdom on 20 August 2007. On 15 August 2007, his new solicitors submitted fresh representations challenging his deportation. These noted that a country guidance case (BK (DRC)) concerning the safety of returns to the DRC of failed asylum seekers/ deportees was to be heard by the AIT on 17 September 2007. On 16 August 2007, the Secretary of State refused to treat those representations as a fresh asylum claim and on the following day, Mr Lumba issued judicial review proceedings challenging that refusal. On 14 September 2007, these proceedings were stayed by consent until the outcome of the pending country guidance case before the AIT was known. On 23 October 2007, Mr Lumba issued the claim for judicial review challenging his detention which has given rise to the present appeal. On 18 December 2007, the AIT promulgated its determination in BK (Democratic Republic of Congo) v Secretary of State for the Home Department and decided that failed asylum seekers were not, as such, at risk in the DRC: [2007] UKAIT 98. Mr Lumba made applications for bail on 23 January 2008, 4 February 2008 and 4 March 2008. They were all rejected by the immigration judge principally on the ground that there was a real risk that if he was released he would re offend. On 23 April 2008, permission was granted to appeal the AITs decision in BK (DRC) to the Court of Appeal. Mr Lumbas claim for judicial review in respect of his detention was heard by Collins J on 4 July 2008. His judgment is reported at [2008] EWHC 2090 (Admin). He concluded that the detention was lawful on Hardial Singh principles and that it would continue to be so until the Court of Appeal gave judgment in BK (DRC), on the assumption that judgment was given by the end of December 2008. In fact judgment was given by the Court of Appeal on 3 December 2008 after the hearing before Davis J, but before he gave judgment: [2008] EWCA Civ 1322. Davis J agreed with the reasoning and conclusion of Collins J as to the lawfulness of the detention. The findings made by Davis J are set out in full by the Court of Appeal at para 99 of their judgment. There is no need to repeat them in this judgment. In summary, Davis J said at para 203 that (i) Mr Lumba posed a high risk of absconding and a high risk of serious reoffending; (ii) at all stages there was a prospect of removing him within a reasonable period; and (iii) there had been no lack of due expedition on the part of the Secretary of State. On 11 February 2009, Mr Lumbas solicitors made fresh representations on his behalf to the Secretary of State, and applied for the revocation of the deportation order. They said that his marriage had broken down and that he was seeking contact with his son. He relied on article 8 of the ECHR. This application was rejected by the Secretary of State on 1 July 2009. Mr Lumba appealed on 8 July 2009. The appeal was dismissed by the AIT on 28 September 2009. A reconsideration was ordered by a senior immigration judge on 26 October 2009. At the reconsideration, the Secretary of State conceded that the original tribunal had erred in law. By a judgment given on 19 February 2010, the Court of Appeal dismissed Mr Lumbas appeals against the decisions of Collins J and Davis J. The Court of Appeal said at para 100 that they had seen nothing to justify interfering with Davis Js findings at para 203 of his judgment. They said in relation to the application of the Hardial Singh principles that the real attack was on the judgment of Collins J. There had been no material error in the approach or conclusions of Collins J who had taken into account the high risk of absconding and re offending, the fact that Mr Lumba could have returned to the DRC voluntarily, and that his deportation had been delayed by his pursuit of several unsuccessful applications for asylum or leave to remain and appeals against their refusal. The Court of Appeal had been asked to consider the period which had elapsed since the judgment of Davis J and subsequent evidence, including a psychiatric report, and to determine the legality of Mr Lumbas current detention in the light of it. They said at para 108 that it would be inappropriate for them to consider as a first instance decision whether Mr Lumbas mental condition rendered his continued detention unlawful. Apart from that, they said that: having reviewed the history of [Mr Lumbas] detention and the reasons given for continuing it, and for the refusals of bail, and his several hitherto unmeritorious appeals and applications, we are satisfied that his detention for the purposes of his deportation continues to be lawful. On behalf of Mr Lumba it is submitted that the Court of Appeal should have concluded that his detention was unreasonably long by the time of the hearing before Collins J on 4 July 2008; alternatively by the time of the hearing before Davis J on 11 14 November 2008; alternatively by the time of the hearing before them between 30 November and 2 December 2009. By the time of the appeal, of particular importance were the facts that (i) Mr Lumba had been in detention for 41 months; (ii) he could not be deported while he was pursuing his appeal against the Secretary of States refusal to revoke the deportation order; and (iii) there was evidence from the Croydon Mental Health Team and consultant psychiatrist Dr Dinakaran which showed that the risk of re offending and psychotic relapse could be managed in the community. Mr Lumba has now been in detention for 54 months. At first sight, his detention seems to have been of unreasonable duration. There must come a time when, however grave the risk of absconding and however the grave the risk of serious offending, it ceases to be lawful to detain a person pending deportation. Moreover, in certain respects the courts below have not applied the Hardial Singh principles correctly. In particular, they have wrongly regarded the fact that Mr Lumba has been able to delay his deportation by pursuing applications and appeals which, thus far, have been unsuccessful as being relevant to the assessment of a reasonable period of detention. It has not been suggested by the Secretary of State that any of these applications or appeals have been hopeless and abusive. For the reasons given above, the fact that the applications and appeals delayed the deportation should have been regarded as irrelevant. The courts below also appear to have taken into account Mr Lumbas refusal of voluntary return without making it clear how this is relevant to the assessment of a reasonable period. As I have said, it is of limited relevance as a free standing reason (see paras 122 128 above). It would be legitimate to infer from the refusal of voluntary return that there is a risk of absconding. But it is not clear that Collins J or Davis J drew such an inference in this case. Mr Husain submits that it was incumbent on the Court of Appeal to consider the legality of the continuing executive detention by reference to the situation current at the time of the appeal and that they erred in failing to do so. He says that they should have considered what the prospects were of removal within a reasonable period. I accept that, where the facts are the same as they were before the first instance judge and the only difference is the passage of further time, there is no reason why the Court of Appeal should not decide for themselves whether a continuing detention is unlawful. I also accept that, where there is fresh evidence, the Court of Appeal are entitled to apply the Hardial Singh principles and consider for themselves on the basis of all the up to date material whether a continuing detention is lawful. Indeed, that was the course that the Court of Appeal took in R (I). But there are some circumstances where that course is not appropriate. In the present case, the Court of Appeal took the view that such a course was inappropriate. They said at para 108 that they should not embark on a first instance decision on matters, such as whether the deportation order should be revoked on account of [Mr Lumbas] mental condition, that Parliament has entrusted to a specialist tribunal. That was an entirely proper reason for the Court of Appeal not making a first instance decision in this case. Mr Husain submits that the Supreme Court should allow Mr Lumbas appeal. I would allow the appeal of both appellants for the generic reasons that I have stated earlier. But I would not decide whether the detention of Mr. Lumba for almost 56 months was in breach of the Hardial Singh principles. The reasons which led the Court of Appeal to refuse to make a first instance decision apply with even greater force in an appeal to the Supreme Court. It is only in the most exceptional case that this court should embark on a task that is normally to be performed by a court of first instance. In view of the passage of further time since the decision of the Court of Appeal as well as the fact that the courts below failed to apply the Hardial Singh principles correctly, I would remit Mr Lumbas claim for damages for breach of those principles to the High Court for reconsideration in the light of all the evidence as to the current position. The case of Mr Mighty As I have already said, Mr Mighty was detained between 19 May 2006 and 28 July 2008. He issued proceedings on 29 May 2008 alleging that his detention was for longer than a reasonable period and inter alia that, on a proper application of the Hardial Singh principles, he should have been released. His Hardial Singh case was rejected by Davis J. There was no appeal on this aspect of the case to the Court of Appeal and the point has not been raised on behalf of Mr Mighty before this court. Exemplary damages The relevant principles are not in doubt. Exemplary damages may be awarded in three categories of case: see per Lord Devlin in Rookes v Barnard [1964] AC 1129. The category which is relevant for present purposes is that there has been an arbitrary and outrageous use of executive power (p 1223) and oppressive, arbitrary or unconstitutional action by servants of the government (p 1226). In this category of case, the purpose of exemplary damages is to restrain the gross misuse of power: see AB v South West Water Services Ltd [1993] QB 507, 529F per Sir Thomas Bingham MR. It must be shown that the conscious wrongdoing by a defendant is so outrageous, his disregard of the plaintiffs rights so contumelious, that something more [than compensatory damages] is needed to show that the law will not tolerate such behaviour as a remedy of last resort: see per Lord Nicholls Kuddus v Chief Constable of Leicestershire Constabulary [2002] 2 AC 122 at para 63. Both Davis J and the Court of Appeal addressed the question of exemplary damages, although in view of their findings on the issue of liability, it was not necessary for them to do so. Davis J said at para 205 of his judgment that: I add, briefly, that, even if I had concluded there was unlawful detention in any of these cases justifying an award of damages, I would not in any event have awarded exemplary damages on the footing of unconstitutional, oppressive or arbitrary conduct, in so far as sought. While the Home Office has, to put it mildly, not covered itself in glory in this whole matter of the new policy, I think the failings were in essence one of failing, promptly and directly, to confront and address a perceived legal difficulty: whether through concerns at being bearers of unwelcome news to the Ministers or through an instinct for ducking an apparently intractable problem or through institutional inertia or some other reason, I cannot really say. I am not prepared, however, to conclude on the material before me that there was a conscious decision within the Home Office to operate tacitly an unpublished policy, known to be highly suspect, in the hope it would not be uncovered or, if it was uncovered, against a plan, if the courts intervened, to present that reversal as being due solely to the courts or the Human Rights Act. In my view what happened here, in any of these five cases, cannot fairly, I think, be described as sufficiently outrageous to justify an award of exemplary damages. In any event, I emphasise that individual consideration was given to the cases of each of the claimants. By the time of the appeal, the Secretary of State had disclosed more material than was before the judge. The Court of Appeal said that, even taking account of the additional material, they agreed with the assessment of the judge. They said: 122. We give weight to that assessment by the judge at the end of his very careful and comprehensive judgment. It also accords with our own view, even taking account of the additional material which has been disclosed. We consider that there was a failure, which to put it very mildly indeed, was very regrettable, on the part of the department to face up to the basic problem that the published policy had not caught up with the much more restrictive approach implicit in ministerial statements on the subject. However, we find it difficult to describe such conduct as unconstitutional, oppressive or arbitrary, in circumstances where the Home Secretary had an undoubted power to detain for the purposes in question, and it has been held that on the facts of the case he could lawfully have exercised that power with the same effect; at any rate, if it can be so described, these circumstances mean that the conduct is at the less serious end of unconstitutional, oppressive or arbitrary. We also bear in mind also that the claimants had the right to apply for bail to an independent tribunal, at which it was possible for the continuing reasonableness of their detention to be challenged. An award of exemplary damages would be an unwarranted windfall for them, and it would have little punitive effect since it will not be borne by those most directly responsible. Rather it would be a drain on public resources which in itself is unlikely to add significantly to the remedial effect of a declaration of unlawfulness. 123. Moreover, it is difficult to see on what basis exemplary damages could be assessed in lead cases such as these. The conduct of the Home Secretary complained of in the present case was common to a large number of detainees who have brought proceedings against him. The selection of lead claimants such as [Mr Lumba] and [Mr Mighty] does not depend on the merits of their individual cases, which have not been assessed other than for the purposes of the grant of permission to apply for judicial review or permission to appeal. Other claimants may have equally or even more meritorious claims to damages, and if appropriate exemplary damages, than the present claimants. There would be no principled basis, therefore, to restrict an award of exemplary damages to the present lead claimants. If an award of exemplary damages is made to the present lead claimants, a similar award would have to be made in every case. Exemplary damages are assessed by reference to the conduct of the tortfeasor. The court would, we think, have to assess an appropriate sum as exemplary damages and divide it between all successful claimants. But we do not know how many successful claimants there will ultimately be. These considerations demonstrate that exemplary damages, in a case such as the present, may be ill suited to be a remedy in judicial review proceedings, and would be in the present cases. Yet further material has been disclosed by the Secretary of State since the hearing before the Court of Appeal. Mr Westgate submits that it can now be seen that this is indeed one of those exceptional cases where awards of exemplary damages are merited. His submissions are detailed and elaborate. I shall endeavour to concentrate on the essential points. He submits that the conditions for an award of exemplary damages have been established because (i) from April 2006 until September 2008 the Secretary of State operated a hidden blanket policy which did not give effect to the Hardial Singh principles; (ii) the Secretary of State actively discouraged disclosure of her true detention policy with the consequence that the integrity of written reasons for detention was compromised; (iii) there was a deliberate decision not to publish the hidden policy; and (iv) the Secretary of State and/or her officials knew that, or were reckless as to whether, their actions were unlawful, preferring for political reasons to leave it to the courts to remedy the illegality. In addition, Mr Westgate submits that the Secretary of State in this litigation has fallen short of the duties of candour owed to the courts in that (v) the courts have been intentionally or recklessly misled by the Secretary of States officials; (vi) elementary safeguards necessary to promote compliance with a public authoritys duty of candour in judicial review proceedings have not been observed: in particular, the Deputy Chief of Staff of the Chief Executive of the UK Border Agency was selected as the person responsible for overseeing disclosure, when the responsibility for disclosure was that of the Treasury Solicitor; and (vii) there remain significant lacunae in the disclosure. I find it convenient to take (i) to (iv) together. I have already referred at paras 16 39 above to the hidden blanket policy which did not give effect to the Hardial Singh principles. There is no doubt that such a policy was operated between April 2006 and November 2007 when a slight relaxation was effected by the introduction of Cullen 1. To a large extent, the policy that was applied until September 2008 was a blanket policy. It certainly remained a hidden policy during the whole period. But that of itself comes nowhere near being sufficient to justify an award of exemplary damages. It is the reasons why the policy was not published that are the matters of real concern. There is undoubtedly evidence to support submissions (ii) to (iv). I shall refer to some of it. A more detailed description of the internal material relating to the period between April 2006 and September 2008 that was disclosed to Davis J appears at para 43 of his judgment. At least from 17 May 2006, senior officers within the Home Office, including lawyers of the Home Office Legal Advisers Branch (HOLAB), expressed concern to, among others, Lin Homer (Chief Executive of the Border and Immigration Agency) (BIA) that the policy was unlawful on the grounds that it did not satisfy the Hardial Singh principles and that it differed from the published policy. Thus, for example, on 20 July 2006, Ms Rogerson (Head of Policy for the BIA) said in an email we are increasingly vulnerable and we should probably publish revised criteria. She suggested that they should review the criteria and consider being prepared to release FNPs in some cases, with public protection as a priority. She added that Ministers preferred position may be to continue to detain all FNPs and let immigration judges take any hit which is to be had by releasing on bail. On 19 January 2007, Joy Munro (Deputy Director, Border Control) wrote to Ms Rogerson asking for written evidence of the lawfulness of detaining FNPs whom they were unable to remove. She referred to there being unrest in the CCD about the power in law to detain some of those held if they are not removable. Ms Rogerson replied: We shouldnt be dealing with thisor any such policy discussionson email in this way. I believe a meeting would be the most profitable way forward. On 13 March 2007, Stephen Braviner Roman of HOLAB wrote to Ken Sutton (Deputy Director of the Immigration and Nationality Directorate) saying: if the courts were to find we had not been following our policy in these cases we would face criticism, but also claims for compensation. He also referred to the fact that Simon Harker (from the Treasury Solicitors Department) had pointed out that they have a duty of candour to the court and cannot mislead. First hand evidence of the attitude of the Secretary of State herself is to be found in an email dated 16 July 2007 sent to Lin Homer in response to a draft bail proposal: Is this an issue primarily about legal vulnerability rather than capacity? If so, what is the reason for worrying about this now? Have we been threatened with legal action? This prompted a series of internal emails, some of which referred to the test case of R (A) (Somalia) v Secretary of State for the Home Department [2007] EWCA Civ 804. In an email dated 17 July 2007, Mr Braviner Roman referred to the impending hearing and said that there was an on going legal vulnerability. If it materialised, we would face a liability in damages as well as severe criticism if it was said that we have maintained a policy of detaining people which was unlawful (as opposed to having a lawful policy but just getting it wrong on the facts from time to time, which is inevitable). But the unpublished policy was not disclosed in that litigation. The response to the Secretary of States question was given in an email dated 19 July 2007 which stated that the issue was one of legal vulnerability. To this the Private Secretary of the Secretary of State replied that there did not seem to be a strong enough or immediate enough reason to be releasing or not detaining people at this point. A further insight into the thinking of the senior officers can be derived from the draft policy submission that had been circulated in May 2007. It referred to the legal advice that the Secretary of State was open to legal challenge for the reasons to which I have earlier referred. It also said: if we were to lose a test case, we could present any change in FNP detention practice as having been forced on us by the courts. I agree with what Davis J said about this document at para 43.12 of his judgment: That may or may not be good politics: but it is deplorable practice, especially when it is seen that almost from day one the new unpublished policy was perceived in virtually all quarters within the department to be at least legally vulnerable and in some quarters positively to be untenable and legally invalid. The tone of this draft is further confirmed by the subsequent comments that the longer the delay the more likely it would be that a court judgment would force us to pay out significant sums in compensation to FNPs whose detention was held to be unlawful as well as exposing the department to criticism in the media and to reputational damage. Mr Westgate is able to point to clear evidence that caseworkers were directed to conceal the true reason for detention, namely the unpublished policy, and to give other reasons which appeared to conform with the published policy. This material was disclosed seven days before the start of the hearing before the Court of Appeal. It comprises an exchange of emails in relation to a Liverpool case. On 21 March 2007, Philip Muirhead of the Criminal Casework Directorate (CCD) in Liverpool said of the FNP under consideration that there was no valid reason to detain him. Nichola Samuel, a lawyer of HOLAB, said that if detention was appropriate in that case, this suggested that they were applying a different policy, ie that all FNPs should be detained pending deportation. Gareth Lloyd (Assistant Director of the CCD) responded that he had an email from Mandie Campbell (Director of CCD) telling me that we must detain all FNPs until removal. In an email dated 22 March 2007, Mr Lloyd said that this was not only a Liverpool issue and in an email sent on the following day, he said: We just detain as instructed and choose the most defendable option in our opinion. From the above, it seems to me to be clear that there was a deliberate decision not to publish the hidden policy. The material that has now been disclosed suggests that the assessment made by Davis J at para 205 may have been somewhat generous to the Secretary of State and her senior officials. It is true that they did not know and could not have known that the policy that was being applied was bound to be struck down as unlawful, but they certainly knew that it was vulnerable to legal challenge and that it did not accord with the published policy. Nevertheless, the question remains whether, regrettable though the behaviour of the Secretary of State and her senior officials may have been, it was sufficiently outrageous and sufficiently unconstitutional, oppressive or arbitrary to merit awards of exemplary damages. I approach this question without regard to the allegations of lack of candour in the litigation. This is because the role of exemplary damages is to punish the commission of the underlying tort and not the subsequent conduct of the litigation. Any disapproval of the conduct of the litigation can be marked by an appropriate order for costs or by an increased award of (compensatory) aggravated damages: Thompson v Commissioner of Police of the Metropolis [1998] QB 498, 517D per Lord Woolf MR. Whether the high threshold for the award of exemplary damages has been crossed in any particular case is ultimately a matter of judgment. Opinions can reasonably differ on whether a defendants conduct has been so outrageous and so unconstitutional, oppressive or arbitrary as to justify the imposition of the penalty of exemplary damages. An appellate court should not interfere with the judgment of the court below unless that judgment is plainly wrong. On the material that was before him, Davis J was entitled to reach the conclusion that he reached. In my view, the Court of Appeal were also entitled to reach the conclusion that they reached on the more extensive material that was before them. Both the judge and the Court of Appeal applied the correct test. In particular, the Court of Appeal were right to place some weight on the fact that the Secretary of State had the statutory power to detain the appellants pending deportation and that, although she in fact exercised that power unlawfully, she could have done so lawfully. They were also right to say that, if her conduct is properly to be described as unconstitutional, oppressive or arbitrary, it was at the less serious end of the scale. It is material that there is no suggestion that officials acted for ulterior motives or out of malice towards the appellants. Nevertheless, there was a deliberate decision taken at the highest level to conceal the policy that was being applied and to apply a policy which, to put it at its lowest, the Secretary of State and her senior officials knew was vulnerable to legal challenge. For political reasons, it was convenient to take a risk as to the lawfulness of the policy that was being applied and blame the courts if the policy was declared to be unlawful. The Court of Appeal identified at para 123 of their judgment a further point which militated against awards of exemplary damages to the appellants. Where there is more than one victim of a tortfeasors conduct, one award of damages should be made which should be shared between the victims, rather than separate awards of exemplary damages for each individual: see Riches v News Group Newspapers Ltd [1986] QB 256. This is because the purpose of the award is to punish conduct rather than compensate the claimants. In Riches, the victims of the tort were a small class who were all before the court. But where (as in the present case) there is potentially a large number of claimants and they are not all before the court, it is not appropriate to make an award of exemplary damages: see AB v South West Water Services Ltd [1993] QB 507, 527B D per Stuart Smith LJ and p 531D E per Sir Thomas Bingham MR. Unless all the claims are quantified by the court at the same time, how is the court to fix and apportion that punitive element of the damages? If the assessments are made separately at different times for different claimants, how is the court to know that the overall punishment is appropriate? The Court of Appeal were right to regard this a further reason why it was not appropriate to award exemplary damages in the present case. There is yet one further point. It is unsatisfactory and unfair to award exemplary damages where the basis for the claim is a number of serious allegations against named officials and Government Ministers of arbitrary and outrageous use of executive power and those persons have not been heard and their answers to the allegations have not been tested in evidence. In a private law action, they would almost certainly have been called to give evidence. But oral evidence is rarely adduced in judicial review proceedings and, understandably, it was not adduced in the present case. Overall conclusion I would, therefore, allow these appeals. For the reasons that I have given, the Secretary of State is liable to both appellants in the tort of false imprisonment on the narrow ground that she unlawfully exercised the statutory power to detain them pending deportation because she applied an unpublished policy which was inconsistent with her published policy. The appellants are, however, only entitled to nominal damages because, if the Secretary of State had acted lawfully and applied her published policy, it is inevitable that both appellants would have been detained. As regards the discrete question whether the detention of Mr Lumba was in any event unlawful on the grounds of a breach of the Hardial Singh principles, I would remit this to a High Court judge. Finally, neither appellant is entitled to exemplary damages. LORD HOPE In agreement with Lord Walker, Lady Hale, Lord Collins, Lord Kerr and Lord Dyson I would hold that the Secretary of State is liable to the appellants in the tort of false imprisonment because she applied to them an unpublished policy which was inconsistent with her published policy, and I too would remit to a High Court judge the question whether Mr Lumbas detention was unlawful as being in breach of the Hardial Singh principles. As I am anxious to avoid adding to the length of the courts judgment, I shall simply say that I am in full agreement with all the reasons that Lord Dyson has given on these issues except that I do not have the same difficulty as he has with the use of the phrase abuse of power by Lord Walker (see para 69, above). There are only three points on which I wish to comment. First, as Lord Phillips has noted (see para 258, below), it was common ground in these appeals that Lord Dyson correctly summarised the effect of Woolf Js judgment in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704. Nevertheless he has indicated that he does not consider that the first and second principles that Lord Dyson has extracted from it can properly be derived from what Woolf J said in that judgment. For my part, I think that Lord Dysons summary, which he has taken from his judgment in R (I) v Secretary of State for the Home Department [2003] INLR 196, para 46, is accurate and I would endorse it. We can, of course, read what Woolf J said for ourselves, and there are no doubt various ways of expressing what Lord Dyson has taken from it. The essential point, as Lady Hale has explained (see para 199, below), is that the detention must be for the statutory purposes of making or implementing a deportation order and for no other purpose. Lord Phillips says that he can see no justification for reading the terms of the statute in this way, that it places an unjustified restriction on the Secretary of States power of detention and that he does not believe that Woolf J intended to say what Lord Dyson has attributed to him. He would read Hardial Singh as concerned only with the length of time that was reasonably necessary to effect deportation and not the purpose of the detention. I am unable, with respect, to agree with this interpretation of Woolf Js judgment. There are two points that need to be considered. The first is, what do the words that Woolf J used actually mean? The second is whether, if they have the meaning that Lord Dyson has attributed to them, this limitation on the statutory power can properly be read into the statute. As to the first point, in the second sentence of the relevant paragraph (see para 262 of Lord Phillipss judgment) Woolf J makes it plain that in his view the statutory power can only authorise detention if the individual is being detained pending the making of a deportation order or pending his removal and for no other purpose. I think that his judgment could not be clearer on this issue, and that Lord Dyson has captured the essential points that Woolf J made accurately in his summary. As for the second, it must be recognised that until now Woolf Js statement of the limitations to the statutory power has never been questioned. I think that there are good reasons for this. To confine the limitation to the period of the detention only and release the Secretary of State from the limitation as to purpose which Woolf J identified would greatly reduce the protection which, as I read it, his judgment was designed to give to the detainee. For obvious reasons that, if it were to happen, would be regrettable. It would, as Lord Phillips indicates in para 269, enable the Secretary of State to exercise the power to detain simply because he believed that the detainee would, if released, pose a threat to national security. I do not think that article 5(1)(f) of the European Convention on Human Rights permits this interpretation of the statutory power. If Parliament had intended that the power to detain could be used for a purpose other than the making or effecting of a deportation order, it would have had to have said this expressly and it has not done so. It is hard also to see how the limitation as to time which Lord Phillips accepts can be read into the statute can be tested without having regard to the purpose for which the detainee is being held. The limitation as to time and the limitation as to purpose are really two sides of the same coin. They cannot be separated from each other. I think that Woolf J was right to recognise this and that there are sound reasons for all that he said about the limitations that must be understood to qualify the statutory power. Second, I cannot accept Lord Phillipss conclusion that the application of the secret policy did not render the detention of the appellants unlawful. The basis for that view is that, if the published policy had been applied they would have been detained anyway and that, had they challenged their continued detention, they would have had no legitimate expectation of obtaining an order for their release. This is the causation argument which, for the reasons Lord Dyson gives in paras 62 68 with which I agree, he rejects. The key point, as I see it, are that we are dealing in this case with the tort of false imprisonment. Torts of this kind are actionable per se regardless of whether the individual suffers any harm. While not every breach of public law will give rise to a cause of action on this ground, the history of this case shows that there was here a serious abuse of power which was relevant to the circumstances of the appellants detention. If the rule of law is to be sustained, the detention must be held to have been unlawful. The appellants were being detained without regard to the purpose for which the Secretary of State was authorised to exercise the power by the statute. The court must insist that powers of detention are exercised according to law. If they are not, those who have abused their powers must accept the consequences. It is no answer for them to say that they could, had they put their mind to it, have achieved the same result lawfully by other means. Third, I agree that this is not a case for exemplary damages. But, for the reasons given by Lord Walker and Lady Hale, I would hold that the breach of the appellants fundamental rights that has occurred in these cases should not be marked by an award only of nominal damages. An award on ordinary compensatory principles is, of course, out of the question. It is plain that the appellants would not have had any prospect of being released from detention if the Secretary of State had acted lawfully. So they cannot point to any quantifiable loss or damage which requires to be compensated. But the conduct of the officials in this case amounted, as Lord Walker says (see para 194, below), to a serious abuse of power and it was deplorable. It is not enough merely to declare that this was so. Something more is required, and I think that this is best done by making an award of damages that is not merely nominal. The principles on which damages for breaches of fundamental rights are to be assessed in situations such as this are not greatly developed, as Elias CJ pointed out in the Supreme Court of New Zealand in Taunoa and others v Attorney General and another [2007] 5 LRC 680, para 108. But some guidance is available from judgments which the Judicial Committee of the Privy Council has given where a constitutional right has been infringed. In Attorney General of Trinidad and Tobago v Ramanoop [2006] 1 AC 328 Lord Nicholls of Birkenhead added his own words to those of the Board in Harrikissoon v Attorney General of Trinidad and Tobago [1980] AC 265 as to how an award of damages should be assessed in such a case. In para 18 he observed that when exercising its constitutional jurisdiction the court is concerned to uphold, or to vindicate, the constitutional right. In para 19 he said that an award, not necessarily of substantial size, might be needed to reflect the sense of public outrage, emphasise the gravity of the breach and deter further breaches. The law on this matter is still in the process of being worked out, so I should like to say just a little more about it. Although such an award is likely in financial terms to cover much the same ground as an award by way of punishment in the sense of retribution, punishment in that sense is not its object. The expressions punitive damages or exemplary damages are therefore best avoided. Allowance must be made for the importance of the right and the gravity of the breach in the assessment of any award. Its purpose is to recognise the importance of the right to the individual, not to punish the executive. It involves an assertion that the right is a valuable one as to whose enforcement the complainant has an interest. Any award of damages is bound, to some extent at least, to act as a deterrent against further breaches. The fact that it may be expected to do so is something to which it is proper to have regard. As for the amount to be awarded, an award is referred to as a conventional award when it is incapable of being calculated arithmetically as there is no pecuniary guideline which can point the way to a correct assessment: Lim Poh Choo v Camden and Islington Area Health Authority [1980] AC 174, 189G H, per Lord Scarman. In most cases the sum to be awarded can be derived from experience and from awards in similar cases: Ward v James [1966] 1 QB 273, 303, per Lord Denning MR. But that cannot be said of this case. So I would turn for guidance to what Lord Bingham of Cornhill said in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309, para 8. The conventional award that he had in mind in that case to mark the injury and loss due to the unwanted child was not, and was not intended, to be compensatory. It was not the product of calculation, nor was it derived from awards in other similar cases. But it was not a nominal, let alone a derisory, award. Its purpose was to afford some measure of recognition of the wrong done. In agreement with Lord Steyn, I regarded the idea of a conventional award under the tort system in that case as contrary to principle: Rees v Darlington Memorial Hospital NHS Trust paras 46, 70 77. But I do not think that it is open to the same objection in the present context. In this case the factors referred to by Lord Nicholls in Ramanoop must be the primary consideration. There must be some recognition of the gravity of the breach of the fundamental right which resulted in false imprisonment, and account should be taken of the deterrent effect of an award lest there be the possibility of further breaches. But account should also be taken of the underlying facts and circumstances which indicate that it should not be more than a modest one. It should do no more than afford some recognition of the wrong done, without being nominal or derisory. Lord Walker has suggested that an award of 1,000 to each appellant would be appropriate. We have no yardstick by which that sum can be measured to test its accuracy. Given the purpose of the award, I see no reason to disagree with his assessment although I, for my part, would have arrived at a substantially lower figure. LORD WALKER The issue on which Lord Brown differs from Lord Dyson is one of high importance and great difficulty. Its high importance is obvious. Lord Dyson cites Lord Bridge in R v Deputy Governor of Parkhurst Prison Ex p Hague [1992] 1AC 58, 162, The tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it. It is a species of trespass to the person and as such a tort actionable without the need for proof of special damage. The notion that no more than nominal damages should ever be awarded for false imprisonment by the executive arm of government sits uncomfortably with the pride that English law has taken for centuries in protecting the liberty of the subject against arbitrary executive action. It would in Lord Browns view seriously devalue the whole concept of false imprisonment. The difference of opinion between two Justices with so much expert knowledge in the field of public law, on a point of such high importance, demonstrates its difficulty. I hardly need say that it is with diffidence that I make any contribution to the debate. Lord Browns approach to the solution to the problem is to distinguish between cases where there is no lawful authority to detain a person (including cases where a precondition to lawful detention has not been satisfied) and cases where there is a power to detain, but in the exercise of that power the decision maker has been in breach of some public law duty. In cases (or at any rate some cases) of the flawed exercise of a power to detain there is (so the argument goes) no false imprisonment at all, and so the question of awarding damages, whether nominal or otherwise, simply does not arise. This solution has considerable attractions. The proposed distinction is based on the difference between the existence (or rather non existence) of a lawful authority to detain, and a defective exercise of an authority which does exist: see the observations of Lord Brown in R (Khadir) v Secretary of State for the Home Department [2006] 1AC 207, para 33. The difficulty that I feel is whether the distinction, though clear enough in theory, can cope with the variety and complexity of the problems that arise in practice, as illustrated by the numerous decided cases cited to the court. I also have difficulty (or perhaps this is another way of putting the same point) in reconciling the basic existence/exercise distinction with the four categories which Lord Brown extracts from his analysis of successful claims for false imprisonment by executive action. His four categories are (1) no power to detain; (2) failure to satisfy a precondition to exercising the power to detain; (3) detention beyond the scope of the power to detain; and (4) power to detain limited by published official policy. The distinction is clear enough in extreme cases. R v Governor of Brockhill Prison Ex p Evans (No 2) [2001] 2AC 19 was a case (in Lord Browns category (1)) in which there was simply no lawful authority for the claimants detention after the date of expiration of her term of imprisonment, when properly adjusted for time spent on remand (the complicated statutory provisions as to allowances for multiple periods spent on remand had been misinterpreted). At or near the other extreme was the breach of a public law duty to see that an asylum seeker detained at a detention centre received a medical examination within 24 hours. The omission to provide a medical examination was an administrative failing but it did not render the detention unlawful: R (HK (Turkey)) v Secretary of State for the Home Department [2007] EWCA Civ 1357. Lord Brown supplements his category (1) by category (2) so as to let in a range of cases in which there is for the time being no lawful authority to detain because some precondition has not been satisfied. A well known example of this is Christie v Leachinsky [1947] AC 573, where a man arrested without a warrant was not correctly informed of the offence which gave rise to the power of arrest without a warrant. Moreover categories (1) and (2) must be expanded to cover cases in which detention, although initially lawful, has become unlawful because of a failure to carry out some procedure or satisfy some condition of precedent fact required by statute. A procedural example is Roberts v Chief Constable of the Cheshire Constabulary [1999] 1WLR 662, where the provisions of the Police and Criminal Evidence Act 1984 required detention in police custody to be reviewed every six hours. The claimant had been detained at 11.25pm and the police officers failure to review his detention by 5.25 am on the next day made his detention unlawful until it was reviewed (and his detention continued) at 7.45 am, and the Court of Appeal refused to overturn or reduce the award of 500 damages, even though it accepted that his detention would have continued if a review had been carried out at the right time. By contrast in R (Saadi) v Secretary of State for the Home Department [2002] 1WLR 3131 the statement of incorrect and inappropriate reasons on an official form handed to detained asylum seekers was not treated as a failure to satisfy a condition precedent affecting the legality of their continued detention. The distinction between these two cases is that the relevant statutes were interpreted in one case as imposing a condition which had to be satisfied if continued detention was to be lawful, and as not imposing such a condition in the other case. It is, as Laws LJ emphasised in R (SK (Zimbabwe)) v Secretary of State for the Home Department [2009] 1WLR 1527, paras 21 and 25, an issue of statutory construction. In that case the Court of Appeal held that compliance with rule 9 of the Detention Centre Rules 2001 (calling for a monthly review of detention with written reasons given to the detained person) was not a precondition to the continuation of lawful detention. (See Laws LJ at paras 31 35 and Keene LJ agreeing, with some hesitation, at para 47.) Lord Browns category (3) is detention beyond the scope of the relevant power. Laws LJ in SK (Zimbabwe), para 21, referred to the reach of the power. These expressions, as I understand them, approximate to the object or purpose for which Parliament has conferred the power. The importance of the statutory purpose has been recognised since Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 and (as Lord Dyson notes in para 30 of his judgment) the Hardial Singh principles (see R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704) reflect the application of the wide general principle of not deviating from the statutory purpose to the particular field of the detention of foreign nationals pending deportation. Woolf J made this clear in Hardial Singh itself at p 706. The wide general principle of not deviating from the statutory purpose is of such fundamental importance in public law that it can be seen as going to the existence of the power, rather than merely to its exercise. In law the power exists only for the purposes for which Parliament has conferred it on the executive. In Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97, 113, the Privy Council put it very simply: If removal is not pending . the director has no power at all. So I would see Lord Browns category (3) as fitting reasonably comfortably into his basic existence/exercise classification. Determining the purpose for which Parliament has conferred a power is also a process of statutory construction. That process should not, in my opinion, be minutely elaborated. I entirely accept the exposition of the Hardial Singh principles by Dyson LJ (as he then was) in R (I) v Secretary of State for the Home Department [2003] INLR 196, para 46. It goes no further than spelling out clearly what is necessarily implicit in the purpose of detention with a view to deportation, and it has been widely cited and followed. I have more of a problem in seeing Langley v Liverpool City Council [2006] 1 WLR 375 as a case where the police departed from the statutory purpose in exercising their power of removal under section 46 of the Children Act 1989 when an emergency protection order under section 44 of that Act had already been made. The purpose of both statutory powers (one conferred on the police, the other on the court) was child protection in an emergency situation. I regard Langley as a finely balanced decision in which the Court of Appeal held that well intentioned police action, directed to child protection and taken under pressure of circumstances, was nevertheless an unlawful manner of exercising the section 46 power. Thorpe LJ (at para 79) reached that conclusion with some reluctance. It is with Lord Browns category (4), however, that I have the greatest difficulty. Here the issues are concerned with official policies how rigid or flexible they may be, whether and in how much detail they should be published, whether (in these appeals) a policy with a presumption towards detention is permissible. Official decision makers need policies for obvious reasons. Although decisions in the field of immigration law are all taken in the name of the Secretary of State, only a tiny handful of cases are actually decided by the Secretary of State personally. Decisions are taken by a small army of officials at different levels, and they need guidance in order to achieve consistency in decision making. Members of the public, or those of the public liable to be affected, should know where they stand, and so they are entitled to know, at least in general terms, the content of the official policies. This is not a matter of being faithful to the purposes of statutory powers, but of seeing that they are exercised consistently and fairly. There is a helpful discussion of these points in the judgment of the Court of Appeal in these appeals, prepared by Stanley Burnton LJ, at paras 53 58. It is here that Lord Diplocks dictum in Holgate Mohammed v Duke [1984] AC 437 calls for consideration. In a passage (at p.444) quoted by both Lord Brown and Lord Dyson, Lord Diplock expressed the view that Wednesbury principles are applicable to determining the lawfulness of the exercise of a statutory power of arrest not only in proceedings for judicial review but also in an action for damages for false imprisonment. As Lord Dyson says, there seems to have been little argument on this point in the House of Lords. Nor has there been much discussion of it in later authorities. It was cited and followed by the Court of Appeal in D v Home Office (Bail for Immigration Detainees intervening) [2006] 1 WLR 1003 (see especially Brooke LJ at para 111). In SK (Zimbabwe), Holgate Mohammed was cited by counsel but not referred to in the judgments in the Court of Appeal. Holgate Mohammed and D v Home Office (Bail for Immigration Detainees intervening) were both discussed at some length in the Court of Appeal in these appeals (paras 50 52, and, in relation to causation, paras 82 84). The Court of Appeal rightly regarded itself as bound by the latter decision. This court is not bound to follow the Court of Appeals acceptance of Lord Diplocks dictum, and for my part I would refrain from giving it unequivocal approval. Mr Beloff QC (appearing for the Secretary of State in this court) put forward some persuasive submissions in favour of an alternative approach. They are noted in paras 76 and 86 of Lord Dysons judgment. The first two submissions would make a qualification or exception, for the purposes of a private law claim for damages for false imprisonment, to the Anisminic equation of any significant public law error with lack of jurisdiction (see Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147). Lord Dyson, in para 87, dismisses these in a single sentence as putting the clock back to pre Anisminic days. With great respect, I think there may be more to be said about it. Anisminic was one of the seminal cases in the development of modern public law. But its full implications are still open to debate. The context in which it equated wrongful exercise of jurisdiction with excess of jurisdiction (the courts response to an ouster clause in the Foreign Compensation Act 1950) was far removed from a private law claim for damages for false imprisonment. It is a big step to extend the principle to a claim for damages for false imprisonment, where a defendant may have his professional reputation at stake and may not enjoy the procedural protections which attend judicial review (strict time limits, and the discretionary nature of the remedy granted). I would prefer a more demanding test, that in a case where an extant statutory power to detain has been wrongly used there would be a private law claim only if the misuse amounted to an abuse of power (including but not limited to cases of misfeasance or other conscious misuse of power). However, it is in my opinion unnecessary to decide the point in these appeals because the conduct of officials, including some senior officials, of the Home Office between April 2006 and September 2008 amounted to a serious abuse of power. Lord Dyson has in paras 154 165 of his judgment described in restrained language how senior officials were well aware of the risk (indeed the likelihood) of challenge and decided to run the risk, (including the proposal to let immigration judges take any hit), and how further damaging facts were disclosed by stages, some before Davis J, some before the Court of Appeal, and some only in this Court. Wherever the line is to be drawn (if, as I think, a line does need to be drawn between public law errors in detention policies which do or do not give rise to an action for false imprisonment) these appeals must in my view fall on the wrong side of the line from the Secretary of States point of view. I agree with Lord Dyson (paras 165 168) that despite the deplorable official conduct this is not a case for exemplary damages. But in my view it is not a case for nominal damages either. Apart from cases concerned with constitutional rights in the Caribbean, (the line of authority starts with Attorney General of St Christophers, Nevis and Anguilla v Reynolds [1980] AC 637), the common law has always recognised that an award of more than nominal damages should be made to vindicate an assault on an individuals person or reputation, even if the claimant can prove no special damage. (See Mayne & McGregor on Damages, 18th ed. (2009) paras 42 008 to 009). In these appeals, each claimant had a very bad criminal record and would undoubtedly have been kept in custody under the Secretary of States published policies. They cannot therefore establish a claim to special damages. But the argument on causation does not completely defeat their claims. I would award each claimant the sum of 1,000 damages. I would remit the case of Mr Lumba as Lord Dyson proposes. On every point on which I have not expressed disagreement or doubt I am in respectful agreement with the judgment of Lord Dyson. LADY HALE I agree entirely with Lord Brown that far and away the most important issue in this case, as it is in the case of SK (Zimbabwe) [2009] 1 WLR 1527, is whether the breach of a public law duty on the part of the person authorising detention is capable of rendering that detention unlawful. If it is, the second question is which breaches of public law duties have that consequence; and the third question is whether it makes any difference that the person authorising the detention both could and would have done so lawfully, without breaching the public law duty in question, had the point been drawn to his attention. If that does not make a difference to liability, a fourth question is whether the fact that the person detained both could and would have been lawfully detained is of any relevance to the assessment of his damages for false imprisonment. But I differ from Lord Brown in his view that the answer to the last of these questions should govern the answer to the first, second or third question: in other words, that if we take the view that no compensatory damages are payable in a case such as this it should follow that there is no liability in the first place. Forcefully and attractively though that argument is made, it does put the cart before the horse. It also fails to acknowledge that false imprisonment is a trespass to the person, actionable per se without proof that the claimant has suffered any harm for which the law would normally grant compensation. As to the first question, this is a stronger case than is still before the Court in SK (Zimbabwe) because the illegality alleged (and now admitted) went to the criteria for detention rather than to the procedure for authorising it. The statutory power to detain under paragraph 2(2) and (3) of schedule 3 to the Immigration Act 1971 (quoted by Lord Dyson at paragraph 4 of his judgment) is, on its face, very broad. Provided that the detainee has been notified of a decision to make a deportation order against him, and he is not detained in pursuance of the sentence or order of a court, he may be detained pending the actual making of the order (para 2(2)). Once the deportation order is made, he may be detained pending his removal or departure from the United Kingdom (para 2(3)). However, since at least the case of R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704, it has been recognised that there are limitations implicit in these powers: the detention must be for the statutory purpose of making or implementing a deportation order and for no other purpose; hence it cannot be continued once it becomes clear that it will not be possible to effect deportation within a reasonable period; the Secretary of State must act with reasonable diligence and expedition to bring this about; and in any event the detention cannot continue for longer than a period which is reasonable in all the circumstances. These limitations were devised long before the Human Rights Act and have been accepted without question ever since. They stem from the long established principle of United Kingdom public law that statutory powers must be used for the purpose for which they were conferred and not for some other purpose: Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997. They were not inspired by article 5(1)(f) of the European Convention for the Protection of Human Rights and Fundamental Freedoms and it does not follow that, because detention would be permissible under article 5(1)(f), it is also permissible under United Kingdom law. The last restriction referred to above has not hitherto been questioned but it is the most questionable, for the Secretary of State may genuinely be doing all that she can to effect deportation, and deportation may still be a realistic possibility, but even so the deportee may have been detained for so long that it is no longer lawful to keep him there. That this has never until now been questioned indicates how strong are the objections to indefinite detention by order of the executive. But it undoubtedly gives rise to some difficult questions, as is amply shown by Lord Dysons discussion, in paragraphs 102 to 128 of his judgment, of the matters to be taken into account in deciding whether or not the period of detention is reasonable. In addition to such substantive limitations, the law has also imposed procedural requirements upon apparently open ended statutory powers. In common with Lord Dyson, I do not think that it matters whether these are characterised as implied conditions precedent or implied procedural requirements. The effect is the same. The best known example is Cooper v Wandsworth Board of Works (1863) 14 CB (NS) 180, 143 ER 414. The Board had power to alter or demolish a house if the builder had not given 7 days notice of his intention to build. The Court held that the common law imposed upon the Board a requirement to notify the builder before they decided to demolish the house, so that he could present arguments why they should not. As the Board had not given the builder such an opportunity before demolishing the house, they were liable to him in damages for trespass. It is true that Byles J founded his opinion partly on the basis that the Board had also failed in their express statutory duty to notify the builder of their demolition order: but the majority based their opinions on the broader principle that he had a right to be heard before the order was made: in other words, there were public law duties inherent in the apparently open ended statutory power. Another example of the same principle is Christie v Leachinsky [1947] AC 573 where the common law implied a duty, when exercising a power of arrest, to tell the arrested person the power under which he was being arrested, so that he might know whether or not he could resist arrest. Once again, the police were liable in false imprisonment. The question is whether the same principles apply where the requirement in question is the duty, imposed by the common law, for the Secretary of State and his officials to comply with a published policy, unless there is good reason not to do so. As I understand it, Lord Brown accepts that they may indeed do so, for he agrees that if the published policy further narrows and defines the circumstances in which the power will be exercisable, the Secretary of State may not lawfully depart from that. It is on that basis that he considers R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139 to have been correctly decided. Support for the proposition that the ordinary requirement to observe public law duties may restrict the lawful exercise of a statutory (or common law) power which would otherwise authorise a trespass can be found in the dictum of Lord Diplock in Holgate Mohammed v Duke [1984] 1 AC 437, 443, quoted by Lord Dyson at para 73 of his judgment. On the face of it, this was a lawful arrest. The argument was that the police officer had arrested the claimant for the wrong reason: to get her to confess. There can be little doubt that, had the House of Lords concluded that this was indeed an impermissible consideration, they would have held that the arrest was unlawful and that the claimant was entitled to the damages she sought. This was, after all, an action for damages for false imprisonment in which the claimant had succeeded in the county court. If the House had thought that she would not have been entitled to damages in any event, it would surely have said so. I agree with Lord Walker that it is not necessary to hold that every single departure from policy, or even failure in the decision making process, attracts these consequences in order to hold that they apply in this case. The discrepancy between what the policy said should happen in these cases and what was actually happening is stark. The claimants were being dealt with, not under the published, lawful policy, but under an unpublished, unlawful policy or practice. Yet it is difficult not to have some sympathy for the officials involved. The Government had been hit by a perfect storm in April 2006 when the popular press discovered that foreign national prisoners were being released after serving their sentences without any consideration being given to whether or not they should be deported. It had cost the then Home Secretary his job. The immediate answer was not to let any of them go. This was at odds with the published policy, which presumed against the use of detention powers. Officials knew this and they also knew that the policy needed amendment. But they found it very difficult to devise a policy for publication which would be both lawful and acceptable to ministers. Ministers wanted a near blanket ban on release, whereas the law requires some flexibility to respond to the circumstances of the particular case. So the situation dragged on for many, many months. These are just the sort of circumstances, where both Ministers and their civil servants are under pressure to do what they may know to be wrong, in which the courts must be vigilant to ensure that their decisions are taken in accordance with the law. To borrow from the civil servants correspondence, the courts must be prepared to take the hit even if they are not. The law requires that decisions to detain should be made on rational grounds and in an open and transparent way and not in accordance with arbitrary rules laid down by Government and operated in secret. One of the most disturbing features of this sorry tale is that the case handling officials had to give reasons for their decisions which were not what their real reasons were. The European Convention on Human Rights and the Strasbourg Court have not imposed the same requirements of proportionality upon detention with a view to deportation under article 5(1)(f) as they have upon detention under other provisions in article 5(1). But any deprivation of liberty has to be in accordance with a procedure prescribed by law. Unless the law has certain essential characteristics, there is a risk that detentions may be arbitrary. That is why the open ended common law power to detain people who lack the capacity to make decisions for themselves on grounds of necessity was found incompatible with article 5(1)(e): see L v United Kingdom (2005) 40 EHRR 32. There is every reason to think that Strasbourg would find a secret policy which presumed in favour of the detention of every foreign national prisoner open to the same objections. The common law is just as respectful of the liberty of the person, and just as distrustful of arbitrary and secret decision making by officials acting on behalf of Government, as is the Convention. I would therefore answer yes to the first question. I would also answer the second question in the way proposed by Lord Dyson. In other words, the breach of public law duty must be material to the decision to detain and not to some other aspect of the detention and it must be capable of affecting the result which is not the same as saying that the result would have been different had there been no breach. The third question is whether it makes any difference that, in these particular cases, if the officials had been operating the published policy they both could and would have authorised the detention of these appellants. This would not normally make any difference. In Christie v Leachinsky, the officers could have made a lawful arrest and only chose to make an unlawful arrest for convenience, but they were still liable for false imprisonment. In Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, the custody officer could have reviewed the case when he should have done and would no doubt have authorised the continued detention then, but there was still liability in false imprisonment. For all the reasons given by Lord Dyson, there is no basis for drawing a distinction according to the reason why the detention is unlawful, permitting what has been referred to as a causation defence in some cases but not in others. The most difficult question is whether this should make any difference to the measure of damages awarded. I quite agree with Lord Brown that the importance of strict adherence to the law when depriving people of their liberty should not be devalued. Awarding the same measure of damages, irrespective of whether or not the person could and would have been lawfully detained, serves to reinforce the importance of this principle. Also, if no distinction, according to the reason why the detention is unlawful, is to be drawn in relation to the second question, there should be no such distinction in relation to damages. If we are to hold that a person who could and inevitably would have been detained lawfully had the correct criteria or procedures been applied is not to be compensated for the loss of liberty, then this must apply irrespective of the reason why depriving him of his liberty was unlawful. We cannot single out these public law cases for special treatment. In most cases of false imprisonment, the problem will not arise, because the detainer does not have a choice between acting lawfully and acting unlawfully. The prison governor in R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19 had no power to detain the prisoner beyond the properly calculated term of her imprisonment: the fact that he was acting in compliance with the law as it had previously been thought to be was neither here nor there. The police officer in Langley v Liverpool City Council [2006] 1 WLR 375 had, as the Court of Appeal found in what I agree with Lord Walker was a finely balanced decision, no power to use his power to take a child into police protection under section 46 of the Children Act 1989 when the child could and should have been protected by social workers implementing an emergency protection order under section 44. The immigration officers in Kuchenmeister v Home Office [1958] 1 QB 496 had no power to detain the claimant in such a way as to prevent his transiting from one aircraft to another at London airport. However, where the defendant has failed to comply with a procedural requirement, there is always the possibility that the deed might have been done lawfully. But the whole point of procedural requirements, such as those in Cooper v Wandsworth Board of Works or Christie v Leachinsky, is that the person whose rights are being infringed should have an opportunity of challenging this. So it will rarely be possible to be confident that, had the correct procedure been followed, the outcome would have been the same. Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 is an example where it was possible. This case is another, because it would appear that, had the decision makers applied the published, lawful policy rather than the unpublished, unlawful policy, they would inevitably have reached the same conclusion. Insofar as damages for false imprisonment are meant to compensate for the loss of liberty, it is difficult to see why a claimant should be compensated for the loss of something which he would never have enjoyed. But, left to myself, I would not regard this as the end of the story. Trespass, whether to person or property, has always been actionable per se, without proof of anything which the law regards as damage. The tort is complete when a direct interference with person or property without lawful justification is established. Usually, there will also be some harm done which the wrongdoer must remedy, either by damages or in some other way. Take, for example, the case of the neighbour who put a row of ridge tiles on his neighbours roof. They did no harm to the roof; they did not diminish the value of the house in any way; indeed many might think them an enhancement; but the claimant did not want them there and successfully sued for trespass. The obvious remedy was to remove the tiles or pay the cost of the claimants doing so. But suppose there is no such harm. The claimant has nevertheless been done wrong. Let us also assume, as is the case here, that the circumstances are not such as to attract punitive or exemplary damages. Is our law not capable of finding some way of vindicating the claimants rights and the importance of the principles involved? A way which does not purport to compensate him for harm or to punish the defendant for wrongdoing but simply to mark the laws recognition that a wrong has been done? As Lord Collins explains, the concept of vindicatory damages has been developed in some Commonwealth countries with written constitutions enshrining certain fundamental rights and principles and containing broadly worded powers to afford constitutional redress (and also in New Zealand, which has no written Constitution but does have a Bill of Rights: Taunoa v Attorney General [2008] 1 NZLR 429). In an early article on the Canadian Charter, Damages as a remedy for infringement of the Canadian Charter of Rights and Freedoms (1984) 62(4) Canadian Bar Review 517, Marilyn Pilkington argued that an award of damages under section 24(1) of the Charter should not be limited by the common law principles of compensation. In a proper case it might be designed to deter repetition of the breach, or to punish those responsible or to reward those who expose it. In Attorney General of St Christopher, Nevis and Anguilla v Reynolds [1980] AC 607, the Privy Council upheld a modest award of exemplary damages for breach of a constitutional right. But there can be a middle course between compensatory and exemplary damages. In Jorsingh v Attorney General (1997) 52 WIR 501, de la Bastide CJ and Sharma JA in the Court of Appeal of Trinidad and Tobago both said, albeit obiter, that the remedies available under section 14(2) of the Constitution were not limited by common law principles. Sharma JA said, at p 512, that The court is mandated to do whatever it thinks appropriate for the purpose of enforcing or securing the enforcement of any of the provisions dealing with the fundamental rights. Not only can the court enlarge old remedies; it can invent new ones as well, if that is what it takes or is necessary in an appropriate case to secure and vindicate the rights breached. Since then, the concept of vindicatory damages for breach of constitutional rights has been recognised by the Judicial Committee of the Privy Council, in Attorney General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328 and Merson v Cartright and Attorney General [2005] UKPC 38 (Bahamas); applied to breach of constitutional provisions other than the fundamental rights and freedoms, in Fraser v Judicial and Legal Services Commission [2008] UKPC 25 (St Lucia) and Inniss v Attorney General [2008] UKPC 42 (St Kitts), which involved the dismissal of respectively a magistrate and a High Court registrar in breach of the procedures laid down in the Constitution; and applied to the breach of fundamental rights in Takitota v Attorney General [2009] UKPC 11 (Bahamas), where the Board quoted from Lord Nicholls in Ramanoop, at para 19: An award of compensation will go some distance towards vindicating the infringed constitutional right. How far it goes will depend on the circumstances, but in principle it may well not suffice. The fact that the right violated was a constitutional right adds an extra dimension to the wrong. An additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach, and deter future breaches. Although such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object. Accordingly, the expressions punitive damages or exemplary damages are better avoided . We are not here concerned with a written constitution with a broadly drawn power to grant constitutional redress. But neither are we concerned with a statutory provision, such as section 8(3) and (4) of the Human Rights Act 1998, with a narrowly drawn power to award damages. We are concerned with a decision taken at the highest level of Government to detain certain people irrespective of the statutory purpose of the power to detain. The common law has shown itself capable of growing and adapting to meet new situations. It has recently invented the concept of a conventional sum to mark the invasion of important rights even though no compensatory damages are payable. In the view of the majority of the House of Lords in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309, there were sound reasons of public policy why damages should not be recoverable for the cost of bringing up a healthy child born as a result of a negligent sterilisation. Nevertheless, an award limited to the stress and trauma associated with the pregnancy and birth was insufficient to mark the legal wrong which had been done to the mother. This should be marked by a fixed, non negligible, conventional sum (in that case 15,000). Rees was concerned with the rights to bodily integrity and personal autonomy, the right to limit ones family and to live ones life in the way planned: see Lord Bingham of Cornhill at paragraph 8. These are important rights indeed. But no one can deny that the right to be free from arbitrary imprisonment by the state is of fundamental constitutional importance in this country. It is not the less important because we do not have a written constitution. It is a right which the law should be able to vindicate in some way, irrespective of whether compensatable harm has been suffered or the conduct of the authorities has been so egregious as to merit exemplary damages. Left to myself, therefore, I would mark the false imprisonment in these cases with a modest conventional sum, perhaps 500 rather than the 1000 suggested by Lord Walker, designed to recognise that the claimants fundamental constitutional rights have been breached by the state and to encourage all concerned to avoid anything like it happening again. In reality, this may well be what was happening in the older cases of false imprisonment, before the assessment of damages became such a refined science. I therefore agree, and (subject to the additional points made above) for the reasons given by Lord Dyson, that both these appeals should be allowed. When considering what was a reasonable period for which to detain Mr Lumba in accordance with the Hardial Singh principles, however, I would stress that his psychiatric condition must be among the factors to be taken into account. LORD COLLINS I agree with Lord Dyson that the appeals should be allowed, substantially for the reasons which he gives. This is a case in which on any view there has been a breach of duty by the executive in the exercise of its power of detention. Fundamental rights are in play. Chapter 39 of Magna Carta (1215) said that no free man shall be seized or imprisoned except by the law of the land and the Statute of Westminster (1354) provided that no man of what state or condition he be, shall be imprisoned without being brought in answer by due process of the law. That the liberty of the subject is a fundamental constitutional principle hardly needs the great authority of Sir Thomas Bingham MR (see In re S C (Mental Patient: Habeas Corpus) [1996] QB 599, 603) to support it, but it is worth recalling what he said in his book The Rule of Law (2010), at p 10, about the fundamental provisions of Magna Carta: These are words which should be inscribed on the stationery of the Home Office. The evidence shows that concern was expressed in the Home Office from an early stage about the lawfulness of the policy, and that a deliberate decision was taken to continue an unlawful policy. As Lord Dyson says, caseworkers were directed to conceal the true reason for detention, namely the unpublished policy, and to give other reasons which appeared to conform with the published policy. Home Office officials recognised that Ministers preferred position may be to continue to detain all FNPs and let the immigration judges take any hit which is to be had by releasing on bail. The draft policy submission circulated in May 2007 recommended a change in policy, but also set out continued detention as one of the options, recognising that legal advisers considered that the department would lose on any legal challenge. The draft added: we could present any change in our approach as having been forced on us by the courts. I am satisfied that the serious breach of public law in this case has the result that the detention of the appellants was unlawful. Any other result would negate the rule of law. Christie v Leachinsky [1947] AC 573 shows that where an arrest was unlawful because it did not comply with the requirements imposed by the common law there would be a false imprisonment even if the arrest could have been effected in a proper manner. Holgate Mohammed v Duke [1984] AC 437, 443, is high authority for the proposition that breach of principles of public law can found an action at common law for damages for false imprisonment. Are they entitled to more than nominal damages? In particular are they entitled to vindicatory damages? The expression vindicatory damages has been in common use in the context of proceedings for violation of constitutional rights since Attorney General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328 and Merson v Cartright and Attorney General [2005] UKPC 38. It would seem that the expression had its origin in the United States, where it was sometimes used as a synonym for exemplary or punitive damages (e.g. Cole v Tucker, 6 Tex 266 (1851); Blair Iron & Coal Co v Lloyd, 3 WNC 103 (Pa (1874)), but at other times used to mean damages designed to vindicate a right but which were compensatory in nature (e.g. McBride v McLaughlin, 5 Watts 375 (Pa 1836); Hallmark v Stillings, 648 SW 2d 230 (Mo 1983)). In England the expression first emerged in a sense somewhat different from, but in a sense related to, that in which it is now used. In Broome v Cassell & Co Ltd [1972] AC 1027, 1071, Lord Hailsham of Marylebone LC said: In actions of defamation and in any other actions where damages for loss of reputation are involved, the principle of restitutio in integrum has necessarily an even more highly subjective element. Such actions involve a money award which may put the plaintiff in a purely financial sense in a much stronger position than he was before the wrong. Not merely can he recover the estimated sum of his past and future losses, but, in case the libel, driven underground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a bystander of the baselessness of the charge. As Windeyer J well said in Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 115, 150: It seems to me that, properly speaking, a man defamed does not get compensation for his damaged reputation. He gets damages because he was injured in his reputation, that is simply because he was publicly defamed. For this reason, compensation by damages operates in two waysas a vindication of the plaintiff to the public and as consolation to him for a wrong done. Compensation is here a solatium rather than a monetary recompense for harm measurable in money. See also, e.g. Sutcliffe v Pressdram Ltd [1991] 1 QB 153; Rantzen v Mirror Group Newspapers (1986) Ltd [1994] QB 670; Purnell v Business F1 Magazine Ltd [2007] EWCA Civ 744, [2008] 1 WLR 1. Any consideration of the Privy Council decisions on vindicatory damages must be prefaced by three points. First, they were concerned with alleged violations of constitutional rights. Second, the constitutions contained provision in relation to such violations for redress (Trinidad and Tobago, section 14(1) (without prejudice to any other action which is lawfully available); Bahamas, article 28(1) (but not if adequate means of redress are available under any other law), or relief together with such remedy as the court considers appropriate (Saint Christopher & Nevis, section 96(1), (3); Saint Lucia, section 105(1), (3)). Third, although the distinction has sometimes been blurred (as perhaps in Takitota v Attorney General [2009] UKPC 11, 13), the decisions are concerned with two heads of damage, compensatory damages and vindicatory damages. In Attorney General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328, at 18 19 Lord Nicholls, speaking for the Board, dealt with both heads of damages in this way: [18] When exercising this constitutional jurisdiction the court is concerned to uphold, or vindicate, the constitutional right which has been contravened. A declaration by the court will articulate the fact of the violation, but in most cases more will be required than words. If the person wronged has suffered damage, the court may award him compensation. The comparable common law measure of damages will often be a useful guide in assessing the amount of this compensation. But this measure is no more than a guide because the award of compensation under section 14 is discretionary and, moreover, the violation of the constitutional right will not always be coterminous with the cause of action at law. [19] An award of compensation will go some distance towards vindicating the infringed constitutional right. How far it goes will depend on the circumstances, but in principle it may well not suffice. The fact that the right violated was a constitutional right adds an extra dimension to the wrong. An additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach, and deter further breaches. All these elements have a place in this additional award. Redress in section 14 is apt to encompass such an award if the court considers it is required having regard to all the circumstances. Although such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object. Accordingly, the expressions punitive damages or exemplary damages are better avoided as descriptions of this type of additional award. In Merson v Cartright and Attorney General [2005] UKPC 38 the gravity of police misconduct was such as to attract an award of $100,000 for violations of the Constitution in addition to $90,000 in damages for assault, battery and false imprisonment, and $90,000 for malicious prosecution. It was held by the Privy Council that the awards were not duplicative. Lord Scott said (at 18): The purpose of a vindicatory award is not a punitive purpose. It is not to teach the executive not to misbehave. The purpose is to vindicate the right of the complainant to carry on his or her life in the Bahamas free from unjustified executive interference, mistreatment or oppression. The sum appropriate to be awarded to achieve this purpose will depend upon the nature of the particular infringement and the circumstances relating to that infringement. It will be a sum at the discretion of the trial judge. In some cases a suitable declaration may suffice to vindicate the right; in other cases an award of damages, including substantial damages, may seem to be necessary. A vindicatory award of $50,000 was made in Inniss v Attorney General [2008] UKPC 42. In Subiah v Attorney General of Trinidad and Tobago [2008] UKPC 47, at 11 Lord Bingham noted that when deciding whether to award vindicatory damages, the answer is likely to be influenced by the quantum of the compensatory award, as also by the gravity of the constitutional violation in question to the extent that this is not already reflected in the compensatory award. See also Durity v Attorney General of Trinidad and Tobago [2008] UKPC 59, 35. But in Suratt v Attorney General of Trinidad and Tobago (No 2) [2008] UKPC 38 and James v Attorney General of Trinidad and Tobago [2010] UKPC 23 declaratory relief was sufficient. The availability of damages for constitutional wrongs, and in particular, exemplary or vindicatory damages, is, or has been, controversial in many countries. In the United States, nominal damages can be awarded for the deprivation of a constitutional right without proof of actual injury, but substantial damages can be awarded only to compensate for actual injury: e.g. Elkins v District of Columbia, 710 F Supp 2d 53, 63 64 (DDC 2010), citing Carey v Piphus, 435 US 247 (1978); Memphis Community School District v Stachura, 477 US 299 (1986). In Ntandazeli Fose v Minister of Safety and Security in the Constitutional Court of South Africa [1998] 1 LRC 198 Ackermann J considered whether appropriate relief for infringements of the Interim Constitution of South Africa justified, in addition to compensatory damages for assault, an award for vindication of the rights and for punitive damages. After a full account of the law in other countries he said that he had considerable doubts whether, even where the infringement of the right caused no damage, an award of constitutional damages in order to vindicate the right would be appropriate, and suggested that the court might conclude that a declaratory order combined with a suitable order for costs would be a sufficiently appropriate remedy to vindicate the right even in the absence of an award of damages. But in any event there was no place for constitutional punitive damages: 68, 69. In Taunoa v Attorney General [2008] 1 NZLR 429 the Supreme Court of New Zealand was more sympathetic to vindicatory damages. Elias CJ said (at para 109) that damages in such cases should be limited to what is adequate to mark any additional wrong in the breach and, where appropriate, to deter future breaches. See also Tipping J at 317 (the interests of the victim require the court to consider what compensation is due, but society is a victim also, and the court must consider also what is necessary by way of vindication to protect fundamental rights and freedoms); also Blanchard J at 258; McGrath J at 370. The most recent consideration of the question was by the Supreme Court of Canada in Vancouver (City of) v Ward [2010] 2 SCR 28, in relation to damages for breach of the Canadian Charter of Rights and Freedoms. McLachlin CJ said that Charter damages had the functions of compensation, vindication and deterrence. By vindication she meant the affirmation of constitutional values, focusing on the harm which breach of the Charter did to society. The fact that the claimant had not suffered personal loss did not preclude an award of damages where the objectives of vindication or deterrence clearly called for an award, and the view that constitutional damages were only available for pecuniary or physical loss had been widely rejected in other constitutional democracies: 28, 30. The present claims are not, of course, for constitutional damages. Exemplary damages are available where the executive has acted in a way which is oppressive, arbitrary or unconstitutional. In Kuddus v Chief Constable of Leicestershire Constabulary [2001] UKHL 29, [2002] 2 AC 122, 63 Lord Nicholls said: The availability of exemplary damages has played a significant role in buttressing civil liberties, in claims for false imprisonment and wrongful arrest. From time to time cases do arise where awards of compensatory damages are perceived as inadequate. The nature of the defendants conduct calls for a further response from the courts. On occasion conscious wrongdoing by a defendant is so outrageous, his disregard for the plaintiffs rights so contumelious, that something more is needed to show that the law will not tolerate such behaviour. Without an award of exemplary damages, justice will not have been done. Exemplary damages, as a remedy of last resort, fill what would otherwise be a regrettable lacuna. But this is not a case for exemplary damages falling within the first head of Rookes v Barnard [1964] AC 1129. Nor do I consider that the concept of vindicatory damages should be introduced into the law of tort. In truth, despite the suggestions to the contrary in the Privy Council in Ramanoop and Merson, vindicatory damages are akin to punitive or exemplary damages (as in Attorney General of St Christopher, Nevis and Anguilla v Reynolds [1980] AC 607). In Ashley v Chief Constable of Sussex Police [2008] UKHL 25, [2008] AC 962 the question was whether there was an abuse of process to allow a claim against the police for the wrongful death of James Ashley to proceed where the police admitted liability for all damages. The House of Lords held by a majority that for the claim to proceed was not an abuse. Lord Scott (obiter) suggested that the claim should proceed in order that vindicatory damages could be available. He referred to Lord Hopes observation in Chester v Afshar [2004] UKLH 41, [2005] 1 AC 134, 87 that the function of the law is to enable rights to be vindicated and to provide remedies when duties have been breached. Lord Scott said at para 22: Although the principal aim of an award of compensatory damages is to compensate the claimant for loss suffered, there is no reason in principle why an award of compensatory damages should not also fulfil a vindicatory purpose. But it is difficult to see how compensatory damages can could ever fulfil a vindicatory purpose in a case of alleged assault where liability for the assault were denied and a trial of that issue never took place. Damages awarded for the purpose of vindication are essentially rights centred, awarded in order to demonstrate that the right in question should not have been infringed at all. In Attorney General of Trinidad and Tobago v Ramanoop [2006] 1 AC 328 the Privy Council upheld an award of vindicatory damages in respect of serious misbehaviour by a police officer towards the claimant. These were not exemplary damages; they were not awarded for any punitive purpose. They were awarded, as it was put in Merson v Cartwright [2005] UKPC 38, another case in which the Privy Council upheld an award of vindicatory damages, in order to vindicate the right of the complainant to carry on his or her life in the Bahamas free from unjustified executive interference, mistreatment or oppression: para 18. The rights that had been infringed in the Ramanoop case and in Merson v Cartwright were constitutional rights guaranteed by the respective constitutions of the countries in question. But the right to life, now guaranteed by article 2 of the European Convention [on Human Rights] and incorporated into our domestic law by the Human Rights Act 1998, is at least equivalent to the constitutional rights for infringement of which vindicatory damages were awarded in Ramanoop and Merson v Cartwright. But what Lord Hope said in Chester v Afshar was not said in the context of damages, and it seems clear that neither Lord Bingham nor Lord Rodger agreed. In particular Lord Rodger said that the right to bodily integrity was protected by the tort actionable per se of trespass to the person, where the law vindicates that right by awarding nominal damages (para 60). To make a separate award for vindicatory damages is to confuse the purpose of damages awards with the nature of the award. A declaration, or an award of nominal damages, may itself have a vindicatory purpose and effect. So too a conventional award of damages may serve a vindicatory purpose. That is the basis of Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309. As a result of a failed sterilisation negligently performed, the claimant gave birth to a child. The House of Lords held by a majority that although the health authority was not liable to compensate for the childs upbringing, compensation in respect of stress, trauma and the costs associated with pregnancy and birth were recoverable. In addition the claimant was awarded an additional sum of 15,000 of which Lord Bingham said: [the] award would not be, and would not be intended to be, compensatory. It would not be the product of calculation. But it would not be a nominal, let alone a derisory, award. It would afford some measure of recognition of the wrong done (para 8). See also Lords Nicholls, Millett, and Scott: at 17, 123, 148, and the critical views expressed in McGregor, Damages 18th ed (2009), paras 35 29735 299. Neither the minority dicta in Ashley v Chief Constable of Sussex Police [2008] UKHL 25, [2008] 1 AC 962 nor the award in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309 justify a conclusion that there is a separate head of vindicatory damages in English law. Consequently I do not consider that there is any basis in the present law for such an award. Nor do I consider that there is a basis in policy for the creation of a head of vindicatory damages at common law, distinct from the existing law of compensatory or exemplary damages. I would therefore restrict the remedy in this case to nominal damages for the reasons given by Lord Dyson. LORD KERR For the reasons given by Lord Dyson, with which I agree, I too would allow this appeal. A causation test False imprisonment is established if there has been a detention and an absence of lawful authority justifying it. The question whether lawful authority exists is to be determined according to an objective standard. It either exists or it does not. It is for this elementary but also fundamental reason that a causation test can have no place in the decision whether imprisonment is false or lawful. By a causation test in this context I mean a test which involves an examination of whether the persons held in custody could have been lawfully detained. The fact that a person could have been lawfully detained says nothing on the question whether he was lawfully detained. The Court of Appeal in the present case decided that, since the claimants could have been detained lawfully had the published policy been applied to them, the fact that an unpublished and unlawful policy was in fact applied was immaterial. With great respect, this cannot be right. The unpublished policy was employed in the decision to detain the appellants. It was clearly material to the decision to detain. Indeed, it was the foundation for that decision. An ex post facto conclusion that, had the proper policy been applied, the appellants would have been lawfully detained cannot alter that essential fact. The inevitability of the finding that the detention was unlawful can be illustrated in this way. If, some hours after making the decision to detain the appellants (based on the application of the unpublished policy), it was recognised that this did not constitute a legal basis on which they could be held, could their detention be said to be lawful before any consideration was given to whether the application of the published policy would have led to the same result? Surely, at the moment that it became clear that there was no lawful authority for the detention and before any alternative basis on which they might be detained was considered, their detention was unlawful. It is, I believe, important to recognise that lawful detention has two aspects. First the decision to detain must be lawful in the sense that it has a sound legal basis and, secondly, it must justify the detention. This second aspect has found expression in a large number of judgments, perhaps most succinctly in the speech of Lord Hope in R v Governor of Brockhill Prison Ex p Evans (No 2) [2001] 2 AC 19, 32 D where he said it is of the essence of the tort of false imprisonment that the imprisonment is without lawful justification. It seems to me to be self evident that the justification must relate to the basis on which the detainer has purported to act, and not depend on some abstract grounds wholly different from the actual reasons for detaining. As Mr Husain QC put it, the emphasis here must be on the right of the detained person not to be detained other than on a lawful basis which justifies the detention. Detention cannot be justified on some putative basis, unrelated to the actual reasons for it, on which the detention might retrospectively be said to be warranted. Simply because some ground for lawfully detaining may exist but has not been resorted to by the detaining authority, the detention cannot be said, on that account, to be lawful. This point was clearly made in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662. In that case the plaintiff had been lawfully arrested and detained in a police cell. A review of his detention as required by statute was not carried out within the prescribed time. At p 667 B the submission of counsel for the Chief Constable was recorded as being that if circumstances existed which were or would be sufficient to justify continued detention the plaintiff could not fairly be said to be detained without lawful excuse. That submission was roundly and, in my view, rightly rejected, Clarke LJ saying, As I see it, it is nothing to the point to say that the detention would have been lawful if a review had been carried out or that there were grounds which would have justified continued detention. Likewise it is nothing to the point in this case that if the decision had been taken on the basis of the published policy, it would have been immune from challenge. As Professor Cane put it in The Temporal Element in Law (2001) 117 LQR 5, 7 imprisonment can never be justified unless actually [as opposed to hypothetically] authorised by law. (The emphasis and the words enclosed in square brackets are mine). The matter might be considered on the following hypothetical basis. Suppose that there were two policies, one lawful published policy for the detention of foreign national prisoners sentenced to more than 5 years imprisonment, the other an unlawful secret policy for detention of those sentenced to more than 2 years imprisonment. On the respondents case an individual detained under the second policy, who would have been detained under the first policy if it had been applied, has not been detained unlawfully. I do not consider that such an argument is viable. A policy may lawfully be devised for the purpose of dealing generally with a regularly occurring species of case but it must always be possible to depart from the policy if the circumstances of an individual case warrant it. As the author of Wade & Forsyth on Administrative Law 10th ed (2009) at page 270 states: It is a fundamental rule for the exercise of discretionary power that discretion must be brought to bear on every case: each one must be considered on its own merits and decided as the public interest requires at the time. In the mooted example, consideration would be given to departing from a policy which is different from that which the individual is entitled to have applied to him. The possible justification for departing from the policy would be considered on a different basis from that which ought properly to determine the question. This is, in my view, impermissible in public law terms. A minister exercising his discretion by applying a published policy is acting lawfully. But if the policy which is applied is unlawful, the exercise of discretion is unlawful. The individual has not had applied to his case the proper exercise of discretion to which he is entitled. The application of an unlawful policy will therefore ipso facto render the decision to detain unlawful. In this context, I consider that it matters not whether the decision is said to be in violation of a public law principle or ultra vires the power to make the decision. To draw such a distinction would mark a radical departure from how error of law has long been understood. Again, a short extract from Wade & Forsyth at p 255 makes the point decisively: Void or voidable was a distinction which could formerly be applied without difficulty to the basic distinction between action which was ultra vires and action which was liable to be quashed for error of law on the face of the record. That distinction no longer survives since the House of Lords [in Anisminic and subsequent cases] declared all error of law to be ultra vires. The nature of the public law breach required to invalidate the detention In R (SK Zimbabwe) v Secretary of State for the Home Department [2009] 1 WLR 1527 it was accepted by the appellant that not every type of public law breach, committed after an initially valid detention, would render continued detention unlawful. On the present appeal the argument on behalf of the detained persons is put thus: a public law error that bears directly on the decision to detain will mean that the authority for detention is ultra vires and unlawful, and will sound in false imprisonment. But breaches which have no direct bearing on the decision to detain do not have that effect. Since, therefore, for instance, statutory obligations to permit a detainee to consult with his legal advisers (Cullen v Chief Constable of the Royal Ulster Constabulary [2003] 1 WLR 1763) or to be provided with food or clothing, or to be held in certain conditions (R v Deputy Governor of Parkhurst Prison Ex p Hague [1992] 1 AC 58) did not bear on the legality of detention, breach of those obligations did not render detention unlawful nor did it give rise to a claim for false imprisonment. Lord Walker has analysed the existence/exercise of power to detain dichotomy in a way that I find compelling. This has led him to the conclusion that the essential test as to the validity of continued detention which is said to be beyond the scope of the power to detain is whether there has been a departure from the statutory purpose. Again, I find his reasoning on this wholly convincing. I do not agree, however, that it is necessary to establish abuse of power in order to show that the decision is beyond the scope of the power to detain, if by abuse of power it is meant that some deliberate misuse of power is required. If a review of a persons detention was inadvertently overlooked and it subsequently became clear that, had the review taken place, he would certainly have been released, it surely could not be suggested that the detention that had in the meantime occurred did not constitute false imprisonment. The statutory purpose of the power to detain foreign nationals after the expiry of their sentence is to facilitate their deportation. (In this connection I agree fully with Lord Dyson in his analysis of the Hardial Singh (R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704) principles and with what he had to say about those principles in R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888, [2003] INLR 196 para 46.) Where the statutory purpose no longer exists, the power to detain falls away. The means of ascertaining whether the statutory purpose remains achievable is the system of review. Where that system is operated on the basis of a policy, it is of obvious and critical importance that the policy be transparent and that those who may be detained on foot of it have the opportunity to make informed representations on its application. Breach of a public law duty which has the effect of undermining the achievement of the statutory purpose will therefore, in my opinion, render the continued detention invalid. A claim of false imprisonment is the natural, indeed inevitable, entitlement of a person whose detention is no longer justified. Since the appellants in the present case were detained by the operation of a secret, unpublished policy, an effective system of review of the justification for their detention was not possible. As a consequence their detention could no longer be said to be justified. As it seems to me, this approach approximates to the way in which the case was put for the appellants but links it more closely to the vital consideration of the statutory purpose of the power to detain. Does the award of nominal damages devalue the tort of false imprisonment? As various members of the court have pointed out, the fact that false imprisonment is a species of trespass to the person and is actionable without proof of special damage must be carefully taken into account in deciding whether nominal damages can ever be considered appropriate. The impact of a finding that the State has been guilty of false imprisonment (whether or not it is also ordered to pay compensation) should not be underestimated, however. Such a finding has the effect, in the words of Lady Hale, of mark[ing] the laws recognition that a wrong has been done. And it is in the unambiguous recognition and declaration by the law that an individual has been falsely imprisoned that the essential value of the entitlement to assert that claim lies. I do not believe, therefore, that the award of nominal damages will, of itself and as a matter of automatic consequence, bring about a devaluation of the tort. On the question whether the award of nominal damages or some other measure of compensation is required in false imprisonment claims, I believe that a distinction is clearly merited between those cases where it is plain that the detainees would have been released and those where it can be shown that they would have been lawfully detained, had the correct procedures been followed. Because false imprisonment is a trespassory tort, it is said that the vindicatory dimension to the assessment of compensation is important. I shall examine that claim presently but, whatever may be said about its correctness, it is surely right that the actual impact on the individual who has been falsely imprisoned (or perhaps more importantly, the impact that could have been avoided) should feature prominently in the assessment of the appropriate amount of compensation. Traditionally, the primary function of damages has been to compensate the individual for the loss that he or she has suffered (compensatory damages). More recently the concept of restitutionary damages has been recognised where damages for the tort are measured according to the gain that the defendant has obtained or the value that the right infringed might have had to the claimant where, for instance, unknown to the claimant, the defendant has used the claimants property. This category of damages is not relevant here. A third type of damages (vindicatory damages) may be. In a number of recent decisions the Judicial Committee of the Privy Council has awarded what might be classified as vindicatory damages where there has been a breach of constitutional rights. Attorney General for Trinidad and Tobago v Ramanoop [2006] 1 AC 328 is perhaps the leading of these cases. At para 19 Lord Nicholls, delivering the judgment of the Committee, said : An award of compensation will go some distance towards vindicating the infringed constitutional right. How far it goes will depend on the circumstances, but in principle it may well not suffice. The fact that the right violated was a constitutional right adds an extra dimension to the wrong. An additional award, not necessarily of substantial size, may be needed to reflect the sense of public outrage, emphasise the importance of the constitutional right and the gravity of the breach and deter further breaches. All these elements have a place in this additional award. Although such an award, where called for, is likely in most cases to cover much the same ground in financial terms as would an award by way of punishment in the strict sense of retribution, punishment in the latter sense is not its object. Accordingly, the expressions punitive damages or exemplary damages are better avoided as descriptions of this type of additional award. Lord Nicholls recognition that this type of award covered much the same ground as that involved in exemplary or punitive damages is reflected in the more recent decision of the Privy Council in Takitota v Attorney General [2009] UKPC 11 where, at para 15, Lord Carswell said : it would not be appropriate to make an award both by way of exemplary damages and for breach of constitutional rights. When the vindicatory function of the latter head of damages has been discharged, with the element of deterrence that a substantial award carries with it, the purpose of exemplary damages has largely been achieved. For the reasons given by Lord Dyson an award of exemplary damages is not warranted in these cases. If there is any scope for the award of vindicatory damages where exemplary damages are not appropriate, it must be, in my opinion, very limited indeed. Such an award could only be justified where the declaration that a claimants right has been infringed provides insufficiently emphatic recognition of the seriousness of the defendants default. That situation does not arise here. The defendants failures have been thoroughly examined and exposed. A finding that those failures have led to the false imprisonment of the appellants constitutes a fully adequate acknowledgement of the defendants default. Since the appellants would have been lawfully detained if the published policy had been applied to them, I agree that no more than a nominal award of damages is appropriate in their cases. DISSENTING JUDGMENTS LORD PHILLIPS Introduction The appellants are foreign nationals who have served sentences of imprisonment in this country (FNPs) They were detained pursuant to Schedule 3 of the Immigration Act 1971 (Schedule 3). They challenge the legality of their detention. At the times of the decisions to detain them there existed a policy published by the Secretary of State setting out the circumstances in which her power to detain immigrants would be exercised. Had the decision maker applied this policy he would have detained each of the appellants. In the event, however, he decided to detain each by the application of a policy which Mr Beloff QC for the Secretary of State has conceded was unlawful. Whether the lawful or unlawful policy had been applied the decision would have been the same. The principal common issues raised by these appeals are first whether, in these circumstances, the detention of each of the appellants was unlawful; secondly whether, if it was unlawful, the result was that the detention of each of the appellants constituted the tort of false imprisonment and; if so, thirdly, whether and on what basis the appellants are entitled to damages. I have placed the words lawful and unlawful in parentheses because these appeals raise the question of whether there is a material difference between a policy, or a decision, or an act which is unlawful because it violates principles of public law and a policy, or a decision, or an act which is unlawful because it is ultra vires. In the case of Mr Lumba there is a second issue. This is whether his detention was or became unlawful because it infringed what have become known as the Hardial Singh principles which date back to the decision of Woolf J in the case of that name over a quarter of a century ago. Lord Dyson at para 22 of his judgment rightly states that it has been common ground in these appeals that he correctly summarised the effect of Hardial Singh in the four principles which he set out in R (I) v the Secretary of State for the Home Department [2003] INLR 196. As I shall explain I have reservations about the first two principles which, so far as I am aware, have never been the subject of debate. Lord Dyson has set out the relevant facts and statutory provisions and I can turn immediately to the common issues raised by these appeals. Lord Dyson has held that the Secretary of State committed the tort of false imprisonment in relation to each appellant because the decision to detain him was reached in violation of public law. The violation was the failure to apply the Secretary of States published policy and the application of a policy to which there were various objections of public law. He has concluded that, because the reasoning offended the requirements of public law, the acts that the decision maker decided upon were beyond his powers, or ultra vires. I have come to a different conclusion. I propose in this judgment to address the following questions. First, what restrictions are implicit, as a matter of statutory interpretation, in the power to detain conferred on the Secretary of State by Schedule 3? Second, what were the policies published by the Secretary of State in relation to the detention of immigrants? Third, what were the practical implications of those policies? Fourth, what were the legal implications of those policies? Fifth, was the detention of each of the appellants contrary to those policies? Sixth, what were the defects in the policy applied when deciding whether the appellants should be detained? Seventh, what were the circumstances in which this policy was applied? Eighth, did the application of that policy render the detention of the appellants unlawful? If so, ninth, are the appellants entitled to damages for false imprisonment? Implied limitations on the power to detain conferred by Schedule 3 I refer to the four principles that Lord Dyson states at para 22 of his judgment are derived from Hardial Singh. The third and fourth principles were an essential part of the reasoning that led Woolf J to the decision that he reached in that case. They are not open to question. This is not true of the first two. The first is that the Secretary of State must intend to deport the person and can only use the power to detain for that purpose. Lord Dyson explains that by this he means that the power to detain must be exercised for the prescribed purpose of facilitating deportation. The second principle is that the deportee may only be detained for a period that is reasonable in all the circumstances. Neither of these principles was stated in these terms in Hardial Singh, although I accept that they are possible interpretations of the words used by Woolf J. Neither of these principles was essential to the conclusion that he reached. I do not myself consider that either principle can properly be derived from his judgment. The applicant in Hardial Singh sought a writ of habeas corpus. He was an Indian who had entered the United Kingdom lawfully and been granted indefinite leave to remain. He had been convicted of offences of burglary and been sentenced to a total of two years imprisonment. Before he was due to be released he was served with a deportation order on behalf of the Secretary of State. He was due for release on 20 July 1983 but was then detained by the Secretary of State pursuant to paragraph 2(3) of Schedule 3. The reason given for his detention was the risk that, if released, he would abscond. Because of delay on the part of the Secretary of State in making arrangements for his return to India he was still detained in December 1983. In these circumstances Woolf J, at p 706, said this about the power of detention under Schedule 3: Although the power which is given to the Secretary of State in paragraph 2 to detain individuals is not subject to any express limitation of time, I am quite satisfied that it is subject to limitations. First of all, it can only authorise detention if the individual is being detained in one case pending the making of a deportation order and, in the other case, pending his removal. It cannot be used for any other purpose. Second, as the power is given in order to enable the machinery of deportation to be carried out, I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose. The period which is reasonable will depend on the circumstances of the particular case. What is more, if there is a situation where it is apparent to the Secretary of State that he is not going to be able to operate the machinery provided in the Act for removing persons who are intended to be deported within a reasonable period, it seems to me that it would be wrong for the Secretary of State to seek to exercise his power of detention. In addition, I would regard it as implicit that the Secretary of State should exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time. There is a degree of ambiguity in the earlier part of this passage. Pending the making of a deportation order is not a purpose. Nor is pending his removal. What then did Woolf J mean when he said that the power to remove cannot be used for any other purpose? He goes on to say that the power is given to enable the machinery of deportation to be carried out and that the power of detention is limited to such period as is reasonably necessary for that purpose. If one takes these two passages together it is possible to interpret Woolf J as saying that you can only detain a person for the purpose of facilitating deportation, as Lord Dyson has done. It is, however, also possible to read him as saying that you can only detain a person while you are pursuing the objective of deporting him and that is how I interpret what he said. I believe that the interpretation given by Lord Dyson places an unjustified restriction on the Secretary of States power of detention. It is obvious that detention will almost always make the practical task of deporting the detainee easier to arrange. Most deportees will be in this country through choice and cannot reasonably be expected to do anything to facilitate their deportation even if they do not try actively to prevent this. It is open to the Secretary of State to detain a person in order to facilitate his deportation and this is often the, or one of the, reasons for doing so. But, as I shall explain, I do not consider that detention of a deportee will only be lawful if used for this purpose. The second principle identified by Lord Dyson is that the deportee may only be detained for a period that is reasonable in all the circumstances. This I understand to be derived from Woolf Js statement The period which is reasonable will depend upon all the circumstances. But that sentence was immediately preceded by the statement that the power to detain was impliedly limited to a period that was reasonably necessary for the purpose of enabling the machinery of deportation to be carried out. Thus I believe that the circumstances that Woolf J had in mind were restricted to those that related to the task of effecting deportation. I am fortified in this belief by the fact that Woolf J went on to cite R v Governor of Richmond Remand Centre, Ex p Asghar [1971] 1 WLR 129. In that case the Secretary of State had detained two persons who were awaiting removal with the object that they should testify in a pending criminal trial. Lord Parker CJ rejected the suggestion that the detention could be justified as reasonable in these circumstances, stating at p 132 it does seem to me that while a reasonable time is contemplated between the giving of the directions and the final removal, that is a reasonable time necessary to effect the physical removal. In Hardial Singh Woolf J was concerned only with the length of time that was reasonably necessary to effect deportation and the relationship that this bore to the power to detain. He was not concerned with the question of whether there were further implied restrictions on the power to detain during that period. The extent of the power to detain pending deportation was an important, albeit not the most important, issue in Chahal v United Kingdom where the nature of the domestic proceedings is apparent from the judgment of the European Court of Human Rights when the case reached Strasbourg (1996) 23 EHRR 413. Mr Chahal was a Sikh separatist leader who had been granted indefinite leave to remain in the United Kingdom. On 14 August 1990 the Secretary of State decided that he ought to be deported because his continued presence in the United Kingdom was unconducive to the public good for reasons of national security and other reasons of a political nature, namely the international fight against terrorism. Two days later he was served with a notice of intention to deport. He was then detained pursuant to Schedule 3 and remained in detention up to the time of the judgment of the Strasbourg Court. During this time he pursued an unsuccessful attempt to be granted asylum. He also, by an application for judicial review, challenged his proposed deportation on the ground that this would violate article 3 of the Convention because it would expose him to the risk of torture and persecution if returned to India. He was unsuccessful in the Divisional Court and the Court of Appeal and was refused leave to appeal to the House of Lords. He then applied to Strasbourg, alleging breaches of articles 3 and 5 of the Convention. In November 1995, while he was awaiting a hearing at Strasbourg, he challenged his continued detention by seeking from the Divisional Court a writ of habeas corpus and judicial review. The Secretary of State opposed his application on the grounds that he could not safely be released because of the substantial threat that he posed to national security. It does not appear to have been suggested that his lengthy detention was necessary to facilitate his deportation. His application was refused on the ground that there was no reason to believe that the Secretary of State did not have good reason for his apprehension. MacPherson J ruled that the detention per se was plainly lawful because the Secretary of State [had] the power to detain an individual who [was] the subject of a decision to make a deportation order ( para 43). It is relevant to see how the Strasbourg Court addressed this matter, if only because any interpretation of Schedule 3 must, if possible, be compatible with the requirements of the Convention. Article 5(1) of the Convention provides, in so far as material: Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: (f) the lawful arrest or detentionof a person against whom action is being taken with a view to deportation The court said this as to the effect of that provision: 112. The court recalls that it is not in dispute that Mr Chahal has been detained with a view to deportation within the meaning of article 5(1)(f). Article 5(1)(f) does not demand that the detention of a person against whom action is being taken with a view to deportation be reasonably considered necessary, for example to prevent his committing an offence or fleeing; in this respect article 5(1)(f) provides a different level of protection from article 5(1)(c). Indeed all that is required under this provision is that action is being taken with a view to deportation. It is therefore immaterial, for the purposes of article 5(1)(f), whether the underlying decision to expel can be justified under national or Convention law. 113. The court recalls, however, that any deprivation of liberty under article 5(1)(f) will be justified only for as long as deportation proceedings are in progress. If such proceedings are not prosecuted with due diligence, the detention will cease to be permissible under article 5(1)(f). These observations echo the Hardial Singh principles, as I would interpret them. The court went on to consider whether the asylum proceedings, which had delayed the stage at which Mr Chahal would have been deported, had taken an excessive length of time, and concluded that they had not. This indicates that the Strasbourg Court, when considering the time reasonably needed for deportation, accepted that this would be prolonged by delay reasonably attributable to attempts to obtain asylum. The court then considered the requirement that the detention should be lawful. It observed at para 119 that there was no doubt that it was lawful under national law but that, because of the extremely long period during which Mr Chahal had been detained it was also necessary to consider whether there existed sufficient guarantees against arbitrariness. At para 122 the court concluded that the domestic procedure under which Mr Chahals appeal against deportation had been considered by an advisory panel provided an adequate guarantee that there were at least prima facie grounds for believing that if Mr Chahal were at liberty, national security would be put at risk and thus, that the executive had not acted arbitrarily when it ordered him to be kept in detention. I am not able to accept that under domestic law it had been an implicit requirement of Schedule 3 that Mr Chahals detention was necessary to facilitate his deportation. Provided that he was being detained with a view to his removal as soon as reasonably possible I consider that the Secretary of State was entitled to detain him pending that removal on the ground that he would pose a terrorist threat if released. The Hardial Singh principles were applied by analogy by the Judicial Committee of the Privy Council when considering the legitimacy under Hong Kong legislation of the detention of four boat people from Vietnam in Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97. Tens of thousands of these people had arrived unlawfully in Hong Kong. They were steadily being repatriated, but this was taking a long time. Section 2 of the Immigration (Amendment) Ordinance 1991 added to the relevant legislation a provision designed expressly to deal with this situation: The detention of a person under this section shall not be unlawful by reason of the period of the detention if that period is reasonable having regard to all the circumstances affecting that persons detention, including (a) in the case of a person being detained pending a decision under section 13A(1) to grant or refuse him permission to remain in Hong Kong as a refugee (i) the number of persons being detained pending decisions under section 13A(1) whether to grant or refuse them such permission; and (ii) the manpower and financial resources allocated to carry out the work involved in making all such decisions; (b) in the case of a person being detained pending his removal from Hong Kong (i) the extent to which it is possible to make arrangements to effect his removal; and (ii) whether or not the person has declined arrangements made or proposed for his removal. (p 106). Lord Browne Wilkinson, giving the advice of the Board, said this, at p 111, under the heading The Hardial Singh principles: Section 13D(1) confers a power to detain a Vietnamese migrant pending his removal from Hong Kong. Their Lordships have no doubt that in conferring such a power to interfere with individual liberty, the legislature intended that such power could only be exercised reasonably and that accordingly it was implicitly so limited. The principles enunciated by Woolf J in the Hardial Singh case [1984] 1 WLR 704 are statements of the limitations on a statutory power of detention pending removal. In the absence of contrary indications in the statute which confers the power to detain pending removal their Lordships agree with the principles stated by Woolf J. First, the power can only be exercised during the period necessary, in all the circumstances of the particular case, to effect removal. Secondly, if it becomes clear that removal is not going to be possible within a reasonable time, further detention is not authorised. Thirdly, the person seeking to exercise the power of detention must take all reasonable steps within his power to ensure the removal within a reasonable time. This accords with my reading of Hardial Singh. His Lordship went on to say, however: Their Lordships are unable to agree with the Court of Appeal of Hong Kong that there is any conflict between the Hardial Singh principles and the provisions of section 13D. Section 13D(1A), which was inserted in 1991, expressly envisages that the exercise of the power of detention conferred by section 13D(1) will be unlawful if the period of detention is unreasonable. It expressly provides that The detentionshall not be unlawful by reason of the period of the detention if that period is reasonable having regard to (Emphasis added.) What section 13D(1A) does is to provide expressly that, in deciding whether or not the period is reasonable, regard shall be had to all the circumstances including (in the case of a person detained pending his removal from Hong Kong) the extent to which it is possible to make arrangements to effect his removal and whether or not the person has declined arrangements made or proposed for his removal. Therefore the subsection is expressly based on the requirement that detention must be reasonable in all the circumstances (the Hardial Singh principles) but imposes specific requirements that in judging such reasonableness those two factors are to be taken into account. The shorthand summary of the Hardial Singh principles as detention must be reasonable in all the circumstances was made in the context of those circumstances that affected the time reasonably necessary to effect removal and, just as in the case of Hardial Singh itself, I would restrict its ambit to those circumstances. This I believe was, and remained, the understanding of some, at least, of the judges dealing with claims in respect of the detention of immigrants in the Administrative Court. Thus in R (Konan) v Secretary of State for the Home Department [2004] EWHC 22 (Admin) Collins J, who had appeared as counsel in Hardial Singh, held at para 21: The power to detain pending removal is not dependent on a fear of absconding or of any other misconduct by the person in question. Provided it is exercised for the purpose of removal, it is lawful. It must be exercised reasonably, but reasonableness in this context relates to whether removal can be achieved within a reasonable time: see R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704 and Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97 as applied in R (Saadi) v Secretary of State for the Home Department [[2002] 1 WLR 356]. R (Saadi) v Secretary of State for the Home Department [2001] EWCA Civ 1512; [2002] 1 WLR 356 raised the question of the legality of the detention at Oakington Reception Centre for up to 10 days of aliens seeking leave to enter whose cases appeared susceptible of speedy processing. The power to detain that was relied on was that afforded by paragraph 16(1) of Schedule 2 to the 1971 Act. Paragraph 2 provides that an immigration officer may examine any person arriving in the United Kingdom to determine whether he should be given leave to enter. Paragraph 16(1) provides: A person who may be required to submit to examination under paragraph 2 above may be detained under the authority of an immigration officer pending his examination and pending a decision to give or refuse him leave to enter. The Court of Appeal, in a judgment which I delivered, considered both the scope of the power to detain afforded by this paragraph and the effect of article 5(1)(f) of the Human Rights Convention. As to the former the court made the following observations: 14. Collins J concluded that the only limitation on the power to detain pending examination and the decision whether to grant or refuse leave to enter is that the detention must be for a reasonable time. For the Secretary of State, the Attorney General supported this conclusion. He argued that the power to detain persisted for so long as was reasonably necessary to conduct the examination and to reach a decision whether or not to grant leave to enter. As a matter of statutory interpretation we accept this submission. Were it not correct, the power to grant temporary admission would also be liable to come to an end before an examination could reasonably be completed and a decision whether to grant or refuse leave to enter reasonably be taken. 15. We are not aware that it has ever been the policy of the Secretary of State that applicants for leave to enter should be detained pending the decision of their applications, however long that might take. A more liberal policy has been adopted whereby he has approved the exercise of the power to grant temporary admission in place of detention. If the basis upon which immigration officers are detaining asylum seekers at Oakington is in conflict with this policy, then, under established principles of public law, they are acting unlawfully. As to the Convention the court held: 66. We consider that the test of proportionality required by article 5(1)(f) requires the Court simply to consider whether the process of considering an asylum application, or arranging a deportation, has gone on too long to justify the detention of the person concerned having regard to the conditions in which the person is detained and any special circumstances affecting him or her. Applying that test no disproportionality is demonstrated in this case. This was not a test of proportionality that the Strasbourg Court had laid down in Chahal and it received no support from that Court when Saadi reached it, as I shall show. Giving the only reasoned speech in a unanimous decision of the House of Lords [2002] UKHL 41; [2002] 1 WLR 3131 Lord Slynn of Hadley referred at para 18 to a statement by the Oakington Project Manager that he accepted that an important consideration in relation to detention powers was that no detention should be longer than reasonably necessary. Lord Slynn went on to express the view at para 22: As the judge and the Court of Appeal stressed, paragraph 16 of Schedule 2 gives power to detain pending examination and a decision; that in my view means for the period up to the time when the examination is concluded and a decision taken. There is no qualification that the Secretary of State must show that it is necessary to detain for the purposes of examination in that the examination could not otherwise be carried out since applicants would run away. Nor is it limited to those who cannot for whatever reason appropriately be granted temporary admission. The period of detention in order to arrive at a decision must however be reasonable in all the circumstances. The last sentence reflected Government policy, as accepted by the Project Manager. One of the applicants in Saadi took his case to Strasbourg (2008) 47 EHRR 427. He claimed that his detention at Oakington had infringed article 5(1)(f). Liberty, and other interveners, contended that a test of necessity and proportionality should be applied to article 5(1)(f), so that an asylum seeker could only be detained if, but for such detention, he would attempt to effect an unauthorised entry into the country. The Grand Chamber rejected this submission. Dealing first with the interpretation of the express provisions of article 5(1)(f) it said: 64. Whilst the general rule set out in article 5(1) is that everyone has the right to liberty, article 5(1)(f) provides an exception to that general rule, permitting states to control the liberty of aliens in an immigration context. As the court has remarked before, subject to their obligations under the Convention, states enjoy an undeniable sovereign right to control aliens entry into and residence in their territory. It is a necessary adjunct to this right that states are permitted to detain would be immigrants who have applied for permission to enter, whether by way of asylum or not. It is evident from the tenor of the judgment in Amuur that the detention of potential immigrants, including asylum seekers, is capable of being compatible with article 5(1)(f). 65. On this point, the Grand Chamber agrees with the Court of Appeal, the House of Lords and the Chamber, that until a state has authorised entry to the country, any entry is unauthorised and the detention of a person who wishes to effect entry and who needs but does not yet have authorisation to do so, can be, without any distortion of language, to prevent his effecting an unauthorised entry. It does not accept that, as soon as an asylum seeker has surrendered himself to the immigration authorities, he is seeking to effect an authorised entry, with the result that detention cannot be justified under the first limb of article 5(1)(f). To interpret the first limb of article 5(1)(f) as permitting detention only of a person who is shown to be trying to evade entry restrictions would be to place too narrow a construction on the terms of the provision and on the power of the state to exercise its undeniable right of control referred to above. As to the argument that a test of proportionality applied to the detention, the Court, referring to Chahal, held: 72. Similarly, where a person has been detained under article 5(1)(f), the Grand Chamber, interpreting the second limb of this sub paragraph, held that, as long as a person was being detained with a view to deportation, that is, as long as action [was] being taken with a view to deportation, there was no requirement that the detention be reasonably considered necessary, for example to prevent the person concerned from committing an offence or fleeing. The Grand Chamber further held in Chahal that the principle of proportionality applied to detention under article 5(1)(f) only to the extent that the detention should not continue for an unreasonable length of time; thus, it held that [A]ny deprivation of liberty under article 5(1)(f) will be justified only for as long as deportation proceedings are in progress. If such proceedings are not prosecuted with due diligence, the detention will cease to be permissible. 73. With regard to the foregoing, the court considers that the principle that detention should not be arbitrary must apply to detention under the first limb of article 5(1)(f) in the same manner as it applies to detention under the second limb. Since states enjoy the right to control equally an aliens entry into and residence in their country (see the cases cited in para 63 above), it would be artificial to apply a different proportionality test to cases of detention at the point of entry than that which applies to deportation, extradition or expulsion of a person already in the country. 74. To avoid being branded as arbitrary, therefore, such detention must be carried out in good faith; it must be closely connected to the purpose of preventing unauthorised entry of the person to the country; the place and conditions of detention should be appropriate, bearing in mind that: [T]he measure is applicable not to those who have committed criminal offences but to aliens who, often fearing for their lives, have fled from their own country; and the length of the detention should not exceed that reasonably required for the purpose pursued. This passage reinforces the conclusions of the court in Chahal. Where a person is detained pending deportation, the only proportionality requirement that Strasbourg imposes, if indeed it is right so to describe it, is that the detention should not be for longer than is reasonably necessary to effect the deportation. Added to this, however, is the important requirement that the exercise of the power to detain must not be arbitrary. Applying this principle the European Commission of Human Rights held manifestly inadmissible an application of infringement of article 5 by a man who had been detained for five years while he used every means to avoid extradition to Hong Kong. See Osman v United Kingdom (Application No 15933/89) (unreported) 14 January 1991. The most recent pronouncement of the Grand Chamber on article 5(1)(f) is to be found in A v United Kingdom (2009) 49 EHRR 625, where it was held that article 5(1)(f) did not justify detention of the famous Belmarsh detainees. At para 164 the Grand Chamber stated: To avoid being branded as arbitrary, detention under article 5(1)(f) must be carried out in good faith; it must be closely connected to the ground of detention relied on by the Government; the place and conditions of detention should be appropriate; and the length of the detention should not exceed that reasonably required for the purpose pursued. Against this background of Strasbourg jurisprudence, I return to domestic consideration of the Hardial Singh principles. In R(I) v Secretary of State for the Home Department [2003] INLR 196 the appellant was an Afghani asylum seeker who had been given exceptional leave to remain. He was then convicted of indecent assaults and sentenced to 3 years imprisonment with a recommendation for deportation. The Secretary of State made a deportation order and detained him pursuant to paragraph 2(3) of Schedule 3 from February 2001 to May 2002. The delay occurred because practical difficulties had caused the Secretary of State to cease removing nationals to that country. He claimed that his further detention was unlawful as there was no reasonable possibility of his being deported within a reasonable period. This raised the question of how such a reasonable period fell to be calculated. Simon Brown LJ addressed three issues of principle that had arisen. The first was the relevance of the fact that he was likely to go to ground and re offend if released. His counsel contended that this was irrelevant to the question of whether removal would be possible within a reasonable time. Simon Brown LJ disagreed. He held at para 29: The likelihood or otherwise of the detainee absconding and/or re offending seems to me to be an obviously relevant circumstance. If, say, one could predict with a high degree of certainty that, upon release, the detainee would commit murder or mayhem, that to my mind would justify allowing the Secretary of State a substantially longer period of time within which to arrange the detainees removal abroad. The second issue was whether it was relevant that the appellant refused to accept voluntary repatriation. Simon Brown LJ held that it was. The third issue was whether the calculation of the reasonable period should take account of the fact that the appellant had been making asylum applications. Simon Brown LJ held that it should not, because it would not have been possible to deport him in any event. The conclusion that he formed at para 37 was that because the Secretary of State could not establish more than a hope of being able to remove him by the summer substantially more in the way of a risk of re offending (and not merely a risk of absconding) than exists here would in my judgment be necessary to have justified continuing his detention for an indeterminate further period. Mummery LJ gave a short dissent on the facts rather than the applicable principles. Dyson LJ agreed with Simon Brown LJ. He set out the four principles that he derived from Hardial Singh in the same form as he has in his judgment in the present case. He then made the following observations about the application of those principles. 47. Principles (ii) and (iii) are conceptually distinct. Principle (ii) is that the Secretary of State may not lawfully detain a person pending removal for longer than a reasonable period. Once a reasonable period has expired, the detained person must be released. But there may be circumstances where, although a reasonable period has not yet expired, it becomes clear that the Secretary of State will not be able to deport the detained person within a reasonable period. In that event, principle (iii) applies. Thus, once it becomes apparent that the Secretary of State will not be able to effect the deportation within a reasonable period, the detention becomes unlawful even if the reasonable period has not yet expired. 48. It is not possible or desirable to produce an exhaustive list of all the circumstances that are, or may be, relevant to the question of how long it is reasonable for the Secretary of State to detain a person pending deportation pursuant to paragraph 2(3) of Schedule 3 to the Immigration Act 1971. But in my view they include at least: the length of the period of detention; the nature of the obstacles which stand in the path of the Secretary of State preventing a deportation; the diligence, speed and effectiveness of the steps taken by the Secretary of State to surmount such obstacles; the conditions in which the detained person is being kept; the effect of detention on him and his family; the risk that if he is released from detention he will abscond; and the danger that, if released, he will commit criminal offences. 49. Simon Brown LJ has identified the three main points of principle which were in issue in the present appeal, namely, the risk of absconding and reoffending, the appellants refusal to accept voluntary repatriation, and the asylum claim and appeal. As I have already stated, the risk of absconding and offending or reoffending is relevant to the reasonableness of the length of a detention pending deportation. It is, as Simon Brown LJ says an obviously relevant circumstance (at para 29): see also per Lord Phillips of Worth Matravers MR in R v (Saadi) v Secretary of State for the Home Department [2001] EWCA Civ 1512, [2002] 1 WLR 356, at paras 65 67. I have accepted that it is possible to derive Lord Dysons first two principles from the language used by Woolf J in Hardial Singh, and explained why I would not do so. The passage from the judgment of the Court of Appeal in Saadi that he cites was dealing with the effect of article 5(1)(f) of the Convention and, as I have shown, advanced a test of proportionality which Strasbourg did not endorse. The problems that have been raised by these appeals suggest that Strasbourg may have had very good reason not to do so. The conceptual difficulty inherent in the first two principles identified by Lord Dyson is apparent in the passage that he has quoted at para 107 from the judgment of Toulson LJ in A. If the risk of re offending can be the determinant factor in deciding how long it is reasonable to detain a FNP why should it not be the determinant, or even the sole reason for detaining him in the first place? Why should it be a pre condition to the power to detain that its use is to facilitate deportation, even if this is not the real reason for detention, as in the case of Chahal? It is that logical inconsistency that underlies the challenge that is made on behalf of Mr Lumba in the present case to the legitimacy of having regard to the risk of his re offending. The interpretation that I would give to the power to detain conferred by the 1971 Act is as follows. The scheme of the Act is simple, and reflects article 5(1)(f) of the Convention. The Secretary of State is not required to permit an immigrant who has unlawfully entered this country to roam free. Schedule 3 permits her to detain the immigrant for as long as she reasonably requires in order to decide whether he should have leave to enter. If he is not given leave to enter she may detain him for as long as she reasonably requires to effect his deportation, provided always that deportation is a practical possibility. If the 1971 Act confers powers as wide as this on the Secretary of State, she has not availed herself of them. She adopted a policy under which, on her calculation, only 1.5% of those who were liable to detention under her immigration powers were actually detained, see para 285 below. Having chosen to discriminate between those whom she detains and those whom she does not, she is subject to the established principles of public law in choosing between the two. It is these principles which constrain the exercise of her power to detain rather than restrictions to be implied into the 1971 Act as a matter of statutory interpretation. They include the obligation to act rationally, an obligation also imposed by article 5 of the Convention. It is rational and lawful to detain a FNP pending deportation to prevent his re offending or because he would pose a security risk if at large, just as it is rational and lawful to detain him because of the risk of his absconding. Public law principles include the restraint that a published policy imposes on executive action, a topic that I am about to consider. As I shall show, the guidance published by the Secretary of State includes a requirement to comply with Lord Dysons first two principles, so that to that extent their enunciation has been self fulfilling. The policies published by the Secretary of State in relation to the detention of immigrants. Lord Dyson has referred to the two White Papers in which in 1998 and 2002 the Secretary of State published her policies in relation to detention. The first of these, Fairer, Faster, Firmer informed the reader at the beginning of Chapter 12 dealing with Detention that at any one time, only about 1.5% of those liable to detention under immigration powers were actually detained. The White Paper dealt with the criteria to be adopted in identifying this small minority of immigrants who were to be detained. FNPs awaiting deportation will have formed only a tiny proportion of those liable to detention under those powers. It is, perhaps, not surprising that the White Paper predominantly addressed the position of the vast majority of immigrants who were not criminals. Thus, in the passage quoted by Lord Dyson at para 11 of his judgment the White Paper spoke of a presumption in favour of granting temporary admission or release, terms that were not appropriate to those recommended for deportation. In dealing with Detention Criteria at 12.3 the White Paper identified three circumstances where detention would normally be justified. The first was where there was a reasonable belief that the individual would fail to keep to the terms of temporary admission or temporary release. The second was to clarify a persons identity and the basis of their claim on entry. The third was where removal was imminent. 12.11 dealt with detention in relation to removals. It focussed entirely on detention to facilitate removals. Nothing in that White Paper gave any suggestion that those awaiting deportation might be detained because of concern as to the way they might behave if permitted to be at large. There was no focus on the provisions of Schedule 3. These comments are equally true of the second White Paper, Secure Borders, Safe Haven, save that this had the following statement in para 4.80 under the heading Serious Criminals: We will explore what more we can do, as other countries have done, to stop serious criminals abusing our asylum system by seeking to remain in the UK having completed a custodial sentence. There is there no indication that such criminals would be liable to detention pending deportation. The two White Papers dealt in broad terms with detention. They were supplemented by Chapter 38, headed Detention and Temporary Release, of the Operational Enforcement Manual, which was a published document, available to the public on the internet. The court was provided with the version that was current in April 2006. This included guidance on the law as it was understood to be. Para 38.1.1.1 gave the following summary of the effect of article 5 and the domestic case law: (a) The relevant power to detain must only be used for the specific purpose for which it is authorised. This means that a person may only be detained under immigration powers for the purpose of preventing his unauthorised entry or with a view to his removal (not necessarily deportation). Detention for other purposes, where detention is not for the purposes of preventing unauthorised entry or effecting removal of the individual concerned, is not compatible with article 5 and would be unlawful in domestic law; (b) The detention may only continue for a period that is reasonable in all the circumstances; (c) If before the expiry of the reasonable period it becomes apparent that the purpose of the power, for example, removal, cannot be effected within that reasonable period, the power to detain should not be exercised ; and (d) The detaining authority (be it the immigration officer or the Secretary of State), should act with reasonable diligence and expedition to effect removal (or whatever the purpose of the power in question is). This summary of the law reflected aspects of the decision of the Court of Appeal in I with which I have differed. None the less the principles that it expounded were consonant with the general policy of the Secretary of State that there was a presumption against detention. Para 38.3 set out the factors that influenced a decision to detain. Those in favour of detention were all matters that bore on the likelihood that the individual would abscond or go to ground if not detained. The manual set out the contents of a standard form IS9IR. This set out 6 possible reasons for detention, with instructions that the Immigration Officer should tick the relevant reasons. In contrast to the general focus on the likelihood of absconding, one of these stated Your release is not considered conducive to the public good. Factors forming the basis of the reasons also had to be ticked. These included You are excluded from the United Kingdom at the personal direction of the Secretary of State. You are detained for reasons of national security, the reasons are/will be set out in another letter. Your previously unacceptable character, conduct or associates. Para 38.5.2 was headed Authority to detain persons subject to deportation action. It summarised the effect of Schedule 3 and required that decisions whether to detain pursuant to the provisions of the Schedule should be made at senior caseworker level in CCT. No specific guidance was given, however, as to the criteria that should be applied when making those decisions. In summary, the general message of these published policies was that detention should be used sparingly and, in the case of detention pending removal or deportation, only where necessary to facilitate this in order to prevent individuals from absconding or otherwise evading the immigration system. Officials were instructed that the law was as held by the Court of Appeal in I and, in particular, that detention could only continue for a period that was reasonable in all the circumstances. Form IS9IR raised, however, the possibility that detention could be used for reasons of national security or where the individuals previous character, conduct or associates were unacceptable. Despite this, there was no specific guidance as to the approach to be adopted to criminals whom the Secretary of State had decided to deport. Not only was it open to the Secretary of State to decide to deport, and to detain pending deportation, criminals in respect of whom the court had made no recommendation, she also had to decide whether to accept recommendations for deportation made by the courts. Under paragraph 2(1) of Schedule 3 those subject to a recommendation remained detained pending the Secretary of States decision whether to deport them unless released by the court or granted bail pursuant to section 54 of the Immigration and Asylum Act 1999, which came into force in February 2003. It may have been thought that paragraph 2(1) created a presumption in favour of detention of FNPs pending deportation but in R (Sedrati) v Secretary of State for the Home Department [2001] EWHC Admin 418, with the agreement of counsel for the Secretary of State, Moses J made a declaration that there was no such presumption. What then, under the Secretary of States published policies, was the position of FNPs whom the Secretary of State decided to deport? It seems to me that many of these were likely to tick the boxes of those who, exceptionally, could properly be detained in accordance with those policies. They were in this country because this was where they had chosen to live. They had committed offences that had led the Secretary of State to conclude that their continued presence was no longer conducive to the public good. Most would be unlikely willingly to submit to deportation. There would be a risk both of re offending and of absconding. As Lord Dyson has explained at paras 14 and 15 of his judgment, on 9 September 2008 the Enforcement Instructions and Guidance, which had replaced the Operational Enforcement Manual, was amended so as to lay down a presumption in favour of detaining immigrants where the deportation criteria were met in order to protect the public from harm and the particular risk of absconding in these cases. I agree with the Court of Appeal and with Lord Dyson that this amendment to her policy was one that it was open to the Secretary of State to make. However, Davis J, at first instance, ruled to the contrary and this led the Secretary of State to withdraw this amendment. The UK Borders Act 2007 has since made provision by section 32 for automatic deportation of foreign criminals in specified circumstances. Section 36 requires the Secretary of State to exercise a power of detention of those being deported under section 32 unless in the circumstances the Secretary of State considers it inappropriate. These provisions were not in force at the time of the events that have given rise to these appeals. There is thus a picture of a series of changes to policy, and of legislation, that has been influenced by decisions of the courts, not all of which have been sound. The practical implications of the policies Under this heading I propose to consider the practical implications of complying with the Secretary of States published policies, including her directions as to the effect of article 5 and our domestic case law. Compliance with the Hardial Singh guidelines, even as I have interpreted them, gives rise to some practical difficulties. Detention pending deportation is permissible for a lengthy period provided that the Secretary of State is taking reasonable steps to effect deportation and provided that there is a reasonable prospect that deportation will be possible. It is the latter proviso that raises particular difficulties for the possibility of deportation may vary from time to time. R (Khadir) v Secretary of State for the Home Department [2005] UKHL 39; [2006] 1 AC 207 illustrates this problem. In the case of each detainee it is necessary to keep the practicability of deportation under review. This problem is made more difficult if there is a requirement to detain for no longer than is reasonable in all the circumstances, where those circumstances include the nature of the crimes committed by the FNP and the degree of risk of re offending. The assessment of what period of detention is reasonable in all the circumstances is not an easy one and there will inevitably be cases where, if subjected to judicial review, it will be held not to have been correctly answered. Furthermore the material circumstances are likely to be subject to frequent change, so that frequent reviews will be necessary. This last fact was reflected by the requirements in relation to Detention reviews imposed under para 38.8 of the Operational Enforcement Manual which lie at the heart of the appeal in SK (Zimbabwe). Where there are concerns about the risk of absconding, it may be possible to meet these by measures which fall short of detention. The Secretary of State may release a FNP who is subject to deportation under a restriction order setting out terms as to residence, employment or occupation and reporting to the police pursuant to paragraph 2(5) of Schedule 3. The court has the same power in respect of those recommended for deportation under paragraphs 4 to 6 of Schedule 3. Detainees also have the right to apply for bail. In para 12.8 of Fairer, Faster, Firmer the Government explained that it believed that there should be a more extensive judicial element in the detention process and proposed that this should be by way of bail hearings, commenting on the resource implications that this would have. Para 4.83 of Secure Borders, Safe Haven stated that Part III of the Immigration and Asylum Act 1999 had created a complex system of automatic bail hearings at specific points in a persons detention, that this had never been brought into force and that most of it was to be repealed. There is now a comprehensive statutory scheme for release on bail produced through a series of amendments to Schedule 2 to the 1971 Act. All of this illustrates the practical problems implicit in the implementation of a regime that attempts to give effect to the policy of using the power to detain only as a last resort. Despite efforts to implement this policy there will inevitably be cases where individuals are detained when, under the policy, they should not be. The question arises of whether those who find themselves in this position are entitled to claim damages for false imprisonment. What are the legal implications of the Secretary of States published policies? The appellants in this case should have been detained had the Secretary of States published policy been applied. They claim to be entitled to damages for false imprisonment because those considering their cases reached the right conclusions by applying the wrong policy. Their complaint is as to the manner in which the decisions to detain them were taken, not as to the substance of those decisions. Thus, the question of the legal effect of the Secretary of States published policies is not directly in issue. Nonetheless, underlying the appellants case is the premise that it would not have been lawful for the Secretary of State to reach a decision that was in conflict with her published policy. For this reason she was required to reach her decision by applying her published policy, not some other policy. It follows that it is material to consider the effect of the Secretary of States published policies. I agree with Lord Dyson that, under principles of public law, it was necessary for the Secretary of State to have policies in relation to the exercise of her powers of detention of immigrants and that those policies had to be published. This necessity springs from the standards of administration that public law requires and by the requirement of article 5 that detention should be lawful and not arbitrary. Decisions as to the detention of immigrants had to be taken by a very large number of officials in relation to tens of thousands of immigrants. Unless there were uniformly applied practices, decisions would be inconsistent and arbitrary. Established principles of public law also required that the Secretary of States policies should be published. Immigrants needed to be able to ascertain her policies in order to know whether or not the decisions that affected them were open to challenge. What is the effect of a decision to take action that falls within a power conferred by statute but which conflicts with a published policy as to the manner in which that power will be exercised? This is no easy question. It overlaps with the question of the nature and effect of a legitimate expectation. Is a decision that is contrary to policy unlawful, so that action taken pursuant to it is ultra vires? If so a published policy has the same effect as delegated legislation. Is this result dictated by the jurisprudence that has its origin in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147? Mr Husain QC for the appellants submitted that it is. He relied on the oft cited catalogue of matters rendering the decision of a tribunal void propounded by Lord Reid in Anisminic at p 171. This included: It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. The words that I have emphasised are significant. Lord Reids proposition cannot necessarily be extended to the situation where the decision maker fails to have regard to his own policy. Anisminic is, however, only the start of the story. The effect of Anisminic was the subject of observations by Lord Diplock, which have been treated as authoritative. In In re Racal Communications Ltd [1981] AC 374, at pp 382 383 he described Anisminic as a legal landmark. It established that when Parliament conferred on an administrative authority the power to decide particular questions defined by the Act conferring the power, and the authority asked itself and answered the wrong question, it did something that the Act did not empower and its decision was a nullity. In OReilly v Mackman [1983] 2 AC 237, at p 278 he observed that if a tribunal mistook the law it must have asked itself the wrong question and one that it had no jurisdiction to determine, so that its decision was a nullity. In R v Hull University Visitor, Ex p Page [1993] AC 682, at pp 701 702 Lord Browne Wilkinson endorsed his comment, adding that any error of law made by an administrative tribunal or inferior court in reaching its decision could be quashed for error of law. Earlier at p 701 he had observed that it was to be taken that Parliament had only conferred the decision making power on the basis that it was to be exercised on the correct legal basis with the effect that an error of law rendered the decision ultra vires. This reasoning cannot readily be extended to a decision which departs from executive policy. It would be totally unrealistic to postulate that when Parliament passes an Act conferring a discretionary power it does so with the intention that if the decision maker publishes a policy in relation to the exercise of that power he will abide by that policy unless he has good reason not to do so. In Boddington v British Transport Police [1999] 2 AC 143 the House of Lords took Anisminic a significant step further. The issue was whether the appellant could raise by way of defence to a criminal charge a contention that the bye law, or an administrative decision taken under it, pursuant to which he was prosecuted, was ultra vires. Lord Irvine of Lairg LC, giving the leading speech, said at p 155 that an order made by the Secretary of State in the purported exercise of a statutory power would be regarded as void ab initio if it had been made in bad faith, or as a result of taking into account an irrelevant, or ignoring a relevant, consideration. At p 158 he said: The Anisminic decision established, contrary to previous thinking that there might be error of law within jurisdiction, that there was a single category of errors of law, all of which rendered a decision ultra vires. No distinction is to be drawn between a patent (or substantive) error of law or a latent (or procedural) error of law. Lord Irvine added, at p 159: Also, in my judgment the distinction between orders which are substantively invalid and orders which are procedurally invalid is not a practical distinction which is capable of being maintained in a principled way across the broad range of administrative action. Other members of the House were not prepared to reject the possibility that an ultra vires act might have legal consequences before its invalidity was recognised by the court: see Lord Browne Wilkinson, at p 164 and Lord Slynn, at p 165. Boddington no longer judged the vires of the exercise of a discretionary power by the assumed intention of Parliament. It held that if a decision was vitiated by procedural impropriety it was ultra vires and a nullity. In the light of Boddington these appeals raise two issues: (i) is a decision of the Secretary of State that, without good reason, conflicts with her published policy outside her powers, so that it is a nullity? (ii) is a decision reached by the Secretary of State by the application of a policy that conflicts with her published policy a nullity, even if the decision itself accords with her published policy? I am currently concerned with the first question. The proposition underlying the appellants case is that if a minister, without good reason, acts in a way that is contrary to her published policy she acts outside her powers. Her action is unlawful and can found a claim for damages if it infringes a private law right. It is time to look at the law relating to policy and legitimate expectation. Where a public authority gives an undertaking to an individual that a discretionary power will be used in a particular way, this creates a legitimate expectation in the individual that the authority will comply with that undertaking. The courts will require the authority to give due consideration to that legitimate expectation when exercising its power: see R (Bibi) v Newham London Borough Council [2001] EWCA Civ 607; [2002] 1 WLR 237. In an extreme case the courts can require the authority to comply with its undertaking: see R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213. The same principle applies where a minister publishes a policy that sets out the way in which he intends to exercise a discretionary power. This also creates a legitimate expectation in those affected by the power as to the manner in which it will be exercised. In either case the court can intervene in performance of its duty to ensure that the executive acts fairly and does not abuse the powers conferred on it by Parliament. These principles have quite often been applied in relation to immigration decisions. I have already quoted my invocation of them in Saadi: see para 271 above. Lord Dyson at para 85 has referred to my judgment in Nadarajah v Secretary of State for the Home Department [2003] EWCA Civ 1768. In that case the Court of Appeal held that Ns detention was unlawful because it was in conflict with the Secretary of States policy. The court further held that as the detention was contrary to law, it infringed article 5(1)(f) of the Convention. The Court had earlier stated at para 15 that the consequence of these findings would be that N would be entitled to damages for unlawful detention. The Secretary of State had sought to show that Ns detention was not contrary to his policy. He had not challenged the proposition that if the detention was contrary to his policy it would be unlawful, nor that this would lead to liability in damages. There was no discussion of the nature and effect of the doctrine of legitimate expectation in the context of detention under the 1971 Act. There was, however, a sequel to the case in which the nature of the doctrine of legitimate expectation received detailed consideration. The development of the law of legitimate expectation was pellucidly set out at some length by Laws LJ, giving the only reasoned judgment in the Court of Appeal in R (Nadarajah) v Secretary of State for the Home Department, [2005] EWCA Civ 1363, a decision which, amazingly, does not seem to have found its way into the law reports. At the end of his judgment, in paras 68 and 69, Laws LJ set out his conclusions on the principles to be derived from these authorities. This merits citation at length: The search for principle surely starts with the theme that is current through the legitimate expectation cases. It may be expressed thus. Where a public authority has issued a promise or adopted a practice which represents how it proposes to act in a given area, the law will require the promise or practice to be honoured unless there is good reason not to do so. What is the principle behind this proposition? It is not far to seek. It is said to be grounded in fairness, and no doubt in general terms that is so. I would prefer to express it rather more broadly as a requirement of good administration, by which public bodies ought to deal straightforwardly and consistently with the public. In my judgment this is a legal standard which, although not found in terms in the European Convention on Human Rights, takes its place alongside such rights as fair trial, and no punishment without law. That being so there is every reason to articulate the limits of this requirement to describe what may count as good reason to depart from it as we have come to articulate the limits of other constitutional principles overtly found in the European Convention. Accordingly a public bodys promise or practice as to future conduct may only be denied, and thus the standard I have expressed may only be departed from, in circumstances where to do so is the public bodys legal duty, or is otherwise, to use a now familiar vocabulary, a proportionate response (of which the court is the judge, or the last judge) having regard to a legitimate aim pursued by the public body in the public interest. The principle that good administration requires public authorities to be held to their promises would be undermined if the law did not insist that any failure or refusal to comply is objectively justified as a proportionate measure in the circumstances. This approach makes no distinction between procedural and substantive expectations. Nor should it. The dichotomy between procedure and substance has nothing to say about the reach of the duty of good administration. Of course there will be cases where the public body in question justifiably concludes that its statutory duty (it will be statutory in nearly every case) requires it to override an expectation of substantive benefit which it has itself generated. So also there will be cases where a procedural benefit may justifiably be overridden. The difference between the two is not a difference of to a principle. Statutory duty may perhaps more often dictate the frustration of a substantive expectation. Otherwise the question in either case will be whether denial of the expectation is in the circumstances proportionate legitimate aim pursued. Proportionality will be judged, as it is generally to be judged, by the respective force of the competing interests arising in the case. Thus where the representation relied on amounts to an unambiguous promise; where there is detrimental reliance; where the promise is made to an individual or specific group; these are instances where denial of the expectation is likely to be harder to justify as a proportionate measure. On the other hand where the government decision maker is concerned to raise wide ranging or macro political issues of policy, the expectations enforcement in the courts will encounter a steeper climb. All these considerations, whatever their direction, are pointers not rules. The balance between an individual's fair treatment in particular circumstances, and the vindication of other ends having a proper claim on the public interest (which is the essential dilemma posed by the law of legitimate expectation) is not precisely calculable, its measurement not exact. This passage in Laws LJs judgment was obiter, as is my approval of it as setting out a compelling analysis of the law. I have, however, some concerns as to the consequences of this extension of the principles of judicial review if a ministers unjustified failure to comply with his policy is to be treated as an unlawful act that subjects him to potential liabilities in private law independently of the discretionary remedies of judicial review. The facts of this case illustrate my concern. Assume that I am correct in concluding that Schedule 3 gives the Secretary of State wide ranging powers to detain those who are illegally in this country, whether pending the processing of their applications for permission to enter or pending their removal when such applications have been refused. The Secretary of State did not choose to exercise those powers to their full extent. The policy of only detaining immigrants as a last resort is a benevolent policy. That policy carries with it, however, as I have explained, the risk that, as a result of erroneous decisions in the application of a difficult test, some immigrants may be detained in breach of that policy. Not all would agree that it is fair that they should be entitled to compensation, in the form of damages for false imprisonment, on the same scale as those whose detention falls outside any statutory power. Notwithstanding these concerns, I have concluded that the detention of a person in circumstances where, under the Secretary of States published policies he should not have been detained, was both a violation of principles of public law and unlawful so as to exclude any justification for the detention under article 5(1)(f) of the Convention and to give rise to liability for false imprisonment. Was the detention of each of the appellants contrary to the Secretary of States published policies? On this question all members of the court are agreed. Each of the appellants, by reason of the risk of re offending and of absconding, fell into the exceptional category of those who were liable to detention under the Secretary of States published policies. Had the decision maker applied those policies each of the appellants would have been detained. On this topic I have nothing to add to the judgment of Lord Dyson. What were the defects in the policy applied when deciding whether the appellants should be detained? Mr Beloff conceded that the policy, which I shall call the secret policy, applied by the decision maker when deciding to detain the appellants was unlawful on three counts. The meaning of the word unlawful in this context needs clarification. It is not having a policy but implementing a policy that may infringe the law. A policy can be described as unlawful if action taken pursuant to it will, or may, be unlawful under private or public law. The first reason why the policy that was applied was unlawful was that it was a blanket policy. It brooked of no exceptions save rare ones that might be made for compassionate reasons. It was a blanket policy in that it was applied to any FNP recommended for deportation. Thus it paid no regard to the severity of the offence for which the FNP had been convicted nor to the likelihood and consequence of his re offending. In this I do not consider that it was open to objection on public law grounds. On my interpretation of Schedule 3 it was open to the Secretary of State to decide her own criteria for determining those she wished to detain pending deportation. Secondly the policy was a blanket policy in that it gave no scope for the application of discretion, save on compassionate grounds. I do not consider that this was objectionable on public law grounds. There is a principle of public law that a minister who is granted a discretionary power must not improperly fetter the exercise of his discretion. In a case such as this, however, a minister has to lay down a firm policy in order to ensure consistency of decision making. The Secretary of State was laying down an exception to the general rule that there was a presumption against detention. I can see no reason why she should not lay down a policy under which all those whom she chose to deport should be detained pending their deportation save in circumstances where there were compassionate reasons for departing from the policy. Where the secret policy was objectionable was that it was to be applied without consideration of whether detention would violate the Hardial Singh principles. Under the secret policy FNPs were liable to be detained even if they were nationals of a country to which deportation was not a practical possibility. Thus application of the secret policy would, in some cases, result in detention that was outside the power conferred by the 1971 Act. The second reason why Mr Beloff conceded that the secret policy was unlawful was that it was inconsistent with the Secretary of States published policy. Inasmuch as the application of the secret policy would result in the detention of some who would not have been detained on the application of the published policy it was plainly open to objection on this ground. The third reason why Mr Beloff conceded that the secret policy was unlawful was that it was secret. This concession was also properly made, for the reasons given by Lord Dyson. What were the circumstances in which the secret policy was applied? Lord Dyson has summarised the circumstances in which the secret policy was applied. Lord Walker and Lord Collins have described these as a serious abuse of power. Lady Hale has expressed some sympathy for the predicament in which the civil servants found themselves. Having considered the voluminous discovery, some of it very belated, I share both the concern expressed by Lord Walker and Lord Collins and the sympathy expressed by Lady Hale. It was clear to officials that the Secretary of State wished all FNPs to be deported, and to be detained pending deportation. They were concerned at the legality of such a policy, particularly because it conflicted with the published policy. There was a protracted period preparing and circulating draft advices to ministers in which each of a lengthy circulation list was given the chance to comment. Many did, whereupon the draft would be re circulated. There seems to have been a reluctance to grasp the nettle of presenting advice that would be unpalatable. There were considerable delays caused by the perceived need to obtain counsels opinion. The picture is of bureaucracy at its worst with the best proving constantly the enemy of the good. The lamentable fact is that approximately two years elapsed between the identification of the need to publish a revised policy on detention and the publication of such a policy in the new Enforcement Instructions and Guidance in September 2008. Although it was suggested that ministers might favour a policy that would appear to make the courts responsible for the release from detention of FNPs, this course was neither advocated nor adopted. There was muddle galore, but I am not persuaded having considered the considerable discovery that there was a deliberate attempt to deceive the courts as to the policy that was being applied. Did the application of the secret policy render the detention of the appellants unlawful? It is now accepted by the Secretary of State that the decision maker in the case of each of the appellants decided that he should be detained by applying to him the secret policy. The power to detain that he purported to apply was that conferred by Schedule 3. Had the appellants been persons whose deportation would not be possible within a reasonable period, so that they fell outside the lawful application of Schedule 3, the application of the secret policy would have resulted in their detention none the less. Had the appellants been persons whose detention would have conflicted with the Secretary of States published policy, so that their detention would be unlawful under the principles of public law discussed above, the application of the secret policy would have resulted in their detention none the less. In the event each appellant fell within the group of FNPs for whom detention was appropriate, indeed inevitable, if the Secretary of States published policy was applied to them. Was their detention none the less unlawful because of the process of reasoning that had brought it about? Mr Husain submits that it was. The Court of Appeal held that it was not, because the application of the secret policy was not material; it produced the result that would have been produced had the right policy been applied. This is I believe a novel question, not to be answered by the simple answer that the detention was unlawful because the decision that produced it was unlawful. It is also a complex question because of the novel feature of the existence of a published policy that would have predetermined the decisions in relation to the two appellants had it been applied. It is helpful to unpick the secret policy and consider its effect if each objection to it had been the only objection. I take first the objection that it was a blanket policy. Imagine the Secretary of State had publicly announced that all FNPs who were given deportation orders would henceforth be detained pending deportation, subject to exceptions on compassionate grounds. The application of this policy would have been objectionable in that it would have resulted in the detention of those FNPs whose deportation would not be possible within a reasonable period. Would this fact have rendered unlawful the detention of the majority of FNPs whose deportation was possible? I see no reason of principle why it should. Next I take the objection that the policy was in conflict with the published policy. Had the secret policy not been secret, this objection would have melted away. The public policy would simply have been publicly altered. This would not have been objectionable. What of the objection that the policy was secret? Had this been the only objection to it I do not see how this could have availed the appellants. They were already subject to a policy that would result in their detention. They had no legitimate expectation of being permitted to remain at large. If the secret policy had extended the category of those FNPs who would be detained, those who, without knowing it, were brought within the category of detainees might have had cause to object to their detention, but I do not see how those who were going to be detained under the previous published policy could legitimately complain. If none of the individual objections to the secret policy would have afforded the appellants legitimate grounds for challenging their detention, does the position change when the objections are considered cumulatively? I can see no reason why it should. Both logically and intuitively my conclusion is that the introduction of the secret policy gave those whose detention resulted from it cause to challenge the legality of their detention, but not those whose legitimate expectation was that they would be detained under the application of the published policy. This was also the reaction of those officials who questioned the application of the secret policy. Their concern was that those whose detention infringed the Hardial Singh guidelines or the published policy would have claims for illegal detention, not that every detainee would have such a claim. I now turn to some of the authorities relied upon by the appellants to see how they bear on the unusual problem raised by these appeals. In Christie v Leachinsky [1947] AC 573 the plaintiff, who claimed damages for false imprisonment, had been arrested by police officers on a charge of unlawful possession under the Liverpool Corporation Act 1921. That Act did not give a power to arrest for this offence. The defendants raised by way of defence a plea that, at the time of the arrest they reasonably suspected him of receiving stolen goods, which provided a valid ground for his arrest. The House of Lords held that this was no defence as at the time of his arrest he had been given a different ground of arrest. This decision is normally cited for the proposition that an arrest will be unlawful if the person arrested is not told the reason for his arrest at the time that he is arrested. It is also authority for the proposition that if a person is arrested for a reason which is not a valid statutory ground of arrest it is no defence to an action for false imprisonment that he could have been validly arrested on alternative grounds. I do not see that this decision bears on the very different facts of the present case. In Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 the Court of Appeal held that detention by the police without the review required by section 40(1)(b) of the Police and Criminal Evidence Act 1984 was unlawful and the fact that, if the review had taken place authorised detention would have continued was no answer to a claim for substantial damages for false imprisonment. That decision has no bearing on the issue that I am considering, which is whether the detention of the appellants was unlawful. In Langley v Liverpool District Council [2005] EWCA Civ 1173; [2006] 1 WLR 375 a constable had purported to exercise a discretionary power under the Children Act 1989 in removing a child from its family. The Court of Appeal held that his exercise of discretion had been wrongful in that, in the circumstances prevailing, it ran counter to the statutory scheme. It followed that the removal of the child was unlawful and the constable had committed the tort of false imprisonment. I have found this decision of no assistance in deciding whether, on the unusual facts of this case, the detention of the appellants was unlawful. One of the cornerstones of the appellants case was the speech of Lord Diplock, with which all other members of the House agreed, in Holgate Mohammed v Duke [1984] AC 437. A police officer had arrested the plaintiff on suspicion of the theft of jewellery. He did so pursuant to section 2(4) of the Criminal Law Act 1967, which gave him a discretionary power to arrest her. She alleged, however, that the exercise of this power had been unlawful because, when deciding whether to exercise his discretion the officer had been influenced by a consideration which was irrelevant, namely the likelihood that the fact that she had been arrested would be more likely to induce her to confess to her crime when interviewed. Lord Diplock held that this consideration was not irrelevant to the proper exercise of the officers discretion. It was a matter to which he could legitimately have regard having regard to the objectives of the statutory power to arrest. Thus the comments upon which the appellants have relied were obiter. Those comments, at p 443 of Lord Diplocks speech, were as follows: The Wednesbury principles, as they are usually referred to, are applicable to determining the lawfulness of the exercise of the statutory discretion of a constable under section 2(4) of the Criminal Law Act 1967, not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for damages for that species of trespass to the person known as false imprisonment, for which the action in the instant case is brought. The first of the Wednesbury principles is that the discretion must be exercised in good faith. The judge in the county court expressly found that Detective Constable Offin in effecting the initial arrest acted in good faith. He thought that he was making a proper use of his power of arrest. So his exercise of that power by arresting Mrs Holgate Mohammed was lawful, unless it can be shown to have been unreasonable under Wednesbury principles, of which the principle that is germane to the instant case is: He [sc the exerciser of the discretion] must exclude from his consideration matters which are irrelevant to what he has to consider. The way in which the appellants argue that this passage impacts on the facts of the present case is, as I understand it, as follows. The decision to detain the appellants was taken by application of the secret policy. This infringed the Wednesbury principles because it failed to have regard to relevant considerations, namely whether the Hardial Singh principles precluded detention and whether the appellants detention complied with the published policy. The answer given by the Court of Appeal to this point is that, so far as the appellants were concerned, the failure to consider these matters was not material because, had they been considered, the conclusion would have been that neither matter posed an impediment to the appellants detention and had they been considered the decision would inevitably have been the same. The approach of the Court of Appeal involves a refinement of the Wednesbury principles. It is an application of the following reasoning of May LJ in R v Broadcasting Complaints Commissioner, Ex p Owen [1985] QB 1153, 1177: Where the reasons given by a statutory body for taking or not taking a particular course of action are not mixed and can clearly be disentangled, but where the court is quite satisfied that even though one reason may be bad in law, nevertheless the statutory body would have reached precisely the same decision on the other valid reasons, then this court will not interfere by way of judicial review. I believe that at least in this new area of the effect of public policy, the approach of the Court of Appeal is a sound one. Where a minister publishes a policy as to the circumstances in which he will exercise a statutory power and then he or his officials apply a different policy which results in the exercise of that power in circumstances which range wider than those published, I do not consider that those whose cases fell within the published policy can automatically contend that the application of the power to them has been unlawful. If the facts are that no reasonable decision maker applying the published policy could have done other than reach the decision which the decision maker arrived at, the fact that he applied a more expansive, but unpublished, policy when reaching his decision will not invalidate that decision. For these reasons, which accord I believe with the reasoning of both the Court of Appeal and Lord Brown, I have concluded that the application of the secret policy did not render the detention of the appellants unlawful. Damages In view of my conclusions on liability, the issue of damages does not arise. Had I agreed with Lord Dyson on liability, I would have shared his approach to damages. I also endorse Lord Collins conclusions in relation to vindicatory damages. Reviews A word about reviews. If the majority are correct in concluding that the application of the secret policy rendered all decisions taken pursuant to it unlawful, then it seems to me that the moment that the secret policy was applied to reviews of the lawfulness of those detained, their continued detention would have been rendered unlawful, even if they were lawfully detained under the published policy before the secret policy was introduced and even if they remained subject to detention within the terms of the published policy. This would be an extraordinary result. MR LUMBAS HARDIAL SINGH APPEAL Mr Lumba has now voluntarily left the country, but the question remains of whether his detention became unlawful in the period before he left. Because of the view that I take of the scope of the Hardial Singh principles, I find the issues in relation to this part of Mr Lumbas appeal easier to resolve than has Lord Dyson. The lengthy period during which Mr Lumba was detained largely resulted from his own efforts to avoid deportation. For most of the period his deportation had been a practical possibility. The Secretary of State had not been dragging her feet in her effort to deport Mr Lumba. I agree with the Court of Appeal that Mr Lumba could not be heard to say that it was impossible to deport him within a reasonable time when the difficulty in doing so resulted from his own attempts to avoid deportation and not from extrinsic problems in effecting his deportation. On my view of the interpretation of Schedule 3, whether Mr Lumba posed a risk of re offending was not relevant to the period for which he could lawfully be detained. It seems to me that para 107 of Lord Dysons judgment lends support to my belief that the power to detain is not dependent upon an object of the detention being to facilitate deportation. The question remains, however, in Mr Lumbas case of whether his continued detention, having particular regard to his mental condition, remained consistent with the Secretary of States published policy. He has now voluntarily left the country, but if the issue of the lawfulness of his detention is to be pursued I agree with Lord Dyson that this is a matter to be considered by the Administrative Court on remission. Subject to this, for the reasons that I have given I would dismiss these appeals. LORD BROWN (with whom Lord Rodger agrees) Amongst the many issues to be decided on these appeals far and away the most important concerns the true nature of the tort of false imprisonment. Lord Dyson having set out all the relevant facts and the detailed legal context in which the many issues here arise for determination, I shall proceed without more to what I recognise is to be a dissenting judgment on this crucial question. Freedom from executive detention is arguably the most fundamental right of all. Thus Lord Bingham of Cornhill in his 2002 Romanes lecture. The tort of false imprisonment is, of course, the remedy provided by law for the violation of this freedom, for the unlawful deprivation of a persons liberty. The outcome of the appeals proposed by the majority of the court is to hold the appellants and, indeed, a large number of others similarly placed to have been unlawfully detained, in many instances for a period of years, and yet to compensate them by no more than a nominal award of damages. They are to be held unlawfully detained because, in his (or her) exercise of the undoubted power to detain them, the Secretary of State breached certain public law duties. But they are to be awarded only nominal damages because, whatever approach had been taken to the exercise of the detaining power, the appellants must inevitably have been detained in any event. Whilst I share to the full the majoritys conclusion that it would be quite wrong in the circumstances of these cases to award the appellants any substantial compensation in respect of their detention, for my part I would reach that conclusion by a very different route. I would hold that a public law breach of duty in the course of exercising an executive power of detention does not invariably, and did not here, result in the subsequent detention itself being unlawful in short, that these appellants were not the victims of false imprisonment. Naturally I recognise the beguiling simplicity and apparent purity of the majoritys approach. Ever since the House of Lords decision in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, decisions made within the decision makers jurisdiction but containing a public law error have generally been regarded as precisely equivalent to decisions made entirely without jurisdiction. Thus, it is said, a decision to detain which is flawed by a public law error is ultra vires and the detention which follows is necessarily unauthorised and therefore unlawful. Logically, indeed, this must be so however minor the public law error involved in the making of the decision and however inevitable it is that the decision to detain would have been made in any event. (At one stage in the argument Mr Husain QC for the appellants accepted that some public law failures might be too inconsequential to require this conclusion but unsurprisingly he was unable to formulate any test by which to determine such cases and, indeed, he had argued before this court on behalf of the appellant in R (SK (Zimbabwe)) v Secretary of State for the Home Department [2009] 1WLR 1527 that false imprisonment must follow inexorably even from periodic failures to comply with the Secretary of States self imposed monthly review process.) Given, moreover, that the tort of false imprisonment is actionable per se that it is of the essence of the tort of false imprisonment that the imprisonment is without lawful justification (Lord Hope in R v Governor of Brockhill Prison ex parte Evans [2001] 2 AC 19, 32) logic also suggests that the notion of nominal damages should have no part to play in determining the compensation payable. Why should someone imprisoned without lawful justification be paid nominal damages only? If the answer is that they would have been imprisoned anyway, under the same power and in just the same way, then in reality the Court is saying that the tort may be committed merely in a technical way. I have to say that such an approach would to my mind seriously devalue the whole concept of false imprisonment. It is true that in Murray v Ministry of Defence [1988] 1 WLR 692, whilst confirming that an action for false imprisonment lies even if the detainee does not know that he has been imprisoned, Lord Griffiths added (p703 A B): If a person is unaware that he has been falsely imprisoned and has suffered no harm, he can normally expect to recover no more than nominal damages. In my opinion, however, there is a very real difference between a detainee who is in fact unaware of being under physical restraint (perhaps because he is asleep or because he simply does not know that the door has been locked) and a detainee who is fully aware of his loss of freedom. To award the latter nominal damages only, on the basis that, even had he been dealt with lawfully he would still have been deprived of his freedom anyway, is really to say that he was in truth rightly in detention. That seems to me very different from saying that he was wrongly imprisoned but happily unaware of it. I have difficulty, therefore, with Lord Dysons criticism (at paras 92 and 93) of the passage on damages in Clarke LJs judgment in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 668. To compensate (or rather to deny compensation) on the basis that the detainee has suffered no loss because he would have remained in detention whether the tort was committed or not is in my opinion the very negation of the tort: it is to hold that the detainee was at one and the same time both rightly and wrongly imprisoned. Search as one may in the judgments both of the Court of Appeal and of the House of Lords in Christie v Leachinsky (respectively [1946] KB 124 and [1947] AC 573), there is no hint of a suggestion that the false imprisonment which followed upon the unlawful arrest in that case might properly attract only a nominal award of damages. I do not say that those falsely imprisoned should be compensated identically irrespective of how deserving they were of liberty rather than restraint during the relevant period of detention; I do say, however, that rather than hold a detainee simultaneously both rightly detained and falsely imprisoned, the law should instead recognise that, notwithstanding a flaw in the decision making process such as to involve the breach of a public law duty, the decision maker has not in those circumstances committed the tort of false imprisonment. A court which speaks with two voices risks bringing the law into disrepute. Is this court then bound by established law to reach so unsatisfactory a conclusion as the majority of the court suggest: tortious liability but for nominal damages only? To my mind it is not. Assuming that a power to detain exists, that any preconditions to its exercise have been satisfied and any limitations upon its scope observed, I know of no case which holds the detainee to have been falsely imprisoned merely because, in the course of exercising the power, the decision maker committed some public law breach of duty. On the contrary, and to my mind hardly surprisingly, the courts have consistently shied away from such a conclusion as is amply and consistently demonstrated by the series of Court of Appeal judgments in this very line of cases. Such was the decision of the Court of Appeal (Laws, Keene and Longmore LJJ) in SK (Zimbabwe), the Court of Appeal (Lord Neuberger of Abbotsbury MR, Carnwath and Stanley Burnton LJJ) in the cases from which the present appeals are brought, and the Court of Appeal (Maurice Kay, Longmore and Black LJJ) more recently still in Anam v Secretary of State for the Home Department [2010] EWCA Civ 1140. In Anam, indeed, Black LJ in giving the leading judgment characterised the appellants argument thus at para 17: At its most radical, the submission advanced by [counsel] is that a failure by the Secretary of State to apply his published policy in making a decision to detain necessarily renders that decision a nullity and the resulting detention unlawful. Have all these Lords Justices, many of them distinguished public law jurists, lost sight of the clear and basic principles of public law which, it is said, necessarily compel such a radical conclusion? So far from the authorities supporting such a surprising conclusion they can and should, I suggest, be analysed rather to the following effect. (1) False imprisonment is the inescapable result of detention absent any power to detain R v Governor of Brockhill Prison (No 2) Ex p Evans [2001] 2 AC 19 is itself a good illustration of this basic proposition: the appellant having been kept in prison beyond the date when her custodial sentence, properly calculated, expired, there could hardly have been a clearer case of false imprisonment. Such would also be the position were someone arrested for a non arrestable offence. Analysed in the way I analysed the power of detention under Schedule 2 to the Immigration Act 1971 (directly analogous to the Schedule 3 power under consideration in these appeals) in R (Khadir) v Secretary of State for the Home Department [2006] 1 AC 207, these are cases not about the exercise of the power, but rather about its existence. (2) The tort of false imprisonment is committed too if someone is detained in breach of a condition precedent to the existence of the detention power. Christie v Leachinsky [1947] AC 573 illustrates the common laws imposition of such a condition precedent: a right of arrest only arises when the citizen is told why he is being arrested. Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662 illustrates the imposition of such a precondition by statute (in that case the requirement for review as a precondition of continued detention beyond six hours). R v Secretary of State for the Home Department Ex p Khawaja [1984] AC 74 provides another such illustration, the House of Lords there deciding that the power to detain and remove an immigrant as an illegal entrant under Schedule 2 to the 1971 Act was dependent upon establishing such illegality as a precedent fact. (3) Detention beyond the scope of a detaining power similarly constitutes false imprisonment. For example, the limitations imposed by the courts following Woolf Js decision in R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704 (the Hardial Singh principles) undoubtedly operate to constrain the power of detention under paragraph 2 of Schedule 3 and it has long been recognised that detention in breach of the Hardial Singh principles gives rise to tortious liability. (Categories 2 and 3, I recognise, may not always be easily distinguishable. It could, for example, be said that the first Hardial Singh principle constitutes a precondition for the exercise of the detention power. It has seemed to me nonetheless worth attempting the distinction.) I would accept too that in certain circumstances a power of detention may (4) be narrowed by a published policy as to how it will be exercised. The Court of Appeals decision in R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139 is, I think, an illustration of that in the present context. The Secretary of State had in that case adopted a published policy which in substance narrowed the grounds on which the detaining power (in that case under schedule 2 to the 1971 Act) would be exercisable (the stated policy there being to release anyone whose removal was not imminent). Certainly it is on that basis alone that I would regard Nadarajah as correctly decided. And it must, of course, be recognised that, as with any other statement of policy (a policy being, by definition, no more than an advance indication of how it is proposed to exercise the particular discretionary power in question) it is always open to the holder of the power to change that policy see, for example, in relation to the Immigration Rules themselves, MO (Nigeria) v Secretary of State for the Home Department [2009] 1 WLR 1230. Every false imprisonment case on which the appellant relies can, in my opinion, be seen to fall within one or other of the above four categories. Besides those already mentioned, two cases in particular call for brief special mention. Kuchenmeister v Home Office [1958] 1 QB 496 concerned a German national who landed at Heathrow en route to Dublin. The immigration officers, instead of refusing him leave to land (as they had been instructed to do), detained him at the airport until it was too late for him to catch the Dublin flight. Holding him to have been wrongfully imprisoned, Barry J said this (p 512): His liberty was restricted to a greater degree than the immigration authorities were entitled to restrict it under [the particular power they sought to rely upon]. The fact that they might have restricted his mobility by employing the powers conferred upon them by other articles of the Order seems to me to be immaterial. It is no answer, when a man says I have been unlawfully arrested without a warrant, to say Well, had I (the person making the arrest) taken the trouble to go and ask for a warrant, I would undoubtedly have got it. That would be no answer to a claim for unlawful arrest. Similarly here, although the [immigration officers] could have detained the plaintiff by refusing him leave to land, that does not entitle them to detain him on the grounds on which they did. The case was to my mind correctly decided and can be seen to fall squarely under the first of the above four categories: the immigration officers simply had no power to restrict the plaintiffs movements in the way they did. Langley v Liverpool City Council [2006] 1 WLR 375 concerned a child in obvious need of protection. Two relevant powers existed, respectively under sections 44 and 46 of the Children Act 1989. Section 44 provides for the grant of an emergency protection order (EPO) authorising the council to remove a child into the care of foster carers; section 46 gives the police power to take a child into police protection. The police officer there having removed the child in purported exercise of his power under section 46, the Court of Appeal held that he had been wrong to do so and accordingly that the child had been falsely imprisoned. Dyson LJ in giving the leading judgment said that the statutory scheme clearly accords primacy to section 44 [which] is sanctioned by the court and . involves a more elaborate, sophisticated and complete process than removal under section 46 (para 38); that section 46 should be invoked only where it is not practicable to execute an EPO (para 40); and that in the result, albeit the officer had jurisdiction to remove [the child] pursuant to section 46, he could not lawfully invoke that power unless there were compelling reasons for exercising this power when, to his knowledge, an EPO was in force which authorised the council to remove [the child] into the care of foster carers (paras 44 and 46). Again, I have no difficulty in accepting the correctness of this decision: just as the Hardial Singh line of cases imposed restrictions upon the power of detention under the 1971 Act, so the court in Langley thought it right to place a limitation upon the scope of the section 46 power. The case falls neatly into category 3 (or perhaps into category 2, on the basis that the impracticality of executing a concurrent EPO was held to be a precondition to the lawful exercise of the section 46 power). In what circumstances, then, does the breach of a public law duty in the exercise of a power to detain result in the detainee being falsely imprisoned? I have already indicated, at paragraph 347(4) above, one such circumstance, namely when the Secretary of State by his published policy indicates that he will not exercise his power to its fullest extent but rather will confine its exercise within certain limits (for example, as in Nadarajah, by releasing anyone whose removal is not imminent). Such a published policy, unless and until it is changed, as a matter of public law requires the decision maker to decide cases (subject always to reasoned exceptions) in accordance with it. It is my clear present view (subject to any further argument on the point) that SK (Zimbabwe) provides a good illustration of circumstances where, the breach of a public law duty notwithstanding, the detainee should not be regarded as falsely imprisoned. The Secretary of State there breached what was his undoubted public law duty to review all detention cases monthly in accordance with his published policy on procedure. As it seems to me, however, it is one thing to breach a policy under which a detainee is entitled to be released; quite another to breach a policy under which he is entitled merely to be reviewed for release. Whereas the former will result in false imprisonment, the latter will not. Obviously, if the detainee on review would have been entitled to be released under the Hardial Singh principles (or, if more favourable, the published policy statements) then he has a claim for false imprisonment. But the claim in those circumstances arises from his continued detention beyond the date of such entitlement, not from the failure to review his case. What, however, is the position in a case like the present when the Secretary of States breach of public law duty consists of applying, in place of his published policy, an unpublished policy less favourable to those subject to the detaining power? On the appellants case, of course, that automatically results in the false imprisonment of every single detainee whose continued detention has been considered under the wrong policy, irrespective of whether or not they would have had the least prospect of release whatever policy had been applied. Applying the wrong policy, the argument runs, means that the Secretary of State failed to have regard to a material consideration, instead had regard to an immaterial consideration, and therefore reached his decision in an unlawful manner. This renders it a nullity with the result that there was no lawful authority for the ensuing detention. The closest this thesis comes to finding high level support in the authorities is in a much quoted dictum of Lord Diplock in Holgate Mohammed v Duke [1984] 1 AC 437. Following Mrs Holgate Mohammeds arrest on suspicion of theft and her detention for six hours at a police station for questioning, she was found at first instance to have been wrongfully arrested and was awarded 1,000. This was on the basis that the arresting officer, in deciding that there would be a better prospect of her confessing if she were arrested and detained rather than merely interviewed under caution, wrongfully exercised his power of arrest. Upholding the Court of Appeals decision to allow the Chief Constables appeal, the House of Lords held that the better prospect of the plaintiff confessing her guilt if arrested and questioned at a police station was in fact a relevant matter so that the arrest was not after all unlawful. In the course of the only reasoned speech, Lord Diplock (at p443) observed that, the condition precedent to the officers powers of arrest and detention having been fulfilled by his having reasonable cause to suspect the plaintiff to be guilty of an arrestable offence, this left him with an executive discretion whether to arrest her or not. It is the next passage in the speech that is so strongly relied upon by the appellants: Since this is an executive discretion expressly conferred by statute upon a public officer, the constable making the arrest, the lawfulness of the way in which he has exercised it in a particular case cannot be questioned in any court of law except upon those principles laid down by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, that have become too familiar to call for repetitious citation. The Wednesbury principles, as they are usually referred to, are applicable to determining the lawfulness of the exercise of the statutory discretion of a constable under section 2(4) of the Criminal Law Act 1967, not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for damages for that species of trespass to the person known as false imprisonment, for which the action in the instant case is brought. Lord Diplock then noted that amongst the Wednesbury principles was that whoever exercises the discretion must (in Lord Greenes words) exclude from his consideration matters which are irrelevant to what he has to consider. It is, to my mind, critical to a proper understanding of Lord Diplocks speech to recognise that the relevant matter in question there, the matter which the judge at first instance held the officer to have wrongly taken into consideration, was a consideration clearly decisive of the way he had exercised his discretion. The whole reason for the officer exercising his power to arrest and detain the plaintiff was so that she would then be more likely to confess. If that had been an unlawful consideration, nothing could be clearer than that without it the officer would not have exercised the power at all. In short, on the facts of the case, the power would have been exercised for an improper reason and the resultant detention necessarily unlawful. Certainly it would in my opinion be quite wrong to regard the case as authority for any wider proposition, least of all a thesis so absolute and unsatisfactory as that contended for here. There had been no argument on the point: the Chief Constable was not even called upon. Small wonder that in the quarter century following, despite the hugely increased scope of public law challenges, not a single case appears to have held an arrested detainee falsely imprisoned on Wednesbury grounds save where the arresting officer acted either in bad faith or for an improper purpose. Perhaps the way to put the point is this. Classically most public law challenges go to the decision making process rather than to the substance of the decision taken. The substantive decision is for the public body and not for the court to take and generally a successful challenge requires that the impugned decision be taken afresh. Obviously, if the substantive decision reached is outside the powers conferred upon the public body purporting to make it (ultra vires in the traditional, literal sense), then it must be nullified. So too if it is irrational in the public law (Wednesbury) sense i.e. outside the range of permissible decisions which the public body is empowered to make. But if, as here, the challenge is to the process whereby decisions to continue a detainees detention were taken or, indeed, as in SK (Zimbabwe), if what is challenged is a failure to take decisions (as often as promised by the policy) as to whether a detainees detention should continue then the appropriate remedy is to require the decision maker to act lawfully: to re decide decisions that resulted from a flawed decision making process or, as in SK (Zimbabwe), to take decisions that earlier the decision maker had omitted to take. It simply does not follow from a flawed decision making process that the detainees continued detention immediately thereupon becomes unlawful so as to make him a victim of false imprisonment until a fresh decision comes later to be lawfully taken so that, for example, a detainee whose detention is reviewed every second month instead of monthly as the published policy dictates, alternates yo yo like between lawful detention and false imprisonment. Nor does it seem to me that the absolutist approach to the consequences of public law error espoused here by the majority of the Court has received universal endorsement over recent years. The decision of the House of Lords in Boddington v British Transport Police [1999] 2 AC 143 is often cited as a modern example of the Anisminic principle being applied in the ordinary course of proceedings (there in the context of a criminal trial). But there are important dicta in the judgments which expressly leave open the question whether legal consequences may nonetheless follow from unlawful action. Consider this passage from the speech of Lord Slynn of Hadley, an acknowledged master in the field of public law: In our jurisdiction the effect of invalidity may not be relied on if limitation periods have expired or if the court in its discretion refuses relief, albeit considering that the Act is invalid. These situations are of course different from those where a court has pronounced subordinate legislation or an administrative act to be unlawful or where the presumption in favour of their legality has been overruled by a court of competent jurisdiction. But even in these cases I consider that the question whether the acts or byelaws are to be treated as having at no time had any effect in law is not one which has been fully explored and is not one on which it is necessary to rule in this appeal and I prefer to express no view upon it. The cases referred to in Wade & Forsyth, Administrative Law, 7th ed. (1997), pp.323 324, 342 344 lead the authors to the view that nullity is relative rather than an absolute concept (p.343) and that void is meaningless in any absolute sense. Its meaning is relative. This may all be rather imprecise but the law in this area has developed in a pragmatic way on a case by case basis. (p.165 C F) (Wade & Forsyth, now in its tenth edition (2010), continues to recognise the relativity of the concept of nullity in this context.) All I am saying is that if the law is to continue to develop in this area in a pragmatic way on a case by case basis, then in this particular case it should expressly recognise that not every decision to detain affected by a public law breach necessarily carries in its wake an unanswerable claim for false imprisonment. That said, I readily acknowledge that the power of executive detention is one to be exercised with the greatest care and sensitivity and that it is of the first importance that those who exercise it should be ever mindful not merely of the legal limits of the power but also of such public law duties as surround its proper exercise. Where, as here, a wrong and less favourable policy has been applied in deciding whether a person should be, or continue to be, detained, I accept that it must be for the Secretary of State as decision maker to establish that this breach of his or her public law duty did not in fact prejudice the detainee. In short, it is for the Secretary of State in these circumstances, in order to avoid liability for the tort of false imprisonment, to establish that the detainee would have been detained in any event even, that is, had the lawful published policy been followed. Assuming, however, that the inevitability of detention in any event can be established, it seems to me nothing short of absurd to hold the tort of false imprisonment nevertheless made out. After all, had a detainee in such circumstances sought to challenge his continued detention by judicial review (or habeas corpus), the court would have been likely to grant declaratory relief only, declining in its discretion to order the detainees release. Assuming, indeed, that the Secretary of States lawful policy in effect dictates the detainees detention, why, one wonders, would a decision to release him not itself be in breach of the Secretary of States public law duty? Given, as the Court of Appeal held, and as I understand each member of this court to accept, that there was no realistic prospect whatever of these appellants having been released even had the Secretary of State applied his more favourable published policy, it follows that for my part, whilst, of course, deeply regretting the public law breaches of which the Secretary of State was here guilty, I would dismiss the appeals. The bulk of this judgment was written upon my understanding that the essential choice facing the court was between (a) no false imprisonment and (b) false imprisonment but nominal damages only. It now appears that some members of the court favour a third outcome: (c) false imprisonment with damages of perhaps 500 1,000 by way of a vindicatory or conventional award. Describe such an award how one will, to my mind it cannot sensibly be justified here. Is the court really to award substantial damages to those conceded to have been rightly detained? I have made clear my difficulties with a nominal award of damages. A substantial award would appear to me more objectionable still. Lord Hope (at para 177 of his judgment) refers to Attorney General of Trinidad and Tobago v Ramanoop [2006] 1 AC 328 a constitutional challenge based upon some quite appalling misbehaviour by a police officer (Lord Nicholls at para 2) and calls here for some recognition of the gravity of the breach of the fundamental right which resulted in false imprisonment. Properly critical though our judgments may be of the conduct of Home Office officials in these and similar cases, I find it quite impossible to recognise in them any breach (grave or otherwise) of the detainees fundamental rights. The detainees, I can only repeat, were rightly detained and it would have been wrong to release them. Save insofar as this judgment indicates the area of my disagreement with Lord Dysons judgment, I wish to say that I am in respectful agreement with it and feel unable to add anything of value on the various other issues arising for decision. |
This appeal is concerned with the law of unjust enrichment and subrogation. The original parties to the action were Melissa Menelaou as claimant (Melissa), the Bank of Cyprus UK Ltd as defendant (the Bank) and a firm of solicitors, Boulter & Co, as third party (Boulters). The trial of the action came before David Donaldson QC, sitting as an additional judge of the Chancery Division (the judge): [2012] EWHC 1991 (Ch). The trial began on 16 May 2012 and lasted three days. By the end of the trial only the Banks counterclaim against Melissa was live. On 19 July 2012 the judge handed down a judgment dismissing the counterclaim. The Bank appealed to the Court of Appeal (Moses, Tomlinson and Floyd LJJ), which allowed the appeal on 4 July 2013: [2013] EWCA Civ 1960, [2014] 1 WLR 854. Melissa appeals to this court. The background facts The facts can largely be taken from the agreed statement of facts and issues. Melissa, who was born on 27 January 1990, is the second of the four children of Mr Parris and Mrs Donna Menelaou (the Menelaou parents). The other children were Danielle, born on 9 August 1986, Max, born on 24 June 1991 and Ella Mae, born on 6 February 2002. In mid 2008, the Menelaou parents and their three youngest children lived at Rush Green Hall, Great Amwell, Hertfordshire (Rush Green Hall), which was a property owned by the Menelaou parents jointly. Melissa was 18 and a student at a nearby college. Rush Green Hall was subject to two charges in favour of the Bank. The Menelaou parents directly owed the Bank about 2.2m, and had personally guaranteed loans made by the Bank to their companies. The Menelaou parents decided to sell Rush Green Hall, to apply some of the proceeds to buy a smaller property as the family home, to provide funds for Danielle to pay the deposit on a house which she wanted to buy with her future husband and to free up capital to invest in a further development project. The Menelaou parents instructed Boulters to act for them in the conveyancing transaction. The senior partner of Boulters was Mr Menelaous sister. They used Mr Paul Cacciatore, who was employed by Boulters as a legal executive and who was also one of Mr Menelaous brothers in law. On 15 July 2008 contracts were exchanged for the sale of Rush Green Hall for the price of 1.9m. The contractual purchasers of Rush Green Hall paid a deposit of 190,000 to Boulters for the account of the Menelaou parents. About a week later, Mr Menelaou informed Mr Cacciatore that he had found a new property to serve as the family home at 2 Great Oak Court, Hunsdon, Hertfordshire (Great Oak Court). On 24 July 2008 contracts were exchanged for the purchase of Great Oak Court for the price of 875,000. On Mr Menelaous instructions, the purchaser of Great Oak Court was to be Melissa. The deposit payable was 87,500. This deposit was paid from the 190,000 held by Boulters as the deposit for the sale of Rush Green Hall. Mr Menelaou told Melissa that Great Oak Court was being bought in her name as a gift to her, on the basis that she would hold the property for the benefit of herself and her two younger siblings. She agreed to the arrangement. The Bank was not approached about the proposed arrangement prior to the exchanges of contracts. The Bank sanctioned the proposed arrangements with some reluctance given the overall indebtedness of the Menelaou parents and their companies. On 5 September 2008 Boulters wrote to the Bank saying that it understood that the Bank was to take a charge over Great Oak Court from Melissa, which Boulters understood would be a third party charge. Completion was to be on 12 September. On 9 September 2008 the Bank wrote to Boulters in these terms: Thank you for your letter dated 5 September 2008. We confirm that upon receipt of 750,000 we will release our charges over [Rush Green Hall] subject to a third party legal charge over [Great Oak Court] which is registered in the name of Melissa Menelaou. Melissa was not aware of the Banks intention to take any charge over Great Oak Court. The Bank also instructed Boulters to act as its solicitors to deal with the discharge of its charges over Rush Green Hall and to obtain a charge in favour of the Bank over Great Oak Court. On 10 September 2008 Boulters replied to the Banks letter of 9 September enclosing a certificate of title undertaking to obtain an executed mortgage in Melissas name over Great Oak Court and to confirm that they had complied or would comply with the Banks instructions. On 11 September 2008 Boulters sent the Bank a form of legal charge over Great Oak Court, purportedly signed by Melissa and identifying her as the customer. It was (and is) Melissas case, supported by her brother and by handwriting evidence, that the signature on the charge was not hers. Indeed, she was unaware of the existence of the charge until 2010. On the same day, 11 September 2008, the Bank telephoned Boulters and pointed out that the identity of the customer in the charge should be the Menelaou parents and not Melissa. Boulters did not contact Melissa. Instead, an employee of Boulters simply changed the name of the customer in manuscript on the charge from that of Melissa to those of the Menelaou parents. On 12 September 2008 completion of the sale of Rush Green Hall by the Menelaou parents and the purchase of Great Oak Court by Melissa both took place. As part of the completion process, Boulters received the balance of the price of Rush Green Hall from its purchasers. They remitted 750,000 to the Bank and sent a further 785,000 to the vendors of Great Oak Court to meet the remaining 90% of the purchase price for Great Oak Court. Boulters also sent the Bank two deeds to be sealed by the Bank authorising the cancellation of the entries in respect of the two registered charges over Rush Green Hall. The discharge of mortgage forms were not returned by the Bank until 13 October 2008. After a considerable delay, Melissa was registered as the proprietor of Great Oak Court. The Bank was also registered as the purported chargee. Following completion, the Menelaou parents, Melissa, and her two younger siblings moved into Great Oak Court and occupied it as their family home. In the spring of 2010 Melissa was told by her parents that their business was experiencing difficulties. It was proposed that Great Oak Court would be sold and a smaller property purchased. It was at this point that Melissa discovered the existence of the charge dated 12 September 2008 over Great Oak Court. Melissas conveyancing solicitors then corresponded with Boulters. The Bank was made aware of the challenge to the validity of its charge and, through its solicitors, intimated a claim against Boulters. Many allegations of breach of duty (fiduciary and otherwise) were made by the Bank against Boulters. The procedural history On 2 November 2010 Melissa issued a Part 7 claim in the Chancery Division seeking orders that all references to the charge, as appearing in the Charges Register for Great Oak Court, be removed. The main basis for this claim was that, not having been signed by Melissa, the Banks charge was void. The Bank defended the claim but also counterclaimed for a declaration that the Bank was entitled to be subrogated to an unpaid vendors lien over Great Oak Court. On 14 January 2011 the Bank issued a Part 20 claim against Boulters for damages for breach of trust and/or fiduciary duty, and an indemnity against all costs and expenses that it might incur in the main claim. After the exchange of witness statements, it became clear to Melissa and her advisers that Boulters had altered the charge without consulting her. By consent of the parties, pursuant to Melissas application dated 13 April 2012, the particulars of claim were amended to rely upon this alteration as a further ground for rendering the charge void. The Banks response was to continue to challenge the invalidity of the charge. As stated above, the trial of the case began on 16 May 2012. At the commencement of the trial all issues were live. Melissa was called to give evidence and was duly cross examined. Thereafter, following an interchange between counsel and the judge, Boulters conceded in the Part 20 claim that the charge was void and that Melissa was entitled to the relief sought in her claim and, as it is put in the statement of facts and issues, reflexively, the Bank conceded the same in the main claim. The issue of liability in the Banks claims against Boulters was then compromised and a written agreement was entered into between the Bank and Boulters whereby Boulters accepted that it was in breach of its duties in both contract and tort and was liable to indemnify the Bank for its losses as a result of an invalid charge being entered against Great Oak Court. As a result of that agreement, the only remaining live issue for determination at the trial was the Banks counterclaim against Melissa. Judgment was reserved and (as stated above) was handed down on 19 July 2012 dismissing the counterclaim. No formal order was made on that day but a further hearing took place on 23 October 2012, when the judge made an order that the Banks charge be removed from the Register (reflecting the Banks and Boulters concession that the Banks charge was void) and formally dismissed the Banks counterclaim with costs. The judge granted the Bank permission to appeal against the dismissal of its counterclaim. The judgment The judge made these findings in the course of his judgment. Whether by operation of law or as a result of any agreement or understanding between the parties, there was nothing to qualify the straightforward position that, in receiving the sale proceeds of Rush Green Hall, Boulters was acting as agent for Mr and Mrs Menelaou and held all the moneys for them alone (para 17). As regards the totality of the purchase price of Great Oak Court, it was not discharged by the use of moneys belonging to the Bank (para 19). The judge approached the matter on two bases, which he described as the narrow or traditional approach to the doctrine of subrogation to the unpaid vendors lien and the wider approach based on the law of unjust enrichment (para 14). He held that the fact that the moneys provided for the purchase were not paid by, and did not belong to, the Bank was fatal to the counterclaim on the narrow or traditional approach (para 19). As to the wider approach, he concluded that there was both benefit to Melissa, namely the gratuitous acquisition of Great Oak Court (albeit to be held on trust for her two younger siblings), and detriment to the Bank, namely the release of its two charges (para 22). He held that The existence of both detriment and benefit does not however establish the further element that the latter should have been at the expense of the Bank (para 22 original emphasis). He added, also in para 22: It is sufficient for me to say that there must in my view be something in the nature of, to use the formula proposed in Burrows, The Law of Restitution, 3rd ed (2010) p 66, a transfer of value from the Bank to the claimant. But here the claimants benefit enured and was complete on 12 September 2008, while the Banks detriment through the mistaken release of its charges over Rush Green Hall occurred a month later. Whether or not times arrow must always and with full rigour be respected in the law of unjust enrichment, I am clear that this is not a case in which economic or any other kind of reality calls for its wholesale rejection. The judge concluded that, although this left Melissa without any charge over her property, it did not leave the Bank without all recourse. This was because the Bank had an indemnity for its losses from Boulters (in reality with that firms indemnity insurers), which indemnity was agreed during the course of the trial (para 11). The Court of Appeal In a judgment handed down on 2 July 2013 the Court of Appeal unanimously allowed the Banks appeal. The question in this appeal is whether it was correct to do so. I will consider its reasoning in the course of my discussion of the issues argued before us. On 4 July 2003 the Court of Appeal handed down a further judgment dealing with a number of consequential issues. It declared that the Bank was entitled to be subrogated to an equitable charge by way of an unpaid vendors lien over Great Oak Court for 875,000 plus interest. The result of the Court of Appeals decision is that Melissas property, Great Oak Court, has been subjected to an equitable charge for 875,000 plus interest. The Banks application to a Master in the Chancery Division seeking to enforce the equitable charge has been stayed by agreement pending the outcome of this appeal. Discussion In the course of the argument, there was much discussion of the relevant legal principles. However, in my opinion it is not necessary to resolve all the possible issues which were discussed. It appears to me that this is a case of unjust enrichment. In Benedetti v Sawiris [2013] UKSC 50, [2014] AC 938 the Supreme Court recognised that it is now well established that the court must ask itself four questions when faced with a claim for unjust enrichment. They are these: (1) Has the defendant been enriched? (2) Was the enrichment at the claimants expense? (3) Was the enrichment unjust? (4) Are there any defences available to the defendant? See, for example, Benedetti at para 10, following Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221 per Lord Steyn at 227 (and per Lord Hoffmann to much the same effect at 234) and Investment Trust Companies v Revenue and Customs Comrs [2012] EWCH 458 (Ch), [2012] STC 1150 per Henderson J at para 38 (ITC). In that paragraph Henderson J noted that Professor Andrew Burrows QC said in The Law of Restitution, 3rd ed (2011) p 27 that, if the first three questions are answered affirmatively and the fourth negatively, the claimant will be entitled to restitution and that those four elements constitute the fundamental conceptual structure of an unjust enrichment claim. In para 39, Henderson J accepted that approach, although he said that the four questions were no more than broad headings for ease of exposition, that they did not have statutory force and that there may be a considerable degree of overlap between the first three questions. I agree. In the instant case, there is no doubt that Melissa was enriched when she became the owner of Great Oak Court, which she was given by her parents, albeit on the basis that she would hold it for the benefit of herself and her two younger siblings. As it is correctly put on behalf of the Bank, her obligation to pay the purchase price of Great Oak Court to the vendor was discharged. The essential question is whether she was enriched at the expense of the Bank, since, if she was, there cannot in my opinion have been any doubt that the enrichment was unjust. I would accept the submission made on behalf of the Bank that the unjust factor or ground for restitution is usually identified in subrogation cases as being, either (1) that the lender was acting pursuant to the mistaken assumption that it would obtain security which it failed to obtain: see eg Banque Financire per Lord Hoffmann at p 234H, or (2) failure of consideration: see the fourth and fifth points made by Neuberger LJ in Cheltenham & Gloucester plc v Appleyard (C&G) [2004] EWCA Civ 291, paras 35 and 36; [2004] 13 EG 127 (CS). On the facts here the Bank expected to have a first legal charge over Great Oak Court securing the debts of the appellants parents and their companies but, as events turned out, it did not have that security interest. The critical question is therefore whether Melissa was enriched at the expense of the Bank. Was Melissa enriched at the expense of the Bank? According to Goff & Jones on The Law of Unjust Enrichment, 8th ed (2011), para 6 01, the requirement that the unjust enrichment of the defendant must have been at the expense of the claimant reflects the principle that the law of unjust enrichment is not concerned with the disgorgement of gains made by defendants, nor with the compensation of losses sustained by claimants, but with the reversal of transfers of value between claimants and defendants. I agree. In my opinion the answer to the question whether Melissa was unjustly enriched at the expense of the Bank is plainly yes. The Bank was central to the scheme from start to finish. It had two charges on Rush Green Hall which secured indebtedness of about 2.2m. It agreed to release 785,000 for the purchase of Great Oak Court in return for a charge on Great Oak Court. It was thus thanks to the Bank that Melissa became owner of Great Oak Court, but only subject to the charge. Unfortunately the charge was void for the reasons set out above. In the result Melissa became the owner of Great Oak Court unencumbered by the charge. She was therefore enriched at the expense of the Bank because the value of the property to Melissa was considerably greater than it would have been but for the avoidance of the charge and the Bank was left without the security which was central to the whole arrangement. As I see it, the two arrangements, namely the sale of Rush Green Hall and the purchase of Great Oak Court, were not separate but part of one scheme, which involved the Bank throughout. I respectfully disagree with the conclusions of the judge summarised in paras 13 to 16 above. It is not, so far as I am aware, in dispute that, if the Bank had received all the proceeds of sale of Rush Green Hall and had then re advanced the moneys required for the purchase of Great Oak Court, it would be entitled to succeed whether or not the re advance was to the Menelaou parents or to Melissa. It is submitted on behalf of the Bank that, if that is so, it would be pure formalism for subrogation to be precluded simply because the moneys remained in Boulters client account (and were not paid to the respondent) between the sale of Rush Green Hall and the purchase of Great Oak Court; just as Lord Steyn commented in Banque Financire at p 227C that it would be pure formalism for the interposition of Mr Herzig between the loan by BFC of its advance and Parcs obligation to repay to be treated as altering the substance of the transaction and the result of the claim. On the facts of the instant case the funds remained in Boulters client account and were not paid to the Bank because of a pre acquisition agreement between it and the Menelaou parents. By this agreement it was agreed that money to which the Bank was otherwise absolutely entitled under its charges could remain advanced to the Menelaou parents for the purpose of purchasing Great Oak Court and was to be released only on condition that the Bank was given a specific charge over Great Oak Court. I would accept those submissions, which support the conclusion in para 24 above. I would reject the submission that there must be a direct payment by the Bank to Melissa. Such a requirement, while sufficient, is not in my view necessary because it would be too rigid. As I see it, whether a particular enrichment is at the expense of the claimant depends upon the facts of the case. The question in each case is whether there is a sufficient causal connection, in the sense of a sufficient nexus or link, between the loss to the Bank and the benefit received by the defendant, here Melissa. There has been much debate both among academics and judges as to the correct test. The contrast was noted by Henderson J at first instance in ITC. He discussed the problem in considerable detail between paras 47 and 73, especially between paras 52 and 73. The contrast is between a rule that requires there to be a direct causal link between the claimants payment and the defendants enrichment, subject to some exceptions (paras 52 59) and a broader more flexible approach (paras 60 69). He expressed his conclusions on the principles as follows in para 67: 67. I must now draw the threads together, and state my conclusions on this difficult question. In the first place, I agree with Mr Rabinowitz that there can be no room for a bright line requirement which would automatically rule out all restitutionary claims against indirect recipients. Indeed, Mr Swift accepted as much in his closing submissions. In my judgment the infinite variety of possible factual circumstances is such that an absolute rule of this nature would be unsustainable. Secondly, however, the limited guidance to be found in the English authorities, and above all the clear statements by all three members of the Court of Appeal in Kleinwort Benson Ltd v Birmingham City Council [1996] 4 All ER 733, [1997] QB 380, suggest to me that it is preferable to think in terms of a general requirement of direct enrichment, to which there are limited exceptions, rather than to adopt Professor Birks view that the rule and the exceptions should in effect swap places (see At the expense of the claimant: direct and indirect enrichment in English law in Unjustified Enrichment: Key Issues in Comparative Perspective, edited by David Johnston and Reinhard Zimmermann, Cambridge (2002), p 494). In my judgment the obiter dicta of May LJ in Filby and the line of subrogation cases relied on by Professor Birks, provide too flimsy a foundation for such a reformulation, whatever its theoretical attractions may be, quite apart from the difficulty in framing the general rule in acceptable terms if it is not confined to direct recipients. The reference to Filby is to Filby v Mortgage Express (No 2) Ltd [2004] EWCA Civ 759, [2004] All ER (D) 198 (Jun). Henderson J continued as follows in para 68. The real question, therefore, is whether claims of the present type should be treated as exceptions to the general rule. So far as I am aware, no exhaustive list of criteria for the recognition of exceptions has yet been put forward by proponents of the general rule, and I think it is safe to assume that the usual preference of English law for development in a pragmatic and step by step fashion will prevail. Nevertheless, in the search for principle a number of relevant considerations have been identified, including (in no particular order): (a) the need for a close causal connection between the payment by the claimant and the enrichment of the indirect recipient; (b) the need to avoid any risk of double recovery, often coupled with a suggested requirement that the claimant should first be required to exhaust his remedies against the direct recipient; (c) the need to avoid any conflict with contracts between the parties, and in particular to prevent leapfrogging over an immediate contractual counterparty in a way which would undermine the contract; and (d) the need to confine the remedy to disgorgement of undue enrichment, and not to allow it to encroach into the territory of compensation or damages. It is submitted on behalf of the Bank that on four occasions since the decision in ITC the Court of Appeal has endorsed the considerations identified by Henderson J. They variously described his approach thus: as relevant considerations in TFL Management Services v Lloyds TSB Bank plc [2014] 1 WLR 2006 (TFL) per Floyd LJ, para 57, as of assistance in Relfo Ltd v Varsani (No 2) [2014] EWCA Civ 360, [2015] 1 BCLC 14 per Arden LJ, para 96; and as relevant considerations skilfully distilled in ITC on appeal, [2015] EWCA Civ 82 per Patten LJ (giving the judgment of the court), paras 67 and 69. Further, in his judgment in this case Floyd LJ described Henderson Js approach as thoughtful and valuable at para 39 and in TFL he said this about Henderson Js para 68: 57. I agree with Henderson J that these are relevant considerations in deciding the question of whether an indirect benefit was conferred at the claimants expense. But the various factors to which he refers are not, and were not I think intended to be, rigid principles. Far less can it be said that if one or more of the factors can be said to be adverse to the claim, the claim is necessarily doomed to failure. That approach seems to me to be consistent with the approach of the Court of Appeal in ITC, where Patten LJ said at the end of para 69: We consider that the correlative of taking a broad approach to the first consideration by taking account of economic or commercial reality is that it is important not to take a narrow view of what, under the third criterion, would conflict with contracts between the parties or with a relevant third party in a way which would undermine the contract. That seems to me to be a sensible approach. There is scope for legitimate debate as to whether the correct approach is to adopt a narrow test with exceptions or a broader approach. However, it appears to me that, whichever test is adopted the result is likely to be the same. In any event it is not to my mind necessary to consider the issue further in this case because, as the Court of Appeal made clear, the position is clear on the facts of the instant case, which is concerned only with the first of Henderson Js relevant considerations. In a case in which more such considerations were relevant, it would be necessary to have regard to a number of different factors, probably with no presumption one way or the other where the starting point is. position is neatly described by Tomlinson LJ as follows in paras 57 and 58: In short, I agree with the approach of the Court of Appeal. In particular, the 57. In the present case, the Bank was to receive 1.9m upon the sale of Rush Green Hall in circumstances where it was owed 2.2m and had charges over Rush Green Hall to secure that indebtedness. The Bank had agreed that it would release its charges over Rush Green Hall upon receipt of 750,000 out of the sale proceeds, in return for a charge over Great Oak Court to secure what would be the remaining indebtedness, 1.45m, thereby enabling the Menelaou parents on the strength of that undertaking by the Bank to use 875,000 out of the sale proceeds of Rush Green Hall for the purchase of Great Oak Court in the name of Melissa. I do not see how this can sensibly be described as anything other than a transfer of value between the Bank and Melissa, in whose name the purchase of Great Oak Court was made. 58. I am glad to be able to reach this conclusion. It gives effect to the reality of the transaction, whereas the conclusion of the judge, in my respectful view, amounts to that pure formalism which Lord Steyn has in this context deprecated That was of course a reference to the speech of Lord Steyn in Banque Financire referred to in para 18 above. Both Floyd and Moses LJJ expressed much the same conclusions at paras 42 and 48 and 61 62 respectively. I am unable to accept that there is any significance in the point which attracted the judge (para 22) that the benefit to Melissa was complete on 12 September, whereas the detriment to the Bank occurred over a month later when its charges over Rush Green Hall were released. As Moses LJ put it at para 62, everyone knew, as a result of the Banks agreement on 9 September 2008, that the Banks security in Rush Green Hall would be released and, provided that the terms of that agreement were satisfied, the Bank was bound to release its charge. For all these reasons I agree with the Court of Appeal that Melissa was enriched at the expense of the Bank. I have already expressed my view that she was unjustly so enriched. Defences The fourth question, namely whether there are any defences available to the defendant, must in my opinion be answered in the negative. On the assumption that the first three questions are answered in the affirmative, I do not understand Melissa to be relying upon any other defence. It is not suggested, for example, that she had a change of position defence. Nor was she a bona fide purchaser for value without notice. She was a mere donee and, as such can be in no better position than her parents as donors. As indicated at the end of para 31 above, I recognise that in another case there may well be defences or at least countervailing considerations, as indicated, for example, in considerations (b), (c) and (d) identified by Henderson J. Remedies The next question is what remedies are available to the Bank. The answer is that the Bank is subrogated to the unpaid sellers lien. Subrogation (sometimes known in this context as restitutionary subrogation) is available as a remedy in order to reverse what would otherwise be Melissas unjust enrichment. It is important to recognise that a claim in unjust enrichment is different in principle from a claim to vindicate property rights; see eg Foskett v McKeown [2001] 1 AC 102 per Lord Browne Wilkinson at p 108F, Lord Millett at p 129E F and Lord Hoffmann at p 115F, where he agreed with Lord Millett. Foskett was a claim to enforce property rights. Lord Millett expressed the distinction between that case and a case of unjust enrichment at p 129F: A plaintiff who brings an action in unjust enrichment must show that the defendant has been enriched at the plaintiffs expense, for he cannot have been unjustly enriched if he has not been enriched at all. But the plaintiff is not concerned to show that the defendant is in receipt of property belonging beneficially to the plaintiff or its traceable proceeds. The fact that the beneficial ownership of the property has passed to the defendant provides no defence; indeed, it is usually the very fact which founds the claim. Conversely, a plaintiff who brings an action like the present must show that the defendant is in receipt of property which belongs beneficially to him or its traceable proceeds, but he need not show that the defendant has been enriched by its receipt. He may, for example, have paid full value for the property, but he is still required to disgorge it if he received it with notice of the plaintiffs interest. The sentence which I have put in italics shows that a claim in unjust enrichment does not need to show a property right. In C&G Neuberger LJ (giving the judgment of the Court of Appeal) summarised the principles relevant to different types of subrogation concisely in paras 24 49. Like Floyd LJ at para 44, he set out the principles relevant here at para 25 as follows: The principle upon which C&G rely has been nowhere better stated than by Walton J in Burston Finance Ltd v Speirway Ltd (in liquidation) [1974] 1 WLR 1648 at p 1652B C: [W]here As money is used to pay off the claim of B, who is a secured creditor, A is entitled to be regarded in equity as having had an assignment to him of Bs rights as a secured creditor. It finds one of its chief uses in the situation where one person advances money on the understanding that he is to have certain security for the money he has advanced, and for one reason or another, he does not receive the promised security. In such a case he is nevertheless to be subrogated to the rights of any other person who at the relevant time had any security over the same property and whose debts have been discharged in whole or in part by the money so provided by him. Neuberger LJ noted at para 26 that that formulation was cited with approval by (among others) Lord Hutton in Banque Financire at p 245C D. He further noted at para 36 that in Banque Financire the lender bargained for what Lord Hoffmann called at p 229C a negative form of protection in the form of an undertaking, which he did not get. He added that this did not prevent his claim to be subrogated to a security, albeit essentially as a personal remedy: see per Lord Steyn at p 228C D and Lord Hoffmann at p 229C. The class of subrogation under discussion in this case is known as subrogation to an unpaid vendors lien. I agree with Floyd LJ at para 15 that it is not a concept which it is particularly straightforward to understand. He puts it thus. What the Bank seeks to achieve is to be placed in a position equivalent to that of the vendor of Great Oak Court at the point where the purchase money has not been paid. At that point the vendor would be able to refuse to convey the title to Great Oak Court, unless the purchase money was paid to him. He added that the lien was explained by Millett LJ in Barclays Bank plc v Estates & Commercial Ltd [1977] 1 WLR 415 at pp 419 420, in this way (omitting citations): As soon as a binding contract for sale [of land] is entered into, the vendor has a lien on the property for the purchase money and a right to remain in possession of the property until payment is made. The lien does not arise on completion but on exchange of contracts. It is discharged on completion to the extent that the purchase money is paid. Even if the vendor executes an outright conveyance of the legal estate in favour of the purchaser and delivers the title deeds to him, he still retains an equitable lien on the property to secure the payment of any part of the purchase money which remains unpaid. The lien is not excluded by the fact that the conveyance contains an express receipt for the purchase money. The lien arises by operation of law and independently of the agreement between the parties. It does not depend in any way upon the parties subjective intentions. It is excluded where its retention would be inconsistent with the provisions of the contract for sale or with the true nature of the transaction as disclosed by the documents. Floyd LJ then set out the passage from the judgment of Walton J in Burston Finance set out by Neuberger LJ in C&G and quoted at para 39 above. I adopt Floyd LJs description of the position at para 17 of his judgment as follows. A third party who provides some or all of the purchase money for a purchaser, thereby discharging the obligation to the vendor, can claim the benefit of the unpaid vendors lien by subrogation. This is so even after the lien has been extinguished as between vendor and purchaser. Floyd LJ notes that it is not intuitively clear how, or why, this should be the case and asks how it is that the unpaid vendors lien transferred from the vendor to the third party. He says with force that it might be thought that once the obligation in question has been extinguished, there is nothing which the vendor could transfer. He further asks by what legal method the transfer takes place, even if there was something to transfer. He notes that there has been no legal assignment and suggests that it was conceptual problems such as these that gave rise to the notion that the vendors lien was kept alive for the benefit of the subrogated third party. Floyd LJ resolves this apparent difficulty by adding that in Banque Financire at p 236 Lord Hoffmann explained that the phrase keeping the charge alive was not a literal truth but a metaphor or analogy: In a case in which the whole of the secured debt is repaid, the charge is not kept alive at all. It is discharged and ceases to exist. Lord Hoffmann added at p 236E F: It is important to remember that, as Millett LJ pointed out in Boscawen v Bajwa [1996] 1 WLR 328, 335, subrogation is not a right or a cause of action but an equitable remedy against a party who would otherwise be unjustly enriched. It is a means by which the court regulates the legal relationships between a plaintiff and a defendant or defendants in order to prevent unjust enrichment. When judges say the charge is kept alive for the benefit of the plaintiff, what they mean is that his legal relations with a defendant who would otherwise be unjustly enriched are regulated as if the benefit of the charge had been assigned to him. In para 19 Floyd LJ notes that Lord Hoffmann reviewed five authorities, namely Chetwynd v Allen [1899] 1 Ch 353, Butler v Rice [1910] 2 Ch 277, Ghana Commercial Bank v Chandiram [1960] AC 732, Paul v Spierway [1976] Ch 220 and Boscawen v Bajwa [1996] 1 WLR 328. Having done so, Lord Hoffmann noted at p 233 that in Boscawen there was no common intention that the vendor, whose mortgage had been paid off, should grant any security to Abbey National. Lord Hoffmann then said this at pp 233H 234D: As Millett LJ pointed out, at p 339 [of Boscawen], the Abbey National expected to obtain a charge from the purchaser as legal owner after completion of the sale, and, in the event which happened of there being no such completion, did not intend its money to be used at all. This meant that: The factual context in which the claim to subrogation arises is a novel one which does not appear to have arisen before but the justice of its claim cannot be denied. These cases seem to me to show that it is a mistake to regard the availability of subrogation as a remedy to prevent unjust enrichment as turning entirely upon the question of intention, whether common or unilateral. Such an analysis has inevitably to be propped up by presumptions which can verge upon outright fictions, more appropriate to a less developed legal system than we now have. I would venture to suggest that the reason why intention has played so prominent a part in the earlier cases is because of the influence of cases on contractual subrogation. But I think it should be recognised that one is here concerned with a restitutionary remedy and that the appropriate questions are therefore, first, whether the defendant would be enriched at the plaintiffs expense; secondly, whether such enrichment would be unjust; and thirdly, whether there are nevertheless reasons of policy for denying a remedy. An example of a case which failed on the third ground is Orakpo v Manson Investments Ltd [1978] AC 95, in which it was considered that restitution would be contrary to the terms and policy of the Moneylenders Acts. That appears to me to be an illuminating passage. Lord Hoffmann stresses what are the same questions as those referred to in para 18 above. Moreover, the reference to Orakpo seems to me to be of some significance. It demonstrates that, when Lord Hoffmann was referring to subrogation as a remedy to prevent unjust enrichment, he was not referring to subrogation to personal rights alone because Orakpo was a case concerning subrogation to property rights. The case of Orakpo is also of interest because it shows the broad nature of the doctrine of unjust enrichment. Three examples suffice. Lord Diplock said at p 104E F: My Lords, there is no general doctrine of unjust enrichment recognised in English law. What it does is to provide specific remedies in particular cases of what might be classified as unjust enrichment in a legal system that is based upon the civil law. There are some circumstances in which the remedy takes the form of subrogation, but this expression embraces more than a single concept in English law. It is a convenient way of describing a transfer of rights from one person to another, without assignment or assent of the person from whom the rights are transferred and which takes place by operation of law in a whole variety of widely different circumstances. Some rights by subrogation are contractual in their origin, as in the case of contracts of insurance. Others, such as the right of an innocent lender to recover from a company moneys borrowed ultra vires to the extent that these have been expended on discharging the companys lawful debts, are in no way based on contract and appear to defeat classification except as an empirical remedy to prevent a particular kind of unjust enrichment. Lord Salmon said this at p 110: The test as to whether the courts will apply the doctrine of subrogation to the facts of any particular case is entirely empirical. It is, I think, impossible to formulate any narrower principle than that the doctrine will be applied only when the courts are satisfied that reason and justice demand that it should be. Finally, Lord Edmund Davies said at p 112: Apart from specific agreement and certain well established cases, it is conjectural how far the right of subrogation will be granted though in principle there is no reason why it should be confined to the hitherto recognised categories (Goff and Jones, The Law of Restitution (1966), pp 376 377). Those statements seem to me to support a flexible approach to the remedies appropriate in a particular case. Indeed, the principles have been extended since the decision in Orakpo because there is now a general doctrine of unjust enrichment in a way that there was not when Lord Diplock drafted his speech. Lord Hoffmann stresses the importance of the questions identified in para 18 above. It appears to me that, on the facts of this case, if, as here, the first three questions are answered in the affirmative and the fourth in the negative, the appropriate equitable remedy is that the claimant is subrogated to the unpaid vendors lien as explained in paras 41 and 42 above. On the facts here the Bank is entitled to a lien on the property, which is in principle an equitable interest which it can enforced by sale. In short, by effectively reinstating Melissas liability under the charge, the remedy of subrogation is reversing what would otherwise be her unjust enrichment. I would accept the submission made on behalf of the Bank that the analyses in Banque Financire have rationalised the older cases through the prism of unjust enrichment. Banque Financire was not limited to subrogation to personal rights. The remedy the House fashioned was subrogation to a property right but, as the Bank puts it, it was attenuated so as not to grant RTB a greater right than that for which it had bargained. There is no reason why, on the facts of this case, the remedy should not be subrogation as described above, even if the Bank did not retain a property interest in the proceeds of sale of Rush Green Hall. The remedy simply reverses the unjust enrichment which Melissa would otherwise enjoy by ensuring that the Bank not only has a personal claim against her but also has an equitable interest in Great Oak Court, as it would have had if the scheme had gone through in accordance with the agreement of the Bank and the Menelaou parents. Moreover, but for the proposed remedy the Bank would lose the benefit it was to receive from the scheme, namely a charge on Great Oak Court to replace the charges it had on Rush Green Hall. In reaching these conclusions I have read Lord Carnwaths judgment in draft with great interest. My own view is that the principles are somewhat broader than he suggests. Conclusion For these reasons I would dismiss the appeal. As I see it, these conclusions make it unnecessary to decide whether the Bank had a security interest in the proceeds of sale that were used to buy Great Oak Court. In so far as the answer to that may depend upon the true ratio of the decision of the Court of Appeal in Buhr v Barclays Bank [2001] EWCA Civ 1223, [2002] BPIR 25 like the Court of Appeal I would prefer to leave that question for determination in a case in which it arises for decision. In so far as the Bank relies upon a Quistclose type trust (Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567), arising in a similar manner to that which arose in Twinsectra v Yardley [2002] 2 AC 164, there seems to me to be much to be said for the conclusions reached by Lord Carnwath. However, in my opinion it is not necessary for the Bank to do so. Postscript Since writing the above I have read Lord Neubergers judgment in draft. I essentially agree with his conclusions and reasoning. I also agree with his tentative conclusions and reasoning in paras 103, 104 and 106. The one point upon which there is or may be a difference between us is whether the Bank would have a personal claim in unjust enrichment against Melissa. For my part I see no reason why it should not in principle have such a claim provided that it is dealt with as suggested by Lord Neuberger in para 81. In any event I agree with him that it is not necessary to decide this question in this appeal for reasons he gives in para 82. I would only say that there seems to me to be considerable force in his comments in para 81, namely that the standard response to unjust enrichment is a monetary restitutionary award in order to reverse the unjust enrichment. This must be left for decision on another day. LORD NEUBERGER: The facts of this case and the findings of the courts below are explained by Lord Clarke in paras 1 17. The question which arises is whether, in the light of those facts, the Bank is entitled to claim a charge over the freehold of Great Oak Court by invoking a right to be subrogated to the unpaid vendors lien over the freehold of Great Oak Court (the Lien). In considering that issue, I shall adopt the nomenclature in Lord Clarkes judgment. The Banks primary case involves two steps; the first is that it has a claim based on unjust enrichment against Melissa; the second step is that that claim was or should be satisfied by subrogating the Bank to the Lien. Melissas main argument against the first step is that she was innocent of any wrong doing and therefore cannot be said to have been unjustly enriched. As to the second step, her main argument is that subrogation as claimed by the Bank is not, as a matter of principle, available as a remedy for unjust enrichment in the circumstances of this case. I agree with Lord Clarke, and with the Court of Appeal, that, despite Melissas arguments to the contrary, each of the two steps in the Banks argument is made out. I am also attracted to the view that the Banks case on the first step could be justified on the alternative basis of an orthodox proprietary claim rather than on unjust enrichment, which in turn would render the second step in its case even clearer. Because the appeal raises points of some significance and because the state of the law appears to be somewhat unclear, I shall explain why I have reached these conclusions. Can the Bank establish an unjust enrichment claim against Melissa? The first step in the Banks case is that it has a claim against Melissa in unjust enrichment. A claim in unjust enrichment requires one to address the four questions which Lord Clarke sets out in para 18 above. I agree with what he says in relation to those four questions in this case in paras 19 35 above, and indeed with the analysis of Floyd LJ in the Court of Appeal at [2013] EWCA Civ 1960; [2014] 1 WLR 854, paras 29 to 42. I express the position in my own words as follows. The answer to the first question, namely whether Melissa has been enriched, would appear to be plainly yes, because she received the freehold of Great Oak Court (the freehold) for nothing. However, although it does not affect the outcome in the present case, there is much to be said for the view that the relevant enrichment for present purposes is that she received the freehold free of any charge, instead of receiving it subject to a charge to secure her parents indebtedness to the Bank (a Charge). This may be a more accurate way of answering the first question for present purposes, because the only aspect of Melissas enrichment which can be complained of by anyone arises from the fact that she received the freehold free of the intended Charge. The fact that the freehold was conveyed to her was an uncontroversial benefit, but the fact that it was not subject to a Charge was not just a benefit, but, in the light of the facts surrounding the sale of Rush Green Hall, the purchase of Great Oak Court and the preparation of the defective Deed of Charge (the Deed), it was accidental and unintended. (The fact that Melissa held the freehold on trust for herself and her siblings adds nothing for present purposes.) In any event, it might be said to be somewhat artificial to distinguish between acquisition of the freehold and acquisition of the freehold subject to the Charge. After all, Great Oak Court could not have been acquired without the Banks agreement that some of the proceeds of sale of Rush Green Hall could be used to purchase it, and that agreement was conditional on the grant of the Charge contemporaneously with the purchase. This is reflected by the observations of Lord Oliver in Abbey National Building Society v Cann [1991] 1 AC 56, 92 93, albeit that his observations apply by analogy rather than directly: [T]he acquisition of the legal estate and the charge are not only precisely simultaneous but indissolubly bound together. The acquisition of the legal estate is entirely dependent upon the provision of funds which will have been provided before the conveyance can take effect and which are provided only against an agreement that the estate will be charged to secure them. The reality is that the purchaser of land who relies upon a building society or bank loan for the completion of his purchase never in fact acquires anything but an equity of redemption, for the land is, from the very inception, charged with the amount of the loan without which it could never have been transferred at all and it was never intended that it should be otherwise. I turn to the second question, namely whether the enrichment was at the expense of the Bank. Professor Burrows refers to this requirement as being that the defendants enrichment must come from (be subtracted from) the claimants wealth Proprietary Restitution: Unmasking Unjust Enrichment (2001) 117 LQR 412, 415. The Bank had the right to demand the whole of the proceeds of sale of Rush Green Hall, as the Menelaou parents debt to the Bank, which had been secured on the freehold of Rush Green Hall, exceeded the proceeds of sale. Instead, the Bank agreed that 875,000 of those proceeds of sale could be used to fund the purchase of the freehold of Great Oak Court, but only provided that the Bank was granted a Charge over that freehold at the time of its acquisition. So the Bank would have had the right to prevent the 875,000 being used to purchase the freehold if it had not been provided with a valid Charge. Even assuming (as Melissa asserts) that the Bank had released to the Menelaou parents 875,000 of the proceeds of sale of Rush Green Hall, the release was only on the basis that it would be granted a Charge over Great Oak Court. Therefore, it seems to me clear that the Bank could have prevented the purchase proceeding until it had been granted a Charge. Accordingly, again deriving support from the passage quoted from Abbey National, looking at the arrangements in relation to the purchase and charging of Great Oak Court, it seems to me plain that Melissas enrichment was at the expense of the Bank. That conclusion is reinforced (if reinforcement is needed) by the point made by Lord Clarke in para 25 above, reflecting the realistic approach of the House of Lords in Abbey National, that it is appropriate not merely to consider the purchase of, and charge over, Great Oak Court as a single composite transaction. It is also appropriate in the present case to treat the sale of Rush Green Hall and the purchase of Great Oak Court as one scheme, at least for present purposes. I see nothing in any of the judgments in Scott v Southern Pacific Mortgages Ltd [2014] UKSC 52, [2015] 1 AC 385 (sub nom Mortgage Business plc v OShaughnessy) which casts doubt on that approach. If one regards the enrichment as having the freehold uncharged rather than subject to a Charge, it therefore seems clear that that enrichment was at the Banks expense. One gets the same answer if Melissas enrichment is regarded as being the freehold in its entirety: that enrichment would be at the expense of the Bank, albeit only to the extent that the freehold was uncharged rather than subject to the Charge, and therefore the points made in paras 66 67 above would apply with equal force. The third question is whether the enrichment was unjust. At first sight, there may appear to be some attraction in Melissas argument that, as between the Bank and herself, her enrichment was not unjust. After all, as Mr Mark Warwick QC pointed out, she owed the Bank nothing, she was wholly unaware of a prospective or actual charge, and she was innocent of any oversight, let alone any wrong doing, whether before, during or after the sale of Rush Green Hall and the purchase of Great Oak Court. The answer to that contention, in my view, lies in the fact that Melissa received the freehold as a gift from her parents. Had she been a bona fide purchaser for full value, it may very well have been impossible to characterise her enrichment as unjust, especially if she had no notice of the Banks rights. If she had paid a small sum to her parents for her acquisition, a difficult question might have had to be faced, although, as at present advised, I think that her enrichment would still have been unjust, but the extent of any unjust enrichment would be reduced by the small sum. But she paid nothing, and she therefore cannot, in my view, be in any better position than her parents so far as the Banks claim is concerned. And there can be no doubt that, if the Menelaou parents, rather than directing the transfer to Melissa, had acquired the freehold themselves in circumstances where the Deed was for some reason invalid, the Bank would have had a claim against them in unjust enrichment. Again, it seems to me to be easier to see why Melissas enrichment should be characterised as unjust if her enrichment is treated as being the receipt of the freehold uncharged instead of subject to the Charge. Her parents were quite properly able to direct the transfer of the freehold of Great Oak Court to Melissa, but they were not properly entitled, so far as the Bank was concerned, to direct the transfer to her of the unencumbered freehold; they were only properly able, at least as against the Bank, to direct the transfer to her of the freehold subject to a Charge. Mr Warwick suggested that this analysis could be called into question by considering the likely outcome if the Menelaou parents had decided to direct the freehold of Great Oak Court to be transferred to a charity, instead of their daughter. I agree that the outcome would be no different, but I see no difficulties in accepting that the Bank would in those circumstances have had a claim in unjust enrichment against the charity. A variant of Mr Warwicks argument on this third aspect is the contention that, if the Bank could otherwise mount a valid unjust enrichment claim, that claim cannot succeed against Melissa, as she was only an indirect recipient of any enrichment, to use the language Goff & Jones on The Law of Unjust Enrichment, 8th ed (2012), eds Professors C Mitchell, P Mitchell and Watterson, paras 6 12ff and in Ben McFarlanes article Unjust Enrichment, Property Rights, and Indirect Recipients (2009) 17 RLR 37. It is fair to say that there was a tripartite relationship in this case, in the sense that not merely Melissa and the Bank, but also the Menelaou parents, were parties to the arrangements which gave rise to the alleged unjust enrichment. However, as already explained above, there was in reality a single transaction, and it was from that transaction that Melissa directly benefitted, even though the benefit was effected at the direction of the Menelaou parents. The benefit to Melissa was direct because it arose as the immediate and inevitable result of the very transaction to which she was party and which gave rise to the unjust enrichment (in contrast to the examples at the beginning of Professor McFarlanes article). I should add that, even if Melissa could be characterised as an indirect recipient of any enrichment, I do not consider that that would assist her: she would still properly be liable on the facts of this case, essentially for the same reasons. As for the fourth question, it appears to me that, if (as I consider) the first three questions are answered in the Banks favour, there is no special reason precluding the conclusion that the Bank had a valid claim in unjust enrichment against Melissa. As already mentioned, the fact that Melissa did not know of the circumstances which caused her enrichment to be unjust does not alter the fact that she was unjustly enriched; nor does it alter the extent of her unjust enrichment. However, it does render it more likely that she would be able to rely on subsequent events to give rise to an innocent change of position defence to a claim based on the unjust enrichment. However, no such defence appears to arise in this case. It was rather tentatively suggested that the Bank should have no right to claim in unjust enrichment against Melissa, as it had a cast iron case for recovering all its losses arising from the defective Deed from Boulters. There is nothing in that point. Boulters liability in no way impinges on the question whether, and to what extent, Melissa was unjustly enriched at the expense of the Bank: the Banks claim against Boulters is res inter alios acta so far as Melissa is concerned. (Further, although the point was not argued, it may well be that, if the Bank had recovered damages from Boulters, then Boulters would be subrogated to the Banks unjust enrichment claim against Melissa.) Standing back, any fair minded person would say that, as a matter of fairness and common sense, by acquiring the freehold from any Charge, Melissa was unjustly enriched at the expense of the Bank, albeit not because of any fault of hers. Tomlinson LJs analysis in the Court of Appeal, as set out by Lord Clarke in para 33 above, accurately summarises the position. Of course, fairness and common sense cannot safely be relied as the sole touchstones as to whether there has been unjust enrichment as a matter of law. In that connection, like Lord Clarke, I would commend Henderson Js observations in Investment Trust Companies v Revenue and Customs Comrs [2012] EWHC 458 (Ch), [2012] STC 1150, paras 67 68, as containing what Floyd LJ called a thoughtful and valuable approach, while rightly not laying down rigid principles. Can the Bank invoke subrogation on the basis of its unjust enrichment claim? I turn then to the second step, namely whether the Banks claim in unjust enrichment can properly be satisfied by holding that it is subrogated to the Lien over the freehold to the extent of the price payable for the freehold, namely 875,000. (And in that connection, the fact that 10% of the 875,000 had already been paid as a deposit is irrelevant for present purposes, as the balance had to be paid to rescue the deposit.) Given that the Bank has a claim based on unjust enrichment against Melissa to the extent described above, it is hard to identify a more appropriate remedy for the Bank to obtain against Melissa. Subrogation to the Lien would accord to the Bank, and impose on Melissa, a right very similar to, although rather less in value than, that which the Bank should have had. It would give the Bank a lien instead of a formal charge, and it would be in the sum of 875,000 (plus interest), rather than the larger debt, well over 1m at the time of the purchase of the freehold, owed by the Menelaou parents to the Bank. An award of financial compensation might seem rather less appropriate. It was never intended that the Bank should have any personal claim against Melissa, merely that the freehold which she owned would be charged with the Menelaou parents debt to the Bank. Even if the compensation was limited to 875,000 (plus interest), it could prejudice Melissa for instance, if the freehold declined in value as a result of a fall in the property market subsequent to her acquisition. However, it is fair to say that the standard response to unjust enrichment is a monetary restitutionary award, to use the terminology adopted by in A Restatement of the English Law of Unjust Enrichment (Burrows et al, 2012), article 34, in order to reverse the unjust enrichment. In this case, the unjust enrichment could be quantified at 875,000, its value at the time it was conferred, or the difference in the value of the freehold uncharged and subject to the Charge at the date of the assessment of the unjust enrichment (or possibly at some other date). In so far as the quantification would result in an unfair or oppressive sum, the court could adjust the sum to avoid any unfairness or oppression. It is not necessary for the purpose of the present appeal to decide whether the Bank has a monetary claim against Melissa in the light of her unjust enrichment, let alone to determine the precise amount which the Bank could seek from her on that basis, or to decide whether the existence of any monetary claim would be affected by the subrogation claim. Nor would it be appropriate to do so, given that none of these points was debated in any detail on this appeal: indeed, the issue of whether the Bank had a money claim against Melissa was barely touched on at all (and no complaint is thereby intended). Turning now to the law, the circumstances in which an unpaid vendors lien typically arises and the circumstances in which subrogation typically can be claimed have been summarised by Millett LJ and Walton J respectively in the passages quoted by Lord Clarke in paras 41 and 39 above. In the course of his attractive argument on behalf of Melissa, Mr Warwick contended that, because the Banks case against Melissa was based on unjust enrichment, it could not justify the Banks claim to be subrogated to the Lien. His contention was that the decided cases and judicial dicta which establish a right to be subrogated to a charge or a debt, all involved the money coming from the person who establishes subrogation being used to pay off the chargee or the creditor respectively see eg per Sir John Romilly MR in Drew v Lockett (1863) 32 Beav 499, 505; per Lord Selborne LC in Duncan, Fox & Co v North and South Wales Bank (1880) 6 App Cas 1, 19; per Romer J in Chetwynd v Allen [1899] 1 Ch 353, 357, per Vaughan Williams LJ in Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1, 9; per Warrington J in Butler v Rice [1910] 2 Ch 277, 282; and, as quoted by Clarke LJ in para 39 above, per Walton J in Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648, 1652. It is true that it can be fairly argued that the dicta in those cases as to when and how subrogation could arise do not apply here. However, there is nothing in those dicta to suggest that the judges in any of those cases were purporting to give an exclusive explanation or definition of when subrogation can arise. Further, as Mr Rainey QC, for the Bank, pointed out in his clear argument, no consideration was given in those cases to analysing whether actual ownership of the money on the part of the person claiming subrogation was needed. Nonetheless, that does not alter the point that subrogation should be accorded to the Bank in this case only if it can be achieved in accordance with principle. In my view, Mr Warwicks argument involves assuming that the circumstances in which subrogation can be claimed are more limited than they really are. That is made good by two decisions of the House of Lords. In Orakpo v Manson Investments Ltd [1978] AC 95, 104, Lord Diplock explained that there were some circumstances in which the remedy [for unjust enrichment] takes the form of subrogation, but this expression embraces more than a single concept in English law. He went on to describe subrogation as a convenient way of describing a transfer of rights from one person to another, without assignment or assent of the person from whom the rights are transferred and which takes place by operation of law in a whole variety of widely different circumstances. He described a case where a person who pays off a secured lender as being [o]ne of the sets of circumstances in which a right of subrogation arises. In the same case at p 110, Lord Salmon expressed himself very broadly, suggesting that [t]he test as to whether the courts will apply the doctrine of subrogation to the facts of any particular case is entirely empirical and that the principle was that the doctrine will be applied only when the courts are satisfied that reason and justice demand that it should be. Lord Edmund Davies suggested at p 112 that there is no reason why it should be confined to the hitherto recognised categories. And, to much the same effect, Slade LJ described the doctrine of subrogation as a flexible one, capable of giving a remedy in many and various situations in In re T H Knitwear (Wholesale) Ltd [1988] Ch 275, 286F. The opinion of Lord Hoffmann in the more recent decision of the House of Lords in Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221 includes some illuminating remarks about subrogation, which are much in point for present purposes. At p 231G H, having described subrogation in the traditional case as a contractual arrangement for the transfer of rights against third parties [which] is founded upon the common intention of the parties, he went on to say that the term is also used to describe an equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived. Then, at pp 231H 232A, he described the former principle as part of the law of contract and the latter, which seems, at least on the face of it, to cover the present case, as part of the law of restitution. Lord Hoffmanns subsequent analysis at p 232B H confirms that the Banks subrogation claim in this case should not be in difficulties because Melissa was wholly ignorant of, and in no way responsible for, the fact that the Bank was intended to have a charge over the freehold (and, as Lord Hoffmann explained, this is confirmed by a number of earlier decisions including two of the cases relied on by Mr Warwick, namely Chetwynd and Butler). Thus, at p 234B D, Lord Hoffmann observed that it was a mistake to regard the availability of subrogation as a remedy to prevent unjust enrichment as turning entirely upon the question of intention (although he also said that this does not mean that questions of intention may not be highly relevant to the question whether or not enrichment has been unjust). He also expressed the view that intention has played so prominent a part in the earlier cases because of the influence of cases on contractual subrogation, and that, in a case of a restitutionary subrogation claim, the appropriate questions were, in effect, those identified by Lord Clarke at para 18 above. At p 236E, Lord Hoffmann explained that subrogation was not a right or a cause of action but an equitable remedy against a party who would otherwise be unjustly enriched. Accordingly, as he went on to say, the notion (in this case) of the unpaid vendors lien being kept alive for the benefit of the Bank was not a literal truth but rather a metaphor or analogy (p 236D). Particularly significantly for present purposes, Lord Hoffmann said at p 236F that subrogation is an equitable remedy against a party who would otherwise be unjustly enriched and a means by which the court regulates the legal relationships between a plaintiff and a defendant in order to prevent unjust enrichment. Accordingly, he said, it would not by any means follow that the [Bank] must for all purposes be treated as an actual assignee of the benefit of the [unpaid vendors lien] and, in particular, that [it] would be so treated in relation to someone who would not be unjustly enriched (p 236G). In my view, the observations in Orakpo and, even more, in Banque Financire, support the Banks claim to be subrogated to the Lien as a result of what happened in this case. It seems to me that this view is supported by the views expressed by the current editors of Goff & Jones at para 39 10, where they describe the true position as that explained by Lord Hoffmann in the passage quoted in para 90 above from Banque Financire at p 236F. The editors go on to say at para 39 12 that subrogation to extinguished rights is therefore a remedy that reverses unjust enrichment of a discharged debtor which follows from the discharge of a debt, by affording the claimant new rights which prima facie replicate the creditors extinguished rights. The same point is made in the following paragraphs. For instance in para 39 16, it is suggested that the subrogation cases can all be explained on the ground for restitution that makes it unjust for the debtor to be enriched at the claimants expense. It is true that there is nothing in Chapter 39 of Goff and Jones which deals with what is said to be the problem for the Bank in this case, namely that the money used to pay off the secured creditor (ie the unpaid vendor) did not emanate from the Bank itself. However, that does not seem to me to present the Bank with a problem in relation to its claim for subrogation. For the reasons given in paras 66 68 above, the Bank has established that Melissas enrichment was at its expense even though the money did not emanate from the Bank directly, so that its unjust enrichment is made out against her. I do not see why the Bank need establish anything more in this case in order to make good its case to be subrogated to the Lien. It is right to add that para 7 02 of Geoff & Jones, cited by Lord Carnwath in para 131 could be read as suggesting that a more stringent test has to be satisfied before the court will award subrogation (and see also paras 37 9 and 37 10). However, in the light of Orakpo and Banque Financire, I do not consider that those paragraphs can be read in this way. Further, at para 6 30 of Goff & Jones, the editors describe the grant by the House of Lords in Banque Financire of a subrogation remedy as unprecedented. However that was primarily because subrogation was accorded to a party who thereby obtained, as Lord Hoffmann himself put it at p 229, far greater security than it ever bargained for, and perhaps also because of the adjustments which had to be made to the subrogated right in order to achieve equity (discussed in Goff & Jones at paras 39 44 and 39 45). The Banks claim to subrogation in this case is stronger in the sense that neither of those two points can be raised against it in this case. Despite the broad statements in Banque Financire, what is said in Chapter 39 of Goff & Jones, and the way in which Lord Salmon and Lord Edmund Davies expressed themselves in Orakpo, the combination of facts that (i) the Bank has a claim in unjust enrichment against Melissa arising out of her acquisition of the freehold, (ii) subrogation is a remedy which can be accorded to reverse unjust enrichment, (iii) the Lien arose out of the transaction giving rise to the acquisition, and (iv) the Lien is a right to which it is legally possible to subrogate, is not enough to justify the conclusion that the Bank should be subrogated to the Lien. There has to be a principled case to support such a conclusion. Having said that, it seems to me that the conclusion is supported by principle. In addition to the general points identified in the previous paragraph, it appears to me that the following five points, when taken together, establish the Banks subrogation claim. (i) The freehold was acquired by being purchased through Boulters for 875,000; (ii) 875,000 was a sum which the Bank could have demanded from Boulters, and it only agreed to its being used to purchase the freehold if the Bank was granted a Charge; (iii) without that agreement, there would have been no 875,000 to purchase the freehold, (iv) owing to an oversight, the Bank was not granted a valid Charge; (v) the payment of 875,000 to purchase the freehold discharged the Lien. In those circumstances, it is hard to see why subrogating the Bank to the unpaid vendors lien is not an appropriate way to remedy the unjust enrichment. I do not consider that the reasoning in Boscawen v Bajwa [1996] 1 WLR 328 presents a problem. In that case, at pp 334D and 335C, Millett LJ discussed in instructive detail both tracing, which he explained was a process, and subrogation, which he described as a remedy. (On reflection, I wonder whether the distinction, despite the approval of Lord Hoffmann in Banque Financire at p 236E of the description of subrogation as a remedy, is as satisfactory as it seems at first sight. It seems to me questionable whether a sharp distinction can satisfactorily be drawn between a process and a remedy, but the point has no effect on the outcome of this case.) While I accept that Millett LJ treated tracing as the appropriate process to achieve subrogation in Boscawen, there are two important caveats for present purposes. First, he nowhere stated that subrogation was an impermissible remedy if tracing was not an available prior process. Secondly, as Mr Rainey QC pointed out, at p 339A B Millett LJ said that it would be perilous to extrapolate from one set of circumstances where the court has required a particular precondition to be satisfied before the remedy of subrogation can be granted a general rule which makes that requirement a precondition which must be satisfied in other and different circumstances. Similarly, at p 334H, Millett LJ described subrogation as a remedy which will be fashioned to the circumstances. Nor do I think that Lord Milletts statement in Foskett v McKeown [2001] 1 AC 102, p 127F about property rights being determined by fixed rules and not being discretionary, casts doubt on my conclusion in this case. His analysis in that case has its critics see eg Burrows, (2001) 117 LQR 412, 417 and The Law of Restitution, 3rd ed (2011), pp 140, 170 171 and 432 434, and Mitchell and Watterson, Subrogation: Law and Practice (2007), para 6.50. However, and more to the point, Lord Milletts remarks were directed to proprietary claims not unjust enrichment claims. Lord Millett made that clear in a passage at p 129E G, where he said, inter alia, that one must distinguish between a claim brought to vindicate property rights and one brought to reverse unjust enrichment, and that Foskett was an example of the former. This point was also made by Lord Browne Wilkinson and Lord Hoffmann at pp 108F and 115G respectively. Finally on this aspect, it is worth mentioning that Melissas case represents a triumph of form over substance, or, to use the words of Lord Steyn in Banque Financire at 227C, pure formalism. It would have been perfectly open to the Bank to have requested Boulters to pay the whole proceeds of the sale of Rush Green Hall to the Bank, with the Bank then remitting back to Boulters the 875,000 needed to purchase Great Oak Court, on the basis that it would be subject to a charge in favour of the Bank to secure the Menelaou parents indebtedness. If that had happened, and the Menelaou parents had then directed the transfer of Great Oak Court to Melissa, and the defective Deed had been executed, it is very difficult to see why the Bank could not have claimed subrogation to the unpaid vendors lien. If Melissas case on this appeal is right, the fact that the Bank sensibly short circuited the process, and agreed that the 875,000 could be retained by Boulters to purchase Great Oak Court, would mean that a small and practical change, of no apparent commercial significance, results in a substantially different commercial outcome. Such an outcome is, of course, possible, but its unattractiveness tends to support the conclusion which I have reached. The Banks proprietary claim This leads conveniently to the final point, namely whether the Banks claim to be subrogated to the unpaid vendors lien could in fact be justified by a simpler and less potentially controversial route. At least on the basis of the arguments we have heard, I am very sympathetic to the notion that the Bank had a proprietary interest in the 875,000 which was used to purchase Great Oak Court, and if that is right, its subrogation claim becomes relatively uncontroversial. I am, however, reluctant to express a concluded view on the topic, as the argument was developed very shortly, although it is fair to say that it was considered (and rejected) at first instance, albeit on a somewhat different basis from that which currently appeals to me. In this connection, I would be inclined substantially to agree with the analysis of Lord Carnwath in paras 135 139 of his judgment. It seems to me difficult, at least on the basis of the relatively limited argument we have heard, to argue against the proposition that the Bank had a proprietary interest in the 875,000 which was used to purchase Great Oak Court. What was intended to happen on 12 September 2006 was that the proceeds of sale of Rush Green Hall, which was charged to the Bank for a debt in excess of those proceeds, were split into two portions, one of which was to be paid to the Bank to reduce the debt, and the other of which was to be used to purchase Great Oak Court on terms that the Bank was to have charge over it for the outstanding indebtedness. In those circumstances, it would seem, either the second portion was the Banks money beneficially subject to its agreement that the money could be used to purchase Great Oak Court, or it was the Menelaou parents money beneficially subject to the Banks right to require it to be paid to the Bank to reduce the Menelaou parents debt unless it was used to purchase Great Oak Court subject to the Charge. When it comes to the beneficial interests in this case, as I see it at the moment, the position would be as follows. There would be little need to resort to Quistclose Investments v Rolls Razor Ltd [1970] AC 597, because there could be no doubt but that Boulters held the 875,000 on trust: it was plainly not their money beneficially. Both the Menelaou parents and the Bank were their clients towards whom they had contractual and equitable duties, and, more particularly, both of whom had an interest in the 875,000. If the Bank beneficially owned the 875,000 (subject to its agreement that the Menelaou parents could use it to purchase Great Oak Court, subject to the Charge), cadit quaestio so far as the Banks subrogation to the Lien is concerned, as I see it: the Banks money was used to redeem the Lien. Assuming, however, that the Menelaou parents were the beneficial owners of the 875,000, the Bank would, in my view, have had the right of requiring that sum to be used to purchase Great Oak Court subject to a Charge back in favour of the Bank, failing which the Bank would have the right to demand that that sum be paid to it. I find it hard to see why that would not have given the Bank a sufficient interest in the 875,000 to enable it to claim to be subrogated to the Lien, even on Melissas restricted view of subrogation. It may well be that the Bank could also claim that, if the 875,000 was to be treated as beneficially owned by the Menelaou parents, it was nonetheless subject to a charge in favour of the Bank, as discussed by Arden LJ in Buhr v Barclays Bank plc [2001] EWCA Civ 1223; [2002] BPIR 25, para 45. This argument was rejected by the Judge at first instance in this case see at [2012] EWHC 1991 (Ch), paras 15 17. It is unnecessary and inappropriate to discuss that possibility further, as it was barely touched on in argument. Conclusion In those circumstances, I would dismiss Melissas appeal on the basis that the Bank has a valid unjust enrichment claim against her which is properly reflected in the Banks claim to be subrogated to the unpaid vendors lien over the freehold of Great Oak Court. I add this. My strong, if provisional, opinion that the Bank had a proprietary interest in the 875,000 which was used to purchase the freehold leads me to wonder whether the conclusion that the Banks unjust enrichment claim is satisfied by subrogation could in fact be regarded as controversial, even before Orakpo and Banque Financire were decided. The reasons which persuade me that the unjust enrichment claim can properly be satisfied by subrogation to the Lien (see paras 91 95 above) are precious close to those which persuade me that there is a very strong case for saying that the Bank had a proprietary interest in the 875,000 (see para 103 above). LORD CARNWATH: Introduction I agree that the appeal should be dismissed, but I arrive at that conclusion by a somewhat different route from that taken by my colleagues. In my view the respondents case can be supported (contrary to the decision of the deputy judge) by a strict application of the traditional rules of subrogation, without any need to extend them beyond their established limits. I am less convinced with respect of the case for rationalising the older cases through the prism of unjust enrichment, as Lord Clarke suggests was done in Banque Financire (Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221), thus in effect conflating the two doctrines. As Lord Millett explained in Foskett v McKeown [2001] 1 AC 102, 129 (cited by Lord Clarke at para 38), there is a clear distinction of principle between a claim to enforce property rights and a claim for unjust enrichment. Earlier in the same judgment (at p 127F) he had emphasised that property rights are to be determined by fixed rules and settled principles, not by discretion or policy. Subrogation to a vendors lien is a claim to a property right, but it is, as Lord Clarke acknowledges, a less than straightforward concept. It should not be extended, nor should the established rules be distorted, without good reason. Conversely, in the light of some decades of academic discussion and of the authorities reviewed by Lord Clarke, it is surely time for the principles of restitution or unjust enrichment to be allowed to stand on their own feet. A proprietary remedy may arguably be justified because, as Lord Neuberger says (paras 79 80), such a remedy, rather than a personal remedy, is the most appropriate response to the unjust enrichment found in this case; but not because of some tenuous relationship with a vendors lien which has no continuing existence or practical relevance. However, that is not how the case has been argued, and, since it is not necessary for my decision on the appeal, I shall limit my observations on those wider issues. In this judgment I will take the facts as set out by Lord Clarke. I would only observe that I approach those facts without any particular predisposition in favour of the Banks claim. As Mr Warwick points out, if Melissa was enriched, it was because her parents gave to her, and to her two younger siblings, some of the proceeds of sale of their property, which she received in good faith. In the same way, Melissas older sister, Danielle, was enriched because she also received some of the proceeds of Rush Green Hall. Neither was aware of any interest of the Bank, and in Danielles case none has been asserted. Melissas ignorance of the Banks claim is the result of their own solicitors incompetence, not of any fault on her part. Subrogation the principles A simple modern statement of the principle of subrogation, frequently adopted in later cases (see eg Cheltenham & Gloucester plc v Appleyard [2004] EWCA] Civ 291, para 25, per Neuberger LJ); [2004] 13 EG 127 (CS), is that of Walton J in Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648, 1652B C: [W]here As money is used to pay off the claim of B, who is a secured creditor, A is entitled to be regarded in equity as having had an assignment to him of Bs rights as a secured creditor. It finds one of its chief uses in the situation where one person advances money on the understanding that he is to have certain security for the money he has advanced, and, for one reason or another, he does not receive the promised security. In such a case he is nevertheless to be subrogated to the rights of any other person who at the relevant time had any security over the same property and whose debts have been discharged, in whole or in part, by the money so provided by him. Probably the fullest textbook discussion of the subject is to be found in Mitchell and Watterson Subrogation Law and Practice (2007) (It is noteworthy that both authors are also editors of the later edition of Goff & Jones (2011) to which I shall come.) Under the heading transfer of extinguished proprietary rights (para 3.26 8) the authors trace the origins of the rule whereby those whose money is used to pay off on land are presumptively entitled to acquire the charge for their own benefit (derived from Patten v Bond (1889) 60 LT 583). They describe as anomalous the extension of the rule beyond payments by someone with an existing interest in the land which requires protection. The anomaly lies in the absence of any sound policy reason to treat such a person any differently to any other person who has voluntarily paid off a persons debt, and for the more substantial reason that liabilities are not to be forced on people behind their backs (citing Falcke v Scottish Imperial Insurance (1886) 34 Ch D 234, 248 per Bowen LJ). However, as they observe the principle became well established in the case law, approved for example in the Privy Council in Ghana Commercial Bank v Chandiram [1960] AC 732, the justification for acquisition of the security being that the claimant was presumed to have intended this at the time when they parted with the money. The application of the concept in the context of an unpaid vendor's lien is also well established, but no less anomalous. Burston itself related to such a claim. The claim failed because, by taking a legal charge over the same property (even though invalid against the liquidator by reason of failure to register under the Companies Act 1948), the lien had been lost either as a result of the doctrine of merger or by presumed intention to waive the unpaid vendors lien (p 1653C). The earliest example in the cases cited to the court was Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1. On a purchase of land by an infant, 250 of the purchase money was paid on her behalf by the building society to the vendor subject to a mortgage. Although the mortgage was held to be void because of the infancy, the Society was subrogated to, and so able to enforce, the vendors lien. Vaughan Williams LJ, after some initial uncertainty and consultation with his colleagues, concluded at pp 9 10: the society, having paid off the vendor, have a right to the remedies of the vendor have a right, that is, to enforce the vendors lien. It is true that the society were not the vendors, but, having paid off the vendor, the society, as against the purchaser, stand in the place of the vendor. At first sight it seems odd that the Society, having failed due to its own mistake of law to get the security which it wanted, was able to revive and take advantage of a different security designed for a different purpose and a different person. As Floyd LJ observed in the Court of Appeal (para 15), the concept, although well established, is not altogether straightforward: A third party who provides some or all of the purchase money for a purchaser, thereby discharging the obligation to the vendor, can claim the benefit of the unpaid vendors lien by subrogation. This is so even after the lien has been, as between vendor and purchaser, extinguished. It is not intuitively clear how, or why, this should be the case. How is the unpaid vendors lien transferred from the vendor to the third party? It might be thought that once the obligation in question has been extinguished, there is nothing which the vendor could transfer. Even if there was something to transfer, by what legal mechanism does the transfer take place? There has been no assignment. (para 17) As he explained, Lord Hoffmann made some attempt to address such conceptual concerns in Banque Financire: In my view, the phrase keeping the charge alive needs to be handled with some care. It is not a literal truth but rather a metaphor or analogy: see Birks, An Introduction to the Law of Restitution, pp 93 97. In a case in which the whole of the secured debt is repaid, the charge is not kept alive at all. It is discharged and ceases to exist. It is important to remember that, as Millett LJ pointed out in Boscawen v Bajwa [1996] 1 WLR 328, 335, subrogation is not a right or a cause of action but an equitable remedy against a party who would otherwise be unjustly enriched. It is a means by which the court regulates the legal relationships between a plaintiff and a defendant or defendants in order to prevent unjust enrichment. When judges say that the charge is kept alive for the benefit of the plaintiff, what they mean is that his legal relations with a defendant who would otherwise be unjustly enriched are regulated as if the benefit of the charge had been assigned to him. It does not by any means follow that the plaintiff must for all purposes be treated as an actual assignee of the benefit of the charge and, in particular, that he would be so treated in relation to someone who would not be unjustly enriched.(P 236D E) It is not clear to me, with respect, how describing the concept as a metaphor adds anything by way of explanatory force. I note that in the passage cited by Lord Hoffmann, Professor Birks began by observing that in the law of restitution, subrogation really adds nothing to the techniques otherwise available; it is in the nature of a metaphor which can be done without (ibid p 93). Thirty years on, I would respectfully agree. In the context of the law of unjust enrichment, the issue should be the nature of the appropriate remedy, not whether it conforms to an analogy derived from some other area of the law. The view of the Court of Appeal In the Court of Appeal (as in this court) the appellant submitted that, there was no justification for extending the rules of subrogation so as to provide a proprietary remedy in this case. A proprietary claim based on subrogation to vendors lien is available only to a claimant who can show that the purchase price has been paid off by use of his own money. That is a common feature of all the cases in which such a claim has been allowed. It is supported by the leading modern authority: Boscawen v Bajwa [1996] 1 WLR 328. Floyd LJ acknowledged that no case had been cited to the court in which a lender had been entitled to a remedy of subrogation when that lender had not advanced funds (para 43). However, he considered that there was no strict requirement to that effect. He described the unusual feature of the present case that the Bank provided the value by agreeing to release a security interest rather than by advancing specific funds. The appellant had relied on Bankers Trust Co v Namdar [1997] NPC 22; [1997] EGCS 20, in which subrogation had been denied because, in the words of Peter Gibson LJ: I cannot see how the Bank can be afforded the remedy of subrogation in circumstances which, as I see it in agreement with the Judge, the Bank cannot properly be said to be the provider of the money used to discharge the debt owed to it by Mr and Mrs Namdar. (Floyd LJs emphasis) In the present case, however, Floyd LJ thought it sufficient the Bank had been a provider of the funds as a matter of economic reality: The mere fact that the claimant does some act in reliance on which there is a transfer of value between different parties is not sufficient. When the Bank gave its undertaking to release its charges on Rush Green Hall, and thus release the purchase moneys for the purchase of Great Oak Court, there was, as I have held, a transfer of value from the Bank to Melissa. Moreover, if one asks Peter Gibson LJs question, namely whether it can properly be said that the Bank is the provider of the money used to discharge the debt, the answer in the present case is that it is. Certainly that is true if one asks whether the Bank is the source of the moneys used as a matter of economic reality. I therefore see no reason in principle or justice why the Bank should not be entitled to the remedy of subrogation. (para 48) Moses LJ preferred to speak of a sufficiently close causal connection, established by showing that, but for the Banks agreement to release its charges over Rush Green Hall, Great Oak Court would never have been purchased and the obligation to pay its vendors would never have been satisfied. In his view, there was no need to invoke the somewhat fuzzy concept of economic reality (paras 61 62). Boscawen In my view, the strict approach advocated by the appellant gains strong support from the judgment of Millett LJ in Boscawen v Bajwa [1996] 1 WLR 328. It is the leading modern authority on the application of principles of tracing and subrogation in a context not dissimilar to the present. As has been seen, it was cited with approval by Lord Hoffmann in Banque Financire at p 233F (a valuable and illuminating analysis of the remedy of subrogation). Because of its acknowledged importance in this area of the law, it justifies careful examination. Indeed, if the test was as flexible as that favoured by the Court of Appeal in this case, much of the discussion in that judgment would have been redundant. The facts (as in the present case) involved a failure by solicitors to complete a transaction in the way intended by the main parties. A much simplified account will suffice. A building society (Abbey National) agreed to make an advance to clients for the purchase of a property from the defendant (Mr Bajwa) to be secured on a first legal charge. The property was subject to an existing mortgage in favour of another building society (Halifax). Abbey National paid the money to solicitors (Dave & Co) acting jointly for the society and the purchaser, on terms which obliged them to use the money for the purchase, and to return it if for any reason completion did not take place. They transferred it to the vendors solicitors (Hill Lawson) to hold to their order pending completion. Before completion Hill Lawson sent the money to Halifax in discharge of their mortgage, after which the sale fell through. In response to a subsequent claim to the property by judgment creditors of Mr Bajwa, the Abbey National claimed to be subrogated to the Halifax mortgage. It was held (in the words of the headnote) that: the money used by the vendors solicitors to discharge the mortgage had been held by the purchasers solicitors as trust money for the building society and by the vendors solicitors to the purchasers solicitors order pending completion of the purchase; that, therefore, the money could be traced into the payment and the vendors solicitors in making it had to be taken to have intended to keep the mortgage alive for the benefit of the building society; and that, accordingly, the building society was entitled, by way of subrogation, to a charge on the proceeds of sale of the property in priority to the plaintiffs. The headnote rightly highlights the importance of establishing a tracing link between the plaintiffs money and the money used to discharge the mortgage, leading to a presumed intention to keep the mortgage alive for the plaintiffs benefit. Millett LJs judgment needs to be read in the context of the issues before him. The main issue before the Court of Appeal was whether, in allowing the claim, the judge had made an impermissible aggregation of two different equitable doctrines, subrogation and tracing (p 333D G). As Millett LJ explained, these arguments showed a confusion of thought as to the nature of tracing: Tracing properly so called, however, is neither a claim nor a remedy but a process. It is the process by which the plaintiff traces what has happened to his property, identifies the persons who have handled or received it, and justifies his claim that the money which they handled or received (and, if necessary, which they still retain) can properly be regarded as representing his property. The process of tracing was to be distinguished from the fashioning of the appropriate remedy, once the plaintiff had succeeded in tracing his property whether in its original or in some changed form into the hands of the defendant, and overcome any defences: The plaintiff will generally be entitled to a personal remedy; if he seeks a proprietary remedy he must usually prove that the property to which he lays claim is still in the ownership of the defendant. If he succeeds in doing this, the court will treat the defendant as holding the property on a constructive trust for the plaintiff and will order the defendant to transfer it in specie to the plaintiff. But this is only one of the proprietary remedies which are available to a court of equity. If the plaintiffs money has been applied by the defendant, for example, not in the acquisition of a landed property but in its improvement, then the court may treat the land as charged with the payment to the plaintiff of a sum representing the amount by which the value of the defendants land has been enhanced by the use of the plaintiffs money. And if the plaintiffs money has been used to discharge a mortgage on the defendant's land, then the court may achieve a similar result by treating the land as subject to a charge by way of subrogation in favour of the plaintiff. The judge had not erred by invoking the two doctrines in the same case: They arose at different stages of the proceedings. Tracing was the process by which the Abbey National sought to establish that its money was applied in the discharge of the Halifaxs charge; subrogation was the remedy which it sought in order to deprive Mr Bajwa (through whom the appellants claim) of the unjust enrichment which he would thereby otherwise obtain at the Abbey Nationals expense. (p 334B 335F, emphasis added) Millett LJ went on to discuss separately the principles of tracing and subrogation, as applied to the instant case. In relation to the former (pp 335 337), it had been argued that the right to trace was lost when the money advanced by Abbey National went into Hill Lawsons general client account, where it was mixed with other money including other funds belonging to Mr Bajwa. It was held in favour of Abbey National that, as against Hill Lawson and Mr Bajwa, who though not wrongdoers were not innocent volunteers, they could rely on equitys ability to follow money through a mixed bank account by treating the money in the account as charged with the repayment of his money (pp 336F, 337G). Under the heading Subrogation (pp 338 339) the principal issue was whether it mattered that Abbey National had failed to show an intention to obtain the benefit of the Halifax security. As Millett LJ explained: In cases such as Butler v Rice and Ghana Commercial Bank v Chandiram [1960] AC 732, where the claimant paid the creditor direct and intended to discharge his security, the court took the claimants intention to have been to keep the original security alive for his own benefit save in so far as it was replaced by an effective security in favour of himself. In the present case the Abbey National did not intend to discharge the Halifaxs charge in the events which happened, that is to say, in the event that completion did not proceed. But it did not intend its money to be used at all in that event. However, that did not mean that the remedy was unavailable: In the present case the payment was made by Hill Lawson, and it is their intention which matters. As fiduciaries, they could not be heard to say that they had paid out their principals money otherwise than for the benefit of their principal. Accordingly, their intention must be taken to have been to keep the Halifaxs charge alive for the benefit of the Abbey National pending completion. In my judgment this is sufficient to bring the doctrine of subrogation into play. (p 339D H) These passages are of direct relevance to the arguments in the present case, and in my view difficult to reconcile with the more flexible approach of the Court of Appeal. It was clearly regarded by Millett LJ as necessary for the claimants to establish that the money used to pay off the loan was their money. Tracing was the process by which this was done. In the context of subrogation, tracing was not about identifying a particular asset in the hands of the defendant, as belonging notionally to the claimant; but rather as providing the necessary link with the payments made to discharge the relevant mortgage. In the passage quoted above, Millett LJ treated such payments as analogous to money spent in improving property. It was not regarded by him as sufficient to apply a broad causation or economic reality test, such as applied by the Court of Appeal in the present case. Had that been enough, the detailed examination of equitable rules relevant to tracing the money in the Hill Lawson account would have been unnecessary. It would have been enough that but for the receipt of the money from Abbey National, the Halifax mortgage would never have been paid off. This aspect of the case is not affected by the decision in Banque Financire. Lord Hoffmann noted that there was no difficulty on the facts of that case in tracing the banks money into the discharge of the relevant debt, since by contrast with Boscawen the payment was direct (p 235C D). I take him to have been using that term in the same sense as Millett LJ. The problem was not so much the right to a proprietary remedy but whether that right should be cut down so as to limit its scope by reference to the limited nature of the initial agreement. The decision itself, and in particular the nature of the remedy (personal, proprietary or hybrid?), have been much discussed (see Goff & Jones para 6 30). But it throws no doubt on the importance, in the present context, of establishing a tracing link between the claimants own money and the payment used to discharge the security. Academic discussion I should make brief reference to some of the academic discussion, if only to note the lack of consensus on the issues before us. Indeed, there are few more hotly debated issues among specialist academics in this field than the scope of the remedies, personal or proprietary, for unjust enrichment. In Mitchell and Watterson (op cit), there is an illuminating discussion of the various strands of academic opinion as it stood at the time of that edition (2007). I note in particular two sections, headed Proprietary remedies for unjust enrichment generally (para 8.40ff) and Proprietary subrogation (para 8.46 7). The former notes, for example, the view of some commentators that the English law of unjust enrichment should be purged of proprietary remedies altogether (para 8.41); contrasted with other more accommodating approaches, such as that of Professor Andrew Burrows (The Law of Restitution, 2nd ed (2002), para 8.42) who accepts the need for special justification for a proprietary remedy, but finds it in two factors, that the payment added to the value of the defendants asset and that the claimant did not voluntarily assume the risk of the defendants insolvency. Against that backdrop, it is said, the subrogation authorities reveal a surprising readiness to award proprietary remedies. Following Banque Financire, it is suggested that the courts should look across from the subrogation authorities to develop a consistent view of the circumstances in which proprietary restitutionary remedies should be awarded (para 8.46 7). The clearest academic exposition in recent textbooks of the distinction on which the appellants rely appears in the current edition of Goff & Jones, The Law of Unjust Enrichment, 8th ed (2011). Floyd LJ referred to para 6 01, relating to the term at the claimants expense, without noting that this was in a chapter dealing specifically with personal claims. Chapter 7, headed At the Claimants Expense; Proprietary Claims contains the following important passage, which on its face appears to support the appellants case: Both personal and proprietary claims are governed by the rule that the defendants enrichment must have been gained at the claimants expense, but the tests used to determine whether this requirement has been satisfied vary with the type of claim. Where the claimant seeks a personal remedy, he must show that there was a transfer of value between the parties, and this is tested by asking whether an event took place that caused the claimant to become worse off and the defendant to become better off. This is discussed in Chapter 6. In contrast, where the claimant seeks a proprietary remedy, it is not enough for him to show that there was a transfer of value between the parties: he must also show either that he previously owned the property in which he now claims an ownership or security interest, or else that the defendant acquired this property in exchange for property that was previously owned by the claimant, or else that this property was formerly the subject matter of an interest that was discharged with property that was previously owned by the claimant. This test is more stringent than the causal test used in the context of personal claims, and it serves as a control mechanism to prevent proprietary restitutionary remedies from becoming too freely available. (para 7 02, emphasis added) The footnote refers to a list of cases cited later in the chapter (para 7 39, fn 87) including in the subrogation context Boscawen (at p 334). The application of those principles to the payment of debts is discussed in more detail later in the chapter (para 7 42). The rule that the tracing process comes to an end when the value being traced is dissipated applies generally where the claimants money is used to pay off a debt. Subrogation is cited as one exception to the rule: if the debt was secured by a charge over the defendants property then Equity can treat the debt and the charge, by a legal fiction, as though they were not extinguished by the payment, thereby enabling the beneficiaries to trace the value inherent in their money into the value inherent in the creditors fictionally subsisting chose in action against the defendant. Again the reference is to Boscawen. Notable here is the close link between subrogation and the doctrine of tracing, which as has been seen was central to the analysis by Millett LJ in that case. There is no apparent support for the Court of Appeals view that a sufficient link could be found in a looser test based on economic reality or simple causation. Is there a tracing link in this case? The Court of Appeal felt able to decide the case on the footing that the Bank did not have an interest in the money used to pay off the security. It found it unnecessary to decide whether that assumption was correct. In this court it has been submitted that it was not. It is argued that the Bank did have a sufficient interest on the basis either of the principle in Buhr v Barclays Bank plc [2001] EWCA Civ 1223, [2002] BPIR 25, or of a so called Quistclose trust (after Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567). Although the Quistclose principle does not appear in terms to have been relied on in argument in the courts below, the substance was sufficiently pleaded in the amended counterclaim (para 13), which asserts that the proceeds of the sale of Rush Green Hall released by the defendant Bank were held on trust for the defendant, subject to a power for Mr and Mrs Menelaou to use the same to purchase a flat in the joint names of Danielle Menelaou and her partner and also to purchase the Property in the name of the claimant but only on condition that the outstanding debts of Mr and Mrs Menelaou were to be secured by a first legal charge over the Property. The issue was also addressed by the judge (paras 14 17), albeit not specifically by reference to the Quistclose principle. It does not depend on any further findings of fact. I see no reason therefore why it cannot properly be relied on by the Bank in this court. The Quistclose principle was explained and applied by the House of Lords in Twinsectra Ltd v Yardley [2002] 2 AC 164. A solicitor (Sims) had received money, lent by Twinsectra to his client (Mr Yardley) for the purchase of a property, under an undertaking that it would be utilised solely for the acquisition of property and for no other purpose. The money was paid to the defendant solicitor (Mr Leach), acting on behalf of the same client; he paid it out to the client who used it for purposes other than the purchase of the property. A claim against the defendant solicitor for dishonest assistance failed only because dishonesty was not established. The money was held to be subject to a trust in the first solicitors client account, the terms of which were found in the terms of the undertaking, which made clear that the money was not to be at the free disposal of [the client]: the effect of the undertaking was to provide that the money in the Sims client account should remain Twinsectras money until such time as it was applied for the acquisition of property in accordance with the undertaking. For example, if Mr Yardley went bankrupt before the money had been so applied, it would not have formed part of his estate, as it would have done if Sims had held it in trust for him absolutely. The undertaking would have ensured that Twinsectra could get it back. It follows that Sims held the money in trust for Twinsectra, but subject to a power to apply it by way of loan to Mr Yardley in accordance with the undertaking (paras 12 13, per Lord Hoffmann) In the present case the critical issue is the status of the money received by Boulters on 12 September 2008, as proceeds of the sale of Rush Green Hall. (I do not understand either party to suggest that the deposit 90,000 should be treated differently from the balance of 785,000.) The judge saw no reason to infer a proprietary interest in the Bank: 16. In the present case the agreement or understanding recorded in the Banks letter of 9 September 2008 did not address the question of ownership or even security rights in the sale proceeds of Rush Green Hall, and had no reason to do so. While the arrival of the sale proceeds from Rush Green Hall and the payment of 785,000 to the vendors of Great Oak Court (or their solicitors) and of 750,000 to the Bank could not have been literally simultaneous, it is unrealistic to suppose that the parties were concerned with the status of the incoming monies in any short interval between them. Critically, the agreement was concerned only with the circumstances in which the charges over Rush Green Hall would be released. So long as they remained in place, there was neither need nor reason for the Bank to have any rights over the proceeds of sale, or thereafter, since the charges were only to be released against substitute security over Great Oak Court. And should there be a defect in that substitute security, the Bank had protected itself by obtaining the undertakings given by Boulters in the Certificate of Title. With respect to the judge, this analysis (like my own as trial judge in Twinsectra) seems to me to start from the wrong end. In the Boulters client account the money was undoubtedly trust money, in the sense that it was held beneficially for their clients (see eg In re A Solicitor [1952] Ch 328). That is not affected by the brevity of the period for which it was expected to be held. The relevant questions are: for whose benefit was it so held and on what terms? By this time they were acting for both the Menelaous and the Bank. Their respective interests in the money depended on the arrangements between them and with their solicitors. It is true that the Banks letter of 9 September 2008 said nothing in terms about an interest in the money to be used for the new purchase. But there is nothing to suggest that the money was treated as freely at the disposal of the Menelaous, which would have been inconsistent with the general purpose of the arrangement. The terms of the certificate of title provided to the Bank by Boulters on 10 September are also relevant. In it Melissa was named as borrower, and the price as 875,000. It included a standard form undertaking prior to use of the mortgage advance, to obtain in the form required by you the execution of a mortgage and a guarantee as appropriate by the persons whose identities have been checked in accordance with paragraph (1) above as those of the Borrower, any other person in whom the legal estate is vested and any guarantor . They also undertook to notify the Bank of anything coming to their attention before completion which would render the certificate untrue or inaccurate, and if so to defer completion pending your authority to proceed and return the mortgage advance to you if required . I agree with Mr Rainey that in its context the reference in the certificate of title to the mortgage advance must be read as a reference to the money received by them from the sale of Rush Green Hall. The natural implication of the undertakings was that, if the sale failed, the sum so defined would be paid to the Bank; not simply transferred to the Menelaous. It follows in my view that there is no difficulty in this case in finding the necessary tracing link between the Bank and the money used to purchase the new property. In this respect it is a much simpler case than Boscawen. The Banks interest in the purchase money was clear and direct. On this relatively narrow ground, I would hold that the appeal should be dismissed. LORD KERR AND LORD WILSON: Subject to the sentence which follows, we agree with the judgments both of Lord Clarke and of Lord Neuberger. We consider, however, that it is preferable to leave the availability of a personal claim against Melissa entirely open and so to that extent we prefer the terms in which Lord Neuberger expresses himself in paras 80 82 above to the marginally different terms in which Lord Clarke expresses himself in para 55 above. |
The court is asked to decide whether the services provided by a specialised air handling system, used in connection with refrigerated merchandise in the appellants retail store, are manufacturing operations or trade processes for rating purposes. This turns on the construction of the Valuation for Rating (Plant and Machinery) (England) Regulations 2000 (SI 2000/540) (the 2000 Regulations). If they are, then the air handling system falls to be ignored in calculating the rateable value of the premises. The Valuation Tribunal decided this issue in favour of the appellants. That finding was reversed by the Upper Tribunal ([2015] UKUT 0014 (LC)), whose decision was upheld by the Court of Appeal ([2016] EWCA Civ 1150; [2017] Bus LR 766). Facts The facts (as found by the Upper Tribunal) were set out in full in the judgment of the Chancellor (with whom Gloster and Sharp LJJ agreed) in the Court of Appeal. It is sufficient here to note the main points. Iceland is a well-known supermarket operator specialising in the sale of refrigerated foods, with more than 800 stores in the UK and Ireland. The appeal property, at 4 Penketh Drive, Liverpool, is typical. It is a small retail warehouse forming part of a larger retail development known as the Speke Centre. Iceland took occupation in May 2007. The property was let in a shell condition, and the air-handling system was installed by Iceland. Its business is mainly focused on the sale of refrigerated products, which represent roughly 80% of its sales by value, divided evenly between chilled and frozen lines. At the Penketh store, frozen and chilled products are stored and displayed in about 80 refrigerated cabinets, arranged around the perimeter of the sales floor and in four aisles running from front to rear. All but one of the cabinets at the Penketh store are integral rather than remote units. The Upper Tribunal explained the difference: 18. The object of any refrigerator is to maintain the internal temperature (and thus that of the goods stored in it) at the desired level by absorbing heat from within the cabinet and expelling it outside the cabinet by means of a condenser. Integral cabinets achieve this using refrigeration equipment and condensers installed within the body of the cabinet itself, and by expelling heat to the environment immediately surrounding the cabinet. Remote cabinets, in contrast, employ refrigeration equipment at a distance from the cabinets; heat is absorbed by a liquid refrigerant which is conveyed to the cabinet through pipes permanently installed in the store and is expelled remotely through condensers located outside the building. 20. As integral cabinets are designed to operate below a particular ambient temperature (25C in the case of Icelands cabinets) the heat generated by the cabinets themselves must be controlled to ensure that they perform as intended and do not malfunction. Where a large number of integral cabinets is present in a confined space, it is necessary to provide an air handling system with a correspondingly large cooling capacity. If the design parameters of the cabinets are exceeded the permitted product storage temperature within the cabinets may be breached causing a deterioration in the quality of the products stored or displayed in them. The advantages for Iceland of integral cabinets include flexibility, independence of operation, and lower capital cost. It is common ground that the value of the cabinets themselves is to be left out of account for rating purposes. The air handling system was described by the Upper Tribunal as follows: 12. The air handling system provides a ventilating, heating and cooling service to the appeal property, and comprises three main elements. A large air handling unit with a mechanical cooling capacity of approximately 85 kW is located outside and to the rear of the building; this unit serves a network of ducts by which warm or cold air is supplied to and extracted from the retail area through an array of ceiling mounted diffusers and grilles. On our inspection we were able to observe the air handling unit and to contrast it with the very much smaller units on the rear walls of adjoining stores - one of which is considerably larger than the [premises]. Icelands equipment occupies its own fenced compound and in size and shape resembles a very large refuse skip (4.5 metres by 2.35 metres in area) from which rise two vertical supply and return air ducts, each a metre square, which enter the rear wall of the building 4 metres above the ground. A separate but linked mechanical extract system is located at the rear of the retail area, furthest from the entrance, to deal with the removal of excess heat in that area. Finally, the whole system is controlled by means of a computerised control unit located adjacent to the air handling unit. The air handling system functions at all times, day and night. It is designed and programmed to maintain the store temperature during trading hours at an acceptable level for both the functioning of the refrigerated cabinets and the comfort of staff and customers. To achieve the acceptable temperature range during trading periods, Icelands control strategy targets a temperature within the store of 21C which is in the middle of the recommended range of comfortable temperatures for staff and customers. For the majority of the time an acceptable temperature is maintained on the sales floor without the use of mechanical cooling, but at 21C mechanical cooling commences. The aim is to ensure that the maximum temperature at which the cabinets are designed to function is not exceeded. Although a substantial proportion of the heat load is generated by other sources, the cabinets are by far the largest single contributor. Without the integral cabinets, the heavy-duty air handling system installed in the store would not be required and a very much smaller system would be sufficient. The statutory provisions Schedule 6 to the Local Government Finance Act 1988 is headed Non- Domestic rating: Valuation. Paragraph 2(1) provides that the rateable value of a non-domestic hereditament is taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on certain specified assumptions (none of which is now in issue). By paragraph 2(8), the Secretary of State is authorised to make regulations providing that in applying the preceding paragraphs, in relation to a hereditament of a prescribed class, prescribed assumptions (as to the hereditament or otherwise) are to be made. The 2000 Regulations were made under that provision. The present form and content of the regulations are derived from a report by an Expert Advisory Committee under the chairmanship of Mr Derek Wood QC, Rating of Plant and Machinery (Cm 2170) (the Wood Report), published in March 1993. The committee was established to review the law and practice relating to the rating of plant and machinery, with a view to updating and harmonising it throughout the United Kingdom. The report was followed by the Valuation for Rating (Plant and Machinery) Regulations 1994 (SI 1994/2680), which replaced the previous law. They were in turn replaced by the 2000 Regulations (applying to England only, following devolution), but without any change to the provisions material to this appeal. As indicated in the explanatory notes to both sets of regulations, they reflected the recommendations of the Wood Report. (Equivalent Regulations, also said to reflect the Wood recommendations, have been made by the relevant legislatures in Scotland, Wales, and Northern Ireland.) It will be necessary to refer in more detail later to parts of the Wood Report, which is clearly an appropriate aid to construction of the Regulations (see Bennion on Statutory Interpretation 7th ed (2017), para 24.9). plant and machinery. It provides: Paragraph 2 of the 2000 Regulations is headed Prescribed assumptions as to 2. For the purpose of determining the rateable value of a hereditament for any day on or after 1 April 2000, in applying the provisions of sub-paragraphs (1) to (7) of paragraph 2 of Schedule 6 to the Local Government Finance Act 1988 - (a) in relation to a hereditament in or on which there is plant or machinery which belongs to any of the classes set out in the Schedule to these Regulations, the prescribed assumptions are that: any such plant or machinery is part of the (i) hereditament; and (ii) the value of any other plant and machinery has no effect on the rent to be estimated as required by paragraph 2(1); and (b) in relation to any other hereditament, the prescribed assumption is that the value of any plant or machinery has no effect on the rent to be so estimated. It is important to emphasise the significance in the valuation of the Classes set out in the Schedule. Those Classes are the only categories of plant and machinery which are brought into account for valuation purposes. They are in effect exceptions to the general rule (embodied in sub-paragraphs (a)(ii) and (b)) that the value of plant and machinery has no effect on the estimation of value of the hereditament for rating purposes. The Schedule sets out the classes of plant to be assumed to be part of the hereditament (in the words of the title). In broad terms, Class 1 covers plant and machinery used for generation, storage or transmission of power on the hereditament. Class 2 (relevant in this case) covers plant and machinery used in connection with heating, cooling and other services to the hereditament. Class 3 covers such items as railway lines, lifts, cables and other items used for transmission of electricity or communications, pipe-lines and drain or sewers. Class 4 covers a number of bulky items of plant and machinery (listed in Tables 3 and 4) such as blast furnaces, fixed cranes, and turbines and generators, but excludes smaller movable items (not exceeding 400 cubic metres) and those that are not in the nature of a building or structure. Class 2 provides: Plant and machinery specified in Table 2 below which is used or intended to be used in connection with services to the hereditament or part of it, other than any such plant or machinery which is in or on the hereditament and is used or intended to be used in connection with services mainly or exclusively as part of manufacturing operations or trade processes. (emphasis added) Services are defined as meaning - heating, cooling, ventilating, lighting, draining or supplying of water and protection from trespass, criminal damage, theft, fire or other hazard. The plant and machinery specified in Table 2 includes (under the heading Heating, Cooling and Ventilating) ten items of equipment (such as water heaters, and refrigerating machines) and associated accessories. It is not in issue that the disputed air handling system is covered by the Table, nor that it is used in connection with services to the hereditament within the meaning of Class 2. The only issue is whether it is excluded by the italicised words quoted above. For simplicity in this judgment (following earlier usage - see below), I shall refer to those words as the Class 2 proviso or the proviso. References in the judgment to the word plant should be read (where appropriate) as including reference also to machinery. Legislative history In this court, as in the Court of Appeal, both parties sought to draw assistance from the background history of these provisions, dating back to the latter part of the 19th century, and including reports by a number of expert committees. The history is of some value in explaining the genesis of Class 2, and more particularly the background of the law and practice as understood at the time that the Wood Committee made its recommendations. The main problem has been to draw a defensible line between, on the one hand, plant properly treated as part of the hereditament for the purpose of assessing its hypothetical letting value, and plant more fairly attributable to the tenants business within it (the tools of the trade), having regard also to the need to keep up with changes in technology. The search for a coherent legislative solution can be traced back to the much-criticised decision of the House of Lords in Kirby v Hunslet Union Assessment Committee [1906] AC 43. The House there disapproved a distinction based on whether the plant was a fixture, in the traditional land law sense, but failed (so it was said) to put in place a workable alternative. The resulting uncertainty led in due course to the establishment of an inter- departmental committee (the Shortt Committee), to inquire into the law and practice regarding the rating of plant in both England and Scotland. The committee reported in February 1925: Report of the Inter-Departmental Committee on the Rating of Machinery and Plant in England and Wales (Cmd 2340). Its recommendations led in turn to the enactment of the Rating and Valuation Act 1925. Section 24 of that Act, taken with the Third Schedule, can be seen as setting the pattern, albeit in simpler form, for subsequent enactments including the 2000 Regulations. It established the general principle that value of plant on the hereditament was to be left out of account for rating purposes, save for the classes specified in the Schedule, which were deemed to be a part of the hereditament. There is a helpful description of the general effect of the Third Schedule in the judgment of Lord Hewart CJ in Townley Mill Co (1919) Ltd v Oldham Assessment Committee [1936] 1 KB 585 (DC), although the facts (relating to plant in a disused mill) are too different from the present to make it of any direct assistance. In particular he drew a distinction (as had the Shortt Committee, para 15) between motive and process plant, only the former being taken into account for rating purposes. He said: When one turns to the Third Schedule of the Act, it is apparent that it enumerates that type of machinery and plant which is conveniently described in the case as motive machinery; it is the machinery without which the mill could not begin to work, as, for example, the generation of power, heating and cooling, lifts and elevators, railways, tramlines and tracks, and other things, the foundation of that which was to become the work of the mill. When the machinery and plant referred to in the Third Schedule are eliminated, what is left is the kind of machinery which is concisely described in this case as process plant and machinery, operative plant and machinery, working and manufacturing plant and machinery. By section 24(1)(b), no account is to be taken of the value of any plant or machinery of that kind (p 598) He noted that under the previous law the value of plant in a mill, though not rated as such, was taken into account as enhancing the value of the hereditament to be rated (p 599). The effect of the Act, intended as beneficial to those interested in the carrying on of industry, was to get rid of all the doctrine of enhanced value, and to lay it down that process plant must henceforth be disregarded when ascertaining the rateable value of the hereditament (pp 602-603). The decision was upheld by the House of Lords, where can be found statements to similar effect (see [1937] AC 419, pp 428-429 per Lord Russell of Killowen). Turning to the detail of the Third Schedule, Class 1(b) can be seen as the precursor of Class 2 of the current regulations. It covered plant used - mainly or exclusively in connection with - (a) (b) the heating, cooling, ventilating, lighting, draining, or supplying of water to the land or buildings of which the hereditament consists, or the protecting of the hereditament from fire: Provided that, in the case of machinery or plant which is in or on the hereditament for the purpose of manufacturing operations or trade processes, the fact that it is used in connection with those operations or processes for the purpose of heating, cooling, ventilating, lighting, supplying water, or protecting from fire shall not cause it to be treated as falling within the classes of machinery or plant specified in this Schedule. (emphasis added) The other classes were (in very broad terms) similar in scope to what became the classes in the 2000 Regulations (see para 9 above). The italicised words in the proviso to Class 1 seem to have been the first appearance in this context of the expression manufacturing operations or trade processes. The circumstances in which the proviso came to be included are of some historical curiosity, since it was proposed by Mr Neville Chamberlain MP, as the responsible Minister (Hansard Standing Committee A, 4 August 1925, col 1093). He explained the purpose as being to exclude such processes as really belong to the precise work which is being carried on in the shops rather than the general heating or ventilating of the plant. He gave an example: where, for instance, a man is polishing at a buff, and there is a fan drawing off the dust so that it shall not go down his throat, that is to be treated as part of the machinery, and not as part of the heating or ventilating plant which is run. It is unnecessary to decide whether those observations are admissible under the principle in Pepper v Hart [1993] AC 593 (see Bennion op cit para 24.11). The general purpose is clear enough from the wording of the proviso itself, and the example is so far from the present facts as to be of no practical assistance in this appeal. Returning to the 1925 Act itself, section 24(3)-(6) enacted a procedure to provide more precise information about the contents of the specified classes. A special committee was to be established to prepare a statement setting out in detail all the machinery and plant [appearing] to fall within any of the classes specified in the Schedule. The statement (modified if necessary following consultation) was to be embodied in a Ministerial order having effect as though substituted for the Third Schedule. Provision was also made for its subsequent revision at intervals as directed by the Minister. The first such order was made in 1927 (The Plant and Machinery (Valuation for Rating) Order 1927 (SR & O 1927/480)). No further change was made until the setting up of the Ritson Committee, which reported in 1959: Report of the Committee on the Rating of Plant and Machinery. Its report included a revised statement under section 24(4), leading to the Plant and Machinery (Rating) Order 1960 (SI 1960/122). Between 1987 and 1990, section 24 was replaced in similar terms by section 21 of the General Rate Act 1967, which preserved the 1960 regulations (section 117(3)). The first regulations made under the 1988 Act (The Valuation for Rating (Plant and Machinery) Regulations 1989 (SI 1989/441)) were in similar form. There was no material change to the substance of Class 1(b) (or 1B as it became) over this period. Meanwhile, as explained by the Wood Report (chapter 4), the law in Scotland had developed separately. The general rule was established by section 42 of the Lands Valuation Act (Scotland) Act 1854 (17 & 18 Vict, c 91), which included within the definition of lands and heritages subject to rates all machinery fixed or attached to any lands or heritages. The perceived burden was partially relieved by the Lands Valuation (Scotland) Amendment Act 1902 section 1, which added a proviso to section 42, limited to any building occupied for any trade, business or manufacturing process. More recently, in response in part to unfavourable comparisons with the position in England, the Local Government and Planning (Scotland) Act 1982 section 4 gave the Secretary of State power to amend the proviso to section 42. That was done by the Valuation (Plant and Machinery) (Scotland) Order 1983 (SI 1983/120). It included (inter alia) an exception for certain categories of plant used in an industrial or trade process, if located wholly or mainly outwith any building (regulation 3(2)). The Wood Report As already noted, the 2000 Regulations were designed to reflect the recommendations of the Wood Report. The committee included representatives of the professions, and the private sector, and of the Valuation Offices of the three jurisdictions The report itself contains a valuable survey of the development of the law, in the different parts of the United Kingdom, and discussion of its difficulties and inconsistencies. Chapter 8, headed The new scheme - competing principles, outlined the committees general approach. In particular they accepted the validity up to a point of a tools of the trade exemption, but considered that it must be subject to qualification in the interests of fairness as between ratepayers (paras 8.6-7). They commented on the problems of dealing with plant used to provide services to a building but also having a trade purpose. Since this passage is relied on by Mr Morshead QC for the respondent, it is right to quote it in full: 8.8 What we have said so far relates to plant and machinery which is used for the purpose of a trade or industrial process. There is also the problem of plant and machinery which is introduced for the purpose of providing services for the premises, or which forms part of its infrastructure. This type of equipment has never given rise to any difficulty as a matter of principle. In the letting market landlords typically provide the services and infrastructure, and it has been taken for granted that such items should always be deemed to form part of the hereditament, even in the case of property which is not normally found in that market. 8.9 The difficulty arises in the practical application of the principle, again as our predecessors have found, because it is extremely unusual, in the case of large-scale industrial property, to find plant and machinery which is installed exclusively for the purpose of providing general services, such as light, heat and ventilation, and is not also closely bound up with the trade process. In the existing regulations in each of the countries of the United Kingdom it has therefore proved necessary to draw some fairly arbitrary line in order to indicate the point up to which such plant and equipment can fairly be rated, by analogy with commercial hereditaments generally, and beyond which rateability should cease, because at that stage it is impossible in practical terms to disentangle the service from the process function. We have looked at the boundaries which have been drawn in the past, and have re- drawn them in order to simplify the task of valuers, assessors and agents and to reflect some of the technical changes which have taken place in industry since they were last reviewed. The committee concluded, at para 8.10, that the underlying conceptual approach of the existing regulations in each part of the UK was soundly based. They then summarised the principles on which future regulations should be based: Rateability should continue, in our opinion, to be determined in accordance with the following rules: (1) that the land and everything which forms part of it and is attached to it should be assessed; (2) that process plant and machinery which can fairly be described as tools of the trade should be exempt within certain limits; (3) that process plant or machinery (in certain cases exceeding a stated size) which is or is in the nature of a building or structure or performs the function of a building or structure should, however, be deemed to be part of the hereditament or subject; (4) that service plant and machinery, and items forming part of the infrastructure of the property should be rated; and (5) that, in the case of plant and machinery which performs both a service and a process function sensible lines have to be drawn which will indicate exactly how much falls to be rated and how much does not. In chapter 9, the committee commented specifically on Class 1B of the English regulations (paras 9.11-12). They noted the distinction between plant and machinery which services property, and that provided for use in connection with the trade process being undertaken, adding: But many services in non-domestic property, which might be found whatever the use of the property, are also used incidentally for manufacturing operations in some instances. The definition in Class 1B was not free from ambiguity and had given rise to disputes as to when plant should be treated as falling within it. As an example of the problem, they referred to the treatment of an air-conditioning plant, which may have been installed to facilitate a particular process - for instance computer suites or clean rooms, or to enhance the working conditions of employees, but it was impossible to distinguish between the two purposes. They concluded: 9.14 We have considered whether the current definition should be amended or dropped altogether. For example, we discussed whether it might be preferable to exclude from rateability only that service plant which solely supports a process function. However to treat plant as process plant only if it was wholly for process purposes would increase the rateability of this type of plant and machinery. Such plant is rarely met in practice. As an alternative, we considered whether it would be possible to apportion the value of the plant between Classes 1B and 4 reflecting the relative use for service and process activity. But this would run contrary to our desire for cost-effectiveness of valuation effort and could create new opportunities for dispute. 9.15 We therefore conclude that notwithstanding the difficulties which have been encountered in deciding the degree to which plant is used for process purposes the law as we understand it in both England and Scotland should remain unaltered but that the draftsmanship should be improved to eliminate the difficulties inherent in the English Regulations. Although the committee did not include their own draft, these paragraphs can be taken as a useful indication of the thinking behind the Class 2 proviso in its current form. Annex L to the report contained a Summary of worked examples with Wood Committee recommendations. This listed some typical items of plant and machinery, for different categories of Industry, with an indication of their rateability respectively in England (including Wales, and Northern Ireland), Scotland, and under the Wood recommendations. One category, headed Industry - (e) Retail distribution, included the example of refrigeration plant, and gave the answers as no, yes, no; so indicating that, at least in the perception of the Committee, such refrigeration plant was currently exempted from rateability and should continue to be so under their recommendations. It is also of interest that the Committee received written evidence from the Cold Storage and Distribution Federation, and the National Association of Warehousekeepers, and paid a visit to the Safeway Main Distribution Centre. Finally, in anticipation of a submission of Mr Morshead, I should note one feature of the Scottish system on which the Wood Committee commented unfavourably. This was the distinction drawn by the 1902 Act between, on the one hand, premises occupied for any trade, business or manufacturing process, and other types of premises, for example, institutional premises such as hospitals, schools, colleges and universities . They recommended against the perpetuation of this distinction in the harmonised system (paras 5.2(1), 8.21, 13.19). The decisions below and the submissions in the appeal The decisions The Upper Tribunal (paras 64-66) found difficulty in finding a satisfactory line to distinguish between uses which amount to trade processes and those which do not. They thought that the conjunction of the expression with manufacturing operations, and the fact that it was an exception to a general rule, pointed to a less expansive approach to the scope of trade processes. They saw force in Mr Morsheads submission that - the common defining characteristic of manufacturing operations and trade processes is activity bringing about a transition from one state or condition to another, including by the creation, completion, repair or improvement of the subject matter of that activity. They did not think that the display or storage of goods in itself, nor the creation of an environment conducive to the display or storage of goods, could properly be regarded as involving a trade process. The requirement of a particular retailer for more substantial or powerful equipment than is normally found in retail premises did not create a relevant distinction. They added: 66. All retail warehouses require heating, cooling and ventilation to a greater or lesser extent. We do not consider that the plant and machinery installed to provide those services can properly be regarded as being used or intended to be used as part of manufacturing operations or trade processes. We appreciate that the scale of Icelands particular air handling system is dictated by the presence in its store of substantial numbers of integral cabinets, each of which creates heat, and which collectively are essential to Icelands preferred style of trading. A serious malfunction of the air handling system would therefore put its stock at risk. That feature distinguishes Icelands air handling needs from those of other retailers, but we do not regard that difference as critical. Although the particular needs of Iceland create a greater need for those services than the norm, we do not agree that they make its air handling system an exception to the general rule that such plant and machinery is to be assumed to be part of the hereditament and therefore to be rateable. The tribunal went on to consider whether, assuming the air handling system was used as part of a trade process, it was mainly so used. They would have answered this question in favour of Iceland. They accepted Icelands evidence that the main technical and operational reason for Icelands selection of this air handling system is its suitability for the maintenance of an environment in which integral cabinets can operate successfully (para 78). This part of their decision has not been challenged. In the Court of Appeal, the Chancellor (paras 40-46), having found little help in the authorities cited or the legislative history, relied on the usual principles of construction. He agreed substantially with the reasoning of the Upper Tribunal. He thought that, normally at least, manufacturing operations and trade processes would be activities that bring about a transition from one state or condition to another, and would include the creation, completion, repair or improvement of the subject matter of that activity (para 41). He noted also that the relevant sub-clause was an exception, not a proviso, and should be construed quite narrowly (para 42). He thought the display of goods for retail sale was the antithesis of a trade process. He accepted that the process of freezing chickens would probably be a trade process, but not just keeping them frozen to be offered for sale. He also agreed with the tribunal that the fact that the environment appropriate for the methods of a particular retailer requires more substantial and complex equipment than normal does not mean that it is used for a trade process (para 45). The submissions In this court, Mr Kolinsky QC for Iceland submitted that the Court of Appeal misunderstood the underlying purpose of the legislation, as disclosed by a study of the legislative history, and adopted an unduly restrictive reading of the provision. He identified Icelands trade process as the continuous freezing or refrigeration of goods to preserve them in an artificial condition without which they would be worthless. Neither the ordinary use of language nor the case law justified the view that a transition was required from one state to another. He relied (as he did in the Court of Appeal) on three authorities which supported a wider approach: i) Union Cold Storage Co Ltd v Southwark Assessment Committee (1932) 16 R & IT 160, relating to the application of the precursor of Class 4 of the 2000 Regulations to cooling chambers in a warehouse used for storing food. The case proceeded on the basis (recorded at p 164) that the chambers were admittedly plant on the hereditament for the purpose of manufacturing operations or trade processes. ii) Union Cold Storage Co Ltd v Bancroft [1931] AC 446, where the issue was whether, for the purposes of industrial derating, certain refrigeration equipment was for storage purposes or for the purposes of altering or adapting goods for sale. Viscount Dunedin described the plant as used as part of an elaborate process involving the use of machinery for the preservation of goods during storage (pp 492-493). iii) Assessor for Lothian Region v BP Oil Grangemouth Refinery Ltd (1985) SLT 453, where the Lands Valuation Appeal Court proceeded on the basis that a marine terminal at a petrochemical works, used solely for the purpose of loading refined oil, was premises used in an industrial or trade process (p 459, per Lord Ross). As a further illustration of the practice of the Valuation Office at the time of the Wood Report, he referred to Hays Business Services Ltd v Raley (Valuation Officer) [1986] 1 EGLR 226 (LT) (Emlyn Jones FRICS). That concerned a warehouse used for the storage of archival materials including documents, films and audio-magnetic tapes. For some items of a sensitive nature, there had been installed specialist items of plant, including heating plant, humidifiers, and fire-protection equipment which utilised Halon gas so as to extinguish fires without damaging the stored items. The tribunal recorded that the Solicitor for the Inland Revenue, for the Valuation Officer, had conceded that the specialist heating and humidification equipment were non-rateable (p 227J). The tribunal reached the same conclusion in respect of the fire protection plant, which was not rateable because it was on the hereditament primarily to protect the material that is stored there. It added: Even if it were to be found that this could only be done by the protection of the building and therefore that that was the main use of the equipment, it would nevertheless not be included within the schedule because it was there expressly for the purpose of the trade process being carried on. (p 228E) To similar effect, Mr Kolinsky relied also on the Wood Report, which proceeded on the assumption that an air-conditioning plant installed to facilitate a particular process such as a computer suite, was excepted from rating (see the passage quoted at para 23 above). He found more recent support for the same broad approach in Leda Properties Ltd v Howells (Valuation Officer) [2009] RA 165 (LT George Bartlett QC President). Although no issue arose under the proviso as such, it was common ground that the sophisticated air handling system of a computer hall, described in the decision (para 3) as provid[ing] the temperature and humidity control necessary for process purposes, was to be left out of account under the regulations (paras 3, 34). Mr Kolinsky (who coincidentally appeared on that occasion for the respondent Valuation Officer) asked us to note that the Valuation Officer, Mr Howells, was described as having had since 1996 a lead role in the valuation of specialist classes of property, including computer centres (para 32). We were asked to infer that the common ground reflected the Valuation Offices considered and established position at the time. For the Valuation Officer, Mr Morshead supported the reasoning of the Upper Tribunal and the Court of Appeal. Like them he submitted that the Class 2 proviso constitutes an exception to the general principle of rateability, and should be narrowly construed. The composite phrase manufacturing operations or trade processes must be read as a whole. It was not enough that the ratepayers activity could be labelled as a trade and that one or more of its activities could be labelled as a process. This was the error made by the tribunal in the Hays case, the reasoning of which was plainly misconceived. The Union Cold Storage cases, to the extent that the statutory context was the same, were not necessarily comparable on the facts. In so far as they involved the application of a reduction in temperature to turn fresh goods into frozen or chilled ones, it would be uncontentious to describe that activity as a manufacturing operation or trade process. He referred also by way of analogy to the Capital Allowances Act 1968 section 7, which defines industrial building as including (inter alia) a building in use for the purposes of a trade which consists in the subjection of goods to any process (section 7(1)(e)). In Bestway (Holdings) Ltd v Luff [1998] STC 357, 381, Lightman J had summarised, under heads (1) to (7), the effect of the authorities on the meaning of the expression subjection to process (notably Kilmarnock Equitable Co-operative Society Ltd v Inland Revenue Comrs (1966) 42 TC 675, 1966 SLT 224): (3) Subjection to a process means a treatment (or course of operations) involving the application of a method of manufacture or adaptation of goods or materials towards a particular use, purpose or end This showed that process implied some form of adaptation of the goods, not simply their storage in a constant state as in this case. Mr Morshead also went further than the Court of Appeal. He submitted that Icelands retail activities were wholly outside the scope of the Class 2 proviso, which was directed towards plant serving productive activities in industry, rather than commercial activities more generally. He supported that submission by reference to the history, including the reports summarised above, and specifically to the Wood Report (in particular paras 8.8-9 quoted above). He read the report as recognising a wide-ranging general rule applicable to commercial hereditaments generally, distinguished from the activities of industry; and as proposing for the latter (in his words) an exemption only in the narrow case of plant which serves a process function in industry. Discussion It is appropriate to begin by addressing Mr Morsheads broader submission, not in terms adopted by the Upper Tribunal or the Court of Appeal: that is, that the Class 2 proviso was concerned with productive activities in industry and not with other forms of commercial activity, such as the retail activities of Iceland. With respect to him, and to those instructing, I find this an impossible contention, both on the wording of the Regulations and against the background of the Wood Report. As to the first, if the draftsman had wished to limit the proviso to industrial activities, it would have been easy to say so. The inclusion of trade processes, as an alternative to manufacturing operations can only be read as designed to widen the scope of the proviso to include other forms of trade and their processes. Trade is a familiar word which naturally extends to Icelands retail activities. Subject to the interpretation of the word process, there is nothing in the proviso or in its context to justify a narrower approach. Further, far from gaining support from the Wood Report, the submission seems to me wholly inconsistent with it. It is true that there were some references in chapter 8 to particular issues affecting industry, but I cannot read those as intended to limit the scope of the recommendations more generally. On the contrary, the emphasis was on the principle of fairness between ratepayers, which was regarded as of paramount importance for the political credibility of the business rating system (para 8.6). Nor was there any such limitation in the general rules proposed at paragraph 8.10, or the specific discussion of Class 2 (paras 9.14-15) (see above). Rule (2) proposed exemption for plant and machinery that can fairly described as the tools of the trade, without any limitation of the nature of the trade. Similarly rule (5) which dealt with the need to draw lines between the service and process functions was expressed in general terms. The submission is even less easy to reconcile with the Scottish legislation, which referred to any trade, business or manufacturing process. As noted above, the report criticised that, not for extending its scope too far, but for not going far enough. Finally, Mr Morshead was unable to explain why, if his submission were correct, the worked examples extended to retail distribution; nor why from 1986 until as recently as 2009 the practice of the Valuation Office had apparently taken a wider view, so as for example to treat air conditioning plant for a computer centre as within the scope of the proviso. The Hays case (1986) is of course not binding on this court, nor indeed on the Valuation Office. It is unnecessary to decide whether on its facts it was correctly decided. However, if it had been thought in any way controversial at the time of the Wood Report, it would be very surprising for it not to have been addressed. Turning to the reasoning below, the Court of Appeal and the Upper Tribunal both saw the proviso as an exception to a general rule, to be construed narrowly; and as naturally referring to a process designed to bring about a transition from one state to another. The Court of Appeal even saw some significance in the change (between 1925 and 1994) from a proviso to an exception: para 42. In my view this approach pays insufficient regard to the place of the proviso in the scheme of the Regulations as a whole. Whatever word has been used at different times, it is and always was an exception to an exception. As already explained, the classes are themselves exceptions to the general rule of non-rateability; the relevant proviso (or exception) brings items of plant back into the scope of the general rule. The rationale is that, although they may provide a service to the building, they also provide a service to the activities of the trader within it, and the latter is their main or exclusive function. They are therefore more fairly considered for rating purposes as tools of the trade (in the words of the Wood Report) within the general rule of non- rateability. There is certainly nothing in the Wood Report to suggest that the use of the word except or the other changes of language were intended to signal a substantive change. On the contrary, the passages quoted above show that the intention was to retain the law substantially without alteration, while improving the draftsmanship. How this was done (reflecting the language of Wood Report paras 9.11-12) is apparent from a comparison of the wording of the 2000 Regulations with that of its predecessors. An important change was the introduction of the expression services to distinguish the functions of different categories of plant. Thus, it is recognised that plant which is used in connection with services to the hereditament may also be used in connection with services as part of manufacturing operations or trade processes . Viewed in this way, the key distinction lies in the main use to which the services are put: in connection with the hereditament, or with the processes within it. In my view, there is nothing in the word process itself which implies a transition or change. The cases under the Capital Allowances Act 1968 were no doubt coloured by the context, related to industrial buildings, and the need for goods to be subjected to a process. This is apparent in particular from the opinion of Lord Guthrie in the Kilmarnock case (42 TC 675, 681, 1966 SLT 224, 228). He recognised process as a word with various meanings some wider than others, including the widest significance of anything done to the goods or materials; but in conjunction with the word subjection a narrower reading was appropriate. I agree respectfully with that view of the wider meaning of the word process, which is also consistent with the standard dictionary definitions. A trade process is simply a process (in that wide sense) carried on for the purposes of a trade. Mr Kolinsky submits that, in the context of Icelands trade, the word is apt to cover the continuous freezing or refrigeration of goods to preserve them in an artificial condition. I agree. Since the services provided by the relevant plant have been held to be used mainly or exclusively as part of that trade process, they should be left out of account for rating purposes. For these reasons, I would allow the appeal, and, on this issue, restore the decision of the Valuation Tribunal. |
On 13 December 2006 the appellant Mohammed al Ghabra, referred to in these proceedings as G, was informed that a direction had been made against him by HM Treasury (the Treasury) under article 4 of the Terrorism (United Nations Measures) Order 2006 (SI 2006/2657) (the TO) and that he was a designated person for the purposes of that Order. He was told that the direction had been made because the Treasury had reasonable grounds for suspecting that he was, or might be, a person who facilitated the commission of acts of terrorism. He was also told that, in light of the sensitive nature of the information on which the decision had been taken, it was not possible to give him further details and that the effect of the direction was to prohibit him from dealing with his funds and economic resources and to prevent anyone notified of the freeze from making funds, economic resources or financial services available to him or for his benefit. On 2 August 2007 the appellants Mohammed Jabar Ahmed, Mohammed Azmir Khan and Michael Marteen (formerly known as Mohammed Tunveer Ahmed), referred to in these proceedings as A, K and M, received letters in almost identical terms telling them that a direction had been made against them under article 4 of the TO by the Treasury. A few days after G had been told that he had been designated under the TO he received a letter from the Foreign and Commonwealth Office saying the Sanctions Committee of the Security Council of the United Nations (otherwise known as the 1267 Committee: see para 18 below) had added his name to its Consolidated List, that this meant that he was subject to a freezing of his funds, assets and economic resources and that these measures were binding on all UN member states with immediate effect and had been implemented in UK law. No mention was made at that stage of the domestic measure under which the restrictions were being imposed on him. But in March 2007 he was told that his listing meant that he was deemed to be a designated person under the Al Qaida and Taliban (United Nations Measures) Order 2006 (SI 2006/2952) (the AQO). In September 2005 Hani El Sayed Sabaei Youssef (or Hani al Sebai), referred to in these proceedings as HAY, was told that his name had been added to the Consolidated List by the 1267 Committee. As a result he too was deemed to be a designated person under the AQO. His interest in these proceedings is virtually identical to those of G and A, K and M. So, although his case comes before this court on an appeal by the Treasury to which he is the respondent (see paras 35 37, below), I shall refer to him and to G and A, K and M as the appellants when I need to refer to all these designated persons collectively. The TO and the AQO were made by the Treasury in purported exercise of the power to make Orders in Council which was conferred on them by section 1 of the United Nations Act 1946 (the 1946 Act). In each case the Orders were made to give effect to resolutions of the United Nations Security Council which were designed to suppress and prevent the financing and preparation of acts of terrorism. The Orders provide for the freezing, without limit of time, of the funds, economic resources and financial services available to, among others, persons who have been designated. Their freedom of movement is not, in terms, restricted. But the effect of the Orders is to deprive the designated persons of any resources whatsoever. So in practice they have this effect. Persons who have been designated, as Sedley LJ observed in the Court of Appeal, are effectively prisoners of the state: A and others v HM Treasury [2008] EWCA Civ 1187; [2009] 3 WLR 25, para 125. Moreover the way the system is administered affects not just those who have been designated. It affects third parties too, including the spouses and other family members of those who have been designated. For them too it is intrusive to a high degree: see R(M) v HM Treasury (Note) [2008] UKHL 26, [2008] 2 All ER 1097. In that case, which concerned the payment of social security benefits to the spouses of listed persons living in the United Kingdom, the House of Lords referred a question to the Court of Justice of the European Communities for a preliminary ruling on the interpretation of Council Regulation (EC) No 881/2002 to which the Al Qaida and Taliban (United Nations Measures) Order 2002 (SI 2002/111) gave effect. The procedure that section 1 lays down enables Orders under it to be made by the executive without any kind of Parliamentary scrutiny. This is in sharp contrast to the scheme for the freezing of assets that has been enacted by Parliament in Part 2 of the Anti terrorism, Crime and Security Act 2001. Orders made under that Act must be kept under review by the Treasury, are time limited and must be approved by both Houses of Parliament: sections 7, 8 and 10. The systems that have been provided for in the TO and the AQO are far more draconian. Yet they lie wholly outside the scope of Parliamentary scrutiny. This raises fundamental questions about the relationship between Parliament and the executive and about judicial control over the power of the executive. The case brings us face to face with the kind of issue that led to Lord Atkins famously powerful protest in Liversidge v Anderson [1942] AC 206, 244 against a construction of a Defence Regulation which had the effect of giving an absolute and uncontrolled power of imprisonment to the minister. In The Case of Liversidge v Anderson : The Rule of Law Amid the Clash of Arms (2009) 43 The International Lawyer 33, 38 Lord Bingham of Cornhill, having traced the history of that judgment, said that we are entitled to be proud that even in that extreme national emergency there was one voice eloquent and courageous which asserted older, nobler, more enduring values: the right of the individual against the state; the duty to govern in accordance with law; the role of the courts as guarantor of legality and individual right; the priceless gift, subject only to constraints by law established, of individual freedom. The consequences of the Orders that were made in this case are so drastic and so oppressive that we must be just as alert to see that the coercive action that the Treasury have taken really is within the powers that the 1946 Act has given them. Even in the face of the threat of international terrorism, the safety of the people is not the supreme law. We must be just as careful to guard against unrestrained encroachments on personal liberty. The legislative background: the history To set the scene for the discussion that follows, it is necessary to trace the history of the various measures that have led to the appellants being dealt with in this way. An examination of the legislative background must begin with the Charter of the United Nations. It was signed in San Francisco on 26 June 1945 as the Second World War was coming to an end. It came into force on 24 October 1945. The Preamble records the determination of the United Nations to save succeeding generations from the scourge of war, to reaffirm faith in fundamental human rights and to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained. Member states bound themselves to maintain international peace and security, to take collective measures for the prevention and removal of threats to the peace and to promote and encourage respect for human rights and for fundamental freedoms: article 1. No principled objections were raised against a strong Security Council. In order to achieve the goal of maintaining peace states were willing to submit to a central organ in a manner that hitherto had been unprecedented: The Charter of the United Nations, A Commentary, ed Bruno Simma, 2nd ed (2002), p 703 (Professor Joachim Frowein and Dr Nico Krisch). Article 2 of the Charter states: The Organisation and its Members, in pursuit of the Purposes stated in Article 1, shall act in accordance with the following Principles. 2. All Members, in order to ensure to all of them the rights and benefits resulting from membership, shall fulfil in good faith the obligations assumed by them in accordance with the present Charter. Article 24 confers the primary responsibility on the Security Council for the maintenance of international peace and security. Article 25 provides: The Members of the United Nations agree to accept and carry out the decisions of the Security Council in accordance with the present Charter. Chapter VII sets out the action to be taken with respect to threats to the peace, breaches of the peace and acts of aggression. Article 39, which introduces this Chapter, provides that it is for the Security Council to determine the existence of any such threat and to make recommendations or decide what measures shall be taken in accordance with articles 41 and 42 to maintain or restore international peace and security. Article 41 states: The Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures. These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations. Article 42 provides for the measures that may be taken if the Security Council considers that measures provided for in article 41 would be or have proved to be inadequate. An example of its use can be found in Resolution 1546 which was adopted by the Security Council on 8 June 2004 which gave authority for a multi national force to take all necessary measures to contribute to the maintenance of peace and security in Iraq: see R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2007] UKHL 58, [2008] AC 332. This case is concerned with measures that have been taken under article 41. Among a number of miscellaneous provisions in Chapter XVI is article 103, with which the complementary provision in article 25 must be read. It provides: In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail. Treaty provisions that are incompatible with ius cogens are void. As for the rest, article 103 does not say that treaty provisions between states which are incompatible with the Charter are void. What it says is that the Charter has higher rank, and that obligations derived from the Charter must prevail. As Professor Rudolf Bernhardt observes at p 1295 of the Commentary, the Charter aspires to be the constitution of the international community accepted by the great majority of states. Obligations under decisions and enforcement measures under Chapter VII prevail over other commitments of the members concerned in international law. As article 103 is concerned only with treaty obligations between member states it says nothing about the relationship between the Charter and the rights and freedoms of individuals in domestic law. In that regard, article 55(c) states that the United Nations shall promote universal respect for, and observance of, human rights and fundamental freedoms. But the obligation in article 25 is unqualified, and the regime in Chapter VII leaves it to the Security Council to judge whether the measures that it decides upon are consistent with the objects of the Charter. The United Kingdom gave effect to the Charter in domestic law by means of the United Nations Act 1946. Section 1 of that Act provides: (1) If, under article 41 of the Charter of the United Nations signed at San Francisco on 26 June 1945 (being the article which relates to measures not involving the use of armed force) the Security Council of the United Nations call upon His Majestys Government in the United Kingdom to apply any measures to give effect to any decision of that Council, His Majesty may by Order in Council make such provision as appears to Him necessary or expedient for enabling those measures to be effectively applied, including (without prejudice to the generality of the preceding words) provision for the apprehension, trial and punishment of persons offending against the Order. Subsection (4) of that section as originally enacted provided that any such Order was not to be deemed to be or contain a statutory rule to which section 1(1) of the Rules Publication Act 1893 applied. That section which was repealed by section 12 of the Statutory Instruments Act 1946, required publication of an Order in the London Gazette at least 40 days before it was made. As I said in R (Stellato) v Secretary of State for the Home Department [2007] UKHL 5, [2007] 2 AC 70, para 10, the opportunity for scrutiny of delegated legislation by Parliament is determined by the provisions of the enabling Act. Four procedures are available: affirmative resolution procedure; negative resolution procedure; simply laying; and no parliamentary stage at all. In the case of Orders in Council made under section 1 of the 1946 Act the procedure is simply laying before Parliament. All statutory instruments that are laid before Parliament are considered by the Joint Committee on Statutory Instruments. But its role is confined to assessing the technical qualities of the instrument. This is to be contrasted with the procedure which applies to an instrument upon which proceedings may be taken in either House. Under that procedure every draft instrument is considered by the Merits of Statutory Instruments Committee with a view to determining whether or not the special attention of the House should be drawn to it on grounds of a more general character. These include (a) that it is politically or legally important or gives rise to issues of public policy likely to be of interest to the House and (b) that it may be inappropriate in view of changed circumstances since the enactment of the parent Act. This level of scrutiny does not apply to the procedure that was chosen for Orders in Council made under section 1 of the 1946 Act. They are not instruments upon which proceedings may be taken in either House. They are laid before Parliament for its information only, not for scrutiny of their merits or for debate. The effect of section 1 of the 1946 Act is that decisions as to the provisions that Orders made under it may or should contain lie entirely with the executive. When he introduced the United Nations Bill at its Second Reading in the House of Lords on 12 February 1946 the Lord Chancellor, Lord Jowitt, said that article 41 was the only article of the Charter that required immediate legislation in order to put His Majestys Government in a position to fulfil their obligations as a member of the United Nations, and that when the Security Council took a decision there was an obligation on the Government to give effect to it: Hansard, HL Debates, 12 February 1946, vol 139, cols 373 375. For the opposition, Viscount Swinton said that he believed that a Bill to enable the Government to do things by Order in Council would have the complete, unanimous and enthusiastic support of everybody in the House, as if the United Nations was to succeed it must be able to take effective action and that action must be prompt and immediate: col 377. Viscount Samuel, supporting the motion, said that the Bill made provision for the eventuality that coercive measures might become necessary by the United Nations against some State which is indulging, or is apparently about to indulge in acts of aggression: col 378. The Lord Chancellor did not suggest, in his brief reply, that this was an incorrect summary of the purpose of the enactment: col 379. Remarks made during the Second Reading of the Bill in the House of Commons on 5 April 1946 cast further light as to what its purpose was understood to be at that time. Introducing the Bill, the Minister of State, Mr Philip Noel Baker, said that it would play its part in the vitally important measures for keeping the peace, as clashes between Governments such as those which might have become wars might occur again: Hansard, HC Debates, vol 421, col 1516. Other speakers referred during the debate to the use of non military, diplomatic and economic sanctions as a means of deterring aggression between states. There was no indication during the debates at Second Reading in either House that it was envisaged that the Security Council would find it necessary under article 41 to require states to impose restraints or take coercive measures against their own citizens. The question whether it would be appropriate, if it were to do so, for the Government to be given power to introduce such measures by Orders in Council in the manner envisaged by the Bill was not discussed. The Security Council Resolutions The world has not, of course, been immune to threats to international peace and security since 1945. Numerous Security Council Resolutions (SCRs) have been made calling upon the members of the United Nations to take measures under article 41. Prior to the terrorist attacks that were perpetrated on 11 September 2001 (9/11) in New York, Washington and Pennsylvania they were directed primarily to the interruption by means of sanctions of economic and other relations between states. As the Security Councils practice evolved they were directed to what states themselves might or might not do. For example, by SCR 1189(1998) the Security Council declared that every state has the duty to refrain from organizing, instigating, assisting or participating in terrorist acts in another state or acquiescing in organised activities within its territory directed towards the commission of such acts. But the bombing of United States embassies in Nairobi and Dar es Salaam in 1999 showed that the spectre of international terrorism was not capable of being defeated by measures directed to the transactions of states as such. In response to these outrages the Security Council directed its attention to the activities of the ruling regimes. SCR 1267(1999) provided for the freezing of funds and other financial resources derived from or generated from property owned or controlled by the Taliban or by any undertaking owned or controlled by them: paragraph 4(b). A sanctions Committee was established to oversee implementation of these measures, known as the 1267 Committee. SCR 1333(2000) took this process a step further. It provided by paragraph 8(c) that all states should freeze funds and other financial assets of Usama bin Laden and individuals and entities associated with him to ensure that no funds were made available for the benefit of any person or entity associated with him, including the Al Qaida organisation. Although previous practice did not go that far, it has not been suggested that it lay outside the powers of the Security Council under article 41 to direct the taking of collective measures at an international level against individuals. The drafting history indicates the contrary. The wording of article 41 was the product of the agreement reached by the Four Powers at Dumbarton Oaks that it should contain an enumeration of the non military measures that could be taken which was illustrative and non exhaustive: Simma, op cit, p 737. SCR 1333(2000) was followed by a series of resolutions refining and updating the measures that were to be taken to deal with Al Qaida, Usama bin Laden, the Taliban and other individuals, groups, undertakings and entities associated with them as designated by the committee established pursuant to SCR 1267. At the hearing of this appeal the most recent was SCR 1822(2008). It was followed and reaffirmed by SCR 1904(2009), which was adopted on 17 December 2009. The preamble to SCR 1822(2008) declared that terrorism in all its forms and manifestations constitutes one of the most serious threats to peace and security, reiterated the Security Councils condemnation of these persons and stressed that terrorism could only be defeated by a sustained and comprehensive approach involving the active participation and collaboration of all states. By paragraph 1 it required all states to take all the measures previously imposed by previous Resolutions with respect to Al Qaida, Usama bin Laden and the Taliban and other individuals, groups, undertakings and entities associated with them, as referred to in the list created pursuant to Resolutions 1267(1999) and 1333(2000) (the Consolidated List), including: (a) Freeze without delay the funds and other financial assets or economic resources of these individuals, groups, undertakings and entities, including funds derived from property owned or controlled directly or indirectly, by them or by persons acting on their behalf or at their direction, and ensure that neither these nor any other funds, financial assets or economic resources are made available, directly or indirectly for such persons benefit, or by their nationals or by persons within their territory. Paragraph 8 of SCR 1822(2008) reiterated the obligation of all Member States to implement and enforce the measures set out in paragraph 1 and urged all states to redouble their efforts in that regard. Paragraph 9 encouraged all Member States to submit to the 1267 Committee for inclusion on the Consolidated List names of individuals, groups, undertakings and entities participating by any means in the financing or support of acts or activities of Al Qaida, Usama bin Laden and the Taliban and other individuals, groups, undertakings and entities associated with them. The persons on that list are the persons to whom the prohibitions in SCR 1267(1999) and subsequent Resolutions applied. Provision was made in paragraphs 1923 for de listing and in paragraphs 24 26 for review and maintenance of the Consolidated List. Individuals, groups, undertakings and entities have the option of submitting a petition for de listing directly to a body known as the Focal Point. The Committee is directed to work, in accordance with its guidelines, to consider petitions for removal from the Consolidated List of those who no longer meet the criteria established in the relevant Resolutions. On 28 September 2001, as part of its response to 9/11, the Security Council broadened its approach to the problem still further. It decided that action required to be taken against everyone who committed or attempted to commit terrorist acts or facilitated their commission. It adopted SCR 1373(2001). The preamble to this Resolution recognised the need for states to complement international co operation by taking additional measures to prevent and suppress, in their territories through all lawful means, the financing and preparation of any acts of terrorism. In paragraph 1 it was declared that the Security Council had decided that all States shall: (a) Prevent and suppress the financing of terrorist acts; (b) Criminalize the wilful provision or collection of funds by their nationals or in their territories with the intention that the funds should be used to carry out terrorist acts; (c) Freeze without delay funds and other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled by such persons; and of persons and entities acting on behalf of, or at the direction of such persons and entities; [and] (d) Prohibit their nationals or any persons and entities within their territories from making funds, financial assets or economic resources or financial or other related services available for the benefit of persons who commit or attempt to commit or facilitate or participate in the commission of terrorist acts, of entities owned or controlled by such persons and of persons and entities acting on behalf of or at the direction of such persons. In paragraph 2 it was declared that the Security Council had decided that all States shall, among various other measures (d) Prevent those who finance, plan, facilitate or commit terrorist acts from using their respective territories for those purposes against other States or their citizens; (e) Ensure that any person who participates in the financing, planning, preparation or perpetration of terrorist acts or in supporting terrorist acts is brought to justice. Provision was made in paragraph 6 for establishing a Committee of the Security Council, consisting of all its members, to monitor implementation of the Resolution. In paragraph 8 the Security Council expressed its determination to ensure the full implementation of the Resolution, in accordance with its responsibilities under the Charter. This Resolution was followed by SCR 1452(2002) which was adopted on 20 December 2002. In order to give effect to SCR 1333(2000) and its successors within the European Community, the Council adopted Regulation (EC) No 881/2002 ordering the freezing of the funds and other economic resources of the persons and entities whose names appear on a list annexed to that Regulation. Practice has varied among member states as to whether to implement their obligations under the UN Charter in parallel with their obligation to legislate in their national legal orders in conformity with Regulation 881. Reports of the member states to the 1267 Committee indicate that eleven of the twenty seven member states appear to have relied on Regulation 881 alone. The remaining sixteen member states, including the United Kingdom, have adopted their own legislative measures which run in parallel with the Regulation. The Orders in Council: the Terrorism Orders The United Kingdom Parliament had already enacted the Terrorism Act 2000 for the creation of a criminal regime dealing with the funding of terrorism. It received the Royal Assent on 20 July 2000. In response to the events of 9/11 the Bill which became the Anti terrorism, Crime and Security Act 2001 was presented to Parliament on 12 November 2001. It received the Royal Assent on 14 December 2001. It was followed by the Prevention of Terrorism Act 2005, which received the Royal Assent on 11 March 2005, the Terrorism Act 2006 which received the Royal Assent on 30 March 2006 and the Counter Terrorism Act 2008 which received the Royal Assent on 26 November 2008. Part 2 of the 2001 Act provided for the making of freezing orders. The 2005 Act provided for the making of control orders. The 2006 Act, among other things, amended the definition of terrorism in the 2000 and 2001 Acts to eliminate disparities between its definition in domestic law and that in various international conventions to which the United Kingdom is a party. The 2008 Act introduced a procedure for setting aside financial restrictions decisions taken by the Treasury. The restrictions that were imposed on the appellants in this case were made by the Treasury under section 1 of the 1946 Act. They were not made under powers that were specifically designed for that purpose by primary legislation. Effect was first given to SCR 1373 by the Terrorism (United Nations Measures) Order 2001 (SI 2001/3365), which was made on 9 October 2001, laid before Parliament on the same day and came into force on 10 October 2001. The wording of its leading provision was modelled on that of the SCR. Article 3 of the Order provided: Any person who, except under the authority of a licence granted by the Treasury under this article, makes any funds or financial (or related) services available directly or indirectly to or for the benefit of (a) a person who commit, attempts to commit, facilitates or participates in the commission of acts of terrorism, (b) a person controlled or owned directly or indirectly by a person in (a), or (c) a person acting on behalf, or at the direction of, a person in (a), is guilty of an offence under this Order. The Terrorism (United Nations Measures) Order 2006 (SI 2006/2657) (the TO) was laid before Parliament on 11 October 2006 and came into force on 12 October 2006. As its preamble records, it was made to give effect to SCR 1373(2001) and SCR 1452(2002). By article 20(1) it revoked the 2001 Order. In place of article 3 of that Order there is a new article 3, which is in these terms: (1) For the purposes of this Order a person is a designated person if (a) he is identified in the Council Decision, or (b) he is identified in a direction. 2) In this Part direction (other than in articles 4(2)(d) and 5(3)(c)) means a direction given by the Treasury under article 4(1). Article 4 provides: (1) Where any condition in paragraph (2) is satisfied, the Treasury may give a direction that a person identified in the direction is designated for the purposes of this Order. (2) The conditions are that the Treasury have reasonable grounds for suspecting that the person is or may be (a) a person who commits, attempts to commit, participates in or facilitates the commission of acts of terrorism; (b) a person identified in the Council Decision; (c) a person owned or controlled, directly or indirectly, by a designated person; or (d) a person acting on behalf of or at the direction of a designated person. (4) The Treasury may vary or revoke a direction at any time. Article 5(4) provides that the High Court or, in Scotland, the Court of Session may set aside a direction on the application of the person identified in the direction. Article 7 of the TO provides: (1) A person (including the designated person) must not deal with funds or economic resources belonging to, owned or held by a person referred to in paragraph (2) unless he does so under the authority of a licence granted under article 11. (2) The prohibition in paragraph (1) applies in respect of (a) any person who commits, attempts to commit, participates in or facilitates the commission of acts of terrorism; (b) any designated person; (c) any person owned or controlled , directly or indirectly, by a person referred to in sub paragraph (a) or (b); and (d) any person acting on behalf or at the direction of a person referred to in sub paragraph (a) or (b). (3) A person who contravenes the prohibition in paragraph (1) is guilty of an offence. Article 7(6) defines the phrase deal with in terms which are designed to catch every conceivable kind of transaction in respect of funds and economic resources. Article 8 provides that a person must not make funds, economic resources or financial services available, directly or indirectly, to or for the benefit of a person referred to in article 7(2) unless he does so under the authority of a licence granted under article 11. Licences under article 11 may be general or granted to a category of persons or to a particular person, may be subject to conditions and may be of indefinite duration or subject to an expiry date. The Treasury may vary or revoke the licence at any time. On 8 July 2009 a further Order in this sequence, the Terrorism (United Nations Measures) Order 2009 (SI 2009/1747), was laid before Parliament. It came into force on 10 August 2009. Like the 2001 and 2006 Terrorism Orders, it was made under section 1 of the 1946 Act to give effect to SCR 1373(2001). It revoked the 2006 Order, but it provided that persons such as A, K, and M and G who had been designated under the 2006 Order were to remain subject to its terms until 31 August 2010 unless their designation was revoked by that date: article 26(4). On 22 October 2009, two weeks after the hearing of these appeals had been concluded, G was informed that his designation under the 2006 Order had been revoked and that he had been redesignated under the 2009 Order. On 30 October 2009 A, K and M were redesignated under the 2009 Order and their designations under the 2006 Order were likewise revoked. There are some differences between the 2006 and the 2009 Orders, such as to the definition of dealing with an economic resource, which ameliorate to some degree the onerous effects of the regime on spouses and other third parties who interact with the designated person. The prohibitions that the 2009 Order imposes on making funds, financial services available for his benefit, and on making economic resources available to him or for his benefit, apply only if the benefit that he obtains or is able to obtain is significant: articles 12(4)(a), 13(3)(a), 14(4)(a). An additional pre condition for designation has been introduced by article 4(1)(b). The Treasury must consider that the direction is necessary for purposes connected with protecting members of the public from the risk of terrorism. But, subject to these minor adjustments, the impact of the regime on the designated person himself is just as rigorous as it was under the 2006 Order, and the phrase reasonable grounds for suspecting in article 4(2) of the 2006 Order has been retained in the 2009 Order: see article 4(2). So, although the 2009 Order is not before the court in these proceedings, the arguments that have been directed to the 2006 Order (the TO) can be taken to apply to it also. They have not been superseded by the action that the Treasury has taken since the end of the hearing on 8 October 2009. The Al Qaida and Taliban Order The Treasurys response to the Security Councils direction by a series of resolutions including SCR 1452(2002) that measures that were to be taken to deal with Al Qaida, Usama bin Laden, the Taliban and other individuals, groups undertakings and entities associated with them as designated by the committee established pursuant to SCR 1267 was to make the Al Qaida and Taliban (United Nations Measures) Order 2002 (SI 2002/111). It was replaced by Al Qaida and Taliban (United Nations Measures) Order 2006, which was laid before Parliament on 15 November 2006 and came into force on 16 November 2006. As in the case of the TO, this Order sets out a rigorous system of prohibitions and licences which is applied to persons who are designated persons for its purposes. Article 3 defines the expression designated persons. It provides: (1) For the purposes of this Order (a) Usama bin Laden, (b) any person designated by the Sanctions Committee, and (c) any person identified in a direction, is a designated person. (2) In this Part direction means a direction given by the Treasury under article 4(1). Article 4 sets out the Treasurys power to designate in these terms: (1) Where any condition in paragraph (2) is satisfied, the Treasury may give a direction that a person identified in the direction is designated for the purposes of this Order. (2) The conditions are that the Treasury have reasonable grounds for suspecting that the person is or may be (a) Usama bin Laden, (b) a person designated by the Sanctions Committee, (c) a person owned or controlled, directly or indirectly, by a designated person; or (d) a person acting on behalf of or at the direction of a designated person. (4) The Treasury may vary or revoke a direction at any time. Article 5(4) provides that the High Court or, in Scotland, the Court of Session may set aside a direction on the application of the person identified in the direction or any other person affected by the direction. The facts Two of the three cases before this court are appeals against orders made by the Court of Appeal on 30 October 2008. In the first case, A, K and M are brothers aged 31, 35 and 36. They are UK citizens and, at the time of their designation, lived in East London with their respective wives and children. A and K no longer live with their families, and their current whereabouts are unknown. Their solicitor, with whom they have not been in contact for a number of months, attributes their disappearance to the damaging effects upon them and their families of the regimes to which they were subjected by the Treasury. It placed an extraordinary burden on their wives, created significant mental health difficulties and led ultimately to the breakdown of their marriages. Ms marriage has also broken down, but he has continued to have a close relationship with his children. He lives at his ex wifes address where his children live also. A, K and M have never been charged or arrested for terrorism related offences. By letters dated 2 August 2007 they were informed that directions had been made in respect of each of them under article 4 of the TO. They received letters which stated that the direction had been made because the Treasury had reasonable grounds for suspecting that you are, or may be, a person who facilitates the commission of acts of terrorism but that, in light of the sensitive nature of the information on which it was taken, they were unable to give them further details. Their solicitors requested further information. By a letter dated 12 September 2007 the Treasury provided further details about the factual basis for the decision to make the directions, to the extent that this was said to be possible given the sensitive nature of some of the material relied upon. It was said that an Al Qaida linked operative had identified A and M as East London based Al Qaida facilitators and that M and his brother K had travelled to Pakistan with the intention of delivering money to contacts there and participating in terrorist training. In the second case, G was informed by a letter dated 13 December 2006 in almost identical terms to that received by A, K and M that a direction had been made against him under article 4 of the TO. A few days later he received a letter from the Foreign and Commonwealth Office saying that the 1267 Committee of the Security Council had added him to its Consolidated List and that this meant that he was subject to a freezing of his funds, assets and economic resources. He was told that these measures were binding on all United Nations member states and had been implemented in UK law. He was told that he could petition the Committee to seek de listing. He was not told until later that his listing had been at the request of the United Kingdom. It was not until March 2007 that he was told that his listing meant that he was a designated person under the AQO. Article 3(1)(b) provides that for the purposes of that Order any person designated by the Committee is a designated person. It appears to have been assumed on his behalf that a direction was made against him under article 4(1) of the AQO. But there is no evidence that this ever happened, and it would have been unnecessary as he was a designated person for the purposes of that Order simply by reason of the fact that he had been listed. A, K, M and G issued proceedings in the Administrative Court seeking orders under article 5(4) of the TO setting aside the directions made against them in pursuance of that Order by the Treasury. G also sought an order under article 5(4) of the AQO setting aside the direction made against him under article 4(1) of that Order in so far as the court considers that such a direction has been lawfully made. The proceedings were consolidated. On 24 April 2008 Collins J held that the TO and the AQO were ultra vires and he quashed both Orders: [2008] EWHC 869 (Admin), [2008] 3 All ER 361. He gave the Treasury permission to appeal, and the orders that he made were stayed pending the hearing of an appeal. On 30 October 2008 the Court of Appeal (Sir Anthony Clarke MR and Wilson LJ, Sedley LJ dissenting in part) allowed the appeal in part. It held that the words or may be in article 4(2) of the TO were not warranted by the SCR, and that, although these words could be severed from the rest of article 4(2), as all the directions had included these words it was necessary to quash the directions. It also held that the provisions of the AQO were lawful but that a person who was designated under article 3(1) was entitled to seek judicial review of the merits of the decision. A, K, M and G were given leave to appeal by an appeal committee of the House of Lords on 3 March 2009. The third proceedings were brought by HAY, who also is resident in the United Kingdom. He is 49 years of age, is married and lives in London with his wife and four of his children. He and his wife are Egyptian nationals and have lived in the United Kingdom since 1994. His name was added to the Consolidated List by the 1267 Committee on 29 September 2005. As a result he became a designated person for the purposes of the AQO in terms of article 3(1)(b). Unlike G, the proposal that his name be added to the list was not made by the United Kingdom. It provided no information to the 1267 Committee in relation to its decision to add his name to the list. But, as it is a member of the 1267 Committee, the United Kingdom had access to all the information available to the Committee that was relied upon at the time of its decision. In December 2005 his solicitors wrote both to the Treasury and to the Foreign and Commonwealth Office requesting disclosure of the state that had proposed HAYs addition to the Consolidated List and of the information that the Committee had relied on in reaching its decision. The Foreign and Commonwealth Office made repeated requests over a long period to the nominating state and to the Committee in an attempt to satisfy these requests. As a result an Interpol Red Note relating to HAY was sent to his solicitors under cover of a letter dated 26 September 2008. It was made clear in this letter that this was not the only information provided to the Committee. But the United Kingdom did not have permission to release any other information, and the nominating state refused to allow its identity to be disclosed. HAY issued a claim for judicial review on 9 February 2009 in which he sought a merits based review of the information relied upon by the 1267 Committee. In the alternative he sought an order quashing the AQO, at least in so far as it applied to him. On 7 April 2009 he submitted an amended claim form which indicated that he was proceeding only on the basis that the AQO was ultra vires. Shortly before the hearing the Foreign Secretary completed a review of the information available to him as to whether HAY continued to meet the criteria applied by the 1267 Committee to determine whether or not a person should be on the Consolidated List. The 1267 Committee, for its part, is presently undertaking a review of the cases of all persons whose names appeared on the list as at June 2008. HAY is in the second tranche of these cases. A decision in his case is unlikely to be reached in the near future. The Foreign Secretary has made an application for HAYs name to be removed from the list, as he considers that HAYs listing is no longer appropriate: see para 82, below. Owen J granted HAYs application for judicial review and made a declaration that the AQO was unlawful in so far as it applied to HAY: [2009] EWHC 1677 (Admin). He concluded that the AQO was ultra vires the 1946 Act but he declined to make a quashing order. He held that the practical effect of the AQO was to preclude access to the court for protection of what HAY contended were his basic rights: para 45. The Treasury appealed against this decision, and by an order dated 14 July 2009 Owen J gave it permission under the leap frog provisions to appeal to the House of Lords so that its appeal could be heard together with the appeals by A, K, M and G. In response to representations made by HAYs solicitors the Treasury amended his licence conditions which enable his wife to obtain welfare benefits, with the result that she is no longer required to provide monthly reports on how the family spend their money. Otherwise, despite the Foreign Secretarys view that listing is no longer appropriate, the freezing regime remains in place. The Treasurys position is that HAY and his family must remain subject to the AQO unless and until the 1267 Committee decides to remove him from the Consolidated List. The effect of the regimes that the TO and the AQO impose is that every transaction, however small, which involves the making of any payments or the passing of funds or economic resources whatever directly or indirectly for the benefit of a designated person is criminalised. This affects all aspects of his life, including his ability to move around at will by any means of private or public transport. To enable payments to be made for basic living expenses a system of licensing has been created. It is regulated by the Treasury, whose interpretation of the sanctions regime and of the system of licensing and the conditions that it gives rise to is extremely rigorous. The overall result is very burdensome on all the members of the designated persons family. The impact on normal family life is remorseless and it can be devastating, as the cases of A and K illustrate. As already mentioned (see para 28, above), the effects on third parties have been ameliorated to some extent in the case of designations made under the 2009 Order. Some transactions are affected only if they are significant. But, taken overall, the regime that is imposed under it remains to a high degree restrictive and, so far as the designated person himself is concerned, just as paralysing. Sir Anthony Clarke MR accepted that the orders are oppressive in their nature and that they are bound to have caused difficulties for the appellants and their families: [2009] 3 WLR 25, para 25. Wilson LJ said that they imposed swingeing disabilities upon those who were designated: para 152. In R(M) v HM Treasury [2008] 2 All ER 1097 the House of Lords described the regime as applied to HAYs wife as disproportionate and oppressive and the invasion of the privacy of someone who was not a listed person as extraordinary: para 15. The appellants have all been subjected to a regime which indefinitely freezes their assets under which they are not entitled to use, receive or gain access to any form of property, funds or economic resources unless licensed to do so by the executive. For example, HAY has been denied access to any funds since September 2005. His only permitted subsistence support is in kind provided by his wife. She is permitted, by licence from the Treasury, to access welfare benefits, which are the familys sole source of support. But she may spend money only on what the Treasury determines are basic expenses. Until recently she was required to report to the Treasury on every item of household expenditure, however small, including expenditure by her children. The issues As Mr Owen QC for A, K and M said at the outset of his submissions, the fundamental issue in this case is whether the Treasury was empowered by section 1 of the 1946 Act to introduce an asset freezing regime by means of an Order in Council. He submitted that the TO was ultra vires on three grounds: (1) illegality because it was passed without Parliamentary approval, (2) lack of legal certainty and proportionality and (3) the absence of procedures that enabled designated persons to challenge their designation. For G, Mr Rabinder Singh QC submitted that the AQO was likewise ultra vires the 1946 Act, and that both the TO and the AQO were unlawful by virtue of section 6 of the Human Rights Act 1998 because they were incompatible with article 8 of the European Convention on Human Rights and with article 1 of Protocol 1. For HAY, Mr Husain submitted that the AQO was ultra vires the 1946 Act because it violated his clients right of access to a court for an effective remedy. Some of the issues raised by these submissions are common to both Orders, and others arise under only one of them. They can perhaps best be grouped as follows: Both Orders 1. Are the Orders ultra vires the 1946 Act by reference to the principle of legality? 2. Are the Orders incompatible with the Convention rights under the Human Rights Act 1998? The TO 3. If it is not ultra vires on one or other of the previous grounds, is the TO ultra vires the 1946 Act because its terms go beyond those required by the SCR? The AQO 4. Is the AQO ultra vires the 1946 Act because it violates the right of effective judicial review? Section 1 of the 1946 Act As the scope of the power conferred by section 1(1) of the 1946 Act is in issue, it is first necessary to examine its wording: see para 12 above, where its full terms are set out. It provides that if the Security Council of the United Nations calls upon the Government to give effect to any of its decisions under article 41 His Majesty may by Order in Council make such provision as appears to Him necessary or expedient for enabling those measures to be effectively applied, including (without prejudice to the generality of the preceding words) provision for the apprehension, trial and punishment of persons offending against the Order. The question is what limits, if any, there are on the power conferred by this subsection. According to its own terms, it extends to any measures mandated by the Security Council. The word any gives full weight to the obligation to accept and carry out the decisions of the Security Council that article 25 of the Charter lays down. But the provisions that may be imposed by this means in domestic law must be either necessary or expedient to enable those measures to be applied effectively. Mr Swift for the Treasury said that the words necessary and expedient were directed to the content of the Order in Council, not the legislative route by which its provisions were given the force of law. I agree, but I do not think that the legislative route that section 1 contemplated can be left out of account. The exclusion of section 1(1) of the Rules Publication Act 1893 by section 1(4) and the direction that the Order is to be forthwith after it is made laid before Parliament are important pointers to the kind of measure that was envisaged when this provision was enacted. They indicate that it was anticipated that the measures that the Security Council was likely to call for would require urgent action rendering Parliamentary scrutiny impracticable. As Mr W S Morrison said in the course of the debate at Second Reading, the procedure possessed the necessary combination of speed and authority to enable instant effect to be given to the international obligations to which we are pledged: Hansard, HC Debates, vol 421, col 1517. The section leaves the question whether any given measure is necessary or expedient to the judgment of the executive without subjecting it, or any of the terms and conditions which apply to it, to the scrutiny of Parliament. In the context of what was envisaged when the Bill was debated in 1946, which was the use of non military, diplomatic and economic sanctions as a means of deterring aggression between states, the surrender of power to the executive to ensure the taking of immediate and effective action in the international sphere is unsurprising. The use of the power as a means of imposing restraints or the taking of coercive measures targeted against individuals in domestic law is an entirely different matter. A distinction must be drawn in this respect between provisions made for the apprehension, trial and punishment of persons offending against the Order (see the concluding words of section 1(1)) and those against whom the Order is primarily directed. So long as the primary purpose of the Order is within the powers conferred by the section, ancillary measures which are carefully designed to ensure their efficacy will be also. The crucial question is whether the section confers power on the executive, without any Parliamentary scrutiny, to give effect in this country to decisions of the Security Council which are targeted against individuals. It cannot be suggested, in view of the word any, that the power is available only for use where the Security Council has called for non military, diplomatic and economic sanctions to deter aggression between states. But the phrase necessary or expedient for enabling those measures to be effectively applied does require further examination. The closer those measures come to affecting what, in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131, Lord Hoffmann described as the basic rights of the individual, the more exacting this scrutiny must become. If the rule of law is to mean anything, decisions as to what is necessary or expedient in this context cannot be left to the uncontrolled judgment of the executive. In Chester v Bateson [1920] 1 KB 829, 837, Avory J referred to Lord Shaw of Dunfermlines warning in R v Halliday [1917] AC 260, 287 against the risk of arbitrary government if the judiciary were to approach actions of government in excess of its mandate in a spirit of compliance rather than that of independent scrutiny. The undoubted fact that section 1 of the 1946 Act was designed to enable the United Kingdom to fulfil its obligations under the Charter to implement Security Council resolutions does not diminish this essential principle. As Lord Brown says in para 194, the full honouring of these obligations is an imperative. But these resolutions are the product of a body of which the executive is a member as the United Kingdoms representative. Conferring an unlimited discretion on the executive as to how those resolutions, which it has a hand in making, are to be implemented seems to me to be wholly unacceptable. It conflicts with the basic rules that lie at the heart of our democracy. If authority were needed for these propositions it is to be found in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539. At p 573 Lord Browne Wilkinson said: I consider first whether there is any principle of construction which requires the court, in certain cases, to construe general words contained in the statute as being impliedly limited. In my judgment there is such a principle. It is well established that Parliament does not legislate in a vacuum: statutes are drafted on the basis that the ordinary rules and principles of the common law will apply to the express statutory provisions. At p 575, having examined the authorities, he said: From these authorities I think the following proposition is established. A power conferred by Parliament in general terms is not to be taken to authorise the doing of acts by the donee of the power which adversely affect the legal rights of the citizen or the basic principles on which the law of the United Kingdom is based unless the statute conferring the power makes it clear that such was the intention of Parliament. I would approach the language of section 1 of the 1946 Act, therefore, on the basis that Parliament did not surrender its legislative powers to the executive any more than must necessarily follow from the words used by it. The words necessary and expedient both call for the exercise of judgment. But this does not mean that its exercise is unlimited. The wording of the Order must be tested precisely against the words used by the Security Councils resolution and in the light of the obligation to give effect to it that article 25 lays down. A provision in the Order which affects the basic rights of the individual but was unavoidable if effect was to be given to the resolution according to its terms may be taken to have been authorised because it was necessary. A provision may be included which is expedient but not necessary. This enables provisions to be included in the Order which differ from those used by the resolution or are unavoidably required by it. But it does not permit interference with the basic rights of the individual any more that is necessary and unavoidable to give effect to the SCR and is consistent with the principle of legality. The points that I have just made may be taken from the wording of section 1 itself. But underlying them is a more fundamental point, which is whether measures of the kind which are before us in this case should have been made by Order in Council at all. Concern about excessive use of the power that section 1 of the 1946 Act confers is not new. In February 1999 the House of Commons Foreign Affairs Committee drew attention to the way a resolution of the Security Council about the imposition of sanctions against Sierra Leone had been implemented by an Order in Council made under section 1 of the 1946 Act. The SCR did not define Sierra Leone, leaving the extent of its application ambiguous. The Order in Council defined it in terms which removed any ambiguity but arguably went beyond the scope of the SCR. This was thought by the Committee to create a significant pitfall for anyone inside or outside the Foreign and Commonwealth Office who had read the SCR but not the Order in Council. In its report the Committee said that the way in which the Order in Council was dealt with was unacceptable as it was subject to no parliamentary procedure. Had it been necessary for a Minister to appear before a Standing Committee on Delegated Legislation or to defend the Order on the floor of the House of Lords, it was likely that wider attention would have been given to its true meaning and extent. It recommended that the 1946 Act be amended so that delegated legislation made under section 1 was subject to affirmative resolution in both Houses of Parliament and that any sanctions order approved by a Minister of the Foreign and Commonwealth Office be brought specifically to the attention of the Foreign Affairs Committee: Second Report of the Foreign Affairs Select Committee on Sierra Leone, Session 1998 1999, HC 116 I, 9 February 1999. In its response (Cm 4325, 1999) the Government said that it was willing to keep the working of the 1946 Act under review, but that application of the affirmative procedure to sanctions orders would put the United Kingdom in breach of its international obligations if an Order was not approved. The recommendation that such Orders be brought to the attention of the Committee has not been adopted, nor has section 1 of the 1946 Act been amended. The Governments reason for declining to follow the Select Committees recommendations may have appeared sufficient at the time of its response. But the case for avoiding scrutiny in the interests of certainty has been weakened by the change of direction that the Security Council has adopted for the freezing of assets to suppress terrorism. Other member states have not found it necessary in this context to rely exclusively on an unlimited delegation of the power to give effect to Security Council resolutions to the executive. Australia gave effect to the post 9/11 SCRs initially by means of regulations passed under the Charter of the United Nations Act 1945. But it then made provision for an asset freezing regime by the Suppression of the Financing of Terrorism Act 2002 which inserted a new Part IV into the 1945 Act. New Zealand initially implemented SCR 1373(2001) by means of regulations made under its United Nations Act 1946, but has replaced them by an asset regime under the Terrorism Suppression Act 2002. The regimes that both Australia and New Zealand have introduced by means of primary legislation are exacting. But they contain various, albeit limited, safeguards and in so far as they interfere with basic rights of the individual that interference has been expressly authorised by their respective legislatures. As I have already noted (see para 23, above), the United Kingdom Parliament had already enacted the Terrorism Act 2000 for the creation of a criminal regime dealing with the funding of terrorism before the events of 9/11. In response to those events, at a time when the general perception was that further terrorist attacks of that kind were likely to occur, the Anti terrorism, Crime and Security Act 2001 was enacted. It received the Royal Assent on 14 December 2001. The focus of attention now was on threats to the United Kingdom and its residents from foreign states and foreign nationals. No mention was made of the Security Councils resolutions in the long title. But Part 2 of the Act, which makes provision for the making of freezing orders, appears to have been modelled on the initiatives that it had already taken both by the Security Council and, under section 1 of the 1946 Act, by the Treasury by means of the Terrorism (United Nations Measures) Order 2001 (see para 24, above). Section 4 of the 2001 Act provides: (1) The Treasury may make a freezing order if the following two conditions are satisfied. (2) The first condition is that the Treasury reasonably believe that (a) action to the detriment of the United Kingdoms economy (or part of it) has been or is likely to be taken by a person or persons, or (b) action constituting a threat to the life or property of one or more nationals of the United Kingdom or residents of the United Kingdom has been or is likely to be taken by a person or persons. (3) If one person is believed to have taken or to be likely to take the action the second condition is that the person is (a) the government of a country or territory outside the United Kingdom, or (b) a resident of a country or territory outside the United Kingdom. (4) If two or more persons are believed to have taken or to be likely to take the action the second condition is that each of them falls within paragraph (a) or (b) of subsection (3); and different persons may fall within different paragraphs. Where the conditions that section 4 sets out are satisfied, the prohibitions contained in the freezing order extend to all persons in the United Kingdom and all persons elsewhere who are United Kingdom nationals: section 5(2). It prohibits persons from making funds available to or for the benefit of a person or persons specified in the order. Section 5(3) provides: The order may specify the following (and only the following) as the person or persons to whom or for whose benefit funds are not to be made available (a) the person or persons reasonably believed by the Treasury to have taken or to be likely to take the action referred to in section 4; (b) any person the Treasury reasonably believe has provided or is likely to provide assistance (directly or indirectly) to that person or any of those persons. Detailed provision is made in Schedule 3 for the content of freezing orders, including a system for the granting of licences authorising funds to be made available. Orders made under the Act are subject to the affirmative resolution procedure (section 10), and they cease to have effect after two years (section 8). To a large degree, the power to make freezing orders under this Act enables the Treasury to do what paras 1(d) and 2(d) of SCR 1373(2001) require (see para 21 above). But it is more precisely worded, and it contains various safeguards. Although the test in section 4(2)(b) is that action which is a threat to the life or property of one or more nationals or residents of the United Kingdom has been or is likely to be taken, it is by no means obvious that the power that it confers was not available for use in the appellants cases. In their letter dated 12 September 2007 to A, K and Ms solicitors, in which further details were given about the factual basis for the decision to make the directions in their cases, the Treasury referred to various contacts between those appellants and persons in Pakistan who were engaged in terrorist activities. The persons with whom they are said to have been in contact would appear to satisfy the conditions in subsection (2)(b) of section 4, and they would appear to be persons of the kind referred to in section 5(3)(b). Yet the Treasury have, it seems, chosen not to make use of the powers given to them by this Act, preferring to use the general power under section 1 of the 1946 Act. Mr Swift said that this was a matter for political control. By this I think he meant it was no business of the court to interfere. For the reasons already given in para 45, above, I disagree. In my opinion the rule of law requires that the actions of the Treasury in this context be subjected to judicial scrutiny. Against that background I now turn to the issues that have been raised about the validity of the TO and the AQO, and the directions that have been made under them, in these appeals. The TO The Treasurys initial response to SCR 1373(2001) was to make the Terrorism (United Nations Measures) Order 2001. The key provision in this Order is to be found in article 3: see para 24, above. For convenience I will set it out again here. It was in these terms: Any person who, except under the authority of a licence granted by the Treasury under this article, makes any funds or financial (or related) services available directly or indirectly to or for the benefit of (a) a person who commits, attempts to commit, facilitates or participates in the commission of acts of terrorism, (b) a person controlled or owned directly or indirectly by a person in (a), (c) a person acting on behalf, or at the direction, of a person in (a), is guilty of an offence under this Order. The wording of this article was closely modelled on that of para 1(d) of the SCR. Article 4, which was headed Freezing of Funds and was modelled on para 1(c) of the SCR, provided that where the Treasury had reasonable grounds for suspecting that the person by, for or on behalf of whom any funds were held was or might be a person described in article 3, it might by notice direct that those funds were not to be made available to any person, except under the authority of a licence granted by the Treasury under that article. The TO, which was made in 2006 and replaced the 2001 Order, introduced the system, to which objection is taken in this case, for persons to be designated if they are identified in a direction given by the Treasury. The power to designate is set out in Article 4: see para 25, above. It provides in para (2)(a) that the Treasury may give a direction if they have reasonable grounds for suspecting that the person is or may be a person who commits, attempts to commit, participates in or facilitates the commission of acts of terrorism. The question is whether, by introducing the words have reasonable grounds for suspecting that the person is or may be, the Treasury exceeded their powers under section 1 of the 1946 Act. The Court of Appeal held that the introduction of the reasonable grounds for suspecting test was within the ambit of that section, provided that the persons right to challenge the direction was preserved: but that there was no warrant in the SCR for the addition of the words or may be and that, as the directions under the TO were made by reference to those words, they should be quashed: [2009] 3 WLR 25, paras 46, 124 and 135. There is no appeal against its decision as to the inclusion of or may be, and the Treasury have made fresh directions against A, K, M and G which do not include these words. The validity of the reasonable grounds for suspecting test remains in issue. SCR 1373(2001) is not phrased in terms of reasonable suspicion. It refers instead to persons who commit, or attempt to commit, terrorist acts. The preamble refers to acts of terrorism. The standard of proof is not addressed. The question how persons falling within the ambit of the decision are to be identified is left to the member states. Transposition of the direction into domestic law under section 1 of the 1946 Act raises questions of judgment as to what is necessary on the one hand and what is expedient on the other. It was not necessary to introduce the reasonable suspicion test in order to reproduce what the SCR requires. It may well have been expedient to do so, to ease the process of identifying those who should be restricted in their access to funds or economic resources. But widening the scope of the Order in this way was not just a drafting exercise. It was bound to have a very real impact on the people that were exposed to the restrictions as a result of it. The facts of these cases show how devastating their imposition can be on the restricted persons and their families. This raises fundamental questions, such as the standard of proof that should be required, whether the directions should be capable of being challenged by an effective form of judicial review and whether they should last indefinitely or be time limited. The validity of the introduction of the reasonable grounds test must be assessed in the light of the entire system that the TO provides for. Is it acceptable that the exercise of judgment in matters of this kind should be left exclusively, without any form of Parliamentary scrutiny, to the executive? Mr Swift submitted that the reasonable grounds test was within the scope of the SCR. He accepted that the less direct the link to the wording of the SCR, the greater the scope for argument about the Orders legality. But he submitted that the test was needed to enable restrictions directed by the Security Council to work effectively and that it was soundly based on international practice. Mr Guthrie, the Head of HM Treasurys Asset Freezing Unit, said in his witness statement that this is the standard that is applied by the United Nations International Task Force. It had overall support among states. The SCR contemplated interference with the economic and other rights of those affected by it. The objection that the designated person had no access to an effective judicial remedy had been met by Part 6 of the Counter Terrorism Act 2008, which introduced a scheme for subjecting financial restrictions decisions of the Treasury under the UN Terrorism Orders and orders made under Part 2 of the 2001 Act to proceedings for judicial review. I do not think that these arguments are sufficient to meet the basic objection to the use of the powers of section 1 of the 1946 to impose the restrictions provided for by the TO on the grounds of a reasonable suspicion only. I can leave aside the use of unsupervised delegated powers to block access to the courts which Sedley LJ in the Court of Appeal, I think rightly, regarded as a fatal flaw in the Order: para 147. It was common ground that, given the intensity of judicial review that would be appropriate under Part 6 of the 2008 Act, this objection has been met by the fact that decisions of the Treasury under the UN terrorism orders are subject to its provisions: see section 63(1)(a) of the 2008 Act. There remains however the objection that the restrictions strike at the very heart of the individuals basic right to live his own life as he chooses. Collins J, in his impressive judgment, described the range of powers that it conferred on the Treasury as draconian, and the AQO as even more so: [2008] 3 All ER 361, para 11. It is no exaggeration to say, as Sedley LJ did in para 125, that designated persons are effectively prisoners of the state. I repeat: their freedom of movement is severely restricted without access to funds or other economic resources, and the effect on both them and their families can be devastating. I would hold that, by introducing the reasonable suspicion test as a means of giving effect to SCR 1373(2001), the Treasury exceeded their powers under section 1(1) of the 1946 Act. This is a clear example of an attempt to adversely affect the basic rights of the citizen without the clear authority of Parliament a process which Lord Browne Wilkinson condemned in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539. As Lord Hoffmann said in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131, fundamental rights cannot be overridden by general or ambiguous words. The absence of any indication that Parliament had the imposition of restrictions on the freedom of individuals in mind when the provisions of the 1946 Act were being debated makes it impossible to say that it squarely confronted those effects and was willing to accept the political cost when that measure was enacted. In my opinion the TO is ultra vires section 1(1) of the 1946 Act and, subject to what I say about the date when these orders should take effect, it together with the directions that have been made under it in the cases of A, K, M and G must be quashed. Various subsidiary arguments were advanced to the effect that the TO was ultra vires because in certain material respects it lacked legal certainty. As I consider that it is open to attack on more fundamental grounds, however, I prefer to express no opinion as to whether any of these criticisms of its terms were well founded and, if so, what would be the consequences. The AQO Mr Singh QC submits for the appellant G that the AQO is ultra vires section 1 of the 1946 and that it is also unlawful by virtue of section 6(1) of the Human Rights Act 1998. He adopted Mr Owens submissions as part of his argument on the first point. Mr Husain for HAY, who has the benefit of a decision in his favour by Owen J in the administrative court, submitted that the AQO was ultra vires because it violated his right of access to a court as he was unable to obtain an effective remedy. G, it will be recalled (see para 33, above), was listed by the 1267 Committee at the request of the United Kingdom. HAYs name, on the other hand, was added to the list at the request of another state in September 2005 (see para 35). His listing is regarded by the United Kingdom as no longer appropriate. But its efforts so far to obtain the de listing of HAYs name have proved to be unsuccessful. Unlike the TO, the AQO does not rely for its application, at least in the first instance, on a reasonable grounds to suspect test. To this extent it does, as Lord Brown says in para 197, faithfully implement the relevant SCRs. The persons who are designated persons for its purposes are (a) Usama bin Laden, (b) any person designated by the Sanctions Committee and (c) any person identified in a direction: article 3. A reasonable grounds to suspect test is introduced by article 4, which provides that the Treasury may give a direction that a person is designated for the purposes of the Order if they have reasonable grounds for suspecting that the person is or may be Usama bin Laden or a person designated by the Sanctions Committee or a person owned or controlled by a designated person or acting on his behalf. Mr Swift explained that the latitude that had been built into article 4 was explicable, at least in part, by problems caused by the widespread use of assumed names by those who were engaged in terrorist activities. It is not necessary to explore the consequences of its use in the context of the AQO any further in this case, however. Both G and HAY are designated persons because their names are on the list maintained by the 1267 Committee. As they have not been subjected to freezing orders on the basis of a reasonable suspicion, the grounds on which I would hold that the TO was ultra vires do not apply to their designation under the AQO. The question which is common to both G and HAY is whether the AQO is ultra vires section 1 of the 1946 Act because there is no effective judicial remedy against a listing by the 1267 Committee. But I must deal first with Mr Singhs argument that the AQO is unlawful under section 6(1) of the Human Rights Act 1998 which, as he explained, he advanced as an alternative to his main submission that the AQO was ultra vires section 1 of the 1946 Act. Mr Singhs case under section 6(1) of the Human Rights Act is that the AQO is unlawful because it interferes with Gs rights protected by articles 6 and 8 of the European Convention on Human Rights and article 1 of Protocol 1. He submits that Gs rights under article 8 and article 1 of Protocol 1 are obviously interfered with, and that his rights under article 6 are interfered with too as his designation under the AQO interfered with his civil rights but did not give him a meaningful right of access to a court which was capable of granting him an effective remedy. He frankly acknowledged that the decision of the House of Lords in R (Al Jedda) v Secretary of State for Defence [2008] AC 332 was against him on this branch of his argument. But he invited this court to reconsider that decision, especially in the light of the decision of the European Court of Justice in Kadi v Council of the European Union (Joined Cases C 402/05P and C 415/05P) [2009] AC 1225. In Kadi v Council of the European Union the ECJ was asked to consider Council Regulation (EC) No 881/2002 implementing UN resolutions under Chapter VII of the Charter of the United Nations for the freezing of the funds and economic resources controlled directly or indirectly by persons associated with Osama bin Laden, Al Qaeda (sic) or the Taliban. It ordered the freezing of the funds and other economic resources of the person and entities whose names appeared on a list annexed to that regulation. Mr Kadi was one of those named on that list, as his name was on the list kept by the Sanctions Committee of the United Nations. He sought annulment of the regulation on the grounds that it was not competent for the Council to adopt it and that it infringed several of his fundamental rights, including his right to property and his right to be heard and to an effective judicial review. The case is important and deserves close attention because of the way the ECJ dealt with the argument about the protection of fundamental rights. Advocate General Maduro observed in para 51 of his opinion that the Community institutions had not afforded any opportunity to Mr Kadi to make known his views on whether the sanctions against him were justified and whether they should be kept in force: The existence of a de listing procedure at the level of the United Nations offers no consolation in that regard. That procedure allows petitioners to submit a request to the Sanctions Committee or to their government for removal from the list. Yet, the processing of that request is purely a matter of intergovernmental consultation. There is no obligation on the Sanctions Committee actually to take the views of the petitioner into account. Moreover, the de listing procedure does not provide even minimal access to the information on which the decision was based to include the petitioner in the list. In para 52 he said that the right to effective judicial protection holds a prominent place in the firmament of fundamental rights. In paras 54 and 55 he said that had there been a genuine and effective mechanism of judicial control by an independent tribunal at the level of the United Nations this might have released the Community from the obligation to provide this within the Community legal order but that, as this was not so, Mr Kadis claim that the regulation infringed his rights was well founded. In its judgment the ECJ endorsed this approach. In paras 281 283 it said that the Community was based on the rule of law, inasmuch as neither its member states nor its institutions could avoid review of conformity of their acts with the EC treaty, that an international agreement could not affect the autonomy of the Community legal system and that according to settled case law fundamental rights formed an integral part of the general principles of law whose observance the Court ensured. In para 285 it said: It follows from all those considerations that the obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the EC Treaty, which include the principle that all Community acts must respect fundamental rights, that respect constituting a condition of their lawfulness which it is for the Court to review in the framework of the complete system of legal remedies established by the Treaty. The court went on to say that it did not follow from the principles governing the international legal order under the United Nations that any judicial review of the internal lawfulness of the contested regulation in the light of fundamental freedoms was excluded by virtue of the fact that that measure is intended to give effect to a resolution of the Security Council adopted under Chapter VII of the Charter of the United Nations: para 287. The existence within the United Nations of the re examination procedure could not give rise to generalised immunity from jurisdiction within the internal legal order of the Community, and the Community judicature must ensure the full review of all Community acts including measures designed to give effect to resolutions adopted by the Security Council under Chapter VII: paras 299 and 326. In his paper, Terrorism and the ECJ: Empowerment and democracy in the EC legal order (2009) 34 EL Rev 103, 126 Professor Takis Tridimas said that the ECJs commitment to the protection of fundamental rights was to be applauded, but that as regards the exercise of finding a balance between the overriding interests of public security and the rights of the individual it marked the beginning rather than the end of the inquiry. The ECJ is not alone in regarding the way the decisions under the listing system administered by the 1267 Committee are dealt with as incompatible with the fundamental right that there should be an opportunity for a review by an independent tribunal of their lawfulness. In Abdelrazik v The Minister of Foreign Affairs [2009] FC 580 Zinn J sitting in the Federal Court of Canada said in para 51: I add my name to those who view the 1267 Committee regime as a denial of basic legal remedies and as untenable under the principles of international human rights. There is nothing in the listing or de listing procedure that recognises the principles of natural justice or that provides for basic procedural fairness. It can hardly be said that the 1267 Committee process meets the requirement of independence and impartiality when, as appears may be the case involving Mr Abdelrazik, the nation requesting the listing is one of the members of the body that decides whether to list or, equally as important, to de list a person. The accuser is also the judge. He found that Mr Abdelraziks right under the Canadian Charter of Rights and Freedoms to enter Canada, his country of citizenship, which had been denied to him because he was listed and facilitating his return by purchasing an airline ticket on his behalf was precluded by the ban on transferring assets to a listed entity, had been breached. He held that the remedy to which Mr Abdelrazik was entitled required the Canadian government to take immediate action so that he be returned to Canada. In KindHearts for Charitable Humanitarian Development Inc v Timothy Geithner, Case 3.08c v 02400, 18 August 2009, the United States District Court for the Northern District of Ohio upheld a challenge to a provisional determination under President Bushs Executive Order no. 13224 of 24 September 2001 by the Office of Foreign Assets Control of the US Treasury Department that KindHearts was a specially designated global terrorist on the ground that blocking access to its assets pending investigation was contrary to its Fourth Amendment right to be secure against unreasonable search and seizure. The judge held that the Offices handling of KindHearts request for access to blocked assets to pay counsels fees had been arbitrary and capricious without individualised consideration of the facts of the case. It is worth noting that the Presidents EO was issued before the Security Council adopted SCR 1373(2001). This appears to be the first time that a challenge to the taking of action of that kind has been successful in the United States. Caution must however be exercised in drawing any firm conclusions from these cases. The decisions of the courts in Canada and the United States were not made under reference to an international human rights instrument such as the European Convention. It should be noted too that in Diggs v Shultz, 470 F.2d 461 (DC Cir 1972) the US Federal Court of Appeals held that it lacked the authority to compel the President to comply with a UNSCR obligation regarding sanctions against Rhodesia, as subsequent legislation by Congress which plainly contravened the SCR had equal status to the obligation under the treaty: see also Whitney v Robertson 124 US 190 (1888). The ECJ was not faced in Kadi v Council of the European Union with the problem that article 103 of the UN Charter gives rise to in member states in international law, as the institutions of the European Community are not party to the UN Charter. We must take our guidance from R (Al Jedda) v Secretary of State for Defence [2008] AC 332. In that case the House was unanimous in holding that the obligation under article 25 of the Charter was, by virtue of article 103, to prevail over any other international agreement, including the Convention. It had regard to a passage in Behrami v France; Saramati v France, Germany and Norway (2007) 45 EHRR SE 85, para 149, which in para 36 of his opinion in Al Jedda Lord Bingham of Cornhill said was a strong statement. In that paragraph the Strasbourg court said that the Convention cannot be interpreted in a manner which would subject the acts and omissions of contracting parties which are covered by UNSCRs to the scrutiny of the court, as to do so would be to interfere with the fulfilment of the UNs key mission to secure international peace and security. Lord Bingham gave this explanation for the conclusion that the House had reached in Al Jeddas case: 35. Emphasis has often been laid on the special character of the European Convention as a human rights instrument. But the reference in article 103 to any other international agreement leaves no room for any excepted category, and such appears to be the consensus of learned opinion. The decisions of the International Court of Justice (Questions of Interpretation and Application of the 1971 Montreal Convention Arising from the Aerial Incident at Lockerbie (Libyan Arab Jamahiriya v United Kingdom) [1992] ICJ Rep 3, para 39; and Application of the Convention on the Prevention and Punishment of the Crime of Genocide [1992] IJC Rep 325, 439 440, paras 99 100 per Judge ad hoc Lauterpacht) give no warrant for drawing any distinction save where an obligation is jus cogens and according to Judge Bernhardt it now seems to be generally recognised that binding Security Council decisions taken under Chapter VII supersede all other treaty commitments (The Charter of the United Nations: A Commentary 2nd ed, ed Simma, pp 1299 1300). 36. I do not think that the European court, if the appellants article 5(1) claim were before it as an application, would ignore the significance of article 103 of the Charter in international law. In para 39, acknowledging that there was clash between a power or duty to detain exercisable on the express authority of the Security Council and a fundamental human right which the United Kingdom had undertaken to secure to those within its jurisdiction, he said that there was only one way that they could be reconciled. This was by ruling that the United Kingdom might exercise the power of detention authorised by the Security Council but must ensure that the detainees rights under article 5 were not infringed to any greater extent than was inherent in such detention. The Security Council resolutions that were in issue in that case were made pursuant to article 42 of the Charter not, as in this case, under article 41. But Mr Singh did not suggest, in my view rightly, that it could be distinguished on that ground. What he did suggest was that the Grand Chamber of the European Court of Human Rights, before which the Al Jedda case is to be heard, might reach a different view on this matter, especially in the light of the decision of the ECJ in Kadi v Council of the European Union. He pointed out that, as the prohibition on the death penalty, unlike that against torture, was not ius cogens, the logical conclusion of the Al Jedda approach was that a direction by the Security Council that those found guilty of terrorist acts must be sentenced to death would have to prevail over article 2 of the Convention and article 1 of Protocol 13 (the Death Penalty Protocol). It was arguable that this was to drive the effect of article 103 too far: see Soering v United Kingdom (1989) 11 EHRR 439. The same could be said of the breaches of Convention rights that resulted from the SCRs directing the kind of freezing regime that the AQO was designed to give effect to, especially in view of their indefinite effect and the lack of effective access to an independent tribunal for the determination of challenges to decisions about listing and de listing. I do not think that it is open to this court to predict how the reasoning of the House of Lords in Al Jedda would be viewed in Strasbourg. For the time being we must proceed on the basis that article 103 leaves no room for any exception, and that the Convention rights fall into the category of obligations under an international agreement over which obligations under the Charter must prevail. The fact that the rights that G seeks to invoke in this case are now part of domestic law does not affect that conclusion. As Lord Bingham memorably pointed out in R (Ullah) v Special Adjudicator [2004] 2 AC 323, para 20, the Convention is an international instrument, the correct interpretation of which can be authoritatively expounded only by the Strasbourg court. It must be for the Strasbourg court to provide the authoritative guidance that is needed so that all the contracting states can adopt a uniform position about the extent to which, if at all, the Convention rights or any of them can be held to prevail over their obligations under the UN Charter. But this leaves open for consideration how the position may be regarded under domestic law. Mr Singh submitted that the obligation under article 25 of the Charter to give effect to the SCRs directing the measures to be taken against Usama bin Laden, Al Qaida and the Taliban had to respect the basic premises of our own legal order. Two fundamental rights were in issue in Gs case, and as they were to be found in domestic law his right to invoke them was not affected by article 103 of the UN Charter. One was the right to peaceful enjoyment of his property, which could only be interfered with by clear legislative words: Entick v Carrington (1765) 19 Howell's State Trials 1029, 1066, per Lord Camden CJ. The other was his right of unimpeded access to a court: R (Anufrijeva) v Secretary of State for the Home Department [2004] 1 AC 604, para 26, per Lord Steyn. As it was put by Viscount Simonds in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1960] AC 260, 286, the subjects right of access to Her Majestys courts for the determination of his rights is not to be excluded except by clear words. As Mr Singh pointed out, both of these rights are embraced by the principle of legality, which lies at the heart of the relationship between Parliament and the citizen. Fundamental rights may not be overridden by general words. This can only be done by express language or by necessary implication. So it was not open to the Treasury to use its powers under the general wording of section 1(1) of the 1946 Act to subject individuals to a regime which had these effects. I would accept Mr Singhs proposition that, as fundamental rights may not be overridden by general words, section 1 of the 1946 Act does not give authority for overriding the fundamental rights of the individual. It does not do so either expressly or by necessary implication. The question is whether the effect of Gs designation under the AQO has that effect. To some extent this must be a question of degree. Some interference with the right to peaceful enjoyment of ones property may have been foreseen by the framers of section 1, as it authorises the making of provision for the apprehension, trial and punishment of persons offending against the Order. To that extent coercive steps to enable the measures to be applied effectively can be regarded as within its scope. But there must come a point when the intrusion upon the right to enjoyment of ones property is so great, so overwhelming and so timeless that the absence of any effective means of challenging it means that this can only be brought about under the express authority of Parliament. Has that point been reached in the case of those who are designated persons under the AQO? The opportunity to seek judicial review under Part 6 of the 2008 Act is not available in the case of persons such as G who are subject to the AQO only because they have been listed by the 1267 Committee. No direction under article 4(1) of the AQO was made in his case. Even if such a direction had been made he would still be a designated person to whom the AQO applied as he has been designated by the Committee: see article 3(1)(b). In the Court of Appeal Sir Anthony Clarke MR summarised the position in which G found himself in this way [2009] 3 WLR 25, para 108: It is common ground that G is subject to the AQO only because he has been listed by the UN Sanctions Committee (the committee). He has never had any contact with the committee, has no idea who precisely made the decision or upon what evidence it was based, although he does now know that it was the UK Government which requested that he be listed. It presumably had some evidential basis for its request. Indeed, it was presumably on the same basis as that relied upon by HMT in making a direction for his designation under the TO and was thus said to be so sensitive that G could not be given details. As to the committee, Mr Singh stresses that there is no information in the public domain that throws any light on who its members are, what degree of independence they enjoy, what evidential test they apply and what, if any, safeguards are in place to protect the rights of the individuals affected. Some further details can be obtained from the Guidelines of the Security Council Committee established pursuant to Resolution 1267(1999) Concerning Al Qaida and the Taliban and Associated Individuals and Entities of 9 December 2008. They state that the committee is comprised of all the members of the Security Council from time to time, that decisions of the committee are taken by consensus of its members and that a criminal charge or conviction is not necessary for a persons inclusion in the consolidated list that the committee maintains, as the sanctions are intended to be preventative in nature. It would appear that listing may be made on the basis of a reasonable suspicion only. It is also clear that, as the committee works by consensus, the effect of the guidelines is that the United Kingdom is not able unilaterally to procure listing, but it is not able unilaterally to procure de listing either under the Focal Point procedure established under SCR 1730(2006). Although the Security Council has implemented a number of procedural reforms in recent years and has sought improvement in the quality of information provided to the 1267 Committee for the making of listing decisions, the Treasury accepted in its response of 6 October 2009 (Cm 7718) to the House of Lords European Union Committees Report into Money Laundering and the Financing of Terrorism (19th Report, Session 2008 2009, HL Paper 132) that there is scope to further improve the transparency of decisions made by the 1267 Committee and the effectiveness of the de listing process. On 17 December 2009 the Security Council adopted SCR 1904(2009) which provides in paras 20 and 21 that, when considering de listing requests, the Committee shall be assisted by an Ombudsperson appointed by the Secretary General, being an eminent individual of integrity, impartiality and experience, and that the Office of the Ombudsman is to deal with requests for de listing from individuals and entities in accordance with procedures outlined in an annex to the resolution. While these improvements are to be welcomed, the fact remains that there was not when the designations were made, and still is not, any effective judicial remedy. Mr Swift accepted that the principle of legality requires that the power to impose restrictions such as those that flow from designation under the AQO should be subject to judicial review. But he said that it was vital to identify the decision that had to be scrutinised. In Gs case the proper focus was on article 3(1)(b) of the AQO. Its effect was that all those designated by the 1267 Committee were subject to the Order. The reasons why the person had been so designated were not relevant in domestic law. He added that the United Kingdom would be setting a bad example if it were to default on its obligation to give effect to the resolutions that had this effect. It was not open to Member States to go behind the system that had been set up to meet the global challenge that was presented by terrorism. While I recognise the force of Mr Swifts argument, it seems to me that it does not meet the essence of Mr Singhs complaint. Nor does the fact that the AQO does what SCR 1267 and subsequent resolutions required of it. In part Mr Singhs complaint was about the inability of the 1267 Committees procedures to provide an effective remedy. But it was also about the means that had been used in domestic law to subject G to the AQOs regime. As Zinn J said in Abdelrazik v The Minister of Foreign Affairs [2009] FC 580, para 51, there is nothing in the listing or de listing procedure that recognises the principles of natural justice or that provides for basic procedural fairness. Some steps have been taken to address this problem, but there is still much force in these criticisms. The essential point that Mr Singh makes is that G ought not to have been subjected to this by an Order made under section 1 of the 1946 Act which avoids Parliamentary scrutiny. This is a fundamental objection which, as in the case of the TO, is directed to the dangers that lie in the uncontrolled power of the executive. I would hold that G is entitled to succeed on the point that the regime to which he has been subjected has deprived him of access to an effective remedy. As Mr Swift indicates, seeking a judicial review of the Treasurys decision to treat him as a designated person will get him nowhere. G answers to that description because he has been designated by the 1267 Committee. What he needs if he is to be afforded an effective remedy is a means of subjecting that listing to judicial review. This is something that, under the system that the 1267 Committee currently operates, is denied to him. I would hold that article 3(1)(b) of the AQO, which has this effect, is ultra vires section 1 of the 1946 Act. It is not necessary to consider for the purposes of this case whether the AQO as a whole is ultra vires except to say that I am not to be taken as indicating that article 4 of that Order, had it been applicable in Gs case, would have survived scrutiny. I would treat HAYs case in the same way. He too is a designated person by reason of the fact that his name is on the 1267 Committees list. As has already been observed, the United Kingdom is now seeking that his name should be removed from it. By letter dated 1 October 2009 the Treasurys Sanctions Team informed his solicitors that the de listing request was submitted on 26 June 2009 but that at the committees first consideration of it a number of States were not in a position to accede to the request. Further efforts to obtain de listing are continuing, but this has still not been achieved. So he remains subject to the AQO. In this situation he too is being denied an effective remedy. Conclusion I would allow the appeals by A, K, M and G. I would declare that the TO is ultra vires and I would quash that Order. I would allow Gs appeal as regards the AQO to the extent of declaring that article 3(1)(b) of that Order is ultra vires. Had the Terrorism (United Nations Measures) Order 2009 under which A, K, M and G have now been re designated been before us, I would have quashed that Order too as it is open to objection on the same grounds. I would allow the Treasurys appeal in HAYs case to the extent of setting aside the declaration by Owen J that the AQO as a whole is ultra vires and substituting for it the order that I would make in Gs case. I would however suspend the operation of the orders that I would make as regards the AQO for a period of one month from the date of the judgment to give the Treasury time to consider what steps, if any, they should now take. I would have suspended the operation of the orders in the appeals of A, K, M and G as regards the TO had it not been for the fact that they have all been re designated under the 2009 Order. The designations made under that order are not before the court in these proceedings. It will be for the administrative court to consider whether the Treasury need time to consider their position should an application be made to it for these fresh designations to be set aside. It is perhaps arguable that suspension of the order relating to the AQO is not needed in HAYs case in view of the steps that are currently being taken for him to be de listed by the 1267 Committee. But so long as he remains on the list the United Kingdom is bound by article 25 of the Charter to treat him as a designated person and must take steps to subject him to a freezing order in this country. So I think that suspension of the order is needed in his case to enable the Treasury, if so minded, to take the steps to give effect to this obligation pending the proceedings for HAYs de listing. LORD PHILLIPS It is particularly appropriate that these should be the first appeals to be heard in the Supreme Court of the United Kingdom, for they concern the separation of powers. At issue is the extent to which Parliament has, by the United Nations Act 1946 (the 1946 Act), delegated to the executive the power to legislate. Resolution of this issue depends upon the approach properly to be adopted by the court in interpreting legislation which may affect fundamental rights at common law or under the European Convention on Human Rights (the Convention). I am grateful to Lord Hope for the clarity with which he has performed the laborious task of describing the legislative background and history of these appeals. Although we have held that anonymity cannot be justified in this case it is convenient to continue to refer to the individuals who have been subjected to freezing orders by initials and I shall follow the example of Lord Hope in referring to them all collectively as the appellants. I shall also adopt his references to the different forms of freezing order by the initials TO and AQO. The appellants claim, for a variety of reasons, that the freezing orders made against them were ultra vires, that is, beyond the power conferred by section 1 of the 1946 Act, which is set out by Lord Hope at paragraph 12. That section confers power on, in effect, the Government, by Order in Council to make such provision as appears necessary or expedient for enabling measures to be effectively applied. The measures in question are those that the Security Council has, pursuant to article 41 of the Charter, decided should be employed to give effect to its decisions and called upon Members to apply. The Security Council embodies such decisions in Resolutions. There are three different bases for contending that the freezing orders are ultra vires: i) The freezing orders violate rights protected by the European Convention on Human Rights (the Convention). ii) The relevant Security Council Resolutions do not fall within the scope of the 1946 Act. iii) The terms of the freezing orders do not fall within the powers of the 1946 Act. Convention Rights The appellants did not put reliance on Convention rights at the forefront of their case, but I propose to start with this ground of appeal. Section 1 of the 1946 Act was passed in order to provide a way of giving effect to this countrys treaty obligations under the United Nations Charter. Executive action in the form of an Order in Council can be used to implement decisions of the Security Council under article 41 of the Charter. The Human Rights Act 1998 (the HRA) was passed to give effect to this countrys obligations under the Convention. Section 6(1) of the HRA prohibits the executive from action that infringes a Convention right. It provides: It is unlawful for a public authority to act in a way which is incompatible with a Convention right. The appellants contend that the freezing orders are incompatible with a number of Convention rights and that, accordingly it was unlawful to make them. There is another way that the HRA can be deployed. Section 3 of the Act requires, in so far as possible, that legislation be read and given effect in a way which is compatible with the Convention rights. It can be argued that the power to make Orders in Council conferred by section 1 of the 1946 Act must be read subject to the implied proviso that such Orders must not violate Convention rights. The appellants argue that the freezing orders violate their right to respect for family life under article 8 of the Convention, their peaceful enjoyment of their possessions under article 1 of the First Protocol and their right to a fair trial under article 6. Mr Swift, for the Treasury, does not accept that, if these articles are applicable, they have been infringed by the freezing orders. His primary submission is, however, that in so far as there is a conflict between the duty of the United Kingdom to comply with Security Council Resolutions under article 41 of the Charter and a duty to secure human rights under the Convention, the former duty prevails. He contends that no claim will lie under section 6(1) of the HRA in respect of breach of Convention rights which are trumped in this way by obligations under the Charter. The starting point of this argument is article 103 of the UN Charter. Article 25 requires members of the United Nations to carry out decisions of the Security Council in accordance with the Charter. Article 103 provides In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail. Next one must turn to the definition of the Convention in section 21 of the HRA: the Convention for the Protection of Human Rights and Fundamental Freedoms, agreed by the Council of Europe at Rome on 4th November 1950 as it has effect for the time being in relation to the United Kingdom (my emphasis). In R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2005] UKHL 57; [2006] 1 AC 529 the House of Lords held that this definition reflected the policy of the HRA, which was to bring rights home, so that no claim for breach of section 6(1) would lie unless the Strasbourg Court would also find a violation of the Convention by the United Kingdom. It follows that the provision of section 6(1) rendering unlawful action incompatible with Convention rights will not render unlawful the making of the freezing orders if the Strasbourg Court accepts that the duty to comply with the Security Council Resolutions takes precedence over the duty to comply with the Convention. That is not a question that the Strasbourg Court has had, directly, to resolve. The Grand Chamber did, however, make some very relevant comments when giving its decision as to admissibility in Behrami v France; Saramati v France, Germany and Norway (2007) 45 EHRR SE 85.The applicants in those cases complained of the action and inaction of members of an international security force (KFOR) that had been deployed in Kosovo pursuant to Security Council Resolution 1244(1999). The Grand Chamber ultimately held that the applications were not admissible on the ground that the Court was not competent ratione personae. This was because the individual respondents fell to be treated as part of KFOR and KFOR was exercising powers lawfully delegated under Chapter VII of the Charter by the UN Security Council. In these circumstances the actions of the respondents were directly attributable to the UN, an organisation of universal jurisdiction fulfilling its imperative collective security objective (para 151). Under the heading Relevant Law and Practice the Court made the following observations about article 103 of the UN Charter: The ICJ considers article 103 to mean that the Charter obligations of UN member states prevail over conflicting obligations from another international treaty, regardless of whether the latter treaty was concluded before or after the UN Charter or was only a regional arrangement (Nicaragua v United States of America, ICJ Reports, 1984, p 392, at para 107. See also Kadi v Council and Commission, para 183, judgment of the Court of First Instance of the European Communities (CFI) of 21 September 2005 (under appeal) and two more recent judgments of the CFI in the same vein: Yusuf and Al Barakaat v Council and Commission, 21 September 2005, paras 231, 234, 242 243 and 254 as well as Ayadi v Council, 12 July 2006, para 116). The ICJ has also found article 25 to mean that UN member states obligations under a UNSC Resolution prevail over obligations arising under any other international agreement (Orders of 14 April 1992 (provisional measures), Questions of Interpretation and Application of the 1971 Montreal Convention arising from the Aerial Incident at Lockerbie (Libyan Arab Jamahiriya v United States of America and Libyan Arab Jamahiriya v United Kingdom), ICJ Reports, 1992, p.16, para 42 and p 113, para 39, respectively).(para 27). Later in its judgment the Grand Chamber cited the first paragraph of article 30 of the Vienna Convention on the Law of Treaties: 1. Subject to article 103 of the Charter of the United Nations, the rights and obligations of states parties to successive treaties relating to the same subject matter shall be determined in accordance with the following paragraphs.(para 35) The Court went on to make the following observations about the Convention and the UN acting under Chapter VII of its Charter: 147. The Court first observes that nine of the twelve original signatory parties to the Convention in 1950 had been members of the UN since 1945 (including the two respondent States), that the great majority of the contracting parties joined the UN before they signed the Convention and that currently all contracting parties are members of the UN. Indeed, one of the aims of this Convention (see its preamble) is the collective enforcement of rights in the Universal Declaration of Human Rights of the General Assembly of the UN. More generally, it is further recalled, as noted at para 122 above, that the Convention has to be interpreted in the light of any relevant rules and principles of international law applicable in relations between its contracting parties. The Court has therefore had regard to two complementary provisions of the Charter, articles 25 and 103, as interpreted by the International Court of Justice (see para 27 above). 148. Of even greater significance is the imperative nature of the principle aim of the UN and, consequently, of the powers accorded to the UNSC under Chapter VII to fulfil that aim. In particular, it is evident from the Preamble, articles 1, 2 and 24 as well as Chapter VII of the Charter that the primary objective of the UN is the maintenance of international peace and security. While it is equally clear that ensuring respect for human rights represents an important contribution to achieving international peace (see the Preamble to the Convention), the fact remains that the UNSC has primary responsibility, as well as extensive means under Chapter VII, to fulfil this objective, notably through the use of coercive measures. The responsibility of the UNSC in this respect is unique and has evolved as a counterpart to the prohibition, now customary international law, on the unilateral use of force (see paras 18 20 above). 149. In the present case, Chapter VII allowed the UNSC to adopt coercive measures in reaction to an identified conflict considered to threaten peace, namely UNSC Resolution 1244 establishing UNMIK and KFOR. Since operations established by UNSC Resolutions under Chapter VII of the UN Charter are fundamental to the mission of the UN to secure international peace and security and since they rely for their effectiveness on support from member states, the Convention cannot be interpreted in a manner which would subject the acts and omissions of contracting parties which are covered by UNSC Resolutions and occur prior to or in the course of such missions, to the scrutiny of the Court. To do so would be to interfere with the fulfilment of the UNs key mission in this field These passages suggest that the Grand Chamber was prepared to recognise the primacy of obligations under the UN Charter over obligations under the Convention. That the Strasbourg Court would take such an approach was accepted by the House of Lords in R(Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2007] UKHL 58; [2008] AC 332. The claimant in that case had been detained by British forces in Iraq, acting pursuant to Security Council Resolution 1546 made under article 42 of the Charter. He claimed under the HRA a declaration that his detention infringed his rights under article 5(1) of the Convention. The Court of Appeal [2006] EWCA Civ 327; [2007] QB 621 held that the United Kingdoms obligations under Resolution 1546 prevailed over its obligations under the Convention and that accordingly, applying Quark Fishing, no action could be founded on the HRA. The House of Lords upheld the Court of Appeal. In paragraph 21 of his opinion Lord Bingham cited the passage from Behrami that I have set out at paragraph 97 above. He went on to hold: I do not think that the European court, if the appellants article 5(1) claim were before it as an application, would ignore the significance of article 103 of the Charter in international law. The court has on repeated occasions taken account of provisions of international law, invoking the interpretative principle laid down in article 31(3)(c) of the Vienna Convention on the Law of Treaties, acknowledging that the Convention cannot be interpreted and applied in a vacuum and recognising that the responsibility of states must be determined in conformity and harmony with the governing principles of international law: see, for instance, Loizidou v Turkey (1996) 23 EHRR 513, paras 42 43, 52; Bankovic v Belgium (2001) 11 BHRC 435, para 57; Fogarty v United Kingdom (2001) 34 EHRR 302, para 34; Al Adsani v United Kingdom (2001) 34 EHRR 273, paras 54 55; Behrami and Saramati, 45 EHRR SE 85, para 122. In the latter case, in para 149, the court made the strong statement quoted in para 21 above. Mr Rabinder Singh QC, in argument advanced on behalf of G which was adopted by the other appellants, recognised that the reasoning of the House of Lords in Al Jedda, which was equally applicable to obligations arising under article 41 of the UN Charter, would be fatal to the appellants claim of breach of section 6(1) of the HRA. He contended, however, that the landscape had been changed by the recent decision of the European Court of Justice (ECJ) The background to Kadi was the practice adopted by the European Council of adopting Regulations to give effect in the Community to UN resolutions under Chapter VII of the Charter. Pursuant to this practice the Council adopted Regulation 881/2002 in order to implement the Security Council resolutions that the United Kingdom has sought to implement by the freezing orders. Mr Kadi is one of those whose name is on the list kept by the 1267 Committee and brought proceedings seeking the annulment of the Regulation on the grounds (i) that it was not competent for the Council to adopt it and (ii) that it infringed his fundamental rights. Before the Court of First Instance both grounds failed. Before the ECJ the challenge to the Councils competence failed, but the challenge based on infringement of his fundamental rights succeeded. The ECJ emphasised that it was concerned with the legitimacy of Regulation 881 as a matter of Community law. It held: 285the obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the EC Treaty, which include the principle that all Community acts must respect fundamental rights, that respect constituting a condition of their lawfulness which it is for the Court to review in the framework of the complete system of legal remedies established by the Treaty. 286. In this regard it must be emphasised that, in circumstances such as those of these cases, the review of lawfulness thus to be ensured by the Community judicature applies to the Community act intended to give effect to the international agreement at issue, and not to the latter as such. 287. With more particular regard to a Community act which, like the contested Regulation, is intended to give effect to a Resolution adopted by the Security Council under Chapter VII of the Charter of the United Nations, it is not, therefore, for the Community judicature, under the exclusive jurisdiction provided for by article 220EC, to review the lawfulness of such a Resolution adopted by an international body, even if that review were to be limited to examination of the compatibility of that Resolution with jus cogens. 288. However, any judgment given by the Community judicature deciding that a Community measure intended to give effect to such a Resolution is contrary to a higher rule of law in the Community legal order would not entail any challenge to the primacy of that Resolution in international law. The ECJ went on to find that the regime imposed by Regulation 881 did not respect fundamental rights in a number of respects. There was no communication to those who were put on the 1267 Committees list of the evidence relied upon to justify their inclusion. In these circumstances their rights of defence, and in particular the right to be heard, were not respected. The right to an effective legal remedy was not observed (paragraphs 347 to 350). Because Mr Kadi suffered a significant restriction of his right to property in circumstances where he was not enabled to put his case to the relevant authorities his plea that his fundamental right to respect for property had been infringed was well founded. Regulation 881, insofar as it concerned him (and another appellant whose case was heard with his), had to be annulled (paras 369 to 372). It is important to note that this decision was about the legitimacy of a Council Regulation judged against the rules of the autonomous and self contained regime instituted under the EC Treaty. Advocate General Maduro in his opinion had gone so far as to suggest at para 30, p 1241 that: if the Court were to annul the contested Regulation on the ground that it infringed Community rules for the protection of fundamental rights, then, by implication, member states could not possibly adopt the same measures without in so far as those measures came within the scope of Community law acting in breach of fundamental rights as protected by the court. Mr Singh did not suggest that the decision in Kadi had any direct effect on the legitimacy of the freezing orders. He simply submitted that it gave cause to reconsider the premise on which the decision of the House of Lords in Al Jedda had been based. I do not believe that any firm conclusion can be drawn from the decision in Kadi as to the approach that the Strasbourg Court will take to the Do the Resolutions fall within the scope of the 1946 Act? I turn to the second basis for contending that the freezing orders are ultra vires, namely that the relevant Security Council Resolutions do not fall within the scope of the 1946 Act. Two separate arguments are advanced in respect of this basis. The first applies both to the TO and to the AQO. The argument was advanced by Mr Owen QC on behalf of A, K and M but adopted by the other appellants, and is as follows. The 1946 Act only permits the making of orders that transpose specific measures directed by the Security Council. The relevant Resolutions do not simply direct Members to implement specific measures but require them to fashion the legislative design that gives effect to the measures. This is a task for Parliament, not the executive. The other argument relates only to the AQO. It is that the relevant Resolutions require Member States to interfere with fundamental rights of individuals within their territories on grounds that those individuals will have no right to challenge before a court. It is argued that section 1 of the 1946 Act does not extend to such a Resolution. The issues raised by this argument are issues of statutory interpretation. Treaties entered into by the United Kingdom do not take direct effect. Treaties are entered into by the Government under the Royal Prerogative, but unless and until Parliament incorporates them into domestic law, they confer no powers upon the executive nor rights or duties upon the individual citizen JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 499 500. The 1946 Act is designed to provide a means of giving effect to the international obligations imposed upon the United Kingdom under article 41 of the UN Charter. The primary arguments advanced by the appellants relate to the true interpretation of section 1 of that Act. Their arguments in relation to this have not turned on the natural meaning of the section. Rather they have relied upon a principle of construction that requires limitations to be placed on the scope of statutory powers as a matter of presumption or implication. This they have described as the principle of legality. The principle of legality The appellants have put this principle at the forefront of their argument on the interpretation of the 1946 Act. Under this principle the court must, where possible, interpret a statute in such a way as to avoid encroachment on fundamental rights, sometimes described as constitutional rights. Lord Hope at paragraph 46 has cited the passages in the speech of Lord Browne Wilkinson in Pierson in which he described this principle. Equally pertinent is the oft cited passage in the speech of Lord Hoffmann in Simms at p 131: Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. The Human Rights Act 1998 will not detract from this power. The constraints upon its exercise by Parliament are ultimately political, not legal. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. In this way the courts of the United Kingdom, though acknowledging the sovereignty of Parliament, apply principles of constitutionality little different from those which exist in countries where the power of the legislature is expressly limited by a constitutional document. Lord Hoffmann went on to say that the principle of legality applied as much to subordinate legislation as to Acts of Parliament. Lord Hoffmann made it plain that the principle of legality was one that applied to the interpretation of general or ambiguous words in the absence of express language or necessary implication to the contrary. At the time of his judgment the Human Rights Act had not yet come into effect and Lord Hoffmann commented that the principle of legality had been expressly enacted as a rule of construction in section 3 of the Act. I believe that the House of Lords has extended the reach of section 3 of the HRA beyond that of the principle of legality. Section 3(1) provides: So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights The Convention rights are defined in section 1 to mean the rights and fundamental freedoms set out in articles 2 to 12 and 14 of the Convention, articles 1 to 3 of the First Protocol and article 1 of the Thirteenth Protocol. The effect of section 3 has been the subject of extensive academic discussion see the literature referred to in footnote 27 to paragraph 4.08 in the Second Edition (2009) of The Law of Human Rights by Clayton and Tomlinson. It has also been the subject of judicial consideration on a number of occasions in the House of Lords. It is not necessary to refer in detail to this body of authority. It suffices to note that it accords to section 3 a role of constitutional significance. By enacting section 3, Parliament has been held to direct the courts to interpret legislation in a way which is compatible with Convention rights, even where such interpretation involves departing from the unambiguous meaning the legislation would otherwise bear, or the legislative intention of Parliament see Ghaidan v Godin Mendoza [2004] UKHL 30; [2004] 2 AC 557 at paragraph 30 per Lord Nicholls and Sheldrake v Director of Public Prosecutions [2004] UKHL 43; [2005] 1 AC 264 at paragraph 24 per Lord Bingham. Such an interpretation must, however, be one that is possible having regard to the underlying thrust or intention of the legislation. Bennion on Statutory Interpretation, 5th ed (2008), at section 270, p.823, comments that the term principle of legality is likely to lead to confusion but goes on to suggest that the so called principle of legality was widened by a majority of the House of Lords in R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36; [2004] 1 AC 604 so as to contradict what Lord Bingham (who dissented) called a clear and unambiguous legislative provision (para 20), the provision in question being contained in delegated legislation. The other members of the House did not, however, purport to depart from wording that was clear and unambiguous see Lord Steyn at para 31, Lord Hoffmann at para 37, Lord Millett at para 43 and Lord Scott at para 58. I do not consider that the principle of legality permits a court to disregard an Transposition and legislative design Mr Owen QC for A, K and M put at the forefront of his submissions the contention that the 1946 Act authorised Orders in Council that gave effect to specific measures directed by the Security Council but not Orders in Council that themselves directed what measures should be taken. He contrasted transposition that was authorised by the Act and legislative design that was not. He submitted that this distinction was one that fell within the principle of legality. In a written note he clarified his submission as follows: The constitutional principle at issue in the instant case is that the recognition by the common law of the supremacy of Parliament is based on an assumption that Parliament will not surrender its law making powers to the Executive (or an international body) on an uncontrolled and uncertain basis. Unless the contrary intention is clearly and expressly indicated, no Act of Parliament will be construed as delivering a blank cheque to the Executive to legislate at will in any area, simply because it is called upon to do so by an international body. This submission was supported by the intervener. On behalf of JUSTICE, Mr Fordham QC submitted that, under the principle of legality, only Parliament could impose an asset freezing regime. Because such a regime interfered with fundamental rights, it was necessary that the controls imposed should be necessary, proportional and certain and attended with basic procedural safeguards under which the individual would secure a fair hearing and effective judicial protection. These were matters for Parliament, not the executive. These submissions overlapped with the submission that the 1946 Act could not, on its true construction, authorise Orders in Council which interfered with fundamental rights. Mr Owen turned to two New Zealand cases for support for his submission. In Reade v Smith [1959] NZLR 996 Turner J sitting in the Supreme Court had to consider the scope of section 6 of the Education Amendment Act 1915 (No 2), which was in the following terms: The Governor General in Council may make such Regulations as he thinks necessary or expedient for avoiding any doubt or difficulty which may appear to him to arise in the administration of the principal Act by reason of any omission or inconsistency therein, and all such Regulations shall have the force of law, anything to the contrary in the principal Act notwithstanding. He observed at pp 1003 1004: To anyone accustomed to the notion that the law giving powers of the people are reposed by them in Parliament, it may come as a surprise to learn that since 1915 the Legislature appears to have surrendered these powers to the Executive as regards such matters as are covered by this section; and that not content with delegating its principal function to the Governor General, it has purported to sign a blank cheque and to ratify in advance whatever he shall do by regulation, even if it is in conflict with the express provisions of the Education Act itself. In construing a section which at first sight may appear to carry self abnegation so far, the Court will strive to give it a restricted interpretation, preferring to regard Parliament as not having made any more complete surrender of its powers than must necessarily follow from the plain words used. In Brader v Ministry of Transport [1981] 1 NZLR 73 the Court of Appeal had to consider the scope of section 11 of the Economic Stabilisation Act 1948 which gave the Minister power by Order in Council to make such regulations as appear to him to be necessary or expedient for the general purpose of this Act. At p 78 Cooke J remarked: It may be added that the recognition by the common law of the supremacy of Parliament can hardly be regarded as given on the footing that Parliament would abdicate its function. This remark was made, however, in the context of restricting the power conferred on the Minister to within reasonable limits. The Court went on to hold that the Minister had acted intra vires in making it a criminal offence to drive a private car on specified carless days with the object of saving petrol. These decisions fall short of supporting the proposition that the principle of legality raises a general presumption against Parliament delegating to the executive the power to make regulations that call for legislative design. Brader points in the opposite direction. I reject Mr Owens submissions on this point. I would accept, however, that a statutory provision which delegates to the executive the power to make regulations should be strictly construed and that, where the power is conferred in general terms, it may be necessary to imply restrictions in its scope in order to avoid interference with individual rights that is not proportionate to the object of the primary legislation. Mr Owen was on stronger ground when he submitted that some limitations had to be placed upon the power conferred by the 1946 Act. He drew attention to paragraph 2(d) of UN SCR 1373 which decides that all States shall Prevent those who finance, plan, facilitate or commit terrorist acts from using their respective territories for those purposes against other States or their citizens. He submitted that on the Treasurys interpretation of the 1946 Act there would have been no obstacle to the Government imposing by Order in Council the provisions contained in the Anti terrorism, Crime and Security Act 2001, permitting indefinite detention of foreign nationals, or preventative measures such as control orders now contained in the Prevention of Terrorism Act 2005. When pressed in argument, Mr Swift for the Treasury accepted, with some reluctance, that such was indeed his position. I do not accept that the 1946 Act authorises such wide ranging legislation. The natural meaning of the wording of section 1, when read with the wording of article 41 of the Charter, imposes limits on the power granted by section 1. That power is to make such provision as appears necessary or expedient for enabling the effective application of measures not involving the use of armed force which the Security Council has decided are to be employed to give effect to its decisions. Measures to which the 1946 Act refers must necessarily have a degree of specificity. They have to be capable of being employed or effectively applied. They will often be the means to an objective rather than the objective itself. Preventing terrorists from using the territory of the United Kingdom for terrorist acts is an objective, it is not a measure. It is not something that can be employed or applied. Detention of foreign nationals or the imposition of control orders are measures, but they are not measures the employment of which forms any part of the decision of the Security Council that is set out in paragraph 2(d) of Resolution 1373. The generality of the provisions of paragraph 2(d) contrasts with the specificity of paragraph 1(b)(c) and (d) of the same Resolution. It is to these provisions that the TO gives effect. These provisions are specific measures. They fall within the scope of the wording of section 1 of the 1946 Act in that one can sensibly speak of provisions that are necessary or expedient to enable them to be effectively applied. They can also properly be described as measures that the Security Council has decided are to be employed to give effect to its decisions under article 41. The TO involves a degree of legislative design, including the creation of offences and the range of penalties that relate to them, but legislation of this type is expressly provided for by section 1 of the 1946 Act. For these reasons I reject the submission that, whether under the natural meaning of section 1 of the 1946 Act, or under the application of the principle of legality, the TO falls outside the powers conferred by the section simply because the TO involves a degree of legislative design rather than mere transposition. I propose to defer consideration of the argument that the Resolutions to which the AQO relates fall outside the scope of the 1946 Act in order to deal first, in relation to the TO, with the third basis for arguing that the freezing orders are ultra vires, which is that the terms of the freezing orders fall outside the scope of what is permitted by the 1946 Act. Do the terms of the TO fall outside the powers of the 1946 Act? The following points are advanced by the appellants: i) The TO goes further than the relevant Security Council Resolution requires. ii) The freezing orders are disproportionate and oppressive. iii) The terms of the freezing orders are uncertain. iv) In the case of the TO adequate provision is not made to enable those designated to challenge their designation. Does the TO go further than the Resolution requires? Resolution 1373 recited that the Security Council decided that all States should: 1 (c) Freeze without delay funds and other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled directly or indirectly by such persons; and of persons and entities acting on behalf of, or at the direction of such persons and entities, including funds derived or generated from property owned or controlled directly or indirectly by such persons and associated persons and entities; (d) Prohibit their nationals or any persons and entities within their territories from making any funds, financial assets or economic resources or financial or other related services available, directly or indirectly, for the benefit of persons who commit or attempt to commit or facilitate or participate in the commission of terrorist acts, of entities owned or controlled, directly or indirectly, by such persons and of persons and entities acting on behalf of or at the direction of such persons; Section 1 of the 1946 Act empowers the making by Order in Council of such provision as appears necessary or expedient for enabling the measures in the Resolution to be effectively applied. The conditions laid down by the 2006 TO for making a freezing order are set out in paragraph 4(2): (2) The conditions are that the Treasury have reasonable grounds for suspecting that the person is or may be (a) a person who commits, attempts to commit, participates in or facilitates the commission of acts of terrorism; (c) a person owned or controlled, directly or indirectly, by a designated person; or (d) a person acting on behalf of or at the direction of a designated person. (b) a person identified in the Council Decision; The wording of the TO tracks the wording of the Resolution, save that those who can be made subject to the Order are not only those described in the Resolution but those whom the Treasury have reasonable grounds for suspecting fall or may fall within that description. The issue is whether it can properly be said to be necessary or expedient to apply this test of reasonable suspicion in order to ensure that the measures in the Resolution are effectively applied to those described in the Resolution. This question goes not merely to the legitimate scope of the TO but to the legitimacy of the entire TO regime. The Court of Appeal concluded that a reasonable suspicion test fell within the scope of what appeared necessary or expedient to give effect to the measures in the Resolution. The Master of the Rolls treated this as essentially a question of the standard of proof and observed that such a test had been accepted by the Strasbourg Court in relation to a similar problem arising out of the risk of terrorism. He concluded: I would accept such a test as lawful provided that the person concerned has a proper opportunity to challenge the decision made against him (para 42). He went on to hold, however, that the inclusion of the words or may be went beyond what was necessary or expedient. He considered that these words widened the test of reasonable suspicion to an extent that was not legitimate, albeit that there is scope for argument as to how much difference this will make (paras 47 49). There may be a tendency to approach the requirements of the Resolution by reference to other measures that have been taken in this jurisdiction to combat terrorism, such as control orders imposed on the basis of reasonable suspicion. Such, however, are exceptional measures, treading the boundaries of what is compatible with respect for fundamental rights and the rule of law. They should not be treated as the norm. Identification of the requirements of Resolution 1373 should be approached, in the first instance, by consideration of the natural meaning of its provisions. That natural meaning appears to me to be relatively clear. The object of the Resolution appears from the following statement in its preamble: Recognizing the need for States to complement international cooperation by taking additional measures to prevent and suppress, in their territories through all lawful means, the financing and preparation of any acts of terrorism. The first specific measure called for by the Resolution in paragraph 1(b) is that States shall: Criminalize the wilful provision or collection, by any means, directly or indirectly, of funds by their nationals or in their territories with the intention that the funds should be used, or in the knowledge that they are to be used, in order to carry out terrorist acts. Paragraph 2(e) adds to this: Ensure that any person who participates in the financing, planning, preparation or perpetration of terrorist acts or in supporting terrorist acts is brought to justice and ensure that, in addition to any other measures against them, such terrorist acts are established as serious criminal offences in domestic laws and regulations and that the punishment duly reflects the seriousness of such terrorist acts; Paragraph 1(c) requires the freezing of the assets of those who commit the acts that the Resolution has required should be criminalised and their agents. Thus what the Resolution requires is the freezing of the assets of criminals. The natural way of giving effect to this requirement would be by freezing the assets of those convicted of or charged with the offences in question. This would permit the freezing of assets pending trial on a criminal charge, but would make the long term freezing of assets dependent upon conviction of the relevant criminal offence to the criminal standard of proof. The Resolution nowhere requires, expressly or by implication, the freezing of the assets of those who are merely suspected of the criminal offences in question. Such a requirement would radically change the effect of the measures. Even if the test were that of reasonable suspicion, the result would almost inevitably be that some who were subjected to freezing orders were not guilty of the offences of which they were reasonably suspected. The consequences of a freezing order, not merely on the enjoyment of property, but upon the enjoyment of private and family life are dire. If imposed on reasonable suspicion they can last indefinitely, without the question of whether or not the suspicion is well founded ever being subject to judicial determination. It may be argued that it is expedient to throw the net wide in order to ensure that the criminals are caught within it, even if this is at the expense of enmeshing those who are not. But I would not give expedient, as used in the 1946 Act, so extravagant a scope. Whether in so deciding I am applying the principle of legality, or a simple rule of construction that confines general words within reasonable limits where fundamental rights are in play, matters not. Bennion would probably say that they are one and the same see p 823. It is, I think, legitimate to look at the parallel series of Resolutions adopted by the Security Council under article 41 that have led to the AQO for guidance on the intended scope of Resolution 1373. I have done so, but found nothing to indicate that the Security Council has decided that freezing orders should be imposed on a basis of mere suspicion. Resolution 1333 first made provision for the Committee to keep what subsequently became the Consolidated List of individuals and entities designated as being associated with Usama bin Laden. The scheme is that the Committee determines what names should be included on the list in the light of information provided by Member States. In recent years there has been an increasing emphasis on the duty of States to specify the evidence justifying the proposal that a name be placed on the list see Resolution 1617 (2005), paragraph 4; Resolution 1735 (2006), paragraph 5 and Resolution 1822 (2008) paragraph 12. The Guidelines of the Committee for the Conduct of its Work, as amended up to 9 December 2008 provide in paragraph 6(d): Member States shall provide a detailed statement of case in support of the proposed listing that forms the basis or justification for the listing in accordance with the relevant resolutions. The statement of case should provide as much detail as possible on the basis(es) for listing indicated above, including: (1) specific findings demonstrating the association or activities alleged; (2) the nature of the supporting evidence (e.g. intelligence, law enforcement, judicial, media, admissions by subject, etc.) and (3) supporting evidence or documents that can be supplied. States should include details of any connection with a currently listed individual or entity. States shall identify those parts of the statement of case that may be publicly released, including for the use by the Committee for development of the summary described in paragraph (h) below or for the purpose of notifying or informing the listed individual or entity of the listing, and those parts that may be released upon request to interested States. Paragraph 6 (c) of the Guidelines provides: Before a Member State proposes a name for addition to the Consolidated List, it is encouraged, if it deems it appropriate, to approach the State(s) of residence and/or nationality of the individual or entity concerned to seek additional information. States are advised to submit names as soon as they gather the supporting evidence of association with Al Qaida and/or the Taliban. A criminal charge or conviction is not necessary for inclusion on the Consolidated List as the sanctions are intended to be preventative in nature. The Committee will consider proposed listings on the basis of the associated with standard described in paragraphs 2 and 3 of Resolution 1617 (2005), as reaffirmed in paragraph 2 of Resolution 1822 (2008). When submitting names of groups, undertakings and/or entities, States are encouraged, if they deem it appropriate, to propose for listing at the same time the names of the individuals responsible for the decisions of the group, undertaking and/or entity concerned. The Resolutions cited lay down specific factual tests for association with Al Qaida and the Taliban. The statement that a criminal charge or conviction is not necessary, if applied to the TO regime, opens the door to the suggestion that freezing orders should be imposed not merely where ancillary to a criminal charge or conviction, but in circumstances where there are reasonable grounds for believing that the subject of the order has been guilty of the relevant offending see, by way of example, the test for a freezing order under section 4 of the Anti terrorism, Crime and Security Act 2001. Whether an Order in Council providing for the making of freezing orders on the basis of reasonable belief would fall within the scope of the 1946 Act is not a question that I would resolve in the abstract. It would be manifestly preferable for any such measure to be imposed by primary legislation, which would not be restricted by the need to keep strictly within the requirements of the relevant Resolution. For the reasons that I have given I would quash the TO on the ground that, by applying a test of reasonable suspicion, it goes beyond what is necessary or expedient to comply with the relevant requirements of Resolution 1373 and thus beyond the scope of section 1 of the 1946 Act. It is not necessary to address the alternative reasons advanced by the appellants for contending that the terms of the TO fall outside the powers of the 1946 Act, but I will record my agreement with the conclusions expressed by Lord Mance in paragraphs 232 to 236 of his judgment. The challenge to the AQO The common law rights of G and HAY to the enjoyment of their property, to privacy and to family life are very severely invaded by the AQO. Their counsel have adopted the submissions that were advanced on behalf of A, K and M to the effect that the principle of legality renders ultra vires orders that have such draconian effect and that lack certainty. If, however, they have justifiably been placed on the Consolidated List on the ground that they have been supporting the activities of Al Qaida, Usama bin Laden or the Taliban they can reasonably expect serious interferences with those rights. Their primary complaint is that they have no right to challenge before a court their inclusion on that list. Access to a court to challenge interference with rights is, they submit, a fundamental right protected by the principle of legality. Access to a court to protect ones rights is the foundation of the rule of law. Mr Swift accepted that if the AQO purported to exclude access to a court it would be ultra vires. He submitted, however, that it did no such thing. Designation by the Sanctions Committee was a fact that, under English law as embodied in the AQO, resulted in the imposition of severe restrictions on the rights of the person listed. It was open to any individual who experienced such restrictions, to challenge, by judicial review proceedings, whether the AQO rendered such interference lawful. In such proceedings the appellant could put in issue the assertion that he was a person designated on the Sanction Committees list. He could challenge the validity of the Order, as indeed G and HAY had done. What he could not do was challenge the basis upon which the Sanctions Committee had placed him on the list, for that question had no relevance to his rights under English law. I find this argument unreal. On the Treasurys case, the relevant Resolutions and the 1946 Act, when read together, have had a devastating effect on Gs and HAYs rights and left them unable to make an effective judicial challenge to the reasons for treating them in this way. That results from the fact that, by the 1946 Act Parliament, in effect, granted to the Security Council the power to specify legislation that it required Member States to enact and granted to the executive the power to enact that legislation by Order in Council. The stark issue is, having regard to the principle of legality did the AQO fall outside limitations, express or implied, to the scope of this legislation? I have already, in paragraphs 124 to 126 identified some limitations on the scope of section 1 of the 1946 Act, derived from the language of the section. As I explained, those limitations did not place the TO outside the ambit The list is, however, the primary object of the challenge brought by G and HAY to the legitimacy of the AQO. Names are placed on the list at the suggestion of Member States. A Member State has to give particulars of its reasons for putting forward a name, but it can place an embargo on disclosing those reasons to the name, or even on disclosing the fact that it was the State responsible for the inclusion of the name on the list. That is precisely what has occurred in the case of HAY. The Security Council has shown an appreciation of the need to provide a means whereby an individual can challenge the inclusion of his name on the Consolidated List. The Guideline that I have quoted at paragraph 140 above makes provision for notifying a listed individual of those parts of a Member States statement of the case against him that the State identifies may be publicly released and Resolutions make express provision for de listing, including the establishment of a focal point for submitting requests for de listing see Resolution 1730. But these provisions fall far short of the provision of access to a court for the purpose of challenging the inclusion of a name on the Consolidated List, and far short of ensuring that a listed individual receives sufficient information of the reasons why he has been placed on the list to enable him to make an effective challenge to the listing. Does an Order in Council that subjects individuals to severe interference with their rights to the enjoyment of property, to privacy and to family life on the ground that they are associated with terrorists, in circumstances where they are denied the right to know the case against them or to have access to a court to challenge that case, fall within the power conferred by section 1 of the 1946 Act? The natural meaning of section 1 is wide enough to extend to implementation of the measures in Resolution 1267 and the later relevant Resolutions that are reproduced in the AQO. Are those measures none the less implicitly excluded from the ambit of the section under the principle of legality? The first question to address is whether the provisions of section 1 are subject to any implied limitation at all. As to this there was no dispute between the parties. Mr Swift accepted that, if the Security Council decided, by a Resolution under article 41, that Member States should obtain information from terrorist suspects by the application of torture, section 1 of the 1946 Act would not apply to that measure. I think that at the very least the powers conferred by section 1 must be limited to measures imposed by the Security It has not, however, been suggested on behalf of any of the appellants that the relevant Resolutions were ultra vires. None the less they are of a kind that Parliament cannot reasonably have anticipated when enacting the 1946 Act. Article 41 gives, by way of example of the measures not involving the use of armed force to which it relates, complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations. These were measures against rogue States, not by States against individuals within them, and it is no cause for surprise that, when debating the Bill in the House of Lords, Viscount Samuel remarked: This particular Bill makes provision for the eventuality that coercive measures may become necessary by the United Nations against some State which is indulging, or is apparently about to indulge, in acts of aggression. Those coercive measures may be either military or non military what we are accustomed to speak of under the name of sanctions, economic sanctions, or similar sanctions. Hansard 12 February 1946 col 378 HL. The fact that Parliament may not have anticipated the nature of the measures upon which the Security Council decided over sixty years after the 1946 Act was passed does not mean that the Act cannot, on its true construction, apply to them see Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800 at p 822. It is necessary to consider the intention of Parliament, reading the statute in the historical context of the situation which led to its enactment per Lord Bingham of Cornhill R(Quintavalle) v Secretary for Health [2003] UKHL 13; [2003] 2 AC 687 para 8. Reference to Hansard demonstrates the enthusiasm in 1946 of all sections of both Houses for the new United Nations and the Security Council, of which the United Kingdom was a permanent member. Parliament should not be presumed to have intended that the measures covered by section 1 of the 1946 Act would be restricted to measures similar to the examples in article 41 of the Charter. Different considerations apply, however, to the question of whether Parliament would have appreciated the possibility that the Security Council would, under article 41, decide on measures that seriously interfered with the rights of individuals in the United Kingdom on the ground of the behaviour of those individuals without providing them with a means of effective challenge before a court. I conclude that Parliament would not have foreseen this possibility, having particular regard to the reference to human rights in the preamble and article 1.3 of the Charter and to the fact that the 1946 Act was passed at a time when the importance of human rights was generally recognised, as exemplified two years later by the adoption by the General Assembly of the Universal Declaration of Human Rights. This is material, for it makes the principle of legality a realistic guide to the presumed intention of Parliament. Applying that principle, I share with the majority of the court the conclusion that the Resolutions to which the AQO relates, insofar as they call for measures to be applied to those on the Consolidated List, fall outside the scope of section 1 of the 1946 Act. I agree with Lord Mance, for the reasons that he gives, that in so far as the Resolutions relate to Usama bin Laden himself, their validity is not impugned. For these reasons I would grant the relief proposed by Lord Hope in paragraph 83 of this judgment. I endorse his comments in relation to the 2009 Order. I agree for the reasons that he gives that the operation of the Order in HAYs case shall be suspended for one month from the date of judgment. Nobody should conclude that the result of these appeals constitutes judicial interference with the will of Parliament. On the contrary it upholds the supremacy of Parliament in deciding whether or not measures should be imposed that affect the fundamental rights of those in this country. LORD RODGER, with whom Lady Hale agrees The Court is asked to decide whether, by virtue of section 1(1) of the United Nations Act 1946, Her Majesty in Council had power to enact the Al Qaida and Taliban (United Nations Measures) Order 2006 (AQO Order) and the Terrorism (United Nations Measures) Order 2006 (TO 2006). The same question arises in respect of the Terrorism (United Nations Measures) Order 2009 (TO 2009). At the time of the hearing TO 2006 was the current embodiment of the measures by which the United Kingdom implemented SCR 1373, which was adopted by the Security Council on 28 September 2001, in the aftermath of the 9/11 attacks on the United States. But SCR 1373 was by no means the first resolution which the Council had adopted to deal with terrorist attacks. What marks it out is that the other resolutions relate to specific incidents and specific individuals, or organisations. SCR 1373 is, by contrast, generic: it deals with international terrorism, with threats to international peace and security caused by terrorist acts. Previous resolutions, such as SCR 1189 (1998), had, of course, included calls for States to take measures for the prevention of terrorism. But SCR 1373 was intended to go much further: the aim was to create a permanent international system for combating terrorism. This helps to explain certain unique, or unusual, features of SCR 1373. The Security Council envisages that its other resolutions relating to terrorist acts will have a limited life before being reconsidered and renewed, if appropriate. There is no such time limit in SCR 1373: it is intended to apply indefinitely unless and until the Security Council decides to revoke it. The other SCRs are targeted at a particular threat for example, SCR 1333 (2000) is directed at the Taliban and Osama bin Laden, Al Qaida and their associates. In para 1(a) of SCR 1373, by contrast, the Security Council simply decides that all States shall prevent and suppress the financing of terrorist acts. Para 1(c) requires States to freeze without delay funds etc of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts. The same thinking runs through the resolution. If, in these respects, SCR 1373 looks more like an international convention, this is not surprising since it really comprises selected measures which had been included in the International Convention for the Suppression of the Financing of Terrorism that was adopted by the General Assembly in December 1999. By September 2001 only a few States had ratified the Convention. So SCR 1373, in effect, imposed on all States the selected obligations which would otherwise have bound them only if they had eventually decided to ratify the Convention. Given its focus on terrorist acts, it is striking that the resolution does not define terrorism or terrorist acts. This is no accident. It would have been impossible to get agreement on a single definition. So, at the risk of some inconsistency and incoherence in their response, SCR 1373 leaves it up to States to adopt measures to combat what they regard as terrorism. In both TO 2006 and TO 2009 the definition adopted by the United Kingdom is to be found in article 2(3) (6). It is important to notice that this definition is These wide provisions are entirely appropriate in a measure that is intended to allow the requirements of SCR 1373 to be effectively applied in the United Kingdom. The freezing orders that are under consideration in these appeals relate to the funds and assets of individuals who live in this country. It is therefore tempting to think of such cases as the paradigm. But that would be a fundamental error. The very premise of SCR 1373 is that terrorism is an international phenomenon. For example, someone living in Ruritania may facilitate acts of terrorism against the government of Utopia by transferring funds from his account in a bank in the United Kingdom to an account controlled by the terrorist in a bank in Erewhon. The hope and intention behind paras 1(b) and 2(e) of SCR 1373 is that the authorities in Ruritania will have the necessary laws and resources to prosecute the individual concerned for financing and facilitating terrorism. Equally, it is hoped that the Erewhon authorities will have the necessary powers to freeze any funds that reach the account in the bank there. But the reality may well be that, for a variety of reasons, Ruritania is not actually in a position to arrest and prosecute the individual concerned for his actions and Erewhon may not have the necessary legislation to freeze his funds. Terrorists may indeed choose to live or operate in States which are too weak to take effective action against them. And, of course, in all probability the British courts will not have jurisdiction to prosecute the individual for facilitating terrorist acts in Utopia even supposing that he could ever be arrested or extradited to this country from Ruritania. Nevertheless, the intention behind SCR 1373 is that the United Kingdom should be able to counter the threat of terrorist acts in Utopia by freezing the individuals assets in the British bank. And the United Kingdom aims to assist in fulfilling the Security Councils intention by giving the Treasury power under TO 2006 and TO 2009 to designate the individual and to freeze his funds in the British bank. It follows that it could never have been the intention of the Security Council that a State should freeze only the funds of individuals whom it could The appellants, A, K, M and G, argue, however, that TO 2006 is ultra vires because it goes further and allows the Treasury to designate an individual and to freeze his assets if they have reasonable grounds for suspecting that [he] is or may be a person who commits, attempts to commit, participates in or facilitates the commission of acts of terrorism. The argument is that this goes further than the terms of para 1(c) of SCR 1373 and that it is neither necessary nor expedient, in terms of section 1(1) of the United Nations Act 1946, for the Treasury to be given power to designate and freeze on the basis of reasonable grounds for suspicion. As Lord Mance puts it, at para 230, this is to freeze the assets of a different and much wider group of persons on an indefinite basis and to change the essential nature and target of the freezing order. I acknowledge the force of the argument, but I have come to the conclusion that it should be rejected. In the first place, as is perhaps apparent from the variety of approaches adopted in the judgments, para 1(c) of SCR 1373 does not provide any express guidance. It simply prescribes the result that is to be achieved: freezing without delay the funds etc of persons who commit etc terrorist acts. It does not indicate how States are to identify the people in question. There will, of course, be no difficulty if the authorities of a State catch someone red handed committing a terrorist act or handing over cash to a terrorist organisation. The State will freeze his assets if there are any within its jurisdiction. And, if satisfied that the information provided is accurate, other Often, however, things will not be so clear cut. Items of information may come from a variety of sources which, if pieced together, indicate, more or less clearly, what an individual or a group is doing. How is effect to be given to para 1(c) of SCR 1373 in that situation? Lord Phillips, at para 136 of his opinion, seems to envisage that a long term freezing order should be dependent on conviction of the relevant criminal offence to the criminal standard of proof or that it would be merely ancillary to a criminal charge or conviction (para 142). I have just explained why I cannot accept that approach which would emasculate the international system that the Security Council wishes to create. I infer from what Lord Mance says, at para 230, that in his view the Security Council envisages that a (long term) freezing order should be made only against individuals who, the State is satisfied, on the balance of probabilities, have committed etc a terrorist act. In other words, even if the State thinks that there is, say, a 40% chance that the individual is busy financing terrorist activities, he should be allowed to continue. I would reject that approach because it would leave a lot of loop holes and would be unlikely to conduce to achieving the Security Councils overall aim of preventing terrorist acts. I understand Lord Brown to opt, at para 199, for a requirement that the Treasury should have reasonable grounds for believing that the person in question is committing, or has committed, etc terrorist acts. That seems to me to be one possible approach which would be likely to identify many people whose funds etc are to be frozen in terms of para 1(c). Plainly, however, if a State applies that test, it will be liable to freeze the assets of a number of people who, it turns out, are not committing, or have not committed etc, terrorist acts. Nevertheless, in my view, a measure which adopted that approach could be said to be expedient for enabling the United Kingdom to fulfil its obligation under SCR 1373 to freeze the assets of those who facilitate terrorist acts. The actual test in the TOs, based on reasonable grounds for suspecting, is just a little less stringent than the one favoured by Lord Brown. In other words, while it may (slightly) increase the chances of catching individuals who are actually committing etc terrorist acts, it correspondingly increases the chances that someone who is not committing etc a terrorist act will have his assets frozen. Lord Hope, at para 58, considers that it may well have been expedient to introduce the reasonable suspicion test to reproduce what the SCR requires, but he is of the view that the formulation of the text should be left to Parliament. In his view, therefore, TO 2006 really fails, not because it is framed too widely, but because of the principle of legality (para 61). As Lord Hope points out, there is evidence that the reasonable grounds for suspecting test would be consistent with the approach of the United Nations International Task Force. It seems to me that the expediency of the United Kingdom adopting that test really depends on a whole range of practical matters with which the members of this Court are largely unfamiliar. Inevitably, much of the information about terrorist activities that is available to national authorities will come from other countries and, often, in the form of intelligence provided by overseas security services. In the case of the United Kingdom, the Treasury and indeed the British security services may well be in no position to make an independent assessment of the material. Similarly, it may well be that, in a significant number of cases, because of its variable quality and fragmentary nature, the available information does not permit the Treasury to go further than to say that they have reasonable grounds for suspecting that the person concerned is committing or facilitating terrorist acts. If so, then it may be better to base designation on reasonable grounds for suspicion rather than on some higher standard which could not be readily achieved and which, if applied faithfully, would mean that the Treasury failed to freeze a significant number of assets which were actually under the control of people who committed etc terrorist acts. I therefore see no sufficient reason to conclude that the test in the TOs is not expedient for enabling the United Kingdom to fulfil its obligations under para 1(c) of SCR 1373. Nevertheless, adopting that test does mean that, sooner or later, someone will be designated who has not actually been committing or facilitating terrorist acts. That is inevitable. The availability of judicial review under Part 6 of the Counter Terrorism Act 2008 is, of course, a palliative. But, in my view, for the reasons given by Lord Hope, at paras 60 and 61, the making of an Order, which, in effect, amounts to permanent legislation conferring powers to affect, directly, very basic domestic law rights of citizens and others lawfully present in the United Kingdom goes well beyond the general power to make Orders in Council conferred by section 1(1) of the United Nations Act 1946. If such measures are to be taken, it is for Parliament to deliberate and to determine that the benefits of giving the Treasury such powers outweigh the potential disadvantages and that it is accordingly expedient to adopt these measures in order to enable the United Kingdom to fulfil its obligations under SCR 1373. That is so, even though, for the reasons given by Lord Hope, at paras 70 73, the Court must proceed on the basis that, having regard to articles 25 and 103 of the Charter, the United Kingdoms obligations under the SCRs would trump any relevant obligations under the European Convention. I consider, however, that section 1(1) would authorise Her Majesty to make an Order in Council, even with these far reaching effects, provided that it had only a limited life span and was replaced, as soon as practically possible, by equivalent legislation passed by Parliament. In this way the United Kingdom could promptly fulfil its obligations under the United Nations Charter. For these reasons TO 2006 was ultra vires and TO 2009, which is, so far as relevant, in similar terms, must also be ultra vires. I am accordingly satisfied that the designation orders relating to A, K and M under TO 2006 were void and that the new orders made under TO 2009 must also be void. I turn now to the AQO. The history of the matter has been described by Lord Hope and Lord Mance. In para 4(b) of SCR 1267 (1999) the Security Council decided that all States should in broad terms freeze funds and other financial resources owned or controlled directly or indirectly by the Taliban, or by any undertaking owned or controlled by the Taliban, as designated by the Committee that was to be established under para 6 of the SCR. This committee, comprising all the members of the Security Council, came to be known as the 1267 Committee. The following year, in SCR 1333 (2000), the Security Council decided that all States were to freeze without delay, inter alia, funds and other financial assets of Usama bin Laden and individuals and entities associated with him as designated by the 1267 Committee, including those in the Al Qaida organisation. After the 9/11 atrocity, at the instigation of the United States, the Committee added a large number of names to its list of groups and individuals associated with Osama bin Laden and Al Qaida. SCR 1267 was aimed at the Taliban regime. So the role of the Committee was to designate Taliban funds which States were to freeze. But, from SCR 1333 onwards, the Security Council has targeted the funds and assets of individuals and entities associated with Osama bin Laden and the Al Qaida organisation. And the role of the 1267 Committee has, therefore, been to designate those individuals whose funds are then to be frozen. As Lord Mance explains, at para 215, this was not a new device: the Security Council had previously adopted resolutions which left it to a committee to designate individuals to whom particular sanctions were to apply. Those resolutions had been directed, however, at individuals associated with a particular rgime in a particular country. By contrast, from SCR 1333 onwards, the 1267 Committee was having to identify individuals and groups associated with a much more Obviously, preventing terrorists from obtaining funds and other assets is a crucial part of any system for combating terrorism. Equally obviously, if there is to be a successful international effort to combat terrorism all over the world, a central organisation which gathers information and co ordinates action is going to play a vital role. Assessing the information and deciding whether to act on it involved matters of political judgment. Obviously, again, much of the necessary information will come from the security services of different countries and there may well be problems about revealing it. The 1267 Committee acts as the central co ordinating body and is not in the habit of revealing much about the basis for its decisions. It would, of course, be absurd to expect the Committee to notify individuals of any proposal to list them: any funds would quickly be disposed of. But, even after the reforms introduced in the last two years, there is little that individuals can do to launch an effective challenge to their listing after it has occurred. The Committee is not obliged to publish more than a narrative summary of reasons for their listing. There is no appeal body outside the Committee to which they can complain. The individuals themselves cannot apply directly to the Committee to have their names removed from the list. Such requests now go to the Ombudsperson. And, if a State applies on their behalf, the name will still not be removed unless all members of the Committee agree. There is an obvious danger that States will use listing as a convenient means of crippling political opponents whose links with, say, Al Qaida may be tenuous at best. The Security Council is a political, not a judicial, body as is the 1267 Committee. And it may be that the Committees procedures are the best that can be devised if it is to be effective in combating terrorism. But, again, the harsh reality is that mistakes in designating will inevitably occur and, when they do, the individuals who are wrongly designated will find their funds and assets frozen and their lives disrupted, without their having any realistic prospect of putting matters right. On one view, they are simply the incidental but inevitable casualties of the measures which the Security Council has judged it proper to adopt in order to counter the threat posed by terrorism to the peace and security of the world. The Council adopts those measures in order to prevent even worse casualties those who would be killed or wounded in terrorist attacks. On the assumption that the Human Rights Act is not in play, Parliament can pass legislation to give effect in our domestic law to the obligations imposed on the United Kingdom by the Security Council resolutions relating to Osama bin Laden, Al Qaida etc however grave the interference with rights of property and even though there is no effective remedy against an unjustified Can the same be done by Order in Council under section 1(1) of the United Nations Act 1946? In other words, does section 1(1) authorise Her Majesty in Council to make legislation which encroaches to such an extent on individuals basic common law rights of property and access to the courts? Undoubtedly, given the terms of article 41 of the Charter which envisages interruption of economic relations, Parliament must have envisaged that, for example, an Order in Council giving effect to a ban on trade with a particular country would interfere significantly with the rights of individuals or companies to export their goods or to use their funds to make payments to individuals or companies in the country concerned. But, having regard to the principle stated by Lord Browne Wilkinson in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539, 575, I have come to the conclusion that, by enacting the general words of section 1(1) of the 1946 Act, Parliament could not have intended to authorise the making of AQO 2006 which so gravely and directly affected the legal right of individuals to use their property and which did so in a way which deprived them of any real possibility of challenging their listing in the courts. Lord Brown rejects that conclusion because, he says, there could surely be no political cost in doing what, unless we were flagrantly to violate our UN Charter obligations, the United Kingdom had no alternative but to do. I accept that there might be no real political cost in enacting the measure. But the essential point is that these matters should not pass unnoticed in the democratic process and that the democratically elected Parliament, rather than the executive, should make the final decision that this system, with its inherent problems, should indeed be introduced into our law. The need for Parliamentary endorsement is all the more important if the ordinary human rights restraints do not apply. I would accordingly hold that article 3(1)(b) of the AQO is ultra vires and void. For these reasons I agree that the appeals of A, K, M and G should be allowed and the appeal by the Treasury should be dismissed. LORD BROWN The principal question for the Courts decision on these appeals is whether the Terrorism (United Nations Measures) Order 2006 (The Terrorism Order) or the Al Qaida and Taliban (United Nations Measures) Order 2006 (The Al Qaida Order) or both fall to be quashed as having been made ultra vires the enabling power section 1 (1) of the United Nations Act 1946 (the 1946 Act). Section 1(1) is central to the appeals: If, under Article 41 of the Charter of the United Nations . (being the Article which relates to measures not involving the use of armed force) the Security Council of the United Nations call upon His Majestys Government in the United Kingdom to apply any measures to give effect to any decision of that Council, His Majesty may by Order in Council make such provision as appears to Him necessary or expedient for enabling those measures to be effectively applied, including (without prejudice to the generality of the preceding words) provision for the apprehension, trial and punishment of persons offending against the Order. The appellants (together with JUSTICE who intervene in these proceedings in support of their case) submit (and I simplify) that the Terrorism Order and the Al Qaida Order are ultra vires the 1946 Act, first, because they offend the common law principle of legality and, secondly, because they necessarily involve violations of Convention rights. Essentially what are challenged here are not the designations of the individual appellants and the directions made against them by the Treasury as such, but rather the Orders themselves. I gratefully adopt without repetition Lord Hopes detailed recitation of the facts of these appeals and the relevant provisions of all the main instruments under consideration: the United Nations Charter, the various United Nations Security Council Resolutions, the impugned Orders and, indeed, a number of other relevant Orders in Council made under the 1946 Act. This enables me to proceed at once to what I regard as the core issues. Although, as I shall come to explain, my final conclusion on these appeals is that the Terrorism Order should be struck down but the Al Qaida Order should stand, let me first make one or two brief introductory observations applicable to both. The draconian nature of the regime imposed under these asset freezing Orders can hardly be over stated. Construe and apply them how one will and to my mind they should have been construed and applied altogether more benevolently than they appear to have been they are scarcely less restrictive of the day to day life of those designated (and in some cases their families) than are control orders. In certain respects, indeed, they could be thought even more paralysing. Undoubtedly, therefore, these Orders provide for a regime which considerably interferes with the article 8 and article 1 of Protocol 1 rights of those designated. Similarly, it is indisputable that serious questions arise as to the sufficiency of protection of the article 6 rights of those designated. This is so, moreover, even if one superimposes upon the regime (as the Court of Appeal thought permissible) the services of a special advocate when required and the means of overcoming the potentially unfair effect of section 17 of the Regulation of Investigatory Powers Act 2000 with regard to the use of intercept evidence. These, then, are powerful reasons for questioning the legitimacy of introducing such restrictive measures by executive order instead of by primary legislation. As Lord Hoffmann famously said in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131: Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. I shall call this for simplicitys sake the Simms principle. There is, however, an important countervailing principle also in play here. Chapter VII of the UN Charter concerns action to be taken with regard to threats to international peace and security and by article 41 authorises the Security Council to decide on measures to be taken short of armed force to maintain peace and security and to call upon member states to apply such measures. When one considers the ravages of terrorism and war and the gross invasions of human rights which they inevitably entail, it is difficult to think of any greater imperative than that member states should fully honour their international law obligation to implement Security Council decisions under article 41. The existence of such an obligation could not be plainer. Article 25 of the Charter mandates it and article 103 expressly dictates that it is to prevail over any conflicting international law obligation. It follows that these appeals involve the clash of conflicting principles, each of profound importance. As it seems to me, almost any Order made under section 1(1) of the 1946 Act is likely to interfere with somebodys fundamental rights. Take a UN resolution imposing trading actions against some state. Any domestic measure giving effect to such a decision is bound to interfere with someones contractual dealings and impinge on their article 1 Protocol 1 rights and quite likely their article 8 rights too. Obviously the Simms principle cannot operate to emasculate the section 1(1) power entirely. What, then, are the touchstones by which to decide whether a particular executive Order falls within the scope of the power? As it seems to me, two paramount considerations will always arise: first, the degree of specificity of the UN decision which the UK is called upon to implement; second, the extent to which the implementing measure will interfere with fundamental human rights. Of course, the legislation affords the Minister some margin of appreciation as to just what is necessary or expedient for enabling the effective implementation of the United Nations resolution. But, the more invasive of the human rights of those affected the proposed provision is, the narrower that margin will be until, indeed, the point is reached where, unless the UK could not consistently with its obligations under the Charter introduce provisions any less invasive of human rights than those proposed, they could not properly be introduced by Order in Council at all but only by primary legislation. Where, as here, those to be designated under the proposed measure will suffer very considerable restrictions under the regime, I would hold that it can only properly be introduced by executive Order in Council if the measure is in all important respects clearly and categorically mandated by the UN resolution which it is purporting to implement. If the implementing measure is to go beyond this, then, consistently with the Simms principle, it can only properly be introduced by primary legislation. Turning to the impugned Orders, there seems to me a crucially important distinction between them. The fundamental reason why I for my part would strike down the Terrorism Order but not the Al Qaida Order as ultra vires the 1946 Act is that whereas I cannot regard the former as sufficiently mandated by SCR 1373 to which it purports to give effect, the Al Qaida Order to my mind does faithfully implement SCRs 1267, 1333 and 1390. Let me explain. First, the Terrorism Order. SCR1373, by paragraph 1(c), decided that all States shall [f]reeze without delay funds and other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts . The Terrorism Order, however, provides for designation by HM Treasury on the basis merely that it has reasonable grounds for suspecting that the person is (I omit the words or may be, struck out by the Court of Appeal) a person who commits, attempts to commit, participates in or facilitates the commission of acts of terrorism. This goes well beyond the strict requirements of Resolution 1373. To my mind, it was not open to the Minister to introduce such a provision by Order in Council under the 1946 Act. By contrast, paragraph 2 of SCR 1390 required that all States [f]reeze without delay the funds and other financial assets or economic resources of Osama Bin Laden, members of the Al Qaida organisation and the Taliban and others associated with them as referred to in the Sanctions Committee list. And that, as it seems to me, is precisely what the implementing Al Qaida Order sets out to achieve, no more and no less. What essentially it provides for is the designation of all those designated by the UN Sanctions Committee. I cannot see why the Simms principle should apply to limit the power of the executive to accomplish this. I have found it instructive in this regard to see how certain other Commonwealth countries have given effect to these same UNSCRs. Australia, New Zealand and Canada all have legislation akin to our 1946 Act. All three countries initially implemented both SCR 1267 and SCR 1373 by Regulations made under that legislation but in 2002 Australia and New Zealand (although not Canada) replaced these by primary legislation. As I understand it, both the Regulations and the legislation have directly implemented the Sanctions Committee designations under Resolution 1267 i.e. they automatically freeze the listed persons assets in just the same way as our Al Qaida Order. On the other hand, the provisions implementing Resolution 1373 are altogether more tightly drawn than our Terrorism Order. Unless designated by the Sanctions Committee, people cannot be subjected to executive designation and asset freezing unless the following conditions are met: in Australia only when the Minister is satisfied that the person is involved in terrorism; in Canada only when the Governor General is satisfied that there are reasonable grounds to believe this; in New Zealand only if the Prime Minister believes this on reasonable grounds (except that he can make an interim designation for 30 days if he has good cause to suspect it). Contrast all this with the position under the Terrorism Order where HM Treasury can designate on a long term basis merely on reasonable grounds for suspecting the person to be involved in terrorism. As I pointed out in a very different context in R v Saik [2007] 1 AC 18, 61, at para 120: To suspect something to be so is by no means to believe it to be so: it is to believe only that it may be so. The way Australia, New Zealand and Canada have dealt with these UNSCRs to my mind tends to support the conclusions I have reached about the impugned Orders. It suggests that whilst SCR 1267 is regarded as mandating the automatic asset freezing of those designated by the Sanctions Committee, SCR 1373 certainly cannot be regarded as mandating the long term asset freezing of people not designated by the Sanctions Committee merely on the ground of reasonable suspicion. With regard to the Terrorism Order I add only this. The logic of the Treasurys argument is that not only is that Order sufficiently mandated by the terms of Resolution 1373 but so too would have been Orders in Council introducing the various other regimes aimed at combating terrorism in fact introduced over recent years by primary legislation. Consider for example paragraph 2(b) of Resolution 1373, deciding that all states should [t]ake the necessary steps to prevent the commission of terrorist acts. Why should not the control order regime or, indeed, the earlier regime involving the executive detention of suspected terrorists unable to be deported have been the subject of Orders in Council under section 1(1) of the 1946 Act? The answer to my mind is plain. Both regimes were hugely invasive of human rights. Plainly they would have had to be mandated in the clearest and most categoric terms by a Chapter VII Resolution before they could properly have been introduced by Orders in Council. Equally clearly they were not. But by the same token that the control order regime itself similarly triggered by the Minister merely having reasonable grounds for suspecting someone of terrorist activity was lawfully introduced by legislation, so too, provided always, of course, that Parliament was persuaded to enact it, could the asset freezing regime have been. I am unimpressed by the alternative grounds on which the Order is challenged, those of certainty and proportionality. Primary legislation introducing this same asset freezing regime could not have been declared incompatible on those grounds. It is only because the Order was plainly insufficiently mandated by the SCR 1373 that I would hold it invalid. I return to the Al Qaida Order which, as I have suggested, does precisely what SCR 1267 (and subsequent Resolutions) expressly required the UK to do. I recognise, of course, that the UKs international law obligations give rise to no domestic law rights or obligations unless and until they are given effect in domestic law. But here the Resolution was given domestic law effect. The only question is whether that could properly be done by Order in Council under the 1946 Act. Inevitably in considering this question one is struck by the dramatic consequences of implementing SCR 1267: the long term radical restrictions upon the lives of those designated by the Sanctions Committee without their being afforded any judicial means of challenging that designation. (I cannot accept the Court of Appeals suggestion that a merits based review can somehow be achieved within the scope of this regime.) In these circumstances it is perhaps unsurprising that the European Court of Justice in Kadi v Council of the European Union (Joined Cases C 402/05P and C 415/05P) [2009] AC 1225 struck down an implementing EC Regulation for want of any procedure for telling those designated of the evidence against them or for a hearing on the merits of the case for (and against) their inclusion in the Sanction Committees list. But, of course, the European Community is not a member state of the UN: unlike the UK, it is not under an international law obligation to implement Security Council decisions under article 41 of Chapter VII of the Charter and, more particularly, to do so in the light of article 103 of the Charter: In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail. The UKs position as a member state is quite different. Not merely was the UK entitled to introduce this asset freezing scheme in respect of those designated by the Sanctions Committee; it was (under international law) bound to do so. And given that it was bound to do so, I can see no good reason why that should not have been achieved under the 1946 Act. I accept, of course, that the regime introduced by the Al Qaida Order is contrary to fundamental principles of human rights (to use Lord Hoffmanns phrase in Simms). But that was the inevitable consequence of implementing Resolution 1267. Obviously, as it seems to me, it could have been implemented by primary legislation. Certainly, whilst R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2008] AC 332 stands, such legislation could not be declared incompatible with Convention Rights. What purpose then, one asks, would be served by adopting this course rather than making use of the 1946 Act? The Simms principle is intended to ensure that human rights are not interfered with to a greater extent than Parliament has already unambiguously sanctioned. The loss of such rights is not to be allowed to [pass] unnoticed in the democratic process. Parliament must squarely confront what it is doing and accept the political cost. But in this case the Security Council by Resolution 1267 unambiguously stated what was required of the UK and the 1946 Act equally unambiguously provided that that measure could be implemented by Order in Council. There could surely be no political cost in doing what, unless we were flagrantly to violate our UN Charter obligations, the UK had no alternative but to do. I do not accept that such an approach carries with it the implication that the 1946 Act could similarly be used to introduce by Order in Council the sort of internment regime mandated by the Security Council Resolution under consideration in Al Jedda. Given the obvious extent to which internment interferes with fundamental human rights, such a resolution would need a degree of specificity at least as great as that characterising SCR 1267 to satisfy my suggested criteria (see para 196 above) for the proper use of the 1946 Act power. Internment where this is necessary for imperative reasons of security (the terms of the resolution providing for internment in post war Iraq with which the House was concerned in Al Jedda), understandable as that was in its particular context, would not sufficiently clearly mandate a comprehensive internment regime in the UK pursuant to Executive Order; internment of named individuals in certain circumstances might. Since, however, it now appears that the approach I favour is not one which commends itself to the majority of the Court, it would be unhelpful to pursue the matter further. I content myself with the hope that the view of the majority will not be thought to indicate any weakening in this countrys commitment to the UN Charter. LORD MANCE Introduction These appeals concern the validity of (i) the Terrorism (United Nations Measures) Order 2006 and (ii) the Al Qaida and Taliban (United Nations Measures) Order 2006. I shall refer to these as the Terrorism Order 2006 and the Al Qaida Order. Both were made in reliance on the power contained in section 1(1) of the United Nations Act 1946, providing: Measures under article 41 If under article forty one of the Charter of the United Nations signed at San Francisco on the twenty sixth day of June, nineteen hundred and forty five (being the Article which relates to measures not involving the use of armed force) the Security Council of the United Nations call upon His Majestys Government in the United Kingdom to apply any measures to give effect to any decision of that Council, His Majesty may by Order in Council make such provision as appears to Him necessary or expedient for enabling those measures to be effectively applied, including (without prejudice to the generality of the preceding words) provision for the apprehension, trial and punishment of persons offending against the Order. Article 41 appears in Chapter VII of the Charter of the United Nations which is headed Action with respect to threats to the peace, breaches of the peace, and acts of aggression and provides: 39. The Security Council shall determine the existence of any threat to the peace, breach of the peace, or act of aggression and shall make recommendations, or decide what measures shall be taken in accordance with Articles 41 and 42, to maintain or restore international peace and security. 41. The Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures. These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations. 42. Should the Security Council consider that measures provided for in article 41 would be inadequate or have proved to be inadequate, it may take such action by air, sea, or land forces as may be necessary to maintain or restore international peace and security. Such action may include demonstrations, blockade, and other operations by air, sea, or land forces of Members of the United Nations. In the cases of A, K, M and G v Her Majestys Treasury [2008] EWCA Civ 1187, [2009] 3 WLR 25, the Court of Appeal, overruling Collins J [2008] EWHC 869 (Admin), [2008] 3 All ER 361, held by a majority (Sir Anthony Clarke MR and Wilson LJ) that both Orders were valid, subject only to the excision from the former Order of the words or may be. Sedley LJ dissented on the issue of the validity of the Terrorism Order. The majority reasoning was that the Orders fell, subject to the excision, within the scope of section 1(1), that they were certain and proportionate and that their operation could be accompanied by sufficient procedural safeguards to preclude any objection to their validity at common law or under the Human Rights Act 1998. Against those conclusions, appeals have been brought with leave by A, K, M and G (who, in the light of our ruling on the first day of the appeal, can be given his Lord Hope has set out the background to and salient terms of the Terrorism Order 2006 and the Al Qaida Order in paras 21 to 27, and the circumstances and effect of application of these Orders to A, K, M, G and HAY in paras 1 to 4 of his judgment. A, K, M and G were each made the subject of a direction by the Treasury under article 4 of the Terrorism Order 2006. They were entitled to challenge the Treasurys direction under article 5(4)(a) of that Order. In late October 2009 (subsequent to the hearing of these appeals), their designations under the Terrorism Order 2006 were revoked and replaced, as Lord Hope recounts in para 27, by designations under the Terrorism (United Nations Measures) Order 2009 (SI 2009/1747), which was itself framed to replace the Terrorism Order 2006. For the reasons which Lord Hope gives in para 28 and without pre judging any contrary argument which may be raised, this redesignation does not appear to make the central issues argued before us under the Terrorism Order 2006 either academic or of past interest only. G and HAY were persons designated by the Sanctions Committee and were accordingly covered without more by article 3(1)(b) of the Al Qaida Order. They were not entitled to bring any challenge under article 5(4)(a) of the Al Qaida Order, since that applies only to persons covered by virtue of a Treasury direction. Gs application to the court under article 5(4)(a) of the Al Qaida Order was thus treated by Collins J as an application for judicial review. HAYs application was brought from the outset as an application for judicial review. Section 1(1) of the 1946 Act The primary argument of the appellants A, K, M and G, supported by the interveners JUSTICE, is that, notwithstanding the wide wording of section 1(1), the Terrorism Order 2006 was by its nature a measure falling outside the scope of section 1(1). Section 1(1) was, they submit, conceived with measures in mind arising from disputes between states, while the Terrorism Order 2006 was an executive order directed in the first place to individuals and interfering with their fundamental rights in a manner which could not, as a matter of constitutional propriety, have been contemplated without legislation in Parliament. A similar argument is mounted in respect of the Al Qaida Order, reinforced by the consideration that, in that case, the Order purports to Section 1(1) of the 1946 Act was introduced to provide a quick and simple means by which the United Kingdom could honour its international obligations and impose upon its citizens the duty to comply with decisions of the Security Council under article 41 of the United Nations Charter. In these circumstances, I agree with views expressed in the Court of Appeal in Oakley Inc v Animal Ltd (Secretary of State for Trade and Industry intervening) [2005] EWCA Civ 1191; [2006] Ch 337. The Court there said that the power under the European Communities Act 1972 to give effect to this countrys international (Community) obligations was a power sui generis and should not be construed narrowly. The same applies to the power conferred by section 1(1) to give effect to Security Council Resolutions under article 41. In considering whether the general language of section 1(1) extends to the implementation of any such Resolution, however radical its effect on individual rights, it is nonetheless of some relevance that section 1(1) involves purely executive action, to implement inter governmental decisions taken in the Security Council, free in each case of any procedure for direct Parliamentary scrutiny. Not surprisingly, article 41 itself illustrates its application in its second sentence by reference to the interruption of economic relations or communications and the severance of diplomatic relations familiar measures directed against states. In the debates in Parliament, these examples were cited by the Lord Chancellor (Hansard 12 February 1946, col 375) and by the Minister of State in the Commons (Hansard 5 April 1946, col 1516). But section 1(1) of the 1946 Act expressly contemplates that sanctions against another state may, in order to be effective, require to be supported at the domestic level by criminal prohibitions addressed directly to and enforceable against persons (individual or corporate). The present appeal concerns measures taken at the international level, but addressed to and enforceable against non state actors and individuals, and the issue is how far section 1(1) enables effect to be given to such measures. That the line between measures against state and non state actors is not as great as might appear is demonstrated by the history of Security Council Resolutions leading to the Terrorism and Al Qaida Orders. Initially, the focus was on the control by the Taliban (described in Resolution 1267 as the Afghan faction known as the Taliban, which also calls itself the Islamic Emirate of Afghanistan) of part of Afghanistan, accompanied by pretensions to control the whole country, and its making available the areas that it controlled to Al Qaida for the purposes of international terrorism against other states. No doubt the threat to international peace by rogue states or states under rogue leadership was in the forefront of everyones mind in 1945 46. But a threat to peace by an organisation which has succeeded in taking over a significant part of a state cannot sensibly be distinguished. Nor indeed can a threat posed by an international organisation which establishes itself outside the jurisdiction, or without taking over any particular part, of any state and presents a threat to international peace. Under article 39 of the United Nations Charter, it is the Security Councils role to identify the existence of a threat to international peace from any such organisation, not just from states. What matters is such a threat, not whether it originates in a traditional subject of international law. Earlier instances exist of Security Council Resolutions under Chapter VII directing states to take measures against non state actors: for example, measures under Resolution 841(1993) to freeze within their territories funds of the de facto authorities in Haiti, as well as funds of the legitimate, though ousted government of President Aristide; measures under Resolution 864(1993) against the UNITA movement in Angola; measures under Where the present Resolutions can be said to go further is that they are directed in the case of Resolutions 1267, 1333 and 1390 not only at particular non state actors, the Al Qaida organization and the Taliban and at Usama bin Laden, but at all members of the Al Qaida organization and the Taliban and other individuals, groups, undertakings and entities associated with them, and in the case of Resolution 1373 at individuals engaging in terrorism. In the case of the latter, the means of identifying such individuals were to be established in domestic law, but in the case of the former the Resolutions provided for identification of the associated individuals, groups, undertakings and entities at the international level by the committee consisting of all Security Council members. The appellants did not challenge indeed they said expressly that they accepted the legitimacy of Resolution 1373 under article 41 of the United Nations Charter. In any event, the legitimacy of such measures is not as such justiciable at a domestic level. It is all the same worth noting the opinion expressed by Sir Michael Wood in his first Hersch Lauterpacht lecture (delivered 7 November 2006) on The Legal Framework of the Security Council that: Depending on the nature of the threat, such measures may be specific, addressed, for example, to the threat emanating from North Korea, or they may be general, addressed, for example, to the global threat from terrorist groups. I do not see any great principle involved here, though the circumstances in which general measures are considered necessary and appropriate may prove to be rare. At a domestic level, the question does, however, arise as to how far all such measures are capable of being reflected by Orders in Council made under section 1(1) of the United Nations Act 1946. Essentially, the question is whether the power in section 1(1) is subject to implicit limitations, arising from the background against which it was passed and the need for express language to override what would otherwise be regarded as basic rights. A similar issue was raised by Hazel Fox (Lady Fox) in 1997 in relation to an order implementing the Resolution 827(1993), whereby the Security Council established the International Tribunal for the former Yugoslavia. The United Nations (International Tribunal) (Former Yugoslavia) Order 1996 (SI 1996/716), made in reliance on section 1(1), providing for, inter alia, the arrest and transfer out of the jurisdiction of individuals for trial to and sentence by the Tribunal. Hazel Fox described the Security Councils Resolution as a wholly novel exercise of power and questioned the legitimacy of the use of section 1(1) for the purpose of its implementation: The objections to transfer of criminal jurisdiction to the UN Tribunal (1997) 46 ICLQ 434. Professor Christopher Greenwood, as he then was, later responded, arguing that the wording of section 1(1) is unconfined: see V Gowlland Debbas (ed.), National Implementation of United Nations Sanctions: a Comparative Study (2004, Martinus Nijhoff), 581, esp at pp 601 603. The Terrorism Order 2006 general The aim of section 1(1) was to enable the United Kingdom government to respond, with despatch, to any call by the Security Council to apply any measures to give effect to any decision of that Council. Section 1(1) is in my view apt to cover Security Council decisions under article 41 requiring every state to take domestic measures against persons who that state identified as involved in terrorist activities. Section 1(1) expressly envisages that Security Council decisions under article 41 will, in order to be effective, require to be accompanied by prohibitions and sanctions addressed to domestic individuals or entities, and impacting, therefore, on rights or freedoms that they would otherwise have particularly to make contracts and deal with or dispose of property. This might be the case either because the Security Council Resolution expressly so required, or because its effective domestic application appeared to the executive to make it necessary or expedient. On the face of it, therefore, it was open to the executive government to react by Order in Council to Security Council Resolutions 1267 and 1373 and their successive resolutions in the same series, by introducing provisions freezing the assets of persons who were identified at the domestic level as terrorists, and thereby enabling measures required by article 4(2) of Resolution 1267 and article 1 of Resolution 1373 to be effectively applied in the United Kingdom. The Terrorism Order 2006 necessary or expedient The essential question is whether the Terrorism Order 2006 was in terms which can be regarded as making such provision as appears to [Her Majesty in Council] necessary or expedient for enabling those measures to be effectively applied. Before the Supreme Court, though it appears to a lesser extent below, considerable emphasis was placed upon the extent to which Parliament had been asked to enact and had enacted anti terrorist measures by primary legislation (in particular the Terrorism Act 2000, passed on 20 July 2000, and ACTA 2001, passed on 14 December 2001) and the suggested constitutional impropriety of the Government by passing Parliament and deciding what powers to accord itself through the Terrorism Orders 2001 and later 2006 and 2009. One can certainly feel concern about the development and continuation over the years of a patchwork of over lapping anti terrorism measures, some receiving Parliamentary scrutiny, others simply the result of executive action. However, the primary legislation does not implement all measures required by the United Nations Resolutions and the primary and secondary legislation are not actually inconsistent. More particularly, Part III of the Terrorism Act 2000 introduced a series of offences relating to terrorist property, defined to include money or other property likely to be used for the purposes of terrorism, as well as the proceeds of, or of acts carried out for the purposes of, terrorism. But these offences are all defined in terms which require mens rea such as an intention, knowledge or reasonable suspicion that money or other property will be used for terrorist purposes. In contrast, the Terrorism Orders 2001 and 2006 both included absolute prohibitions on certain dealings with designated persons. The 2001 Order included a precursor (article 3) to article 8 of the 2006 Order (article 3 was confined to making available any funds or financial (or related services)), as well as a precursor (article 4) to articles 4 and 7(1) of the 2006 Order (article 4 only gave power to the Treasury to direct that funds be not made available to any person by a person by, for or on behalf of whom such funds were held where the Treasury had reasonable grounds for suspecting that the latter person is or may be within one of the three categories matching article 4(2)(a), (b) and (d) of the 2006 Order). As to the ACTA 2001, this was passed over two months after the Terrorism Order 2001. In theory at least, Parliament had the opportunity, when enacting the ACTA 2001 to consider whether the Terrorism Order 2001 should be allowed to continue in force. The same may be said in relation to the enactment of the Terrorism Act 2006. However there is little, if anything, to suggest that Parliamentary attention was ever focused on or drawn to this opportunity. The Explanatory Notes to the 2001 and 2006 Acts make no The extensive power to make freezing orders under Part 2 of ACTA 2001 is limited by pre conditions, the first that the Treasury should reasonably believe that action to the detriment of the United Kingdom economy or constituting a threat to the life or property of one or more United Kingdom nationals has been or is likely, but the second, critically, that the person taking or likely to take such action is a foreign government or overseas resident. The Terrorism Orders 2001 and 2006 extend, and have regularly been used, in relation to purely domestic threats. It may well be thought desirable that such measures should be debated in Parliament alongside the primary legislation which Parliament did enact, and correspondingly undesirable that there should be developed and continued, as a result of executive Orders, a patchwork of measures that have and have not been debated in Parliament. But I cannot view the making of the Orders under section 1(1), or their continuation in force, as constitutionally improper merely because of these considerations. This however leaves open whether the measures introduced by executive Order were of a nature falling within the scope of section 1(1) of the United Nations Act 1946. The argument in the courts below focused on the prescribed pre conditions to the making of any direction under article 4, and, in particular, on the words that the Treasury have reasonable grounds for suspecting that the person is or may be . While Collins J and the Court of Appeal considered that the words or may be lowered the threshold too far, the majority in the Court of Appeal accepted that the executive could properly conclude that it was expedient to provide that reasonable grounds for suspicion was an appropriate test (paras 42 and 155 157). The Master of the Rolls observed that Resolution 1373 was silent on the standard of proof to be satisfied on the question whether a particular person commits, or attempts to commit, terrorist acts before a state can freeze his assets within paragraph 1(c) or prohibit certain activities within paragraph 1(d) (para 42). In this context, because of the nexus with domestic law arising from the language of section 1(1) itself, it is necessary to form a view about the scope of Security Council Resolution 1373. I see its scope differently to the Master of the Rolls. The relevant wording of Security Council Resolution 1373 article 1(c) and (d) is directed at the prevention and suppression and the criminalisation and prosecution of actual terrorist acts; at the freezing of funds or other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts and of entities owned or controlled, or acting on behalf of or at the direction of such persons and entities; and at prohibiting nationals or persons and entities within their territories from making any funds, financial assets or economic resources or financial or related services available for the benefit of any such persons. This wording does not suggest that the Security Council had in mind reasonable suspicion as a sufficient basis for an indefinite freeze. When, following the terrorist bombing on 14 February 2005 which killed former Lebanese Prime Minister Rafiq Hariri, the Security Council adopted Resolution 1636 (2005) under Chapter VII, it decided, as a step to assist in the investigation of this crime and without prejudice to the ultimate judicial determination of the guilt or innocence of any individual, that all individuals designated by the [international investigation] Commission [S/2005/662] or by the Government of Lebanon as suspected of involvement in this terrorist act, upon notification of such designation to and agreement of the Committee [established by the Security Council for the purpose] should be prohibited entry to or transit through states other than their own, and that all states should freeze all such individuals funds, financial assets and economic resources. The absence of any similar reference to persons suspected in Resolution 1373 is notable. Further, the freezing measures prescribed by Resolutions 1267, 1333 and 1390 (which in turn led to the Al Qaida Order 2006) have been explained as preventative in nature and not reliant upon criminal standards set out under national law: see recitals to Resolutions 1735 (2006), 1822 (2008) and 1904 (2009). Resolutions 1735 and 1822 themselves called on states not merely to freeze the assets of individuals on the Sanctions Committee list, but also to prevent the supply, sale or transfer to such individuals of arms and related material. The latter would have to be proscribed at the domestic level, at which level issues would arise as to the standard of proof contemplated. The wording of the recitals to Resolutions 1735 and 1822, post dating that of Resolution 1636 (2005), does not suggest that reasonable suspicion was contemplated as the appropriate test, but rather an ordinary civil standard of proof of relevant allegations. In so far as the Court of Appeal justified its decision on the basis that the Security Council Resolutions contemplate indefinite freezing orders based not on proof but on reasonable suspicion, I therefore disagree. That is not the end of the matter, because of the power to make such provision as appears to Her Majesty in Council necessary or expedient for enabling the relevant Security Council Resolutions to be effectively applied. That undoubtedly justifies provisions going beyond those of the Resolutions, and expediency goes wider than necessity. To that extent, I cannot accept the description of section 1(1) given by Mr Fordham QC as a mere transposition power. An example of such a provision under section 1(1) itself is found in R v Her Majestys Treasury, Ex p Centro Com [1994] CLC 628 (CA). The Order in Council there went beyond Security Council Resolution 757 (1992) relating to the conflict in the former Yugoslavia, in so far as it enabled the Treasury to prohibit the making of payments from funds held in the United Kingdom even of medical supplies and foodstuffs, and the Treasury determined that it would refuse permission for payment of all supplies (even supplies already made), other than medical supplies and foodstuffs supplied from the United Kingdom. The reason was the risk that payments were being made from funds held in the United Kingdom, for supplies from other countries which were ostensibly but were not in fact medical supplies or foodstuffs, and the impracticality of eliminating this risk in relation to goods supplied from abroad. The Court of Appeal (unanimous on this point) upheld the validity of the Treasurys determination in principle, with Glidewell LJ dissenting only in relation to its retrospective application to past supplies. The court mentioned that its decision did not prevent the supply of medical supplies or foodstuffs from any country. It merely imposed a limitation on the origin of the funds which the purchasers could use to pay for such supplies. In the present case, the Order as worded imposes an indefinite freeze on the use of funds or economic resources by any person designated by the Treasury for the purposes of the Order on the basis that the Treasury have reasonable grounds for suspecting that he is or may be (a) a terrorist or (b) a person identified in Council Decision 2006/379(EC) or (c)/(d) a person owned or controlled or acting on behalf or at the direction of any person so designated. Only on the basis that the Treasury did not have reasonable grounds for suspecting this, could a person seek under article 5(4) to set aside a Treasury direction made under article 4. The courts below held that the phrase or may be was outside the scope of the power in section 1(1), as lowering the threshold too far. Mr Swift for the Treasury does not concede that this conclusion was correct (though there has been no cross appeal against it), but said frankly that the reason there was no cross appeal in respect of the deletion of the words or may be was because the Treasury did not really need to, if it had the words have reasonable grounds for suspecting. In my opinion, there is an objective limit to the extent to which section 1(1) permits the executive by Order in Council to enact any measure that appears to it expedient to enable the effective application of the core prohibition mandated by Resolution 1373 and summarised in para 225 above. A measure cannot be regarded as effectively applying that core prohibition, if it substitutes another, essentially different prohibition freezing the assets of a different and much wider group of persons on an indefinite basis. I accept that it could have been regarded as necessary or expedient to freeze the funds and economic resources of suspects on a temporary basis, in order to ensure the effectiveness of any permanent freezing order, once their terrorist activity had been shown or they had had, at the least, the opportunity of disproving it to a civil standard. I also accept that the indefinite freezing of funds and economic resources of suspects may make it probable that the group of persons whose funds, etc. are frozen will include more actual terrorists, etc. But it does so by changing the essential nature and target of the freezing order. That being the case, it is no longer possible to say that the Order is either necessary or expedient for enabling those measures [those decided by Resolution 1373] to be effectively applied. It is enabling or applying different measures. Further and in any event, since the Treasurys case involves interpreting the words necessary or expedient in section 1(1) of the United Nations Act 1946 as authorising a major inroad, on the basis of reasonable suspicion alone, into the rights of individuals to dispose of their assets and live their lives free of executive interference, the principle of legality, which I discuss in more detail below in relation to the Al Qaida Order, argues for the more limited interpretation. For these reasons, I consider that the Terrorism Order 2006 was outside the power conferred upon the Treasury under section 1(1). It was not submitted that, in these circumstances, not only the words or may be but also the words that the Treasury have reasonable grounds for suspecting in article 4(2) could be blue pencilled, so as to leave the Order valid on that changed basis. But, in any event, such a suggestion would, even if accepted, have made no difference to the appeals of A, K, M and G in respect of the Terrorism Order 2006, since their designation was based on too relaxed a test. In these circumstances, I consider that we should allow the appeal in respect of this Order, declare that the Order was ultra vires and quash it. Since A, K, M and G are all now subject to designation under the Terrorism Order 2009, which could only be quashed in separate proceedings, there is no point in staying the operation of our order quashing the Terrorism Order 2006 for any period. The alternative grounds of challenge to the Terrorism Order I add some words on the alternative grounds on which the appellants sought to challenge the Terrorism Order 2006. They were presented under the heads of certainty and proportionality, in each case in reliance on the Human Rights Convention. The prohibitions in articles 7(1) and 8(1) of the Order were said to amount to an unlawful interference with Convention rights, particularly the right to peaceful protection of possessions protected by article 1 of Protocol 1 and the right to respect for private and family life protected by article 8. The same prohibitions, in combination with the criminal sanctions provided by articles 7(3) and 8(2), are said to have been insufficiently certain to comply with article 7 of the Convention. Three particular aspects of alleged uncertainty are identified: the first, the scope of the prohibition in article 7(2)(d) in respect of any person acting on behalf or at the direction of a person referred to sub paragraph (a) or (b); the second, the scope of the words make economic resources available, directly or indirectly in article 8(1); and the third, the scope of the further words in that article to or for the benefit of a person referred to in article 7(2). The requisite standard governing certainty under article 7 was summarised by the European Court of Human Rights in Kafkaris v Cyprus (2008) 49 EHRR 877 as follows: the 141. Furthermore, implies qualitative requirements, including those of accessibility and foreseeability (see, among other authorities, Cantoni v France, judgment of 15 November 1996, Reports of Judgments and Decisions 1996 V, p 1627, para 29; Come v Belgium, cited above, para 145; and EK v Turkey (2002) 35 EHRR 1344, para 51). These qualitative requirements must be satisfied as regards both the definition of an offence and the penalty the offence in question carries (see Achour v France (2006) 45 EHRR 9, para 41). An individual must know from the wording of the relevant provision and, if need be, with the assistance of the courts' interpretation of it, what acts and omissions will make him criminally liable and what penalty will be imposed for the act committed and/or omission (see, among other authorities, Cantoni, cited above, para 29). Furthermore, a law may still satisfy the requirement of foreseeability where the person concerned has to take appropriate legal advice to assess, to a degree that is reasonable in the circumstances, the consequences which a given action may entail (see, among other authorities, Cantoni, cited above, p 1629, para 35; and Achour, cited above, para 54). term law 142. The Court has acknowledged in its case law that however clearly drafted a legal provision may be, in any system of law, including criminal law, there is an inevitable element of judicial interpretation. There will always be a need for elucidation of doubtful points and for adaptation to changing circumstances. Again, whilst certainty is highly desirable, it may bring in its train excessive rigidity and the law must be able to keep pace with changing circumstances. Accordingly, many laws are inevitably couched in terms which, to a greater or lesser extent, are vague and whose interpretation and application are questions of practice (see, mutatis mutandis, Sunday Times No 1, cited above, p 31, para 49, and Kokkinakis, cited above, p 19, para 40). The role of adjudication vested in the courts is precisely to dissipate such interpretational doubts as remain (see, mutatis mutandis, Cantoni, cited above). Article 7 of the Convention cannot be read as outlawing the gradual clarification of the rules of criminal liability through judicial interpretation from case to case, provided that the resultant development is consistent with the essence of the offence and could reasonably be foreseen (see SW v United Kingdom, cited above, para 36, and Streletz, Kessler and Krenz vs Germany GC, nos 34044/96, 35532/97 and 44801/98, para 50, ECHR 2001 II). Judged by these standards, I agree with the Court of Appeals reasoning and conclusion that the relevant provisions of articles 7 and 8 were and are sufficiently certain to be valid. That difficult cases may arise is not the point. Further, both under domestic law and under the jurisprudence of the European Court of Human Rights, criminal law provisions will, in case of real doubt, be construed restrictively, in the accused's favour: see Kafkaris, para 138. Among other points, it is relevant to note that article 7(1) read with 7(2)(d) is addressing a situation where a person (A) deals with funds or economic resources belonging to, owned or held by a person (B) acting on behalf or at the direction of a terrorist or designated person (usually C, though it could be A) rather than with funds owned or held by A. In relation to make economic resources available in article 8(1), it is relevant to note that economic resources are defined to mean assets which are not funds, but can be used to obtain funds, goods or services. This would be unlikely to be the case in respect of a number of the examples canvassed in argument (supply of a cooked meal or a bed for the night, for example). The appellants were able to point to the stringent interpretation of the words for the benefit of, for which the Treasury has argued under Council Regulation (EC) 881/2002 in R(M) v HM Treasury (Note) [2008] UKHL 26; [2008] 2 All ER 1097. The interpretation advanced there by the Treasury would, if correct, preclude the payment (without Treasury licence) to the wife of a designated person of social security benefits, enabling her to expend money on domestic expenses such as I am at present also unpersuaded that the content of the Orders could be challenged on grounds of lack of proportionality, although I need express no final view about this. Combating terrorism, and the freezing of funds or resources which can be used for terrorist purposes, are undoubtedly matters of first importance. Those introducing legislative measures in this area have to make a judgment as to the nature and stringency of the measures required. The severity of impact of the freezing order provisions in the Terrorism Orders 2001 and 2006 on designated individuals in respect of whom there is only a reasonable suspicion of terrorism and on others such as members of their families is relevant when considering whether such measures could be introduced as delegated legislation under section 1(1) of the 1946 Act. But, assuming this otherwise to be permissible, designation was not automatic and the Treasury was under the Terrorism Order 2006 empowered to grant licences to make available or deal with funds or economic resources in a manner which would otherwise be prohibited. The appellants complained about the stringency with which and way in which the Treasury has in fact operated its licensing system, but this does not appear as a complaint which can affect the validity of the Orders themselves, as opposed to the propriety of the Treasurys interpretation or use of its powers under the Orders. The latter aspect is not in issue before us. The appellants in their printed case also sought in relation to the Terrorism Order 2006 to rely upon the absence of any statutory provisions for the use of closed material by way of the special advocate procedure, and for the disapplication of the statutory prohibition under section 17 of the Regulation of Investigatory Powers Act (RIPA) 2000. The Counter Terrorism Act 2008 now makes express provision covering both points (ss.67 69). The original designations under the Terrorism Order 2006 were quashed, as a result of the conclusion in the courts below that the words or may be were inadmissibly included in the Order. Fresh designations were made after the Court of Appeals decision, and have in turn been replaced by those now in existence under the Terrorism Order 2009. The procedures in the Counter Terrorism Act 2008 would apply to any challenges to these fresh designations. The points raised below regarding the absence of an express special advocate procedure and the disapplication of section 17 of RIPA are therefore academic under the Terrorism Order 2006, and I need say no more about them in that connection. The Al Qaida Order I turn to the Al Qaida Order, relevant to both G and HAY. G and HAY are persons designated by the Sanctions Committee within article 3(1)(b), and subject accordingly to the prohibitions in articles 7 and 8, of the Order. It is at the heart of both the Treasurys and Gs and HAYs cases that the application to them of such prohibitions was required by the Security Council Resolutions to which the Order was intended to give effect, and that, once their designation by the Sanctions Committee was accepted, the merits of their designation were and are a matter external to and incapable of challenge in any domestic court. The Treasury derives from this the conclusion that the making of the Order incorporating article 3(1)(b) was authorised and valid under section 1(1). G and HAY submit that, precisely because domestic law can in these circumstances offer them no effective recourse, the making of the Order was invalid. In the case of G, where the United Kingdom had sought and obtained Gs listing, it was held (at least by Wilson LJ: para 157) that effective recourse consisted in no more than a merits based judicial review of the executives response to [Gs] application that it should request or support his own request, for delisting by the Sanctions Committee. In the case of HAY, Owen J held, after reviewing the Court of Appeals reasoning, that no effective recourse existed in respect of HAY, because of the lack of any certainty that he would be delisted, despite the United Kingdoms support, in circumstances where another unidentified state had sought his listing. The appellants put their case on two distinct bases, one common law, the other based on the Human Rights Act. At common law, the submission is that section 1(1) cannot be taken to have contemplated or permitted Orders which would interfere with, or at all events violate, fundamental rights. Under the Human Rights Act, they recognise an obstacle in the reasoning in R(Quark Fishing Ltd.) v Secretary of State for Foreign and Commonwealth Affairs [2005] UKHL 57; [2006] 1 AC 529, particularly at paras 25 and 88, per Lord Bingham and Lord Hope, and in the decision in R(Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2007] UKHL 58; [2008] AC 332. In Al Jedda the House of Lords held, in the light of article 103 of the Charter, that a power to detain authorised by Security Council Resolution 1546 and successive further Resolutions under Chapter VII prevailed over the limitations on the power to detain otherwise contained in article 5 of the Convention (although a detainees rights under article 5 were not to be infringed to any greater extent than was inherent in such detention: para 39, per Lord Bingham). G and HAY invite the Supreme Court to reconsider both these cases and to depart from them so far as necessary. As noted above (para 218), section 1(1) of the United Nations Act 1946 contemplates that Orders in Council implementing Security Council Resolutions under Chapter VII may interfere with individual persons rights to enter into contracts or to deal with or dispose of their business. The limitations imposed by the Al Qaida Order on Gs and HAYs rights to use their property and on their privacy or family life were not, as such, of a character falling outside the scope of the section 1(1) power to give effect to Security Council Resolutions. The real issue is whether section 1(1) permits the making of an Order which interferes with such rights on a basis which is immune from any right of challenge on the merits before a court or other judicial tribunal. G and HAY submit that section 1(1) does not embrace the making of an Order in Council which deprived them of any effective right of access to a court or judicial tribunal to challenge the basis upon which they had been categorised as associates of Al Qaida or the Taliban, with the limitations on their rights to use their property and on their privacy and family life that followed from that categorisation. It is not suggested that the Sanctions Committee equates with a court or judicial tribunal, though steps have been taken to respond to the General Assemblys call in September 2005 on the Security Council to ensure that fair and clear procedures exist for placing individuals and entities on sanctions lists and removing them, as well as for granting humanitarian exemptions (UNGA Resolution 60/1 of 16 September 2005). The Committees procedures are set out in Guidelines first adopted on 7 November 2002 and now current in a version adopted on 9 December 2008. The Committee usually meets in closed session, and it determines what information about its proceedings or considered by it should be made public or otherwise disclosed. Its decisions are usually taken by consensus, but if none is achieved the matter may be submitted to the Security Council itself, which decides by majority. The Committee receives applications for removal of a name from the list either by states, or, through the Focal Point procedure established by Resolution 1730 (2006), from any person or entity on the list. But there is no judicial procedure enabling a person or entity affected to know and respond to the full case regarding it. The identity of the member state seeking a listing or seeking to uphold a listing may not even be known or disclosed to that person or entity. Under Resolution 1822 (2008) para 12, the member state proposing inclusion on the list identifies those parts of the detailed statement of case that may be publicly released, and about which the person affected should under para 17 be notified. The most recent Resolution 1904 (2009) adopted on 17 December 2009 reflects in a number of respects concerns expressed about the effects of the United Nations Resolutions and the Committees procedures; it reverses the onus by deciding that the statement of case shall be releasable upon request, except for the parts a Member State identifies as being confidential to the Committee, and may be used to develop the narrative summary of reasons for listing to be published on the Committees website (para 11); and it provides for an Ombudsperson (an eminent individual of high moral character, impartiality and integrity with high qualifications and experience in relevant fields, such as legal, human rights, counter terrorism and G and HAY invoke under English law the statement of principle in Lord Browne Wilkinsons speech in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539, 575C D to the effect that: A power conferred by Parliament in general terms is not to be taken to authorise the doing of acts by the donee of the power which adversely affect the legal rights of the citizen or the basic principles on which the law of the United Kingdom is based unless the statute conferring the power makes it clear that such was the intention of Parliament. Lord Browne Wilkinson dissented in that case only as to whether the principle applied on its particular facts. In R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131E G, Lord Hoffmann developed the principle of legality in these terms: Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. The Human Rights Act 1998 will not detract from this power. The constraints upon its exercise by Parliament are ultimately political, not legal. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. In this way the courts of the United Kingdom, though acknowledging the sovereignty of Parliament, apply principles of constitutionality little different from those which exist in countries where the power of the legislature is expressly limited by a constitutional document. In Pyx Granite Co Ltd v Ministry of Housing and Local Government [1960] AC 260, 286, Viscount Simonds referred to the principle that the subjects right of recourse to Her Majestys courts for the determination of his rights as a fundamental rule and as not by any means to be whittled down. In Ex p Pierson Lord Browne Wilkinson referred with approval to R v Lord Chancellor, Ex p Witham [1998] QB 575, where the right of access to the courts was treated as a basic constitutional right, the abrogation of which was not to be taken as authorised by the general words of a statutory provision, so that the setting of court fees at a level precluding access to the court by some litigants was not authorised by a general power to prescribe fees. Applying the principles recognised in these cases, I put aside, as circular in this context, the submission made by Mr Swift for the Treasury that Gs and HAYs right of access to a court is unaffected since the only right they have under the Al Qaida Order is to challenge the fact of their listing or their identity with any listed person. That is a relevant submission once the courts adjudicative power is shown to be excluded or limited by some valid and applicable legislative provision or common law principle: Holland v Lampen Wolfe [2000] 1 WLR 1573 provides an example. But here the question is whether the Al Qaida Order (or more particularly article 3(1)(b) of that Order) is valid. That depends upon whether section 1(1) of the 1946 Act enables the executive not merely to legislate in a manner which interferes with individual property rights that is as such clearly contemplated by section 1(1) but to restrict them so directly and radically as severely to curtail personal and family life on an indefinite basis, without affording any means of judicial recourse (domestic or international) to test the underlying premise of the restriction, namely association with an organisation identified by the Security Council as a threat to international peace. In arguing for a negative answer to this question, G and HAY suggest as an analogy the reasoning and decision of the European Court of Justice in Kadi v Council of the European Union (Joined Cases C 402/05P and C 415/05P) [2009] AC 1225. That case concerned Regulation 881/2002(EC), the aim of which, since the Community is not as such a member of the United Nations, was to ensure a uniform application of the United Nations Resolutions 1267 and 1390 within the member states of the Community. The Regulation set out in Annex I the names of persons designated by the United Nations Sanctions Committee as associated with Al Qaida and the Taliban and contained provisions mirroring those of the Security Council Resolutions freezing their assets. The Court held that the European Community was an autonomous legal system, based on the rule of law and in which fundamental rights formed an Mr Swift points out that the decision in Kadi turned on the Courts view of the Community as an autonomous legal order (and not itself a member of the United Nations, although this factor does not appear explicitly in the Courts reasoning). The United Kingdom is, in contrast, a member of the United Nations, bound by its Charter, and committed in international law to giving effect to Security Council Resolutions under Chapter VII. Counsel for G and HAY, supported by Mr Fordham for Justice, point out in response that the United Kingdom takes a dualist view of international law, and that international law has no domestic effect unless and until implemented at a domestic level: J H Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418. The force of this submission is weakened by the consideration that the whole purpose of section 1(1) is to address the consequences of the dualist view by facilitating the implementation at domestic level of the United Kingdoms international legal obligations under Chapter VII. Nevertheless, the issue remains, whether section 1(1) covers any and every Security Council Resolution that might be passed, including even a Resolution directed at what would otherwise be regarded as basic constitutional rights under domestic law. In considering this issue, it is relevant background that the United Nations is itself an institution committed to the promotion of human rights. The preamble to the Charter reaffirms faith in fundamental human rights and article 1 includes among its purposes, in addition to maintaining international peace and security and developing friendly relations among nations: 3. To achieve international co operation in solving international problems of an economic, social, cultural, or humanitarian character, and in promoting and encouraging respect for human rights and for fundamental freedoms for all without distinction 4 To be a centre for harmonising the actions of nations in the attainment of these common ends. It is also of note that the Security Council by Resolution 1456 on 20 January 2003 adopted the following declaration on the issue of combating terrorism: 1. All States must take urgent action to prevent and suppress all active and passive support to terrorism, and in particular comply fully with all relevant resolutions of the Security Council, in particular resolutions 1373 (2001), 1390 (2002) and 1455 (2003): 6. States must ensure that any measure taken to combat terrorism comply with all their obligations under international law, and should adopt such measures in accordance with international law, in particular international human rights, refugee, and humanitarian law; . In its second report (S/2005/83) to the United Nations Sanctions Committee, the Analytical Support and Sanctions Monitoring Team established pursuant to Resolution 1526(2004) identified the challenges made to European Community and national measures implementing Security Council Resolution 1267 and acknowledged, as the High Level Panel before it had, that at that date: The way entities or individuals are added to the terrorist list maintained by the Council and the absence of review or appeal for those listed raise serious accountability issues and possibly conflict with fundamental rights, norms and conventions (para 53). More recently, Resolution 1822 (2008) reaffirms the need to combat by all means, in accordance with the Charter and international law, including applicable international human rights, refugee and humanitarian law. Against this background, it is open to question at an international level how far the United Nations Security Council Resolutions can have been intended either to require member states to enact domestic legislation that would violate fundamental principles of human rights under their domestic constitutions or laws or to exclude domestic review of the compatibility of such legislation with such rights. Be that as it may, the relevant question at the domestic level is how far the United Kingdom Parliament in enacting section 1(1) of the 1946 Act can have envisaged that a Security Council Resolution could or would be used as the basis for introducing a domestic measure that would conflict with such rights. The basic common law right at issue on these appeals is Gs and HAYs right to access to a domestic court or tribunal to challenge the basis for including their names in the list of persons associated with Al Qaida or the Taliban and so freezing their property with the severe personal consequences already indicated. This was also the limit of the equivalent right identified under European Community law by the Court of Justice in Kadi. There was no suggestion in Kadi that Mr Kadi was entitled to an opportunity to challenge the basic premise of Security Council Resolution 1267 and of Regulation 881/2002 (EC), viz that the Taliban (or Al Qaida) was and is a terrorist organisation. In the traditional sphere of decision making under article 41 (that is action, in the form of, say, sanctions, against a member state of the United Nations or against a non state actor, such as the Taliban or Al Qaida), a person affected by a domestic prohibition aimed at giving effect to such sanctions could not sensibly suggest that he had a fundamental right to access to a domestic court to challenge the premise of that prohibition. He could not demand access to a domestic court to challenge the proposition that the member state or non state actor was in some way a threat to international peace meriting the imposition of sanctions. Equally, a head of a state or senior minister or other person closely identifiable with (an alter ego of) a state or non state actor could, I think, find it hard to suggest that he had any basic right to challenge the legitimacy of a Security Council Resolution requiring the sanctions to extend to his movements or his dealings with property. He could of course be expected to have a right of access to a domestic court to challenge any suggestion that the prohibition applied to him (eg that he was the head of state) or his activities or that he had infringed it. But, if one takes Usama bin Laden himself, who is identified in Resolutions 1267 read with 1333 as an individual whose assets are required to be frozen and appears on this basis in the United Nations list and in article 3(1)(a) of the Terrorism Order 2006, as well as in Annex I to Regulation 881/2002 (EC), it must be very doubtful whether the European Court of Justice would have held in Kadi that he should have a right to challenge his listing. Several points can be made about this. First, the listing of Usama bin Laden was directly determined by the Security Councils legally binding decision, rather than by any listing decision of the Sanctions Committee. Second, the position of Usama bin Laden, in relation to a non state actor like Al Qaida, parallels that of a head of state in relation to sanctions against a state; while, The Security Council and Sanctions Committee are closely related. To describe the former as legislating and the latter as executing or adjudicating upon the implementation of measures determined by the former is hardly realistic. The former was delegating listing to the latter, composed of representatives of all states sitting on the former. In these circumstances, I do not think that the Al Qaida Order was outside the scope of section 1(1) merely because it gave effect to a determination made by the Sanctions Committee, rather than the Security Council. But I do consider that there is a relevant distinction between, on the one hand, measures directed at states or non state actors such as Al Qaida identified by the Security Council as threats to international peace, or at their acknowledged heads or alter egos, and, on the other hand, measures directed in entirely general terms at anyone associated with such non state actors. In the case of the Terrorism Order, it was left to domestic legal systems to determine the identity of persons active as terrorists on whom the sanctions should bite. In the case of the Al Qaida Order, the determination was undertaken by non judicial process at the international level, by which member states were to be bound without more. The words of section 1(1) are general, but for that very reason susceptible to the presumption, in the absence of express language or necessary implication to the contrary, that they were intended to be subject to the basic rights of the individual: see Ex p Simms, per Lord Hoffmann (above). In the event of the Security Council establishing under Chapter VII a rgime requiring the internment of individuals (as was held to be the case in Al Jedda), section 1(1) could hardly enable the executive by Order in Council to introduce provisions for such internment within the United Kingdom. As an extreme form of restriction of individual liberty, internment without the right to challenge its basis before any court or judicial tribunal would, if it were to be possible at all, at the least require primary legislation. Designation as an associate of a rogue state or non state organisation under Resolutions 1267, 1333 and 1390, and the consequential freezing of assets, also has radical consequences for personal and family life. It is a matter which one would expect to be subject to judicial control, before or after the designation. So here, in my view, section 1(1) was and is an inappropriate basis for the Al Qaida Order, freezing indefinitely the ordinary rights of individuals to deal with or dispose of property on the basis that they were associated with Al Qaida or the This makes it unnecessary to consider the alternative submissions developed under article 5 of the European Convention on Human Rights. The Houses previous decision in Al Jedda is about to be reviewed in proceedings brought by Mr Al Jedda before the European Court of Human Rights. I would in these circumstances decline the invitation to re consider that decision at this stage. It is also unnecessary to express any views on the fairness of the procedure available (particularly in the absence of any special provision for the use of special advocates), had it been the position that G and HAY were entitled under English law to challenge domestically the basis for their listing as associates of Al Qaida or the Taliban. Conclusion Hilary Term [2010] UKSC 5 On appeal from: [2008] EWCA Civ 1187 JUDGMENT (Appellants) Her Majestys Treasury (Respondent) v Mohammed Jabar Ahmed and others (FC) Her Majestys Treasury (Respondent) v Mohammed al Ghabra (FC) (Appellant) R (on the application of Hani El Sayed Sabaei Youssef) (Respondent) v Her Majestys Treasury (Appellant) (no. 2) before Lord Phillips, President Lord Hope, Deputy President Lord Rodger Lord Walker Lady Hale Lord Brown Lord Mance JUDGMENT GIVEN ON 4 February 2010 Heard on 28 January 2010 Appellants A, K, M and Raza Husain (Instructed by Birnberg Peirce and Partners) Appellant G Alex Bailin (Instructed by Tuckers) Respondent Jonathan Swift Andrew OConnor (Instructed by Treasury Solicitor) Respondent HAY Raza Husain (Instructed by Birnberg Peirce and Partners) LORD PHILLIPS, with whom Lord Rodger, Lord Walker, Lady Hale, Lord Brown and Lord Mance agree. 1. When judgment was given on 27 January 2010 an issue arose in respect of the order that the court proposed to make. The court has held that the TO and article 3(1)(b) of the AQO were ultra vires. This means that the restrictions imposed on individuals pursuant to these Orders have been imposed without authority and are of no effect in law. Because this has not been appreciated there has been compliance with these restrictions, not least by third parties, including banks holding funds of those purportedly affected by the Orders. Thus the Orders have, in practice, achieved the effect that the Treasury intended when making them. 2. The Treasury is anxious that this state of affairs should persist until the invalid restrictions can be replaced by restrictions that have the force of law. To this end Mr Swift has submitted that the court should suspend the operation of the orders that it proposes to make declaring the TO and article 3(1)(b) of the AQO ultra vires and quashing them, in the case of the former for a period of 8 weeks to 25 March 2010 and in the case of the latter for a period of 6 weeks to 11 March 2010. 3. This submission is a variation and extension of a limited suspension to the operation of its orders that Lord Hope had proposed that the court should make in paragraph 84 of his judgment. I had concurred in this proposal, but having considered the matter further I have concluded that it would not be appropriate to suspend any part of the courts order. 4. Mr Swift submitted that this court has power to suspend the effect of any order that it makes. Counsel for the appellants conceded that this was correct and that concession was rightly made. The problem with a suspension in this case is, however, that the courts order, whenever it is made, will not alter the position in law. It will declare what that position is. It is true that it will also quash the TO and part of the AQO, but these are provisions that are ultra vires and of no effect in law. The object of quashing them is to make it quite plain that this is the case. 5. The effect of suspending the operation of the order of the court would be, or might be, to give the opposite impression. It would suggest that, during the period of suspension of the quashing orders, the provisions to be quashed would remain in force. Mr Swift acknowledged that it might give this impression. Indeed, he made it plain that this was the object of seeking the suspension. 6. Mr Swifts submissions are described in the dissenting judgment of Lord Hope. He did not suggest that the court could or should give temporary validity to the unlawful provisions. He did not suggest that the court could or should purport prospectively to overrule them. He did not suggest that suspension was necessary in order to permit action by the executive which might otherwise appear to be flouting the decision of the court, as it was in Koo Sze Yiu v Chief Executive of the Hong Kong Special Administrative Region, Final Appeal Nos 12 & 13 of 2006 (Civil) 12 July 2006. He did not suggest that the suspension would have any effect in law. 7. Mr Swift urged the court to suspend the operation of its judgment because of the effect that the suspension would have on the conduct of third parties. He submitted that the banks, in particular, would be unlikely to release frozen funds while the courts orders remained suspended. I comment that if suspension were to have this effect this would only be because the third parties wrongly believed that it affected their legal rights and obligations. 8. The ends sought by Mr Swift might well be thought desirable, but I do not consider that they justify the means that he proposes. This court should not lend itself to a procedure that is designed to obfuscate the effect of its judgment. Accordingly, I would not suspend the operation of any part of the courts order. That order should provide as follows: THE COURT ORDERS that (1) the appeals of Mohammed Jabar Ahmed, Mohammed Azmir Khan and Michael Marteen and of Mohammed al Ghabra as regards the Terrorism (United Nations Measures) Order 2006 (S.I. 2006/2657) be allowed it be declared that the Terrorism (United Nations Measures) (2) Order 2006 is ultra vires and the Order quashed the appeal of Mohammed al Ghabra as regards the Al Qaida (3) and Taliban (United Nations Measures) Order 2006 (S.I. 2006/2952) be allowed to the extent that it be declared that article 3(1)(b) of the Order is ultra vires and the Order quashed (4) the appeal of HM Treasury be allowed to the extent only of setting aside the declaration made by Mr Justice Owen on 10 July 2009 in the Administrative Court of the Queens Bench Division of the High Court (5) the respondent pay, or cause to be paid, to the appellants, Mohammed Jabar Ahmed, Mohammed Azmir Khan and Michael Marteen, their costs in the House of Lords, the Supreme Court, the Court of Appeal and the Administrative Court, to be subject to detailed assessment if not agreed (6) the parties in the appeal of R (on the application of Hani El Sayed Sabaei Youssef) vs HM Treasury and in the appeal of HM Treasury vs Mohammed al Ghabra make written submissions on costs in the House of Lords, the Supreme Court, the Court of Appeal and the Administrative Court by 18 February 2010 (7) there be a detailed assessment of the publicly funded costs in all three appeals. LORD HOPE, dissenting 9. I have the greatest possible respect for the views of my colleagues and for the reasons which Lord Phillips has set out so carefully in his judgment. I regret however that I am unable to agree with what he proposes. As the issue is important, was not the subject of any decision by the House of Lords and has not previously been considered by this Court, I should like to explain in my own words why I am of that opinion. 10. In para 84 of my judgment which was given on 27 January 2010 I said that I would suspend the operation of the orders that I would make as regards article 3(1)(b) of the Al Qaida and Taliban (United Nations Measures) Order 2006 (SI 2006/2952) (the AQO) in the case of Hani El Sayed Sabaei Youssef (referred to previously as HAY in these proceedings) for a period of one month. This was to enable the Treasury, if so minded, to take the steps that were needed to give effect to the obligation by which the United Kingdom is bound by article 25 of the Charter of the United Nations pending the proceedings that are currently being taken by the United Kingdom for him to be de listed by the United Nations Security Council 1267 Committee. Lord Phillips said in para 156 that, for the reasons that I gave, he agreed that the operation of the order in HAYs case should be suspended for one month from the date of judgment. Lord Mance said in para 249 that the declaration that he would make that article 3(1)(b) of the AQO was invalid generally should be subject to a stay of one month on its operation on respect of HAY. There was no dissent from this proposal, although Lord Brown did not agree with the view of the majority that article 3(1)(b) of the AQO was ultra vires. 11. In accordance with Supreme Court Practice Direction 6.8.3 the parties were provided in advance with a copy of the Courts judgment and a draft of the orders that the Court proposed to make. Written submissions on behalf of the Treasury, Mohammed al Ghabra (referred to previously as G) and HAY were shown to the Court before it sat to deliver the judgment. Counsel for HAY did not object to the proposal that the operation of the Courts order in his case should be suspended for a period of one month. Mr Husain adhered to this position on HAYs behalf when the proposed orders were discussed in more detail the day after judgment was given. He informed the Court that his position was one of neutrality. He then said that, on instructions, he agreed with Mr Swift for the Treasury that the judgment was not self executing and that the Court had power to suspend the operation of the orders that it proposed to make in his case. He said that HAY welcomed the opportunity that the Courts judgment gave for the orders that the Treasury proposed to make to receive proper Parliamentary scrutiny, and that he would prefer a stay to a resort to emergency legislation without such scrutiny to cover the period until the steps that were necessary to achieve this could be taken. His attitude may well be: better the devil you know than the devil you dont. But, whatever his reasons, it is clear that HAYs position is that he does not oppose the order that I was proposing. Had the matter rested there, I would have been satisfied that the order that I was proposing should be made. 12. But the matter does not rest there. Mr Swift for the Treasury asks the Court to suspend the operation of the order for the quashing of the Terrorism (United Nations Measures) Order 2006 (SI 2006/2657) (the TO 2006) for a period of 8 weeks to 25 March 2010 to enable the Treasury to address the effects of the Courts judgment in relation to that Order by introducing primary legislation for consideration by Parliament. He also asks the Court to suspend the operation of the orders that it proposes to make in relation to the AQO for a period of 6 weeks to 11 March 2010, not the 4 weeks that I had suggested, and that it should extend this suspension to the order that quashed the AQO generally, not just in the case of HAY as I had suggested. This was to enable the Treasury to made an order under section 2 of the European Communities Act 1972 containing enforcement measures in support of Council Regulation (EC) No 881/2002 implementing UN resolutions under Chapter VII of the Charter of the United Nations for the freezing of the funds and economic resources of persons associated with Osama bin Laden, Al Qaeda or the Taliban. In each case the suspension is sought for the purpose of enabling steps to be taken to ensure that the United Kingdom remains in compliance with its international obligations under the UN Charter. These applications have made it necessary for the Court to look more closely at the question whether it has power to make orders of that kind and, if so, whether it should do so in this case. 13. Before considering these issues I should mention some other matters by way of background. The Court was told that at present 13 persons remain designated under the TO 2006. There are also 25 persons or entities who remain designated under the Terrorism Order 2001 and 21 persons who have been designated under the Terrorism Order 2009. As I indicated in para 84 of my judgment, I had assumed that the existence of the 2009 Order under which A, K, M and G were re designated had removed the need for a short period to be given for the Treasury to address the consequences of the Courts judgment in regard to the TO 2006. On the facts that are now before the Court the web created by these Orders is more far reaching than I had imagined. As for the AQO, the court was told that 18 persons including G and HAY, and 4 other entities present in the United Kingdom who are named on the Consolidated List, have been designated by the 1267 Committee. The United Kingdom will be in breach of its obligations under UN Security Council Resolution 1904/ 2009, which replaced Resolution 1822/2008 with effect from 17 December 2009, and under EC Regulation 881/2002 if effect is not given to these designations in domestic law. 14. Having regard to these obligations, in a letter dated 9 October 2009 copies of which were sent to the other parties solicitors, the Treasury sought a widening of the opportunity that is provided by Practice Direction 6.8.3, which enables judgments to be released to counsel, solicitors and in house legal advisers six days before the delivery of the judgment. Permission was sought for the judgment in this case to be released also to 38 named individuals in relevant government departments and an unspecified number in the Security Service, to allow for contingency planning to safeguard national security should the Treasury be unsuccessful in the appeals. As this was an open letter, the reasons for this request were not fully explained. But the point was made that operational concerns might arise in the form of an increased risk of previously frozen funds being withdrawn from unfrozen bank accounts and diverted for terrorist purposes or being used as a conduit to this end. It was made clear at the same time that the Treasury would, for operational reasons, strongly oppose provision of the embargoed judgment to A, K, M, G and HAY for any period additional to the 24 hours provided for in the Practice Direction. The Court was not willing to accede to this request. But the reasons why it was made have not gone away. 15. I was aware of the Treasurys request when I proposed in my judgment that the order quashing article 3(1)(b) of the AQO should be suspended for one month in HAYs case. It is worth noting also that in Kadi v Council of the European Union (Joined Cases C 402/05P and C 415/05P) [2009] AC 1225, para 373, the European Court of Justice recognised that the immediate effect of its decision would be capable of seriously and irreversibly prejudicing the effectiveness of the restrictive measures imposed by Regulation 881/2002 which the Community was required to implement because, for example, steps might be taken to prevent any further measures freezing funds from being applied to them. So it delayed effect being given to its judgment by three months. The risk of serious and perhaps irreversible damage to efforts to defeat international terrorism in our case too must weigh heavily with this Court in deciding what it should do to meet the concerns that have been expressed by the Treasury. This is not simply a matter of meeting international obligations. The national interest in resisting threats to our own security is just as important. The power to suspend 16. Mr Swift submitted that it was clear, as a matter of simple vires, that the court had power to make the orders he seeks. Rule 29 of the Supreme Court Rules 2009 (SI 2009/1603) states that the Court has all the powers of the court below, and section 40(5) of the Constitutional Reform Act 2005 gives the Court power to determine any question necessary to be determined for the purposes of doing justice in an appeal. CPR 40.7(1) provides: A judgment or order takes effect from the day when it is given or made, or such later date as the court may specify. This rule reflects the well established principle that it is the order that the court makes that disposes of the proceedings and provides the basis for an appeal, not the issuing of the reasons for it in the form of the courts judgment: Lake v Lake [1955] P 336; Re Mathew [2001] BPIR 531 per Lawrence Collins J at 532A G. Examples of the application of that principle can be found in this case, as Mr Swift pointed out. They can be seen in the orders that Collins J made suspending the effect of his judgment pending appeal to the Court of Appeal and in the orders made by the Court of Appeal pending applications for leave to appeal to the House of Lords. The situation in which the Supreme Court finds itself is different, as there is no further right of appeal. This has a bearing on the question whether the orders that it proposes to make should be suspended. But I do not think that the Court lacks the power to specify a later date for the taking effect of the orders it proposes to make should it consider that it should do so. 17. There was some discussion in the course of the hearing of the question whether the Court should declare that the orders that it proposed to make should have effect prospectively only. The usual rule, of course, is that an order quashing an order or other measure as ultra vires operates retrospectively as well as prospectively. The question whether there was power to place temporal limitations on the effect of its judgments was considered by the House of Lords in In re Spectrum Plus Ltd [2005] UKHL 41, [2005] 2 AC 680. The focus in that case was on the prospective overruling of decisions on points of law. The House held that it had jurisdiction to make such an order, although it declined to do so on the facts of that case. In A Time for Everything under the Law: Some Reflections on Retrospectivity (2005) 121 LQR 57, 77 Lord Rodger of Earlsferry acknowledged that prospective overruling might be particularly useful in cases involving the application of Convention rights. 18. The situation in this case is quite different. For the reasons that the Court has given, the TO 2006 and article 3(1)(b) of the AQO were ultra vires and void from the moment that the Orders were made. It would be entirely contrary to the reasoning on which that conclusion is based for the ruling to be applied only to the future and not to the past. But I do not think that it is necessary to explore the point further because Mr Swift, very properly, made it clear that the Treasury were not seeking prospective overruling in this case. He accepted that the Courts orders, when made, will apply retroactively as usual. What he is seeking is simply a delay in the date as from which that consequence will take effect. That being so, I would hold that the Court has power to make the orders that he seeks. I do not think that there is any difference of view between us on that point. The more difficult question is whether it should do so. The view of the majority, as Lord Phillips has explained, is that this would not be appropriate. Should the power be exercised? 19. The first question that needs to be considered is the effect, if any, that suspension would have in practice. It would be wrong to regard the suspension as giving any kind of temporary validity to the provisions that are to be quashed. As Mr Justice Bokhary PJ said in Koo Sze Yiu v Chief Executive of the Hong Kong Special Administrative Region, Final Appeal Nos 12 & 13 of 2006 (Civil), 12 July 2006, para 63, there is no shield from legal liability for functioning pursuant to what has been declared to be ultra vires during the period of the suspension. Mr Swift did not seek to argue the contrary. He made it clear that the Treasury accepted that suspension would do no more than delay the taking effect of the Courts orders, which would then operate retrospectively as from the specified date. It would have no effect whatever on remedies for what had happened in the past or during the period of the suspension. 20. It was suggested in the course of the hearing that this was an absurd result. After all, now that the Courts judgment has been made public everyone knows what the Court proposes to do. The prohibitions that the Orders have imposed will remain in place, but to use them as a fetter on the designated persons access to funds would be contrary to what is now known to be the law. Any person who contravenes the prohibition in article 7(1) of the TO 2006 in the meantime would on paper be committing a criminal offence. But that would be a pointless restriction. Mr Swifts answer was that, while technically that was so, it would be obvious by the time any prosecutions were brought that the Order was ultra vires. So any prosecutions that might be brought for what was done during this period would not be proceeded with. I agree that to prosecute would plainly be a waste of time and public money. So, to the extent that it may be thought to prolong the effect of the criminal sanctions, it can be seen that nothing would be gained by a suspension. 21. Mr Swift insisted that a suspension would nevertheless have practical effect. This was because it would not be ignored by the banks and other institutions, which would continue to give effect to the prohibitions and obligations in the TO and the AQO until they were directed otherwise by an order of the Court. That, he indicated, is how these institutions conduct their affairs in practice and what they could be expected to do in this case. Judging by the grounds that the Treasury gave for seeking a relaxation on the embargo under the Practice Direction, this is a matter of far greater significance to combating international terrorism than breaches of the prohibitions by individuals such as the friends and family members of those who have been designated. For obvious reasons the Court has not been given any detailed information about the whereabouts or amounts of the funds that may be in the hands of the financial institutions, of the damage that would be caused to the national interest if the institutions were to feel able to release them or disregard the conditions that may have been attached to any licences that may have been issued to them without notifying the Treasury or whether or not that damage would be irreparable. Nor has it been given any indication by the financial institutions themselves, who have not been named, that they would not release any funds during the period of the suspension. But I think that it would be wrong for the Court not to accept Mr Swifts assurance that in this respect suspension would achieve something that would be of real practical value. 22. Although the situation now is different from that which the courts below faced when they suspended the effect of their orders, it is comparable in this respect. We have recognised that the breaches of fundamental law which render the Orders in question ultra vires are capable of being remedied. In their case there was the possibility of their decisions being reversed on appeal. In our case there is the possibility indeed more than that, the likelihood that the remedial measures will be approved by Parliament. If that were not so, there would be no grounds for any delay in making the orders that are needed to give effect to the courts judgment. As it is, it would seem that there is everything to be said for not letting the cat whose dimensions and capacity to inflict damage we can only guess at out of the bag in the meantime. I think that the national interest, as well as respect for our international obligations, requires the Court to do what it can to see that this does not happen. 23. There was also some discussion at the hearing of measures that the Treasury might itself take to achieve the same result. In para 176 of the judgment Lord Rodger said that in his opinion section 1(1) of the United Nations Act 1946 would authorise Her Majesty to make an Order in Council, even with the far reaching effects that are to be seen in the current Orders, provided it only had a limited life span and was replaced as soon as practically possible by equivalent legislation passed by Parliament. Mr Swift said that the Treasury had given some thought to this suggestion but had concluded, after studying the judgment as a whole, that it would not be appropriate for it to adopt it. Emergency legislation by Parliament is also in theory not impossible. But that would mean achieving the desired result by two Acts of Parliament in quick succession, not one. It was suggested that this would be an absurd way to proceed, but it may be the only practicable alternative. Conclusion 24. There is an obvious attraction in putting the orders that the Court proposes to make into effect as soon as possible. There is perhaps a risk, as Lord Phillips has said, that suspension would tend to obfuscate the effect of the Courts judgment. But I would not myself regard that as a decisive factor in deciding where the balance of advantage lies. The judgment itself has been promulgated, and the Treasury accepts that suspension would have no effect whatever on its effect once the period of suspension has been lifted. Furthermore, the steps that the Treasury proposes to take to comply with the international obligations are now known. So it is possible to assess the advantages of a suspension as against the disadvantages. The periods proposed are short indeed they have been shortening by the day as time has gone by since the judgment was issued. In view of the way the financial institutions can be expected to respond to a suspension, it cannot be said that this would be of no practical value. On the contrary, not to suspend could result in damage to the effectiveness of the measures that the international obligations require which might well be, as the ECJ indicated in Kadi, serious and irreversible. Bearing in mind too, as Mr Swift concedes, that suspension would have no effect whatsoever on remedies for what had happened in the past or during the period of the suspension, I consider that the balance lies in favour of suspension in the terms requested by the Treasury. 25. I would therefore have directed that the order quashing the TO 2006 should not take effect until 25 March 2010 and that the orders quashing article 3(1)(b) of the AQO should not take effect until 11 March 2010. I would therefore dispose of the appeals and make orders in respect of the Terrorism Order 2006 as indicated in paragraph 231 and the Al Qaida Order as indicated in paragraph 249 above. |
Part III of the Matrimonial and Family Proceedings Act 1984 was enacted to give the English court the power to grant financial relief after a marriage had been dissolved (or annulled) in a foreign country. This appeal raises for the first time at this appellate level the proper approach to the operation of Part III of the 1984 Act. Mr and Mrs Agbaje (the husband and the wife) were married for 38 years prior to their divorce in 2005 on the husbands petition in Nigeria. They were born in Nigeria, but both have British and Nigerian citizenship. All five children of the family were born in England. The wife has been living in England continuously since 1999, when the marriage broke down. The assets are about 700,000, of which 530,000 represents two houses in London in the husbands name, and the balance represents properties in Nigeria. The Nigerian court awarded the wife a life interest in a property in Lagos (which, as found by the Nigerian court, had a capital value of about 86,000) and a lump sum which was the equivalent of about 21,000. Munby J acceded to an ex parte application by the wife for leave to make an application under Part III, and confirmed his decision on the husbands application to set it aside. On the substantive hearing Coleridge J made an order which was intended to enable the wife to house and maintain herself in London by providing her with 65% of the proceeds of sale (expected to be about 275,000) of the house in which she has been living. His order is the equivalent of a 39% award to the wife. The Court of Appeal (Ward, Longmore and Jackson LJJ) allowed the husbands appeal, principally on the ground that the judge had given insufficient weight to the connections of the case with Nigeria: [2009] EWCA Civ 1, [2009] 3 WLR 835. An Appeal Committee of the House of Lords granted leave to appeal from that decision. Matrimonial and Family Proceedings Act 1984, Part III The background to Part III of the 1984 Act The background to Part III was concern at the hardship to wives and children caused by the effect of a combination of the liberality of the rules relating to recognition of foreign divorces and the restrictive approach of some foreign jurisdictions to financial provision. The problem became apparent in a series of cases in the 1970s in which there had been a foreign divorce in proceedings (both judicial and extra judicial) instituted by the husband in which no financial provision had been made for the wife. In those cases the divorce was entitled to recognition in England, e.g. because of a real and substantial connection with the foreign country (under the rule in Indyka v Indyka [1969] 1 AC 33) or because of the husbands citizenship of that country (Recognition of Divorces and Legal Separations Act 1971, now the Family Law Act 1986). As a result the parties were regarded as no longer married, and the court was not able to make an order in her favour for financial relief: Turczak v Turczak [1970] P 198, in which it was held that, following a Polish divorce, there was no power to order maintenance under the Matrimonial Causes Act 1965 because the parties were no longer husband and wife; Torok v Torok [1973] 1 WLR 1066, in which Ormrod J drew attention to the fact that, if a divorce were obtained in Hungary on the basis of the husbands Hungarian nationality, it would have to be recognised, and the English court would have no jurisdiction under the Matrimonial Proceedings and Property Act 1970 to deal with the house in England where the wife and children were living, even though the Hungarian court was unlikely to award maintenance. As a result of these cases there were calls for legislation to give the English court jurisdiction to grant ancillary relief after a foreign divorce: e.g. Karsten (1970) 33 MLR 205 and (1972) 35 MLR 299; Pearl [1974] CLJ 77. In Quazi v Quazi [1980] AC 744, which was decided in 1979, the husband had pronounced a talaq in Pakistan. The question was whether the English court had jurisdiction on the wifes petition to dissolve the marriage and make consequential orders relating to a house in Wimbledon in which the wife was living with their son and which belonged to the husband, and to make provision for their financial support. It was held by the House of Lords that the talaq was to be recognised under the 1971 Act. Consequently there was no subsisting marriage and no power in the English court to make financial provision. In the Court of Appeal Ormrod LJ (as he had become) drew attention to the urgent need for attention by Parliament to deal with the problem. In the House of Lords Lord Scarman agreed (at 819) that there was need for reform, and expressed the hope that the matter would be referred to the Law Commissions. The matter was then referred to the Law Commissions. In 1980 the Law Commission for England and Wales published a Working Paper on Financial Relief after Foreign Divorce (Working Paper No 77 (1980)), which was supplemented by a Scottish Law Commission Consultation Paper in 1981. Both Commissions published Reports in 1982: Law Com No 117 and Scot Law Com No 72. The Law Commissions recommended that the law be reformed to allow financial provision to be ordered after a foreign divorce not only in cases where no financial provision had been made, or could have been made, in the country where the divorce was granted, but also where the provision was inadequate. The Law Commission for England and Wales also recommended a filter mechanism requiring leave of the court to make an application to the English court. Part III of the 1984 Act As a result of the work of the Law Commissions, Part III (applying to England and Wales) and Part IV (applying to Scotland) of the Matrimonial and Family Proceedings Act 1984 were enacted. The law in Northern Ireland is equivalent to Part III of the 1984 Act: SI 1989 No 677 (NI 4). There are significant differences between Part III and Part IV, to which it will be necessary to revert. Part III applies to annulment and judicial separation as well as to divorce, but for ease of exposition only divorce will be referred to in this account. By section 12, where a marriage has been dissolved, by means of judicial or other proceedings in an overseas country, and the divorce is entitled to be recognised as valid in England and Wales, either party to the marriage may apply to the court in the manner prescribed by rules of court for an order for financial relief under Part III. A filter mechanism is established by section 13: (1) No application for an order for financial relief shall be made under this Part of this Act unless the leave of the court has been obtained in accordance with rules of court; and the court shall not grant leave unless it considers that there is substantial ground for the making of an application for such an order. (2) The court may grant leave under this section notwithstanding that an order has been made by a court in a country outside England and Wales requiring the other party to the marriage to make any payment or transfer any property to the applicant or a child of the family. (3) Leave under this section may be granted subject to such conditions as the court thinks fit. Section 15(1) sets out the jurisdictional requirements: (a) domicile in England and Wales of either of the parties on the date of the application for financial provision or on the date when the divorce in the foreign country took effect; or (b) habitual residence of either of the parties for one year ending on the date of the application or the foreign divorce; or (c) a beneficial interest by either or both, at the date of the application, in a dwelling house in England and Wales which was at some time during the marriage used as a matrimonial home. Section 16 provides: the connection which the parties to the marriage have with (1) Before making an order for financial relief the court shall consider whether in all the circumstances of the case it would be appropriate for such an order to be made by a court in England and Wales, and if the court is not satisfied that it would be appropriate, the court shall dismiss the application. (2) The court shall in particular have regard to the following matters (a) England and Wales; (b) the connection which those parties have with the country in which the marriage was dissolved or annulled or in which they were legally separated; (c) country outside England and Wales; (d) any financial benefit which the applicant or a child of the family has received, or is likely to receive, in consequence of the divorce, annulment or legal separation, by virtue of any agreement or the operation of the law of a country outside England and Wales; in a case where an order has been made by a court in a (e) country outside England and Wales requiring the other party to the marriage to make any payment or transfer any property for the benefit of the applicant or a child of the family, the financial relief given by the order and the extent to which the order has been complied with or is likely to be complied with; the connection which those parties have with any other (f) any right which the applicant has, or has had, to apply for financial relief from the other party to the marriage under the law of any country outside England and Wales and if the applicant has omitted to exercise that right the reason for that omission; the availability in England and Wales of any property in (g) respect of which an order under this Part of this Act in favour of the applicant could be made; (h) is likely to be enforceable; (i) divorce, annulment or legal separation. the length of time which has elapsed since the date of the the extent to which any order made under this Part of this Act On the substantive hearing the court is given power by section 17 to make (inter alia) the orders in sections 23 (financial provision orders) and 24 (property adjustment orders) of the Matrimonial Causes Act 1973, and pension sharing orders within the meaning of Part I of the 1973 Act. The powers of the court to make orders are more restrictive where jurisdiction depends on the matrimonial home having been in England and Wales: section 20. In deciding whether to apply its powers under section 17, and, if so, in what manner, the court must (by section 18) have regard, so far as material to this appeal, to three matters. First, the court is to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen (section 18(2)). Second, as regards the exercise of those powers in relation to a party to the marriage, the court is to have regard to the matters mentioned in section 25(2)(a) (h) of the 1973 Act (section 18(3)). Third, where a foreign court has made an order for payments or the transfer of property by a party to the marriage, in considering the financial resources of the other party to the marriage, the court is to have regard to the extent to which that order has been, or is likely to be, complied with (section 18(6)). Section 18(2) of the 1984 Act is in the same terms as section 25(1) of the Matrimonial Causes Act 1973, which also directs attention to all the circumstances of the case, and section 25(2) of the 1973 Act contains the familiar list of factors to be taken into account in the exercise of the statutory discretion, which is designed to achieve a fair outcome: White v White [2001] 1 AC 596; McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618. The facts The husband is aged 71, and is a barrister in Nigeria. He lives in Lagos. The wife is aged 68. She lives in a house in Lytton Road, New Barnet, Hertfordshire (the Lytton Road property) which is in the husbands sole name. She undertakes occasional work as a carer, and is in receipt of a basic state pension supplemented by pension credit as well as a small Nigerian occupational pension. Both parties were born in Nigeria. In the 1960s each of them came to England to live. The husband came in 1961 to read for the Bar, and the wife came in 1962 to study and work. They met in December 1965 and were married in London in May 1967. There were five children of the family, the eldest born to the wife in 1965 shortly before she had met the husband and four children of the marriage, born in 1967, 1969, 1973 and 1980. All the children were born in England. In 1972 the parties acquired United Kingdom citizenship and each now has dual British and Nigerian nationality. In September 1973 the husband returned to Nigeria to qualify there and to set up a legal practice. In May 1974 the wife and the children joined the husband in Nigeria, but all the children were educated in England except the youngest. In November 1975 the husband purchased the Lytton Road property. The wife says that it was a matrimonial home, and the husband says that it was purchased for the purpose of providing a home for the children (and their nanny) when they were in England. Between 1978 and 1982 the family lived at 76 Ijeshatado Road, Lagos, and from 1982 to 1999 at Plot 2, Tin Can Island, Lagos (Tin Can Island). In 1999, the parties separated after 32 years of marriage. The wife moved to England and settled at the Lytton Road property, where she has since lived. The husband remained in Nigeria although he purchased an investment property in Windmill Drive, NW2 (the Windmill Drive property) in 2002 which he says (and which the Nigerian court accepted) was bought for the youngest child. The husband issued divorce proceedings in the High Court of Lagos on June 4, 2003. The wifes case was that, although she knew that the husband had initiated divorce proceedings in Nigeria, she did not receive a copy of the husbands petition until December 10, 2003. She issued her divorce petition on December 8, 2003 in Barnet County Court based on her habitual residence in England and Wales for at least one year. On February 24, 2004, the wife filed an answer and cross petition in the Lagos proceedings seeking ancillary relief, including a claim that Tin Can Island and the Lytton Road property (and subsequently the Windmill Drive property) be settled on her. The wife also sought two cars, and a lump sum of 10 million naira (about 42,000) as a maintenance allowance for her during her lifetime. The husband made an application in England for a stay of the wifes divorce proceedings. The wife made an application in Lagos for a stay of the Lagos proceedings, and also applied in England for an anti suit injunction restraining the Lagos proceedings. In November 2004 Ryder J dismissed the wifes application for an anti suit injunction, but he envisaged that she might apply in England for an order under Part III of the 1984 Act. The husbands application for a stay was adjourned pending the wifes application for a stay in the Lagos proceedings. In the course of those proceedings, the wife sought to withdraw her claim for ancillary relief and gave evidence that she wanted her ancillary relief claims to be determined in London. On June 2, 2005 the judge in Nigeria, Nicol Clay J, granted a decree nisi on the husbands petition (based on three years separation), and dismissed the wifes cross petition. The judge refused the wifes request that her ancillary relief claims should be determined in London. She ordered that Tin Can Island, the former matrimonial home, be settled on the wife for life (as the husband had agreed) under the Nigerian Matrimonial Causes Act 1990, section 72(1). That section gives the court power to require the parties to make such a settlement of property to which the parties are, or either of them is, entitled, as the court considers just and equitable; but it does not give power to the court to order an outright transfer. She also ordered the husband to make a payment of a lump sum of 5 million naira (about 21,000) as maintenance for life. The judge dismissed the wifes claims in respect of the London properties (and a Nigerian property) on the basis that she had failed to prove any financial contribution towards their purchase. Decree absolute was granted by the High Court of Lagos on September 2, 2005. The application for leave It is necessary to set the course of the application for leave out in some detail for two reasons. The first reason is that the Court of Appeal was critical of Coleridge J for his reliance on Munby Js judgment on the husbands application to set aside the order for leave. The second reason is that the enormous delay caused by the husbands application to set aside gives rise to considerable disquiet about the procedure in Part III proceedings. At the end of September 2005, the wife sought leave to apply for an order for financial relief pursuant to section 13(1) of Part III. Leave was granted by Munby J at the end of November 2005: [2005] EWHC 3459 (Fam). Munby J referred to the very considerable discrepancy between the aggregate value of what the English court would consider to be the relevant matrimonial assets and the actual provision to the wife, and concluded (at [7]): that that very significant discrepancy, and the very modest amount of the provision made for this wife following a marriage of that length in relation to a case where there appear to be significant assets, is such that, having regard, as I do, to each of the facts and matters set out in section 16(2) of the Act, there are established substantial grounds for making this application within the meaning of section 13(1). In February 2006, the wife issued her application for periodical payments, a property adjustment order in respect of the Lytton Road property, and a lump sum order. At the end of April 2006, the husband issued an application to set aside the grant of leave. He conceded that the court had jurisdiction to make an order under Part III on the basis of the wifes habitual residence in England. In July, 2006 Charles J ordered that the application be listed for a one day hearing fixed for November 17, 2006 before Munby J, and gave directions for the filing of evidence. Munby J delivered a reserved judgment on December 18, 2006 in which he set out the facts and the law in the fullest detail over 28 single spaced pages: [2006] EWHC 3285 (Fam). He reaffirmed the views expressed in his judgment on the ex parte application about the effect of the significant discrepancy between the matrimonial assets and what the wife was awarded. He accepted that it was not necessary to make a finding of exceptional circumstances. He was satisfied that there were exceptional circumstances and that the wife would suffer hardship real hardship if leave were not given, being faced with the unenviable choice of either remaining homeless in England, where she was based and wanted to stay, or returning to Nigeria: [57] [60]. Munby J ordered that the application for relief be limited to (a) a periodical payments order; (b) a property adjustment order in relation to the Lytton Road property; and (c) a lump sum order. Leave was made subject to a number of conditions pursuant to section 13(3), in particular that the principal findings of fact made by Nicol Clay J were to stand in the Part III proceedings; and that neither party was permitted to adduce valuation evidence of the Nigerian properties. The matter was further delayed until the question of costs was dealt with, and an order was not entered until March 16, 2007. Munby J refused the husband permission to appeal. The husband applied to the Court of Appeal for permission to appeal on April 11, 2007. His application was refused on paper by Thorpe LJ, and on June 18, 2007 the husband renewed his application for permission before Wilson and Wall LJJ, who dismissed the application: [2007] EWCA Civ 681. The consequence was that the leave process took from September 2005 until June 2007 to be completed, and that the substantive hearing did not come on until April 2008. This is a shocking delay, to which has to be added the time taken in appeals to the Court of Appeal and this court. As indicated above, the filter mechanism for leave in section 13 was recommended by the Law Commission. The Working Paper suggested that the ground for leave be that in all the circumstances the case was a proper one to be heard, but it added (para 53, n 195) that the court would have an inherent power to deal with individual cases in the most convenient way, e.g. by adjourning an application for leave to enable evidence to be filed by the other side; and by dealing with applications for leave inter partes and (if leave is given) with the substantive matters at the same hearing. The Law Commission Report recommended that the filter should require the applicant to establish a substantial ground for the making of the application, and if necessary Rules of Court could specify the circumstances in which the respondent could object: para 2.3. Rule 3.17 of the Family Proceedings Rules provides for the ex parte application where leave is sought under Part III. But a subsequent application to set aside is not specifically provided for under the Rules, although it is of course a fundamental rule of procedure that the court may set aside the making an ex parte order on the application of the respondent. Concern has been expressed at the delay caused by applications to set aside: see Jordan v Jordan [2000] 1 WLR 210, 222 per Thorpe LJ, and Munby J and Ward and Longmore LJJ in the present proceedings. It is clear that something must be done to prevent the waste of costs and court time, and prejudice to the applicant, caused by applications to set aside which have only questionable chances of success. That must of course be balanced by a proper application of the threshold of substantial ground. But as Deane J said in the Federal Court of Australia in an entirely different context, the word substantial is not only susceptible of ambiguity: it is a word calculated to conceal a lack of precision: Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees Union (1979) 42 FLR 331, 348. In the present context the principal object of the filter mechanism is to prevent wholly unmeritorious claims being pursued to oppress or blackmail a former spouse. The threshold is not high, but is higher than serious issue to be tried or good arguable case found in other contexts. It is perhaps best expressed by saying that in this context substantial means solid. Once a judge has given reasons for deciding at the ex parte stage that the threshold has been crossed, the approach to setting aside leave should be the same as the approach to setting aside permission to appeal in the Civil Procedure Rules, where (by contrast with the Family Proceedings Rules) there is an express power to set aside, but which may only be exercised where there is a compelling reason to do so: CPR r 52.9(2). In practice in the Court of Appeal the power is only exercised where some decisive authority has been overlooked so that the appeal is bound to fail, or where the court has been misled: Barings Bank plc v Coopers & Lybrand [2002] EWCA Civ 1155; Nathan v Smilovitch [2007] EWCA Civ 759. In an application under section 13, unless it is clear that the respondent can deliver a knock out blow, the court should use its case management powers to adjourn an application to set aside to be heard with the substantive application. The substantive hearing: Coleridge J and the Court of Appeal The matter came before Coleridge J on April 3 and 4, 2008 and he delivered an unreserved judgment. He relied on Munby Js second judgment for the chronology and the relevant law. He directed himself that he was unfettered by any hardship test, and if an order was appropriate the provision made after a foreign order should be the minimum required to overcome the injustice, i.e. not a complete re run of the proceedings as if these were domestic ancillary relief proceedings, relying on A v S (Financial Relief after Overseas US Divorce) [2003] 1 FLR 431 (Bodey J). He took into account the following matters in particular. The parties had a longstanding real connection with the United Kingdom, its culture and way of life. In particular they were British citizens, and all the children were British and were born in England. The wife had been resident in England for nearly 10 years, had strong connections there and would continue to make her main home there. The parties had bought two properties in England. But it was not an English ancillary relief case. He took into account, in particular, the length of the marriage and the needs of the wife. He ordered that the wife should receive a lump sum equal to 65% of the gross proceeds of sale of the Lytton Road property. This would be about 275,000 comprising 225,000 to meet her housing need and 50,000 to supplement her income and provide for her when she could not work. As a condition of the order, the wife agreed to relinquish her life interest in Tin Can Island. The award of 275,000 represented 39% of the total assets. Coleridge J refused the husbands application for permission to appeal, and on an application to the Court of Appeal for permission, Wilson LJ adjourned the application to be heard with appeal to follow if permission were granted. The Court of Appeal (Ward, Longmore and Jackson LJJ) gave permission to appeal and allowed the appeal: [2009] EWCA Civ 1, [2009] 3 WLR 835. The main judgment was given by Ward LJ. The principal elements of his reasoning were as follows. The true question was whether the foreign order provided an unjust result. Disparity in potential awards was an obvious factor to which regard must be had, but it should not be permitted to dominate because (as he put it) London was perceived to be the divorce capital of the world. The focus should be on whether, objectively speaking, substantial justice or injustice was done overseas, a fortiori when the foreign court was the appropriate forum for granting the divorce and regulating the financial consequences of the dissolution. Coleridge J had not adequately referred to the parties connection with Nigeria. He had not addressed the need for respect and deference to be paid to the Nigerian court. He had not expressly addressed the factors in section 16(2)(d),(e) and (f) (the right to apply in Nigeria and the award in Nigeria). It was not enough to find that a serious injustice was done to the wife in Nigeria simply because there was no power to make a transfer of property order there, and it was not in accord with the purpose of section 16 for the English court to sit on appeal from the judgment of a foreign court, which was effectively what Coleridge J had done. Coleridge J had relied too much on Munby Js judgment. He had not explained why the case hinged on the parties connection with England, why the connection with Nigeria was not the more important factor, why the Nigerian proceedings did not command full deference for reasons of comity, why no substantial injustice was done to the wife in Nigeria and why justice would be done to the husband if, within months of the conclusion of those proceedings, he were to be forced to litigate the matters afresh in England notwithstanding the earlier acceptance by the courts of Nigeria as the appropriate forum for the resolution of the divorce and ancillary relief claims. In view of those matters the discretion was to be exercised afresh by the Court of Appeal. The parties had a more significant connection with Nigeria than with England, and Nigeria, not England, was the natural and appropriate forum for the resolution of the wifes claims. No substantial injustice was done to the wife in Nigeria notwithstanding the absence of a power to transfer the Tin Can Island property to her. Although she would suffer real hardship in England, having exhausted the lump sum designed to provide for her sustenance in Nigeria (as she asked for it there), comity commanded respect for the overseas order and it would not be appropriate to grant her what Ward LJ described as even another nibble at the cherry. The appeal There is little difference between the approach of Coleridge J and the Court of Appeal, and this appeal could be disposed of simply by considering whether Coleridge J had taken the relevant factors into account and weighed them properly. But the approach of the judge and the Court of Appeal does raise a number of questions of principle which require attention before the question whether there were any grounds for interference with the exercise of discretion is addressed. Those questions are these: (1) To what issue the matters listed in section 16(2) are directed. (2) What role (if any) forum non conveniens principles or comity have to play in the exercise of the discretion. (3) Whether the applicant must show exceptional circumstances, or hardship, or serious injustice, before an order can be made. (4) To what matters the court should have regard in deciding whether, and in what way, to exercise its powers under section 17, and in particular whether there is a principle that the court is limited to making an order which represents the minimum necessary to remedy the hardship or injustice. The relevance of the section 16(2) factors Munby J [2006] EWHC 3285 (Fam), ([37]) and Coleridge J (at page 3 of his judgment), and the Court of Appeal (at [16]) considered that the question for determination in section 16 is whether it was appropriate for an order to be made. This is in error. On the substantive hearing Part III directs the court to two principal areas of fact or appreciation. First, section 16(2) sets out matters to which the court must have regard for the purposes of section 16(1). Second, section 18(2) and (3) refer to the matters to which the court is to have regard in deciding whether to exercise the powers under section 17. The factors in section 16(2) are not expressed to be relevant to the question whether an order is to be made. They are the matters to which regard must be had in considering whether it would be appropriate for such an order to be made by a court in England and Wales (section 16(1)). There is no ambiguity in the language, and it is therefore not necessary to resort for confirmation to the sidenote to section 16 or the Law Commission Report. The sidenote is Duty of the court to consider whether England and Wales is appropriate venue for application. The Law Commissions explanatory note on the draft Bill included this on what became section 16: It is intended that it should be possible to raise the issue of appropriateness of the English court separately from, or together with, the matters relevant to the exercise of the courts discretion in deciding whether to exercise its powers and if so in what way (Report, page 29) Consequently both Munby J and Coleridge J and the Court of Appeal, were in error to the extent that they treated section 16 itself as determining the criteria by which the question whether the order for financial provision was to be made. That question depends on the combined effect of sections 17 and 18, to which it will be necessary to revert. The error is not likely, however, to have any significant practical importance. By section 18(2) the court is to have regard to all the circumstances of the case, and several of the factors in section 16(2) will plainly be relevant to the question of whether an order is to be made, and, if so, what order: for example, the financial benefit which the applicant has received; or whether the applicant has failed to take advantage of a right under the foreign law to claim financial relief. So also because the list in section 16(2) is not exhaustive (The court shall in particular have regard ), matters which are not expressly referred to in section 16(2), such as hardship or injustice, may be taken into account for the purpose of determining whether it is appropriate that the English court should make an order, just as they can be taken into account under section 18. Forum non conveniens and comity The second question relates to the role of forum non conveniens and principles of comity in the exercise under section 16. The doctrine of forum non conveniens, it hardly needs to be said, is that a stay of English proceedings will be granted if another forum is more appropriate in the sense of more suitable for the ends of justice. It was definitively adopted from Scots law by the decisions of the House of Lords in The Abidin Daver [1984] AC 398 and Spiliada Maritime Corpn v Cansulex Ltd [1987] AC 460, and was applied to stays of English matrimonial proceedings in de Dampierre v de Dampierre [1988] AC 92. The doctrine was in its infancy in England when the Law Commission reported and when the 1984 Act was enacted substantially in line with the Law Commissions draft Bill. In several decisions the Court of Appeal has drawn an analogy between the exercise in Part III, of determining whether it is appropriate for an order to be made by a court in England and Wales, and the grant of stays on the ground of forum non conveniens. For example, in Jordan v Jordan [2000] 1 W.L.R. 210, 220, a Part III case, Thorpe LJ said that de Dampierre v de Dampierre [1988] AC 92 establishes the importance of fixing the primary jurisdiction before competitive litigation in more than one jurisdiction has unnecessarily depleted available assets. It is equally important to outlaw unnecessary competitive litigation after the primary jurisdiction identified by common consent has performed its essential function to divide assets and income. See also Holmes v Holmes [1989] Fam 47, 54 55, 59; Moore v Moore [2007] 2 FLR 339, at [109]. In the present case Ward LJ relied (at [44] [45]) on the classic stay cases, Spiliada Maritime Corpn v Cansulex Ltd and de Dampierre v de Dampierre, to conclude that substantial justice had been done in Nigeria, and that an order should not have been made in England under Part III. Having referred to the fact that Ryder J had refused to grant the wife an anti suit injunction (and no doubt would have granted the husband a stay of the English proceedings), Ward LJ concluded that it would need some compelling reason to conclude one day that the husband would be entitled to a stay of the English proceedings on the basis that substantial justice could be done in the appropriate forum (or that the wife would not be entitled to an anti suit injunction), only to decide very soon afterwards that a serious injustice had been inflicted on the wife in the proceedings concluded by the court overseas. Ward LJ considered (at [53]) that there should be: symmetry between the rules relating to stays and anti suit injunctions on the one hand and the exercise of jurisdiction under section 16 on the other. It is through that prism that section 16 must be viewed in a case like the one before us. But the forum non conveniens principles were developed to deal with cases in which it was necessary to decide which of two jurisdictions was the appropriate one in which proceedings were to be brought. Section 16 does not impose a statutory forum non conveniens test. It does not require the court to determine the only appropriate forum where the case may be tried more suitably for the interests of the parties and the ends of justice. No choice between jurisdictions is involved. The whole basis of Part III is that it may be appropriate for two jurisdictions to be involved, one for the divorce and one for ancillary relief. Many of the factors in section 16(2) have much in common with those which would be relevant in a forum non conveniens enquiry, but they are not directed to the question of which of two jurisdictions is appropriate. They are directed to the question whether it would be appropriate (which is the meaning of the word conveniens in forum conveniens) for an order to be made by a court in England and Wales when ex hypothesi there have already been proceedings in a foreign country (including proceedings in which financial provision has been made). Little assistance can therefore be obtained from the stay cases (and still less from the anti suit injunction cases) in the Part III exercise. The task for the judge under Part III is to determine whether it would be appropriate for an order to be made in England, taking account in particular of the factors in section 16(2), notwithstanding that the divorce proceedings were in a foreign country which may well have been the more appropriate forum for the divorce. The next question is whether principles of comity will add anything useful to the analysis. Comity is a term of very elastic content: Dicey, Morris & Collins, Conflict of Laws, 14th ed (2006), paras 1 008 et seq; Collins, in Reform and Development of Private International Law (ed Fawcett, 2002), 89. But in the present context it may be relevant in three respects. First, comity is sometimes used not simply in the sense of courtesy to foreign states and their courts, but also in the sense of rules of public international law which establish the proper limits of national legislative jurisdiction in cases involving a foreign element. In that sense it will be contrary to comity for United Kingdom legislation to apply in a situation involving a foreign country when the United Kingdom has no reasonable relationship with the situation. That is not the case here. There is nothing internationally objectionable in legislation which gives a court power to order financial provision notwithstanding a foreign decree of divorce, whether or not the foreign court has ordered financial provision, provided that the forum has an appropriate connection with the parties or their property. The whole point of the factors in section 16(2) is to enable the court to weigh the connections of England against the connections with the foreign jurisdiction so as to ensure that there is no improper conflict with the foreign jurisdiction. That is why in Holmes v Holmes [1989] Fam 47, at 53, Purchas LJ was right to note that section 16 reflected the principles of comity as between competent courts. The second relevant sense in which comity is used is that a court in one country should not lightly characterise the law or judicial decisions of another country as unjust. But in the present context it is hardly necessary to resort to comity to establish that elementary principle. The third sense in which comity may be relevant is that it is said to be the basis for the enforcement and recognition of foreign judgments. Part III allows the court to supplement the order of a foreign court. Nigerian maintenance orders are enforceable in England under the Maintenance Orders (Facilities for Enforcement) Act 1920: SI 1959/377. But there is no obligation to recognise such orders in the sense that they must be regarded as determining the rights of the spouses to financial relief. It is not likely that the Nigerian order is to be regarded in England as a final judgment, since it is subject to variation by the court which made it: Nigerian Matrimonial Causes Act 1990, section 73(1)(j). It is not necessary to consider whether it was capable of creating any issue estoppels because Munby J ordered that the crucial findings of fact in the Nigerian proceedings were to stand in the Part III proceedings, including the fact that the wife had failed to prove that she had contributed to the acquisition of the London properties. But, although the point does not arise on this appeal, a warning note must be struck about the position with regard to States to which Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation) applies. The effect of sections 15(2) and 28(4) of the 1984 Act is that the jurisdictional provisions of Part III and Part IV respectively are subject to the Brussels I Regulation (and the Lugano Convention). Those sections do not address the question whether a judgment in a Brussels I Regulation State making financial provision on divorce (or refusing to make such provision) would be entitled to recognition so as to prevent an award under Part III or Part IV. For the purposes of the Brussels I Regulation and the Lugano Convention there is a distinction between maintenance which is within the scope of the Regulation (Article 5(2), which confers jurisdiction on the courts of the maintenance creditors domicile, in addition to that of the debtors domicile under Article 2); and rights in property arising out of a matrimonial relationship (rgimes matrimoniaux) which are expressly excluded from the scope of the Regulation. These are autonomous concepts: Case 143/78 de Cavel v de Cavel (No 1) [1979] ECR 1055; Case 120/79 de Cavel v de Cavel (No 2) [1980] ECR 731. The Brussels II Revised Regulation (Council Regulation (EC) 2201/2003 on jurisdiction and the recognition of judgments in matrimonial matters and matters of parental responsibility) does not apply to the property consequences of the marriage or any other ancillary measures (Recital (8)), or to maintenance obligations (Recital (11)). It is only necessary to mention that if an award of maintenance had been made in another Member State, the question might arise as to whether the application in England under Part III would be precluded on the basis that the issue of maintenance had been determined in the other jurisdiction and that that determination was entitled to recognition. That would depend, at least in part, on whether the application was to be characterised as relating to maintenance or to rights in property arising out of a matrimonial relationship. Case C 220/95 Van den Boogaard v Laumen [1997] ECR I 1147, [1997] QB 759 shows that a transfer of property may be in the nature of maintenance if it is intended to ensure the support of a spouse; but a transfer of property which serves only the purpose of a division of property is not in the nature of maintenance, and concerns rights in property arising out of a matrimonial relationship. See also Schlosser Report on the Accession Convention to the Brussels Convention ([1979] OJ C59), para 50; Moore v Moore [2007] 2 FLR 339 (CA). This is an area which involves difficult questions which do not arise for decision on this appeal. Hardship, injustice, exceptionality and an award of the minimum extent necessary to remedy the injustice In its Working Paper (para 48) the Law Commission said that the proposals should be concerned primarily to give a remedy in those exceptional cases where a spouse, usually the wife, had been deprived of financial relief in circumstances where an English court might be driven to hold that it would be unjust to recognise the foreign decree. It went on to say (at para 51): 51 [W]e think that it should be made clear by express statutory provision that the object of the discretion is to provide for the occasional hard case. We consider, therefore, that the court should be given power to entertain an application for a financial provision or property adjustment order notwithstanding the existence of a valid foreign divorce, if in the light of all the circumstances of the case (and in particular certain specified circumstances) the case would otherwise be one where serious injustice might arise. Our present inclination is not to favour any requirement that the applicant must establish the facts of the case to be exceptional since he may well belong to a religious or ethnic group in which it is not uncommon, for example, for a wife to be divorced abroad without having a right to claim financial relief. The Report did not revert to the question of an express provision for hardship, and Part III contains no express reference to hardship, injustice or exceptionality. There has been a tendency in the Family Division and in the Court of Appeal to regard hardship as a condition for the exercise of the jurisdiction rather than as an important factor to be taken into account where it is present. There has been a similar tendency in the Court of Appeal to treat the element of exceptionality in the same way, by saying that the jurisdiction should be exercised only in exceptional circumstances: Holmes v Holmes [1989] Fam 47, 59; Hewitson v Hewitson [1995] Fam 100, 105. It is true that at least one of the purposes of Part III is to remit hardships which have been experienced in the past in the presence of a failure in a foreign jurisdiction to afford appropriate financial relief: Holmes v Holmes at P57, per Purchas LJ. But hardship is not a pre condition of the exercise of the jurisdiction. Thorpe LJ pointed out, correctly, in Jordan v Jordan [2000] 1 WLR 210, 221: as a matter of logic it does not follow that hardship is a necessary prerequisite and I doubt that it was open to Cazalet J. [in N v N (Foreign Divorce: Financial Relief) [1997] 1 FLR 900] to hold that an applicant must prove some hardship or injustice in order to obtain the court's leave. Parliament might have so legislated, but it did not. The statutory criteria are fully expressed. A case in which the applicant crosses the barriers contained in sections 13 and 16 without proving some specific hardship or injustice is perfectly conceivable. The proposal in the Law Commission Working Paper that the court should have the power to order financial relief following a foreign divorce if the case would otherwise be one where serious injustice might arise was not followed through in the Law Commission Reports draft Bill and finds no place in Part III. Thorpe LJ was right to say in Jordan v Jordan (in the same passage at 221) that injustice is not a necessary pre condition. Although they are not pre conditions, both hardship and injustice will of course be relevant factors for the court to take into consideration under both section 16 and section 18. The next question is on what basis the order for financial provision should be made. Among the provisional recommendations of the Law Commission Working Paper were that English law should govern the principles on which a court granted financial relief, the court should be able to make any financial order it might have made in English divorce proceedings, and should exercise its powers in accordance with the guidelines laid down in section 25 of the Matrimonial Causes Act 1973: paras 56 57, and recommendations (8) and (9). This recommendation was also made in the Report, and in the provisions of the draft Bill which became sections 17 and 18. In decisions at first instance, however, it has been held that it is only appropriate for the English court to intervene with financial relief to the minimum extent necessary so as to remedy the injustice perceived to exist without intervention: A v S (Financial Relief after Overseas US Divorce and Financial Proceedings) [2003] 1 FLR 431, at [98], a decision of Bodey J, applied by Coleridge J in the present case. There is no statutory basis for this limitation, and it is contrary to principle. For a example a talaq entitled to recognition may be granted abroad in a big money case when almost all relevant connecting factors are with England. In those circumstances there would be no reason not to apply English law so as to give the same provision for the wife as she would have obtained had there been divorce proceedings in England. There would be no need for any enquiry as to the minimum required to remedy the injustice. Nor, if the wife had independent means, would an enquiry into hardship be necessary or relevant. But equally it is not the intention of the legislation in England and Wales to allow a simple top up of the foreign award so as to equate with an English award. This is apparent from a comparison of Part III with the Scottish provisions of Part IV. The Scottish provisions have the effect that if certain jurisdictional criteria, and certain conditions, are fulfilled, then the application for financial relief is treated as a purely domestic application in Scottish matrimonial proceedings. The explanation is to be found in the Scottish Law Commission Report (Scot. Law Com. No 72, 1982): 2.12 The problem is to find a solution which will enable financial provision after a foreign divorce to be claimed and awarded in appropriate cases, but will not enable it to be claimed or awarded in inappropriate cases 2.13 It is here that we find ourselves differing from the Law Commission. They prefer a solution in which there are wide grounds of jurisdiction and in which it is left to the courts, guided by a list of factors to be taken into account, to sift out cases where an award would be inappropriate. We prefer a solution in which there are stricter grounds of jurisdiction and the legislation identifies certain cases as inappropriate in advance. In our view, a system based on rules is likely to be fairer to defenders and less objectionable to other countries than a system which depends almost entirely on judicial self restraint. We accept that strict rules on jurisdiction may exclude some cases which a judge in his discretion might allow to proceed. A power to award financial provision after a foreign divorce is, however, a new and exceptional one in our law, and we would rather proceed with caution . The consequence was that the Scottish provisions in Part IV of the 1984 Act provided that the court could entertain an application for an order for financial provision in Scotland after a divorce in a foreign country, if certain jurisdictional requirements and conditions were satisfied: section 28(1). But once these were satisfied, the case was to be treated as if it were a Scottish divorce. The jurisdictional requirements were that (a) the applicant was domiciled or habitually resident in Scotland on the day when the application was made; and (b) the other party to the marriage was domiciled or habitually resident in Scotland when the application was made; or was domiciled or habitually resident in Scotland when the parties last lived together as husband or wife; or was, when the application was made, an owner or tenant of, or had a beneficial interest in, property in Scotland which had at some time been a matrimonial home of the parties: section 28(2). The conditions were that: (a) the divorce fell to be recognised in Scotland; (b) the other party to the marriage initiated the proceedings for divorce; (c) the application was made within 5 years after the date when the divorce took effect; (d) a court in Scotland would have had jurisdiction to entertain an action for divorce between the parties if such an action had been brought in Scotland immediately before the foreign divorce took effect; (e) the marriage had a substantial connection with Scotland; and (f) both parties were living at the time of the application: section 28(3). Once these conditions were fulfilled, in disposing of the application under section 28, the court shall exercise its powers so as to place the parties, in so far as it is reasonable and practicable to do so, in the financial position in which they would have been if the application had been disposed of, in an action for divorce in Scotland, on the date on which the foreign divorce took effect: section 29(2). In determining what is reasonable and practicable the court shall have regard to the parties resources and any order of the foreign court: section 29(3). This is not the solution adopted in Part III. Section 18 could have provided that, once England and Wales was to be regarded as the appropriate forum under section 16, then the case was to be treated as a purely English proceeding for financial relief. But it did not do so. Instead a more flexible approach was deliberately adopted. There will be some cases, with a strong English connection, where it will be appropriate to ask what provision would have been made had the divorce been granted in England. There will be other cases where the connection is not strong and a spouse has received adequate provision from the foreign court. Then it will not be appropriate for Part III to be used simply as a tool to top up that provision to that which she would have received in an English divorce. The proper approach To take up some of the points made in the preceding paragraphs, the proper approach to Part III simply depends on a careful application of sections 16, 17 and 18 in the light of the legislative purpose, which was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England. There are two, inter related, duties of the court before making an order under Part III. The first is to consider whether England and Wales is the appropriate venue for the application: section 16(1). The second is to consider whether an order should be made under section 17 having regard to the matters in section 18. There are two reasons why the duties are inter related. First, neither section 16(2) nor section 18(2) and (3) refers to an exhaustive list of matters to be taken into account. Section 16(1) directs the court to have regard to all the circumstances of the case and section 16(2) refers the court to certain matters in particular. Second, some of the matters to be considered under section 16 may be relevant under section 18, and vice versa. An obvious example would be that section 16(2)(e) refers the court to the financial provision which has been made by the foreign court. Plainly that would be relevant under section 18. So also the direction in section 18(6) to the court, in considering the financial resources of a party, to have regard to whether an order of a foreign court has been complied with would plainly be relevant in considering whether England is the appropriate venue. It is not the purpose of Part III to allow a spouse (usually, in current conditions, the wife) with some English connections to make an application in England to take advantage of what may well be the more generous approach in England to financial provision, particularly in so called big money cases. There is no condition of exceptionality for the purposes of section 16, but it will not usually be a case for an order under Part III where the wife had a right to apply for financial relief under the foreign law, and an award was made in the foreign country. In such cases mere disparity between that award and what would be awarded on an English divorce will certainly be insufficient to trigger the application of Part III. Nor is hardship or injustice (much less serious injustice) a condition of the exercise of the jurisdiction, but if either factor is present, it may make it appropriate, in the light of all the circumstances, for an order to be made, and may affect the nature of the provision ordered. Of course, the court will not lightly characterise foreign law, or the order of a foreign court, as unjust. The amount of financial provision will depend on all the circumstances of the case and there is no rule that it should be the minimum amount required to overcome injustice. The following general principles should be applied. First, primary consideration must be given to the welfare of any children of the marriage. This can cut both ways as the children may be being supported by the foreign spouse. Second, it will never be appropriate to make an order which gives the claimant more than she or he would have been awarded had all proceedings taken place within this jurisdiction. Third, where possible the order should have the result that provision is made for the reasonable needs of each spouse. Subject to these principles, the court has a broad discretion. The reasons why it was appropriate for an order to be made in England are among the circumstances to be taken into account in deciding what order should be made. Where the English connections of the case are very strong there may be no reason why the application should not be treated as if it were made in purely English proceedings. The full procedure for granting ancillary relief after an English divorce does not apply in Part III cases. The conditions which can be attached to leave, together with the courts case management powers, can be used to define the issues and to limit the evidence to be filed, as was done by Munby J in this case. This enables the jurisdiction to be tailored to the needs of the individual case, so that the grant of leave does not inevitably trigger a full blown claim for all forms of ancillary relief. This case To the extent, therefore, that Coleridge J considered that there was a rule that the provision made under Part III should be the minimum required to overcome an injustice, he was in error, but there is no cross appeal on quantum. It is not therefore necessary to consider whether a different result would have been justified, particularly since the total provision ordered in both jurisdictions did not fall markedly short of what the wife would have received in a purely English proceeding. The Court of Appeal erred in principle in applying traditional forum non conveniens principles, and its criticisms of Coleridge Js conclusions did not meet the necessary threshold for interference with the exercise of discretion. To the extent that the Court of Appeal took the view that Coleridge J relied too much on Munby Js judgment, the criticism is in reality one of lack of adequate reasoning. Coleridge Js judgment was an unreserved judgment given after a 2 day hearing against the background of a full exposition of the facts and the law (over, to repeat, some 28 single spaced pages) in the same case by Munby J. Coleridge J was fully entitled to incorporate by reference Munby Js account of the background facts. To the very limited extent that further facts were to be found (principally as regards the wifes earnings) Coleridge J made appropriate findings. He cannot be criticised for failing to refer to every relevant factor in section 16(2). What the wife received and to what she was entitled in Nigeria were obvious. The judges reasons (particularly in the light of his incorporation of Munby Js judgment) have to be read on the assumption that the judge knew how he should perform his functions and which matters he should take into account, particularly when those matters had not only been fully set out by Munby J but are familiar to every experienced judge in the Family Division: cf. Piglowski v Piglowska [1999] 1 WLR 1360, 1372 (in relation to the exercise of discretion by reference to the factors in section 25 of the Matrimonial Causes Act 1973). Because the Court of Appeal wrongly applied traditional forum non conveniens principles, it erred in criticising Coleridge J for failing to identify which court had the closest and most appropriate connection with the parties or for failing to identify Nigeria as the natural and appropriate forum to deal with the divorce. The English connections were substantial, if not overwhelming, and Coleridge J plainly took the relevant matters in section 16(2) into account. It was not so much that there was a very large disparity between what the wife received in Nigeria and what she would have received in England, but that there was also a very large disparity between what the husband received and what the wife received such as to create real hardship and a serious injustice. There was no basis for interference with the exercise of discretion. The appeal will be allowed and the order of Coleridge J restored. |
Mrs Owens appeals against an order of the Court of Appeal dated 24 March 2017 (Sir James Munby, the President of the Family Division, and Hallett and Macur LJJ), [2017] EWCA Civ 182, [2017] 4 WLR 74, by which it dismissed her appeal against the dismissal of her petition for divorce by Judge Tolson QC (the judge) on 25 January 2016 in the Central Family Court in London. The petition of Mrs Owens was based upon section 1(2)(b) (the subsection) of the Matrimonial Causes Act 1973 (the 1973 Act), which extends only to England and Wales: she alleged that her marriage to Mr Owens had broken down irretrievably and that he has behaved in such a way that [she] cannot reasonably be expected to live with [him]. It was in the belief that the appeal of Mrs Owens would raise a novel issue about the interpretation of the subsection that this court gave permission for it to be brought. Her principal ground of appeal had been that the subsection should now be interpreted as requiring not that the behaviour of Mr Owens had been such that she could not reasonably be expected to live with him but that the effect of it on her had been of that character. But, important though the effect on the petitioner of the respondents behaviour is under the subsection, Mr Marshall QC on her behalf conceded at the hearing that the principal ground went too far. So issues about the interpretation of the subsection, at any rate as between Mr and Mrs Owens, have narrowed substantially. But our judgments may nevertheless remain of some value to those who in the future wish to invoke, or need to apply, the subsection. Resolution, the name by which the Solicitors Family Law Association is now known, intervenes in the appeal. It commends, by contrast, a re interpretation of the subsection along the lines of that principal ground of appeal. The court is grateful for its presentation but in the circumstances will refer only briefly to it. Mrs Owens is aged 68. Mr Owens is aged 80. They were married in 1978 and have two children, now adult. During the marriage, with the support of Mrs Owens, Mr Owens built a successful business and they each now have significant wealth. The matrimonial home, in which Mr Owens continues to live, is a substantial manor house in a village in Gloucestershire. Mrs Owens now lives next door, in a property which they also own. It was in June 2012 that Mrs Owens first consulted her solicitors about a divorce. In about November 2012 she began an affair. It ended in August 2013, which was when (as Mrs Owens later discovered) Mr Owens learnt of it. Mrs Owens told the judge that the affair was the result of a bad marriage, not the cause for divorce. The judge did not say whether he accepted what she said: he could not do so because, as I will explain, he did not receive evidence about the quality of the marriage prior to 2013. In February 2015 Mrs Owens left the matrimonial home and, following five months in rented accommodation, began to occupy the property next door to the home. They have not lived together since her departure. The judge found as facts that the marriage had broken down; that Mrs Owens could not continue to live with Mr Owens; and that, in so far as he believed otherwise, Mr Owens was deluding himself. Back in December 2012 Mrs Owens had handed to Mr Owens a letter written by her solicitors, with which was enclosed a draft petition for divorce based upon the subsection; and in the letter the solicitors had enquired of Mr Owens whether, if a petition were to be issued in the terms of the draft, he would defend it. As he accepts, Mr Owens then told Mrs Owens that, if she filed the petition, he would never speak to her again. The judge remarked that, like the petition which she filed much later, this initial draft lacked beef. That should have been a compliment, not a criticism. Family lawyers are well aware of the damage caused by the requirement under the current law that, at the very start of proceedings based on the subsection, one spouse must make allegations of behaviour against the other. Such allegations often inflame their relationship, to the prejudice of any amicable resolution of the ensuing financial issues and to the disadvantage of any children. Thus for many years the advice of the Law Society, now contained in the second guideline of para 9.3.1 of the fourth edition (2015) of the Family Law Protocol, has been: Where the divorce proceedings are issued on the basis of unreasonable behaviour, petitioners should be encouraged only to include brief details in the statement of case, sufficient to satisfy the court In his judgment the judge observed that the draft petition was delivered to Mr Owens at the time when Mrs Owens had begun the affair. The strong implication, he said, is that there was no substance in the draft petition. Indeed at the hearing he had suggested that the existence of the affair knocks out the allegations made in it and provides an ulterior motive for the proposed petition. With respect, I suggest that it is wrong to infer that a spouse who aspires to present a petition while conducting an affair has no case under the subsection. In the event the draft petition was never issued. Mr and Mrs Owens continued to live in the matrimonial home, and to a substantial extent to live together, for a further two years. But Mrs Owens continued to keep a diary of incidents between herself and Mr Owens of which she might later wish to complain. In May 2015 Mrs Owens issued the petition which is the subject of the proceedings. Like the earlier draft, it was based on the subsection and was cast in appropriately anodyne terms. The statement of case comprised five paragraphs. In them Mrs Owens alleged only that Mr Owens had prioritised his work over their life at home; that his treatment of her had lacked love or affection; that he had often been moody and argumentative; that he had disparaged her in front of others; and that as a result she had felt unhappy, unappreciated, upset and embarrassed and had over many years grown apart from him. For some reason Mr Owens declined to instruct the solicitors who had been corresponding on his behalf with Mrs Owens solicitors to accept service of the petition; so it was served upon him personally. He indicated an intention to defend the suit. By his answer, he denied that the marriage had broken down irretrievably and alleged, in the event incorrectly, that in bringing the suit Mrs Owens was motivated by a wish to continue the affair and that the other man was exercising a malign influence over her. At that stage Mr Owens largely denied the allegations about his behaviour and said that, although never emotionally intense, the marriage had been successful and that he and Mrs Owens had learnt how to rub along. In October 2015 a recorder conducted a case management hearing pursuant to rule 7.22(2) of the Family Procedure Rules 2010 (the FPR). In the light of Mr Owens defence of the suit, Mrs Owens was granted permission to amend the petition so as to expand her allegations of behaviour. The recorder also directed that the parties should file short witness statements, which were to stand as their evidence in chief. The recorder made two further significant directions. The first was that there should be no witness other than the parties themselves. It appears that, by counsel, Mrs Owens agreed to that direction. The second related to the requirement under the rule for the recorder to give directions for the conduct of the final hearing of the suit. The court is told that, by their respective counsel, the wife suggested that a hearing of one half day would suffice whereas the husband suggested that three days were required. In the event the recorders direction was for a hearing of one day. Why did the experienced legal advisers to Mrs Owens consider that the court would need only one half day in which to determine the issues raised by her petition and that she would not need to call any witness to corroborate, for example, her allegation of disparaging comments on the part of Mr Owens in front of others? The answer to this question is not in dispute. It lies in an understanding of the practical operation of the family court nowadays when determining a defended suit for divorce. Defended suits are exceedingly rare. In his judgment the President noted that, in relation to the 114,000 petitions for divorce which were filed in England and Wales in 2016, fewer than 800 answers were filed; and he estimated that the number of suits which proceeded to a final, contested hearing was 0.015% of the petitions filed, which amounts to about 17 in that whole year. The degree of conflict between the parties which is evident in a fully defended suit will of itself suggest to the family court that in all likelihood their marriage has broken down. While it recognises that, unless and until repealed by Parliament, section 1 of the 1973 Act must conscientiously be applied, the family court takes no satisfaction when obliged to rule that a marriage which has broken down must nevertheless continue in being. In No Contest: Defended Divorce in England and Wales, published in 2018 by the Nuffield Foundation, Professor Trinder and Mark Sefton make a report on their detailed study of recently defended suits. In an admirable summary of the approach of the family court at pp 7 8, they say: While respondents are typically focused on defence as a means to establish their truth of why the marriage broke down, the family justice system is predicated on settlement and compromise. That settlement orientation applies even in cases where a formal defence has been issued, with encouragement to settle at each stage of proceedings, up to and including, contested hearings. The very active promotion of settlement at each stage, with lawyers and judges working in concert, reflects the dominant family justice perspective that agreed outcomes are less costly and damaging, that trying to apportion blame is a fruitless and inherently non justiciable task and that defence is futile where one party has decided that the marriage is over. For reasons which I will explain, the subsection nowadays sets at a low level the bar for the grant of a decree. The expectations therefore are that, even when defended to the bitter end, almost every petition under the subsection will succeed; that, in the interests again of minimising acrimony, the petitioner will be encouraged at the hearing to give no more than brief evidence in relation only to a few allegations of behaviour; and that then, after an equally short riposte on behalf of the respondent by cross examination, oral evidence and submission, the court will deliver a brief judgment, almost certainly culminating in the pronouncement of a decree. As Mr Owens himself acknowledged when recounting the advice given to him, Courts rarely stand in the way of a party seeking a divorce. Indeed the authors of the No Contest report discovered no recent example, other than Mr Owens himself, of a respondent to a defended suit who successfully opposed the grant of a decree on some basis or other. Mrs Owens duly amended her petition. By alleged reference to her diary, she gave 27 individual examples of the third and fourth allegations in her petition that Mr Owens had been moody and argumentative and had disparaged her in front of others. She cannot have thought that the time allowed for the hearing would enable her to give evidence of more than a few of them. The earliest of her examples was said to have occurred in 2013. So she chose not to give any specific example of Mr Owens behaviour during the first 35 years of the marriage or prior to the date of the initial draft petition. Perhaps there was no such example which she could honestly give; or perhaps, on advice, she did not regard it as necessary to do so. In his amended answer Mr Owens admitted some of the alleged examples but sought to place them in a different context; described some as exaggerated; and professed not to remember others. He entered very few denials. At the outset of the hearing before the judge, which took place ten days before he handed down his judgment, Mr Marshall QC, on behalf of Mrs Owens, said that, although in her witness statement she had confirmed the veracity of all 27 of the examples given in the amended petition, he proposed to focus only on a very few of them. Mr Marshall did so; and, at the judges invitation, Mr Dunlop, on behalf of Mr Owens, did likewise. Indeed, during his final submission Mr Marshall, at the request of the judge, identified the four examples on which he most relied. The result was that no evidence was put before the judge in relation to most of the 27 examples, apart from the written confirmation of their veracity on the part of Mrs Owens and from the mixture of responses to them which Mr Owens had given in his amended answer and confirmed to be true in his witness statement. It also follows that, although at one point Mrs Owens told Mr Dunlop that Mr Owens had been making hurtful and disparaging remarks to her long before 2012, in effect no evidence was given in relation to the marriage prior to its two final years. In a short judgment written on six pages, to which I will refer in more detail below, the judge announced at the outset that the petition was hopeless. Having concluded that the marriage had broken down, he found that: a) all 27 of the pleaded examples of behaviour were at best flimsy; b) Mrs Owens had significantly exaggerated their context and seriousness; c) Mr Owens was somewhat old school; d) Mrs Owens was more sensitive than most wives; e) three of the examples on which Mr Marshall had in particular relied (the judge making no reference to the fourth) were isolated incidents, not part of a persistent course of conduct on the part of Mr Owens; f) Mrs Owens had cherry picked one of those examples, which illustrated her approach; the three examples scarcely merited criticism of Mr Owens; and g) h) much the same could be said of the other 24 examples. The Law This court, like the appellate committee of the House of Lords which preceded it, has never had occasion to consider what the law requires a petitioner to establish under the subsection. Its words largely speak for themselves. But there are six judgments delivered in the lower courts which helpfully illumine their effect. They are old authorities which date from a period when controversy surrounding the establishment of a case under the subsection was slightly less rare. First, Pheasant v Pheasant [1972] Fam 202. A husband petitioned for divorce pursuant to section 2(1)(b) of the Divorce Reform Act 1969 (the 1969 Act), which came into force on 1 January 1971 and which was repealed when the 1973 Act came into force on 1 January 1974. Section 1(2)(b) of the 1973 Act is in the same terms as was section 2(1)(b) of the 1969 Act. The husbands case was that the wife had been unable to give him the demonstrative affection which he needed. Ormrod J dismissed the petition. At p 206 he observed that Parliament had not yet assimilated the law relating to marriage with the law of partnership, which made different provisions both for dissolution and for the resolution of financial issues consequent upon it. At pp 207 208 he construed section 2(1)(b) as placing primary emphasis on the respondents behaviour rather than on the petitioners personal idiosyncrasies. And at p 208 he asked himself whether it was: reasonable to expect this petitioner to put up with the behaviour of this respondent, bearing in mind the characters and the difficulties of each of them, trying to be fair to both of them, and expecting [of them] neither heroic virtue nor selfless abnegation Second, Livingstone Stallard v Livingstone Stallard [1974] Fam 47. Dunn J upheld a wifes petition based on the subsection. At p 54 he suggested that it was unhelpful to analyse the conduct required by the subsection in terms of its gravity. While purporting to distance himself from the question posed in the Pheasant case, Dunn J seems there to have asked himself a closely similar question, namely: Would any right thinking person come to the conclusion that this husband has behaved in such a way that this wife cannot reasonably be expected to live with him, taking into account the whole of the circumstances and the characters and personalities of the parties? This question was approved and applied by the Court of Appeal in ONeill v ONeill [1975] 1 WLR 1118 at 1125. Third, Thurlow v Thurlow [1976] Fam 32. A husbands petition under the subsection was based on the wifes failure to contribute to the running of the home and on her increasingly erratic behaviour, both of which were the result of a severe neurological condition. At p 41 Rees J noted that, before approving the form of words in section 2(1)(b) of the 1969 Act, Parliament had considered and rejected a form of words that the conduct of the respondent has been so intolerable that the petitioner could not reasonably be expected to continue or resume cohabitation. At pp 41 43 he held that a respondents failure to act could amount to behaviour for the purposes of the subsection. Even more significantly, he held at p 46 that behaviour caused by illness could fall within the subsection; and, in granting a decree to the husband, he added that no blame of any kind can be nor is attributed to the wife. Fourth, Stevens v Stevens [1979] 1 WLR 885. The facts were unusual and, for present purposes, of interest. In March 1976 a judge had dismissed the wifes petition under the subsection. He had held that the marriage had irretrievably broken down; that the wife had not established her case of behaviour against the husband; and that the cause of the breakdown had been her own behaviour. Thereupon the parties had continued to live under the same roof. In due course the wife presented a second petition, again under the subsection but relying only on the husbands behaviour occurring after March 1976. Sheldon J granted her a decree. He adhered at p 887 to the earlier findings that the marriage had irretrievably broken down prior to March 1976 and that the wifes behaviour had caused it to do so. He held that he had to consider the totality of the evidence of the matrimonial history and the cumulative conduct of the husband. He found that following March 1976 the husband had behaved in such a way that the wife could not reasonably be expected to live with him; and he held that it was irrelevant that the husbands behaviour was not the cause of the breakdown of the marriage. Fifth, Balraj v Balraj (1981) 11 Fam Law 110. The husbands petition was based not on the subsection but on section 1(2)(e) of the 1973 Act, namely that he and the wife had lived apart for at least five years. The Court of Appeal upheld the judges rejection of the wifes opposition to the grant of a decree, which was that it would result in grave hardship to her within the meaning of section 5 of the 1973 Act. She had argued that the judge had failed to pay sufficient regard to her subjective reaction, as a Hindu wife, to the grant of a decree. In giving the leading judgment Cumming Bruce LJ at p 112 offered an analogy: In behaviour cases the court has to decide the single question whether the husband (for example) has so behaved that it is unreasonable to expect the wife to live with him. In order to decide that, it is necessary to make findings of fact of what the husband actually did and then findings of fact upon the impact of his conduct on that particular lady. As has been said again and again between a particular husband and a particular lady whose conduct and suffering are under scrutiny, there is of course a subjective element in the totality of the facts that are relevant to the solution but, when that subjective element has been evaluated, at the end of the day the question falls to be determined on an objective test. And sixth, Buffery v Buffery [1988] 2 FLR 365. A recorder had dismissed a wifes petition under the subsection on the basis that she had failed to establish either that the husbands behaviour had been grave and weighty or that it had caused the breakdown of the marriage. The Court of Appeal held that behaviour under the subsection did not have to be grave or weighty. At p 367 May LJ said that the gravity or otherwise of the conduct complained of is of itself immaterial. The court also reiterated what Sheldon J had held in the Stevens case, namely that the 1973 Act did not require the respondents behaviour to have caused the breakdown of the marriage. The wifes appeal was nevertheless dismissed on the basis that, even when judged by reference to correct principles, her petition failed. As in effect the Court of Appeal in the present case has held, and as Mrs Owens now concedes, these six old authorities continue to provide a correct interpretation of the subsection. The inquiry has three stages: first (a), by reference to the allegations of behaviour in the petition, to determine what the respondent did or did not do; second (b), to assess the effect which the behaviour had upon this particular petitioner in the light of the latters personality and disposition and of all the circumstances in which it occurred; and third (c), to make an evaluation whether, as a result of the respondents behaviour and in the light of its effect on the petitioner, an expectation that the petitioner should continue to live with the respondent would be unreasonable. Resolution explains that its members are gravely concerned about the continued existence of a law which in substantial part links entitlement to divorce to the making of allegations by one spouse against the other. It argues that the State thereby actively precipitates dispute. Pending wholesale reform of section 1 of the 1973 Act, it clearly wishes to mitigate what it regards as the malign effect of the subsection. It therefore submits that historically the lower courts have placed a flawed construction on it. It contends, as in effect Mrs Owens contended in her grounds of appeal but no longer contends, that the entire focus should be on the reaction of the petitioner to the respondents behaviour; and that, if the petitioner genuinely cannot continue to live with the respondent, it might well be thought that the petitioner cannot reasonably be expected to live with the respondent. But the question posed by the subsection is more narrow than whether the petitioner cannot reasonably be expected to live with the respondent; it is whether the respondents behaviour has been such that the petitioner cannot reasonably be expected to do so. In determining whether a continuation of life with the respondent cannot reasonably be expected of the petitioner, it is therefore impossible to avoid focus on the respondents behaviour, albeit assessed in the light of its effect on the petitioner. With respect to Resolution, its suggested interpretation of the subsection is incorrect. So also, for the reasons given by the President in paras 76 to 81 of his judgment, is its suggestion (not further maintained by Mrs Owens in her grounds of appeal to this court) that either the subsection if taken alone or section 1 of the 1973 Act if taken as a whole might be incompatible with the rights of petitioners under article 8 of the European Convention on Human Rights. But, although its interpretation by these courts remains correct even after 40 years, the application of the subsection to the facts of an individual case is likely to change with the passage of the years. In R (Quintavalle) v Secretary of State for Health [2003] UKHL 13, [2003] 2 AC 687, Lord Bingham of Cornhill said: 9. There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking. If Parliament, however long ago, passed an Act applicable to dogs, it could not properly be interpreted to apply to cats; but it could properly be held to apply to animals which were not regarded as dogs when the Act was passed but are so regarded now. The meaning of cruel and unusual punishments has not changed over the years since 1689, but many punishments which were not then thought to fall within that category would now be held to do so. In Miller v Miller, McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618, the appellate committee developed a new approach to the exercise of the discretionary jurisdiction under the 1973 Act to make financial orders following divorce. It was in that context, somewhat similar to the present, that both Lord Nicholls of Birkenhead at para 4 and Lord Hope of Craighead at para 115 justified the new approach by reference to the change in social and moral values from one generation to the next. I cannot readily think of a decision which more obviously requires to be informed by changing social norms than an evaluation whether, as a result of the respondents behaviour and in the light of its effect on the petitioner, an expectation of continued life together would be unreasonable. In Ash v Ash [1972] Fam 135 Bagnall J suggested at p 140: that a violent petitioner can reasonably be expected to live with a violent respondent; a petitioner who is addicted to drink can reasonably be expected to live with a respondent similarly addicted; and if each is equally bad, at any rate in similar respects, each can reasonably be expected to live with the other. The judges suggestion now seems almost comical. In the two specific examples quoted, surely each spouse would nowadays be entitled to a decree against the other under the subsection. But the relevant social norm which has changed most obviously during the last 40 years has, I suggest, related to our societys insistence upon equality between the sexes; to its recognition that marriage is a partnership of equals; and, specifically, to its assessment of the moment when a husbands behaviour, in the light of its effect on his wife, begins to make it unreasonable to expect her to continue to live with him. For a wife that moment now arrives earlier than it did before; it now arrives at the same time for both sexes in equivalent situations. In Priday v Priday [1970] 3 All ER 554, which was decided months before section 2(1)(b) of the 1969 Act came into force, Cumming Bruce J dismissed a husbands petition for divorce on the ground of the wifes cruelty under section 1(1)(a)(iii) of the Matrimonial Causes Act 1965. But, in recounting the history of the marriage, the judge also commented at p 557 on the conduct of the husband towards the wife: Up to 1968 [the husband] sometimes attempted intercourse by force in the hope that if he succeeded in intercourse, even by such method, that . might stimulate her again emotionally to return to reality, but that was unsuccessful and he naturally abstained from such attempts. I am satisfied that his recourse to force in intercourse was not in any sense culpable but was a desperate attempt on his part to re establish what might have been an important element in matrimonial consortium. Today such an assessment would be inconceivable. Eight years ago, in Miller Smith v Miller Smith in the Court of Appeal, [2009] EWCA Civ 1297, [2010] 1 FLR 1402, I observed at para 15: Our society in England and Wales now urgently demands a second attempt by Parliament, better than in the ill fated Part II of the [Family Law Act 1996], to reform the five ancient bases of divorce; meanwhile, in default, the courts have set the unreasonableness of the behaviour required to secure the success of a petition on the second basis, namely pursuant to section 1(2)(b) of the Act of 1973, even when defended, at an increasingly low level. The ease with which a petitioner can nowadays establish a case under the subsection, if undefended, led the President in his judgment to speak of its widespread dishonest and collusive manipulation. If the allegations of behaviour are not true, there is indeed dishonesty and, by not challenging them, a respondent might loosely be said to collude with it; and unfortunately such dishonesty is unlikely to be uncovered when, by reference only to the papers filed, the court decides pursuant to rule 7.20(2)(a) of the FPR whether to certify that the petitioner is entitled to a decree. But my reference in the Miller Smith case to the greater availability of a decree under the subsection was intended to recognise not its abuse in some cases but a legitimate enlargement of its application reflective of changing social norms in other cases. Nevertheless, in making that reference, I used a phrase which I regret: for I referred to the unreasonableness of the behaviour. Unreasonable behaviour has always been the family lawyers shorthand description for the content of the subsection. But it is wrong. The subsection requires not that the behaviour should have been unreasonable but that the expectation of continued life together should be unreasonable. Within about a year of the advent of the 1969 Act, the error inherent in the shorthand description was exposed: Katz v Katz [1972] 1 WLR 955, 960. Indeed, in Bannister v Bannister (1980) 10 Fam Law 240, in which the Court of Appeal allowed a wifes appeal against the dismissal of her petition for divorce, Ormrod LJ observed at p 240: The learned judge, I am afraid, fell into the linguistic trap which is waiting for all of us when we speak of unreasonable behaviour in relation to section 1(2)(b) cases. The basis of this subsection is not unreasonable behaviour but behaving in such a way that the petitioner cannot reasonably be expected to live with the respondent, a significantly different concept. It is difficult to find an alternative shorthand expression for this subsection, so we all talk, inaccurately, of unreasonable behaviour. The Judgment In the course of his short judgment in the present case the judge referred five times to unreasonable behaviour. Questions arise. Was he looking for behaviour objectively worse than what the law requires? What lay behind his search for beef? Was he looking for behaviour for which he might blame Mr Owens, contrary to the decision in the Thurlow case cited at para 24 above? Was he looking for behaviour of gravity, contrary to the decision in the Buffery case cited at para 27 above? No doubt blameworthy or grave behaviour often makes it more likely that the third stage evaluation under the subsection will be that an expectation of continued life together would be unreasonable. But such is not a pre requisite of a successful petition under the subsection. as it went. He said: It seems, however, that the judge gave himself a correct self direction, so far In determining the question whether this respondent has behaved in such a way I apply an objective test what would the hypothetical reasonable observer make of the allegations but with subjective elements. I have to take into account the individual circumstances of the spouses and the marriage The judge then proceeded to repeat the question which Dunn J had asked himself in the Livingstone Stallard case, set out at para 23 above. The President described the judges self direction as entirely adequate. But did it go far enough? Did he remind himself of the need, noted in the Stevens case cited at para 25 above, to consider the behaviour of Mr Owens as a whole? Or equally, of the need to consider the effect of all of it on Mrs Owens cumulatively? In Jamieson v Jamieson [1952] AC 525 the appellate committee reversed the decision of the Court of Session that a wifes allegations of cruelty should be struck out as irrelevant and insufficient. Lord Normand suggested at pp 535 536: that it does not do justice to the averments to take up each alleged incident one by one and hold that it is trivial or that it is not hurtful or cruel The relationship of marriage is not just the sum of a number of incidents Equally, as Hallett LJ pointed out in the present case, behaviour which the other spouse may consider trivial in the context of a happy marriage may bear more heavily upon a spouse trapped in an unhappy marriage. In his judgment the President noted that the judge had failed to make explicit reference to the cumulative effect of Mr Owens behaviour on Mrs Owens, of which indeed she had given copious evidence. He said, however, that once he had surveyed the whole of the judges judgment, including in particular the reference to the whole of the circumstances in the question first articulated by Dunn J, he had become satisfied that the judge had paid sufficient regard to the cumulative effect of it on Mrs Owens, whom he had acknowledged to be more sensitive than most wives. But had the judge heard enough evidence to be able to appraise the cumulative effect on Mrs Owens of the conduct, taken as a whole, upon which she relied? How could he find the three examples of behaviour to which he made specific reference to be no more than isolated incidents, not part of a persistent course of conduct, in circumstances in which it had been agreed to be convenient to place so many other pleaded examples, albeit verified in writing by Mrs Owens, to one side? This, says Mrs Owens, represents appealable error even in this court. It was this court itself which, at the hearing, raised with counsel another possible cause for concern about the judgment. It is clear from the cases of Stevens and Buffery, cited in paras 25 and 27 above, that section 1 of the 1973 Act does not require the behaviour under the subsection to have caused the breakdown of the marriage. Nevertheless Mr Owens and his advisers energetically denied that any behaviour on his part had caused the breakdown of the marriage. In his witness statement Mr Owens twice averred that if, which he did not accept, the marriage had broken down, the breakdown had not been the result of his behaviour; and his counsels skeleton argument before the judge spoke of the possibility that the marriage was at an end but not due to [Mr Owens] fault. This courts question to counsel was whether these no doubt innocent misrepresentations of the nature of the inquiry under the subsection had misled the judge into considering that Mrs Owens needed to establish that the alleged behaviour of Mr Owens had caused the marriage to break down. For, in adverting briefly to the allegation in the petition, never particularised, that Mr Owens had prioritised his work over life at home, the judge first pointed out that Mr Owens had in effect been retired for many years; and then, in a passage which Mr Dyer QC on behalf of Mr Owens acknowledged to be unfortunate and difficult for him to interpret, continued: The idea that the lifestyle, whatever it may have been, now contributes to the breakdown of the marriage is fanciful. The ground is no more than a conventional form of words with no application to the present or the breakdown of the marriage at all. Moreover, at the end of his judgment, the judge explained his crucial conclusion in the following few words: I find no behaviour such that the wife cannot reasonably be expected to live with the husband. The fact that she does not live with the husband has other causes. The petition will be dismissed. (italics supplied) The facts remain, however, that Mr Marshall on behalf of Mrs Owens never argued in the Court of Appeal that the judge had fallen into this possible error; that the Court of Appeal did not see fit to raise it of its own motion; and that, even after it was raised at the hearing in this court, Mr Marshall did not squarely rely on it. The judge has long experience of family law (albeit, as he said, that he had previously tried only one defended suit for divorce) and the view must have been taken that the quoted passages represent too weak a foundation for a conclusion that he had fallen into elementary error. In such circumstances it is inappropriate for this court further to consider the point. There is no denying that the appeal of Mrs Owens generates uneasy feelings: an uneasy feeling that the procedure now conventionally adopted for the almost summary despatch of a defended suit for divorce was inapt for a case which was said to depend on a remorseless course of authoritarian conduct and which was acknowledged to appear unconvincing if analysed only in terms of a few individual incidents; an uneasy feeling about the judges finding that the three incidents which he analysed were isolated in circumstances in which he had not received oral evidence of so many other pleaded incidents; and an uneasy feeling about his finding that Mrs Owens had significantly exaggerated her entire case in circumstances in which Mr Owens had not disputed much of what she said. But uneasy feelings are of no consequence in this court, nor indeed in any other appellate court. The advantages of the judge in reaching the relevant conclusions need no rehearsal. The complaints of Mrs Owens about his judgment have already been analysed and dismissed by members of the Court of Appeal who have unrivalled authority in this sphere. Permission for her further appeal to this court was founded upon a novel interpretation of the subsection which at the hearing and in the event correctly she abandoned. As the above paragraphs testify, this court is not precluded from proceeding to address her remaining complaints, in particular in relation to the judges evaluation at the third stage of the inquiry; but in the above circumstances it is most unlikely to be appropriate for it to intervene. The Conclusion The appeal of Mrs Owens must be dismissed. She must remain married to Mr Owens for the time being. Were she to continue to live apart from Mr Owens until 2020, he would surely have no defence to a petition then brought under section 1(2)(e) of the 1973 Act on the basis that they had lived apart for a continuous period of five years. Parliament may wish to consider whether to replace a law which denies to Mrs Owens any present entitlement to a divorce in the above circumstances. LADY HALE: I have found this a very troubling case. It is not for us to change the law laid down by Parliament our role is only to interpret and apply the law that Parliament has given us. Lord Wilson has explained very clearly what that law requires. He sets out the three stages of the inquiry at para 28. He explains at para 30 that the application of that inquiry to the facts of an individual case is likely to change with the passage of the years. Expectations of whether it is reasonable to expect one spouse to continue to live with the other, in the light of the way the latter has behaved and its effect upon the former, have indeed changed over the 47 years since the Divorce Reform Act 1969 came into force. As Lord Wilson observes at para 34, the social norm which has changed most obviously over that time is the recognition that marriage is a partnership of equals. Indeed, the equality of the sexes is now also a legal norm, reflected in developments not only in family law but also in equality and anti discrimination law. With that statement of the law in mind, I have several misgivings about the trial judges judgment in this case. The first is his repeated reference to unreasonable behaviour. This is a convenient but deeply misleading shorthand for a very different concept. And it can so easily lead into error. In particular, it can lead to a search for blame, which is not required. Indeed, those of us who have made or supported proposals for reform of the law over the years may not have helped by referring to no fault divorce when the current law does not require fault. Worse still, referring to unreasonable behaviour can also lead to a search for who is the more to blame, which is also irrelevant. The Divorce Reform Act 1969 swept away the concepts in the old law relating to matrimonial offences which did make an attempt, however crude, to work out who was the more to blame. The current law simply does not do this. It is, for example, no answer to a petition based on adultery that the petitioner had been unfaithful and unloving for years or that the couple had not lived together for a long time. We should be referring to the facts in section 1(2)(a) and (b) as conduct based rather than fault based. My second misgiving is that the judge appears, at least from the passages quoted by Lord Wilson in para 41, to have thought that the behaviour complained of had to be the cause of the breakdown of the marriage. That is, as Lord Wilson has explained, simply not the law. The marriage has to have broken down irretrievably. One of the five facts prescribed in section 1(2)(a) to (e) of the 1973 Act has to be proved. But the Act does not require that there be a causal connection between them. It is, for example, most unlikely that the fact that a couple have been living apart for five years (fact (e)) is the cause of the breakdown of their marriage: it will have broken down for other reasons often attributable to the petitioner and long ago. But my third misgiving is the most troubling of all. This was a case which depended upon the cumulative effect of a great many small incidents said to be indicative of authoritarian, demeaning and humiliating conduct over a period of time. Those who have never experienced such humiliation may find it difficult to understand how destructive such conduct can be of the trust and confidence which should exist in any marriage. There is an analogy here with constructive dismissal cases in employment law. As Langstaff J (President) in the Employment Appeal Tribunal has put it (in Ukegheson v London Borough of Haringey, UKEAT/0312/14/RN, at paras 30 31): The meaning that correspondence or observations have when they are directed by one person to another may often depend very much on the context of the relationship between the two . [Looking at incidents in isolation] is perhaps to fail to see the eloquence of the story painted by the whole of the series of events and to focus instead upon events taken individually as though they were in silos. In a constructive dismissal case arising out of a poisoned relationship between parties, what matters is the totality of the picture rather than any individual point along the way. The problem, as Lord Wilson has shown, is that this hearing was not set up or conducted in a way which would enable the full flavour of such conduct to be properly evaluated. But what are we to do about it? This court is not a court of error. If the law is clear, permission to appeal is not normally given, either by this court or the court below, simply because the law may have been misapplied in the individual case. In this case, as Lord Wilson has explained, permission to appeal was given because it was argued that it was the effect of the respondents behaviour, rather than the behaviour itself, which should make it unreasonable to expect the petitioner to live with the respondent. That argument is no longer pursued. However, permission having been given to come to this court, we would in my view be failing in our duty if we were not to correct any error into which we found that the courts below had fallen. I am concerned that the trial court did indeed fall into error in the three respects identified earlier. Are we then to do nothing? Or are we to allow the appeal? And if so can we decide it ourselves or should we send it back to be heard again? Given that the principal problem is that the hearing did not enable the court to evaluate the petition as a whole and in context, it seems to me that the case would have to go back for a rehearing. We cannot assume that a properly instructed and constructed hearing would inevitably lead to a decree being granted. In my view therefore, the correct disposal of this appeal would be to allow the appeal and send the case back to be tried again. However, in the appellants written case, it was argued that it cannot be in the interests of the parties or in accordance with the overriding objective for there to be a further contested hearing (para 94). Orally, counsel viewed such a prospect with dread. It would place the appellant in an unenviable dilemma, given that, in February 2020, five years will have elapsed from their separation and, should the petitioner still wish to be divorced, it is difficult to see that there would be any obstacle standing in her way. I am therefore reluctantly persuaded that this appeal should be dismissed. LORD MANCE: I agree that this appeal should be dismissed. As to the law, I agree with paras 21 37 of Lord Wilsons judgment. As to its application to the facts, my reasons can be put in like terms to those contained in Lord Wilsons summary in para 43. I also agree with his conclusions and observations in paras 44 45. The judge stated and explained the legal test correctly in his para 10. His references, when summarising or referring to the evidence, to allegations of unreasonable behaviour adopted an inaccurate shorthand which is evidently, though regrettably, common in the profession. But there is no reason to think that the judge did not ultimately apply the correct test to the allegations. He expressly applied it when reaching his conclusions in his para 15. The judge, in the course of explaining the correct test in para 10, identified the need to take into account the individual circumstances of the spouses and the marriage the whole of the circumstances and the characters and personalities of the parties. He went on find that all of the allegations were at best flimsy, and, having heard both parties give evidence, that Mrs Owens had exaggerated their context and seriousness to a significant extent. He then considered various batches of allegations and three allegations which counsel for Mrs Owens ranked foremost in terms of seriousness. He concluded that these were all insignificant and that much the same could be said of all the other allegations and of Mrs Owens case generally. It appears fanciful to suppose that it would have made any difference to the judges assessment if he had also expressly put and answered the question whether, even if the allegations were individually insignificant, they were cumulatively significant. The judge clearly formed the view that there was nothing in the case overall. I share Lord Wilsons unease in paras 13 19 and 42 about an apparently conventional procedure, whereby this defended divorce petition was listed for what, in common law terms, might be regarded as a relatively short period in this case one day. But it was Mrs Owens who through counsel submitted that even that period was not required, and that only half a day would suffice, while Mr Owens case was that three days were required. The case was conducted, and the judge was invited to decide it, on the basis of his direction for a hearing of one day, not appealed as such. I do not think that we can now interfere to say that it was not possible in the circumstances to have a fair determination or for the judge to reach the overall conclusions which he did. Finally, I do not think that the judges judgment is open to the construction (raised with counsel by the Supreme Court) that he thought that the husbands conduct had to cause the breakdown. Considering the allegation that the husbands working lifestyle had caused Mrs Owens much unhappiness and made her feel unloved, the judge said (para 7) that: The idea that the lifestyle, whatever it may have been, now contributes to the breakdown of the marriage is fanciful. In his conclusions in para 15, he said: I find no behaviour such that the wife cannot reasonably be expected to live with the husband. The fact that she does not live with the husband has other causes. The judges use of the word contributes in the first passage is consistent with his recognising that, even though the actual breakdown may have had some other cause, the husbands behaviour may still have been such that the petitioner could not be expected to live with him. After expressly rejecting, in the first sentence quoted above from para 15, Mrs Owens case that the husbands behaviour had been such, the judge was in my view doing no more in the second quoted sentence than responding to the obvious factual or evidential question: if the husbands conduct was not such as the wife could not reasonably be expected to put up with, why is she living apart from him? There is to my mind no inference that he thought that the husbands behaviour must not only be such that the wife could not reasonably be expected to live with him as a matter of fact, but also that it must as a matter of law be the actual reason why she had determined to live, or was living, apart from him. |
In this appeal two men who had been convicted of very serious offences and who would continue to be detained in a penal institution on 18 September 2014 sought to establish a right of convicted prisoners to vote in the Scottish independence referendum on that date. As a prompt decision was needed, the court debated the matter and dismissed the appeal on the same day as the hearing. This judgment sets out the reasoning of the majority of the court. The proceedings giving rise to the appeal were applications for judicial review of the Scottish Independence Referendum (Franchise) Act 2013 (the Franchise Act), an Act of the Scottish Parliament. The Franchise Act based the franchise for the referendum on the franchise for local government elections, which is determined by the Representation of the People Act 1983 (the 1983 Act), and extended it to young voters over the age of 16. Section 2(1)(b) of the 1983 Act provides that a person who is subject to any legal incapacity to vote is not entitled to vote as an elector at a local government election. Section 3(1) of the 1983 Act incapacitates convicted prisoners from voting. Such prisoners have lacked the legal capacity to vote since 1969. Before then, there were other legal provisions which disenfranchised felons or had the effect of preventing prisoners from being registered to vote. The challenges follow on from decisions of the European Court of Human Rights (the Strasbourg Court) concerning the disenfranchisement of convicted prisoners. In Hirst v The United Kingdom (No 2) (2005) 42 EHRR 849 the Grand Chamber held that the general and automatic disenfranchisement of convicted prisoners was a violation of article 3 of Protocol No 1 (A3P1) of the European Convention on Human Rights (ECHR). In Scoppola v Italy (No 3) (2012) 56 EHRR 663 the Grand Chamber confirmed its judgment in Hirst. More recently, this court in McGeoch v Lord President of the Council 2014 SC (UKSC) 25 (R (Chester) v Secretary of State for Justice [2014] AC 271) has applied the principles in Hirst and Scoppola in claims under the Human Rights Act 1998 (HRA 1998). The appellants did not claim that, if their appeal were to succeed, they would necessarily have a right to vote in the referendum but asserted that it was important to review the lawfulness of the legislation, which was a matter of general public importance. The Lord Advocate and the Advocate General for Scotland did not challenge that assertion. Lord Glennie, who heard the applications in the Outer House of the Court of Session, issued his opinion refusing them on 19 December 2013 (2014 SLT 213). The First Division of the Inner House of the Court of Session refused a reclaiming motion on 2 July 2014 (2014 SLT 755). An expedited appeal was presented to this court on 24 July 2014. Mr Aidan ONeill QC for the appellants, submitted that the Franchise Acts blanket disenfranchisement of convicted prisoners in relation to the independence referendum was ultra vires the Scottish Parliament under the following headings: 1. 2. 3. 4. 5. because it was incompatible with A3P1 of the ECHR; because it was incompatible with article 10 of the ECHR (article 10); because it was incompatible with the law of the European Union (EU law); because it contravened the substantive requirements of the International Covenant on Civil and Political Rights (ICCPR); because it was incompatible with the basic democratic principles of the common law constitution, namely the principle of universal suffrage and the concomitant fundamental right to vote; and because it contravened the common law requirements of the rule of law. 6. The first three challenges are concerned with the effect which the Scotland Act 1998 gives to certain international norms, namely Convention rights incorporated into domestic law by HRA 1998 or EU law (defined in section 126(9) of the Scotland Act) which has precedence within its sphere over domestic law under the European Communities Act 1972, as limitations on the powers of the Scottish Parliament. Section 29(1) of the Scotland Act provides that an Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. Subsection (2)(d) states that a provision is outside that competence so far as it is incompatible with any of the Convention rights or with EU law. In relation to those three challenges the issue is whether the appellants or other convicted prisoners have rights which invalidate the relevant provisions of the Franchise Act. The fourth challenge raises a separate issue, namely whether the ICCPR has any effect in domestic law. The fifth and sixth challenges raise the questions whether the common law recognises a principle of universal suffrage and whether a denial of such a principle would be contrary to the rule of law. I consider each challenge in turn. (i) A3P1 of the ECHR A3P1 is entitled Right to free elections. It provides: The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. The article requires the contracting states to hold elections at reasonable intervals and the Strasbourg Court, drawing on the travaux prparatoires, has interpreted it as also conferring a right of participation, both by standing for election and voting, in the election of representatives to the legislature: Mathieu Mohin and Clerfayt v Belgium (1987) 10 EHRR 1, paras 46 51. The natural meaning of the article is that the phrase the free expression of the opinion of the people in the choice of the legislature is the product of the free elections at reasonable intervals by secret ballot. The article states that the elections are to be held under conditions which will ensure that free expression. Article 31(1) of the Vienna Convention on the Law of Treaties (1969) provides, as a general rule of interpretation: A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. In my view the ordinary meaning of the words of A3P1 strongly supports the view that the signatories of the ECHR were undertaking to hold periodic elections to a democratically elected legislature. The requirement that the elections are held at reasonable intervals also suggests that the drafters of A3P1 did not have referendums in mind. The words in their ordinary meaning do not support a wider view that A3P1 was intended to cover any major political decision which was put to a popular vote, however important that decision might be. That the object and purpose of A3P1 is so limited is confirmed by the consistent case law of the European Commission on Human Rights and the Strasbourg Court. The Lord Ordinary, Lord Glennie, in para 22 of his opinion referred to X v United Kingdom (Application No 7096/75, 3 October 1975) and 11 subsequent decisions on admissibility which vouched the principle that A3P1 applies to elections to the legislature and has no application to voting in other elections or in a referendum. Lady Paton, delivering the succinct opinion of the First Division, agreed in para 24. It is not necessary to analyse all of those decisions, which vouch a consistent line of reasoning. I therefore examine four to highlight the scope of the reasoning of the Strasbourg Court. X v UK concerned the referendum in 1975 on whether the United Kingdom should remain a member of the EEC. The Commission decided that A3P1 did not cover the referendum because it was not an election concerning the choice of the legislature. In v Latvia (Application No 14755/03, 26 January 2006) the Third Section dealt with a complaint that a prisoner had not been allowed to vote in a referendum on Latvias accession to the EU. It rejected the application as inadmissible, reiterating that the obligations imposed on Contracting States by A3P1 were limited to parliamentary elections and do not apply to referendums. Niedwied v Poland (2008) 47 EHRR SE6 concerned a prisoner who had been deprived of a right to vote in (i) the presidential election of 2000, (ii) parliamentary elections in 2001 and (iii) the referendum on Polands accession to the European Union in 2003. The Strasbourg Court rejected the claims in respect of (i) and (iii) ratione materiae because the A3P1 obligations related to the choice of legislature. The fourth decision, McLean and Cole v United Kingdom (2013) 57 EHRR SE95, concerned complaints by convicted prisoners about their disenfranchisement from (i) elections to the European Parliament in 2009, (ii) the United Kingdom parliamentary election of 2010, (iii) elections to the Scottish Parliament in 2007 and 2011, (iv) the nationwide referendum on the alternative vote also in 2011 and (v) local government elections. The court held that local authorities in the United Kingdom were not part of the legislature in A3P1 and that complaint (v) was inadmissible. In relation to complaint (iv) the court reiterated (in para 32) that A3P1 was limited to elections concerning the choice of the legislature and did not apply to referendums. It continued (in para 33): There is nothing in the nature of the referendum at issue in the present case which would lead the court to reach a different conclusion here. It follows that complaint concerning the alternative vote referendum is incompatible ratione materiae with the provisions of the Convention and its Protocols and must be rejected pursuant to article 35(4). Mr ONeill QC founded on the first sentence of this extract to argue that the Strasbourg Court would apply A3P1 to a particular referendum, such as a referendum transferring powers from one legislature (the UK Parliament) to another (the Scottish Parliament). He also pointed out that some of the admissibility decisions did not contain detailed reasoning. For the reasons which we set out below we are not persuaded by either point. For completeness I also refer to Anchugov and Gladkov v Russia [2013] ECHR 638 in which the First Section of the Strasbourg Court held (in paras 54 and 55) that the obligations which A3P1 imposed on Contracting States did not extend to the election of a Head of State. Thus a complaint under A3P1 of exclusion from the important election of the Russian President was declared inadmissible ratione materiae. While the Court considered (in paras 38 40) as relevant legal material article 25 of the ICCPR, which I discuss in paras 26 31 below, only the disenfranchisement from the parliamentary elections was held to breach A3P1. The courts of the United Kingdom are not bound by the judgments of the Strasbourg Court in interpreting the ECHR. In section 2 of HRA 1998 the courts are obliged only to take into account that jurisprudence. There is room for disagreement and dialogue between the domestic courts and the Strasbourg Court on the application of provisions of the ECHR to circumstances in the UK. Nonetheless, it is consistent with the intention of Parliament in enacting HRA 1998 that our courts should follow a clear and constant line of decisions of the Strasbourg Court, whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle: Manchester City Council v Pinnock (Nos 1 and 2) [2011] 2 AC 104, Lord Neuberger at para 48. On occasion our domestic courts may choose to go further in the interpretation and application of the ECHR than Strasbourg has done where they reach a conclusion which flows naturally from Strasbourgs existing case law: Rabone v Pennine Care NHS Trust [2012] 2 AC 72, Lord Brown of Eaton under Heywood para 112; In re G (Adoption: Unmarried Couple) [2009] AC 173. As Mr ONeill submitted, the Strasbourg Court has on many occasions emphasised both that democracy is a fundamental feature of the European public order and that the ECHR was designed to promote the ideals and values of a democratic society: see for example Staatkundig Gereformeerde Partij v The Netherlands (Application No 58369/10, 10 July 2012) at para 70. Further, it is in the appellants favour that there is no doubt that a vote whether to secede from a 307 year old Union is a momentous and historic decision for a democratic country. If the ECHR protected a principle of universal suffrage in all important democratic decisions, the Scottish independence referendum would clearly merit such protection. But, in my view, the case law of the Strasbourg Court is unequivocal. What A3P1 requires is regular periodic elections to the legislature of a Contracting Party and it also protects the right to vote and stand for election in such elections. The legislature is not confined to a national Parliament but includes the European Parliament Matthews v UK (1999) 28 EHRR 361 but it does not include local authorities in the United Kingdom: McLean & Cole v UK. There is thus no real support for the appellants position in the Strasbourg jurisprudence. There is no clear direction of travel in that jurisprudence to extend A3P1 to referendums. On the contrary, between 1975 and 2013 there have been at least 12 applications in which claims under A3P1 concerning a right to vote in referendums have been rejected as inadmissible. The fact that in some cases the Strasbourg Court has not set out detailed reasoning does not assist the appellants. The applications were treated as manifestly ill founded, avoiding the need for such reasoning. At best for the appellants there is the first sentence from the quotation in para 11 above from McLean and Cole, which could suggest that there could be a referendum which would be the equivalent of an election to a legislature. But that must be construed against the backdrop that the Strasbourg Court has held that referendums which could have a direct and material effect on the powers and operation of a legislature are not within the ambit of A3P1. Thus accession to the European Union, by which the European Parliament is introduced as a new legislature in relation to a Contracting State and the powers of the national legislature are constrained, is outside A3P1: Z v Latvia and Niedwied v Poland. So also is a referendum on the way in which the legislature is elected: McLean and Cole. In my view there is no material difference between accession and secession in this context. In each case the powers of one legislature are reduced in favour of another legislature. Nor am I persuaded that the Edinburgh Agreement, by which the United Kingdom Government and the Scottish Government agreed to be bound by the outcome of the Scottish independence referendum, is a point of distinction from other referendums. The secession of Scotland from the UK could, in theory at least, have been organised constitutionally without a referendum by legislation of the UK Parliament. The fact that the referendum is a very important political decision for both Scotland and the rest of the United Kingdom is not material. If the political importance of a democratic decision were the criterion for inclusion within A3P1, it is likely that the election of the executive President of the Russian Federation would have come within that article. But it did not: Anchugov and Gladkov v Russia. In view of the clear line of case law by the Strasbourg Court, I do not think, for the reasons discussed in para 28 below, that article 25 of the ICCPR affects the proper interpretation of A3P1. In Mathieu Mohin and Clerfayt v Belgium the Strasbourg Court stated (at para 53): Article 3 (P1 3) applies only to the election of the legislature, or at least of one of its chambers if it has two or more (fn 76: Travaux Prparatoires, vol VIII, pp 46, 50 and 52). The word legislature does not necessarily mean only the national parliament, however; it has to be interpreted in the light of the constitutional structure of the State in question. The passage of time and the Strasbourg case law since 1988 have not altered the meaning of A3P1. There are clearly arguments of legal policy which could suggest that a right to vote in a historic constitutional referendum should be protected in the same way as a right to vote in an election of a national or European legislature. In several cases the Strasbourg Court has stated that any general, automatic and indiscriminate departure from the principle of universal suffrage risks undermining the democratic validity of the legislature thus elected and the laws which it promulgates: Hirst at para 62; Sitaropoulos and Giakoumopoulos v Greece (2012) 56 EHRR 320 (Grand Chamber) at para 68; Scoppola v Italy (No 3) (Grand Chamber) at para 84; and Shindler v UK (2013) 58 EHRR 148 (4th Section) at para 103. That reasoning could readily be applied to democratic decisions other than elections to the legislature. A referendum which results in the creation of a new legislature or the transfer of powers from one legislature to another could have an equal effect on the democratic validity of the resulting Parliament. But A3P1, as currently worded, does not protect such a wider right of participation in public life. The appellants claim under A3P1 therefore fails. (ii) Article 10 of the ECHR Article 10 of ECHR provides 1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises. 2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. The courts below held that article 10 does not confer any wider right to vote than is conferred by A3P1. I agree, essentially for the reasons which they gave (the Lord Ordinary at paras 37 and 40 43 and the First Division at para 25). The European Commission on Human Rights and the Strasbourg Court have repeatedly held in decisions on admissibility that article 10 did not protect the right to vote or other rights already secured by A3P1 as the lex specialis. See, for example, Liberal Party v United Kingdom (1980) 4 EHRR 106, paras 14 16, and the other cases to which the Lord Ordinary referred at para 37 of his opinion. This is consistent with the wording of article 10 and with the approach to construction of the ECHR which considers an individual article in the context of the Convention as a whole. In any event, there is nothing in the Strasbourg jurisprudence to suggest that a claim under article 10, if admitted as in Hirst v United Kingdom, would confer a wider right of political participation by voting or standing for election than that protected by A3P1: Hirst, para 89; Anchugov and Gladkov, paras 113 116; danoka v Latvia (2006) 45 EHRR 478, para 141. The claim under article 10 therefore fails. (iii) European Union law The appellants asserted that the disenfranchisement of convicted prisoners entailed a breach of EU law. The argument ran thus. If voters in Scotland voted for independence, the appellants as Scottish born British citizens would automatically be made citizens of an independent Scotland on the enactment of the Scottish Governments draft Scottish Independence Bill. An independent Scottish Government would have to apply to join the EU. If the application did not succeed, the appellants new Scottish nationality would not carry with it the rights of EU citizenship, including the rights in the Charter of Fundamental Rights of the EU. Because the outcome of the referendum might affect rights conferred and protected by the legal order of the EU, Mr ONeill QC submitted that the legislative conditions for participation in the referendum were amenable to judicial review carried out in the light of EU law. The blanket and comprehensive statutory prohibition from voting was, he submitted, contrary to EU law and thus outside the legislative competence of the Scottish Parliament. I do not think that the prohibition from voting in the independence referendum involves any breach of EU law for the following two reasons. First, it must be borne in mind that a yes vote in the referendum would not itself determine the citizenship of the appellants or other people born in Scotland. The Scottish Government and UK Government would have to negotiate the terms of Scotlands secession from the UK and it is not possible at this time to say whether people may be empowered to elect to retain United Kingdom citizenship. While the Scottish Independence Bill, if enacted as currently drafted, would end the UK citizenship of a Scottish born citizen, that Bill might be amended in the light of the negotiations. It would not have been the independence referendum but legislation that followed those negotiations and also negotiations between the Scottish Government and the governments of European Union Member States which might have given rise to a withdrawal of EU citizenship. The judgment of the Court of Justice of the European Union in Rottmann v Freistaat Bayern [2010] QB 761 may be distinguished on the basis that the Scottish Parliament in enacting the Franchise Act to provide for the franchise of the referendum was not exercising powers in the sphere of nationality in a way which affected the rights conferred or protected by the EU legal order. Secondly, as the Lord Advocate and the Advocate General for Scotland submitted, this court has recently held that EU law does not incorporate any right to vote, such as that recognised in the Strasbourg Courts case law on the ECHR: McGeoch v Lord President of the Council 2014 SC (UKSC) 25, Lord Mance at paras 56 59. The EU law challenge therefore fails. (iv) The International Covenant on Civil and Political Rights (ICCPR) Mr ONeill prayed in aid article 25 of the ICCPR for two purposes. First, he submitted that this Court should use the article as an aid in the interpretation of the scope of A3P1 of the ECHR. Secondly, he argued that the Act was outside the competence of the Scottish Parliament because it was contrary to the UKs obligations in international law contained in that article. Article 25 of the ICCPR provides: Every citizen shall have the right and the opportunity, without any of the distinctions mentioned in article 2 and without unreasonable restrictions: (a) To take part in the conduct of public affairs, directly or through freely chosen representatives; (b) To vote and to be elected at genuine periodic elections which shall be by universal and equal suffrage and shall be held by secret ballot, guaranteeing the free expression of the will of the electors; (c) To have access, on general terms of equality, to public service in his country. Article 2 involves an undertaking to respect the ICCPR rights without distinction of any kind. The United Nations Human Rights Committee, which was established under article 28 of the ICCPR, expressed the view in Gillot v France (Communication No 932/2000) (2002) 10 IHRR 22, that article 25 applied to referendums on self determination in New Caledonia. The French government did not contest that view, which can readily be justified by reference to the combination of paras (a) and (b) of article 25 of the ICCPR. In the General Comment adopted by the Human Rights Committee under article 40, para 4 of the ICCPR, 27 August 1996, the Committee stated (in para 6): Citizens participate directly in the conduct of public affairs when they exercise power as members of legislative bodies or by holding executive office. This right of direct participation is supported by paragraph (b). Citizens also participate directly in the conduct of public affairs when they choose or change their constitution or decide public issues through a referendum or other electoral process conducted in accordance with paragraph (b). The different wording of article 25 of the ICCPR from that of A3P1 of the ECHR explains the different interpretations of the scope of the provisions. Thus in Yevdokimov and Rezanov v Russian Federation (Communication No 1410/2005) the Committee concluded that article 25 of the ICCPR extends to the vote on the election of the Russian President, while in Anchugov and Gladkov the Strasbourg Court, having cited article 25 of the ICCPR, held that A3P1 did not. The decisions on article 25 of the ICCPR do not in my view assist the interpretation of A3P1 of the ECHR. Mr ONeill QCs submission that the Scottish Parliament lacks the competence to legislate in breach of article 25 of the ICCPR fails to allow for the fundamental separation of powers in our constitution. The UK Parliament and the Scottish Parliament make laws; the executive branch of the UK Government makes international treaties; but unless those treaties are incorporated into law, they do not affect domestic rights. In J H Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, Lord Oliver of Aylmerton stated (p 500B C): [A]s a matter of the constitutional law of the UK, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. Treaties, as it is sometimes expressed, are not self executing. There is a clear difference between Convention rights which have been incorporated into the domestic laws of the UK by HRA 1998 and rights arising under the ECHR, which are not part of this countrys law but obligations under international law: In re McKerr [2004] 1 WLR 807, Lord Nicholls at para 25, Lord Hoffmann at paras 62 63; R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, Lord Bridge of Harwich pp 747G 748F. The drafters of the Scotland Act 1998 clearly bore in mind the distinction between international and domestic obligations. Section 126(10) excluded from the expression international obligations the obligations to observe and implement EU law and the Convention rights. The latter obligations, as part of our domestic law, limit the competence of the Scottish Parliament (section 29(2)(d); para 6 above). No such limit is imposed on the Scottish Parliament in relation to the international obligations of the UK, which are not part of our domestic law. Instead, section 35(1) empowers the Secretary of State, who is a minister of the UK Government, to make an order prohibiting the Presiding Officer from submitting a Bill for Royal Assent if it contains provisions which he has reasonable grounds to believe would be incompatible with any international obligations. That provision do[es] not limit the legislative competence of the Scottish Parliament in a way that can be decided upon by a court: Whaley v Lord Advocate 2008 SC (HL) 107, Lord Hope at paras 8 9. The challenge based on international law, and in particular article 25 of the ICCPR, therefore fails. (v) The common law right to vote In essence Mr ONeill QC argued that because we live in a developed liberal parliamentary democracy the common law had developed to recognise as a fundamental or constitutional right a principle of universal and equal suffrage, subject only to proportionate limitations, such as for a minimum age, which must be provided for by law. I have no difficulty in recognising the right to vote as a basic or constitutional right. The House of Lords did so in Watkins v Secretary of State for the Home Department [2006] 2 AC 395. See for example Lord Bingham (para 25) and Lord Rodger (para 61). It is also not in doubt that the judiciary have the constitutional function of adapting and developing the common law through the reasoned application of established common law principles in order to keep it abreast of current social conditions. Nor is it controversial to suggest that judges can take into account rules of international law which are binding on the United Kingdom when interpreting statutes and in developing the common law: R v Lyons [2003] 1 AC 976, Lord Bingham at para 13, Lord Hoffmann paras 27 28; R (Osborn) v Parole Board [2013] 3 WLR 1020, Lord Reed para 62. In McGeoch v Lord President of the Council Lord Sumption (para 121) stated: The courts have for many years interpreted statutes and developed the common law so as to achieve consistency between the domestic law of the United Kingdom and its international obligations, so far as they are free to do so. In my view the concluding words are an important limitation. Like the courts below I do not think that the common law has been developed so as to recognise a right of universal and equal suffrage from which any derogation must be provided for by law and must be proportionate. It is important to bear in mind, as the Lord Ordinary did in para 70 of his opinion, the historical development of the right to vote. Parliaments were initially summoned and the franchise created by the Kings writ. In the fifteenth century parliamentary legislation in both Scotland and England and Wales sought to regulate the franchise. In Scotland the Election of Commissioners Act 1681 established the county franchise which survived until 1832. Since then the franchise has been extended by statute. It has thus been our constitutional history that for centuries the right to vote has been derived from statute. The UK Parliament through its legislation has controlled and controls the modalities of the expression of democracy. It is not appropriate for the courts to develop the common law in order to supplement or override the statutory rules which determine our democratic franchise. In In re McKerr [2004] 1 WLR 807, Lord Nicholls of Birkenhead stated (para 30): The courts have always been slow to develop the common law by entering, or re entering, a field regulated by legislation. Rightly so, because otherwise there would inevitably be the prospect of the common law shaping powers and duties and provisions inconsistent with those prescribed by Parliament. R v Lyons [2003] 1 AC 976 is a recent instance where the House rejected a submission having this effect. See also the similar statements of Lord Steyn (para 51) and Lord Hoffmann (para 71). In my view that consideration is apt in relation to the submission that this court should recognise a common law right of universal and equal suffrage and provides a complete answer to the submission. Such a right would contradict sections 2(1)(b) and 3(1) of the 1983 Act. Although the impugned Act is an Act of the Scottish Parliament to which the doctrine of parliamentary sovereignty does not apply, the appellants proposition has to be tested against the provisions of the 1983 Act. So tested, I am satisfied that there is no common law right of universal and equal suffrage which could require the Scottish Parliament to extend the franchise in the Act to encompass convicted prisoners. While the common law cannot extend the franchise beyond that provided by parliamentary legislation, I do not exclude the possibility that in the very unlikely event that a parliamentary majority abusively sought to entrench its power by a curtailment of the franchise or similar device, the common law, informed by principles of democracy and the rule of law and international norms, would be able to declare such legislation unlawful. The existence and extent of such a power is a matter of debate, at least in the context of the doctrine of the sovereignty of the United Kingdom Parliament: see AXA General Insurance Co Ltd v Lord Advocate 2012 SC (UKSC) 122, Lord Hope (paras 49 51) and in relation to the Scottish Parliament Lord Reed (paras 153 154). But such a circumstance is very far removed from the present case, and there is no need to express any view on that question. Finally, I derive little assistance from Sauv v Attorney General of Canada [2002] 3 SCR 519, to which Mr ONeill QC referred. In that case the Supreme Court of Canada considered the constitutionality of a statutory disenfranchisement of convicted prisoners serving a sentence of more than two years in the context of sections 3 and 15(1) of the Canadian Charter of Rights and Freedoms. The majority of the court held that the right to vote was fundamental to Canadian democracy and the rule of law (McLachlan CJ at paras 9 and 58) and that the disenfranchisement in the election legislation was unconstitutional. The judgment has to be understood in the context of the Charter of Rights which in section 3 gives every citizen of Canada the right to vote in the election of members of federal and provincial legislatures and in section 15(1) gives every individual equal benefit of the law. Further, in Haig v Canada [1993] 2 SCR 995 the Supreme Court held that section 3 of the Charter of Rights did not extend to a federal referendum on the constitution of Canada: LHeureux Dub J at pp 1030 1033. In my view, the Canadian cases provide no support for the appellants position. I therefore reject the submission that there is a common law right to vote. (vi) The Rule of Law In my view there is no separate argument that the rule of law encompasses a universal right to vote. Nor can the rule of law be a means of subverting the dualist approach of the laws of the UK towards international treaties: paras 29 and 30 above. The Franchise Act has established the franchise for the referendum in accordance with the rule of law. The Scotland Act 1998, in Schedule 5, Part I, para 5A, empowered the Scottish Parliament to enact legislation to hold a referendum on Scottish independence, by excluding such a referendum from reserved matters. This gave the Scottish Parliament Conclusion authority to apply the 1983 Act to the referendum franchise as well as to extend the franchise to young people aged 16 or over. It is for these reasons that the court dismissed the appeal. As the appellants were legally assisted persons and remained in detention, it was agreed that the court should make an order awarding costs against them as assisted persons but modifying their liability to nil. LORD NEUBERGER: (with whom Lady Hale, Lord Clarke, Lord Hodge and Lord Reed agree) I agree with Lord Hodge that this appeal must be dismissed for the reasons which he gives. I add a few words of my own on the issue which divides the Court, namely the applicability of article 3 of the First Protocol to the European Convention on Human Rights (A3P1) to a referendum under the Scottish Independence Referendum (Franchise) Act 2013 (the Referendum). A3P1 is in these terms: The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. Given the issue on this appeal, namely whether the Referendum would be or was unlawful because people in prison who would otherwise be entitled to vote are excluded from the franchise, it is important to note the structure of the article. The first half of the article imposes a duty, which is to hold free elections at reasonable intervals by secret ballot. The second half of the article is directed to what is required of that ballot. The phrase on which the appeal rests, namely which will ensure the free expression of the opinion of the people, thus does not apply to every national ballot: it only applies to a ballot in which the expression of opinion can be said to involve the choice of the legislature. My agreement with Lord Hodge and the courts below that the respondent is right and that A3P1 does not apply to the Referendum is founded on four reasons based on the language of the article. Three of those reasons rely on the natural meaning of the words, and the fourth reason arises from the Strasbourg Courts jurisprudence. It is perhaps worth emphasising that, in my view, the second reason is enough on its own to justify this conclusion, and that may well also be true of the third and fourth reasons. The first reason, which would probably not be enough on its own, is that the word elections is not a word that naturally covers a referendum which does not involve electing anyone to any post. Of course, it might be said (perhaps particularly by a lawyer) that the Referendum required the Scottish people to elect whether to leave the United Kingdom, but that is a pedantic or syntactical point, which avoids addressing the natural meaning of the word election. Save in technical contexts (such as English legal terminology), which plainly do not arise here, an election is a ballot where people choose between more than one candidate. The second reason is based on the expression at reasonable intervals. It is appropriate, indeed necessary, in the present age that every democratic state has a national election to select the members of the national legislature at reasonable intervals. And no one can doubt that A3P1 requires what we in the United Kingdom call general elections to be held at reasonable intervals. However, it would be little short of absurd to suggest that there can be an obligation on a government to have a referendum, particularly one such as the Referendum the subject of this appeal which is concerned with a classic one off issue, at reasonable intervals. There could be no objection under A3P1, for instance, if no further referendum was ever held in relation to Scottish independence. At reasonable intervals cannot mean once. Thirdly the requirement that people are entitled to vote in the choice of the legislature does not naturally suggest a choice as to which legislature governs or does not govern. The definite article before legislature strongly suggests that the legislature to which the article refers is a specific and established entity, and that it is its membership to which the article refers. Indeed, there is no doubt that A3P1 refers to general elections, ie to elections for the membership of the legislature, and it is a little difficult to see how the words the choice of the legislature can do double duty, and refer to such elections and to referenda or other ballots which have a different aim. Fourthly, decisions of the of the Strasbourg Court indicate that A3P1 only applies to directly effective elections ie to elections which ipso facto result in what the people voted for, and not to ballots which require some further legal step to produce that result. Thus, in a general election in the UK, a Member of Parliament is elected as soon as all the votes are cast. Nothing else is needed, apart from the pure machinery of counting the votes and announcing the result. On the other hand, while the main political parties had committed themselves to accept the result of the Referendum, a yes vote would not of itself have triggered independence for Scotland. If there had been a yes vote, Scotland would not have achieved independence unless and until the UK Parliament had voted in favour, and, whatever the main parties had promised, Members of Parliament would have been free, indeed constitutionally bound, to vote as they saw fit. The Strasbourg Court appears to have consistently considered that a referendum which was not automatic, and only advisory, in nature was not within the ambit of A3P1. It can be traced to the Commissions admissibility decision X v United Kingdom (Application No 7096/75), where it was held that A3P1 did not apply to the 1975 UK referendum on whether to leave the EEC (as it then was), because it was of a purely consultative character. That formulation has been impliedly adopted in subsequent decisions of the Commission and the Court, some of which are considered in paras 10 16 of Lord Hodges judgment. The 1975 referendum, which was considered in X v UK, would almost certainly have been regarded as committing the UK to leaving the EU in practice, but it could not have been legally binding any more than the Referendum was or would have been. I agree with Lord Hodge that article 31(1) of the Vienna Convention on the Law of Treaties (quoted in his para 8 above) takes things no further. The travaux prparatoires relating to A3P1 throw no light on the present issue. What they do show is an intention not to require elections for the executive or the judiciary, but that is not germane to the issue on this appeal. I cannot see how the deletion of the words and government after legislature at the end of the draft A3P1 assists the conclusion that the article does not have the meaning preferred by Lord Hodge and the courts below. On the contrary: the retention of those two words would have provided some support for an argument that A3P1 was intended to have a wider meaning than it otherwise would have. There is, I accept, some initial attraction in the argument that, if a provision such as A3P1 is meant to apply to the membership of a legislature, then it ought a fortiori to apply to the logically anterior, and arguably more fundamental, issue of the existence or nature of the legislature itself. However, quite apart from the fact that the article does not apply to such an issue as a matter of language, I do not consider that this argument can in fact withstand scrutiny. The purpose of A3P1 is to ensure that the membership of any national legislature is the subject of elections which must be (i) reasonable in terms of frequency, and (ii) on the basis of universal (or close to universal) suffrage. There is no reason in terms of practice or principle why this should apply to a vote on the form of the legislature. The effect of the article is that, whatever the form of the legislature and, however that form is determined, it must be a legislature whose membership is elected in accordance with A3P1. Thus, the UK Parliament could decide to dissolve itself and to be replaced by a new legislature without a national ballot approving the decision, but election to the membership of the new legislature would have to be effected by a national ballot, as it must comply with A3P1. Taken to its logical conclusion, it appears to me that, because its membership of the EU involves the UK being in some way subject to the European Parliament, the appellants argument would mean that leaving the EU would actually require a national ballot and joining the EU in 1973 without a national ballot must have infringed A3P1. For these reasons, which are little more than a footnote to Lord Hodges reasons, I would reject this appeal, but, as he points out, there is a further ground for doing so. The decisions starting with X v UK and referred to by Lord Hodge in his paras 10 16 above, show that there is a clear and consistent view in Strasbourg that A3P1 does not apply to referenda. It is open to us to go further than the Strasbourg Court in deciding on the ambit of a provision in the Convention, but such an unusual course would require sound justification. I can see no such justification in the present case. LADY HALE: This is a difficult case. I agree with Lord Hodge and Lord Neuberger that, on a literal interpretation, article 3 of the First Protocol (A3P1) does not apply to the Scottish independence referendum. But I also agree with Lord Kerr and Lord Wilson that the evolutive approach to the interpretation of the Convention adopted by the European Court of Human Rights strongly suggests that it might indeed encompass a referendum such as this and that the European Court may well have been hinting just as much in para 33 of its decision in McLean and Cole v United Kingdom (2013) 57 EHRR SE95, quoted by Lord Hodge at para 11. I further agree that, if we are confronted with a question which has not yet arisen in the European Court, we have to work out the answer for ourselves, taking into account, not only the principles which have been developed in Strasbourg, but also the principles of our own law and constitution. However, while it is clear that A3P1 requires the holding of regular parliamentary elections, it is also clear that it does not require the holding of a referendum, even on such an important issue as Scottish independence. Nor would I take it for granted that article 1 of the International Covenant on Civil and Political Rights, quoted by Lord Kerr at para 81, requires there to be such a referendum. This depends upon several difficult questions, not only about the interpretation of article 1, but also about the import of the Treaty of Union between Scotland and England, and how that Treaty might lawfully be brought to an end, issues of the highest constitutional importance upon which we have heard no argument at all. In the end, therefore, I conclude that, as A3P1 does not require there to be such a referendum, then the requirements (which the Strasbourg Court has implied into that article) as to the right of individuals to participate in the elections which it does require do not apply to such a referendum. If this be so, the only source of such a right would be the common law. It would be wonderful if the common law had recognised a right of universal suffrage. But, as Lord Hodge has pointed out, it has never done so. The borough franchise depended upon royal charter. The 40 shilling freehold county franchise appears to have been the creation of Parliament. Every subsequent expansion of the franchise, from the great Reform Act of 1832 onwards, has been the creation of Parliament. It makes no more sense to say that sentenced prisoners have a common law right to vote than it makes to say that women have a common law right to vote, which is clearly absurd. 56. For these reasons, I would dismiss this appeal. LORD KERR: 58. The appellants, Leslie Moohan and Andrew Gillon, challenge the validity of the Act of the Scottish Parliament which authorised the referendum on Scottish independence. The referendum took place on 18 September this year. The appeal was heard by this court as a matter of urgency in July and, as Lord Hodge has explained, the courts decision was announced on the day of the hearing, with reasons to follow. 59. The Act under challenge was the Scottish Independence Referendum (Franchise) Act 2013. The appellants challenge was advanced on a number of grounds. It was claimed that the Act, in indiscriminately preventing convicted prisoners from voting, was incompatible with the European Convention on Human Rights; was in violation of EU law; and constituted a breach of a fundamental common law right to vote. The Convention arguments 60. It is clear from the decisions of both the ECtHR and this court that a blanket ban on prisoner voting in elections is incompatible with article 3 of Protocol 1 (A3P1) to the Convention. It provides: The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. 61. The critical question to be determined on the Convention arguments, therefore, is whether the independence referendum falls within the scope of that article. If it does, the 2013 Act is not law (section 29, Scotland Act 1998), it having been agreed between the parties that it would not be possible for this court to excise the offending provisions and leave the remainder of the Act in place. 62. The appellants also claimed that the refusal to allow them to participate in the referendum constituted a violation of article 10 of the ECHR which guarantees freedom of expression. For the reasons given by Lord Hodge in paras 19 and 20 of his judgment, with which I agree, this claim must fail. Application of the principle expressed in the maxim, lex specialis derogat legi generali, precludes reliance on article 10. This applies in domestic and international law contexts. Where two provisions are capable of governing the same situation, a law dealing with a specific subject matter overrides a law which only governs general matters. A3P1 is specifically concerned with freedom of expression in the choice of legislature. Article 10, dealing with freedom of expression generally, cannot provide rights in relation to voting which are greater than those provided for by A3P1. The correct approach to interpretation of A3P1 63. A3P1 is not to be read as if it were a Westminster or a Holyrood statute. It is an instrument of international law, to be interpreted according to that systems markedly distinct canons of interpretation. These are encapsulated in articles 31 and 32 of the Vienna Convention on the Law of Treaties (VCLT): see, eg, Genocide (Bosnia and Herzegovina v Serbia and Montenegro) 2007 ICJ Rep 43, 109 110. The following provisions of those articles are particularly relevant to this case: Article 31 General rule of interpretation 1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. 2. The context for the purpose of the interpretation of a treaty shall [include] its preamble and annexes 3. There shall be taken into account, together with the context: c. Any relevant rules of international law applicable in the relations between the parties. Article 32 Supplementary means of interpretation Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31 64. It would be wrong to read article 31 as reflecting something like the so called golden rule of statutory interpretation where one starts with the ordinary meaning of the words and then moves to other considerations only if the ordinary meaning would give rise to absurdity. That is not international law. The International Law Commission made clear in its Commentary to the draft treaty, at p 219, that, in accordance with the established international law which these provisions of VCLT codified, such a sequential mode of interpretation was not contemplated: 65. 66. The Commission, by heading the article General rule of interpretation in the singular and by underlining the connection between paras 1 and 2 and again between para 3 and the two previous paragraphs, intended to indicate that the application of the means of interpretation in the article would be a single combined operation. I should say that, even if a golden rule type of interpretation was considered to be appropriate, I do not consider that this would impel the interpretation for which the respondent and the intervener contend. They argue that A3P1 does not apply to this referendum because the Strasbourg cases have applied it only to elections to a legislature and, at any rate, not to referendums. For reasons that I will give presently, I do not accept that the position is as clear cut as the respondent and the intervener contend. In any event, if A3P1 was designed to apply only to elections to legislatures, it would have been most naturally expressed as reading, The High Contracting Parties undertake to hold free elections to the legislature at reasonable intervals by secret ballot. Instead the core of the obligation is to hold free elections. A corollary of that is that any vote that is held must be held fairly. And that obligation is to be performed under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. This phrasing may, on one view, point to a focus on legislative elections, but it by no means justifies an exclusion of other votes. Why should it? If voting for a representative in a legislature is deemed sufficiently important that it should be guaranteed to all, why would voting for the form of government be deemed less important? If the interpretation of A3P1 is not free from doubt, recourse to the travaux prparatoires is appropriate article 32 VCLT. They suggest that its focus on legislatures is not intended to be a positive restriction of its application only to legislative elections, but rather a right of political participation that did not extend to elections of the executive (elections to the judiciary not having been contemplated to begin with). The background to this is that the United Kingdom had proposed that the text of the article should read: Signatory governments undertake to respect the political liberty of their nationals and, in particular, to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of legislature and government (emphasis added). The delegate of Sweden, a constitutional monarchy, was unable to commit his Government with regard to this proposal. That followed the expression of unease by both Sweden and Norway, another constitutional monarchy, about the definition of the right of the people to choose their government. (Preparatory work on article 3 of Protocol No 1 to the ECHR, p 59). Such hesitation is understandable, as a provision in those terms might have been interpreted as requiring the end of monarchical government in two countries with so long and proud a tradition of it. The reference to choice of government urged by the United Kingdom was accordingly dropped. 67. Approaching the problem with the three powers of government in mind, and with no reason to think beyond that, it was therefore logical for the drafters of Protocol No 1 to express a right that excluded elections to the judiciary and executive as a right in positive terms to participate in legislative elections. But it does not follow that A3P1 ought not to apply to situations which were not in the contemplation of its original drafters. In addition to the imperative to interpret the Convention as a living instrument (see, eg, Tyrer v United Kingdom (1978) 2 EHRR 1), the court has an obligation to interpret A3P1 in light of its object and purpose (VCLT, article 31(1)). The object and purpose of A3P1 must be as contributors to the overall purpose of the Convention as expressed in the preamble. It envisages the guarantee of an effective political democracy as the foundation for all other rights enjoyed by those within its protection. 68. Provided the exclusion of elections to executive and judicial posts from A3P1 is respected, it is difficult to see how that purpose would be other than frustrated by preventing the safeguards applicable to ordinary legislative elections from applying to this most fundamental of votes. The fact, if indeed it be the fact, that the framers of A3P1 did not have referendums in mind does not provide a definitive answer. Of their nature, referendums are held less frequently and more irregularly than elections to legislatures. But a referendum on whether a country should become independent of others with which it has been united for centuries and whether, in consequence, it should have a radically different form of government is surely intimately associated with citizens expression of opinion about the choice of legislature. 69. The majoritys reasoning lays emphasis on the requirement to hold elections at regular intervals but, in my view, this is secondary to the primary aim of the provision which is to ensure that citizens should have a full participative role in the selection of those who will govern them. Given that a referendum as to whether Scotland should become an independent nation would have made a critical difference to the form of government to which the appellants and other citizens in Scotland would be subject, I consider that the right to vote in this particular referendum should be recognised as an undeniable aspect of the appellants A3P1 right. Strasbourgs approach to referendums 70. The ECtHR has so far declined to extend the ECHRs protections to referendums. The question arises, however, whether that exclusion by the Strasbourg Court is categorical. As Lord Hodge has pointed out in para 11 of his judgment, in McLean and Cole v United Kingdom (2013) 57 EHRR SE95, at para 33 the ECtHR, in dismissing the applicants complaint that they had been disenfranchised from the nationwide referendum on the alternative vote, said that there was nothing in the nature of the referendum at issue in that case which warranted a different conclusion from that reached in earlier decisions concerning referendums. Lord Hodge was not disposed to attribute to the words, the referendum at issue in the present case the significance which the appellants seek to attach to them. At para 16 of his judgment he suggested that the statement must be construed against the backdrop that the Strasbourg Court has held that referendums which could have a direct and material effect on the powers and operation of a legislature are not within the ambit of A3P1. But it is noteworthy that in para 32 of the judgment the ECtHR said this: The Convention organs have emphasised on a number of occasions that article 3 of Protocol No 1 is limited to elections concerning the choice of the legislature and does not apply to referendums (see X v United Kingdom (7096/75) 3 October 1975; Bader v Germany (26633/95) 15 May 1996; Castelli v Italy (35790/97 and 38438/97) 14 September 1998; Hilbe v Liechtenstein (31981/96) 9 September 1999; and Borghi v Italy (54767/00) 20 June 2002 (extracts). (emphasis added) 71. The ECtHR appears here to draw a contrast between, on the one hand, elections which concern the selection of legislatures and, on the other, referendums which, in their conventional form, are not usually associated with that type of choice. A distinction can be drawn between referendums which merely have an effect on the powers and operation of a legislature and those which necessarily determine the type of legislature that citizens of a country will have. The latter surely involve the choice of legislature. Deciding whether Scotland should be independent is inextricably bound up with the question of what sort of legislature it will have; whether it will be a sovereign Parliament or one which must act within the range of powers devolved to it. I do not consider that Strasbourg can be said to have set its face against recognising that A3P1 should cover referendums that, in effect, determine the choice of legislature for a countrys people. 72. Another way of approaching the question is to focus on the rationale for, and therefore the proper scope of, the exclusion of referendums from A3 P1. Of the cases cited by the ECtHR in McLean and by the Lord Ordinary in the present case, only the admissibility decision of the Commission in X v United Kingdom (Application No 7096/75, 3 October 1975) contains any reasoning. All of the others either cite X without further discussion, or cite one or more cases which in turn cite X (or a case citing X), likewise without further discussion. It is therefore X that illuminates the reasons why Strasbourg has not subsequently applied A3P1 to referendums, and consequently the scope of such a restriction. The Commission held in that case that the referendum on continued British membership of the European Union fell outside A3P1 for two reasons: [I]t was of a purely consultative character and there was no legal obligation to organise such a referendum. It did not, therefore, fall within the scope of article 3 of Protocol No 1 to the Convention. It follows that a right to participate in the referendum could not be derived from that provision 73. The independence referendum meets both criteria which the Commission considered were absent in X. Both the United Kingdom and Scottish governments had agreed that the result of the referendum would be binding and section 1(1) of the Scottish Independence Referendum Act imposed the legal obligation to organise the referendum. It is strictly unnecessary to go further but it would be wrong not to observe the serious deficiencies in the Commissions reasoning. First, there was a legal obligation to hold the referendum in X: it was imposed by section 1(1) of the Referendum Act 1975. Secondly, and more fundamentally, it cannot be correct that the absence of a legal obligation (in domestic law) to hold a particular vote means that that vote does not fall within A3P1. If that were so, the obligation to hold free elections would have no effect in a totalitarian country whose laws did not require elections at all. That would be absurd. The Commission may have meant that the obligation to hold the vote had to be imposed by international law, but that would simply be begging the question. X, and consequently all subsequent Strasbourg authorities concerning referendums, must therefore be regarded with some caution. Be that as it may, even if one takes X and its progeny as good law, this referendum would fall within A3P1. There is not, in the words of Lord Slynn in R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23; [2003] 2 AC 295, para 26, any clear and constant jurisprudence of the ECHR to contrary effect and at least some indications in Strasbourg case law that a vote which involves the selection of a form of legislature as an incident of a referendum would come within the ambit of A3P1. 74. In v Latvia (Application No 14755/03, 26 January 2006) the ban on prisoners voting in the EU accession referendum was said not to breach A3P1 because the obligations imposed by this provision are limited to parliamentary elections and do not apply to referendums. In support of this proposition the court relied on Bader v Austria (Application No 26633/95, Commission decision of 15 May 1996). In that case the Austrian Constitutional Court, had found that there was a fundamental difference between elections and referendums on the basis that in elections the voter had the opportunity to choose between competing political parties whereas in referendums the voter had to give his opinion on an issue which had already been determined by the legislature. The voter did not have to decide on parties and personalities but on the question whether a decision by the legislator should acquire the force of law or not. 75. Apart from that contained in X itself, this is the only articulation of the justification for distinguishing between voting in a referendum and voting for a candidate in an election to a legislature. But the distinction between the form of referendum involved in the Bader case and the present is not difficult to find. Quite apart from the fact that political parties took up markedly different positions on the Scottish referendum and, to that extent, the choice made by the voter reflected his or her predilection for the stance of each, the referendum involved here did not involve the endorsement of a decision already taken by a legislature. On the contrary, it concerned the choice of the mode of government for that country. The philosophical underpinning for A3P1 must surely be that citizens should be entitled to have influence in how they are to be governed. To deny them participation in the stark choice between the two forms of government that the referendum posed must strike at the root of the values which A3P1 are designed to protect. 76. Democracy is the only political model contemplated by the ECHR. The concept of universal entitlement to participate in the political process is the natural concomitant of the underlying premise of all human rights law, as recognised in article 1 of the Universal Declaration of Human Rights, that All human beings are born free and equal in dignity and rights. This spirit informs the Convention and its application. In United Communist Party of Turkey v Turkey (1998) 26 EHRR 121, at para 45 the court said: Democracy is without doubt a fundamental feature of the European public order (see the Loizidou judgment cited above, p 27, 75). That is apparent, firstly, from the Preamble to the Convention, which establishes a very clear connection between the Convention and democracy by stating that the maintenance and further realisation of human rights and fundamental freedoms are best ensured on the one hand by an effective political democracy and on the other by a common understanding and observance of human rights (see the Klass and Others judgment cited above, p 28, 59). The Preamble goes on to affirm that European countries have a common heritage of political tradition, ideals, freedom and the rule of law. The court has observed that in that common heritage are to be found the underlying values of the Convention (see the Soering v the United Kingdom judgment of 7 July 1989, Series A no 161, p 35, 88); it has pointed out several times that the Convention was designed to maintain and promote the ideals and values of a democratic society (see the Kjeldsen, Busk Madsen and Pedersen v Denmark judgment of 7 December 1976, Series A No 23, p 27, 53, and the Soering judgment cited above, p 34, 87). In addition, articles 8, 9, 10 and 11 of the Convention require that interference with the exercise of the rights they enshrine must be assessed by the yardstick of what is necessary in a democratic society. The only type of necessity capable of justifying an interference with any of those rights is, therefore, one which may claim to spring from democratic society. Democracy thus appears to be the only political model contemplated by the Convention and, accordingly, the only one compatible with it. 77. This is the most extensive analysis by the ECHR of the vital importance of effective political democracy. It demonstrates that democracy and democratic principles are indissolubly linked to the society which the Convention seeks to foster. To find that the choice of government by which one is to be ruled lies outside the sphere of protection that the Convention provides would be remarkable indeed. Self determination 78. Although the material relating to other treaties was deployed in the appellants written case principally in support of an argument that the common law must reflect their terms, Mr ONeill QC submitted on their behalf at the hearing that they were also relevant to the interpretation of A3P1 directly. In particular, the appellants relied on the International Covenant on Civil and Political Rights (ICCPR), the parties to which include all parties to the ECHR. It is therefore, in the terms of article 31(3)(c) VCLT, a relevant rule of international law applicable in the relations between the parties which must be taken into account in interpreting A3P1. 79. Two provisions of the ICCPR are relevant. Article 25 is the rather more expansively phrased counterpart of A3P1: Every citizen shall have the right and the opportunity, without any of the distinctions mentioned in article 2 and without unreasonable restrictions: (a) To take part in the conduct of public affairs, directly or through freely chosen representatives; (b) To vote and to be elected at genuine periodic elections which shall be by universal and equal suffrage and shall be held by secret ballot, guaranteeing the free expression of the will of the electors; (c) To have access, on general terms of equality, to public service in his country. 80. The appellants relied on two decisions of the United Nations Human Rights Committee, Gillot v France (2002) 10 IHRR 22 and Yevdokimov and Rezanov v Russian Federation (21 March 2011, Application No 1410/2005). These make it clear that article 25 ICCPR extends to referendums and to the election of a head of state, respectively. Given my conclusion about the applicability of A3P1 to referendums of the type involved in this appeal, the decision in Gillot would not present a difficulty in the use of article 25 of ICCPR as an aid to the interpretation of A3P1. But in Yevdokimov and Rezanov it was applied to the election of the Russian President. In light of ECtHRs decision in Anchugov and Gladkov v Russia (Application Nos 11157/04 and 15162/05) where it was held that A3P1 did not apply to the election of a head of state, despite having considered the Yevdokimov and Rezanov case, the use of article 25 as a freestanding aid to the interpretation of A3P1 is at least problematical. 81. The same considerations do not apply to article 1 of the ICCPR. It provides: 1. All peoples have the right of self determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development. 2. All peoples may, for their own ends, freely dispose of their natural wealth and resources without prejudice to any obligations arising out of international economic co operation, based upon the principle of mutual benefit, and international law. In no case may a people be deprived of its own means of subsistence. 3. The States Parties to the present Covenant, including those having responsibility for the administration of Non Self Governing and Trust Territories, shall promote the realization of the right of self determination, and shall respect that right, in conformity with the provisions of the Charter of the United Nations. 82. The Scottish people were exercising their right to self determination when they voted in the referendum. They were freely determining their political status. The circumstance that they acquired that right by virtue of the 2013 Act does not detract from that argument. Not only is the right to self determination guaranteed by the ICCPR; it is also a peremptory norm of international law, also known as ius cogens, with which no other rule of international law may conflict: see, eg, International Law Commission, Conclusions of the work of the Study Group on the Fragmentation of International Law: Difficulties arising from the Diversification and Expansion of International Law (2006), paras 33 and 41. 83. Given that under the VCLT the ICCPR must be interpreted as a coherent whole, it is clearly arguable that the protections guaranteed by article 25 ICCPR ought to apply to any vote taken in the exercise of the article 1 right to self determination. That is consonant with the conclusion reached above that the corollary of the core obligation in A3P1 is that any election that is held must be held freely ie with every safeguard that has been held necessarily to apply. Thus, although article 25 does not, solely on its own account, provide the irrefutable interpretation of A3P1, taken in combination with article 1 of the ICCPR, it sheds light on how the Convention provision should be applied. I do not consider that its influence on the proper application of A3P1 can be dismissed on the basis that the wording of article 25 differs from that of A3P1 and that different interpretations of the two provisions are therefore acceptable. Conclusion 84. In light of my conclusions on the proper interpretation to be given to A3P1 I would have allowed the appeal. I agree with Lord Hodge, however, in his rejection of the arguments founded on EU law for the reasons that he has given. 85. Since it is unnecessary for me to do so, I would prefer not to express a view on the claim that the appellants enjoyed a common law right to vote beyond agreeing with what Lord Sumption said in McGeoch v Lord President of the Council 2014 SC (UKSC) 25, quoted with approval by Lord Hodge in para 33 of his judgment. 87. 86. The common law can certainly evolve alongside statutory developments without necessarily being entirely eclipsed by the latter. And democracy is a concept which the common law has sought to protect by the incremental development of a system of safeguarding fundamental rights. In this regard, it marches in step with other European states see, for instance, Lautenbach (2013) in European states the protection of human rights, democracy and the rule of law are interwoven and all part of the domestic [and legal] system: The Concept of the Rule of Law and the European Court of Human Rights, p 209. It is therefore at least arguable that exclusion of all prisoners from the right to vote is incompatible with the common law. I must regard it as a moot point whether the observations of Lords Nicholls, Steyn and Hoffmann in In re McKerr [2004] 1 WLR 807 provide a complete answer to the claim that the common law should, in the absence of any Convention right, now recognise a right to vote. I acknowledge, however, the force of the point made by Lord Hodge that, insofar as a claim to a common law right to vote conflicted with sections 2(1)(b) and 3(1) of the Representation of the People Act 1983, it could not succeed. I would wish to hear rather fuller argument than was possible on this appeal on the effect of the interaction between the 1983 Act and the 2013 Act (which is, of course, a measure of the Scottish Parliament) before reaching a final conclusion on this issue. 88. LORD WILSON: Introduction 89. The Lord Advocate acknowledges that the rights under A3P1 of convicted prisoners in Scotland are currently violated by the blanket prohibition, not yet reformed, against their voting in elections to the UK Parliament, to the Scottish Parliament and to the European Parliament. Such was the interpretation given to A3P1 by the Grand Chamber of the European Court of Human Rights (the ECtHR) in Hirst v United Kingdom (No 2) (2005) 42 EHRR 849; and in R (Chester) v Secretary of State for Justice [2013] UKSC 63, [2014] AC 271, this court decided to adopt it: see the judgment of Lord Mance at paras 9 and 34. Such being part of our law, the Lord Advocate nevertheless invited us, at the hearing on 24 July 2014, to hold that the rights under A3PI of convicted prisoners in Scotland were not violated by the blanket prohibition against their voting in the Scottish referendum on 18 September 2014. That seemed to me to suggest so bizarre an anomaly as to demand the closest scrutiny. My conclusion was that it did not withstand it. I agree with the judgment of Lord Kerr. 90. 91. The question in the referendum was whether Scotland should become an independent country. Of all the ramifications raised by that question, perhaps the most important was its effect on the identity of the legislature which would both rule and serve the Scottish people. Those who voted yes voted that the sovereign legislative power of the UK Parliament should no longer extend to Scotland; that instead sovereignty should reside in the people of Scotland; and that, subject to the proposed written constitution for Scotland, the Scottish Parliament should become the sole repository of legislative power in Scotland. I cannot accept the suggestion of Lord Hodge in para 16 above that the effect of secession, like that of accession to the EU, would be no more than to reduce the power of the UK Parliament. Had it been necessary (which it was not) to ask whether voters in the referendum were choosing their legislators as well as their legislature, one might have responded that they were choosing whether all those individuals to be elected in constituencies in England, Wales and Northern Ireland to serve as members of the UK Parliament should have any continuing role as legislators for the people of Scotland. Lord Kerr points out at para 72 above that in the X case the European Commission of Human Rights laid stress on its understanding (right or wrong) that the UKs referendum in 1975 on continued membership of the EEC was of a purely consultative character. On any view the same could not be said of the Scottish referendum. By the Edinburgh Agreement dated 15 October 2012, the UK government and the Scottish government agreed that it should deliver a decisive expression of the views of the people in Scotland. In his Opinion the Lord Ordinary observed that he had no reason to doubt that the outcome of the referendum will in practice and as a matter of agreement be binding. Lord Neubergers hypothesis at para 47 above that a majority of the members of the UK Parliament might nevertheless have refused to enact legislation reflective of a yes vote seems to me, with respect, to be far fetched. Interpretation of A3P1 92. Lord Kerr suggests at para 63 above that A3P1 falls to be interpreted in accordance with article 31 of the Vienna Convention on the Law of Treaties (the Vienna Convention). I agree. In Bankovic v Belgium (2001) 11 BHRC 435, the Grand Chamber of the ECtHR said at para 55: The court recalls that the convention must be interpreted in the light of the rules set out in the Vienna Convention So the search is for the ordinary meaning to be given to the terms of [A3P1] in their context and in the light of its object and purpose. 93. It is in my view significant, as well as unusual, that the objective of A3P1 has been set out as part of its terms. It is to ensure the free expression of the opinion of the people in the choice of the legislature. Those words are dominant: the other words of the article are subservient to them. I consider both that the drafters of the article did not have in mind a secession referendum but that, had they had it in mind, they would have expressly provided that a right to vote in it fell within its ambit. Although neither of those considerations is relevant, what is intriguing is that the drafters alighted upon a phrase choice of the legislature which happens, as I have explained, to be a particularly apt description of the exercise in which Scottish voters were engaged on 18 September. Yes, indirectly and generically, they might also be said to have been choosing their legislators but on any view they were choosing their legislature. Lord Neuberger suggests at para 46 above that the reference in the article to the legislature strongly suggests an established entity. I cannot subscribe to his construction: in my view the reference is to the choice of the legislature which will exercise power over the voters irrespective of whether it is already established. In any event, however, both the UK Parliament and the Scottish Parliament were already established entities. 94. I turn from the dominant words to the subservient words, in which I must confront the reference to elections at reasonable intervals. It is possible that in time to come there will be another secession referendum in Scotland but one cannot say that such referenda might, still less should, take place at reasonable intervals. 95. The general rule of interpretation set by article 31 of the Vienna Convention requires that the terms of the articles in the ECHR should be read in their context and in the light of their object and purpose. This will sometimes precipitate the need to depart from a literal interpretation. Take the case of Pretto v Italy (1983) 6 EHRR 182. It was the practice of the Court of Cassation in Italy to disseminate its judgments solely by depositing them in its registry. Article 6(1) of the ECHR provides that [j]udgment shall be pronounced publicly . The ECtHR accepted at para 28 that the Court of Cassation had not pronounced its judgment publicly. Nevertheless it held that the rights of the disappointed litigant under article 6(1) had not been violated. It said at para 26: The Court therefore does not feel bound to adopt a literal interpretation. It considers that in each case the form of publicity to be given to the judgment must be assessed in the light of the special features of the proceedings in question and by reference to the object and purpose of article 6(1). 96. I have already explained that the objective behind A3P1 is set out in the dominant words of the article itself. But, at a higher level of generality, what are the object and purpose behind the objective of seeking to ensure the free expression of the opinion of the people in the choice of the legislature? 97. Article 31(2) of the Vienna Convention provides that the context of the terms of a treaty includes its preamble. Short though the preamble to the ECHR is, the government signatories chose in it to reaffirm their belief that the freedoms which were the foundation of justice and peace in the world would best be maintained on the one hand by an effective political democracy and on the other by a common understanding and observance of the human rights upon which they depend. Thus it was that in Zdanoka v Latvia (2006) 45 EHRR 478 the Grand Chamber embarked on its assessment of the ambit of A3P1 by observing at para 98 that it was apparent from the preamble to the ECHR that democracy constituted a fundamental element of the European public order. It proceeded at para 103 to reaffirm the words by which, five months earlier in the Hirst case, it had identified the overall object and purpose of A3P1. There it had said at para 58: The Court has had frequent occasion to underline the the importance of democratic principles underlying interpretation and application of the Convention and it would use this occasion to emphasise that the rights guaranteed under article 3 of Protocol No 1 are crucial to establishing and maintaining the foundations of an effective and meaningful democracy governed by the rule of law. 98. Indeed in the Hirst case it had proceeded in para 82 to describe A3P1 as a vitally important Convention right. If, as the Grand Chamber has held and as this court has acknowledged (see R (Barclay) v Lord Chancellor and Secretary of State for Justice [2009] UKSC 9, [2010] 1 AC 464, para 53, Lord Collins of Mapesbury), A3P1 is indeed crucial to establishing and maintaining the foundations of an effective democracy, it follows that its effect will be apt to establishing and maintaining them. If the ambit of the article were not to have extended to the referendum about whether Scotland should become an independent country, it would not have been apt to establishing and maintaining the foundations of a democracy in Scotland. The object and purpose of the article therefore drive a conclusion that its ambit did extend to it and, were that conclusion to be overridden by the reference in the article to reasonable intervals, then (for a clich can often be the most telling means of making a point) the tail would be wagging the dog. 99. But the requisite exercise in interpreting A3P1 is not yet complete. For article 31(3)(c) of the Vienna Convention requires account to be taken of any relevant rules of international law. In Neulinger v Switzerland (2010) 28 BHRC 706 the ECtHR observed at para 131 that the ECHR should not be interpreted in a vacuum but, in accordance with article 31(3)(c), should be interpreted in harmony with general principles of international law. In ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 AC 166, Lady Hale at para 21 indorsed that observation. In Bayatyan v Armenia (2011) 54 EHRR 467 the ECtHR added at para 102 that account had to be taken not only of the terms of international instruments but also of their interpretation by competent organs. 100. It is therefore no surprise to find that, in cases about the effect of A3P1, the ECtHR has regularly had regard to article 25 of the International Covenant on Civil and Political Rights 1966 (the ICCPR) and to its interpretation by the Human Rights Committee which was established under article 28 of it and which reports on its implementation and determines issues arising under it: see the Hirst case, cited at para 89, paras 26 27; Scoppola v Italy (No 3) (2012) 56 EHRR 663, paras 40 42; and Anchugov and Gladkov v Russia (Applications Nos 11157/04 and 15162/05), 4 July 2013, paras 38 40. In the last of those cases the court proceeded to observe at para 94 that the rights enshrined in A3P1 were the same as those enshrined in article 25 of the ICCPR. In para 28 above Lord Hodge demonstrates, by reference to conflicting determinations about rights to vote in the election of the Russian President, that the ambit of article 25 must be somewhat more extensive than that of A3P1. But it is unsurprising that the determination of the Human Rights Committee in that particular regard shed no light on the meaning of the choice of the legislature in A3P1. By contrast the approach of the committee in Gillot v France, Communication No 932/2000, (2002) 10 1HRR 22, sheds significant light on it. Although it did not uphold the complaint that the rules for qualification to vote in the referenda in New Caledonia about secession from France were such as to violate rights under article 25, France did not even seek to deny, nor did the committee appear to hesitate before accepting, that rules for qualification to vote in referenda about secession had to be consonant with the rights set out in article 25. Determinations of the ECtHR about referenda 101. Since in my view every aspect of the requisite approach to the construction of A3P1 militates in favour of a conclusion that a secession referendum falls within its ambit, I turn to see whether the ECtHR has determined otherwise and, in either event, how this court should then proceed. 102. The Lord Advocate contended that there is a clear and constant line of determinations by the ECtHR that A3P1 does not apply to referenda. This is true. But it is too glib. For the court has never had occasion to consider the application of A3P1 to a secession referendum. No doubt the least dissimilar of its determinations are those which hold that the article does not apply to referenda about accession to the EU. But there remains a substantial difference between a determination whether to curtail some of the powers of the existing legislature by accession to the EU and whether to eliminate every aspect of the role of the existing legislature by creation of a new state. And what about the terms used by the ECtHR in its admissibility decision in the McLean and Cole cases cited by Lord Hodge at para 11 above? One of the complaints, unsurprisingly inadmissible, was of a disentitlement to vote in the UKs referendum in May 2011 on whether to conduct its elections under the alternative vote system. What did the court have in mind in choosing to point out that there was nothing in the nature of the referendum at issue in the present case which would lead it to decline to follow its earlier decisions that A3P1 did not apply to referenda? The answer is not hard to find. The two applicants were convicted prisoners and at least one of them was imprisoned in Scotland. The court gave its decision on 11 June 2013 and less than three months earlier the Scottish government had told the world that the referendum on Scottish independence would take place on 18 September 2014. 103. The majority of the court considers that the case law of the ECtHR is, to use the word favoured by Lord Hodge at para 14 above, unequivocal. I am driven to say that I totally disagree. There is no decision of the ECtHR in point. All one can say is that to determine that A3P1 extended to voting in the Scottish referendum would be to go significantly further than the ECtHR has gone. In Brown v Stott [2003] 1 AC 681, Lord Bingham of Cornhill, borrowing a phrase devised by another judge in another context, described the ECHR at p 703 as a living tree capable of growth and expansion within its natural limits while adding that its limits often called for careful consideration. But three years later Lord Bingham articulated the Ullah principle. Does that principle disable this court from going significantly further than has the ECtHR by determining that A3P1 extended to voting in the Scottish referendum? Retreat from the Ullah principle 104. I offer this timeline. The facts of the decisions to which I refer are irrelevant. (a) 1998: Parliament requires the court to take into account any decision of the ECtHR so far as it is relevant: section 2(1) of the HRA 1998. (b) 2001: Lord Slynn of Hadley observes that in the absence of special circumstances the court should follow any clear and constant jurisprudence of the ECtHR: R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295, para 26. He explains that otherwise the case may proceed to that court, which is likely to follow its own jurisprudence. (c) 2004: Lord Bingham articulates what has become known as the Ullah principle, namely that the court must keep pace with evolving Strasbourg jurisprudence no more, but certainly no less: R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20. He cites Lord Slynns observation with approval and (d) explains that it reflects the fact that the ECHR is an international instrument, the correct interpretation of which can be authoritatively expounded only by the ECtHR. Equally however, he might have noted that such parts of the ECHR as are scheduled to the HRA 1998 also represent domestic law, the correct interpretation of which can be authoritatively expounded only by this court, as had been held only three months earlier in In re McKerr [2004] UKHL 12, [2004] 1 WLR 807, para 63, Lord Hoffmann. June 2007: Lord Brown of Eaton under Heywood observes that the final words of the Ullah principle might equally have been no less, but certainly no more: R (Al Skeini) v Secretary of State for Defence [2007] UKHL 26, [2008] AC 153, para 106 (with which Baroness Hale agrees, para 90). Lord Brown explains that, were this court to construe a Convention right too widely, the UK could not apply to ECtHR to have it corrected but that, in the obverse situation, the aggrieved individual could apply to have it corrected. In my respectful view, however, the notion that the ECtHR has power to correct a decision of this court is a constitutional aberration. (e) October 2007: Lord Bingham observes that the ECtHR has not been required to determine any case closely comparable with the case before the court, that it is inappropriate to align it with the least dissimilar of the ECtHR cases and that instead the task of the court is to seek to give fair effect to the principles laid down by the ECtHR: Secretary of State for the Home Department v JJ [2007] UKHL 45, [2008] AC 385, para 19. (f) 2008: Lord Hope of Craighead, possibly unaware of what Lord Brown has recently said, stresses that the words of the Ullah principle are certainly no less and not certainly no more and that the jurisprudence of the ECtHR is not to be treated as a straitjacket: In re G (Adoption: Unmarried Couple) [2008] UKHL 38, [2009] AC 173, para 50. (g) 2009: Lord Phillips of Worth Matravers, giving the judgment of the court, holds that it is open to it to decline to follow a decision of the ECtHR if it seems insufficiently to have appreciated aspects of our domestic process: R v Horncastle [2009] UKSC 14, [2010] 2 AC 373, para 11. (h) February 2011: Lord Neuberger, giving the judgment of the court, qualifies Lord Slynns observation by stating that the duty to follow any clear and constant jurisprudence of the ECtHR arises only if its effect is not inconsistent with a fundamental aspect of our law and if its reasoning does not overlook or misunderstand a point of principle: Manchester City Council v Pinnock [2011] UKSC 6, [2011] 2 AC 104, para 48. (j) (i) October 2011: Lord Kerr, in a dissenting judgment, expresses powerful criticism of what he calls Ullah type reticence: Ambrose v Harris [2011] UKSC 43, [2011] 1 WLR 2435, paras 126 130. 2012: Lord Brown suggests that the Ullah principle establishes only that the court should not unwillingly find a violation of Convention rights unless clearly compelled to do so by the law of the ECtHR; that it would be absurd to wait for it to make a decision almost directly in point before finding a violation; and that the court can carry its law a step further if it follows naturally from it: Rabone v Pennine Care NHS Trust [2012] UKSC 2, [2012] 2 AC 72, para 112. (k) 2013: Lord Mance observes that the court could refuse to follow a decision of the Grand Chamber of the ECtHR only in the event of inconsistency with a fundamental principle of our law or of egregious oversight or misunderstanding: the Chester case, cited at para 89 above, para 27. 2013: Lord Sumption points out, that by article 46 of the Convention, the UK has an international obligation to abide by the final judgment of the ECtHR in any case to which it is a party, with the result that it cannot do (l) otherwise save in altogether exceptional cases: the Chester case, cited at para 89 above, para 121. (m) 2014: Lord Neuberger suggests that, where the decisions of the ECtHR are not directly in point, the court should extract and apply the principles which underlie them: Surrey County Council v P [2014] UKSC 19, [2014] AC 896, para 62. (n) 2014: Lord Kerr suggests that the duty of the court under section 6 of HRA 1998 not to act incompatibly with a Convention right requires it to determine whether an alleged right exists even where the jurisprudence of the ECtHR discloses no clear answer: the Surrey County Council case, cited at subpara (m) above, para 86. 105. The effect of the above is that protracted consideration over the last six years has led this court substantially to modify the Ullah principle. The present case does not require further consideration of the current status of Lord Binghams opinion that our courts must certainly [do] no less than to keep pace with the jurisprudence of the ECtHR. For present purposes the relevant part of his opinion was we must do no more, or, as Lord Brown at one time considered, certainly [do] no more, than to keep pace with it. At any rate where there is no directly relevant decision of the ECtHR with which it would be possible (even if appropriate) to keep pace, we can and must do more. We must determine for ourselves the existence or otherwise of an alleged Convention right. And, in doing so, we must take account of all indirectly relevant decisions of the ECtHR and, in particular, of such principles underlying them as might, whether as currently expressed or as subject to the natural development apt to a living instrument, inform our determination. 106. Such is the exercise which I believe that I have performed above and it explains the conclusion which I reached on 24 July 2014 that the rights of convicted prisoners in Scotland under A3P1 had been violated by the blanket prohibition against their voting in the referendum. |
The question in these proceedings is whether it would be compatible with the appellants Convention rights within the meaning of the Human Rights Act 1998 for the appellant, who is an Albanian national, to be extradited to Albania. On 7 April 2001, while he was in the United Kingdom as an illegal immigrant, another Albanian national named Ylli Pepa, was killed. On the day after this incident the appellant left London and travelled to Glasgow, where he assumed a false Macedonian identity. It was alleged that he had been responsible for Ylli Pepas murder. But the Metropolitan Police were unable to locate him, and he continued to live in Glasgow for the time being under that false identity. In December 2001 the Crown Prosecution Service delivered all the materials about the case that were in their possession, including witness statements and productions, to the prosecuting authority in Albania. This was done under cover of a letter which referred to the European Convention on Extradition 1957, to which both the United Kingdom and Albania are parties. It invited the Albanian authorities to prosecute the appellant, and they decided to do so. Albania has jurisdiction to prosecute in cases of homicide committed extra territorially where the deceased and the alleged perpetrator are both Albanian. The law in Albania also provides for the trial in absence of those who are accused of such crimes. As the appellant could not be traced he was not formally notified of the proceedings that were being taken against him. So the trial took place in his absence. But evidence was heard and counsel were appointed to represent his interests. On 23 December 2002 the appellant was convicted in the Judicial Court of Elbasan of premeditated murder under article 78 of the Criminal Code of Albania. He was sentenced to 22 years imprisonment. On 3 January 2003 that decision became final. On 17 February 2003 the office of the District Prosecutor of Elbasan issued an order for the execution of the decision against the appellant. But his whereabouts were still unknown. So no further steps were taken to make the decision effective. In May 2010 the UK police became aware of the fact that the appellant was living in Glasgow. They notified the Albanian authorities. This led to a formal request by the Albanian Ministry of Justice on 22 June 2010 that the appellant be extradited to Albania, which for the purposes of the Extradition Act 2003 (the 2003 Act) is a category 2 territory. On 24 June 2010 the appellant was arrested in Glasgow under a provisional arrest warrant. On 25 June 2010 he appeared in the sheriff court at Edinburgh and was remanded in custody. The request for the appellants extradition was sent to the Home Office on 29 June 2010. On 29 July 2010 the Scottish Ministers issued a certificate under sections 70 and 141 of the 2003 Act that the request for his extradition to Albania on his conviction for the offence of premeditated murder was valid. The proceedings On 20 January 2011 the sheriff at Edinburgh, having conducted an extradition hearing over a period of three days in December 2010, held that there were no bars to the extradition. So, as he was required to do by sections 87(3) and 141 of the 2003 Act, the sheriff sent the case to the Scottish Ministers for their decision whether the appellant was to be extradited. The appellant was remanded in custody under section 92(4) to await that decision. The Scottish Ministers decided that they were not prohibited from ordering the appellants extradition, and an order was made under section 101(2) under the hand of a member of the Scottish Government which was served on the appellant on 15 March 2011. He appealed against the order under sections 108 and 216(9) of the 2003 Act to the High Court of Justiciary. He remains in custody. In the course of various procedural hearings which then followed the appellant informed the court that he no longer wished to insist on some of the grounds of appeal which had originally been intimated. On 12 October 2011 he was allowed to lodge a minute of amendment by which various grounds were deleted from the note of appeal and a new ground (v) was introduced. The effect was that the grounds of appeal which remained before the court were as follows: (iv) The sheriff erred in concluding that the appellant would be entitled to a retrial in terms of section 85(5) of the Act. Separatim. The sheriff erred in concluding that the rights specified in section 85(8) of the Act would be made available to the appellant. (v) The learned sheriff erred in concluding that the appellants extradition would be compatible with his Convention rights in terms of section 87 of the said Act. Separatim. In seeking the appellants extradition to Albania the Lord Advocate and the Scottish Ministers are acting in a way which is contrary to the appellants fundamental rights in terms of the European Convention. In particular, the appellants extradition to Albania would interfere with his right to liberty and the right to fair trial as provided for in articles 5 and 6 of the Convention. A devolution minute was also lodged in which it was stated that for the Lord Advocate to seek to support the appellants extradition would be for him to act in a way which would be incompatible with his rights under article 6(1) and 6(3)(c) of the Convention and accordingly ultra vires in terms of section 57(2) of the Scotland Act 1998. The new argument of which notice was given in ground (v) was supported by averments in the minute of amendment in which it was said that the judicial system in Albania was systemically corrupt. They incorporated a number of reports about the judicial system in that country by, among others, the European Commission, the Swedish International Cooperation Agency and the US Department of State, Bureau of Democracy, Human Rights and Labour. Reference was also made to reports prepared by Dr Mirela Bogdani and Ms Miranda Vickers, copies of which were lodged on 10 November 2011. The appellant also sought to rely on a report by an Albanian lawyer named Periand Teta about the circumstances in which a right to a retrial might or might not be available in Albania. The Lord Advocate did not oppose the amendment of the grounds in the note of appeal or the receipt of the devolution minute. But he submitted that the amended ground (v) should not be argued until a preliminary issue about the admissibility of the new evidence relating to it had been determined. He did not oppose the receipt or use of the report by Periand Teta in relation to ground (iv). A further procedural hearing was fixed for determining the preliminary issue as to the admissibility of the new evidence on ground (v). The issue as to admissibility was debated on 11 November and 20 December 2011. Counsel for the Lord Advocate submitted that the reports by Dr Bogdani and Ms Vickers did not satisfy the test for the admission of new evidence in section 104(4)(a) of the 2003 Act, as it was not evidence which did not exist at the time of the extradition hearing before the sheriff or could not have been obtained with reasonable diligence: Engler v Lord Advocate [2010] HCJAC 42, 2010 JC 235, para 12. He also submitted that their criticisms of the Albanian judicial system were advanced entirely at the level of generality, and that there was nothing in them which indicated how such criticisms as might be made of the system would affect the appellants right to a fair trial. So they should not be introduced as new evidence, and the appeal in so far as based on ground (v) should be refused. On 2 February 2012 the Appeal Court (Lady Paton, Lord Turnbull and Lord Marnoch) issued their decision on the preliminary issue: [2012] HCJAC 17. Delivering the opinion of the court Lord Turnbull said in paras 28 30 that an examination of the reports disclosed that counsel for the Lord Advocates analysis of them was correct. None of the examples of the particular deficiencies in the judicial system impacted on circumstances in which the appellant would find himself if returned to face trial in Albania. The material which they contained was of a wholly general nature, and it contained nothing to suggest that any of the concerns identified would apply to his case. In para 30 Lord Turnbull said: Nothing within either report supports the appellants contention that he would face an unfair trial on his return to Albania or in any way supports his contention that any retrial would lack the fundamental requirements of article 6. We note also that nothing in either report bears upon the question of whether any such retrial would comply with the particular requirements referred to in section 85(8) of the Act. Accordingly, in our view, the proposed new evidence contained in the reports prepared by Dr Bogdani and Ms Vickers is irrelevant to the ground of appeal in question and ought not to be admitted for this reason. It was agreed that the additional evidence of Periand Teta should be admitted, and the Lord Advocate was given leave to lead evidence in rebuttal of it, if so advised. The court declined to give effect to the submission that the appeal so far as based on ground (v) should be refused, holding that the appellant could present arguments in support of it based on evidence led before the sheriff and in the Teta report. Counsel for the appellant submitted that an appellant was entitled to rely on new evidence even if it could have been made available at the extradition hearing, as to which there appears to be some uncertainty about the approach that should be taken. That which was adopted in Engler, paras 11 12, appears not to be consistent with the more flexible approach indicated by Trajer v Lord Advocate [2008] HCJAC 78, 2009 JC 108, paras 28 29. But the Appeal Court found it unnecessary to resolve this issue. A further hearing as to the issues raised by ground (iv) took place in May 2012. On 1 June 2012 the Appeal Court (Lord Justice General Hamilton, Lord Menzies and Lord Wheatley) dismissed the appeal against the sheriffs order of 20 January 2011: [2012] HCJAC 84. In para 3 of his opinion the Lord Justice General observed that the ruling of 2 February 2012 had, in effect, excluded ground (v) of the grounds of appeal. The only subsisting ground was ground (iv), and the court was satisfied that under Albanian law the appellant would, on his return, be entitled to apply for an extension of the time limit for bringing an appeal against his conviction, that he would be entitled to have that appeal granted and that thereafter he would be entitled to a review amounting to a retrial with the rights referred to in section 85(8) of the 2003 Act: para 22. On 21 June 2012 the appellant asked for and was given leave to appeal the issue raised in his devolution minute to the Supreme Court. That was the issue which had in effect been excluded by the Appeal Courts ruling on 2 February 2012 that the evidence that the appellant wished to lead in support of it was irrelevant. Jurisdiction The Scotland Act 2012 made a number of important changes to this courts jurisdiction to deal with devolution issues under Schedule 6 to the 1998 Act. They came into effect on 22 April 2013: see ONeill and Lauchlan v HM Advocate [2013] UKSC 36, para 5. Under the previous law, the question whether the exercise of a function by a member of the Scottish government in ordering the appellants extradition was compatible with the affected persons Convention rights was a devolution issue within the meaning of paragraph 1(d) of Schedule 6 to the Scotland Act 1998, as to which a right of appeal against the determination of a court of two or more judges of the High Court of Justiciary was provided by paragraph 13(a) of the Schedule: BH v Lord Advocate [2012] UKSC 24, 2012 SC (UKSC) 308, para 34. The appellant submitted in his written case that, as a consequence of the amendments that were introduced by the 2012 Act, the issue which was identified in his devolution minute had been converted into a compatibility issue. At the hearing his counsel, Mr Scott QC, conceded that this was not so. But the point is of some importance, and it is worth saying something about it. Section 36(4) of the 2012 Act amends the definition of devolution issue in paragraph 1 of Schedule 6 to the 1998 Act by adding at the end of that paragraph the words: But a question arising in criminal proceedings in Scotland that would, apart from this paragraph, be a devolution issue is not a devolution issue if (however formulated) it relates to the compatibility with any of the Convention rights or with EU law of (a) an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament, (b) a function, (c) the purported or proposed exercise of a function, (d) a failure to act. Section 288ZA(2) of the Criminal Procedure (Scotland) Act 1995, which was inserted into the 1995 Act by section 34(3) of the 2012 Act, provides that compatibility issue means, among other things, a question, arising in criminal proceedings, as to (a) whether a public authority has acted (or proposes to act) (i) in a way which is made unlawful by section 6(1) of the Human Rights Act 1998, or (ii) in a way which is incompatible with EU law The appellants point was that, if the issue is a compatibility issue, the focus of attention is not limited to the compatibility of an act of a member of the Scottish government. It can extend to the broader question whether the Appeal Court was correct in its determination of the compatibility issue. A court is a public authority. So acts of a court, including those of the Appeal Court itself, can be brought under scrutiny under the new system if they raise a compatibility issue as so defined. This, it is suggested, widens the scope of the appeal. The nature of the issue is relevant too to the powers that the Supreme Court may exercise. There is no restriction on the powers that it may exercise under rule 29(1) of the Supreme Court Rules 2009 (SI 2009/1603) when it is determining a devolution issue. The amendments introduced by the 2012 Act leave those powers unaltered. That is not so if the issue is a compatibility issue. It is open to the Supreme Court to determine a compatibility issue on an appeal to it under section 288AA of the 1995 Act, which was inserted by section 36(6) of the 2012 Act. But section 288AA(2) provides that the powers of the Supreme Court are exercisable only for the purpose of determining the compatibility issue. Subsection (3) provides that, when it has determined the compatibility issue, the Supreme Court must remit the proceedings to the High Court of Justiciary. Subsection (4) provides that the expression compatibility issue has the same meaning for the purposes of section 288AA as it has in section 288ZA. The Lord Advocate submits that, properly construed, extradition proceedings are not criminal proceedings for the purposes of section 288AA(4) of the 1995 Act: see para 15 above, in which the definition of compatibility issue for the purpose of that subsection is set out. This is because they do not involve the determination of any criminal charge. The Lord Advocate performs the functions that he is required to carry out in proceedings of this kind under section 191 of the 2003 Act, which states that he must conduct any extradition proceedings in Scotland. He accepts that he is constrained in what he can do by the fact that he is a member of the Scottish Government under section 57(2) of the 1998 Act, which provides that he has no power to act in a way that is incompatible with any of the Convention rights. But his position is that he does not perform these functions in his capacity as the public prosecutor. In Pomiechowski v District Court of Legnica, Poland [2012] UKSC 20, [2012] 1 WLR 1604, para 31 Lord Mance said that an examination of the case law of the Strasbourg court shows that both the commission and the court have stood firm against any suggestion that extradition as such involves the determination of a criminal charge or entitles the person affected to the procedural guarantees provided in the determination of such a charge under article 6(1) or 6(3) of the Convention. In BH v Lord Advocate, para 33 it was noted that in Goatley v HM Advocate [2006] HCJAC 55, 2008 JC 1 and La Torre v HM Advocate [2006] HCJAC 56, 2008 JC 23 the Lord Advocate had conceded that devolution minutes were competent in proceedings under the 2003 Act. It seemed to me that this concession was properly made and that the High Court was right to give the concession its approval. The basis on which it was made was that the Lord Advocate and the Scottish Ministers were performing their functions under the 2003 Act as members of the Scottish Executive within the meaning of section 57(2) of the Scotland Act 1998, and that the Lord Advocate was not acting as head of the system of prosecution in Scotland: see Goatley, paras 13 14; La Torre, paras 46 47. A challenge to their proposed exercise of those functions by means of a devolution minute was to be seen as a parallel remedy to that afforded by section 87(1) of the 2003 Act. The conclusion that these proceedings are not criminal proceedings for the purposes of section 288AA(4) of the 1995 Act which follows from the analysis in BH v Lord Advocate is reinforced by the fact that extradition is a reserved matter under section B11 of Schedule 5 to the Scotland Act 1998. Scots criminal law is devolved, unless it relates to a reserved matter: section 29(4) of that Act. The Lord Advocate and the Scottish Ministers are given a specific role under various provisions of the 2003 Act in relation to extradition proceedings in Scotland, as is the High Court of Justiciary. These roles are not made part of, but are provided for separately from, those that they are required to perform under the 1995 Act. It is to be noted that there is no right of appeal to this court against a decision of the High Court of Justiciary under Part 2 of the 2003 Act. Section 114(13) provides that the provisions of that section, under which an appeal lies to the Supreme Court from a decision of the High Court on an appeal under Part 2, do not apply to Scotland. That it was thought necessary to make this provision shows that an interlocutor pronounced by the High Court of Justiciary in extradition proceedings is not to be regarded as having been made under Part VIII of the 1995 Act, which has its own provision excluding any further right of appeal. Section 124(2) of that Act provides that an interlocutor under that Part is final and conclusive and not subject to review by any court whatsoever. One can appreciate, in this context, the significance of the Lord Advocates concession in Goatley and La Torre. Its effect is that, although there is no right of appeal to this court under the 2003 Act, the person affected is entitled to exercise the right of appeal against a determination of a devolution issue by two or more judges of the High Court of Justiciary which paragraph 13(a) of Schedule 6 to the Scotland Act 1998 provides for: see BH v Lord Advocate, para 34. The wording of that paragraph is wide enough to accommodate any issue which falls within the definition of devolution issue in paragraph 1 of the Schedule. It includes a question whether a purported or proposed exercise of a function by a member of the Scottish Government is incompatible with any of the Convention rights: paragraph 1(d). That will include the exercise of functions under the 2003 Act. I would hold therefore that it follows from the nature of the statutory provisions under which the Lord Advocate performs his functions in extradition cases, and from the reasoning in BH v Lord Advocate which led to the conclusion set out in para 34 of that judgment, that the issue which has given rise to the proceedings under which this appeal is brought is a devolution issue as defined by paragraph 1(d) of Schedule 6 to the Scotland Act 1998. It is not a question arising in criminal proceedings. So it is not excluded from the definition of devolution issues by section 36(4) of the Scotland Act 2012. I should add that I see no disadvantage to the appellant in this conclusion. The protection against the exercise of functions by the Lord Advocate under the 2003 Act in a way that is incompatible with any of the Convention rights that the devolution issues system provides is just as effective as if the new system introduced by the 2012 Act had applied to them. The substantive issue Mr Scott accepted that, although the situation in Albania about the possibility of a retrial in cases where there has been a conviction in absentia remains complicated, he can no longer rely on ground (iv) alone as the basis for his appeal. In R (Mucelli) v Secretary of State for the Home Department [2012] EWHC 95 (Admin), para 55, Cranston J said that in his view the law and practice in Albania was now such that there was no real risk that the applicant in that case would suffer a flagrant denial of justice on his return to Albania, as he was entitled to a retrial on the merits of the case against him. In Zeqaj v Albania [2013] EWHC 261 (Admin), para 16, Gloster J concluded that the further evidence which the court heard in that case did not justify departing from the analysis in Mucelli. In neither of these cases, however, was extradition resisted on the basis that the judicial system in Albania is systemically corrupt. The appellants case is that from the time of its foundation in 1991, following the dissolution of the former Socialist Republic, the Republic of Albania has suffered from problems with corruption which it inherited from the former Republic. They were still in evidence when Albania joined the Council of Europe in 1995 and when it ratified the European Convention on Human Rights in 1996. While it has been addressing this problem, it has not been eliminated. The Institute for Development Research and Alternatives Report Corruption in Albania: Report of Comparisons between the 2005 Judges and National Surveys (revised on 16 May 2006) noted in its executive summary at p 2 that slightly more than half of the judges surveyed agreed that, although bribery was not thought to be a common feature, corruption in the court system was a serious problem in Albania and that lawyers approached them outside of court to influence their decisions. In the 2009 Foreign and Commonwealth Office Annual Report on Human Rights (March 2010) (Cm 7805), at p 70, it was stated that widespread corruption remains a major obstacle to upholding individual rights in Albania. The Home Office UK Border Agency Country of Origin Information Report of 30 March 2012 includes in para 12.01 a quotation from the US State Department 2010 Human Rights Report on Albania (USSD Report 2010) published on 8 April 2011 to the effect that widespread corruption prevents the judiciary from functioning independently and efficiently. There was enough in this material and in the reports of Dr Bogdani and Ms Vickers to give rise to a concern that the Appeal Court did not give proper consideration to the issue when it refused to admit the proposed new evidence contained in their reports on the ground that it was irrelevant. For the Lord Advocate Mr Wolffe QC pointed out that in 2009 Albania applied for membership of the European Union, and that in October 2012 the Commission recommended that Albania should be accepted as a candidate for membership subject to measures for judicial and public service reform. Albania has a modern code of criminal procedure which is not now said to be incompatible with the Convention and which provides for rights of appeal. But he did not seek to suggest that corruption was not still a problem in that country and he accepted that corruption was an issue about which concern should be expressed. Further work had been done on the Lord Advocates behalf to obtain information as to the situation as it is now, as it was recognised that it was unsatisfactory for the court to be asked to deal with the issue on a hypothesis. For example, it had been established that it is now possible for Albanian judges to be prosecuted on corruption charges, and it appeared that the judges themselves are committed to addressing the problem. The information that had now been obtained would be put before the Appeal Court if the case were to be remitted to it for a reconsideration of this ground of appeal. But Mr Wolffes basic point remained that which he made when the issue was debated before the Appeal Court in December 2011. This was that the material in the reports on which the appellant wished to rely was of a wholly general nature. The question was whether, if the appellant were to face a retrial in Albania, he would be the victim of a flagrant denial of justice: EM (Lebanon) v Secretary of State for the Home Department [2009] UKHL 64, [2009] AC 1198, paras 34 35, per Lord Bingham of Cornhill. There was nothing in the reports on which the appellant wished to rely which addressed the issue whether judicial corruption would lead to a flagrant denial of justice in his case. He pointed out that a finding that any one accused who was facing extradition and a retrial in Albania would face a flagrant denial of justice because the judicial system was corrupt would be of interest to everyone. He said that there were 17 countries which were regarded as being more corrupt than Albania. The precise figure does not matter, but it appears from the Transparency International Corruption Index for 2012 that there are at least that many countries to which the UK currently has extradition arrangements. Discussion It is a sad fact that, despite all the many provisions in international human rights instruments which emphasise that everyone has the right to a fair trial before an independent and impartial judge, there are still states where the judiciary as a whole is infected by corruption. It is, of course, hard to get at the true facts. But there is no smoke without fire, and where allegations of corruption are widespread they must be taken seriously. So too must an appreciation of what corruption may lead to when it affects the whole system. It may involve simple bribery of judges and court officials, or it may involve interference with the judicial system for political reasons of a much more insidious kind. Unjust convictions may result, just to keep the system going and keep prices up. Everyone whose case comes before the courts of that country where practices of that kind are widespread is at risk of suffering an injustice. Those who are familiar with the system may know how much they need to pay, or what they have to do, to obtain a favourable decision but be quite unable to come up with what is needed to achieve that. Those who are not familiar with it will be at an even greater disadvantage. How, then, is the question whether the appellant would suffer a flagrant denial of justice if he were to be extradited to be applied in this case? The Lord Advocate submits that this is a stringent test. It goes beyond mere irregularities or lack of safeguards in the trial process that might give rise to a breach of article 6 if they were to occur within the contracting state itself. In Mamatkulov and Askarov v Turkey (2005) 41 EHRR 494, to which Lord Bingham referred when he was describing the test in EM (Lebanon), it was held that this test was not satisfied. The Grand Chamber held that, while there may have been reasons for doubting whether the applicants would receive a fair trial, there was not sufficient information to show that any possible irregularities in the trial were liable to constitute a flagrant denial of justice. In para O III14 of their joint partly dissenting opinion, to which Judge Rozakis also subscribed, Judges Bratza, Bonello and Hedigan said that in their view the word flagrant was intended to convey a breach of the principles of fair trial guaranteed by article 6 which was so fundamental as to amount to a nullification, or destruction of the very essence, of the right guaranteed by the article. In Othman v United Kingdom (2012) 55 EHRR 1 the applicants complaint was that his retrial in Jordan would amount to a flagrant denial of justice because of a number of factors including a very real risk that incriminating statements against him had been obtained by torture. The court adopted the meaning to be given to the phrase flagrant denial of justice in the partly dissenting opinion in Mamatkulov, which it said was a stringent test of unfairness: para 260. It was satisfied that the ill treatment of the witnesses which was alleged amounted to torture. That meant that the two questions it had to consider were whether a real risk of the admission of that evidence was sufficient and, if so, whether a flagrant denial of justice would arise in the applicants case: para 271. It was conscious of the fact that the Grand Chamber did not find that the test had been met in Mamatkulov: para 283. But the applicants complaint was not of the general and unspecific kind that was made in that case. It was a sustained and well founded attack on a State Security Court system that would try him in breach of one of the most fundamental norms of international justice, which was the prohibition on the use of evidence obtained by torture. The court found that his deportation to Jordan would be in violation of article 6. In the most recent case to which we were referred the Strasbourg court has shown no sign of wishing to soften its approach. In Insanov v Azerbaijan (Application No 16133/08) unreported, given 14 March 2013, the court found that the criminal proceedings against the applicant did not comply with certain guarantees of article 6. Nevertheless it held in para 184 that the flaws were not of such a nature as to render the entire trial so fundamentally unfair as to amount to a flagrant denial of justice. It observed that until now the court has found that a flagrant denial of justice has occurred or would occur only in certain very exceptional circumstances. The test itself is not in doubt. As Lord Bingham said in EM (Lebanon), para 35, the point could not have been put more clearly than it was by the Asylum and Immigration Tribunal in Devaseelan v Secretary of State for the Home Department [2003] Imm AR 1. The threshold test will require a flagrant breach of the relevant right, such as will completely deny or nullify the right in the destination country. But none of the cases in which the test has been described was concerned with the way it is to be applied where the complaint is of systemic judicial corruption. It is not so obvious that the only way it can be met, as it was in those cases, is by pointing to particular facts or circumstances affecting the case of the particular individual. The stark fact is that systemic corruption in a judicial system affects everyone who is subjected to it. No tribunal that operates within it can be relied upon to be independent and impartial. It is impossible to say that any individual who is returned to such a system will receive that most fundamental of all the rights provided for by article 6 of the Convention, which is the right to a fair trial. For these reasons I would hold that the allegations that the appellant makes are sufficiently serious for it to be necessary to have a closer look at the material in order to determine how systemic or widespread the problem now is. We are not in a position to do that in this court. The reports of Dr Bogdani and Ms Vickers have been lodged, but they are two years out of date and Mr Scott, very properly, did not ask us to examine them as if they were the last word on the subject. There is reason to think that matters have moved on since they did their work. The further evidence which is available to for the Lord Advocate is not before us. The proper course, therefore, is for the case to be returned to the Appeal Court so that it can be provided with up to date information and reach a properly informed decision as to whether or not the threshold test is satisfied. Its task will be greatly eased if, as there is every reason to expect from responsible counsel, the parties exchange and agree as much information as possible with a view to reducing to a minimum the need for any oral evidence. The further delay that will result in the resolution of these proceedings is regrettable. But it is of the highest importance that due process be observed in matters of this kind. It is always tempting to resort to short cuts. But where a persons liberty and his right to a fair trial is at issue that temptation must be resisted. It is plain that the matter must be properly investigated before a decision is taken as to whether the appellants extradition to Albania should go ahead. Conclusion permitted to adduce evidence to rebut any conclusions in the appellants favour that may be derived from those reports and any other admissible evidence that he may lead. The appellant must remain in custody for the time being. I would recall the Appeal Courts interlocutor of 1 June 2012 by which it dismissed the appeal against the sheriffs order of 20 January 2011, and remit the case to the High Court of Justiciary for further consideration. I would set aside the Appeal Courts finding on 2 February 2012 that the proposed new evidence contained in the reports prepared by Dr Bogdani and Ms Vickers was irrelevant to the ground of appeal and ought not to be admitted. The Lord Advocate should be |
The appellants, Mrs Sheila Davies and Mrs Maureen Mowat, operate a childrens nursery, known as All Stars Nursery, at 95 Don Street, Aberdeen. As it was a care service within the meaning of section 2(1)(m) of the Regulation of Care (Scotland) Act 2001 (the 2001 Act), it required to be registered under Part I of that Act. It was a criminal offence to provide a care service which is not registered: section 21. Section 1 of the 2001 Act established the Scottish Commission for the Regulation of Care (the Commission) as a body corporate with the aim of creating a national body for the regulation of care services provided in Scotland. It was to the Commission that applications for registration had to be made under section 7. The Commission had power under section 9 to grant an application unconditionally or subject to such conditions as it thought fit to impose. It also had a continuing duty to ensure that the national care standards and any regulatory requirements were complied with. Where a service was failing, it could give notice under section 10 that unless improvements were made within a specified period steps would be taken for its registration to be cancelled. If those steps were not taken it could propose to cancel the registration and, after having given notice of the proposal, adhere to that proposal and give notice of its decision to do so under section 17(3). There was a right of appeal to the sheriff under section 20 against a decision of which notice had been given under that subsection. The appellants application for registration of the nursery was granted, subject to certain conditions, in 2004. It was not very long before the Commission became concerned at the way the nursery was being operated. On 5 March 2008 it served an improvement notice on the appellants under section 10. As in its view significant improvements had not been made within the period which had been specified, it served a further notice under section 15(2) of the 2001 Act of a proposal that the nurserys registration should be cancelled. On 18 August 2008 it gave notice to the nursery under section 17(3) of its decision to implement that proposal. The appellants disputed the factual basis for the Commissions concerns. They appealed to the sheriff against the decision to implement the proposal under section 20 of the 2001 Act. Section 20 of the 2001 Act is in these terms: (1) A person given notice under section 17(3) of this Act of a decision to implement a proposal may, within fourteen days after that notice is given, appeal to the sheriff against the decision. (2) The sheriff may, on appeal under subsection (1) above, confirm the decision or direct that it shall not have effect; and where the registration is not to be cancelled may (either or both) (a) vary or remove any condition for the time being in force in relation to the registration; (b) impose an additional condition in relation to the registration. On 10 October 2008 the Commission gave notice under section 15(2) of a second proposal that the appellants registration should be cancelled. This was followed on 30 March 2009 by a further notice under section 17(3) of the Commissions decision that the proposal should be implemented. The appellants appealed to the sheriff against this decision also. The two appeals then proceeded together as summary applications under rule 1.4 of the Act of Sederunt (Summary Applications, Statutory Applications and Appeals etc Rules) 1999. The primary crave in each case was that the sheriff should direct that each of the decisions should have no effect, as they were unreasonable and disproportionate and based on findings that were inaccurate. The appeals proceeded to proof before the sheriff. There appears to have been, in that court, a marked and highly regrettable lack of case management. Evidence was heard on 24 days spread over a period of about 15 months. 20 of those days were taken up by counsel for the Commission in his cross examination of the first named appellant. At the end of her cross examination, when several witnesses on both sides still had to give evidence, counsel for the appellants moved the sheriff to be allowed to lead evidence in re examination about the current circumstances of the nursery. The evidence up to that point had been directed to the manner in which the nursery was being run prior to the two notices of cancellation. Counsel for the Commission objected, on the ground that the appeals should be decided on the basis of the facts as they were at the dates of the decisions to cancel. The sheriff heard legal argument on this issue over a period of five days. On 3 February 2011 he upheld the objections and ruled that evidence as to the state of the nursery after 30 March 2009 was inadmissible. The Sheriff gave leave to appeal his decision on this point to the Sheriff Principal. The appellants appealed against the sheriffs decision to the sheriff principal. The hearing of the appeal was fixed for 12 April 2011. In the meantime the Public Services Reform (Scotland) Act 2010 (the 2010 Act) had been enacted. The overarching purpose of this statute was to simplify and improve what the policy memorandum which accompanied the Bill when it was introduced in the Scottish Parliament in May 2009 described as the landscape of public bodies in Scotland. Part 5 of the 2010 Act contained provisions for the furthering of improvement in the quality of social services, and the setting up under section 44 of a body to be known as Social Care and Social Work Improvement Scotland (SCSWIS). Part 6 provided for the furthering of improvement in the quality of health care and the setting up of a body to be known as Healthcare Improvement Scotland (HIS). The functions of the Commission were to be divided between these two bodies, and section 52 provided that the Commission was to be dissolved. Section 47 provided that day care of children, which was the service for the provision of which the appellants had been registered under the 2001 Act, was to be one of the care services for which SCSWIS was to be responsible. Provision was made in section 102 for the transfer of staff and all property (including rights) and liabilities of the Commission existing immediately before the date when section 44 was to come into force to SCSWIS. By paragraph 37 of Schedule 14 it was provided that Part 1 of the 2001 Act was to be repealed. The relevant provisions of the 2010 Act were brought into force by the Public Services Reform (Scotland) Act 2010 (Commencement No 4) Order 2011 (SSI 2011/122) (the No 4 Commencement Order) on 1 April 2011. The effect of that Order was, among other things, to establish SCSWIS under section 44 and, by bringing sections 52 and 102 into force, to dissolve the Commission and transfer all the Commissions staff and property to SCSWIS. It also brought into force the repeal of Part 1 of the 2001 Act. At the outset of the hearing on 12 April 2011 before the sheriff principal counsel for the appellants said that he wished to raise a preliminary point. This was that the Commission could no longer be a party to the appeal, as it had been dissolved and replaced by SCSWIS. But SCSWIS had no title or interest to enter the proceedings, as the proceedings were concerned only with things that had been done under the 2001 Act before it came into existence. His submission was that each of the decisions of the Commission of which notice had been given under section 17(3) of the 2001 Act was a nullity, and that it should be so directed. Counsel on both sides were agreed that the sheriff principals decision on this point might render the discussion of the principal issue in the appeal unnecessary. So he heard argument on the preliminary point only. It was common ground that the effect of the No 4 Commencement Order was that on 1 April 2011 Part 1 of the 2001 Act was repealed, that the Commission was dissolved and that its staff, property and liabilities were transferred to SCSWIS which came into existence on the same day. The question was whether there was anything in the Public Services Reform (Scotland) Act 2010 (Health and Social Care) Savings and Transitional Provisions Order 2011 (SSI 2011/121) and the Public Services Reform (Scotland) Act 2010 (Health and Social Care) Savings and Transitional Provisions (No 2) Order 2011 (SSI 2011/169) which showed that it was still open to counsel to appear for the Commission and that the Commission itself could continue to participate in the proceedings and oppose the appellants appeals. On 9 May 2011 the sheriff principal held that, as the Commission had ceased to exist and there was no provision in either of the transitional orders that the decisions which the Commission made were to be treated as if they had been made by SCSWIS, those decisions could no longer have any meaning or effect: 2011 SLT (Sh Ct) 208, para 17. As he saw it, he had no alternative but to so hold, given that the Scottish Ministers had chosen to bring sections 52 and 102 of the 2010 Act into force. He removed a condition that had been imposed on the first named appellant to the effect that she was not to have contact with, or access to, children enrolled or enrolling at the nursery. He also held that the effect of his order was that the nursery was to be treated for all purposes as if it had been registered under Part 5 of the 2010 Act, with the result that SCSWIS would have all the necessary powers to monitor the situation at the nursery and to take any action under that Act in the interests of the children that might be necessary. The Commission appealed against the sheriff principals decision to the Court of Session. On 24 January 2012 the First Division (Lord President Hamilton and Lord Drummond Young, Lord Marnoch dissenting) allowed the appeal and continued it to a later date to enable the parties to consider their position on the issue of whether the sheriff was in error in refusing to permit the appellants to lead evidence as to the current condition of their care service: [2012] CSIH 7, 2012 SLT 269. The majority were of the opinion that the effect of the transitional provisions was that the proceedings were still governed by the 2001 Act, that the Commission continued in existence for the purposes of these proceedings and that it was the proper respondent: para 26. The relationship between it and SCSWIS, which had taken over all the Commissions staff and its financial resources and in practical terms was performing all the Commissions functions, was one of implied agency: para 31. Lord Marnoch was of the opinion that the effect of the transitional provisions was that the proceedings should be adjudicated on as if, so far as relevant, Part 1 of the 2001 Act remained in force, that SCSWIS should be held to have taken over the conduct of the proceedings as from 1 April 2011 and that, while the proceedings should be allowed to proceed, the Commission was no longer the proper contradictor: para 42. The appellants have now appealed against that decision to this court. The judgment of the First Division was an interlocutory judgment within the meaning of section 40(1)(a) of the Court of Session Act 1988. It comes before us on appeal without the leave of the Inner House of the Court of Session. Section 40(1)(a) provides that it is competent to appeal from the Inner House to the Supreme Court against an interlocutory judgment without the leave of the Inner House where there is a difference of opinion among the judges. The respondents position, as set out in paragraph 9 of the statement of facts and issues, is that they do not accept that there was any relevant difference of opinion as to the substantive issue before the court, which was the correctness or otherwise of the sheriff principals disposal of the case. But Mr Mitchell QC did not insist on this point at the hearing of the appeal, and I think that he was right not to do so. There plainly was a difference of opinion on the question whether the Commission remained in existence for the purpose of conducting the proceedings or had been replaced for this purpose by SCSWIS. This was more than a mere technicality, as a proper understanding of the effect of the transitional provisions is needed to resolve questions as to who is in a position to serve any further notices that may be needed and to give instructions for the future conduct of any further proceedings before the sheriff. In my opinion this appeal, albeit without leave of the Inner House, is competent. The transitional provisions It is obvious that a reorganisation of existing public services such as that which the 2010 Act was designed to achieve requires transitional provisions to ensure that there is an orderly transfer of the old system to the new one. As Ian McLeod, Principles of Legislative and Regulatory Drafting (2009), p 98 points out, savings and transitional provisions are intended to smooth the operation of the law when an Act is repealed. He adds that it is particularly important that drafters are able to identify the gaps in their instructions which the instructing department would have plugged if it had appreciated the need to do so. Then at p 99 headed Matters requiring particular care and attention he draws attention to the fact that, where an existing statutory corporation is being replaced by a new one, transitional provisions are necessary to deal with a range of purely practical matters. These include the transfer of rights of action vested in the old corporation to the new one, and the power to take over litigation which was being carried on by or against the old one at the time of its demise. By section 132 of the 2010 Act it was provided that the Scottish Ministers were to have power by order to make such consequential, supplementary, incidental, transitional or saving provision as they considered necessary or expedient for the purposes of giving full effect to any provision of the Act. Section 133(1) provided that the power was to be exercised by statutory instrument. That power was exercised by the making on 18 February 2011 of the Public Services Reform (Scotland) Act 2010 (Health and Social Care) Savings and Transitional Provisions Order 2011 (the No 1 Order) and by the making ten days later, presumably to fill a gap that had been perceived in the No 1 Order, of the Public Services Reform (Scotland) Act 2010 (Health and Social Care) Savings and Transitional Provisions (No 2) Order 2011 (the No 2 Order). One might have expected the solution to the issue which the sheriff principal was asked to consider to have been obvious upon an examination of these orders. Unfortunately that is not so. There is a gap which needs to be filled and, as the division of opinion in the Inner House shows, there is room for argument as to how this can be done. Careful drafting ought not to have allowed this to happen. It is a pity that Mr McLeods advice was not followed. The result has been the compounding of the delay caused by the protracted proceedings in the sheriff court. It has taken almost two years ^ for this issue to be argued out in the appeal courts. The No 1 Order was in five parts. Article 1 in Part I defined the expressions used elsewhere in the Order, including the appointed day. It was to mean 1 April 2011. Part II set out a number of transitional provisions relating to care services, as did Part III for independent health care services. Part IV set out a number of savings provisions. Part V did the same thing in relation to the provisions of another statute with which this case is not concerned. The effect of articles 2 to 8 of Part II was that steps taken under the relevant provisions of the 2001 Act with regard to registration, the giving of improvement, cancellation and condition notices, applications for the variation or removal of conditions and the registration of authorised persons were to be treated for all purposes as if they had been made under the corresponding provisions of the 2010 Act and that national care standards published under the 2001 Act were to be treated as if they were the standards applicable to care services under the 2010 Act. Article 9 was in these terms: Where immediately before the appointed day, the Commission has received a complaint relating to (a) the Commission; (b) a care service; or (c) an independent health care service, and investigation of that complaint has not concluded, the investigation of that complaint is to be carried out by SCSWIS. The savings provisions in articles 15 to 18 of Part IV dealt with what was to happen in the case of applications for registration, inspections by the Commission, integrated inspections by the Commission and Her Majestys inspectors and urgent cancellation proceedings that had been commenced before the appointed day and had not concluded or been determined. The effect of these provisions was that the provisions of the 2001 Act under which these actions or proceedings had been commenced were to continue in force until they had come to an end. Article 19 dealt with appeals taken against decisions notified 14 days before the appointed day by the Commission under section 17(3) of the 2001 Act. Article 20 dealt with offences, and article 21 listed a number of regulations that were to continue in force despite the repeal of the 2001 Act. Of these various provisions, article 15 is of particular interest. It was in these terms: (1) Subject to paragraphs (2) and (3), where a person who seeks to provide a care service or an independent healthcare service has made an application to the Commission in accordance with section 7 or 8 of the 2001 Act in respect of that service, and that application has not been determined by the Commission before the appointed day, that application is to continue to be dealt with under those provisions, and sections 9 and 15 of the 2001 Act remain in force for that purpose. (2) Where paragraph (1) applies (a) if the application relates to a care service all references to the Commission are to be read as references to SCSWIS; and (b) if the application relates to an independent health care service all references to the Commission are to be read as references to HIS. (3) Where SCSWIS or HIS determine that such an application should be granted, SCSWIS or HIS, as the case may be, must grant registration under section 60 of the 2010 Act or section 10Q of the NHS Act, as the case may be, subject to such conditions as they think fit. Sections 9 and 15 of the 2001 Act set out various steps that were to be taken by the Commission following upon the applications provided for by sections 7 and 8 of that Act. The direction set out in article 15(2) that references to the Commission were to be read as references to SCSWIS or HIS, as the case might be, addressed the problem as to which of those bodies was to exercise those functions after the appointed day. But it was not repeated in any of the following articles. They were silent on that point. The No 2 Order contained only three articles. The first set out the relevant definitions, amongst other things. Article 2, which was headed Appeal proceeds (sic) savings provision, dealt in paragraph (1) with appeals against notices given by the Commission under section 17(3) of the 2001 Act that had been raised under section 20 of that Act and had not been finally determined before 1 April 2011. The direction that was set out in that paragraph with respect to such appeals was as follows: Part I of the 2001 Act will continue to apply for the purposes of the care service or independent health care service which is the subject of those appeal proceedings until the final determination of those proceedings. Article 2(2) provided that article 2(1) of the No 1 Order, which provided that where on the appointed day a person was providing a care service which immediately before that day was registered under the 2001 Act that service was to be treated for all purposes as if it had been registered under the 2010 Act, was not to apply to any care service to which article 2(1) of the No 2 Order applied. Article 3 provided that, where the final determination of an appeal under section 20 of the 2001 Act was that the registration of a care service was not cancelled, it was to be treated for all purposes as if it had been registered under Part 5 of the 2010 Act. The explanatory note to the No 2 Order referred to the fact that the No 1 Order had already made various savings and transitional provisions in the light of the 2010 Act relating to SCSWIS and HIS. It then said that the No 2 Order made further provisions for SCSWIS and HIS. But nowhere in any of the articles of the No 2 Order is mention made of either of these bodies. As was the case in articles 16 to 18 of the No 1 Order, the direction set out in article 15(2) that references to the Commission in the relevant provisions of the 2001 Act that were to continue in force were to be read as references to SCSWIS or HIS, as the case might be, does not appear in article 2. It too was silent on that point. The issues The question which is at the heart of the appeal is whether the Commission is to be taken to have remained in existence for the purpose of conducting these proceedings, or whether SCSWIS must be held to have taken its place for that purpose after 1 April 2011. Its answer is to be found on a consideration of the effect of article 2 of the No 2 Order, read in the context of the whole of the statutory background including the terms of the No 1 Order. But the matter has been complicated by the service between July and December 2012 of further improvement notices, of further notices of proposals to cancel the appellants registration and of further notices of decisions to implement these proposals. The appellants have challenged the validity of these various notices, on the ground that they were not served by a body which had power to do this under the relevant Act. They have also appealed against the decision notices under section 20 of the 2001 Act and section 75 of the 2010 Act. The result is that the proceedings that began in the sheriff court in 2008 and 2009 with reference to the state of affairs in the nursery in those years are now being duplicated by parallel proceedings which are directed to the state of affairs in the nursery in 2012. Two further questions therefore need to be addressed. The first is as to the validity of the decisions that were the subject of the notices that were given between July and December 2012. The second is as to the future conduct of these proceedings, given the lapse of time since the section 17(3) notices were served in 2008 and 2009 and the fact that the notices served in 2012 are now also under appeal. The effect of article 2 of the No 2 Order The savings provision in this article does make one thing plain. Article 2(1) states in the clearest terms that Part 1 of the 2001 Act is to continue to apply for the purposes of the care service which is the subject of appeal proceedings until the final determination of those proceedings. It is accompanied by article 2(2) which makes it clear that, in the circumstances referred to in article 2(1), the care service is to remain registered under Part 1 of the 2001 Act. The service is not to be treated, for the time being, as if it had been registered under Part 5 of the 2010 Act. The Order might have directed that the appeal proceedings were to continue and be determined under section 75 of the 2010 Act as if the notices that were under appeal had been served under Part 5 of that Act. Had it done this, it would not have been open to doubt that SCSWIS was the body which had title and interest to oppose the appeal. As it is, the direction that Part 1 of the 2001 Act is to continue to apply until the appeals have been determined raises the question as to which body is in a position to do this. It is a question which the No 2 Order fails to answer. There is a gap here that requires to be filled. Mr Gale QC for the appellants said that he favoured the solution to the problem that had been adopted by Lord Marnoch. By operation of law, reading the provisions of the No 2 Order in context, the proper body to resist the appeals was SCSWIS. The proceedings should be remitted to the sheriff, before whom the issue as to whether evidence could be led as to the current state of the nursery remained open as the sheriff principal did not deal with that question. But the sheriff would also have to regularise the position by giving permission to SCSWIS to enter the process by being sisted as a party to the appeals. He made it clear that the appellants would seek to oppose its being sisted on the ground that the proceedings had been so long delayed. If they were successful in their opposition to a motion to sist, the decisions that had been taken in 2008 and 2009 would fall to be treated as no longer having any effect. Mr Mitchells primary position, as it was put in his written case, was that the decision of the majority was correct and that the Commission remained in existence for the purpose of conducting these proceedings. At the outset of his reply to Mr Gales submissions, however, he said that it was not a matter of concern to his clients whether the Commission or SCSWIS, on whose instructions he appeared, was to be regarded as being in a position to perform that function. The majoritys view that the relationship between the Commission and SCSWIS was one of implied agency was difficult to support, and he submitted that it was not necessary for him to attempt to do so. His point was that all that needed to be done was to note, if this was to be the case, that as a matter of law SCSWIS had taken the place of the Commission. It was not his clients intention to apply for SCSWIS to be sisted. He acknowledged that it would be simpler if SCSWIS were to be held to be the proper party. This would accord with the way things were in practice, since the Commission in reality no longer existed. But it should be understood that, whichever body it was, it was the proper body for the performance of all the functions in Part 1 of the 2001 Act so long as they continued to have effect in terms of article 2(1) of the No 2 Order, including the service of any new notices. Mr Wolffe QC for the Lord Advocate, who had entered the process on behalf of the Scottish Government, said that those instructing him wanted to know what was the correct analysis. If the correct position was that, as Part 1 of the 2001 Act remained in force until the final determination of the proceedings, the dissolved Commission was the body that required to perform the functions that needed to be performed under it, the Scottish Government would have to do something to address that situation. His primary position in his written case was to adopt the reasoning of the majority in the Inner House. But he too acknowledged that the solution preferred by Lord Marnoch would provide a more satisfactory outcome, as all the Commissions staff and financial resources had been transferred to SCSWIS. There was no practical reason for wishing to argue that the Commission still remained in being for the limited purpose envisaged by article 2(1) of the No 2 Order. The intention of the Scottish Parliament was that there should be a seamless transfer. I am in no doubt that, of the two alternative approaches that are to be found in the judgment of the Inner House, that proposed by Lord Marnoch is the one which should be adopted. The reality is that the Commission no longer exists. It is nearly two years since it was dissolved and all its staff and resources were transferred to SCSWIS. But the position today must be taken to be the same as it was on the appointed day. As from that date it ceased to exist, and it was incapable in law and in fact of performing any functions. This makes it hard to support the majoritys suggestion that the relationship between the Commission and SCSWIS was one of implied agency. Lord Drummond Young said in para 31 that there was no difficulty in implying such a relationship, as it was in essence an extremely simple one which could readily be implied in almost any case where one person performs a task on behalf of another, either consensually or under a statutory scheme. That implication may present no difficulty in other contexts, but I do not see how that can be so in this case. The Commission, once it had been dissolved, was not in a position to enter into any consensual relationship with anybody. The proposition that it is possible to imply a relationship of agency from the statutory scheme under which the Commission is to be taken to have a continued existence begs the question as to what that scheme provides. That is the question which we are having to answer. Lord Marnoch rejected the majoritys approach because he was not convinced that the effect of article 2 of the No 2 Order was to resurrect the Commission. Its purpose was to ensure that only the substantive law was applied in the course of the proceedings. It was not necessary to re establish the Commission for that purpose. The intention was that SCSWIS should replace the Commission. It was not necessary to insert or alter any words to give effect to it. One could simply read the provisions as a whole: para 42. I agree, but I think that it is possible to say a bit more to reinforce his argument. The No 2 Order, looked at on its own and on its own terms, leaves this problem unsolved. There is, as I have said, a gap in its provisions that has to be filled. The explanatory note says that the Order makes further provisions for SCSWIS, but it does not explain what they are. So I do not think that it offers any assistance. The No 1 Order, on the other hand, does contain a provision which is directly in point. Article 15 deals with the question what was to happen where applications made under sections 7 or 8 of the 2001 Act had not been determined by the Commission before the appointed day: see para 20, above. It states that in that situation, if the application relates to a care service, all references to the Commission are to read as references to SCSWIS. There is an echo here of the direction in article 9 of the No 1 Order that, where a complaint was made before the appointed day and the investigation had not been concluded, the investigation of the complaint was to be carried out by SCSWIS: para 18, above. Why, one asks, was it thought appropriate to give these directions? The answer must surely be that it was appreciated that, as the Commission was to be dissolved on the appointed day and all its staff and resources transferred to SCSWIS, the logical consequence was to transfer responsibility for the performance of the relevant functions after the appointed day to SCSWIS. The method that was chosen in article 15 is particularly instructive. All references to the Commission in relation to an application under sections 7 or 8, and the functions referred to in sections 9 and 15, are to read as references to SCSWIS. No other mechanism was thought to be necessary. Can the gap that is left by article 2 of the No 2 Order be filled by reading all references to the Commission as references to SCSWIS in that context too? A similar question arose in Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586, where it was plain that when making a consequential amendment the draftsman had not used language apt to achieve the intention of the legislature. This had the effect of wholly excluding a right to appeal which it had not previously been suggested should be abolished or restricted. Lord Nicholls of Birkenhead said at p 592 that the wording of the provision should be read in a manner which gave effect to the Parliamentary intention. It had long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors too, and in suitable cases this would mean adding or omitting or substituting words in discharging its interpretative function. Lord Nicholls went on, however, to say that the courts must exercise considerable caution before doing so: Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation. I do not think that any of these conditions would be breached if we were to adopt the formula that article 15 of the No 1 Order used and read it into the direction given in article 2(1) of the No 2 Order: that until the final determination of the proceedings all references to the Commission in Part 1 of the 2001 Act are to read as references to SCSWIS. There is here clearly a case of inadvertence. The No 2 Order needed to say how the provisions of Part 1 of the 2001 Act were to be put into effect after the Commission was dissolved. The intended solution, and the substance of the provision that would have been written in if the draftsman had spotted the point, is to be found in article 15(2) of the No 1 Order. There is a template there that is apt for use in this context too. To do otherwise and follow the solution adopted by the majority would leave the dissolved Commission in existence for some of the purposes of Part 1 of the 2001 Act and require a reference to the Commission to be read as a reference to SCSWIS for others. That would be very untidy. I think that it can safely be assumed that, if the draftsman had considered the point, he would have written the words he used in article 15(2) into article 2(1). I would so hold. This solution is also supported by article 19 of the No 1 Order, because its effect is that an appeal taken prior to 1 April 2011 against a decision notified by the Commission within 14 days prior to that date is thereafter to be treated as taken under the 2010 Act. It follows that the respondent in the appeal should be SCSWIS. The validity of the 2012 notices On 23 July 2012 two notices were served on the appellants to inform them that it had been concluded that the nursery was not operating in accordance with the statutory requirements or conditions and that unless there was a significant improvement in the provision of the service the intention was to make a proposal to cancel its registration. One of these notices was given by SCSWIS in the name of the Commission under section 10 of the 2001 Act. The other was given by SCSWIS in its own name under section 62 of the 2010 Act. In a covering letter of the same date, which was written by a solicitor employed by SCSWIS, it was stated that nothing in these two notices should be taken to prejudice the position of SCSWIS, whether on its own account or as acting for the Commission, as to the true statutory position. Those notices were followed by an improvement notice given by SCSWIS in the name of the Commission under section 10 of the 2001 Act and an improvement notice given by SCSWIS in its own name under section 62 of the 2010 Act. Both of these notices extended the timescale for making the improvements. On 9 November 2012 two further notices were issued. The first was a notice given by SCSWIS in the name of the Commission under sections 12 and 15 of the 2001 Act of a proposal to cancel the nurserys registration. The second was a notice to the same effect given by SCSWIS in its own name under sections 64 and 71 of the 2010 Act. The appellants solicitors responded to the notice that had been given under the 2001 Act by letter dated 23 November 2012, saying that the notice issued in the name of the Commission was a nullity as the Commission had ceased to exist. In a letter of the same date in response to the notice given under the 2010 Act they said that it was not accepted that SCSWIS was capable of or competent at law to regulate the nursery, as in terms of article 2 of the No 2 Order the registration of the nursery had not been transferred to it pending determination of the appeal. So this notice too was a nullity. SCSWIS did not agree, and on 4 December 2012 two further notices were issued. The first was given by SCSWIS as agents for the Commission under section 17 of the 2001 Act giving notice of its decision to cancel the nurserys registration. The other was a notice to the same effect given by SCSWIS in its own name under section 73 of the 2010 Act. The appellants have appealed to the sheriff against the decisions that were the subject of those notices. Those appeals are not before us. But I think that it would be wrong of us not to address the question whether, as the appellants have asserted, the notices that were given are to be regarded as nullities. This is so for two reasons. First, it is appropriate that we should explain how they are to be regarded in the light of our decision as to the effect of the No 2 Order. The question is whether either, and if so which, of them can be given effect. A view expressed by us on that issue now will save the cost and delay of arguing that point in the sheriff court. Second, the fact that SCSWIS have taken these further steps to achieve cancellation of the nurserys registration has the result that appeals are now being taken against them while the other appeals have not been finally determined. This raises a very real problem of case management. It needs to be addressed before a decision is taken as to how we should dispose of the appeal to this court. The notice of the decision that was given under the 2010 Act must be regarded as ineffective. Article 2(1) of the No 2 Order provides in the clearest terms that Part 1 of the 2001 Act is to continue to apply for the purposes of the care service until the final determination of the appeals that were taken against the decisions of which notice was given in 2008 and 2009. Article 2(2) disapplies article 2(1) of the No 1 Order, with the result that the nursery is still registered under the 2001 Act. So it is with reference to the provisions of the 2001 Act, not those of the 2010 Act, that any steps with a view to the cancellation of the nurserys registration would have had to have been taken until the final determination of these appeals. The notice of the decision that was given under the 2001 Act was said to have been given in terms of article 2 of the No 2 Order by SCSWIS as agents for the Commission. SCSWIS were, of course, proceeding on the basis that Lord Drummond Youngs analysis of the effect of article 2 of that Order, with which the Lord President agreed, was correct. For the reasons given above, I am of the opinion that his was not the right analysis. The effect of the article is that references to the Commission are to be read as references to SCSWIS. SCSWIS has, as a matter of law, taken the place of the Commission for these purposes. So it was unnecessary for SCSWIS to adopt the formula that it did when taking the various steps that it was open to it to take with regard to the nurserys registration under Part 1 of the 2001 Act. The fact that it did so cannot be regarded, however, as incompatible with the true position that it was SCSWIS and not the dissolved Commission which was taking these steps. The notice was given by an employee of SCSWIS from its address in Aberdeen under SCSWISs letter heading. The true position was obvious for all to see, and it cannot be said that the appellants have been in the least prejudiced by the fact that the formula that was chosen was inaccurate. As this notice was given under the right statute by the body that was empowered to take the decision referred to in it, I would hold that it was a valid notice for the purposes of Part 1 of the 2001 Act. The future conduct of these proceedings The situation in which this case now finds itself is highly unsatisfactory. The appeal process which was provided by section 20 of the 2001 Act was designed to provide a person who had been given notice of a decision to implement a proposal with a remedy that was to be sought under the summary procedure. It was not intended to be an obstacle to giving prompt effect to the proposal, which is what has been happening in this case. The registration system is intended to ensure that care services are provided which satisfy the published national care standards: see section 5 of the 2001 Act. It is in the public interest, and especially in the interests of those who wish to make use of those services, that those standards are adhered to and that prompt steps are taken to address a failure to do so and, if necessary, remove the service from the register. The fact that the question whether decisions to cancel the registration of the nursery are the subject of two parallel appeal proceedings directed to the state of affairs in the nursery on significantly different dates is a cause for real concern. The problem is one of SCSWISs own making. It has chosen, no doubt for good reasons, not to rely on the Commissions 2008 and 2009 decision notices but to rely instead on a decision that was taken with reference to the situation that is now current in the nursery. The obvious consequence would seem to be for the 2008 and 2009 decisions to be withdrawn so that the sheriff can concentrate on the issues raised by the decision that was taken in 2012. Mr Mitchell made it clear, however, that he was not prepared to do this, in case this would lead to another challenge to the validity of the notices that were given on 4 December 2012. Mr Gale, when asked to clarify his position, said that he accepted that at least one of the appeals would have to proceed. He gave an express undertaking at the bar to the effect that his ground of challenge to the various notices issued by SCSWIS as agents for the Commission under the 2001 Act would not be insisted on. For the reasons already given (see para 39, above) they must fall in any event to be regarded as valid notices. Mr Mitchell accepted that, if the appeal against the 2012 decision were to be successful, SCSWIS could not continue to seek cancellation of the appellants registration based on shortcomings in the running of the nursery at least four years earlier. The question whether the 2008 and 2009 decisions should have effect is no longer of any practical importance. In my opinion, were SCSWIS to insist that this question be left to the sheriff, that would, in the events that have happened and in the light of this courts ruling as to the validity of the 2012 decision notice, be an abuse of process. It is well established in Scots law that the court can exercise its inherent jurisdiction in the case of an abuse of process by way of a procedural sanction such as dismissal without express parliamentary authority: Tonner v Reiach and Hall [2007] CSIH 48, 2008 SC 1, para 62, per Lord Abernethy; Moore v The Scottish Daily Record and Sunday Mail Ltd [2008] SCIH 66, 2009 SC 178, para 14, per Lord Justice Clerk Gill. Mr Mitchell, for understandable reasons, declined to commit his clients to a final decision as to whether or not they should insist on the decisions that the Commission took in 2008 and 2009. The time has come, however, for this court to intervene in order to minimise further delay and expense. In the very unusual circumstances of this case it is open to it to proceed on the basis that, if SCSWIS were to adhere to those decisions, that would be, in the light of the undertaking given to the court by Mr Gale, an abuse of process and, in the interests of appropriate case management, to take steps now to prevent such an abuse. The sheriff has power on an appeal under section 20(2) of the 2001 Act to confirm the decision that has been appealed against or direct that it shall not have effect. Those powers are available to this court on the disposal of this appeal: rule 29(1) of the Supreme Court Rules 2009 (SI 2009/1603). It would normally only be open to us to exercise those powers after considering the merits of the appeal. But where a procedural sanction is being imposed for an abuse of process a consideration of the merits is unnecessary. I would therefore direct that the decisions that were the subject of the Commissions notices of 18 August 2008 and 30 March 2009 shall not have effect. That would leave unaffected the appellants appeal, also taken in 2008, against the condition imposed in 2007, which was the subject of their third crave. That should also be dismissed. I would also direct, for the avoidance of doubt, that the effect of the order making that direction is that the appeal proceedings against those decisions have been finally determined. The decision that was the subject of the notice that was given on 4 December 2012 under section 17(3) of the 2001 Act was taken by SCSWIS, not by the Commission. It follows that article 2(1) of the No 2 Order, which refers to decisions by the Commission, will no longer apply. So I would also direct, again for the avoidance of doubt, that the nursery must now be treated for all purposes in terms of article 2(1) of the No 1 Order as if it had been registered under Part 5 of the 2010 Act: see article 3 of the No 2 Order. This means that the decision under section 17(3) of the 2001 Act of which notice was given by SCSWIS on 4 December 2012, which Mr Gale accepted was validly given, must be treated as if it had been given under section 73 of the 2010 Act, and that the appeal against that decision must now proceed under section 75 of that Act. There is no material difference between the relevant provisions of the 2001 Act and those of the 2010 Act. The appeal to the sheriff should proceed on this basis from now on. Conclusion aim should be to bring the appeal against the decision of which notice was given on 4 December 2012 to a conclusion as expeditiously as the administration of justice will allow (see MacPhail, Sheriff Court Practice (3rd edition, 2006), para 26.01). I would affirm that part of the interlocutors of 24 January 2012 by which the Inner House allowed the appeals against the Sheriff Principals interlocutors. Quoad ultra I would recall the Inner Houses interlocutors of 24 January 2012 and remit the case to the Inner House for any further orders that may be required. |
Section 82(1) of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) provides that where an immigration decision is made in respect of a person he may appeal to the Asylum and Immigration Tribunal, now the First Tier Tribunal (Immigration and Asylum) (the Tribunal). Section 82(2) and (3A) define the meaning of an immigration decision and include at section 82(2)(h): a decision that an illegal entrant is to be removed from the United Kingdom by way of directions under paragraphs 8 to 10 of Schedule 2 to the Immigration Act 1971 (c77) (control of entry: removal). We shall refer to the Immigration Act 1971 as the 1971 Act. The issue that arises on this appeal is whether it is possible to challenge by way of an appeal an immigration decision within the meaning of section 82(2)(h) on the ground that the country or territory of destination stated in the notice of the decision is not one that would satisfy the requirements of para 8(1)(c) of Schedule 2 to the 1971 Act should removal directions to that country or territory in fact be given. The facts The appellant was born in Gaza in 1985. In 1990, he left Gaza and went to Libya where he lived until about 2002. He then spent time first in Italy and then in France before arriving clandestinely in a lorry in the United Kingdom in April 2007. Some time after his arrival in the United Kingdom, he claimed asylum and humanitarian protection. On 25 April 2007, he was served with a notice of illegal entry and of his liability to be detained under para 16(2) of Schedule 2 to the 1971 Act pending a decision whether or not he was to be given removal directions and be removed in pursuance of such directions. By a letter dated 24 May 2007, the Secretary of State rejected the appellants asylum and human rights claims. The letter was accompanied by a Form IS151B entitled Decision to remove an illegal entrant/person subject to administrative removal under section 10 of the Immigration and Asylum Act 1999 [the 1999 Act]Asylum/Human Rights Claim refused. The notice said: a decision has now been taken to remove you from the United Kingdom. It gave details about the appellants right of appeal. Against the rubric REMOVAL DIRECTIONS appeared the following: If you do not appeal, or you appeal and the appeal is unsuccessful, you must leave the United Kingdom. If you do not leave voluntarily, directions will be given for your removal from the United Kingdom to Palestine National Authority. The appellant appealed. By a determination promulgated on 19 July 2007, Immigration Judge Lloyd dismissed his appeal on both the asylum and human rights issues that he had raised. She also dismissed his appeal in so far as it was based on the contention that the immigration decision made on 24 May was not in accordance with the law within the meaning of section 84(1)(e) of the 2002 Act. The argument advanced was that the decision was not in accordance with the law because removal directions could not lawfully be given to remove the appellant to the Palestinian Territories pursuant to Schedule 2 to the 1971 Act, since it was not a country or territory to which there was reason to believe that he would be admitted within the meaning of para 8(c)(iv) of Schedule 2 to the 1971 Act. The immigration judge accepted the evidence given on behalf of the appellant by Elizabeth Griffith, a case worker with the Refugee Legal Centre (as it then was). Her evidence was that she had been told by a Mr Sumara at the Palestine General Delegate Office that a Palestinian could not return to the Palestinian Territories without an ID card. An ID card was proof that the bearer was resident in either Gaza or West Bank. Once in possession of an ID card, a Palestinian could apply for a passport/travel document. She said that she explained the appellants circumstances to Mr Sumara. These were that upon leaving Gaza, the appellant had lost contact with his family and that to the best of his knowledge, he did not have a birth certificate and had no other Palestinian identity papers. Based on this information, Mr Sumara said that it was very unlikely that the appellant would be able to return to the Palestinian Territories. Mr Sumara later said that it would be impossible for the appellant to return in view of the fact that he had no birth certificate, no living parents and no ID. The appellant sought a reconsideration of the immigration judges determination by the Tribunal under section 103A of the 2002 Act. He did not challenge the immigration judges findings in relation to his appeal on asylum or human rights grounds. The sole basis for his challenge was that the immigration judge had materially erred in law in failing to accept his argument that the immigration decision was not in accordance with the law within the meaning of section 84(1)(e) of the 2002 Act. On 17 August 2007, Senior Immigration Judge Jordan made an order for reconsideration. On the reconsideration, the Tribunal (Mr Ockelton, Deputy President, Designated Immigration Judge OMalley and Immigration Judge Parkes) concluded that the immigration judge had not made any material error of law and ordered her decision to stand. The appellants appeal against this decision was dismissed by the Court of Appeal (Rix, Scott Baker and Jacob LJJ): [2009] EWCA Civ 17; [2009] Imm AR 3. The statutory framework Section 82(1) of the 2002 Act provides that where an immigration decision is made in respect of a person, he may appeal to the Tribunal. Section 82(2) defines immigration decision as meaning: (a) refusal of leave to enter the United Kingdom. (b) refusal of entry clearance, (c) refusal of a certificate of entitlement under section 10 of this Act, (d) refusal to vary a persons leave to enter or remain in the United Kingdom if the result of the refusal is that the person has no leave to enter or remain, (e) variation of a persons leave to enter or remain in the United Kingdom if when the variation takes effect the person has no leave to enter or remain, (f) revocation under section 76 of this Act of indefinite leave to enter or remain in the United Kingdom, (g) a decision that a person is to be removed from the United Kingdom by way of directions under section 10(1)(a), (b), (ba) or (c) of the Immigration and Asylum Act 1999 (c33) (removal of person unlawfully in United Kingdom), (h) a decision that an illegal entrant is to be removed from the United Kingdom by way of directions under paragraphs 8 to 10 of Schedule 2 to the Immigration Act 1971 (c77) (control of entry: removal), (ha) a decision that a person is to be removed from the United Kingdom by way of directions under section 47 of the Immigration, Asylum and Nationality Act 2006 (removal: persons with statutorily extended leave), (i) a decision that a person is to be removed from the United Kingdom by way of directions given by virtue of paragraph 10A of that Schedule (family), (ia) a decision that a person is to be removed from the United Kingdom by way of directions under paragraph 12(2) of Schedule 2 to the Immigration Act 1971 (c77) (seamen and aircrews), (ib) a decision to make an order under section 2A of that Act (deprivation of right of abode), (j) a decision to make a deportation order under section 5(1) of that Act, and (k) . Section 84(1) specifies the grounds on which an appeal under section 82(1) against an immigration decision must be brought. They include: (c) that the decision is unlawful under section 6 of the Human Rights Act 1998 (c42) (public authority not to act contrary to Human Rights Convention) as being incompatible with the appellants Convention rights; (e) that the decision is otherwise not in accordance with the law; . (g) that removal of the appellant from the United Kingdom in consequence of the immigration decision would breach the United Kingdoms obligations under the Refugee Convention or would be unlawful under section 6 of the Human Rights Act 1998 as being incompatible with the appellants Convention rights. Section 120 provides: (1) This section applies to a person if (a) he has made an application to enter or remain in the United Kingdom, or (b) an immigration decision within the meaning of section 82 has been taken or may be taken in respect of him. (2) The Secretary of State or an immigration officer may by notice in writing require the person to state (a) his reasons for wishing to enter or remain in the United Kingdom, (b) any grounds on which he should be permitted to enter or remain in the United Kingdom, and (c) any grounds on which he should not be removed from or required to leave the United Kingdom. Schedule 2 to the 1971 Act provides: 8. (1) Where a person arriving in the United Kingdom is refused leave to enter, an immigration officer may, subject to sub paragraph (2) below (a) give the captain of the ship or aircraft in which he arrives directions requiring the captain to remove him from the United Kingdom in that ship or aircraft; or (b) give the owners or agents of that ship or aircraft directions requiring them to remove him from the United Kingdom in any ship or aircraft specified or indicated in the directions, being a ship or aircraft of which they are the owners or agents; or (c) give those owners or agents directions requiring them to make arrangements for his removal from the United Kingdom in any ship or aircraft specified or indicated in the direction to a country or territory so specified being either (i) a country of which he is a national or citizen; or (ii) a country or territory in which he has obtained a passport or other document of identity; or (iii) a country or territory in which he embarked for the United Kingdom; or (iv) a country or territory to which there is reason to believe that he will be admitted. 9. (1) Where an illegal entrant is not given leave to enter or remain in the United Kingdom, an immigration officer may give any such directions in respect of him as in a case within paragraph 8 above are authorised by paragraph 8(1). (2) Any leave to enter the United Kingdom which is obtained by deception shall be disregarded for the purposes of this paragraph. 10. (1) Where it appears to the Secretary of State either that directions might be given in respect of a person under paragraph 8 or 9 above, but that it is not practicable for them to be given or that, if given, they would be ineffective; or (a) (b) that directions might have been given in respect of a person under paragraph 8 above but that the requirements of paragraph 8(2) have not been complied with; then the Secretary of State may give to the owners or agents of any ship or aircraft any such directions in respect of that person as are authorised by paragraph 8(1)(c). (2) Where the Secretary of State may give directions for a persons removal in accordance with sub paragraph (1) above, he may instead give directions for his removal in accordance with arrangements to be made by the Secretary of State to any country or territory to which he could be removed under sub paragraph (1). The 2002 Act was enacted on 7 November 2002 and the provisions relating to appeals came into force on 1 April 2003. The Immigration (Notices) Regulations 2003 (SI 2003/658) (the 2003 Regulations) were made on 11 March 2003 and came into force on 1 April 2003. The 2003 Regulations were made by the Secretary of State in exercise of the powers conferred on him by section 105 and 112(1) to (3) of the 2002 Act. They were subject to annulment in pursuance of a resolution by either House of Parliament. Regulation 4(1) provides that: Subject to regulation 6, the decision maker must give written notice to a person of any immigration decisiontaken in respect of him which is appealable. Regulation 2 provides that an immigration decision has the same meaning as in section 82(2) and (3A) of the 2002 Act. Regulation 5 provides: (1) A notice given under regulation 4(1) . (b) if it relates to an immigration decision specified in section 82(2)(a), (g), (h), (ha), (i), (ia) (j) or (3A) of the 2002 Act (i) shall state the country or territory to which it is proposed to remove the person; or (ii) may, if it appears to the decision maker that the person to whom the notice is to be given may be removable to more than one country or territory, state such countries or territories The relevant legislative background to the 2002 Act The 1971 Act did not create a general right to challenge removal directions, but limited that right to two circumstances. First, section 16 provided that, where removal directions were given for a persons removal (a) on the ground that he was an illegal entrant or had entered the United Kingdom in breach of a deportation order, or (b) under the special powers conferred by Schedule 2 to the 1971 Act in relation to members of the crew of a ship or aircraft coming to the United Kingdom to join a ship or aircraft as a member of the crew, he could appeal on the ground that on the facts of the case there was no power to give the directions on the ground on which they were given. Secondly, section 17 of the 1971 Act gave a right of appeal against removal directions on the basis that removal should be to a different country or territory from that specified by the Secretary of State. That right was only given where directions were given for a persons removal from the United Kingdom (a) on his being refused leave to enter; or (b) on a deportation order being made against him; or (c) on his having entered the United Kingdom in breach of a deportation order. This position did not change following the introduction of the Asylum and Immigration Act 1993 (the 1993 Act). Section 8(4) of the 1993 Act did, however, extend the right of illegal entrants to appeal against removal directions on the ground that removal would be contrary to the United Kingdoms obligations under the Refugee Convention. Section 10(1) of the 1999 Act provided: A person who is not a British citizen may be removed from the United Kingdom, in accordance with directions given by an immigration officer, if (a) having only a limited leave to enter or remain, he does not observe a condition attached to the leave or remains beyond the time limited by the leave; (b) he uses deception in seeking (whether successfully or not) leave to remain; or (ba) his indefinite leave to enter or remain has been revoked under section 76(3) of the Nationality Immigration and Asylum Act 2002 (person ceasing to be refugee); (c) directions have been given for the removal under this section of a person to whose family he belongs. The 1999 Act repealed Part 2 of the 1971 Act (which included sections 16 and 17), but the restricted right to challenge removal directions provided by the earlier statute was reproduced in sections 66 and 67 of the 1999 Act. The right of appeal on the ground that on the facts of the case there was no power in law to give removal directions on the ground on which they were given was extended to those who could be removed under section 10 of the 1999 Act. It was also held by the Court of Appeal in R (Kariharan & Another) v Secretary of State for the Home Department [2002] EWCA Civ 1102, [2003] QB 933 that there was a right of appeal against removal directions under section 65 of the 1999 Act on the ground that removal would be in breach of a persons rights under the European Convention on Human Rights (the ECHR). The appellants argument The following is a summary of the submissions of Mr Knafler QC. An immigration decision may be appealed by an illegal entrant on the ground that it is otherwise not in accordance with the law within the meaning of section 84(1)(e) when the notice of the decision states that he is to be removed to a country or territory to which he contends it is not lawful to give directions to remove him under the 1971 Act. The decision under section 82(2)(h) is not simply that an illegal entrant is to be removed. It is that he is to be removed by way of directions under paragraphs 8 to 10 of Schedule 2 to the Immigration Act 1971. Para 8(1)(c) limits the countries or territories to which removal is legally possible. Whether it is legal to remove an illegal entrant to a particular country or territory is manifestly relevant to the lawfulness of the decision to remove. The specifying or proposing of a particular country or territory in a notice of an immigration decision to remove an illegal entrant is an integral part of the decision. The Secretary of State has to do no more than show that the destination country or territory to which he proposes to remove an illegal entrant is one to which there is reason to believe that the illegal entrant will be admitted within a reasonable time of the making of the immigration decision. An appeal to the Tribunal is a more effective mechanism than judicial review for resolving disputes as to the lawfulness of removing persons to particular destinations. To require a challenge to the proposed destination country or territory to be by way of appeal against the immigration decision, rather than by judicial review of the removal directions when given is also more consistent with the one stop policy that is embodied in section 120 of the 2002 Act. It means that any challenge to the proposed destination stated in the notice of decision can be resolved by an appeal at the decision stage rather than by judicial review at the stage when the removal directions are actually given. Mr Knafler also says that his interpretation is supported by regulation 5(1)(b)(i) of the 2003 Regulations, which provides that the notice of an immigration decision : shall state the country or territory to which it is proposed to remove the person (emphasis added). Discussion Central to this appeal is the question whether the specifying or proposing of a particular country or territory in a notice of an immigration decision to remove an illegal entrant within the meaning of section 82(2)(h) of the 2002 Act is an integral part of the decision. If it is, then there is a right of appeal under section 84(1)(e) if it is not in accordance with the law to specify the country or territory that has been specified. We shall use the phrase destination country to denote the country or territory to which the notice proposes to remove the illegal entrant. The language of the 2002 Act There are a number of reasons why the language of section 82(2)(h), when read in its statutory context, does not support the argument that the proposing of a destination country is an integral part of an immigration decision. First, in section 84 a clear distinction is drawn between an immigration decision that a person is to be removed from the United Kingdom and removal pursuant to removal directions in consequence of an immigration decision. Section 84(1)(g) provides as a ground of appeal that removal of the appellant from the United Kingdom in consequence of the immigration decision would breach the Refugee Convention or be incompatible with the appellants ECHR rights. The use of the conditional would is to be contrasted with the use of the present tense is in sections 84(1)(a)(c) and (e). Thus Parliament has provided that in a case where it is alleged that removal in consequence of a decision to remove would involve a breach of the Refugee Convention or the ECHR, there is a right of appeal against the immigration decision itself. But that is the only case where Parliament has provided a right of appeal against a decision to remove by reference to the potential illegality of a consequent removal. This is a strong indication that the proposing of a destination country is not an integral part of an immigration decision under section 82(2)(h). Secondly, the decisions referred to in section 82 that a person is to be removed are all decisions that a person is to be removed from the United Kingdom. None refers to a destination. This indicates that a destination is not part of a decision. That is consistent with the fact that some removal directions are not required to propose a destination at all: see para 8(1)(a) and (b) of Schedule 2 to the 1971 Act. Thirdly, the words by way of directions under paragraphs 8 to 10 of Schedule 2 to the Immigration Act 1971 Act do not mean that the immigration decision itself must comply with the requirements of paras 8 to 10 of Schedule 2 to the 1971 Act. Section 82(2) describes one of five types of immigration decision that a person is to be removed from the United Kingdom. The same formula of by way of directions under is used in each case. In each case, the words by way of directions etc describe and identify the type of immigration decision that may be the subject of an appeal. The purpose is not to describe the content of lawful directions under the relevant statutory provision, since that is done by the statutory provision itself. Fourthly, a person who is not an illegal entrant, but is refused leave to enter, can be the subject of removal directions under para 8 of Schedule 2. But an immigration decision under section 82(2)(a) (refusal of leave to enter) is not required to say anything about removal, still less specify the destination country to which it is proposed to remove the person. It follows that a person who is refused leave to enter cannot appeal against the refusal of leave to enter on the ground that removal to the destination country proposed in the notice of decision would not be in accordance with para 8 of Schedule 2 to the 1971 Act. But if the proposing of a destination country is an integral part of an immigration decision under section 82(2)(h), it is difficult to see why Parliament did not provide that the proposing of a destination country should not also be an integral part of any decision from which removal directions will result. There is no rational basis for distinguishing between an immigration decision within the meaning of section 82(2)(h) and any other immigration decision from which removal directions will result. This indicates that Parliament is unlikely to have intended that the proposing of a destination country should be an integral part of any immigration decision. Fifthly, it is (rightly) common ground that there is no right of appeal against removal directions under the 2002 Act. The power to give removal directions is given by Schedule 2 to the 1971 Act. It includes the power to give detailed directions requiring arrangements to be made for the removal of a person in any ship or aircraft specified. Mr Knafler acknowledges that there is no right of appeal against directions of a technical nature in relation to the removal, such as the specifying of a particular ship or aircraft and other detailed mechanics of return or technical matters: see HH (Somalia) and others v Secretary of State for the Home Department [2010] EWCA Civ 426 at [82] to [84]. But he says that the specifying of a particular destination is of a different character from directions of a technical nature and that there is a right of appeal in respect of that. We shall deal with his argument based on the 2003 Regulations later. But it is impossible, as a matter of construction of section 82(2)(h), to make the distinction between the different removal directions that Mr Knafler seeks to make. Either section 82(2)(h) imports into the immigration decision all future removal directions or it imports none. There is no warrant in the language of section 82(2)(h) for saying that the only direction that is imported into the decision is that which specifies the country of destination. The legislative history When the legislative history is taken into account, it becomes even clearer that Parliament did not intend that any of the removal directions should be treated as an integral part of the immigration decision. When Parliament provided for a right of appeal against removal directions in previous legislation, it did so in express terms. The 1971 and 1999 Acts permitted an appeal against the directions. When the 1999 Act introduced a right to challenge prospective removal to a particular country, it did so in similarly clear terms: see section 67(2). The 2002 Act does not permit a challenge to removal directions on any grounds. And yet, if Mr Knafler is right, the effect of sections 82(2)(h) and 84(1)(e) is that an illegal entrant can challenge the lawfulness of future removal directions on grounds which could not have been the subject of challenge under any of the previous legislation. Under the pre 2002 legislation, those who were refused leave to enter, leave to remain or were the subject of a deportation order could challenge removal directions on the basis that removal should be a different country or territory from that specified by the Secretary of State, but no class of person could challenge removal directions on the ground that there were no grounds for believing that he or she would not be admitted to the destination country. The declared purpose of the 2002 Act in relation to removal directions was set out in the Explanatory Notes to the statute which at para 220 stated: . The position relating to removal directions has been clarified. It is the initial immigration decision which may result in removal which attracts the right of appeal, not any consequential giving of directions to the carrier or re giving of directions following an appeal or temporary suspension. In the light of this purpose, it would be remarkable if the effect of the 2002 Act were that a person could challenge future removal directions at all, let alone on grounds on which removal directions that had been given could not have been challenged under the previous legislation. Practical and policy considerations There are also practical and policy considerations which justify the conclusion that Parliament is unlikely to have intended a scheme such as that for which the appellant contends. These provide yet further support for the interpretation of section 82(2)(h) which, for the reasons already given, we would adopt. The controversial issues raised by immigration decisions are usually (i) whether the person is entitled to benefit from the immigration rules (eg whether he is an illegal entrant or entitled to leave to enter or leave to remain) and (ii) whether he is entitled to international protection under the Refugee Convention or the ECHR. These are suitable for determination at a one stop appeal as envisaged by section 120 of the 2002 Act. We acknowledge that, if there is a long period between the date of determination and the date when removal directions are given, there may be a change in circumstances which materially affects the decision on asylum and humanitarian issues. But in many cases a decision on these issues will be determinative of the question whether an immigration decision that a person is to be removed from the United Kingdom is lawful. On the other hand, the ability of the Secretary of State to give removal directions (whether under Schedule 2 to the 1971 Act or otherwise) will frequently depend on practical and operational issues which are only capable of being addressed shortly before the removal is to take place. These issues are inherently unsuitable for resolution at the time of an appeal, when the question of entitlement to international protection and/or whether there is a right to leave to enter or remain in the United Kingdom is being determined and at a time which may be long before the Secretary of State is in a position to give removal directions. As Sedley LJ stated in the Court of Appeal in R (MS, AR and FW) v Secretary of State for the Home Department [2009] EWCA Civ 1310 at [26]: It is also the case that the obstacles to return are commonly an amalgam of fact, governmental practice and policy, international law and local law, often in a form which is impossible to disentangle. Thus at the stage when no removal directions have yet been given, it may be difficult, if not impossible, for the Secretary of State or the Tribunal to determine when, if at all, it will be practicable to give them. We take account of the fact that, as Mr Knafler points out, the threshold set by para 8(1)(c)(iv) of Schedule 2 to the 1971 Act is no higher than that the destination country is one to which there is reason to believe that he will be admitted. But take the present case where the obstacles to the appellants removal are of a practical nature and concern the documentation necessary to secure his admission to the Palestinian Territories. It may be very difficult for the Secretary of State at the decision stage and the Tribunal at the appeal stage to decide whether, when the removal directions come to be given in the future, the Palestinian Territories will be a country or territory to which there is reason to believe that the appellant will be admitted. There is no reason to suppose that the Secretary of State will give directions for the removal of the appellant to the Palestinian Territories until he is satisfied that there is reason to believe that he will be admitted. The Secretary of State may need to engage in a detailed dialogue with the Palestine General Delegates Office about the appellants circumstances and possible methods of re documentation. The Tribunal would not be in a position to evaluate any of this at an appeal before removal directions have been given. In the unlikely event that removal directions are given which cannot be implemented and the Secretary of State stands by his directions despite the practical problems identified by the person to be removed, then judicial review is available. But that should rarely be necessary, because the practical issues of the type that are not susceptible to appeal under section 84 of the 2002 Act are unlikely to be controversial. On the other hand, the construction advanced on behalf of the appellant is inimical to the finality which the one stop procedure is intended to achieve. If Mr Knafler is right, in the case of a person who has successfully challenged prospective removal directions, the Secretary of State is required to make a fresh section 82(2)(h) decision before the removal can proceed. In this way, a further right of appeal may be generated, although it has already been finally determined that the person had no entitlement to remain in the United Kingdom at all, whether under this countrys international obligations or under the immigration rules. The 2003 Regulations Is a different conclusion as to the true interpretation of section 82(2)(h) compelled by regulation 5 of the 2003 Regulations? Mr Knafler submits that regulation 5 sheds light on the meaning of section 82(2)(h) of the 2002 Act. As Lord Lowry said in Hanlon v The Law Society [1981] AC 124, 193H 194C, there are circumstances in which regulations made under a statute and contemporaneously with it may confirm a certain interpretation of the statute or be a reliable guide to its meaning. But, as he also said, regulations do not decide or control its meaning, since that would be to substitute the rule making authority for the judges as interpreter and would disregard the possibility that the regulation relied on was misconceived or ultra vires. We doubt whether regulation 5 may be used as an aid to the true construction of section 82(2)(h). Although the 2003 Regulations and the relevant provisions of the 2002 Act came into force on the same day, the regulations were made on 11 March 2003, some months after the 2002 Act was enacted on 7 November 2002. As Lord Lowry said, regulations do not decide or control the meaning of the statute under which they are made, since the possibility that the regulations are ultra vires cannot be disregarded. For the reasons that we have given, we consider that the meaning of section 82(2)(h) is clear and unambiguous and there is no need to seek confirmation or light from the 2003 Regulations as an aid to construction, even if it is a legitimate exercise to do so. The explanation for the requirement in regulation 5(1)(b)(i) that the notice of decision should state the country or territory to which it is proposed to remove the person is that given by the Court of Appeal in this case and in the other decisions referred to at [28] of Rix LJs judgment. It is that the proposed country of destination is needed in order to provide a focus for the issues which might arise for the purpose of an applicants asylum and human rights claims. Indeed, it will usually be necessary for the immigration decision to identify the proposed destination country if the person is to be able to appeal under section 84(1)(c) or (g) at all. Appeals on the ground that to remove a person would breach his rights under the ECHR or the Refugee Convention usually involve a consideration of whether the conditions in a particular proposed destination country are such that his removal to that country would breach those rights. In the context of a proposed removal, an appeal on asylum or human rights grounds cannot be made in the abstract. The purpose of regulation 5, therefore, is to make the right of appeal given by section 84(1)(c) and (g) effective. We would add that we agree with the further point made by Rix LJ at [29] that: a proposed destination is not the same as a destination to which the Secretary has decided to remove the applicant, and may not even amount to a destination to which the Secretary of State intends to remove the applicant. Conclusion Our attention has been drawn to a number of previous decisions, including GH (Iraq) v Secretary of State for the Home Department [2005] EWCA Civ 1182, [2006] INLR 36; AK v Secretary of State for the Home Department [2006] EWCA Civ 1117, [2007] INLR 195; MA (Somalia) v Secretary of State for the Home Department [2009] EWCA Civ 4, [2009] Imm AR 413 and HH (Somalia) (already cited). We do not consider that anything that we have said in this judgment calls into question the decisions in these cases. For the reasons that we have given, we would dismiss this appeal. There is no right of appeal against an immigration decision under section 82(2)(h) on the ground that the country or territory stated in the notice of the decision is not one that would satisfy the requirements of para 8(1)(c) of Schedule 2 to the 1971 Act. |
When the court issued its previous judgment on this appeal ([2013] UKSC 15), it allowed the parties an opportunity to make written submissions as to the form of the order to be made. The Commissioners then made submissions inviting the court to make a further reference to the Court of Justice of the European Union under article 267 of the Treaty on the Functioning of the European Union. LMUK made submissions opposing such a reference and inviting the court to dismiss the appeal. Summarising matters developed at much greater length in the submissions, the Commissioners have put forward two principal arguments in favour of a further reference. First, they submit that a national court is obliged under EU law to make a further reference if it finds the ruling of the CJEU on the first reference to be incomplete or unsatisfactory. In support of that submission, they refer to the judgment in Wnsche Handelsgesellschaft GmbH & Co v Federal Republic of Germany (Case 69/85) [1986] ECR 947, in which the court said at para 15 that the authority of a preliminary ruling does not preclude the national court from properly taking the view that it is necessary to make a further reference before giving judgment. The court added that such a procedure may be justified when the national court encounters difficulties in understanding or applying the judgment, when it refers a fresh question of law to the court, or when it submits new considerations which might lead the court to give a different answer to a question submitted earlier. Secondly, the Commissioners submit that there must be an issue of EU law raised in the present appeal on which a decision is necessary, and which cannot be considered to be acte clair, given the difference of view on the court. In relation to the first point, LMUK point out correctly that the court did not in its earlier judgment question the European courts ruling on any question of EU law. On the contrary, the court recognised the binding character of the European courts judgment on questions as to the validity, meaning or effect of any EU instrument: see paras 56, 103 and 119. The court proceeded however on the basis of a more comprehensive consideration of the facts of the case than that set out in the reference to the European court: see for example paras 38, 40, 48 and 49. A different view of the facts from that on which the European court had based its ruling might of course necessitate a further reference in order to obtain further guidance, but it cannot be said that it would necessarily do so. On a different view of the facts, the difficulty which had led to the reference might no longer arise. That was the position in the present case, in the view of the majority of the court. They considered that, with the benefit of hindsight, there had in reality been no need for a reference in the first place: see paras 30, 87 and 118. They noted that the European court had itself considered that the case raised no new point of law: see paras 34, 55, 87 and 118. They considered the judgment of the European court in order to identify the principles which it had applied to the incomplete account of the facts which it had been requested to consider: see for example para 56. They then applied the principles established by the case law of the European court to the more comprehensive account of the facts which, in their judgment, this court required to consider: see paras 73 75 and 78 82. On that view of the case, there is no question of EU law which now requires to be elucidated, and therefore no need for a further reference. In relation to the second point, as I have explained the majority of the court considered that the case could be decided by applying well established principles to the particular facts. They also noted, as I have mentioned, that the European court had dealt with the reference on the basis that it raised no new point of law. That was also acknowledged by the minority of the court: para 129. Although the minority of the court questioned the approach adopted in the majority judgments to the application of EU law and to the judgment of the European court, those criticisms were not accepted by the majority, and they are not regarded by the court as now requiring or justifying a further reference. In so far as the minority raised issues of fairness under domestic law, they raise no issue of European law suitable for the European court. In the circumstances, including the European courts own assessment that the case raised no new point of EU law, the court does not consider that a further reference to the European court is necessary. It would be unfortunate if the position were otherwise, bearing in mind that this litigation has already lasted since 2003. Hilary Term [2013] UKSC 15 On appeal from: [2007] EWCA Civ 938 JUDGMENT Her Majesty's Revenue and Customs (Appellant) v Aimia Coalition Loyalty UK Limited (formerly known as Loyalty Management UK Limited) (Respondent) Lord Hope, Deputy President before Lord Walker Lord Wilson Lord Reed Lord Carnwath JUDGMENT GIVEN ON 13 March 2013 Heard on 24 and 25 October 2012 Appellant Philippa Whipple QC Suzanne Lambert (Instructed by VAT & Duties Litigation Team, Solicitor's Office, HM Revenue and Customs) Respondent David Milne QC Michael Conlon QC (Instructed by Hogan Lovells International LLP) LORD REED Introduction 1. This appeal concerns the well known Nectar scheme. Its essential elements as at the relevant time can be summarised as follows. A member of the scheme has an account with Aimia Coalition Loyalty UK Ltd, formerly called Loyalty Management UK Ltd (LMUK), the promoter of the scheme, and is issued with a Nectar card. When a member purchases goods or services from a retailer which has agreed with LMUK to participate in the scheme in relation to the issue of points, the retailer swipes the Nectar card and the members account with LMUK is electronically credited with a number of points. The member is then entitled to use the points to receive goods or services, either at no cost or at a reduced cost, from a retailer which has agreed with LMUK to participate in the scheme in relation to the redemption of points. When the member receives goods or services from that retailer, the retailer swipes the Nectar card and the members account with LMUK is electronically debited with the number of points which have been redeemed. 2. The scheme involves four parties: (1) the promoter of the scheme, LMUK; (2) the members of the scheme (collectors); (3) retailers of goods and services (sponsors), who pay for their customers, if they produce a Nectar card, to have points credited to their accounts with LMUK when they have purchased goods or services and their cards are swiped; and (4) other retailers of goods and services (redeemers), from whom collectors receive goods and services, at no cost or at a reduced cost, when their cards are swiped and points are debited to their accounts. 3. The scheme depends upon a network of contracts between LMUK and the three other parties. First, LMUK agrees with the collectors the terms upon which their accounts are operated, including an obligation on the part of LMUK that it will ensure that the collectors can obtain points when they purchase goods or services from sponsors, and that it will make goods and services available to the collectors at no cost, or at a reduced cost, when they redeem their points. LMUK provides the members with information about the identities of sponsors and redeemers, the particular goods and services which can be obtained using the points, and the number of points required in order to receive the goods or services in question. 4. Secondly, LMUK agrees with the sponsors that it will credit collectors accounts with the points for which the sponsor has agreed to pay and will secure that goods and services are made available to collectors on their redemption of the points. In return, the sponsors make payments to LMUK based on the number of points credited to collectors accounts, at an agreed value per point, together with an annual marketing fee. Each sponsor is granted by LMUK the exclusive right to participate in the Nectar scheme in a particular market sector. The contract entered into between LMUK and each sponsor provides that their agreement does not create a relationship of partnership or agency. 5. Thirdly, LMUK agrees with the redeemers that they will provide collectors with specified goods and services upon the redemption of the applicable number of points, and will in addition provide a number of other services to LMUK, in return for the payment of service charges by LMUK based on the number of points redeemed, at an agreed value per point. That value is lower than the value agreed with the sponsors. In relation to the other services which redeemers are required to supply, they must for example provide LMUK with information about problems affecting the quality or availability of goods and services, provide customer data and other information which LMUK requires for marketing purposes, grant permission for the use of their names and brands in marketing material, handle complaints by collectors and replace faulty goods. The commercial arrangements between LMUK and each of the redeemers are negotiated individually. The sponsors and collectors are not involved in these negotiations and are not normally in a position to know what arrangements have been made. In particular, since a sponsor or collector does not normally know the agreed redemption value of the points, it is not normally in a position to know the price paid by LMUK to a redeemer for the provision of particular goods and services: a price which will however be less than the amount which the sponsor paid LMUK for the issue of the points in question to the collector. 6. The three contracts involved in the scheme, described in the preceding paragraphs, are separate from, and should not be confused with, the contracts between the sponsors and the collectors, or the contracts between the collectors and the redeemers. In particular, the purchase of goods or services by a collector from a sponsor is a separate transaction, between different parties, from the crediting of points by LMUK to a collectors account, or the payment of LMUK by a sponsor in respect of those points. 7. As is apparent from this summary of the arrangements, which reflects the findings of fact made by the Value Added Tax and Duties Tribunal (the tribunal), to refer to points being issued, purchased and redeemed is to speak metaphorically. The points are a means of describing the collectors contractual rights to receive goods and services at no cost or at a reduced cost. The sponsors pay LMUK for the grant of those rights to collectors. LMUK uses part of its receipts from the sponsors to pay the redeemers to provide collectors with the goods and services in accordance with their rights. LMUK derives its profits from the difference between its receipts from the sponsors and its payments to the redeemers. In essence, therefore, when sponsors pay LMUK for the points issued to collectors, they are paying LMUK for granting the collectors the right to receive goods and services in exchange for their points. The redeemers provide the collectors with the goods and services to which their points entitle them, and LMUK pays the redeemers the redemption value of the points. It is thus by means of the redeemers performance of their contractual obligations to LMUK that LMUK fulfils the obligations which it has undertaken to the sponsors and collectors and so carries on its business. Since points are used by collectors to obtain goods or services, they may be regarded as a means of payment for those goods or services. The amount paid for the right to obtain the goods or services is the amount paid to LMUK by the sponsors for the issue of the points which the collector uses. The amount received by the redeemer, following the provision of the goods or services, is the lesser amount which it is paid by LMUK. It is common ground that the provision of points to collectors in return for payment by the sponsors is a taxable supply by LMUK. When LMUK charges VAT on the payments which it receives from the sponsors, it is therefore charging VAT on the amount which it receives as consideration for granting to collectors the right to receive goods and services in exchange for the points. The redeemers in turn charge VAT on the payments which they receive from LMUK. The VAT is charged at the standard rate, regardless of whether the goods and services provided to the collectors are zero rated or exempt, on the basis that it is charged in respect of a service supplied by the redeemers to LMUK. The facts of this case, as I have described them, are both complex and unusual. In particular, the business operated by LMUK differs in fundamental respects from sales promotion or customer loyalty schemes which are operated by retailers as part of their own business, and under which the issue of points or vouchers does not involve a taxable supply. That being so, LMUKs business cannot be assumed to fall within the scope of decided cases concerned with schemes of the latter kind. Rather than relying upon inexact analogies with other forms of business, it is essential to bear in mind the particular characteristics of the business carried on by LMUK when considering the issue raised in the present appeal. The issue in dispute is whether LMUK is entitled to deduct as input tax the VAT element of the payments which it makes to the redeemers. LMUK contends that the payments are the consideration for the redeemers supply to it of the services for which it has contracted with them. Since that supply is made to LMUK for the purpose of its business, it maintains that it is entitled to deduct the VAT as input tax in accordance with article 17 of Council Directive 77/388/EEC of 17 May 1977 (the Sixth Directive), as implemented by the Value Added Tax Act 1994. The Commissioners on the other hand decided in 2003 that the payments were third party consideration for the redeemers supply of goods and services to collectors, and that any VAT charged on such a supply was therefore not deductible by LMUK as input tax. LMUK appealed to the tribunal against that decision. The relevant legislation The relevant EU legislation is contained in Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (the First Directive), and the Sixth Directive, as amended by Council Directive 95/7/EC of 10 April 1995. These are translated into domestic law by the Value Added Tax Act 1994. It is sufficient to refer to the EU provisions. Article 2 of the First Directive describes the basic system of value added tax: The principle of the common system of value added tax involves the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, whatever the number of transactions which take place in the production and distribution process before the stage at which tax is charged. On each transaction, value added tax, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of value added tax borne directly by the various cost components. The common system of value added tax shall be applied up to and including the retail trade stage. Article 2 of the Sixth Directive provides: The following shall be subject to value added tax: (1) the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such . Articles 5 and 6 define supply of goods and supply of services respectively. The former means the transfer of the right to dispose of tangible property as owner. The latter means, generally, any transaction which does not constitute a supply of goods within the meaning of article 5. Article 11 defines the taxable amount. It provides, so far as relevant: (A) Within the territory of the country 1. The taxable amount shall be: (a) in respect of supplies of goods and services, everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies. Article 17(2) allows a taxable person the right, in so far as the goods and services are used for the purpose of his taxable transactions, the right to deduct VAT due or paid in respect of goods or services supplied or to be supplied to him by another taxable person. The decision of the tribunal The tribunal allowed LMUKs appeal against the Commissioners decision ([2005] BVC 2628). It considered that the transactions in question could only be understood in the context of the arrangements between LMUK, the sponsors, the redeemers and the collectors viewed as a whole. Assessing the commercial and economic reality of the case on that basis, the tribunal concluded that the proper analysis of the transaction under which a [redeemer] provides goods to a [collector] in return for points is that the [redeemer] is providing a service to [LMUK] in assisting it to discharge its obligation to [collectors] (para 60). The tribunal reached the same conclusion in relation to the provision of services to collectors. The tribunal further concluded that LMUKs payments to redeemers were consideration only for the supply of the service which it received from them. In that regard, the tribunal applied the principle, established by the case law of the Court of Justice of the European Union, that the concept of consideration requires a direct link between the goods or services provided and the consideration received. The tribunal considered that LMUK was provided by redeemers with a In the view of the tribunal, the only taxable supply for which LMUK provided consideration was therefore the supply of services to itself. Since that was a supply to a taxable person for the purpose of its business, it followed that the VAT element of the amounts for which the redeemers invoiced LMUK was deductible as input tax. The tribunal declined to make a preliminary reference to the Court of Justice, observing that the real issue in the appeal did not concern the interpretation of the relevant directives but rather concerned the correct analysis of the facts. The decision of the High Court The Commissioners appealed against the tribunals decision: it is relevant to recall that an appeal lies on a point of law only. The appeal was allowed by the High Court ([2007] STC 536). Lindsay J noted that, when goods were provided by a redeemer to a collector, that must be a supply of goods to the collector. That followed from the definition of a supply of goods in article 5(1) of the Sixth Directive (the transfer of the right to dispose of tangible property as owner) as interpreted by the Court of Justice, notably in Auto Lease Holland BV v Bundesamt fr Finanzen (Case C 185/01) [2003] ECR 1 1317; [2005] STC 598: a case to which it will be necessary to return. Since there were passages in the tribunals decision where it had said that goods should be regarded as being supplied to LMUK, it followed that the tribunal had in that respect erred in law. Lindsay J considered that this error was material to the tribunals decision. Lindsay J stated that whether a redeemers provision of goods or services to a collector was wholly for points or partly for points, what the redeemer received had to include what LMUK became obliged to pay him upon his having supplied the collector. On that basis the service charge paid by LMUK to the redeemer was third party consideration for that supply. It followed that the payments made by LMUK to the redeemers could not also be consideration for the supply of services to LMUK. Ultimately, Lindsay J stated that he preferred the argument of the Commissioners because it seems to me the more consistent with the requirements, illustrated in Auto Lease and the coupon cases, that one should stand back and look at the characteristics of the provision and payment in issue in a relatively robust and commonsensical way (para 78). In that regard, emphasis was placed upon the fact that the payments made by LMUK were related to the number of points redeemed, and upon the absence of any separately identifiable fee for the services provided to LMUK other than the provision of goods and services to collectors. The decision of the Court of Appeal LMUKs appeal against the decision of the High Court was allowed by the Court of Appeal ([2008] STC 59). Chadwick LJ, in a judgment with which the other members of the Court of Appeal agreed, regarded the decision of the House of Lords in Customs and Excise Commissioners v Redrow Group plc [1999] 1 WLR 408; [1999] STC 161 as authority for two propositions: first, that a supplier could be treated as making, in the same transaction, both a supply of services to one person and a supply of different services to another person; and secondly, that in addressing a claim for input tax by one of those persons, the relevant questions were (1) whether that person had made a payment to the supplier, (2) whether the payment was consideration for the services supplied to him, and (3) whether the services were used or to be used in the course of a business carried on by that person. Applying the approach adopted by Lord Millett in the case of Customs and Excise Commissioners v Plantiflor Ltd [2002] UKHL 33; [2002] 1 WLR 2287; [2002] STC 1132, to which it will be necessary to return, Chadwick LJ observed that it might be said that LMUK made a supply of services to the collectors: it granted them rights which they could exercise to obtain goods and services. When a collector received goods and services from a redeemer, the redeemer made two different supplies. One was the supply of the goods and services to the collector; the other was the supply to LMUK of the services of providing the rewards to the collector and providing the agreed information and other services to LMUK. In relation to the supply by the redeemer to LMUK, the answer to each of the three relevant questions identified in Redrow was an affirmative: (1) LMUK made a payment to the redeemer, (2) that payment was consideration for services supplied by the redeemer to LMUK, since LMUK received something of value in return for the payment, and (3) the services supplied by the redeemer to LMUK were used or to be used in the course of LMUK's business of operating the scheme. It followed that there was a supply of services by the redeemer to LMUK and that the supply was made for a consideration. If that was correct, it was not in dispute that LMUK was entitled to input tax credit in respect of the VAT paid on that supply. Chadwick LJ also observed that it was important to keep in mind the tribunals finding that the collectors right to receive goods and services was a right which he acquired when he was credited with points. The sponsor paid LMUK for the issue of the points, and thus for the grant of that right. LMUK accounted to the tax authorities for the output tax. The tax authorities therefore received VAT at that time on the supply of the right to receive goods and services in exchange for the points. If, when the collector exercised that right, the provision of the goods or services was treated as a taxable supply to him, the tax authorities would receive not only VAT on the amount paid for the right to obtain those goods and services but also VAT on the amount paid to satisfy that right. If, on the other hand, the provision of the goods and services to the collector formed part of a service supplied by the redeemer to LMUK, the tax authorities would still receive from LMUK the VAT chargeable on the amount paid for the collectors right to obtain those goods and services (and on any additional amount paid by the collector when it exercised that right) but account would also be taken of LMUKs entitlement to deduct as input tax the VAT element of the amount which it had to pay in order to satisfy that right. The Court of Appeal declined to make a reference to the Court of Justice. Chadwick LJ observed that the real issue in the appeal was not as to the interpretation of Community legislation, or as to the effect to be given to judgments of the Court of Justice, but as to how principles which were not in doubt should be applied to the particular facts. That was an issue which the Court of Justice would expect the national court to resolve. The preliminary reference The Commissioners appealed against the decision of the Court of Appeal to the House of Lords. It is that appeal which is now before this court. The House referred the following questions to the Court of Justice for a preliminary ruling: In circumstances where a taxable person (the promoter) is engaged in the business of running a multi participant customer loyalty rewards programme (the scheme), pursuant to which the promoter enters into various agreements as follows: (a) Agreements with various companies referred to as sponsors under which the sponsors issue points to customers of the sponsors (collectors) who purchase goods or services from the sponsors and the sponsors make payments to the promoter; (b) Agreements with the collectors which include provisions such that, when they purchase goods and/or services from the sponsors, they will receive points which they can redeem for goods and/or services; and (c) Agreements with various companies (known as redeemers) under which the redeemers agree, among other things, to provide goods and/or services to collectors at a price which is less than would otherwise be payable or for no cash payment when the collector redeems the points and in return the promoter pays a service charge which is calculated according to the number of points redeemed with that redeemer during the relevant period; 1. How are articles 14, 24 and 73 of the Council Directive 2006/112/EC of 28 November 2006 [the VAT Directive] (formerly Articles 5, 6 and 11(A)(1)(a) of Council Directive 77/388/EEC of 17 May 1977 [the Sixth Directive]) to be interpreted where payments are made by the promoter to the redeemers? 2. In particular, are those provisions to be interpreted such that the payments of the kind made by the promoter to redeemers are to be characterised as: (a) consideration solely for the supply of services by the redeemers to the promoter; or (b) consideration solely for the supply of goods and services by the redeemers to the collectors; or (c) consideration in part for the supply of services by the redeemers to the promoter and in part for the supply of goods and/or services by the redeemers to the collectors? 3. If the answer to question 2 is (c), so that the service charge is consideration for two supplies by the redeemers, one to the promoter and the other to the collectors, what are the criteria laid down by Community law to determine how a charge such as the service charge is to be apportioned between those two supplies? The House of Lords reasons for concluding that it was necessary that a preliminary reference should be made are not recorded. Although the case was not straightforward, the view of the tribunal and of the Court of Appeal, that the issue in the case was as to how established principles should be applied to the particular facts, was one for which there was in my view much to be said. More importantly, it is apparent from what followed that the reference did not make sufficiently clear to the Court of Justice what the central issues were, as they emerged from the judgment of the Court of Appeal: issues which had appeared to the highest court in this country to be of such difficulty that a reference was required. Nor did the reference direct the attention of the Court of Justice to the facts found by the tribunal which bore most directly upon those issues. In relation to the facts, for example, the statement that the sponsors issue points to customers was a very compressed, and potentially misleading, way of describing the arrangement under which the sponsors computer communicates electronically with LMUK when a collectors card is swiped, LMUK then credits the collectors account with the rights represented by points, and the sponsor pays LMUK for the grant of those rights. That compressed description gave no indication of how different the arrangement was from that involved in a typical loyalty rewards scheme, where a retailer issues points to its customers: on the contrary, it tended to suggest that the LMUK scheme was of a similar character. Nor was it explained that, unlike the position in a typical loyalty rewards scheme, where no identifiable consideration is given for the issuing of points (as, for example, in Kuwait Petroleum (GB) Ltd v Customs and Excise Commissioners (Case C 48/97) [1999] STC 488, the issuing of points by LMUK was accepted by both parties to be a taxable supply. Nor was it explained that LMUK therefore accounted for VAT on the consideration given for the supply to collectors of the right to receive rewards. In relation to the issues emerging from the judgment of the Court of Appeal, one such was what might be described as the Redrow issue: that is to say, whether, considering the transactions in question in the context of the scheme as a whole, the payments made by LMUK to the redeemers were most aptly regarded as the consideration paid for the supply of services to it by the redeemers, which it required for the purposes of its business: services which included the provision of goods and services to collectors. A second issue, closely related to the first, was whether the principle that VAT is neutral in its effect upon taxable persons required that LMUK, having accounted for VAT on its supply of the right to receive the goods and services provided by redeemers, should be able to deduct the VAT element of the costs which it incurred in order to satisfy that right. As a consequence of these aspects of the reference, a situation was created in which, instead of the dialogue between the Court of Justice and national courts which is the essence of the preliminary reference procedure, there was a danger that the ruling of the Court of Justice would fail to address the issues which lay at the heart of the appeal before the referring court. The Court of Justice joined the reference with another, in the case of Baxi Group Ltd v Commissioners for Her Majestys Revenue and Customs [2008] STC 491, which was concerned with a loyalty scheme of an entirely different character. It appears to have considered that both cases alike involved the straightforward application of established principles, since it determined them without a submission from the Advocate General. In terms of article 20, paragraph 5 of its Statute, it may do so only where it considers that the case raises no new point of law. The preliminary ruling In its judgment Commissioners for Her Majestys Revenue and Customs v Loyalty Management UK Ltd and Baxi Group Ltd (Joined Cases C 53/09 and C 55/09) [2010] STC 2651, the Court of Justice reformulated the questions so as to ask the following: whether, in the context of a customer loyalty reward scheme such as those at issue in the main proceedings: payments made by the operator of the scheme at issue to redeemers who supply loyalty rewards to customers must be considered, in Case C 53/09, as third party consideration for a supply of goods to those customers, and/or, as the case may be, for a supply of services made by those redeemers for the benefit of those customers, and/or as the consideration for a supply of services made by those redeemers for the benefit of the operator of that scheme. The court answered the question which it had formulated as follows: Payments made by the operator of the scheme concerned to redeemers who supply loyalty rewards to customers must be regarded, in Case C 53/09, as being the consideration, paid by a third party, for a supply of goods to those customers or, as the case may be, a supply of services to them. It is, however, for the referring court to determine whether those payments also include the consideration for a supply of services corresponding to a separate service. The judgment of the Court of Justice In its judgment, the court made a preliminary observation about the limited nature of the reference, and the fact that it did not touch on the relationship between LMUK and the sponsors: It must also be stated, in relation to Case C 53/09, that neither the questions referred by the national court nor the views exchanged before the Court of Justice touched on the relationship between the sponsors and the operator of the loyalty reward scheme, namely LMUK. Consequently, the court will confine its assessment to the questions as referred by the national court. (para 32) It is readily understandable that the Court of Justice should have made that preliminary observation. The case law of the court, including its judgment in the present case, indicates that, when determining the relevant supply in which a taxable person engages, regard must be had to all the circumstances in which the transaction or combination of transactions takes place. In the present case, in particular, it would be impossible to answer the questions on a proper footing without considering as a whole the relationships between LMUK, the sponsors, the collectors and the redeemers. The Court of Justice was not however in a position to consider the matter in that way. This preliminary observation also implied that the assessment by the Court of Justice would leave out of account matters which had been regarded as being of importance in the national proceedings. In particular, the tribunal and the Court of Appeal had, as I have explained, attached significance to the undisputed fact that LMUK made taxable supplies when it granted to collectors, in return for payment by the sponsors, the right to receive goods and services from redeemers. The Court of Justice then carried out an evaluation of the facts of the case on that limited basis. It stated that it was evident from the orders for reference that the loyalty rewards schemes at issue in both the present case and the Baxi case were designed to encourage customers to make their purchases from particular traders. To that end, the court said, LMUK, in the present case, and Baxis sub contractor, @1, in the Baxi case, provide a number of services linked to the operation of those schemes (para 41). The court appears therefore to have inferred from the reference that the present case, like the Baxi case, concerned a scheme operated by traders with the assistance of a third party. That approach does not however fully reflect the facts found by the tribunal, by which this court is bound. LMUK did not provide a number of services linked to the operation of the scheme: it operated the scheme. The scheme was established by LMUK. It was designed to earn profits for LMUK, and to provide benefits to its millions of members (according to the evidence, 40% of UK households), as well as to the retailers who took part. The court did not mention that the services provided by LMUK included the supply of the right to receive the rewards. Nor did it mention that the payments made by LMUK to redeemers for the provision of the rewards were met out of the consideration which it received from sponsors for the supply of the right to receive the rewards. As I have explained, these matters had not been focused in the reference. They had however played an important part in the reasoning of the Court of Appeal. On the basis of its assessment of the economic reality, the Court of Justice concluded, in the first place, that loyalty rewards were supplied by the redeemers to the collectors. That much was not in dispute between the parties, and had been understood by the Court of Appeal. The court then considered whether the transactions between the collectors and the redeemers constituted supplies of goods or services to the collectors within the meaning of the Sixth Directive. In a case where the transaction involved the provision of goods, the court held that that must constitute a supply of goods within the meaning of article 5(1) of the Sixth Directive, since there was a transfer by the redeemer to the collector of the right to dispose of tangible property as owner. In a case where the transaction did not constitute a supply of goods, it held that it must constitute a supply of services within the meaning of article 6(1) of the Sixth Directive, since the transaction did not constitute a supply of goods, and article 6(1) defines the expression supply of services as meaning any transaction which does not constitute a supply of goods. These matters also were not in dispute and had been understood by the national courts. The court next considered whether the supply of goods or services by the redeemer to the collector was a taxable supply. As I have explained, that depended upon whether the supply was effected for consideration. The court noted that it followed from its case law that, in order for that requirement to be satisfied, there must be a direct link between the goods or service provided and the consideration received. These matters had been understood by the national courts. The court then addressed the possibility that collectors might have provided consideration for the supply of the rewards when they purchased goods and services from sponsors. It noted that the price which customers paid to the sponsors was the same whether the customers were collectors or not. The court referred to its earlier judgment in Kuwait Petroleum (GB) Ltd v Customs and Excise Commissioners (Case C 48/97) [1999] STC 488. That case had concerned a loyalty rewards scheme operated by a petrol retailer, under which customers received points which they could exchange for goods. Since the customers paid the same price for their petrol regardless of whether they took the points or not, the court held that the price could not be regarded as containing an element representing the value of the points or of the goods for which they were exchanged. The sale of the petrol which gave rise to the award of points, on the one hand, and the supply of goods in exchange for the points, on the other hand, were therefore two separate transactions. In the view of the court, it followed that, in the case at hand, the sale of goods and services giving rise to the award of points, on the one hand, and the supply of goods and services in return for points, on the other hand, were also two separate transactions. So far as it went, that conclusion was uncontentious. What is however significant is that the court did not address the possibility that the sponsors might have provided consideration for the supply of the rewards when they paid LMUK for the points issued to collectors, as the Court of Appeals judgment had suggested. The court again left out of account the fact (1) that the award of points was a taxable supply by LMUK, separate from the supply of goods or services by the sponsor, (2) that, as a consequence of LMUKs having made that supply, the collectors were entitled to receive goods and services at no cost or at a reduced cost, and LMUK had to make goods and services available to them on that basis, and (3) that it paid redeemers to provide those goods and services on that basis. These features had not been present in the Kuwait case. The court continued at para 57: In that regard, it is evident from the order for reference in Case C 53/09 that the exchange of points by the customers with the redeemers gives rise to the making of a payment by LMUK to those redeemers. The amount of that payment is the sum total of the charges, which are of a fixed amount for each point redeemed against all or part of the price of the loyalty reward. In that context, it must be considered that, as maintained by the United Kingdom Government, that payment corresponds to the consideration for the supply of the loyalty rewards. On the basis of the approach to the facts which the court had adopted, its conclusion is unsurprising. As I have explained, however, the terms of the reference resulted in the courts approaching the facts on a different basis from that which the referring court was bound to adopt. It left out of account a number of matters found by the tribunal and relied upon by LMUK before the national courts, including (1) the fact that sponsors pay LMUK for the grant to collectors of the right to receive goods and services, (2) the fact that LMUK meets the cost of the provision of goods and services to collectors out of those payments, (3) the fact that LMUK has, in return for those payments, granted collectors the right to receive goods and services without further payment or at a reduced cost, (4) the fact that collectors obtaining goods and services from redeemers are therefore exercising a right which has already been paid for, (5) the fact that the provision of goods and services by the redeemers is the means by which LMUK discharges its obligations to sponsors and collectors and (6) the fact that the payments made by LMUK to redeemers are therefore an essential cost of its business. More generally, as I have explained, the court does not appear to have assessed the transactions in question in the context of the arrangements considered as a whole, or determined on that basis what they amounted to in terms of economic reality. Nor is it apparent that the court took into account, in reaching its conclusion, the fact that (1) LMUK was agreed to make a taxable supply when it granted to collectors the right to receive goods and services at no cost or at a reduced cost, and (2) collectors receiving goods and services on that basis were therefore exercising a right for which LMUK had already been paid, and the consideration for which had already been subject to VAT. The court is not of course to be criticised for failing to take these matters into account. As I have explained, they were not focused in the reference, and the court understandably confined its assessment to the matters raised in the questions referred. The question whether there was also a supply of services to the promoter of the scheme was considered by the court principally in relation to the scheme with which the Baxi case was concerned. That scheme was of a different character from the Nectar scheme. It was an in house scheme under which Baxi issued points to its own customers, which they could redeem in order to obtain rewards in the form of goods. The operation of the scheme had been subcontracted to an operator, @1, which purchased the rewards and supplied them to customers in return for points. Baxi paid @1 the retail sale price of the rewards. The court held that there was a supply of goods by @1 to the customers. It was against that background that the court considered Baxis contention that (in the courts words) the consideration for the payment did not correspond to a supply of goods, but to a complex service under which the supply of rewards to customers was one of a number of services. On the facts of the case, the court concluded that the payments made by Baxi could be divided into two elements, each of which corresponded to a separate service: the supply of the rewards to the customers on the one hand, and the service supplied by @1 to Baxi on the other. In relation to the present case, the court stated at para 64: By contrast, in Case C 53/09, LMUK has, in both its written and oral observations, asserted that the payments which it makes to the redeemers are not the consideration for two or more separate services. It is, however, for the referring court to determine whether that is the case. The issues now arising The first issue which now arises is how this court should apply the ruling of the Court of Justice. Article 267 TFEU confers on the Court of Justice jurisdiction to give preliminary rulings concerning (a) the interpretation of the Treaties and (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union. In the present case, it is the courts jurisdiction to rule on the interpretation of the VAT directives which is relevant. On the other hand, putting the matter very broadly, the evaluation of the facts of the case, and the application of EU law to those facts, are in general functions of the national courts. The relevant principles were summarised more precisely by the Court of Justice in AC ATEL Electronics Vertriebs GmbH v Hauptzollamt Mnchen Mitte (Case C 30/93) [1994] ECR I 2305, paras 16 18: 16. On that point, it should be borne in mind that Article [267] of the Treaty is based on a clear separation of functions between the national courts and the Court of Justice, so that, when ruling on the interpretation or validity of Community provisions, the latter is empowered to do so only on the basis of the facts which the national court puts before it (see the judgment in Case 104/77 Oehlschlger v Hauptzollamt Emmerich [1978] ECR 791, point 4). It is not for the Court of Justice, but for the national court, to 17. ascertain the facts which have given rise to the dispute and to establish the consequences which they have for the judgment which it is required to deliver (see the judgment in Case 17/81 Pabst & Richarz v Hauptzollamt Oldenburg [1982] ECR 1331, paragraph 12). 18. It is, moreover, solely for the national court before which the dispute has been brought, and which must assume the responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of each case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the question which it submits to the court (see the judgments in Case 247/86 Alsatel v Novasam [1988] ECR 5987, paragraph 8, and in Case C 127/92 Enderby v Frenchay Health Authority and Secretary of State for Health [1993] ECR I 5535, paragraph 10). As I have explained, the Court of Justice recognised that the reference in the present case raised no new point of law. The court however endeavoured to clarify how established principles applied in the circumstances of the case, so far as they emerged from the reference. It is particularly unfortunate in those circumstances that, as I have explained, the reference failed to reflect fully either the facts on the basis of which this court must proceed or the issues at the heart of the dispute, with the consequence that the Court of Justice did not fully address those facts or those issues. The Court of Justices analysis of the legal issues focused in the reference, on the basis of the facts as it understood them, is not open to question. This court is required by section 3(1) of the European Communities Act 1972 (as amended by section 3 of and the Schedule to the European Union (Amendment) Act 2008) to determine any question as to the validity, meaning or effect of any EU instrument in accordance with any relevant decision of the European Court. Nevertheless, this courts responsibility for the decision of the present case on the basis of all the relevant factual circumstances, and all the arguments presented, requires it to take into account all the facts found by the tribunal, including those elements left out of account by the Court of Justice, and to consider all those arguments, including those which were not reflected in the questions referred. That responsibility under domestic law is also recognised in EU law, as the Court of Justice explained at paragraphs 17 and 18 of its AC ATEL judgment. In the exceptional circumstances of this case, this court cannot therefore treat the ruling of the Court of Justice as dispositive of its decision, in so far as it was based upon an incomplete evaluation of the facts found by the tribunal or addressed questions which failed fully to reflect those arguments. This court must nevertheless reach its decision in the light of such guidance as to the law as can be derived from the judgment of the Court of Justice. In that regard, important aspects of the judgment include the statement that consideration of economic realities is a fundamental criterion for the application of the common system of VAT (para 39), and the statement that, where a transaction comprises a bundle of features and acts, regard must be had to all the circumstances in which the transaction in question takes place (para 60). Before turning to consider the present case on that basis, it is necessary to say something about the principal authorities which are relied upon by the parties in support of their contentions. The Redrow line of authority LMUK seeks support for its contentions from the approach adopted by the House of Lords in Customs and Excise Commissioners v Redrow Group plc [1999] 1 WLR 408; [1999] STC 161. That case concerned a sales incentive scheme under which Redrow, a firm of housebuilders, promoted the sale of its houses to prospective customers by arranging for estate agents to value and market the customers existing homes. This was done on the basis that the cost would be borne by Redrow, provided the customer bought a Redrow house. The House concluded that there was a supply of services by the estate agents to the customers, and simultaneously a supply of services by the estate agents to Redrow. Since the latter supply was received by Redrow for the purposes of its business, it followed that Redrow was entitled to deduct the VAT which it had paid as input tax. The critical reasoning appears in the speeches of Lord Hope of Craighead and Lord Millett, with which the other members of the Committee agreed. Lord Hope said at pp 412 413: Questions such as who benefits from the service or who is the consumer of it are not helpful. The answers are likely to differ according to the interest which various people may have in the transaction. The matter has to be looked at from the standpoint of the person who is claiming the deduction by way of input tax. Was something being done for him for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration which has attracted value added tax? The fact that someone else in this case, the prospective purchaser also received a service as part of the same transaction does not deprive the person who instructed the service and who has had to pay for it of the benefit of the deduction. Lord Milletts reasoning was similar, at p 418: The fact is that the nature of the services and the identity of the person to whom they are supplied cannot be determined independently of each other, for each defines the other. Where, then, should one begin? One should start with the taxpayer's claim to deduct tax. He must identify the payment of which the tax to be deducted formed part; if the goods or services are to be paid for by someone else he has no claim to deduction. Once the taxpayer has identified the payment the question to be asked is: did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment? This will normally consist of the supply of goods or services to the taxpayer. But it may equally well consist of the right to have goods delivered or services rendered to a third party. The grant of such a right is itself a supply of services. Applying this reasoning to the present case, LMUK argues that it is in a similar situation to Redrow. LMUK pays the redeemers and obtains services in return, including the provision of goods and services to the collectors in fulfilment of its contractual obligations towards them, which it uses for the purposes of its business. Following the approach adopted in Redrow, it is therefore entitled to deduct input tax. LMUK seeks to draw further support from the decision of the House of Lords in Customs and Excise Commissioners v Plantiflor Ltd [2002] UKHL 33; [2002] 1 WLR 2287; [2002] STC 1132. Plantiflor sold horticultural goods by mail order, and contracted with its customers to arrange for the delivery of the goods by Parcelforce and to meet the cost of that delivery, in return for the payment by its customers of a charge for postage. It contracted with Parcelforce for the delivery of the goods in return for payment of the postage charge. Plantiflor argued that it was not accountable for output tax on the postage charges paid by its customers, since it received those payments merely as the agent of its customers rather than as consideration for any service provided by itself: it maintained that the charges were the consideration for a service supplied to the customers by Parcelforce. The majority of the House however rejected that analysis, holding that Plantiflor was acting as a principal and received consideration from its customers for providing them with the service of arranging the delivery of the plants. Parcelforce made two supplies: it supplied to the customers the service of delivering the plants they had ordered, and it supplied to Plantiflor the service of delivering the goods which it had sold. These authorities were followed by the Court of Appeal in WHA Ltd v Customs and Excise Commissioners [2004] STC 1081. WHA was an insurance claims handler which acted on behalf of motor breakdown insurers. It entered into agreements with garages under which it authorised and paid for repairs to policyholders cars. The issue was whether it could deduct the VAT element of the repair bills as input tax. The Court of Appeal held that it could. It received a service from the garages, namely the carrying out of the repairs, and it did so for the purposes of its business, since it was discharging its obligations to the insurers. Although there were other beneficiaries of the repairs, namely the car owners, that did not prevent the repairs being a supply of services to WHA. That decision is currently under appeal to this court. The Commissioners contend that the decision of the Court of Justice in the present case is incompatible with that line of authority, and in particular with both the reasoning and the conclusion reached in Redrow, which should therefore not be followed. I cannot however find anything in the courts judgment which directly engaged with the issues considered in those cases. That indeed is part of the problem with which this court is faced, since the decision of the Court of Appeal in this case was based upon the application of the principles established in Redrow. I see no reason to question the correctness of the conclusions reached on the facts of Redrow and Plantiflor (it would not be appropriate to express any view in relation to WHA, since it is under appeal). Nor do I question the reasoning. On the contrary, the passages which I have cited from the speeches of Lord Hope and Lord Millett appear to me to provide valuable guidance. I would at the same time stress that the speeches in Redrow should not be interpreted in a manner which would conflict with the principle, stated by the Court of Justice in the present case, that consideration of economic realities is a fundamental criterion for the application of VAT. Previous House of Lords authority had emphasised the importance of recognising the substance and reality of the matter (Customs and Excise Commissioners v Professional Footballers Association (Enterprises) Ltd [1993] 1 WLR 153, 157; [1993] STC 86, 90), and the judgments in Redrow cannot have been intended to suggest otherwise. On the contrary, the emphasis placed upon the fact that the estate agents were instructed and paid by Redrow, and had no authority to go beyond Redrows instructions, and upon the fact that the object of the scheme was to promote Redrows sales, indicates that the House had the economic reality of the scheme clearly in mind. When, therefore, Lord Hope posed the question, Was something being done for him for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration ?, and Lord Millett asked, Did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment?, those questions should be understood as being concerned with a realistic appreciation of the transactions in question. Reflecting the point just made, it is also necessary to bear in mind that consideration paid in respect of the provision of a supply of goods or services to a third party may sometimes constitute third party consideration for that supply, either in whole or in part. The speeches in Redrow should not be understood as excluding that possibility. Economic reality being what it is, commercial businesses do not usually pay suppliers unless they themselves are the recipient of the supply for which they are paying (even if it may involve the provision of goods or services to a third party), but that possibility cannot be excluded a priori. A business may, for example, meet the cost of a supply of which it cannot realistically be regarded as the recipient in order to discharge an obligation owed to the recipient or to a third party. In such a situation, the correct analysis is likely to be that the payment constitutes third party consideration for the supply. It is also important to bear in mind that decisions about the application of the VAT system are highly dependent upon the factual situations involved. A small modification of the facts can render the legal solution in one case inapplicable to another. I would therefore hesitate to treat the judgments in Redrow as laying down a universal rule which will necessarily determine the identity of the recipient of the supply in all cases. Given the diversity of commercial operations, it may not be possible to give exhaustive guidance on how to approach the problem correctly in all cases. Auto Lease Holland The Commissioners on the other hand rely upon the decision of the Court of Justice in Auto Lease Holland BV v Bundesamt fr Finanzen (Case C 185/01) [2003] ECR 1 1317; [2005] STC 598. That case was concerned with fuel management agreements between Auto Lease, a vehicle leasing company, and its lessees, under which a lessee could fill up his vehicle in the name and at the expense of Auto Lease, using a credit card issued by a credit card company, DKV. The lessee paid a monthly sum to Auto Lease based on his likely consumption of fuel, with a balancing sum being paid at the end of the year. Auto Lease contended that it was entitled to deduct the VAT paid on the fuel as input tax, on the basis that it was the recipient of the supply of the fuel. The Court of Justice rejected the contention. It noted in the first place that the expression "supply of goods" was defined by article 5(1) of the Sixth Directive as meaning the transfer of the right to dispose of tangible property as owner. The court continued: 34. It is common ground that the lessee is empowered to dispose of the fuel as if he were the owner of that property. He obtains the fuel directly at filling stations and Auto Lease does not at any time have the right to decide in what way the fuel must be used or to what end. 35. The argument to the effect that the fuel is supplied to Auto Lease, since the lessee purchases the fuel in the name and at the expense of that company, which advances the cost of that property, cannot be accepted. As the Commission rightly contends, the supplies were effected at Auto Lease's expense only ostensibly. The monthly payments made to Auto Lease constitute only an advance. The actual consumption, established at the end of the year, is the financial responsibility of the lessee who, consequently, wholly bears the costs of the supply of fuel. 36. Accordingly, the fuel management agreement is not a contract for the supply of fuel, but rather a contract to finance its purchase. This decision does not appear to me to assist the Commissioners in the present case. Although the Court of Justice referred to it in its judgment, it did so in the context of identifying the recipient of a supply of goods in a situation where redemption goods are provided by a redeemer to a collector. As the court held, the recipient of that supply is the collector. That conclusion is not in dispute in this appeal: indeed, it was not in dispute before the Court of Justice. The present case The only issue which this court has to determine is whether LMUK is entitled to deduct as input tax the VAT element of the payments which it makes to the redeemers. As the Court of Justice has explained many times, VAT is chargeable on each transaction in the production and distribution process only after deduction of the amount of VAT borne directly by the costs of the various price components. The court has consistently stressed that the deduction system is meant to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities, and that the VAT system consequently ensures complete neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are subject in principle to VAT (see for example the statement of the Grand Chamber to that effect in Halifax plc & Others v Customs and Excise Commissioners (Case C 255/02) [2006] Ch 387 para 78). The right to deduct VAT, as an integral part of the VAT scheme, has been described by the court as a fundamental principle underlying the common system of VAT, which in principle may not be limited (see, for a recent statement to that effect, Commissioners for Her Majestys Revenue and Customs v RBS Deutschland Holdings GmbH (Case C 277/09) [2010] ECR I 13805, paras 38 39). The consequence of the deduction of input VAT is that the tax is charged, at each stage in the production and distribution process, only on the added value and is ultimately borne only by the final consumer (see, for a recent statement to that effect, Lebara Ltd v Revenue and Customs Commissioners (Case C 520/10) [2012] STC 1536, paras 24 25). In the present case, the Court of Justice focused upon the relationship between redeemers and collectors. Since collectors are usually final consumers of the goods and services provided by redeemers, the principle described in paragraph 75 would suggest, at first sight, that final taxation should take place at the stage of that supply. Since no monetary consideration is paid by the collector in so far as the goods or services are exchanged for points, but a payment is subsequently made by LMUK which is based on the value of the points as agreed with the redeemer, it would be possible, if these aspects of the present case were considered in isolation, to conclude that that payment should be regarded as third party consideration for that supply, and taxed accordingly. As I have explained, however, there is another dimension to the case, which the Court of Justice was not requested to consider, and which it therefore left out of account. The appeal before this court is concerned with the claim of LMUK, a taxable person, to deduct input tax. LMUKs business is of an unusual character. Through the Nectar scheme, it provides collectors with a contractual right to obtain goods and services from redeemers in exchange for points. It is common ground before this court that that is a taxable supply, and that the taxable amount is the whole of the consideration which is received by LMUK. The counterpart of the right supplied to collectors is an obligation on the part of LMUK to procure that redeemers provide goods and services in exchange for points. The payments made to redeemers constitute the cost of fulfilling that obligation, and are therefore a cost of LMUKs business. Applying the principles summarised in paragraphs 73 and 74 above, VAT should be chargeable on LMUKs taxable supplies only after deduction of the VAT borne by LMUKs necessary costs. The most obvious of those costs, as I have explained, is the cost of securing that goods and services are provided to collectors in exchange for their points: that is to say, the payments made by LMUK to the redeemers. The principles summarised in paragraphs 73 and 74 therefore indicate that LMUK should be authorised to deduct from the VAT for which it is accountable the VAT charged by the redeemers, so that it accounts for VAT only on the added value for which it is responsible. Only in that way will VAT be completely neutral as regards LMUK. It is implicit in that approach that the transaction between a redeemer and LMUK involves a taxable supply by the former to the latter. That analysis appears to me to be consistent with economic reality. LMUK carries on a genuine business for its own benefit. It issues the points in its own name and on its own behalf: it is not a mere cipher for the sponsors. As a matter of economic reality, the payments which it makes to redeemers are an essential cost of its business. Its business model is to sell the right to receive goods and services, pay redeemers to provide the goods and services, and derive a profit from the difference between its income from the sponsors and its expenditure on the redeemers. There is a legal relationship between the redeemer and LMUK pursuant to which there is reciprocal performance. In accepting points, which have no inherent value, in exchange for goods or services, the redeemer is acting in a manner which is only explicable because of its agreement with LMUK, under which LMUK will pay it for doing so. LMUK pays it for doing so because its business is dependent on redeemers accepting points in exchange for the provision of goods and services. The only economically realistic explanation of LMUKs behaviour is the value to LMUK itself of the redeemers acceptance of points in exchange for the provision of goods and services. In these circumstances, it can in my view be said that the remuneration received by the redeemer represents the value to LMUK of the service which the redeemer provides (cf Tolsma v Inspecteur der Omzetbelasting Leeuwarden (Case C 16/93) [1994] STC 509, para 14; First National Bank of Chicago v Customs and Excise Commissioners (Case C 172/96) [1999] QB 570; [1998] STC 850, paras 26 to 29). The approach described in the foregoing paragraphs is consistent with the fundamental principle, as the Court of Justice has described it, that a taxable person is entitled to deduct the VAT payable in the course of his economic activities. The alternative approach described in paragraph 76 is not. This approach is also consistent with the application of the guidance given in Redrow. If one asks whether, when the redeemer accepts points in exchange for the provision of goods or services to a collector, something is being done for LMUK for which, in the course or furtherance of its business, it has to pay a consideration, the answer seems to me to be in the affirmative, for the reasons given in paragraph 80. If one asks, what about taxation of the supply to the final consumer, the answer is that the Commissioners have decided to treat the issue of the points to the collectors that is to say, the award of the right to obtain goods and services from redeemers as a taxable supply. The taxable amount is agreed to be the whole of the consideration received by LMUK for the grant of those rights: an amount which exceeds the value received by the redeemers from LMUK when the rights are exercised. No question arises in this appeal as to whether that tax treatment is correct. Because of the principle of tax neutrality, however, that tax treatment has implications for the question in issue. As the Court of Appeal pointed out, if the provision of goods or services by redeemers were treated as a taxable supply to the collector (other than to the extent to which any monetary consideration might be paid by the collector), the tax authorities would receive not only VAT on the amount received by LMUK for supplying the right to receive those goods and services, but also VAT on the amount which LMUK must pay to satisfy that right. If, on the other hand, the consideration paid by LMUK to the redeemers is regarded as the consideration for the supply of a service to LMUK (a service which encompasses the provision of goods and services to collectors), the tax authorities will still receive VAT from LMUK on the difference between the value of the supplies which it makes in the course of its business (ie its receipts from the supply of the right to receive such goods and services) and the value of the supplies which it receives for the purposes of that business (ie the cost to LMUK of satisfying that right). The tax authorities will thus recover VAT on the value added by the taxable transactions entered into by LMUK, taking the issue and redemption of points as a whole. That conclusion is in accordance with the basic principle of VAT. Conclusion For these reasons, I would be inclined to uphold the decision of the Court of Appeal and dismiss the appeal. The parties should however be afforded an opportunity to make written submissions on the form of order to be made. LORD HOPE I think that it was a pity that a preliminary ruling was sought in this case. I agree with Chadwick LJs observation in the Court of Appeal that the real issue is not one as to the interpretation of Community legislation or as to the effect to be given to judgments of the Court of Justice, but rather as to how principles that are not themselves in doubt should be applied to particular facts: Loyalty Management UK Limited v Commissioners for HM Revenue and Customs [2007] EWCA Civ 938, [2008] STC 59, para 66. The CJEU seems to have taken a similar view. It did not seek an opinion from the Advocate General before it proceeded to judgment, indicating that in its view the case raised no new point of law. This places the reader at a disadvantage, as its judgment lacks the depth of reasoning which a judgment informed by an opinion would have provided. It is quite rare for the domestic court to find itself in this position. The recent case of OBrien v Ministry of Justice (Case C393/10) [2012] 2 CMLR 25 is an excellent example of the guidance that the CJEU normally gives on issues of EU law and there are, of course, many more. I also think that the questions that were referred, although agreed to by the parties and approved by the House of Lords, tended to obscure what became the real issue when the case was argued in Luxembourg. For this reason the CJEU can hardly be blamed for not addressing that issue directly when it was conducting its analysis. The situation was also complicated by the fact that in the case of Baxi Group Ltd (Case C 55/09), which was referred by the House to the CJEU at the same time, there was a separate set of questions designed to fit the facts of that case. The CJEU analysed the Baxi Group Ltd case separately in the same judgment. Its analysis of the facts of that case may have influenced its analysis of the present case to the disadvantage of its treatment of the case for LMUK. The issue Chadwick LJ said that the issue in the present case was whether there was a supply of redemption services by the redeemer to LMUK for the purposes of VAT: para 33. This is how LMUK put its case in paragraph 29 of its written observations to the CJEU: LMUKs analysis is that the redeemers made supplies to both LMUK (redemption services) and the collectors (rewards) and that the recipient in either case can deduct VAT which it pays, subject to the normal rules. Only LMUKs analysis results in the VAT being deductible (subject to the normal rules) by the person who has actually paid the VAT and ensures that the UK Government collects VAT on the amount of the consideration actually paid by the final consumer. [emphasis added] The words both and in either case in this analysis are important. They directed attention to the fact that LMUKs argument was that the redeemers were making supplies in both directions. The Revenues argument, on the other hand, was encapsulated in question (2)(b) of the reference (see para 29, above). It asked whether the provisions of articles 14, 24 and 73 of Council Directive 2006/112/EC of 28 November 2006 were to be interpreted, where payments were made by the promoter to the redeemers, such that those payments were to be characterised as consideration solely for the supply of goods and/or services by the redeemers to the customers. In paragraph 9 of its written observations the Revenue said that the correct analysis was that the relevant supplies were made by the redeemers to the collectors, and that the consideration given by LMUK to the redeemers was third party consideration for those supplies. The questions in paragraphs (2) (c) and (3) of the reference then asked whether the consideration was in part for the supply of services by the redeemers to LMUK and in part for supplies by the redeemers to the customers and, if so, what the criteria are for an apportionment. Their inclusion in the reference was unfortunate, as they tended to divert attention from the way the case was presented when it reached the CJEU. This was not, in the event, an analysis which was argued for by either party. It was not LMUKs case by that stage that the consideration that it paid to the redeemers was in part for the supply of services by the redeemers to it and in part for the supply of goods and services to the customers, and that the consideration could or should be apportioned accordingly. A question which directed attention to the argument that the redeemers made supplies both to LMUK and the collectors, and that the recipient in either case could deduct the VAT which it paid on the consideration for the supply, was not included in the reference. In his submissions to this court Mr Milne QC renewed the case which he had presented to the CJEU. He said that apportionment was not what his clients wanted, and emphasised that it had not been a live issue before the tribunal. LMUKs case, looked at from its point of view (see Customs and Execise Commissioners v Redrow Group plc [1999] 1 WLR 408, 412; [1999] STC 161, 166), was that services were supplied to it by the redeemers for which it paid consideration and, that as the payment it made to the redeemers attracted VAT, it was entitled to deduct input tax on that amount. The scheme required the co operation of both the sponsors and the redeemers. The redeemers were accountable for the VAT payable on the consideration which they received both for their supplies to the customers and for the services provided by them to LMUK. The customers, assuming that they were traders (as some of them were), and LMUK were both entitled to the benefit of the doctrine of fiscal neutrality. In para 33 of its judgment the Court said that the essence of the questions that were put to it in LMUKs case was whether payments made by LMUK to the redeemers must be considered as third party consideration for supplies to or for the benefit of customers (which was the Revenues case), or as the consideration for the supply of services made by the redeemers for the benefit of LMUK. This was an incomplete appreciation of the alternative analyses on which the Courts interpretation of the EU legislation was sought. The argument for the Revenue was that LMUKs ability to deduct the input tax on the consideration which it paid to the redeemers for the services that they provided for its benefit was excluded by the fact that the payments that it made to the redeemers were third party consideration for the goods or services provided by the redeemers to the customers. LMUKs argument was that the treatment of the consideration passing between it and the redeemers should be considered separately from that passing between the redeemers and the customers. A summary of the observations submitted to the CJEU is set out in paras 34 to 37 of the judgment. The Revenues case is appropriately summarised in para 36, that the payments made by LMUK to the redeemers must be regarded as third party consideration for supplies of goods and services to the customers. LMUKs case is summarised in para 34. The summary is in these terms: In Case C 53/09, LMUK argues that the payments which it made to the redeemers constitute the consideration for services supplied to it by the redeemers. Those services, it submits, consist of various contractually agreed services, including the redeemers undertaking to supply goods or services to customers without charge or at a reduced price. This formulation takes the point made by LMUK in paragraph 29 of its written observations. But it does not recognise the argument that the redeemers made supplies both to the collectors and to LMUK, and that the recipient in either case could deduct the VAT which it paid. The judgment The Courts reply to these observations begins in para 38. The obvious point is made in that paragraph that the system of VAT involves the application of a general tax on consumption which is exactly proportional to the price of the goods and services. In para 39 of the judgment reference is then made to economic realities as a fundamental consideration for the application of the system. Two examples are given: first, the meaning of place of business and, secondly, the identification of the person to whom goods are supplied. The second example is said to be illustrated by Auto Lease Holland BV v Bundesamt fr Finanzen (Case C 185/01) [2003] ECR I 1317. Having asked itself what the nature was of the transactions under the schemes at issue, the Court said in para 42 that the economic reality was that loyalty rewards were supplied by the redeemers to the customers. So far as it goes, this point was not in dispute. But no mention is made of the effect of applying the economic reality test to the argument that there was also a supply of services by the redeemers to LMUK. Here again the significance of the way LMUK put its case in paragraph 29 of its written observations, where the word both was used, appears to have been overlooked. In para 43 of its judgment the Court asks itself whether the supply of the rewards constituted a supply of goods or services effected for consideration by a taxable person. The conclusion is then drawn in para 49 that the redeemers were supplying goods and services to the customers within the meaning of articles 5(1) and 6(1) of the Sixth Directive. This is unsurprising. But it does not advance the argument, as it was already common ground between the parties. In para 50 the Court asks itself the question whether these supplies were carried out for consideration. In para 56 the point is made that article 11.A(1)(a) of the Sixth Directive provides that the consideration may be obtained from a third party. There then follows para 57, which is in these terms: In that regard, it is evident from the order for reference in Case C 53/09 that the exchange of points by the customers with the redeemers gives rise to the making of a payment by LMUK to those redeemers. The amount of that payment is the sum total of the charges, which are of a fixed amount for each point redeemed against all or part of the price of the loyalty reward. In that context, it must be considered that, as maintained by the United Kingdom Government, that payment corresponds to the consideration for the supply of the loyalty rewards. [emphasis added] At first sight the sentence which I have emphasised determines this appeal in favour of the Revenue. But the proposition which I have emphasised does not include the word solely. Nor is any mention made of the point that LMUK made in paragraph 29 of its observations, where the word both was used: that the redeemers were supplying services to LMUK too, and that the payments which LMUK made to the redeemers could also be seen as consideration for services supplied to it by the redeemers. If that proposition was being rejected at this stage on the ground that it was not in accordance with the economic reality, this is not clearly stated. Nor is any reason given here for its rejection. In paras 58 to 63 of the judgment there is an analysis of the issues raised by Baxi Group Ltd (Case C 55/09), where it was contended by Baxi that the consideration for the payment by it to the redeemer did not correspond to a supply of goods but to a complex advertising service under which the supply of loyalty rewards to customers was one of a number of services. The conclusion that the Court drew from its analysis of the facts of that case, assisted by a question directed to this issue, was that the payment could be divided into two elements, each of which corresponded to a separate service. This was because it was possible to identify a profit margin consisting of the difference between the retail sale price of the loyalty rewards to the customer paid by Baxi and the price at which those rewards were purchased by the redeemer. Its conclusion was that the payment was the consideration for two separate supplies. It was in part consideration, paid by the third party Baxi, for a supply of goods to the customers and in part consideration for the supply of services to Baxi. The answer to the question how, in view of that conclusion, the payment was to be apportioned between these two supplies was given in para 63. The judgment then sets out the conclusion that, in contrast to its conclusion in Baxi, the Court reached in LMUKs case. It is set out in para 64 as follows : By contrast, in Case C 53/09, LMUK has, in both its written and oral observations, asserted that the payments which it makes to the redeemers are not the consideration for two or more separate [supplies]. It is, however, for the referring court to determine whether that is the case. The first sentence is a correct statement as far as it goes. It distinguished LMUKs case from that of Baxi. But, for the reasons already mentioned, it does not address the question that needed to be answered. Here again, as in para 57 of its judgment, the Court seems to have overlooked the point that LMUK made in paragraph 29 of its observations that services were also supplied to LMUK by the redeemers in return for consideration paid by LMUK. If that proposition was being rejected, once again this is not clearly stated. The question which is then sent back to the referring court is not in point. LMUK was not asserting, and did not seek to argue before us, that the payments made to the redeemers were the consideration for two or more separate supplies. Lastly, there are the answers that the Court gives in para 65 to the questions referred in each case. The answer to the questions referred in LMUKs case is as follows: [P]ayments made by the operator of the scheme concerned to redeemers who supply loyalty rewards to customers must be regarded as being the consideration, paid by a third party, for a supply of goods to those customers or, as the case may be, a supply of services to them. It is, however, for the referring court to determine whether those payments also include the consideration for a supply of services corresponding to a separate [supply]. This answer brings together the points that the Court made in paras 57 and 64. Here again, it respectfully seems to me, the point that is really in issue in this case is not answered. The question sent back to the referring court must be taken to be the same as that which the Court set out in para 64. An affirmative answer to it would lead to the making of an apportionment of the consideration between the two separate services. But LMUK is not contending that there should be an apportionment. The CJEU then sets out a proposition for which LMUK was not contending and did not contend when the case came back to this court. The response We are, of course, obliged to treat any question as to the meaning or effect of any EU instrument as a question of law which must be determined as such in accordance with the principles laid down by and any relevant decision of the CJEU: section 3 of the European Communities Act 1972, as substituted by the European Union (Amendment) Act 2008, section 3 and the Schedule, Part 1. And where a question is referred to the CJEU for a preliminary ruling, it is our duty to give effect to the Courts ruling as to how the instrument must be interpreted according to the principles of EU law. We must be loyal to our Treaty obligations. But I do not read the ruling contained in this judgment as determining how the principles that it sets out are to be applied to the facts of this case. That is our responsibility. The problem that we face in looking to the judgment for guidance is that it does not say that the payments made by the promoters to the redeemers are to be characterised solely as consideration for the supplies by the redeemers to the customers. Nor does it say that the proposition that the redeemers made supplies in both directions and that the recipients of those supplies could deduct VAT on the payments they made must be rejected. That, as I understand the competing arguments which were advanced before us, is what is really at issue. In this situation it must be treated as an issue of fact for us to decide. It is worth recalling that in para 38 of his judgment in the Court of Appeal Chadwick LJ said that the passages which he had quoted from the speeches in Customs and Excise Commissioners v Redrow Group Plc provided clear authority for the propositions (a) that there is no reason why, in a VAT context, a supplier (S) may not be treated as making, in the same transaction, both a supply of services to one person (P1) and a supply of different services to another person (P2); and (b) that, in addressing a claim for input tax credit by P2, to whom services have been supplied in these circumstances, the relevant question are (i) did P2 make a payment to S, (ii) was that payment consideration for services supplied to P2 and (iii) were those services used or to be used in the course of a business carried on by P2. Having considered the speeches in Customs and Excise Commissioners v Plantiflor Ltd [2002] 1 WLR 2287; [2002] STC 1132 and the judgment of Neuberger LJ in WHA Ltd and another v Customs and Excise Commissioners [2004] STC 1081, Chadwick LJ observed in para 51 that the argument that found favour with Lindsay J in the present case which was that, in a case where it was possible to identify different supplies to different recipients in the same transaction, only one could be the relevant supply for VAT purposes was not self evident. His own conclusion was to the contrary. Mr Milne invited us to endorse that conclusion. As he put it, the fact that there was a supply to the customers did not eliminate the possibility of their having also been the supply of a service to LMUK. The ruling that has been obtained from the CJEU does not, as I have sought to show, address this issue. The question then is whether the judgment lays down any principles which are determinative of this issue. Mrs Whipple QC for the Revenue said that the question in this case all the way up has been: to whom was the supply made? She submitted that it must be taken from what the Court said in para 39 of its judgment that this question must be answered by considering the economic realities, as this was a fundamental criterion for the application of the system of VAT: Customs and Excise Commissioners v DFDS A/S (Case C 260/95) [1997] 1 WLR 1037, para 23 and Planzer Luxembourg Srl v Bundeszentralamt fr Steuern (Case C 73/06) [2007] ECR I 5655, para 43. The judgment in Auto Lease Holland [2003] ECR I 1317, paras 35 and 36 showed how this test was to be applied to identify the person to whom the goods are supplied. The case of Redrow was wrongly decided. The economic realities of the case could show that the supply was to a third party, not to the person who paid the consideration. That was the position in this case. The problem with this approach is that it does not exclude the possibility that there may, as a matter of economic reality, be two or more supplies within the same transaction. Mrs Whipple said that one must start with the economic reality, and I have no difficulty in accepting that. But what the economic reality is in a given case must surely be a question of fact for the domestic court. The statement that the Court makes in para 42 of its judgment that the economic reality is that the loyalty rewards are supplied by the redeemers to the customers is only part of the story. This is shown by the fact that the Court said in para 64 that it was for the referring court to determine whether the payments that LMUK makes to the redeemers were the consideration for two or more separate services. Presumably the test which it would have to apply, if it were to address this question, would be to consider the economic realities. If that is a question which it is proper to send back to the referring court, why is it not open to it to examine the question that the Court itself did not answer whether it is possible, upon consideration of the economic realities, to identify two different supplies by the redeemers to two different recipients in the same transaction? If, as the Court of Appeal held, it is possible to identify different supplies by the redeemers to different recipients in the transaction by which LMUK pays consideration to the redeemers, what then? It is not easy to see why the economic realities test should exclude the possibility there can be more than one relevant supply for VAT purposes. It seems to me that the judgment leaves it open to this court to determine whether, in fact and as a matter of economic reality, the redeemers may not be treated as having made, in the same transaction, both a supply of services to the customers and a supply of different services to LMUK or, as LMUK put its case in paragraph 29 of its written observations, the redeemers made supplies both to LMUK (redemption services) and to the customer (rewards). For the reasons the Court of Appeal gave, I would answer that question in the affirmative. Mrs Whipple argued strongly to the contrary. She submitted that it followed from the CJEUs judgment that Customs and Excise Commissioners v Redrow Group plc, which the Court of Appeal applied to the facts of this case, was wrongly decided. But I am unable to find anything in the CJEUs judgment that drives us to that conclusion. The only statement of principle which it contains is that consideration of economic realities is a fundamental criterion for the application of VAT: para 39. I do not see this as undermining the way the questions of fact were determined in Redrow or the conclusion by the appellate committee that, as the services in respect of which Redrow claimed input tax deductions were supplied for a consideration paid to it in return, it was entitled to the benefit of the deduction. I am not persuaded that Redrow was wrongly decided. I acknowledge, however, that some of the reasoning in Redrow needs to be adjusted in the light of later authority. I would not wish to alter what I said at [1999] 1 WLR 408, 412H 413A: was something being done for the person claiming the deduction for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration which has attracted value added tax? But I think that Lord Millett went too far at p 418 G when he said that the question to be asked is whether the taxpayer obtained anything anything at all used or to be used for the purposes of his business in return for that payment. Payment for the mere discharge of an obligation owed to a third party will not, as he may be taken to have suggested, give rise to the right to claim a deduction. A case where the taxpayer pays for a service which consists of the supply of goods or services to a third party requires a more careful and sensitive analysis, having regard to the economic realities of the transaction when looked at as a whole. It may lead to the conclusion that it was solely third party consideration, or it may not. Conclusion For the reasons I have given, do I not see the CJEUs judgment as precluding a finding in LMUKs favour that the redeemers should be treated as having made, in the same transaction and as a matter of economic reality, both a supply of goods and services to the customers and a supply of different services to LMUK, and that LMUK is entitled to input tax credit on the consideration in return for which those different services were supplied to it. In my opinion the only conclusion that can properly and fairly be reached in this case is that the Court of Appeals decision should be affirmed. For these reasons, and for the further reasons given by Lord Reed, I would make the order that he proposes. LORD WALKER I am doubtful whether I can usefully add anything to the thorough and closely reasoned judgments of Lord Hope and Lord Reed, with which I am in full agreement. But as this Court is divided I think it right to restate, as briefly as I can, what I see as the essential reasons for dismissing this appeal. Anyone with even a passing acquaintance with value added tax is familiar with the basic concept of the fiscal neutrality of a chain of transactions which, however short or long, leaves the burden of the tax on the ultimate consumer. In BLP Group Plc v Customs & Excise Commissioners (Case C 4/94) [1996] 1 WLR 174, 190, [1995] ECR I 983, 993, [1995] STC 424, 430, para 30, the Advocate General (Lenz) referred to . an ideal image of chains of transactions . intended to attach to each transaction only so much VAT liability as corresponds to the added value accruing in that transaction, so that there is to be deducted from the total amount the tax which has been occasioned by the preceding link in the chain. In a simple chain (a wholly linear series of transactions) each transaction in the chain must be considered separately to determine what output tax is payable and what credit is available for input tax. But in developed economies wholly linear series of transactions are relatively unusual. Increasingly, businesses are organised so as to rely on subcontracting and outsourcing. Consumers are increasingly encouraged to obtain packages of goods and services put together by entrepreneurs. Many marketing schemes (such as that run by LMUK during the period now under consideration) operate through a construct of contractual relationships of some sophistication. It is a construct that is more like a web than a chain. In cases of that sort it is still necessary, in determining the proper amounts of output tax and input tax, to look separately at different parts of the web of transactions. But in determining the economic reality it is also necessary to look at the matter as a whole. This Court was not shown any authority establishing that a payment by A to B cannot be both consideration for a service supplied to A by B, and (as third party consideration) an element of the consideration paid for a supply by B to C (in this case, the collector, who is usually, but not always, also the final consumer). That negative proposition was adopted by Lindsay J in the Chancery Division in his once and one way only theory: [2007] STC 536, paras 58 and 76 to 80. In support of it he relied on EC Commission v Germany (Case C 427/98), [2002] ECR I 8315, [2003] STC 301. That was a case about a simpler promotional scheme for reduction of the retailers price for goods on presentation of a coupon distributed by the manufacturer to potential retail customers. But the Court of Justices decision related to the amount of tax on the supply by the retailer to the customer. It did not rule that the manufacturer must suffer a loss of input tax credit when it reimbursed the retailer, and it would have been inconsistent to have made such a ruling. Like Lord Hope and Lord Reed I consider that Customs & Excise Commissioners v Redrow Group Plc [1999] 1 WLR 408 and Customs & Excise Commissioners v Plantiflor Ltd [2002] 1 WLR 2287 were correctly decided, and are still good law. Lord Milletts unqualified language (anything anything at all) at p 418 may be capable of being misunderstood, but in context (including his explanation at p 417 of BLP Group Plc v Customs & Excise Commissioners) it must be understood as referring to anything that can properly be regarded as a taxable supply. Mrs Whipple QC suggested in her oral submissions that Plantiflor was an exception of a relatively small and insignificant category of cases of delivery. But if that expression is taken, in the common modern usage, to cover the delivery of a variety of packages of outsourced services, it can be seen as more than a small or insignificant category. The Court of Justice did not discern any significant issue of EU law arising on this case. The issue of economic reality is for the national court. I was one of the Law Lords who, five years ago, directed a reference to the Court of Justice, but with hindsight I recognise that it was unnecessary, and that it would have been better not to have made a reference. For these reasons, and for the much fuller reasons stated by Lord Hope and Lord Reed, I would make the order proposed by Lord Reed. LORD CARNWATH (with whom Lord Wilson agrees) (dissenting) Luxembourg has spoken In the light of the CJEU judgment, I would have regarded the appeal as bound to succeed. With respect to my colleagues, I find it difficult to see how their contrary view can be compatible with our responsibilities under the European Communities Act 1972. Criticism is made in the majority judgments of the form of the questions referred to the court, and even of the fact that a reference was made at all. I find this very surprising. The decision to refer was made by a panel of the House of Lords (Lords Hoffmann, Walker, and Mance, one of whom is a member of the present panel), following an oral hearing on 3 April 2008. Although there is no formal record of the reasons, they can be inferred from the Commissioners request, which pointed to an apparent conflict between the decision of the House in Redrow and the CJEU judgment in Auto Lease. The questions were then agreed by the parties in the normal way, submitted to the House on 30 June 2008, and adopted for the purpose of the reference. They were substantially in the form of the draft appended to in the Commissioners petition of appeal. LMUKs notice of objection, dated 16 November 2007, and signed by the counsel for LMUK (who had appeared successfully in the Court of Appeal), challenged the need for a reference; but LMUK did not take material issue with the form of questions proposed, then or later. We must assume that they were thought by all, including the members of the House and LMUK, to be the questions which needed answers in order to determine the appeal. I do not see how we can, properly or responsibly, go behind either the decision of the House to make the reference, or the questions which were then approved with LMUKs consent. Nor, still less (with respect to Lord Reed), do I believe that it is appropriate or fair for us now to decide that there were other relevant facts , necessary for the determination, but which, through oversight of ourselves and the parties, were not drawn to the attention of the court; and, further, that the true issues were not questions of law at all, so that we are free to redetermine them for ourselves as questions of fact, without regard to the CJEUs conclusions on them. Those are to me entirely novel and controversial propositions, on which at the very least I would have wished to hear submissions from the parties. As it happened, there was a significant delay between the agreement of the questions in June 2008 and the formal order making the reference on 15 December 2008, which was registered by the CJEU on 6 February 2009. This delay, as I understand it, was caused principally by the decision to link this case with the Baxi case. The history is summarised in a letter to the judicial office dated 19 February 2009 from LMUKs solicitors. In that letter, they complained of the delay and of the handling of the case by the office, but they made no criticism of the form of the questions. At some point, certainly before May 2009, new counsel (Mr Milne QC) was instructed. The hearing in the CJEU took place in January 2010. If at any time during that period LMUKs representatives had formed the view that the questions were defective in some way, they had plenty of time to seek to amend or supplement them. The real issue two supplies or one Lord Hope (para 89 above) defines what he calls the real issue by reference to a paragraph in LMUKs written observations to the CJEU: LMUKs analysis is that the redeemers made supplies to both LMUK (redemption services) and the collectors (rewards) and that the recipient in either case can deduct VAT which it pays, subject to the normal rules. Only LMUKs analysis results in the VAT being deductible (subject to the normal rules) by the person who has actually paid the VAT and ensures that the UK Government collects VAT on the amount of the consideration actually paid by the final consumer. (para 29, Lord Hopes emphasis) Lord Hope attaches importance to the words both and in either case, as showing the nature of LMUKs case. It was not that the consideration was to be apportioned between the two forms of supply; rather that, following Redrow, and looking at the matter solely from LMUKs own point of view (regardless of the collectors position), the whole consideration was paid for services supplied to LMUK, which was accordingly entitled to deduct input tax on the whole amount. If this was seen by LMUK as the real issue, it is strange that they took no steps to ensure that it was adequately reflected in the submitted questions. In LMUKs notice of objection to HMRCs petition, the sole issue was said to be whether the supplies were made to LMUK notwithstanding that third parties, namely the Collectors, also benefited de facto from the making of such supplies. The Commissioners suggested alternative of apportionment was said to have no merit in it. Against that background, I can only infer that the omission of a question directed specifically to Chadwick LJs formulation was a matter of deliberate choice, presumably because it was thought unlikely to succeed in Europe. As Lord Hope recognises, it is hard to criticise the CJEU for failing to answer an issue which had not been raised in the questions referred to it, even if mentioned in some of the subsequent observations. I note in passing Mr Milnes separate complaint about the lack of any specific reference, either in the questions, or in the Courts response, to the issue of deduction of input tax as such. I found this difficult to understand. Since deduction of input tax was what the case had been about from the outset, it is fanciful to suggest that there was any doubt in anyones mind of the context in which the questions were asked. It was referred to in terms in the European Commissions observations (see below), and the Court began its judgment by accurately summarising the course of proceedings below, beginning with LMUKs claim to deduct input VAT on its payments of service charges to the redeemers (para 13). Absence of an Advocate Generals Opinion In agreement with Lord Hope, I think it was unfortunate that there was no Advocate Generals Opinion in this case. This is by no means unusual. Published figures show that it happens in more than 40% of the cases decided by the court. But those figures say nothing about the relative importance of the various cases, or the level of the court from which they have been referred. Article 20, paragraph 5, of the CJEU Statute provides: Where it considers that the case raises no new point of law, the Court may decide, after hearing the Advocate General, that the case shall be determined without a submission from the Advocate General. I can understand that this case was thought to raise no new point of law, as such. The underlying principles had been discussed in many previous judgments. However, it was a reference by the highest court in this country. It should have been clear from the judgments below, and the submissions, that it had raised serious differences as to the correct application of those principles, including questions as to the authority of the leading House of Lords decision in the light of subsequent European authority. The court itself does not as a matter of practice comment directly on domestic cases, but the Advocate General may have more flexibility in that respect, and more opportunity to look at the issues in a wider context. Experience shows that the Advocate Generals Opinion can often provide a fuller discussion of the principles and their practical application, against which the sometimes sparse reasoning of the judgment can be easier to understand and apply. In this case, at least in retrospect, as the present controversy demonstrates, it was an unfortunate omission. On the other hand, it is important to note that United Kingdom interpretation was supported by the European Commission in written observations. They provide some useful background information, and to that extent did something to fill the gap left by the absence of an Advocate Generals opinion. In particular they addressed the possibility of a more comprehensive view, not dissimilar to that adopted by the Lord Reed: 21. One possible approach to such schemes would be to say that there is no such thing as a free gift. Loyal customers pay for those gifts as part of the price of goods they buy; customers who are not loyal, moreover, pay for the gifts enjoyed by those who are loyal. The cost of operating a loyalty scheme is a cost of business for the trader, and at any given level of profit there is no difference between lowering the price for all customers and selectively lowering the price for loyal customers by giving them more products for the same price. Nor is there any difference between giving loyal customers additional quantities of the products normally supplied by the trader and giving them other goods or services. Again, this is a form of price discrimination in favour of loyal customers: it is no different from granting them a quantity discount or for that matter a cash rebate. Over time, the customer has paid a certain amount for the whole of goods received by him, including those presented as being free. Accordingly, he should bear the VAT on that amount, which is the total of his consumption. There is no reason to charge additional VAT in respect of the free goods, because in reality he (together with the customers who are not loyal) has already paid for them. They rejected this approach as inconsistent with Kuwait Petroleum. They then considered whether the inclusion of the services made any difference to the analysis: 26. The circumstances of the present cases appear at first sight to fall within that analysis. However, in an apparent attempt to evade its consequences, the creators of the loyalty schemes concerned have introduced a nuance: the payments made to the redeemers, that is to say the persons supplying the goods to the customers, are described as payments for services. Those services are said to be redemption services (compendiously described in point 8 of the order for reference in Case C 53/09) or marketing services (in Case C 55/09). In the Commissions view the inclusion of the services did not make a material difference. The economic reality of the situation was that the redeemer was being paid to provide goods to the customers, and nothing more. Even if there can be said to be a service element, it is purely ancillary, and the core of the transaction is the supply of goods. (para 27) Accordingly, the payments were to be regarded as third party consideration for the supply of the goods, and no input VAT is deductible in respect of those payments. Such payments could be considered as including payment for services to promoters only in so far as it is possible to identify a service separate from the provision of the goods and to determine the price of that service. The courts reasoning In spite of the criticisms which can be made of some aspects of the judgment, I do not myself find any serious uncertainty about what the court has decided and why. In substance the court adopted the Commissions reasoning. It is important to read the judgment in the light of the words of the directive, and the previous European case law, and without any preconceptions derived from domestic case law, or from an independent view as to how the tax should operate. There are as I see it three crucial points underlying the courts decision. First, the supply of loyalty rewards by the redeemers to the collectors was to be treated as a distinct transaction, separate from the other elements of the rewards scheme (para 55). As the court noted (para 32), this approach accorded with the form of the questions and the submissions of the parties, and also with previous case law (Kuwait Petroleum [1999] ECR I 2323, para 28). That being so, it is unsurprising (as Lord Reed acknowledges paras 36 38 above) that the court did not undertake a broader analysis of the relationships between LMUK and the other parties involved. While I acknowledge the apparent attractions of Lord Reeds analysis and the elegance with which it is presented, the decision of the court is to my mind clear on this point and binding on us. Nor did I understand LMUK to argue otherwise. Secondly, the taxable event under the directive (article 2.1) is a supply of goods or services for consideration. In relation to any transaction, it is therefore necessary to start by identifying the relevant supply in respect of which tax is said to be chargeable or deductible. Thirdly, the amount of the charge to tax on the one hand, and the right to deduct on the other, are governed by two provisions of the Directive respectively: i) Article 11, which defines the taxable amount as everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies. ii) Article 17(2), which allows a taxable person the right, in so far goods and services are used for the purpose of his taxable transactions, to deduct value added tax due or paid in respect of goods or services supplied or to be supplied to him by another taxable person. It is noteworthy that these two provisions are not directly matched. From the point of view of the person making the supply, and accounting for the tax, the taxable amount is not limited to consideration from the recipient of the goods, but includes consideration from third parties. Conversely, the person seeking to deduct tax has to show, not merely that he gave consideration and paid tax in connection with his own taxable transactions. He must show also that the tax was paid in respect of goods or services supplied to him. Consideration given by a third party is taken into account in assessing the taxable amount, but there is no corresponding provision giving the person paying third party consideration the right to deduct. Applied to the facts of this case, if one ignores for the moment the incidental information and other support services given to LMUK by the redeemers, the CJEUs interpretation of those provisions is readily understandable. As is now common ground, the goods were supplied by the redeemers to the collectors, not to LMUK, who merely paid third party consideration for them. Article 17(2) gives LMUK no right to deduct, even though the consideration was paid in respect of their taxable transactions, because it was not paid in respect of supplies received by them. It is true that the redeemers had a contractual obligation to LMUK to make the supplies to the collectors. But there is nothing in the words of the directive to suggest that the mere fulfilment of a contractual obligation of this kind is to be equated with the supply of a service. This approach can be seen as a natural extension of the courts reasoning in Auto Lease Holland BV v Bundesant fr Finanzen (Case C 185/01) [2003] ECR I 1317. Under the fuel management agreement between Auto Lease and its lessees, the cost of petrol supplied to lessees was paid for by Auto Lease (through a credit card arrangement) and reimbursed by lessees by monthly payments and an annual balancing charge. It was held that there was no relevant supply to Auto Lease. The fuel management agreement was not a contract for the supply of fuel, but rather a contract to finance its purchase. The fuel was purchased not by Auto Lease, but by the lessee having a free choice as to its quality and quantity, as well as the time of purchase. (para 36). So here, the agreement between LMUK and the redeemers, so far as relates to the supply of goods, is no more than a contract to finance their purchase, the choice of goods and the time of purchase being left entirely to the collectors. Does the addition of the information and other services make any difference? The courts answer (para 58 64) was no, unless the services can be separately identified, and part of the consideration properly apportioned to them. That was possible in respect of Baxi but not LMUK. There is nothing surprising about that conclusion. Once it is accepted that the contractual obligation to supply the goods does not in itself amount to the taxable supply of a service to LMUK, there is no reason why the provision of such incidental services should fundamentally alter the position in relation to the goods element of the transaction, as opposed to any value properly attributable to the services as such. Other interpretations might have been possible. Arguably, a broader, more purposive interpretation might have led the court to an approach similar to that proposed by Lord Reed, and in line with that of the Court of Appeal in this case. That might also have had the attraction of avoiding what appears to be an element of double taxation if the scheme is looked at as a whole (as Lord Reed suggests para 84 above). However, that is (or should be) water under the bridge. Interpretation of the directive is ultimately a matter for the CJEU, not the domestic courts. We are bound to follow their lead. LMUKs submissions Mr Milne QC, for LMUK, submitted that, properly understood, the judgment is not inconsistent with the reasoning of the Court of Appeal. The finding that the payments were third party consideration for supply of rewards to customers did not exclude the possibility of their being at the same time consideration for redemption services supplied to LMUK. On the contrary, the judgment acknowledged that possibility in paragraph 64, by leaving it to the referring court to determine whether those payments also include the consideration for the supply of services corresponding to a separate supply. Accordingly there is nothing in the judgment to undermine the reasoning of Chadwick LJ, or the decisions in Redrow and Plantiflor on which it was based. In his oral submissions, Mr Milne relied strongly on the decision of the CJEU in Case C 165/86 Leesportefeuille Intiem CV v Staatssecretaris van Financin [1989] 2 CMLR 856 (Intiem), and the comments of the Advocate General in Case C 338/98 EC Commission v Netherlands [2004] 1 WLR 35; [2003] STC 1506. They showed that there could be a taxable supply of goods to one person, notwithstanding that delivery was to a third party. He also relied on a table, showing hypothetical payments and their tax consequences, as indicating that LMUKs argument alone was consistent with the underlying principle of fiscal neutrality. As a fall back position, Mr Milne argued for an apportionment on the basis that the service charge should be split between the cost incurred by the redeemer in providing the rewards, and the difference between such cost and the total service charge; alternatively on the basis of the market value of the services provided to LMUK less the cost of the rewards. He suggested that the issue might be remitted to a new tribunal for determination. Discussion Fairly read, it is impossible in my view to read the judgment as leaving open the possibility that the whole consideration might be taken as in respect of supplies both to LMUK and to the collectors. Even if that possibility was not addressed in terms, the judgment as a whole, particularly the reasoning in the Baxi case, leaves no serious doubt what the answer would have been. The court considered the argument that the payments should be treated, not as payment for supply of goods, but rather for a complex advertising service under which the supply of loyalty rewards to customers is one of a number of services (para 59). That argument was clearly rejected. The element of the payments, representing the price of the rewards and the cost of packaging and delivery, was treated solely as consideration for the supply of goods to collectors, only the profit margin being allocated to the services to Baxi (paras 61 63). That reasoning is inconsistent with the proposition that, other than by apportionment, the consideration could be treated at the same time as being in respect of supplies to both parties. Paragraph 64 of the judgment must be seen in that context. It cannot be read as leaving open the issue of whether the whole consideration could be treated as in respect of two different supplies. Although the issue of apportionment had not previously been raised in the LMUK case, and had been rejected by LMUK itself as without merit, it was included in the questions before the court, and therefore required an answer. Paragraph 64 follows the treatment of the same issue in the Baxi case, where it did arise. As I read paragraph 64, it is simply covering the same issue for the sake of completion in the LMUK case, indicating that, in the absence of any relevant findings before the court, it must be left to the domestic courts to determine. Intiem I turn to the argument based on Intiem. The company operated a business involving the distribution by its employees of a catalogue to customers at their homes. The employees used their own cars for deliveries. At the end of each working day, they were able to refuel at the companys expense at a filling station near the companys office, under a contractual arrangement between the company and the station. The filling station then invoiced Intiem for the petrol so supplied to employees. The issue referred to the CJEU was whether the company could deduct the full amount of tax on the petrol so supplied, notwithstanding that it was supplied in fact to the employees. That question was answered in the affirmative. Having noted that the right to deduct applied to goods and services connected with the pursuit of the taxable persons business, the Court said: 14 It must accordingly be concluded that this deduction system must be applied in such a way that its scope corresponds as far as possible to the sphere of the taxable persons business activity. Where, in such circumstances, article 17 (2) of the Sixth Directive restricts the taxable persons right of deduction, as regards the value added tax on supplied goods, to the tax due or paid in respect of goods . supplied to him, the purpose of that provision cannot be to exclude from the right of deduction the value added tax paid on goods which, although sold to the taxable person in order to be used exclusively in his business, were physically delivered to his employees. As the Advocate General had said: The fact that the petrol is pumped directly into the tank of the employees car and is used on account of the undertaking in no way affects the legal and economic reality of the transaction In economic terms, the petrol with which Intiem is invoiced and for which it has to pay constitutes one of its production cost components which bears the value added tax charged on it at the previous stage ([1989] 2 CMLR at p 861) That judgment was distinguished in Case C 338/98 EC Commission v Netherlands [2004] 1 WLR 35; [2003] STC 1506, where, under Dutch legislation, an employer was able to pay employees allowances for use of their cars in the employers business and a standard 12% deduction was allowed by way of input VAT. That arrangement was held to be incompatible with the relevant EU legislation for a number of reasons. The Court noted (para 37), and implicitly accepted, the Commissions identification of three significant differences from the facts of Intiem: first, there was no agreement between the employer and the supplier; secondly, the goods were not used exclusively for the employers business; and thirdly, the taxable employer was not invoiced by the taxable supplier. The Court arrived at its conclusion on the true interpretation of the Sixth Directive, while accepting that it might not appear fully consistent with certain objectives pursued by that Directive such as fiscal neutrality and the avoidance of double taxation (para 55). Mr Milne submits that this case is analogous to Intiem, rather than the Netherlands case, in that, while the goods are physically supplied to the customers, that is in pursuance of contracts between LMUK and the Redeemers, and invoiced accordingly, and it is done wholly for the purposes of LMUKs business. Attractively though the argument was put, the short answer is that it is irreconcilable with the CJEUs decision in this case. The Court has clearly decided that, on the facts of this case, and notwithstanding the contractual position, economic reality lies in treating the rewards as goods supplied to the collectors and not, directly or indirectly, as part of services supplied to LMUK. Previous House of Lords authorities It remains to consider how the judgment in this case affects the reasoning and conclusions of the House of Lords in the Redrow and Plantifor. The relevant facts and the essential reasoning of the House of Lords in each case have been described by Lord Reed. Like him, I see no reason to doubt the correctness of the decision in either case, but hesitate to regard either as laying down a universal rule. The Commissioners position on the correctness of the decision in Redrow has fluctuated. Lindsay J recorded, and in effect adopted, their submission (presented at that time by Mr Vajda QC) that Redrow was distinguishable on the facts: Mr Vajda draws attention to the very different facts of Redrow. There it was Redrow not the prospective house purchaser who chose the estate agents and gave instructions to them. Redrow obtained a contractual right as against the estate agents and could even prevent or override changes in the agents' instruction which the house purchasers might otherwise have been minded to make By contrast, says Mr Vajda, it was not LMUK that selected the particular goods or services enjoyed by way of reward by Collectors, nor, (in the sense that no Collector was bound to use points in all his acquisitions but could deal with retailers who were not Suppliers) was it LMUK that selected who it was that was to supply them. LMUK had no role in determining whether goods or services should be acquired by Collectors only by the use of points or wholly by cash or partly for one and partly for the other or in what proportions between the two forms of satisfaction. Nor is it the case that such provision as is made to Collectors is exclusively at LMUK's expense; in all cases where points alone did not suffice the Collectors, too, would bear some expense. In Redrow it was easy enough to see the legal and financial characteristics that were there being examined as pointing to a supply to Redrow but the overriding characteristics of the Programme suggest a provision to Collectors, says Mr Vajda, with third party consideration for that provision coming from LMUK (para 72 73) Similar submissions were made in the Commissioners written observations to the CJEU, when it was asserted that the House of Lords reached the correct result in the Redrow case, but for the wrong reasons. By contrast, before us Mrs Whipple for the Commissioners submitted that neither the reasoning nor the conclusion in Redrow was compatible with the CJEU decision in the present case. The House of Lords had been wrong to focus on the position from the point of view of the taxpayer, rather than determining the economic reality of the transaction. On that view, the estate agency services were supplied to the householders, albeit subject to a measure of control by Redrow. Lord Hope was right to acknowledge that reality (clearly the estate agents were supplying services to prospective purchasers), but wrong to think that it could stand with a finding that tax was deductible by the person who instructed the service and who has had to pay for it of the benefit of the deduction ([1999] 1 WLR 408, 412). I prefer the Commissioners earlier view. The facts of Redrow differed markedly from those of the present case, for the reasons Mr Vajda gave. Although the prospective purchasers benefited, Redrow did not merely pay for the services, but exercised a high degree of control and received benefits for purposes directly related to its own business objectives. By contrast, in the present case LMUK had no direct or indirect interest in the reward goods themselves; their interest was only in the fulfilment of obligations previously undertaken as part of the rewards scheme as a whole. As Lord Reed has noted, Redrow was followed and applied in Plantiflor, though the outcome in the latter case was victory for the Commissioners. It is unnecessary to repeat his description of the case. Mrs Whipple submitted that the decision in Plantifor is compatible with the reasoning of the CJEU in the present case. As she put it in her printed submissions, in terms with which I readily agree: There plainly are cases which fall properly within the delivery model referred to by Lord Millett as being cases where the arrangements consist of the right to have goods delivered or services rendered to a third party. A typical example is where A contracts with B to have flowers delivered to C. The economic reality of those arrangements is that A and B contract, on terms that As payment is to B, for services provided to A, those services consisting of delivery to C. In CEC v Plantifor, Plantifor contracted with Parcelforce to have flowers delivered to its customers. The supply was by Parcelforce to P of the service of delivering Ps goods (plants and garden products) to Ps customers pursuant to a contract for delivery made between Parcelforce and P, and for a consideration payable by P. The House of Lords correctly identified the VAT supply as being, on these facts, by Parcelforce to P, and not to Ps customer. I do not find it necessary or useful to consider in detail the other cases to which we have been referred. They merely serve to illustrate, as Lord Reed has said, how difficult and fact sensitive the issues may be in individual cases. Other issues I have noted that the CJEU left open the possibility of an apportionment of the service charge, and LMUK has proposed that the issue should be referred back to the Tribunal. I agree with Mrs Whipple that this point is not open to them at this stage, having clearly and repeatedly declined hitherto to make it a part of their case. It would be contrary to well established principles to remit the case to the Tribunal for findings on factual issues which could have been but were not raised when the matter was originally before them. Both parties have claimed that the principles of fiscal neutrality support their respective cases. I have found this a somewhat elusive concept on the facts of this case. It must be assumed that so far as appropriate this aspect has been taken into account by the CJEU in their decision. We were told by Mr Milne that they were shown the tables which are before us, and which appear to show an element of double taxation looking at the scheme as a whole. However, as I have indicated, where third party consideration is involved, a potential for imbalance is inherent in the definitions respectively of the taxable amount and of the right to deduct. It is clear from the CJEU case law that the principle of neutrality is not to be treated as an overriding principle of interpretation such as to justify a departure from the words of the directive (see for example EC Commission v Netherlands cited above). Conclusion For these reasons, I would have allowed the appeal, and restored the order of Lindsay J. |
This is, in effect, an appeal against the decision of the High Court of Justiciary in HM Advocate v McLean [2009] HCJAC 97, 2010 SLT 73, which was heard by a bench of seven judges. The link between that case and the appeal is that the minuter in that case and the appellant, Peter Cadder, in this were both detained under section 14 of the Criminal Procedure (Scotland) Act 1995, as amended (the 1995 Act). This has given rise, in both cases, to the question whether the Crowns reliance on admissions made by a detainee during his detention while being interviewed by the police without access to legal advice before the interview begins is incompatible with his right to a fair trial. The minuter and the appellant were both interviewed by the police while they were being detained under section 14. They made admissions on which, in McLean, the Crown intended to rely at trial and which, in Peter Cadders case, it did rely in obtaining a conviction. In neither case did they have access to legal advice while they were in detention. Nor was a solicitor present while they were being interviewed. McLean had requested that intimation of the fact and place of his detention should be made to a solicitor. But he was not offered an opportunity to have legal advice before he was interviewed, nor did he request this. Cadder was asked whether he wished a solicitor to be contacted, and he replied that he did not. At no time while he was being questioned did he request access to a solicitor. In Salduz v Turkey (2008) 49 EHRR 421 the Grand Chamber of the European Court of Human Rights held unanimously that there had been a violation of article 6(3)(c) of the European Convention on Human Rights, in conjunction with article 6(1), because the applicant did not have the benefit of legal assistance while he was in police custody. In McLean the Appeal Court held, notwithstanding the decision in Salduz, that the fact that legal representation was not available to the minuter did not of itself constitute a violation of articles 6(1) and 6(3)(c) read in conjunction. In its opinion the guarantees otherwise available under the Scottish system were sufficient to avoid the risk of any unfairness. It approved its decisions in Paton v Ritchie 2000 JC 271 and Dickson v HM Advocate 2001 JC 203 (by a court of five judges) that the Crowns reliance on admissions made by a detainee while being interviewed in the absence of a solicitor was not incompatible with the right to a fair trial. The appellant seeks to challenge the decision in McLean. He submits that the decision in Salduz requires this court to hold that there has been a violation of those articles. It is remarkable that, until quite recently, nobody thought that there was anything wrong with this procedure. Ever since the statutory power to question a suspect prior to charge was introduced by sections 1 to 3 of the Criminal Justice (Scotland) Act 1980, the system of criminal justice in Scotland has proceeded on the basis that admissions made by a detainee without access to legal advice during his detention are admissible. Countless cases have gone through the courts, and decades have passed, without any challenge having been made to that assumption. Many more are ongoing or awaiting trial figures were provided to the court which indicate there are about 76,000 such cases or are being held in the system pending the hearing of an appeal although not all of them may be affected by the decision in this case. There is no doubt that a ruling that the assumption was erroneous will have profound consequences. But there is no room, in the situation which confronts this court, for a decision that favours the status quo simply on grounds of expediency. The issue is one of law, as the court appreciated in McLean. It must be faced up to, whatever the consequences. The facts of this case At around 14.30 hours on 13 May 2007 the appellant was detained by the police at his home in Glasgow under section 14(1) of the 1995 Act following an incident in which Liam Tracey and his father John Tracey had been attacked by a group of youths. In accordance with section 14(6) he was informed that he was being detained on suspicion of serious assault, and he was cautioned in accordance with section 14(9). He made no comment, and was conveyed to London Road Police Office. He arrived there at about 14.45 hours. On arrival he was again cautioned in accordance with section 14(9). At about 14.49 he was informed in accordance with section 15 of the 1995 Act that he was entitled to have intimation of his detention sent to a solicitor, but he declined to have a solicitor contacted on his behalf. Thereafter, for a period of approximately 27 minutes commencing at about 15.03 hours, he was interviewed under caution by two police officers. During this interview he made a number of admissions with regard to the offences with which he was later charged. At 15.30 he was informed that he was no longer a detained person under section 14, and he was placed under arrest. At 15.35 hours he was cautioned and charged with various offences in regard to the incident. He made no reply to any of these charges. On 27 August 2008 an identification parade was held at London Road Police Office. A DVD compilation showing an image of the appellant and images of other individuals was shown to potential witnesses. The complainer Liam Tracey identified the image of the appellant as that of his assailant. The complainer John Tracey failed to identify anyone. On 24 December 2008 an indictment was served on the appellant and two co accused charging them with assaulting Liam Tracey to his severe injury and permanent disfigurement, assaulting John Tracey to his injury and breach of the peace. The appellant went to trial in the Sheriff Court at Glasgow on 26 May 2009. On 27 May 2009 the procurator fiscal depute intimated that the Crown did not seek a conviction against the co accused and the trial proceeded against the appellant alone. During the course of the trial the procurator fiscal depute led evidence from Liam Tracey, who identified the appellant as one of those involved in assaulting both him and his father John Tracey. He also led evidence from John Tracey who identified the appellant in court as one of those involved in the assaults. Evidence was led of the content of the interview of the appellant while he was in detention. An audio tape recording of it was played in full to the jury, and the jury were given copies of the transcript. In his charge to the jury the sheriff made reference both to the contents of the interview and to the dock identification of the appellant by John Tracey. On 29 May 2009 the appellant was convicted on all charges and on 26 June 2009 he was sentenced to 250 hours Community Service. The sheriff also imposed a compensation order for 500. On 9 July 2009 the appellant lodged intimation of his intention to appeal against his conviction. On 12 October 2009 he lodged a note of appeal in which he sought leave to challenge his conviction on four grounds. Grounds 1 and 2 referred to the reliance by the procurator fiscal depute on the contents of his interview. Ground 3 was concerned with the sheriffs directions in relation to the crime of breach of the peace. Ground 4 was concerned with the reliance by the procurator fiscal depute on dock identification evidence. In relation to grounds 1, 2 and 4 the appellant relied on article 6 of the Convention and section 57(2) of the Scotland Act 1998, and he gave notice that he intended to raise a devolution issue with respect to the issues raised in each of them. By letter dated 10 November 2009 the Depute Clerk of Justiciary informed the appellant that the judge who was conducting the first sift had considered his application for leave to appeal and that it had been refused. On 19 November 2009 the appellant appealed against this refusal, supported by an opinion provided by his counsel, Mr Shead. By letter dated 27 November 2009 the Depute Clerk of Justiciary informed the appellant that his appeal had been considered by three judges at the second sift stage, and that it also had been refused. The following reasons were given: Although we have had regard to counsels opinion, grounds 1 and 2 are not arguable, standing the 7 judge decision in McLean. As to ground 3 it is not arguable, having regard to the particular circumstances of the alleged offence and the judges charge as a whole, that his directions were apt to confuse or that any miscarriage of justice could be said to have resulted. As to ground 4, it is not arguable, having regard inter alia to Holland v HM Advocate 2005 1 SC (PC) 3, that it would have been incompatible with the appellants Article 6 rights for the Crown to seek to rely on dock identification in the circumstances of the case. On 15 December 2009 the appellants solicitors wrote to the Depute Clerk of Justiciary asking for the case to be put out for a procedural hearing so that an application could be made for leave to appeal to the Supreme Court. By letter dated 23 December 2009 the Appeals Manager replied that this request had been considered by the Criminal Appeals Administration Judge and had been refused on the basis that, as the refusal of leave to appeal at the second sift did not amount to a determination of a devolution issue from which an appeal might lie to the Supreme Court, no further procedure was competent. The appellant then submitted an application for special leave to appeal to the Supreme Court under para 13 of Schedule 6 to the Scotland Act 1998. The issues The first three issues relate to the question whether it is open to this court to give permission to appeal. In the statement of facts and issues they are set out in these terms: 1. Whether the decision dated 25 November 2009 by three judges of the High Court of Justiciary to refuse the appeal against the refusal to grant leave to appeal was the determination of a devolution issue. 2. Whether the Court below has refused to grant permission to appeal to the Supreme Court of the United Kingdom. 3. Whether, in all the circumstances, permission to appeal should be granted by the Supreme Court in whole or in part. The remaining issues are the substantive issues in the appeal. They can be stated, in simplified terms, as follows: 4. Whether the Crowns reliance on the content of the appellants interview was incompatible with his rights under articles 6(1) and 6(3)(c), having regard to the decision in Salduz. 5. Whether the act of the Lord Advocate in leading and relying on that evidence was ultra vires, having regard to sections 57(2) and (3) of the Scotland Act 1998 and section 6(2) of the Human Rights Act 1998. 6. Whether the act of the Lord Advocate in leading and relying on evidence of the dock identification of the appellant was incompatible with his rights under article 6(1) and thereby ultra vires in terms of section 57(2) of the Scotland Act 1998. 7. Whether the acts of the Lord Advocate referred to in issues 5 and 6, taken together, were incompatible with the appellants rights under article 6(1) and thereby ultra vires in terms of section 57(2) of the Scotland Act 1998. 8. Whether, if issue 5 is answered in the affirmative, the decisions in Paton v Ritchie and HM Advocate v McLean should be overruled with prospective effect only or with any other limit on the temporal effect of the decision. Permission to appeal: issues 1 3 As the history which I have narrated in para 9 shows, the appellants appeal to the High Court of Justiciary never reached the stage of a full hearing by the appeal court. It was dealt with on paper by means of the sift procedure under section 107(5) and (6) of the 1995 Act. But there is no doubt that this resulted in the refusal of the appeal and that, for the reasons that were explained in McDonald v HM Advocate [2008] UKPC 46, 2008 SLT 993, it amounted to the determination of a devolution issue for the purposes of para 13 of Schedule 6 to the Scotland Act 1998; see also Allison v HM Advocate [2010] UKSC 6, 2010 SLT 261, para 6, per Lord Rodger of Earlsferry. As I said in para 16 of McDonald, the word determination in para 13 of Schedule 6 to the Scotland Act 1998 can include any decision which disposes of the issue in the lower court, including a refusal to consider the issue. I do not think that it would be right to say that the judges who conducted the second sift refused to consider the devolution issues which the appellant was seeking to raise. But they certainly did dispose of them when, for the reasons given, they refused his application for leave to appeal. Nor does the fact that the appellants application for leave to appeal was dealt with on paper by the Criminal Appeals Administration Judge create a procedural obstacle to his application to this court for special leave to appeal. His decision that the application for leave to appeal was incompetent, as communicated by the Appeals Manager to the appellants solicitors, was based on the view that the refusal of leave by the sifting judges did not amount to a determination of the devolution issues. This, for the reasons I have given, was a misconception of the effect of what the sifting judges had done. It falls to be treated for the purposes of para 13 of the Schedule as amounting to a refusal of leave by the lower court. That being so, it is open to this court to decide whether it has jurisdiction to entertain the application for special leave. Dock identification: issues 6 and 7 At the outset of the hearing the parties were informed that the court was satisfied that special leave to appeal should be given with regard to the devolution issues identified as issues 4, 5 and 8 in the statement of facts and issues. They are directed to the question as to the effect of the decision of the Grand Chamber in Salduz and whether the view of that case which was taken in HM Advocate v McLean can be sustained. Issue 6, on the other hand, is directed to the appellants complaint about the Crowns reliance at his trial on the dock identification of him by John Tracey, who failed to identify him at the identification parade. In Holland v HM Advocate 2005 SC 1 (PC) 3 the Board rejected the argument that the use of dock identification evidence in solemn proceedings must always be regarded as incompatible with the accuseds right under article 6(1) of the Convention to a fair trial. Lord Rodger said in para 57 that, except perhaps in an extreme case, there was no basis either in domestic law or in the Convention for regarding evidence of dock identification as inadmissible per se. There is nothing more to be said on that question. But the appellants complaint, as presented in his written case, is not that the evidence of the dock identification as such was inadmissible. His complaint is that the sheriffs directions to the jury were inadequate, as he did not tell the jury that, standing John Traceys failure to identify the appellant at the identification parade, they had to consider whether they accepted his dock identification as reliable. In other words, his complaint is directed to the way this issue was dealt with by the sheriff when he was delivering his charge to the jury, not to the act of the Lord Advocate in leading and relying upon this evidence. The question as to the adequacy or otherwise of the sheriffs charge is a matter that lies exclusively within the jurisdiction of the High Court of Justiciary. It does not raise a devolution issue which is open to consideration by this court. The application for special leave to appeal on issues 6 and 7 is refused. This leaves for more detailed consideration issues 4, 5 and 8. Salduz: issue 4 As already mentioned, the question whether reliance on admissions made by an accused without access to legal advice when detained under section 14 of the 1995 Act gives rise to a breach of his article 6 Convention right to a fair trial was considered by a bench of seven judges in the High Court of Justiciary in HM Advocate v McLean 2010 SLT 73. Its decision that the fact that legal representation was not available at the time of the interview did not of itself constitute a violation of the appellants rights under article 6(3)(c) read in conjunction with article 6(1) was based on the view that in Salduz v Turkey (2008) 49 EHRR 421 the Grand Chamber recognised a certain flexibility in the requirement that access to a lawyer should be provided (see the last sentence of para 24), and on the proposition that the guarantees otherwise available under the Scottish system are sufficient to secure a fair trial for a person who, while detained, is interviewed by police officers without access to a lawyer (see the first sentence of para 26). In this court Mr Shead for the appellant submitted that in both respects the decision in McLean was unsound and that, together with the decisions in Paton v Ritchie 2000 JC 271 and Dickson v HM Advocate 2001 JC 203, it should be disapproved. This argument can, perhaps, most helpfully be approached in three stages: first, by examining the decision of the Grand Chamber in Salduz; second, by considering whether this court should follow Salduz, having regard to subsequent decisions in Strasbourg; and third, by considering whether the guarantees otherwise available under the Scottish system provide a sound basis for holding that, whatever the Grand Chamber may have said in Salduz, for the Crown to rely on admissions made by an accused person while being interviewed in detention without access to a solicitor does not constitute a violation of his rights under article 6(3)(c) read with article 6(1). Article 6(1) provides: (1) In the determination of any criminal charge against him, everyone is entitled to a fair and public hearing by an independent and impartial tribunal established by law Article 6(3) provides: (3) Everyone charged with a criminal offence has the following minimum rights: (c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require. The effect of these provisions, taken in conjunction, was the subject of the decision in Salduz. But first it is necessary to say something about the procedure that has been laid down for Scots law by the statute. The statutory procedure The practice of removing persons to and detaining them at police stations for the purpose of questioning them in relation to allegations of criminal conduct is regulated by sections 14 and 15 of the 1995 Act, into which the provisions of the 1980 Act were consolidated. Section 14(1) provides that, where a constable has reasonable grounds for suspecting that a person has committed or is committing an offence punishable by imprisonment, he may for the purpose of facilitating the carrying out of investigations into the offence and as to whether criminal proceedings should be instigated against the person, detain him and take him as quickly as is reasonably practicable to a police station or other premises. Section 14(2) provides that detention under subsection (1) must be terminated not more than six hours after it begins or, if earlier, when the person is arrested or is detained in pursuance of any other enactment or where there are no longer grounds for his detention. Among the subsections that then follow are the following: (7) Where a person is detained under subsection (1) above, a constable may (a) without prejudice to any relevant rule of law as regards the admissibility in evidence of any answer given, put questions to him in relation to the suspected offence; (b) exercise the same powers of search as are available following an arrest (9) A person detained under subsection (1) above shall be under no obligation to answer any question other than to give the information mentioned in subsection (10) below, and a constable shall so inform him both on so detaining him and on arrival at the police station or other premises. The information mentioned in section 14(10) comprises the persons name, his address, his date and place of birth and his nationality. Section 15(1) provides, so far as relevant, as follows: (1) Without prejudice to section 17 of this Act [right of accused to have access to a solicitor immediately upon arrest], a person who (a) has been arrested and is in custody in a police station or other premises, shall be entitled to have intimation of his custody and of the place where he is being held sent to a person reasonably named by him; (b) is being detained under section 14 of this Act and has been taken to a police station or other premises or place, shall be entitled to have intimation of his detention and of the police station or other premises or place sent to a solicitor and to one other person reasonably named by him, without delay or, where some delay is necessary in the interest of the investigation or the prevention of crime or the apprehension of offenders, with no more delay than is so necessary. (2) A person shall be informed of his entitlement under subsection (1) above (a) on arrival at the police station or other premises; or (b) where he is not arrested, or as the case may be detained, until after such arrival, on such arrest or detention. Subsection (3) provides that where the person requests such information to be sent a record must be made of the time at which such request was made and complied with. Special arrangements are made under subsection (4) for intimation to a parent where the person detained appears to be under the age of 16 years. The procedure that these provisions regulate was based on the recommendations of the Thomson Committee: Criminal Procedure in Scotland (Second Report) (Cmnd 6218) (October 1975). Among the problems with which it was confronted were the absence of any clear statement of the law of arrest, the rule of law that had been laid down in Chalmers v HM Advocate 1954 JC 66 that it was not competent for the police to detain a person on suspicion without formally charging him and uncertainties about the extent to which statements made by a suspect in answer to police questioning were admissible: see Hartley v HM Advocate 1979 SLT 26. Lord Cameron described this as an extremely difficult and delicate topic on which the police lacked adequate guidance: Scottish practice in relation to admissions and confessions by persons suspected or accused of crime, 1975 SLT (News) 265, 266. In para 2.01 the Committee noted that in these and certain other areas of law there was a conflict between the public interest in the detection and suppression of crime on the one hand and the interest of the individual in freedom from interference by the police on the other. In para 2.03, recognising that any solution to the problems under consideration must necessarily be a compromise between these two interests, it said that such a solution: must safeguard the individuals right to go about his lawful business free from unreasonable police interference, and his right to have his personality and human dignity respected when he is in the hands of the police, without creating a situation in which criminals can render the investigation of their crimes difficult or even impossible merely by standing on their rights. It must recognise the realities of the situation, and take account of those police practices which are accepted as fair by the public including criminals although they may be technically illegal or at least of doubtful legality. In paras 2.04 it said that the protection afforded to accused persons must not be so strong as to restrict the collection and presentation to the court of such evidence against an accused person as was, in accordance with the then current ideas of fairness and propriety, considered admissible. In Chapter 7 the Committee dealt with the law of interrogation by police officers and the admissibility of statements made to them by the accused. Having noted the lack of clarity in the law as to the questioning of suspects, it recommended in para 7.13 that it should be competent for the Crown to lead evidence of statements made by a suspect before arrest in answer to police questioning. As regards the presence of a solicitor, it said in para 7.16: Although a person who has been charged with an offence is entitled to an interview with a solicitor, we recommend that a solicitor should not be permitted to intervene in police investigations before charge. The purpose of the interrogation is to obtain from the suspect such information as he may possess regarding the offence, and this purpose might be defeated by the participation of his solicitor. It is for this reason that we recommend in chapter 5.08 that it will be a matter of police discretion whether to allow the detainee an interview with his solicitor. There was a clear signal here that in the Committees view the public interest in the detection and suppression of crime outweighed any disadvantage to the detainee in being subjected to police questioning in the absence of his solicitor. It did not rule out the possibility of his being given legal advice before he was questioned. But this was to be at the discretion of the police. The rights of the detainee were to take second place to the public interest in allowing the police to question him without being deflected from their task by the presence of a solicitor. The statutory procedure was framed on this basis. There is a right to have intimation of his detention sent to a solicitor. But there is no right of access to legal advice before he is interviewed. In Paton v Ritchie 2000 JC 271, 276 Lord Justice Clerk Cullen, delivering the opinion of the appeal court, said that neither the common law nor the Convention requires that in all cases the person who is detained should be afforded the opportunity to have his solicitor present, and that the question whether a fair trial can be achieved depends not simply on what happened during the preliminary investigation but on the whole proceedings. In Dickson v HM Advocate 2001 JC 203, which was heard by a court of five judges, the appellant was detained under sections 24 and 25 of the Criminal Law (Consolidation) (Scotland) Act 1995, which conferred on customs officers the same powers as those given to the police by sections 2 and 3 of the Criminal Justice (Scotland) Act 1980. She made repeated requests during her interview to have a solicitor present, but this was refused. It was submitted that the right to have a solicitor present was implicit in the right to a fair trial under article 6(1) of the Convention where such a request was made. Reference was made to Murray v United Kingdom (1996) 22 EHRR 29 and Averill v United Kingdom (2000) 31 EHRR 839. The court held, affirming Paton v Ritchie, that the question whether a fair trial can be achieved depends on the whole proceedings: p 218, per Lord Cameron of Lochbroom. At p 225 Lord Macfadyen said that the cases of Murray and Averill were clearly distinguishable, as the appellant had been cautioned, clearly understood the caution and declined, for the most part, to answer the questions that were put to her. He rejected the submission that the evidence of the interview was inadmissible simply because it was conducted in the face of her requests for a solicitor to be present. In an affidavit that was prepared for the appeal to this court D Sgt Paul Carruthers said that in his experience requests for a solicitor to be contacted are made by detained persons fairly frequently. The response will depend on the circumstances of the case, in particular the time constraints imposed by section 14 which limits the period of detention to six hours. If it is feasible within the time limit for a solicitor to attend and give advice then, in the vast majority of cases, the solicitor is allowed to confer with his client before the interview commences. He would also be allowed to sit in during the interview, but he would not be allowed to take an active role. For that he gave this explanation: By this I mean that the solicitor would not normally interrupt the interview, unless he had a concern over its fairness. Any advice he had to give would be given prior to the interview commencing. It is the suspect who is there to be interviewed, not the solicitor. The situation in this appeal however, as it was in HM Advocate v McLean 2010 SLT 73, is that no solicitor was present at any stage either before or during the interview. In McLean, having examined the decision of the Grand Chamber in Salduz, the appeal court took the view that it permitted a certain flexibility in the application of the requirement: para 24, last sentence. It saw no reason to depart from the approach that had been laid down in Paton v Ritchie 2000 JC 271 and Dickson v HM Advocate 2001 JC 203. In para 31 the Lord Justice General (Hamilton), delivering the opinion of the court, said: Even if, contrary to our view, the decision of the Grand Chamber in Salduz amounts to the expounding of a principle that article 6 requires that access to a lawyer should be provided as from the first interrogation of a suspect by the police, we are satisfied that that principle cannot and should not be applied without qualification in this jurisdiction. In particular, if other safeguards to secure a fair trial of the kind which we have described are in place, there is, notwithstanding that a lawyer is not so provided, no violation, in our view, of article 6. The decisions and reasoning in Paton v Ritchie and Dickson v HM Advocate are approved. The other safeguards to secure a fair trial to which the Lord Justice General referred in para 31 are described in para 27 of his opinion in McLean. Detention is a form of limited or temporary apprehension on suspicion. The safeguards against its abuse include the detainees right to be cautioned on his detention and on arrival at the police station; the right, if arrested, to have a solicitor informed of what has happened and to a subsequent interview with him before his appearance in court; the fact that he may not, after caution and charge, be further questioned by the police; the fact that in all serious cases the interview is tape recorded and in some cases recorded on video; the fact that police are not entitled to coerce the detainee or otherwise to treat him unfairly, and that if they do any incriminating answers will be rendered inadmissible; the fact that the accused has an absolute right to silence, and that the jury is expressly directed that it may not draw any inference adverse to the accused from the fact that he declined to answer police questions; the fact that an accused cannot be convicted on the basis of his own admission alone, as Scots law requires that there be corroboration by independent evidence; and the fact that a person may not be detained for more than six hours from the moment of his detention. In para 28 of his opinion in McLean the Lord Justice General referred to my observations in Brown v Stott 2001 SC (PC) 43 at 73, where I said that the statutory rules to be found in sections 14 and 15 of the 1995 Act had been framed in such a way as to provide appropriate checks and balances in the interests of fairness to the accused. He referred also to a comment to the same effect by Lord Rodger of Earlsferry in Cullen v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 39, [2003] 1 WLR 1763, para 87, where he said, with reference to the different rights of detainees in Northern Ireland and England and Wales on the one hand and in Scotland on the other: This difference may well be explicable by reference to the much more restricted powers that are given to the police in Scotland to detain people for questioning. As it is entitled to do, Parliament has thus struck the balance differently and established two distinct systems of powers and rights within the same overall constitutional framework of the United Kingdom. In para 88 Lord Rodger went on to say that, since detainees have no right to consult a solicitor in Scotland, it followed that at trial the Crown regularly leads evidence of incriminating statements made by the accused while he was detained and before he consulted a solicitor. The Lord Justice General said that by his remarks in that paragraph Lord Rodger implicitly approved of the decisions of the High Court of Justiciary in Paton v Ritchie and Dickson v HM Advocate. There is no doubt that the appeal courts decision in McLean was entirely in line with, and fully supported by, previous authority. The question, however, is whether it can survive scrutiny in the light of what the Grand Chamber said in Salduz v Turkey (2008) 49 EHRR 421. The Grand Chamber's decision in Salduz The applicant, who was a Turkish national and was then 17 years old, was taken into custody at about 10.15 pm by police officers of the anti terrorism branch of the Izmir Security Directorate on suspicion of having taken part in an unlawful demonstration in support of an illegal organisation and of hanging an illegal banner from a bridge. At 1 am the next day he was reminded of his right to remain silent and was then interrogated by the anti terrorism branch. No lawyer was present during his interrogation. He made various admissions in the course of which he confessed to the suspected offences, and samples were taken of his handwriting. Later that day he was brought before the public prosecutor and subsequently the investigating judge. Before the public prosecutor he denied involvement in the offences. He told the investigating judge, retracting the statement that he made to the police, that it had been extracted under duress. It was only after all this questioning was over that he was allowed access to a lawyer. At 11.45 pm the same day he was examined by a doctor, who stated that there was no sign of ill treatment on his body. He was subsequently tried on indictment before the state security court. Although he again sought to retract his police statement, alleging that it had been extracted from him under duress, he was convicted as charged. He was sentenced to four years and six months imprisonment, reduced to two and a half years as he was a minor at the time of the offence. It appears from the circumstances as described in the report that there are some significant differences between the way the applicants case was handled and that of the appellant. The applicant was not told that he had a right to have intimation of his detention sent to a lawyer. The time that had elapsed between his being taken into custody and his being interviewed is not recorded. His suggestion that he confessed under duress is not matched by anything in this case, there being no suggestion that the appellant was coerced while he was being interviewed. The questioning of the applicant does not appear to have been tape recorded. On the other hand, the applicant was not convicted on his own admissions. The court had before it evidence from his co accused before the public prosecutor that the applicant had urged them to participate in the demonstration and that he had been in charge of organising it. His handwriting was also compared with that on the banner. There is, of course, common ground between the two cases in that both interviews were carried out without the assistance of a lawyer either before they began or during the process of questioning. Like the applicant in Salduz, the appellant was a minor when he was taken into detention. He was born on 4 June 1990 and was 16 years old. The Grand Chamber began its assessment of the applicable principles by making some general observations which appear to be in line with the view that was taken in Paton v Ritchie and Dickson v HM Advocate of the effect of the Convention right. Having noted in para 50 that the right set out in article 6(3)(c) of the Convention is one element, among others, of the concept of a fair trial in criminal proceedings in article 6(1) (see Imbrioscia v Switzerland (1993) 17 EHRR 441 and Brennan v United Kingdom (2001) 34 EHRR 18), it stated in para 51: The Court further reiterates that although not absolute, the right of everyone charged with a criminal offence to be effectively defended by a lawyer, assigned officially if need be, is one of the fundamental features of fair trial. Nevertheless, article 6(3)(c) does not specify the manner of exercising this right. It thus leaves to the contracting states the choice of the means of ensuring that it is secured in their judicial systems, the Courts task being only to ascertain whether the method they have chosen is consistent with the requirements of a fair trial. In para 52, having stated that article 6 will normally require that the accused be allowed to benefit from the assistance of a lawyer at the initial stages of police interrogation, it said: However, this right has so far been considered capable of being subject to restrictions for good cause. The question, in each case, has therefore been whether the restriction was justified and, if so, whether, in the light of the entirety of the proceedings, it has not deprived the accused of a fair hearing, for even a justified restriction is capable of doing so in certain circumstances. [emphasis added] The more one reads on through the judgment, however, the clearer it becomes that the Grand Chamber was determined to tighten up the approach that must be taken to protect a detainee against duress or pressure of any kind that might lead him to incriminate himself. As Peter W Ferguson QC has observed, it marks an apparent change in approach: The right of access to a lawyer, 2009 SLT (News) 107, 108. In para 53 the Grand Chamber asserts that the principles which it outlined in para 52 are consistent with generally recognised international standards which are at the heart of the concept of a fair trial, whose rationale relates in particular to the need to protect the accused against abusive coercion on the part of the authorities. Reference is made to aims pursued by article 6, notably equality of arms between the investigating or prosecuting authorities and the accused. In para 54 reference is made to the particularly vulnerable position that the accused finds himself in at the investigation stage of the proceedings. The point is made that in the majority of cases this vulnerability can only be adequately compensated for by the presence of a lawyer whose task it is, among other things, to help to ensure that the right of an accused not to incriminate himself is respected. Early access to a lawyer is said to be part of the procedural safeguards to which the Court will have particular regard when examining whether a procedure has or has not extinguished the very essence of the law against self incrimination. Reference is made to the numerous recommendations by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment which underline the point that the right of any detainee to have access to legal advice is a fundamental safeguard against ill treatment. There is perhaps an indication here that the primary concern of the Grand Chamber was to eliminate the risk of ill treatment or other forms of physical or psychological pressure as a means of coercing the detainee to incriminate himself. If that was the aim, it might have been thought that the use of techniques such as tape recording would meet the need to monitor the need for fairness and that, as cases where there are real grounds for suspecting that abusive methods were used can be dealt with appropriately by the trial judge under Scots procedure, there would be no reason to doubt the essential fairness of the Scottish system. But the way the Grand Chamber then went on to express itself removes the possibility of resorting to such an analysis. what it had said in the previous paragraphs as follows: In para 55 the Grand Chamber expressed the conclusion which it drew from Against this background, the Court finds that in order for the right to a fair trial to remain sufficiently practical and effective article 6(1) requires that, as a rule, access to a lawyer should be provided as from the first interrogation of a suspect by the police, unless it is demonstrated in the light of the particular circumstances of each case that there are compelling reasons to restrict this right. Even where compelling reasons may exceptionally justify denial of access to a lawyer, such restriction whatever its justification must not unduly prejudice the rights of the accused under article 6. The rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police interrogation without access to a lawyer are used for a conviction. The emphasis throughout is on the presence of a lawyer as necessary to ensure respect for the right of the detainee not to incriminate himself. The last sentence of paragraph 55 could hardly be more clearly expressed. In a concurring opinion the President of the Grand Chamber, Judge Bratza, was at pains to emphasise the importance that was to be attached to the need for a lawyer to be present during the course of police interrogation. Like Judge Zagrebelsky, who was joined by two other judges, he thought that the Grand Chamber had not gone far enough. Referring to the general principle stated in paragraph 55 of the Courts judgment, he said in para O I2: This principle is consistent with the Courts earlier case law and is clearly sufficient to enable the Court to reach a finding of a violation of article 6 on the facts of the present case. However, I share the doubts of Judge Zagrebelsky as to whether in appearing to hold that the right of access to a lawyer only arises at the moment of first interrogation, the statement of principle goes far enough. Like Judge Zagrebelsky, I consider that the Court should have used the opportunity to state in clear terms that the fairness of criminal proceedings under article 6 requires that, as a rule, a suspect should be granted access to legal advice from the moment he is taken into police custody or pre trial detention. It would be regrettable if the impression were to be left by the judgment that no issue could arise under article 6 as long as a suspect was given access to a lawyer at the point when his interrogation began or that article 6 was engaged only where the denial of access affected the fairness of the interrogation of the suspect. The denial of access to a lawyer from the outset of the detention of a suspect which, in a particular case, results in prejudice to the rights of the defence may violate article 6 of the Convention whether or not such prejudice stems from the interrogation of the suspect. I have the greatest respect for Judge Bratza, who has made an outstanding contribution during his time as the United Kingdoms judge on the Strasbourg court. But I cannot help thinking that there is an air of unreality about his insistence that a detainee should have access to legal advice from the moment that he is taken into police custody, otherwise there will be a violation of article 6. Peter W Ferguson QC has described it, not entirely unreasonably, as a staggering proposition because of its absolutist nature: 2009 SLT (News) 107, 109. Under the Scottish system, a person is taken into police custody as soon as he is detained under section 14(1) of the 1995 Act. This could happen anywhere, and at any time of the day or night. Inevitably there will be an interval of time between the taking of this step and the arrival of a solicitor in response to intimation that the person has been detained. The best that is likely to be achievable is the presence of a solicitor within a short time of the detainees arrival at the police station. Despite the present rigorous time limit of six hours that is imposed by section 14(2), the police will have to defer any questioning of the detainee until an enrolled solicitor is actually present in the police station. To go further and require the solicitor to be present from the very moment when the person is detained would in most cases make use of the power of detention under section 14 practically impossible. It may be that Judge Bratza had in mind the arrival at the place where the person was to be held as marking the point at which his being taken into police custody began. Even then, practical considerations such as other demands on solicitors time and the time of day or night of the arrival would be likely to make it difficult to adhere to the rule that he was advocating in all cases. The public interest in the detection and suppression of crime would not be well served if the police had in all cases to delay resort to the detention of a suspect until the person concerned had contacted a solicitor and to ensure that he had his solicitor with him from the moment when he was detained. A more generous interpretation, as Lord Rodger suggests, is that Judge Bratza was assuming that legal assistance was actually available when the suspect was detained in which case it could not be denied to him, and that he was not intending to assert that there was a positive duty to ensure its availability whatever the circumstances. That all having been said, there is no doubt that the effect of Judge Bratzas remarks is to underline the importance of the rule that was expressed in para 55 of the Courts judgment. In para 24 of his judgment in HM Advocate v McLean the Lord Justice General said that the first sentence of what the Grand Chamber said in that paragraph was open to interpretation. He said that the requirement for a solicitor to be present was subject to exception and applied only as a rule. He said that it was open to two alternative interpretations. One was that the court was laying down that every jurisdiction must, to be compliant with the Convention, have in place a system under which access to a solicitor was ordinarily provided as from the first interrogation, whatever safeguards there may otherwise be for a fair trial. The other was that, while this is what the court would generally expect, it was recognising that the issue as to whether or not there has been a fair trial will depend on the circumstances of the case, including what arrangements the jurisdiction in question has made for access to legal advice, seen against the guarantees which are otherwise in play in that jurisdiction to secure a fair trial. On this approach there would be room for, as he put it, a certain flexibility in its application. In para 25 he said that the court was inclined to favour the alternative interpretation. Were that not what the court intended, it would be departing from its previous case law, contrary to Judge Bratzas statement that the principle being enunciated was entirely consistent with it. I do not think, with respect, that the alternative interpretation is tenable. It has, of course, often been said by the Strasbourg court that it leaves to the contracting states the choice as to the means by which the manner of exercising the right to a fair trial is secured in their judicial systems. Indeed the Grand Chamber said as much in para 51 of Salduz. The admissibility of evidence, for example, is primarily a matter for the domestic legal systems of the contracting states. But there is no hint anywhere in its judgment that it had in mind that the question whether or not a detainee who was interrogated without access to a lawyer has had a fair trial will depend on the arrangements the particular jurisdiction has made, including any guarantees otherwise in place there. Distinctions of that kind would be entirely out of keeping with the Strasbourg courts approach to problems posed by the Convention, which is to provide principled solutions that are universally applicable in all the contracting states. It aims to achieve a harmonious application of standards of protection throughout the Council of Europe area, not one dictated by national choices and preferences. There is no room in its jurisprudence for, as it were, one rule for the countries in Eastern Europe such as Turkey on the one hand and those on its Western fringes such as Scotland on the other. The statement in para 55 that article 6(1) requires that, as a rule, access to a lawyer should be provided as from the first interrogation of a suspect must be understood as a statement of principle applicable everywhere in the Council of Europe area. The statement that the rights of the defence will in principle otherwise be irretrievably prejudiced must be understood in the same way. It is true that the use of such expressions indicates that there is room for a certain flexibility in the application of the requirement, as the Lord Justice General said in HM Advocate v McLean, para 24. But they do not permit a systematic departure from it, which is what has occurred in this case under the regime provided for by the statute. The area within which there is room for flexibility is much narrower. It permits a departure from the requirement only if the facts of the case make it impracticable to adhere to it. The reference in that paragraph to its being demonstrated in the light of the particular circumstances of the case that there are compelling reasons to restrict the right reinforces this interpretation. It is the particular circumstances of the case, not other guarantees that are available in the jurisdiction generally, that will justify such a restriction. The appeal courts view that if that interpretation were not what the court intended it would be departing from its previous case law might seem, at first sight, to have more to commend it. In Windsor v United Kingdom, application no 13081/87, 14 December 1988, the Commission observed that the applicant had not established that the initial period of six hours of his detention was of crucial relevance to the preparation of his defence or to the fairness of his trial or that he was prejudiced in any material way by the refusal of access to his solicitor during this period. The court has indicated in cases such as Imbrioscia v Switzerland (1993) 17 EHRR 441 and Brennan v United Kingdom (2001) 34 EHRR 18 that the absence of a lawyer during the preliminary investigation is not necessarily incompatible with the accuseds right to a fair trial. In Imbrioscia, para 38, the court said that the manner in which article 6(3)(c) was to be applied during the preliminary investigation depends on the special features of the proceedings involved and on the circumstances of the case. In Brennan the fact that a lawyer was not present during police questioning was not treated as creating irretrievable prejudice to the right to a fair trial. In Murray v United Kingdom (1996) 22 EHRR 29, para 63, it said that, while article 6 will normally require that the accused be allowed to benefit from the assistance of a lawyer at the initial stages of police interrogation, that right might be subject to restrictions for good cause and that the question in each case is whether, in the light of the entirety of the proceedings, it has deprived the accused of a fair hearing. There are, however, passages in the courts judgment in Murray v United Kingdom which come very close to saying what the Grand Chamber said in Salduz, and it cannot be overlooked that there is no indication anywhere in its judgment that it was intended to be a departure from previous case law. As Lord Rodger points out in para 67, recognition of the implied right of the accused not to incriminate himself can be traced back to the decision of the Grand Chamber in Saunders v United Kingdom (1996) 23 EHRR 313, para 68. In Murray, para 66, the court said the scheme contained in the Criminal Evidence (Northern Ireland) Order 1988 was such that it was of paramount importance for the rights of the defence that an accused had access to a lawyer at the initial stages of police interrogation as at that stage the accused was confronted with a fundamental dilemma relating to his defence. Similar observations are to be found in paras 52 and 54 of Salduz. Later in the same paragraph in Murray the court said that to deny access to a lawyer for the first 48 hours of police questioning, in a situation where the rights of the defence might be irretrievably prejudiced, was whatever the justification for such denial incompatible with the rights of the accused under article 6. The last sentence of para 55 in Salduz is a reiteration of the same point. It may well be, as the appeal court suggested in HM Advocate v McLean, para 25, that the Grand Chamber was particularly influenced by what was said in Jalloh v Germany (2006) 44 EHRR 32, para 101, to which reference is made in a footnote to para 54 of its judgment in Salduz. In Jalloh where the applicant had been forced to regurgitate a bag of cocaine, there was a complaint that article 3 had been violated as well as article 6. In para 101 the court said that in examining whether a procedure has extinguished the very essence of the privilege against self incrimination, it will have regard, in particular, to the following elements: the nature and degree of compulsion, the existence of any relevant safeguards in the procedures and the use to which any material so obtained will be put. This passage was referred to by the Grand Chamber in support of its observation in para 54 of Salduz that early access to a lawyer is part of the procedural safeguards to which the court will have particular regard when examining whether a procedure has extinguished the very essence of the privilege against self incrimination. It plainly had in mind that there was a consensus across Europe that the presence of a lawyer was a safeguard against ill treatment, as can be seen from its reference in para 54 to the recommendations of the European Committee for the Prevention of Torture. But it is just as plain that the risk of irretrievable prejudice to the accused because of a lack of respect of his right to remain silent was at the forefront of its mind too: see para 110 of Jalloh, where the court observed that the privilege against self incrimination is commonly understood in the contracting states and elsewhere to be primarily concerned with respecting the will of the defendant to remain silent in the face of questioning and not to be compelled to provide a statement. Its reasoning cannot be confined to cases where a violation of article 3 is in issue. Should this court follow Salduz? The starting point is section 2(1) of the Human Rights Act 1998, which provides that a court which is determining a question which has arisen in connection with a Convention right must take into account any decision of the Strasbourg court. The United Kingdom was not a party to the decision in Salduz nor did it seek to intervene in the proceedings. As the Lord Justice General observed in McLean, para 29, the implications for the Scottish system cannot be said to have been carefully considered. But in R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295, para 26, Lord Slynn of Hadley said that the court should follow any clear and constant jurisprudence of the Strasbourg court. And in R (Anderson) v Secretary of State for the Home Department [2002] UKHL 46, [2003] 1 AC 837, para 18, Lord Bingham of Cornhill said the court will not without good reason depart from the principles laid down in a carefully considered judgment of the court sitting as a Grand Chamber. In R v Spear [2002] UKHL 31, [2003] 1 AC 734, on the other hand, the House refused to apply a decision of the Third Section because, as Lord Bingham explained in para 12, they concluded that the Strasbourg court had materially misunderstood the domestic legal context in which courts martial were held under United Kingdom law. And in R v Horncastle [2009] UKSC 14, [2010] 2 WLR 47 this court declined to follow a line of cases in the Strasbourg court culminating in a decision of the Fourth Section because, as Lord Phillips explained in para 107, its case law appeared to have been developed largely in cases relating to the civil law without full consideration of the safeguards against an unfair trial that exist under the common law procedure. In this case the court is faced with a unanimous decision of the Grand Chamber. This, in itself, is a formidable reason for thinking that we should follow it. In its judgment in Panovits v Cyprus, application no 4268/04, 11 December 2008, the Strasbourg court considered the question whether an applicant, aged 17 at the time, who confessed his guilt when he was subjected to police questioning for about 30 40 minutes without legal advice was deprived of his right to a fair trial. His confession was decisive for the prospects of his defence and constituted a significant element on which his conviction was based. Having reviewed its previous jurisprudence on the right not to incriminate oneself, albeit without the benefit of the Grand Chambers observations in Salduz which came too late for them to be take into account, it held in para 77 that there had been a violation of article 6(3)(c) in conjunction with article 6(1) on account of the lack of legal assistance to the applicant during the initial stages of police questioning. This decision is entirely consistent with Salduz. As for the question whether Salduz has given rise to a clear and constant jurisprudence, the case law shows that it has been followed repeatedly in subsequent cases. A full list was provided in its helpful written intervention by JUSTICE. There are far too many for them all to be mentioned in this judgment. The following selection is sufficient to show that the court has consistently applied the ruling in Salduz, holding that the rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police interrogation without access to a lawyer are used for a conviction: kran Yildiz v Turkey, application no 4661/02, 3 February 2009; Amutgan v Turkey, application no 5138/04, 3 February 2009, paras 17 18; Plonka v Poland, application no 20310/02, 31 March 2009, para 35; Pishchalnikov v Russia, application no 7025/04, 24 September 2009, para 70; Dayanan v Turkey, application no 7377/03, 13 October 2009, paras 32 33; Fatma Tun v Turkey, application no 18532/05, 13 October 2009, paras 14 15. It was applied in Amutgan v Turkey although the applicant had confirmed to the trial judge the accuracy of his confession and admitted that he had carried out a number of armed activities: para 7; and in Dayanan v Turkey notwithstanding the fact that the applicant made use of his right to remain silent whilst in custody: para 29. It was not applied in Zaichenko v Russia, application no 39660/02, but in that case the applicant was not formally arrested or interrogated in police custody but stopped for a road check: para 47. Nor was it applied in Yolda v Turkey, application no 27503/04, 23 February 2010, but in that case the applicant had the right to legal assistance during his custody but he refused it and his decision to waive assistance was considered to have been freely and voluntarily made: para 52. In my opinion the Strasbourg court has shown by its consistent line of case law since Salduz that the Grand Chambers finding in para 55 is now firmly established in its jurisprudence. There are two other recent judgments which should be noted. In Gfgen v Germany, application no 22978/05, 1 June 2010, the applicant was subjected while being interrogated to threats of deliberate and imminent ill treatment within the scope of article 3 and he complained that his right to a fair trial had been violated. The court said that it was not its function to lay down any rules on the admissibility of evidence as such, which was primarily a matter for regulation under national law: para 162. Having regard to the particular circumstances of the case it held that the failure to exclude evidence secured as a result of the interrogation did not have a bearing on his conviction and sentence, and that there had been no violation of articles 6(1) and 6(3): paras 187 188. In para 5 of their partly dissenting opinion Judge Rozakis and five others indicated that in their opinion this approach was very difficult to reconcile with the absolutist position that the Grand Chamber adopted in Salduz that events that occurred subsequently could not cure the defects which had occurred during the time spent in police custody. This was a pragmatic decision which proceeded on the basis that the evidence obtained in breach of article 3 was, on the facts, irrelevant to the applicants conviction. I do not think that it can be regarded as raising any doubt as to the decision in Salduz, which was mentioned with approval in para 177. But it serves as a warning that the Salduz principle cannot be confined to admissions made during police questioning. It extends to incriminating evidence obtained from elsewhere as a result of lines of inquiry that the detainees answers have given rise to. In Brusco v France, application no 1466/07, 14 October 2010, the reasoning in Salduz was applied by the court in finding that there had been a violation of article 6(1) in circumstances where the applicant had been subjected to a police interrogation without access to a lawyer. The conclusion that I would draw as to the effect of Salduz is that the contracting states are under a duty to organise their systems in such a way as to ensure that, unless in the particular circumstances of the case there are compelling reasons for restricting the right, a person who is detained has access to advice from a lawyer before he is subjected to police questioning. As JUSTICE has shown by the materials referred to in its written intervention, the majority of those member states which prior to Salduz did not afford a right to legal representation at interview (Belgium, France, the Netherlands and Ireland) are now recognising that their legal systems are, in this respect, inadequate. In the Netherlands the Supreme Court has held that a suspect arrested by the police must be offered the opportunity to consult a lawyer before being interviewed and that an arrested minor was entitled to have the assistance of a lawyer while being interviewed: LJN BH3079, 30 June 2009. In France the Conseil Constitutionnel has held that articles 62 and 63 of the Code of Criminal Procedure, which authorise the questioning of a person remanded in police custody (the process known as la garde vue) but do not allow the person held against his will to have the benefit of legal assistance while undergoing questioning, are unconstitutional because they could not be reconciled with articles 9 and 16 of the Dclaration of 1789 des droits de lhomme et du citoyen: Dcision No 2010 14/22 QPC, 30 July 2010. It postponed the effect of its decision until 1 July 2011 to allow the legislature to remedy the unconstitutionality. The Criminal Chamber of the Cour de Cassation has applied the law as declared by the Conseil Constitutionnel but postponing the effect of its decision, and has set aside two rulings of lower courts which pre empted the postponement: arrt no 5699 and arrts nos 5700 and 5701, 19 October 2010. The Conseil dEtat in its turn has drawn the governments attention to the fragility, in the light of article 6 of the Convention, of article 706 88 of the code de procdure pnale, which prevents access to legal assistance at this stage: Section de lintrieur, Projet de loi relatif la garde vue, 7 October 2010 (No 384.505). There has, as yet, been no decision as to the effect of Salduz in Ireland. But if Scotland were not to follow the example of the others it would be almost alone among all the member states in not doing so. It would not be able to find support for that position from England and Wales or Northern Ireland. Access to legal advice was described in R v Samuel [1988] QB 615 as a fundamental right, and section 58(1) of the Police and Criminal Evidence Act 1984 provides that a person arrested and held in custody in a police station or other premises shall be entitled, if he so requires, to consult a solicitor privately at any time: see also section 59(1) of the Police and Criminal Evidence (Northern Ireland) Order 1989 (SI 1989/1341 (NI 12)). I should add for completeness that I see no room for any escape from the Salduz ruling on the ground that the guarantees otherwise available under the Scottish system are sufficient to secure a fair trial. The appeal court made much of this point in HM Advocate v McLean, para 27, as did the Lord Advocate in her address to this court. As I have already said, the ruling in para 55 of Salduz must be read as applicable equally in all the contracting states. There is room for a restriction of the right of access to a solicitor during the police interrogation, but only if there are compelling reasons in the light of the particular circumstances of the case which make the presence of a solicitor impracticable. The guarantees otherwise available are entirely commendable. But they are, in truth, incapable of removing the disadvantage that a detainee will suffer if, not having had access to a solicitor for advice before he is questioned by the police, he makes incriminating admissions or says something which enables the police to obtain incriminating evidence from other sources which is then used against him at his trial. Much was made, of course, of the rule of Scots law that there must be corroboration of a confession by independent evidence. But there was independent evidence in Salduz. The reasoning in that case offers no prospect of its ruling being held not to apply because any confession must under Scots law be corroborated. The fact is that the system of detention under sections 14 and 15 of the 1995 Act was devised, on the advice of the Thomson Committee, on a view of where the balance is to be struck between the public interest and the rights of the accused which is irreconcilable with the Convention rights. It was also out of keeping with current thinking in the rest of the United Kingdom. There is no sign in its report of any attempt at comparative jurisprudence on this issue. The Royal Commission on Criminal Procedure (the Philips Commission), on the other hand, concluded that all suspects other than those suspected of grave offences should have an unrestricted right to consult and communicate privately with a solicitor at any stage of the investigation, and even for the restricted group the circumstances in which that right might be withheld should be limited and the subject of record and review: Report of the Commission, Cmnd 8092 (January 1981), para 4.93. Subsequent research showed that the presence of a solicitor or other legal adviser had relatively little effect on the behaviour of detainees when they were being questioned by the police: David Dixon, Common sense, legal advice and the right of silence (1991) Public Law 233, 252. Of course, Parliament was entitled to establish two different systems within the same overall constitutional framework of the United Kingdom, as Lord Rodger observed in Cullen v Chief Constable of the Royal Ulster Constabulary [2003] 1 WLR 1763, para 87. But, by preferring to go their own way, those who were promoting the legislation that gave effect to the Thomson Committees recommendations were shutting their eyes to the way thinking elsewhere was developing. Now, sadly, 30 years on the Scottish criminal justice system must reap the consequences. Section 6(2) of the Human Rights Act 1998: issue 5 The Lord Advocate submitted that her reliance on the evidence of the police interview was protected by section 57(3) of the Scotland Act 1998, even if that act was incompatible with the appellants article 6 Convention rights. This was because she was giving effect to provisions in sections 14 and 15 of the 1995 Act which could not be read or given effect in a way that was compatible with them. I can dispose of this issue quite shortly. Section 57(2) of the Scotland Act provides that a member of the Scottish Executive has no power to make any subordinate legislation or to do any other act so far as the legislation or act is incompatible with the Convention rights. Section 57(3) provides: (3) Subsection (2) does not apply to an act of the Lord Advocate (a) (b) in prosecuting any offence, or in his capacity as head of the systems of criminal prosecution and investigation of deaths in Scotland, which, because of subsection (2) of section 6 of the Human Rights Act 1998, is not unlawful under subsection (1) of that section. Subsections (1) and (2) of section 6 of the Human Rights Act are in these terms: (1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. (2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions. The Lord Advocate did not seek to rely on the exception provided by subsection (2)(a) of section 6. She could not, of course, do so as there is nothing in sections 14 or 15 of the 1995 Act which prohibits access by the detainee to legal advice prior to or during a police interview or directs that the answers given must be led in evidence. Everything therefore depends on whether she can bring herself within the exception provided by subsection (2)(b). It seems to me however that, as Lord Rodger pointed out during the argument, she faces an insuperable obstacle, having regard to what section 14(7) of the 1995 provides. So far as relevant, it states: (7) Where a person is detained under subsection (1) above, a constable may (a) without prejudice to any relevant rule of law as regards the admissibility in evidence of any answer given, put questions to him in relation to the suspected offence. [emphasis added] The question is whether the phrase which I have identified can or cannot be read or given effect in a way which is compatible with the detainees article 6 Convention rights. There can, I think, be only one answer to this question. It is plain that the phrase which I have emphasised can be read and given effect so as to preclude the admission in evidence of any incriminating answers obtained by the police from a detainee who is subjected to questioning without access to legal advice. The consequence of Salduz is that, as a general rule, such evidence is inadmissible. Allowance must be made, as the Grand Chamber acknowledged in para 55, for the possibility that in the light of the particular circumstances of the case there are compelling reasons to restrict the right of access. But nothing of that kind has been suggested in this case. As section 14(7) can be read and given effect in a way that would preclude leading and relying on the evidence of the police interview, the act of the Lord Advocate in leading and relying on that evidence is not exempted from challenge by section 57(3) of the Scotland Act. The conclusion must be that, in terms of section 57(2), she had no power to lead and rely on that evidence. Prospective overruling: issue 8 This is, perhaps, the most difficult and anxious of all the issues that the court faces in this case. As is well known, the decision in Salduz caused a considerable disruption to criminal business in Scotland. It led to preliminary objections being taken in many cases, and associated devolution issue minutes being lodged, on the basis that the Crowns proposed reliance on incriminating statements made by suspects while detained would render the trial unfair. This has disrupted and delayed the progress of criminal trials throughout Scotland. Numerous appeals by persons wishing to take that point are awaiting hearing in the High Court of Justiciary. That disruption, which is likely to impose a severe burden on an already overburdened appeal court, is continuing and is likely to continue. If it were open to the court to provide a solution to this problem, there would be compelling reasons why it should do so. The court has power under section 102(2) of the Scotland Act 1998 to make an order removing or limiting any retrospective effect of a decision that an Act of the Scottish Parliament is not within the legislative competence of the Scottish Parliament. But we are not dealing in this case with the effect of legislation which is incompatible with a Convention right. The issue is directed to the powers of the Lord Advocate as one of the Scottish Ministers. Section 102 does not give the court power to remove or limit the effect of a decision that an act of the Lord Advocate was one that, in terms of section 57(2) she had no power to make. The absence of such a power in the statute, at the very least, is a considerable obstacle, on the inclusio unius est exclusio alterius principle. The legislation could have included such a power, but it did not do so. In its absence, the statutory declaration that the Lord Advocate had no power to do what she did must be given effect. Her act, whenever it occurred, must simply be held to have been invalid. It is hard to see how, under this statutory regime, there can be any room for limiting the effect of that decision by holding that it is not to have retrospective effect. There are now a considerable number of dicta to the effect that the court has a general inherent power to limit the retrospective effect of its decisions: see, for example, In re Spectrum Plus Ltd [2005] UKHL 41, [2005] 2 AC 680; Ahmed v HM Treasury (no 2) [2010] UKSC 5, [2010] 2 WLR 378, para 17. The principle of legal certainty, which the Strasbourg court in Marckx v Belgium (1979) 2 EHRR 330, para 58, said was inherent in the Convention as in Community law, suggests that there would be no objection to this on Convention grounds. In that case the court dispensed the Belgian state from re opening legal acts or situations that antedated the delivery of its judgment. It followed the same approach in Walden v Liechtenstein, application no 33916/96, 16 March 2000. The court said that it had also been accepted that, in view of the principle of legal certainty, a constitutional court may set a time limit for the legislator to enact new legislation with the effect that an unconstitutional provision remains applicable for a transitional period. Section 102 of the Scotland Act gives effect to that principle. Had it been open to us to do so, I would have wished to exercise the inherent power in this case. But I have come to the conclusion that the statutory regime that applies to this case precludes our doing so. Furthermore, it would not be right to deny the appellant, and other appellants like him who have taken the point timeously, an appropriate remedy for breach of the Convention right. I would have felt less inhibited if the Grand Chamber had made it clear in Salduz that it was departing from its previous case law and that it was laying down a new principle. But, as I have already observed, there is no indication anywhere in its judgment that it was its intention to do so. Far from making a ruling that was not applicable to acts or situations that pre dated its judgment, it ruled that the applicants Convention rights were violated in 2001 when the relevant events took place. That is not to say that the principle of legal certainty has no application. On the contrary, I think that there are strong grounds for ruling today, on the basis of this principle and bearing in mind the fact that the Salduz objection could have been raised at any time after the right of challenge on Convention grounds became available, that the decision in this case does not permit the re opening of closed cases. Cases which have not yet gone to trial, cases where the trial is still in progress and appeals that have been brought timeously (see section 100(3B) of the Scotland Act 1998, as amended by the Convention Rights Proceedings (Amendment) (Scotland) Act 2009 to which Lord Rodger refers in paras 105 and 106) but have not yet been concluded will have to be dealt with on the basis that a person who is detained must have had access to an enrolled solicitor before being questioned by the police, unless in the particular circumstances of the case there were compelling reasons for restricting this right. As for the rest, I would apply Murray CJs dictum that the retrospective effect of a judicial decision is excluded from cases that have been finally determined: A v The Governor of Arbour Hill Prison [2006] IESC 45, [2006] 4 IR 88, para 36. That was a case where the statutory provision under which the applicant was convicted was later declared by the Irish Supreme Court to be unconstitutional. In paras 125 126 the Chief Justice set out the general principle in these terms: 125 In a criminal prosecution where the State relies in good faith on a statute in force at the time and the accused does not seek to impugn the bringing or conduct of the prosecution, on any grounds that may in law be open to him or her, including the constitutionality of the statute, before the case reaches finality, on appeal or otherwise, then the final decision in the case must be deemed to be and to remain lawful notwithstanding any subsequent ruling that the statute, or a provision of it, is unconstitutional. That is the general principle. 126 I do not exclude, by way of exception to the foregoing general principle, that the grounds upon which a court declares a statute to be unconstitutional, or some extreme feature of an individual case, might require, for wholly exceptional reasons related to some fundamental unfairness amounting to a denial of justice, that verdicts in particular cases or a particular class of cases be not allowed to stand. In para 127 he observed that the applicant, like all persons in his position, could have sought to prohibit prosecution on several grounds including that the section was inconsistent with the Constitution and that, not having done so, they were tried and either convicted or acquitted under due process of law. Once finality is reached in these circumstances, he said, the general principle should apply. The same approach was recently adopted by the Court of Appeal in England in a case where the statute under which the appellants were convicted had not been notified as required by EU law: R v Budimir [2010] EWCA Crim 1486. Reference was made in that case to Marckx v Belgium and Walden v Liechtenstein, as well as to Murray CJs observations in A v Governor of Arbour Hill Prison. In the light of these authorities I would hold that convictions that have become final because they were not appealed timeously, and appeals that have been finally disposed of by the High Court of Justiciary, must be treated as incapable of being brought under review on the ground that there was a miscarriage of justice because the accused did not have access to a solicitor while he was detained prior to the police interview. The Scottish Criminal Cases Review Commission must make up its own mind, if it is asked to do so, as to whether it would be in the public interest for those cases to be referred to the High Court. It will be for the appeal court to decide what course it ought to take if a reference were to be made to it on those grounds by the Commission. Conclusion I agree with Lord Rodgers judgment. For the reasons he gives, and these reasons of my own, I would hold that the decisions of the High Court of Justiciary in Paton v Ritchie 2000 JC 271, Dickson v HM Advocate 2001 JC 203 and HM Advocate v McLean 2010 SLT 73 are no longer good law in the light of the Grand Chambers ruling in Salduz and that they should be overruled. I would allow the appeal on the ground that leading and relying on the evidence of the appellants interview by the police was a violation of his rights under article 6(3)(c) read in conjunction with article 6(1) of the Convention. Mr Shead invited the court simply to allow the appeal and quash the conviction. But that would only be appropriate if it was clear that there was insufficient evidence for a conviction without the evidence of the police interview or that, taking all the circumstances of the trial into account, there was a real possibility that the jury would have arrived at a different verdict had they not had that evidence before them: McInnes v HM Advocate [2010] UKSC 7, 2010 SLT 266. This court is not in a position to make that assessment. It is a matter that must be for determination by the High Court of Justiciary. So I would remit the case to that court for further procedure. LORD RODGER I have had the advantage of considering Lord Hopes judgment in draft. I agree with it and, for the reasons which he gives, I too would allow the appeal. In doing so, the Court will be overruling the unanimous decision of the seven member appeal court in HM Advocate v McLean 2010 SLT 73, the written judgment in which was issued on 15 December 2009. Because of this, and because of the obvious importance of the appeal, I add some observations of my own. In doing so, I gratefully adopt Lord Hopes account of the facts and issues. Understandably, both the appeal court and the Lord Advocate in her submissions to this Court were at pains to describe the many safeguards that the criminal law of Scotland provides for accused persons. They pointed out that sections 14 and 15 of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act) were to be seen in that overall context. I agree with that general approach which I indeed adopted when briefly referring to the Scottish position in Cullen v Chief Constable of the Royal Ulster Constabulary [2003] 1 WLR 1763, 1790 1791, para 87. But, in a very real sense, for present purposes these safeguards are beside the point. The European Courts reasoning in Salduz v Turkey (2008) 49 EHRR 421 starts from the implied right of an accused person under article 6(1) and (3)(c) of the European Convention not to incriminate himself. The recognition of this right under the Convention can be traced back to the decision of the Grand Chamber in Saunders v United Kingdom (1996) 23 EHRR 313, 337, para 68: The Court recalls that, although not specifically mentioned in article 6 of the Convention, the right to silence and the right not to incriminate oneself, are generally recognised international standards which lie at the heart of the notion of a fair procedure under article 6. Their rationale lies, inter alia, in the protection of the accused against improper compulsion by the authorities thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of article 6. The right not to incriminate oneself, in particular, presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused. In this sense the right is closely linked to the presumption of innocence contained in article 6(2) of the Convention (internal citations omitted). This reasoning is reflected in Salduz, 49 EHRR 421, 436, para 54. To avoid the risk that the police may use coercion or oppression to obtain evidence from a suspect, the Grand Chamber goes on to derive a further implied right, viz the right to early access to a lawyer. Again, the court is building on its existing case law. It cites, inter alia, Murray v United Kingdom (1996) 22 EHRR 29, 66, para 63: National laws may attach consequences to the attitude of an accused at the initial stages of police interrogation which are decisive for the prospects of the defence in any subsequent criminal proceedings. In such circumstances article 6 will normally require that the accused be allowed to benefit from the assistance of a lawyer already at the initial stages of police interrogation. However, this right, which is not explicitly set out in the Convention, may be subject to restrictions for good cause. The question, in each case, is whether the restriction, in the light of the entirety of the proceedings, has deprived the accused of a fair hearing. When referring to Murray and two other cases, the English text of para 52 of the judgment in Salduz, 49 EHRR 421, 436, says that the right to legal assistance at the initial stages of police interrogation has so far been considered capable of being subject to restrictions for good cause (emphasis added) and that the question in each case has therefore been whether the restriction was justified. The language might seem to suggest that in Salduz the Grand Chamber was innovating and laying down a rule under which restrictions for good cause would now be treated differently. The language of the French text of para 52 is different and gives no support for any such inference, however. Referring to the right to legal assistance at the initial stage of police questioning, the court says: Ce droit, que la Convention nnonce pas expressment, peut toutefois tre soumis des restrictions pour des raisons valables. Il sagit donc, dans chaque cas, de savoir si la restriction litigieuse est justifie et, dans laffirmative, si, considre la lumire de la procdure dans son ensemble, elle a ou non priv laccus dun procs quitable, car mme une restriction justifie peut avoir pareil effet dans certaines circonstances. Moreover, the court finds, 49 EHRR 421, 437, para 55, that, for the right to a fair trial to remain sufficiently practical and effective, article 6(1) requires that, as a rule (en rgle gnrale), access to a lawyer should be provided as from the first interrogation of a suspect by the police, unless it is demonstrated in the light of the particular circumstances of each case that there are compelling reasons to restrict this right. Even then, any restriction must not unduly prejudice the rights of the accused under article 6. The law remains the same in this respect. The narrow base the need to protect the right against self incrimination from which the Grand Chamber in Salduz derives this right of access to a lawyer explains why, in its view, access is to be provided from the first interrogation of the suspect, rather than from the time when he is taken into police custody. As his concurring opinion shows, 49 EHRR 421, 441, para OI1, like Judge Zagrebelsky, the President, Judge Bratza, would have preferred to go further and to affirm that, as a rule, a suspect should be granted access to legal advice from the moment he is taken into police custody or pre trial detention. A right to legal advice from that earlier stage could not, of course, be derived from the implied right against self incrimination, but would have to be derived from the need for legal assistance for other purposes for example, to support the accused in distress, to check his conditions of detention etc. See p 446, para O III5. It is unnecessary to express any view on the merits of that argument since the point does not arise in this case. But, as I see it, if a suspect had the right to access to legal assistance from the time of his detention, as envisaged by Judge Bratza, it would mean that he could not be refused such assistance if it were available. But the State would not be under a positive obligation to ensure the availability of legal assistance in all circumstances. So there would be no violation of the right simply because, due, say, to the time of night or the remoteness of the police station, no legal assistance was actually available when the suspect was detained. Cf Brennan v United Kingdom (2001) 34 EHRR 507, 521, para 47. I would read Judge Bratzas opinion in that sense. The fact that the European Court derives the suspects right to legal assistance at the initial stages of police questioning from his right not to incriminate himself has two significant consequences for present purposes. First, in HM Advocate v McLean 2010 SLT 73, 84, para 29, the appeal court noted that the European Commission of Human Rights had made no adverse comment on the Scottish system of police questioning in Windsor v United Kingdom (Application No 13081/87), 14 December 1988 (unreported), and Robson v United Kingdom (Application No 25648/94), 15 May 1996 (unreported). These decisions cannot be regarded as authoritative today, however, since they antedate the Grand Chamber decision in Saunders on the right not to incriminate oneself. Secondly, the derivation of the right to legal advice before questioning explains why many of the established safeguards for accused persons in Scots law are really beside the point in the present context. Since this implied right is based on the need to protect the right of the person concerned not to incriminate himself, the only safeguards in Scots domestic law which could be relevant would be those which were designed to protect that right. Those safeguards have evolved over time. So, while the precise issue in the present case is relatively new, it is important to notice that the issue of whether legal advice should be available to suspects being questioned about an offence is by no means new: on the contrary, it has a long pedigree in Scottish criminal law. In sketching the twists and turns, I acknowledge the assistance which I have derived from Sir Gerald Gordons article, The Admissibility of Answers to Police Questioning in Scotland, in P R Glazebrook (ed), Reshaping the Criminal Law: Essays in honour of Glanville Williams (1978), pp 317 343. Originally, the official charged with investigating crime was usually the sheriff substitute (the sheriff) of the district, who would appoint a procurator fiscal to assist him. (The link between sheriffs and procurators fiscal was not broken until section 2 of the Sheriff Courts and Legal Officers (Scotland) Act 1927 transferred the right to appoint procurators fiscal to the Lord Advocate.) If presented with information about an apparently serious crime, the sheriff would grant warrant to officers of law to search for and apprehend the suspect and to bring him to court for examination. (The wording of the warrant remains essentially the same today.) It was then the duty of the sheriff to examine the suspect about the crime. It appears that, originally at least, that examination could be fairly vigorous. While practice seems to have varied from district to district, by the middle of the nineteenth century, except in the gravest cases, many sheriffs left the questioning to the procurator fiscal. Again, the practice of procurators fiscal varied, but by the 1860s the predominant view appears to have been that, if the suspect did not wish to say anything, he should not be pressed to do so. Eventually, section 77 of the Summary Jurisdiction (Scotland) Act 1908 provided that, if the accused or his agent intimated that he did not desire to emit a declaration, it was to be unnecessary to take one. By that time, the system of judicial declarations had largely fallen into desuetude, however. While the judicial examination system was still active, the position was that, once the suspect had made his declaration or had declined to do so, he would be committed for further examination. The procurator fiscal would then either continue, or begin, precognoscing the witnesses to the alleged crime. When that had been done, the suspect could be further examined in the light of the additional evidence. It was then the sheriffs duty to decide, in the light of all the available material, whether the suspect should be released or committed until liberated in course of law. If he was committed, the papers would be sent to Crown Office for Crown counsel to decide whether proceedings should be taken. If Crown counsel decided against prosecution, the proceedings would come to an end and, if still in custody, the suspect would be released. Otherwise, he would be indicted for trial or, if Crown counsel thought that the offence was relatively minor, he would be tried summarily. Under this system it was essential for the sheriff to be present during the examination of the suspect, as it is his duty to protect him from any unfair or oppressive examination (the prisoner not being permitted to have legal advice): Macdonald, A Practical Treatise on the Criminal Law of Scotland (first edition, 1867), p 290. In particular, since anything said by the suspect was evidence against him only if it was emitted of his own free will, it was the duty of the sheriff to inform the prisoner of this, because he may not always know, or may sometimes be afraid to assert his privilege: Hume, Commentaries on the Law of Scotland respecting Crimes (third edition by B R B Bell, 1844) vol 2, pp 80 81; Alison, Practice of the Criminal Law of Scotland (1833), p 131. The lack of legal advice, in a procedure which was apparently designed to obtain admissions to be used against the suspect, struck a distinguished German observer, Carl Mittermaier, when he visited Scotland in 1850: C J A Mittermaier, Das englische, schottische und nordamerikanische Strafverfahren (1851), pp 193 194. Plainly, the theory was that the presiding sheriff would ensure that the prisoners rights, including his right against self incrimination, were protected. To be effective, this system depended on the sheriff and the procurator fiscal acting conscientiously. Since the whole procedure took place in private, however, it was hard to be sure that they always actually did so. See, for instance, R C, On the Investigation of Crime in Scotland (1864) 8 Journal of Jurisprudence 473 484, at p 480; F Russell, On the Procedure in Criminal Prosecutions in Scotland Preliminary to Trial (1870) 14 Journal of Jurisprudence 259 268. The system was examined by the Royal Commission on the Courts of Law in Scotland chaired by Lord Colonsay. A number of witnesses thought that suspects should have a right to legal advice before being examined. For instance, Mr Macdonald, advocate, the author of the recently published book on criminal law, had never been able to reconcile himself to the practice of taking a declaration from a prisoner before he was allowed to have any legal advice: the Commissions Third Report (C 36, 1870), p 679, Q 16,895. The majority of the Commission recommended against the introduction of a right to legal advice before the declaration: Fifth Report (C 260, 1871), p 6. They may have been influenced by Macdonalds evidence that persons in the better rank who were legally advised usually then declined to answer questions at their examination: Third Report, p 680, Q 16,906. Notable among the minority who favoured introducing a right for the suspect to consult a lawyer were Lord Advocate Young and the future Lord Shand. No legislation on this matter followed the Commissions report. But Mr Macdonald bided his time and eventually, as Lord Advocate, he promoted the Bill which became the Criminal Procedure (Scotland) Act 1887 (the 1887 Act). Section 17 provided that any person who was arrested on a criminal charge was to be entitled immediately upon such arrest to have intimation sent to a lawyer that his assistance was needed. The lawyer was to be told the place to which the person was to be taken for examination and the lawyer was to be entitled to have a private interview with the person accused before he is examined on declaration, and to be present at such examination, which shall be conducted according to the existing practice. The sheriff could delay the examination for up to 48 hours from the time of arrest, in order to allow the lawyer to attend. It was soon held that, at least in serious cases, it was the duty of the sheriff, before taking the declaration, to inform the accused that he had the right to confer with a lawyer: HM Advocate v Goodall (1888) 2 White 1. Therefore, once the 1887 Act was in force, an accuseds right not to incriminate himself at his judicial examination was protected by the right to a private interview with his lawyer before the examination. At first sight, the Scottish system would have gone at least some way towards meeting the relevant requirement of article 6(1) and (3)(c) of the Convention. In practice, things were rather different. In the course of the nineteenth century police forces were set up in burghs under the Burghs Police (Scotland) Act 1833 and in counties under the Police (Scotland) Act 1857. Therefore, by the time the 1887 Act was passed, the reality was that police officers, rather than the sheriff and his procurator fiscal, had come to shoulder the main burden of investigating offences, though they worked under the supervision of the local procurator fiscal. So, instead of simply applying for, and executing, warrants to take those suspected of committing crimes to be examined before the sheriff, police officers would conduct enquiries of their own. In particular, they would look for witnesses and take statements from them. In itself, that was not problematic. But, when suspicion came to focus on an individual, a significant problem did emerge. Could the police question that individual or should they take him to the sheriff so that he could be examined in court where he would enjoy the protections afforded by the right to consult a lawyer beforehand, by the presence of the lawyer at his examination and by the supervision of a judicial figure? In practice, it was accepted that, once the police had arrested and charged a suspect, they could not question him further: he had a right to legal advice and any further questioning had to take place in the context of his subsequent judicial examination. But, as noted already, by 1909, the system of judicial examination was in decline. The changes made by the Summary Procedure (Scotland) Act 1908 completed that decline. See Renton and Brown, Criminal Procedure according to the Law of Scotland (second edition, 1928), p 33. So the position came to be simply that the police could not question someone whom they had arrested. The prevailing view was, however, that police officers could take any voluntary statement that he chose to make even though he had not enjoyed the protections of a judicial examination. Obviously, the police could not avoid the bar on questioning after arrest by choosing to postpone arresting and charging someone against whom they already had sufficient evidence (the chargeable suspect). But, short of that, could police officers question someone whom they already suspected of committing the offence, in the hope of obtaining enough evidence to charge him? There were two very real difficulties. In practice, the police would question suspects at a police station. But it was hard to find any legal basis for the police detaining such a person whom they had not arrested. Since someone in that position had no right to legal advice (Thompson v HM Advocate 1968 JC 61, 65, per Lord Justice General Clyde), in practice, most people acquiesced in the questioning. See, for instance, the remarks of Lord Justice General Cooper in Chalmers v HM Advocate 1954 JC 66, 75. In this connexion, in their second report on Criminal Procedure in Scotland (Cmnd 6218, 1975), para 2.03, the Thomson Committee elegantly referred to police practices which were accepted by the public, including criminals, as fair although they may be technically illegal or at least of doubtful legality. But, assuming that the suspect stayed to be questioned, were his answers admissible in evidence against him? The views of the judges fluctuated considerably over a long period. Eventually, however, a consensus emerged that questioning of a person in that position was permissible and the answers were admissible in evidence against him, provided only that the questioning was fair. See, for instance, Hartley v HM Advocate 1979 SLT 26. The very real difficulty for police officers and for courts was to determine at what point someone passed, from being a suspect who could be questioned, to being a suspect who could no longer be questioned since there was enough evidence to charge him. In Chalmers v HM Advocate 1954 JC 66, 81 82, Lord Justice Clerk Thomson referred to the ordinary routine investigation by the police of a crime and continued: In the course of such an investigation the man ultimately accused may be interviewed. It would unduly hamper the investigation of crime if the threat of inadmissibility were to tie the hands of the police in asking questions. It would help to defeat the ends of justice if what the person so questioned said in answer to ordinary and legitimate questions were not admissible in evidence against him. I am assuming throughout that the questioning is not tainted by bullying, pressure, third degree methods and so forth. Evidence obtained by such methods can never be admissible in our courts, whatever stage the investigation has reached. But there comes a point of time in ordinary police investigation when the law intervenes to render inadmissible as evidence answers even to questions which are not tainted by such methods. After the point is reached, further interrogation is incompatible with the answers being regarded as a voluntary statement, and the law intervenes to safeguard the party questioned from possible self incrimination. Just when that point of time is reached is in any particular case extremely difficult to define or even for an experienced police official to realise its arrival. There does come a time, however, when a police officer, carrying out his duty honestly and conscientiously, ought to be in a position to appreciate that the man whom he is in process of questioning is under serious consideration as the perpetrator of the crime. Once that stage of suspicion is reached, the suspect is in the position that thereafter the only evidence admissible against him is his own voluntary statement. In summary, at the stage of routine investigation, the right to protection against self incrimination was not in play because the individuals were being questioned as potential witnesses rather than as suspects. But, once the police officer realised, or should have realised, that a particular individual was under serious consideration as the perpetrator of the crime, the common law intervened to safeguard him from possible self incrimination and the only admissible evidence was his own voluntary statement. Admittedly, the intervention of the common law did not go so far as to secure him the right to consult a lawyer. This was the background against which the Thomson Committee made their recommendations in 1975. One aim was to put an end to the doubts about the legal basis for holding suspects for questioning when they had not been arrested. Another was to clarify the law as to the power of the police to question suspects and as to the admissibility of any answers that the suspects gave to such questions. The upshot, in relation to the legal basis for holding a suspect, was section 2 of the Criminal Justice (Scotland) Act 1980 (the 1980 Act), which was consolidated as section 14 of the 1995 Act. The section gives a constable a right to detain a person for questioning where he has reasonable grounds for suspecting that the person has committed or is committing an offence punishable by imprisonment. In other words, anyone who is detained under the section is, by definition, already reasonably suspected of committing the offence about which he is being questioned. The authorised period of detention under the section is six hours, after which the police must arrest and charge him or else release him. In this way the legislation successfully resolved the doubts about the legal basis for detaining suspects for questioning. Section 3 of the 1980 Act, now section 15 of the 1995 Act, deals with legal assistance for those detained under the legislation. It is noticeably weaker than section 17 of the 1887 Act: it does not confer any right for the suspect to consult a lawyer before being questioned or, a fortiori, to have the questioning delayed until a lawyer can be consulted. The suspect is simply entitled to have intimation of his detention, and of the place of his detention, sent to a solicitor without delay or, where some delay is necessary in the interest of the investigation or the prevention of crime or the apprehension of offenders, with no more delay than is so necessary. Section 6 of the 1980 Act tried to breathe new life into the procedure for judicial examination. The reformed system is now to be found in sections 35 39 of the 1995 Act. Notably, section 36(6) gives the accused a right to consult his solicitor before answering any of the procurator fiscals questions. Although judicial examination forms a recognised step in solemn cases, the truth is that only rarely does the accused make use of it to give an account of his position. Having usually said all that he wished to say when questioned by the police before his arrest, the accused tends to decline to say more on the advice of his solicitor. The re introduction of the procedure cannot therefore be accounted a real success from the point of view of either the Crown or accused persons. Since the maximum period of detention under section 14 of the 1995 Act is six hours, it is obvious that, in the absence of any power to postpone the running of the six hour period, a right to consult a lawyer before the questioning began would, in many cases, be unworkable. So the denial of a right for a suspect to consult a lawyer before being questioned might, in theory, have been devised merely as a necessary trade off for restricting the permissible period of detention to six hours. That is indeed how I tended to see the position in Cullen v Chief Constable of the Royal Ulster Constabulary [2003] 1 WLR 1763, 1790 1791, para 87. But the investigations of counsel in the present case show beyond doubt that the thinking behind section 15 was very different. The reasoning behind the section is to be found in para 7.16 of the second report of the Thomson Committee: Although a person who has been charged with an offence is entitled to an interview with a solicitor, we recommend that a solicitor should not be permitted to intervene in police investigations before charge. The purpose of the interrogation is to obtain from the suspect such information as he may possess regarding the offence, and this purpose might be defeated by the participation of his solicitor. It is for this reason that we recommend in chapter 5.08 that it will be a matter of police discretion whether to allow the detainee an interview with his solicitor. Following this recommendation, section 3 of the 1980 Act (now section 15 of the 1995 Act) was designed to deny an individual, who was already reasonably suspected of committing the crime, a right to obtain legal advice when he was to be questioned. This was done because of a fear that allowing him to take legal advice beforehand would tend to frustrate the police in their efforts to obtain information from him about the crime. In short, section 15 of the 1995 Act deliberately deprives the suspect of any right to take legal advice before being questioned by the police, in the hope that, without it, he will be more likely to incriminate himself during questioning. As already mentioned, in HM Advocate v McLean 2010 SLT 73, 83, para 27, the appeal court listed many features of Scots criminal law that provide protection to an accused person. They are indeed admirable and, in certain respects, go further than the protections offered by some other systems. But these protections cannot, and do not, make up for the lack of any right for the suspect to take legal advice before being questioned. For example, a modern recording of a police interview shows how it was conducted, what answers the suspect gave and what his attitude was. It therefore eliminates many of the doubts that used to surround police questioning but it does nothing to diminish the fact that the questioning takes place without the suspect having any right to legal advice as to whether he should say anything at all and, if so, how far he should go. It is significant that, in the 1887 Act, Parliament introduced a right to take legal advice before a suspect was judicially examined, even though the questioning was to be overseen by a sheriff and the administration of a form of caution and the doctrine of corroboration were recognised elements of Scottish criminal law at the time. By withholding the right to take legal advice, section 15 of the 1995 Act is intended to give the police and therefore the prosecution an enhanced possibility of obtaining incriminating admissions from the suspect which can then be deployed in evidence at his trial. The Lord Advocate did not suggest that whether due to the existence of the various protections or for any other reason the legislation had failed to fulfil this intention. The only possible conclusion is that section 15 creates a procedure under which, as a rule, access to a lawyer is denied at the stage when a suspect is questioned by the police even though the aim of the questioning is to obtain admissions from him which may later be used against him at trial. The present case, where the Crown suggested to the jury that the appellants answers to the police were a very significant part of the evidence, is fairly typical. The procedure under sections 14 and 15 of the 1995 Act is therefore, in this respect, the very converse of what the Grand Chamber holds is required by article 6(1) and (3)(c) of the Convention: Salduz v Turkey (2008) 49 EHRR 421, 437, para 55. Moreover, the Grand Chamber long since declared that the right to silence and the right not to incriminate oneself, are generally recognised international standards which lie at the heart of the notion of a fair procedure under article 6: Saunders v United Kingdom (1996) 23 EHRR 313, 337, para 68. Cf Murray v United Kingdom (1996) 22 EHRR 29, 60, para 45. A right of access to a lawyer, which is implied in order to protect a right at the heart of the notion of a fair procedure under article 6, must itself lie near that heart. For this reason, in my view there is not the remotest chance that the European Court would find that, because of the other protections that Scots law provides for accused persons, it is compatible with article 6(1) and (3)(c) for the Scottish system to omit this safeguard which the Committee for the Prevention of Torture regards as fundamental and for suspects to be routinely questioned without having the right to consult a lawyer first. On this matter Strasbourg has spoken: the courts in this country have no real option but to apply the law which it has laid down. Two points are perhaps worth adding. First, as the European Court recognises, 49 EHRR 421, 437, para 55, since the right to legal assistance at the stage when a suspect is to be questioned is an implied right, it is not absolute and must be subject to exceptions when, in the particular circumstances, there are compelling reasons to restrict it. It is not suggested that there would have been any such reasons in this case. But the circumstances in which section 15 of the 1995 Act envisages delaying intimation to a solicitor (the interest of the investigation or the prevention of crime or the apprehension of offenders) could perhaps constitute compelling reasons to restrict the right of access in an appropriate case. It has to be remembered, however, that even a justified restriction may deprive an accused of a fair hearing and so lead to a violation of article 6: 49 EHRR 421, 436, para 52. Secondly, although the Court has deliberately refrained from entering into the circumstances of this particular case, which is still to be considered by the appeal court, it is common ground that the appellant actually declined to have intimation of his detention sent to any solicitor. It might therefore be that, had he had a right to consult a solicitor, he would have waived that right. It is, indeed, quite common for those who have been arrested to decide to make a voluntary statement to the police and not to exercise their right to obtain legal advice before doing so. See, for instance, the famous example in Manuel v HM Advocate 1958 JC 41, 49. Similarly, if a suspect had a right to legal advice before being questioned, but declined to exercise it, a court might have to consider whether, having regard to all the circumstances, he had effectively waived his relevant article 6 Convention right so that no violation would arise. To return to the main point. Assume that, up to now, the system for questioning suspects under the 1995 Act has assisted the police in obtaining incriminating information from suspects. It must follow that the recognition of a right for the suspect to consult a solicitor before being questioned will tilt the balance, to some degree, against the police and prosecution. Although inescapable, that consequence is one that many of those who are familiar with the way the present system operates may well find unpalatable. The change will, however, have the effect of putting the police and prosecution in Scotland in the same position in this respect as the police and prosecution in the rest of the United Kingdom and, indeed, in other countries which are members of the Council of Europe. Lord Hope has mentioned that a number of States have taken steps to alter their law to bring it into line with the approach laid down by the European Court in Salduz. In particular, as he explains, since the hearing there has been a series of developments in France. These culminated in the decision of the European Court in Brusco v France (Application no 1466/07), 14 October 2010, paras 45 and 54, confirming the law as laid down in Salduz, followed by the three decisions of the Chambre Criminelle of the Cour de Cassation of 19 October 2010 applying that law, but postponing the effect of doing so. The need for legislation to deal with the new situation has been recognised in France. Equally, there will need to be changes in both legislation and police and prosecution practice to bring the Scottish system of police questioning into line with the requirements of Strasbourg and to ensure that, overall, any revised scheme is properly balanced and makes for a workable criminal justice system. At the hearing before this Court the Lord Advocate indicated that, despite the judgment in HM Advocate v McLean 2010 SLT 73, steps had already been taken to allow for the possibility that, at some point, section 15 of the 1995 Act might be found to be incompatible with article 6. Reports in the media since the hearing indicate that further steps are being taken by various groups in anticipation of a change. The necessary reforms are, however, matters for the Scottish Executive and Parliament, not for this Court. The interval between the hearing of the appeal and the announcement of the Courts decision should, however, have given the responsible authorities time to prepare appropriate legislation for the consideration of the Parliament. Any changes in the relevant legislation or practices will, of course, apply only to future cases. At the hearing of the appeal the Lord Advocate submitted that, if the Court were to decide against the Crown, it should make a ruling with only prospective effect. As she pointed out, since 1999 the Scottish courts have dealt with many thousands of cases in which the Crown obtained convictions by relying, to a greater or lesser extent, on answers to questioning under section 14 of the 1995 Act. The Court should not make a ruling that would throw these convictions into doubt. The Lord Advocates submission appeared to be based on an apprehension that, unless the Court took some exceptional step, a decision to allow this appeal would operate retroactively to undermine any convictions which had been obtained in reliance on evidence from police questioning in cases completed since May 1999. That would, however, be to adopt an extreme version of the accepted doctrine that courts declare not only what the law is, but what it has always been. And it would be to adopt a theory which has never been applied to other well known appellate decisions that were perceived to alter the law as it had previously been understood. The effect of a decision which develops the law was examined by the Supreme Court of Ireland in A v The Governor of Arbour Hill Prison [2006] 4 IR 88. In June 2004 A pleaded guilty to, and was convicted of, unlawful carnal knowledge, contrary to section 1(1) of the Irish Criminal Law (Amendment) Act 1935. Then, on 23 May 2006, in CC v Ireland [2006] 4 IR 66, the Supreme Court declared that section 1(1) was inconsistent with the Irish Constitution. Three days later, A applied for an order for his release on the ground that his detention, by virtue of a sentence of imprisonment following his conviction in 2004 under section 1(1), was unlawful because that provision had now been declared to be unconstitutional. The Supreme Court rejected that argument and held that the declaration of inconsistency in CC v Ireland applied to the parties in that case, or in related litigation, and prospectively, but that it did not apply retrospectively, unless there were wholly exceptional circumstances. The very full judgments in A v The Governor of Arbour Hill Prison repay study. But for present purposes guidance can be derived from the judgment of Murray CJ, [2006] 4 IR 88, 117, paras 36 38: 36. Judicial decisions which set a precedent in law do have retrospective effect. First of all the case which decides the point applies it retrospectively in the case being decided because obviously the wrong being remedied occurred before the case was brought. A decision in principle applies retrospectively to all persons who, prior to the decision, suffered the same or similar wrong, whether as a result of the application of an invalid statute or otherwise, provided of course they are entitled to bring proceedings seeking the remedy in accordance with the ordinary rules of law, such as a statute of limitations. It will also apply to cases pending before the courts. That is to say that a judicial decision may be relied upon in matters or cases not yet finally determined. But the retrospective effect of a judicial decision is excluded from cases already finally determined. This is the common law position. 37. Only a narrow approach based on absolute and abstract formalism could suggest that all previous cases should be capable of being reopened or relitigated (even if subject to a statute of limitations). If that absolute formalism was applied to the criminal law it would in principle suggest that every final verdict of a trial or decision of a court of appeal should be set aside or, where possible, retried in the light of subsequent decisions where such subsequent decision could be claimed to provide a potential advantage to a party in such a retrial. In principle both acquittals and convictions could be open to retrial. But one has only to pose the question to see the answer. No one has ever suggested that every time there is a judicial adjudication clarifying or interpreting the law in a particular manner which could have had some bearing on previous and finally decided cases, civil or criminal, that such cases be reopened or the decisions set aside. 38. It has not been suggested because no legal system comprehends such an absolute or complete retroactive effect of judicial decisions. To do so would render a legal system uncertain, incoherent and dysfunctional. Such consequences would cause widespread injustices. Murray CJs description of the effect of a decision which alters the law as previously understood can be applied to Scots law. For instance, in Smith v Lees 1997 JC 73 the Court of Five Judges overruled Stobo v HM Advocate 1994 JC 28 and thereby laid down a more restrictive test for corroboration in cases of sexual assault. The new test applied to the appellants case and to other cases that were still live. But it could never have been suggested that the decision meant that convictions in completed cases, which had been obtained on the basis of the law as laid down in Stobo, were ipso facto undermined or invalidated. Similarly, in Thompson v Crowe 2000 JC 173, the Full Bench overruled Balloch v HM Advocate 1977 JC 23 and re established the need to use the procedure of a trial within a trial when the admissibility of statements by the accused is in issue. But, again, this had no effect on the countless completed cases where convictions had been obtained on the basis of evidence of such statements by the accused which judges had admitted in evidence without going through that procedure. So, here, the Courts decision as to the implications of article 6(1) and (3)(c) of the Convention for the use of evidence of answers to police questioning has no direct effect on convictions in proceedings that have been completed. To hold otherwise would be to create uncertainty and, as Murray CJ rightly observes, cause widespread injustices. And the Strasbourg court has pointed out that the principle of legal certainty is necessarily inherent in the law of the European Convention: Marckx v Belgium (1979) 2 EHRR 330, 353, para 58. In the Irish case Geoghegan J said, [2006] 4 IR 88, 200, para 286, that he was satisfied that it would be wholly against good order if convictions and sentences which were deemed to be lawful at the time they were decided had to be reopened. I emphatically agree. And that policy is, of course, embodied in section 124 of the 1995 Act which makes interlocutors and sentences pronounced by the appeal court final and conclusive and not subject to review by any court whatsoever, except in proceedings on a reference by the Scottish Criminal Cases Review Commission. The only way, therefore, in which the Courts decision in this case could have any effect on completed cases would be, indirectly, through the mechanism of such a reference by the Review Commission. It is, however, no part of this Courts function, in an appeal to which the Commission is not a party, to comment on the approach that it should adopt in handling any application for such a reference. It is for the Commission to consider where the public interest lies if an application is made to it for a reference to the High Court in a case that was properly conducted according to the law as understood at the time. A fortiori, it is no part of this Courts function on this occasion to comment on the approach to be adopted by the appeal court if the Commission should make a reference in such a case. That would be a matter for the appeal court to determine in the light of the arguments presented to it. I would not wish, however, to part with this case without drawing attention to a matter which was not mentioned by any of the counsel who appeared. In Somerville v Scottish Ministers 2008 SC (HL) 45 the House of Lords held that the time limit in section 7(5) of the Human Rights Act 1998 did not apply to proceedings in relation to Convention rights brought by reference to the Scotland Act 1998. It followed that, subject to any common law limitations or any specific statutory time limit, such proceedings could be brought at any time. The Scottish Parliament eventually responded to that decision by passing the Convention Rights Proceedings (Amendment) (Scotland) Act 2009, which amended section 100 of the Scotland Act so as to introduce a one year time limit like the one in section 7(5) of the Human Rights Act. In its present (amended) form section 100 provides: (1) This Act does not enable a person (a) to bring any proceedings in a court or tribunal on the ground that an act is incompatible with the Convention rights, or (b) to rely on any of the Convention rights in any such proceedings, unless he would be a victim for the purposes of Article 34 of the Convention (within the meaning of the Human Rights Act 1998) if proceedings in respect of the act were brought in the European Court of Human Rights. (2) Subsection (1) does not apply to the Lord Advocate, the Advocate General, the Attorney General, the Advocate General for Northern Ireland or the Attorney General for Northern Ireland. (3) This Act does not enable a court or tribunal to award any damages in respect of an act which is incompatible with any of the Convention rights which it could not award if section 8(3) and (4) of the Human Rights Act 1998 applied. (3A) Subsection (3B) applies to any proceedings brought on or after 2 November 2009 by virtue of this Act against the Scottish Ministers or a member of the Scottish Executive in a court or tribunal on the ground that an act of the Scottish Ministers or a member of the Scottish Executive is incompatible with the Convention rights. (3B) Proceedings to which this subsection applies must be brought before the end of (a) the period of one year beginning with the date on which the act complained of took place, or (b) such longer period as the court or tribunal considers equitable having regard to all the circumstances, but that is subject to any rule imposing a stricter time limit in relation to the procedure in question. (3C) Subsection (3B) does not apply to proceedings brought by the Lord Advocate, the Advocate General, the Attorney General, the Attorney General for Northern Ireland or the Advocate General for Northern Ireland. (3D) In subsections (3A) and (3B) act does not include the making of any legislation but it does include any other act or failure to act (including a failure to make legislation). (3E) The reference in subsection (3A) to proceedings brought on or after 2 November 2009 includes proceedings relating to an act done before that date. (4) Subject to subsection (3D), in this section act means (a) making any legislation, (b) any other act or failure to act, if it is the act or failure of a member of the Scottish Executive. The present proceedings are proceedings brought on the ground that it is incompatible with article 6(1) and (3)(c) for the Lord Advocate to lead evidence of answers to questions elicited by the police under section 14 of the 1995 Act when the accused had no right to legal advice and had not had legal advice. The leading of such evidence is an act for the purposes of the section: subsections (3D) and (4). Any fresh proceedings which sought to raise the same point in other cases would be brought on the same ground. If those proceedings were brought on or after 2 November 2009, they would fall within section 100(3A) of the Scotland Act as amended. Subsection (3E) makes it clear that subsection (3A) applies to proceedings relating to an act done before 2 November 2009. It follows that, by reason of subsection (3B), to be competent, any such proceedings would need to have been commenced before the end of a year beginning with the date on which the Crown led the evidence, or within such longer period as the court considered equitable having regard to all the circumstances. LORD WALKER I agree with the judgments of Lord Hope and Lord Rodger (between which I can discern no significant difference on any point of principle). LORD BROWN I have had the advantage of reading in draft the judgments of Lord Hope and Lord Rodger. I agree with both of them and for the reasons they give I too would allow this appeal. The critical point can, I think, be comparatively shortly made. The Strasbourg jurisprudence makes plain that it is not sufficient for a legal system to ensure that a suspect knows of his right to silence and is safeguarded (perhaps most obviously by the video recording of any interviews) against any possibility that by threats or promises of one sort or another he may nonetheless be induced against his will to speak and thereby incriminate himself. It is imperative too that before being questioned he has the opportunity to consult a solicitor so that he may be advised not merely of his right to silence (the police will already have informed him of that) but also whether in fact it is in his own best interests to exercise it: by saying nothing at all or by making some limited statement. He must in short have the opportunity to be advised by a solicitor not to make incriminating statements despite whatever inclination he might otherwise have to do so. It is clearly Strasbourgs judgment that whatever in the result may be lost in the way of convicting the guilty as a result (wholly or partly) of their voluntary admissions is more than compensated for by the reinforcement thereby given to the principle against self incrimination and the guarantees this principle provides against any inadequacies of police investigation or any exploitation of vulnerable suspects. LORD KERR For the reasons given by Lord Hope and Lord Rodger, with which I am in full agreement, I too would allow the appeal. SIR JOHN DYSON SCJ For the reasons given by Lord Hope and Lord Rodger, with which I am in full agreement, I too would allow the appeal. |
This appeal is concerned with claims for first year allowances (FYAs) under the Capital Allowances Act 2001 (CAA 2001) in respect of expenditure on software rights. The claims were made by two limited liability partnerships, the respondents Tower MCashback 1 LLP (LLP1) and Tower MCashback 2 LLP (LLP2). The two claims were not identical, because there was an issue as to whether LLP 1 had started trading during the 2003 4 tax year for which it claimed FYAs (LLP2s claim was for the 2004 5 tax year). This point of distinction led to different outcomes in the Court of Appeal, as explained below. Throughout the litigation there have been two main issues, one procedural and one substantive, each of which is of some general importance. There were also other issues below which have now disappeared. The procedural issue concerns the effect of two closure notices dated 20 June 2006 signed by Mr Peter Frost, an officer in the Anti Avoidance Group (Investigation) of the appellants, the Commissioners for Her Majestys Revenue and Customs (HMRC). The respondents contend that the terms of each closure notice restricted HMRC, on the taxpayers appeal against it, to a single issue (which HMRC have now abandoned). HMRC contend that the notice did not have that restrictive effect. The substantive issue (referred to below as the expenditure issue to distinguish it from the trading issue and the conditional contract issue, neither of which is live in this Court) goes to the efficacy of the tax saving scheme embarked on by LLP1 and LLP2. In this judgment I shall try to use LLPs as referring to limited liability partnerships generally, and the LLPs to refer to LLP1 and LLP2 (with or without LLP3 and LLP4, which are of peripheral interest). The litigation has followed a tortuous course. The Special Commissioner (Mr Howard Nowlan) decided the procedural point in favour of HMRC and disallowed 75% of LLP2s claim for FYAs. He disallowed the whole of LLP1s claim on the separate ground that it had not been trading during the 2003 4 tax year: [2008] STC 3366, 3369 3411. On appeal ([2008] EWHC 2387 (Ch), [2008] STC 3366, 3411) Henderson J allowed the LLPs appeals on the procedural issue. That made the expenditure issue academic, but Henderson J considered it fully and set out the reasons why he would have allowed the LLPs appeals on that ground also (but for the trading issue affecting LLP1, on which he dismissed LLP1s appeal). He also dismissed HMRCs cross appeal on the conditional contract issue. By then it was common ground that if LLP2 was ultimately successful in its claim for FYAs for the 2004 5 tax year, then LLP1 would also be entitled to FYAs for that year. So on further appeal to the Court of Appeal ([2010] EWCA Civ 32, [2010] STC 809), on LLP1 abandoning its appeal on the trading issue, HMRC was for all practical purposes the appellant on both remaining issues. The majority (Scott Baker and Moses LJJ) reversed Henderson J on the procedural issue but agreed with him on the expenditure issue. Arden LJ agreed with the judge on both issues. Because of its abandonment of the trading issue, LLP1s appeal was formally dismissed by the Court of Appeal. But before this Court the argument has in substance been an appeal by HMRC on the expenditure issue and a cross appeal by the LLPs on the procedural issue. Counsel sensibly agreed that both issues should be opened by Mr Kevin Prosser QC (who appeared with Miss Rebecca Murray for HMRC) and responded to by Mr Giles Goodfellow QC (who appeared with Mr Richard Vallat and Mr Thomas Chacko for the LLPs). The procedural issue: statutory provisions Matters of procedure in charging income tax, capital gains tax and corporation tax are regulated largely by the Taxes Management Act 1970 (TMA 1970) and regulations made under TMA 1970. Major amendments were made to TMA 1970 in order to provide for the introduction of self assessment (described by HMRC, as Moses LJ noted, at para 1, as the most fundamental reform of personal tax administration for 50 years). The changes were introduced by the Finance Act 1994 (FA 1994) and took effect, for income tax and capital gains tax purposes, in 1996 97. Further amendments were made by the Finance Act 2001 (FA 2001) intended to simplify and clarify the process of self assessment. A limited liability partnership established under the Limited Liability Partnership Act 2000 has a legal personality separate from those of its members. But if it carries on a trade it is, under section 118ZA of the Income and Corporation Taxes Act 1988 (ICTA 1988), taxed as if it were an ordinary, non incorporated partnership. Section 118ZA(1) (as substituted by FA 2001) provides: For the purposes of the Tax Acts, where a limited liability partnership carries on a trade, profession or other business with a view to profit (a) all the activities of the partnership are treated as carried on in partnership by its members (and not by the partnership as such), (b) anything done by, to or in relation to the partnership for the purposes of, or in connection with, any of its activities is treated as done by, to or in relation to the members as partners, and (c) members as partnership property. the property of the partnership is treated as held by the The most important provisions of the self assessment regime, as it applies to LLPs, are to be found in sections 12AA, 12AB, 12AC, 28B, 31 and 31A of TMA 1970 (the first two introduced by FA 1994, the last four substituted by FA 2001). The familiar provisions of section 50 of TMA 1970, relating to procedure before the Commissioners (now the First tier Tribunal) were also amended by those Acts. Together the provisions require a partnership to submit a partnership return, which is to contain a partnership statement with the particulars required by section 12AB(1). That section, as further amended by the Finance Acts 1995, 1996 and FA 2001, (and in contrast to section 9 of TMA 1970, which applies to a personal return or a trustees return) does not actually include the expression self assessment, but that is its effect. By section 12AC an officer of HMRC may give notice of enquiry into a partnership return. The time limit for a notice of enquiry is generally a year from the due date for submission of the return. Section 28B provides as follows: (1) An enquiry under section 12AC(1) of this Act is completed when an officer of the Board by notice (a closure notice) informs the taxpayer that he has completed his enquiries and states his conclusions. In this section the taxpayer means the person to whom notice of enquiry was given or his successor. (2) A closure notice must either (a) state that in the officers opinion no amendment of the return is required, or (b) make the amendments of the return required to give effect to his conclusions. (3) A closure notice takes effect when it is issued. (4) Where a partnership return is amended under subsection (2) above, the officer shall by notice to each of the partners amend (a) the partners return under section 8 or 8A of this Act, or (b) the partners company tax return, so as to give effect to the amendments of the partnership return. (5) The taxpayer may apply to the Commissioners for a direction requiring an officer of the Board to issue a closure notice within a specified period. (6) Any such application shall be heard and determined in the same way as an appeal. (7) The Commissioners hearing the application shall give the direction applied for unless they are satisfied that there are reasonable grounds for not issuing a closure notice within a specified period. Section 31(1)(b) gives the taxpayer a right of appeal against any conclusion stated or amendment made by a closure notice. By section 31A(5) and (6) the notice of appeal must specify the grounds of appeal, but the Commissioners (or now the First tier Tribunal) may allow other grounds to be put forward. Section 50 (as amended) regulates the disposal of the appeal: (6) If, on an appeal, it appears to the majority of the Commissioners present at the hearing, by examination of the appellant on oath or affirmation, or by other . evidence (a) that . the appellant is overcharged by a self assessment; (b) that . any amounts contained in a partnership assessment are excessive; or (c) that the appellant is overcharged by an assessment other than a self assessment, the assessment or amounts shall be reduced accordingly but otherwise the assessment or statement shall stand good. (7) If, on an appeal, it appears to the Commissioners (a) that the appellant is undercharged to tax by a self assessment . ; (b) that any amounts contained in a partnership statement . are insufficient; or (c) that the appellant is undercharged by an assessment other than a self assessment, the assessment or amounts shall be increased accordingly. (9) Where any amounts contained in a partnership statement are reduced under subsection (6) above or increased under subsection (7) above, an officer of the Board shall by notice to each of the relevant partners amend (a) the partners return under section 8 or 8A of this Act, or (b) the partners company tax return, so as to give effect to the reductions or increases of those amounts. The procedural issue: the facts This summary follows the agreed statement of facts and issues, which give details in relation to LLP2 only. The facts are not materially different in relation to LLP1. On 30 June 2005 HMRC issued a notice of enquiry in relation to LLP2s partnership return. Meetings and correspondence ensued between HMRC and KPMG, acting for the LLPs. HMRC concentrated its enquiries on section 45(4) of CAA 2001 (as inserted by the Finance Act 2003), which withholds FYAs for expenditure on software rights if the person incurring it does so with a view to granting to another person a right to use or otherwise deal with any of the software in question. HMRC asked for quite a lot of information, not all of which was supplied promptly. On 24 May 2006 Mr Peter Honeywell, a director of KPMG, sent a six page letter to Mr Frost, the officer in charge of the enquiry, supplying a good deal more information. The penultimate paragraph of the letter stated: The repayments claimed by a number of partners are currently being withheld and in these circumstances the partnerships generally are anxious to ensure that your enquiries are settled without delay. In these circumstances I have to inform you that if we do not receive either confirmation that you can now agree the amounts claimed in the partners returns or a detailed explanation of your reasons for not doing so by 20 June 2006, we will apply to the Commissioners for a directive under section 28A(4) TMA 1970. Mr Frost replied on 2 June 2006: In helping you to managing your clients expectations I can tell you that I very much hope to reply fully before 31 July, although if I have to defend an application for closure notice before then that date will obviously slip back. In the event Mr Frost, after one more letter from Mr Honeywell, did issue a closure notice on 20 June 2006. A great deal of expensive legal argument might have been avoided if Mr Frost had stood his ground and insisted that he needed more time to consider the matter. The closure notice referred in its heading to LLP2 and section 28B of TMA 1970. It read as follows (emphasis applied): I have now concluded my enquiries into the Partnership Tax Return for the year ended 5 April 2005. As previously indicated, my conclusion is: The claim for relief under section 45 CAA 2001 is excessive. The partnership return for the year ended 5 April 2005 is amended as follows. Capital Allowances Nil Allowable Loss Nil. There was a further paragraph dealing with the practical consequences of this conclusion. The words As previously indicated in the closure notice call for emphasis because Henderson J regarded them as providing a context which the Special Commissioner had ignored. The context was that Mr Frost had on 19 June 2006 written Mr Honeywell a letter concerned solely with the section 45(4) issue, and stating that there seems to be no further point in us debating [that] issue. The closure notice was sent with a covering letter dated 20 June 2006 which stated: Given the content of my last letter to you I am satisfied that the MCashback scheme fails on the section 45(4) CAA 2001 point alone. I would prefer to have had longer to examine the full records, as they have only been completely made available to me with your letter of 24 May. This would enable me to provide your clients with a full list of additional points for their consideration. In the circumstances I have to accept that any additional points that may arise will make no difference to the bottom line that no loss relief is due because of section 45(4). Therefore as your clients are so very anxious to receive closure notices I now enclose copies of those that I have issued today. Henderson J read this as Mr Frost making a conscious decision to pin his colours to the mast of section 45(4). The alternative view is that Mr Frost saw section 45(4) as a sufficient reason for a decision to disallow the claims completely, but not necessarily the only relevant reason for doing so. The procedural issue: discussion Henderson J reached his conclusion despite his having correctly observed, at para 113: There is no express requirement that the officer must set out or state the reasons which have led him to his conclusions, and in the absence of an express requirement I can see no basis for implying any obligation to give reasons in the closure notice. What matters at this stage is the conclusion which the officer has reached upon completion of his investigation of the matters in dispute, not the process of reasoning by which he has reached those conclusions. He also observed (again, in my view, entirely correctly), at paras 115 116: There is a venerable principle of tax law to the general effect that there is a public interest in taxpayers paying the correct amount of tax, and it is one of the duties of the Commissioners in exercise of their statutory functions to have regard to that public interest. [The judge then considered changes in the tax system and continued] For present purposes, however, it is enough to say that the principle still has at least some residual vitality in the context of section 50, and if the Commissioners are to fulfil their statutory duty under that section they must in my judgment be free in principle to entertain legal arguments which played no part in reaching the conclusions set out in the closure notice. Subject always to the requirements of fairness and proper case management, such fresh arguments may be advanced by either side, or may be introduced by the Commissioners on their own initiative. That is not to say, however, that an appeal against a closure notice opens the door to a general roving inquiry into the relevant tax return. The scope and subject matter of the appeal will be defined by the conclusions stated in the closure notice and by the amendments (if any) made to the return. Arden LJ reached the same conclusion as Henderson J but the majority of the Court of Appeal took a different view. Moses LJ (with whom Scott Baker LJ agreed) observed, at para 32, that an appeal under section 31(1)(b) of TMA 1970 is confined to the subject matter of the conclusion. On this point he approved and followed the decision of Dr John Avery Jones CBE in DArcy v Revenue and Customs Commissioners [2006] STC (SCD) 543. Moses LJ (at para 41) took the view that it was for the Special Commissioner (or now the First tier Tribunal) to identify what section 28ZA describes as the subject matter of the enquiry. The closure notice completes that enquiry and states the inspectors conclusions as to the subject matter of the enquiry. The appeal against the conclusions is confined to the subject matter of the enquiry and of the conclusions. But I emphasise that the jurisdiction of the special commissioners is not limited to the issue whether the reason for the conclusion is correct. Accordingly, any evidence or any legal argument relevant to the subject matter may be entertained by the special commissioner subject only to his obligation to ensure a fair hearing. There was little if any difference between the majority of the Court of Appeal and Henderson J as to the principles to be applied (Arden LJ did take a rather different approach). The difference between the majority and the judge was as to the application of those principles. I prefer the approach of Moses LJ, who set out his conclusions on this point at paras 50 51: I agree with Henderson J that the fact that the taxpayers had pressed the inspector to issue the closure notice had no relevance to the identification of the subject matter of the appeal. It was, as he remarked, open to the inspector to delay until he had considered, for example, the business plan. He chose not to do so. But the fact that the inspector had indicated that there might have been other issues which arose, was relevant to the exercise of the special commissioners case management powers. The taxpayer was not deprived of an opportunity fairly to marshal evidence as to the other grounds subsequently advanced by the Revenue on the appeal. There is a second basis on which I differ from Henderson J. Apart from the importance of leaving it to the fact finding tribunal to determine the subject matter of the closure notice, in my view the closure notice itself does not allow of so restricted a view of the subject matter of the appeal. Whilst it did refer to previous correspondence which clearly focussed on section 45(4), the closure notice itself was, in plain terms, a refusal of the claim for relief under section 45 CAA 2001. That was the conclusion stated pursuant to section 28B(1). There is neither statutory warrant nor any need to look further. This should not be taken as an encouragement to officers of HMRC to draft every closure notice that they issue in wide and uninformative terms. In issuing a closure notice an officer is performing an important public function in which fairness to the taxpayer must be matched by a proper regard for the public interest in the recovery of the full amount of tax payable. In a case in which it is clear that only a single, specific point is in issue, that point should be identified in the closure notice. But if, as in the present case, the facts are complicated and have not been fully investigated, and if their analysis is controversial, the public interest may require the notice to be expressed in more general terms. As both Henderson J and the Court of Appeal observed, unfairness to the taxpayer can be avoided by proper case management during the course of the appeal. Similarly Dr Avery Jones observed in DArcy, para 13: It seems to me inherent in the appeal system that the tribunal must form its own view on the law without being restricted to what the Revenue state in their conclusion or the taxpayer states in the notice of appeal. It follows that either party can (and in practice frequently does) change their legal arguments. Clearly any such change of argument must not ambush the taxpayer and it is the job of the Commissioners hearing the appeal to prevent this by case management. CAA 2001 In Barclays Mercantile Business Finance Ltd v Mawson [2004] UKHL 51, [2005] 1 AC 684 (BMBF) Lord Nicholls of Birkenhead (delivering the opinion of the whole appellate committee) explained the general nature of capital allowances (para 3): A trader computing his profits or losses will ordinarily make some deduction for depreciation in the value of the machinery or plant which he uses. Otherwise the computation will take no account of the need for the eventual replacement of wasting assets and the true profits will be overstated. But the computation required by Schedule D (whether for the purpose of income or corporation tax) has always excluded such a deduction. Parliament therefore makes separate provision for depreciation by means of capital allowances against what would otherwise be taxable income. In addition, generous initial or first year allowances, exceeding actual depreciation, are sometimes provided as a positive incentive to investment in new plant. In practice, generous FYAs have also provided a positive incentive to artificial tax avoidance schemes. The relevant statutory provisions as to capital allowances are mostly in Parts 1 and 2 of CAA 2001. They are set out quite fully in paras 15 to 27 of the judgment of Henderson J. Because there is now only a single substantive issue in dispute I can summarise them rather more briefly. Allowances are available for capital expenditure on plant and machinery (section 1(1) and (2)(a)) which includes computer software (section 71, which makes appropriate modifications to the notions of providing and owning plant where it consists of computer software). Allowances must be claimed (section 3). There are fairly complex provisions as to when capital expenditure is incurred (section 5). Section 5 is less directly in point than it was below, but it may be helpful to set out the relevant subsections: (1) For the purposes of this Act, the general rule is that an amount of capital expenditure is to be treated as incurred as soon as there is an unconditional obligation to pay it. (2) The general rule applies even if the whole or a part of the expenditure is not required to be paid until a later date. (3) There are the following exceptions to the general rule. (4) If under an agreement (a) the capital expenditure is expenditure on the provision of an asset, (b) an unconditional obligation to pay an amount of the expenditure comes into being as a result of the giving of a certificate or any other event, (c) the giving of the certificate, or other event, occurs within the period of one month after the end of a chargeable period, and (d) at or before the end of that chargeable period, the asset has become the property of, or is otherwise under the agreement attributed to, the person subject to the unconditional obligation to pay, the expenditure is to be treated as incurred immediately before the end of that chargeable period. (5) If under an agreement an amount of capital expenditure is not required to be paid until a date more than 4 months after the unconditional obligation to pay has come into being, the amount is to be treated as incurred on that date. The claimant must carry on a qualifying activity, which includes a trade (sections 11(1) and 15(1)(a)). The claimant must also incur qualifying expenditure (section 11(1) and (4)). The last mentioned subsection provides: The general rule is that expenditure is qualifying expenditure if (a) it is capital expenditure on the provision of plant or machinery wholly or partly for the purposes of the qualifying activity carried on by the person incurring the expenditure, and (b) the person incurring the expenditure owns the plant or machinery as a result of incurring it. It is not suggested that the general rule is not applicable in this case. The most important types of capital allowances are FYAs and writing down allowances. FYAs are generally more attractive to the taxpayer, especially if they are granted at the rate of 100% of the whole expenditure. 100% FYAs were available under section 45 (ICT expenditure incurred by small enterprises). That section (as amended by the Finance Act 2003) provided as follows: (1) Expenditure is first year qualifying expenditure if (a) it is incurred on or before 31 March 2004, (b) it is incurred by a small enterprise, (c) it is expenditure on information and communications technology, and (d) it is not excluded by section 46 (general exclusions) or subsection (4) below. (2) Expenditure on information and communications technology means expenditure on items within any of the following classes: Class A. Computers and Associated Equipment . Class B. Other Qualifying Equipment . Class C. Software This class covers the right to use or otherwise deal with software for the purposes of any equipment within Class A or B . (4) Expenditure on an item within Class C is not first year qualifying expenditure under this section if the person incurring it does so with a view to granting to another person a right to use or otherwise deal with any of the software in question. The various statutory conditions are brought together by section 52, which specifies the percentages for FYAs. It is common ground that LLP2 was a small enterprise. Originally HMRC relied on section 45(4) as excluding relief, but that contention was abandoned, rightly or wrongly, on the third day of the hearing before the Special Commissioner, and no attempt has been made to reintroduce it. The purpose of section 45(4) was evidently to ensure that the full relief was available only to small enterprises which acquired software rights for use in their own business activities, and not simply as a source of income from licences. The expenditure issue As explained below, the investor members of the LLPs were individuals with large incomes who themselves put up only 25% of the consideration said to have been paid for acquiring rights in software. The remaining 75% was provided by interest free loans on non recourse terms, made to the investor members by special purpose vehicles set up for the purpose. HMRC rely strongly on the circularity of these transactions as more fully described below. The essential issue (simply stated but not simply resolved) is whether the LLPs incurred capital expenditure, to the extent of the whole stated consideration, in acquiring software rights for the purposes of their trades. The LLPs case is that they have plainly satisfied the statutory test, and that they have concurrent conclusions of the Chancery Division and the Court of Appeal in their favour (indeed Henderson J observed, at para 30, that in view of the Special Commissioners findings one might have thought that the answer to this question was obvious). HMRCs case is that in relation to each of the LLPs there was a single composite transaction (that much, at least, is common ground, as the LLPs printed case refers to the wider transaction) and that by that transaction, realistically assessed, much less than the full claimed amount of the expenditure was incurred on the acquisition of software rights. HMRCs printed case (para 66) puts its position as follows: The overall effect of the single composite transaction from LLP2s point of view is that the highly uncommercial loan reduced the cost to LLP2 of the software with the result that LLP2 did not incur expenditure of 27.5m for the purposes of CA 2001. It did incur expenditure of at least 5m, but . it was for LLP2 to prove how much more than this it incurred, by giving evidence as to the value of its members liability under the Member Loans. But LLP2 chose to give no evidence of this before the Special Commissioner. In those circumstances the correct conclusion is that LLP2 incurred expenditure of only 5m. Out of context, the value of its members liability under the Member Loans is a rather opaque expression, but I take it to mean the value of the benefit conferred by the highly uncommercial loan just referred to. Those familiar with the leading cases in this troublesome area of the law will not be surprised to hear that the LLPs rely strongly on the decision of the House of Lords in BMBF [2005] 1 AC 684 and seek to distinguish the decision of the House of Lords in Ensign Tankers (Leasing) Ltd v Stokes [1992] 1 AC 655 (Ensign). HMRCs position is not precisely the converse of that: they seek to distinguish BMBF but do not rely particularly strongly on Ensign, while repudiating any suggestion that Ensign has been impliedly overruled by BMBF. The wider transaction: the participants The arrangements in which the LLPs took part involved three main participants: MCashback Limited (MCashback) which developed and originally owned the software; Tower Group plc (Tower), a financial services company; and the LLP in question (I shall follow the courts below in concentrating on LLP2). MCashback had a board of directors with what the Special Commissioner described as impressive credentials in the retailing world. Its CEO was Mr Bob Cooper, who had been a main board director at Sainsbury. MCashbacks board also included Dr Adrian Rowe (or Roe there are variant spellings in the papers), an IT expert who developed the software, and Mr Ahmed Zghari, its Chief Operating Officer. Dr Rowe and Mr Zghari gave evidence to the Special Commissioner but Mr Cooper (who was principally responsible for income forecasts) did not. The software was for a system described in the agreed statement of facts and issues (paras 27 28) as follows: MCashback had devised a complex software package, called the M Rewards system, to enable manufacturers to promote their products to retail customers by offering them free airtime on their mobile phones. The manufacturers would pay MCashback a fixed fee, called a clearing fee, per transaction. MCashback required additional funding to roll out the M Rewards system. This potentially involved negotiations with manufacturers, supermarket groups and mobile phone companies around the world. MCashback approached Tower Group plc (Tower), which had experience of arranging finance for similar software companies. The funding arrangement proposed by Tower was for MCashback to sell part of its software (by means of SLAs) to four newly created Tower LLPs, the members of which would include Tower personnel and individual outside investors, for a total of 143 million; the LLPs would thereby acquire a right to receive part of the clearing fees derived from the exploitation of the M Rewards system. In the event these ambitious plans were not realised. Only LLP1 and LLP2 (which raised about 7.33m and 27.5m respectively after fees and expenses) completed their transactions in full; LLP3s completion was very much scaled down and LLP4 never completed its transaction at all. Tower was involved in advising and making arrangements for the transactions between MCashback and the LLPs. It had a subsidiary relevant to LLP2, Tower MCashback Finance UK 2 Limited (Tower Finance 2). There was also an entity called Tower Project Finance LLP which acted in an advisory capacity. Some of Towers personnel (Mr Paul Feetum, Mr Stephen Marsden and Mr Simon Smith) became founder members of the LLPs. In the case of LLP1 they also became investor members, as mentioned below. Mr Feetum and Mr Marsden gave evidence to the Special Commissioner. The LLPs were to have founder members (who set them up and entered into contracts with MCashback before relief under section 45 ran out on 1 April 2004) and investor members. The latter were to provide the funds and obtain the tax advantages of the FYAs. LLP1 was very short of investor members, since a number of potential investors dropped out at a late stage, which was why the three founder members became investor members also. LLP2, by contrast, had more than 50 investor members. Its partnership return for 2004 5 shows that the partnership claimed an allowable loss of just under 30m, 27.5m of which was for capital allowances. The largest claim for any individual member was 2,497,439, and the average claim was for a little over 500,000. Most of the investors became partners during June or July 2004. Apart from the three main groups of participants two banks, both based in Guernsey, were involved in the arrangements. These were R & D Investments Ltd (R&D) and Janus Holdings Ltd (Janus). As explained in more detail below, R&D held security deposits placed with it by MCashback, which R&D in turn deposited with Janus as security for a loan by Janus to a Tower Finance company (described in the schemes explanatory material as the Lending SPV). The Tower Finance company made interest free non recourse loans to individual investor members of the LLPs. The Special Commissioner concluded (para 127) that the function of the banks was window dressing, and was actually counter productive, since When I can discern no real change or implication or benefit that results from the insertion of the two banks, the fact that that interposition has increased costs, complexity, documentation and legal fees just serves to underline how vital it was thought to try to disguise the reality of what was happening. The wider transaction: the documents As already noted, it is not disputed that the sequence of events amounted to a prearranged, composite transaction of the type to which Lord Wilberforce referred 30 years ago in a famous passage in W T Ramsay v IRC [1982] AC 300, 326: To force the courts to adopt, in relation to closely integrated situations, a step by step, dissecting, approach which the parties themselves may have negated, would be a denial rather than an affirmation of the true judicial process. In each case the facts must be established, and a legal analysis made: legislation cannot be required or even be desirable to enable the courts to arrive at a conclusion which corresponds with the parties own intentions. In contrast to the timing of events in some other closely integrated situations which have been investigated in some of the well known authorities, the sequence of events in relation to LLP2 was quite protracted. The completion of the transaction entered into on 31 March 2004, which was under the contract required to take place within four months (in order to satisfy section 5(5) of CAA 2001) was in the event delayed until mid January 2005, and in the meantime there seems to have been real doubt as to whether sufficient investor members would come forward to provide the cash sum of 7.5m (25% of 30m, which was the total sum required to meet the whole stated consideration of 27.5m together with 2.5m for fees and expenses). There was also real doubt as to whether the M Rewards scheme would be as big a commercial success as the directors of MCashback hoped. The smooth operation of the scheme was therefore by no means fully pre ordained. But from 31 March 2004 it could be predicted with confidence that if the investors did come up with the necessary funds, their destination would follow a pre ordained pattern. In order to bring the LLP1 and LLP2 transactions to completion ten significant documents (as well as many other more routine items) were executed or issued between 31 March 2004 and early 2005. Those in the appeal papers are as follows (not all the specimen documents in the appeal papers relate to the same LLP): date (1) 31 March 2004 (2) 6 July 2004 Description Software licence agreement (SLA) Limited liability partnership agreement (the partnership agreement) Operations agreement (the operations agreement) Valuation report Information Memorandum Application form (specimen) Loan agreement (members loan agreement) Loan agreement Parties MCashback (1) LLP2 (then Tower Taxi Technology 34 LLP)(2) Original founder members (1) LLP2 (2) MCashback (1)LLP1 (2) LLP2 (3) LLP3 (4) LLP4 (5) Valuation Consulting Ltd (Mr Ian Brewer) Issued by Tower Project Finance LLP (relates to LLP3) PJ Donaldson (an adhering investor member of LLP2) Tower MCashback Finance (1) P J Donaldson (2) Tower MCashback (3) 6 July 2004 (4) 7 July 2004 (5) 12 July 2004 (6) 29 July (7) 30 July 2004 (8) 1 December 2004 Finance (1) Janus (2) (9) 12 January 2005 Guarantee and deposit R & D (1) Janus (2) agreement (10) 12 January 2005 Collateral agreement MCashback (1)R&D(2) It is simplest to comment on these documents in chronological order, after a preliminary word about the position immediately before 31 March 2004. The four LLPs were in existence, having been registered in the names of Tower Taxi Technology 34, 35, 36 and 38 LLP respectively. It is apparent from the recitals and definitions in the specimen SLA that these four corporate limited partnerships were intended to be renamed as LLP1, LLP2, LLP3 and LLP4 respectively. But in the event they changed their names on 14 April 2004 (after signature of the SLAs but before signature of the partnership agreements) so that 34, 35, 36 and 38 became 2, 3, 4 and 1 respectively. In consequence the specimen SLA (describing itself as the LLP1 agreement) was entered into by LLP2 and the agreement defined as the LLP4 agreement was entered into by LLP1. This produced some apparent inconsistencies in other documents. Regrettably these facts were not explained to the Court (though counsel may have had the well meaning intention of avoiding unnecessary complication). So what we are concentrating on is the LLP1 agreement, actually entered into by LLP2. LLP1 and LLP2 each had three founder members who were part of the Tower team, and few if any investor members had committed themselves to investing. The negotiations that were taking place were between MCashback and Tower and their respective advisers. Within the last two or three days before the deadline on 1 April new advice seems to have raised doubt about the wisdom of software rights being acquired by different LLPs in undivided shares, leading to a last minute decision to bundle software into bits (as it was put in an email sent by Mr Feetum at 7.33am on 30 March 2004). In addition there were still vigorous negotiations being conducted on other points (an email sent by Mr Feetum to his team at 7.45 am on 31 March 2004, describing his discussions with Dr Rowe, is vivid evidence of this). Henderson J (at para 31) referred to the emails and was in no doubt that the SLAs were negotiated at arms length between wholly unconnected parties. The Special Commissioner made these findings (para 44) about the decision to bundle the software rights into bits: An email from Towers lawyers on 29 March indicated however that there would be some problem in the LLPs simply purchasing percentage slices of the software, and therefore the solution was adopted that LLP1 would buy the Code Generation Software for 7.334m, carrying an entitlement to 0.66% of clearing fees and to 5.128% of the clearing fees allocable to all four LLPs; LLP2 would buy the Customer Support Software for 27.501m; LLP3 would buy the Call Centre Software for 45.835m and LLP4 would buy the fourth element of software for 62.33m. Notwithstanding the allocations of specific software to each of the LLPs, the price payable by, and the percentage entitlement to clearing fees acquired by, each LLP retained their earlier matched relationship. These details appear to be correct, despite the confusion resulting from the way in which the LLPs were renamed. But it must be borne in mind that the SLA entered into by LLP2 had been drafted for LLP1 (that may be the explanation of a comment by Henderson J in the fifth sentence of para 36 of his judgment). The heart of LLP2s SLA was an obligation on MCashback to grant an exclusive world wide royalty free licence to LLP2 to use the Licensed Software, defined as the Customer Support Interface. The consideration was to be 27.501m payable on completion against an undertaking by MCashbacks solicitors to apply it in obtaining a release of an existing charge on the software and in the procurement of a new security. LLP2 was to be entitled indefinitely to 2.5% of the (gross) clearance fees received from exploitation of the M Rewards system. There is a full summary in the judgment of Henderson J which is readily available ([2002] STC 3366, 3411, paras 36 to 47) and I cannot hope to improve on it. I gratefully adopt the description in para 42 of how the SLA looked forward to matters which had not yet been finally decided: It was always intended that each LLP would raise 75% of the finance which it needed by way of bank borrowing, and that MCashback would be obliged to deposit approximately 82% of the consideration which it received for the grant of the licence as an indirect security for that borrowing. The details had not yet been worked out on 31 March 2004, and the identity of the two participating banks was still undecided. However, the basic framework of the arrangements had been agreed, and this was reflected in the definitions in clause 1.1 of the SLA of the Bank Loan, Bank One, Bank One Security, Bank Two and Bank Two Security. Clause 4.2(d) provided that on completion MCashback should deliver to Bank Two the Bank Two Security, and procure that Bank Two provide to Bank One the Bank One Security. He then summarised Clause 4.2 and Clause 4.3, dealing with security. Bank One was to have been Lloyds TSB, but turned out to be Janus. Bank Two was to have been Halifax Bank of Scotland, but turned out to be R & D. Had all four LLPs proceeded as Tower hoped, they would have produced a total cash investment (from investor members of the LLPs) of 39m, supplemented by bank loans from Janus (through the medium of a SPV, Tower Finance 2 in the case at LLP2) of 117m. A total sum of 156m would have been paid out by the LLPs in three directions: (i) payment of fees and expenses of about 13m; (ii) payment to R & D of a security deposit of 117m; and (iii) payment of the balance of 26m to MCashback for its roll out expenses. These figures are taken from paras 30 and 31 of the agreed statement of facts and issues. As between the different LLPs the plan was as follows: % of clearing fees 0.66 consideration licensed software (m) LLP1 7.334 Code Generation system LLP2 27.501 2.50 Customer Support Interface LLP3 45.835 4.16 Call Centre system LLP4 62.330 5.68 Reporting Module ______ _____ 143.000 13.00 But as already mentioned, only LLP1 and LLP2 got far off the ground. The authorities In BMBF [2005] 1 AC 684, paras 26 to 38, the House of Lords (in an opinion of the appellate committee delivered by Lord Nicholls) gave a brief summary, under the heading The Ramsay Principle, of the laws development, during the past thirty years, in its attitude to artificial tax avoidance. There is another, more detailed discussion of the same topic (starting with the heading Ramsay: A principle of construction? and going on with several other headings) in the opinion of Lord Hoffmann in MacNiven v Westmoreland Investments Ltd [2001] UKHL 6, [2003] 1 AC 311, paras 28 to 62. Those passages are by now well known and I shall not try to summarise them. But I wish to add a few footnotes. The Ramsay case (Ramsay (WT) Limited v Inland Revenue Commissioners [1982] AC 300) was the fountain head, as Lord Hoffmann put it in MacNiven at para 30. Nothing in Lord Wilberforces magisterial opinion in Ramsay was revolutionary, as he was careful to point out (p323). It did not introduce a new, judge made principle (p326). But the clarity of Lord Wilberforces insights was rather obscured by some subsequent decisions, especially (if I may respectfully say so) the opinion of Lord Brightman in Furniss v Dawson [1984] AC 474, 527. There, Lord Brightman, in another very well known passage, following Lord Diplock in Inland Revenue Commissioners v Burmah Oil Co Ltd [1982] STC 30, 33, appeared to lay down a detailed and fairly inflexible prescription of how the Ramsay principle works. Lord Hoffmann commented on this in MacNiven at para 49: In the first flush of victory after the Ramsay, Burmah and Furniss cases, there was a tendency on the part of the Inland Revenue to treat Lord Brightmans words as if they were a broad spectrum antibiotic which killed off all tax avoidance schemes, whatever the tax and whatever the relevant statutory provisions. The need to recognise Ramsay as a principle of statutory construction, the application of which must always depend on the text of the taxing statute in question, was clearly recognised in Craven v White [1989] AC 398: see especially, in the House of Lords, Lord Keith of Kinkel at p 479 and Lord Oliver of Aylmerton at pp 502 503. The House was split three two, the dissenters being Lord Templeman and Lord Goff of Chieveley, who gave the only two full opinions in the House of Lords unanimous decision in Ensign four years later. The drawing back from the rigidity of Furniss v Dawson was continued by the important decisions in Inland Revenue Commissioners v McGuckian [1997] 1 WLR 991 (discussed by Lord Hoffmann in MacNiven at paras 51 to 57) and MacNiven itself. There are also many helpful insights in the judgments in the Court of Final Appeal of Hong Kong in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46. That is, in brief summary, the historical context of the decision of the House of Lords in Ensign. Although the composite transaction considered in that case had to be gathered from no fewer than seventeen legal documents, and although the hearing before the Special Commissioners took 18 days, for present purposes the essential facts can be summarised quite briefly (the fullest statement of facts is to be found in the decision of the Special Commissioners [1989] STC 705: details of the setting up and operation of the scheme bank account can be found at pp 719 and 725). Victory Partnership (VP) was a limited partnership formed under the Limited Partnerships Act 1907. Ensign Tankers (Leasing) Ltd (Tankers) was one of the limited partners, with much the largest capital contribution. VP agreed with Lorimar Productions Inc (LPI), a film production company, to acquire the right to make and exploit a film which was then in production (and which LPI agreed to continue to produce on behalf of VP). $4.780m had already been spent out of a budget of $13m. VP agreed to pay $3.25m towards the cost of the film and LPI agreed to lend VP the balance of the budgeted sum (the production loan) and any further sum (the completion loan) needed if (as happened) the film went over budget. To implement these arrangements a bank account (the scheme account) was opened by Guinness Mahon, a merchant bank specialising in such schemes. The account was in the name of VP but could not be operated without the approval of a representative of LPI. VP paid $3.25m into the scheme account, from which it was transferred to LPIs bank, Chemical Bank, to reduce LPIs indebtedness. Lord Templeman described the subsequent operation of the account as follows ([1992] 1 AC 655, 664): Thereafter, when LPI required to spend or spent money in making the film, the amount involved was credited by LPI to the scheme current account (which was controlled by LPI) and returned to LPI on the same day for credit to its account at Chemical Bank. The scheme current account was thus never in credit or debit at the close of any day and [VP] was never in debt as a result of the scheme. In substance the film was funded by LPI borrowing from Chemical Bank. VPs liability to repay the so called loans from LPI was limited both by the Limited Partnerships Act 1907 and by express terms in the scheme documents. VP claimed capital allowances for the whole cost of producing the film. Its claim turned on how much capital expenditure VP had incurred. Lord Templeman differed from Millett J (the first instance judge) as to the significance of the non recourse nature of the loans (p 667): But the non recourse nature of the borrowing ensured that LPI paid the whole cost of the film exceeding $3m and conversely that [VP] would not be liable for the cost of the film in excess of $3m. By the operation of the scheme current account in accordance with the provisions of the scheme, the money of LPI, at all times under the control of LPI, was electronically transferred from Hollywood to the City of London and back again without serving any useful purpose and leaving no trace except entries on computer prints. After a wide ranging survey of authorities on tax avoidance Lord Templeman restated his conclusion at p 676: In the present case if LPI had been a British company, the fact that LPI borrowed $10m from Chemical Bank to enable LPI to make the film would not have denied to LPI a first year allowance equal to the sums borrowed and expended. But [VP] neither borrowed nor spent $10m. Lord Goff took the same view. He observed at p 682: I accept, too, that money was indeed paid by LPI to VP on the various occasions when the relevant account was credited; although that too was deprived of any practical effect by the immediate repayment, on the same day, of exactly the same sum from that account. What I have to do, however, is to stand back from the composite transaction; to look at it as a whole; and to decide, first, what is the true nature and effect of the transaction and, second, whether, on a true construction of section 41(1) of the Finance Act 1971, VP is entitled to an allowance in respect of the whole of the cost of the film, viz $14m. When I embark upon this process, I find it impossible to characterise the money paid by LPI into the bank account to the credit of VP as, in any meaningful sense, a loan. It was not in my opinion money lent to VP to enable VP to finance the production of the film. It was money paid by LPI into the bank account opened in VPs name to enable VP to indulge in a tax avoidance scheme, and for no other purpose. Here Lord Goff emphasised that the Ramsay principle is indeed a principle of construction. He focused on the text of section 41(1) of the Finance Act 1971 (in terms not materially different from those of CAA 2001), and answered the ultimate question . whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically (Ribeiro PJ in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46, para 35, quoted by Lord Nicholls in BMBF at para 36). In the result the House of Lords concluded that VP had spent $3.25m, not $14m, on production of the film, and that was the extent of VPs entitlement to capital allowances. This Court has not been invited, formally or informally, to overrule or depart from Ensign. HMRC suggest in their printed case that Henderson J treated it as impliedly overruled by BMBF, but I do not read his judgment in that way. He did state (para 62) that BMBF is now the leading case in this area. But in BMBF the House of Lords did not mention Ensign, though it was cited, and in the Court of Appeal ([2002] EWCA Civ 1853, [2003] STC 66) only Peter Gibson LJ (paras 40 41) referred to it, without in any way questioning it. He impliedly distinguished it (as I understand those paragraphs) on the basis that Ensign was not a case in which the money went round in a circle; more simply, nothing happened to the money. At first instance in this case Henderson J referred to Ensign once only, at para 48, in a passage dealing with the opinion of tax counsel which had been provided to prospective investor members of the LLPs. The decision of the Court of Appeal in BMBF is of interest for another reason. Both Peter Gibson LJ (with whom Rix LJ agreed) and Carnwath LJ (at paras 44 and 69 to 73 respectively) courteously expressed difficulty with the distinction between legal and commercial concepts drawn by Lord Hoffmann in MacNiven in relation to the construction of tax legislation. Para 38 of Lord Nicholls opinion in BMBF may perhaps be regarded as something of a strategic withdrawal by the House of Lords from a position which, if not untenable (indeed perhaps something of a truism), was likely to give rise to misunderstandings. I must now come to what BMBF itself decided. It was a leasing finance scheme entered into by the taxpayer (which I shall call Barclays Finance to distinguish the body corporate from the decided case). Barclays Finance was described by Lord Nicholls as the UK market leader in this field. Under the scheme Barclays Finance paid about 91m to acquire a newly constructed gas pipeline under the Irish Sea from its owner, Bord Gais Eireann (BGE), an Irish statutory corporation. The pipeline was then leased by Barclays Finance to BGE for an initial term of about 30 years, at an escalating rent, and subleased by BGE to a subsidiary, with which BGE also entered into a transportation agreement and other arrangements under which the subsidiary operated the pipeline. Barclays Finance borrowed the whole of the 91m from Barclays Bank at a fixed commercial rate (10.95%). The sum received by BGE was deposited with a Jersey company called Deepstream, which undertook complicated obligations to make a range of periodical payments to BGE. The deposit with Deepstream returned, via an Isle of Man Barclays subsidiary, to Barclays Banks Treasury. So it was a case in which the money could be said to have gone round in a circle. These transactions were entered into at the end of 1993, that is fairly soon after the decision of the House of Lords in Ensign. The schemes tax implications did not however come before the Special Commissioners until 2001. The Special Commissioners concluded that the scheme had no commercial reality, a conclusion that the Court of Appeal (paras 32 36 and 52 59) found insupportable. The first instance judge, Park J ([2002] STC 1068), had upheld the Special Commissioners but on the different and narrower ground (as Peter Gibson LJ put it [2003] STC 66, para 18) that this was not a case where the finance enabled the lessee to have the use of an asset which, absent the lease finance, it would not have, nor was it a case where the lessee uses the proceeds of sale to repay borrowings or for other purposes of the lessees business. [Park J] described all those cases as being where the finance lessor provided up front finance to the lessee and the finance so provided is used in the lessees business. He contrasted that with the present case where BGE already owned the Pipeline, and after the transaction it was still able to use it as before, though by virtue of the Headlease, the Sublease and the Transportation Agreement, and it still owed the banks the money which it had borrowed, nor was the 91,292,000 available for BGE to use in any other way to finance transactions or activities of its business. Peter Gibson LJ disagreed (para 37): Section 24 focuses on the incurring of expenditure by the trader on the provision of plant or machinery wholly and exclusively for the purposes of his trade. It therefore requires one to look only at what the taxpayer did. To the test posed in section 24 it is immaterial how the trader acquires the funds to incur the expenditure or what the vendor of the provided plant or machinery does with the consideration received. So did Carnwath LJ (para 54): However, there is nothing in the statute to suggest that up front finance for the lessee is an essential feature of the right to allowances. The test is based on the purpose of the lessors expenditure not the benefit of the finance to the lessee. Nor, as the judge recognised, should it make any difference whether the arrangements by which the tax advantage was achieved were simple or, as the Commissioners thought in this case, complicated [and] convoluted. Carnwath LJ also stated, in a passage at para 58 to which Moses LJ attached great importance (he quoted it twice, at paras 69 and 86 of his judgment in the Court of Appeal, supplying emphasis as below): There might be more room for argument as to whether there was expenditure, given the apparent circularity of the payments. However, once one accepts the transfer of ownership, it is difficult to question the reality of the expenditure by which the purchase price was discharged. I have discussed the decision of the Court of Appeal in BMBF at some length because it was the latest relevant authority when MCashback and Tower were planning and negotiating their arrangements; HMRCs appeal to the House of Lords was pending (Henderson J referred to this in para 48 of his judgment). Moreover the single opinion of the House of Lords amounted to a general endorsement of the decision of the Court of Appeal (I have already referred to the matter of the legal commercial concept dichotomy). The House of Lords summarised their conclusion in para 42: If the lessee chooses to make arrangements, even as a pre ordained part of the transaction for the sale and leaseback, which result in the bulk of the purchase price being irrevocably committed to paying the rent, that is no concern of the lessor. From his point of view, the transaction is exactly the same. No one disputes that [Barclays Finance] had acquired ownership of the pipeline or that it generated income for [Barclays Finance] in the course of its trade in the form of rent chargeable to corporation tax. In return it paid 91m. The circularity of the payments which so impressed Park J and the Special Commissioners arose because [Barclays Finance], in the ordinary course [of] its business, borrowed the money to buy the pipeline from Barclays Bank and Barclays happened to be the bank which provided the cash collateralised guarantee to [Barclays Finance] for the payment of the rent. But these were happenstances. None of these transactions, whether circular or not, were necessary elements in creating the entitlement to the capital allowances. The decision of the Special Commissioner The Special Commissioner had an unenviable task and it is clear that he must have devoted a lot of time and thought to the preparation of his written decision, which runs to 176 paragraphs. The decision attracted a good deal of criticism from Henderson J (in particular paras 60, 61 and 74 to 84 of his judgment), and some of the judges criticisms have force. The Special Commissioner reached a conclusion which had not been contended for by either side, which is an adventurous course to take in a complex tax case (see Billingham v Cooper [2001] EWCA Civ 1041, [2001] STC 1177, para 31). Nevertheless the Special Commissioner was the fact finding tribunal, and his findings of fact can be departed from by appellate courts only on the principles laid down in Edwards v Bairstow [1956] AC 14. The most important findings made by the Special Commissioner include the following: (1) the scheme was not a sham, but it was pre ordained and designed as a composite whole (paras 128 132); (2) the market value of the software rights disposed of was very materially below the price ostensibly paid for those rights (para 99, elaborated at paras 100 to 111); (3) the last minute decision to sell the software in bits added to the artificiality of the valuations (para 103); (4) there was little chance that the members loan would be repaid in full within ten years; as much as 60% of the loans might be unpaid, and waived, at the end of that period (para 57); (5) there was no commercial justification for the insertion into the scheme of the two banks, R & D and Janus (paras 66, 127); and (6) the consideration paid by the LLPs was not paid partly for soft finance, which was the Special Commissioners own third approach (paras 113 121). The Special Commissioners conclusion on the expenditure point, so far as it is to be found in any single paragraph, is probably to be found in para 138: The question that I have to address, therefore, is whether it is appropriate to say that capital expenditure of the gross figures has been incurred when the seller has filtered back 75% of the price to the investor members of the LLPs via the cosmetic banking chain, when the reality is that there is a great likelihood that a substantial proportion of the wholly uncommercial loans will eventually be waived, and when, in the meantime, any partial repayments of the loans will be liable to be made on an entirely contingent basis. And when I address that question by looking at the legal reality of what has occurred, and at the money movements, rather than looking fixedly at discredited labels attached to the transactions by the parties, I conclude that the gross capital expenditure has not been incurred. On a purposive basis it seems to me that the investor members and the LLPs have so far incurred the 25% element of the total price, and that the LLPs will incur further capital expenditure if and to the extent that the LLPs discharge members loans on their behalf by the envisaged application of 50% of clearing fees. The judgment of Henderson J Henderson J dealt with the expenditure issue at paras 30 to 86 of his judgment. Paras 30 to 61 are concerned with the facts and I have already summarised the judges careful exposition of the scheme documents. Paras 62 to 71 are concerned with the law, especially the decisions of the Court of Appeal and the House of Lords in BMBF which (as already noted) the judge described as the leading case. The judges discussion of the issue and his conclusions are to be found in fifteen closely reasoned paragraphs, 72 86. sentence of para 72: In fact the judge began the discussion by stating his conclusion in the first In the light of the principles laid down in BMBF and MacNivens case, there cannot in my judgment be any real doubt about the answer to the Expenditure Issue. The whole of the purchase price of 27.501m was expended by LLP2 on the acquisition of the software, and it was not expended on anything else. The rest of the paragraph provides the principal reasons for this conclusion: (1) the purchase price was negotiated at arms length between wholly unconnected parties; (2) title to the software rights passed on completion in January 2005; (3) what happened to the purchase price of 27.501m after it had been paid by LLP2 to MCashback is immaterial, because section 11 of CAA 2001 requires one to look only at what the taxpayer did (BMBF in the Court of Appeal, per Peter Gibson LJ [2003] STC 66, para 37). Henderson J treated the circularity of the movement of the 22.5m as irrelevant, as it had been in BMBF (para 73 of his judgment). He thought that the Special Commissioner had been distracted from the true question by a combination of errors into an unsound approach of his own devising (para 74). In particular: (1) the Special Commissioner had considered the authorities only after reaching his own provisional view, and treated BMBF as irrelevant (para 75); (2) he had been greatly over influenced by his views on the question of valuation, which he had discussed at great length, expressing his conclusions in colourful and sometimes contradictory terms (para 76); (3) market value was, Henderson J stated, completely irrelevant to the expenditure issue, as HMRC were not relying on any of the anti avoidance provisions in section 214 216 of CAA 2001 (para 77); and (4) in any event the criticisms of the evidence of Mr Brewer (who made the valuation report dated 7 July 2004) were largely unfounded, showing a fundamental confusion between the prediction of future income and the valuation of predicted income (para 78). Henderson J then turned (paras 79 83) to the Special Commissioners four possible approaches. The judge considered that the approach that was correct in law was the second approach, that is that the market value of the acquired software might be materially lower than the price paid for it in this case, but that nevertheless the LLPs should still be entitled to claim capital allowances by reference to the full price paid because, whilst the LLPs might only have paid that price because of the non recourse loans provided to the members to contribute their capital, the LLPs have nevertheless paid the full price for the software and nothing can adjust that analysis for tax purposes. The judge agreed with the Special Commissioner as to the difficulties in the third (soft finance) approach, while commenting that on his own findings the Special Commissioner should logically have accepted it. The Special Commissioner had been entitled to conclude that the insertion of the two banks had no commercial justification (para 84 of the judges judgment) but nevertheless the only real transaction was the transaction which the parties actually carried out, involving the banks. The judge rejected the argument that BMBF was distinguishable because in that case the circularity was happenstance. His conclusions can be found in paras 85 and 86: I accept that there are distinctions between the facts of the present case and those of BMBF, and I would agree that in the absence of evidence from the banks the Special Commissioner was entitled to be sceptical about the commerciality of the arrangements into which they entered. It seems to me, however, that none of this advances the Revenues case, because it does not impinge on the narrow question whether LLP 2 incurred the relevant expenditure on the acquisition of the software. The judge referred to MacNivens case, and continued: I hope I have now said enough to explain why in my judgment the Special Commissioners conclusion on the Expenditure Issue cannot stand, and in the absence of a finding of sham the only conclusion open to him was that the whole of the consideration for the software, when it was paid on completion of the SLA in January 2005, was expenditure incurred on the provision of plant within the meaning of section 11 of CAA 2001. The Court of Appeal In the Court of Appeal the only full judgment on the expenditure issue is that of Moses LJ. His judgment covers this issue at paras 56 to 87. He referred at some length to BMBF in the Court of Appeal and the House of Lords (paras 61 to 72), and to Ensign in the House of Lords (paras 73 78). He did not accept the submission (made on behalf of the LLPs) that BMBF shows that the terms of borrowing are simply irrelevant (paras 78 79): The terms of the borrowing, in the context of all the facts, may be relevant in order to cast light on whether LLP2 had really incurred expenditure, as Carnwath LJ foresaw ([2003] STC 66, para 58). The source of the money was irrelevant in BMBF because the borrowing was on regular, commercial terms. Rather than regarding the terms on which LLP2 borrowed 75% of the consideration as simply irrelevant, the Court should consider them in relation to the fundamental question whether the taxpayer suffered the economic burden of paying the full amount. By doing so, it is possible to decide whether there was real expenditure. Moses LJ put aside (paras 80 to 81) the issue of whether incurring expenditure was a legal or commercial concept. The rest of the judgment of Moses LJ (paras 82 to 87) concentrated on the question whether there was real expenditure by the LLPs (without any emphasis on the question for what the expenditure was incurred). Moses LJ distinguished Ensign on two principal grounds. The first was (para 84): Whilst there was an expectation, on the basis of conservative predictions, that the whole of the loan agreement would not be paid off in full over the period of ten years, it cannot be shown that the terms were such that the loan was never likely to be repaid. It all depended on success in marketing the software. In Ensign, the loan never had to be repaid whatever success the film achieved. The last sentence was challenged by Mr Prosser as factually incorrect. The second point of distinction perceived by Moses LJ was (para 85): LLP and its members owned free of any liability software which could generate a substantial proportion of an annual income which the projections showed to be approximately 38m. In Ensign Tankers, the partnership never acquired a right to more than 25% of the returns. In my view this is a seriously oversimplified version of the facts in each case. The LLPs did not own the software; they owned rights in bits of the software which together (if the whole plan had gone through) would have brought them 13% of the clearing fees (one component in computing in MCashbacks trading profit). VP did own the whole of the master negative of the film, but that ownership did not entitle VP to the whole net profits from the film, because there were also heavy distribution and exploitation costs to be incurred by other companies connected with LPI before the film earned what it had cost to make. Moses LJ set out his conclusion in para 86 (referring back to para 85): It is this feature which to my mind is the most important ground for distinguishing Ensign Tankers and this appeal. The ownership of the software agreement was transferred to LLP 2. The question of transfer of ownership casts a clear light on the reality of the expenditure, just as it did in Ensign Tankers. It was unacceptable to contemplate that [VP] had incurred 100% of the expenditure on the film in acquiring a mere 25% of the rights. But the fact that LLP2 acquired the right to the full economic benefit of the agreement is a powerful, and, to my mind, a determinative feature of this appeal. It is worth repeating part of Carnwath LJs judgment (at para 85) which I cited earlier: However, once one accepts the transfer of ownership, it is difficult to question the reality of the expenditure by which the purchase price was discharged. Discussion and conclusions I start from the Special Commissioners findings of fact summarised in para 55 above. Henderson J accepted (1) (not sham, but pre ordained) and (5) (no commercial purpose for insertion of banks, but with the qualification that it was nevertheless the only real transaction). He did not disagree with (6) (the Special Commissioners rejection of his third approach) while commenting that logically he would have expected the Special Commissioner to accept it. As to (4) (prospect of repayment of members loans) the judge set the bar (to my mind) surprisingly low in commenting (para 81) that the Special Commissioner recognised that there was (at the lowest) a real possibility that the clearing fees derived from the software would be sufficient to ensure that at least some of the 75% loan finance would be repaid. The judge strongly disagreed on (2) (valuation) and did not mention (3) (disposition and valuation of rights to software in bits). Before disagreeing strongly with the Special Commissioners views on valuation, Henderson J stated (para 77) that the market value of the software was completely irrelevant. That is, in my view, putting it a good deal too high. It is true that HMRC (for reasons that I do not understand) made no attempt to invoke any of the anti avoidance provisions in CAA 2001. But I cannot accept that the question of valuation was totally irrelevant in the context of a complex pre ordained transaction where the court is concerned to test the facts, realistically viewed, against the statutory text, purposively construed. Henderson J went on to say that the Special Commissioner betrayed a fundamental confusion between the prediction of future income and the valuation of predicted income (Mr Brewers task being limited to the second function). That comment preserves Mr Brewers professional reputation he was acting in accordance with his instructions but to my mind (as to the Special Commissioners mind) it leaves the valuation of the software, on the basis of predicted income derived solely from Mr Coopers revised business plan, as lacking any sort of independent professional approval. I see great force in the Special Commissioners comment (para 104) that in rightly following the instructions that he was given, Mr Brewer naturally produced a fairly useless conclusion. Mr Brewer himself said that a far more extensive exercise would have been required by a private equity firm investing, and that the present valuation was only good enough for Inland Revenue purposes. Moreover the LLPs were not buying the software, either as a whole or even in bits. They were acquiring a licence to use it which was far short of absolute ownership (clause 7.4 of the SLA restricted their right of access to the source code, and there seems to have been no evidence certainly there was no finding about any separate escrow agreement made under that sub clause). In practice, even if all four of the LLPs had completed as planned, they would together have received no more than 13% of the clearance fees in respect of their rights in the software. Cooperation between MCashback and the LLPs was to take place under the opaque terms of the operating agreement. That, on the LLPs case, was the consideration for which they would have been paying 156m (had all the schemes gone through). All those points would arise even in the absence of the last minute change when it was decided to sell the software rights in bits. The Special Commissioner speculated as to which bits, if any, remained unsold (see para 103: his reference to a retained interest in 87% of the clearance fees seems to have overlooked that the LLPs 13% was a gross figure). A confidential report dated 5 July 2004 made by Mr John Heap, an IT expert, suggests that the four systems allocated to the four LLPs (Code Generation, Reporting Module, Customer Support Interface and Call Centre Interface) were the essential parts of the system. But the report (though written more than three months after the SLAs were entered into) reports a different allocation (LLP1 Customer Support Interface; LLP2 Call Centre Interface; LLP3 Reporting Module; LLP4 Code Generation). Both sides accept that that is wrong, and that Mr Heap must have been misled by his instructions. Mr Brewers valuation does not specify the categories of software to which it apportions the total valuation of 145m to 150m, nor does it explain the basis on which the apportionment has been made. The fact that these errors and omissions were made and apparently caused no concern emphasises the extreme unreality of selling the software rights in bits, when they were parts of a closely integrated system designed for a specialised task. To my mind it is only a little less unreal than for a syndicate which owns a racehorse in undivided shares to decide, 48 hours before the big race, to partition the animal so that one member takes the head and neck, and another the off hind leg, and so on. A further indication of how little practical importance seems to have been attached to the division of the software rights, and what they were to earn, is that the reader of the information memorandum relating to LLP3 has to get to p 42, if he gets that far, before learning that the rights in the Call Centre Interface (itself mentioned on p 12) are to earn 4.16% of the clearing fees. For these reasons I respectfully consider that the judge, although correct in his view that market value was not determinative, and also correct in thinking that the Special Commissioner had used unnecessarily colourful and contradictory language, was wrong to dismiss, as sweepingly as he did, the Special Commissioners scepticism about the valuation of the software rights, and the commercial soundness of the transactions. The judge also downplayed the Special Commissioners doubts about the prospects of the members loans being repaid within ten years. He treated the case as essentially similar to BMBF, while conceding that there were factual points of difference. The essential point that he took from BMBF (in para 84 of his judgment) was that CAA 2001 is resistant to an approach on Ramsay lines, because it focuses attention solely on the position of the purchaser. In conclusion on this issue he stated (para 86, which I have already quoted): In the absence of a finding of sham the only conclusion open to him was that the whole of the consideration for the software . was expenditure incurred on the provision of plant within the meaning of section 11 of CAA 2001. I respectfully think that that was wrong in law, and overlooked the continuing validity of the decision of the House of Lords in Ensign. It is not clear to me how far the judge, in these conclusions, was relying on the Special Commissioners rejection of his own third approach, the soft finance analysis (to which the judge had referred in para 30 of his judgment, at the very start of his discussion of the expenditure issue). The grounds on which the Special Commissioner rejected the soft finance analysis (paras 113 121 of his decision) are to my mind rather confused. He recognised that it does not involve any re analysis of the transactions. Ultimately he seems to have rejected it mainly on the practical grounds of difficulty of valuation (though he had, both at a directions hearing and on the first morning of the main hearing, refused HMRCs application for an adjournment in order to obtain expert evidence on valuation matters). He was also apparently influenced by the thought that it would be unrealistically harsh to deprive the investor members of possible future claims for capital allowances in later years. I find those reasons unconvincing. HMRC has now abandoned the soft finance argument as such. But it has not vanished completely, as appears from para 66 of HMRCs printed case, quoted at para 25 above. Before this Court Mr Prosser argued (though this is probably an oversimplification of his more subtle arguments) that even if an investor member did spend the money which he borrowed (say 225,000) as well as his own money (say 75,000) he did not incur expenditure of 300,000 on acquiring software rights, because only 50,000 of the money reached MCashback, and 225,000 went into a loop from which MCashback received no immediate benefit at all. If in the future money were to flow back to MCashback out of the loop it would be because of its own commercial success in generating clearing fees. Whatever the 225,000 was spent on, it was not spent in acquiring software rights from MCashback, because the 225,000 never reached MCashback (I leave open for the present the expenditure, in this example, of the odd 25,000 on fees and expenses). The judge was right to emphasise that the transaction was the subject of tough negotiation between MCashback and Tower (whose founder members stood to make a large gain, when the investor members rights had been fully satisfied, if the M Rewards scheme was as successful as both sides hoped it would be). The negotiations were tough because MCashback (unlike BGE in BMBF) really did need up front finance in order to roll out its software and give effect to its business plan. It saw itself as parting with potentially very valuable rights indefinitely (the investor members dropped out after ten years, but the founder members did not) for only a modest part (just over 18% before fees and expenses, or just under 17% after fees and expenses) of the total capital apparently being raised. That was because 75% of the capital raised, although not simply a sham, was really being used in an attempt to quadruple the investor members capital allowances. That is what the tough bargain which Tower struck with MCashback enabled Tower to offer to its investor members. I have already (para 47 above) quoted Lord Goff in Ensign [1992] 1 AC 655, 682. The facts of that case were different, since in that case there was not in any meaningful sense a loan at all. In this case there was a loan but there was not, in any meaningful sense, an incurring of expenditure of the borrowed money in the acquisition of software rights. It went into a loop in order to enable the LLPs to indulge in a tax avoidance scheme. Despite the shortcomings in his decision, the Special Commissioner was essentially right in his conclusion in para 138 (quoted in para 56 above). I respectfully consider that Moses LJ was right in deriving assistance from Ensign (paras 78 and 79 of his judgment, quoted in para 62 above) as to the relevance of the terms of the borrowing (here interest free and non recourse). But I respectfully think that he was wrong to concentrate on the terms as an indication of whether there was real expenditure. That was the issue in Ensign (no real loan, no real expenditure). Here the issue was whether there was real expenditure on the acquisition of software rights. I think that Moses LJ gave the right answer to the wrong question. The transfer of ownership (or at least of rights) indicated the reality of some expenditure on acquiring those rights, but was not conclusive as to the whole of the expenditure having been for that purpose. Moses LJ was also wrong (on the point of fact raised by Mr Prosser) in saying that in Ensign the loan never had to be paid, whatever success the film achieved: see [1992] 1 AC 655, 663 (Lord Templeman) and 683 (Lord Goff); also the detailed case stated at [1989] STC 705, 721 722, summarising clause 11 of the distribution agreement. One of the lessons of BMBF is that it is not enough for HMRC, in attacking a scheme of this sort, to point to the money going round in a circle. Closer analysis is required. In BMBF the whole 91m was borrowed by Barclays Finance from Barclays Bank on fully commercial terms (though they were companies in the same group) and Barclays Finances acquisition of the pipeline was on fully commercial terms. BGE had the whole 91m at its disposal, and though it was disposed of at once under further pre arranged transactions, those transactions were entirely for the benefit of BGE. BGE had no pressing need for upfront finance (which is not, contrary to what Park J supposed, an essential feature of a leasing scheme capable of generating capital allowances). In the present case, by contrast, the borrowed money did not go to MCashback, even temporarily; it passed, in accordance with a solicitors undertaking, straight to R & D where it produced no economic activity (except a minimal spread for the two Guernsey banks) until clearing fees began to flow from MCashback to the LLPs (in an arrangement comparable, though not closely similar, to the arrangements between LPI and VP in Ensign). The LLPs relied on the decision of the House of Lords in Corporation of Birmingham v Barnes [1935] AC 292. The Corporation was held to be entitled to wear and tear allowances in respect of the whole cost of building and renewing tramways although it had received contributions to the cost from two sources (a factory owner benefited by the tramway and a government grant to encourage public works as a means of reducing unemployment). The statutory words to be construed were the actual cost to the Corporation. Lord Atkin (with whom the rest of the House agreed) understood the words as directed (p 298) to the amount which the Corporation paid for the tramway works, regardless of the source of its funds. That does not assist the LLPs, which did not pay the borrowed money to MCashback to acquire software rights. Instead they put it into a loop as part of a tax avoidance scheme. For these reasons I would allow HMRCs appeal, dismiss the LLPs cross appeal, and set aside the orders of the Court of Appeal and Henderson J. I have considered whether it would be right (especially in view of the factual confusion and absence of any valuation evidence about the allocation of software rights) to remit the matter to another Special Commissioner for further findings. But I do not think it would be right to do so. Neither side asked for a remission, and the Special Commissioner himself twice refused an adjournment for further valuation evidence to be adduced. No one has suggested that that case management decision should now be revisited. I would direct the conclusions and amendments in the closure notices to be amended to allow 25% only of the FYAs claimed. That is in one way generous to the LLPs, since in fact about one third of their contribution (the 25,000 in the example given above) was devoted to fees and expenses. But I think it would, in all the circumstances, be the fair outcome in a confusing case. If a majority of the Court agrees with my conclusion, it is to be expected that commentators will complain that this Court has abandoned the clarity of BMBF and returned to the uncertainty of Ensign. I would disagree. Both are decisions of the House of Lords and both are good law. The composite transactions in this case, like that in Ensign (and unlike that in BMBF) did not, on a realistic appraisal of the facts, meet the test laid down by the CAA, which requires real expenditure for the real purpose of acquiring plant for use in a trade. Any uncertainty that there may be will arise from the unremitting ingenuity of tax consultants and investment bankers determined to test the limits of the capital allowances legislation. LORD HOPE I accept with gratitude Lord Walkers careful description of the facts of this case, his discussion of the authorities and the conclusions that he has reached. Like him, I would dismiss the cross appeal by the LLPs on the procedural issue, allow HMRCs appeal on the expenditure issue and make the order that he proposes. I would however like to add one or two footnotes to what he has said. The procedural issue The stage at which an enquiry under section 12AC(1) of TMA 1970 is completed is identified by a notice given under section 28B by the officer in charge of the enquiry to the taxpayer. Section 28B(1) describes this as a notice which informs the taxpayer that the officer has completed his enquiries and states his conclusions. If an amendment to the return is required to give effect to his conclusions, section 28B(2) requires him to make those amendments. The taxpayer has a right of appeal under section 31(1)(b) of TMA 1970 against any conclusion stated in or amendment made by a closure notice. So it is desirable that the statement by the officer of his conclusions should be as informative as possible. This is because of the function that the terms of the notice will serve in identifying the subject matter of any appeal. In this case the closure notice that Mr Frost issued was in very bald terms. All he said was that the claim for relief under section 45 CAA was excessive, and that the amount in the return for capital allowances was amended to nil. No details were given of the reasons why he had reached the conclusion to which his amendment gave effect. The statute does not spell out exactly what it means by the words his conclusions. But taxpayers are entitled to expect a closure notice to be more informative. Notices of this kind, however, are seldom, if ever, sent without some previous indication during the enquiry of the points that have attracted the officers attention. They must be read in their context. In this case Mr Frost drew attention to this when he prefaced his conclusion with the words as previously indicated. He also sent a covering letter which cast further light on the approach which he had taken to the various issues that had been under examination. In these circumstances it does not seem unfair to the LLPs to hold that the issue as to their entitlement to the allowances claimed should be examined as widely as may be necessary in order to determine whether they are indeed entitled to what they have claimed. Furthermore, while the scope and subject matter of the appeal will be defined by the conclusions and the amendments made to the return, section 50 of TMA does not tie the hands of the Commissioners (now the Tax Chamber) to the precise wording of the closure notice when hearing the appeal. I would therefore respectfully endorse the points that Lord Walker makes in para 18. Our decision to dismiss the cross appeal should not be taken as indicating that uninformative closure notices of the kind that Mr Frost, no doubt under pressure, issued in this case should be the norm. The aim should be to be helpful, both to the taxpayer and to the Tax Tribunal which will have to case manage any appeal. The officer should wherever possible set out the conclusions that he has reached on each point that was the subject of enquiry which has resulted in his making an amendment to the return. The expenditure issue The issue, reduced to its simplest terms, is whether the whole of the 27.5m paid by LLP2 to MCashback under the terms of the software licence agreement was expenditure incurred by LLP2 on the provision of software within the meaning of the Capital Allowances Act 2001. The general rule itself is not in doubt. Expenditure is qualifying expenditure if it is capital expenditure on the provision of plant or machinery wholly or partly for the purposes of the qualifying activity carried on by the person incurring the expenditure: CAA, section 11(4). The problem that the facts of this case give rise to is the extent to which surrounding circumstances, such as the source and destination of the funds expended and the commercial soundness of the transaction when looked at as a whole, may be taken into account in an assessment of the question whether the taxpayer was involved in expenditure that entitled it to the allowance claimed. The case for the LLPs was that transfer of ownership was itself enough to show that real expenditure was incurred. They also maintained that the source of the funds was irrelevant, as also was what the purchaser did with the funds received by it. Moses LJ too adopted a similar approach in the Court of Appeal when he concluded that there was nothing in the terms of the loans which showed that they were never likely to be repaid, as it all depended on success in marketing the software: [2010] STC 809, para 84; and that it was sufficient that the LLPs acquired the right to the full economic benefit of the software: para 86. The reality, however, was that much of the consideration paid by the LLPs for the software was derived from funds borrowed by members of the LLPs on non recourse terms which was immediately passed back by way of a chain of banks to the lender. This was, as Lord Walker says in para 67, a complex pre ordained transaction which requires the facts, realistically viewed, to be tested against the wording of the statute. In Barclays Mercantile Business Finance Ltd v Mawson [2005] 1 AC 684, para 32 Lord Nicholls of Birkenhead said that the question is always whether the relevant provisions of the statute, upon its true construction, applies to the facts as found. In para 39 he stressed the need for a close analysis of what, on a purposive construction, the statute actually requires. CAA, section 11(4) sets out the general rule that expenditure must satisfy if it is to be qualifying expenditure. Purposively construed, it requires it to be demonstrated in this case that the whole of the claimed expenditure of 27.5m was actually incurred on acquiring rights in the software. This is a factual inquiry, the extent and depth of which will always depend on the circumstances of each case. The Special Commissioner held that the scheme in this case was not a sham, but that the market value of the software rights was very materially below the price that had ostensibly been paid for them. A significant proportion of the consideration for their acquisition was provided from loans which were immediately returned to the lender in a way that had been pre ordained. Whatever purpose the loans were designed to serve, it is not obvious that it was to secure the acquisition of rights in the software. The LLPs maintained that the source of this part of the consideration, and what was done with it, was irrelevant. They referred, in support of that proposition, to Birmingham Corporation v Barnes [1935] AC 292, where the Corporation incurred expenditure on building and operating a tramway. Part of the funding for the tramway came from the owner of a factory near to whose premises the tramway ran. Another part came from an Unemployed Grants Committee because the Corporation had used direct labour which included workers who had previously been unemployed. It was held that, when determining the actual cost of the tramway, the source of the funding was irrelevant. I do not think that the decision in that case, on relatively simple facts, offers any guidance as to the view that should be taken of this case. In that case there was no doubt that the whole of the money which the Corporation received, from whatever source, was actually expended on the tramway. A significant part of the money that was passing from one party to another in this case was returned to its source immediately. As Lord Walker points out in para 76, it did not go to MCashback as payment for the rights in the software, even temporarily. This suggests that it is, to say the least, questionable whether it was expended in their acquisition at all. I think that the LLPs were perhaps on stronger grounds in relying on Peterson v Commissioner of Inland Revenue [2005] UKPC 5, [2005] STC 448. In that case the taxpayer was a member of a syndicate of investors formed to finance a feature film in New Zealand. The investors were induced to invest in it by the prospect of obtaining a depreciation allowance to set off against their taxable income, but they were led to believe that the film would cost more than it was actually expected to cost. They signed a contract in which they accepted a liability to pay the artificially inflated amount to the production company. That sum was to be paid in cash at the outset, funded in part by the investors out of their own resources, and in part by the proceeds of a non recourse loan from a third party connected to the production company. Unknown to the investors, the production company did not use the portion of the consideration funded by the loan to make the film but recycled the money back to the lender immediately it was received. The investors claimed to be allowed to set off the full amount against their taxable income. The Commissioner allowed that part which had been funded out of their own resources. But he disallowed the loan element, on the ground that it did not represent expenditure by them at all. The question was whether the investors had obtained a tax advantage which could be held to be void under the tax avoidance legislation in force in New Zealand. The Board held by a majority (Lord Millett, Baroness Hale of Richmond and Lord Brown of Eaton under Heywood) that the investors were entitled to depreciate their full acquisition costs for the film, whatever the means by which they had obtained funds to finance its acquisition. The fact that the cost of the acquisition was funded wholly or in part by a non recourse loan was irrelevant, as was the fact that the costs of the films production had been falsely inflated. The focus was on the party who acquired the asset and his having incurred the cost of doing so. It did not matter where the money came from, nor did it matter what the party who disposed of the asset did with the money when he received it. He was not required to apply the proceeds of disposing of the film to the investors in making the film. So the Commissioner had not succeeded in showing that the investors had not incurred the economic burden of paying the inflated amount for its acquisition. It should be noted, however, that the majority were careful to say that they reached their conclusion on the facts agreed or found by the Taxation Review Authority, the way in which the Commissioner put his case from time to time and the allegations and concessions he had made: para 47. They said that they were not to be understood as deciding that, had the necessary facts been found, the Commissioner might not have successfully challenged the investors case that the obligation which they incurred to pay the inflated amount was exclusively incurred as consideration for the acquisition of the film. There was also a powerful dissent by the minority (Lord Bingham of Cornhill and Lord Scott of Foscote), who thought that it was plain that the non recourse loan was no more than a device to produce a higher capital sum to be depreciated and, thereby, a higher tax deduction: para 91. While the mechanism that was used there was broadly the same as that which was used in this case, I would confine the decision to its own facts. In Barclays Mercantile Business Finance Ltd v Mawson the House of Lords adopted a practical, commercial approach to the reality of the expenditure. Although the facts of this case lead to a different result, I would adopt the same approach here. As Lord Walkers exacting analysis has shown, they do not support LLPs case that the whole of the claimed expenditure was actually used to acquire the rights in the software. I agree that, in the circumstances of this case, we can and should reach our own conclusion as to the amount that should be allowed in respect of the claimed expenditure. LORD RODGER, LORD COLLINS, LORD KERR, LORD CLARKE LORD DYSON For the reasons given by Lord Walker and Lord Hope, with which we entirely agree, we too would dismiss the cross appeal by the LLPs on the procedural issue, allow HMRCs appeal on the expenditure issue and make the order that Lord Walker proposes. |
The central issue in this appeal is whether the Court of Appeal in Northern Ireland was entitled to order that a claim for damages under section 8 of the Human Rights Act 1998, for breach of the requirement under article 2 of the European Convention on Human Rights that an investigation into a death should begin promptly and proceed with reasonable expedition, should not be brought until an inquest has been concluded, or if already brought should be stayed until after that date. The facts The appellants son, Pearse Jordan, was shot and killed by a member of the Royal Ulster Constabulary on 25 November 1992. In 1994 the appellants husband, Hugh Jordan, made an application to the European Court of Human Rights, complaining that the failure to carry out a prompt and effective investigation into his sons death was a violation of article 2. An inquest commenced on 4 January 1995 but was adjourned shortly afterwards. On 4 May 2001 the European Court of Human Rights upheld Mr Jordans complaint and awarded him 10,000 in respect of non pecuniary damage, together with costs and expenses: Jordan v United Kingdom (2003) 37 EHRR 2. A fresh inquest into Pearse Jordans death commenced on 24 September 2012, and a verdict was delivered on 26 October 2012. Hugh Jordan then brought proceedings for judicial review of the conduct of the inquest, which resulted in the verdict being quashed: In re Jordans application for Judicial Review [2014] NIQB 11. A subsequent appeal against that decision was dismissed: [2014] NICA 76. In 2013 Hugh Jordan brought the present proceedings for judicial review, in which he sought declarations that the Coroner and the Police Service of Northern Ireland (PSNI) had been responsible for delay in the commencement of the inquest in violation of his rights under article 2, together with awards of damages under section 8 of the Human Rights Act in respect of the delay from 4 May 2001 until 24 September 2012. Stephens J upheld the claim against the PSNI, finding that there had been a series of failures to disclose relevant information until compelled to do so, and also a delay in commencing a process of risk assessment relating to the anonymity of witnesses: [2014] NIQB 11, paras 350 359. Following a further hearing in that case and five other similar cases, he made a declaration that the PSNI delayed progress of the Pearse Jordan inquest in breach of article 2 of the European Convention on Human Rights and contrary to section 6 of the Human Rights Act 1998, and awarded damages of 7,500: [2014] NIQB 71. The Chief Constable of the PSNI appealed against the declaration and award of damages, contending that although the PSNI might have been responsible for part of the delay, they should not have orders made against them where other state authorities had also been responsible for the delay but were not party to the proceedings. Hugh Jordan cross appealed against the dismissal of his claim against the Coroner. The Department of Justice was joined as a respondent to the proceedings. It is a matter of agreement before this court that, at the hearing of the appeal, the Court of Appeal raised a preliminary issue relating to the timing of the application for judicial review, and heard argument on that issue only. The judgment itself states that the issue of timing was raised by counsel for the PSNI, who argued that the application was time barred under section 7(5) of the Human Rights Act, since there was no finding that delay in breach of article 2 had occurred within the period of 12 months immediately prior to the commencement of the proceedings, and there was no reason why the court should exercise its discretion to extend the period for bringing proceedings under section 7(5)(b). Judgment was handed down on 22 September 2015: [2015] NICA 66. That judgment was subsequently withdrawn and a revised judgment, also dated 22 September 2015, was issued on 12 May 2017. The resultant orders, also dated 22 September 2015, were made on 10 June 2017. The judgment and orders are discussed below. The immediate result of the orders was a stay of proceedings. A further inquest into Pearse Jordans death commenced on 22 February 2016 and a verdict was delivered on 9 November 2016. That verdict was challenged in judicial review proceedings brought by Pearse Jordans mother, the present appellant, but without success: In re Jordans application for Judicial Review [2018] NICA 34. She also took over the conduct of the present proceedings from her husband as his health had deteriorated so as to prevent him from taking part. On 23 October 2017, following a hearing which it had convened of its own motion in the exercise of its case management functions, the Court of Appeal lifted the stay on the present proceedings. It had been in place for a period of two years and one month. Both the Chief Constables appeal and the claimants cross appeal were heard during 2018. The cross appeal was dismissed: [2018] NICA 23. The appeal has not yet been decided. The delays in the investigation into Pearse Jordans death, and the repeated litigation which has characterised that process, are a common feature of what have come to be known as legacy cases: that is to say, cases concerning deaths occurring in Northern Ireland during the Troubles. In his recent judgment In re Hughes application for Judicial Review [2018] NIQB 30, Sir Paul Girvan found that there was systemic delay in these cases, arising from a lack of resources to fund inquests of the length, complexity and contentiousness involved. There were at that point 54 inquests pending in relation to 94 deaths. Only one inquest was heard during 2018. In an effort to address this problem, reforms have been proposed by the Lord Chief Justice of Northern Ireland which, it is hoped, will enable all the outstanding cases to be heard within five years. The proposed reforms have not however been implemented, as the necessary funding has not been provided. The judgment and order of the Court of Appeal In its judgment the court considered how section 7(5) of the Human Rights Act applies to complaints of delay in relation to the holding of inquests. Section 7(1)(a) provides that a person who claims that a public authority has acted in a way which is made unlawful by section 6(1) (ie has acted in a way which is incompatible with a Convention right) may bring proceedings against the authority under the Act. Section 7(5) provides: (5) Proceedings under subsection (l)(a) must be brought before the end of the period of one year beginning with the date on (a) which the act complained of took place; or (b) considers equitable having regard circumstances such longer period as the court or tribunal the to all The court observed that it was apparent from the history of this case and other legacy cases that delay as a result of failures to disclose evidence had been a recurring problem. Where there had been a series of failures of disclosure, was it necessary, the court asked, for the applicant to issue proceedings within one year of the end of a particular failure to disclose, or was the applicant entitled to include periods of delay resulting from earlier failures where proceedings were issued within 12 months of the latest failure? Might the answer to that question depend upon whether there was a finding that all of the failures of disclosure were part of a policy or practice to cause delay? The court did not answer these questions, but it observed that in the light of these issues, and the very long delays occurring in legacy cases, those who wished to avoid being captured by the primary limitation period under section 7(5)(a) might well feel obliged to issue proceedings separately in relation to each and every incident of delay. That might involve separate proceedings against different public authorities allegedly contributing to periods of delay which might or might not overlap. If each case had to be pursued within one year of the end of each particular element of delay, that would introduce a proliferation of litigation in respect of which periods of delay justified an award of damages against which public authorities. Practicality and good case management pointed towards ensuring that all of those claims against each public authority should be heard at the same time. In the present case a fresh inquest had been ordered (ie the inquest which began on 22 February 2016 and had already been completed when the substituted judgment was delivered). If it did not take place within a reasonable time, that would constitute a fresh breach of the Convention for which a remedy, including damages, might be available. It was when the inquest was completed that it would be possible to examine all the circumstances surrounding any claim for delay, and the court would then be in a position to determine whether adequate redress required an award of damages and, if so, against which public authority in which amount. The court stated at para 21: We consider, therefore, that in legacy cases the issue of damages against any public authority for breach of the adjectival obligation in article 2 ECHR ought to be dealt with once the inquest has finally been determined. Each public authority against whom an award is sought should be joined. In order to achieve this it may be necessary to rely upon section 7(5)(b) of the 1998 Act. The principle that the court should be aware of all the circumstances and the prevention of even further litigation in legacy cases are compelling arguments in favour of it being equitable in the circumstances to extend time if required. Where the proceedings have been issued within 12 months of the conclusion of the inquest, time should be extended. This appears on its face to constitute general guidance for all legacy cases in which damages are sought. The court made it clear at para 22 that it expected there to be very few, if any, exceptions to this approach: We find it difficult to envisage any circumstances in which there should be an exception to the approach set out in the preceding paragraph in such cases. The court concluded at para 23: For the reasons given we consider that the claim for damages for delay should be assessed after the completion of the inquest but should be made within one year of the completion. Since we have ordered a fresh inquest in this case that period has not yet commenced. We will hear the parties on whether the appeal on the award of damages should be adjourned until after the inquest or allowed without adjudication on the merits to enable the issue of a fresh claim. The first sentence in this passage again appears to constitute general guidance for legacy cases (since damages had already been assessed in the present case). So far as the present case was concerned, the alternatives set out in the third sentence were either to adjourn further consideration of the appeal until after the inquest had been completed, or to allow the appeal without a decision on the merits, so that the proceedings were brought to an end and a further claim could be brought after the inquest. In the event, the resultant order stayed the proceedings until the conclusion of the inquest, as explained earlier. Separate orders were made on 10 June 2017 in respect of the appeal and the cross appeal. In relation to the appeal, the court ordered: 1. that the claim for damages for breach of the article 2 procedural requirement that an inquest be conducted promptly should not be brought until the inquest has finally been determined. that where a claim for damages for breach of the article 2. 2 procedural requirement that an inquest be conducted promptly is brought within 12 months of the conclusion of the inquest, time should be extended under section 7(5)(b) of the 1998 Act [ie the Human Rights Act]. that the appeal be stayed until the conclusion of the 3. inquest proceedings. In relation to the cross appeal, the court ordered: 1. that the issue of delay at ground 7 on the cross appeal be stayed until the conclusion of the inquest proceedings. Paragraph 1 of the order in the appeal was consistent with the general guidance given in the judgment, and appeared to lay down a general rule that claims of the present kind should not be brought until an inquest has been concluded. It has no direct bearing on the present proceedings, where the claim was brought as long ago as 2013. Paragraph 2 addressed the implications of paragraph 1 in relation to the limitation period imposed by section 7(5). Only paragraph 3, and the order in the cross appeal, directly concerned the present proceedings. The decision of the Court of Appeal appears to have been understood as laying down a general rule that claims of the present kind could not be brought before the conclusion of an inquest, and that any claims which had been brought before that stage should be stayed until then. The present appeal The present appeal was brought in order to challenge the general guidance given by the Court of Appeal, reflected in paragraph 1 of the order made in the appeal. The main issue in the appeal was agreed to be whether the Court of Appeal was correct to rule that a victim adversely impacted by delay in the conduct of an inquest could not bring a claim for damages prior to the conclusion of the inquest. The appellant sought to set aside the judgment and order made by the Northern Ireland Court of Appeal whereby it decided that her claim for damages for breach of article 2 ECHR by reason of delay could only be brought after the conclusion of the inquest into her sons death. In re McCords application for Judicial Review After the hearing of the present appeal, the Court of Appeal handed down judgment in another legacy case where the applicant had applied for leave to issue judicial review proceedings in which he sought a declaration that the non disclosure of certain documents by the PSNI had caused delay in the holding of an inquest, in violation of his rights under article 2: In re McCords application for Judicial Review, unreported, 18 January 2019. The proceedings had been stayed by the High Court. In the course of its judgment, the Court of Appeal considered the judgment under appeal in the present proceedings (in its original version). It said at paras 21 22, in relation to para 27 of its original judgment in the present case (identical to para 22 of the revised version, cited at para 15 above): 21. We accept that this passage created the impression that in every legacy case any application to pursue a remedy by way of damages for delay could only be dealt with at the end of the inquest. Indeed it is clear that that was the common understanding of the parties before the learned trial judge as a result of which the applicant decided to abandon the determination of his claim for damages in the proceedings and rely solely upon the claim for a declaration 22. We consider, however, that this passage of the judgment ought to be interpreted in a rather more qualified manner. First, it has to be borne in mind that the court, having given the judgment in September 2015, decided of its own motion to relist the case for the determination of the damages claim in June 2017 having regard to the fact that the inquest had not yet concluded. Secondly, it needs to be borne in mind that this was a case management decision and was not intended to set forth any rule of law about the entitlement to damages in legacy cases. Thirdly, the case was concerned with circumstances in which there were active and ongoing inquest proceedings but where issues of delay in the course of those active proceedings arose. It was such cases that were being discussed in this passage of the judgment and we consider that the interpretation of para 27 [ie para 22 of the revised version] should be confined to cases in which those circumstances are present. The court observed at para 23 that the case before it was different: The inquest in this case has not taken place. No Coroner has been allocated to hear it and no materials have been provided to the Coroners Service by the police. It is impossible to estimate how many years it might take before the inquest might proceed In these circumstances the appeal was allowed. In the light of this judgment, it appears that the Court of Appeal intends the guidance given in the present case to be confined to cases where the only outstanding issue is damages and where an inquest can be expected to begin within the near future, if not already under way. The court also indicated in para 22 that the appropriateness of the stay should be kept under review, and that it should be lifted if the claim for damages will not otherwise be determined within a reasonable time. Discussion In considering the guidance given by the Court of Appeal in the present case, as clarified in the case of McCord, it must be borne in mind at the outset that, in cases of the present kind, it is the delay itself which constitutes a breach of the claimants Convention rights and gives rise to a right to bring proceedings under the Human Rights Act. The breach does not crystallise only after the inquest has been concluded: the claimant is entitled to bring proceedings as soon as the delay reaches the requisite threshold under article 2. Claims arising from such delay are brought under section 7(1)(a) of the Human Rights Act. That provision confers a statutory right on any person who claims that a public authority has acted in a way which is incompatible with a Convention right to bring proceedings against the authority, provided that he or she qualifies as a victim of the unlawful act and brings the proceedings within the time limits set by section 7(5). The court then has the power to grant appropriate relief under section 8. This may take the form of relief designed to end the delay, such as a mandatory order or declaration, or relief designed to compensate for the consequences of delay, in the form of an award of damages. In the present proceedings, both a declaration and damages were sought and awarded. The same remedies were also sought in the McCord case, although the claim for damages was abandoned in light of the guidance given in the present case. No court can take away the right conferred by section 7(1)(a), whether in the exercise of case management powers or otherwise. Leaving aside the courts power to control vexatious litigants and abuses of process, which are not here in issue, there can be no question of anyone being prevented from bringing proceedings at a time of their choosing (subject to the limitation provision in section 7(5)) in respect of a claimed violation of their Convention rights. Although the court cannot prevent proceedings from being brought by persons who claim that their Convention rights have been violated, it can exercise powers of case management in relation to those proceedings. Such powers can include ordering a stay of proceedings in appropriate circumstances. In that regard, however, three important aspects of Convention rights must be borne in mind. 1. Rights that are practical and effective First, the European Court has emphasised many times that Convention rights must be applied in a way which renders them practical and effective, not theoretical and illusory: see, for example, Airey v Ireland (1979) 2 EHRR 305, para 24. The effectiveness of the right under article 2 to have an investigation into a death begin promptly and proceed with reasonable expedition could be gravely weakened if there were a general practice of staying proceedings seeking to secure the prompt holding of an inquest, typically by obtaining a mandatory order or a declaration. Although compensation might be payable at a later stage, the primary object of the Convention, and of the Human Rights Act, is to secure compliance with the Convention so far as possible, rather than to tolerate violations so long as compensation is eventually paid. On the other hand, a practice of staying the assessment of damages (as distinct from the consideration of remedies designed to end the delay) until the entirety of the delay can be considered is less likely to undermine the effectiveness of the right, since that is less likely to depend on the point in time at which damages are assessed and awarded. Nevertheless, it remains necessary to consider whether that might be the consequence of a stay in the individual case before the court. 2. Determination within a reasonable time Secondly, since the right conferred by section 7(1)(a) of the Human Rights Act is a civil right within the meaning of article 6 of the Convention, a claimant is entitled under that article to have his claim determined within a reasonable time. That right under article 6 is distinct from the article 2 right on which the proceedings are based. A breach of the article 6 right is itself actionable under section 7(1)(a). The staying of proceedings will be unlawful if it results in a breach of the reasonable time guarantee in article 6. That would be a real possibility in some cases, if stays until after the completion of an inquest were ordered as a general rule. In the McCord case, the Court of Appeal observed that it was impossible to estimate how many years it might take before the inquest might proceed. In the proceedings brought by Hugh Jordan successfully challenging the verdict of the second inquest, the Lord Chief Justice remarked that if the existing legacy inquests are to be brought to a conclusion under the present system someone could easily be hearing The proportionality of a restriction on access to the courts some of these cases in 2040: [2014] NICA 76, para 122. The state of affairs described in Sir Paul Girvans recent judgment In re Hughes application for Judicial Review is consistent with that assessment. Plainly, a stay of that duration, or anything like it, would constitute a breach of article 6. 3. Thirdly, since a stay of proceedings prevents a claim from being pursued so long as it remains in place, it engages another aspect of article 6 of the Convention, namely the guarantee of an effective right of access to a court: see, for example, Woodhouse v Consignia plc [2002] EWCA Civ 275; [2002] 1 WLR 2558. It must therefore pursue a legitimate aim, and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved: see Tinnelly & Sons Ltd v United Kingdom (1998) 27 EHRR 249, para 72. It follows that even in a case where a stay would not render the article 2 right ineffective or breach the reasonable time guarantee in article 6, it is nevertheless necessary to consider whether it would be a proportionate restriction of the right of access to a court. As will be explained, that exercise requires consideration of the circumstances of the individual case before the court. So far as legitimate aims are concerned, the Court of Appeal mentioned two objectives: that a proliferation of litigation should be avoided, and that the court should be aware of all relevant circumstances when determining claims. Both of those aims are clearly legitimate. The courts concern about a potential proliferation of litigation was based, as it explained, on uncertainty in the legal profession about the answers to certain questions affecting the limitation of claims: whether a separate violation of the article 2 right to a prompt investigation, for which a separate claim arises, occurs on every occasion when a public authority is responsible for some measure of unjustified delay; and if so, whether such claims become time barred under section 7(5)(a), subject to the courts exercise of its discretion under section 7(5)(b), 12 months after each claim arises. How those questions should be answered has seemingly yet to be considered. If a suitable case were brought before the court for determination, that uncertainty could be resolved one way or the other. Until that occurs, however, the courts concern that uncertainty may result in a proliferation of litigation is reasonable and constitutes an important consideration on one side of the scales. In relation to the other legitimate aim, namely that the court should be aware of all relevant circumstances, the point made by the Court of Appeal was that it is only after an inquest has been completed that it is possible to determine whether adequate redress for delay requires an award of damages, and if so against which public authority and in which amount. Whether that is so depends on how damages are assessed. Hitherto, assessment has not depended on factors which can only be considered after an inquest. The possibility of assessing damages on a broadly conventional basis prior to the conclusion of an inquest is demonstrated by several judgments of the European Court in cases emanating from Northern Ireland, including its judgment in the Jordan case. That is not to say, however, that there may not be good practical reasons for staying the proceedings, where the question arises of whether it is appropriate to award damages, and if so in what amount. Particularly in a situation where the court may have to decide claims against different public bodies in respect of the same or different periods of delay, deferring consideration of these issues until after the conclusion of an inquest may enable the court to consider all relevant periods of delay, and responsibility for them, at one and the same time. It is therefore another means of reducing the risk of an undue burden being placed on the courts by a proliferation of claims for damages (and potentially for contribution, depending on how the concept of joint and several liability applies in this context: another question which seemingly has yet to be considered). As indicated earlier, this is a relevant and significant factor to be weighed in the balance. Whether a stay is proportionate depends on an assessment of the weight of the competing interests at stake in the circumstances of the particular case. The cogency of the arguments in favour of a stay will depend on the degree of risk that the proceedings may otherwise result in a proliferation of litigation, if that is the legitimate aim pursued. On the other side of the scales, the importance to the claimant of obtaining monetary redress for the violation of his or her Convention rights without avoidable delay has to be considered. In most cases the claimant is likely to be the widow, parent or child of the deceased, and may suffer anguish as decades pass without any adequate inquiry into the circumstances of the death, particularly where there are allegations of state involvement in the death (as in the present case), and of collusion and cover up. The imposition of delay in the determination of their claim for damages may cause additional distress. There may be other factors in individual cases which make the expeditious determination of the claim particularly important. The present case, for example, illustrates the importance of expedition where proceedings are brought by claimants who are elderly or infirm. In striking an appropriate balance between the different interests at stake, the length of any stay will be of considerable importance. There is no doubt that there may be cases in which it is proportionate to impose a stay on a claim for damages in a legacy case, weighing the relevant factors for and against it. There is equally no doubt that there may be cases in which, weighing those factors, a stay is not proportionate. Since the relevant factors can differ in nature and weight from one case to another, it follows that courts should carry out the necessary balancing exercise in the individual case. A virtually automatic rule requiring all such claims to be stayed until after the inquest, regardless of their individual circumstances, would not comply with that requirement, and in addition, as previously explained, would result in breaches of the reasonable time requirement of article 6. The present case The guidance which the Court of Appeal was understood to have given in paras 21 23 of its judgment in the present case was not consistent with the foregoing principles. On its face, it involved no assessment of proportionality or consideration of individual circumstances. It was also liable to render the article 2 procedural right ineffective, and to result in breaches of the reasonable time guarantee. The clarification provided in the case of McCord has, however, considerably narrowed the apparent scope of that guidance, so as to confine it to cases where the only outstanding issue is damages and where an inquest can be expected to begin within the near future, if not already under way. The court also indicated that the appropriateness of the stay should be kept under review, and that it should be lifted if the claim for damages will not otherwise be determined within a reasonable time. Guidance to that effect is generally consistent with the principles discussed above, although it remains necessary to allow for the possibility of exceptions in individual cases. The foregoing discussion has concerned the general guidance given by the Court of Appeal in the present case, and the reconsideration of that guidance in the case of McCord. So far as the present proceedings are concerned, the decision which is challenged was to stay the claim for damages until the inquest had been concluded. It has not been argued that the effect of that decision was to render the claimants article 2 right theoretical or illusory, or that there was a breach of the reasonable time requirement imposed by article 6. On the other hand, it does not appear from the judgment of the Court of Appeal that it carried out any assessment of the proportionality of the stay which it ordered. It is uncertain whether the court would have ordered the stay if such an assessment had been conducted, particularly if Mr Jordans ill health had been drawn to its attention. Conclusion It is impossible not to feel considerable sympathy for the serious practical difficulties which the courts in Northern Ireland face in dealing with legacy cases, and which prompted the guidance which was given in the present case and clarified in the case of McCord. As has been explained, the guidance as originally given was defective on its face, and the appellant was entirely justified in bringing this appeal in order to challenge it. The Court of Appeal has, however, recognised that the terms in which it expressed itself have caused difficulty, and it has resolved the problem in its McCord judgment, to which I would only add that it remains necessary to consider whether that general guidance should be applied in the circumstances of an individual case. So far as complaint is made about the order made in the present proceedings, this court would not normally question a case management decision. The decision in question was however taken without any evident consideration of its proportionality in the particular circumstances of this case. In addition, it is uncertain whether the Court of Appeal would have reached the same decision if the question of proportionality had been considered in the light of all the relevant facts, including the then claimants declining health. In these circumstances I would allow the appeal. |
The facts of this case can fairly be described as exotic, but very few of them are relevant to the present appeal. Dr Williams claims to be the victim of a fraud instigated by the Nigerian State Security Services which occurred in 1986. His case is that he was induced to serve as guarantor of a bogus transaction for the importation of foodstuffs into Nigeria. In connection with that transaction, he paid $6,520,190 to an English solicitor, Mr Reuben Gale, to be held on trust for him on terms that it should not be released until certain funds had been made available to him in Nigeria. Dr Williams says that in fraudulent breach of that trust, Mr Gale, knowing that those funds were not available to him in Nigeria, paid out $6,020,190 of the money to an account of the Central Bank of Nigeria with Midland Bank in London, and that he pocketed the remaining $500,000. The Central Bank is said to have been party to Mr Gales fraud. The Bank applied for an order setting aside the permission given to Dr Williams to serve the claim form and particulars of claim on the Central Bank in Nigeria and declaring that the English court lacked, or at any rate should not exercise, jurisdiction in respect of it. That in turn depended on whether there was a serious issue to be tried. Supperstone J, who heard the matter in the High Court, held that of the various claims then advanced by Dr Williams, the only ones which raised a serious issue to be tried on the pleaded facts were the so called 1986 trust claims: [2011] EWHC 876 (QB). Dr Williams no longer challenges that. The 1986 trust claims comprised (i) a claim to require the Central Bank to account for the $6,520,000 on the footing that it dishonestly assisted Mr Gales breach of trust; (ii) a claim to require it to account for $6,020,190 on the footing that it received that sum knowing that it was being paid by Mr Gale in breach of trust; and (iii) a claim to trace the $6,020,190 in the Central Banks hands. As far as these claims were concerned, the issue turns wholly on whether they were subject to statutory limitation by virtue of section 21 of the Limitation Act 1980, which deals with time limits for actions in respect of trust property. It is common ground that so far as any of the 1986 trust claims is subject to statutory limitation, the limitation period has expired and that on that footing those claims would give rise to no serious issue to be tried. Since Supperstone J gave judgment, Dr Williams has received permission to amend his Particulars of Claim to add three further causes of action, collectively known as the Nigerian law claim. This court has not been concerned with that claim, and I say nothing more about it. The result is that regardless of the outcome of this appeal, permission to serve out of the jurisdiction will stand, so that the Nigerian law claim may be tried. Section 21 of the Limitation Act 1980 provides (so far as relevant) as follows: 21. (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy ; or (b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use. (3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued. Section 23 provides: An action for an account shall not be brought after the expiration of any time limit under this Act which is applicable to the claim which is the basis of the duty to account. Section 38(1) of the Limitation Act 1980, defines the terms trust and trustee as having the same meanings, respectively, as in the Trustee Act 1925. This is a reference to section 68(17) of the Trustee Act 1925, which provides that subject to immaterial exceptions, the expressions trust and trustee extend to implied and constructive trusts. and to the duties incident to the office of a personal representative, and trustee where the context admits includes a personal representative. As applied to the 1986 trust claims, these provisions give rise to two questions. The first is whether a stranger to a trust who is liable to account (as the Central Bank is alleged to be) on the footing of dishonest assistance in a breach of trust or knowing receipt of trust assets is a trustee for the purposes of section 21(1)(a). If the answer to that question is No, then the second question is whether an action in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy includes an action against a party such as the Central Bank which is not itself a trustee. Both questions were argued before Supperstone J. He held that the Central Bank could not be described as a trustee, but that it was at least arguable that section 21(1)(a) was not confined to actions against the trustee and extended to an action against the Bank arising out of its participation in the trustees fraud. He therefore refused to set aside the order for service. Before the Court of Appeal (Sir Andrew Morritt C, Black and Tomlinson LJJ), Dr Williams conceded the first question, as a result of which only the second was argued: [2013] QB 499. They decided that question in favour of Dr Williams, and affirmed the judges decision. Before this court, Mr Adkin QC, who appeared for Dr Williams, has partially withdrawn his concession on the first issue. He still accepts that a person liable to account on the footing of dishonest assistance in anothers breach of trust is not a trustee. But he says that a person liable to account on the footing of knowing receipt is a trustee. Mr Philipps QC, appearing for the Central Bank did not object to his being allowed to take this point, and was clearly right not to do so. Not only is it a pure question of law, but a proper understanding of section 21 requires an examination of both questions. We are not concerned (as the Judge thought he was) with the question whether Dr Williams case on limitation is merely arguable. Dr Williams case is certainly arguable, and has been exceptionally well argued. Both parties now accept that we can and should decide whether it is right. In my opinion it is not. The 1986 trust claims are time barred, essentially because section 21(1)(a) of the Limitation Act 1980 is concerned only with actions against trustees and the Central Bank is not a trustee. This is because a constructive trust of the kind alleged against the Bank is not a true trust. To explain why this is so, it is necessary to examine the rather complicated interaction between the successive statutes of limitation and the equitable rules regarding the limitation of actions against trustees. Two categories of constructive trust The combined effect of the definition sections of the Limitation Act 1980 and the Trustee Act 1925 is that in section 21 of the Limitation Act a trustee includes a constructive trustee. Unfortunately, this is not as informative as it might be, for there are few areas in which the law has been so completely obscured by confused categorisation and terminology as the law relating to constructive trustees. The starting point for any consideration of this subject remains the well known statement of principle of Lord Selborne in Barnes v Addy (1874) LR 9 Ch App 244, 251: Now in this case we have to deal with certain persons who are trustees, and with certain other persons who are not trustees. That is a distinction to be borne in mind throughout the case. Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees. It is clear that Lord Selborne regarded as a constructive trustee any person who was not an express trustee but might be made liable in equity to account for the trust assets as if he was. The problem is that in this all embracing sense the phrase constructive trust refers to two different things to which very different legal considerations apply. The first comprises persons who have lawfully assumed fiduciary obligations in relation to trust property, but without a formal appointment. They may be trustees de son tort, who without having been properly appointed, assume to act in the administration of the trusts as if they had been; or trustees under trusts implied from the common intention to be inferred from the conduct of the parties, but never formally created as such. These people can conveniently be called de facto trustees. They intended to act as trustees, if only as a matter of objective construction of their acts. They are true trustees, and if the assets are not applied in accordance with the trust, equity will enforce the obligations that they have assumed by virtue of their status exactly as if they had been appointed by deed. Others, such as company directors, are by virtue of their status fiduciaries with very similar obligations. In its second meaning, the phrase constructive trustee refers to something else. It comprises persons who never assumed and never intended to assume the status of a trustee, whether formally or informally, but have exposed themselves to equitable remedies by virtue of their participation in the unlawful misapplication of trust assets. Either they have dishonestly assisted in a misapplication of the funds by the trustee, or they have received trust assets knowing that the transfer to them was a breach of trust. In either case, they may be required by equity to account as if they were trustees or fiduciaries, although they are not. These can conveniently be called cases of ancillary liability. The intervention of equity in such cases does not reflect any pre existing obligation but comes about solely because of the misapplication of the assets. It is purely remedial. The distinction between these two categories is not just a matter of the chronology of events leading to liability. It is fundamental. In the words of Millett LJ in Paragon Finance Plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400, at 413, it is the distinction between an institutional trust and a remedial formula between a trust and a catch phrase. Selangor United Rubber Estates Ltd v Craddock (no. 3) [1968] 1 WLR 1555, is a decision of Ungoed Thomas J about the elements of ancillary liability. It has been much criticised for drawing the net of liability too wide, and for making excessively fine distinctions between different mental states. But it contains a clear and entirely orthodox statement of the different categories of constructive trustee. The judge observed, at p 1579: It is essential at the outset to distinguish two very different kinds of so called constructive trustees: (1) Those who, though not appointed trustees, take upon themselves to act as such and to possess and administer trust property for the beneficiaries, such as trustees de son tort. Distinguishing features for present purposes are (a) they do not claim to act in their own right but for the beneficiaries, and (b) their assumption to act is not of itself a ground of liability (save in the sense of course of liability to account and for any failure in the duty so assumed), and so their status as trustees precedes the occurrence which may be the subject of claim against them. (2) Those whom a court of equity will treat as trustees by reason of their action, of which complaint is made. Distinguishing features are (a) that such trustees claim to act in their own right and not for beneficiaries, and (b) no trusteeship arises before, but only by reason of, the action complained of. Later in his judgment, at p 1582, the judge expanded upon the characteristics of his category (2): It seems to me imperative to grasp and keep constantly in mind that the second category of constructive trusteeship (which is the only category with which we are concerned) is nothing more than a formula for equitable relief. The court of equity says that the defendant shall be liable in equity, as though he were a trustee. He is made liable in equity as trustee by the imposition or construction of the court of equity. This is done because in accordance with equitable principles applied by the court of equity it is equitable that he should be held liable as though he were a trustee. The same point was made in very similar language by Millett LJ in Paragon, at pp 408 409: Regrettably, however, the expressions constructive trust and constructive trustee have been used by equity lawyers to describe two entirely different situations. The first covers those cases already mentioned, where the defendant, though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the plaintiff. The second covers those cases where the trust obligation arises as a direct consequence of the unlawful transaction which is impeached by the plaintiff. A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another. In the first class of case, however, the constructive trustee really is a trustee. He does not receive the trust property in his own right but by a transaction by which both parties intend to create a trust from the outset and which is not impugned by the plaintiff. His possession of the property is coloured from the first by the trust and confidence by means of which he obtained it, and his subsequent appropriation of the property to his own use is a breach of that trust. In these cases the plaintiff does not impugn the transaction by which the defendant obtained control of the property. He alleges that the circumstances in which the defendant obtained control make it unconscionable for him thereafter to assert a beneficial interest in the property. The second class of case is different. It arises when the defendant is implicated in a fraud. Equity has always given relief against fraud by making any person sufficiently implicated in the fraud accountable in equity. In such a case he is traditionally though I think unfortunately described as a constructive trustee and said to be liable to account as constructive trustee. Such a person is not in fact a trustee at all, even though he may be liable to account as if he were. He never assumes the position of a trustee, and if he receives the trust property at all it is adversely to the plaintiff by an unlawful transaction which is impugned by the plaintiff. In such a case the expressions constructive trust and constructive trustee are misleading, for there is no trust and usually no possibility of a proprietary remedy; they are nothing more than a formula for equitable relief. Relevance of the distinction to limitation Before the Trustee Act 1888, no statutory time bar applied to a claim by a beneficiary against a trustee. The practice of equity was to apply statutory limitation periods by analogy to equitable claims, in addition to its own doctrines of laches and acquiescence. But by way of exception statutory limitation periods were not applied, even by analogy, to claims by a beneficiary against a trustee for breach of trust. Trustees were accountable to their beneficiaries without limitation of time. It is important to understand why equity adopted this rule, for its rationale will not necessarily apply to every kind of constructive trust. The reason was that the trust assets were lawfully vested in the trustee. Because of his fiduciary position, his possession of them was the beneficiarys possession and was entirely consistent with the beneficiarys interest. If the trustee misapplied the assets, equity would ignore the misapplication and simply hold him to account for the assets as if he had acted in accordance with his trust. There was nothing to make time start running against the beneficiary. It will be apparent that this reasoning can apply only to those who, at the time of the misapplication of the assets have assumed the responsibilities of a trustee, whether expressly or de facto. Persons who are under a purely ancillary liability are in a different position. They are liable only by virtue of their participation in the misapplication of the trust assets itself. Their dealings with the assets were at all times adverse to the beneficiaries, and indeed to the true trustees holding the legal interest. This point was first articulated by Lord Redesdale, Lord Chancellor of Ireland, in Hovenden v Lord Annesley (1806) 2 Sch & Lef 607, a classic judgment delivered (according to the reporter) after several days of argument around his sickbed at home. Referring to a judgment of Lord Maccelsfield on the application of statutory limitation by analogy to claims against trustees for breach of trust, he continued at pp 632 633: Now I take it that the position which has been laid down, that trust and fraud are not within the statute, is qualified just as he qualifies it here: that is, if a trustee is in possession and does not execute his trust, the possession of the trustees is the possession of the cestui que trust; and if the only circumstance is, that he does not perform his trust, his possession operates nothing as a bar, because his possession is according to his title. But the question of fraud is of a very different description: that is a case where a person who is in possession by virtue of that fraud, is not, in the ordinary sense of the word, a trustee, but is to be constituted a trustee by a decree of a court of equity, founded on the fraud; and his possession in the meantime is adverse to the title of the person who impeaches the transaction on the ground of fraud. The position of a person who is not an express or a de facto trustee but is constituted a trustee by a decree of a court of equity may be illustrated by another early case, Beckford v Wade (1805) 17 Ves Jun 87, a decision of the Privy Council on appeal from Jamaica. The claim was to recover trust assets from a stranger to the trust into whose hands they had come. The issue concerned the application of the English statutes of limitation, which were held to apply in Jamaica subject to a Jamaican statute excepting (among other people) trustees. Delivering the advice of the Board, Sir William Grant MR said, at pp 95, 97: The question then is, what the true construction of the Act is in this particular: whether it meant only actual and express trusts, as between cestui que trusts and trustees properly so called, upon which length of time ought to have no effect: or whether it intended to leave open to perpetual litigation every equitable question relative to real property. It is certainly true, that no time bars a direct trust, as between cestui que trust and trustee. But if it is meant to be asserted that a court of equity allows a man to make out a case of constructive trust at any distance of time, after the facts and circumstances happened, out of which it arises, I am not aware that there is any ground for a doctrine, so fatal to the security of property as that would be. Inconsistent case law These cases gave a coherent and rational explanation of the reason why, exceptionally, limitation could not be taken by an express or de facto trustee against his beneficiary, but was available to strangers who had incurred an ancillary liability. Courts of equity, however, later lost sight of the underlying principle and for much of the 19th century continued to deal with the issue on a confusing and inconsistent basis, generally without analysis or reference to earlier authority. For many years, Bonney v Ridgard (1784) 17 Ves 87 and Beckford v Wade (1805) 17 Ves Jun 87 were the principal authorities for the proposition that limitation was available to strangers who were under an ancillary liability arising from a breach of trust. Wilson v Moore (1834) 1 My&K 337 and Bridgman v Gill (1857) 24 Beav 302 were authority for the opposite proposition. I do not propose to analyse the facts of these cases, some of which are very summarily reported. The story can conveniently be taken up in 1893, when Soar v Ashwell [1893] 2 QB 390 came before the Court of Appeal. Soar v Ashwell was decided under the general principles of equity relating to limitation as they stood before the Trustee Act 1888. The facts were similar to those of many other cases about Victorian family trusts. The fund had been entrusted by the trustees to Ashwell, the solicitor to the trust, who exercised all of their administrative and investment powers for them and misapplied the assets. The actual question at issue was whether the reasoning which deprived trustees of the right to raise limitation against their beneficiaries applied to him, given that he was not an express trustee. The Court of Appeal held that it did. According to Lord Esher MR and Bowen LJ, this was because he stood in a fiduciary position to the trustees as his clients. According to Kay LJ it was because he was a trustee de son tort. For present purposes, the difference does not matter. In either case, as Lord Esher put it at pp 393, 394, he had assumed to act as if he were a trustee. The Court of Equity treats the defendant as a trustee become so by construction, and the trust is called a constructive trust. Lord Esher recognised the distinction explained by Lord Redesdale between a person liable by reason of his pre existing status as a trustee and a person liable only by reason of his involvement in a misapplication of the assets. At p 394 he observed: Assume that he misappropriated that money to his own use, and that was all; the misappropriation would at once of itself make him the holder of the money in trust for the rightful owner, but if that were all only a trustee by construction of a constructive trust. But the questions in this case are whether Ashwell was not, in view of a Court of Equity, a trustee of the money before the alleged breach by misappropriation and, if he was, under which class of trust he was with regard to limitations. The moment the money was in his hands, he was in a fiduciary relation to the nominated trustees; he was a fiduciary agent of theirs; he held the money in trust to deal with it for them as directed by them; he was a trustee for them. He was therefore a trustee of the money before he committed, if he did commit, the alleged breach of trust, and was in possession of and had control over the money before he committed, if at all, the alleged breach of trust. Notwithstanding this impeccable statement of the reasons why Ashwell could not rely on limitation, all three members of the court went on to deal, in terms which had no regard to it, with the position of other kinds of constructive trustee. Lord Esher expressed the view, at pp 394 395, that a stranger to the trust who knowingly assisted in a dishonest misapplication of trust assets would be treated for limitation purposes in the same way as an express trustee. Bowen LJ, at pp 396 397, while recognising that the authorities were irreconcilable, identified three cases where a constructive trustee would be treated for limitation purposes like an express trustee, namely the case of de facto trustees, which was the case before the court; the case of a stranger to the trust knowingly assisting the fraud of a trustee; and the case of a stranger knowingly receiving trust property in breach of trust. Kay LJ, whose own examination of the authorities at pp 400 405 disclosed the same inconsistency, seems to have been of the same view as Bowen LJ. None of them suggested that a stranger liable to account as a constructive trustee on the footing of knowing assistance or knowing receipt was actually a trustee, only that for the purpose of the general equitable principles governing limitation such persons were to be treated in the same way as trustees. None of them sought to explain why the rather special rationale of the rule of equity applicable to express or de facto trustees should apply to a person who was not a trustee but had a purely ancillary liability to account as a constructive trustee. Nonetheless in the years immediately following the decision in Soar v Ashwell, most judges were content to follow the dicta in that case: see In re Gallard [1897] 2 QB 8; Heynes v Dixon [1900] 2 Ch 561; In re Eyre Williams [1923] 2 Ch 533 (although only the first of these cases was a true case of ancillary liability). Statutory modification From this unsatisfactory state of affairs, the law was rescued by the intervention of statute, which provoked some fresh judicial analysis. Section 25(2) of the Judicature Act 1873 gave statutory effect to the rule which deprived trustees of the right to raise limitation, at any rate so far as express trustees were concerned. It provided: No claim of a cestui que trust against his trustee for any property held on an express trust, or in respect of any breach of such trust, shall be held to be barred by any statute of limitations. The first significant change in the law came with the Trustee Act 1888, which sought to relieve honest trustees who had parted with the assets and had not converted them to their own use from the harshness of the rule which held them accountable without limitation of time. Section 8(1) of the Act applied in any action or other proceeding against a trustee or any person claiming through him, except where the claim is founded upon any fraud or fraudulent breach of trust to which the trustee was party or privy, or is to recover trust property, or the proceeds thereof still retained by the trustee, or previously received by the trustee and converted to his use If these conditions were satisfied, the trustee was entitled to the same statutory period of limitation as would have been available if he had not been a trustee or, in the case of an action to recover trust money or property, to the limitation period applicable to a common law action for money had and received. This meant, in effect, six years. For the purpose of section 8(1), trustee was defined in section 1(3) as including an executor or administrator and a trustee whose trust arises by construction or implication of law as well as an express trustee. The leading case on the effect of sections 1(3) and 8(1) of the Trustee Act 1888 was Taylor v Davies [1920] AC 636, a decision of the Privy Council on a Canadian statute in the same terms. Davies was a secured creditor of an insolvent firm whose property had been the subject of an assignment for the benefit of creditors. He was also a member of the committee of inspection appointed to supervise the assignee. He took a conveyance of the mortgaged property from the assignee in satisfaction of the debt at what was alleged to be an undervalue. Twelve years later, the other creditors sought to set aside the conveyance, on the ground that as a member of the committee of inspection Davies had been a fiduciary and as such precluded by the self dealing rule from acquiring the property himself, at any rate without fuller disclosure. There was no allegation of dishonesty. The Board held that Mr Davies was not an express trustee because the assets of the insolvent were vested in the assignee and the committee of creditors had no power to dispose of them. The same point would have been fatal to any suggestion that he was a de facto trustee. They considered that he was a constructive trustee, apparently on the footing of knowing receipt of assets held in trust by the assignee. In those circumstances, the question arose whether the Act applied. It was argued for Davies that the Act had no application to constructive trustees whose liability was purely ancillary, because such persons had always been entitled in equity to raise limitation. The creditors argument was that the definition of trustee extended to constructive trustees, and that Davies was deprived of the right to raise limitation by the statutory exception for cases where the property or its proceeds was still in the hands of the alleged trustee. The Board decided this question in favour of Davies. Their reason was that the Act did not extend to constructive trustees whose liability to account arose from the wrongful misapplication itself. Two passages from the advice of the Board, given by Viscount Cave, are relevant. At pp 650 651, Viscount Cave said: The possession of an express trustee was treated by the Courts as the possession of his cestuis que trust, and accordingly time did not run in his favour against them. This disability applied, not only to a trustee named as such in the instrument of trust, but to a person who, though not so named, had assumed the position of a trustee for others or had taken possession or control of property on their behalf, such (for instance) as the persons enumerated in the judgment of Bowen L.J. in Soar v Ashwell or those whose position was in question in Burdick v Garrick, In re Sharpe, Rochefoucauld v Boustead, and Reid Newfoundland Co v Anglo American Telegraph Co. These persons, though not originally trustees, had taken upon themselves the custody and administration of property on behalf of others; and though sometimes referred to as constructive trustees, they were, in fact, actual trustees, though not so named. It followed that their possession also was treated as the possession of the persons for whom they acted, and they, like express trustees, were disabled from taking advantage of the time bar. But the position in this respect of a constructive trustee in the usual sense of the words that is to say, of a person who, though he had taken possession in his own right, was liable to be declared a trustee in a Court of equity was widely different, and it had long been settled that time ran in his favour from the moment of his so taking possession. This rule is illustrated by the well known judgment of Sir William Grant MR in Beckford v Wade. Turning to the extended definition of trustee to include constructive trustees, Viscount Cave said at p 653: The expressions trust property and retained by the trustee properly apply, not to a case where a person having taken possession of property on his own behalf, is liable to be declared a trustee by the Court; but rather to a case where he originally took possession upon trust for or on behalf of others. In other words, they refer to cases where a trust arose before the occurrence of the transaction impeached and not to cases where it arises only by reason of that transaction. The exception no doubt applies, not only to an express trustee named in the instrument of trust, but also to those persons who under the rules explained in Soar v Ashwell and other cases are to be treated as being in a like position; but in their Lordships' opinion it does not apply to a mere constructive trustee of the character described in the judgment of Sir William Grant. There is some confusion in these passages, arising from the references to Soar v Ashwell. Some of Viscount Caves turns of phrase, taken in isolation, might be thought to suggest that he was approving Bowen LJs extension of the equitable rule to cases of ancillary liability. But I think that he must have been referring to the ratio of that case, ie to the extension of the equitable rule to de facto trustees. Otherwise, he could not have decided the case in the way he did. Nor could he have distinguished cases in which the liability to account was imposed by equity by reason of the wrongful act itself, such as the decision of Sir William Grant in Beckford v Wade, the relevant part of which he had quoted at 651 652. Three years later, in Clarkson v Davies [1923] AC 100, the Privy Council applied the same reasoning to the same statute, in another case involving the knowing receipt of a companys funds by its directors. Taylor v Davies, they said at 110 111, was authority for a distinction between a trust which arises before the occurrence of the transaction impeached and cases which arose only by reason of that transaction. In 1936, the Law Revision Committee under the chairmanship of the then Master of the Rolls Lord Wright presented its fifth interim report, on statutes of limitation. Paragraph 11 of the report dealt with section 8 of the Trustee Act 1888, so far as relevant to the present issues. The Committee regarded the section as generally satisfactory. But it identified a problem about actions against persons, in particular executors, who owed fiduciary obligations in relation to property but were not express trustees. In two cases decided after the Act of 1888 but under the previous law, it had been held that executors were entitled to rely on a statutory time bar even if they were still in possession of the assets. This was because section 25(1) of the Judicature Act, in giving statutory effect to the rule of equity preventing trustees from raising limitation against their beneficiaries, had referred only to express trustees and executors were not express trustees: see In re Jane Davies [1891] 3 Ch 119; In re Lacy [1899] 2 Ch 149. This result was not consistent with section 8(1) of the Act of 1888, which had excluded from its ambit cases in which the trustee was still in possession when sued. But the anomaly would nevertheless persist because section 8(3) preserved any pre existing right to rely on limitation. The Committees conclusion, at para 11, was as follows: It is difficult to find any real justification for the rule that an executor or other person holding property as a trustee, but not on an express trust, can plead the statute, though he still retains the trust property or has converted it to his own use. The rule has been extensively modified by decisions giving such a wide meaning to express trust as to bring most cases of fiduciary relationship within the exception to the Trustee Act, and to raise serious doubt as to where the line is to be drawn for this purpose between express and constructive trusts. See the judgment of the Bowen LJ in Soar v Ashwell [1893], 2, QB at p 395, and the authorities there cited, and the cases referred to by Romer J in In re Eyre Williams [1923] 2 Ch 533. It is perhaps too late now to suggest that the Trustee Act, 1888 was intended to do away with the distinction between express and constructive trusts for the purpose of the limitation of actions, though the definition of trustee in section 1 (8) seems to point to that conclusion. At any rate we consider that the distinction should now be abolished, and we recommend that the exception in section 8 of the Trustee Act, 1888 should be expressly made to extend to trustees whether holding on express or constructive trusts, including personal representatives. Recommendation (7) of the Committee was that the Statutes of Limitation should only apply to constructive trustees to the extent to which they do to express trustees. It will be apparent from these observations that the only distinction which needed to be abolished for limitation purposes in order to dispose of the anomaly identified by the Committee was the distinction between express trustees and executors. It is clear that in referring to the position of persons who still held the property in their possession the Committee had in mind de facto trustees and other persons such as executors owing fiduciary duties in relation to property by virtue of their office. Notwithstanding the ambiguous reference to Bowen LJs judgment in Soar v Ashwell, there is nothing in the Committees reasoning to suggest that they had in mind ancillary liabilities. The Limitation Act 1939 was both a consolidating and an amending Act. So far as it amended the law, it was intended to give effect to the principal recommendations of the Wright Committee. It is, however, necessary to be cautious about transposing the views of the Wright Committee into the statutory language. The Committee did not produce a draft bill and the language of section 19 does not follow that of the report as some other sections do. It may therefore have been influenced by other considerations. As far as trustees were concerned the Act repealed the Trustee Act 1888 and replaced section 8 of that Act by section 19 of the new Act. Section 19(1) and (2) were in substantially the same terms as section 21(1) and (3) of the Limitation Act 1980, which I have set out above. They employed a different drafting technique from the old section 8(1). Instead of creating a right on the part of trustees to raise limitation by analogy with statute, subject to the two exceptions for cases of fraud by the trustee or actions to recover trust property in the possession of the trustee or previously converted to his use, it reversed the order of ideas. It provided that no limitation period prescribed by the Act should apply in those two cases, and then that the limitation period in other cases should be six years. The effect was to address the Wright Committees specific concerns about the survival of pre existing rights to raise limitation in cases falling within the exceptions, by excluding such rights in terms. If, which I doubt, the Wright Committee intended to propose the abolition of the distinction for limitation purposes between express trustees and every kind of constructive trustee, including those whose liability was ancillary, then it is clear that this proposal was not adopted by Parliament. Section 31(1) of the 1939 Act adopted the meaning given to trust and trustee in section 68(17) of the Trustee Act 1925. This had the effect of broadening the definition to include personal representatives, whose unsatisfactory position had been the main source of concern to the Committee. Otherwise the scope of the new definition was no broader than that of the Trustee Act 1888. But it goes further than that. By adopting the meaning and not just the language of the definition in the Trustee Act 1925, Parliament made it even clearer that the intention was simply to cover de facto trustees. The Trustee Act 1925 is concerned with the administration of true trusts. It is not concerned with constructive trusts imposed by equity on strangers to the trust in the exercise of its remedial jurisdiction. As Millett LJ observed when making this point in Paragon, at p 412, constructive trustees required to account in the exercise of equitys remedial jurisdiction, have no trust powers or duties; they cannot invest, sell or deal with the trust property; they cannot retire or appoint new trustees; they have no trust property in their possession or under their control, since they became accountable as constructive trustees only by parting with the trust property. They are in reality neither trustees nor fiduciaries, but merely wrongdoers. All of these considerations apply equally to section 21 of the Limitation Act 1980, which is in the same terms. It was suggested to us that in enacting section 19 of the Limitation Act 1939, Parliament must have intended to abolish for limitation purposes the distinction between true trustees and others upon whom equity imposed a liability to account as if they were trustees. This was because it intended to adopt the recommendations of the Wright Committee, and that (it was said) is what the Wright Committee intended. It is I think important to remember that we are construing the Act, not the report of the Committee. But the submission cannot in any event be correct for a number of reasons. In the first place, there is nothing in the report of the Wright Committee which suggests that they intended to abolish that distinction. What they were concerned with was the distinction between different kinds of true trustees. In particular, they were concerned with the anomalous distinction which had crept into recent case law between the application of the law of limitation to express trustees and an executor or other person holding property as a trustee, but not on an express trust. Second, if the Committee had intended to abolish for limitation purposes any distinction between true trustees and persons incurring an ancillary liability, it is hardly conceivable that they would have done so without discussing or even mentioning the two recent decisions of the highest persuasive authority, Taylor v Davies and Clarkson v Davies, which were based on precisely that distinction. The reason why they ignored the two Privy Council decisions was not that they were ignorant of them, or that they regarded them as outliers or wrong, but because they were not at all concerned with the question of ancillary liabilities which arose in those cases. Third, if Parliament had understood the Wright Committee as having recommended the abolition for limitation purposes of the distinction between true trustees and persons incurring an ancillary liability, they would not have done so by adopting the definition of trustee in the Trustee Act 1925. That definition extends the category of trustees to a personal representative, but says nothing about ancillary liabilities, with which the Trustee Act was not concerned. The latter point raises an altogether more fundamental objection to using the Committees report to elucidate not the rules of limitation as such but the categories of trustee to which they were intended to apply. By adopting not just the language but the meaning of the ready made definition in the Trustee Act 1925, Parliament directed the courts to discover its meaning in the latter Act. On that question, the intentions of a Committee reporting 11 years later cannot be of the slightest assistance. The above analysis of section 21 of the Limitation Act 1980 has now been accepted by the English courts at every level below this court. The turning point was the decision of the Court of Appeal in Paragon Finance Plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400, which is notable mainly for an extended obiter dictum of Millett LJ on the distinction, for limitation purposes, between a liability for breach of a true trust and an ancillary liability. I have already quoted freely from this valuable and characteristically trenchant judgment, which among other things draws attention to the importance of the decisions in Beckford v Wade and Taylor v Davies. There is a briefer dictum to the same effect by Lord Millett, as he had by then become, in Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366, 404. In Cattley v Pollard [2007] Ch 353, Richard Sheldon QC sitting as a deputy judge of the High Court, after an impressive review of a substantial body of case law and academic literature, held that section 21(1)(a) of the Limitation Act 1980 applied only to express and de facto trustees and not to persons liable only by virtue of their dishonest assistance in a breach of trust. In JJ Harrison (Properties) v Harrison [2002] 1 BCLC 162, and again in Gwembe Valley Development Co Ltd v Koshy (no. 3) [2004] 1 BCLC 131, the Court of Appeal adopted the analysis of Millett LJ and applied it to a case of knowing receipt of the assets of a company. It was held in both cases that no period of limitation applied, but only because the defendant was a director and as such to be treated as a true trustee. It is clear from the courts reasoning that the limitation position would have been different if he had not been. In Halton International (Holdings) Inc Sarl v Guernroy Ltd [2006] WTLR 1241, the Court of Appeal adopted the same reasoning and held that section 21(1) applied only to claims against express or de facto trustees, and not to claims against constructive trustees whose liability came into being as a result of the transaction impeached. In Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HKC 135, the Court of Final Appeal of Hong Kong held that the relevant provision of the Hong Kong Ordinance, which was in the same terms as section 19(1) of the English Limitation Act 1939, did not apply to a person liable to account as a constructive trustee on the footing of dishonest assistance. Lord Hoffmann, delivering the leading judgment, declined to follow the dicta of the Court of Appeal in Soar v Ashwell, which he regarded as wrong in principle and unsupported by authority. He was also unimpressed by the submission that this put a dishonest assister in a better position than an innocent or merely negligent trustee: The principle is not that the limitation defence is denied to people who were dishonest. It plainly applies to claims based on ordinary common law fraud. The principle is that the limitation period is denied to fiduciaries. But dishonest assisters are not fiduciaries. Para 24 These decisions represent a formidable corpus of modern and carefully reasoned authority in favour of a principle which is in my view correct. Is knowing receipt different? Mr Adkin realistically acknowledged that so far as his clients claim was based on dishonest assistance in a breach of trust, the Central Bank could not be regarded as a trustee for the purposes of the Limitation Act. But he submitted that so far as his claim was based on knowing receipt or on a right to follow the money into the hands on the Central Bank, the position was different. I do not think that it is. It is true that many of the authorities which I have reviewed involved the participation of the defendant in a fraud, and some of the statements of principle are expressed by reference to that situation. But others, notably Taylor v Davies, did not involve fraud and can only be analysed as cases of knowing receipt. The difficulty about Mr Adkins submission is that the principle does not depend on the difference between assistance and receipt, dishonesty or innocence. It depends on the difference between the liability of a true trustee, and the liability which a stranger incurs solely by reason of his participation in the very misapplication of trust assets which the claimant seeks to impeach. The essence of a liability to account on the footing of knowing receipt is that the defendant has accepted trust assets knowing that they were transferred to him in breach of trust and that he had no right to receive them. His possession is therefore at all times wrongful and adverse to the rights of both the true trustees and the beneficiaries. No trust has been reposed in him. He does not have the powers or duties of a trustee, for example with regard to investment or management. His sole obligation of any practical significance is to restore the assets immediately. It is true that he may be accountable for any profit that would have been made or any loss that would have been avoided if the assets had remained in the hands of the true trustees and been dealt with according to the trust. There may also, in some circumstances, be a proprietary claim. But all this is simply the measure of the remedy. It does not make him a trustee or bring him within the provisions of the Limitation Act relating to trustees. Application of section 21(1)(a) to an action against a non trustee If, as I conclude, the Central Bank was not a trustee, the question arises whether it is nevertheless a party sued in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy. Section 8 of the Trustee Act 1888 applied to any action or other proceeding against a trustee or any person claiming through him. Accordingly, it was expressly confined to actions against a trustee. However, the words which I have quoted were lost when the provision was reformulated in 1939. Did this change, which carried through into section 21 of the Act of 1980, extend the scope of that provision to actions against a stranger who was not a trustee? Mr Adkin submits that it did. But no authority has ever supported that contention apart from a tentative dictum of Danckwerts J in GL Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216, at 1222 and an alternative ratio of Evans Lombe J in Statek Corporation v Alford [2008] EWHC 32 (Ch). For my part, I would accept that this is a linguistically possible construction. But I think that it is mistaken because it overlooks the principles of equity which provide the background and subject matter of this section. In my opinion, it clear that section 21(1)(a) of the Act of 1980 is concerned only with actions against trustees on account of their own fraud or fraudulent breach of trust. In the first place the whole of the legislative history, as I have summarised it above, demonstrates that what is now section 21(3) was intended to relieve trustees, save in the two cases specified in section 21(1), from the harsh consequences of the equitable rule which held them liable to account without limitation of time. The exceptions must apply to the same persons as the rule. On a correct analysis of the law, restated in Taylor v Davies and Clarkson v Davies, the rule had never applied to strangers who were subject only to an ancillary liability, and they had therefore never needed to be relieved. This was essentially the ground on which Lord Hoffmann in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HKC 135, paras 24 and 25 considered that the corresponding provision in the Hong Kong ordinance had no application to claims against such persons. Second, unlike section 21(3), which introduces the general limitation period for trust claims, section 21(1)(a) is limited to cases of fraud or fraudulent breach of trust to which the trustee was a party or privy. These words are there to relieve trustees who acted in good faith, including the honest co trustees of a dishonest trustee. They would be unnecessary if the provision applied to actions against strangers to the trust, because any fraudulent breach of trust must necessarily be one to which the trustee is a party or privy. The inclusion of the phrase makes sense only on the footing that the section applies to actions against trustees and that it was intended to limit the circumstances in which it applied to them. The point is reinforced by the use of the definite article (the trustee), which can only mean that the draftsman was referring to fraud or fraudulent breach of trust on the part of the particular trustee sued. Third, the ancillary liability of a stranger to the trust arises independently of any fraud on the part of the trustee. This has always been recognised in the case of ancillary liabilities on the footing of knowing receipt. A liability on that basis does not require proof of any dishonesty on anyones part. Knowing assistance is different. It is based on fraud. But it is now clear that that knowing assisters are liable on account of their own dishonesty, irrespective of the dishonesty of the trustees: Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 There is no rational reason why the draftsman of section 21(1)(a) should have intended that the availability of limitation to a non trustee should depend on a consideration which had no bearing on his liability, namely the honesty or dishonesty of the trustee. Mr Adkin submitted that the Act was drafted on the mistaken assumption that liability for knowing assistance depended on the dishonesty of the trustee, because that was how Lord Selborne had expressed it in Barnes v Addy and everyone assumed it to be the law when the legislation assumed its current form in 1939. I do not accept this. The liability of a knowing assister has always depended on the unconscionability of his conduct. Cases involving an honest trustee and a dishonest assister have rarely arisen, whether before or after 1939. In practice the trustee usually is dishonest and the alleged constructive trustees conscience is affected because he has participated in the scheme with knowledge of that fact. That was why Lord Selborne spoke as he did. But the authorities cited by Lord Nicholls of Birkenhead in Royal Brunei Airlines, at 385, show that in those, older, cases where the question of the honest trustee and the dishonest assister had been considered, the critical question was the state of mind of the assister. The problem, as he pointed out at 386, was the tendency since Selangor United Rubber Estates Ltd v Craddock (no. 3) [1968] 1 WLR 1555 to read Lord Selbornes statement like a statute. Finally, section 21(1)(b), which deals with actions to recover trust property in the possession of the trustee, is unquestionably limited to actions against the trustee. It does not apply to actions against third parties such as knowing recipients of trust property. I can discern no rational reason why Parliament, if it wished to exclude persons under an ancillary liability, should have done so in cases where such persons were liable to account on the footing of knowing assistance but not in cases of knowing receipt. The truth is that both paragraphs (a) and (b) are concerned with actions against the trustee. The Report of the Wright Committee seems to me to have no bearing on this issue. The relevant part of it is concerned only with the question how a trustee should be defined for the purposes of statutory limitation. The present issue arises only once it is concluded that the Bank was not a trustee for the purposes of statutory limitation. I agree with Lord Neuberger that if anything the Committees analysis tends to militate against giving a wider meaning to section 21(1)(a) of the Act. Conclusion For these reasons, and for the very similar reasons given by Lord Neuberger, I would allow the appeal and declare that the English court has no jurisdiction which it ought to exercise in respect of the 1986 trust claims. It follows that those claims should be struck out. LORD NEUBERGER, (with whom Lord Hughes agrees) Introductory This appeal, whose substantive and procedural history is summarised in paras 1 and 2 above, raises two questions, both of which concern the scope of section 21(1)(a) of the Limitation Act 1980 (the 1980 Act), which, together with the other relevant statutory provisions, is set out in para 3 above. The questions which arise are: a) Is a stranger to a trust who is liable to account on the grounds of knowing receipt of trust assets and/or on the grounds of dishonest assistance in a breach of trust, a trustee for the purposes of section 21(1)(a) of the 1980 Act (section 21(1)(a))? b) Does an action in respect of any fraud or fraudulent breach of trust under section 21(1)(a) to which the trustee was a party or privy, include an action against a party which is not itself a trustee? Given the rather tangled way in which the law has developed in this area, through both cases and statutes, it is important to bear in mind that these are separate questions, although they are concerned with resolving the same issue. In the courts below, the respondent, Dr Williams conceded that the answer to the first question was no, but he now contends that it is yes; he also contends, as he contended below, that the answer to the second question is yes, and the Court of Appeal (Sir Andrew Morritt C, and Black and Tomlinson LJJ) agreed see [2013] QB 499. The appellant, Central Bank of Nigeria, contends that the answer to both questions is no. There is a divergence of opinion in this Court as to the outcome of Central Bank of Nigerias appeal to this Court. I agree with Lord Sumption that this appeal should be allowed. However, because the resolution of the two issues is not easy, the first issue has been raised for the first time in this Court, we are not all agreed, and I differ from the Court of Appeal, I propose to give my reasons for allowing the appeal. In doing so, I shall consider the two questions in turn. The meaning of trustee in section 21(1)(a) Limitation bars on claims against trustees It is important to bear in mind the history of the law relating to limitation and trustees, now contained in section 21 of the 1980 Act, particularly when considering earlier judicial decisions. Until 1888, there was no express statutory limitation period applicable to claims in equity. However, as Lord Redesdale LC (Ireland) explained in Hovenden v Lord Annesley (1806) 2 Sch & Lef 607, 632, the Courts of Equity took the view that wherever the legislature has limited a period for law proceedings, equity will, in analogous cases, consider the equitable rights, as bound by the same limitation. He added that the Courts of Equity also proceeded on the basis that trust and fraud are not within the statute ie that there was no virtual enact[ment], to use his language at 631, which applied to claims for breach of trust or claims based on fraud. The sweeping procedural reforms of the 1870s maintained this position, in that section 25(2) of the Judicature Act 1873 (the 1873 Act) specifically excluded from the ambit of any Statute of Limitations, any claim of a cestui que trust against his trustee in respect of any breach of trust. Thirteen years later, section 8 of the Trustee Act 1888 (the 1888 Act) entitled a trustee to raise a limitation defence against a claim brought by a beneficiary. The relevant parts of section 8 of the 1888 Act (section 8), which did not involve a repeal of section 23(2) of the 1873 Act, are set out in para 22 above. The law on limitation of actions generally was considered by the Law Revision Committee in its Fifth Interim Report (Statutes of Limitation) Cmd 5334 (the 1936 Report), which was presented to Parliament in December 1936. The recommendations in the 1936 Report resulted in the Limitation Act 1939 (the 1939 Act). In para 24, Lord Sumption sets out the centrally relevant passages in the 1936 Report, and Lord Mance, in paras [146 147] quotes passages from the speeches of the Lord Chancellor, Lord Wright and Lord Romer in the House of Lords, and of the Solicitor General in the House of Commons, when introducing the Bill which became the 1939 Act. The 1939 Act repealed all previous legislation relating to limitation (including section 25(2) of the 1873 Act and section 8) and contained provisions which were, for present purposes, to the same effect as the sections of the 1980 Act summarised in para 3 above. The 1980 Act repealed the 1939 Act, and re enacted almost all its provisions, albeit with many significant amendments, none of which is relevant to the first (or indeed the second) issue on this appeal. The proper approach The word trustee in section 21(1)(a) is defined in section 38(1) of the 1980 Act, which provides that trust and trustee have the same meaning respectively as in the Trustee Act 1925. Where a term in a later statute is defined by reference to a definition in an earlier statute, it seems to me self evident that the meaning of the definition in the later statute must be the same as the meaning of the definition in the earlier statute. Hence, the meaning of the term in the later statute is determined by the definition in the earlier statute. Further, the adoption of the definition in the later statute cannot somehow alter the meaning of the definition in the earlier statute. It accordingly follows that one has to determine the meaning of the term in the later statute simply by construing the definition in the earlier statute. Thus, the meaning of trustee in section 21(1)(a) must be determined by construing the definition of trustee in section 68(1)(17) of the 1925 Act (section 68(1)(17)). In the light of Lord Mances judgment, it is, I think, important to emphasise that the way in which the definition of trustee in section 68(1)(17) is incorporated into the 1980 Act appears to leave no scope for contending that the meaning of the expression in the 1980 Act can somehow be different from that which it bears in the 1925 Act. It follows from this that a correct reformulation of the first question raised on this appeal is whether the definition of trustee in section 68(1)(17) includes a stranger to a trust who is a knowing recipient or a dishonest assister ie a person, not otherwise a trustee, who is liable to account on the grounds of knowing receipt of trust assets and/or on the grounds of dishonest assistance in a breach of trust. The 1925 Act was, of course, a consolidating statute, with amendments, which formed part of the sweeping property law reforms of that year. It was concerned with the powers and duties of trustees, not with limitation, and the definition in section 68(1)(17) largely follows the wording of the definition of trustee in earlier legislation concerned with the powers and duties of trustees, the Trustee Acts 1850 and 1893. In my view, therefore, judicial decisions as to the meaning of trustee, or related expressions, in a non statutory context or in connection with different legislation, have to be approached with a degree of caution. I also consider that it is self evident that statements made in the 1936 Report, and by the Solicitor General in Parliament in connection with the Bill which became the 1939 Act must be irrelevant to the resolution of the first issue on this appeal. What a committee recommended in 1936, or what was said in Parliament in 1939, cannot, as I see it, possibly affect the meaning of a definition in a statute enacted in 1925. The problem thrown up by the first issue The definition of trustee in section 68(1)(17) (the Definition) obviously extends to a person who accepts property expressly (or impliedly) on the basis that he is to hold it for the benefit of another, a classic definition of a trustee. It is also apparent that the term includes a trustee de son tort, a somewhat archaic expression, explained thus in Lewin on Trusts 18th ed, (2008) para 42 74: If a person by mistake or otherwise assumes the character of trustee when it does not really belong to him, he becomes a trustee de son tort and he may be called to account by the beneficiaries for the money he has received under the colour of the trust. A trustee de son tort closely resembles an express trustee. The principle is that a person who assumes an office ought not to be in any better position than if he were what he pretends: he is accountable as if he had the authority which has been assumed. However, as Millett LJ explained in Paragon Finance Plc v DB Thackerar & Co (a firm) [1999] 1 All ER 400, 409, the Courts of Equity treated as a trustee not only an express or implied trustee and a trustee de son tort, but also a person, who though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the [claimant]. As he then said, such a person is known as a constructive trustee, and really is a trustee, as his possession of the property is coloured from the first by the trust and confidence by means of which he obtained it, and his subsequent appropriation of the property to his own use is a breach of that trust. It is, rightly, common ground that the persons described in paras 16 and 17 above are properly called trustees and are within the scope of the Definition. The question which arises is whether a person who is treated as accountable to the claimant in equity solely as a result of (i) knowingly wrongly receiving property, or (ii) dishonestly assisting a trustee in committing a breach of trust, is a constructive trustee for the purposes of the Definition. Knowing recipients: the authorities A number of clear and considered judicial observations over the past two centuries seem to me to make it clear that a knowing recipient is not a trustee. I have in mind what was said by Lord Redesdale in Hovendens case at pp 632 633, Lord Selborne LC in Barnes v Addy (1874) 9 Ch App 244, 251 Viscount Cave LC in Taylor v Davies [1920] AC 636, 650 1 and 653, Ungoed Thomas J in Selangor United Rubber Estates Ltd v Cradock (no. 3) [1968] 1 WLR 1555, 1579 and 1582, Millett LJ in the Paragon case at pp 409 410, and Lord Hoffmann NPJ in the Hong Kong Court of Final Appeal in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HK 135, para 24, quoted, respectively, by Lord Sumption in paras 14, 8, 23, 10, 11 and 28 above. The point at issue in Hovendens case involved a question of alleged knowing receipt. Lord Redesdale referred, at pp 632 633, to a trustee [who] does not execute his trust, and described such a person at p 633 as having possession according to the right of the party against whom he seeks to set it up. He then went on to explain that the question of fraud is of a very different description because a person who is in possession by virtue of that fraud is not, in the ordinary sense of the word, a trustee, but is to be constituted a trustee by a decree of a court of equity founded on the fraud. He contrasted such a persons possession in the meantime with that of a trustee on the ground that it was adverse to the title of the person who impeaches the transaction on the ground of fraud. In Barnes v Addy, Lord Selborne similarly distinguished between those who were clothe[d] with a legal power and control over the trust property, imposing on [them] a corresponding responsibility, and those to whom a similar responsibility [was] extended in equity to others who are not properly trustees, such as those actually participating in any fraudulent conduct of the trustee. In Taylor v Davies, the Privy Council adopted the same approach in connection with a Canadian limitation statute, which was in very similar terms to its contemporary English equivalent, section 8. At p 651, Viscount Cave, giving the judgment of the Board, said that, although time did not run in favour of a trustee properly so called, the position in this respect of a constructive trustee in the usual sense of the words that is to say, of a person who, though he had taken possession in his own right, was liable to be declared a trustee in a Court of Equity was widely different, and it had long been settled that time ran in his favour from the moment of his taking possession. Like section 8 and, now, section 21, the definition of trustee in the Canadian statute extended to a constructive trustee, but Viscount Cave said two pages later, that the references to constructive trustee apply to a case where he originally took possession upon trust for or on behalf of others, so that they refer to cases where a trust arose before the occurrence of the transaction impeached and not to cases where it arises only by reason of that transaction. (It is true that the defendant in that case was not alleged to be a knowing recipient in the normal sense, but the principle expressed by Viscount Cave is clear, and, in one sense, the facts were stronger against the defendant than in this case, as he already had fiduciary obligations to the plaintiff). That approach was followed by the Privy Council in another appeal concerning the same Canadian statutory provision, Clarkson v Davies [1923] AC 100. In that case, at pp 110 111, the Board (which included Viscount Cave), in a judgment written by Lord Scott Dickson, the Lord Justice Clerk (who died before it was given) said Taylor was authority for a distinction between a trust which arises before the occurrence of the transaction impeached and cases which arose only by reason of that transaction. In the Selangor case [1968] 1 WLR 1555, 1582, Ungoed Thomas J explained that a person who was held liable to account as a knowing recipient was made liable in equity as trustee by the imposition or construction of the court of equity, and explained that this was because the Court of Chancery considered it equitable that he should be held liable as though he were a trustee ie he was liable to account in the same way as a trustee, not that he was a trustee and was therefore liable to account. Millett LJ (with whom Pill and May LJJ agreed) reached the same conclusion in his closely reasoned, bravura judgment, from which I have briefly quoted at para 54 above, in the Paragon case. It was also the conclusion reached by Lord Hoffmann (with whom the other four Justices of the Court of Final Appeal agreed) in the Peconic case at paras 19 24. To my mind, those observations are convincing and in accordance with principle. It is unreal to refer to a person who receives property dishonestly as a trustee, ie a person in whom trust is reposed, given that the trust is said to arise simply as a result of dishonest receipt. Nobody involved, whether the dishonest receiver, the person who passed the property to him, or the claimant, has ever placed any relevant trust and confidence in the recipient. As Millett LJ expressed the point in the Paragon case at p 409, a knowing recipient never assumes the position of a trustee and if he receives the trust property at all it is adversely to the [claimant]; and, while he is not a trustee at all, he may be liable to account as if he were. Knowing assistance: the authorities While the cases I have just been discussing suggest a clear and consistent approach to knowing recipients, they do not, as Lord Mance says, deal with dishonest assisters. Indeed, dishonest assisters were expressly discussed by Millett LJ in the Paragon case in the passage Lord Mance quotes at para 124 below. However, I have some trouble with that observation of Millett LJ. First, it misses the essential point that the meaning of trustee in section 21(1)(a) is not to be determined by reference to earlier cases or statutes on limitation, but by reference to the definition in section 68(1)(17). Secondly, there is no reason why an accessory to a fraud should not be subject to a shorter limitation period than the principal fraudster. In any event, Millett LJ was merely saying that there was a case for treating dishonest assisters in the same way as fraudulent trustees, when it came to limitation. In my judgment, given that knowing recipients are not constructive trustees, it must follow that dishonest assisters are not either. As Professor Mitchell observed in Dishonest Assistance, Knowing Receipt and the Law of Limitation [2008] 72 Conv 226, 233, it is harder to characterise dishonest assistants as trustees than it is knowing recipients, not least because dishonest assisters do not take possession of any of the funds at issue (as if they did, they would be knowing recipients). If a dishonest trustee was assisted by X in stealing trust funds, and then passed on some of those funds to Y, and X and Y both were aware of the dishonesty, it would be remarkable if X, who merely helped the trustee and did not receive any of the trust funds, was deemed a trustee when Y, who actually received (and maybe still holds) some of the funds was not. Furthermore, many of the points made by Millett LJ in the Paragon case as to why a knowing recipient is not a trustee (reflecting what was said in the earlier cases mentioned in para 19 above) apply equally to a dishonest assister. Two examples should suffice, but there are many others. At p 409, he said that a knowing recipient never assumes the position of a trustee, and if he receives the trust property at all it is adversely to the plaintiff by an unlawful transaction which is impugned by the plaintiff and that there is no trust and usually no possibility of a proprietary remedy. That is at least as true of a dishonest assister. And Millett LJs description at p 413 of Taylor v Davies as mark[ing] a real difference between trustees (whether or not expressly appointed as such) who commit a breach of trust (however created) and persons who are not trustees at all but are described as trustees for the purpose of enabling equitable relief to be granted against them applies to dishonest assisters just as it applies to knowing recipients. Accordingly, I agree with the conclusion reached by Mr Sheldon QC in his impressive judgment in Cattley v Pollard [2007] Ch 353, para 82, where he said that Millett LJs class of claims which do not give rise to a constructive trust, but simply amount to an obligation to account is apt to cover the position of claims for dishonest assistance in a fraudulent breach of trust. As he went on to explain, this was on the basis that in the Paragon case Millett LJ was drawing the distinction first expressed in the Privy Council cases [viz Taylor v Davies and Clarkson v Davies] between those whose trusteeship preceded the transaction impugned and those who only became trustees on the occurrence of the transaction . The statutory context When one looks at the Definition, at least on its own, there is no reason to think that the drafter of section 68(1)(17) intended constructive trust or trustee to have a wider meaning than that which they had been accorded by the Courts of Equity over the years. Indeed, it would be surprising if a statute concerned with consolidating the law governing the powers and duties of trustees did not adopt an orthodox definition of trust and trustee. If one casts ones eyes more widely, the provisions of the 1925 Act appear to me to reinforce the notion that knowing recipients or dishonest assisters were not intended to be covered by the Definition. The Act is concerned with classic trusts, or, as Millett LJ put it in the Paragon case at p 412, with the powers and duties of trustees properly so called, rather than persons whose trusteeship is merely a formula for giving restitutionary relief. It appears to me that a dishonest assister cannot be within the statutory definition as he does not have trust property without also being a knowing recipient, and, as for a knowing recipient, he never assumes the position of a trustee because his receipt of trust property is adversely to the [claimant], to quote Millett LJ again. I should add that that is a vital distinction between a trustee de son tort and a knowing recipient, which is why, assuming (which is almost certainly right) that a trustee de son tort is included within the section 68(1)(17) definition, that does not assist Dr Williamss case. The first four Parts of the 1925 Act deal with permitted investments, general powers of trustees, appointment and discharge, and the powers of the court; and the remaining, fifth, Part contains general provisions. It is a little difficult to see how most of the sections of the 1925 Act could apply to a dishonest assister (at least unless he was also a knowing recipient), because he has no assets in respect of which he can he said to be a trustee. Further, many of the provisions appear inappropriate in relation to property for which a knowing recipient is obliged to account. I have in mind provisions such as sections 8, 30 (exculpatory where trust money lost on loans, or due to agents defaults), section 25 (delegation of trustees functions), 31 and 32 (powers of maintenance and advancement), 36 39 (power to retire and appoint fresh trustees) and 57 (power of court to authorise dealings). As Lord Sumption says in para 31 above, a knowing recipient has one overriding duty, and that is to account for and return the property. Given the unambiguous way in which the 1939 and 1980 Acts incorporate the definition in the 1925 Act, the definition of trustee in the 1925 Act simply cannot have a different meaning in the later Acts from that which it has in the 1925 Act itself, simply because any wording is subject to the context, or because of the mischief being addressed in the later Acts, or because of Parliaments evident intention when enacting the later Acts. When interpreting a statute, the courts function is to determine the meaning of the words used in the statute. The fact that context and mischief are factors which must be taken into account does not mean that, when performing its interpretive role, the court can take a free wheeling view of the intention of Parliament looking at all admissible material, and treating the wording of the statute as merely one item. Context and mischief do not represent a licence to judges to ignore the plain meaning of the words that Parliament has used. As Lord Reid said in Black Clawson International Ltd v Papierwerke Waldhof Aschaffenburg AG [1975] AC 591, 613, We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used. In the present instance, the definition sections of the 1939 and 1980 Acts unambiguously state that the meaning of trustee is to be determined by reference to the definition in the 1925 Act. For a court to suggest that, in the 1939 or 1980 Acts, the definition or the expression can have a different meaning from that which it has in the 1925 Act is both inconsistent with the plainly expressed will of Parliament as set out in the definition sections of the 1939 and 1980 Acts and a recipe for uncertainty in future cases of statutory interpretation. The obiter dicta in Soar v Ashwell I have not so far referred to observations in Soar v Ashwell [1893] 2 QB 390, which are strongly relied on to support the wider interpretation of trustee, so that it incorporates a dishonest assister and/or a knowing recipient. The actual decision in Soar v Ashwell that limitation could not be relied on was unexceptionable, because, as the court held, the deceased solicitor whose estate was being sued was liable, on any view, as a trustee either because he received the property concerned as a trustee for the trustees of a pre existing and fully constituted trust (per Lord Esher MR at p 394 and Bowen LJ at pp 397 and 398), or because he became a trustee de son tort of that trust (per Kay LJ at pp 405 406). However, each member of the Court of Appeal in Soar v Ashwell expressed obiter views which are said to support the notion that a dishonest assister or a knowing recipient is a trustee. After explaining that a trustee de son tort could not rely on limitation, Lord Esher added this at pp 394 395: There is another recognised state of circumstances in which a person not nominated a trustee may be bound to liability as if he were a nominated trustee, namely, where he has knowingly assisted a nominated trustee in a fraudulent and dishonest disposition of the trust property. Such a person will be treated by a Court of Equity as if he were an express trustee of an express trust. Bowen LJ, again after referring to the fact a trustee de son tort could not rely on limitation, said this at pp 396 397: Secondly, the rule as to limitations of time which has been laid down in reference to express trusts has also been thought appropriate to cases where a stranger participates in the fraud of a trustee . Thirdly, a similar extension of the doctrine has been acted on in a case where a person received trust property and dealt with it in a manner inconsistent with trusts of which he was cognizant . And Kay LJ observed at p 405, after reviewing the authorities: [T]here are certain cases of what are, strictly speaking, constructive trusts, in which the Statute of Limitations cannot be set up as a defence. Amongst these are the case where a stranger to the trust has assumed to act and has acted as a trustee, and the case where a stranger has concurred with the trustee in committing a breach of trust, and has taken possession of the trust property, knowing that it was trust property, and has not duly discharged himself of it by handing it over to the proper trustees or to the persons absolutely entitled to it. Properly analysed, I am of the view that these observations (the obiter dicta in Soar v Ashwell) do not support a positive answer to the issue posed in para 40(a) above. In the passage quoted in para 76 above, Lord Esher did not say that a dishonest assister is a trustee; he said that a dishonest assister is liable as if he were a nominated trustee, and that he is treated in equity as if he were an express trustee. In other words, he was saying that, at least in some circumstances for the purpose of limitation, Courts of Equity treated such a person not as a trustee, but as if he were a trustee. For present purposes it does not matter whether Lord Esher intended that passage to apply to limitation cases, which is not as clear as it may seem, because to read it in this way would be inconsistent with what he said at p 394 (quoted by Lord Sumption at para 18 above), as well as with the reasoning of Lord Redesdale in Hovendens case and Sir William Grant MR in Beckford v Wade (1805) 17 Ves Jr 87 (discussed above by Lord Sumption at para 15). The essential point, it seems to me, is that Lord Esher was saying that a dishonest assister is not actually a trustee. Accordingly, as the meaning of trustee in the limitation legislation has been taken from the 1925 Act, where it has an orthodox meaning, I am of the view that Lord Eshers observations, if anything, actually assist the interpretation I favour. The same is true of Bowen LJs observations. The statement that the rule as to limitations of time which has been laid down in reference to express trusts has also been thought appropriate to cases of dishonest assistance, highlights two points. The first part of that statement shows that Bowen LJ was concerned with limitation law, not with the meaning of trustee; the subsequent words appear to distinguish between a stranger as opposed to a trustee. The latter point is reinforced by the closing words of the passage I have quoted, namely that a similar extension of the doctrine is made in relation to knowing recipients. In other words, Bowen LJ expressed himself in a way which indicated that he did not consider dishonest assisters or knowing recipients to be trustees, but that the Court of Equitys disapplication of limitation periods to claims against trustees was extended to such people, even though they are not trustees. Again, when one bears in mind the issue which we have to determine, namely the meaning of the word trustee, Bowen LJ appears to have regarded a dishonest assister or a knowing recipient as not being a trustee. Kay LJ does not seem to me to have expressly dealt with dishonest assisters or knowing recipients, although he may well have agreed with his colleagues obiter dicta, particularly in the light of his suggestion that in some earlier cases where limitation had been raised, courts had treated the trustee exemption as going wider than was laid down in Hovendens and Beckfords cases. The two strongest cases for this purpose are Wilson v Moore (1834) 1 My&K 337 and Bridgman v Gill (1857) 24 Beav 302. In each case, the defendants, merchants in one case and bankers in the other, held money which they knew to be trust money, which they then took for themselves to pay a debt owed to them by the trustee personally, which they knew was a breach of trust. However, neither in Wilson v Moore nor in Bridgman v Gill did the plaintiff beneficiary need to assert a trust arising as a result of, or even at the moment of, the misappropriation. He simply relied on fact that, at the time of the misappropriation, the defendants held the money subject to a pre existing trust whose terms they knew precluded their taking the money for themselves. The decisions therefore can be said to fall within the principle stated by Lord Redesdale in Hovendens case, and by Millett LJ in the Paragon case. Whether or not they were so intended (and, as indicated, I accept that they may very well have been), the obiter dicta in Soar v Aswell were regarded as representing the law on limitation in a number of subsequent cases. In In re Gallard [1897] 2 QB 8, 14, they were cited, relied on and applied by Vaughan Williams J. In In re Dixon [1900] 2 Ch 561, 574, Sir Richard Webster MR considered the obiter dicta, and regarded them as binding authority, but neither Rigby LJ nor Collins LJ addressed the point (although Rigby LJs slightly cryptic comment at the bottom of p 580 suggests that he may have agreed with the Master of the Rolls on the point). In re Eyre Williams [1923] 2 Ch 533 deserves special consideration because, at pp 537 541, Romer J considered the obiter dicta in some detail and regarded them as binding; he also referred to them briefly as representing the law in In re Mason [1928] 1 Ch 385, 394. And Maugham J referred to the obiter dicta very briefly, on the apparent assumption that they were correct in In re Blake [1932] Ch 54, 63. Soar v Ashwell was decided on the basis of the law of limitation as developed by the Courts of Equity. Thus Lord Esher said at p 393 that the two questions to be answered were was the plaintiff within a meaning of the word trustee attributed to it in equity, and was he such a trustee as a Court of Equity will not allow to rely on the Statutes of Limitation, and Bowen LJ at p 395 described the question at issue as being whether the claim of the plaintiff can be barred through lapse of time, by analogy to the Statute of Limitations. The only reference to any statutory provision was made by Kay LJ who at p 403 referred to section 25 of the 1873 Act. However, he mentioned that provision simply to say that it effected no change in the law. The absence of any reference in Soar v Ashwell to section 8(1) may seem a little mystifying, as the action was commenced in 1891, and section 8(3) provided that section 8(1) applied to an action started in or after 1890. However, as I see it, section 8(1) could not have been relied on by the defendant in that case, as, even if the solicitor had been a trustee, his estate still retained the trust property, or the proceeds thereof. Given that section 25(2) of the 1873 Act was still in force, the limitation argument had to be decided on the basis of the law as developed by the Courts of Equity. In In re Eyre Williams at p 537, Romer J specifically explained why section 8(1) did not apply (namely because the money at issue had been received by the testator [viz the deceased trustee] and applied to his own use), and, in those circumstances, he similarly dealt with the limitation defence by reference to the law as developed by the judges in relation to equitable claims. Having considered that case law, he concluded at p 541 that he was bound by the obiter dicta in Soar v Ashwell. The judges in the other cases referred to in para 81 appear to have adopted the same approach, but their reasoning was much more attenuated. Thus, in all the cases in which the obiter dicta in Soar v Ashwell have been followed, the courts approached the issue before them (i) on the basis that the question at issue concerned limitation rather than a statutory definition of trustee, (ii) on the assumption that the relevant law on limitation was as it had been developed by the Courts of Equity rather than as laid down in statute, (iii) on the assumption that the obiter dicta in Soar v Ashwell were intended to apply to limitation, (iv) on the basis that the obiter dicta were effectively binding, and (v) without considering the principles enunciated in Hovendens or Beckfords cases. Given that, since 1939, the definition of trustee for limitation purposes has been that in section 68(1)(17), and it is with that statutory definition with which the first issue on this appeal is concerned, I do not consider that it would be very helpful to say much more about the obiter dicta in Soar v Ashwell and the cases in which they were applied. The approach in those cases, all of which of course preceded the 1939 Act, is, at least in some respects, as likely to mislead as to assist when it comes to interpreting section 68(1)(17). Having said that, I consider that the obiter dicta in Soar v Ashwell were probably incorrect (if they were intended to suggest that a knowing recipient or dishonest assister could not rely on common law limitation periods), because they were inconsistent with the earlier decisions discussed, and for the reasons given, in paras 57 68 above, as well as for the fuller reasons given by Lord Sumption. Conclusion on the first issue Accordingly, I conclude that a trustee in section 21(1)(a) does not include a party who is liable to account in equity simply because he was a dishonest assister and/or a knowing recipient. This is because such a party, while liable to account in the same way as a trustee, is not, according to the law laid down by the courts, a trustee, not even a constructive trustee; and trust and trustee in the 1925 Act were meant to have orthodox meanings. Further, even if the obiter dicta in Soar v Ashwell (assuming that they were intended to apply to limitation, as Dr Williams contends, as they may well have been, and as they were understood to have been in subsequent cases) were correct (which I do not think they were), they do not call this into question. An action in respect of any fraud or fraudulent breach of trust The nature of the issue In the light of my conclusion on the first issue, namely that neither a dishonest assister nor a knowing recipient is a trustee for the purpose of section 21(1)(a), it is necessary to address the second issue, namely whether such a person, while not a trustee, is nonetheless properly a party who is sued in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy within section 21(1)(a). The second issue requires us to decide (i) whether section 21(1)(a) only applies to claims brought against the trustee who was a party or privy to the fraud or fraudulent breach of trust (the narrower meaning), or (ii) whether it applies to anyone, including such a trustee, who was involved in the fraud or fraudulent breach of trust (the wider meaning). Unlike the first issue, which involves interpreting a word in section 21(1)(a) by reference to a definition in another statute, this second issue involves construing section 21(1)(a) directly. Further, although the 1936 Report is of potential relevance to the second issue, this issue does not require much consideration of earlier judicial decisions. The arguments based on the wording of section 21(1)(a) It is convenient to start the examination by saying that, in agreement with Lord Mance, I consider that, if section 21(1)(a) has the wider meaning, it could be relied on against dishonest assisters or advisers, without applying to innocently (as opposed to fraudulently) negligent co trustees and professional advisers, of a fraudulent trustee. Where a trustee defrauds a trust, a claim against a dishonest assister or adviser can fairly be described as an action in respect of [that] fraud or fraudulent breach of trust, and that would also normally be true in the case of a dishonest recipient. However, as discussed more fully below, the words in respect of are flexible, in that they can have a broad or a restricted effect. Accordingly, while the contrary view is tenable as a matter of language, the context of section 21(1)(a) suggests that a claim against an innocently negligent co trustee or professional adviser of the fraudulent trustee is not an action in respect of fraud or fraudulent breach of trust. Rather it should be characterised as an action in respect of [their] negligence. In the case of a co trustee, this is borne out by what is stated in Article 96.1 of Underhill and Haytons The Law of Trusts and Trustees, 18th ed (2010), namely that a trustee is not vicariously answerable for the defaults of his co trustee, but only for his own acts or defaults. With that introductory point, I turn to the wording of section 21(1)(a). On a quick reading, one can well see how the provision may strike a reader as having either the wider or the narrower meaning. In particular, it may appear to bear the wider meaning, because, while para (a) limits the type of action to which it applies, there appears to be no express qualification as to the identity of the person against whom that action may be brought. However, closer examination calls that impression into question, and suggests that there are five reasons for thinking that section 21(1)(a) has the narrower meaning. First, if section 21(1)(a) has the wider meaning and is not limited to claims against the trustee referred to at the end of para (a), it is hard to see what effect can be given to the words to which the trustee was a party or privy. Given that the wider meaning involves giving a restricted effect to the words in respect of, so that only those involved in the fraud would be within section 21(1)(a) on the wider meaning, they must include the trustee, not least because there can be no breach of trust save one to which the trustee was a party or privy. On the other hand, if the narrower meaning is correct, the expression in respect of can be given a broad effect, so that the words to which the trustee was party or privy serve an important function, in that they limit the circumstances in which section 21(1)(a) can apply to a trustee. I note that this point caused Black LJ concern in the Court of Appeal, although she ultimately agreed that the wider meaning was correct see at [2013] QB 499, para 56. Approached in this way, I consider that the fact that it is common ground that the words an action in respect of any breach of trust in section 21(3) are broad enough to cover a claim against a dishonest assister or knowing recipient, actually support, rather than undermine this first reason. At first sight, there is force in Lord Clarkes argument that, if that expression in section 21(3) covers dishonest assistance or knowing receipt, the similar expression an action in respect of any fraudulent breach of trust in section 21(1)(a) should do so as well. But the vital words to which the trustee was a party or privy are not to be found in section 21(3). The essential point in this connection is that the fact that the expression in respect of in section 21(3) has a broad, rather than a restrictive, effect suggests that the expression should also have a broad effect in section 21(1)(a), in which case the words to which the trustee was a party or privy are otiose unless section 21(1)(a) as a whole is given the narrower meaning for which Central Bank of Nigeria contends, rather than the wider meaning supported by Dr Williams. Secondly, the expression the trustee at the end of section 21(1)(a) presents a difficulty unless the action in the opening part of the subsection is understood as meaning an action against a trustee, and in particular the trustee referred to in the closing words of the paragraph. If one does not read the opening part in this way, it is hard to justify the use of the definite article in the expression the trustee in para (a): it would have to mean a trustee. If it is said that the trustee means the trustee against whom the action is brought, then that would bring one back to the reading of the opening words of section 21(1) suggested at the start of this paragraph. Thirdly, the wider meaning would have the consequence that section 21(1)(a) could be relied on against a dishonest knowing recipient or a dishonest assister if one of the trustees was guilty of fraud, but it could not be relied on against such a person if the trustee was merely negligent, and not guilty of fraud. It seems inappropriate that the ability of a dishonest assister or dishonest knowing recipient to invoke the normal six year limitation period should depend on whether or not the trustee, whom he assisted or from whom he received trust assets, was fraudulent. This is not a fanciful possibility. As Mr Sheldon QC rightly pointed out in the Cattley case, para 41, Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 said in terms that an accessory will be liable if there is dishonest assistance on his part in the breach of trust by the trustee irrespective of whether or not the breach of trust by the trustee was itself dishonest. Fourthly, there is section 21(1)(b), which is concerned with claims to recover trust property or its proceeds from the trustee. Like section 21(1)(a), it disapplies the normal six year time limit, but it quite clearly only applies to claims against a trustee, and does not apply to claims against dishonest assisters or knowing recipients, even if the recipient is not only knowing, but dishonest. It may be hard to think of a case where such a claim could be brought against a dishonest assister who was not also a knowing recipient, but that does not weaken the point that it would be very odd if section 21(1)(a) applied to dishonest knowing recipients as well as to trustees, given that section 21(1)(b) only applies to trustees. Fifthly, and perhaps less tellingly, it is clear that section 21(1)(a) and (b) originate from section 8(1) of the 1888 Act (set out in para 22 above), and there is no doubt that the benefit of that provision was limited to a claim against the fraudulent trustee, and not any dishonest assister or knowing recipient. These points persuade me that section 21(1)(a) can only be invoked by a beneficiary against a trustee, and not against a knowing recipient or a dishonest assister. The narrower meaning is not called into question by the obiter dicta in Soar v Ashwell or judicial views expressed in any other case prior to the 1980 Act, save for some very tentative remarks of Danckwerts J in GL Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216, 1222 (reversed on other grounds at p 1225). It is only fair to add that, at least as far as I can see, there is no decision prior to the 1980 Act which calls the wider meaning into question, as neither in Taylor v Davies nor in Clarkson v Davies did this point arise; at any rate, it was not apparently considered. The 1936 Report In support of the wider meaning of section 21(1)(a), reference was made to the 1936 Report and what was said in Parliament when the Bill which became the 1939 Act was introduced by the Solicitor General. In that connection, provided certain requirements are satisfied, the contents of the 1936 Report and what was said in Parliament can be raised as an aid to interpretation. However, one must not lose sight of four important factors in that connection. First, the courts constitutional role in any exercise of statutory interpretation is to give effect to Parliaments intention by deciding what the words of the relevant provision mean in their context. Secondly, it follows that, in so far as any extraneous material can be brought into account, it is only as part of that context. Thirdly, before such material can be considered for the purpose of statutory interpretation, certain requirements have to be satisfied see eg per Lord Mance in The Presidential Assurance Co Ltd v Resha St Hill [2012] UKPC 33, para 23 and per Lord Browne Wilkinson in Pepper v Hart [1993] AC 593, 640. Fourthly, even where those requirements are satisfied, any court must be wary of being too ready to give effect to what appears to be the Parliamentary intention from what was said by the authors of a report or by the sponsors of the relevant Bill: one cannot always be sure that what they say has been read or heard, or accepted, by the Parliamentarians who voted in favour of the provision in question. Having said that, I accept that, as was said in the Presidential Assurance case, at para 23, in principle, assistance in interpreting legislation can be obtained as to the general background and as to the mischief which the legislation was addressing by looking at the reports of the proceedings in Parliament. Turning now to the 1936 Report, para 11 identified the only difficulty with section 8 of the 1888 Act as being that it does not apparently apply to a constructive trustee, eg an executor or an administrator. The Report went on to say that it was difficult to justify a rule whereby an executor or other person holding property as a trustee, but not on an express trust, can plead [a limitation defence] though he still retains the trust property or has converted it to his own use. The Report then explained that the courts had given the concept of an express trust a very wide meaning, citing Bowen LJs judgment in Soar v Ashwell and the cases cited by Romer J in In re Eyre Williams. The Report then recommended that the exception to [section 8] should be expressly made to extend to trustees whether holding on express or constructive trusts, including personal representatives. The specific recommendation at the end of the 1936 Report was that limitation should only apply to constructive trustees to the extent that [it does] to express trustees. When the Bill which became the 1939 Act was introduced into Parliament, it was described as based on the 1936 Report. In my judgment, the 1936 Report is of no assistance when it comes to resolving the second issue. The only relevant recommendation of the Report related to the definition of trustee, which does not apply to the second issue in this appeal at all. In any event, even in relation to the first issue, it takes matters no further, because the recommendation was simply that the definition of trustee should extend to personal representatives which was achieved by adopting the section 68(1)(17) definition. It also may be worth adding that the reference to constructive trustee in the 1936 Report could be a little misleading as I do not think that it is intended thereby to refer to a constructive trustee in the sense that it has been used in the present appeal. As mentioned, the Report itself refers to the fact that section 8(1) does not apparently apply to a constructive trustee, eg an executor or an administrator, who are not constructive trustees in the sense that the term is currently normally used, and, in any event, section 8 already included a trust by construction within the meaning of trust. Nonetheless, it is said that the 1936 Report accepts the correctness of the obiter dicta, or at least the obiter dictum of Bowen LJ, in Soar v Ashwell. In addition, or perhaps in amplification, of what is said in para 103 above, there are a number of reasons why I consider that the references to the judgments of Bowen LJ and Romer J in the 1936 Report do not help the argument in support of the wider meaning of section 21(1)(a). First, it is not entirely clear that the 1936 Report does accept the correctness of the obiter dicta which are relied on by the respondent in this appeal and are set out in paras 74 76 above. The reference to Bowen LJs judgment is very general in that it simply identifies the first page of the judgment, and the only one of the cases referred to by Romer J in In re Eyre Williams which can actually be said to support the respondents case in any way on this appeal is Soar v Ashwell itself. Secondly, even assuming that the obiter dicta in Soar v Ashwell were being approved in para 11 of the 1936 Report, the authors of the Report were in that paragraph considering the ambit of the words trustee and trust, and were (on this assumption) saying that the words extended to a dishonest assister and a knowing recipient, and the trust funds they held. While that could have a bearing on the first issue on this appeal (were it not ruled out for the reasons given in paras 49 53 above), it cannot assist on the second issue on this appeal which is concerned with a different issue. Indeed, if anything, it could be said that, if the 1936 Report approved the obiter dicta, any such approval would support the narrower meaning of section 21(1)(a), because, on the view taken by the authors of the 1936 Report, trustee would have embraced dishonest assisters and, possibly, knowing recipients, so there would have been no need for section 21(1)(a) to have the wider meaning. Thirdly, one is here concerned with the intention of Parliament and I cannot accept the contention that Parliament somehow approved the observations in the 1936 Report relating to the obiter dicta in Soar v Ashwell. The purpose of the Bill which became the 1939 Act was to consolidate the law on limitation and to give effect to the recommendations of the 1936 Report. To contend that, in enacting those proposals, Parliament was adopting those recommendations, which therefore may be looked at for the purpose of interpreting the 1939 Act, is one thing. To contend that, in enacting those proposals, Parliament was approving the legal analysis or reasoning behind those recommendations, which therefore may be looked at for the same purpose, is quite another. Save possibly in a very clear case indeed, I consider that such an approach would be inappropriate. That is particularly true in this case, where the analysis and reasoning were somewhat opaque, unspecific, and unnecessary to the ultimate recommendation. Opaque as I have explained in para 102 above; unspecific because there was no explanation in the 1936 Report or by the Solicitor General as to what Bowen LJ or Romer J actually decided, and to assume that Parliamentarians would have appreciated the analysis and reasoning appears to me unrealistic; unnecessary, because the ultimate recommendation related to personal representatives, and therefore did not involve the question whether dishonest assisters or knowing recipients should be within the scope of section 21(1)(a). Fourthly, it would not in any event be safe to assume that Parliament followed every recommendation in the 1936 Report, let alone the thinking behind those recommendations, to the letter. This is not a case where the Report had a draft Bill attached or proposed draft clauses. Further, as Lord Sumption says in para 27, rather than incorporating and amending the definition of trustee in section 8, as the Report effectively suggested, Parliament decided to incorporate a definition from an existing statute. Conclusion on the second issue I therefore disagree with the conclusion reached by the Court of Appeal on this second issue, and would hold that the narrower meaning of section 21(1)(a) is to be preferred. Conclusion For these reasons, which are much the same as those of Lord Sumption, with whose judgment I agree, I am of the view that, as against Dr Williams, Central Bank of Nigeria was not a trustee within the meaning of section 68(1)(17), and that he cannot rely on section 21(1)(a), as it only applies to claims against fraudulent trustees. It follows from this that the 1986 trust claims are barred by limitation, and I would therefore allow the appeal. I should add that this conclusion does not appear to me to give rise to difficulties. It is consistent with the case law before Soar v Ashwell; and, in any event, the obiter dicta in that case, and their application in the subsequent cases which followed them, cannot sensibly be invoked as a reliable aid to the interpretation of the definition of trustee in section 68(1)(17) or to the scope of section 21(1)(a). With the exception of the tentative remarks in GL Baker, in no reported case until Paragon was any consideration given to the meaning of trustee in the 1939 or 1980 Acts, or to the proper scope of section 21(1)(a). The powerful reasoning in the Paragon case is consistent with principle and the authorities, and it justifies the conclusion that neither a knowing recipient nor a dishonest assister is a trustee, and that section 21(1)(a) is limited to claims against trustees. That reasoning has been applied by the Court of Appeal in a number of recent cases, such as JJ Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162, Gwembe Valley Development Company Ltd v Koshy (no. 3) [2004] 1 BCLC 131, and Halton International (Holdings) Inc Sarl v Guernroy Ltd [2006] WTLR 1241. So far as raising a limitation defence is concerned, this conclusion places dishonest assisters and knowing recipients (i) in the same position as those who are liable in common law for improper or dishonest conduct, and (ii) in a better position than defaulting trustees. The first result seems appropriate: as Millett LJ said in the Paragon case at p 414, [t]here is no case for distinguishing between an action for fraud at common law and its counterpart in equity. As for the second result, it is plainly justifiable, as defaulting trustees have pre existing fiduciary duties to claimants which dishonest assisters and knowing recipients do not. Finally, it is right to mention that in some cases of dishonest assistance or knowing receipt, even though the normal six year period may have expired, a claimant may be able to invoke section 32 of the 1980 Act, which postpones the commencement of the six years, in cases based upon the fraud of the defendant, or where the defendant has deliberately concealed relevant facts from the claimant. LORD MANCE, dissenting I have read with interest the judgment prepared by Lord Sumption and supported by Lord Neuberger in his judgment. The rationalisation which Lord Sumption imputes to Parliament is coherent: the exception to the right to limit would be confined to trustees or those owing fiduciary duties. But it is not the only coherent rationalisation, and whether it is historically accurate or catches Parliaments real intention is another matter. The present appeal raises two potential issues: (i) how far are, first, dishonest assisters and, second, knowing recipients to be treated as trustees within the meaning of section 21(1) of the Limitation Act 1980, and (ii) does section 21(1)(a) of the 1980 Act cover only actions against the trustee, or does it also cover actions against a dishonest assister in respect of a trustees fraud? The rationalisation which Lord Sumption advances and Lord Neuberger adopts relies upon a general distinction drawn in Beckford v Wade (1805) 17 Ves Jun 87 between: (a) possession of trust assets obtained consistently with the trust by someone who later acts contrary to the trust and (b) possession which is taken from the outset adversely to the trust. It treats (b) as covering knowing recipients, and overlooks the fact that the distinction does not address at all: (c), the status of a person who, whether or not he also takes or has taken possession, dishonestly assists a trustee to dispose of trust assets contrary to the trust. Lord Neuberger in his paras 58 and 59 refers to passages in two other early cases as supporting a distinction between categories (a) and (c) for limitation purposes: Hovenden v Lord Annesley (1806) 2 Sch & Lef 607, 633 634 and Barnes v Addy (1874) 9 Ch App 244, 251. But in fact in Hovenden v Lord Annesley (1806) 2 SCh & lef 607, 633 634, the two categories (a) and (c) were identified not to distinguish them, but to explain that they were to be assimilated for limitation purposes. As to Barnes v Addy (1874) 9 Ch App 244, 251, Lord Neuberger suggests that it distinguished between (i) those clothe[d] with a legal power and control over the trust property, imposing on [them] a similar responsibility and (ii) those to whom a similar responsibility [was] extended in equity who are not properly trustees such as, he says, those actually participating in any fraudulent conduct of the trustee. But Lord Selborne LC actually identified his category (ii) as follows: others who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui qui trust. He was, in other words, assimilating categories (a) and (c) for limitation purposes. An executor de son tort is a person within category (a) as Lord Neuberger accepts in his paragraphs 73 and 74. Moreover and this is an important feature of the issue under discussion the assimilation of the dishonest assister with the dishonest trustee for limitation purposes has a coherent and principled basis, as Millett LJ observed in Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400, 414a d, when he said: A principled system of limitation would also treat a claim against an accessory as barred when the claim against the principal was barred and not before. There is, therefore, a case for treating a claim against a person who has assisted a trustee in committing a breach of trust as subject to the same limitation regime as the claim against the trustee: see J W Brunyate, Limitation of Actions in Equity (1932). This assimilation is supported by Soar v Ashwell [1893] 2 QB 390 and a wealth of case law to which I refer in the following paragraphs. I shall also return below (paras 140 and 141) to the law as analysed by J W Brunyate and a unanimous body of other distinguished textbook writers in the 1930s, all to the same effect. Their work constitutes important background to a proper understanding of section 19 of the Limitation Act 1939, reproduced in substance in section 21(1), (3) and (4) of the Limitation Act 1980 with which the present appeal is concerned. Soar v Ashwell was itself concerned with a solicitor who fell within (a), either because he had received funds in a fiduciary capacity for clients (trustees under a will) or because he had assumed to act as such. The Court of Appeal held that he was to be considered as having been in the same position as an express trustee. So he was unable to plead limitation. But all three members of the Court of Appeal also identified another situation in which the rule as to limitations of time which had been laid down in reference to express trusts has also been thought appropriate (per Bowen LJ, p 396) : that is (c) dishonest assistance arising, as Lord Esher MR put it, where [a person not nominated a trustee] has knowingly assisted a nominated trustee in a fraudulent and dishonest disposition of the trust property (pp 394 395); or, as Bowen LJ put it, where a stranger participates in the fraud of a trustee: Barnes v Addy LR 9 Ch 244 (p 396) ; or, as Kay LJ put it, where a stranger has concurred with the trustee in committing a breach of trust, and has taken possession of the trust property, knowing that it was trust property, and has not duly discharged himself of it by handing it over to the proper trustees or to the person absolutely entitled to it (p 405). Consistently with Barnes v Addy, these formulations describe dishonest assistance by a stranger in terms indicating a form of liability accessory to that of the dishonest trustee. As Lewin on Trusts 18th ed (2008), paras 44 56 and 44 57 states, prior to Royal Brunei Airlines Sdn. Bhd. v Tan [1995] 2 AC 378, it was thought that liability was based on knowing assistance in a dishonest and fraudulent breach of trust on the part of the trustee, though since that case fraud of the express trustee is now irrelevant to the actual liability of a dishonest assister. In asserting its limitation defence to Dr Williams claim, the Central Bank of Nigeria submits that the six year limitation period provided by section 21(3) of the Limitation Act 1980 for an action by a beneficiary to recover trust property or in respect of any breach of trust is in terms wide enough to apply to an action by a beneficiary against a holder of trust property or against a trustee or someone assisting a trustee in respect of a breach of trust. The Central Bank has to assert this, since otherwise it has no basis for asserting any statutory limitation defence at all. But, when it comes to section 21(1)(a), the Bank alleges that the exception in respect of an action by a beneficiary under a trust, being an action (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy does not cover an action by a beneficiary against someone dishonestly assisting in a fraud or fraudulent breach of trust to which the trustee was a party or privy. As Lord Clarke demonstrates in his judgment, it is unconvincing to suggest that the words an action in respect of any breach of trust do, yet the words an action . in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy do not, cover an action by a beneficiary against someone who is not the trustee but who dishonestly assists a fraudulent trustee. Yet that is and has to be the Central Banks case. The line between those who owe fiduciary duties and those who do not certainly does not offer any reason for implying such a distinction and Lord Neuberger does not suggest that it does. It is coherent and understandable if the law distinguishes, in the context of fraud or fraudulent breaches of trust, between, on the one hand, actions against trustees and others party or privy thereto, and, on the other hand, actions against trustees and others innocent of involvement therein. It is true that, since the Royal Brunei case, it has been recognised as conceptually possible that a dishonest stranger to a trust may assist in bringing about a fraud on a trust to which no trustee is party or privy. But that is a possibility barely, if at all, envisaged at the dates when the statutory language of section 21 and its predecessor crystallised. Even now that it is clearly recognised, it is possible to see logic in a distinction between situations in which a dishonest trustee does and does not exist. In the latter situation, beneficiaries are particularly prejudiced, and it is understandable that the law should lift the limitation period against them and their dishonest assisters. I will give an example of how that distinction would as I see it work. Take an action against an innocent trustee or against the innocent solicitors or accountants acting for trustees for failure to discover and prevent a fraud by a guilty trustee assisted in conjunction with a dishonest stockbroker. The action against the fraudulent trustee and dishonest assister would fall within section 21(1)(a). The action against the innocent trustee would not be in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy. Nor would be the action against the allegedly negligent solicitor or accountant. Indeed, I do not consider that it would even be in respect of any breach of trust within section 21(3). It would be an action for negligence for which there would be a six year time limit in tort under section 2 and/or contract under section 5. This analysis is consistent with that adopted by J W Brunyate, cited by Millett LJ: see para 124 above and para 140 below; and Lord Neuberger accepts it in his paragraph 94. Nevertheless, Lord Neuberger suggests, as it appears must Lord Sumption, that the phrase in respect of means different things in section 21(1)(a) and section 21(3). The reasons he gives are addressed and rebutted in Lord Clarkes judgment. As to the first, it is true that section 21(1)(a) applies to a case where the defendant is the dishonest trustee as well as a case where the defendant is a dishonest assister of a trustee. But the words in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy both preclude any suggestion that section 21(1)(a) extends the limitation period for a claim against a non fraudulent trustee who was party to a breach of trust in circumstances where a fraudulent trustee was also party, and put beyond doubt, in the case of a claim against a dishonest assister, that the only relevant dishonest assistance is assistance of a fraudulent trustee. As to the second reason, the words the trustee postulate that there is a fraudulent trustee whom the assister has dishonestly assisted. In a situation in which there was both a fraudulent and an innocent trustee, the language makes only the fraudulent trustee relevant. As to the third, in the state of the law as it was understood and developed at the relevant times, section 21(1)(a) and its predecessor were probably addressing the only type of dishonest assistance then clearly established, namely dishonest assistance of a fraudulent trustee. On that basis, section 21(1)(a) represented a coherent picture: see paras 124 and 127 of this judgment. For good measure, even now that dishonest assistance has clearly been recognised as a basis of liability when there is no fraudulent trustee, a coherent rationale still exists: see paras 124 and 157 of this judgment. As to the fourth, I see nothing strange about an analysis according to which a dishonest assister who is also a knowing recipient of trust property falls within section 21(1)(a), even if (contrary to the view which I express in paras 160 161 below) a knowing recipient is not, as such, a trustee for the purposes of section 21(1)(b). Dishonest assistance is a separate (and on its face, it may be thought, more opprobrious) category of liability, identified as such in the authorities and legal writings from Soar v Ashwell onwards, as well as by Millett LJ in Paragon. Finally, Lord Neuberger refers in his paragraph 100 to the 1888 Act. That evidences an error, which in my opinion underlies the majoritys analysis, namely treating the legislator by the deliberately chosen different wording of the 1939 Act as reproducing or restricting the previously understood exemption from the operation of limitation, rather than, as was clearly the case, expanding it: see the rest of this judgment. It is surprising to find such emphasis being now placed on the words to which the trustee was party or privy which were present in section 8(1) of the 1888 Act and remain in section 19(1)(a) of the 1939 Act and now section 21(1)(a) of the 1980 Act, but no weight at all given to Parliaments omission from section 19(1)(a) and section 21(1)(a) of the qualification against a trustee or any person claiming through him which had governed both limbs of the predecessor section 8(1). This is particularly surprising when the drafters took care to reinsert into section 19(1)(b), now section 21(1)(b), equivalent words in the form of the phrase from the trustee. It is the changes in the legislation in 1939 on which attention should focus but which the majority reasoning sets at naught contrary to the Law Revision Committees and Parliaments clear intention to maintain and expand upon existing previously understood exceptions from limitation: see paras 137 149 below. Let me therefore return to the historical position. In Soar v Ashwell the action brought in 1891 by a surviving trustee against a solicitors personal representatives concerned the solicitors failure to account to trustees in January 1879 (the solicitor himself having died later in 1879). The claim was equitable, and counsels submissions as reported turned upon whether or not the Statute of Limitations applied by analogy. The judgments refer more straightforwardly to the question as being whether the Statute of Limitations applied. The reason may lie in Kay LJs reference on p 403 to section 25 of the Judicature Act 1875, and of a statement by Baggallay LJ that section 25 is but a statutory declaration of a law which had always been recognised and administered in Courts of Equity. Section 25(2) of the Judicature Act 1873 read: No claim of a cestui que trust against his trustee for any property held on an express trust, or in respect of any breach of such trust, shall be held to be barred by any Statute of Limitations. Section 25(2) was confined to claims against a trustee. But the Court of Appeal in Soar v Ashwell was clearly indicating that both categories (a) and (c), identified in paras 121 and 122 above, should be treated in the same way as claims against a trustee for breach of an express trust within section 25(2). However, in In re Jane Davies [1891] 3 Ch 119 (CA), dealing with a claim arising between 1858 and 1888 and In re Lacy [1899] 2 Ch 149 (Stirling J), dealing with a claim arising in 1873, it was held that executors were not express trustees within section 25(2) and so were entitled to limit. The Trustee Act 1888 (51 & 52 Vict c59) enacted on 24 December 1888 adopted a much wider definition of trustee, deeming the expression to include an executor or administrator and a trustee whose trust arises by construction or implication of law as well as an express trustee. Section 1(3) At the same time section 8(1)(b) enabled the trustee or person claiming through him to limit, where no existing statute of limitation applies, as if the claim had for money had and received. But it excepted from this any action or other proceeding where the claim is founded upon any fraud or fraudulent breach of trust to which the trustee was party or privy, or is to recover trust property, or the proceeds thereof still retained by the trustee, or previously received by the trustee and converted to his use. Following the passing of the 1888 Act (though in most of the cases in relation to pre Act events), there was a series of cases in which the principles stated in Soar v Ashwell were cited with approval or applied. In re Gallard [1897] QBD 8 concerned post 1888 Act events consisting of a sale in 1889 by a trustee to a purchaser who knew that the sale was at a gross undervalue. Vaughan Williams J noted that the submission was that the Statute of Limitations applied by analogy, rather than directly; he then cited passages in Lord Eshers judgment in Soar v Ashwell identifying the two categories, (a) and (c), mentioned in paras 122 and 123 above, in which a person not nominated as a trustee would be treated as if he were an express trustee. On the basis that category (c) applied, i.e. that the defendant had dishonestly assisted in a fraudulent and dishonest disposition of the trust property, he held that the lapse of time could not be relied upon. In In re Dixon [1900] 2 Ch 561, 574, the facts of which concerned events between 1876 and 1896, Webster MR referred to the classes enumerated by Bowen LJ in Soar v Ashwell of persons who are subject to the rule that time is no bar in the case of express trusts, and applied the third (where a person received trust property and dealt with it in a manner inconsistent with trusts of which he was cognizant). In In re Eyre Williams [1923] 2 Ch 533, mortgage monies which had been agreed to be assigned to marriage settlement trustees had in 1887 been received by a testator who failed to pay them over to the trustees before his death. Romer J said (p 537) that there was of course, no express Statute of Limitations which would apply to the claim of the trustees to recover these moneys from the estate of the testator, unless it be the Trustee Act 1888. He noted the equitable rule that an express trustee could not avail himself by analogy of the Statute of Limitations, a rule which had been ultimately given statutory recognition and force by section 25(2) of the 1873 Act, and further noted that the exception has, however, in certain cases been extended by the Courts of Equity to constructive trustees. He then said that In the present case it cannot be contended that the testator was ever constituted an express trustee, but without any question he did become a constructive trustee of the mortgage moneys which he received. He then cited with approval, first, passages from Soar v Ashwell dealing with each of the exceptional classes of constructive trustee treated as being in the position of express trustees for limitation purposes, and, second, Webster MRs judgment in In re Dixon. On that basis, he held that the testator, although he had only been a constructive trustee, could not rely on limitation. In In re Mason [1928] 1 Ch 385, 394, Romer J referred to In re Eyre Williams as an instance of a case where the trust funds or the proceeds of the trust funds have been received by a person with knowledge that they have been wrongly paid to him. Under this case law, the principles in Soar v Ashwell were regarded as applicable, and dishonest assisters were clearly recognised as within the exception to limitation, whether the claim was or was not strictly to be regarded as falling within the 1888 Act. Against this background came the Law Revision Committees Fifth Interim Report (Cmd 5334), dated December 1936, which led in due course to s.19 of the Limitation Act 1939, and its consolidating successor, section 21 of the Limitation Act 1980. The Report described section 8 of the Trustee Act 1888, noted that it had been considered satisfactory and so left unaffected when the Trustee Act 1925 was passed, but identified, at para 11, as the only difficulty the fact that section 8 does not apparently apply to a constructive trustee, eg an executor or administrator; and doubts arise as to whether or not any statute of limitations applies to property still retained by an executor or administrator. Cited as authority for these concerns and doubts were In re Jane Davies and In re Lacy (see para 132 above). They concerned pre 1888 Act events, but there was apparently no more recent authority. The Report continued with the passages cited by Lord Sumption in his para 24, which I repeat for ease of reference: 11. It is difficult to find any real justification for the rule that an executor or other person holding property as a trustee, but not on an express trust, can plead the statute, though he still retains trust property or has converted it to his own use. The rule has been extensively modified by decisions giving such a wide meaning to express trust as to bring most cases of fiduciary relationship within the exception to the Trustee Act, and to raise serious doubt as to where the line is to be drawn for this purpose between express and constructive trusts. See the judgment of the Bowen LJ in Soar v Ashwell [1893], 2, QB at p 395, and the authorities there cited, and the cases referred to by Romer J in In re Eyre Williams [1923] 2 Ch 533. It is perhaps too late now to suggest that the Trustee Act, 1888 was intended to do away with the distinction between express and constructive trusts for the purpose of the limitation of actions, though the definition of trustee in Section 1(3) seems to point to that conclusion. At any rate we consider that the distinction should now be abolished, and we recommend that the exception in Section 8 of the Trustee Act, 1888 should be expressly made to extend to trustees whether holding on express or constructive trusts, including personal representatives. Recommendation (7) of the Committee was that the Statutes of Limitation should only apply to constructive trustees to the extent to which they do to express trustees. Several matters are clear from this passage. First, there is not a hint of disagreement with the principles stated in Soar v Ashwell, in In re Eyre Williams and in In re Dixon (the other case cited by Romer J in In re Eyre Williams). Second, the Report was, on the contrary, to the effect that these principles should be affirmed. Third, after an expression of regret about the possible missed opportunity to do this provided by the Trustee Act 1888, an unequivocally general intention was stated to do away with the distinction between express and constructive trusts for the purposes of limitation. There is nothing to support the suggestion by Lord Neuberger and Lord Sumption that the Law Revision Committee Report can and should be read as dealing only with some constructive trustees, effectively only category (a) trustees, that is anyone holding property subject to a trust or fiduciary obligations before the occurrence of the transaction impeached (a trustee de son tort). The language of the Report or its recommendations gives no support to it, it postulates a retreat from the English law position as established and understood at the time (when the Committee was clearly advocating a decisive move in the opposite direction), and it postulates the preservation of a distinction which the Committee was at pains to abolish. Fourth, and in contrast, the approach taken by the Committee is in no way surprising, particularly when Romer J, who had decided both In re Eyre Williams and In re Mason was a member of the Committee, as indeed was A F Topham KC who had successfully argued that there was no limitation in In re Mason. A fifth point is just as significant. There is no mention in the Report of either of the Privy Council decisions, Taylor v Davies [1920] AC 636 and Clarkson v Davies [1923] AC 100, cases under a Canadian statutory provision paralleling section 8 of the English 1888 Act. Lord Sumption suggests that Taylor v Davies was the leading case on the effect of sections 1(3) and 8(1) of the 1888 Act. He also suggests (para 27) that The reason why they [the authors of the Law Revision Committee] ignored the two Privy Council decisions was not that they were ignorant of them, or that they regarded them as outliers or wrong, but because they were not at all concerned with the question of ancillary liabilities which arose in those cases. Clairvoyance aside, I note that not only does the Committees Report focus exclusively on the relevant English case law, showing no awareness of either Privy Council case, but Lord Sumption cites no English authority in which either was mentioned and contemporary text books are also notable for their absence of any reference to them. The text books state the law exclusively in accordance with the principles in the English cases including Soar v Ashwell, In re Eyre Williams and In re Dixon to which I have referred: see eg Brunyates Limitation of Action in Equity (1932), Halsburys Laws of England 2nd ed (1936), Limitation of Actions, para 1036, Lewins Practical Treatise on The Law of Trusts 14th ed (1939), Chap VIII, Limitation of Actions, pp 839 840 and Underhills The Law relating to Trusts and Trustees 9th ed (1939), article 101. Thus, Brunyate (Fellow of Trinity, Cambridge, and barrister) said, at p 108: A person who assists a true trustee in committing a fraudulent breach of trust is very properly held liable as though he had himself been a trustee, and he cannot plead the Statute of Limitations (In re Gallard .; and see Soar v Ashwell.). A person who assists in a breach of trust which is not fraudulent is not generally liable in equity to the cestui que trusts, even apart from the Statute of Limitations, unless he has become chargeable with trust property (Barnes v Addy .; .). Thus a solicitor who has assisted in a wrongful investment of trust money by drawing up deeds will only be liable, if at all, to an action for negligence to which the statute will apply. Brunyate went on to identify as another class of persons said to be unable to plead the Statute of Limitations persons who have obtained possession of property which is subject to trusts of which they are cognizant, noting that the scope of this class is very doubtful. Halsbury (1936), para 1036, stated (citing In re Dixon, Soar v Ashwell and In re Eyre Williams) that if a person enters into possession or receives the rent of property with full notice of the trust, he is a trustee, and . cannot, when he is called upon to account for the property, avail himself of the lapse of time as a defence. Lewin (1939), p 841, recorded that Soar v Ashwell had separately enumerated at least three instances of a constructive trust in which it was not open to a constructive trustee to plead the Statute, footnoting in this connection In re Eyre Williams. In similar vein is Underhill (1939), article 101, stating that: All persons who knowingly meddle with trust funds, or mix themselves up with a breach of trust, are equally liable with the trustees; and equally subject to the restrictions on the right of pleading the Statutes of Limitation. The absence in all these passages of references to Taylor v Davies and Clarkson v Davies (which dealt only briefly with the present issue, citing Taylor v Davies) becomes perhaps less surprising in view of passages in Taylor v Davies, particularly at pp 651 and 653, which expressly refer with apparent approval to the persons enumerated in the judgment of Bowen LJ in Soar v Ashwell and those persons who under the rules explained in Soar v Ashwell and other cases are to be treated as in a like position to an express trustee. The Privy Council cases may well therefore have passed in their day as cases leaving undisturbed the rules established in Soar v Ashwell and its successor cases. The facts in Taylor v Davies are in this connection also instructive. The defendant, Davies, was not a trustee, but an inspector appointed by the assignee under an assignment made by a debtor for the benefit of creditors, and, as such, he was held to owe a fiduciary duty which precluded him from buying for his own benefit unless he made full disclosure, which he failed to do. Any liability he had as constructive trustee arose simply from that act. He was not someone who had assumed possession of any trust assets before or indeed by the breach of duty and so he was also not a dishonest assister in a breach of trust or even a knowing recipient of previously existing trust assets (see Lewin On Trusts, 18th ed, para 42 22 for the requirements for knowing receipt). So he was not within any of the categories identified in paragraph 122 above or considered in Soar v Ashwell. A constructive trust was imposed as a simple result of and in order to remedy his breach of fiduciary duty (see eg Lewin on Trusts, paragraph 4.24 et seq). The facts in Clarkson v Davies were similar. The directors were not trustees, and had not assumed possession of any assets. Nor were they dishonest assisters of any breach of trust or knowing recipients of any previously existing trust monies. Their liability arose upon a sale of the assets of the selling company, of which they were directors, to another company, in connection with which they had personally received a payment from the buying company. A constructive trust was imposed simply to remedy this breach of fiduciary duty. Whatever the reason, however, the two Privy Council cases do not feature as part of the English legal background leading to the 1939 Act. The Law Revision Committee Report is in contrast a powerful indication of the genesis and aims of section 19 of that Act. These were to reflect and build on the established principles set out in Soar v Ashwell and the other English case law discussed above. A comparison of section 8 of the 1888 Act and section 19 of the 1939 Act shows careful redrafting to achieve this. Under the 1888 Act, the right to limit was confined to actions by the trustee or persons claiming through him, and the exception for claims founded on fraud and claims to recover trust property was correspondingly limited to such actions. Under section 19(2) of the 1939 Act (now section 21(2) of the 1980 Act), the right to limit applies simply to an action by a beneficiary to recover trust property or in respect of any breach of trust, ie without any limit as to the persons against whom the action was brought. The exception is also, on its face, unrestricted as regards the persons against whom the action is brought, being defined by reference to the nature of the action. The question is simply: is the action in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy? The change (as I have said in para 132 above) must have been deliberate, particularly bearing in mind the preservation in section 19(1)(b) (now section 21(1)(b) of the 1980 Act) of a limitation that the action to recover trust property must be against the trustee. As to the definition of trustee, section 31(1) of the 1939 Act provides that: In this Act, unless the context otherwise requires, . Trust and trustee have the same meanings respectively as in the Trustee Act, 1925. The 1939 Act is therefore to be read as if these phrases were defined expressly to give this the same meaning as in the Trustee Act 1925. Section 68 of that Act provides that: In this Act, unless the context otherwise requires . (17) . the expressions trust and trustee extend to implied and constructive trusts, and to cases where the trustee has a beneficial interest in the trust property, and to duties incident to the office of a personal representative, and trustee where the context admits, includes a personal representative, and new trustee includes an additional trustee. It is not difficult to see why the draftsman should have thought that this was wide enough to overcome any possible difficulties that could arise from the 1888 Act and all such concerns and proposals as the Law Revision Committee had expressed. I return later in this judgment to the significance for this appeal of this redefinition, which I see as being primarily to assimilate knowing recipients of trust property with those obtaining possession within category (a). In other words, it was no longer to be significant whether possession of trust property was gained innocently, with its later wrongful handling converting the possessor into a trustee de son tort, or was knowingly taken from the outset contrary to the interests of the beneficiary. The 1939 Act was intended to give effect to the recommendations of the Law Revision Committee. The mischiefs at which it was aimed were those identified in that Committees Report. [A]ssistance can . be obtained as to the general background and as to the mischief which the legislation was addressing by looking at the reports of the proceedings in Parliament: see The Presidential Insurance Co Ltd v Resha St Hill [2012] UKPC 33, para 23 24, citing Gopaul v Iman Bakash [2012] UKPC 1, para 3 per Lord Walker, and R (Jackson) v Attorney General [2005] UKHL 56, [2006] 1 AC 262, para 97 per Lord Steyn. This is so without satisfying the requirements which Pepper v Hart [1993] AC 593 imposes when the aim is to rely on ministerial statements in Parliament to clarify ambiguity in a legislative text (although those requirements would, if necessary, also be capable of being satisfied in this case). The Bill was a House of Lords Bill. It was introduced for second reading by the Lord Chancellor on 27 June 1938 in the presence of Lord Wright, who had chaired the Law Revision Committee, and Lord Romer, as he now was. All three spoke. Clauses 19 and 20 of the Bill were in precisely the same form as became sections 19 and 20 of the 1939 Act. The Lord Chancellor said: The matter was put before the Law Revision Committee, who reported on the matter in December 1936, and I am glad to see here my noble and learned friends Lord Wright and Lord Romer, who were concerned with the hard work which was necessary before this Bill could attain its present simple, or comparatively simple, form. I do not propose to go through the provisions of this difficult and complex Bill, because I am quite satisfied that those who have done the work and are here present can tell your Lordships with much more accuracy and ability the reasons why any particular provision in the Bill is to be found there and can explain any conundrum that your Lordships may wish to put to them. (Hansard (HL Debates) 27 June 1938, vol 110, col 310). Lord Wright added: The Report on which this Bill is based has been before the country for a considerable number of months, and surely if it is to be criticised, if it has blemishes, it is for those who are concerned to point them out. We have done our best, and it is for Parliament to decide whether effect should be given to our recommendations, and what form that effect should take. (Hansard (HL Debates) 27 June 1938, vol 110, col 314). The Bill went to the House of Commons, where it was introduced by another member of the Law Revision Committee, the Solicitor General, Sir Terence OConnor QC. He opened the debate at 11.56 pm on 19 July 1938 by saying It is not a simple Bill and I feel to some extent a parental responsibility because I served on the Law Revision Committee on whose report it is based. their Report was laid before Parliament in December 1936, and this Bill introduced in another place last month in order to do something to clear up the confusion which was found to exist in the law. Clauses 19 and 20 extend the general exclusion from all limitations to actions to recover money from trustees and executors, and in the case of personal estates, make a similar exemption. (Hansard (HC Debates) 2 February 1939, vol 343, cols 487 515) Not surprisingly, due to the very late hour of its introduction, the Bill was then withdrawn, but was reintroduced by the Solicitor General at the more civilised hour of 9.00 pm on 2 February 1939 with similar explanations both generally and relating to clauses 19 and 20. It then received its second reading, no member of the House having raised any point on these clauses. Closing the debate on this occasion, the Solicitor General also made clear that: The whole of the material upon which this Bill is founded has been embodied in the report of the Law Revision Committee, and it has been available ever since 1936, so that there has been ample opportunity for everybody to know what the proposals of the Committee were. (Hansard (HC Debates) 2 Feb 1939, vol 343, cols 487 516) Reviewing the effect of the 1939 Act in the Modern Law Review vol 4 in July 1940, pp 45, 47, J Unger wrote: This Act, which came into operation on the 1st July, 1940, is founded upon the Fifth Interim Report of the Law Revision Committee. Section 19 simplifies the law of limitation of actions in respect of trust property. All constructive trustees are now subject to the same restrictions when claiming the protection of the Statute as express trustees. Thus the obstacle presented by Soar v Ashwell to a proper classification of trusts has been removed. The same view was expressed by Professor Donovan Waters in a book on Canadian law, The Constructive Trust (published 1964) cited by Millett LJ in Paragon Finance at p 411G. Professor Waters stated (with hindsight over optimistically) that with the Limitation Act 1939 it [the limitation controversy] passed, probably, for ever, the generally accepted view being that the false and limited trilogy of trusts in Soar v Ashwell had been swept away (p 411) and that the Limitation Act was intended to bury this issue (p 1020, as cited by Millett LJ). In this light, it is unsurprising that section 19(1)(a) of the 1939 Act gave rise to little litigation. The one decision worth noting was by Dankwerts J at first instance in G L Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216. The judgment suggests that there was only limited examination of the relevant history and case law. But Dankwerts J, in a part of his judgment not appealed, held that section 19(1)(a) was wide enough to cover a claim against a third party company based on a fraudulent payment of trust monies by a trustee to the company (of which the trustee was a director). Since the company was treated as innocent of the fraud, that conclusion went wider than category (c), and is in my opinion open to questions to that extent. It is only recently in litigation under section 21 of the 1980 Act that the theses have been developed, first that a knowing recipient cannot benefit by a limitation defence and, later, that a dishonest assister can benefit by a limitation defence although the dishonest trustee whom he assists cannot (in short, that category (c) cases are also outside section 21(1)(a)). These theses were initially, and in my view correctly, rejected by the Isle of Man Staff of Government Division in Barlow Clowes International Ltd v Eurotrust International Ltd (31 March 1998). The first thesis was however accepted by Millett LJ in Paragon Finance, but he was, as I have already noted, careful to make clear that he was not accepting, but was leaving undecided, the second thesis. It is however a thesis which it is suggested that Lord Millett (as he had by now become) accepted in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, [2003] 2 AC 366, para 141. It was not, however, a thesis advanced or discussed in submissions by counsel (who included Mr Jonathan Sumption QC), because limitation was not advanced and was irrelevant. The issue in that case was simply one of contribution between joint tortfeasors. The remarks by Lord Millett at paras 140 143 in Dubai Aluminium were addressed to the question which was relevant, which was whether . a firm and its innocent partners may be vicariously liable for a partners dishonest assistance in a breach of trust (para 81). What Lord Millett was concerned to do was underline his previous remarks in Paragon Finance about the distinction between the two entirely different situations in which the expressions constructive trust and trustee were used. Lord Milletts statements in Dubai Aluminium that a person in the dishonest partners position in that case could not plead the Limitation Acts as a defence to the claim were passing comments relating to the informal remedial sense in which it is (he suggested unfortunately) used. They cannot be read as deciding sub silentio an issue which he had carefully left open in Paragon Finance. It is equally inappropriate to treat it as sharing the authority of the two other members of the House (Lord Hutton and Lord Hobhouse) whose judgments record their general agreement with the reasons given by both Lord Nicholls (who said nothing on the present subject) and Lord Millett. None of the Court of Appeal decisions in J J Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162, Gwembe Valley Development Co Ltd v Koshy (No 3) [2004] 1 BCLC 131 and Halton International (Holdings) Inc Sarl v Guernroy Ltd [2006] EWCA Civ 801 concerned a dishonest assister. In Harrison a director who without disclosing material information bought specific property from his company, which was under his control and in respect of which he owed pre existing fiduciary duties, was unable to plead limitation because of section 21(1)(b). In Gwembe Valley a director making an undisclosed profit from a currency transaction entered into by the company was liable only under a constructive remedial trust, so that section 21(1)(b) was not applicable: paras 120 and 161(10). However, since he was held to have been fraudulent, the claim did fall, directly or by analogy, within section 21(1)(a) see paras 120 and 161(9) and (12). Halton was another case, like Gwembe Valley, in which the benefit obtained by alleged fiduciaries did not consist of pre existing property belonging to the company, but consisted in shares which came into existence only because of the transaction impeached. The next cases are conflicting first instance authorities on the limitation position of dishonest assisters: Cattley v Pollard [2006] EWHC 3130 (Ch), [2007] Ch 353 (Richard Sheldon QC, sitting as a deputy) and Statek Corp v Alford [2008] EWHC 32 (Ch) (Evans Lombe J). In an impressive analysis of prior authority, Richard Sheldon QC concluded (para 81) that the dicta in Soar v Ashwell could no longer stand as good law in the light of Millett LJs analysis in Paragon Finance and Lord Milletts speech in Dubai Aluminium. He also held that section 21(1)(a) did not cover claims against a dishonest assister. A year later Evans Lombe J expressed his opposite view, albeit obiter. A yet further year later, the same point came before the Hong Kong Final Court of Appeal in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HKC 135. Lord Hoffmann gave the main judgment. Speaking quite briefly, he acknowledged the high authority of the dicta in Soar v Ashwell, but thought them wrong in principle and unsupported by authority (para 24). He therefore saw no basis to treat a dishonest assister as a trustee within the meaning of section 21(1)(a) (paras 23 24). He also rejected the view that a claim against a dishonest assister would be within section 21(1)(a) because it is in respect of , in the sense of being accessory to, the actual trustees fraudulent breach of trust (para 25). He though that, had that been intended, then the language would have been a good deal clearer. He did not refer to the Law Revision Committee Report, the relevant Parliamentary material or the actual contemporary understanding of the law, evidenced by the case law and jurisprudence to which I have referred. Instead, he relied on Taylor v Davies as an authoritative statement of the previous position. Above all, however, he did not mention section 21(3) or therefore address the obvious objection presented by it to his analysis of the words in respect of. I cannot in these circumstances attach weight to the analysis or decision in Peconic. All the modern cases from Paragon Finance onwards in fact make reference to the Privy Council decisions in Taylor v Davies and Clarkson v Davies. As I have pointed out, these form no part of the actual background to section 19 of the 1939 Act or therefore section 21 of the 1980 Act, and were also not cases of dishonest assistance or knowing receipt in respect of any trust assets. Further, none of the modern cases analyses the position as it was (clearly) understood to be in the 1930s and in the report of the Law Reform Committee which led to the 1939 Act. All that Millett LJ said in the Paragon Finance case at p 412, was that The actual recommendation of the Law Reform Committee went wider than the mischief to which it drew attention [viz the interpretation of trustee to exclude an executor], and it is an open question whether Parliament intended to adopt the wider recommendation or merely to put an end to the mischief He thought that, if Parliament had intended the latter, it would have said so more clearly. In fact, it is clear from the Parliamentary material (paras 146 and 147 above) that Parliament intended to deal with all the mischiefs identified by the Law Revision Committee, so that it was wrong to describe the adoption of the Committees wider recommendation as an open question. In addition, Millett LJ was not concerned at all with the question, which he expressly left open later in his judgment, whether Parliament had intended to abolish the previously well understood rule that dishonest assisters were in the same position as regards limitation as the dishonest trustees who they assisted and his attack on the use of the term constructive trust was based on cases which involved neither dishonest assistance nor knowing receipt, but pure remedial trusts. To make dishonest assistance, and in my view also knowing receipt cases subject to limitation, Parliament would have had to have been imputed with the intention to do the opposite of what the Law Reform Committee had advised, that is to reverse rather than reflect the common understanding of the legal position stated in Soar v Ashwell, In re Dixon and other authorities. There is no basis or likelihood for that at all. Neither Millett LJ nor any of the other authorities suggests any. The Parliamentary material quoted in paras 146 and 147 above puts it beyond doubt (if any otherwise existed) that this was not the intention. The Courts role is to give to section 21 in the 1980 Act the effect which Parliament must be taken to have intended it to have. That in turn depends upon the effect to be given to section 19 of the 1939 Act. In my view, it is clear that this was to treat dishonest assisters as in the same position as regards limitation as the dishonest trustees they assist. That is the approach adopted by the Court of Appeal in its dicta in Soar v Ashwell. There is no difficulty about treating dishonest assisters as persons sued in respect of the fraud of the principal trustee within section 21(1)(a). It was the clear intention of the Law Revision Committee and Parliament under the 1939 and now 1980 Acts that dishonest assisters should not be able to plead limitation. It is only recently, since Royal Brunei in 1995, that it is clear that liability as a dishonest assister does not necessarily depend upon the existence of a dishonest trustee. Even if one looks at the position since Royal Brunei, the resulting position is still not incoherent. A beneficiary whose trustee is involved in fraud is particularly exposed. A third person who dishonestly procures the removal of trust assets without a trustee being complicit in the fraud can be compared with any other stranger committing a fraud on a property owner. But to equate a third person, who dishonestly joins with a dishonest trustee to defraud the trust, with the dishonest trustee for limitation purposes is entirely natural. See also Millett LJs statement in Paragon (para 124 above). Certainly, that was the understanding prior to and when the 1939 Act was passed, and it was, as I have shown, one which the Act was clearly intended to reflect. In these circumstances, I am of the opinion that Dr Williams claim against the Central Bank of Nigeria as alleged dishonest assisters falls within section 21(1)(a) of the 1980 Act and is not time barred. As to Dr Williams claim for knowing receipt by the Central Bank of Nigeria, to avoid limitation, he has to show that this claim falls within section 21(1)(b). It may be open to doubt how far the rules in Soar v Ashwell were themselves designed to cover this type of claim (category (b) identified in para 122 above) and take it outside the limitation defence. The class of case identified by Kay LJ at p 405 (see para 126 above) identified a situation involving a combination of knowing assistance and knowing receipt and J W Brunyate observed that the scope of the class of persons referred to in Soar v Ashwell who have obtained possession of property which is subject to trusts of which they are cognizant and could not on that basis plead limitation was very doubtful (para 140 above). However, by the time of the Law Revision Committee Report Romer J had decided both In re Eyre Williams and In re Mason, and, in the latter case he had (see para 136 above) specifically explained the former as a case where the trust funds or the proceeds of the trust funds have been received by a person with knowledge that they have been wrongly paid to him (ie as a category (b) case: see para 122 above). Further, Halsbury (1936) and Underhill (1939), cited in para 141 above, endorsed this approach. In its Report, the Law Revision Committee, on which Romer LJ (as he now was) sat, made clear that it was intending to endorse the approach taken not just in Soar v Ashwell, but also in the cases cited in In re Eyre Williams, which (apart from Soar v Ashwell and Lee v Sankey (1872) LR 15 Eq 204) consisted only of In re Mason. Finally, the Committee made clear that it intended to do away with the distinction between express and constructive trusts in the area of limitation, and the 1939 Act adopted a definition in terms wide enough to achieve that result. On that basis, Parliaments clear intention in 1939 appears as being that, for the purposes of limitation, those guilty of knowing receipt should be unable to plead limitation, falling to be treated as trustees within the scope of section 21(1)(b), in the same way as possessors falling within category (a) (see para 122 above). To that extent the distinction drawn in Beckford v Wade was to be abrogated. Lord Neuberger seeks to derive from an examination of the effect of the definition of trust and trustee in the context of the 1925 Act a conclusion that these phrases cannot embrace all express, implied and constructive trusts and trustees in the context of the 1939 Act. I do not agree that the phrases are limited in the context of the 1925 Act in such a way as to exclude a knowing recipient. I understand Lord Neuberger and Lord Sumption to accept that section 21(1)(a) covers a category (a) possessor that is an executor de son tort (a person, such as a solicitor, who is not strictly a trustee but receives trust property honestly, and only later decides to deal with it contrary to the trust). That being so, I fail to see why the 1925 Act definition is incapable of covering a category (b) knowing recipient (someone who knowingly receives trust property intending from the outset to deal with it contrary to the trust). On the contrary, it seems to me understandable that the Law Revision Committee in 1936 and Parliament in 1939 should decide to assimilate these two cases for the purposes of section 21(1)(b). Possession is the hallmark of a trustees role and shapes a trustees duties. A knowing recipient has possession just as does an executor de son tort. An executor de son tort is treated as a trustee under section 21(1)(b) because of the wrong he commits. Precisely the same reason justifies treating a knowing recipient as a trustee under section 21(1)(b). As regards taking possession, a knowing recipient and an executor de son tort differ from a simple dishonest assister. A dishonest assister conspiring with a fraudulent trustee can however also be seen as even less meriting of protection by limitation than a mere knowing recipient. That is quite apart from the evident oddity (on Lord Neubergers and Lord Sumptions case) of one conspirator (a dishonest assister) benefitting by limitation, while the other (the fraudulent trustee) does not. Hence, in my opinion, the formulation of section 21(1)(a) to cover a dishonest assister. I would only add, though not necessary for my decision, that the definitions in both the 1925 and the 1939 Acts are made subject to context. I do not see why the 1925 definition when read into the 1939 Act should not be capable of being shaped in effect by any factors generally admissible to shape the interpretation of the 1939 Act. Those factors include the case law background, the mischief being addressed and Parliaments evident intention when enacting section 21. I therefore consider that Dr Williams succeeds on both dishonest assistance and knowing receipt, and that the appeal by the Central Bank of Nigeria should be dismissed. LORD CLARKE, dissenting in part I appreciate that this is a minority judgment. I will therefore keep it short. In the course of the argument, I was attracted by the submission that the Central Bank of Nigeria was a trustee within the meaning of section 21(1)(a) of the Limitation Act 1980 for the reasons powerfully set out by Lord Mance in his judgment. However, somewhat reluctantly, I am persuaded by the reasoning of Lord Neuberger and Lord Sumption that he was not. In particular, I agree with them that it is not apt to describe a person who receives property dishonestly as a trustee where the trust is alleged to arise, as Lord Neuberger puts it at para 64, simply as a result of dishonest receipt. As he says, nobody has ever placed any relevant trust and confidence in the recipient. What then of the knowing assister? There is force in the point that, if a dishonest recipient is not a trustee, it is difficult to see why a dishonest assister should be one. However, as I see it, the critical points derive from the terms of the statute. Section 38(1) of the 1980 Act defines the terms trust and trustee as having the same meanings, respectively, as in the Trustee Act 1925. As Lord Neuberger puts it at para 69, there is no reason to think that the drafter of section 68(1)(17) of the 1980 Act intended constructive trust or trustee to have a wider meaning than that which they had been accorded by Courts of Equity over the years. As he says, it would be surprising if a statute consolidating the law governing the powers and duties of trustees did not adopt an orthodox definition of trust and trustee. The effect of the argument for Dr Williams is to give those expressions a wider meaning than they would have had in the Trustee Act standing alone. I agree with Lord Neuberger that, for the reasons he gives at paras 72 and 73, it is not permissible to achieve that result by reference to context. The point upon which I have reached a different conclusion from the majority is whether this action is an action by Dr Williams as the beneficiary of a trust, being an action in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy within the meaning of section 21(1)(a) of the 1980 Act. As Lord Sumption explains in para 2, the alleged trustee was a Mr Gale and Dr Williams asserts that the Central Bank of Nigeria dishonestly assisted Mr Gales breach of trust and/or received money knowing that it was being paid by Mr Gale in breach of trust. All three members of the Court of Appeal (the Chancellor and Black and Tomlinson LJJ) held that the action is such an action within section 21(1)(a). It is submitted that they were wrong so to hold on the ground that the section is limited to actions against the trustee. I would reject that submission. There is nothing in the language of the section to lead to that conclusion. I appreciate that section 21 has been set out by Lord Sumption. I set it out again because its wording is critical on this point. It provides, so far as relevant: 21. (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy ; or (b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use. (3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued. Section 23 provides: An action for an account shall not be brought after the expiration of any time limit under this Act which is applicable to the claim which is the basis of the duty to account. Section 21(1)(a) contains two requirements: (a) the action must be brought by a beneficiary under a trust; and (b) it must be an action in respect of a fraud or fraudulent breach of trust to which the trustee was a party or privy. Here the action was brought by Dr Williams as a beneficiary of a trust in which Mr Gale was the trustee and the action was against the Central Bank of Nigeria in respect of a fraudulent breach of trust to which it is alleged that Mr Gale was a party. On this basis, the action in my opinion falls within the ordinary meaning of the language used in the section. There is nothing to suggest that the action must be against the trustee. It would have been very simple for the drafters so to provide if that was intended. In para 91 Lord Neuberger identifies the question as whether the person in the position of the Central Bank of Nigeria is sued in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy. In para 94 he treats the question as being whether the words in respect of should be given a wider meaning, in which case he accepts that they can properly be construed to extend to dishonest assisters or advisers without applying to innocently (as opposed to fraudulently) negligent co trustees and professional advisers of a fraudulent trustee. He says that the words in respect of are flexible in that they can have a broad or restricted effect. He concludes that, construed in their context, they should be given a narrow effect. The difficulty with an approach which depends upon the construction of the expression in respect of any fraud or fraudulent breach of trust as meaning that the action must be against the trustee is, as I see it, that it is common ground that in section 21(3) the expression an action by a beneficiary in respect of any breach of trust includes an action against a dishonest assister. It is only by construing subsection (3) in that way that, on the Central Banks case, the relevant time period under the 1980 Act is six years. The purpose of section 21(3) is to reflect the position in section 21(1)(a) and (b), albeit treating them in the reverse order. It refers first to an action by a beneficiary to recover trust property, which is a reference back to section 21(1)(b), which is expressly concerned only with an action to recover trust property. It then refers to an action by a beneficiary in respect of any breach of trust, which is surely a reference back to section 21(1)(a), which refers to an action by a beneficiary in respect of any fraud or fraudulent breach of trust. It seems to me to be clear that section 21(1)(a) and section 21(3) must be read together. The purpose of them was to provide the circumstances in which there would be no limitation period and the circumstances in which the period would be six years. Since section 21(3) is expressly subject to the preceding provisions of the section, which of course include section 21(1)(a), section 21(3) has the effect that a claim by a beneficiary against a dishonest assister is six years unless section 21(1)(a) applies. Section 21(1)(a) applies where the dishonest assister assists a fraud or fraudulent breach of trust to which the trustee was a party or privy. If, as is correctly common ground, an action against a dishonest assister is an action in respect of a breach of trust within section 21(3), it seems to me that such an action must also be an action in respect of a fraud or fraudulent breach of trust to which the trustee is a party or privy where that is the position on the facts. (My emphasis) Both the history of section 21 and the section itself show that the drafters could readily have limited section 21(1)(a) to actions against the trustee if they had wished. As to the history of the provision, section 21(1) of the 1980 Act was a re enactment of section 19 of the Limitation Act 1939. Prior to that, the relevant provision was section 8(1) of the Trustee Act 1888, which was confined to any action or other proceeding against a trustee or any person claiming through him. There is no such express provision in section 21(1)(a). As to section 21 itself, by contrast with section 21(1)(a), section 21(1)(b) is expressly limited to actions against the trustee to recover property and the like. It is suggested that this approach gives no sensible effect to the words to which the trustee was a party or privy. I respectfully disagree. It seems to me that that they emphasise that whoever is the defendant will only be deprived of the benefit of the six year limitation provision in section 21(3) if the trustee is privy to the fraud or fraudulent breach of trust. The purpose of the drafters was to ensure that the both the trustee and any other person liable in respect of the fraud would be treated in the same way for limitation purposes. To my mind that is an understandable purpose. It is further suggested that the use of the expression the trustee is inconsistent with this approach. Again, I respectfully disagree. The reference to the trustee is no more than a reference back to the trust in the opening words of the section. Thus, the action must be by a beneficiary of a trust and the reference to the trust in (a) does no more than make it clear that the trustee of that trust must be a party or privy to the fraud or fraudulent breach of trust concerned. Next, it is suggested that it seems inappropriate that the ability of a dishonest assistant or dishonest knowing recipient to invoke the normal six year period should depend upon whether or not the trustee was fraudulent. Reference is made to the speech of Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, where he said that a dishonest assistant may be liable whether or not the breach of trust on the part of the trustee was dishonest. I accept that that is the position but I am not persuaded that that was appreciated at the time of the Limitation Acts 1939 and 1980. Whether it was or not, I have already expressed the view that it is understandable that the drafters should have thought it appropriate to treat the trustee and the dishonest assister in the same way for limitation purposes. Finally, I am not persuaded that there is anything in section 21(1)(b) which leads to any different conclusion. I recognise that this conclusion is inconsistent with that expressed by Lord Hoffmann in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HKC 135, where the Court of Final Appeal in Hong Kong was considering a Hong Kong Ordinance in the same terms as section 21. In para 25, after recognising that the words in respect of may have a very wide meaning and referring to the possibility of such a meaning being given to them being tentatively considered by Dankwerts J in GL Baker Ltd v Meday Builders and Supplies Ltd [1958] 1 WLR 1216, 1222, he said this: But I think that in the context of section 20 of the Ordinance it simply means that the beneficiary must be claiming against the trustee on the ground that he has committed a fraudulent breach of trust. If it had been intended to include claims against dishonest assisters or other non fiduciaries on the ground that they were accessories to the breach of trust, the language would have been a good deal clearer. Lord Hoffmann makes no reference to the use of the expression in respect of in section 21(3) as discussed above and, while I recognise the experience of Lord Hoffmann in this area, the question for decision is one of construction of the section and, as I see it, the section does not have the limited effect to which he refers. For the reasons I have given I would dismiss the appeal on this point. |
The issues in this appeal are (i) whether the Protection from Eviction Act 1977 (PEA 1977) requires a local housing authority to obtain a court order before taking possession of interim accommodation it provided to an apparently homeless person while it investigated whether it owed him or her a duty under Part VII of the Housing Act 1996 (the 1996 Act), and (ii) whether a public authority, which evicts such a person when its statutory duty to provide such interim accommodation ceases without first obtaining a court order for possession, violates that persons rights under article 8 of the European Convention on Human Rights (ECHR). Factual background CN was born on 3 August 1994. His mother (JN) applied to the London Borough of Lewisham (Lewisham) for assistance under Part VII of the 1996 Act in August 2009 and Lewisham arranged for a housing association to grant her an assured shorthold tenancy which commenced in May 2010. JN and her family became homeless in November 2011 after the housing association obtained an order for possession because of arrears of rent. JN again applied to Lewisham for homelessness assistance. On 15 November 2011 Lewisham, fulfilling its duty under section 188 of the 1996 Act, granted JN a licence of a five bedroom house with communal kitchen and bathroom pending its inquiries under section 184 of that Act as to whether she was eligible for assistance and, if so, what duty, if any, was owed to her. The property was privately owned. Its owner licensed it to Lewisham for use as temporary accommodation for homeless persons. On 15 December 2011 Lewisham wrote to JN to intimate its decision under section 184 of the 1996 Act (the section 184 decision). It stated that its duty to house her had come to an end because she had become homeless intentionally from the housing association property. Lewisham informed her that it would terminate the temporary accommodation within 28 days and that she would be served with a notice to vacate shortly. It stated that it was under a duty to provide her with advice and assistance in her efforts to secure accommodation and invited her to contact its housing options centre for that purpose. The letter also informed her of her right to request a review under section 202 of the 1996 Act and enclosed a leaflet explaining the review process. Lewishams Homeless Families Floating Support Service carried out a needs assessment on 12 January 2012 and concluded that the family did not need the support which that service provided. On 5 March 2012 JN requested a review of the section 184 decision and instructed solicitors to represent her. Lewisham extended her interim accommodation pending the outcome of the review. On 27 March 2012 Lewisham wrote to inform her that the review officer had upheld the section 184 decision and had found that she had become homeless intentionally. It intimated that its duty to secure accommodation for her had come to an end and gave her 28 days to leave the property. Lewisham informed her that she was entitled to advice and assistance from its housing options centre and that she could appeal to the county court on a point of law against the outcome of the section 202 review. JN chose not to do so. Thereafter JNs solicitors requested an assessment under the Children Act 1989. On 29 April 2012 the solicitors wrote to challenge Lewishams decision to evict her without a court order and before completing an assessment under the Children Act 1989. Lewisham extended the provision of temporary accommodation until the outcome of that assessment. Lewisham wrote on 30 April 2012 with a copy of the assessment and intimated that the accommodation would cease on 1 May 2012. In response, CN issued the judicial review claim which has given rise to the appeal to this court. ZH was born on 23 March 2012. His mother (FI) was born in 1991 and has a younger sister (MI) who was born in 1994. FI had an assured tenancy of a house in Liverpool. She left Liverpool in October 2011 to live with her aunt in London. In August 2012 her aunt asked FI to leave and on 7 September 2012 FI applied to the London Borough of Newham (Newham) for assistance under Part VII of the 1996 Act. In a letter dated 26 November 2012 Newham, acting under section 188 of the 1996 Act, granted FI a licence to occupy a two bedroom self contained flat on a day to day basis. Newham had licensed the property from a private sector company (RC) which provided spot booked bed and breakfast and nightly let accommodation for homeless and other persons. In a letter dated 19 February 2013 Newham advised FI that it had decided that she was homeless and in priority need but that she had become homeless intentionally by giving up her assured tenancy in Liverpool. Newham stated that it would help her search for alternative accommodation and allow her to stay in her current accommodation until 18 March 2013. Newham also provided her with written advice and informed her of her right to review the decision. On the same day solicitors acting for ZH asked Newham to review the decision and for accommodation pending the review. The solicitors also informed RC of their view that RC could not evict without first obtaining a court order. In a letter dated 14 March 2013 Newham refused to provide accommodation pending a review and told FI that she must leave the property by 21 March 2013. ZH commenced judicial review proceedings on 18 March 2013 in which he challenged the decision to evict without first obtaining a court order. After an assessment under the Children Act 1989 Newham undertook to provide interim accommodation and financial support to assist FI in securing private rented accommodation. Newham also carried out a section 202 review which FI appealed to the county court. That appeal settled after Newham, in September 2013, accepted that it owed FI a full housing duty under section 193(2) of the 1996 Act, namely to secure that accommodation was available for her to occupy (the full housing duty). By that stage ZHs case had been linked to CNs case in the Court of Appeal. The legal proceedings CN was initially refused permission to proceed with the judicial review claim. That decision was appealed and on 23 November 2012 Davis LJ granted permission for the judicial review and ordered the claim to be retained in the Court of Appeal for a hearing. On 9 May 2013 Sales J gave ZH permission for his judicial review and transferred it to the Court of Appeal. The two judicial review claims were heard in June 2013; and on 11 July 2013 the Court of Appeal handed down judgment dismissing the claims. Interim injunctions have protected CNs occupation of accommodation and on 23 November 2012 Davis LJ continued the injunction pending final disposal of the appeal. Although Newham has provided ZH with accommodation in accordance with its full housing duty, the parties agreed that it was appropriate that his case should be considered with that of CN in this appeal. The homelessness legislation For many years Governments in the United Kingdom have sought to alleviate the suffering caused by homelessness. In Part III of the National Assistance Act 1948 local authorities were placed under a duty to provide temporary accommodation to persons who were in urgent need of it. The accommodation was to be provided in premises which the relevant local authority or another local authority managed or in the premises of a voluntary organisation to which the local authority made appropriate payments (sections 21 and 26). The local authority was empowered to make rules for the management of the premises which entitled it to require a person to leave the premises if he was no longer entitled to receive accommodation under that Part of the Act (section 23). The Housing (Homeless Persons) Act 1977 replaced the provisions of the 1948 Act, by which only temporary accommodation was provided, with a statutory regime which also provided longer term accommodation for the homeless. That regime in its essentials survives in the 1996 Act. In particular, the 1977 Act introduced: i) the concept of priority need (section 2), ii) the obligation on the local housing authority to provide temporary accommodation while it investigates whether the applicant is homeless and in priority need and whether he or she is homeless intentionally (section 3), and iii) the duties, arising from the results of that investigation, (a) to provide advice and appropriate assistance, (b) to provide temporary accommodation for a period to give a reasonable opportunity to secure other accommodation, or (c) to secure that accommodation becomes available for occupation (section 4). The 1977 Act was consolidated into wider housing legislation in Part III of the Housing Act 1985. That in turn was repealed by the 1996 Act, which in Part VII provides the current statutory regime for tackling homelessness. I need only summarise the relevant provisions of the 1996 Act. When an applicant applies for accommodation or assistance in obtaining accommodation (section 183), the local housing authority carries out inquiries to satisfy itself whether he or she is eligible for assistance and, if so, what if any duty is owed (section 184). Of central importance in this appeal is the interim duty to accommodate under section 188. Section 188(1) provides: If the local housing authority have reason to believe that an applicant may be homeless, eligible for assistance and have a priority need, they shall secure that accommodation is available for his occupation pending a decision as to the duty (if any) owed to him under the following provisions of this Part. Section 188(3) provides: The duty ceases when the authoritys decision is notified to the applicant, even if the applicant requests a review of the decision (see section 202). The authority may secure that accommodation is available for the applicants occupation pending a decision on a review. The possible results of section 184 investigation, so far as relevant, are as follows. If the local housing authority is satisfied that the applicant is homeless, eligible for assistance but homeless intentionally, its duty, if he or she has a priority need, is (a) to secure that accommodation is available for a period to give a reasonable opportunity of securing accommodation for occupation and (b) to provide advice and assistance in attempts to secure accommodation (section 190(2)). If not satisfied that the applicant has a priority need, the authoritys duty is confined to (b) above (section 190(3)). If the authority is satisfied that the applicant is homeless and eligible for assistance, not satisfied that he or she is intentionally homeless, but also not satisfied that he or she has a priority need, the duty is to provide advice and assistance as in (b) above (section 192). If the authority is satisfied that the applicant is homeless, eligible for assistance and has a priority need and is not satisfied that he or she became homeless intentionally, it is under a duty to secure that accommodation is available for occupation by the applicant (section 193(2)). In this appeal we are concerned only with whether an applicant is entitled to both a set period of notice and a court order before eviction if, on completing the section 188 investigation, a local authority finds him or her to be homeless intentionally or otherwise not entitled to the full housing duty under section 193 of the 1996 Act. The logic of the answer to that question will apply also to other temporary accommodation provided under Part VII of the 1996 Act, namely sections 188(3) (above), 190(2) (above), 200(1) (accommodation pending a possible referral to another authority), and 204(4) (accommodation pending the determination of an appeal). Protection from eviction legislation Abuses by private sector landlords in the 1950s and 1960s led to measures to regulate the eviction of tenants in section 16 of the Rent Act 1957 and Part III of the Rent Act 1965. PEA 1977 consolidated those provisions and related enactments. Section 1 makes the unlawful eviction or harassment of a residential occupier a criminal offence. Section 3 prohibits eviction without due process of law. Of particular relevance are section 3(1) and (2B). Section 3(1), which, subject to an immaterial amendment, is in the same terms as originally enacted, provides: the tenancy (in this section referred to as the former Where any premises have been let as a dwelling under a tenancy which is neither a statutorily protected tenancy nor an excluded tenancy and (a) tenancy) has come to an end, but (b) of them, it shall not be lawful for the owner to enforce against the occupier, otherwise than by proceedings in the court, his right to recover possession of the premises. the occupier continues to reside in the premises or part Section 3(2B), which was inserted by the Housing Act 1988, provides: Subsections (1) and (2) above apply in relation to any premises occupied as a dwelling under a licence, other than an excluded licence, as they apply in relation to premises let as a dwelling under a tenancy, and in those subsections the expressions let and tenancy shall be construed accordingly. Section 3A, which the 1988 Act also introduced, listed excluded tenancies and licences. The listed exclusions now include among others a tenancy or licence granted as a temporary expedient to a trespasser (section 3A(6)), a tenancy or licence to occupy premises for a holiday (i.e. a holiday let) or if granted otherwise than for money or moneys worth (i.e. a bare licence) (section 3A(7)), a tenancy or licence granted to provide accommodation under Part VI of the Immigration and Asylum Act 1999 (i.e. accommodation provided to asylum seekers and their dependants) (section 3A(7A)) or temporary accommodation to displaced persons (section 3A(7C)), and a licence which confers rights of occupation in a hostel provided by specified bodies (section 3A(8)). There is no general exclusion in section 3A of accommodation provided under Part VII of the 1996 Act or in particular under section 188 of that Act. Section 5(1A) of PEA 1977 provides that a notice to determine a periodic licence to occupy premises as a dwelling (other than an excluded licence) is valid only if it is in writing and contains prescribed information and is given not less than 4 weeks before the date on which it is to take effect. Accordingly, where a person grants a licence to which PEA 1977 applies, he must give notice of at least 28 days and also obtain a court order to regain possession of the premises. While counsel could not agree on the likely timescale of average court proceedings, it is likely that, in uncontested proceedings, a local authority might often have to wait several months to recover possession of a property provided as interim accommodation if such accommodation is subject to PEA 1977. In contested proceedings the wait would probably be longer. Lewishams experience is that it can take between 3 and 6 months to recover possession in undefended proceedings in the county court. Newhams experience is that such undefended proceedings take between 3 and 4 months. The first issue: the appellants challenge On the first issue the appellants case was straightforward. Mr Arden submitted (i) that PEA 1977 requires a court order to recover possession of premises occupied as a dwelling under a licence (section 3(2B)) and (ii) that Parliament had set out comprehensively in section 3A of PEA 1977 the tenancies and licences which were to be excluded from the scope of section 3 of that Act. As a result, an owner can take possession of the accommodation provided by a local housing authority under section 188 of the 1996 Act only after he has obtained a court order. The court must give effect to the clear words of Parliament. In support of his submission he also referred, by way of contrast, to other legislation which contained express exclusions and, he submitted, supported the view that Parliament viewed temporary accommodation provided to the homeless as being let as a separate dwelling, a phrase which has long been the key definition of property which was subject to statutory rent restrictions and security of tenure. He submitted that, if premises were let as a separate dwelling, they were necessarily let as a dwelling in section 3 of PEA 1977. He referred to the Housing Act 1985, which in Schedule 1 paragraph 4 expressly excluded all tenancies granted under Part VII of the 1996 Act from the security of tenure which the Housing Act 1980 had introduced for public sector tenants. Similarly, section 209 of the 1996 Act (adapting earlier provision in section 1(6) of the Housing Act 1988) provides that a tenancy granted by a private landlord under arrangements which a local housing authority makes in pursuance of its interim duties under sections 188, 190, 200 or 204(4) cannot be an assured tenancy before the end of 12 months after the date on which the applicant is notified of the relevant decision or outcome of the appeal unless the landlord has given notice to the contrary. In short, he submitted that Parliament had exempted the temporary provision of accommodation to homeless persons from security of tenure but not from PEA 1977. If that was correct, the extension of PEA 1977 to cover licences in 1988 meant that temporary accommodation provided to a homeless person under a licence also fell within the scope of that Act. He also drew attention to section 130 of the Social Security Contributions and Benefits Act 1992, which gives an entitlement to housing benefit when a person is liable to make payments in respect of a dwelling which he occupies as his home. Housing benefit is often paid to people who occupy temporary accommodation under Part VII of the 1996 Act. This supported the view that such accommodation should be treated as a dwelling under PEA 1977. Discussion of the first issue (i) licence to occupy premises as a dwelling The first issue is whether the premises, which the authorities provided to CN and ZH as temporary occupation under section 188 of the 1996 Act, were licensed for occupation as a dwelling. Counsel agreed that the phrases let as a dwelling under a tenancy in section 3(1) and premises occupied as a dwelling under a licence in section 3(2B) of PEA 1977 both addressed the purpose of the tenancy or licence rather than the use of the premises by the occupier. I also agree: section 3(2B) (para 18 above) applies section 3(1) to licensed premises; as section 3(1) looks to the purpose of the lease, so also must section 3(2B) look to the purpose of the licence. Unless that licence is superseded by a later contract, either express or inferred from the parties actions, which provides for a different user, the court looks to the purpose of the original licence. See the judgments of the Court of Appeal on analogous provisions in the Rent Acts in Wolfe v Hogan [1949] 2 KB 194 and Russell v Booker (1982) 5 HLR 10. See also, in the context of accommodation initially provided under section 188 of the 1996 Act, the judgment of Elias J in Rogerson v Wigan Metropolitan Borough Council [2005] HLR 129, at paras 33 and 34. Accordingly, as there is no suggestion that the legal basis of the occupation by CN and ZH changed since the licences were granted, PEA 1977 instructs us in each case to look to the purpose of the licence to see if it is for occupation as a dwelling. The word dwelling is not a technical word with a precise scientific meaning. Nor does it have a fixed meaning. Words such as live at, reside and dwell are ordinary words of the English language, as is home. It is clear, as the respondent local authorities submitted, that the word dwelling in the phrase, let as a dwelling has been used in PEA 1977 in the same sense as that word was used in the phrase let as a separate dwelling in the Rent Acts. Section 3 of PEA 1977 had its origin in section 32 of the Rent Act 1965 and section 5 in section 16 of the Rent Act 1957. There is no reason to think that Parliament intended the word dwelling to have a different meaning in sections on protection from eviction from its meaning in provisions relating to rent restriction and security of tenure. In Skinner v Geary [1931] 2 KB 546, Scrutton LJ (at 564) said that the Rent Acts did not protect a tenant who was not in occupation of a house in the sense that the house was his home. More recently, in Uratemp Ventures Ltd v Collins [2002] 1 AC 301 the speeches in the House of Lords showed that the word dwelling had different shades of meaning. Lord Bingham of Cornhill (at para 10) said that a dwelling house was the place where someone dwells, lives or resides. Lord Steyn (at para 15) suggested that the court should not put restrictive glosses on the word which conveyed the idea of a place where someone lived. Lord Millett said (at para 30): The words dwell and dwelling are not terms of art with a specialised legal meaning. They are ordinary English words, even if they are perhaps no longer in common use. They mean the same as inhabit and habitation or more precisely abide and abode, and refer to the place where one lives and makes ones home. They suggest a greater degree of settled occupation than reside and residence, connoting the place where the occupier habitually sleeps and usually eats, In my view there is no strict hierarchy in terms of settled occupation between the words live at, reside and dwell and much may depend on the context in which the words are used. But there are nuances and as a general rule I agree with Lord Millett that dwelling suggests a greater degree of settled occupation than residence. 28. Under the Rent Acts when the court considers whether a property is let as a separate dwelling it looks to the purpose of the tenancy. That involves a consideration of both the terms of the contract and the factual matrix of the letting. Thus a tenancy at will is the letting of a dwelling, notwithstanding the precariousness of the contractual right to occupy, where it is clear that the indeterminate period of authorised occupation is consistent with an intention that the tenant establishes a home in the property. In ascertaining the nature of the tenancy the court looks at the lease, which is a practical document dealing with a practical situation (Danckwerts J in Levermore v Jobey [1956] 1 WLR 697 CA, 708), and also the surrounding circumstances. It considers the parties contract, the nature of the premises and also the statutory intention. Thus, for example, in Martin Estates Ltd v Watt and Hunter [1925] NI 79 (CA), in which police officers occupying police barracks sought to resist the recovery of possession on the basis that the property was let as a dwelling house, the Northern Irish Court of Appeal rejected the defence. Moore LJ (86 87) held that housing let for the public service and occupied by public servants was not a dwelling for the purposes of the Rent Acts and that policemen in police barracks, patients in hospital and inmates in a gaol could not claim security of tenure. 30. A similar approach is appropriate here. The court, in deciding whether the accommodation involved in these appeals falls within the meaning of dwelling in section 3(1) of PEA 1977, must construe the terms of the relevant licences in the context of the applicable provisions of the 1996 Act. Section 188(1) imposes on the local housing authority a duty with a low threshold. It arises if the authority has reason to believe that the applicant may be homeless, eligible for assistance and have a priority need. The duty is to secure that accommodation is available for his or her occupation pending the authoritys section 184 decision. The authority is not under a duty to provide a particular form of accommodation or to provide the same accommodation for the applicant throughout the period pending its decision. It can require the applicant to transfer from one address to another more than once during that period. The duty to secure short term accommodation under section 190(2), in order to give someone who is found to be homeless intentionally a reasonable opportunity to secure alternative accommodation for occupation, is similarly limited. So too are the powers under sections 188(3) and 204(4) to provide accommodation pending a decision on a review or pending an appeal. In some cases the authority can reach a section 184 decision very quickly. Other cases require more complex inquiries. The Homelessness Code of Guidance for Local Authorities (2006), which the Government issued under section 182 of the 1996 Act, suggested (at para 6.16) that inquiries should whenever possible be concluded within 33 working days. In CNs case Lewisham notified JN of its section 184 decision within one month after it provided the interim accommodation. Newhams inquiries took almost 3 months after it granted FI the licence of the temporary accommodation. 32. The licences granted to the applicants in these cases are consistent with the limited and short term nature of the authoritys duty. Lewishams licence to JN was an offer of interim nightly paid accommodation for about two weeks. It stated: 31. As this is nightly paid temporary accommodation it is likely that you will be moved with short notice. When this occurs you will be expected to move on either the same day or the next working day. Also, if you plan to not stay at your accommodation for more than 1 night you must inform the council. JN also undertook in the licence that only the persons named in her application for assistance would occupy the accommodation. Newhams licence to FI was for interim accommodation on a day to day basis while it decided whether it had a duty to provide her with re housing. Newham explained that it had entered into arrangements with accommodation providers to provide self contained accommodation and hotel accommodation which it let on a day to day basis. It stated: You occupy interim accommodation on a day to day basis. You do not therefore have the rights of security of a tenant. In the event that the proprietor does not want to continue to allow the council to use the property, we shall have to withdraw our permission for you to live there and ask you to move to other accommodation which we shall provide. If there is a need to move you we shall endeavour to tell you that as soon as we can. As you do not enjoy the rights of a tenant, if you are required to leave the interim accommodation and refuse there is no obligation on the proprietor of the premises or the council to obtain a Court Order requiring you to leave the premises. 33. Newham also required FI to sign a daily register and restricted those allowed to reside in the accommodation to three named individuals, namely FI, ZH and MI. In my view there are a number of features that militate against such licences being licences to occupy premises as a dwelling. First, there is the statutory context of the licence in the 1996 Act, namely the provision by the local housing authority to a homeless person of short term accommodation at one or more locations and in one or more forms of accommodation pending the section 184 decision, the outcome of a review or appeal, or the expiry of the reasonable period under section 190(2). The statutory duty in section 188 of the 1996 Act is to secure accommodation for the applicant, not necessarily at one location, for a short and determinate period. Most significantly, a person who is given temporary accommodation under Part VII of the 1996 Act does not cease to be homeless. To hold otherwise would defeat the scheme of the 1996 Act. In Moran v Manchester City Council [2009] 1 WLR 1506, this was a matter of concession (paras 54 and 55) and Lady Hale (at para 65) stated an analogous principle that in most cases a woman who has left her home because of domestic (or other) violence within it remains homeless even if she has found a temporary haven in a womens refuge. Such temporary accommodation is not intended to provide a home. Another way of looking at the matter is that having a roof over your head in such short term accommodation does not give you a fixed abode. 34. Secondly, consistently with that statutory regime, each licence is a day to day or nightly licence which recognises that the authority may require the applicant to transfer to alternative accommodation at short notice. The licence in each case confers private law rights in relation to the property to which it relates, but the licence must be construed and the nature of those rights must be assessed in the context of the authoritys duties under the 1996 Act. 35. Thirdly, the imposition of the requirements of PEA 1977 would significantly hamper the operation by the authorities of the statutory scheme under the 1996 Act and its predecessor Acts. An authority would not be able to transfer an applicant from one location to another without either his or her consent or, alternatively, the obtaining of a court order. The authority, while awaiting the court order for possession, would have to provide accommodation to someone about whom it had made an adverse section 184 decision and to whom it had already given a reasonable opportunity to obtain alternative accommodation, thereby tying up scarce housing resources. In a time of strained public finances this may deprive other applicants who may have priority need of suitable accommodation and also restrict the authoritys ability to provide accommodation where it has a discretion to do so, as under sections 188(3) and 204(4) of the 1996 Act. Further, there seems little purpose in requiring court proceedings to recover possession as it is difficult to see what a homeless person could advance as a defence to the application, particularly as the 1996 Act contains its own provisions for challenging adverse decisions of the local authority by way of review and appeal to the court (para 69 below). In my view the policy considerations of the third point would not by themselves be determinative, but the features in combination, the legislative and factual context of licences, point to the conclusion that the temporary accommodation, which the authority provides in performance of its duties under section 188 of the 1996 Act, is not provided as a dwelling for the purpose of PEA 1977. I turn to the case law on which the respondent authorities relied for the more general proposition that a temporary residence cannot be a dwelling. There 36. 37. are dicta in those cases which support the proposition; but they also must be seen in context. Many of the judicial statements were made in cases in which a person alleged that he or she had two homes and the court had to decide if a second home fell within the scope of the Rent Acts. Walker v Ogilvy (1974) 29 P & CR 288 concerned a tenant of a flat which he used principally at weekends and for short holidays. The tenant had another permanent residence. Ormrod LJ (at p 293) stated that Parliament in passing the Rent Act 1968 never intended to protect people in occupation of what were in effect holiday houses. Regalian Securities Ltd v Scheuer (1982) 5 HLR 48 concerned the right of a protected tenant to become a statutory tenant on the termination of the protected tenancy under section 2(1)(a) of the Rent Act 1977, which required him to occupy the dwelling house as his residence. In that case the tenant occupied the flat as a temporary expedient for part of the time when the house, which his wife had purchased and in which they and their children lived, was let to others during the winter. The Court of Appeal held that his residence in the flat did not have the quality needed to attract the protections of the Rent Acts. Cumming Bruce LJ (at p 56) asked whether the second residence was used as a home rather than a place of convenient resort. Eveleigh LJ (at p 59) and May LJ (at p 62) took a similar approach, the latter asking whether there was occupation as a home. Cumming Bruce LJ (at p 58) stated two principles that were relevant in that context: First, the court enquires what is the extent and what are the characteristics of the user of the residence? When that is ascertained the court also enquires: Is the nature of the residence during the period that it persisted the kind of residence that is within the contemplation of the Rent Act? Is this the kind of residence that Parliament intended should clothe the tenant with the right to claim statutory protection? 38. In Swanbrae Ltd v Elliott (1986) 19 HLR 86 the Court of Appeal considered the quality of residence required where a person claimed to be a statutory tenant in succession to her mother, who had been a protected tenant, because she had resided in the premises with her before she died. The appellant had visited frequently and then had moved in on a part time basis to nurse her sick mother while retaining a home elsewhere. The Court held that residing with meant more than living at; a person claiming a statutory tenancy had to show that she had made her home in the premises. Swinton Thomas J (at p 90) distinguished the earlier case of Collier v Stoneman [1957] 1 WLR 1108 on its facts because Mrs Elliott had a tenancy of her own while in that case the claimant did not. He concluded (at p 95) that Mrs Elliott had not shown that she had made her home at the premises and become part of the household. Kerr LJ (at p 96) agreed and made the same distinction from other cases because Mrs Elliott had a permanent home of her own. 39. Similarly, in Freeman v Islington London Borough Council [2010] HLR 6, another succession to tenancy case in which the focus was on the statutory words resided with, the Court of Appeal adopted a similar approach, looking at the claimants actions and ascertaining whether they exhibited a home making intention rather than merely staying with the tenant for a limited time and a limited purpose: Jacob LJ at paras 28 and 33. In my view the statutory successor cases are of only limited assistance. Because of the different statutory provisions the court in each case looked objectively at the quality of the claimants residence and at her intention when living with the protected tenant. They establish that occupation which has the quality of home building is needed to obtain protection as a successor of a protected tenant. They did not entail an assessment of the purpose of a letting or licence, which the current case involves. 40. 41. MacMillan & Co Ltd v Rees [1946] 1 All ER 675 was not a case which involved an allegation that someone had two homes. It concerned the lease of premises as an office in which the tenant or her business partner were authorised to sleep when required. The Court of Appeal drew a distinction between an authorised user of merely sleeping or eating on premises and use as a dwelling house. Authorised acts, which were residential in character, did not make the business premises a dwelling house: Evershed J, delivering the judgment of the court at pp 677 678. 42. The respondent authorities and the Secretary of State also relied on the two Court of Appeal cases which have directly addressed the question whether PEA 1977 applies to temporary accommodation provided under section 188 of the 1996 Act or its predecessor Act. In Mohamed v Manek and Kensington and Chelsea LBC (1995) 27 HLR 439, the Court of Appeal was concerned with the predecessor provisions in section 63 of the Housing Act 1985 under which the local authority arranged for the provision to the claimant of interim bed and breakfast accommodation in a private hotel. Auld LJ (at p 450) held as a matter of construction that occupied as a dwelling under a licence in section 3(2B) of PEA 1977 did not apply to bed and breakfast accommodation provided as a temporary arrangement pending what is now a section 184 decision. He also stated that it did not accord with the ordinary use of language to describe temporary accommodation in a hotel or hostel for this purpose as premises occupied as a dwelling under a licence. Nourse LJ agreed and stated (at p 451) 43. 44. I rest my decision primarily on the simple proposition, derived from a purposive construction of both statutes, that accommodation made available for an applicant pursuant to section 63(1) of the Housing Act 1985 pending a decision as a result of the local housing authoritys inquiries under section 62 cannot, as a general rule, be premises let as a dwelling under a tenancy of premises occupied as a dwelling under a licence within section 3(1) and (2B) respectively of the Protection from Eviction Act 1977. [I]t cannot be a purpose of the 1977 Act to give protection to persons whose entirely transient needs bring them within section 63(1). Henry LJ agreed with both judgments. In Desnousse v Newham London Borough Council [2006] QB 831, which also concerned the application of PEA 1977 to arrangements entered into under section 188 of the 1996 Act (in that case a self contained flat), the Court of Appeal applied Mohamed v Manek in the face of a sustained challenge by Mr Arden which Lloyd LJ analysed in detail. The court held that the ratio of Mohamed v Manek was not confined to accommodation of the nature of a hotel or hostel but was a general proposition. The court was divided on whether the reading of section 3(2B) of PEA 1977 in Mohamed v Manek was compatible with article 8 of ECHR. Lloyd LJ (at para 143) held that it was not and that section 3 of the Human Rights Act 1998 required the court to apply section 3 of PEA 1977 to the occupation of self contained residential accommodation provided in pursuance of the local authoritys duties under section 188(1) or 190(2)(a) of the 1996 Act. Tuckey LJ and Pill LJ disagreed. I discuss article 8 of ECHR in paras 57 73 below. In Mohamed v Hammersmith and Fulham London Borough Council [2002] 1 AC 547 the House of Lords held that the occupation by a homeless person of interim accommodation provided under section 188 of the 1996 Act could be normal residence for the purpose of establishing a local connection under section 199(1)(a) of that Act. Lord Slynn of Hadley, with whom the other Law Lords agreed, stated (at para 18) that words like ordinary residence and normal residence take their precise meaning from the context of the legislation in which they appear. He suggested that the place that a person voluntarily accepts and in which he eats and sleeps is for the relevant time where he normally resides. The fact that the local authority had given him interim accommodation in performance of its statutory duty under section 188 of the 1996 Act did not prevent that accommodation from being the place where he was for the time normally resident. This is consistent with the view that Lord Millett expressed in Uratemp (para 26 above) that dwelling generally connotes a greater degree of settled occupation than residence. 45. Pulling together the threads of the case law, in my view the following can be stated: (i) the words live at, reside and dwell are ordinary words of the English language and do not have technical meanings, (ii) those words must be interpreted in the statutes in which they appear having regard to the purpose of those enactments, (iii) as a matter of nuance, dwelling as a general rule suggests a more settled occupation than residence and can be equated with ones home, although residence itself can in certain contexts (such as the two home cases) require such an equation, and (iv) under the 1996 Act a person remains homeless while he or she occupies temporary accommodation provided under sections 188(3), 190(2), 200(1) or 204(4) of the 1996 Act so long as the occupation is properly referable to the authoritys performance or exercise of those statutory duties or powers. In my view it is consistent with this approach to conclude in the context of PEA 1977 that an overnight or day to day licence of accommodation pending the making of a decision under section 184 or on review or appeal does not show any intention to allow the homeless applicant to make his or her home in that accommodation. (ii) The exclusions in section 3A of PEA 1977 47. 46. Mr Arden also contended that section 3(1) and (2B) of PEA 1977 covered all residential tenancies or licences unless they were expressly excluded by section 3A of that Act. The exclusions in section 3A included several arrangements which were likely to be temporary in nature. He submitted that by defining the excluded tenancies and licences, Parliament had expressed an intention that all other residential tenancies and licences were subject to the protections in sections 3 and 5 of PEA 1977. I am not persuaded that that submission is correct. If, by providing the exclusions, Parliament meant that otherwise the excluded tenancies or excluded licences would have been within the concepts of let as a dwelling or occupied as a dwelling under a licence (section 3(1) and (2B)), that would have had the effect of altering the meaning of dwelling from that of the Rent Acts, in which the protection against eviction originated. As mentioned above, it is clear from prior case law (Walker v Ogilvy) that holiday lets did not fall within the expression let as a separate dwelling. But such lets are expressly excluded in section 3A(7)(a). Similarly, the Rent Acts treated a tenancy under which the occupier shared accommodation with the landlord and other persons as a restricted contract rather than a protected tenancy: Rent Act 1977 section 21. Yet such was expressly excluded in 48. section 3A(2). In my view Parliament, by providing those exclusions, sought to confirm the scope of the statutory protection which the provisions of the Rent Acts or case law established rather than alter the concept of dwelling. While it is correct that, as Mr Arden submitted, the Housing (Homeless Persons) Act 1977, which was enacted at the same time as PEA 1977, could have excluded its provision of temporary accommodation from the scope of the latter Act, it was not necessary to do so. It may be correct, as both Mr Hutchings for the respondent local authorities and Mr Chamberlain for the Secretary of State contended, that several of the express exclusions of temporary accommodation involve circumstances in which the occupation may continue for significant periods of time. The exclusion in section 3A(6) of a tenancy or licence granted as a temporary expedient to a trespasser is an example of an exclusion of a letting which was intended to be temporary. But such lettings are on occasion intended to last for several years. See, for example, Smart v Lambeth London Borough Council [2014] HLR 7, in which a local authority granted a licence to a housing association which in turn allowed a housing cooperative to provide accommodation to former squatters on a licence which was initially for 5 years but was extended. But for the exclusion, such accommodation by providing settled occupation could readily fall within the scope of section 3 of PEA 1977. Similarly, the tenancy or licence granted to provide accommodation under Part VI of the Immigration and Asylum Act 1999 (section 3A(7A)) or under the Displaced Persons (Temporary Protection) Regulations 2005 (SI 2005 No 1379) (section 3A(7C)) can in some cases involve the provision of accommodation for prolonged periods which might prima facie bring it within section 3 of PEA 1977. The exclusions remove accommodation so provided from the scope of PEA 1977. But I do not rely on distinctions between certain types of temporary accommodation and another type. Rather I base my view on the meaning of dwelling in section 3 and the absence of any evidence of an intention on the part of Parliament to extend that meaning to cover accommodation which would not have been treated as a dwelling under the Rent Acts. 49. Absent an intention to re define the meaning of dwelling, it appears to me that Parliament in enacting and amending section 3A created several of the exclusions for the avoidance of doubt. One must address the prior question as to what is a dwelling. The absence of an exclusion for accommodation provided under section 188 of the 1996 Act does not mean that such accommodation falls within section 3 of PEA. (iii) Inferences from other statutes 50. As set out in para 22 above, Mr Arden also invited the court to draw an inference of parliamentary intention in PEA 1977 from provisions in other statutes. I am not persuaded that such inferences should be drawn. Section 209 of the 1996 Act, adapting the earlier provisions in the Housing Act 1985 (section 79(2) and Schedule 1 paragraph 4), and section 1(6) and (7) of the Housing Act 1988, prevents a tenancy from being an assured tenancy before the end of 12 months after the relevant decision by the local authority. But a tenancy which continued for such a period after a decision under section 184 or on review or appeal would in most cases have ceased to be properly referable to the provision of interim accommodation pending the decision (see para 24 above). 51. Housing benefit under section 130 of the Social Security Contributions and Benefits Act 1992 (the 1992 Act) has been given to people provided with temporary accommodation under the 1996 Act. That section provides: A person is entitled to housing benefit if he is liable to make payments in respect of a dwelling in Great Britain which he occupies as his home; It is argued that, if an applicant in temporary accommodation is entitled to housing benefit because she is occupying a dwelling as her home, she is also occupying a dwelling under a licence for the purposes of section 3(2B) of PEA 1977. But there are two answers which to my mind contradict this view. First, the social security legislation is in a different field of human activity from PEA 1977 and looks to the fact of occupation rather than the purpose of the letting. I see no reason why in the context of the 1992 Act temporary occupation of premises should not be treated as occupation as a home while in other legislation, which has different policy objectives, a different conclusion is reached. Secondly, the 1992 Act defines dwelling by reference to the type of building rather than its intended use. The definition of dwelling in section 137 is in these terms: any residential accommodation, whether or not consisting of the whole or part of a building and whether or not comprising separate and self contained premises. (iv) Settled practice and policy considerations 52. Mr Hutchings submitted that it had for years been a widespread practice of local housing authorities in London to arrange for the re possession of temporary accommodation provided under section 188 of the 1996 Act without first obtaining a court order. They had adopted and followed that practice in good faith and might face criminal sanctions if this court were to change the law. Their practice was consistent with the Secretary of States guidance in the Homelessness Code of Guidance for Local Authorities (2006) which (at para 7.11) refers to the general rule that accommodation provided under section 188(1) does not create a tenancy or licence under PEA 1977 but notes that the general rule may be displaced by an agreement between the authority and the applicant or if the accommodation is allowed to continue on more than a transient basis. 53. Mr Chamberlain further argued that Parliament had endorsed the Secretary of States construction of PEA 1977. Parliament, he submitted, should be taken to have been aware of the Court of Appeals judgments in Mohamed v Manek and Desnousse (the former having been decided in 1995 and the latter in 2006) and had not reversed those decisions although there had been opportunities to do so in legislation which amended either PEA 1977 or the 1996 Act. Lord Carnwath has set out this argument in more detail in his concurring judgment. It suffices for me to say that where Parliament re enacts a statutory provision which has been the subject of authoritative judicial interpretation, the court will readily infer that Parliament intended the re enacted provision to bear the meaning that case law had already established: Barras v Aberdeen Sea Trawling and Fishing Co Ltd [1933] AC 402, Viscount Buckmaster at pp 411 412. Applying that in the present case, one can readily conclude, as I have, that the word dwelling in the phrase let as a dwelling in PEA 1977 must bear the same meaning as it had in section 31 of the Rent Act 1965 and in the phrase let as a separate dwelling in the Rent Acts. Inferences from parliamentary inaction are more difficult. In my view, the settled practice principle, of which Lord Carnwath writes, is available where there is ambiguity in a statutory provision. But for the reasons set out above, I detect no ambiguity in section 3 of PEA 1977 in its application to a licence to a person who is and remains homeless throughout the period of interim accommodation: it does not apply. 54. Counsel also referred to considerations of policy. I accept, as Mr Arden submitted, that families with young children and other vulnerable people often invoke the homeless persons provisions of the 1996 Act. They are clearly worthy of protection. But that does not mean that a court order for eviction must be obtained when the authority has reached an adverse section 184 decision and terminates its licence of temporary occupation. As the respondent local authorities argued, private sector providers of accommodation for homeless persons depend on the local authorities for their business, which they would lose if they behaved irresponsibly in re possessing their properties. They are also subject to the Protection from Harassment Act 1997 and section 6 of the Criminal Law Act 1977 which prohibits the use or threats of violence to secure entry to premises. Further, as Mr Chamberlain submitted, good administration requires local housing authorities to use scarce public resources effectively in providing support for homeless persons. He referred to Auld LJ in Mohamed v Manek who stated (at pp 449 450): A councils ability efficiently to perform their public duty as a local housing authority could be seriously affected if the protection of the 1977 Act were automatically to attach to every temporarily housed unsuccessful applicant for housing just because he had been able to satisfy the low threshold under [section 184] for investigation of his application. In my view policy considerations do not point in one direction as a homeless person might prefer a court officer to control his or her eviction, and, in any event, as I have said (para 35 above) the inconvenience to local authorities is not sufficient by itself to determine the outcome this appeal. 55. For reasons which I discuss below, I do not consider that article 8 of ECHR requires a different, broader interpretation of the scope of section 3(1) and (2B) of PEA 1977. (v) Further clarification 56. I recognise that the conclusion which I have reached on this first issue has not found favour with Lord Neuberger or Lady Hale. It may be helpful if I comment briefly on some areas of disagreement. First, the provisions of PEA 1977 in issue in this appeal, which extended section 3 to licences and introduced the exclusions, were enacted in 1988, over a decade after the Housing (Homeless Persons) Act 1977, which created the new homelessness regime, came into operation. Thus while the concept of let as a dwelling predated the new homelessness legislation, its extension to licences and the enactment of the exclusions did not. Secondly, my emphasis on the terms of the licences which should be construed against the background of the interim duties of the 1996 Act (paras 33 and 34 above) entails a recognition that mere precariousness of occupation, as in a tenancy at will, would not exclude the statutory protection of PEA 1977 if one could infer that the property was let as a home; see para 29 above. It is not the mere precariousness of the occupation but the wider statutory context in which the licences were granted that reveals the true nature of the arrangement and supports the exclusion of section 3 of PEA 1977. Accordingly my interpretation does not provide a green light to unscrupulous landlords in other contexts. 57. Thirdly, I accept that, if other things were equal, the fact that a person is homeless for the purposes of the 1996 Act would not mean that as a matter of statutory interpretation he or she did not dwell in the provided accommodation for the purpose of another statute. I adopt a similar approach in my discussion of the 1992 Act in para 51 above. But if, as is my view, the Rent Acts and by extension PEA 1977 require a contract that is intended to give the occupant a degree of settled occupation, in other words a home, the context of the 1996 Act in which the licences were granted points clearly against their being licences of a dwelling for the purpose of PEA 1977. The second issue: Article 8 of ECHR 58. The appellants submission in short was that it is inherent in article 8 of ECHR that a public authority must always use court proceedings before it evicts someone from his or her home. Mr Arden submitted that it did not matter that the owner of the property in each case was a private sector landlord as the authority controlled the whole process. The authority decided whom it placed in accommodation and when the licence ended in each case. 59. Article 8 of ECHR, which section 1 of the Human Rights Act 1998 created as a Convention right in our domestic law, provides: 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. 60. The respondent local authorities and the Secretary of State all conceded that article 8.1 was engaged in these appeals. But they did not accept that article 8 was engaged in all cases of temporary accommodation provided under Part VII of the 1996 Act and questioned whether a public authority was responsible for interference with an article 8 right when it was the private sector landlord who was evicting the homeless persons. I do not think that it is necessary to reach a concluded view on those matters or on the question of horizontal effect in this case. It is better to leave such issues to a case in which they have to be determined. Because of the view that I have reached on the position if article 8.2 were engaged, I am content to proceed on the basis that both article 8.1 and 8.2 are engaged. Discussion of the second issue 61. Article 8 of the ECHR so far as relevant is concerned with a persons right to respect for his or her home and regulates interference by public bodies with that right. In article 8 the concept of home is autonomous and does not depend on classification under domestic law. It is concerned with occupation in fact, and it is not limited to premises which are lawfully occupied or have been lawfully established. It is concerned with the existence of sufficient and continued links with a specific place. See among others Hounslow London Borough Council v Powell [2011] 2 AC 186, Lord Hope para 33; Prokopovich v Russia (2006) 43 EHRR 10, para 36; Kryvitska and Kryvitskyy v Ukraine App No 30856/03, para 40. Thus premises may not be let as a dwelling under PEA 1977 and yet be a home for the purposes of article 8 of the ECHR. 62. As is well known, an interference with an article 8 right must be in accordance with the law, in pursuit of a legitimate aim, and necessary in a democratic society for that aim. The latter notion implies a pressing social need and requires that measure to be proportionate to the legitimate aim pursued: Blei v Croatia (2005) 41 EHRR 13, at paras 55 59. Proportionality involves striking a fair balance between the interests of the individual and those of the community as a whole. The ECHR guarantees rights that are practical and effective. A public authority that interferes with a persons right to respect for his or her home, especially when it intervenes in the most extreme way by removing him or her from that home, must have in place a fair procedure in order to show that respect. This requires the occupier to be involved in the decision making process in order to protect his or her rights. In assessing the effectiveness of the procedure to achieve respect for the safeguarded rights the court looks to the whole proceedings involving the interference with the home. See Tysic v Poland (2007) 45 EHRR 42 paras 113 and 115; Blei v Croatia para 68; Zehentner v Austria (2011) 52 EHRR 22 para 54. 63. A fair procedure requires the occupant to have a right to raise the issue of the proportionality of the interference and to have that issue determined by an independent tribunal: Manchester City Council v Pinnock [2011] 2 AC 104, Lord Neuberger MR para 45; McCann v United Kingdom (2008) 47 EHRR 40, para 50; Kay v United Kingdom (2012) 54 EHRR 30, para 68; Pauli v Croatia [2009] ECHR 1614, para 43; Buckland v United Kingdom (2013) 56 EHRR 16, para 65. The appellants submit that that procedural protection requires the owner to obtain a court order before evicting the occupant, thus enabling the latter to raise the issue of proportionality as a defence. The respondent local authorities and the Secretary of State disagree and submit that it suffices if there are procedures by which the occupant can raise the issue before an independent tribunal. 64. The authoritys assessment of an applicants circumstances as a result of its inquiries under section 184 of the 1996 Act is intimately linked to the decision to end the provision of temporary accommodation. The authority provides the accommodation while undertaking the inquiries and its decision as to its housing duties brings to an end its obligation to provide the interim accommodation. In my view, when one looks at the procedures as a whole, the procedural safeguards contained in the 1996 Act, the procedures available under the Children Act 1989 and the possibility of judicial review of the authoritys section 202 decision by a court with enhanced powers are sufficient to comply with article 8 of ECHR in this context. See paras 70 and 71 below. Article 8s procedural guarantee does not require further involvement of the court in granting an order for possession. The interim accommodation which an authority provides under section 188 of the 1996 Act is but transient accommodation, a stop gap pending the completion of inquiries and a decision on the scope of the authoritys duties towards a homeless person. As I have set out above, domestic law requires less formal procedures at the final stage of the recovery of possession in such circumstances than when the occupier has a more substantial and long term connection with the accommodation. It is only in very exceptional cases that the applicant will succeed in raising an arguable case of a lack of proportionality where an applicant has no right under domestic law to remain in possession of a property: Kay v Lambeth London Borough Council [2006] 2 AC 465, Lord Bingham para 29, Lord Nicholls paras 53 54; McCann v United Kingdom para 54; Kay v United Kingdom, para 73; Manchester City Council v Pinnock, Lord Neuberger MR para 54. In my view this is so particularly where an authority seeks to recover possession of interim accommodation provided under section 188 of the 1996 Act: if court proceedings are necessary, and the day of the court hearing arrives, what would be the homeless persons defence? 65. 66. 67. It is for the occupier to raise the question of proportionality: Pauli v Croatia [2009] ECHR 1614, para 43; Orli v Croatia [2011] ECHR 974, para 66. The court may deal with such an argument summarily unless it is seriously arguable: Manchester City Council v Pinnock, Lord Neuberger MR para 61; Hounslow London Borough Council v Powell [2011] 2 AC 186, Lord Hope paras 35 37, Lord Phillips para 92. In an appropriate case the court, if satisfied that eviction was disproportionate, could prohibit the eviction for as long as that was the case, for example if the local authority did not provide alternative accommodation: Manchester City Council v Pinnock, Lord Neuberger MR paras 45 and 64.; Hounslow London Borough Council v Powell, Lord Hope paras 62 and 63. I turn to the application of an article 8 analysis to the facts of these cases. First, in each case the termination by the authority of the occupiers licence and the private owners actions to recover possession of the property are both in accordance with the law see the discussion of the first issue above and in pursuit of a legitimate aim. The local authority, faced with the pressing social problem of homelessness and charged with duties to provide accommodation for the homeless with priority need, will wish to make the accommodation available to other applicants who are entitled to benefit from the provision of interim accommodation under the 1996 Act. The private owner of the property seeks to recover possession of it in accordance with his or its right of ownership and to put the property to economic use by obtaining income from the local authority for its occupation. These are legitimate aims which fall within the protection of the rights and freedoms of others: Hounslow London Borough Council v Powell, Lord Phillips para 80. 68. Secondly, in my view recovery of possession is proportionate to the aim which is being pursued and is therefore necessary in a democratic society under article 8. It is well known that authorities have limited resources to provide accommodation to individuals who claim to be homeless and in priority need. As a general rule there can be no justification for preferring those whose claims have been investigated and rejected over those whose claims are still the subject of inquiry under section 184 of the 1996 Act and who may be found to be homeless, to have priority need, and to be the objects of the authoritys full housing duty. There are also safeguards in the decision making process that allow the occupant to be involved in the process and, through an appeal to the county court or by judicial review in the Administrative Court, give an opportunity for him or her to raise the question of proportionality before an independent tribunal. There is no need for an additional procedural hurdle which would impose costs on an authority without any significant benefit to the applicant. 69. Those safeguards include the following. First, the authority must give the applicant written notice of the reasons for an adverse section 184 decision, thus enabling the applicant to understand the basis of the decision: section 184(3) and (6). In so doing the authority must inform the applicant of his or her right to request a review of the decision under section 202: section 184(5). Secondly, the Governments Homelessness Code (2006) (at para 7.1.10) requires the authority to give the applicant/occupier a reasonable period of notice to vacate the accommodation. The general practice of authorities is to give 28 days notice. Thirdly, where the individual has become homeless intentionally, the authority is under a duty to give the applicant advice and assistance in his or her attempts to obtain alternative accommodation: section 190(2) and (3). If the applicant, who has become homeless intentionally, has a priority need the authority is under a duty to secure that accommodation is available to give him a reasonable opportunity of securing alternative accommodation. 70. Fourthly, the applicant is entitled to have the adverse decision reviewed: sections 202 and 203. The purpose of the review is, as Lord Hope stated in Hounslow London Borough Council v Powell (at para 42) to correct errors and misunderstandings. The authority is under a duty to inform the applicant of the reasons for the decision on review and inform him of his right to appeal: section 203(4) and (5). Fifthly, that right is a right to appeal the decision on review to the county court on a point of law: section 204. 71. Sixthly, the decisions of this court in 2011, in Manchester City Council v Pinnock and Hounslow London Borough Council v Powell, extended the powers of the county court when hearing applications by a local authority to recover possession of a property in order to comply with article 8 of ECHR. It appears to me that it is necessary for the same reason to interpret section 204 of the 1996 Act as empowering that court to assess the issue of proportionality of a proposed eviction following an adverse section 184 or 202 decision (if the issue is raised) and resolve any relevant dispute of fact in a section 204 appeal. As there is no other domestic provision involving the court in the repossession of the accommodation after an adverse decision, the section 204 appeal, which reviews the authoritys decision on eligibility for assistance, is the obvious place for the occupier of the temporary accommodation to raise the issue of the proportionality of the withdrawal of the accommodation. Alternatively, as Moses LJ stated in this case ([2013] EWCA Civ 804) at para 89, the occupier of the temporary accommodation may raise the issue of proportionality of such an eviction by way of judicial review in the Administrative Court, which similarly could resolve relevant factual disputes. An occupier might have to resort to judicial review if an authority were not willing to continue the provision of interim accommodation pending a review. 72. Finally, where a child forms part of the homeless family, the authority is under a duty in section 213A of the 1996 Act to seek the consent of the applicant to refer the facts of the case to the social services authority or department. That authority or department will carry out an assessment of the childrens needs as part of its general duty under section 17 of the Children Act 1989 to promote the welfare of children in need. Lewisham made such an assessment of CN, which it completed on 27 April 2012. The assessment concluded that if his family did not find private accommodation, the authority would seek to provide him with accommodation as a child in need. Newham completed an assessment of ZH under the Children Act 1989 on 1 May 2013. As a result the authority gave appropriate interim accommodation and financial support to assist FI in securing private rented accommodation, until, in the course of an appeal to the county court against its section 202 decision, Newham accepted that it owed FI a full housing duty. It is correct that the current arrangements involve eviction at the hands of the landlord or his agent, if the occupant does not vacate voluntarily in response to notice, while an enforcement officer would, if necessary, carry out an eviction after a court made an order for possession. But that does not in my opinion alter the balance between the interests of the individual and those of the community so as to render the eviction disproportionate. 73. 74. Having regard to the proceedings as a whole, there are several opportunities for the applicant to involve himself or herself in the decision making process and also procedures by which an independent tribunal can assess the proportionality of the decision to re possess the accommodation and determine relevant factual disputes. In my view there are sufficient procedural safeguards to satisfy the applicants article 8 rights. The article 8 challenge therefore fails. Conclusion 75. I would dismiss both appeals. LORD CARNWATH 76. I agree that the appeals should be dismissed for the reasons given by Lord Hodge. I add some comments on an argument which has been advanced in various forms on behalf of both the local authorities and the Secretary of State: that particular weight should be given to the Court of Appeals interpretation of the relevant statutory words, in effect because it has stood the test of time. 77. This, it is said, is reflected in the facts that the reasoning in Mohammed v Manek has stood without challenge for 20 years and was confirmed by the same court eight years ago in Desnousse v Newham LBC; that since at least 2006 it has been adopted without criticism or comment in the Departments statutory code of guidance; that it has been applied on numerous occasions by local authorities and the lower courts without apparent problems or injustice; and that Parliament has not legislated to reverse its effect despite many opportunities to do so. As Kitchin LJ observed in the Court of Appeal, when refusing permission to appeal in this case: Those opportunities include the Homelessness Act 2002, the Housing and Regeneration Act 2008 and the Localism Act 2011, each of which amended Part VII of the 1996 Act; and the Immigration and Asylum Act 1999, the Nationality, Immigration and Asylum Acts of 2002 and the Immigration, Nationality and Asylum Act 2006, each of which amended the 1977 Act. (para 83) 78. Mr Chamberlain for the Secretary of State goes further, drawing to our attention the committee debates on what became the Housing and Regeneration Act 2008 (HC Deb (2007 08), 24 January 2008 (afternoon), cc 512 516), in which the responsible minister apparently relied on the reasoning of the Court of Appeal in those cases when resisting a proposed amendment to extend the protection available to those in temporary accommodation under this legislation. 79. Appealing as such arguments may be as a matter of common sense, they need to be based on sound legal principle, if they are to be accepted as a ground of decision on an issue of statutory interpretation. Subject to narrowly defined exceptions (such as under Pepper v Hart [1993] AC 593), it is a cardinal constitutional principle that the will of Parliament is expressed in the language used by it in its enactments (Wilson v First County Trust Ltd (No 2) [2003] UKHL40; [2004] 1 AC 816 at [67] per Lord Nicholls). The courts primary task therefore is to ascertain the intention of Parliament from the language it has used. If that does not conform to the way it has been applied in practice, the conventional remedy, pending legislative amendment, is to correct the practice, not rewrite the law. 80. Notwithstanding that general principle, support for the use of subsequent practice as an aid to interpretation may be found in the textbooks and the authorities there cited. Mr Chamberlain groups them under two headings: tacit legislation and customary meaning. Tacit legislation 81. Under this heading, Mr Chamberlain relies on a passage in Bennion on Statutory Interpretation (6th ed.), p.661: Parliament is normally presumed to legislate in the knowledge of, and having regard to, relevant judicial decisions. If therefore Parliament has a subsequent opportunity to alter the effect of a decision on the legal meaning of an enactment, but refrains from doing so, the implication may be that Parliament approves of that decision and adopts it. This is an aspect of what may be called tacit legislation. 83. 82. With respect to that distinguished author, I have difficulty with the phrase tacit legislation, if it is intended to connote some form of silent endorsement by Parliament implied from its failure to act. As Lord Nicholls made clear, Parliament legislates by what it says, or what is said under its authority, not by what it does not say. Anything else can only be justified, if at all, as judge made law, and the criticisms implicit in that expression must be faced. It is true that this passage in Bennion was cited with approval by the Divisional Court in R (Woolas) v The Parliamentary Election Court [2010] EWHC 3169 (Admin), para 86, per Thomas LJ. But the context was quite different from the present. Following judicial interpretation of a particular statutory provision, which Parliament had re enacted in substantially the same form, the court held that the previous interpretation continued to apply. The principal authority relied on, Barras v Aberdeen Sea Trawling Co Ltd [1933] AC 402, was to similar effect. The House of Lords held that the word wreck or loss of a ship as interpreted by the Court of Appeal under the Merchant Shipping Act 1894 must be treated as having the same sense when re enacted in a 1925 statute. The House approved (at p 412 per Viscount Buckmaster) the statement of the rule by James L.J. in Ex parte Campbell: L. R. 5 Ch. 703, 706: Where once certain words in an Act of Parliament have received a judicial construction in one of the Superior Courts, and the Legislature has repeated them without alteration in a subsequent statute, I conceive that the Legislature must be taken to have used them according to the meaning which a Court of competent jurisdiction has given to them. 84. The principle has been often applied (a very recent illustration of the principle and its limits can be found in Manchester Ship Canal Co Ltd v United Utilities Water plc [2014] UKSC 40). However, account also needs to be taken of the comments of members of the House of Lords in the cases referred to by Lord Neuberger. Whatever the true scope of the principle, I do not find the expression tacit legislation a very apt description. In such cases Parliament has not remained silent. Rather, the previous court decision (even at a level below the highest court) is relevant, because it is part of the background against which Parliament has spoken, and by reference to which accordingly its intention can properly be ascertained. In any event, we were referred to no authority which has applied that principle to a case where, as here, the most that can be said is that Parliament has failed to take what might have seemed an obvious opportunity to legislate. Absence of legislation may be governed by many factors which have nothing to do with the perceived merits of a possible change, not least Parliamentary time and other government priorities. 85. 86. Nor, with respect to Mr Chamberlains initial submissions (in fairness, not strongly pressed on this point), can the argument be bolstered by reference to Ministerial statements to Parliament in response to possible amendments which were not in the event carried. The special exception allowed by Pepper v Hart is directed at Ministerial statements in support of legislation, and even then the circumstances in which reference is permissible are closely defined. It provides no support for reference to such a statement in relation to proposed legislation which was not in the event adopted. In the same context Mr Hutchings (for the two local authorities) sought support in words of Lord Neuberger in Williams v Central Bank of Nigeria [2014] 2 WLR 355, concerning the meaning of the word trustee in the Limitation Act 1980. That I read as no more than an application of another familiar principle, that Parliament is taken to use legal words in their ordinary legal sense. As Lord Neuberger said, it would have been surprising if a statute concerned with consolidating the law governing the powers and duties of trustees did not adopt an orthodox definition of trust and trustee (para 69). It provides no assistance in the present case. 87. 88. Other common law countries have also attempted to grapple with this issue but there does not appear to be a settled or uniform approach. The presumption applied in Barras v Aberdeen Steam Trawling has been restated in Australian and Canadian case law on numerous occasions: see e.g. the unanimous High Court bench of seven justices in Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96; 123 ALR 193 and the Supreme Court of Canada in Studer v Cowper [1951] SCR 450. However, the common law position has been modified by statute in both countries: see e.g. section 18 of the Acts Interpretation Act 1915 (South Australia) and section 45(4) of the Interpretation Act (RSC 1985). These provisions expressly remove the presumption that Parliament is taken to have approved or adopted any judicial construction of an enactment when it is re enacted. However, courts may still draw appropriate inferences from the legislative history of a statutory provision even in the absence of any common law presumption. The US Supreme Court has sometimes inferred that inaction on the part of Congress can be taken as approving or acquiescing in a judicial construction of a provision, especially where the construction has been brought to the attention of the public and Congress: see e.g. United States v Rutherford 442 US 544 (1979) and Bob Jones Univ v United States 461 US 574 (1983). Customary meaning 89. In the alternative Mr Chamberlain relies on what he calls the customary meaning of the words of the statute. He refers to the judgment of Lord Phillips in this court, in Bloomsbury International Ltd v Department for Environment, Food and Rural Affairs [2011] 1 WLR 1546, para 57 60. The appeal concerned the meaning of the phrase landed in the United Kingdom in the context of a levy imposed on those engaged in the sea fish industry. Lord Phillips gave a judgment agreeing with the majority but he was on his own on this issue. He drew attention to the the unusual feature that for nearly thirty years everyone concerned had proceeded on the basis of a broad interpretation of the phrase, that the levy had been collected on that basis, and the funds so raised disbursed in payment for schemes intended to benefit the sea fish industry activities which if the decision of the Court of Appeal were correct, must be drastically curtailed. He thought that in such circumstances there must be, at the very least, a powerful presumption that the meaning that has customarily been given to the phrase in issue is the correct one. 90. He quoted from a judgment of my own (Isle of Anglesey County Council v Welsh Ministers [2009] EWCA Civ 94, [2010] QB 163 para 43): Where an Act has been interpreted in a particular way without dissent over a long period, those interested should be able to continue to order their affairs on that basis without the risk of being upset by a novel approach. He commented that this had the air of pragmatism rather than principle, but agreed that courts are understandably reluctant to disturb a settled construction and the practice that has been based on that construction (referring to Bennion on Statutory Interpretation, 5th ed (2008), section 288 at p 913 and the authorities there cited). 91. He thought that a more principled justification for the principle would be that of contemporaneous exposition, citing Clyde Navigation (Trustees of) v Laird & Sons (1883) 8 App Cas 658, where Lord Blackburn had regarded the levying and payment of statutory dues on a particular basis without protest for twenty five years as a strong indication that there must exist some legal ground for exacting the dues. He noted, however, that Lord Watson had not agreed with this approach (except possibly in relation to very old statutes). Lord Phillips commented: An important element in the construction of a provision in a statute is the context in which that provision was enacted. It is plain that those affected by the statute when it comes into force are better placed to appreciate that context than those subject to it thirty years later. (para 61) 92. I doubt if contemporary exposition, in the sense described by Lord Phillips, would have provided a satisfactory answer in the Anglesey case. The issue was not one of linguistic usage, but of application in practice whether fishery rights granted by an 1868 Act should be treated as purely personal, rather than capable of assignment as had been the general understanding (and the basis on which subordinate legislation had been drafted) over the intervening century and a half. 93. The sentence quoted by Lord Phillips from my judgment was part of a longer section (paras 39 44) discussing the question left unresolved by Lord Blackburn and Lord Watson, that is the relevance of subsequent history as an aid to statutory interpretation. I referred to authorities cited in that connection in Halsbury's Laws Vol 44(1) Statutes, paras 1427 1430, which disclosed no consistent or settled view. They ranged from the contrasting views expressed in 1883 in the Clyde Navigation case, to much more recent observations in R (Jackson) v Attorney General [2006] 1 AC 262, by Lord Nicholls (paras 68 9) and by Lord Carswell (para 171), which tended to support Lord Blackburns approach. I concluded: My own respectful view is that Lord Blackburn's more liberal view is supported by considerations of common sense and the principle of legal certainty. Where an Act has been interpreted in a particular way without dissent over a long period, those interested should be able to continue to order their affairs on that basis without risk of it being upset by a novel approach. That applies particularly in a relatively esoteric area of the law such as the present, in relation to which cases may rarely come before the courts, and the established practice is the only guide for operators and their advisers.(para 43) Legal certainty and settled practice 94. Review of these authorities shows how varied are the contexts in which a settled understanding or practice may become relevant to issues of statutory interpretation. Concepts such as tacit legislation or customary meaning provide no more than limited assistance. The settled understanding may emerge from a variety of sources, not necessarily dependent on action or inaction by Parliament, or particular linguistic usage. Nor can the debate, exemplified by the difference 130 years ago between Lord Watson and Lord Blackburn, be reduced to one between principle and pragmatism, as Lord Phillips suggested. Rather it is about two important but sometimes conflicting principles legal correctness and legal certainty. In drawing the balance between them, as in most areas of the law, pragmatism and indeed common sense have a legitimate part to play. In my view this case provides an opportunity for this court to confirm that settled practice may, in appropriate circumstances, be a legitimate aid to statutory interpretation. Where the statute is ambiguous, but it has been the subject of authoritative interpretation in the lower courts, and where businesses or activities, public or private, have reasonably been ordered on that basis for a significant period without serious problems or injustice, there should be a strong presumption against overturning that settled practice in the higher courts. This should not necessarily depend on the degree or frequency of Parliamentary interventions in the field. As in the Anglesey case, the infrequency of Parliamentary intervention in an esoteric area of the law may itself be an added reason for respecting the settled practice. On the other hand it may be relevant to consider whether the accepted interpretation is consistent with the grain of the legislation as it has evolved, and subsequent legislative action or inaction may be relevant to that assessment. 95. 96. This would not be new law, even at this level. The approach receives strong endorsement, in a context close to the present, from the House of Lords decision in Otter v Norman [1989] AC 129. In interpreting the phrase payments in respect of board in the Rent Acts, the House of Lords placed weight on the obiter observations of the Court of Appeal in a case decided more than 60 years before, in the absence of legislative intervention in the ensuing period on this particular point (in spite of the enactment of more precise statutory definitions on related aspects). Lord Bridge (giving the only substantive speech) said: There has been no reported English decision bearing upon the point after Wilkes vs Goodwin [1923] 2 KB 86. But Parliament chose not to interfere in relation to board, and it seems to have been assumed ever since that the majority view in Wilkes vs Goodwin, albeit expressed obiter, correctly stated the law, in the words of Bankes LJ, at p 93, that any amount of board which is more than de minimis will suffice to exclude a tenancy from statutory protection. Thus successive editions of Sir Robert Megarry's standard text book on the Rent Acts (Megarry, The Rent Acts) have stated that: In practice, the dividing line appears to fall between the early morning cup of tea on the one hand and 'bed and breakfast' on the other:" see 10th ed (1967), p 141. The same view has been adopted in Scotland: see Holiday Flat Co. vs Kuczera, 1978 SLT (Sh.Ct.) 47. My Lords, I think we must assume that for many years many landlords and tenants have regulated their relationships on this basis, and even if I thought that a different construction could reasonably be placed on section 7(1) of the Act of 1977 I would not think it right to adopt it now and to upset existing arrangements made on the basis of an understanding of the law which has prevailed for so long. (p 145 6) 97. This provides direct authority for the application of the settled practice principle in a situation closely analogous to the present. That case was concerned with the basis on which private landlords and tenants had regulated their relationships. I see no reason why the same principle should be less relevant to relations between housing authorities and those for whom they are responsible under the homeless persons legislation. Indeed, given the pressures facing authorities in this area, and the financial constraints under which they are acting, it is particularly important that the legal and policy context in which they act should be clear and settled. One of the purposes of the departmental code is to provide such guidance. Although the guidance may not compete in terms of legal scholarship with Sir Robert Megarrys great work on the Rent Acts, it has the underpinning of statute, and the authorities were bound to have regard to it. If that practice is now overturned, they have been responsible, albeit acting in good faith, for many unlawful evictions. It may be that this result would have to be accepted, if the statute properly construed permitted no other reasonable interpretation. But this is not such a case. With respect to Lord Neuberger I do not consider that the authority of Lord Bridges words is undermined by the absence of any reference to Barras or Farrell. As I have explained they were dealing with a different issue, which had nothing directly to do with the issue of settled practice as an aid to interpretation. 98. For these reasons, even if the issues were more finely balanced than indicated by Lord Hodges judgment, the settled practice principle would in my view be an additional reason for dismissing the appeal. LORD NEUBERGER: Introductory 99. The two issues raised by these appeals are identified by Lord Hodge in para 1 of his judgment, and I gratefully adopt his explanation of the factual and legal background as see out in paras 2 19 and 58 60 of his judgment. 100. While I agree with Lord Hodge on the second issue, the first issue gives rise to a difficult point, on which I have reached a different conclusion. 101. The first issue, in a nutshell, is whether accommodation occupied pursuant to a temporary licence granted to a homeless person by a local housing authority under section 188 of Part 7 of the Housing Act 1996 (the 1996 Act), while the authority investigates whether she is eligible for assistance and if so what if any duty is owed to her under Part 7, is occupied by that person as a dwelling under a licence within the meaning of section 3(2B) of the Protection from Eviction Act 1977 (PEA 1977), as amended by the Housing Act 1988. 102. I agree with what Lord Hodge says at para 23, namely that the effect of section 3(2B), when read together with section 3(1) of PEA 1977 and cases such as Wolfe v Hogan [1949] 2 KB 194, is that the issue can, at least normally, be reformulated as being whether, in the light of the terms of the licence and the circumstances in which it was granted, the purpose of the licence, objectively assessed, was to enable the licensee to occupy the accommodation in question as a dwelling ie was the accommodation licensed for occupation as a dwelling? 103. I include the qualification at least normally, because it is possible that, after the grant of the licence, something may have been said or done which justifies the conclusion that the parties agreed or must have intended a change in the purpose of the licence. However, the mere fact that the occupation continues longer than expected, for instance while the investigation or appeal process continues under Part 7 of the 1996 Act, would, on its own, be insufficient to change the objectively assessed intention of the parties. The relevance of court decisions in relation to the Rent Acts 104. The words occupied as a dwelling under a licence have to be interpreted in their context, as is illustrated by the point made in para 102 above. The statutory history may be a legitimate factor to take into account as part of the context, given that PEA 1977 consolidated section 16 of the Rent Act 1957 and Part III of the Rent Act 1965, at the same time as Parliament was consolidating the rest of the Rent Act legislation (with certain amendments) in the Rent Act 1977. Prior to that, almost all of the Rent Act legislation had previously been in the Rent Act 1968, which itself consolidated all the previous Rent Act legislation (with the exception of those provisions which were consolidated in PEA 1977). 105. However, there are many judicial warnings against the use of previous statutory provisions when interpreting the words in a consolidating statute. The law on the topic was authoritatively discussed in R v Environment Secretary Ex p Spath Holme Ltd [2000] UKHL 61, [2001] 2 AC 349. Lord Bingham said at p 388 that it is plain that courts should not routinely investigate the statutory predecessors of provisions in a consolidation statute, particularly where the issue concerns the construction of a single word or expression, although he added that it seems to me legitimate for the court even incumbent on it to consider the earlier, consolidated, provision in its social and factual context for such help as it may give, the assumption, of course, being (in the absence of amendment) that no change in the law was intended. Lord Nicholls, having referred to the legislative history as a potential external aid on the previous page, said at p 398 that the constitutional implications point to a need for courts to be slow to permit external aids to displace meanings which are otherwise clear and unambiguous and not productive of absurdity, Lord Hope said at pp 405 406 that there is no doubt that, as general rule, it is not permissible to construe a consolidating enactment by reference to the repealed statutes which that enactment has consolidated, but added that an exception may be made where words used in the consolidation Act are ambiguous or where the purpose of a statutory word or phrase can only be grasped by an examination of the social context in which it was first used. To the same effect at p 409, Lord Hutton said that the underlying principle which emerges from the cases is that in construing a consolidation Act a court should not have regard to earlier enactments unless the language of the Act is unclear or ambiguous or there is something in the context of the Act or the relevant section which causes the court to consider that it should look for guidance to an earlier enactment or enactments. 106. Accordingly, any reliance in the present appeals on decisions as to the meaning of words such as dwelling and residence in the Rent Act legislation, which stretches back to 1915, may be hard to justify. Nonetheless, the statutory history is at least be worth examining because of the division of opinion in this court as to the meaning of the words, the fact that dwelling and even residence are words not greatly in current use, and also because so much judge made law has been added to, even incorporated in the Rent Act legislation. Quite apart from this, we were referred to many cases concerned with the meaning of dwelling and residing in the Rent Act context, and so it may be helpful to start by considering those cases and the statutory history of PEA 1977. The Rent Act context 107. Since 1968 (reflecting a combination of previous statutory and judge made law), the Rent Acts have provided that (i) a tenancy was protected provided that, inter alia, it was a tenancy of a dwelling house, which could be a house or part of a house, which was let to the tenant as a separate dwelling (section 1 of the Rent Act 1968, now section 1 of the Rent Act 1977), (ii) after such a tenancy expired, the tenant had a statutory tenancy, ie a right to retain possession, so long as he occupie[d] the dwelling house as his residence (section 3(1)(a) of the Rent Act 1968, now section 2(1)(a) of the Rent Act 1977), and (iii) oversimplifying things a little, after a statutory tenant died, a relation who had been residing with him could succeed to the tenancy (Schedule 1 to the 1968 Act, now Schedule 1 to the Rent Act 1977). 108. The expressions dwelling house and let as a separate dwelling were included in the Rent Act legislation from the start, namely in section 2(2)(a) of the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915. However, the requirement that a tenant must occupy the dwelling house as a residence if he was to enjoy a statutory tenancy was developed by the courts, perhaps most significantly in Haskins v Lewis [1931] 2 KB 1 and Skinner v Geary [1931] 2 KB 546. The courts developed the rule that a tenant who was absent from the dwelling house had to establish animus revertendi and corpus possessionis, inward and outward manifestations of residential occupation, before he could be held to be occup[ying] the dwelling house as his residence see eg Brown v Brash [1948] 2 KB 247. Similarly, it was decided that a tenant who had another principal home could occupy a dwelling house as a residence, provided it was a genuine home, and not merely a resort of convenience see Beck v Scholz [1953] 1 QB 570. 109. Residence only became a statutory requirement of a statutory tenancy in section 3 of the Rent Act 1968, subsection (2) of which, somewhat unusually, provided that the expression occupies as his residence was to be construed as it had been by the courts since 1920 (now re enacted in section 2(3) of the Rent Act 1977). The distinction between a dwelling house let as a dwelling and occupie[d] as a residence was thus that a tenancy of a dwelling house let as a separate dwelling remained protected by the Rent Acts until it determined, whereas the question of the tenants residence only arose after the contractual tenancy came to an end. As for the residing with requirement for succession to a statutory tenancy, it was introduced early on see section 12(1)(g) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920. 110. Turning to the cases on the Rent Acts to which we were referred, I do not consider that cases on the residence requirement for statutory tenants, such as Skinner, Walker v Ogilvy (1974) 29 P&CR 288 and Regalian Securities v Scheuer (1982) 5 HLR 48, are helpful in the present context. The primary issue on these appeals is whether premises are let as a dwelling (or licensed for occupation as a dwelling) in circumstances where the occupier has no other home. Those cases were concerned with a different issue, namely whether the tenant was occupying the relevant premises as a residence, which is a different expression, with a different statutory history and a different statutory purpose. But at least as importantly, in each of those cases the tenant had another residence, which was his principal home. 111. The words dwelling and dwelling house in the Rent Acts are used in a phrase dealing with the objective purpose of the letting of the premises in question, whereas the word residence considered in those cases was used in a phrase dealing with the subsequent use of, and attitude of the occupier to, those premises. Further, in all the cases mentioned in para 110, the tenant had another home, and the court was considering whether the tenants intermittent use of, or long absence from, the premises concerned, defeated his contention that he occupie[d] the dwelling house as his residence, given that he undoubtedly had another home, which even on his case was his principal home. These appeals are concerned with individuals for whom the premises in question would be their only home as they would otherwise be homeless, and therefore the quality or intensity of their use of the premises is not in issue. What is in issue on these appeals is the effect of the precarious, provisional, and short term nature of their occupation of what is their only accommodation, which was not a feature of the two homes cases on residence. 112. Even more unhelpful in my view are cases such as Collier v Stoneman [1957] 1 WLR 1108, Swanbrae v Elliott (1986) 19 HLR 86 and Freeman v Islington LBC [2010] HLR 6, which were concerned with the question whether a person was residing with a statutory or assured tenant who has died, and therefore had a right to succeed to a statutorily protected tenancy. Not only do many of the problems described in the immediately preceding two paragraphs apply, but, additionally, there are the consequences of the important word with which has to be taken into account, and which of course plays no part in the instant case. 113. Previous decisions concerned with the question whether premises were a dwelling house which was let as a dwelling under the Rent Acts are potentially more in point. The history of the courts approach to the expressions was discussed illuminatingly by Wilson LJ in Pirabakaran v Patel [2006] EWCA Civ 685, [2006] 1 WLR 3112. As he explained in para 22, dwelling house has been given a broad meaning ever since Epsom Grandstand Association Ltd v Clarke [1919] WN 171. However, as in Wilson LJs discussion in Pirabakaran at paras 24 29, almost all of the cases to which we were referred which addressed the question of whether premises were let as a [separate] dwelling were concerned with premises let for commercial purposes, but with some residential use. In my view, those cases are of no real assistance in the present case as the issue was very different. Although each case involved someone (normally the tenant) sleeping in the premises concerned, the landlords argument in almost all the cases was that the premises had been let for a very different purpose. 114. Thus, cases such as Wolfe or MacMillan & Co Ltd v Rees [1946] 1 All ER 675 involved premises which had been let primarily for commercial use, and the issue was whether the indulgence of the landlord permitting the tenant to sleep on the premises brought the letting within the Rent Acts. The facts did not require the court to consider the quality of the contemplated habitation (to use a neutral word) required for the premises to be let as a dwelling. Having said that, it is perhaps worth noting that Evershed J made the point in MacMillan at 677H that to sleep on particular premises at night, or to have one's meals upon them by day, or both, ought not ipso facto to have the effect in law of making those premises a dwelling house . In Martin Estates Co Ltd v Watt [1925] NI 79, officers who slept in police barracks were held not to be protected by the Rent Acts. However, that was because the barracks had been let for the public service, and the court held that the surrounding circumstances and nature of the demised premises made it clear that the purpose of the letting was not as a dwelling. As was explained in the judgment, premises let for use as a prison, or as a hospital, would not be held to be let as a dwelling simply because prison officers, or doctors and nurses, slept and ate on the premises, even if that was contemplated at the time of the letting. Again, that is very different issue from that raised in these appeals, because it is ultimately concerned with living accommodation, which was very much ancillary to the purpose of the letting. 115. The issue in such cases was explained by Romer LJ in Whiteley v Wilson [1953] 1 QB 77, 85, in these terms: [T]he question in such cases, where the subject matter of the tenancy is one building used partly as a dwelling house and partly as a shop, and no purpose is specified in the tenancy agreement, is whether the building should in a broad sense be regarded as a dwelling house which is partly, or even substantially used for a shop, or on the other hand as a shop which is used in part for residential purposes. It is not without significance that Romer LJ seems to have regarded residential purposes as being effectively synonymous with dwelling house let as a dwelling. In the same case, Sir Raymond Evershed MR similarly treated the letting of a dwelling house as a dwelling as equivalent to the premises concerned being used for residential purposes at p 83. Uratemp Ventures v Collins [2001] UKHL 43, [2002] 1 AC 301 116. Although the issue in the House of Lords case of Uratemp Ventures v Collins [2001] UKHL 43, [2002] 1 AC 301 concerned the question whether certain premises were a dwelling house let as a dwelling, the issue was, again, very different from that in these appeals. It was whether a room was precluded from being within the Housing Act 1988 (section 1(1) of which uses the expression dwelling house let as a separate dwelling, obviously taken from the Rent Acts), because the tenant was forbidden to cook in it. The decision of the House of Lords removed some long standing and artificial distinctions which many people assumed had been built up by the courts over the years (in particular, the quaint notion that a tenancy of a room without washing facilities could be a letting of the room as a separate dwelling, whereas a tenancy of a room without cooking facilities could not). 117. Further, I must confess to a little confusion as to the precise nature of the ratio of the case other than the simple point that the prohibition on cooking did not prevent such a room being a dwelling house let as a separate dwelling. Thus, Lord Irvine LC seems to have addressed the question by reference to the composite expression see para 2. However, Lord Bingham, with whom Lord Irvine and Lord Steyn agreed, approached the issue on the basis that it was whether the room was a dwelling house see paras 9, 10 and 13. So did Lord Steyn (with whom Lord Irvine and Lord Bingham agreed), who apparently thought it plain that the room had been let as a separate dwelling see paras 13 15, especially the third sentence of para 13. Lord Millett, with whom Lord Irvine, Lord Steyn and Lord Hobhouse agreed, considered the issue by reference to the expression let as a separate dwelling see paras 30 and 40ff. Although this can be said to represent a divergence of approach, it is fair to say that all their Lordships were concerned with the meaning of dwelling, whether as part of the composite noun dwelling house, or in the expression let as a separate dwelling or both. 118. However, some general guidance was given in Uratemp. Lord Steyn said at para 15 that dwelling house is a word of wide import used interchangeably with lodging, and conveys the idea of a place where somebody lives. He continued: The setting in which the word appears in the statute is important. It is used in legislation which is intended to afford a measure of protection to tenants under assured tenancies. This context makes it inappropriate for the court to place restrictive glosses on the word dwelling. On the contrary, the courts ought to interpret and apply the word dwelling house in [the Housing Act 1988] in a reasonably generous fashion. This observation is supported by Lord Irvines deprecation in para 2 of a restrictive interpretation given that the statutory purpose was to give some protection to tenants in modest rented accommodation. It is also supported by Lord Bingham in para 10, where he said that a dwelling house describes a place where someone dwells, lives or resides, and stated that the legislation should be interpreted bearing in mind that it was directed to giving a measure of security to those who make their homes in rented accommodation at the lower end of the housing market. 119. Lord Millett took a slightly different approach, saying at para 30 that: The words dwell and dwelling are ordinary English words, even if they are perhaps no longer in common use. They mean the same as inhabit and habitation or more precisely abide and abode, and refer to the place where one lives and makes one's home. They suggest a greater degree of settled occupation than reside and residence, connoting the place where the occupier habitually sleeps and usually eats, but the idea that he must also cook his meals there is found only in the law reports. And in the following paragraph he added this: In both ordinary and residential accommodation is a dwelling if it is the occupier's home (or one of his homes). It is the place where he lives and to which he returns and which forms the centre of his existence. Just what use he makes of it when living there, however, depends on his mode of life. literary usage, 120. Unsurprisingly, on these appeals the respondent Housing Authorities and the Secretary of State relied on Lord Milletts suggestion that dwell and dwelling involve a greater degree of settled occupation than reside and residence. However, at least to me, the two types of word do not have this rather subtle distinction: a temporary dwelling is as natural a concept as a temporary residence, and carries the same meaning. Further, I would have thought that, particularly in the context of the Rent Acts and associated legislation, such a subtle distinction between two words which are effectively synonyms is of questionable value in that it is likely to lead to over subtle distinctions. Indeed, as already mentioned in para 115 above, Evershed MR and Romer LJ seem to have thought that premises were a dwelling house let as a separate dwelling if the principal use was intended to be residential, using the latter word in its normal way. And in Beck at pp 575 576, Evershed MR plainly treated home, a rather more frequently used word, as a synonym for residence. And I note that what many people think of as the bible on the topic, Megarry on The Rent Acts, treats residence as synonymous with dwelling when discussing the meaning of dwelling in the phrase let as a separate dwelling see 11th edition (1988) pp 109 117. 121. In any event, as a matter of statutory interpretation, in the context of the Rent Acts it seems pretty plain to me that Lord Milletts suggested distinction is demonstrably wrong. As explained briefly in paras 107 111 above, the law relating to residence had been conceived and developed up by the courts between 1920 and 1968, so that, as a matter of policy, a degree of intensity of occupation of the premises (in the case of intermittent use), or physical and mental commitment to the premises (in the case of absence), was required on the part of the tenant before the court was prepared to hold a tenant resident in a dwelling house, and the law as thus developed was incorporated into the statutory scheme in 1968. No such requirements as to the quality of the tenants use of the dwelling house were developed in relation to the issue of whether premises were let as a dwelling; on that aspect, issues arose either because of the mixture of residential and commercial uses, or because the demised premises lacked an allegedly essential functionality. 122. Furthermore, given the structure of the opening few sections of the Rent Act 1968 (and the Rent Act 1977), as summarised in para 107 above, the draftsman must, in my view, have assumed that a tenant of a tenancy of a dwelling house let as a separate dwelling could lawfully occup[y] the dwelling house as his residence. That is because it seems unlikely that he would have envisaged that it would be impermissible for a tenant to occup[y] a dwelling house as his residence if it was a dwelling house let as a separate dwelling. This must logically mean that the draftsman considered that dwelling was at least as wide as residence. 123. That point is reinforced when one considers the two homes cases such as those referred to in paras 109 110 above, and more fully discussed by Lord Hodge in paras 36 38 of his judgment. In those cases, the occupier was held to have no statutory tenancy, because his use of the premises concerned was insufficient to enable him to establish that he occupie[d] the dwelling house as his residence. Yet there was no suggestion in any of those cases that the premises were not a dwelling house or had not been let as a separate dwelling. Indeed, in Walker at p 290, Orr LJ specifically referred to the premises in that case as the dwelling house that is the flat. Conclusion on the Rent Act cases 124. In my view, therefore, even in the absence of the concerns expressed in Spath Holme as to the appropriateness of relying on the meaning of words or expressions in predecessor legislation, only limited assistance can be safely gathered from the history of the Rent Act legislation or the decided cases on the meaning of those statutes, as to the meaning in 3 of PEA 1977 of the expression let as a dwelling or licensed for occupation as a dwelling. 125. However, para 15 of Lord Steyns opinion in Uratemp is valuable to the extent that it emphasises that (i) dwelling is an ordinary English word, (ii) it is of wide import, and (iii) in the Rent Act type of context, it is to be interpreted generously. Lord Milletts suggestion in the same case that dwelling implies a more permanent meaning than residence may be said to be inconsistent with the latter two observations, but, for the reasons I have given, it seems to me to be wrong as a matter of ordinary language as well as in the context of the Rent Acts. The Protection from Eviction Act 1977 126. The effect of section 3(1), (2A) and (2B) of PEA 1977 is to render it an offence for the owner of premises, which are let as a dwelling, or occupied as a dwelling under a licence, albeit subject to exclusions identified in section 3A, to take possession of the premises otherwise than by proceedings in court, where the occupier continues to reside in the premises, provided, according to subsection (2), that that occupation is lawful. 127. As mentioned in para 120 above in relation to the wording of the Rent Acts, the wording of section 3(1) of PEA 1977 indicates that the concept of dwelling is at least as wide as residing, as the draftsman appears to have proceeded on the basis that it would be lawful to reside in any premises let as a dwelling. Indeed, I consider that the structure of section 3(1) of PEA 1977 makes the point even more clearly than sections 1 and 3 of the Rent Act 1968 (or sections 1 and 2 of the Rent Act 1977). The words continues to reside in section 1(1)(a) of PEA 1977 seem to me plainly to assume that the premises let as a dwelling house will have been resided in at the inception of the tenancy, and therefore ex hypothesis, that they can lawfully be resided in. Furthermore, PEA 1977 has no equivalent to section 3(2) of the Rent Act 1968 (see para [11] above), so reside must be assumed to have its ordinary meaning, and is not encrusted with the case law to which section 3(2) of the 1968 Act makes reference. Thus, any premises let as a dwelling for the purpose of section 1(1) can be resided in for the purpose of section 1(1), ergo a dwelling has at least as wide a meaning as residence. This is not called into question by section 3(2) of PEA 1977, which appears to me to be included simply to exclude unlawful occupiers from the protection of PEA 1977. 128. This conclusion is also supported by section 5 of PEA 1977, which requires a notice to quit premises let as a dwelling (or a notice to determine a licence to occupy premises as a dwelling) to give at least four weeks notice, but which makes no reference as to how the premises are occupied whether as a residence or otherwise. It would be curious if any premises, other than those subject to an excluded tenancy or excluded licence, which were lawfully occupied as a residence, were not subject to that provision, which again suggests that the meaning of dwelling is at least as broad as residence. Other cases on statutory provisions referring to residence and dwelling 129. As Lord Hodge rightly implies in para 51 in relation to the appellants argument based on the inclusion of the word dwelling in section 130 of the Social Security Contributions and Benefits Act 1992, one has to be careful before taking into account statutes in different fields even where they use the same words. However, although they are of limited value, I consider that observations made in two House of Lords cases, Railway Assessment Authority v Great Western Railway Co [1948] AC 234 and Mohamed v Hammersmith and Fulham LBC [2001] UKHL 57, [2002] AC 547, about the normal meaning of the words residing and dwelling are of some relevance to the present case. As to Railway Assessment, the fact that dwelling and dwelling house are somewhat archaic expressions suggests that real help may be obtained from a highly authoritative source considering their meaning at a time when they were in more current usage. And the fact that Mohamed v Hammersmith is a House of Lords case concerned with accommodation provided under section 188 of the 1996 Act means that it is at least worth considering in another case involving the same provision. 130. Railway Assessment concerned the expression occupied as a dwelling house in the context of a rating statute. The property in question was a hostel in Didcot, which had a canteen and many furnished cubicles, in which railway company employees were permitted to live there while they were temporarily working away from their home stations see at pp 236 237. Although it is a rather different context from the present, Lord Thankerton (who gave the only reasoned opinion) made it clear at p 238, that he thought that the words occupied as a dwelling house must be given their ordinary meaning. He went on to explain that the accommodation in that case had been provided for staff while they were working far from home, because there was insufficient lodging house accommodation at Didcot. He then said that [w]hile they are at their work, these members of the staff may properly be said to dwell or reside in the hostel, or to inhabit the hostel. On three subsequent occasions at pp 238 239, he again used the expression dwell or reside or residence or dwelling, treating the concepts of residing and dwelling as meaning much the same thing. At p 240, Lord Thankerton rejected the view that the occupation by the employees was not as a dwelling because it was too transient and their families lived elsewhere, saying that the fact that the occupants of the cubicles do reside in the hostel through all the periods of their duty, and do not leave the hostel until their employment at Didcot terminates, provides a sufficient element of permanence. He added that he could not think that the presence of families and household goods is an essential element. 131. It appears to me that this decision provides a measure of support for a number of propositions. First, and perhaps least relevantly for present purposes, it shows the width of the term dwelling house, as used in normal parlance. Secondly, it confirms the notion that the normal concept of dwelling includes a relatively temporary residence even where the premises concerned consist of a room in an employees hostel and the occupier has a permanent home where his family remains. Thirdly, the reference to lodging house accommodation strikes the same note as Lord Steyns observation in Uratemp (see para 118 above). Fourthly, the discussion supports the notion that, as a matter of ordinary language, the concepts of dwelling and residing are very similar, and can often be used interchangeably (consistently with the way in which Evershed MR and Romer LJ expressed themselves in Whiteley). 132. In relation to the ordinary meaning of the word residence, I consider that the decision of the House of Lords in Mohamed v Hammersmith is of assistance. That case is also rather more in point on the facts than any of the other cases so far discussed, as the issue was whether a person was normally resident (for the purposes of section 199 of the 1996 Act) in accommodation provided under section 188 of the 1996 Act, the very section under which accommodation was provided to the appellants in the instant appeals. 133. Having said that words like normal residence may take their precise meanings from [their] context, Lord Slynn (who gave the only reasoned judgment) said this in para 18: [T]he prima facie meaning of normal residence is the place where at the relevant time the person in fact resides. So long as that place where he eats and sleeps is voluntarily accepted by him, the reason why he is there rather than somewhere else does not prevent that place from being his normal residence. He may not like it, he may prefer some other place, but that place is for the relevant time the place where he normally resides. If a person, having no other accommodation, takes his few belongings and moves into a barn for a period to work on a farm that is where during that period he is normally resident, however much he might prefer some more permanent or better accommodation. In a sense it is shelter but it is also where he resides. Where he is given interim accommodation by a local housing authority even more clearly is that the place where for the time being he is normally resident. The fact that it is provided subject to statutory duty does not, contrary to the appellant authority's argument, prevent it from being such. 134. As I read those observations, Lord Slynn was saying that a person provided with temporary accommodation under section 188 of the 1996 Act, as a matter of ordinary language normally resides in that accommodation, even though it is provided to her on a temporary basis by a housing authority, because she lives there and because she has no other home. To my mind, it follows that for the same sort of reasons, the person may, as a matter of normal language be said to be dwelling in such accommodation, which would naturally be described as a dwelling house. Conclusions on the first issue 135. The purpose of section 3 of PEA 1977 is to prevent a person who has been lawfully living in premises, which have been let as a dwelling or licensed to be occupied as a dwelling, being evicted without a court order, and the purpose of section 5 is to ensure that, where premises have been let as a dwelling, or licensed to be occupied as a dwelling, on terms which require notice to vacate, the occupier must be given at least 28 days notice. Plainly, it seems to me, these sections should not be accorded an unnaturally narrow effect; indeed, I think one should lean in favour of a wide, rather than a narrow, meaning when it comes to deciding the ambit of these sections. They do not represent a substantial incursion into the property rights of the owners of premises, and they reflect a policy that people who have been lawfully living in premises should not be summarily evicted or locked out. Because of the nature of the rights accorded by these provisions and their aim of protecting people against the inconvenience and humiliation of being deprived of their homes summarily, one would expect the two sections to have a wide, rather than a narrow, meaning, a conclusion supported by the passages which I have referred to in the opinions in Uratemp in para 118 above. 136. I do not consider that it would be appropriate to exclude from the ambit of those sections accommodation, whether a house or flat or room, which has been lawfully occupied by a person (or families) as her (or their) only home, simply because her (or their) occupation is short term, provisional or precarious. It is a perfectly natural use of the word to describe a person as dwelling, or indeed residing, in accommodation provided by a housing authority under section 188 of the 1996 Act, or occupying those premises as a dwelling house, even though she may be there for a short term on a precarious basis. Of course, it would be wrong to say that, simply because she has no other dwelling, the accommodation must be that persons dwelling: a person does not need to have a dwelling. But, equally, as a matter of language, the fact that the person would be otherwise homeless makes it all the more difficult to contend that it is an inappropriate use of language to describe the accommodation provided to her under section 188 as a dwelling, even if it was on a temporary basis, pursuant to a statutory duty. To describe a house flat or room as the occupiers temporary or short term dwelling is a perfectly natural use of language. 137. Accordingly, the fact that the arrangement under which a person is permitted to occupy premises as her only habitation is short term and precarious does not seem to me to prevent them being let as a dwelling house or occupied as a dwelling, as a matter of ordinary language. So long as the arrangement persists, the premises are that persons lodging and the place where [she] lives, to quote Lord Steyn, or the place where [she] lives and to which [she] returns and which forms the centre of [her] existence to quote Lord Millett, in Uratemp. The mere fact that the landlord or licensor has the right to substitute other premises on short notice does not seem to me to alter that conclusion: unless and until that right is exercised, the premises are the occupiers lodging, where she lives and to which she returns. If that were not so, it would have provided a very simple method for private sector landlords to avoid the incidence of the Rent Acts. I draw some support for this conclusion from the observations of Lord Thankerton in Railway Assessment and of Lord Slynn in Mohamed v Hammersmith, in addition to the observations in Uratemp. 138. Of course, the nature of the premises subject to the letting may be such that it might not be natural to refer to them as a dwelling or dwelling house (as illustrated by the cases considered in paras 113 115 above). However, apart from such cases where the nature of the premises precludes them being described as being let or occupied as a dwelling, I find it hard to see why the relatively temporary nature of the occupation, or the fact that the occupier can be required to shift to other premises on a days notice, prevents premises being let or licensed as a dwelling or occupied as a dwelling, or indeed occupied as a residence, particularly where the tenant or licensee has no other home. Indeed, many might think that those who are housed under section 188 of the 1996 Act are the sort of people who particularly need the protection of PEA 1977, given that, whatever the merits of their claims under Part 7 of the 1996 Act, they are likely to come from the more vulnerable sectors of society. 139. In my opinion, the view that people housed under section 188 of the 1996 Act are entitled to the benefit of sections 3 and 5 of PEA 1977 receives considerable support from section 3A of PEA 1977, which identifies the arrangements which are excluded from the ambit of section 3. The exclusions in subsections (6)(8) appear to me to be particularly significant for present purposes. They include a tenancy or licence (i) if it was granted as a temporary expedient to a person who entered the premises as a trespasser, (ii) if it is for a holiday only, (iii) if it is gratuitous (iv) if it is granted in order to provide accommodation for asylum seekers and their families under Part VI of the Immigration and Asylum Act 1999, or (v) if it confers rights of occupation in a hostel, within the meaning of the Housing Act 1985, which is provided by [certain defined authorities]. These are all types of licences which need not have been excluded from the ambit of PEA 1977 if it did not apply to short term, precarious and/or charitable arrangements, and so they strongly support my conclusion. I am unimpressed by the point that some of these licences or tenancies could last a long period. First, that point does not apply to categories (i) and (ii). Secondly, the fact that the arrangement in categories (iv) and (v), or indeed category (iii), may continue for some time in a few cases is not really the point, as one is normally concerned with the purpose of the arrangement in question when it started, and almost all such arrangements would be expected to be short term. Indeed, it may well be that interim accommodation provided under Part 7 of the 1996 Act will occasionally be occupied for a long time eg because the appeal process is protracted. 140. I was initially attracted by the argument developed in para 33 of Lord Hodges judgment, that, because a person who is temporarily housed by a housing authority under Part 7 of the 1996 Act, while inquiries are pending, should be treated as homeless for the purpose of that Act, he can and should be treated as not being provided with a dwelling, or indeed a residence under PEA 1977. However, on reflection, it appears to me that this does not involve a proper approach to statutory interpretation. As already mentioned, the fact that dwelling is given a certain meaning in the 1996 Act (whether in the statute or by the court) does not entitle that meaning to be simply applied to another Act, namely PEA 1977, and it appears to me to be a fortiori that the fact that someone is homeless for the purposes of one Act does not mean that she cannot have a dwelling or indeed a residence for the purpose of PEA 1977. 141. Further, as already mentioned, the House of Lords in Mohamed v Hammersmith accepted that, as a matter of ordinary language, the occupier of accommodation provided under section 188 of the 1996 Act would be normally resident in that accommodation, and therefore was normally resident for the purposes of section 199 of the 1996 Act. It seems to me that, if a person occupying accommodation provided under section 188 of the 1996 Act is normally resident in that accommodation for the purposes of another provision in the same Act, then, to put it at its lowest, it can scarcely be inconsistent with section 188 to say that she continues to reside in the accommodation for the purposes of another Act. And, if she resides for the purposes of section 3 of PEA 1977, as was envisaged when her tenancy or licence was granted, then, for the reasons already given, it would seem to follow that the premises must have been let as a dwelling or licensed for occupation as a dwelling. The effect of previous Court of Appeal decisions on the issue 142. The Court of Appeal in previous decisions on the interrelationship of Part 7 of the 1996 Act and PEA 1977 had come to a different conclusion see Mohammed v Manek and Kensington and Chelsea LBC (1995) 27 HLR 439 and Desnousse v Newham LBC [2006] QB 831. It is argued by the respondent Housing Authorities and the Secretary of State that we should not disturb the effect of those decisions, and therefore dismiss these appeals, even if we would not otherwise have done so, on the ground that Parliament has amended PEA 1977 and re enacted the earlier homelessness legislation in the 1996 Act, on terms which were consistent with those decisions. However, it is accepted that there is no specific statutory provision which demonstrates Parliamentary confirmation or assumption that those decisions were correct. 143. In my view, where, as here, Parliament has not specifically enacted any legislation which shows that it must have assumed or accepted that the law as stated by the Court of Appeal is correct, it is not safe in practice or appropriate in principle to draw the conclusion that the present legislation bindingly assumes sub silentio that the law is as the Court of Appeal had decided. Parliament must be taken to know not only that the Court of Appeal has decided as it has, but also that the House of Lords, or now the Supreme Court, could overrule the Court of Appeal. It would, in my view, be dangerous both in practice and principle, for the courts to start second guessing the legislature. Of course, where it is clear that, in subsequent legislation, Parliament has expressly, or even impliedly, accepted clearly the correctness of the Court of Appeal decision, or adopted the decision, different considerations are very likely to apply. 144. I note what Lord Carnwath says about the principle in Barras v Aberdeen Sea Trawling and Fishing Co Ltd [1933] AC 402 in paras 79 87. If Parliament has re enacted a statutory provision in identical words, after it has been interpreted as having a certain meaning by the courts of record, then there is, I accept, some attraction in the notion that the Parliamentary intention was that the provision should have that meaning particularly if (as here) the interpretation has been confirmed by the Court of Appeal more than once. The issue is similar to that discussed in paras 104 106 above, and I am far from convinced that the principle can be regarded as correct, at least in the absence of some additional factor in favour of maintaining the interpretation previously adopted, in light of observations in Farrell v Alexander [1977] AC 59. In that case, the unsuccessful respondent argued that a particular statutory provision (prohibiting the charging of premiums for the assignment of Rent Act tenancies) had been interpreted by the Court of Appeal in Remmington v Larkin [1921] 3 KB 404, and that, in the light of the Barras doctrine, the fact that the provision had been subsequently re enacted in much the same way more than once, the interpretation in Remmington had been effectively adopted by Parliament. 145. Lord Wilberforce thought that Remmington could be distinguished, but, after referring to Barras, he said at p 74, that he had never been attracted by the doctrine of Parliamentary endorsement of decided cases, which he described as based upon a theory of legislative formation which is possibly fictional. He added that if there are any cases in which this doctrine may be applied any case must be a clear one. Lord Dilhorne (who thought that Remmington could not be distinguished and should be overruled), while not referring expressly to Barras doctrine, said at p 81, that while it may be that the decision in Remington escaped the notice of the draftsman, our task is to give effect to the intention of Parliament which involved considering the words used by Parliament. Lord Simon of Glaisdale also thought that Remmington could not be distinguished and should be overruled, and at pp 90 91 he was critical of the Barras doctrine, saying at p 91: To pre empt a court of construction from performing independently its own constitutional duty of examining the validity of a previous interpretation, the intention of parliament to endorse the previous judicial decision would have to be expressed or clearly implied. Mere repetition of language which has been the subject of previous judicial interpretation is entirely neutral in this respector at most implies merely the truism that the language has been the subject of judicial interpretation for whatever (and it may be much or little) that is worth. Lord Edmund Davies thought that Remington had been rightly decided, but that the statutory language had since significantly altered, and he was accordingly concerned with a different doctrine, namely the assumption that in enacting consolidating legislation Parliament did not intend to change the law see at 94. Only Lord Russell (who dissented) appears at pp 101 103 to have assumed that the Barras doctrine was correct. 146. Since then, in A v Hoare [2008] UKHL 6, [2008] 1 AC 844, para 15, Lord Hoffmann followed an earlier decision of the House of Lords, Lowsley v Forbes [1999] 1 AC 329, which he explained in these terms: In that case, the Court of Appeal in 1948 (W T Lamb and Sons v Rider [1948] 2 KB 331) had given a provision of the Limitation Act 1939 an interpretation which the House thought was probably wrong. But Parliament had then enacted the Limitation Amendment Act 1980 in terms which made sense only on the basis that it was accepting the construction which had been given to the Act by the Court of Appeal. Lord Hoffmann also said that [t]he value of such previous interpretations as a guide to construction will vary with the circumstances. 147. In my opinion, in the light of the views expressed in Farrell and in A v Hoare, before this Court could invoke the Barras principle, it would almost always require something more than the mere re enactment of a previous statutory provision which has been interpreted by the Court of Appeal. Like Lord Simon, I am concerned about the constitutional propriety of this Court simply invoking what it regards as a judicial misreading of an earlier statute to justify a decision that a current statute means something other than this Court thinks it means. However, as it is not necessary to decide the point on these appeals, I would not wish to be taken to be saying that it could never be done. 148. I have even greater reservations about the so called customary meaning rule. As just mentioned, a court should not lightly decide that a statute has a meaning which is different from that which the court believes that it has. Indeed, so to decide could be said to be a breach of the fundamental duty of the court to give effect to the will of parliament as expressed in the statute. Legal certainty and settled practice, referred to by Lord Carnwath in paras 94 97 are, as I see it, an aspect of customary meaning. Although Lord Bridge expressed himself as he did in Otter v Norman [1989] AC 129, 145 6 (as quoted by Lord Carnwath in para 96), neither Barras nor Farrell was cited to him, and he relied on the fact that for many years, many landlords and tenants have regulated their relationships on [the] basis that observations in an earlier decision of the Court of Appeal were right. Even on that basis, I would wish to reserve my position as to the correctness of Lord Bridges obiter observations. 149. Turning to these appeals, there is no question of PEA 1977 having been re enacted since the decisions in Mohammed v Manek or Desnousse, and therefore the Barras principle cannot apply. Even if there is a customary meaning rule and twenty years is a long enough period to justify invoking it, I do not consider that it should apply here. One can see the force of the customary meaning rule where private individuals and companies have made dispositions or entered into agreements in the reasonable belief that the law was as laid down by the Court of Appeal as Lord Bridge said in Otter. However, it is much harder to justify invoking the rule in circumstances where a housing authority may have assumed that the law is as laid down by the Court of Appeal in connection with an arrangement which the authority was in any event required to enter into by statute. A housing authority can hardly claim to have complied with its duty to provide temporary accommodation under section 188 of the 1996 Act, only because it believed that the occupier of the accommodation could not invoke sections 3 or 5 of PEA 1977. I do not suggest that no housing authority could identify any action that it had (or had not) taken in the belief that PEA 1977 did not apply to licences such as those granted to the appellants in these cases, but I do not believe that any such action (or inaction) would be such as to justify invoking the customary meaning rule. Conclusion 150. For these reasons, despite the clear and impressive reasoning in his judgment, I have reached a different conclusion from Lord Hodge. 151. To many people this may appear an unattractive result, as it does not seem obviously sensible for homeless individuals, who are temporarily housed on an interim basis, while the housing authority makes enquiries as to what rights if any they may have, to be afforded protection under PEA 1977. Such a conclusion would inevitably increase the pressure on already hard pressed housing authorities, many of whom are faced with a demand for residential accommodation which substantially exceeds the supply, which places a great administrative burden on them. However, the consequences of my view as to the effect of PEA 1977 would, I suspect, be more of an exacerbating nuisance rather than a far reaching disaster. And, while I see the good sense of PEA 1977 not applying to licensees such as the appellants in these appeals, it does not seem to me obvious that they should not be able to benefit from PEA 1977. 152. Even if that is wrong, having interpreted PEA 1977, and noted Parliaments exercise of its power to identify which short term, precarious and charitable rights of occupation should be excluded from protection, I consider that the correct, if to some people a rather unpalatable, conclusion is that individuals such as the appellants in these appeals are entitled to the benefit of sections 3 and 5 of the Protection from Eviction Act 1977. 153. The contrary view is to some extent based upon policy considerations. I accept that, when considering the proper interpretation of a statute, a court can, and where appropriate should, take into account policy considerations, and I sympathise with the view that policy considerations favour dismissing these appeals, as I have indicated in para 151 above. However, judges have to be very careful before adopting an interpretation of a statute based on policy considerations, and should only to do so where those considerations point clearly in one direction. In this case, it seems to me to be particularly difficult to justify dismissing the appeal on policy grounds, given that (i) it involves departing from the natural meaning of the relevant statutory words, (ii) the policy argument is not overwhelming, (iii) there are policy considerations pointing the other way, and (iv) Parliament has apparently considered the policy in section 3A. 154. Furthermore, when it comes to relying on policy in a case of statutory interpretation, I would respectfully refer to the observations of Lord Simon and Lord Diplock in Maunsell v Olins [1975] AC 373, 393 which, although in a dissenting judgment (as might be appreciated from the way in which they are expressed), were cited with apparent approval (see at p 388) by Lord Bingham in Spath Holme at p 385: For a court of construction to constrain statutory language which has a primary natural meaning appropriate to its context so as to give it an artificial meaning which is appropriate only to remedy the mischief which is conceived to have occasioned the statutory provision is to proceed unsupported by principle, inconsonant with authority and oblivious of the actual practice of parliamentary draftsmen. 155. As to the second issue discussed by Lord Hodge in paras 61 71 of his judgment, it would not, on my view on the first issue, arise. However, on the basis of the view reached by the majority of the Court on the first issue, the second issue does arise. On that basis, I agree with Lord Hodges reasoning and conclusion on the second issue. 156. For my part, therefore, for the above reasons and for those much more economically expressed by Lady Hale, I would have allowed these appeals on the first issue, the appellants reliance on the Protection from Eviction Act 1977, but I would dismiss these appeals on the second issue, namely their reliance on article 8 of the European Convention on Human Rights. LADY HALE 157. The issue in this case is the meaning of the words licensed as a dwelling house in section 3(1) of the Protection from Eviction Act 1977, when read with section 3(2B) of that Act, which provided for the inclusion of licences in the protection given by that section (the relevant provisions are helpfully set out in the judgment of Lord Hodge at para 17). It is agreed that those words refer to the purpose for which the premises in question were licensed to the licensee and not to the purpose for which she actually occupied them (see the judgment of Lord Hodge at para 23). In these cases, however, it is difficult to see a distinction between the two: JN and FI and their children used these premises for the purpose for which they were licensed to occupy them. The question is what that purpose was. 158. There can be little doubt that the premises in each case constituted a dwelling house. As it happens, both were self contained premises, not shared with others when they were licensed. The courts have always taken a broad view of what constitutes a dwelling house. It has long been held that a room without bathroom facilities may be a dwelling house let as a separate dwelling for the purpose of section 1 of the Housing Act 1988 and its predecessors. In Uratemp Ventures v Collins [2001] UKHL 43, [2002] 1 AC 301, the House of Lords held that a room in an hotel where cooking was forbidden nevertheless constituted a dwelling house let as a separate dwelling for the same purpose. There is no requirement in section 3 of the 1977 Act that the premises be let or licensed as a separate dwelling. 159. When a dwelling house is let or licensed to an individual to occupy, albeit for what may turn out to be for a very short time, considerable work has to be done in order to conclude that the purpose of the letting or licence is not to use the premises as a dwelling. Counsel for the local authorities in question, and for the Secretary of State, have put in considerable work in order to persuade us that the words must be read in the light of the construction given to similar (but not identical) wording in other provisions in the Rent Acts. For the reasons given by Lord Neuberger, which I need not repeat, I do not find any of that work persuasive, let alone convincing. I share his view that dwelling is at least as wide as residing and thus must respectfully disagree with the view expressed by Lord Millett (but not by the other members of the appellate committee) in Uratemp that The words dwell and dwelling suggest a greater degree of settled occupation than reside and residing. That is, at it seems to me, to confuse two rather different meanings of the verb to dwell. I dwell on a subject when I fix my attention, write or speak on it length (as we sometimes have to do in our judgments). I dwell in a place when I live there. In my view, residing and dwelling and living somewhere generally mean the same thing, although all may be distinguished from staying. 160. Unlike holiday makers, it is hard to describe these families as simply staying in their accommodation. If, as the House of Lords held in Mohamed v Hammersmith and Fulham LBC [2001] UKHL 57, [2002] AC 547, a person can be normally resident in accommodation provided under section 188 of the 1996 Act, because he lives there for the time being and has nowhere else to go, I find it hard to see how he is not also provided with that accommodation as a dwelling. As Lord Neuberger demonstrates, a person can dwell, reside or live in premises where his occupation is not only temporary but precarious in the extreme. The purpose of the 1977 Act was not to provide security of tenure: that was done in other ways. The purpose was to prevent landlords resorting to such self help as is lawful to rid themselves of tenants (and now licensees) who would not leave voluntarily. 161. Nor, with respect, do I find persuasive any of the three matters relied upon by Lord Hodge in reaching a contrary conclusion. He points, first, to the statutory context of the licence, as a purely temporary measure while the local authority pursue their statutory inquiries. We are, of course, construing section 3 of the 1977 Act and not Part 7 of the 1996 Act. That statutory context cannot, of course, have been in the contemplation of the legislature when the provisions with which we are concerned were first enacted. The Protection from Eviction Act 1977 and the Housing (Homeless Persons) Act 1977 received the Royal Assent on the same day. But the Protection from Eviction Act was a pure consolidation Act, bringing together provisions which had first been enacted, in the case of the requirement of four weeks notice to quit in section 5 of the 1977 Act, in section 16 of the Rent Act 1957, and in the case of section 3 of the 1977 Act with which we are principally concerned, in Part III of the Rent Act 1965. At that time, such duty as there was to provide temporary accommodation for people in urgent need of it was contained in section 21(1)(b) of the National Assistance Act 1948. There was nothing to prevent a local authority separating homeless families by receiving the children into care and leaving the adults to fend for themselves. The Housing (Homeless Persons) Act 1977 was intended to bring in a new regime in which specific and carefully modulated duties were owed to particular classes of homeless persons. 162. People in temporary accommodation are still treated as homeless for the purpose of what is now Part 7 of the 1996 Act while the local authorities enquiries are persisting. (This is despite the fact that they have an express licence to occupy the accommodation with which they are provided, and so would fall outside the definition of homeless in section 175 of the Act unless that definition is directed to the time when they present themselves to the local authority.) That does not mean that they do not live in the accommodation provided for the time being or that they are not provided with that accommodation for that purpose. 163. Many (indeed one suspects the great majority) of those provided with temporary accommodation under Part 7 of the 1996 Act are in receipt of housing benefit. The whole system of funding local authorities duties under the 1996 Act would fall apart if housing benefit were not available to those who cannot afford to pay for the (often expensive) temporary accommodation arranged for them. Section 130 of the Social Security Contributions and Benefits Act 1992 provides that a person is entitled to housing benefit if he is liable to make payments in respect of a dwelling which he occupies as his home. If the temporary and transient nature of his occupation is not sufficient to prevent the dwelling being his home for this purpose, I find it very difficult indeed to see how that same temporary and transient nature is sufficient to prevent the licence under which he is permitted to occupy the dwelling also being for the purpose of his occupying it as his home, that is, dwelling or residing or living rather than merely staying there. 164. Secondly, Lord Hodge relies upon the terms of the licences in question. But these cannot take something which would otherwise fall within the statutory protection outside it. Calling a tenancy a licence does not make it a licence if in fact it is a tenancy: Street v Mountford [1985] AC 809. Reserving the right to change the accommodation provided at little or no notice does not prevent the accommodation being provided as a home if that is what it is. Otherwise, as Lord Neuberger points out, it would have been extremely easy for unscrupulous landlords to avoid the effect of the 1977 Act and its predecessor. 165. In this context, I am puzzled by what appears to be the generally accepted view that the protection of section 3 of the 1977 Act will apply once the local authority have accepted that they owe the family the full housing duty in section 193(2) of the 1996 Act. But the existence of that full housing duty is a quite separate matter from the terms on which the family occupy their accommodation. They may well remain in exactly the same accommodation on exactly the same contractual terms thereafter. There may well be no new letting or no new licensing for some time. Their occupation of those particular premises is just as precarious as before. The full housing duty will come to an end if they refuse an offer of suitable accommodation elsewhere. So can it be said that the purpose for which the premises were let or licensed has changed just because the nature of the local authoritys duty has changed? Even if that could be said, the contractual terms of the tenancy or licence cannot be determinative of its purpose. 166. Thirdly, Lord Hodge relies upon the unfortunate practical consequences if section 3 is held to apply to temporary accommodation provided under Part 7 of the 1996 Act. Counsel before us disagreed about how real the problems would in fact be; but we can, I think, take it for granted that it would indeed make life more difficult for hard pressed housing authorities who are having to cope with increasing numbers of homeless persons and diminishing resources with which to do so. However, as Lord Hodge himself acknowledges, this would not by itself be determinative. The answer to the practical problems is a properly tailored legislative exception, as has already been provided for some other situations in section 3A of the 1977 Act. 167. I fear that I am also unimpressed by the argument that we should not disturb what has been understood to be the law since the decision of the Court of Appeal in Mohammed v Manek and Kensington and Chelsea LBC (1995) 27 HLR 439, followed in Desnousse v Newham LBC [2006] QB 831. There is no question of Parliament having passed legislation on the basis that the law as stated by the Court of Appeal is correct. The 1977 Act has not been repealed and re enacted so as to invoke the principle in Barras v Aberdeen Sea Trawling Co Ltd [1933] AC 402. The most that can be said is that Parliament might have amended the 1977 Act so as to reverse or modify the Court of Appeals decision, if it did not like it, but has not done so. That comes nowhere near an expression of Parliamentary approval of it. Parliament can always legislate to change a decision of the higher courts should it wish to do so, but no conclusions can be drawn from the fact that it has not. There must be many, many decisions which the Parliament of the day finds surprising, inconvenient or downright wrong, but has done nothing to correct. The reasons for inaction may range from ignorance, indifference, lack of Parliamentary time or Whitehall resources, to actual approval. Moreover, Parliaments failure to act tells us nothing about what Parliament intended when the legislation was passed, which is what this court must decide. Parliament must, like everyone else, be taken to understand that a Court of Appeal decision may always be overturned on appeal to this court. (Of course, there are occasions when Parliament has specifically legislated on the basis that a Court of Appeal decision is correct, but the higher court has still been prepared to hold that it was incorrect: see Bakewell Management Ltd v Brandwood [2004] UKHL 14, [2004] 2 AC 519.) 168. I also share Lord Neubergers reservations about the so called customary meaning rule. In In re Spectrum Plus [2005] UKHL 41, [2005] 2 AC 680, the House of Lords was not deterred from over ruling a decision of a highly respected High Court judge as to the effect of the wording of a particular debenture in common use, despite the fact that his decision had stood and been relied upon by the banks for many years. The banks, like anyone else, must be taken to know that the decisions of the lower courts are liable to be over turned on appeal, even years after the event, if they are wrong. They cannot be regarded as definitely settling the law or have, as Lord Nicholls put it, lulled the banks into a false sense of security (para 43). In this case, there can be no question of the local authorities relying upon the Court of Appeals decisions. Their duties towards the homeless remain the same, whether or not the 1977 Act applies to the accommodation arrangements they make. They still have to go on fulfilling those duties. Unlike the banks in In re Spectrum Plus, there is nothing they can do about it, and they have not been lulled into a false sense of security. 169. In agreement with Lord Neuberger therefore, to whose judgment this is merely a footnote, I would therefore allow these appeals on the first issue. That being the case the second issue does not, in my view, arise. Mr Arden did not argue that a dwelling encompassed any residential accommodation provided for occupation, regardless how short was the intended period of occupation. He accepted that an overnight stay in a hotel or hostel would not amount to dwelling in that accommodation. Beyond that he submitted that it was a question of fact in each case. The respondent local authorities submitted, by reference to cases that I consider in paras 37 44 below, that premises must be occupied as a settled home and that lettings for a limited and temporary purpose involving transient occupation did not enjoy the protection of the Rent Acts in the past or of PEA 1977. They also pointed out that breach of section 3(1) of PEA was a criminal offence and submitted that there was a need for certainty as to its scope. I do not find either view wholly persuasive. The former makes insufficient allowance for a degree of settled occupation, the establishment of a home, as a component of dwelling. It also fails to recognise the extent to which the courts in several of the cases which I consider below have included as a component of their interpretation of the word dwelling their understanding of the relevant statutory policy; see in particular the cases in para 37 below. The latter view draws on case law which points to a statutory intention in the Rent Acts, and by extension in PEA 1977, to protect a persons home but not accommodation provided or occupied as a temporary expedient. There is force in the respondents interpretation (see para 45 below) but it risks setting up a generalised proposition that goes beyond that which the case law supports. In my view, in construing words that may have refined distinctions of meaning it is important to have regard to the statutory policy of PEA 1977. In applying the statutory words to a specific contract, the legal and factual context of the contract is particularly important. |
The appeals relate to the proper interpretation of paragraph 49 of the National Planning Policy Framework (NPPF), which is in these terms: Housing applications should be considered in the context of the presumption in favour of sustainable development. Relevant policies for the supply of housing should not be considered up to date if the local planning authority cannot demonstrate a five year supply of deliverable housing sites. The Court of Appeal observed that the interpretation of this paragraph had been considered by the Administrative Court on seven separate occasions between October 2013 and April 2015 with varying results. The court had been urged by all counsel to bring much needed clarity to the meaning of the policy. Notwithstanding the clarification provided by the impressive judgment of the court (given by Lindblom LJ), controversy remains. The appeals provide the opportunity for this court not only to consider the narrow issues of interpretation of para 49, but to look more broadly at issues concerning the legal status of the NPPF and its relationship with the statutory development plan. Both appeals relate to applications for housing development, one at Yoxford in the administrative area of the Suffolk Coastal District Council (the Yoxford site), and the other near Willaston in the area of Cheshire East Borough Council (the Willaston site). In the first the councils refusal of permission was upheld by the inspector on appeal, but his refusal was quashed in the High Court (Supperstone J), and that decision was confirmed by the Court of Appeal. In the second, the council failed to determine the application, and the appeal was allowed by the inspector. The councils challenge succeeded in the High Court (Lang J), but that decision was reversed by the Court of Appeal, the judgment of the court being given by Lindblom LJ. Both councils appeal to this court. The statutory provisions The relevant statutory provisions are found in the Town and Country Planning Act 1990 (the 1990 Act) and the Planning and Compulsory Purchase Act 2004 (the 2004 Act). Plan making Part 2 of the 2004 Act deals with local development. Each local planning authority in England is required to keep under review the matters which may be expected to affect the development of their area or the planning of its development (2004 Act section 13), and to prepare a local development scheme, which (inter alia) specifies the local development documents which are to be development plan documents (section 15). The authoritys local development documents must (taken as a whole) set out the authoritys policies (however expressed) relating to the development and use of land in their area (section 17). Local development documents are defined by regulations made under section 17(7). In short they are documents which contain statements as to the development and use of land which the authority wishes to encourage, the allocation of sites for particular types of development, and development management and site allocations policies intended to guide determination of planning applications. Together they comprise the development plan or local plan for the area (Town and Country Planning (Local Planning) (England) Regulations (SI 2012/767) regulations 5 and 6). In preparing such documents, the authority must have regard (inter alia) to national policies and advice contained in guidance issued by the Secretary of State (section 19(2)). Every development plan document must be submitted to the Secretary of State for independent examination, one of the purposes being to determine whether it complies with the relevant statutory requirements, including section 19 (section 20(1)(5)(a)). The Secretary of State may, if he thinks that a local development document is unsatisfactory, direct the local planning authority to modify the document (section 21). Section 39 gives statutory force to the concept of sustainable development (undefined). Any person or body exercising any function under Part 2 in relation to local development documents must exercise it with the objective of contributing to the achievement of sustainable development, and for that purpose must have regard to national policies and advice contained in guidance issued by the Secretary of State An adopted plan may be challenged on legal grounds by application to the High Court made within six weeks of the date of adoption, but not otherwise (section 113). Schedule 8 contained transitional provisions providing generally for a transitional period of three years, after which the plans produced under the previous system ceased to have effect subject to the power of the Secretary of State to save specified policies by direction. Planning applications taken into account in the handling of planning applications: Provision is made in the 1990 and 2004 Acts for the development plan to be 1990 Act section 70(2) In dealing with such an application the authority shall have regard to (a) material to the application, (b) material to the application, and (c) any local finance considerations, so far as the provisions of the development plan, so far as any other material considerations. 2004 Act section 38(6) If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise. Unlike the development plan provisions, these sections contain no specific requirement to have regard to national policy statements issued by the Secretary of State, although it is common ground that such policy statements may where relevant amount to material considerations. The principle that the decision maker should have regard to the development plan so far as material and any other material considerations has been part of the planning law since the Town and Country Planning Act 1947. The additional weight given to the development plan by section 38(6) reproduces the effect of a provision first seen in the Planning and Compensation Act 1991 section 54A. In City of Edinburgh Council v Secretary of State for Scotland [1997] 1 WLR 1447, the equivalent provision (section 18A of the Town and Country Planning (Scotland) Act 1972) was described by Lord Hope (p 1450B) as designed to enhance the status of the development plan in the exercise of the planning authoritys judgment. Lord Clyde spoke of it as creating a presumption that the development plan is to govern the decision, subject to material considerations, as for example where a particular policy in the plan can be seen to be outdated and superseded by more recent guidance. However, the section had not touched the well established distinction between the respective roles of the decision maker and the court: It has introduced a requirement with which the decision maker must comply, namely the recognition of the priority to be given to the development plan. It has thus introduced a potential ground on which the decision maker could be faulted were he to fail to give effect to that requirement. But beyond that it still leaves the assessment of the facts and the weighing of the considerations in the hands of the decision maker (p 1458) An appeal against a refusal of planning permission lies to the Secretary of State, who is subject to the same duty in respect of the development plan (1990 Act sections 78, 79(4)). Regulations under section 79(6) and Schedule 6 now provide for most categories of appeals, including those here in issue, to be determined, not by the Secretary of State, but by an appointed person (normally referred to as a planning inspector). The decision on appeal may be challenged on legal grounds in the High Court (section 288). The National Planning Policy Framework The Framework (or NPPF) was published on 27 March 2012. One purpose, in the words of the foreword, was to (replace) over a thousand pages of national policy with around 50, written simply and clearly, thus allowing people and communities back into planning. The Introduction explains its status under the planning law: Planning law requires that applications for planning permission must be determined in accordance with the development plan, unless material considerations indicate otherwise. The National Planning Policy Framework must be taken into account in the preparation of local and neighbourhood plans, and is a material consideration in planning decisions. NPPF is divided into three main parts: Achieving sustainable development (paragraphs 6 to 149), Plan making (paragraphs 150 to 185) and Decision taking (paragraphs 186 to 207). Paragraph 7 refers to the three dimensions to sustainable development: economic, social and environmental. Paragraph 11 begins a group of paragraphs under the heading the presumption in favour of sustainable development. Paragraph 12 makes clear that the NPPF does not change the statutory status of the development plan as the starting point for decision making. Paragraph 13 describes the NPPF as guidance for local planning authorities and decision takers both in drawing up plans and as a material consideration in determining applications. Paragraph 14, which is important in the present appeals, deals with the presumption in favour of sustainable development, which is said to be at the heart of the NPPF and which should be seen as a golden thread running through both plan making and decision taking. It continues: For plan making this means that: local planning authorities should positively seek opportunities to meet the development needs of their area; Local Plans should meet objectively assessed needs, with sufficient flexibility to adapt to rapid change, unless: any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or specific policies development should be restricted. this Framework indicate in For decision taking this means: approving development proposals that accord with the development plan without delay; and where the development plan is absent, silent or relevant policies are out of date, granting permission unless: any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or specific policies development should be restricted. this Framework indicate in We were told that the penultimate point (any adverse impacts ) is referred to by practitioners as the tilted balance. I am content for convenience to adopt that rubric. Footnote 9 (in the same terms for both parts) gives examples of the specific policies referred to: For example, those policies relating to sites protected under the Birds and Habitats Directives (see paragraph 119) and/or designated as Sites of Special Scientific Interest; land designated as Green Belt, Local Green Space, an Area of Outstanding Natural Beauty, Heritage Coast or within a National Park (or the Broads Authority); designated heritage assets; and locations at risk of flooding or coastal erosion. These are said to be examples. Thus the list is not exhaustive. Further, although the footnote refers in terms only to policies in the Framework itself, it is clear in my view that the list is to be read as including the related development plan policies. Paragraph 14 cannot, and is clearly not intended to, detract from the priority given by statute to the development plan, as emphasised in the preceding paragraphs. Indeed, some of the references only make sense on that basis. For example, the reference to Local Green Space needs to be read with paragraph 76 dealing with that subject, which envisages local communities being able through local and neighbourhood plans to identify for special protection green areas of particular importance to them, and so rule out new development other than in very special circumstances Section 6 (paragraphs 47 to 55) is entitled Delivering a wide choice of high quality homes. Paragraph 47 states the primary objective of the section: To boost significantly the supply of housing, local planning authorities should: use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in [the NPPF], including identifying key sites which are critical to the delivery of the housing strategy over the plan period; identify and update annually a supply of specific deliverable sites sufficient to provide five years worth of housing against their housing requirements with an additional buffer of 5% to ensure choice and competition in the market for land. ; identify a supply of specific, developable sites or broad locations for growth, for years six to ten and, where possible, for years 11 15; for market and affordable housing, illustrate the expected rate of housing delivery through a housing trajectory for the plan period and set out a housing implementation strategy for the full range of housing describing how they will maintain delivery of a five year supply of housing land to meet their housing target; and set out their own approach to housing density to reflect local circumstances. This group of provisions provides the context for paragraph 49, central to these appeals and quoted at the beginning of this judgment; and in particular for the advice that relevant policies for the supply of housing should not be considered up to date, unless the authority can demonstrate a five year supply of deliverable housing sites. Section 12 is headed Conserving and enhancing the historic environment (paragraphs 126 to 141). It includes policies for designated and non designated heritage assets, as defined in the glossary. The former cover such assets as World Heritage Sites, Scheduled Monuments and others designated under relevant legislation. A non designated asset is one identified as having a degree of significance meriting consideration in planning decisions because of its heritage interest. Paragraph 135 states: The effect of an application on the significance of a non designated heritage asset should be taken into account in determining the application. In weighing applications that affect directly or indirectly non designated heritage assets, a balanced judgment will be required having regard to the scale of any harm or loss and the significance of the heritage asset. Significance in this context is defined by the glossary in Annex 2 as meaning the value of a heritage asset to this and future generations because of its heritage interest, which may be derived not only from a heritage assets physical presence, but also from its setting. Annex 1 (Implementation) states that policies in the Framework are material considerations which local planning authorities should take into account from the day of its publication (paragraph 212); and that, where necessary, plans, should be revised as quickly as possible to take account of the policies through a partial review or by preparing a new plan (paragraph 213). However, it also provides that for a transitional period of a year decision takers may continue to give full weight to relevant policies adopted since 2004, even if there is a limited degree of conflict with this Framework (paragraph 214); but that thereafter due weight should be given to relevant policies in existing plans according to their degree of consistency with this framework (the closer the policies in the plan to the policies in [the NPPF], the greater the weight that may be given). (paragraph 215) NPPF Legal status and Interpretation The court heard some discussion about the source of the Secretary of States power to issue national policy guidance of this kind. The agreed Statement of Facts quoted without comment a statement by Laws LJ (R (West Berkshire District Council) v Secretary of State for Communities and Local Government [2016] EWCA Civ 441; [2016] 1 WLR 3923, para 12) that the Secretary of States power to formulate and adopt national planning policy is not given by statute, but is an exercise of the Crowns common law powers conferred by the royal prerogative. In the event, following a query from the court, this explanation was not supported by any of the parties at the hearing. Instead it was suggested that his powers derived, expressly or by implication, from the planning Acts which give him overall responsibility for oversight of the planning system (see R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295, paras 140 143 per Lord Clyde). This is reflected both in specific requirements (such as in section 19(2) of the 2004 Act relating to plan preparation) and more generally in his power to intervene in many aspects of the planning process, including (by way of call in) the determination of appeals. In my view this is clearly correct. The modern system of town and country planning is the creature of statute (see Pioneer Aggregates (UK) Ltd v Secretary of State for the Environment [1985] AC 132, 140 141). Even if there had been a pre existing prerogative power relating to the same subject matter, it would have been superseded (see R (Miller) v Secretary of State for Exiting the European Union (Birnie intervening) [2017] 2 WLR 583, para 48). (It may be of interest to note that the great Case of Proclamations (1610) 12 Co Rep 74, which was one of the earliest judicial affirmations of the limits of the prerogative (see Miller para 44) was in one sense a planning case; the court rejected the proposition that the King by his proclamation may prohibit new buildings in and about London .) Although planning inspectors, as persons appointed by the Secretary of State to determine appeals, are not acting as his delegates in any legal sense, but are required to exercise their own independent judgement, they are doing so within the framework of national policy as set by government. It is important, however, in assessing the effect of the Framework, not to overstate the scope of this policy making role. The Framework itself makes clear that as respects the determination of planning applications (by contrast with plan making in which it has statutory recognition), it is no more than guidance and as such a material consideration for the purposes of section 70(2) of the 1990 Act (see R (Cala Homes (South) Ltd) v Secretary of State for Communities and Local Government [2011] EWHC 97 (Admin); [2011] 1 P & CR 22, para 50 per Lindblom J). It cannot, and does not purport to, displace the primacy given by the statute and policy to the statutory development plan. It must be exercised consistently with, and not so as to displace or distort, the statutory scheme. Law and policy The correct approach to the interpretation of a statutory development plan was discussed by this court in Tesco Stores Ltd v Dundee City Council (ASDA Stores Ltd intervening) [2012] UKSC 13; 2012 SLT 739. Lord Reed rejected a submission that the meaning of the development plan was a matter to be determined solely by the planning authority, subject to rationality. He said: The development plan is a carefully drafted and considered statement of policy, published in order to inform the public of the approach which will be followed by planning authorities in decision making unless there is good reason to depart from it. He added, however, that such statements should not be construed as if they were statutory or contractual provisions: It is intended to guide the behaviour of developers and planning authorities. As in other areas of administrative law, the policies which it sets out are designed to secure consistency and direction in the exercise of discretionary powers, while allowing a measure of flexibility to be retained. Those considerations point away from the view that the meaning of the plan is in principle a matter which each planning authority is entitled to determine from time to time as it pleases, within the limits of rationality. On the contrary, these considerations suggest that in principle, in this area of public administration as in others policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context. (para 18) Although a development plan has a legal status and legal effects, it is not analogous in its nature or purpose to a statute or a contract. As has often been observed, development plans are full of broad statements of policy, many of which may be mutually irreconcilable, so that in a particular case one must give way to another. In addition, many of the provisions of development plans are framed in language whose application to a given set of facts requires the exercise of judgment. Such matters fall within the jurisdiction of planning authorities, and their exercise of their judgment can only be challenged on the ground that it is irrational or perverse (Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759, 780 per Lord Hoffmann) (para 19) In the present appeal these statements were rightly taken as the starting point for consideration of the issues in the case. It was also common ground that policies in the Framework should be approached in the same way as those in a development plan. However, some concerns were expressed by the experienced counsel before us about the over legalisation of the planning process, as illustrated by the proliferation of case law on paragraph 49 itself (see paras 27ff below). This is particularly unfortunate for what was intended as a simplification of national policy guidance, designed for the lay reader. Some further comment from this court may therefore be appropriate. In the first place, it is important that the role of the court is not overstated. Lord Reeds application of the principles in the particular case (para 18) needs to be read in the context of the relatively specific policy there under consideration. Policy 45 of the local plan provided that new retail developments outside locations already identified in the plan would only be acceptable in accordance with five defined criteria, one of which depended on the absence of any suitable site within or linked to the existing centres (para 5). The short point was the meaning of the word suitable (para 13): suitable for the development proposed by the applicant, or for meeting the retail deficiencies in the area? It was that question which Lord Reed identified as one of textual interpretation, logically prior to the exercise of planning judgment (para 21). As he recognised (see para 19), some policies in the development plan may be expressed in much broader terms, and may not require, nor lend themselves to, the same level of legal analysis. It must be remembered that, whether in a development plan or in a non statutory statement such as the NPPF, these are statements of policy, not statutory texts, and must be read in that light. Even where there are disputes over interpretation, they may well not be determinative of the outcome. (As will appear, the present can be seen as such a case.) Furthermore, the courts should respect the expertise of the specialist planning inspectors, and start at least from the presumption that they will have understood the policy framework correctly. With the support and guidance of the Planning Inspectorate, they have primary responsibility for resolving disputes between planning authorities, developers and others, over the practical application of the policies, national or local. As I observed in the Court of Appeal (Wychavon District Council v Secretary of State for Communities and Local Government [2008] EWCA Civ 692; [2009] PTSR 19, para 43) their position is in some ways analogous to that of expert tribunals, in respect of which the courts have cautioned against undue intervention by the courts in policy judgments within their areas of specialist competence (see Secretary of State for the Home Department v AH (Sudan) [2007] UKHL 49; [2008] 1 AC 678, para 30 per Lady Hale.) Recourse to the courts may sometimes be needed to resolve distinct issues of law, or to ensure consistency of interpretation in relation to specific policies, as in the Tesco case. In that exercise the specialist judges of the Planning Court have an important role. However, the judges are entitled to look to applicants, seeking to rely on matters of planning policy in applications to quash planning decisions (at local or appellate level), to distinguish clearly between issues of interpretation of policy, appropriate for judicial analysis, and issues of judgement in the application of that policy; and not to elide the two. The two appeals Evolving judicial guidance To understand the reasoning of the two inspectors in the instant cases, it is necessary to set it in the context of the evolving High Court jurisprudence. The decisions in the two appeals were given in July and August 2014 respectively, after inquiries which ended in both cases in June. It is not entirely clear what information was available to the inspectors as to the current state of the High Court jurisprudence on this topic. The Yoxford inspector referred only to William Davis v Secretary of State for Communities and Local Government [2013] EWHC 3058 (Admin) (Lang J, 11 October 2013). This seems to have been the first case in which this issue had arisen. One of the grounds of refusal was based on a policy E20 the effect of which was generally to exclude development in a so called green wedge area defined on the proposals map. Lang J recorded an argument for the developer that the policy should have been regarded as a relevant policy for the supply of housing under paragraph 49 because the restriction on development potentially affects housing development. The judge rejected this argument summarily, saying policy E20 does not relate to the supply of housing and therefore is not covered by paragraph 49 (her emphasis). By the time the two inquiries in the present case ended (June 2014), and at the time of the decisions, it seems that the most recent judicial guidance then available on the interpretation of paragraph 49 was that of Ouseley J in South Northamptonshire Council v Secretary of State for Communities and Local Government and Barwood Land [2014] EWHC 573 (Admin) (10 March 2014) (the Barwood Land case). Ouseley J favoured a wider reading which examines the degree to which a particular policy generally affects housing numbers, distribution and location in a significant manner. He thought that the language could not sensibly be given a very narrow meaning because This would mean that policies for the provision of housing which were regarded as out of date, nonetheless would be given weight, indirectly but effectively through the operation of their counterpart provisions in policies restrictive of where development should go He contrasted general policies, such as those protecting the countryside, with policies designed to protect specific areas or features such as gaps between settlements, the particular character of villages or a specific landscape designation, all of which could sensibly exist regardless of the distribution and location of housing or other development. At that time, it seems to have been assumed that if a policy were deemed to be out of date under paragraph 49, it was in practice to be given minimal weight, in effect disapplied (see eg Cotswold District Council v Secretary of State for Communities and Local Government [2013] EWHC 3719 (Admin), para 72 per Lewis J). In other words, it was treated for the purposes of paragraph 14 as non policy, in the same way as if the development plan were absent or silent. On that view, it was clearly important to establish which policies were or were not to be treated as out of date in that sense. Later cases (after the date of the present decisions) introduced a greater degree of flexibility, by suggesting that paragraph 14 did not take away the ordinary discretion of the decision maker to determine the weight to be given even to an out of date policy; depending, for example, on the extent of the shortfall and the prospect of development coming forward to make it up (see eg Crane v Secretary of State for Communities and Local Government [2015] EWHC 425 (Admin), para 71 per Lindblom J). As will be seen, this idea was further developed in Lindblom LJs judgment in the present case. The Yoxford site In September 2013 Suffolk Coastal District Council refused planning permission for a development of 26 houses on land at Old High Road in Yoxford. The applicant, Hopkins Homes Ltd (Hopkins), appealed to an inspector appointed by the Secretary of State. He dismissed the appeal in a decision letter dated 15 July 2014, following an inquiry which began in February and ended in June 2014. The statutory development plan for the area comprised the Suffolk Coastal District Local Plan (SCDLP) adopted in July 2013, and certain saved policies from the previous local plan (the old Local Plan) adopted in December 1994. Chapter 3 SCDLP set out a number of strategic policies, including: i) Under the heading Housing, Policy SP2 (Housing numbers and Distribution) proposed as its core strategy to make provision for 7,900 new homes across the district in the period 2010 2027. In addition, an early review to be commenced by 2015 was to identify the full, objectively assessed housing needs for the district, with proposals to ensure that these were met so far as consistent with the NPPF. A table showed the proposed locations across the district to make up the total of 7,900 homes. ii) Under the heading The Spatial Strategy, Policy SP19 (Settlement Policy) identified Yoxford as one of a number of Key Service Centres, which provide an extensive range of specified facilities, and where modest estate scale development may be appropriate within the defined physical limits (under policy SP27 Key and Local Service Centres). Outside these settlements (under policy SP 29 The Countryside) there was to be no development other than in special circumstances. iii) The commentary to SP19 (para 4.05) explained that physical limits boundaries or village envelopes would be drawn up for the larger settlements, but that these limits are a policy tool and that where allocations are proposed outside the envelopes, the envelopes would be redrawn to include them. In his report on the examination of the draft SCDLP, the inspector had commented on the adequacy of the housing provision (paras 31 51). He had noted how the proposed figure of 7,590 homes fell short of what was later agreed to be the requirement for the plan period of 11,000 extra homes. He had considered whether to suspend the examination to enable the council to assess the options. He decided not to do so, recognising that there were other sites which might come forward to boost supply, and the advantages of enabling these to be considered in the context of an up to date suite of local development management policies that are consistent with the Framework The saved policies from the old plan included: AP4 (Parks and gardens of historic or landscape interest) The District Council will encourage the preservation and/or enhancement of parks and gardens of historic and landscape interest and their surroundings. Planning permission for any proposed development will not be granted if it would have a materially adverse impact on their character, features or immediate setting. AP13 (Special Landscape Areas) The valleys and tributaries of (named rivers) and the Parks and Gardens of Historic or Landscape Interest are designated as Special Landscape Areas and shown on the Proposals Map. The District Council will ensure that no development will take place which would be to the material detriment of, or materially detract from, the special landscape quality. The appeal site formed part of an area of Historic Parkland (related to an 18th century house known as Grove Park) identified by the council in its Supplementary Planning Guidance 6 Historic Parks and Gardens (SPG) dated December 1995. In his decision letter on the planning appeal, the inspector identified the main issues as including: consideration of a five years supply of housing land, the principle of development outside the defined village, and the effects of the proposal on the local historic parkland and landscape (para 4). He referred to paragraphs 14 and 49 of the NPPF, which he approached on the basis that it was very unlikely that a five years supply of housing land could now be demonstrated (paras 5 6). There had been a debate before him whether the recent adoption of the local plan meant that its policies are automatically up to date, but he read the comments of the examining Inspector on the need for an early review of housing delivery as indicating the advantages of considering development in the light of other up to date policies, whilst accepting that pending the review relevant policies for the supply of housing may be considered not to be up to date (para 7). He then considered which policies were relevant policies for the supply of housing within the meaning of paragraph 49 (paras 8 9). Policy SP2 which sets out housing provision for the District was one such policy and cannot be considered as up to date. Policy SP15 relating to landscape and townscape and not specifically to the supply of housing was not a relevant policy and so is up to date. For the same reason, policy SP19, which set the settlement hierarchy and showed percentages of total proposed housing for broad categories of settlements, but did not suggest figures or percentages for individual settlements, was also seen as up to date; as was SP27, which related specifically to Key and Local Service Centres, and sought, among other things, to reinforce their individual character. Of the saved policy AP4 he noted a degree of conflict with paragraph 215 of the Framework due to the absence of a balancing judgement in Policy AP4, but thought its broad aim consistent with the aims of the Framework. He said: these matters reduce the weight that I attach to Policy AP4, although I shall attach some weight to it. Similarly, he thought Policy AP13 consistent with the aims of the Framework to recognise the intrinsic quality of the countryside and promote policies for the conservation and enhancement of the natural environment (para 10). In relation to the proposal for development outside the defined village limits, he observed that the appeal site was outside the physical limits boundary as defined in the very recently adopted Local Plan. He regarded the policy directing development to within the physical limits of the settlement to be in accordance with one of the core principles of the Framework, recognising the intrinsic character and beauty of the countryside. On this aspect he concluded: I consider that the appeal site occupies an important position adjacent to the settlement, where Old High Road marks the end of the village and the start to the open countryside. The proposed development would be unacceptable in principle, contrary to the provisions of Policies SP27 and SP29 and contrary to one of the core principles of the Framework. (paras 13 14) As to its location within a historic parkland, he discussed the quality of the landscape and the impact of the proposal, and concluded: 20. In relation to the built character and layout of Yoxford and its setting, Old High Road forms a strong and definite boundary to the built development of the village here. I do not agree that the proposal forms an appropriate development site in this respect, but would be seen as an ad hoc expansion across what would otherwise be seen as the village/countryside boundary and the development site would not be contained to the west by any existing logical boundary. 21. In respect of these matters, the historic parkland forms a non designated heritage asset, as defined in the Framework and I conclude that the proposal would have an unacceptable effect on the significance of this asset. In relation to local policies, I find that the proposal would be in conflict with the aims of Policies AP4 and AP13 of the old Local Plan Finally, under the heading The planning balance, he acknowledged the advantage that the proposal would bring additional homes, including some affordable, within a District where the supply of homes is a concern, but said: However, I have found significant conflict with policies in the recently adopted Local Plan. I have also found conflict with some saved policies of the old Local Plan and I have sought to balance these negative aspects of the proposal against its benefits. In doing so, I consider that the unacceptable effects of the development are not outweighed by any benefits and means that it cannot be considered as a sustainable form of development, taking account of its three dimensions as set out at paragraph 7 of the Framework. Therefore, the proposal conflicts with the aims of the Framework. (paras 31 32) Hopkins challenged the decision in the High Court on the grounds that the inspector had misdirected himself in three respects: in short, as to the interpretation of NPPF paragraph 49; as to the status of the limits boundary to Yoxford; and as to the status of Policy AP4. The Secretary of State conceded that the inspector had misapplied the policy in paragraph 49. Supperstone J referred to the approach of Ouseley J in the Barwood Land case, with which he agreed, preferring it to that of Lang J in the William Davis case. He accepted the submission for Hopkins that the inspector had erred in thinking that paragraph 49 only applied to policies dealing with the positive provision of housing, with the result that his decision had to be quashed (paras 33, 38 41). He held in addition that this inspector had wrongly proceeded on the basis that the village boundary had been defined in the recent local plan, rather than in the earlier plan (para 46); and that he had failed properly to assess the significance of the heritage asset as required by paragraph 135 of the Framework (para 53). On 30 January 2015 Supperstone J quashed the decision. The councils appeal to the Court of Appeal failed. It now appeals to this court. The Willaston site The Crewe and Nantwich Replacement Local Plan, adopted on 17 February 2005 (the adopted RLP) sought to address the development needs of the Crewe and Nantwich area for the period from 1996 to 2011. Under the 2004 Act, it should have been replaced by a Local Development Framework by 2008. This did not happen. As a consequence, the policies were saved by the Secretary of State by Direction (dated 14 February 2008). Crewe is identified as a location for new housing growth in the emerging Local Plan, which is the subject of an ongoing examination in public and subject to objections, as are some of the proposed housing allocations. At the time of the public inquiry in June 2014, the emerging Local Plan was understood to be over two years from being adopted. Richborough Estates Partnership LLP (Richborough) in August 2013 applied to Cheshire East Borough Council for permission for a development of up to 170 houses on land north of Moorfields in Willaston. The council having failed to determine the application within the prescribed period, Richborough appealed. Willaston is a settlement within the defined urban area of Crewe, but for the most part is physically separate from the town. As a consequence there is open land between Willaston and the main built up area of Crewe, within which open land the appeal site lies. NE.2, NE.4, and RES.5: In the appeal Cheshire East relied on the adopted RLP, in particular policies i) Policy NE.2 (Open Countryside) seeks to protect the open countryside from new build development for its own sake, permitting only a very limited amount of small scale development mainly for agricultural, forestry or recreational purposes. ii) Policy NE.4 (Green Gap) relates to areas of open land around Crewe (including the area of the appeal site) identified as needing additional protection in order to maintain the definition and separation of existing communities. The policy provides that permission will not be granted for new development, including housing, save for limited exceptions. It has the same inner boundary as NE.2. iii) Policy RES.5 (Housing in the open countryside) permits only very limited forms of residential development in the open countryside, such as agricultural workers dwellings. In his decision letter dated 1 August 2014 the inspector allowed the appeal and granted planning permission for up to 146 dwellings. He concluded that Cheshire East was unable to demonstrate the minimum five year supply of housing land required under paragraph 47 of the NPFF. The council appears to have accepted at the inquiry that policy NE.2 was a policy for the supply of housing. The inspector thought that the same considerations applied to the other two policies relied on by the council, all of which were therefore relevant policies within paragraph 49, although he acknowledged that policy NE.4 also performed strategic functions in maintaining the separation and definition of settlements and in landscape protection. He noted also that two of the housing sites in the emerging local plan were in designated green gaps, which led him to give policy NE.4 reduced weight (paras 31 35). He concluded on this aspect (para 94): 94. I have concluded that there is not a demonstrable five year supply of deliverable housing sites (issue (i)). In the light of that, the weight of policies in the extant RLP relevant to the supply of housing is reduced (issue (ii)). That applies in particular to policies NE.2, NE.4 and RES.5 in so far as their extent derives from settlement boundaries that in turn reflect out of date housing requirements, though policy NE.4 also has a wider purpose in maintaining gaps between settlements. He considered the application of the Green Gap policy, concluding that there would be no significant harm to the wider functions of the gap in maintaining the definition and separation of these two settlements (para 95). His overall conclusion was as follows: 101. I conclude that the proposed development would be sustainable overall, and that the adverse effects of it would not significantly and demonstrably outweigh the benefits when assessed against the policies in the Framework as a whole. There are no specific policies in the NPPF that indicate that this development should be restricted. In such circumstances, and where relevant development plan policies are out of date, the NPPF indicates that permission should be granted unless material considerations indicate otherwise. There are no further material considerations that do so. The councils challenge succeeded before Lang J, who quashed the inspectors decision by an order dated 25 February 2015. In short, she concluded that the inspector had erred in treating policy NE.4 as a relevant policy under paragraph 49, and in seeking to divide the policy, so as to apply it in part only (para 63). Richboroughs appeal was allowed by the Court of Appeal with the result that the permission was restored. The council appeals to this court. The Court of Appeals interpretation Giving the judgment of the court, Lindblom LJ referred to the relevant parts of the NPPF and (at para 21) the three competing interpretations of paragraph 49: i) Narrow: limited to policies dealing only with the numbers and distribution of new housing, and excluding any other policies of the development plan dealing generally with the disposition or restriction of new development in the authoritys area. ii) Wider: including both policies providing positively for the supply of new housing and other policies, or counterpart policies, whose effect is to restrain the supply by restricting housing development in certain parts of the authoritys area. iii) Intermediate: as under (ii), but excluding policies designed to protect specific areas or features, such as gaps between settlements, the particular character of villages or a specific landscape designation (as suggested by Ouseley J in the Barwood Land case). He discussed the connection between paragraph 49 and the presumption in favour of sustainable development in paragraph 14, which lay in the concept of relevant policies being not up to date under paragraph 49, and therefore out of date for the purposes of paragraph 14 (para 30). He explained the courts reasons for preferring the wider view of paragraph 49. He read the words for the supply of housing as meaning affecting the supply of housing, which he regarded as not only the literal interpretation of the policy, but the only interpretation consistent with the obvious purpose of the policy when read in its context. He continued: 33. Our interpretation of the policy does not confine the concept of policies for the supply of housing merely to policies in the development plan that provide positively for the delivery of new housing in terms of numbers and distribution or the allocation of sites. It recognizes that the concept extends to plan policies whose effect is to influence the supply of housing land by restricting the locations where new housing may be developed including, for example, policies for the Green Belt, policies for the general protection of the countryside, policies for conserving the landscape of Areas of Outstanding Natural Beauty and National Parks, policies for the conservation of wildlife or cultural heritage, and various policies whose purpose is to protect the local environment in one way or another by preventing or limiting development. It reflects the reality that policies may serve to form the supply of housing land either by creating it or by constraining it that policies of both kinds make the supply what it is. (para 33) The court rejected the narrow interpretation, advocated by the councils, which it thought plainly wrong: It is both unrealistic and inconsistent with the context in which the policy takes its place. It ignores the fact that in every development plan there will be policies that complement or support each other. Some will promote development of one type or another in a particular location, or by allocating sites for particular land uses, including the development of housing. Others will reinforce the policies of promotion or the site allocations by restricting development in parts of the plan area, either in a general way for example, by preventing development in the countryside or outside defined settlement boundaries or with a more specific planning purpose such as protecting the character of the landscape or maintaining the separation between settlements. (para 34) Whether a particular policy of a plan was a relevant policy in that sense was a matter for the decision maker, not the court (para 45). Furthermore 46. We must emphasize here that the policies in paragraphs 14 and 49 of the NPPF do not make out of date policies for the supply of housing irrelevant in the determination of a planning application or appeal. Nor do they prescribe how much weight should be given to such policies in the decision. Weight is, as ever, a matter for the decision maker Neither of those paragraphs of the NPPF says that a development plan policy for the supply of housing that is out of date should be given no weight, or minimal weight, or, indeed, any specific amount of weight. They do not say that such a policy should simply be ignored or disapplied In relation to the Yoxford site, the court agreed with Supperstone J that the inspector had wrongly applied the erroneous narrow interpretation. Policies SP 19, 27 and 29, were all relevant policies in that they all affect the supply of housing land in a real way by restraining it (paras 51 52). The court also agreed with the judge that the inspector had been mistaken in assuming that the physical limits of the village had been established in the 2013 plan (para 58); and also that he had misapplied paragraph 135 relating to heritage assets (para 65). In that respect there could be no criticism of his treatment of the impact of the development on the local landscape, but what was lacking was a distinct and clearly reasoned assessment of the effect the development would have upon the significance of the parkland as a heritage asset, and, crucially, the balanced judgment called for by paragraph 135, having regard to the scale of any harm or loss and the significance of the heritage asset. (para 65) In respect of the Willaston site, the court disagreed with Lang Js conclusion that policy NE.4 was not a relevant policy for the supply of housing. The inspector had made no error of law in that respect, and his decision should be restored (paras 69 71). Discussion Interpretation of paragraph 14 The argument, here and below, has concentrated on the meaning of paragraph 49, rather than paragraph 14 and the interaction between the two. However, since the primary purpose of paragraph 49 is simply to act as a trigger to the operation of the tilted balance under paragraph 14, it is important to understand how that is intended to work in practice. The general effect is reasonably clear. In the absence of relevant or up to date development plan policies, the balance is tilted in favour of the grant of permission, except where the benefits are significantly and demonstrably outweighed by the adverse effects, or where specific policies indicate otherwise. (See also the helpful discussion by Lindblom J in Bloor Homes East Midlands Ltd v Secretary of State for Communities and Local Government [2014] EWHC 754 (Admin), paras 42ff) It has to be borne in mind also that paragraph 14 is not concerned solely with housing policy. It needs to work for other forms of development covered by the development plan, for example employment or transport. Thus, for example, there may be a relevant policy for the supply of employment land, but it may become out of date, perhaps because of the arrival of a major new source of employment in the area. Whether that is so, and with what consequence, is a matter of planning judgement, unrelated of course to paragraph 49 which deals only with housing supply. This may in turn have an effect on other related policies, for example for transport. The pressure for new land may mean in turn that other competing policies will need to be given less weight in accordance with the tilted balance. But again that is a matter of pure planning judgement, not dependent on issues of legal interpretation. If that is the right reading of paragraph 14 in general, it should also apply to housing policies deemed out of date under paragraph 49, which must accordingly be read in that light. It also shows why it is not necessary to label other policies as out of date merely in order to determine the weight to be given to them under paragraph 14. As the Court of Appeal recognised, that will remain a matter of planning judgement for the decision maker. Restrictive policies in the development plan (specific or not) are relevant, but their weight will need to be judged against the needs for development of different kinds (and housing in particular), subject where applicable to the tilted balance. Paragraph 49 Unaided by the legal arguments, I would have regarded the meaning of paragraph 49 itself, taken in context, as reasonably clear, and not susceptible to much legal analysis. It comes within a group of paragraphs dealing with delivery of housing. The context is given by paragraph 47 which sets the objective of boosting the supply of housing. In that context the words policies for the supply of housing appear to do no more than indicate the category of policies with which we are concerned, in other words housing supply policies. The word for simply indicates the purpose of the policies in question, so distinguishing them from other familiar categories, such as policies for the supply of employment land, or for the protection of the countryside. I do not see any justification for substituting the word affecting, which has a different emphasis. It is true that other groups of policies, positive or restrictive, may interact with the housing policies, and so affect their operation. But that does not make them policies for the supply of housing in the ordinary sense of that expression. In so far as the paragraph 47 objectives are not met by the housing supply policies as they stand, it is quite natural to describe those policies as out of date to that extent. As already discussed, other categories of policies, for example those for employment land or transport, may also be found to be out of date for other reasons, so as to trigger the paragraph 14 presumption. The only difference is that in those cases there is no equivalent test to that of the five year supply for housing. In neither case is there any reason to treat the shortfall in the particular policies as rendering out of date other parts of the plan which serve a different purpose. This may be regarded as adopting the narrow meaning, contrary to the conclusion of the Court of Appeal. However, this should not be seen as leading, as the lower courts seem to have thought, to the need for a legalistic exercise to decide whether individual policies do or do not come within the expression. The important question is not how to define individual policies, but whether the result is a five year supply in accordance with the objectives set by paragraph 47. If there is a failure in that respect, it matters not whether the failure is because of the inadequacies of the policies specifically concerned with housing provision, or because of the over restrictive nature of other non housing policies. The shortfall is enough to trigger the operation of the second part of paragraph 14. As the Court of Appeal recognised, it is that paragraph, not paragraph 49, which provides the substantive advice by reference to which the development plan policies and other material considerations relevant to the application are expected to be assessed. The Court of Appeal was therefore right to look for an approach which shifted the emphasis to the exercise of planning judgement under paragraph 14. However, it was wrong, with respect, to think that to do so it was necessary to adopt a reading of paragraph 49 which not only changes its language, but in doing so creates a form of non statutory fiction. On that reading, a non housing policy which may objectively be entirely up to date, in the sense of being recently adopted and in itself consistent with the Framework, may have to be treated as notionally out of date solely for the purpose of the operation of paragraph 14. There is nothing in the statute which enables the Secretary of State to create such a fiction, nor to distort what would otherwise be the ordinary consideration of the policies in the statutory development plan; nor is there anything in the NPPF which suggests an intention to do so. Such an approach seems particularly inappropriate as applied to fundamental policies like those in relation to the Green Belt or Areas of Outstanding Natural Beauty. No one would naturally describe a recently approved Green Belt policy in a local plan as out of date, merely because the housing policies in another part of the plan fail to meet the NPPF objectives. Nor does it serve any purpose to do so, given that it is to be brought back into paragraph 14 as a specific policy under footnote 9. It is not out of date, but the weight to be given to it alongside other material considerations, within the balance set by paragraph 14, remains a matter for the decision maker in accordance with ordinary principles. The two appeals Against this background I can deal relatively shortly with the two individual appeals. On both I arrive ultimately at the same conclusion as the Court of Appeal. It is convenient to begin with the Willaston appeal, where the issues are relatively straightforward. On any view, quite apart from paragraph 49, the current statutory development plan was out of date, in that its period extended only to 2011. On my understanding of paragraph 49, the council and the inspector both erred in treating policy NE.2 (Countryside) as a policy for the supply of housing. But that did not detract materially from the force of his reasoning (see the summary in paras 44 45 above). He was clearly entitled to conclude that the weight to be given to the restrictive policies was reduced to the extent that they derived from settlement boundaries that in turn reflect out of date housing requirements (para 94). He recognised that policy NE.4 had a more specific purpose in maintaining the gap between settlements, but he considered that the proposal would not cause significant harm in this context (para 95). His final conclusion (para 101) reflected the language of paragraph 14 (the tilted balance). There is no reason to question the validity of the permission. The Yoxford appeal provides an interesting contrast, in that there was an up to date development plan, adopted in the previous year; but its housing supply policies failed to meet the objectives set by paragraph 47 of the NPPF. The inspector rightly recognised that they should be regarded as out of date for the purposes of paragraph 14. At the same time, it provides a useful illustration of the unreality of attempting to distinguish between policies for the supply of housing and policies for other purposes. Had it mattered, I would have been inclined to place in the housing category policy SP2, the principal policy for housing allocations. SP 19 (settlement policy) would be more difficult to place, since, though not specifically related to housing, it was seen (as the commentary indicated) as a planning tool designed to differentiate between developed areas and the countryside. Understandably, in the light of the judicial guidance then available to him, the inspector thought it necessary to make the distinction, and to reflect it in the planning balance. He categorised both SP 19 and SP 27 as non housing policies, and for that reason to be regarded as up to date (see para 35 above). Under the Court of Appeals interpretation this was an erroneous approach, because each of these policies affected the supply of housing, and should have been considered out of date for that reason. On my preferred approach his categorisation was not so much erroneous in itself, as inappropriate and unnecessary. It only gave rise to an error in law in so far as it may have distorted his approach to the application of paragraph 14. As to that I agree with the courts below that his approach (through no fault of his own) was open to criticism. Having found that the settlement policy was up to date, and that the boundary had been approved in the recent plan, he seems to have attached particular weight to the fact that it had been defined in the very recently adopted Local Plan (para 37 above). I would not criticise him for failing to record that it had been carried forward from the previous plan. In some circumstances that could be a sign of robustness in the policy. But in this case it was clear from the plan itself that the settlement boundary was, to an extent at least, no more than the counterpart of the housing policies, and that, under the paragraph 14 balance, its weight might need to be reduced if the housing objectives were to be fulfilled. He should not have allowed its supposed status as an up to date policy under paragraph 49 to give it added weight. It is true that he also considered the merits of the site (quite apart from the plan) as providing a strong and definite boundary to the village (para 20). But I am not persuaded that this is sufficient to make it clear that the decision would have been the same in any event. I do not, however, agree with the Court of Appeals criticisms of his treatment of the Heritage Asset policy. Paragraph 10 of his letter (summarised at para 36 above) is in my view a faithful application of the guidance in paragraph 215 of the Framework. That does not, and could not, suggest that even saved development plan policies are simply replaced by the policies in the Framework. What it does is to indicate that the weight to be given to the saved policies should be assessed by reference to their degree of consistency with the Framework. That is what the inspector did. Having done so he was entitled to be guided by the policies as stated in the saved plans, and not treat them as replaced by paragraph 135. In any event, in so far as there needs to be a balanced judgement, which the Court of Appeal regarded as crucial (para 65), that seems to me provided by the last section of his letter, headed appropriately the planning balance. Overall the letter seems to me an admirably clear and carefully constructed appraisal of the relevant planning issues, in the light of the judicial guidance then available. It is with some reluctance therefore that I feel bound to agree with the Court of Appeal that the decision must be quashed, albeit on narrower grounds. The result, is that the order of Supperstone J will be affirmed, and the planning appeal will fall to be re determined. Conclusion For these reasons I would dismiss both appeals. LORD GILL: (with whom Lord Neuberger, Lord Clarke and Lord Hodge agree) I agree with Lord Carnwaths conclusions on the decision that is appealed against and with his views as to the disposal of these appeals. I only add some comments on the approach that should be taken in the application of the National Planning Policy Framework (the Framework) in planning applications for housing development. These appeals raise a question as to the respective roles of the courts and of the planning authorities and the inspectors in relation to guidance of this kind; and a specific question of interpretation arising from paragraph 49 of the Framework. In Tesco Stores Ltd v Dundee City Council, (ASDA Stores Ltd intervening) ([2012] UKSC 13) Lord Reed considered the former question in relation to development plan policies. He expressed the view, as a general principle of administrative law, that policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context (at para 18). The proper context, in my view, is provided by the over riding objectives of the development plan and the specific objectives to which the policy statement in question is directed. Taking a similar approach to that of Lord Reed, I consider that it is the proper role of the courts to interpret a policy where the meaning of it is contested, while that of the planning authority is to apply the policy to the facts of the individual case. In my opinion, the same distinction falls to be made in relation to guidance documents such as the Framework. In both cases the issue of interpretation is the same. It is about the meaning of words. That is a question for the courts. The application of the guidance, as so interpreted, to the individual case is exclusively a planning judgment for the planning authority and the inspectors. The guidance given by the Framework is not to be interpreted as if it were a statute. Its purpose is to express general principles on which decision makers are to proceed in pursuit of sustainable development (paras 6 10) and to apply those principles by more specific prescriptions such as those that are in issue in these appeals. In my view, such prescriptions must always be interpreted in the overall context of the guidance document. That context involves the broad purpose of the guidance and the particular planning problems to which it is directed. Where the guidance relates to decision making in planning applications, it must be interpreted in all cases in the context of section 70(2) of the Town and Country Planning Act 1990 and section 38(6) of the Planning and Compulsory Purchase Act 2004, to which the guidance is subordinate. While the Secretary of State must observe these statutory requirements, he may reasonably and appropriately give guidance to decision makers who have to apply them where the planning system is failing to satisfy an unmet need. He may do so by highlighting material considerations to which greater or less weight may be given with the over riding objective of the guidance in mind. It is common ground that such guidance constitutes a material consideration (Framework, para 2). In relation to housing, the objective of the Framework is clear. Section 6, Delivering a wide choice of high quality homes, deals with the national problem of the unmet demand for housing. The purpose of paragraph 47 is to boost significantly the supply of housing. To that end it requires planning authorities (a) to ensure inter alia that plans meet the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in the Framework, including the identification of key sites that are critical to the delivery of the housing strategy over the plan period; (b) to identify and update annually a supply of specific deliverable sites sufficient to provide five years worth of housing against their housing requirements, with an additional buffer of 5% to ensure choice and competition in the market for the land; and (c) in the longer term to identify a supply of specific, developable sites or broad locations for growth for years six to ten and, where possible, for years 11 15. The importance that the guidance places on boosting the supply of housing is further demonstrated in the same paragraph by the requirements that for market and affordable housing planning authorities should illustrate the expected rate of housing delivery through a housing trajectory for the plan period and set out a housing implementation strategy for the full range of housing, describing how they will maintain delivery of a five years supply of housing land to meet their housing target; and that they should set out their own approach to housing density to reflect local circumstances. The message to planning authorities is unmistakeable. These requirements, and the insistence on the provision of deliverable sites sufficient to provide the five years worth of housing, reflect the futility of authorities relying in development plans on the allocation of sites that have no realistic prospect of being developed within the five year period. Among the obvious constraints on housing development are development plan policies for the preservation of the greenbelt, and environmental and amenity policies and designations such as those referred to in footnote 9 of paragraph 14. The rigid enforcement of such policies may prevent a planning authority from meeting its requirement to provide a five years supply. This is the background to the interpretation of paragraph 49. The paragraph applies where the planning authority has failed to demonstrate a five years supply of deliverable sites and is therefore failing properly to contribute to the national housing requirement. In my view, paragraph 49 derives its content from paragraph 47 and must be applied in decision making by reference to the general prescriptions of paragraph 14. To some extent the issue in these cases has been obscured by the doctrinal controversy which has preoccupied the courts hitherto between the narrow and the wider interpretation of the words relevant policies for the supply of housing. I think that the controversy results from too narrow a focus on the wording of that paragraph. I agree with the view taken by Lindblom LJ in his lucid judgement that the task of the court is not to try to reconcile the various first instance judgments on the point, but to interpret the policy of paragraph 49 correctly (at para 23). In interpreting that paragraph, in my opinion, the court must read it in the policy context to which I have referred, having in view the planning objective that the Framework seeks to achieve. I regret to say that I do not agree with the interpretation of the words relevant policies for the supply of housing that Lindblom LJ has favoured. In my view, the straightforward interpretation is that these words refer to the policies by which acceptable housing sites are to be identified and the five years supply target is to be achieved. That is the narrow view. The real issue is what follows from that. If a planning authority that was in default of the requirement of a five years supply were to continue to apply its environmental and amenity policies with full rigour, the objective of the Framework could be frustrated. The purpose of paragraph 49 is to indicate a way in which the lack of a five years supply of sites can be put right. It is reasonable for the guidance to suggest that in such cases the development plan policies for the supply of housing, however recent they may be, should not be considered as being up to date. If the policies for the supply of housing are not to be considered as being up to date, they retain their statutory force, but the focus shifts to other material considerations. That is the point at which the wider view of the development plan policies has to be taken. Paragraph 49 merely prescribes how the relevant policies for the supply of housing are to be treated where the planning authority has failed to deliver the supply. The decision maker must next turn to the general provisions in the second branch of paragraph 14. That takes as the starting point the presumption in favour of sustainable development, that being the golden thread that runs through the Framework in respect of both the drafting of plans and the making of decisions on individual applications. The decision maker should therefore be disposed to grant the application unless the presumption can be displaced. It can be displaced on only two grounds both of which involve a planning judgment that is critically dependent on the facts. The first is that the adverse impacts of a grant of permission, such as encroachment on the greenbelt, will significantly and demonstrably outweigh the benefits of the proposal. Whether the adverse impacts of a grant of permission will have that effect is a matter to be assessed against the policies in the Framework, taken as a whole. That clearly implies that the assessment is not confined to environmental or amenity considerations. The second ground is that specific policies in the Framework, such as those described in footnote 9 to the paragraph, indicate that development should be restricted. From the terms of footnote 9 it is reasonably clear that the reference to specific policies in the Framework cannot mean only policies originating in the Framework itself. It must also mean the development plan policies to which the Framework refers. Green belt policies are an obvious example. Although my interpretation of the guidance differs from that of the Court of Appeal, I have come to the same conclusions in relation to the disposal of these cases. I agree with Lord Carnwath that in the Willaston decision, notwithstanding an erroneous interpretation of policy NE.2 as being a policy for the supply of housing, the Inspector got the substance of the matter right and accurately applied paragraph 14. I agree too with Lord Carnwath, for the reasons that he gives (at para 68), that in the Yoxford decision the Inspector made a material, but understandable, error. I would therefore dismiss both appeals. |
This is an appeal from an interlocutor of the First Division of the Inner House of the Court of Session (the Lord President (Hamilton), Lord Reed and Lord Emslie) in a joint referral to the Special Commissioners by Scottish Widows Plc (the Company) and Her Majestys Revenue and Customs (HMRC) under para 31 of Schedule 18 to the Finance Act 1998: [2010] CSIH 47, 2010 SLT 885, 2010 STC 2133. The question that was referred to the Special Commissioners for their determination was in these terms: Whether in computing the Case 1 profit or loss of Scottish Widows plc for the accounting periods ending in 2000, 2001 and 2002, amounts described by the company as transfers from Capital Reserve and included as part of the entries at line 15 of Form 40 for each period fall to be taken into account [as receipts] in computing the profit or loss as the case may be. It is agreed that the words as receipts, which were not in the question as referred, may be understood as following after the words into account. The Special Commissioners answered that question in the affirmative. The Company appealed against that decision and HMRC cross appealed. The Court of Session by a majority (Lord Emslie dissenting) refused the appeal and unanimously refused the cross appeal. Both sides have appealed against its decisions to this court. The essence of the dispute between the parties is whether, in each of the three consecutive years in question, part of the entry in line 15 of the Companys form 40 must be taken as falling within the scope of either section 83(2) or section 83(3) of the Finance Act 1989, as substituted by paragraph 16 of Schedule 8 to the Finance Act 1995 and paragraph 4 of Schedule 31 to the Finance Act 1996. If it falls within the scope either of these two subsections, the sum concerned will fall to be treated as a chargeable receipt for the purposes of Case 1 of Schedule D in ascertaining whether, and if so to what extent, the Company made a loss during those years. The Company carries on business as a life assurance company. Insurance business is a trade within the meaning of Case 1 of Schedule D: Income and Corporation Taxes Act 1988, section 18. The amounts to be taken into account in computing its profits include its investment income from its long term business fund and any increase in the value of its assets during the accounting period. Those profits may be computed for tax purposes in one or other of two ways. They may be computed on the Schedule D, Case 1 basis, the actuarial surplus being a suitable starting point for dealing with cases of this description: see Scottish Union and National Insurance Co v Inland Revenue (1889) 16 R 461, 475, per Lord President Inglis. Or they may be computed on the basis of the income which the insurer receives on its investments less management expenses, known as the I E basis. HMRC are entitled to elect to charge tax on the investment income, and they almost invariably do so as it nearly always pays the Crown to take the interest on the investments and not to trouble with the profits: Revell v Edinburgh Life Insurance Co (1906) 5 TC 221, 227 per Lord President Dunedin. But a Case 1 computation is nevertheless required in every case. The dispute between the parties arises from the demutualisation in 2000 of the Scottish Widows Fund and Life Assurance Society (the Society) and the transfer, under a scheme sanctioned by the Court, of its business to the Company. The scheme came into effect on 3 March 2000. In para 22.1 it was provided that on or after the effective date the Company was to maintain a memorandum account within its long term fund, designated as the capital reserve, which was to represent the amount of the shareholders capital held within the long term business fund. The capital reserve was to be divided between the Companys with profits fund and its non participating fund. Para 22.4 provided that the Company was to maintain records of the capital reserve and of the parts of it allocated to each of these two funds. While the funds comprised identifiable assets with all the qualities that attach to items of that kind, the capital reserve was a device or, as Lord Walker says in para 55, an abstraction. It was created for accounting purposes only and had no real life of its own. At the time of the transfer to the Company the value of the Societys assets was substantially in excess of its liabilities. But the Company sustained trading losses in each of the relevant accounting periods. The market value of its assets decreased from the inception of its long term business fund, due principally to falls in the value of the stock market. The Company claims that account should be taken of its commercial losses in its non participating fund during the relevant accounting periods. It has included Case 1 losses in its tax returns and computations for those periods equal to 28,689,437, 612,583,866 and 431,261, 757 respectively. HMRC maintain that, on a proper construction of section 83(2) of the 1989 Act, which failing of section 83(3), and having regard to entries in the Companys statutory returns for the relevant periods in which it was required to show that it had a surplus in excess of its liabilities for regulatory purposes, these claims should be disallowed. The Company brought various sums into account, described as transfers from the capital reserve, in the years in which they sustained losses. HMRC submit that each increase in the regulatory value selected by the Company falls to be treated as an increase in the value of its assets within the meaning of section 83(2)(b). In any event the amounts brought into account and recorded as transfers from the capital reserve fall to treated as receipts under section 83(3) because they were amounts which had previously been added to the long term business fund as part of the transfer of business to the Company from the Society. The statutory provisions Section 83, as amended, so far as relevant to this case provides as follows: (1) The following provisions of this section have effect where the profits of an insurance company in respect of its life assurance business are, for the purposes of the Taxes Act 1988, computed in accordance with the provisions of that Act applicable to Case 1 of Schedule D. (2) So far as referable to that business, the following items, as brought into account for a period of account (and not otherwise), shall be taken into account as receipts of the period (a) the companys investment income from the assets of its long term business fund, and (b) any increase in value (whether realised or not) of those assets. If for any period of account there is a reduction in the value referred to in paragraph (b) above (as brought into account for the period), that reduction shall be taken into account as an expense of that period. (3) In ascertaining whether or to what extent a company has incurred a loss in respect of that business in a case where an amount is added to the companys long term business fund as part of or in connection with (a) a transfer of business to the company, or (b) a demutualisation of the company not involving a transfer of business, that amount shall (subject to subsection (4) below) be taken into account for the period for which it is brought into account, as an increase in value of the assets of that fund within subsection (2)(b) above. (4) Subsection (3) above does not apply where, or to the extent that, the amount concerned (a) would fall to be taken into account as a receipt apart from this section, (b) is taken into account under subsection (2) above otherwise than by virtue of subsection (3) above, or (c) is specifically exempted from tax. In section 83(8) of the 1989 Act, as amended it is provided that the word add in that section, in relation to an amount and a companys long term business fund, includes transfer (whether from other assets of the company or otherwise). Section 83A(1), which was inserted by section 51 of and paragraph 16 of Schedule 8 to the Finance Act 1995 and amended by paragraph 6 of Schedule 31 to the Finance Act 1996, provides that brought into account in sections 83 to 83AB (as inserted by paragraph 5 of Schedule 31 to the 1996 Act) means brought into account in an account which is recognised for the purposes of those sections. Section 83A(2) provides: Subject to the following provisions of this section and to any regulations made by the Treasury, the accounts recognised for the purposes of those sections are (a) a revenue account prepared for the purposes of the Insurance Companies Act 1982 in respect of the whole of the companys long term business; (b) any separate revenue account required to be prepared under that Act in respect of a part of that business. Paragraph (b) above does not include accounts required in respect of internal linked funds. The revenue account that section 83A(2)(b) refers to is the regulatory return in form 40: see para 12, below. Section 431 of the 1988 Act contains a list of interpretative provisions relating to insurance companies. They include a definition of the word value: see section 83(2)(b) of the 1989 Act. It is in these terms: value, in relation to assets of an insurance company, means the value of the assets as taken into account for the purposes of the companys periodical return. Insurance companies are under an obligation to submit annual returns to the Financial Services Authority (FSA) for regulatory purposes. The purpose of these returns is to demonstrate that the insurer meets the regulatory standard of solvency. They are required to show the results of a statutory actuarial investigation, which calculates the value of the insurers liabilities and identifies the amount of surplus in excess of those liabilities. They must show that there is a sufficient surplus to cover any declared bonuses. At the time of the demutualisation the relevant regulations were to be found in the Insurance Companies Act 1982, the Insurance Companies Regulations 1994 (SI 1994/1516) and the Insurance Companies (Accounts and Statements) Regulations 1996 (SI 1996/943). Section 17 of the 1982 Act provides that every insurance company carrying on insurance business in the United Kingdom must prepare a revenue account for each financial year of the company, a balance sheet and a profit and loss account, the contents of which are to be such as may be prescribed by regulations. Section 18 provides for an actuarial investigation once in every period of twelve months of every insurance company which carries on long term business. Section 28 provides that it must maintain an account of the assets and liabilities attributable to its ordinary long term insurance business. Regulation 45(6) of the 1994 Regulations provides that an insurance company may, for the purposes of an investigation to which section 18 of the Act applied, elect to assign to any of its assets the value given to the asset in question in the books or other records of the company. This was already a practice of long standing in the insurance industry. For a detailed description of the background to these requirements and to the provisions of the Finance Act 1989 about the taxation of the life assurance business of an insurance company, reference may be made to Lord Reeds opinion in the Court of Session to which, like Lord Walker, I would pay tribute: 2010 SLT 885, paras 91 126. A useful summary of the FSA regime that was in force at the relevant time is to be found in Lord Emslies opinion, para 198 (ix) to (xii); see also Lord Walker, at paras 49 53, below. In short, the regulatory returns which a company carrying on long term life insurance was required to complete and submit included a series of numbered forms. Form 13 set out an analysis of all the companys admissible assets, entered at a value which broadly corresponded to their year end market value. Form 14 set out in line 51 the amount by which the net admissible assets exceeded the companys long term business liabilities. Form 40, which was headed Revenue account, set out revenue flows and expenditure for the Companys long term business fund, its with profits fund and its non participating fund, and the amount of each fund to be carried forward to form 58. Form 58, which was headed Valuation result and distribution of surplus, determined the amount of the actuarial surplus by comparing the value of the insurers liabilities under the policies that it has issued with the fund shown on form 40. The data that were used to prepare these regulatory returns were the same as those used to prepare the Companys statutory accounts. The amounts that were calculated by the Company as the commercial losses of its non participating fund were derived from decreases in the market value of the admissible assets less liabilities in that fund during the relevant accounting periods. For each of these periods, however, there were included in the figure entered as other income in line 15 of form 40 amounts described as transfers from capital reserve which reduced the capital reserve by an equivalent amount. They should perhaps have been included as an increase in the value of assets brought into account in line 13. But it is agreed that the way they fall to be treated does not depend on whether they were entered there or in line 15. The Special Commissioners said there is no difference in principle, as both lines are brought into account in the total shown at line 19: para 51. The amounts in aggregate for the relevant accounting periods were 33,410,000, 472,724,000 and 370,000,000 respectively. The approach to construction It is well understood that statutory provisions which bring profits and gains into charge to tax are to be construed as directed towards profits and gains in their natural and proper sense in a sense which no commercial man would misunderstand and that those words are equally applicable whatever the commercial concern may be: Gresham Life Assurance Society v Styles [1892] AC 309, 315, per Lord Halsbury LC. The objective is to ascertain and charge the true profits and gains of the business in question. The requirement that there should be a true and fair view involves the application of a legal standard. The courts are, in general, guided as to the content of the computation by expert opinions of accountants as to what the best current accounting practice requires: Revenue and Customs Commissioners v William Grant & Sons Distillers Ltd [2007] UKHL 15, 2007 SC (HL) 105, [2007] 1 WLR 1448, para 2, per Lord Hoffmann. The special rules that section 83 of the 1989 Act lays down for the calculation of the profits of life assurance companies in respect of their life insurance business for the purposes of corporation tax are, in this respect, no different from the rules that apply to companies generally. They provide a legal standard according to which these profits are to be ascertained. As has already been noted, that section has been amended more than once. But I do not think that it is helpful to look back into the legislative history. Lord Wilberforce said in Farrell v Alexander [1977] AC 59, 73 that self contained statutes, whether consolidating previous law or so doing with amendments, should be interpreted, if reasonably possible, without recourse to antecedents, and that the recourse should only be had when there is a real and substantial difficulty or ambiguity which classical methods of construction cannot solve. Further amendments to section 83 were introduced by section 170 and paragraph 2 of Schedule 33 to the Finance Act 2003. In Inland Revenue Commissioners v Joiner [1975] 1 WLR 1701, 1715 1716 Lord Diplock said that it was a legitimate purpose of legislation by Parliament to clarify the law by making it clear in which of two alternative meanings the ambiguous language of an earlier statute was to be understood, but that it would only be if the language of a provision in an existing statute was ambiguous that it would be legitimate to infer that a purpose of the subsequent statute was to remove doubts as to what the law had always been. So the proper approach is to concentrate on the wording of sections 83(2) and 83(3) as they were at the relevant accounting periods. With that background, and with the benefit of the much more comprehensive description of the facts that Lord Walker has provided and of the carefully reasoned opinions of all the judges in the Inner House, I now turn to the provisions of the 1989 Act which are under scrutiny in this case. Section 83(2) This subsection directs that there must be taken into account as receipts of the period for the purposes of Case 1 of Schedule D (a) the Companys investment income from the assets of its long term business fund and (b) any increase in value of those assets, in so far as these items have been brought into account by the Company. The question is whether its language permits the Company to claim that it in fact sustained an allowable loss during the relevant period when the values as brought into account for that period indicate the contrary. It is common ground that the reference to investment income in paragraph (a) of the subsection is a reference to actual income from assets actually comprised in the long term business fund. The Company submits that, by parity of reasoning, the reference to any increase in value in paragraph (b) must be taken to be a reference to something that can be recognised on a commercial basis as a real increase in real assets. So the word assets in both paragraphs meant assets of the long term business fund which had the capacity to earn income and to grow in value. The fact was that its assets had decreased, not increased, in each of the relevant accounting periods. The amounts included in line 15 of form 40 were there for regulatory purposes only. They were book entries which had no commercial validity. The fact was that the assets of the long term business fund had decreased, not increased, in each of the relevant accounting periods. The mere fact that an amount, such as interest on unpaid tax, was entered in form 40 did not mean that it was taxable. To arrive at a true and fair view it was necessary to go behind the entries on the forms and look at the facts. In the Court of Session the judges of the First Division were unanimous in accepting this argument and rejecting the argument for HMRC. The Lord President said that he was unable to accept that the contents of the revenue account that had been prepared for regulatory purposes had the definitional character for which HMRC contended. The fact that the investment income was inevitably an actual receipt suggested that the increase in value should be an actual sum, as opposed to an accounting element: para 54. Lord Reed made the same point in para 181, adding that the words whether realised or not were a strong indication that section 83(2) was concerned with real gains rather than a change in notional values. Lord Emslie said that, consistent with the long established distinction between assets and fund, the reference to an increase in value of assets should be taken as reflecting commercial reality in the form of actual increases in the value of assets: para 204. As Mr Andrew Young QC for HMRC pointed out, however, that section 83(2) is a special rule for the computation of the profits of an insurance company in respect of its life assurance business. The general rules for the computation of profits and gains for the purposes of Case 1 of Schedule D must be taken to have been modified to the extent provided for in this subsection. The Company was being taxed on the I minus E basis and it is this subsection, not the rules that are generally applicable, that must be construed. An insurance company is entitled to elect, under regulation 45(6) of the 1994 Regulations, to assign to any of its assets the value given to the asset in the books or other records of the company. Section 83(2) can be taken to have been drafted in the light of the fact that insurance companies almost always, if not invariably, choose to use book values (in the sense indicated by regulation 45(6)) to arrive at the necessary balance in form 40 to demonstrate solvency to the regulatory authority. Once this point is grasped, it seems to me that the meaning to be given to section 83(2)(b) falls fairly easily into place. The wording of the subsection follows that of the forms. While the investment income in paragraph (a) is real income, the increase in value referred to in paragraph (b) may or may not be a real increase. The assets which gave rise to this increase in value may or may not be the same assets as those referred to in paragraph (a). It depends on the content of the amounts shown in lines 13 and 15 of form 40. Amounts taken from its long term business fund were used by the Company to supplement its trading income in each of the three years in question. It chose to use its own book values, not values computed according to the current value of the assets of its long term business fund, to arrive at the final values that were brought into account on form 40. In the absence of further directions in the statute as to how the increase in value is to be computed in cases where that option has been chosen and there are none I would hold that the increase in value referred to in paragraph (b) must be taken to be the amount which has been brought into account on the form. The phrase as brought into account for a period of account in the opening words of the paragraph lies at the heart of this interpretation. It was suggested by the Company that this phrase determined the period for which items were to be treated as taxable receipts but not the items which were taxable. But this interpretation of the phrase does not, I think, give full weight to the word as. Linked to the words the following items which precede it, the phrase indicates that the computation must proceed on the basis of the way the items have actually been entered on the forms. If values shown in the books or other records of the company have been used, instead of market values, it will be the book values that will determine whether or not there has been any increase in value during the relevant period and, if so, how much that increase is. The phrase and not otherwise was said to support the Companys interpretation of paragraph (b) because it indicated that it was being assumed that the items that were being brought into account when any increase in value was being assessed were items that could be realised, not notional ones. But I think that their purpose is to make it clear that the basis of computation referred to in subsection (2) is the only basis that is relevant for the purposes referred to in subsection (1). The words whether realised or not are there to indicate a change from the computation indicated by the original wording of section 83. If the company chooses to bring unrealised increases in value into account, those increases in value must be taken into account as receipts for the period in the same way as increases that have been realised. For these reasons I am unable to agree with the judges of the Court of Session as to the meaning and effect of section 83(2)(b). But in para 205 of his opinion Lord Emslie made some further points which, as they were attractively put, need to be answered too. He said that a factor which favoured the Companys construction of section 83(2) was that it accorded well with the general principles (1) that the ascertainment of receipts or gains for tax purposes should prima facie reflect commercial reality; (2) that income or gains to be taxed should prima facie be the taxpayers and not those of a third party; and (3) that the ordinary recognition of shareholders capital to cover actual trading should not prima facie be a chargeable receipt. He described these principles in more detail in paras 197 and 198, and I agree with him that prima facie they can be taken to be a reliable guide as to how tax legislation ought to be construed. But his use of the phrase prima facie indicates, if I may say so quite correctly, that these are not absolute rules that are incapable of being disapplied by the statute. In this case we are dealing with special rules that have been designed to take account of the unique nature of the business carried on by life assurance companies. That in itself suggests that it is the language of the statute, rather than these general rules, that should be the determinative factor in this case. Taking Lord Emslies three points in turn, I would hold, firstly, that the language of section 83(2) shows conclusively that, if the insurance company chooses to use book values to arrive at the final values shown on form 40, it is on those values that the computation referred to in section 83(1) must be based. This can be said to reflect the commercial reality of the life assurance industry, as the Companys taxable receipts were based on its own figures as submitted to the regulatory authorities to justify the surplus of assets that it wished to recognise. Secondly, there is no question, in this case, of taxing the income or gains of a third party. The values brought into account on form 40 are the product of assets that were vested in the Company when it established its long term business fund. Their link with the Society was entirely broken when the transfer under the scheme took effect. As to Lord Emslies third point, it must be appreciated that the capital reserve was not, as he said in para 202, ordinary shareholders capital. The words themselves might be taken as suggesting otherwise, but I think that the name that was given to what the scheme described as a memorandum account is a distraction. The reality is that the reserve had no life of its own separate from the long term business fund. It was an accounting mechanism which the Company had established for its own internal accounting purposes as part of its long term business fund. It did not consist of particular assets but was a financial structure which was subject to all the statutory restrictions and requirements to which that fund was subject. In para 205 he said that, as the capital reserve was shareholders capital, its ordinary recognition to cover actual trading receipts should not prima facie be deemed a chargeable receipt. But, as the capital reserve had no life of its own, amounts that were described as transfers from the reserve fell to be treated in the same way as any other assets comprised within the long term business fund for regulatory purposes and, in consequence, for the purposes of section 83(2) too. For these reasons, and those given by Lord Walker, I would allow the HMRCs cross appeal. Section 83(3) As I would answer the question in the reference in favour of HMRC on the ground that the amounts in question fall to be taken into account as receipts under section 83(2) with the result that there was a corresponding increase in the assets of the long term business fund for each of the relevant accounting periods within the meaning of paragraph (b) of that subsection, the question whether section 83(3) applies to those amounts does not arise. This is because section 83(4) provides that subsection (3) of that section does not apply where, or to the extent that, the amount concerned is taken into account under subsection (2). But, as the judges of the Court of Session were divided in this issue and out of respect for the care which they took to examine it, I would like to make these few brief comments. The exercise to which section 83(3) is directed proceeds in two stages which are, as Lord Reed said in para 191(1), conceptually distinct from each other. First, there is the question whether an amount has been added to the companys long term business fund as a part of or in connection with a transfer of business to the company. Section 83(8) provides that the word add includes transfer. As for the facts of this case, amounts were added to the Companys long term business fund when the scheme took effect as part of the transfer of the Societys business to the Company. The whole of the amount that was to be treated as the capital reserve for accounting purposes was added or transferred to the Companys long term business fund as an integral part of the scheme. It seems to me to be plain, having regard to the terms of the scheme, that the addition to the Companys long term business fund was as part of or in connection with the transfer of the Societys business to the Company. The fact that it was only later that some amounts were brought into account by way of what were called transfers from the capital reserve does not matter. The second stage is the bringing of the amount into account for the period in question. It seems to me that this occurs as and when, and indeed whenever, the amount is brought into account as an increase in value to reduce or eliminate a loss that would otherwise have occurred during the relevant period. As Lord Reed said in para 191(2), there are understandable reasons why Parliament might consider that the use of amounts acquired on a transfer of business to offset liabilities resulting from normal patterns of trading which were not otherwise chargeable to tax should be disallowed. I agree with him that, when the amounts were subsequently brought into account on form 40, they would but for the fact that they were already caught by section 83(2) have fallen to be treated by section 83(3) as chargeable receipts for the purpose of ascertaining whether or to what extent the Company had incurred a loss in each of the relevant periods. Lord Emslies point, which he made in para 228 of his dissenting opinion, that the transfers were made in a non chargeable context is answered by the two stage nature of the exercise to which section 83(3) is directed. It is not the context in which the transfer was made at the outset that determines the way in which the amounts fall to be treated when, at some later stage, they are brought into account. Had it been necessary to do so to arrive at an answer to the question that was referred to the Special Commissioners, I would have affirmed the decision of the majority in the Inner House on this issue and dismissed the Companys appeal. Conclusion I would recall the interlocutor of the Inner House of the Court of Session, allow the cross appeal by the HMRC and answer the question referred to the Special Commissioners in the affirmative. LORD WALKER Introduction On 3 March 2000 Scottish Widows plc (the Company), a new company within the Lloyds TSB banking group, acquired the principal assets and liabilities of the life assurance business of the Scottish Widows Fund and Life Assurance Society (the Society). The Society had a long and distinguished history. It was established in Edinburgh in 1814 upon the principle of mutual assurance. It was incorporated by statute in 1861 as a company without a share capital and it remained a mutual life office that is an entity owned by its members, the policyholders, with no outside shareholders until the change in 2000, which has been referred to as demutualisation. The process of demutualisation was achieved by a scheme of transfer approved by the Court of Session under section 49 of and Schedule 2C to the Insurance Companies Act 1982 (ICA 1982). Some of the provisions of the scheme are of central importance to this appeal. The transfers which it effected were on a very large scale: the Company acquired, in round terms, assets with a market value of the order of 25bn and became subject to actuarial liabilities of the order of 19bn. The qualifying members of the Society received compensation of approximately 5.846bn, representing the difference (with various adjustments and enhancements) between the assets and the liabilities. This compensation was paid by the Companys holding company, Scottish Widows Financial Services Holdings Limited (Holdings), which owns the whole of the Companys issued share capital. The Societys assets included large holdings of equities as well as fixed interest securities, immovable property and other investments. As it happens the United Kingdom stock market reached what was (and remains) an all time high in the new year of 2000, and in the first years of the Companys business the market value of its holdings of equities was substantially reduced. This unexpected and unwelcome turn of events has led to a dispute between the Company and HM Revenue and Customs (the Revenue) as to the tax consequences. On 11 October 2006 the Company and the Revenue joined in making a referral to the Special Commissioners under Schedule 18, para 31 of the Finance Act 1998. The agreed question to be determined was as follows (with a small agreed explanatory addition): Whether in computing the Case 1 profit or loss of [the Company] for the accounting periods ending in 2000, 2001 and 2002, amounts described by the company as transfers from Capital Reserve and included as part of the entries at line 15 of Form 40 for each period fall to be taken into account [as receipts] in computing the profit or loss as the case may be. It is common ground that the answer to this question depends on two issues, one turning on the meaning and application of a general provision in subsection 83(2) (read with subsection (1)) of the Finance Act 1989 as amended (FA 1989), and the other turning on the meaning and application of a more particular provision in subsection 83(3) (read with subsection (4)) of the same section. The Company must win on both issues in order to succeed. Conversely it is sufficient for the Revenue to succeed if it wins on either issue. The first issue, once understood, is a short point of construction. But for the non specialist a lot of background, some of it quite technical, is required in order to understand the point, and to be able to weigh the linguistic arguments against more general considerations based on the legislative scheme and purpose. The second issue (which arises only if the Company is successful on the first issue) is a rather more intricate point of construction. The complex background, and the large amounts of tax at stake, help to explain why these two points of construction took four and a half days before the Special Commissioners, and no less than seven and a half days before the Court of Session. The Special Commissioners (Mr J Gordon Reid QC and Dr John F Avery Jones CBE) decided the first issue in favour of the Company and the second issue in favour of the Revenue, so that the Revenue was successful. The First Division of the Inner House of the Court of Session (the Lord President (Hamilton), Lord Reed and Lord Emslie) reached the same conclusions on both issues, unanimously on the first and with Lord Emslie dissenting on the second: [2010] CSIH 47; 2010 SLT 885; [2010] STC 2133. The Company now appeals on the second issue and the Revenue cross appeals on the first issue. The historical background. The first issue (the subject of the Revenues cross appeal) comes naturally before the second issue (the subject of the Companys appeal). But before getting to the detailed arguments on either issue it is necessary to say something about the historical background, and to cover regulatory as well as taxation aspects, since these two aspects have become closely interrelated. The background has already been covered with conspicuous thoroughness and clarity in the judgment of Lord Reed (paras 87 104), to which I gratefully acknowledge my indebtedness. This part of my judgment is largely based on the fuller description by Lord Reed, with the addition of a few points of my own. Life assurance, in its many different forms, has played an important part in British social and economic history. Actuarial science was already developing by the beginning of the eighteenth century (one of the founding fathers, Edmund Halley, published a paper on The Degrees of the Mortality of Mankind, commissioned by the Royal Society, in 1693). The Life Assurance Act 1774 addressed the problem of insurable interest and curbed the scandal of tontines, then fashionable in some wealthy circles. Interest in life policies was by no means restricted to the wealthy. The Society was only one (and among the most prominent in Scotland) of many mutual societies by which working men could insure against the risk of their families being left in penury in the event of the early death or disablement of the main breadwinner. In England the most prominent comparable body was probably the Friends Provident Society, founded in 1832 (it was a registered friendly society, regulated by a different statutory system). The growth of these mutual societies was remarkable: they had just over 700,000 members in 1803, over 3 million in 1887, and over 6 million in 1910 (there are fuller statistics in D. Green, Reinventing Civil Society, 1993). The mutual movement went into decline after Lloyd George introduced a system of compulsory national insurance in 1911. The public interest in life assurance as encouraging prudent self reliance was reflected in its tax treatment, though for the most part the incentives were directed to policyholders rather than life offices. In 1870, after several life offices had run into difficulties, Parliament introduced a new system of regulation. It was the foundation of the more elaborate system that we have today. The Life Assurance Companies Act 1870 (LACA 1870) required life offices (whether mutual or proprietary) to keep proper accounts and to prepare annual financial statements consisting of a revenue account and a balance sheet in a prescribed form. Regular actuarial investigations were made mandatory. Lord Reed explains in his judgment (paras 91 94) how section 4 of LACA 1870 introduced for the first time the statutory concept of a life assurance fund held as security for the rights of holders of life policies and annuities. This was the origin of what is now referred to as a life offices long term business fund (LTBF). As regards taxation, during the 19th century and the first two thirds of the 20th century there was no corporation tax and no capital gains tax. Companies were subject, in much the same way as individuals, to income tax assessed and charged under the various schedules and cases defined in the Income Tax Acts. If a taxpayer received income which could be regarded as falling within more than one schedule or case, the Revenue could not claim tax twice, but could choose which schedule to apply. This choice (sometimes referred to as the Crown option) was available to the Revenue in relation to proprietary life offices, which held large reserves of income producing investments in order to meet their actuarial liabilities and provide for unforeseen contingencies. They could be taxed either on the profits of a trade under Schedule D Case I, or on their investment income as such. It was usually more advantageous for the Revenue to make an assessment on the companys investment income, as Lord President Dunedin noted in Revell v Edinburgh Life Insurance Co (1906) 5 TC 221, 227. The Crown option was abolished by the Finance Act 2007 and replaced by mandatory provisions. With a mutual life office the Revenue never had a choice, since mutual trading does not produce profits taxable under Schedule D Case I. The first statutory provisions giving special tax treatment to life offices were in the Finance Act 1915. Life assurance was to be treated as a separate business. Annuity funds were to be taxed separately from life funds. Life offices taxed on their investment income were to be allowed a deduction for management expenses (including commission paid to brokers). This system of taxation is generally referred to as the I minus E (that is, income minus expenses) basis of assessment. It remained open to the Revenue to choose to assess a life office to tax under Schedule D Case I, but the basis of that assessment was altered (and the likelihood of its actually being adopted by the Revenue was reduced) by section 16 of the Finance Act 1923 (FA 1923), which gave effect to a recommendation in the report, published in 1920, of the Royal Commission on Income Tax (Cmd 615). Profits allocated to with profits policies were to be excluded from the life offices taxable profits. This was not unprincipled, since on allocation the profits became liabilities. This provision has been re enacted in successive consolidating statutes, and finally in section 433 of the Income and Corporation Taxes Act 1988 (ICTA 1988), the terms of which are set out in para 103 of Lord Reeds judgment. Section 433 of ICTA 1988 was repealed and replaced by FA 1989. The change made by FA 1923 was an important change. In practical terms it diminished the difference in tax treatment as between proprietary and mutual life offices. Its importance increased with changes in economic conditions in Britain during the second half of the 20th century (in brief, monetary inflation and the prospect of substantial capital gains from investment in equities and property). The Society was required by its constitution and regulations (to be found in their final form in the Scottish Widows Fund and Life Assurance Act 1980), as the Company is required under the scheme, to allocate to the holders of its with profits whole life and endowment policies nine tenths of the with profits part of the gains which it recognised, or brought into account (the expressions mean the same), in the revenue account of its LTBF. After the introduction of capital gains tax and corporation tax on chargeable gains, realised gains made by the Society were taxed at differential rates, the details of which are not material. But unrealised gains could be recognised (or brought into account) in order to enable larger bonuses to be allocated and paid to with profits policyholders without having been taxed in the Societys hands. This was perceived by the Revenue as a serious defect in the system, as appears from an official consultation document published in 1988, The Taxation of Life Assurance, (summarised in paras 123 126 of Lord Reeds judgment). This document gives a summary of how during the 1980s the life assurance industry was rapidly evolving into being part of a larger savings industry, in competition with unit trusts and other savings media, and itself increasingly making use of unit linked policies rather than traditional with profit policies (investment by small savers in authorised unit trusts and approved investment trusts was encouraged in a different way, by deferring tax on capital gains until individual unitholders or shareholders realised their gains). Section 83 of FA 1989, which is at the heart of this appeal, was part of the changes which Parliament made in consequence of this review. It makes an express link between the imposition of liability to tax (or the creation of an allowable loss) under Schedule D Case I and the regulatory regime under ICA 1982. It is therefore necessary, before coming to section 83, to give a short account of the regulatory regime in ICA 1982 and regulations made under it. ICA 1982 and regulations under it The regulatory system introduced by LACA 1870 had been re enacted and modified from time to time. ICA 1982 replaced it with a similar but much more detailed system, elaborated in a number of statutory instruments, of which the most relevant for present purposes are the Insurance Companies Regulations 1994 (SI 1994/1516) (the 1994 regulations) and the Insurance Companies (Accounts and Statements) Regulations 1996 (SI 1996/943) (the 1996 regulations). Section 17 of ICA 1982 required every insurance company to which Part II applied to prepare with respect to each financial year of the company, a revenue account for the year, a balance sheet as at the end of the year and a profit and loss account (or for a mutual an income and expenditure account) for the year. Each of these was to be in a form prescribed by regulations. Under the 1996 regulations (as amended down to the year 2000) different forms were prescribed for different types of insurance companies, and they were still required by the new regulatory system mentioned in para 55 below. The form of balance sheet prescribed (by regulation 6) for companies carrying on long term business were forms 13 (relating to assets) and 14 (relating to liabilities). These together made up the two sides of the balance sheet. The form prescribed (by regulation 8) for companies carrying on long term business was form 40; if the company had more than one LTBF a separate account was required for each LTBF, and a consolidated form for all of them. The Company has three LTBFs, a with profits fund, a non participating fund for business taken over from the Society, and a non participating fund for new business. Section 18 of ICA 1982 required every insurance company to which it applied, and which carried on long term business, to cause its actuary to make an annual investigation of its financial condition, and to cause an abstract of the actuarys report to be made. Assets were to be valued and liabilities determined in accordance with valuation regulations, and the abstract was to be in a form prescribed by regulations. Under regulation 25 of the 1996 regulations (as under the new regulatory system) the most relevant of the prescribed forms to be included in the abstract was form 58. Regulation 45 of the 1994 regulations (as amended down to the material time) dealt with valuation of assets. After some general provisions in paras (1) to (5) it dealt specifically with actuarial investigations under section 18 of ICA 1982: (6) Notwithstanding paragraph (1) above (but subject to the conditions set out in paragraph (7) below), an insurance company may, for the purposes of an investigation to which section 18 of the Act applies or an investigation made in pursuance of a requirement under section 42 of the Act, elect to assign to any of its assets the value given to the asset in question in the books or other records of the company. (7) The conditions referred to in paragraph (6) above are (a) that the election shall not enable the company to bring into account any asset for the valuation of which no provision is made in this Part of these Regulations; (b) that the value assigned to the aggregate of the assets shall not be higher than the aggregate of the value of those assets as determined in accordance with regulations 46 to 57 of these Regulations. Section 28 and 29 of ICA 1982 required separate accounts and funds to be maintained for long term business, and for the assets representing those funds to be applicable only for the purposes of the appropriate business, except so far as the value of the assets was shown, on a statutory actuarial investigation, to exceed the liabilities attributable to the fund. I shall have to come back to the prescribed forms. I add one comment. Lord Reed observed (para 112), and I agree, that the use of the word fund in ICA 1982 is not entirely consistent. Lord Reed had earlier quoted an observation of Lord Greene MR in Allchin v Coulthard [1942] 2 KB 228, 234: The word fund may mean actual cash resources of a particular kind (e.g. money in a drawer or a bank), or it may be a mere accountancy expression used to describe a particular category which a person uses in making up his accounts. This is an important distinction, although Lord Greenes reference to cash resources is a little surprising and may have been influenced by the context of the particular case before him (it concerned the taxation of a local authoritys general rate fund). In the context of life assurance a LTBF is a fund of investments of various types, and it falls within Lord Greenes first category. The investments (the assets of the fund) change from time to time, as and when the investment managers need to raise money or exercise their judgment to switch investments, and the values of the assets fluctuate constantly. But at any time it is possible to identify the assets for the time being constituting the fund, which is a continuing entity. By contrast the Capital Reserve established by the scheme approved by the Court of Session and put into effect in 2000 (and here I am putting down a marker for later parts of this judgment), if it was a fund at all, was a fund in Lord Greenes second sense. It was an accounting abstraction and it never consisted of identifiable assets. Before going on to the scheme it is convenient to record, out of chronological sequence, that ICA 1982 was repealed by a statutory instrument made under the Financial Services and Markets Act 2000 which came into full force on 1 December 2001 (having come into force at earlier dates for limited purposes including rule making powers). In consequence the new regime applied to the second and third of the Companys accounting periods relevant to this appeal that is, the calendar years 2001 and 2002; the Financial Services Authority (FSA) became the regulator, and the system of regulation was prescribed by rules made by the FSA rather than by statutory instrument. But the substance of the system, and the identifying numbers of the forms, were unchanged. In particular, rule 9.10(c) of the FSAs Interim Prudential Sourcebook for Insurers Instrument 2001 reproduced the effect of regulation 45(6) of the 1994 regulations. There were some minor changes of terminology in the forms, which were set out in Appendices 9.1 (forms 13 and 14), 9.3 (form 40) and 9.4 (form 58) of the 2001 instrument. The scheme The scheme for the transfer of the Societys business to the Lloyds TSB group was preceded by an agreement dated 23 June 1999 between the Society and Lloyds TSB Group plc. The agreement provided for the scheme to be approved by a special resolution of the Society in general meeting (which duly occurred) and for an application to be made to the Court of Session for sanction of the scheme under section 49 of and Schedule 2C to ICA 1982. The Court of Session (Lord Nimmo Smith) sanctioned the scheme by an order made on 28 February 2000, and the scheme took effect on 3 March 2000. The scheme also obtained regulatory approval and tax clearances. The scheme is lengthy and in parts very technical. It runs to 41 clauses and 12 schedules. In bare outline, the bulk of the assets and liabilities of the Society were transferred to the Company; pension policies and assets and liabilities associated with them were transferred to another Lloyds TSB group company and are not relevant to this appeal. Payment of the membership compensation to qualifying members of the Society (later quantified at 5,846m) was undertaken by Holdings, which is the owner of all the Companys issued share capital. The provisions of the scheme which call for most attention are in Part D (Fund Structure) and Part E (operation of the Funds). Clause 22 in Part E (Capital Reserve) is of particular importance. Under Part D (Fund Structure) the most basic division was between the LBTF (defined as the Long Term Fund) and the Shareholders Fund. The latter fund was to have allocated to it infrastructure assets and shares in seven subsidiaries and any joint venture companies (clause 15.1 and relevant definitions in Schedule 1). All other assets (other than pension assets as mentioned above) were to be allocated to the LTBF, which was to be divided into two separate subfunds, the With Profits Fund and the Non Participating Fund (respectively the WPF and the NPF), with an appropriate allocation of existing policies (clauses 13 and 14.1). The allocation of assets between the WPF and NPF was to be determined by the actuary in accordance with the detailed provisions of clause 15.2 to 15.6, 15.10 and 15.11. Liabilities were to be similarly matched, subject to some special exceptions (clause 16). In part E (Operation of the Funds) clause 18 deals with allocation of surplus arising in the WPF. One ninth of the amount of bonuses allocated to conventional (that is, not unit linked) with profits policies (in other words one tenth of the gross allocation) is to be allocated to the NPF or the Shareholders Fund, as the board directs. All other surplus is to be applied as bonus for the benefit of holders of with profits policies. This replicates the position under the Societys constitution and regulations (para 47 above). In life offices shorthand the WPF is a 90/10 fund. The NPF, by contrast, is a 0/100 fund. Following each actuarial valuation of the NPF the board may transfer to the WPF statutory surplus arising in the NPF (clause 21). Finally I come to the Capital Reserve, provided for in clause 22. Clause 22.1 is as follows: On and after [3 March 2000], [the Company] shall maintain a memorandum account within the [LTBF] designated as the Capital Reserve (the Capital Reserve). At [3 March 2000] the Capital Reserve shall represent the amount of the shareholders capital held within the [LTBF]. Clause 22.2 provides for the Capital Reserve to be credited with an amount arrived at by a complicated formula. It is common ground that this amount was 4,455m. Clause 22.3 (headed Maintenance of Capital Reserve) provides that no more may be added to the Capital Reserve and that it may be reduced only by being brought into account in the revenue account of the WPF (up to a limit arrived at by a formula) or the revenue account of the NPF (without limit). There does not seem to have been a finding or formal agreement as to the amount of the WPF limit, but the unchallenged evidence of Mr Adrian Eastwood, the Companys actuarial director at the material time, was that the amount was 432m. Clause 22.4 to 22.6 provided for the Capital Reserve to be notionally allocated between the WPF and the NPF. The initial division was 1,895m to the WPF and 2,560m to the NPF. Tables B and C annexed to the agreed statement of facts and issues (SFI) show how the Companys opening capital of 4,769m in its LTBF can be reconciled with the opening Capital Reserve (4,455m) and the membership compensation (5,846m). Clause 22A of the scheme provided for what was described as a contingent loan, free of interest, from the NPF to the WPF, repayable as mentioned in that clause. Its purpose was to compensate the WPF for the fact that its right to future profits could not be included, for regulatory purposes, as an asset with an admissible value. This inter subfund loan (described in SFI, para 29) hardly featured in the parties written and oral submissions, but it is a further complication in understanding the regulatory forms, to which I now turn. The forms The balance sheet consists of forms 13 and 14. Form 13 sets out the values of the assets of the fund (that is, the LTBF or a subfund of it) at their admissible values (a technical term which in practice was not less than 99% of market value). The effective bottom line of form 13 is line 89, Grand total of admissible values. Form 14 sets out liabilities and margins. For present purposes the most important lines are: 11, mathematical reserves (that is, actuarial liabilities which have not yet been finally quantified); 13, balance of surplus (or valuation deficit); 14, LTBF carried forward; 49, total other (ie non actuarial) liabilities; 51, excess of the value of net admissible assets; and 59, total liabilities and margins. The entries at line 89 of form 13 and line 59 of form 14 must be the same. The balancing items on form 14 are the figures entered at line 13 (balance of surplus) and line 51 (excess of the value of net admissible assets, which is also called the investment reserve: SFI para 53(2)). The interrelation between the figures at lines 13 and 51 of form 14 is that the line 13 figure is generally a relatively small amount representing value that has been brought into account but not yet finally appropriated. The line 51 figure is the true balancing figure, and is the last figure to be entered on the form. It represents the (generally very much larger) value that has not yet been brought into account at all the amount by which the admissible value of the LTBF assets exceeds the book value that has been brought into account. It illustrates the proposition stated (perhaps in rather question begging terms) in para 9 of the Revenues written case, that life offices are treated differently from most businesses in that they can shelter profits from taxation to meet unforeseen future liabilities. This point is discussed further in paras 82 to 86 below headed Bringing assets into account at book value. Form 40, the revenue account, shows movements during the accounting period. The most important lines for present purposes are 11, earned premiums; 12, investment income; 13, increase (or decrease) in the value of non linked assets brought into account; 14, increase (or decrease) in the value of linked assets; 15, other income; 19, total income; 29, total expenditure; 39, increase (decrease) in fund in financial year; 49, fund brought forward; and 59, fund carried forward (39 + 49). The entry at line 49 must be the same as line 14 on form 14 for the previous accounting period, and the entry at line 59 must be the same as line 14 on form 14 for the current period. As to lines 13 and 14, Lord Reed explains in his judgment (para 116) that any increase or decrease in the value of linked investments (line 14) is required to be brought into account automatically, but unrealised increases in the value of non linked assets (line 13) need not be brought into account. Form 58 (valuation result and distribution of surplus) shows the actuarial surplus (line 29), its movement during the accounting period (lines 31, 34 and 35), and its distribution as between policyholders (line 46), shareholders (line 47) and balance (line 49, this being the same as line 13 on form 14). The term distribution as used in lines 41 48 does not imply that sums necessarily leave the Companys hands; it refers to an allocation as between policyholders and shareholders. Three separate forms 58 were completed for the WPF, the transferred business in the NPF and the new business in the NPF. How the forms were completed by the Company Volume V of the papers before the Court contains over 500 pages of the Companys regulatory returns for the three relevant accounting periods, including completed forms 13, 14, 50 and 58 for the LTBF and its sub funds (except that form 58 was completed, as already noted, for three sub funds and not for the LTBF as a whole). From these forms the following information as to the whole LTBF can be extracted (in bn, rounded to the nearest 1m, and with some rounding adjustments in the computations). 2000 2001 2002 Form 13 line 89: total assets at admissible value 20.962 Form 14 line 11: mathematical reserves 18.645 line 13: balance of surplus 0.181 line 14: LTBF carried forward 18.827 23.066 19.128 0.033 19.162 22.427 19.807 0.064 19.871 0.386 2.107 22.427 0.468 0.441 1.668 3.462 20.962 23.066 line 49: total non actuarial liabilities line 51: excess of value of net admissible assets line 59: total liabilities and margins Form 40 2.000 2.445 2.540 line 11: earned premiums 0.922 0.633 0.787 line 12: investment income line 13: increase (decrease) in value of non linked assets brought (2.254) 1.273 (1.168) into account line 14: increase (decrease) in value of (0.036) linked assets (0.031) (0.011) 0.408 0.502 16.875 line 15: other income 1.040 line 19: total income 21.216 2.631 1.921 2.084 2.054 line 29: total expenditure (1.045) line 39: increase (decrease) in LTBF 19.162 0.709 19.871 line 49: fund brought forward .000 19.162 19.162 19.871 18.827 line 59: fund carried forward Form 58 (WPF) line 59: distributed surplus line 61: percentage distributed to policyholders It would be imprudent to attempt any sophisticated commentary on these figures. The entry on form 40, line 15 for 2000 is obviously exceptional, representing the effect of a change of ownership of a long established business; no one has suggested that the whole sum is taxable. But we know that it included a sum of 33.410m as a transfer from Capital Reserve (see para 70 below). Taken overall, the figures illustrate the effect of bringing into account value which, for prudential reasons, has not previously been recognised. During the three accounting periods the admissible (for practical purposes, market) value of the assets of the LTBF fell by about 4bn (the figures can be collected from SFI, Table A and the Companys completed forms 13 for the three accounting periods). The mathematical reserves decreased by a little under 0.5bn and the recognised value of the LTBF, tracking as it did the mathematical reserve and the unappropriated surplus, went down by about 0.3bn. But the investment reserve, that is the excess of admissible value over the recognised value of the LTBF (line 51 on form 14) was reduced by almost 1.8bn. The successive entries 0.633 0.915 94.72 96.64 0.576 97.05 on line 13 of form 40 are noteworthy. In the accounting period ending on 31 December 2000 the value of non linked assets brought into account increased by over 1.2bn although their admissible value decreased during that period. This disparity was reversed in the two following accounting periods, during which (taken together) admissible value fell further by about 1.6bn but the form 40, line 13 decrease was a good deal larger, about 3.4bn. During the whole period the Company declared bonuses of significant amounts, and allocated more than the mandatory 90% to with profits policyholders. Part of the form 40, line 15 amounts included sums described in the notes submitted with the statutory forms (volume V, pp1756, 2035 2036 and 2319) as transfers from Capital Reserve. The amounts were as follows (SFI, paras 56 60): 2000 2001 2002 m to WPF 33.410 30.724 17.000 81.134 total 33.410 472.724 370.000 876.134 to NPF 442.000 353.000 795.000 Whether they should nevertheless have been brought into the computation of the Companys profit or loss under Schedule D Case I under section 83(1) and (2) of FA 1989 is the first issue. Line 15 of form 40 is, it will be recalled, specifically mentioned in the referred question (set out at para 36 above). The statutory provisions The provisions which this Court has to construe are in a single section, section 83 of FA 1989. A rapid survey of the landscape in which that section is found shows that in the consolidating statute, ICTA 1988, Part XII dealt with special classes of companies and businesses, and Chapter 1 of Part XII dealt with insurance companies, underwriters and capital redemption businesses. I have already mentioned section 433, which was repealed by FA 1989 and replaced by similar (but more complex) provisions in section 82 of FA 1989. Section 444A, inserted into ICTA 1988 by the Finance Act 1990, applies to a transfer of long term business in accordance with a scheme sanctioned under section 49 of ICA 1982, but neither side placed any reliance on this section. At the time when the consolidating statute was enacted the government was engaged in a far reaching review of the taxation of life offices, as already noted (para 48 above). The outcome was sections 82 to 90 of FA 1989 (together with Schedule 8 to that Act, amending Part XII of ICTA 1988). These sections, and Schedule 8, were frequently amended between 1989 and 2000, especially by the Finance Acts of 1995 and 1996. The details are set out in Lord Reeds judgment (paras 134 to 163). But I agree with Lord Hope (in para 15 of his judgment) that it is unnecessary, and maybe unhelpful, to go into the legislative history. What matters is the statutory provisions as they were in 2000, 2001 and 2002. During that period section 83(1) to (4) was in the following terms: (1) The following provisions of this section have effect where the profits of an insurance company in respect of its life assurance business are, for the purposes of the Taxes Act 1988, computed in accordance with the provisions of that Act applicable to Case 1 of Schedule D. (2) So far as referable to that business, the following items, as brought into account for a period of account (and not otherwise), shall be taken into account as receipts of the period (a) the companys investment income from the assets of its long term business fund, and (b) any increase in value (whether realised or not) of those assets. If for any period of account there is a reduction in the value referred to in paragraph (b) above (as brought into account for the period), that reduction shall be taken into account as an expense of that period. (3) In ascertaining whether or to what extent a company has incurred a loss in respect of that business in a case where an amount is added to the companys long term business fund as part of or in connection with (a) a transfer of business to the company, or (b) a demutualisation of the company not involving a transfer of business, that amount shall (subject to subsection (4) below) be taken into account for the period for which it is brought into account, as an increase in value of the assets of that fund within subsection (2)(b) above. (4) Subsection (3) above does not apply where, or to the extent that, the amount concerned (a) would fall to be taken into account as a receipt apart from this section, (b) is taken into account under subsection (2) above otherwise than by virtue of subsection (3) above, or (c) is specifically exempted from tax. Section 83A(1) to (3) of FA 1989 was in the following terms: (1) In sections 83 to 83AB brought into account means brought into account in an account which is recognised for the purposes of those sections. (2) Subject to the following provisions of this section and to any regulations made by the Treasury, the accounts recognised for the purposes of those sections are (a) a revenue account prepared for the purposes of the Insurance Companies Act 1982 in respect of the whole of the companys long term business; (b) that Act in respect of a part of that business. any separate revenue account required to be prepared under Paragraph (b) above does not include accounts required in respect of internal linked funds. (3) Where there are prepared any such separate accounts as are mentioned in subsection (2)(b) above, reference shall be made to those accounts rather than to the account for the whole of the business. It is common ground that the relevant revenue accounts are forms 40 for the whole LTBF and its constituent parts, the WPF and the NPF. The first point of construction (which I have already described as a short point, but one which takes some getting to) is the meaning of value (whether realised or not) of those assets in section 83(2)(b). The Company contends that it means market value, and that any reduction in their value (the form of words at the end of the subsection) is to be treated as an expense capable of giving rise to an allowable loss. The Revenue contends that section 83(2) is referring to a difference in value (whether it be an increase or a reduction) as brought into account for the relevant period of account, and that section 83(A)(2) leaves no room for doubt as to what that means. It directs attention to the appropriate regulatory account, in this case form 40. The Lord President (para 54) described this approach as definitional. Taxing a loss? The Companys written case before this Court, and Mr Gardiner QCs robust oral submissions, characterised the Revenues position as unnatural, uncommercial and contrary to fundamental principles of tax law. The Court was reminded of some famous judicial observations made more than a century ago, including Lord Halsbury LC in Gresham Life Assurance Society v Styles [1892] AC 309, 315: The word profits I think is to be understood in its natural and proper sense in a sense which no commercial man would misunderstand and Lord Macnaghten in London County Council v Attorney General [1901] AC 26,35: Income tax, if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else. In this case, Mr Gardiner submitted, the Revenue was attempting to tax what was in reality a loss of capital. These submissions call for careful consideration. The massive volume of documents and figures put before the Special Commissioners and the Court of Session, and now before this Court, creates a risk of getting lost in a labyrinth of abstractions. Actuaries, accountants and lawyers are trying to converse in the same language, but it is not easy going. It is a case in which there is a real danger, in the hackneyed phrase, of not seeing the wood for the trees. It may help to avoid confusion to start with three simple points. The first point is that the Revenue is not seeking to exact tax from the Company under Schedule D Case I either on profits or on losses incurred by the Company; it is taxing the Company on the I minus E basis. Simultaneously the Company is seeking to establish large Schedule D Case I losses in order to have them available for surrender to obtain group relief. The second point is that it is, and always has been, standard practice for life offices to bring the assets of their LTBFs into account, not at market values that fluctuate from year to year, but at a book value (though in practice that expression is applied to LTBFs in a way that an outsider may find surprising). The third point is that the Capital Reserve is not, and never has been, a separate fund distinct from the Companys LTBF. It has always been part of the LTBF. Each of these three points calls for some further explanation. The Crown option as it applies to this case The Revenue is not seeking to charge tax under Schedule D Case I on losses incurred by the Company. It is common ground (SFI, para 61) that at all material times since 3 March 2000 the Company has been taxed on the I minus E basis (the detailed computations for 2000 and 2002 can be seen in volume VII at pages 3211 and 3290; the relevant page for 2001 seems to have been inadvertently omitted). Nevertheless (SFI paras 62 and 63) the Company seeks to claim an allowable loss under Schedule D Case I which would be available for surrender to other Lloyds TSB group companies by way of group relief. The Revenue accepts (SFI, paras 62 and 63) that if the Company succeeds in this appeal the losses available for surrender would be approximately 28.7m for 2000, 612.6m for 2001 and 431.3m for 2002 (the relevant computations are at volume VII pages 3216, 3255 and 3295). The fact that a proprietary life office can simultaneously pay tax on the I minus E basis and have an allowable loss under Schedule D Case I shows that whatever the position a century ago, when there were no special statutory provisions, the taxation of long term life assurance business is now a very specialised area. Bringing assets into account at book value Regulation 45(6) of the 1994 Regulations (set out in para 20 above, and later reproduced in Rule 9.10(c) of the FSAs 2001 instrument) allowed a life office, for the purposes of an actuarial investigation, to take the value of any of its assets as its value in the books or other records of the company. This had been expressly permitted by the regulatory system since 1980, when Regulation 3 of the Insurance Companies (Valuation of Assets) Regulations 1976 (SI 1976/87), was amended by the Insurance Companies (Valuation of Assets) (Amendment) Regulations 1980 (SI 1980/5). But the two expert witnesses agreed that it was a very long standing and well established practice, and the Special Commissioners made a finding to that effect (para 16 of their decision). It would be potentially misleading to say that a life office is permitted to bring the assets of its LTBF into account at book value, since that is normally understood to mean historic cost. In a LTBF some assets are normally brought into account at the full admissible value, and others at nil (Special Commissioners decision, para 48; also para 122 of Lord Reeds judgment). It is unnecessary to go into the reasons for this practice, as to which there was no dispute. The reasons for maintaining an investment reserve of unrecognised value are fundamental to the way in which long term life business, and especially with profits business, has been conducted in the United Kingdom. It is the mechanism by which the life office, relying on the professional skills of its chief actuary and his staff, can achieve a balance between competing considerations and interests. First and foremost is the overriding need for a sufficient margin of solvency. Subject to that the life office will wish to produce consistently good results for its with profit policyholders, both in the policyholders interests and to preserve and enhance the companys reputation. It must also achieve fairness between different classes of policyholders in accordance with their rights and expectations (the difficulties of which are illustrated by Equitable Life Assurance Society v Hyman [2002] 1 AC 408). Finally there are tax considerations. No company likes to pay more tax than it has to, or to pay it sooner than it has to. Before 1989 the tax system allowed life offices to defer taxation, especially on unrealised capital gains. It is common ground that section 83 of FA 1989 was intended to change that; the controversy is as to the extent of the change. These points were well made by Mr Brian Drummond, an accountant, in an article entitled Making Sense of the FSA Return in Life Company Tax Computations (Tax and Accountancy Review, June 2006, p6). Some changes had taken place by then (both on the regulatory front and the taxation front) but the article is nevertheless instructive. After mentioning recent changes the author gives a brief overview of the forms: In broad terms, however, the overall structure remains unchanged. Form 13 remains a reasonably straightforward analysis of the total admissible value of the assets of the company by category with narratives that are commendably clear; Form 40 demonstrates how much of the Form 13 value is brought into account for the purposes of calculating surplus; Form 58 deals with the calculation, composition and distribution of the surplus; and, Form 14 then links that exercise back to Form 13 by showing how much of that original Form 13 value is covering liabilities and bonuses and how much of it is being held in reserve. He describes form 14 as an area of linguistic opacity, and comments: This confusion is carried across into form 14 of the FSA return where it increases further. The first line in form 14 is described as mathematical reserves, after distribution of surplus and in this one narrative only two of the six words (after and of) take their conventional or even accounting meaning. The most relevant passage is on the general philosophy of with profits business (at pp 9 10): Form 40 is described as revenue account but in conventional terms it is a very partial one. By reference to normal accounting convention it is surprising to have a revenue account that makes no explicit reference to a movement in liabilities to third parties. The layout of Form 40 and its interaction with Form 58 reflects much more of the history of with profit funds than it reflects normal accounting principles. In with profits funds the starting point in determining the extent to which surplus is recognised is establishing what bonus should be recommended. This will be driven by a combination of the results of the company (in terms of investment return and underwriting profit) together with policyholder reasonable expectations and the need to treat customers fairly. One of the principles of UK with profits business is smooth bonuses from year to year. Having established what bonus it is appropriate to declare for the year it is then possible, depending on the structure of the fund, to calculate the minimum extent to which surplus must be recognised both to meet the bonus requirement and any corresponding entitlement of the shareholders to participate in surplus as a fraction of the amount allocated to policyholders (very often one ninth the 90:10 structure). Historically with profit funds hesitated to recognise any more surplus than was required to meet the bonus, and associated shareholder entitlement, and hence the fund would generally be approximately equal to the liabilities (after current year bonus) plus any residual surplus not allocated. The nature of the Capital Reserve The third point mentioned in para 78 above is that the Capital Reserve is not, and never has been, an appropriated fund separate from the Companys LTBF. It is, as para 22.1 of the scheme makes clear, part of the LTBF. It is an account falling within Lord Greene MRs second category in Allchin v Coulthard [1942] 2 KB 228, 234 235 merely an accounting category. Abstract though it is, the Capital Reserve is on the Companys case of central importance to this appeal. It is not easy to discern its purpose. The Companys own independent actuarial expert, Mr Chamberlain, stated in his report dated 18 September 2007, para 5.1: The Scheme by which [the Society] demutualised established something it refers to as a Capital Reserve. This Reserve is a financial structure whose form and operation is defined by the Scheme, and does not meet any particular regulatory or other requirement, other than that emanating directly from the Scheme. It is a memorandum account and does not consist of particular assets. Mr Allen, the Revenues independent expert, stated in his report dated 5 October 2007, para 6.1: Within the notes to their returns I understand that [the Company] created a memorandum account (the Capital Reserve) with an initial balance of approximately 4.5bn. Notwithstanding that this account was referred to in the Scheme which obtained approval from the Court of Session, in my opinion this memorandum account had no meaning or relevance, other than as an item of information, as regards either the Companys statutory report and accounts or its regulatory returns. The memorandum account did not represent any particular assets, nor did it reflect any actual profit or loss incurred by the Company, it was simply a note of a particular transaction. The experts did not give a further explanation of the expression memorandum account, nor did counsel offer any. The Special Commissioners made a finding that reflects the natural meaning of memorandum (para 45): The purpose of the Capital Reserve was to keep a record of this initial value created by [Holdings] and to distinguish it from subsequent profits. The notion that it was an item of information that ought to be remembered comes out most clearly in the witness statement of Mr Michael Ross. He was an actuary who was employed by the Society for most of his career, becoming chief actuary of the Society in 1986 and the first chief executive of the Company in 2000. In his witness statement (paras 18 to 27, not challenged in cross examination) he described how demutualisation involved a strategic choice between ring fencing the estate and monetising the estate (the estate is a term used to describe a mutuals excess of assets over liabilities, or investment reserve). After careful thought the Lloyds TSB group and the Society opted for monetising the estate. This course was likely to be more attractive to the Societys members but required the Lloyds TSB group to find a very large sum to pay the membership compensation. But the payment of that compensation gave the Lloyds TSB group the advantage that the Company had a comfortable investment reserve at the inception of its business (whereas with ring fencing the group might have had to inject further capital). The group wanted to earmark what Mr Ross (para 27) regarded as shareholder owned capital, held within the [LTBF] in order to be able, in the long term, to benefit from it. That provides a clue, I think, to the purpose of the restriction on reduction of the Capital Reserve in para 22.3 of the Scheme (summarised in para 60 above). Only a limited amount (432m out of 4,455m) of the Capital Reserve could be brought into account in the revenue account of the WPF, because it was a 90/10 fund and nine tenths of the distributed surplus were to go for the benefit of holders of with profit policies; only one tenth (at most) could find its way to the shareholder, Holdings. There was no restriction (beyond the total amount of the Capital Reserve) on bringing it into account in the NPF, which was a 0/100 fund. The decision of the Special Commissioners and the judgments in the Court of Session The Special Commissioners decided the first issue in favour of the Company, and the Court of Session unanimously upheld that decision (Lord Emslies dissent was on the second, narrower issue as to section 83(3)). All three members of the Court delivered full judgments, so this Court has four separately reasoned routes to the same conclusion on the first issue. The reasoning can be imprecisely classified under three heads: the correct approach to the construction of taxing statues, arguments based on the legislative scheme and purpose, and detailed linguistic arguments. The Lord President dealt most fully with statutory construction (paras 45 to 49). He cited the well known speech of Lord Steyn in Inland Revenue Commissioners v McGuckian [1997] 1 WLR 991, 9991000, in which Lord Steyn referred to Lord Wilberforces seminal speech in W T Ramsay Ltd v Inland Revenue Commissioners [1982] AC 300, 323: Lord Wilberforce restated the principle of statutory construction that a subject is only to be taxed upon clear words . To the question What are clear words? he gave the answer that the court is not confined to a literal interpretation. He added There may, indeed should, be considered the context and scheme of the relevant Act as a whole, and its purpose may, indeed should, be regarded. This sentence was critical. It marked the rejection by the House of pure literalism in the interpretation of tax statutes. The Lord President ultimately decided the issue by applying the clear words principle in the light of his view of the statutory purpose (paras 55 and 56). Lord Emslie relied on the same principle, and some other principles which he set out at para 197: Since this appeal concerns the construction of tax legislation, certain fundamental rules, principles and presumptions may be thought to apply. First, as Lord Wilberforce explained in Vestey v Inland Revenue Commissioners [1980] AC 1148, 1172: Taxes are imposed upon subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined. Second, in the absence of specific charging provisions, capital and capital receipts do not fall to be taxed as revenue and vice versa. Third, corporation tax being an annual tax on the profits of a company, it is prima facie reasonable and appropriate to construe statutory charging provisions as directed towards real receipts and gains . in a sense which no commercial man would misunderstand: Gresham Life Assurance Society v Styles [1892] AC 309, 315, per Lord Halsbury LC. And fourth, as reflected in countless provisions of the taxing statutes, a subject is in general assessable to tax on his own profits and gains, and not on those of any third party. The second, third and fourth of these principles (and especially the second) may be what the Special Commissioners had in mind (in para 79 of their decision) in a more general reference to tax principles as predisposing them in the Companys favour, and in characterising the transfer from the Capital Reserve as a capital receipt (para 80). Arguments based on the legislative scheme and purpose move from the very general to the rather more particular. What was the underlying purpose of section 83? In particular was it intended, as the Lord President stated in para 55 of his judgment, to reverse the effect of section 433 of ICTA 1988? Is there a key conceptual distinction (Lord Emslie, para 201) between the Companys LTBF and the assets representing that fund? Was a transfer from the Capital Reserve a capital receipt comparable to an injection of new capital (Special Commissioners, para 80)? How cogent is the argument (Lord Reed, para 183; Lord Emslie, para 197, fourth point, and para 205, second point) that one taxpayer should not be taxed on another taxpayers profits or gains? What practical results do the statutory provisions produce if construed (Lord Emslie, para 200) as a one stage or alternatively a two stage process? I shall consider these points in turn. Legislative scheme and purpose It is permissible, without getting into the territory of Pepper v Hart [1993] AC 593, to look at the official consultation paper published in 1988, The Taxation of Life Assurance, to see the general nature of the problem perceived by the Revenue. The most relevant paragraphs are paras 6.2 to 6.7, 6.12 to 6.21, 6.33 and 7.1 to 7.8 A life office might have a large capital gain on a long term income producing investment (such as a fully let office block or a strategic holding of shares in an oil company) as part of the with profits part of its LTBF. Before 1989 this gain could be recognised (or brought into account) in its revenue account without being realised so as to give rise to a chargeable gain. Value representing at least nine tenths of the gain could then be distributed (in the form 58 sense, that is allocated) to the holders of with profits policies so as to obtain the protection of section 433 of ICTA 1988, as well as escaping income tax or capital gains tax in the policyholders hands on the maturity of their policies (assuming them to be qualifying policies). Section 83 of FA 1989 made the recognition of an unrealised capital gain a receipt to be brought into the Schedule D Case I computation, while section 82 of FA 1989 re enacted the substance of section 433 in a more satisfactory form. All this is very clearly set out, in a good deal more detail, in paras 123 to 133 of Lord Reeds judgment (which refer to section 83 in the form in which it was originally enacted). I respectfully think that in para 55 of his judgment the Lord President was to some extent running together the functions of sections 82 and 83, and misunderstanding the purpose of the two sections in tandem. Lord Emslie referred to section 433 (para 200) but not to section 82. In my opinion Lord Reeds analysis is to be preferred. Section 83 is concerned with the immediate implications, in making the necessary Case I computations, of bringing into account all or part of the difference between book value and market value, and section 82 is concerned with the next stage of the computations, that is adjustments in respect of the distribution of surplus to holders of with profits policies (covered by form 58, lines 41 to 59). The next point is the term fund. It is, as both Lord Reed (para 112) and Lord Emslie (para 199) observed, used inconsistently both in ICA 1982 and in the regulatory forms. But the two principal and relevant meanings, in this context, are clear (and here I am repeating ground I have already covered). The LTBF is an actual, appropriated fund of identifiable investments, the constituent assets of which (with their admissible values) appear in form 13. The Capital Reserve is a notional part of that fund to an initial amount of 4,455m; the independent actuarial experts agreed that it serves no regulatory purpose. The fund for the purposes of lines 39, 49 and 59 of form 40, and for all the purposes of form 58, is the same fund, but valued in a special way (that is at book values in the sense that actuaries use that term) in order to produce the life offices objectives solvency and prudent preservation of the investment reserve, but at the same time smooth progress in the allocation of bonuses to with profits policies. I am not sure that I understand para 201 of Lord Emslies judgment. In that paragraph he is (as I understand it) setting out part of the submissions made on behalf of the Company. But later (para 204) Lord Emslie himself accepted that there is a significant distinction between the assets and the fund itself. Of course there is a difference, the difference between the parts and the whole. But the value of the whole is in this case the sum of the values of the parts, and the significant distinction, affecting both, is the basis of valuation. It is common ground that if in 2001 or 2002 the Lloyds TSB Group had decided to inject fresh capital into the Companys LTBF (as might have been done by the Company issuing new shares to Holdings, paid for in cash that was appropriated to the LTBF) it would not have been treated as a receipt under section 83(2). The new money would have appeared on line 26 of form 40 (transfer from non technical account). The admissible value of the LTBF would have been increased, and so (if it was needed for solvency purposes) would its value as brought into account (lines 39 and 59 of form 40). A transfer from the Capital Reserve, by contrast, costs the group nothing (although it may be an indication that the state of the business is disappointing). The transfer does not increase the market value of the LTBF. Nor has it any regulatory significance, as the experts agreed. What happens is that part of the value held in the investment reserve is brought into account, a familiar event generally recorded (as Mr Allen stated, though Mr Chamberlain disagreed) on line 13 of form 40. I respectfully consider that the Special Commissioners, and to some extent the Court of Session also, attached too much weight to the label Capital Reserve and to the notion that capital gains ought not to be taxed under Schedule D, Case I. It could not be clearer that under section 83(2)(b) any increase in value (whether realised or not) of investments constituting a LTBF, as brought into account, is to come into the Case I computation. The argument that (in the absence of very clear words) one taxpayer ought not to be taxed on another taxpayers profits or gains is, on the face of it, a strong one. It is not satisfactorily answered simply by pointing out (though this should not be forgotten) that this appeal is not about taxing profits. It is about allowing losses capable of being surrendered for the benefit of other group companies. But the Company acquired a long established mutual business and a LTBF with a healthy investment reserve. That reserve may have been built up by the Society largely by means of unrealised gains. But it was the Company and the Lloyds TSB Group that decided, for entirely understandable reasons, to bring part of the investment reserve into account, rather than making an injection of new capital. The language of section 83(3)(b) (as amended in 1996) shows that Parliament had demutualisation well in mind as a situation for which the legislation should make provision. The last general point to be considered, before getting to linguistic arguments, is the implication of Lord Emslies illuminating distinction (para 200, summarising the Companys argument, and para 204, accepting it) between a two stage process (asking whether there are any real gains, and then how far they have been brought into account) and a one stage process (asking simply what increase in value, if any, has been brought into account). Again, it is necessary to be reminded that this appeal is about losses, not gains; and the three accounting periods have to be considered separately, and not as a whole. In any accounting period the operation of the statutory provisions, if analysed as a two stage process, allows six different combinations, although some of them may be fairly improbable in practice, as follows (AV denoting admissible value, and RV value recognised and brought into account): (1) AV up, RV up by less (2) AV up, RV up by more (3) AV up, RV down (4) AV down, RV down by less (5) AV down, RV down by more (6) AV down, RV up. It is easy to see how the competing interpretations work in situations (1), (2), (4) and (5). On the Companys two stage approach the lower figure (whether an increase or a reduction) will be brought into the computations; on the Revenues one stage approach the difference in RV will always be taken. But it is not so easy to see how either sides interpretation would apply to situations (3) and (6); and the Companys regulatory return for 2000 disclosed situation (6). It might be thought that though neither sides interpretation fits easily, the Companys two stage approach is distinctly more difficult to reconcile with the situation in which there is a reduction in admissible value, but an increase in value brought into account, in an accounting period, and the Company is seeking to establish an allowable loss during that period. But so far as I can see that submission was not made either to the Special Commissioners or to the Court of Session, nor do I recollect it being put forward in this Court. The terms of the agreed question do not positively require the point to be resolved. Indeed SFI, para 63 suggests that the point may already have been agreed between the parties. So the best course is, I think, to exclude that point, which was not argued, from any consideration of the statutory scheme and purpose. Nevertheless, unlike the Special Commissioners and (to some extent) the Court of Session, I do not approach the narrower linguistic points with any predisposition in favour of the Companys case. I approach them disposed towards the Revenues case as being more in accordance with the statutory scheme and purpose. Linguistic points on the first issue I can take these more shortly, and it is convenient to do so by reference to the numbered sub paragraphs at the end of para 181 of Lord Reeds judgment. The first point is that an increase in value . of . assets is said to refer most naturally to capital gains. In some contexts it might do so. In the context of a system of computation which is closely and explicitly linked to the regulatory returns in respect of LTBFs I see little force in this point. What is important is how value is to be measured, and to my mind sections 83(2) and 83A leave no doubt about that. The second point is on the words (whether realised or not) in section 83(2)(b). The section was making an important change in the law in that unrealised increases in value, so far as brought into account, were to come into the tax computation. To my mind it would have been surprising if the draftsman had not inserted this parenthesis so as to leave no doubt as to the character of the change in the law. The third point is on another parenthesis in section 83(2), (and not otherwise), though these words have come out in the text of Lord Reeds judgment before us as or otherwise. Again, I have to say that I think the draftsman is being rather unfairly criticised for his efforts to leave no doubt about the intended meaning. The preceding word as means in the manner that and the parenthesis means and in no other manner. To my mind it is a bit hard to dismiss this as otiose. Lord Reeds fourth point is that the expression brought into account is not apt to describe the overall effect of those entries. I confess that I simply do not understand this point. The critical entry is line 13 on form 40 (increase (decrease) in the value of non linked assets brought into account). That is the only line on form 40 in which the words brought into account are found. It was conceded that the line 15 entry could have been on line 13. The bottom lines (39, 49 and 59) show the overall position, and do not use the words brought into account. Lord Reeds remaining points on the first issue (in para 181(5) and (6) and para 183) are more general and I will not revisit them. Conclusion In my judgment the Revenues submissions on the first issue are correct, both as to the statutory scheme and purpose and as to the linguistic points just mentioned. I have gone into the matter at some length because I am conscious that I am differing both from the Special Commissioners and from the unanimous view of the Court of Session. But in the end I consider that it is simply a question of giving section 83(1) and (2) of FA 1989, as amended, their natural meaning. On that basis the second issue does not arise and I prefer to say nothing about it. I would allow the Revenues cross appeal and treat the Companys appeal as moot. LADY HALE As so often happens, what appears at first sight to be a very complicated question turns out on closer analysis to be quite a simple one. When calculating the profits of an insurance company in respect of its life assurance business under Case 1 of Schedule D to the Taxes Act, does an increase in value or conversely a reduction in the value of the assets of its long term business fund refer to an increase or decrease in their actual value? Or does it refer to an increase or decrease in their value as brought into account for a period of account in the companys revenue account prepared for the purpose of the Insurance Companies Act 1982? We know that the words as brought into account for a period of account (and not otherwise) in section 83(2) of the Finance Act 1989 (set out by Lord Walker at para 41 above) describe the words the following items; we know that the following items are (a) the companys investment income from the assets of its long term business fund, and (b) any increase in value (whether realised or not) of those assets; we know from section 83A (set out by Lord Walker at para 74 above) that brought into account means brought into account in the revenue account (or accounts) prepared for the purposes of the Insurance Companies Act 1982 in respect of the companys long term business (or part of it); so the linguistic question boils down to what is meant by as in section 83(2). The Company would have it that as means when. The link to the regulatory returns is a purely temporal one. Value means real value not whatever the company chose to put in the forms. The Revenue would have it that as means as. What is taken into account in computing the companys profits for income tax purposes is what the company brings into account in completing its revenue accounts for regulatory purposes. In my experience, if Parliamentary counsel mean when, they write when, and if they mean as, they write as. We should be slow to re write what they have written. The words and not otherwise, if nothing else, make it clear that there might have been some other way of taking items (a) and (b) into account for income tax purposes, but this is the way it is to be done. They are making a special rule for life insurance business. This is not surprising, for all the reasons that Lord Walker has so clearly and carefully explained. The words whether realised or not point to the real change which was being made by the 1989 Act. Otherwise it was business as usual. It was not until 1995 that these insurance companies were required to file any other sort of accounts than those which they had to file for regulatory purposes. It was natural for the Revenue to use the figures in the regulatory revenue account as their starting point. In full agreement with Lord Walker, and Lord Hope and Lord Neuberger, therefore, I would allow the Revenues cross appeal and regard the Companys appeal as moot. LORD NEUBERGER I too would recall the interlocutor of the Inner House of the Court of Session and allow HMRCs cross appeal. Having had the great benefit of reading in draft the judgments of Lord Hope and Lord Walker, I can express my reasons shortly. The cross appeal raises an issue as to the meaning of section 83(2) of the Finance Act 1989 (as substituted by paragraph 16 of Schedule 8 to the Finance Act 1995). It is unnecessary for me to set out section 83, as it is fully quoted in para 7 of Lord Hopes judgment and para 73 of Lord Walkers judgment. As will be clear to anyone who has read those judgments, the difficulty in this case arises from the fact that the issue of interpretation arises in the context of a very complex background. That complexity is attributable to a number of different factors, namely (i) the technical rules as regards the regulatory returns to be made by life assurance offices, (ii) the many changes in the legislation embodying those rules since they were first introduced in 1870, (iii) the many changes in the statutory provisions governing the taxation of life assurance offices, (iv) the extensive contractual provisions in the documentation governing the scheme (the scheme) for transferring of the business of Scottish Widows Fund and Life Assurance Society to Scottish Widows plc (the Company), and (v) the details of the regulatory returns made by the Company in the three accounting years in issue. When considering the application of section 83(2) to the facts of this case, I am sceptical about the value of analysing the history of the statutory provisions governing either the returns to be made by life assurance offices or the taxation of profits made by life assurance offices i.e. what I have characterised as factors (ii) and (iii). This cross appeal concerns the meaning of the statutory provision in force during the three relevant years, section 83(2), and its impact on the returns actually made in respect of those years, in the then stipulated form by the Company. Particularly as the provisions of the scheme, the prescribed forms for returns, and the contents of the Companys returns for the three years in question, all require careful analysis, it seems to me that to focus in addition on the rather intricate history, as opposed to the present provisions, of the regulations, risks taking ones eye off the ball (or, as Lord Walker puts it, not seeing the wood for the trees). Legislative archaeology has its place in statutory interpretation, but its role is limited. Where a statutory provision, when read in its immediate statutory and practical context, has a meaning which is tolerably clear as a matter of language, and not unreasonable or unfair in terms of its consequences, it seems to me that little is to be gained, and much may be lost (in terms of time, expense and eventual confusion) by going into the genesis and development of the provision in earlier legislation. As Lord Hope points out, such an approach is consistent with what was said both by Lord Wilberforce in Farrell v Alexander [1977] AC 59, 73 and by Lord Diplock in Inland Revenue Commissioners v Joiner [1975] 1 WLR 1701, 1715 6. Once one understands the scheme, the relevant regulations, the forms, and the Companys returns for the three years in question, it appears to me that the answer to the question posed on the cross appeal, namely the meaning and effect of section 83(2), is tolerably clear. I could not hope to equal the clarity of Lord Walkers analysis in paras 49 to 53, 57 to 70, and 82 to 91, and, very gratefully, adopt the benefit of his distillation of the various complex matters which he there explains. Turning to the central issue on the cross appeal, the meaning of section 83(2), it may be a little glib to suggest that HMRCs case is ultimately vindicated by a single word. However, if one was to isolate a single crucial point, it seems to me that it would involve focussing on the word as in that subsection, as Lady Hale suggested during argument. Section 83(2) stipulates that the items which should be taken into account as receipts of [a particular accounting] period are to be those items identified in paras (a) and (b) as brought into account for [that] period of account. The obvious and natural effect of the words which I have emphasised is that those items are to be taken into account for the period in question in the same way and to the same extent as they are brought into account for that period. It was argued on behalf of the Company that the expression as brought into account for a period of account should be treated simply as a reference to the period in which the item was brought into account, and was not concerned with how the item was brought into account. Particularly in the light of the inclusion of the word as, that does not seem to me to accord with the natural reading of the expression. Although both the Company and HMRC relied on other provisions in the 1989 Act to support their respective cases on the meaning of the expression, I am unconvinced that they are of any real assistance. Thus, it was suggested that the words (and not otherwise) in the subsection assisted the Companys interpretation. I do not see how that is so: they are there simply to emphasise that an item is only to be brought into account if it falls within the expression, and therefore they can take the issue of what the expression means no further. Equally, the fact that section 83A(1) (as inserted by paragraph 16 Schedule 8 to, the 1995 Act and amended by paragraph 6 of Schedule 31 to the 1996 Act) defines the term brought into account does not take matters further, as the position of each party is consistent with that definition. The conclusion that HMRCs construction of section 83(2) is correct seems to me to be supported, rather than undermined, by the normal approach to taxation of business profits as explained by Lord Halsbury LC in Gresham Life Assurance Society v Styles [1892] AC 309, 315 and by Lord Hoffmann in Revenue and Customs Commissioners v William Grant & Sons Distillers Ltd [2007] UKHL 15, [2007] SC (HL) 105, [2007] 1 WLR 1448, para 2. In connection with taxing business profits, the concept of a profit should normally be accorded its proper meaning, which will obviously depend on the specific context, but current accountancy practice is generally a good, and often the best, guide as to the precise quantification of any profit. In the case of a life assurance business, HMRCs case is that, in effect, statute requires the profit to be assessed by a rather unusual means, namely by reference to the returns in the regulatory forms. This is entirely consistent with the normal approach to assessing the profits of companies for taxation purposes, as these returns effectively take the place of the statutory audited accounts, which are relied on to define the profits of the overwhelming majority of other businesses owned by limited companies. Furthermore, although there is, at first sight, real force in the Companys argument that HMRCs case results in its business being taxed on some figure which cannot sensibly be said to be a profit, a closer analysis of the situation, as provided by Lord Walker in paras 81 to 90 and 95 to 105, shows that this is incorrect. Accordingly, and in agreement with the fuller reasoning of Lord Hope and Lord Walker, I would allow HMRCs cross appeal. As the cross appeal succeeds, it is unnecessary to consider the Companys appeal. I agree with Lord Walker that it would be better not to go into the question whether the majority of the Inner House was right in finding for HMRC on section 83(3). It is tempting to do so, given that there is a decision of the Inner House on the point. However, at least on the basis of the argument we have heard on this appeal, it does seem to me that the interpretation of subsection (3) is rather difficult, and I think it would be better to wait for a case where the issue matters, not least as it may be that some assistance would be gleaned from the facts of such a case, which may throw light on the practical consequences of the rival interpretations. LORD CLARKE I confess that I was initially attracted by the approach of Lord Emslie to the issues in relation to both the cross appeal and the appeal. However, having considered the masterly judgment of Lord Walker, I have found his reasoning compelling and agree with him (and indeed Lord Hope, Lady Hale and Lord Neuberger) that the Revenues cross appeal on the true construction of section 83(2) of the Finance Act 1989 as amended should be allowed. Like Lord Walker, Lady Hale and Lord Neuberger, I prefer to express no view on the issue of the true construction of section 83(3). I too would therefore allow the Revenues cross appeal and treat the Companys appeal as moot. |
This judgment is in two parts. One part considers whether this Court has jurisdiction to hear this appeal. This is a question of United Kingdom law, depending upon the meaning of an EEA decision in regulation 2(1) of the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (the 2006 Regulations) which transposed Parliament and Council Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the member states (the Citizens Directive) into UK law. Logically this question should come first. But as we have concluded that we do have jurisdiction, it will be simpler and clearer to explain our reasoning after we have considered the substantive issues in the case. These are questions of European Union law. Briefly, they concern the position under the Directive of a child who is a third country national but has been placed in the legal guardianship of European Union citizens under the Islamic kefalah system in her own country. Accordingly, Part 1 of this judgment discusses the substantive issues and refers three questions to the Court of Justice of the European Union. Part 2 discusses the jurisdiction issue. Part 1: The Substantive Issues The law before turning to the detailed facts and the history of this litigation. Article 1 of the Citizens Directive explains its subject matter thus: It is convenient to set out the applicable provisions of both EU and UK law This Directive lays down: (a) the conditions governing the exercise of the right of free movement and residence within the territory of the member states by Union citizens and their family members; (b) the right of permanent residence in the territory of the member states for Union citizens and their family members; (c) the limits placed on the right sets out in (a) and (b) on grounds of public policy, public security or public health. Article 2 contains definitions, including that of a family member, who enjoys the right to move with and reside with the Union citizen. This includes: (2) Family member means: (a) the spouse; (b) the partner with whom the Union citizen has contracted a registered partnership, on the basis of the legislation of a member state, if the legislation of the host member state treats registered partnerships as equivalent to marriage and in accordance with the conditions laid down in the relevant legislation of the host member state; (c) the direct descendants who are under the age of 21 or are dependants and those of the spouse or partner as defined in point (b); (Emphasis supplied.) Article 3 defines who are to be beneficiaries of the Directive, and makes in article 3.2 more limited and discretionary provision for those who do not qualify as family members within the meaning of article 2.2: 1. This Directive shall apply to all Union citizens who move to or reside in a member state other than that of which they are a national, and to their family members as defined in point 2 of article 2 who accompany or join them. 2. Without prejudice to any right to free movement and residence the persons concerned may have in their own right, the host member state shall, in accordance with its national legislation, facilitate entry and residence for the following persons: (a) any other family members, irrespective of their nationality, not falling under the definition in point 2 of article 2 who, in the country from which they have come, are dependants or members of the household of the Union citizen having the primary right of residence, or where serious health grounds strictly require the personal care of the family members by the Union citizen; (b) durable relationship, duly attested. the partner with whom the Union citizen has a The host member state shall undertake an extensive examination of the personal circumstances and shall justify any denial of entry or residence to these people. (Emphasis supplied.) (1) Subject to paragraph (2), for the purpose of these Regulations the following persons shall be treated as the family members of another person (b) direct descendants of his, his spouse or his civil partner who are under 21; or (i) (ii) dependants of his, his spouse or his civil partner; Regulation 7 of the 2006 Regulations transposes article 2.2(c) into UK law as follows: Regulation 8 makes provision for extended family members. At the time when this case was heard in the First tier Tribunal it provided as follows: (1) In these Regulations extended family member means a person who is not a family member of an EAA national under the regulation 7(1)(a), (b) or (c) and who satisfies the conditions in paragraph (2), (3), (4) or (5). (2) A person satisfies the condition in this paragraph if the person is a relative of an EEA national, his spouse or his civil partner and the person is residing in [a country other than the (a) United Kingdom] in which the EEA national also resides and is dependent upon the EEA national or is a member of his household; (b) the person satisfied the condition in paragraph (a) and is accompanying the EEA national to the United Kingdom or wishes to join him there; or the person satisfied the condition in paragraph (c) (a), has joined the EEA national in the United Kingdom and continues to be dependent upon him or to be a member of his household. (3) A person satisfies the condition in this paragraph if the person is a relative of an EEA national or his spouse or his civil partner and, on serious health grounds, strictly requires the personal care of the EEA national his spouse or his civil partner. (4) A person satisfies the condition in this paragraph if the person is a relative of an EEA national and would meet the requirements in the immigration rules (other than those relating to entry clearance) for indefinite leave to enter or remain in the United Kingdom as a dependent relative of the EEA national were the EEA national a person present and settled in the United Kingdom. (5) A person satisfies the condition in this paragraph if the person is the partner of an EEA national (other than a civil partner) and can prove to the decision maker that he is in a durable relationship with the EEA national. (6) In these Regulations relevant EEA national means, in relation to an extended family member, the EEA national who is or whose spouse or civil partner is the relative of the extended family member for the purpose of paragraph (2), (3) or (4) or the EEA national who is the partner of the extended family member for the purpose of paragraph (5). We doubt whether this regulation accurately transposed article 3.2 of the Directive in at least two respects. First, it imposed (and still imposes) a requirement that the dependant or member of the household be a relative of the EEA national. Second, it required that they both live or have lived in the same country outside the United Kingdom: however, that was rectified in November 2012 by the deletion of the words in which the EEA national also resides from regulation 8(2)(a). Under regulation 12(1), an Entry Clearance Officer (ECO) must issue an EEA family permit to a family member if certain conditions are met. Under regulation 12(2), an ECO may issue an EEA family permit to an extended family member if those conditions are met and (c) in all the circumstances, it appears to the Entry Clearance Officer appropriate to issue the EEA family permit. Also relevant and important in this appeal are the requirements of the law of England and Wales (there is separate but largely equivalent legislation in Scotland and Northern Ireland) relating to the adoption of children from abroad. The object is (i) to ensure, so far as possible, that such adoptions are in the best interests of the children concerned and attended by safeguards equivalent to those in UK law; (ii) to protect such children from the risk of exploitation, abuse and trafficking; and (iii) to ensure that the rights of the birth family are protected. By section 83 of the Adoption and Children Act 2002 (the 2002 Act), it is an offence to bring a child into the UK for the purpose of adoption here or having been adopted in another country, unless the Adoption with a Foreign Element Regulations 2005 (SI 2005/392) have been complied with. These require, inter alia, an assessment by a UK adoption agency of the suitability of the adopters to adopt. This does not apply to adoptions under the Hague Convention on Protection of Children and Co operation in Respect of Intercountry Adoption (1993) (the Hague Convention), implemented in UK law by the Adoption (Intercountry Aspects) Act 1999, because these children are protected by the safeguards in the Convention itself. In particular, article 4 requires that the state of origin should have determined that the child is adoptable; that an inter country adoption is in the childs best interests; that the required consents have been given freely and with proper information and counselling; and that consideration has been given to the childs own wishes and opinions, having regard to his age and degree of maturity, and his consent given where required. Section 66(1) of the 2002 Act lists those adoptions which are recognised by the law of England and Wales as conferring the status of adoption on the child. These are (a) an adoption order made in England and Wales, Scotland or Northern Ireland; (b) adoption by an order made in the Channel Islands or Isle of Man; (c) an adoption effected under the law of a Hague Convention country outside the British Islands and certified as having complied with the Convention requirements; (d) an overseas adoption; that is an adoption order made in one of the countries listed in (currently) the Adoption (Recognition of Overseas Adoptions) Order 2013 (SI 2013/1801), provided for in section 87 of the 2002 Act; and (e) an adoption recognised by the law of England and Wales and effected under the law of any other country; these will only be recognised if they satisfy the criteria for recognition at common law. For the sake of completeness, it should be mentioned that a child who does not qualify for entry under the Citizens Directive may qualify for entry as an adopted or de facto adopted child under the Immigration Rules. For a convenient account of the four routes available under the Rules as they then stood, see MN (India) v Entry Clearance Officer (New Delhi) [2008] EWCA Civ 38; [2010] 2 FLR 87, per Wilson LJ at paras 13 18. However, this judgment is concerned only with entry and residence under the Citizens Directive and the 2006 Regulations. The facts The appellant, whom I shall call Susana, was born in Algeria on 27 June 2010, so is now seven years old. She is a national of Algeria. Her male guardian, Mr M, is a French national of Algerian origin who has a permanent right of residence in the United Kingdom. Her female guardian, Mrs M, is a French national by birth. They married here in 2001. Finding themselves unable to conceive naturally, in 2009 they travelled to Algeria to be assessed as to their suitability to become guardians under the kefalah system. The First tier Tribunal judge found that this was a choice they made having learned that it was easier to obtain custody of a child in Algeria than it would be in the United Kingdom (para 35). Having been assessed as suitable, in a process described by the judge as limited, they were informed in June 2010 that Susana had been abandoned after her birth. They applied to become her guardians. There was then a three month waiting period, during which under Algerian law the birth parents were able to reclaim the child. On 28 September 2010, the Algerian Ministry of National Solidarity and Family in the province of Tizi Ouzou made a decree placing Susana, then aged three months, under their guardianship. On 22 March 2011, a legal custody deed was issued, having regard to the opinion of the public prosecutor, awarding them legal custody of Susana and transferring parental responsibility to them under Algerian law. The deed requires them: to give an Islamic education to the child put into his custody, keep her fit physically and morally, supplying her needs, looking after her teaching, treating her like natural parents, protect her, defend her before judicial instances, assume civil responsibility for detrimental acts. The deed also authorises them to get family allowances, subsidies and indemnities duly claimable, to sign all administrative and travel documents, and to travel with Susana outside Algeria. On 3 May 2011, the Court of Tizi Ouzou issued an order that Susanas surname as it appears on her birth certificate be changed to that of Mr and Mrs M. In October 2011, Mr M left Algeria and returned to the United Kingdom to resume his employment here as a chef. Mrs M remained in Algeria with Susana. In January 2012, Susana applied for a visa to visit the United Kingdom, which was refused. In May 2012, she applied for entry clearance as the adopted child of an EEA national under regulation 12(1), or alternatively 12(2) of the 2006 Regulations. The ECO refused this on the basis (i) that as Algeria was not a party to the 1993 Hague Convention on Intercountry Adoption and was not named in the Adoption (Designation of Overseas Adoptions) Order 1973 then in force, the Algerian guardianship was not recognised as an adoption in UK law; and (ii) no application had been made under section 83 of the 2002 Act for intercountry adoption. The First tier Tribunal dismissed Susanas appeal. The judge held that she did not qualify as either a legal or a de facto adopted child under the Immigration Rules, nor did she fall within the definitions of family member, extended family member or adopted child of an EEA national under the 2006 Regulations. On her appeal, the Upper Tribunal upheld the decision that she was not a family member under regulation 7 of the 2006 Regulations. However, it allowed her appeal on the basis that she did fall within the definition of extended family member under regulation 8. The case was therefore returned to the Secretary of State for her to exercise the discretion conferred upon her by regulation 12(2)(c). The Court of Appeal allowed the ECOs appeal: [2015] EWCA Civ 1109; [2016] Imm AR 239. The court correctly observed that the real question was not whether Susana fell within the definition of family member in regulation 7 or the definition of extended family member in regulation 8. Rather, it was whether she was a direct descendant within the definition of family member in article 2.2(c) of the Citizens Directive; or alternatively whether she fell within any other family members, , who, in the country from which they have come, are dependants or members of the household of the Union citizen having the primary right of residence in article 3.2(a). The court held that the Directive permitted Member States to restrict the forms of adoption which they would recognise for the purpose of article 2.2(c). Not having been adopted in a manner recognised by UK law, Susana could not fall within that article; and that being so, those restrictions could not be undermined by recognising that she might fall within article 3.2(a). This Court gave permission to appeal, initially only on the issues relating to article 3.2(a) of the Citizens Directive and regulation 8. However, in the course of the hearing before us on 23 March 2017, it emerged that there might also be issues relating to article 2.2(c) and regulation 7 which this Court should consider. The hearing was therefore adjourned for written submissions relating to those issues, as well as to the issue of jurisdiction which had been mentioned for the first time by the Secretary of State in her written case. After the adjournment, Coram Childrens Legal Centre (CCLC) and the Advice on Individual Rights in Europe (AIRE) Centre applied for and were given permission to intervene on both issues. In the light of written submissions from them and from the appellant, the court granted formal permission to appeal in relation to article 2.2(c) on 26 July 2017. Once the Secretary of States submissions on that issue had been received in October 2017, a further hearing was arranged for 29 November 2017. Article 3.2(a) This Court has little doubt that Susana would fall within article 3.2(a) if she does not fall within article 2.2(c). The 2006 Regulations have caused confusion by introducing the word relative which nowhere appears in article 3.2(a). Family member is a wider term than relative as it is well capable of including people who are not related by consanguinity or affinity. All that is required is that the person (i) falls within the broad concept of family member; (ii) was either a dependant or a member of the household of the Union citizen; and (iii) that dependency or household membership was in the country from which the person has or would come. A child for whom the Union citizen has parental responsibility under the law of the childs country of origin is clearly capable of being regarded as a family member; Susana was both a dependant and a member of the household of Mr and Mrs M; and this was in Algeria, the country from which she would be coming to this country. The obligation of the host member state is to facilitate entry and residence in accordance with its national legislation, to undertake an extensive examination of the personal circumstances, and to justify any denial of entry and residence. UK legislation relating to foreign adoptions is clearly relevant to that examination. A refusal of entry and residence would, in principle, be justified if there were reason to believe that the child was the victim of exploitation, abuse or trafficking, or that the claims of the birth family had not been respected. But the fact that the arrangements did not comply in every respect with the stringent requirements of UK adoption law would not be determinative. The Secretary of State and her officials are required by section 55 of the Borders, Citizenship and Immigration Act 2009 to discharge their functions in relation to immigration, asylum and nationality having regard to the need to safeguard and promote the welfare of children who are in the United Kingdom. This duty was imposed in the light of the UKs obligation under article 3.1 of the United Nations Convention on the Rights of the Child (1989) that In all actions concerning children the best interests of the child shall be a primary consideration. Under article 2.1 the rights set out in the Convention are to be secured to children within the jurisdiction, but the Secretary of State has made it clear that section 55 will also be observed in relation to children applying to enter this jurisdiction. The same obligation arises under article 24.2 of the Charter of Fundamental Rights of the European Union, which applies whenever a member state is implementing EU law. In a case such as this, the need to safeguard and promote childrens welfare would obviously encompass the need to protect all children from the dangers of exploitation, abuse and trafficking. But the best interests of the individual child must also be a primary consideration. This would depend upon factors such as whether the child had been abandoned by her birth family; whether if she had not been the subject of a kefalah arrangement she would have continued to be brought up in an institution; whether her guardians had been assessed as suitable by the authorities in her birth country; whether they had gone through all the appropriate legal procedures in that country; their reasons for not going through the appropriate procedures for intercountry adoption here; the cultural and religious background of both the child and her guardians, including whether adoption in the UK sense is compatible with their religious beliefs; how well her guardians are fulfilling their legal obligations towards her; and perhaps above all how well integrated she is into their family and household and how close and beneficial their relationships are with one another. In making that evaluation, the decision makers, whether in the Home Office or in the appellate system, would also have to bear in mind that the purpose of the Directive is to simplify and strengthen the right of free movement and residence for all Union citizens, freedom of movement being one of the fundamental freedoms of the internal market. Having to live apart from family members or members of the family in the wider sense may be a powerful deterrent to the exercise of that freedom. Article 2.2(c) However, this Court cannot simply allow the appeal and restore the order of the Upper Tribunal, on the basis that Susanas case should be considered under article 3.2(a), if in reality she falls within the definition of family member in article 2.2(c). In that event she enjoys the automatic rights of entry and residence conferred by the Directive. What then does direct descendant mean? Obviously, it refers to consanguineous children, grand children and other blood descendants in the direct line (query whether it also refers to step descendants). It has also been common ground in this case that it must include those descendants who have been lawfully adopted in accordance with the requirements of the host country. But there is reason to think that it goes further than that. Firstly, there is the Communication from the Commission to the European Parliament and the Council on guidance for better transposition and application of Directive 2004/38/EC (Com (2009) 313 final). Paragraph 2.1.2 is headed Family members in direct line and thus apparently refers to article 2.2(c). It says this: Without prejudice to issues related to recognition of decisions of national authorities, the notion of direct relatives in the descending and ascending lines extends to adoptive relationships or minors in custody of a permanent legal guardian. Foster children and foster parents who have temporary custody may have rights under the Directive, depending upon the strength of the ties in the particular case. There is no restriction as to the degree of relatedness. National authorities may request evidence of the claimed family relationship. (Original emphasis.) On the face of it, this would clearly include a child such as Susana, who is in the permanent legal guardianship of Mr and Mrs M. Secondly, as Advocate General Bot reminded us in his opinion in Secretary of State for the Home Department v Rahman (Case C 83/11) [2013] QB 249, at point 39: according to clearly established case law, the need for a uniform application of European Union law and the principle of equality require that the terms of a provision of European Union law which makes no express reference to the law of the member states for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the European Union: see Ziolkowski v Land Berlin (Joined Cases C 424/10 and C 425/10) [2012] Imm AR 421, para 32 and the case law cited. Accordingly, if the wording of a provision of Directive 2004/38 does not give any guidance as to how the terms used in that provision are to be understood and does not contain any reference to national laws as regards the meaning of those terms either, those terms must be regarded, for the purpose of the application of that Directive, as designating an autonomous concept of EU law which must be interpreted in a uniform manner throughout the member states, by taking into consideration, inter alia, the context in which the terms occur and the purposes of the rules of which they form part: Ziolkowskis case, paras 33 and 34 and the case law cited. There is nothing in article 2.2(c) to suggest that the term direct descendant should be interpreted in accordance with the national law of the host member state. This is in contrast with article 2.2(b), which expressly relates the concept of registered partnership to the laws of the member state where it was contracted and to the treatment of such a partnership in the laws of the host member state. It would appear, therefore, that direct descendant is an autonomous term in EU law which should be given a uniform interpretation throughout the Union. Thirdly, that view is supported by the recent opinion of Advocate General Wathelet in Coman v Inspectoratul General pentru Imigrri (Case C 673/16) (ECLI EU:C:2018:2, as yet unreported), point 32: that the word spouse in article 2(1)(a) must be given an autonomous meaning and applies to a third country national of the same sex as the citizen of the European Union to whom he or she is married. Fourthly, such a uniform interpretation would accord with the purpose of the Directive. Again, as Advocate General Bot reminded us in Rahmans case, at point 36, albeit in the context of article 3.2: the right to family reunification is understood as the corollary of the right of free movement for the Union citizen, based on the principle that the latter may be dissuaded from moving from one member state to another if he cannot be accompanied by members of his family. Family reunification thus enjoys indirect protection by reason of the potential impairment of the effectiveness of Union citizenship. If some member states recognise kefalah children as direct descendants but others do not, this clearly places barriers to free movement for those European Union citizens who have such children. It also discriminates against those who, for religious or cultural reasons, are unable to accept the concept of adoption as it is understood in the UK and some other European countries, that is, as the complete transfer of a child from one family and lineage to another. On the other hand, the fact that the term direct descendant may have an autonomous meaning does not necessarily entail that it should have a broad meaning. We therefore cannot consider it acte clair that a child in Susanas position is not to be regarded as a direct descendant of her guardians for the purpose of article 2.2(c). At the same time, we are concerned that such an interpretation could, in some cases, create opportunities for exploitation, abuse and trafficking in children, which it was the object of the Hague Convention to prevent and deter. We are also concerned that an automatic right of entry for kefalah children might lead to some of them being placed in homes which domestically would have been rejected as unsuitable. Article 1(c) of the Citizens Directive recognises that limits may be set on the rights of free movement and residence on grounds of public policy, public security or public health. But these limits are restricted by the later substantive provisions. The relevant articles appear to us to be article 27 and article 35. Article 27 is subject to the procedural safeguards in articles 30 and 31. So far as immediately relevant, it provides: 1. Subject to the provisions of this Chapter, member states may restrict the freedom of movement and residence of Union citizens and their family members, irrespective of nationality, on grounds of public policy, public security or public health. These grounds shall not be invoked to serve economic ends. 2. Measures taken on grounds of public policy or public security shall comply with the principle of proportionality and shall be based exclusively on the personal conduct of the individual concerned. Previous criminal convictions shall not in themselves constitute grounds for taking such measures. The personal conduct of the individual concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. Justifications that are isolated from the particulars of the case or that rely on considerations of general prevention shall not be accepted. This would only provide adequate protection for children who are or might be the victims of exploitation, abuse or trafficking, or otherwise placed in unsuitable homes, if (i) the individual concerned were the sponsoring Union citizen rather than the child seeking entry; (ii) such conduct were considered to affect one of the fundamental interests of society; and (iii) such conduct, whether in the past or the future, was capable of representing a genuine, present and sufficiently serious threat to such an interest. Article 35 provides for Abuse of rights: Member states may adopt the necessary measures to refuse, terminate or withdraw any right conferred by this Directive in the case of abuse of rights or fraud, such as marriages of convenience. Any such measure shall be proportionate and subject to the procedural safeguards provided for in articles 30 and 31. This article does not in terms state that it must be the person seeking entry who has abused his or her rights. It may therefore be wide enough to cater for a Union citizen who abuses the right of family reunification implicit in his freedom of movement to bring in a child who has been, or is at risk of being, the victim of exploitation, abuse or trafficking; but this is not clear. It also appears to us that the answers to the questions posed must be the same whether the child involved is a third country national or a national of another Member State. The relevant provisions do not distinguish between them. Thus, the Court refers the following three questions to the Court of Justice of the European Union for a preliminary ruling: (1) Is a child who is in the permanent legal guardianship of a Union citizen or citizens, under kefalah or some equivalent arrangement provided for in the law of his or her country of origin, a direct descendant within the meaning of article 2.2(c) of Directive 2004/38? (2) Can other provisions in the Directive, in particular articles 27 and 35, be interpreted so as to deny entry to such children if they are the victims of exploitation, abuse or trafficking or are at risk of such? Is a member state entitled to inquire, before recognising a child who (3) is not the consanguineous descendant of the EEA national as a direct descendant under article 2.2(c), into whether the procedures for placing the child in the guardianship or custody of that EEA national was such as to give sufficient consideration to the best interests of that child? As these proceedings concern a young child, whose application for entry clearance was made as long ago as May 2012, we hope that this reference can be dealt with as a matter of urgency. Part 2: Jurisdiction The Court of Appeal handed down judgment in this case on 4 November 2015 [2015] EWCA Civ 1109; [2016] Imm AR 239. This Court gave permission to appeal on 28 April 2016. At neither stage was it suggested that there was no right of appeal against the ECOs decision and thus that neither the tribunals or the courts had any jurisdiction to hear this case. Nor was the issue raised in the Statement of Facts and Issues agreed between the parties for the purpose of this appeal. However, on 6 June 2016, the Upper Tribunal held, in Sala v Secretary of State for the Home Department [2016] UKUT 411; [2017] Imm AR 141, paras 85, 87, that there was no statutory right of appeal against the refusal of a residence card to a person claiming to be an extended family member under the 2006 Regulations. This was first drawn to our attention for information in the Secretary of States written case dated 8 March 2017. We took the view, however, that we could not proceed with the issue relating to article 3.2(a) of the Directive and regulation 8 of the 2006 Regulations without determining whether we had jurisdiction to do so. It is a matter of great regret that the point was not drawn to our attention immediately after the Sala decision, because it could then have been dealt with as a matter of urgency and the delay in these proceedings avoided. The argument is a simple one. Under regulation 26(1) of the 2006 Regulations: Subject to the following paragraphs of this regulation, a person may appeal under these Regulations against an EEA decision. Except where an appeal lies to the Special Immigration Appeals Commission (which is not this case), the appeal lies to the First tier Tribunal (Immigration and Asylum Chamber). The following paragraphs do not exclude decisions relating to extended family members (indeed, one which was added later, paragraph 26(2A), deals with the evidence which must be produced by a person claiming to be in a durable relationship for the purpose of regulation 8(5)). Everything therefore turns on what is meant by an EEA decision. This was defined thus in regulation 2(1) at the relevant time: a persons entitlement to be admitted to the EEA decision means a decision under these Regulations that concerns (a) United Kingdom; (b) a persons entitlement to be issued with or have renewed, or not have revoked, a registration certificate, residence card, document certifying permanent residence or permanent residence card; or (c) (d) persons right to reside in the UK. a persons removal from the United Kingdom; or the cancellation, pursuant to regulation 20A of a In Sala, the Upper Tribunal decided that, because decisions concerning extended family members involve, not only a determination as to whether a person falls within the definition of extended family member, but also the exercise of a discretion whether to admit or grant a residence card to that person, they did not concern that persons entitlement to either. The Tribunal acknowledged that the point was not an easy one. It had long been assumed, both by appellants and by the Secretary of State, that there was such an appeal. Both parties maintained that position before the Tribunal: only an amicus appearing at the Tribunals request argued the contrary. (Indeed, regulation 26 had been amended in 2012 to introduce paragraph 26(2A), which made no sense if extended family members did not have a right of appeal; but that could not change the meaning which the Regulations already bore.) In the Tribunals view, the natural and ordinary meaning of paragraph (b) in the definition of EEA decision did not cover the refusal of a residence card (para 48) (which was the issue in that case). Shortly before the second hearing before us, the Court of Appeal handed down judgment in Khan v Secretary of State for the Home Department [2017] EWCA Civ 1755, in which the Secretary of State had refused to grant a residence card to the Pakistani nephew of a German national. The arguments were wide ranging, the Secretary of State now contending that Sala was correct. Nevertheless, the principal point at issue was whether the decision in question was one which concerns an entitlement to enter and be granted a residence card (para 42). In Sala, the Upper Tribunal had proceeded on the basis that this meant an existing entitlement (Khan, para 43). Both the appellant and the Secretary of State had argued then that there was a two stage process: first the factual decision whether the appellant fell within the definition of an extended family member; and second the decision whether it was appropriate to grant entry and a residence card; once granted, this would result in an entitlement to enter and reside; hence the decision concerns that entitlement because it is relevant to or important to, relates to or is about the entitlement to a residence card (see para 24). Irwin LJ held that a decision which concerns an entitlement appears to me naturally to include a decision whether to grant such an entitlement (para 45). Longmore LJ, agreeing, added that, even where there was a discretion, it had to be exercised in accordance with the correct legal principles: a litigant was entitled to a decision exercised in that way (para 48). Sir Terence Etherton MR agreed with both judgments. The decision in Sala was therefore overruled. That now being the interpretation of the 2006 Regulations as they stood at the date when this appeal was launched, it is for the Secretary of State to persuade us that the Court of Appeal was wrong to reach the conclusion that it did. That she has been unable to do. On the contrary, in our view the Court of Appeal was clearly correct and there is no need for us to rehearse the very wide ranging arguments put before them. Despite the breadth of the discretion in article 3.2 cases, there is nevertheless a duty to facilitate entry, to make full enquiries and to justify refusal. There will therefore be cases in which a refusal cannot be justified. Such a person will be entitled to a family permit and thereafter to be treated as a family member. As Lord Wilson pointed out in the course of argument, jurisdiction cannot depend upon fine judgments as to the proportionality of refusal. It also makes no practical sense in a case such as this, which turns on whether the appellant has a present entitlement under article 2.2(c) or a potential entitlement under article 3.2(a): on the Secretary of States present case and in the light of our conclusions on article 3.2(a) above, Susana would have a right of appeal to the tribunal in relation to her claims under article 2.2(c), but would have to bring judicial review proceedings in relation to her claim under article 3.2(a). We are satisfied, therefore, that the Court of Appeals decision in Khan was correct and that Sala should be overruled. For completeness, it should be recorded that on 20 February 2017, in Secretary of State for the Home Department v Banger ([2017] UKUT 125, unreported), a differently constituted Upper Tribunal referred a number of questions concerning the claim of the unmarried partner of a British national to the Court of Justice of the European Union. Among those questions, in the light of Sala, was this: Is a rule of national law which precludes an appeal to a court or tribunal against a decision of the executive refusing to issue a residence card to a person claiming to be an extended family member compatible with the [Citizens] Directive? Despite the decision in Khan, that question is not moot, as the 2006 Regulations have since been replaced by the Immigration (European Economic Area) Regulations 2016 (SI 2016/1052). These largely reproduce the 2006 Regulations, as amended, but decisions to refuse to issue an EEA family permit, a registration certificate or a residence card to an extended family member have been expressly excluded from the definition of an EEA decision in regulation 2(1). We understand that the oral hearing in Banger took place in January 2018. The issue is whether the procedural safeguards laid down in articles 15, 20 and 21 of the Directive require a full merits appeal to a court or tribunal or whether they can be satisfied by the UKs procedure for judicial review of administrative action: is that an effective remedy for this purpose? Given the conclusion we have reached in this case, it would be inappropriate for us to comment further on this issue. We shall await with interest the outcome of the reference in Banger. |
The appellant Shaun Docherty fell to be sentenced in the Crown Court for offences of serious violence. He was on any view a high risk of further, and perhaps worse, serious violence. At the time when he was sentenced the statutory scheme for the sentencing of offenders who represent a future public danger was in the course of change. The scheme provided for by the Criminal Justice Act 2003 (the CJA 2003), as amended, was being replaced by a different one under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). The transitional provisions made by the Commencement Order for LASPO preserved the old scheme sentences if the conviction was before the prescribed commencement date. Docherty was convicted before that date and was accordingly sentenced, after it, to an indeterminate sentence of imprisonment for public protection (IPP) under the scheme of the CJA 2003, although that form of sentence was in the course of being abolished for the future. In his appeal against sentence he contended that the Commencement Order containing the transitional provisions was, to the extent that it preserved IPP for him, unlawful. He submitted that this was so for one or more of three reasons: (a) because the new scheme was less severe than the earlier one, and therefore to apply the earlier was unlawful as contrary to an international principle of lex mitior, which is binding on the English court via article 7 of the European Convention on Human Rights (ECHR), as explained by the Strasbourg court in Scoppola v Italy (No 2) (2010) 51 EHRR 12 (Scoppola); or (b) because the purpose of LASPO was to remove IPP from the armoury of sentencing, and therefore transitional provisions which preserved it to any extent were outside the authority given by that statute; or (c) because to impose an IPP on him, but not on a person convicted after the LASPO commencement date, amounted to unlawful discrimination against him, contrary to article 14 of the ECHR, read with article 5. The facts Docherty was born in April 1978. By the time he came to be sentenced in December 2012 on the occasion now under scrutiny he was 34 years of age. He had been convicted on 16 previous occasions of some 28 offences. There was a clear pattern of aggressive offending, usually fuelled by alcohol, supplemented in some cases by cannabis. His offences included affray, other public order offences, criminal damage and, most significantly, violent offences causing injury to others. In 1997 he was convicted of two violent offences, one of unlawful wounding (section 20 Offences against the Person Act 1861) and the other of causing grievous bodily harm with intent (section 18 of the same Act). They were separate incidents. In the first, he had punched and kicked another man to the head and body. In the second, he had forced his way into the flat of his stepfather in what he later said was a punishment expedition in revenge for suggested misbehaviour by that man towards Dochertys mother. He had broken the others jaw in two places and inflicted cuts to his head. For these two offences he was sentenced to five years imprisonment. On 12 July 2012 he started an altercation with two drinking companions, Cook and Lord. He persisted although Lord avoided confrontation. He slapped Cook in the face. When the other two sought to leave, he went and fetched a vegetable paring knife and, on his return, stabbed Cook in the back of the neck, the back and chest, some of the wounds inflicted as Cook tried to crawl away. There were at least six stab wounds in all and the knife was left embedded in his chest. Lord had tried to protect Cook, but Docherty stabbed him also in the face and head. Cooks kidneys were damaged and he was in hospital for four days. Lord sustained a deep penetrating wound to the scalp together with other injuries to the head, arms and hands. Both victims were significantly affected by what had happened to them. These events gave rise to two counts of wounding with intent to do grievous bodily harm, contrary to section 18 Offences against the Person Act 1861. In due course Docherty admitted them and pleaded guilty in the Crown Court. Between release from the five year sentences imposed in 1997 and the commission of these new and more serious offences, he had been either convicted or cautioned for drunken disorder or violence in 2004 (twice), 2005, 2006 (twice), 2007, 2009 and 2010, and then on four different occasions between late May and the beginning of July of 2012. Two of these incidents were relatively minor, involving arriving very drunk at the police station either threatening that he would knock someone out if not taken home or reporting that he had broken a number of windows. The police domestic violence unit had, however, also been called out to three further incidents of drunken aggression on his part. Reports from the probation officer and a consultant forensic psychiatrist confirmed that what lay behind this pattern of behaviour was long standing alcohol abuse. There was no mental health disability. Docherty was aware of his alcohol problem, and from time to time expressed remorse. His sister had written a letter supportive of him and expressing faith in his underlying goodness of heart. But it was clear that he was not in control of himself. Moreover, the probation officers assessment was that he tended to use violence as a means to gain compliance from others and to solve problems. So his was a case of injuries thus far inflicted which were grave and it was largely a matter of chance that they had not been graver, or indeed fatal. He posed the risk of further attacks, with similar or worse consequences; the probation officer described that risk as very high. The statutory maximum sentence for the offences of which Docherty was convicted is, and has been for well over a century, life imprisonment. The judge passed a sentence of IPP on 20 December 2012. He specified five years and four months as the period which had to pass before the Parole Board could consider release on licence. That was done under the rules for the construction of an IPP sentence which are set out in para 9 below. The sentence meant that Docherty will be eligible for consideration for parole after five years and four months, thus in 2018, but before such release on licence can occur the Parole Board will have to be satisfied that it is no longer necessary for the protection of the public that he be detained. There is no complaint that, if IPP was available, the sentence was either excessive or incorrectly calculated. The change in the law The CJA 2003 had introduced a new scheme of preventive sentencing for dangerous offenders, there defined as those who are convicted of specified offences and who present a significant risk to the public of serious harm (death or serious personal injury) from further serious offending. That Act was by no means the first to address the sentencing of offenders posing a future risk. An early example was a system of preventive detention for habitual criminals (section 10 of the Prevention of Crime Act 1908), and different provisions were made by statute from time to time thereafter. Immediately before 2003, the solution adopted to the problem was the authorisation of determinate sentences for the dangerous which were longer than commensurate, ie longer, on grounds of future risk, than would be appropriate simply to the facts of the current offence (section 2(2)(b) Criminal Justice Act 1991). The CJA 2003 removed that power and substituted a new scheme. It consisted, for dangerous adult offenders, of a menu of three possible sentences alongside ordinary determinate or non custodial sentences: (1) life imprisonment where the offence creating section provided that as the maximum available, (2) IPP and (3) an extended sentence. There were broadly equivalent sentences for those under 18. IPP was a new form of sentence. The judge was required to specify a minimum period before which there could be no eligibility for parole. In effect he had to identify what the hypothetical determinate sentence for the offence would have been if commensurate, that is calculated purely by reference to the gravity of the offence and the responsibility of the offender, without consideration of future risk. Then the judge had to specify half that term as the period before parole was possible (half, because the hypothetical prisoner sentenced to a determinate sentence would, under the CJA 2003, serve half his term in prison and the second half on licence). After the specified minimum period had been served, the IPP prisoner was eligible for release providing that the Parole Board was satisfied that it was no longer necessary for the protection of the public that he be detained. These release provisions were for most practical purposes the same as (although not quite identical to) those which applied and still apply to life sentences: see R v Lang [2005] EWCA Crim 2864; [2006] 2 Cr App R (S) 3, at para 8. But IPP was available, if the offender met the statutory test of serious danger to the public, for those specified offences which did not otherwise carry life imprisonment as well as for those which did. The extended sentence provided for by the CJA was broadly similar to previous forms of sentence with the same name. It consisted of a commensurate determinate term plus an elongated period of licence beyond that which would normally attend that length of sentence. As is now well documented, there ensued considerable difficulty in the administration of IPP sentences. As originally framed, the CJA 2003 created a presumption of dangerousness and made the sentence mandatory. This led to a large number of IPP sentences being passed, including many for offences which did not otherwise carry life imprisonment. Some IPP sentences, passed according to the statutory rules, had quite short specified minimum periods. All those thus sentenced had to be treated in prison in the same way as those sentenced to life imprisonment, because the test for release was the same. There were far too many IPP prisoners for the rehabilitative systems of the prisons to cope with. This resulted in decisions both domestically and in the Strasbourg court that the duty to provide reasonable facility to the prisoner to reform himself and to demonstrate that he was no longer a public danger was too often not discharged: see James, Lee and Wells v United Kingdom (2013) 56 EHRR 12, R (James, Lee and Wells) v Secretary of State for Justice [2009] UKHL 22; [2010] 1 AC 553, and R (Kaiyam) v Secretary of State for Justice [2014] UKSC 66; [2015] AC 1344. The prison administration of life prisoners was distorted. From 2008, modifications were made by the Criminal Justice and Immigration Act of that year to the conditions for imposing an IPP sentence, which reduced the numbers. But in due course the decision was made to abolish altogether that form of sentence for the future, and this was accomplished by Parliament in LASPO. By section 123 of LASPO the sections of the CJA 2003 providing for both IPP and the 2003 model of extended sentence (and for their equivalents for those under 18) were repealed. LASPO did not, however, simply remove IPP from the sentencing armoury. It substituted one menu of preventive sentencing for another, just as previous legislation had done. Insofar as it is new, the scheme has been inserted into the CJA 2003 as new sections of that Act. Overall, it comprises three elements. (i) A life sentence, where that is the statutory maximum for the offence committed, if the court is of the opinion that there is a significant risk to members of the public of serious harm occasioned by the commission by the defendant of further offences specified in Schedule 15 and the gravity of the offence(s) is such as to call for such a sentence section 225(2); this part of the scheme is unaltered from the 2003 regime. (There might be cases where a discretionary life sentence is justified for an offence outside Schedule 15 if its gravity and the danger presented by the defendant are sufficient see the discussion in R v Saunders [2013] EWCA Crim 1027; [2014] Cr App R (S) 258, para 11 it is not necessary to discuss this possibility in the present case). (ii) A new obligatory life sentence, unless its imposition would be unjust in the circumstances, if the defendant is now convicted for a second time of one of a defined group of violent or sexual offences (Schedule 15B), where both the previous and current offences have been met by, or would call for, determinate terms of ten years or more, or their equivalent section 224A. This is entirely new. If the conditions are met, it may, even if not frequently owing to the levels of determinate term required, lead to the passing of a life sentence for offences which otherwise have a statutory maximum well below life imprisonment examples include several forms of sexual offence, contrary to sections 9 12 and 48 50 of the Sexual Offences Act 2003, and offences of child pornography contrary to section 1 of the Protection of Children Act 1978, all of which are listed in Schedule 15B. (iii) A new form of extended sentence under section 226A. Although the expression is not used in the statute, the Ministry of Justice appears to have adopted the label Extended Determinate Sentence (EDS) for this latest model of extended sentence, and this is certainly a convenient means of distinguishing it from its predecessors. For similar reasons the CJA 2003 model of extended sentence, as amended in 2008 and now abolished by LASPO, has had bestowed on it the label EPP (extended sentence for public protection). The new EDS is discretionary and, like the former EPP, consists of a commensurate determinate term plus an additional period of licence beyond the usual licence for the remainder of the custodial term which follows early release. The superficial similarity of the two conceals, however, significant differences between them. EPP (as amended from 2008 onwards) and EDS share the following features. (a) The basic condition for the imposition of both is that the defendant is being dealt with for a specified offence, which means one contained in Schedule 15 to the CJA 2003 (section 224), and that he presents a significant risk to the public of serious harm through the commission of further such offences; (b) Both are constructed of custodial term and extension of licence period; (c) In both cases the total of those two periods must fall within the statutory maximum for the offence; (d) For both, the custodial term is measured by what would be the commensurate determinate term if an extended sentence were not being passed; (e) It is a condition for the imposition of both that the custodial term is four years or more or that there is a qualifying previous conviction (though not identical in each case: see para 14(ii) below); (f) For both, the extension periods have a maximum of five years for violent offences and eight years for sexual offences; and (g) For both, the criterion by which the length of the extension period is to be fixed is the period (within the maximum) required for the purpose of protecting the public from serious harm occasioned by the commission of further specified offences. But there are significant differences between the two. (i) EPP could be imposed only for an offence committed after the commencement of the CJA 2003 (4 April 2005), but EDS is expressly made available by section 226A(1) for an offence whenever committed. EDS but not EPP is thus available when sentencing so called historic cases, especially those of sexual abuse, which are often uncovered many years after the event. (ii) EPP was available only (unless the custodial term would be at least four years) where the defendant has previously been convicted of an offence listed in Schedule 15A to the CJA 2003, but EDS is available when he has previously been convicted of one listed in Schedule 15B. Those two lists are not the same, and neither is the same as Schedule 15. The EDS list in Schedule 15B is appreciably wider and covers many offences for which EPP was not available. These include many sexual offences (sections 7, 9, 10, 11, 14, 15, 25, 26, 48 and 49 Sexual Offences Act 2003), a number of terrorist offences, of which there are none in the EPP list in Schedule 15A, the very common offence of possessing (etc) indecent photographs of children contrary to section 1 Protection of Children Act 1978 and an entirely new category of offence consisting of abolished offences which amounted to the same as listed ones (no doubt inserted because of point (i) above); moreover two of the sexual offences which are listed in both Schedules (sections 4 and 47 Sexual Offences Act 2003) are, for the purposes of EPP, confined to cases where the defendant would be eligible for life imprisonment, but that restriction is removed from the EDS list in Schedule 15B. In short, EPP and EDS are not available for the same offences. (iii) An EDS extension period must be for at least one year (for offences committed after the commencement of amendments brought about by the Offender Rehabilitation Act 2014 on 1 February 2015), but there was no minimum length for an EPP extension period. (iv) Within the sentence imposed, there are very significant differences in the rules for early release. For EPP (as amended in 2008) release was automatic at half the custodial term. By new section 246A, the rules for EDS are that there can be no early release before two thirds of the custodial term has been served, and if either the offence was a Schedule 15B offence or the custodial term was ten years or more, (and, after 13 April 2015, in all cases: section 4 of the Criminal Justice and Courts Act 2015) there can be early release only on the recommendation of the Parole Board. Thus an EDS prisoner must serve two thirds in prison and may have to serve the whole of the custodial term imposed by the court. It follows that the temptation to summarise the effect of LASPO as replacing IPP with EDS ought to be resisted. IPP, if it is replaced by anything, is replaced by the new obligatory life sentence under section 224A, but this latter is available for a very much more restricted group of defendants and offences. EDS is similarly constructed to EPP, but different in availability and effect. Meanwhile, there remains, unaltered, for offences where the statutory maximum sentence is life imprisonment, that sentence (section 225(2)). It is, however, clearly true that the wider availability of EDS, in comparison with EPP, is premised on the disappearance of IPP and the narrower availability of the new obligatory life sentence. That is an illustration of the necessity to consider the CJA 2003 and LASPO schemes as a whole in each case. The reality is that no sentence is a direct replacement for a former one. The 2003 regime as a whole has been replaced by the LASPO regime as a whole. When the question arises which sentence, if any, of the ones newly prescribed, will fit a particular offence, it will not be answered by referring back to the previous regime, but must be tackled afresh. One example of this proposition is afforded by the guideline decision of the Court of Appeal (Criminal Division) in Attorney Generals Reference No 27 of 2013 (Burinskas) [2014] EWCA Crim 334; [2014] 1 WLR 1409. This makes it clear that courts may well have to consider life sentences in future (where the offence carries such a sentence) in cases where previously the necessity to do so did not in practice arise because an IPP sentence was virtually indistinguishable from it: see in particular paras 15 to 18 and the example provided by the different statutory context of R v DP [2013] EWCA Crim 1143, discussed in Burinskas at 21. In both Burinskas and the earlier case of Saunders successive Lords Chief Justice were at pains to emphasise that EDS cannot be regarded simply as a replacement for IPP. LASPO: commencement and transitional provisions The general rule of English law, not confined to the criminal law, is that a statute is prospective rather than retrospective in effect unless it distinctly says otherwise: see for example the discussion in a very different context in Wilson v First County Trust Ltd (No 2) [2003] UKHL 40; [2004] 1 AC 816 at 19, 98, 152 and 186. The presumption against retrospective operation applies equally to repeals. Section 16 of the Interpretation Act 1978, re enacting a provision which was formerly contained in section 38 of the Interpretation Act 1889, provides: (1) where an Act repeals an enactment, the repeal does not, unless the contrary intention appears, (b) affect the previous operation of the enactment repealed or anything duly done or suffered under that enactment; (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under that enactment; (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against that enactment; (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing Act had not been passed. As to the operative date, ordinarily thus for prospective effect, it is standard practice for UK statutes either to prescribe a commencement date in the body of the Act or, more frequently, to provide for such date(s) to be appointed by the Secretary of State by order, that is to say by delegated legislation. This standard practice is recognised by, inter alia, section 4 of the Interpretation Act. It is particularly necessary where a single statute legislates on a range of unconnected topics, as LASPO does. Section 151 of LASPO contains this standard form of provision. By section 151(5), also in standard form, different dates may be appointed for different purposes and the Order may make transitional, transitory or saving provision. The commencement order in question here is Number 4 (SI 2012/2906), made on 17 November 2012. Some of the provisions of LASPO contain explicit statements as to the chronology of events to which they apply. One of them is the new section 226A, inserted into the CJA 2003, which creates the EDS sentence: 226A Extended sentence for certain violent or sexual offences: persons 18 or over (1) This section applies where (a) a person aged 18 or over is convicted of a specified offence (whether the offence was committed before or after this section comes into force) [emphasis supplied] The new section 226A may be contrasted with the new section 224A (which creates the new obligatory life sentence). The latter says: 224A Life sentence for second listed offence (1) This section applies where a person aged 18 or over is convicted of an (a) offence listed in Part 1 of Schedule 15B, (b) comes into force, and [emphasis supplied] the offence was committed after this section The obvious reason for the difference is to be found in article 7 ECHR (see below) or an analogous principle well established in English legislative practice. Section 224A (new obligatory life) creates for some offenders (those whose offence does not otherwise carry a maximum of life imprisonment) a sentence which may be heavier than was available under the old CJA 2003 regime, since life is, technically at least, heavier than IPP. By contrast, section 226A (EDS) does not, for although the mechanics of EDS operate more severely on offenders than those of EPP did, still EDS is not more severe than was available under the old regime; in particular it is not more severe than IPP or (where the offence carries it) life. Moreover, the release conditions applied to a sentence are not part of the penalty for the purposes of article 7: R (Uttley) v Secretary of State for the Home Department [2004] 1 WLR 2278 and Uttley v UK in Strasbourg, Application No 36946/03, and see para 47 below. This is thus an example of invariable English practice conforming to article 7 ECHR. Both the new sections distinguish events according to whether they fall before or after this section comes into force. The Commencement Order then supplied the dates. By article 2 of that Order much of the Act, including, by 2(e), the part which deals with the sentencing of dangerous offenders (Chapter 5 of Part 3), was brought into force on 3 December 2012. By articles 3 4 a number of sentencing provisions outside Chapter 5 were, however, stipulated not to come into force in relation to offences committed, or breaches of community orders occurring, before that date. These sentencing provisions are all ones by which the court is given somewhat more severe powers than it had under the previous legislation. So, by article 3, sections 65, 71, 72 and 81 are not commenced in relation to offences prior to 3 December 2012; these are provisions for new aggravating factors affecting sentence or for new restrictive orders such as curfew requirements to be added to sentences. Similarly a new power to extend the length of a community order is, by article 5, to apply only to orders first made after the commencement date. These are again plainly provisions designed to ensure, in compliance with article 7 ECHR, that no greater punishment is imposed than was available at the time of the offence. Article 6 of the Commencement Order (2012 No 2906 (c 114)) is directly in point in this case. It provides: Saving provision in relation to persons convicted before 3 December 2012. 6. The coming into force of the following provisions of the Act is of no effect in relation to a person convicted before 3 December 2012 section 123 (abolition of certain sentences for (a) dangerous offenders); [equivalent provisions for offenders under 18 and for those subject to armed service law] The effect of article 6(a) is clear: IPP and EPP disappear from the judicial armoury on 3 December 2012 except for anyone already convicted but not yet sentenced. The effect of section 224A is also clear: the new obligatory life sentence is only available where the offence (and thus inevitably the conviction) falls after 3 December 2012. There was a dispute between the parties as to the effect of section 226A(1)(a). The appellant and the Secretary of State submitted that it clearly meant that EDS became available for anyone convicted after 3 December 2012, whenever the offence was committed, but was not available for someone convicted before that date even if his sentencing was, in the ordinary course of court process, adjourned until after that date, for example for reports. This approach reads is convicted in section 226A(1)(a) as is hereafter convicted. By contrast, the Crown Prosecution Service advanced the submission that the section could be read as making EDS available to anyone sentenced after the commencement date, whenever convicted. This involves reading is convicted in section 226A(1)(a) as has been convicted or stands convicted. It may be true that, taken alone, the words is convicted could, as a matter merely of grammar, sustain either sense. But there is not much doubt that the ordinary meaning is the former. If has been convicted had been meant, it would have been more natural to use those words. Next, the Act like any other is forward looking. To adopt the CPS reading would give the statute a retrospective element despite the absence of any explicit provision to that effect, contrary to the ordinary approach to statutory construction. Moreover, section 226A(1) contains an express provision making it applicable whatever the date of the offence. If it was also meant to apply whatever the date of conviction, one would have expected it to say so: expressio unius, exclusio alterius. The suggested construction would also, perhaps more importantly, involve reading the same words is convicted in a different sense in adjacent provisions of the same statute. The same expression is convicted appears in several other places in LASPO, and indeed in other statutes. Within LASPO, in section 224A(1) those words can only mean is hereafter convicted because the offence has to come after commencement, and hence also the conviction. The same is true of section 142 which creates two new public order offences of carrying offensive weapons aggravated by an immediate risk of serious harm. In the case of both, a custodial sentence is ordinarily then required where a person is convicted (of the offence). Similarly, section 146 amends the Scrap Metals Act 1964 which in turn by section 4 gives the court power where a person is convicted of offences, to impose an hours restriction on his trading; LASPO creates a new offence and uses the same expression to extend that power to conviction also for it. The fact that in those sections the Secretary of States and appellants meaning is compelled by the context does not alter the consequence that, on the CPS argument, the same words would mean different things in different places. Nor does it displace the force of the point that when LASPO means to speak of convictions hereafter to come it is is convicted which is the expression used. It is also true that in the course of a debate in the House of Lords on the bill which became LASPO, Lord McNally, speaking for the Government, incorporated in responses to proposed amendments the following: The Government took the view from an early stage that IPPs must be replaced, and we have brought forward proposals in the Bill to do so. Once those provisions are commenced, no further IPPs can be imposed, even for previous offending. That is a major step forward. We are now concerned with those who have or will receive an IPP sentence prior to abolition (Committee stage: House of Lords Debates 9 February 2012 at col 443, emphasis added) This passage is, however, of no legitimate help in construing section 226A(1). The minister was not considering the clause which became that section, nor any question of commencement date. He was responding to pleas by various members of the House to incorporate extra provisions converting past IPP sentences into some other form. Understandably, in rejecting retrospective conversion, he drew attention to the prospective nature of the abolition of IPP. His words do not come near to meeting the conditions in which a ministerial statement can be invoked as an aid to statutory construction under Pepper v Hart [1993] AC 593. Once the introduction of EDS was, by section 226A(1)(a), made to apply only to those convicted after the commencement of LASPO, the provisions of article 6(a) of the Commencement Order follow. The old regime was continued for the doubtless very small cohort of offenders, of whom Docherty is one, who had been convicted before the commencement date and had still to be sentenced when that date arrived. The combined effect of section 224A, 226A and article 6(a) is thus, for a person convicted as the appellant was of an offence carrying life imprisonment: if offence, conviction and sentence are all before 3 December 2012 (i) the old regime applies; Life, IPP and EPP are available; (ii) if offence and conviction were before 3 December 2012, but sentence comes after that date, there are available: life, IPP and EPP but not section 224A obligatory life nor EDS; this is the appellants category; if the offence was before 3 December 2012, but both conviction and (iii) sentence come after that date, neither IPP nor EPP, nor section 224A obligatory life are available; but life and EDS are; (iv) if offence (and therefore conviction and sentence) all come after 3 December 2012, the old regime of IPP and EPP is not available, and all three elements of the new are, thus life, section 224A obligatory life, and EDS. In addition of course, for all categories, a determinate sentence and non custodial sentences are or were available. In summary, the timetable so far as is relevant to the present issues, was: 1 May 2012 (but commencement to be LASPO Royal Assent: prescribed by Order) 12 July 2012 Offences: Conviction (guilty plea entered): 13 November 2012 17 November 2012 Commencement Order made: Commencement date: 3 December 2012 20 December 2012. Sentence passed: The appellants argument in the present case essentially accepts that article 6(a) and section 226A(1)(a) were designed to go together. His case is, however, that it was unlawful for the Commencement Order to preserve IPP and EPP for those convicted before 3 December 2012. Article 6(a), he says, should be struck down. His first and principal basis for that argument is article 7 ECHR as interpreted by the Strasbourg court in Scoppola v Italy (No 2) [2010] EHRR 12, to which it is now necessary to turn. Article 7: lex gravior and lex mitior Article 7(1) ECHR provides: No punishment without law (1) No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed. The language follows closely that of article 11(2) of the Universal Declaration of Human Rights, adopted by the General Assembly of the United Nations in 1948. As pointed out by the minority judgment at O 111 in Scoppola (see below), it reflects a fundamental principle of criminal law: Nullum crimen nulla poena sine praevia lege poenali: no one is to be convicted or punished without a pre existing criminal law in force. The second sentence of article 7(1) gives effect to the so called lex gravior principle (no heavier penalty). Quite separate is a principle termed lex mitior. This is conveniently stated in article 15 of the UN International Covenant on Civil and Political Rights (ICCPR) (Treaty Series No 6 of 1977). Article 15 is in the same terms as article 7 ECHR but contains an additional sentence: If, subsequent to the commission of the offence, provision is made by law for the imposition of a lighter penalty, the offender shall benefit thereby. As pointed out in the dissenting judgment of the minority in Scoppola (No 2) at O 111, this represents a norm of a different order from the principle of no punishment without law. Whilst the lex gravior principle is a fundamental and essential condition of freedom, lex mitior expresses a choice that reflects the development of a social process in the context of criminal law. It circumscribes the scope of criminal law by preserving benefits accruing to defendants as a result of substantive laws subsequent to the commission of the offence and applicable while the case was pending. The difference between the two principles is underlined by the fact that whereas lex gravior prohibits applying to a case a rule which was not the law when the acts under judgment were committed, lex mitior, when it operates, actually requires such a rule to be applied. An additional sentence containing this lex mitior principle (benefit of a more lenient penalty) was considered and rejected when article 7 ECHR was adopted in 1950. As far as appears from the material before us, article 15 of the ICCPR was the first international instrument to give it formal effect, in 1966. Subsequently similar wording appeared in article 9 of the American Convention on Human Rights (adopted on 22 November 1969, and coming into force on 18 July 1978); and also much later (in December 2000) in article 49 of the Charter of Fundamental Rights of the European Union, which applies when EU law is in question, although it does not insert the second sentence into the general domestic law of member states. Notwithstanding these international developments, in 1978, in X v Germany Application No 7900/77, the European Commission of Human Rights declared inadmissible a claim that article 7 guaranteed the right to a more lenient penalty provided for in a law subsequent to the offence. It rejected an argument that article 7 should be treated as containing the principle derived from the equivalent article of the ICCPR. The Court reached the same conclusion on the same arguments in Petit v UK Application No 35574/97, 5 December 2000 and Zaprianov v Bulgaria Application No 41171/98, 6 March 2003. As recorded in the dissenting judgment in Scoppola at O 117, the court held categorically in Zaprianov that Article 7 does not guarantee the right to have a subsequent and favourable change in the law applicable to an earlier offence. In 2005 the subject was considered by the Court of Justice of the European Communities in the case of Berlusconi, (Joined Cases C 387/02, C 391/02 and C 403/02) [2005] ECR I 3565, in the context of Italian laws on the publication of annual company accounts. Charges had been laid alleging the deliberate falsification of accounts. The offences were alleged to have taken place at a time in the 1980s or 1990s when the prescribed punishment on conviction was one to five years. By an Italian presidential decree of 2002 the penalty was very greatly reduced; the minimum disappeared and a maximum of 18 months was imposed. There were also alterations to the definitions of the offences, and to the limitation periods, which were very favourable to the defendants, to the extent that it might not be possible to prosecute at all. The Tribunale in Milan had felt able to describe the new penalties as derisory. The issue referred to the CJEU was whether the new, much more lenient, rules failed to meet the requirements of the relevant European Directives on the subject, under which penalties had to be appropriate in the sense of providing effective sanction and dissuasion. The Italian Criminal Code contained an express lex mitior provision: if the law in force when an offence was committed differed from later law, the applicable law was that which was more favourable to the accused. Lex mitior was raised by the defendants as a barrier to any decision that the new regime failed to comply with European law. The short answer of Advocate General Kokott (paras AG162 and 165) was that it was no such barrier; the principle is based upon fairness and it cannot prevail against the obligation of the state under the Directives to provide effective penalties. The court, however, declined (at para 71) to answer that question because it held (paras 72 73) that a Directive cannot be relied upon directly against an individual to increase the penalty to which he is liable. En route to her advice, the Advocate General recognised at paras AG 156 157 that the principle of retroactive application of more lenient penalties is recognised not only nationally, in Italy and elsewhere in the EU, but also internationally. She recorded, at note 129, that so far as she had been able to ascertain, lex mitior was not expressly recognised either in the UK or Ireland, although it was in all other EU states. In its turn, the court accepted (at para 68) that such principle represented part of the constitutional tradition common to member states. It did not consider either the content of such principle nor how general the tradition was, given the reservation which the Attorney General had expressed, but, on its conclusion, lex mitior did not arise. In Scoppola (No 2) the majority of the Grand Chamber at Strasbourg held that article 7 ECHR is now to be read as if it contained the additional sentence providing for lex mitior. It so held notwithstanding the drafting history and the previous decisions of commission and court to the contrary. In para 107 it held that article 7 does not exclude inserting the addition, which plainly it does not. In para 109 it went further and held that a lex mitior principle is implicit in that article. The latter is a more difficult proposition; if it were wholly accurate none of the debate at the time of drafting would have been necessary. However, in substance, the majority founded its change of view upon the proposition (at para 106) that: since the X v Federal Republic of Germany decision a consensus has gradually emerged in Europe and internationally around the view that application of a criminal law providing for a more lenient penalty, even one enacted after the commission of the offence, has become a fundamental principle of criminal law. It is also significant that the legislation of the respondent state had recognised that principle since 1930. At paras 103 and 105, the Court cited as evidence of such a consensus the ICCPR, the American Convention on Human Rights, the Charter of Fundamental Rights of the European Union, the statute of the International Criminal Court, the practice of the Court for former Yugoslavia and the French Cour de Cassation, and it referred to the decision of the CJEU in Berlusconi. Scoppola had murdered his wife and injured a son on 2 September 1999. At the time of the murder, the offence carried life imprisonment, it would seem as a mandatory penalty rather than as a maximum. In December 1999 Italy introduced a new abbreviated procedure, for which a defendant could elect; it involved fewer procedural rules from which he might otherwise benefit, but if he chose to elect for it the prescribed penalty became 30 years instead of life. He did elect for it, was convicted on 24 November 2000, and was sentenced accordingly to 30 years. That same day, although coming into effect only after the sentencing was over, a further change in the sentencing law was made, as a result of which someone in the position of the defendant was liable to life imprisonment, albeit without daytime isolation, on the grounds that there were cumulative or continuous offences. There ensued an appeal by the prosecution and such a sentence was substituted. The issue was whether that entailed an infringement of his Convention rights. The court held unanimously that there had been an infringement of article 6, because when he elected for the summary procedure Scoppola had foregone rights which otherwise he would have had in return for the limitation on punishment; accordingly it was a breach of article 6 to go back on that quid pro quo. The sentence of life imprisonment was accordingly a Convention breach independently of the article 7 point. Nevertheless, the latter was an equally central part of the decision of the court. The court explained the rationale for lex mitior in para 108. It is that it is wrong to impose a penalty which the state by later legislation has recognised to be excessive. The court said this: 108. In the courts opinion, it is consistent with the principle of the rule of law, of which article 7 forms an essential part, to expect a trial court to apply to each punishable act the penalty which the legislator considers appropriate. Inflicting a heavier penalty for the sole reason that it was prescribed at the time of the commission of the offence would mean applying to the defendants detriment the rules governing the succession of criminal laws in time. In addition, it would amount to disregarding any legislative change favourable to the accused which might have come in before the conviction and continuing to impose penalties which the state and the community represents now consider excessive However, some of what the court went on to say in both that paragraph and the ensuing paras 109 and 119 might suggest at least a possibility that the principle should have the effect of requiring a court not only to apply a more lenient penalty currently recognised as appropriate to the crime, but also to select, from all the penalty rules which have existed over the period from the commission of the crime to the date of sentencing, the one most favourable to the defendant. In para 108 the court continued: The court notes that the obligation to apply, from among several criminal laws, the one whose provisions are the most favourable to the accused is a clarification of the rules on the succession of criminal laws, which is in accord with another essential element of article 7, namely the foreseeability of penalties. [emphasis supplied] In para 109 it said: 109. In the light of the foregoing considerations, the court takes the view that it is necessary to depart from the case law established by the Commission in the case of X v Federal Republic of Germany and affirm that article 7(1) of the Convention guarantees not only the principle of non retrospectiveness of more stringent criminal laws but also, and implicitly, the principle of retrospectiveness of the more lenient criminal law. That principle is embodied in the rule that where there are differences between the criminal law in force at the time of the commission of the offence and subsequent criminal laws enacted before a final judgment is rendered, the courts must apply the law whose provisions are most favourable to the defendant. [emphasis supplied] And in para 119 it said of Scoppola himself: It follows that the applicant was given a heavier sentence than the one prescribed by the law which, of all the laws in force during the period between the commission of the offence and delivery of the final judgment, was most favourable to him. [emphasis supplied] There is a very clear difference between (1) a principle which prevents a court from imposing a penalty above and outside the range currently provided for by the State as appropriate to the crime and (2) a principle which requires the court to seek out and apply the most favourable rule which has existed at any intervening time since the offence was committed, even if it has since been abandoned. The first would fall within the rationale of confining the court to a range currently considered appropriate for the offence; the latter would not. The difference between the two is not adverted to, still less explored, in the judgment in Scoppola. It is, accordingly, by no means clear that the court intended to expand its incorporation of lex mitior into article 7 by including the latter proposition. The arguably wider statements just described need to be read in the Italian domestic context in which they arose. The eventual sentence under question (passed on appeal) might not have been more severe than would have been applicable at the time the offence was committed (both were life imprisonment), but it was more severe than was provided for by the law in force at the time of his trial and sentence. The Italian Criminal Code contains, as noted in Berlusconi, an express lex mitior provision couched in terms which would give a defendant in the position of Scoppola the benefit of (at least) the law operative at the time of trial and sentence. As will be seen below, there could be no question of English law adopting, between trial and appeal, a new more severe penalty regime. However that may be, there is no discussion in Scoppola of the difference between the two principles identified in para 40 above. Clearly, on this point, Berlusconi is of no assistance, since lex mitior was not applicable to the decision and the question of its extent therefore did not arise. Lex mitior: English practice As Advocate General Kokott correctly noted in Berlusconi English law does not identify a rule by the name of lex mitior. Nor, although that principle appears in a few constitutional instruments in the common law world, such as the Canadian Charter, the New Zealand Bill of Rights and the State of Victorias Charter of 2006, can it be said that it is recognised by name generally in jurisdictions based on the common law. It is clearly adopted only piecemeal in the USA, whilst being wholly rejected by some 22 states see Western, University of Michigan Public Law and Legal Theory Research Paper No 455, March 2015. But Englands longstanding common law practice is to recognise the principle, at least in the narrower form justified in Scoppola as abstaining from imposing a sentence now recognised as excessive. English criminal courts sentence according to the law and practice prevailing at the time of sentence, whenever the offence was committed, subject only to scrupulous observance of the lex gravior principle of article 7, namely that no sentence must be imposed which exceeds that to which the defendant was exposed at the time of committing the offence. The Scottish practice is the same. With the exception of the mandatory life sentence for murder, the sentence for English criminal offences is not prescribed by statute. The statute prescribes the maximum. Sentence within that maximum is a matter for the judgment of the judge according to the individual aggravating and mitigating factors relating to the offence and to the offender. Nor, with very few exceptions, does the statute prescribe a minimum sentence. English sentencing statutes do not, as many laws in other countries do, fix a range between top and bottom points within which a sentence must fall. Guidance is given as to the assessment of the gravity of offences, and as to the likely range of sentence, by both the Court of Appeal (Criminal Division) when hearing individual appeals, and, now, by the Sentencing Council, which publishes general guidelines. But the judge remains the arbiter of when justice requires him to depart from the guidelines: see for example the explicit provision to that effect in the legislation relating to Sentencing Council guidelines, by way of section 125(1) of the Coroners and Justice Act 2009. Thus: (a) if the maximum sentence has been increased by statute since the offence was committed, the English court cannot sentence beyond the maximum which applied at the time of the offence, because that is the sentence to which the defendant was at that time exposed (lex gravior); (b) if the maximum sentence has been reduced by statute since the offence was committed, the English court will sentence within the now current maximum; in R v Shaw [1996] 2 Cr App R (S) 278 the statute reducing the maximum sentence (for theft) was held as a matter of construction to apply to past as well as to future offences, but in R v H (J) (Practice Note) [2011] EWCA Crim 2753; [2012] 1 WLR 1416, a guideline case dealing principally with the sentencing of cases of historic sexual abuse, Lord Judge CJ stated the general approach at para 47(b): Similarly, if maximum sentences have been reduced, as in some instances, for example theft, they have, the more severe attitude to the offence in earlier years, even if it could be established, should not apply. (c) if sentencing practice as to the assessment of the gravity of an offence has moved downwards since the offence was committed, the court should sentence according to the now current view, and if it did not do so the sentence would be vulnerable to reduction by the Court of Appeal on the grounds that it was manifestly excessive; (d) if a new sentencing option which is arguably less severe is added by statute or otherwise to the menu of available sentences after the commission of the offence but before the defendant falls to be sentenced, that new option will be available to the court in his case, unless the statute expressly otherwise directs; in the Canadian case of The Queen v Johnson 2003 SC 46 the menu of sentencing options for those presenting a future risk had had added to it a new, and for some offenders a possibly less severe, option of post custody supervision in the community; this was applied to the defendant although his offence had been committed before the change in the law; if such circumstances were to occur in England the result would be the same. (e) appeals against sentence to the Court of Appeal are not conducted as exercises in re hearing ab initio, as is the rule in some other countries; on appeal a sentence is examined to see whether it either erred in law or principle or was manifestly excessive, and those questions are determined by reference to the law and practice obtaining at the time that the sentence was passed by the trial judge: see R v Graham [1999] 2 Cr App R (S) 312 and R v Boakye [2012] EWCA Crim 838 discussed at para 53 below; accordingly the situation which arose in Scoppola out of a change in the law between sentence and appeal could not raise a similar difficulty here; (f) moreover, except in very limited cases the Court of Appeal has no power to increase a sentence on appeal (Criminal Appeal Act 1968 section 11(3)); in the exceptional case where it can do so on the application of the Attorney General, its power is limited to putting itself in the position of the trial judge and asking whether on the rules then applying he passed an unduly lenient sentence; for this reason also if the circumstances of Scoppola were to occur in England there could be no question of the trial judges 30 year sentence being replaced on appeal by a life sentence; (g) similarly, in the separate case of sentences for minor offences which are appealable from the Magistrates Court to the Crown Court, an appeal lies only at the suit of the defendant; although the Crown Court re sentences ab initio and can thus pass a more severe sentence than did the magistrates, the practice, if such a step is contemplated, is to give notice of this risk to enable the defendant to abandon his appeal if he wishes; once again therefore the kind of sequence of events which obtained in Scoppola would not occur. English practice does not, however, attempt to examine all intervening rules or practices which have obtained over the period between the offence and the sentencing process with a view to finding whether at any time there has been a more favourable practice. To that extent it does not accord with any wider expression of lex mitior, if such was indeed suggested in Scoppola by the second half of para 108, the last sentence of 109 and the words of 119 (see para 38 above). Nor is there any reason for such an extension. Sentencing legislation and practice may well go up and down as public policy is held by legislators to change, or current responsible views on particular offending are perceived by courts to develop. But there is no injustice to a defendant to be sentenced according either to the law as it existed at the time of his offence or, if more lenient, according to the law as it exists when he is convicted and sentenced. To insist that a defendant should not be sentenced on a basis now authoritatively regarded as excessive is one thing. It is quite another to say that he should be sentenced according to a practice which did not obtain when he committed the offence and does not obtain now, merely because for some time in the interim, however short, a different practice was adopted which has now been abandoned as wrong. This can be illustrated by a provision of the Criminal Justice Act 1991. Parliament having, by section 2(2)(a) of that Act, introduced the concept of the commensurate sentence measured only by the seriousness of the offence, went on to provide by section 29, controversially, that an offence could not be considered to be more serious than otherwise it would by reason either of the defendants previous offending or his failure to respond to past sentences. Consistently with the English practice explained above, that provision, which operated to the advantage of most defendants, was applied immediately to all those coming before the courts, whenever their offences had been committed. But the rule was rapidly found to be unrealistic and wrong, requiring habitual criminals such as sexual predators or fraudsters to be treated as if they were first offenders. Parliament reversed it by section 66 of the Criminal Justice Act 1993. It is not English law that every defendant whose offence was committed before the commencement of section 29 of the 1991 Act is now entitled to be sentenced on the basis that, however often he had done the same thing before, his crime has to be treated as if it were a first offence, simply because for the two years 1991 1993 that section had been in force. The sections brief stay on the statute book after the offence was committed can have had no conceivable impact on such a defendant and should have nothing to do with his sentencing in 2016. It seems unlikely that the Strasbourg court, which was not in Scoppola considering any such scenario, would hold otherwise. The lex mitior principle should not be held to extend to such a proposition. The well settled aspects of English legislative and judicial practice set out above in relation to the penalties provided for need to be distinguished from the exercise of the sentencing judges discretion within the maximum permitted at any time. The sentence to which a defendant was exposed, at the time of his offence, is, by English law, a sentence up to the maximum then permitted. It is well recognised that the multifarious factors which fall to be considered when fixing a sentence will inevitably vary in weight as time passes. New aggravating or mitigating factors will be recognised from time to time, or the weight accorded to such factors will alter. The long term damage to victims of sexual abuse, for example, is very much better understood now than it was 30 years ago. Very large numbers of crimes of persistent sexual abuse committed many years ago are now coming before the courts, principally because victims are belatedly feeling able to reveal them. New investigation techniques, such as DNA testing, may also identify various types of offender, by no means only sexual offenders, years after the event. The discovery of a recent offence may not infrequently lead to the revelation that the offender has been committing similar offences for many years. Although a court sentencing today for an offence committed many years ago must confine itself within the maximum which was available by statute at the time of the offence, it is not required, nor should it be, to apply an outdated assessment to the gravity of the conduct. Nor, if the impact of the offending on the victim has been greatly increased by years of suppression in consequence of the manner of abuse, should the court ignore that fact. The basic rule, as carefully explained by Lord Judge CJ in R v H (supra) is that the applicable maximum is that in force at the time of the offence, but it is positively wrong for a court in 2016 to attempt to evaluate the particular offence by hypothesising that it is sitting in (say) 1984. That it is the maximum sentence which matters to lex gravior is the approach which has been consistently adopted. In Coeme v Belgium [2000] ECHR 250, considering the lex gravior rule in article 7, the Strasbourg court held (at para 145) that article 7 required that it be shown that when the offenders act was done there was in force a legal provision making it punishable and that the punishment imposed did not exceed the limits fixed by that provision. (emphasis supplied). That was the meaning of the expression penalty applicable in article 7. In R (Uttley) v Secretary of State for the Home Department [2004] 1 WLR 2278 the House of Lords applied the same approach. All the law lords expressly rejected the contention that that article is concerned with the penalty which the court could in practice have been expected to impose. As Lord Rodger pointed out at para 42, that would involve speculative excursions into the realm of the counterfactual. What matters is the maximum penalty permitted. The same approach was expressly adopted by the Strasbourg court when application was made to it in that same case: Uttley v UK Application 36946/03. This learning is confirmed in Scoppola. At para 95 the court held, citing Coeme: The court must therefore verify that at the time when an accused person performed the act which led to his being prosecuted and convicted there was in force a legal provision which made that act punishable, and that the punishment imposed did not exceed the limits fixed by that provision. [emphasis supplied] And at para 98 it reiterated the rule that the court, like the Commission before it, draws a distinction between a measure that is in substance a penalty and a measure, such as one relating to the regime for early release, which concerns the execution or enforcement of the penalty. In countries, unlike England, where sentencing laws prescribe a range between a minimum and a maximum, the raising of the minimum has an effect comparable to the raising of the maximum: both constrain the court by creating a more severe regime, thus engaging the rule against lex gravior. Such a situation came before the Strasbourg court in Maktouf v Bosnia & Herzegovina (2014) 58 EHRR 11. The effect of the change was to alter the range for the defendant Maktouf (an accomplice) from 1 15 to 5 20 years. For the defendant Damjanovich (a principal) the range was altered from 5 15 to 10 20. Maktouf was expressly sentenced to the new minimum of five years, but the court could not go below that figure as previously it could have done. Damjanovich was sentenced to 11 years, just one year above the new minimum, and the Court was satisfied that if the old range had been treated as governing the case he might well have received less. Accordingly there were breaches of the lex gravior rule in article 7, although it did not follow that lower sentences ought to have been imposed: that was a matter for the sentencing court. What the Strasbourg court appears to have been contemplating was the possibility that in order to maintain the differential between Damjanovicj and someone else who had committed the same offence but in a less grave manner, the court might have had to raise his sentence a little above the new minimum, thus to leave room below it for the less grave example of similar offending. It was not suggesting that the revision of the minimum prevented a contemporaneous assessment of the gravity of his offence. There was no reason why that assessment should not have been undertaken according to the practice at the time of sentencing, as it appears that it was, and as would occur in England. Thus the ECtHR was concerned with altered statutory constraints operating on the sentencing court, of which one, the new minimum, might have (but had not necessarily) prevented the court from sentencing as it otherwise would have done. Similar considerations might apply in the present case if IPP was not legitimately available to the judge (as to which see below). But there is nothing in this which is inconsistent with the English practice in relation to historic offences as explained in R v H (J), and no question of either the lex gravior or the lex mitior principles requiring the court to undertake the hypothetical exercise of imagining itself sentencing many years ago. That exercise would be both artificial and unjust. Phased commencement and anticipation New legislation frequently calls for carefully planned and phased commencement. That is a fact by no means confined to sentencing legislation, but that field is certainly no exception. New sentencing regimes may require quite extensive administrative adjustments, for example to the organisation of the probation service or the prisons. They may also, and in England and Wales often do, entail complex adjustments to the associated rules for early release, as do the new EDS provisions in LASPO. Phased introduction of sentencing changes is perfectly sensible. The decision about what to introduce when can be complex and may well admit of more than a single solution, but there is nothing unlawful about leaving it to the minister charged by the statute with making the necessary commencement orders. Some sentencing changes may be relatively simple. A change in the maximum sentence may be one. The Canadian case of The Queen v Johnson is an example of a more sophisticated change of regime, and would no doubt have entailed putting in place new offender management administrative arrangements; it was nevertheless comparatively simple because the existing options remained with a fresh one added. That may be contrasted with a case such as the present. If regime A, consisting of options 1, 2 and 3, is to be replaced by regime B, consisting of options 1, 4 and 5, and the new options are positively inconsistent with the old, commencement and transition are likely to require careful handling. The wish to provide for lex mitior may collide with the greater imperative not to impose lex gravior. If one or more of the new options cannot be brought into force in relation to past offences, in order to avoid infringement of lex gravior, it may be necessary to defer repeal of one or more of the old options until there is a coherent scheme in place. The objects of sentencing include of course fairness to the offender, but they also include proper punishment, the deterrence of crime and, most significantly, the protection of the public from dangerous offenders. In the transition from the scheme of the CJA 2003 to that of LASPO several of these difficulties arose. First, the new obligatory life sentence was more severe for some offenders than what went before. Second, the new EDS, despite its nominal similarity to EPP, affected different offenders. EDS and EPP could not sensibly co exist, and not simply because the prospect of the court having to consider two possible regimes is alarming. There would be an unacceptable risk of unfairness and of arbitrariness. For example, a great many sexual offences can be charged under several different sections of the Sexual Offences Act 2003. The same act of sexual abuse of a child under 13 can easily fall within both sections 7 and 8. But whilst if charged under section 8 it qualifies for both an EPP and an EDS, if charged under section 7 EPP would not be available but EDS would. Two defendants, differently charged for essentially the same behaviour, might have to be sentenced differently, whilst a single defendants sentencing regime would vary for the same conduct according to which charge had been preferred. Even if it were possible to postulate a rule that the more lenient sentence had to be applied, this would not solve the problem of potentially unfair differential between similar defendants where either only one sentence is available for each, or one defendant could be subject to both, and another to only one. The reality is that all changes in sentencing law or practice have to start somewhere. It is perfectly rational, indeed sensible, for a date to be fixed and for the sentencing of any offender which takes place after that date to be governed by the new rule/practice, whenever the offence was committed, in accordance with the usual English approach and subject only to avoiding lex gravior. That is the practice now adopted by the Sentencing Council when promulgating new guidelines. Such guidelines are issued on the explicit basis that they are to become applicable from a stated date, as soon after publication as it is practicable for courts and practitioners to be equipped with and digest copies. The new guidelines are made applicable to any sentence passed after that date, whenever the offence was committed. In 2012 a guideline for drug offences included the recommendation that the offences of some couriers from abroad, where they were vulnerable and exploited by others, ought not to be treated as quite so grave as other drug importation cases. The guideline was stated to operate for sentences from 27 February 2012, whenever the offence had been committed. It had been preceded in the usual way by a public consultation, in which this change, like others, had been canvassed as a possibility. A number of previously sentenced defendants who said they were in this category (although they were not) abstained from appealing their sentences until after the new guideline was published. Their offences and sentences had been between 2008 and 2011; all the appeals were very much beyond the time limit. In R v Boakye [2012] EWCA Crim 838 the Court of Appeal held that even if these cases had been within the new assessment of gravity, it was not possible retrospectively to re visit unappealed sentences. That was to apply well established law: see R v Graham [1999] 2 Cr App R (S) 312, where the court had considered a reference to the court by the Criminal Cases Review Commission long after sentence and following a change in sentencing practice. Rose LJ had there said, at p 315: A defendant sentenced lawfully, in accordance with the prevailing tariff, and when all factors relevant to sentence were known to the sentencing judge, can, in our view, hardly be described as the victim of [a miscarriage of justice]. Secondly, an alteration in the statutory maxima or minima penalty between sentence and reference cannot, in our view, give rise to legitimate grievance. Whilst a court will faithfully give effect to a change in a sentencing regime from the time that it is introduced, it is not permissible for it to anticipate its commencement. That way lies chaos. Sometimes, indeed, changes which are legislated for in statute are never brought into force. That was the case with a raft of new provisions for intermittent custody enacted by the Criminal Justice Act 2003. The present appeal amounts to a claim by Docherty to anticipate the commencement of the change of regime, to the extent that he wishes the disappearance of IPP to be effective for him before the Commencement Order (by article 6(a)) abolishes it. He can no more do that than it would be possible for him to contend that IPP should be treated as unavailable for every court from the day that LASPO received the Royal Assent on 1 May 2012. Anticipation of a change which is yet to take effect is no part of lex mitior. Lex mitior, as explained in Scoppola at para 108, prevents the imposition of a sentence which the system has now adjudged, by a change of law, to be excessive. But if the change has yet to be made, that judgment has not yet been given effect; it is in prospect only. The fixing of the date for the change is part of the change itself. If a conscious decision has been made not yet to commence the new law/practice, it cannot yet be said that society now considers excessive the old. And it may well consider, rationally, that a penalty shall be regarded as excessive for the future but not for the past. Conclusion: lex mitior There are real difficulties in interpreting the decision in Scoppola, both with the insertion of a new sentence into article 7 when such was deliberately left out at the time of drafting, and with its extent if it is to be considered inserted. As to the first, the decision is the considered view of the Grand Chamber. It is not necessary to revisit the controversy because English practice recognises lex mitior in its ordinary form, namely the principle that an offender should be sentenced according to the law and practice prevailing at the time of his sentence, subject to not exceeding the limits (ie in England normally the maximum) provided for at the time the offence was committed. If it were necessary to investigate the second difficulty, and the possibility that a defendant is entitled to insist on being sentenced according to any more favourable law or practice which has at any time obtained between the commission of the offence and the passing of sentence, that extended rule is not clearly adopted by the Grand Chamber, appears not to be within the stated rationale for the principle of lex mitior, and would entail unwarranted consequences. Such an extended concept of the principle should, with great respect, not be applied. Given these conclusions, the various other examples, to which we were referred, of express inclusions in national and international instruments of an additional sentence stating the lex mitior rule, do not take the matter any further forward. Unlike ECHR article 7 they are not part of domestic English law. They do not in any event shed any light on the second question examined above, as to the extent of the lex mitior principle, assuming it is to be read into article 7. Application to the present case If the new LASPO regime had been commenced for a defendant in Dochertys position at the time he fell to be sentenced, then in accordance with English practice, it would have been applicable to him, notwithstanding that his offence had been committed before the change in the law. But the new regime was not in force for his case. It was the subject of legitimate phased introduction. For the reasons set out in para 54 above, lex mitior does not entitle Docherty to anticipate the statutory commencement of LASPO. The case made on his behalf was, both in the Court of Appeal [2014] EWCA Crim 1197; [2014] 2 Cr App R 76, and before this court, that he ought to have been sentenced to EPP. That exposes the flaw in the argument, for it would seek to insist on the benefit of (accelerated) removal of one part of the old regime (IPP) whilst at the same time claiming the preservation of another part of it (EPP). The Court of Appeal also upheld the sentence of IPP on an additional basis. It accepted that the principle of lex mitior should be followed, without needing to resolve the possible debate as to its extent. But it adverted to the fact that Dochertys offences were punishable by a maximum of life imprisonment. It correctly rejected the conclusion that that maximum was, by itself, enough to show that no question of lex mitior arose. It by no means follows that every case which would have been met by IPP will now be met by a life sentence: see for example the case of Smith dealt with in Burinskas at para 138 of the transcript at [2014] EWCA Crim 334. But the Court of Appeal went on to hold that the lex mitior principle did not apply if there was a reasonable possibility that, had IPP not been legitimately applicable, Docherty would have been sentenced to life. Since there was the real possibility that such a sentence would have been passed, that was held to constitute a further reason for dismissing the appeal. The Court of Appeal was plainly right that the judge might, if IPP had not been available, have passed a life sentence. He said that he did not need to do so, because IPP was available to him, and he expressly remarked that the position may well change with the changes in the law. Burinskas (para 16 above) has since shown that to have been a far sighted observation. But if lex mitior had meant that IPP, although technically available, should not have been passed, the sentence of IPP passed would fall to be quashed as wrong in principle or manifestly excessive unless in its absence a life sentence would have been the correct sentence and thus lex mitior could not have availed Docherty. On this hypothesis, whether or not a life sentence would, absent IPP, have been the correct sentence would fall to be determined by the Court of Appeal itself. It would not be sufficient that life might well have been the judges sentence. This did not, however, arise. Article 6(a) ultra vires? The appellants alternative argument is that once the decision had been made, for good reasons, to abandon IPP as a form of sentence, it was unlawful, as contrary to the clear purpose of LASPO, to preserve it for anyone who had yet to be sentenced after that Act was commenced. For that reason, he contends, article 6(a) of the Commencement Order, at least insofar as it preserved IPP, was not properly made within the purpose for which such an order can be made under the power given by LASPO. It offends the Padfield principle (Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997). This alternative argument founders on the same rock as the argument from lex mitior. There is nothing irrational, and therefore nothing contrary to the statutory purpose, in phased commencement. It is no more permissible for the appellant to use this argument to anticipate the planned commencement of LASPO than it is to deploy lex mitior to do so. Discrimination The suggested discrimination is said to arise as between a defendant in the position of the appellant, and a defendant who committed an identical offence on a similar date, but who was convicted on 4 December 2012. It is certainly true that the effect of the Commencement Order is that IPP is available to be imposed in the case of the appellant but not in the case of that comparator. The appellant submits that this discriminates objectionably against him on grounds of other status, namely either (i) his status as a convicted person prior to 3 December or (ii) his status as a prisoner who is subject to an indeterminate sentence. Assuming for the sake of argument that status as a prisoner subject to a particular regime can in some circumstances amount to sufficient status to bring article 14 into question (Clift v UK [2010] ECHR 1106), it cannot do so if the suggested status is defined entirely by the alleged discrimination; that was not the case in Clift. For that reason, the second suggested status cannot suffice. As to the first, even if it be assumed in the appellants favour that the mere date of conviction can amount to a sufficient status, which is doubtful, the differential in treatment is clearly justified. All changes in sentencing law have to start somewhere. It will inevitably be possible in every case of such a change to find a difference in treatment as between a defendant sentenced on the day before the change is effective and a defendant sentenced on the day after it. The difference of treatment is inherent in the change in the law. If it were to be objectionable discrimination, it would be impossible to change the law. There are any number of points which may be taken as triggering the change of regime. The point of conviction is clearly one, and the point of sentence is another. Neither is, by itself, irrational or unjustified. Disposal It follows that the several challenges to the sentence of IPP fail and the appeal must be dismissed. |
Mr Durkin has fought this battle for many years. He purchased a laptop computer from PC World in Aberdeen for 1,499 on 28 December 1998. He entered a debtor creditor supplier agreement with HFC Bank plc under section 12(b) of the Consumer Credit Act 1974 to fund the purchase, apart from a 50 deposit which he paid. On the next day he rejected the computer because it did not conform to his contract. PC World did not accept that he had validly rescinded the contract until the sheriff at Aberdeen in a judgment dated 26 March 2008 determined that he had. In the meantime, HFC treated him as being in default and intimated that default to credit reference agencies. Mr Durkin claimed damages for financial loss caused by the damage to his credit. The principal issue in this appeal is whether Mr Durkin was entitled to rescind the credit agreement on rescission of the sale agreement. The factual background In December 1998 Mr Durkin wanted to buy a laptop computer which had an internal modem by which he could connect to the internet. On 28 December 1998 he went to PC World in Aberdeen to purchase a suitable product. He specified his requirements to Mr Andrew Taylor, a member of the stores management, who introduced him to a sales assistant, Mr Robert Slorance. The sales assistant identified a product but said he was unsure whether it had an inbuilt modem. Because PC World did not allow customers to remove a laptop from its box before purchase, the sales assistant agreed that Mr Durkin could take the computer home and, if on inspection it was found not to contain an internal modem, he could return it. Mr Durkin paid the deposit and completed and signed the credit agreement, which the sales assistant gave him, for the balance of 1,449. The sales assistant signed the credit agreement on behalf of HFC. When he took his purchase home and opened the sealed box, he discovered that the laptop did not have an internal modem. At about 9 am on the following day he handed back the computer to the store and asked for his deposit of 50 to be returned and the credit agreement cancelled. Mr Taylor refused to accept Mr Durkins rejection of the goods and took no step to cancel the credit agreement. That remained PC Worlds position in the action which Mr Durkin initiated in the sheriff court in Aberdeen in 2004 until the sheriff in his judgment of 26 March 2008 granted a declarator that Mr Durkin had validly rescinded the contract of sale. In the later proceedings before the Inner House PC World did not challenge the sheriffs finding that the contract of sale had been rescinded. Mr Durkin did not pay any money to HFC under the credit agreement. In late February or early March 1999, after he returned from working offshore, he responded to a request for payment by telephoning HFC to advise it that he had rejected the laptop and had rescinded his contract with PC World. He intimated to HFC that he had rescinded the credit agreement also. On 8 March 1999 Mr Durkin wrote to the managing director of PC World to explain that he had rejected the computer, that PC Worlds manager had refused to refund the deposit, and that HFC was demanding money from him because the manager would not tell it that the goods had been rejected. On 22 July 1999 HFC wrote to Mr Durkin to warn him that he had arrears of 326.22 and that if he did not resume payments under the credit agreement it was possible that he might have difficulty in obtaining a mortgage or other credit because HFC reported monthly to credit reference agencies on the status of customer accounts. HFC also informed him that if he did not respond to the letter it would serve a default notice on him in accordance with section 87(1) of the 1974 Act. Mr Durkin telephoned HFC to re affirm his position that the sales contract had been rescinded and that he was not due to pay any sums under the credit agreement. Without making any enquiries about Mr Durkins claim that he had rescinded both the contract of sale and the credit agreement, HFC issued a default notice and intimated to the UK credit reference agencies, Experian Ltd and Equifax Ltd, that he had been in default of his obligations under the credit agreement since 14 January 1999. They recorded the alleged default on their registers. Thereafter Mr Durkin attempted without success to persuade the credit reference agencies to correct their registers. The entries remained on the registers until about 2005 or 2006. The legal proceedings Mr Durkin raised a small claims action against DSG Retail Limited, which trades under the name of, among others, PC World, and recovered his 50 deposit in an out of court settlement in which DSG did not admit any liability. But that did not resolve his problem with HFC. He found that the entries on the credit registers prevented him from opening new accounts with credit card companies and other lending institutions. He had used credit cards in funding his lifestyle and wished to make use of offers of 0% credit on transferred balances to minimise the cost of his borrowing by transferring from one credit card company to another at the end of each period of interest free credit. The entries on the registers of the credit reference agencies prevented him from doing so. Mr Durkin therefore raised an action in Aberdeen sheriff court in early 2004 against both DSG and HFC. He sought a declarator that he had validly rescinded both the contract of sale and the credit agreement and claimed damages of 250,000 from HFC for its negligence in representing to the credit reference agencies that he had defaulted on the credit agreement. He claimed damages from HFC under three heads of loss: (i) damage to his financial credit, (ii) loss from interest charges caused by his inability to exploit seriatim the offers of 0% credit and (iii) loss caused by his inability to put down a 30% deposit on a house in Benalmedena, Spain in October 2003, measured essentially by the difference between the price available in 2003 and the enhanced value of that property three years later. DSG contested Mr Durkins claim that he had rescinded the contract of sale and it was only after proof of the facts that he established that DSG had been in material breach of contract entitling him to rescind the sale contract. HFC contested both his entitlement to rescind the credit agreement and his claim for damages. Sheriff Tierney followed the opinion of Sheriff Principal Reid in United Dominions Trust Ltd v Taylor 1980 SLT (Sh Ct) 28 and held that section 75 of the 1974 Act (which I discuss in paras 18 26 below) had the effect that Mr Durkin had been entitled to rescind and had rescinded both the sale contract and the credit agreement. The sheriff awarded Mr Durkin (i) 8,000 for injury to his credit, (ii) 6,880 for the extra interest which he had had to pay and (iii) 101,794 for the loss of a capital gain arising from his inability to purchase the Spanish property in 2003. Mr Durkin appealed to the Inner House of the Court of Session against the sheriffs assessment of his damages. HFC cross appealed against the sheriffs findings (i) that section 75 of the 1974 Act enabled Mr Durkin to rescind the credit agreement, (ii) that HFC was in breach of its duty of care, and (iii) that HFCs breach of duty had caused the second and third heads of loss. HFC did not dispute the award of 8,000 if it had been in breach of its duty but submitted that there was no evidence to entitle the sheriff to make the awards which he did under the second and third heads of loss. At a hearing before the First Division of the Inner House Mr Durkins appeal on the amount of damages failed. Worse for him, HFCs counsel persuaded the court that section 75 did not allow him to rescind the credit agreement. In addition, the court accepted HFCs submission that, absent averments and evidence of the sort of enquiries which a bank could reasonably have been expected to make, Mr Durkin had not shown that HFC had failed in its duty of care. Further, counsel for HFC analysed the evidence in the transcripts of evidence and the documents and persuaded the court that the evidence did not permit the sheriff to hold that a breach of duty by HFC had caused Mr Durkin loss under the second and third heads of claim. The court therefore amended the sheriffs findings of fact to exclude his claims for loss of interest and the loss arising from his inability to purchase the property in Spain. On 15 June 2010 the First Division granted decree of absolvitor to HFC. This appeal Mr Andrew Smith QC sought permission to advance a new ground of appeal, namely that there was on a proper analysis no contract of sale and no credit agreement. As this stance contradicted the basis on which the case had been pleaded from the outset and argued in the courts below, we refused his application. The issues for this court therefore are (i) whether Mr Durkin had rescinded the credit agreement, (ii) whether HFC was in breach of a duty of care to him and (iii) whether on the findings of fact any breach of HFCs duty of care caused him loss exceeding the 8,000 which the sheriff had awarded for the loss of his credit. Whether Mr Durkin rescinded the credit agreement The credit agreement, which DSGs sales assistant presented to Mr Durkin for his signature in the PC World store, was a personal loan agreement which described in a schedule the purchase of the computer, the 50 deposit payable on supply and the amount of credit which was the balance of the purchase price. The first clause of the terms and conditions was entitled Payment of the Supplier and stated (a) We [HFC] agree to lend to you and you agree to borrow the Amount of Credit. Subject to clause 1(b) below, you authorise us to pay the Amount of Credit to the Supplier. (b) We may withhold payment to the Supplier until we are satisfied that the Goods and/or Services have been supplied and/or installed or completed to your satisfaction. (c) By signing this Agreement you declare that you have paid the Deposit (if any is shown in the Schedule) to the Supplier. In order to understand the arguments about the interpretation of section 75 of the 1974 Act, it is necessary to set out certain statutory provisions. The agreement was a consumer credit agreement under section 8(1) of the 1974 Act as it was an agreement between an individual (the debtor) and any other person (the creditor) by which the creditor provides the debtor with credit of any amount. It was a regulated consumer credit agreement under section 8(3) of the 1974 Act as it was not an exempt agreement. It was also a debtor creditor supplier agreement under section 12 of the 1974 Act. To understand the definitions in section 12 one must first look at section 11. That section lists three types of restricted use credit agreement and also an unrestricted use credit agreement. It provides: (1) A restricted use credit agreement is a regulated consumer credit agreement (a) to finance a transaction between the debtor and the creditor, whether forming part of that agreement or not, or (b) to finance a transaction between the debtor and a person (the supplier) other than the creditor, or (c) to refinance any existing indebtedness of the debtors, whether to the creditor or another person, and restricted use credit shall be construed accordingly. (2) An unrestricted use credit agreement is a regulated consumer credit agreement not falling within subsection (1), and unrestricted use credit shall be construed accordingly. (3) An agreement does not fall within subsection (1) if the credit is in fact provided in such a way as to leave the debtor free to use it as he chooses, even though certain uses would contravene that or any other agreement. Section 12 provides: A debtor creditor supplier agreement is a regulated consumer credit agreement being (a) (b) a restricted use credit agreement which falls within section 11(1)(a), or a restricted use credit agreement which falls within section 11(1)(b) and is made by the creditor under (c) pre existing arrangements, or in contemplation of future arrangements, between himself and the supplier, or an unrestricted use credit agreement which is made by the creditor under pre existing arrangements between himself and a person (the supplier) other than the debtor in the knowledge that the credit is to be used to finance a transaction between the debtor and the supplier. We are not concerned in this case with the circumstance in which the creditor is also the supplier (sections 11(1)(a) and 12(a)). Section 75, which I set out below, covers both restricted use credit agreements under section 12(b) and unrestricted use credit agreements under section 12(c). The agreement in this case is an example of the former, where the creditor pays the money to the supplier. An example of the latter would be where a supplier introduces the customer to a financial organisation to obtain a loan to finance the transaction with him but the customer, who receives the money, could use it for another purpose, even if by that use he broke a contract (section 11(3)). Section 75 provides (so far as relevant): (1) If the debtor under a debtor creditor supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor. (2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under subsection (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor. In my view the First Division was correct to hold that section 75(1) did not give the debtor any right to rescind the credit agreement if he did not have such a right under the general law. I have reached this view for the following five reasons. First, it is consistent with the ordinary meaning of the words of section 75(1): they give the debtor who has a claim against a supplier a like claim against the creditor. Thus a debtor, who has a right of action against the supplier for misrepresentation or breach of the contract of supply, can sue the creditor for that misrepresentation or breach of the supply contract. In other words, the creditor is concurrently liable for the suppliers breach. Secondly, it is consistent with that concurrent primary liability that the creditor and the supplier should be jointly and severally liable to the debtor. I do not suggest that the provision of joint and several liability of itself means that the claim against the supplier must be a monetary claim, because the closing words of the subsection can readily be interpreted as having effect where applicable and not as words of limitation. Thirdly, the creditors entitlement to indemnity from the supplier under subsection (2) is consistent with his incurring of concurrent liability for matters which he cannot control. Fourthly, my view matches the relevant recommendation of the Report of the Committee on Consumer Credit chaired by Lord Crowther in 1971 (Cmnd 4596), whose review led to the 1974 Act. In its discussion of the liability of connected lenders (paras 6.6.24 6.6.31) the committee favoured an approach which made the lender answerable in damages for misrepresentations made by the seller in antecedent negotiations and for breaches of any term of the agreement relating to title, fitness or quality of the goods (paras 6.6.26 27). I set out in full the committees recommendation (at para 6.6.28). We therefore recommend that where the price payable under a consumer sale agreement is advanced wholly or in part by a connected lender that lender should be liable for misrepresentations relating to the goods made by the seller in the course of antecedent negotiations, and for defects in title, fitness and quality of the goods. Further, we consider that where the sale and the loan are made by separate contracts, the borrower should nevertheless have the right to set off against any sum payable by him under the loan contract any damages he is entitled to recover from the lender for breaches of the sale agreement by the seller. It is of note that in this recommendation the claim against the lender is derived from the sellers breach of contract or misrepresentation and is not a claim relating to the credit agreement or the actions of the creditor. Fifthly, section 75 also applies to an unrestricted use credit agreement under section 12(c) in which the supplier introduces the debtor to a financial organisation in order to fund a supply transaction with him but the debtor, who receives the money, is not restricted in fact, even if he is by contract, to using the loan which he obtains to finance that particular transaction. In such a case where there was no contractual restriction, if the supply contract were rescinded and the purchase price repaid, the debtor could use the borrowed money for other purposes. There is no obvious need for a right to rescind the finance agreement where the debtor can use the borrowed funds to obtain substitute or other goods and services, if such use does not contravene the credit agreement. Mr Smith relied on section 75 for Mr Durkins entitlement to rescind. For the reasons set out above, I do not think that he can do so. But that is not the end of the matter. In the course of the debate counsel were asked how the debtor would obtain his remedy if the contract of sale were rescinded and the credit agreement were not. Mr Clark submitted that, if the supplier contested the rescission of the contract of supply, the credit contract would remain in force until the debtor had established his right to rescind the supply agreement and had repaid the creditor or made a claim to offset against the creditors claim. On establishing his right to rescind the debtor could raise an action against the supplier to recover his deposit on the basis of unjustified enrichment and also claim damages for breach of contract. Those damages could include the loss he had incurred and would incur in meeting his obligations under the credit agreement. Thus he could pay off his obligations to his creditor. Section 75 would allow him to claim those damages against the creditor, who would probably counter claim for the sums outstanding on the credit agreement and make a third party claim against the supplier. The debtor could wait until the creditor sued him and then plead a section 75 claim for damages to offset the creditors claim. In Scots law the debtor would be able to plead a defence of compensation as the amount of his damages claim against the creditor could readily be measured by the creditors claim against him and any deposit (Henderson & Co Ltd v Turnbull & Co 1909 SC 510, 517 per Lord Low). In English law he could plead an equitable set off (Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927, 974 975 per Lord Denning MR). In neither jurisdiction would the debtors claim for damages extinguish his debt to the creditor until either it was upheld by a court or the creditor agreed to cancel the debt. It is not consistent with the policy of the 1974 Act that the debtor in a case such as this should have to work out the consequences of the rescission of the supply contract in such a complex way. In my view he does not have to. Section 11(1)(b) of the 1974 Act states that the purpose of the restricted use credit agreement, such as the agreement in this case, is to finance a transaction between the consumer and the supplier. Where, as here, the contract is tied to a particular transaction, it has no other purpose. The rescission of the supply agreement excuses the innocent party from further performance of his obligations (if any) under the supply agreement (Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 844 per Lord Wilberforce) and entitles him to repetition of sums paid and damages. If the supplier were to pay in damages the sums needed to pay off the creditor under the credit agreement, the debtor could not retain those sums or spend them on anything else. He would have to pay the creditor forthwith because he had borrowed money solely for a transaction which had ceased to have effect. In most cases the consumers acceptance of the repudiation of a supply agreement does not frustrate the credit contract by analogy with the coronation case, Krell v Henry [1903] 2 KB 740, because the creditor will have paid the supplier and the purpose of the credit agreement will have been fulfilled by the purchase of the goods, before the consumer rescinds the supply contract. But that does not mean that the debtor has no remedy. It is inherent in a debtor creditor supplier agreement under section 12(b) of the 1974 Act, which is also tied into a specific supply transaction, that if the supply transaction which it financed is in effect brought to an end by the debtors acceptance of the suppliers repudiatory breach of contract, the debtor must repay the borrowed funds which he recovers from the supplier. In my view, in order to reflect that reality, the law implies a term into such a credit agreement that it is conditional upon the survival of the supply agreement. The debtor on rejecting the goods and thereby rescinding the supply agreement for breach of contract may also rescind the credit agreement by invoking this condition. As the debtor has no right to retain or use for other purposes funds lent for the specific transaction, the creditor also may rescind the credit agreement. It appears to me that similar reasoning would apply to a section 12(c) agreement where the credit agreement tied the loan to a particular transaction. agreement. Mr Clark submitted that it was not open to Mr Durkin to argue that the common law gave him a right to rescind because he had staked his case on section 75. I disagree. Mr Durkins assertion throughout has been that he had rescinded both the sale agreement and the credit agreement. His legal advisers relied on a decision of the sheriff principal in United Dominions Trust which, although criticised in textbooks and legal articles, had been followed in other sheriffdoms. If I am correct that a restricted use credit agreement which falls under section 12(b) of the 1974 Act and relates to a specified supply transaction is conditional upon the substantive survival of that supply transaction, so the purchaser can bring to an end the credit agreement without invoking section 75, the result is the same but the mechanism more simple. In this case I do not think that the different legal analysis of the rescission amounts to a different case. I am satisfied therefore that this reformulation of his claim does not come too late for Mr Durkin. I am satisfied therefore that Mr Durkin was entitled to rescind the credit Before considering the delictual case against HFC, it is necessary to take into account section 102(1) of the 1974 Act, which provides: Where the debtor or hirer under a regulated agreement claims to have a right to rescind the agreement, each of the following shall be deemed to be the agent of the creditor or owner for the purpose of receiving any notice rescinding the agreement which is served by the debtor or hirer (b) any person who, in the course of a business carried on by him, acted on behalf of the debtor or hirer in any negotiations for the agreement. Notice means notice in writing (section 189 of the 1974 Act). In this case the sales assistant in the PC World store, Mr Slorance, was the person who discussed with Mr Durkin the provision of credit for the purchase of the computer. He did so on the instructions of the manager, Mr Taylor. Mr Durkin intimated the cancellation of the credit agreement to Mr Taylor orally on 29 December 1998. That was not sufficient for section 102 as it was not in writing. But his letter of 8 March 1999 to the managing director of PC World was confirmation of the rejection of the computer and intimation of the rescission of the credit agreement. By virtue of section 102(1) DSG was deemed to have received notice of that rescission as HFCs agent at that time. But Mr Durkin does not have to rely on section 102. HFC had notice of his asserted rescission of the credit agreement directly through the telephone calls in February and March 1999 which I described in para 4 above. The delictual case against HFC The First Division rejected Mr Durkins case in delict. HFC accepted that it was under a duty to exercise reasonable care not to make untrue statements about Mr Durkin to the credit reference agencies. But HFC submitted that Mr Durkin had failed to plead or prove the nature of the enquiries that it should have carried out and what the outcome of those enquiries would have been. The First Division accepted that submission. Accordingly they held that Mr Durkin had not established that any act or omission by HFC amounted to a breach of duty which had caused him loss. I take a different view. HFC, knowing of Mr Durkins assertion that the credit agreement had been rescinded, was under a duty to investigate that assertion in order reasonably to satisfy itself that the credit agreement remained enforceable before reporting to the credit reference agencies that he was in default. HFC could readily foresee that registration of a default could damage Mr Durkins credit: it said so in its letter of 22 July 1999. As it knew that Mr Durkins assertion of rescission of the sale agreement was unresolved, it had the options of (i) saying nothing to the credit reference agencies or (ii) if it chose to notify them, incurring the duty to him to take reasonable care to ensure that the notification was accurate (cf. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, 486 per Lord Reid). HFC made no enquiries before intimating Mr Durkins alleged default to the credit reference agencies. After Mr Durkin complained about the entries on the credit registers, HFC told him to sort matters out with DSG. As the First Division recorded in amended finding of fact 21, HFC made no enquiries and, at all material times throughout the litigation, accepted without question DSGs position that Mr Durkin had not been entitled to rescind the contract of sale. It is relevant to ask what would have happened if HFC had made enquiries (McWilliams v Sir William Arrol & Co 1962 SC (HL) 70). The answer is clear. If HFC had contacted DSG, it is likely that DSG would have said that it contested the rejection of the computer. But HFC would not have known whether DSGs stance was correct. If it had been faced with a contested rescission of the supply agreement and an asserted rescission of the credit agreement which it was not in a position to resolve, HFC should have refrained from intimating a default until the issues were resolved. HFC could have sought to test the continued effectiveness of the credit agreement by suing Mr Durkin to enforce its terms. Alternatively, it could have waited for Mr Durkin to sue to resolve the issue, as he later did. It would have known that if it did so, it was entitled to be indemnified by DSG under section 75(2) of the 1974 Act. But it should not have intimated the default without a reasonable basis for the belief that it had occurred. In so doing it acted in breach of its duty of care to Mr Durkin. There may be cases in which a creditor, having made enquiries, acts reasonably in reaching the view that the debtors assertions are unfounded. This is not such a case. The quantification of Mr Durkins loss HFC did not contest the award of 8,000 for injury to Mr Durkins credit if it were established that it had breached its duty of care to him. But Mr Smith sought also to restore the sheriffs award of damages for the extra interest which he had paid and for the loss of the capital gain on the Spanish property. Mr Durkin faces an insuperable difficulty in pursuing this part of his appeal. Section 32 of the Court of Session Act 1988 sets out how the Court of Session is to handle appeals from the judgment of a sheriff after proof and limits the role of the Supreme Court in relation to such appeals. It provides in relation to the Court of Session: (4) Where such an appeal is taken to the Court from the judgment of the sheriff principal or sheriff proceeding on a proof, the Court shall in giving judgment distinctly specify in its interlocutor the several facts material to the cause which it finds to be established by the proof, and express how far its judgment proceeds on the matter of facts so found, or on matter of law, and the several points of law which it means to decide. In relation to the Supreme Court it provides: (5) The judgment of the Court on any such appeal shall be appealable to the Supreme Court only on matters of law. The First Division held that the evidence before the sheriff did not establish the extent to which Mr Durkin would have made use of 0% interest rate credit cards between 2001 and 2005 or the net benefit which he would have gained from such use (paras 78 80). They altered the relevant finding of fact to exclude this claim. This court is not empowered to go behind the amended finding of fact absent a demonstrated legal error. Mr Durkins much larger claim for loss of the capital gain on the Spanish property was based on the proposition that his inability to borrow on his credit cards at 0% interest had caused him to borrow more from the Northern Rock Building Society, which had a security over his home. That borrowing used up funds that would otherwise have been available to pay the deposit on the Spanish property which he wished to purchase. The First Division (in paras 80 82) concluded that there was no evidence to support the sheriffs crucial finding that Mr Durkins additional borrowing from the Northern Rock was caused by the non availability of 0% credit rather than by the general level of his expenditure. Again they altered the relevant finding of fact. As a result, on the findings of fact there is no causal link between the adverse credit reference and Mr Durkins inability to fund the purchase of the Spanish property. Again we cannot go behind those findings of fact, there being no demonstrated legal error. Conclusion I would allow the appeal and declare that Mr Durkin was entitled to rescind and validly rescinded the credit agreement by giving notice to HFC in about February 1999. Damages resulting from HFCs breach of its duty of care are confined to injury to Mr Durkins credit in the sum of 8,000. I would give the parties an opportunity to agree the date from which interest should run and the rate or rates of interest to be applied. |
An Algerian national whose true identity has not been revealed, but who has been referred to throughout these proceedings as B, was sentenced to four months imprisonment by the Special Immigration Appeals Commission (SIAC) on 26 November 2010. That sentence was imposed because of what was found to be Bs deliberate and contumelious refusal to obey an order made by SIAC on 19 July 2007. By that order, SIAC had required B to give particulars of his true identity and to consent to provide a sample for the purpose of DNA testing. B had supplied the sample but had steadfastly refused to disclose his identity or the other particulars. B appealed SIACs order committing him for contempt. Before the Court of Appeal [2011] EWCA Civ 828 the principal arguments advanced on his behalf were that the sentence of imprisonment gave rise to breaches of his rights under articles 3 and 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). Secondary submissions were made that SIAC had failed to give reasons for a critical finding that B was likely to continue to take medication while in prison and that the sentence was excessive. The significance of the point about medication was that it underlay SIACs conclusion that B was unlikely to suffer a relapse into paranoid psychosis if he was committed to prison. He had suffered from that condition previously and there was medical evidence that, if sent to prison, he was likely to react by refusing to take prescribed medication and that, in consequence, he would revert to a psychotic state. The Court of Appeal found that SIAC had erred in expressing confidence that B would not relapse into paranoid psychosis if he was sent to prison. In particular, it had erred in rejecting, in effect, the evidence of two consultant psychiatrists, Dr Deeley and Dr Payne, that B would refuse to take his medication and that, in consequence, the onset of a psychotic state was likely. Moreover, SIAC had misunderstood the evidence of another doctor, Dr Thompson, that B would take medication if detained. Dr Thompson had expressed that opinion on the basis that B would be detained in a secure hospital. He did not hold that view in relation to Bs detention in prison which was, of course, the place that he would be detained on foot of SIACs order. A majority of the Court of Appeal (Longmore LJ and Laws LJ) held that, notwithstanding SIACs error, the appeal against the four months committal order should be dismissed. They rejected the arguments based on articles 3 and 8 of ECHR. Longmore LJ accepted that there was a risk of relapse if B did not continue to take his medication in prison (para 16) and it is implicit in that finding that there was also a risk that he would not do so. A relapse into a psychotic condition whilst in prison would not amount to a breach of article 3, in Longmore LJs view, because arrangements would be in place for Bs transfer to hospital if such a relapse occurred. (Section 48 of the Mental Health Act 1983, as amended by section 1(4) of, and paragraph 11 of Schedule 1 to, the Mental Health Act 2007, empowers the Secretary of State, if satisfied that a civil prisoner which would be the appellants status was in need of urgent medical treatment, to ensure that such treatment was received in hospital.) On the question whether the four months imprisonment was excessive, the majority found that it was not. Longmore LJ said: Many people might think that a sentence of four months for a deliberate and contumelious contempt, frustrating the Secretary of States intention to deport B and causing SIAC great difficulty in its final disposition of the appeal before it, is a sentence which is comparatively merciful. (para 20) Laws LJ was of like mind. At para 37 he said: this was a grave and deliberate contempt of court. Even on the footing that the appellant is at risk of a relapse into paranoid psychosis, I am wholly unpersuaded that there is the least possibility of any violation of ECHR article 3 or 8. This was a lenient sentence. Etherton LJ, while agreeing that SIAC had erred in the manner found by Longmore LJ, was of the view that the case should be remitted to SIAC for reconsideration. He considered that SIAC was in a far better position (para 33) than was the Court of Appeal to evaluate recent medical evidence about Bs mental state. The appeal to this court The Court of Appeal refused permission to appeal but certified the following questions: (1) whether the Court of Appeal is correct that it should adopt the approach of the Court of Appeal (Criminal Division) and only allow an appeal where a sentence is manifestly excessive or whether section 13 of the Administration of Justice Act 1960 (when read with the Civil Procedure Rules) gives it a broader discretion that enables it to remit a case where a first instance judgment regarding sentence was flawed and/or procedurally unfair? (2) whether the Court of Appeal must remit a case where a first instance judgment regarding sentence imposed in a contempt case was flawed and/or procedurally unfair unless it concludes that the court below would have reached the same conclusion even if it had not fallen into error The focus of the appeal in this court was distinctly different from that which had been central to the hearing before the Court of Appeal. Before this court it was argued that the Court of Appeal had unwarrantably deferred to SIACs selection of the appropriate sentence and had wrongly determined that the sentence of four months was proper on the basis that it was not manifestly excessive. Mr Southey QC, on behalf of the appellant, took particular issue with Longmore LJs statement in para 12 of his judgment where he said: As in any appeal against a sentence of imprisonment, the question for this court is whether the sentence imposed was excessive or, indeed, to use the almost invariable language of the Criminal Division of this court, manifestly excessive since there is, of course, a wide discretion given to any sentencing tribunal. To adopt the conventional approach taken by the Court of Appeal, Criminal Division to appeals against sentence by first instance courts was wrong, the appellant argued, for three reasons. First, it treated SIACs decision as having residual validity, despite it having been found that the basis on which that decision had been reached was flawed. The second reason was related to the first. Section 13(1) of the Administration of Justice Act 1960 gives an automatic and broadly based right of appeal from a decision of a court in the exercise of its jurisdiction to punish for contempt of court. Section 13(3) gives an unfettered power to the appellate court to reverse or vary the order of the lower court. It was therefore wrong, the appellant contended, to constrain the exercise of that power by reference to the possible propriety of the lower courts penalty. It was necessary for the appellate court to take an entirely de novo decision on the proper penalty, if any, to impose on the defendant in a contempt proceeding. Finally, it was argued that, in general, where an appellate court has found that the court exercising the power to punish for contempt had done so on an unlawful basis, it should remit the matter to the original sentencing court so that the defendants right to have the case properly adjudicated by a first instance court and to have an opportunity to appeal from that decision was preserved. Discussion Where an appellate court has concluded that the basis on which the decision of the lower court to sentence someone for contempt is flawed, it does not follow that the sentence chosen by the lower court is inevitably wrong. It may be an entirely correct sentence but for different reasons from those articulated by the original sentencing court. The affirmation of the original sentence does not necessarily entail an endorsement of the reasons for which the decision to sentence was made. Where it has been determined that the basis for the original sentence of imprisonment is wrong, a de novo assessment must indeed occur. A fresh look at the circumstances material to the question of whether imprisonment is the right disposal should take place in light of the correct understanding of those circumstances. It is not essential, however, even as a matter of generality, that the fresh look be undertaken by the original sentencing court. If it is sufficiently clear to the appellate court that a sentence of imprisonment is appropriate in light of its revised view of the relevant facts, it is not required as a matter of principle or of practice that the matter be remitted to the court which first imposed the sentence. As Jackson LJ said in JSC BTA Bank v Solodchenko (No 2) [2012] 1 WLR 350 para 60, where an appellate court is seised of the case and in possession of all relevant facts, the proper course is for the appellate court to determine what the proper sentence for contempt should be on the basis of the true facts. Where, of course, a fresh investigation of new facts is required and it is necessary or desirable that this be undertaken by a first instance court, remittal will be suitable. This is not such a case. The Court of Appeal was able to evaluate the medical evidence and reach reliable conclusions on its significance. It could decide what the appropriate sentence should be and it was right to do so. In the present case it is quite clear that the Court of Appeal undertook a fresh examination of the question whether it was appropriate to sentence the appellant to prison for his admitted contempt. Two principal reasons that he should not be sent to prison were advanced on the hearing of the appeal before this court. The first of these does not appear to have featured in the appellants arguments before the Court of Appeal, at least not in the form that it was pursued in this court. It was that the committal order would have no coercive effect whatever. The second argument was that the appellants incarceration would lead to his relapsing into a psychotic state. A third, supplementary, argument was made that, because of the already considerable restrictions on the appellants liberty, committal to prison was inappropriate (on his release from prison in 2005 he was made subject to a control order and has been, since appearing before SIAC, under restrictive bail conditions). There is nothing to show that the Court of Appeal was unmindful of the significant limitation on the appellants liberty that the current bail conditions require. It is, in any event, at least questionable that this could be a factor of any significance in deciding whether committal should be ordered. Committal is appropriate where it can reasonably be expected that this will induce the contemnor to purge his contempt (the coercive effect). It is also appropriate to punish contempt of a courts order (the penal element). Frequently both elements will underlie a committal order. Where there is reason to believe that committal will secure compliance with a courts order, the fact that the person subject to it has already substantial restrictions on his liberty is immaterial. Where it is required in order to properly punish the contemnor, the loss of residual liberty is unlikely to weigh heavily against the making of the order. Contrary to the appellants argument on the first two grounds, the Court of Appeal in effect reached conclusions which were favourable to the appellant on both issues and, so far as it was required, their conclusions on those issues amounted to a de novo examination of the question whether the imposition of a sentence of imprisonment was appropriate. SIAC did not find that the appellants committal to prison would have a coercive effect on him in terms of persuading him to disclose his true identity. Rather, it approached the question of possible coercive effect by considering whether it had been shown that sending him to prison would not in any circumstances induce him to divulge the required information. At para 71 of its judgment SIAC said: the Commission agrees with Mr Tam that the position at the present time is not such that it can be said that committal of the appellant to prison would be so unlikely to coerce him into obeying the Commission's order as to render committal (for that reason) disproportionate, either in terms of article 8 or otherwise to make it inappropriate to commit the appellant to prison. In the appellants skeleton argument for the hearing in the Court of Appeal, it was suggested that this passage from SIACs judgment shows that the Commission considered that the prospect of committal having a coercive effect may be very remote. There is nothing in the skeleton or in the Court of Appeals treatment of the appellants argument to indicate that it was suggested on the appellants behalf that the prospect of committal having a coercive effect was not only remote but non existent. In any event, in as much as the medical evidence indicated that committal would not induce the appellant to comply with SIACs order of 19 July 2007, there is no reason to suppose that this was not accepted by the Court of Appeal. In para 8 of his judgment Longmore LJ set out the detailed summary of the medical evidence that SIAC had provided in para 47 of its judgment. This included Dr Paynes opinion that the appellants mental health difficulties were not causing his refusal to disclose his identity. That refusal, in Dr Deeleys opinion, was based on an understandable fear that his family might be mistreated or tortured if he did make the required disclosure and that he might himself be deported and subjected to ill treatment or torture. It was Dr Deeleys view that this fear and the appellants motivation in refusing to disclose his identity were likely to endure even if his mental health problems were treated. SIACs summary of the medical evidence also recorded the opinion, held by both Dr Payne and Dr Deeley, that sending the appellant to prison would result in his being uncooperative with prison authorities and mental health teams. Ultimately, this would lead to his re admission to a psychiatric facility. All of this was recorded uncritically by Longmore LJ. Indeed, he expressly accepted (in paras 10 and 11) Mr Southeys criticism of SIAC for its disregard of the evidence of Dr Payne and Dr Deeley and for its expression of confidence that the appellant would not relapse into paranoid psychosis if he was sent to prison. Acceptance of the doctors opinion as to the likely outcome if the appellant were returned to prison necessarily involves recognition that he would not comply with the order in other words, that committal to prison would not have a coercive effect. And, indeed, there is nothing in the judgments of any of the members of the Court of Appeal that is remotely suggestive of a view that sending the appellant to prison would bring about a change of heart on his part. The judgments of the majority make it clear that the committal was required in order to punish, not to induce compliance of, the contempt. It is plain that the second argument against committing the appellant that this would cause him to relapse to a psychotic state was dealt with on an entirely different basis from that which was considered by SIAC. That the Court of Appeal dealt with this as a de novo assessment is beyond argument. Its conclusions on this aspect of the case were premised on the real risk that such a state would develop but that this did not contraindicate a prison sentence because of the arrangements that were in place which would enable his transfer to hospital if it materialised. This is completely different from the basis on which SIAC decided that committal to prison was appropriate. There is nothing therefore in the appellants claim that there has not been a de novo examination of the question of whether he should be sent to prison because of his admitted contempt. What then of his complaint that the affirmation of the four months sentence imposed by SIAC constituted unacceptable deference to that courts decision? In considering this issue it is necessary at the outset to draw a distinction between, on the one hand, the validity of the decision to make a committal order and, on the other, the selection of the sentence necessary to achieve the objects of the order. Here the basis for SIACs decision that a committal order should be made was found to be misconceived. That has been corrected by the Court of Appeals re consideration of that issue on what it perceived to be the true import of the evidence. That re assessment has not been challenged on its merits. One must focus, therefore, on the question whether the Court of Appeal, in deciding that four months imprisonment was not excessive, paid undue regard to SIACs selection of that term as the appropriate sentence. The Court of Appeal was faced with a sentence chosen by SIAC on an erroneous basis but it was a sentence that was nevertheless designed to punish the contempt which SIAC had found to exist. On the hearing before the Court of Appeal the appellant had accepted that he was guilty of contempt. That court then had to consider whether a sentence of imprisonment should be imposed for the contempt. The majority concluded that it should be, albeit for different reasons than those found by SIAC. Having so concluded, it was entirely unexceptionable that the court should consider the propriety of the sentence which SIAC had chosen. This did not involve any deference to the SIACs reasoning in deciding that a sentence of imprisonment should be imposed. It merely involved an examination of whether a sentence of four months imprisonment was suitable, given that both SIAC and the majority of the Court of Appeal had both concluded that some term of imprisonment was required. Where an appellate court decides that the basis for the original sentencing was wrong, it may not be appropriate to consider the propriety of the sentence imposed solely by asking whether it was manifestly excessive. If the choice of sentence has been influenced by the reasons for finding that imprisonment is required, the sentence chosen may be open to challenge on that basis, quite apart from considerations of obvious immoderation. In the present case, however, the sentence imposed by SIAC was not determined by the reasons that it had concluded that imprisonment was appropriate. The length of the sentence was not influenced by the conclusion that the appellant would not relapse into paranoid psychosis. It was chosen to reflect the seriousness of the appellants contempt. It was therefore not inappropriate for the Court of Appeal to consider whether the sentence imposed was manifestly excessive. In light of that conclusion, the first certified question does not require an answer. The Court of Appeal concentrated exclusively on the propriety of the length of sentence in order to decide how long the appellant should serve as punishment for his contempt. There was nothing untoward about testing that decision against the sentence chosen by SIAC since it was engaged on essentially the same exercise as that on which the Court of Appeal was required to embark. There is no reason that the Court of Appeal should ignore SIACs sentence. To do so would be artificial. It would introduce an air of unreality about the sentencing exercise. I would answer the second certified question that an appellate court need only remit a case where a first instance judgment regarding sentence imposed in a contempt case was flawed and/or procedurally unfair if it considers that a fresh investigation of new facts is required and it is necessary or desirable that this be undertaken by the first instance court. I would dismiss the appeal. |
This is the first time the highest court (whether the House of Lords or Supreme Court) has been required to decide an appeal on section 84 of the Law of Property Act 1925. That section confers on the Upper Tribunal a power, in specified circumstances, to discharge or modify restrictive covenants affecting land. In this case the party entitled to the benefit of a restrictive covenant, preventing development of an area of open land, is the Alexander Devine Childrens Cancer Trust (the Trust). The party seeking the discharge or modification of the restrictive covenant under section 84 of the 1925 Act is now Housing Solutions Ltd (Housing Solutions) which is a property company concerned with the provision of affordable housing. Housing Solutions acquired the land encumbered by the restrictive covenant (which I shall refer to as the application land) from a property developer, Millgate Developments Ltd (Millgate). It was Millgate which made the application to the Upper Tribunal under section 84. Housing Solutions was named as having an interest in the application land as prospective purchaser. The underlying dilemma posed by this case is clear. On the one hand, there is a charitable childrens cancer trust that seeks to maintain the benefit of a restrictive covenant, to which it is entitled, so that terminally ill children in a hospice built on the Trusts land can fully enjoy, in privacy, the use of the grounds. On the other hand, there is a company that is seeking to ensure that 13 units of affordable housing, built in breach of the restrictive covenant on the application land adjoining the Trusts land, do not go to waste. Millgates application succeeded before the Upper Tribunal (Lands Chamber) (Martin Rodger QC and Paul Francis FRICS): [2016] UKUT 515 (LC). The Upper Tribunal decided that the restrictive covenant should be modified to allow the occupation and use of the application land for the 13 housing units built on it provided that Millgate paid 150,000 as compensation to the Trust. That decision was overturned by the Court of Appeal ([2018] EWCA Civ 2679; [2019] 1 WLR 2729) with the leading judgment being given by Sales LJ with whom Underhill and Moylan LJJ agreed. The basis of the Court of Appeals decision was that the Upper Tribunal had made various errors of law; and, exercising its powers to re make the decision, the Court of Appeal refused the application. Housing Solutions now appeals to this court against that decision. It is our essential task to decide whether the Court of Appeal was correct that errors of law were made by the Upper Tribunal. The facts will first be summarised before setting out section 84 of the Law of Property Act 1925 and explaining the distinction contained within it between the Upper Tribunals jurisdiction and discretion. After looking at the proceedings below, I shall then turn to the central issue on this appeal which is the relevance of Millgates cynical breach (a term which is explained at para 36). Finally, I shall briefly examine the two other issues raised on this appeal. The facts This summary of the facts draws heavily on the very clear factual background set out by Sales LJ in his judgment in the Court of Appeal for which I am most grateful. The application land is close to Maidenhead and is located in an area designated as Green Belt in the applicable development plan. The relevant restrictive covenants are contained in a conveyance dated 31 July 1972 made between John Lindsay Eric Smith (Mr John Smith) as vendor and Stainless Steel Profile Cutters Ltd (SSPC) as purchaser. Mr John Smith was a local farmer who owned extensive open agricultural land. SSPC owned some land and industrial buildings next to the application land (I shall call this the unencumbered land). By the conveyance, the application land was sold and transferred by Mr John Smith to SSPC making, in combination with the unencumbered land already owned by SSPC, a rectangular plot of land (the Exchange House site). The conveyance provided that SSPC covenanted for the benefit of the owners for the time being of the land then belonging to Mr John Smith (and situated within three quarters of a mile of the application land) that at all times thereafter it would observe and perform certain stipulations which included the relevant restrictive covenants. Those restrictive covenants provide as follows: 1. No building structure or other erection of whatsoever nature shall be built erected or placed on [the application land]. 2. The [application land] shall not be used for any purposes whatsoever other than as an open space for the parking of motor vehicles. The conveyance also contained an overage provision. This provided that if, within 21 years from the date of the conveyance, planning permission was granted for the development of the application land for any purpose other than the parking of vehicles, SSPC would pay an overage payment equivalent to 75% of the uplift in the value of land. On payment of the overage sum, those with the benefit of the restriction would execute a discharge to enable the planning permission to be implemented. The overage provision expired in 1994. In due course, Mr John Smiths son Bartholomew (Mr Barty Smith) inherited from his father agricultural land, including land next to the application land. In December 2011 he proposed making a gift to the Trust of part of his land (next to the application land), for the construction of a hospice for seriously ill children with terminal cancer and their carers. Mrs Fiona Devine is the co founder and chief executive of the Trust. The plans for the hospice were to make full use of the land to be given by Mr Barty Smith, including recreational areas and a wheelchair path around its circuit. Planning permission was granted for the construction of the hospice on 2 December 2011. In March 2012 Mr Barty Smith made the gift of the land to the Trust. However, construction of the hospice had to await the raising of adequate funds from charitable donations. Millgate acquired the Exchange House site in the first part of 2013. Millgate was aware of the restrictive covenants at the time it acquired the site, presumably as a result of its own investigation of title at that time. Millgate did not adduce evidence to suggest that it made any attempt to identify those entitled to enforce the restrictive covenants. The Upper Tribunal found that Millgates solicitors, DAC Beachcroft, could readily have identified Mr Barty Smith and the Trust as beneficiaries of the restrictive covenants if they had tried; and it drew the inference (which was not challenged) that Millgate either took no steps to find out who the beneficiaries were or knew the identity of some or all of them and chose not to raise the issue of the restrictive covenants before beginning to build in breach of them. In July 2013 Millgate applied for planning permission to build 23 affordable housing units on the Exchange House site. This was linked to Millgates application for planning permission to build 75 housing units on another site (the Woolley Hall site) for commercial sale. In due course, in March 2014 the local planning authority granted planning permission for both developments, with the permission for the development of the Woolley Hall site being conditional on the provision of the affordable housing on the Exchange House site. By a clause in a deed made pursuant to section 106 of the Town and Country Planning Act 1990, Millgate unilaterally undertook not to occupy (ie not to make available for sale) more than 15 units constructed pursuant to the planning permission for the Woolley Hall site until 23 units constructed pursuant to the planning permission for the Exchange House site had been transferred to an affordable housing provider. The plans submitted with the application for permission for the development of the Exchange House site showed ten residential units to be provided in a block of flats on the unencumbered land plus nine two storey houses and four bungalows on the application land. It seems that the local planning authority was not aware of the position in relation to the restrictive covenants affecting the application land although, in any event, it is unlikely that the local planning authority would have viewed it as its role to use its planning powers to ensure compliance with those covenants. Its concern was to ensure that the requisite number of affordable housing units should be provided on the Exchange House site. It is a very important point (as I shall later explain) that the Upper Tribunal recorded (at para 62 of its decision) that, had Millgate chosen to lay out its development of the Exchange House site differently so as to honour the restrictive covenants, by building a larger block of flats with 23 units on the unencumbered land, with the application land (presumably) remaining as a car park for the flats, the local planning authority indicated that it would have approved such a proposal. In July 2013 Mrs Devine had a conversation about the Exchange House site with a director of Millgate, Mr Graeme Simpson. As appears from paras 44 45 of the Upper Tribunals decision, it was about this time that Mrs Devine became aware of Millgates application for planning permission in relation to that site, although she did not see the plans it had submitted and was unaware of the detail of Millgates proposals. She was also unaware of the restrictive covenants. She only learned of their existence after Millgate made its application to the Upper Tribunal to have them discharged or modified. In the period prior to that application, Mrs Devine, for the Trust, made no adverse comment concerning Millgates application for planning permission for its development of the Exchange House site. In granting planning permission for the application land in March 2014, the local planning authority determined that although the proposal was, in principle, inappropriate for the Green Belt, and was contrary to the development plan, special circumstances existed which justified the grant of permission. The local planning authority considered that those special circumstances were that the development would enhance the character and amenity of the area, was on previously developed land, would improve the access to and relationship with the hospice (for which, as we have seen in para 10, planning permission had already been approved) and was sensitive to adjoining uses. On 1 July 2014 Millgate began clearing the site preparatory for construction. Mr Barty Smith was unaware of Millgates application for planning permission in relation to the Exchange House site. He first became aware of physical development of the site when he flew over it in a light aeroplane on 30 August 2014. He consulted a solicitor. He visited the site on 15 September 2014, by which time the original light industrial buildings on the unencumbered land had been cleared and work on the new foundations across the whole site had commenced. By letter dated 26 September 2014, Mr Barty Smith wrote to Millgate to object to the development on the application land. He referred to the restrictive covenants and stated that Millgate seemed to be in breach of them by reason of the works it had already carried out on the application land. His letter stated that Millgate should immediately halt any plans it had to build on the application land. Despite this, Millgate continued with its construction works. It appears that Millgate passed Mr Barty Smiths letter on to DAC Beachcroft for reply. The eventual reply was by a letter sent by DAC Beachcroft to Mr Barty Smith dated 20 November 2014. This pointed out that the restrictive covenants had to touch and concern the land of anyone claiming to be entitled to enforce them; said that Mr Barty Smith could only enforce them if they benefited land which he owned; and suggested that as he only owned open land close to the site it is not immediately obvious why the covenants benefit your land. Mr Barty Smith took counsels advice. With the benefit of this, he replied to DAC Beachcroft by a letter dated 11 December 2014. He maintained that the restrictive covenants self evidently touch and concern the land neighbouring the application land and specifically asserted that they benefited both his own land (open fields retained by him in the vicinity of the application land, as identified in a map he enclosed with his letter) and the hospice land adjacent to the application land. He claimed that it was improper for Millgate to commence building works in breach of covenant and said that any application to the Upper Tribunal to modify the restrictive covenants would be vigorously opposed. He explained the reason why the enforcement of the restrictive covenants was particularly important in relation to the hospice: In 2012 I donated land worth 500,000 to the charity to build the hospice as a peaceful place for children with terminal cancer to end their days in calm and dignity with access to private country gardens. Now your client seeks to build multiple units with windows and open areas facing directly into hospice land. That is regrettable. It seems that at this stage Millgate was still far from completing the buildings on the application land. It was not suggested that it had yet erected the second storey of the nine houses which would directly overlook the hospice gardens. In continued breach of the restrictive covenants, Millgate continued to build the houses and bungalows on the application land. It was only on 10 July 2015 that the development of the 23 residential units on the Exchange House site, together with a childrens recreation area next to the bungalows, was completed. The 13 housing units on the application land comprise the following: four bungalows, the roofs of which are visible over a timber boundary fence separating the gardens of the bungalows from the hospice land; and nine two storey houses, the gardens of which are separated from the hospice land by a timber fence. The upper floor bedrooms of these houses directly overlook the hospice grounds. By an agreement dated 22 May 2015, Millgate agreed to sell the development at the Exchange House site, once it was completed, to Housing Solutions. The sale of the site was subject to a condition that there should be no reasonable risk of any court application being successful, in respect of the restrictive covenants, for an injunction to stop or restrict the development or demolish the existing development; and Millgate provided Housing Solutions with the benefit of certain insurance policies and an indemnity against any wasted expenses or losses which Housing Solutions might suffer if that condition was not fulfilled. On 20 July 2015 Millgate issued its application to the Upper Tribunal seeking modification of the restrictive covenants pursuant to section 84. The modification sought was to allow the nine houses and four bungalows, which Millgate had already built on the application land, to continue to stand there and to be occupied as residential properties. Millgate gave notice of the application to Mr Barty Smith and the Trust. They both entered objections to the application. On 28 July 2015 Millgate conveyed to Housing Solutions the unencumbered land (with the block of ten residential flats on it). In September 2015, the construction of the hospice began. By an agreement dated 9 February 2016, the relevant section 106 obligation in respect of the Woolley Hall site (referred to in para 12 above and which required Millgate to provide 23 units of affordable housing on the Exchange House site as a condition for being able to release properties at the Woolley Hall site for sale) was varied to permit Millgate, in partial substitution for that original obligation, to make a payment of 1,639,904 to the Council if Millgates application to the Upper Tribunal was not successful and the application land was not transferred to Housing Solutions by 30 September 2017. This payment was intended to enable the Council to secure an equivalent amount of replacement affordable housing (13 units) at other locations in its area. The effect of Millgate making this payment would be that it would be able to market and sell the residential units it had built on the Woolley Hall site. This agreement was designed to ensure that the Councils requirement for affordable housing as the quid pro quo for planning permission for development of the Woolley Hall site would be satisfied whether the restrictive covenants remained in place and were enforced or not. The Upper Tribunal found that the Exchange House Site as a whole gave the appearance of having been well designed and built. The houses and bungalows, which the Upper Tribunal inspected, were described as simple and functional but neither shoddy nor utilitarian. The Upper Tribunal regarded the development as one which would be likely, in time, to mellow into a modest and not unattractive environment providing decent accommodation suitable for people in different stages of life living in what might become a neighbourly community. The Upper Tribunal found that despite the proximity of the houses to the boundary of the hospice, and their visibility from the hospice, it was unlikely that they would make much visual impression on the children, or on staff or visitors, while within the hospice building itself. However, the visual impact of the buildings would be much more apparent from the grounds of the hospice land. On 18 November 2016 the Upper Tribunal gave its decision on Millgates application to modify the restrictive covenants. The Upper Tribunal held that the restrictive covenants should be modified pursuant to section 84 so as to permit the occupation and use of the application land for the houses and bungalows which had been constructed on it. As a condition of this ruling, Millgate was ordered to pay 150,000 as compensation to the Trust, that being the Upper Tribunals assessment of the cost of remedial planting and landscaping works to screen the hospice grounds plus an element of compensation for loss of amenity. On 15 February 2017, the day before the last day on which the Trust could serve an in time notice of appeal according to the Civil Procedure Rules, when no application had been received for permission to appeal, the view was taken that the condition in the sale agreement between Millgate and Housing Solutions (referred to in para 22 above) had been satisfied and Millgate immediately that day transferred the 13 housing units on the application land to Housing Solutions. No effort was made to check with the Trust whether it intended to apply for permission to appeal. On the following day, 16 February, Millgate received notice of the Trusts application for permission to appeal and for a short extension of time in which to do so. Floyd LJ granted permission to appeal and an extension of time. Housing Solutions is therefore now the owner of the 13 housing units on the application land. This means that, in the event, Millgate did not have to pay the Council the sum stipulated in the agreement of 9 February 2016, referred to in para 24 above. As against Millgate, Housing Solutions continues to have the benefit of the indemnity provision in the sale agreement, should the decision of the Upper Tribunal be reversed and the restrictive covenants enforced. The 13 housing units are now occupied by tenants. On 28 November 2018, the Court of Appeal (as has been mentioned in para 4 above) overturned the Upper Tribunal and re made the decision by refusing the application. Housing Solutions appeals against that decision. As at the time of the hearing before the Supreme Court, the Trust had not made any application for an injunction to demolish the nine houses and four bungalows built on the application land or for damages for breach in lieu of an injunction. Following the Court of Appeals decision, the Trusts solicitors, Russell Cooke, wrote to the solicitors for Housing Solutions, DAC Beachcroft, by letter dated 19 December 2018, indicating an intention to issue injunction proceedings. By a letter dated 20 December 2018 the solicitors for Housing Solutions responded that, since these proceedings were ongoing, it would be inappropriate for the Trust to apply for injunctive relief and that, should the Trust choose to do so, Housing Solutions would apply for a stay pending the outcome of this appeal. Section 84 of the Law of Property Act 1925, jurisdiction and discretion 3. So far as relevant to this case, section 84 of the Law of Property Act 1925 (as amended by section 28(1) (3) of the Law of Property Act 1969 and paragraph 5(a) of Schedule 1 to the Transfer of Tribunal Functions (Lands Tribunal and Miscellaneous Amendments) Order 2009) reads as follows: 84. Power to discharge or modify restrictive covenants affecting land (1) The Upper Tribunal shall have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction on being satisfied that by reason of changes in the character of the (a) property or the neighbourhood or other circumstances of the case which the Upper Tribunal may deem material, the restriction ought to be deemed obsolete; or (aa) that in a case falling within subsection (1A) below the continued existence thereof would impede some reasonable user of the land for public or private purposes or, as the case may be, would unless modified so impede such user; or (b) that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction have agreed, either expressly or by implication, by their acts or omissions, to the same being discharged or modified; or (c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction: and an order discharging or modifying a restriction under this subsection may direct the applicant to pay to any person entitled to the benefit of the restriction such sum by way of consideration as the Tribunal may think it just to award under one, but not both, of the following heads, that is to say, either (i) a sum to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification; or (ii) a sum to make up for any effect which the restriction had, at the time when it was imposed, in reducing the consideration then received for the land affected by it. (1A) Subsection (1)(aa) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of land in any case in which the Upper Tribunal is satisfied that the restriction, in impeding that user, either (a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them; or (b) is contrary to the public interest; and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification. (1B) In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Upper Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances. (9) Where any proceedings by action or otherwise are taken to enforce a restrictive covenant, any person against whom the proceedings are taken, may in such proceedings apply to the court for an order giving leave to apply to the [Upper Tribunal] under this section, and staying the proceedings in the meantime. The original version of section 84 of the Law of Property Act 1925 laid down four grounds under which the relevant Authority (now the Upper Tribunal) was given the power to discharge or modify restrictive covenants. These were, in short, where the restrictive covenant was obsolete; where the restriction was impeding the reasonable user of the land without securing practical benefits; where the persons entitled had agreed to the discharge or modification; and where the discharge or modification would be non injurious. These correspond (with some modification to the second ground) to what are now, respectively, section 84(1)(a); section 84(1)(aa), (1A)(a); section 84(1)(b); and section 84(1)(c). However, following a Report of the Law Commission on Transfer of Land: Restrictive Covenants (1967) (Law Com No 11), pp 21 23, a significant extension was made by adding a fifth ground (what is now section 84(1)(aa), (1A)(b)) so that discharge or modification may be ordered where the restriction is impeding the reasonable user of land and that impeding of reasonable user is contrary to the public interest (and provided money will be adequate compensation for any loss suffered by the person entitled to the benefit of the restrictive covenant). It is with that contrary to the public interest ground that this appeal is concerned. It is well established (see, for example, Driscoll v Church Comrs for England [1957] 1 QB 330) that, if satisfied that one of the prescribed grounds has been made out, the Upper Tribunal has a discretion whether or not to make an order for modification or discharge of the restrictive covenant. The important statutory words to this effect are in section 84(1): the Upper Tribunal shall have power. The five grounds are therefore concerned with establishing the Upper Tribunals jurisdiction and can be helpfully labelled the jurisdictional grounds: at least one of those jurisdictional grounds must be established by the applicant before the Upper Tribunal can go on to make what is ultimately a discretionary decision. The proceedings below and the appeal to this court The Upper Tribunal held that the contrary to public interest jurisdictional ground (section 84(1)(aa), 84(1A)(b)) was made out by Millgate. The reasoning was as follows: (i) It was common ground that the proposed use of the application land to provide 13 units of affordable housing was a reasonable user of the land. (ii) Impeding that reasonable user was contrary to the public interest because it is not in the public interest for these houses to remain empty and the covenants are the only obstacle to them being used (para 106 of the decision). That public interest was so important and immediate that, even assuming that the cautious approach to the public interest ground put forward in In re Collins Application (1975) 30 P & CR 527, 531, remains good law, the public interest here justified the serious interference with private rights and with the sanctity of contract (para 107). (iii) Although the provision of significant additional boundary planting would not insulate the hospice land from all the adverse consequences of the use of the application land for housing, an award of money to allow for such additional planting was capable of providing adequate compensation to the Trust (para 110). Turning to the exercise of its discretion, the Upper Tribunal looked at the conduct of Millgate. In an earlier passage, referring to Mr Barty Smiths view, it described Millgates behaviour as highhanded and opportunistic (para 105). It contrasted the conduct of applicants in past cases (such as In re SJC Construction Co Ltds Application (1974) 28 P & CR 200 (LT), affd (1975) 29 P & CR 322; Winter v Traditional & Contemporary Contracts Ltd [2007] EWCA Civ 1008; [2008] 1 EGLR 80; and In re Trustees of the Green Masjid and Madrasahs Application [2013] UKUT 355 (LC)). It was not prepared to accept that Millgate had acted in good faith and without any intention to force the hand of the beneficiary of the covenant (para 117). Nevertheless, the Upper Tribunal considered that it should exercise its discretion to grant Millgates application because the public interest outweighed that high handed and opportunistic conduct (and all other factors) in this case. In the words of the Upper Tribunal, at para 120: [O]ur decision will have an effect not only on the parties but also on 13 families or individuals who are waiting to be housed in these properties if, and as soon as, the restrictions are modified. We consider that the public interest outweighs all other factors in this case. It would indeed be an unconscionable waste of resources for those houses to continue to remain empty. I interject here that the description of Millgates behaviour as highhanded and opportunistic is what some commentators, especially in the context of breach of contract, have described as cynical: see, for example, Peter Birks, Restitutionary Damages for Breach of Contract: Snepp and the Fusion of Law and Equity [1989] LMCLQ 421. In line with this, I shall use the phrase cynical breach as a useful shorthand description of the conduct of Millgate in deliberately committing a breach of the restrictive covenant with a view to making profit from so doing. The Trust appealed against the Upper Tribunals granting of the section 84 application. It put forward four grounds of appeal ie four grounds on which it alleged that the Upper Tribunal had erred in law. Those four grounds of appeal were as follows (see Sales LJs judgment at para 41): applying Lawrence v Fen Tigers Ltd [2014] UKSC 13; [2014] AC 822 by analogy (ground one); at the jurisdictional stage, ignoring Millgates cynical breach while regarding as highly relevant the fact that, by the time of the application, 13 housing units had been built (ground two); ignoring (including in the exercise of the Upper Tribunals discretion) Millgates ability to satisfy its planning obligation by making alternative provision of equivalent affordable housing elsewhere (ground three); failing properly to take account of Millgates cynical breach in the exercise of the Upper Tribunals discretion (ground four). The first two grounds of appeal and part of the third ground went to the jurisdiction of the Upper Tribunal (under the contrary to public interest jurisdictional ground), whereas part of the third ground of appeal and the whole of the fourth ground went to the discretion of the Upper Tribunal. The Court of Appeal overturned the decision of the Upper Tribunal on all four grounds of appeal and re made the decision by refusing the application. I shall explain in due course the Court of Appeals reasoning in doing so. In the appeal by Housing Solutions to this court, counsel for Housing Solutions, Martin Hutchings QC, submits that the Court of Appeal was wrong as a matter of law on all those four grounds of appeal and that the Upper Tribunals decision should be restored. In contrast, Stephen Jourdan QC for the Trust, the respondent, submits that the Court of Appeal was correct, for the reasons it gave, to have overturned the decision of the Upper Tribunal and to have re made the decision by refusing the application. It follows that, on this appeal, it is convenient to continue to refer to the four grounds of appeal with the questions being whether the Court of Appeal was correct in holding that the Upper Tribunal had erred in law on each of those four grounds. The focus of most of the submissions of counsel reflecting this as being the central issue in the case was on the relevance of Millgates cynical breach (using that shorthand description of Millgates conduct as explained in para 36 above). In other words, I am primarily concerned with grounds two and four of the grounds of appeal. I shall therefore deal with that central issue first before going on to look more briefly at grounds one and three of the grounds of appeal. 5. The central issue: the relevance of Millgates cynical breach (1) Did the Upper Tribunal, at the jurisdictional stage, make an error of law by ignoring Millgates cynical breach while regarding as highly relevant the fact that, by the time of the application, 13 housing units had been built? The essential elements of section 84 in relation to the contrary to public interest jurisdictional ground are sections 84(1)(aa) and (1A)(b). These have been set out in para 31 above. Reduced to their core, they read as follows: (1) [The Upper Tribunal shall have the power to discharge or modify a restrictive covenant on being satisfied] (aa) that in a case falling within subsection (1A) below the continued existence [of the restriction under the covenant] would impede some reasonable user of the land ; (1A) Subsection (1)(aa) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of land in any case in which the Upper Tribunal is satisfied that the restriction, in impeding that user (b) is contrary to the public interest; and that money will be an adequate compensation for the loss or disadvantage (if any) which any person will suffer from the discharge or modification. Mr Hutchings submitted that the statute requires a narrow interpretation of what is meant by contrary to the public interest. I agree. It is clear from the statutory words that one must ask whether the impeding of the reasonable user of the land by the continuation of the restrictive covenant is contrary to the public interest. If one is satisfied that the proposed use of the land is reasonable (and it was common ground that that was satisfied in this case) one must ask whether the impediment of that use by the continuation of the restrictive covenant is contrary to the public interest. It is of central importance that the question that has to be asked is not the wider one of whether in all the circumstances of the case it would be contrary to the public interest to maintain the restrictive covenant. Rather the wording requires one to focus more narrowly on the impeding of the reasonable user of the land and to ask whether that impediment, by continuation of the restrictive covenant, is contrary to the public interest. On the facts of this case, therefore, that narrow wording required the Upper Tribunal to determine whether it was contrary to the public interest for the 13 housing units not to be able to be used. The waste involved would be a very strong factor indicating that that would indeed be contrary to the public interest. To be weighed against that would be the public interest in the hospice providing a sanctuary for children dying of cancer which would be protected by the continuation of the restrictive covenant. Two competing uses of the land are therefore pitted against each other. It is the resolution of a land use conflict that we are here dealing with. That was the approach taken by the Upper Tribunal and there was no error of law in its deciding that the contrary to public interest jurisdictional ground was made out on these facts. Once one appreciates that the relevant wording requires a narrow enquiry and does not involve asking the wide question of whether in all the circumstances it is contrary to the public interest to maintain the restrictive covenant, it is clear that the good or bad conduct of the applicant is irrelevant at this jurisdictional stage. The manner of the breach of the restrictive covenant (ie whether the breach was cynical or not) is irrelevant because that tells us nothing about the merits of what the burdened land is being used for or will be used for. This, of course, is not to deny that the manner of breach the cynical breach by the applicant is a highly relevant consideration when it comes to the discretionary stage of the decision. But it is irrelevant at the jurisdictional stage. There are three further points supporting that interpretation of the contrary to the public interest jurisdictional ground: (i) There is plainly no room for a consideration of the manner of breach the applicants cynical breach under any of the other four jurisdictional grounds. Yet at least in relation to the first limb of section 84(1)(aa) the jurisdictional ground concerned with where the restriction was impeding the reasonable user of the land without securing substantial practical benefits it must be relevant to the ultimate decision to take into account at the discretionary stage the applicants cynical breach. There is no other stage at which to consider it. And that is borne out by, for example, In re Trustees of the Green Masjid and Madrasahs Application where the applicants conduct was considered at the discretionary stage in a case in which jurisdiction arose under the first limb of section 84(1)(aa). It undermines the coherence of section 84 if the same conduct is taken into account at the jurisdictional stage in relation to one jurisdictional ground and at the discretionary stage in relation to other jurisdictional grounds. (ii) Linked to that first point is that the purpose of section 84, reflected in its structure, is that the five jurisdictional grounds (with the possible exception of the consent jurisdictional ground in section 84(1)(b)) are concerned to identify restrictive covenants that unreasonably fetter a preferable use of the land. The manner of the defendants breach is irrelevant to that. As the Law Commission in its Report on Transfer of Land: Restrictive Covenants (1967) (Law Com No 11) at p 23 said of its proposal to introduce the contrary to public interest ground: This [proposal] is designed to contain a restatement of the powers of the Lands Tribunal [the predecessor of the Upper Tribunal] in such terms as to enable it to take a broader view of whether the use of land is being unreasonably impeded Kevin Gray and Susan Gray, Elements of Land Law, 5th ed (2009), helpfully set out, at p 292, at the start of their examination of section 84, what may be regarded as the high level aim of the section: Like all property in land, the benefit of a restrictive covenant cannot be regarded as absolute and inviolable for all time [citing Sir Thomas Bingham MR in Jaggard v Sawyer [1995] 1 WLR 269, 283]. Restrictive covenants place a long term fetter upon the affected land, but in some cases it is clearly undesirable that the inhibition upon land use should continue indefinitely. There may arise changes of circumstance where it becomes preferable, in the interests of general social utility, that the constraints imposed by a particular covenant should be abrogated or modified. Narrowly conceived private interests cannot be allowed to frustrate proposed developments which promise a distinct benefit to the entire community or to some significant section of it. (footnotes omitted) See also Law Commission Report on Making Land Work: Easements, Covenants and Profits Prendre (2011) (Law Com No 327), paras 7.3 7.4. (iii) As the conduct of an applicant can embrace a wide spectrum of blameworthy behaviour (from negligence through to outrageous dishonesty), it is ideally suited to being considered at the discretionary rather than the jurisdictional stage. It should also be noted that section 84(1B) is consistent with the interpretation advocated by Mr Hutchings and with which I agree. That subsection reads as follows: (1B) In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Upper Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances. The main body of this emphasises, as one would expect for the resolution of a land use conflict, that the development plan and patterns of planning permission in the area are relevant considerations. The last phrase any other material circumstances means that the circumstance must be material to the question one is asking; and I have clarified in para 42 above that the question one should be asking in relation to the contrary to public interest jurisdictional ground is whether the impeding of the reasonable user of the land by the continuation of the restrictive covenant is contrary to the public interest. What the phrase does not mean is that one should be taking into account all circumstances that may be said to be relevant to deciding the incorrect and wider question of whether it would be contrary to the public interest to maintain the restrictive covenant. It follows that, with great respect, I cannot agree with the approach taken by the Court of Appeal which regarded the manner of breach/cynical breach as being of importance at the jurisdictional stage under the contrary to the public interest ground. Of course, the Court of Appeal was correct that these considerations are important to the overall decision and must be taken into account at the discretionary stage. But, on the correct interpretation of the Act, they are relevant at the discretionary stage only and not at the jurisdictional stage. As I am respectfully disagreeing with his reasoning (and with Mr Jourdans submissions on this point), it is appropriate to set out Sales LJs full discussion of this matter which extended over several paragraphs: 56. There is a public interest in having private contractual and property rights respected in dealings between private persons. Further, if private contractual/property rights under a restrictive covenant are to be overridden in the public interest, the Upper Tribunal should be astute to see that the public interest reasons for discharge or modification of the covenant are clearly made out. 57. In my judgment, this means that at the stage of application of the contrary to the public interest test in section 84(1A)(b) the Upper Tribunal should have regard to whether the applicant has made fair use of opportunities available to it to try to negotiate a waiver of a restrictive covenant or, if necessary, to test the public interest arguments in an application made under section 84 in advance of acting in breach of that covenant. In general, if the applicant has not made fair use of opportunities available to it to test the position in a way which affords proper recognition to the contractual/property rights of the beneficiary of the restrictive covenant, it will not be contrary to the public interest for the restriction (ie the restrictive covenant) to be allowed to continue to impede the applicants proposed user of the restricted land. The contrary to the public interest test has an important dimension which is concerned with such procedural matters and the process followed by the applicant before making its application under section 84. 58. I note in that regard that the then President of the Lands Tribunal, Douglas Frank QC, also took the view (rightly, in my opinion) that the way in which the applicant had behaved in bringing about a state of affairs in which building had taken place on the restricted land was relevant to the question whether the test in section 84(1A)(b) was satisfied, in In re SJC Construction Co Ltds Application (1974) 28 P & CR 200, 205. The case went on appeal on a different point: SJC Construction Co Ltd v Sutton London Borough Council (1975) 29 P & CR 322. On the appeal, the Lands Tribunal judgment on the other aspects of section 84, including section 84(1)(b), was noted by Lord Denning MR at pp 324 325 without him suggesting any doubt about the tribunals reasoning in respect of them. 59. As I have said, enforcement of contractual and property rights is generally in the public interest, so it is relevant when assessing under section 84(1A)(b) whether the restriction, in impeding [some reasonable user of land], is contrary to the public interest to see whether an applicant has behaved appropriately in seeking to respect and give due weight to such rights in the course of its dealings with the holder of such rights, so that the question of the public interest has been tested in an appropriate way. If the property developer has bargained for a waiver of the restrictive covenant and it is found that there is a price acceptable to both parties, it could not be said (at any rate, in ordinary circumstances) to be contrary to the public interest that the covenant should be maintained in place unless and until that price is paid. Similarly, if an application under section 84 is made in advance of any conduct by the developer in breach of the covenant, that will allow the public interest to be tested in the context of due weight being given to upholding the public interest as regards respect for property and contract rights, rather than in a context where the developer has unilaterally and unlawfully violated those rights. 61. In my view, in the circumstances of this case, in which Millgate had deliberately circumvented the proper procedures for testing and respecting the Trusts rights under the restrictive covenants, the Upper Tribunal could not properly be satisfied that it was contrary to the public interest for the restrictive covenants to be maintained in place. Millgate has acted in an unlawful and precipitate manner by building in breach of the restrictive covenants. It has acted with its eyes open and completely at its own risk. As a result it is appropriate and in conformity with the public interest that it should bear the risk that it may have wasted its own resources in building the 13 housing units on the application land. 64. in general terms it is in the public interest that contracts should be honoured and not breached and that property rights should be upheld and protected. A property developer which knows of a restrictive covenant which impedes its development of land has a fair opportunity before building either to negotiate a release of the covenant or to make an application under section 84 to see if it can be modified or discharged. That is how the developer ought to proceed. It is contrary to the public interest in ensuring that proper respect is given to contractual or property rights for a property developer to proceed without any good excuse to build in violation of such rights, as contained in an enforceable restrictive covenant, in an attempt to improve its position on a subsequent application under section 84. Put another way, it is contrary to the public interest for the usual protections for a person with the benefit of a restrictive covenant to be circumvented by a developer seeking to obtain an advantage for itself by presenting the tribunal with a fait accompli in terms of having constructed buildings on the affected land without following the proper procedure, and then in effect daring the tribunal to make a ruling which might have the result that those buildings have to be taken down. If the presence on the affected land of a building constructed in breach of the relevant covenant is to be regarded as capable of being relevant to the public interest question under subsection (1A)(b) as in principle it is I consider that the issue of how that situation arose is also highly relevant to that question. 65. It should be noted that the discussion in relation to these grounds is directed to the issue whether the condition in section 84(1A)(b) has been satisfied, which is a precondition for the Upper Tribunal to have any discretionary power under section 84(1) to discharge or modify a restrictive covenant. That is different in important respects from the distinct issue of how such a discretionary power should be exercised, once it is found to have arisen. In this case, the Upper Tribunal wrongly postponed consideration of the conduct of Millgate to the discretionary stage (paras 113 121), and at para 117 treated the decision of the Lands Tribunal (Douglas Frank QC, President) in In re SJC Construction Co Ltds Application (1974) 28 P & CR 200 as relevant to that stage, even though in the relevant passage (at p 205) referred to by the Upper Tribunal the President in fact referred to the conduct of the applicant in the context of addressing the question whether the precondition in section 84(1A)(b) had been satisfied. 66. In my view, it is appropriate to bring into account the rights based and procedural dimension of the public interest in the interpretation of section 84(1A)(b), as in the SJC Construction Co case, in order to secure fuller protection and due respect for the contractual rights with property characteristics which are sought to be overridden on an application under section 84. I do not consider that Parliament intended that section 84 should operate so as to allow those rights to be deliberately ignored by an applicant, with it then being left as a purely discretionary matter for the Upper Tribunal to decide whether to override them. I shall not repeat the reasons set out above why I regard that approach as incorrect. But I would like to make two final points on this issue triggered by Sales LJs discussion. The first is that, as Mr Hutchings submitted, one can detect in various passages in Sales LJs judgment (for example, in paras 59 and 61) a diversion into the wider and incorrect question of whether maintaining the restrictive covenant is contrary to the public interest. Secondly, I do not regard it as entirely clear that Douglas Frank QC in In re SJC Construction Co Ltds Application took the applicants conduct into account at the jurisdictional stage. The difficulty is that that decision made no reference to the two distinct stages of jurisdiction and discretion and, as Mr Hutchings submitted, one can read the relevant passage about the applicants behaviour as in effect a point in parenthesis that cuts across the five matters that Douglas Frank QC said he was taking into account. In any event, the applicants conduct in question in that case was acting in good faith in the sense that they did not intend to force the Councils hand (at p 205) whereas, as we have seen at para 35 above, in the instant case, the Upper Tribunal was not prepared to accept that Millgate had acted in good faith and without any intention to force the hand of the beneficiary of the covenant (para 117). It follows from my reasoning above that, contrary to the decision of the Court of Appeal on the second ground of appeal, the Upper Tribunal did not make an error of law at the jurisdictional stage by ignoring Millgates cynical breach while regarding as highly relevant the fact that, by the time of the application, 13 housing units had been built. (2) Did the Upper Tribunal make an error of law by failing properly to take account of Millgates cynical conduct in the exercise of its discretion? It should be stressed at the outset that the issue here is whether the Upper Tribunal made an error of law in the exercise of its discretion. In this case, it would only be appropriate for an appellate court (including this court) to interfere, at the discretionary stage, with the decision of the specialist tribunal charged by Parliament with exercising the discretionary power to decide matters under section 84, if that tribunal has made an error of law. While I may not have reached the same decision when balancing the considerations taken into account by the Upper Tribunal, it is clear that that is not a sufficient reason for this court to intervene with the discretionary decision of the Upper Tribunal. I am acutely conscious of the need to tread very carefully so as to avoid simply substituting my view of how the considerations should be weighed for that of the specialist tribunal. I also accept that the Upper Tribunal in the Trustees of the Green Masjid case was correct to say, at para 129, that once a jurisdictional ground has been established, the discretion to refuse the application should be cautiously exercised. Nevertheless, I agree with the decision of the Court of Appeal that, in relation to the cynical conduct of Millgate, there was indeed an error of law made by the Upper Tribunal in the exercise of its discretion. However, I have some reservations about how the Court of Appeal chose to explain that error of law. Sales LJ said the following: 77. On the assumption that the relevant discretion under section 84(1) had arisen, I consider that the Upper Tribunal fell into error I reach the view I have notwithstanding the discretionary nature of the exercise which the Upper Tribunal had to conduct at this stage in the analysis and even though the Upper Tribunal correctly referred in this part of its decision to relevant authority and reminded itself at paras 114 115 of factors which pointed against the exercise of discretion in favour of Millgate. In my view, the Upper Tribunal still arrived at a conclusion which was wrong within the meaning of CPR rule 52.21(3)(a) (ex rule 52.11(3)(a)), in that it failed to attach sufficient weight to the deliberately unlawful and opportunistic conduct of Millgate in the circumstances of this case, which was directed to subverting the proper application of section 84 without good reason. 82. Millgate acted in a high handed manner by proceeding to breach the restrictive covenants without any justification or excuse. Millgate had attempted to steal a march on the Trust and had sought to evade the jurisdiction of the Upper Tribunal at the appropriate stage, by failing to make its section 84 application before building. In my judgment, the appropriate course for the Upper Tribunal in the present case, having regard to the need for due protection of the Trusts rights and to the general public interest in having the section 84 procedure invoked at the proper time and in the proper manner, was to exercise its discretion to refuse Millgates application. It is highly desirable that there should be consistency and predictability as regards the exercise of discretion under section 84(1), and I consider that those values are best promoted by the exercise of discretion against acceding to Millgates application in the present case. 84. the application should have been refused in the exercise of discretion by the Upper Tribunal because Millgate had acted without proper regard to the rights of the Trust and with a view to circumventing the proper consideration of the public interest under section 84. Clearly, such an exercise of discretion is called for in part to deter others; and from a certain perspective it might be thought to have a punitive character; but the true reason for the exercise of discretion in this way in the present case is wider than that. It would be inappropriate for an appellate court to interfere with a discretionary decision of a specialist tribunal just because it considers that the tribunal failed to attach sufficient weight (see Sales LJ at para 77) to a particular factor. Sales LJ would, of course, be well aware of that. My interpretation of what he was saying, therefore, was that the Upper Tribunals approach was contrary to principle. And the relevant principle in play here was, as I understand it, that an applicant who has committed a cynical breach of the type committed on these facts should have its application refused. In other words, as a matter of principle, a cynical breach such as that committed in this case outweighs what would otherwise be the public interest in discharging or modifying the restrictive covenant. I am sorely tempted to agree that there is such a principle. However, I have major concerns as to whether, without discretionary qualifications to cater for exceptions, such a principle would be too rigid and would inappropriately fetter the Upper Tribunals discretion. And once one lets in discretionary qualifications to temper such a principle, it is hard to see how the Upper Tribunal in this case could be said to have made an error of law. In deciding that the public interest in allowing the houses to be used outweighed all other considerations, including Millgates cynical conduct, the Upper Tribunal can be said to have been applying such qualifications to any such principle within the legitimate exercise of its discretion. Certainly it is plain that the Upper Tribunal took into account the cynical nature of the breach by Millgate. This is made clear at paras 116 118 of the judgment which included a careful consideration of whether, for example, the egregious nature of the breach of covenant should lead to a denial of the application so as to punish the wrongdoer. The cynical conduct in this case was compared and contrasted with other cases where, for example, the applicant had acted in good faith without knowledge of the covenant or had already partly completed the buildings before objections were raised. What the Upper Tribunal said at para 118 is particularly important in this context: Ms Windsor emphasised that, unlike the applicants in Green Masjid, Millgate had acted with professional advice and suggested that its behaviour was so egregious and unconscionable that relief should be refused. We have taken into account all of the matters of conduct which she relied on in reaching our conclusion. We were supplied with Ms Windsors expanded closing submissions (for the objectors) at the Upper Tribunal hearing. Those submissions replaced previous skeleton arguments. Under the heading of Conduct, they set out over ten paragraphs (paras 41 50) Ms Windsors submissions regarding Millgates conduct. The details of the alleged egregious and unconscionable conduct are particularised at paragraph 46(a) (k). Nevertheless, like the Court of Appeal, I am satisfied that, even though it took into account Millgates cynical conduct, something has gone fundamentally wrong with the Upper Tribunals exercise of discretion on the particular facts of this case such that one can say that there has been an error of law. In my view, the correct way of pinpointing this is to recognise that the Upper Tribunal failed to take into account in the exercise of its discretion two particular factors, concerned with the effect of Millgates conduct, that should have been taken into account. I shall refer to these factors as the two omitted factors. Taken separately, and certainly taken together, they make the facts of this case exceptional. Neither was referred to by Ms Windsor in her closing submissions and neither was mentioned in the judgment of the Upper Tribunal. Both relate to the important recognition by the Upper Tribunal (see para 14 above) that, had Millgate initially applied for planning permission to build all the required affordable housing on the unencumbered land, the local planning authority indicated that permission would have been granted. The first omitted factor is that, had the developer respected the rights of the Trust by applying for planning permission on the unencumbered land, there would then have been no need to apply to discharge the covenant under section 84 and the hospice would have been left unaffected. Millgate was not just a cynical wrongdoer which had gone ahead with the development in deliberate breach of the covenants and in the face of objections raised. Rather, in addition, and crucially, Millgate, by its cynical breach, put paid to what, on the face of it, would have been a satisfactory outcome for Millgate and, at the same time, would have respected the rights of the Trust (because building on the unencumbered land would not have involved any breach of the restrictive covenant). It is important to deter a cynical breach under section 84 but it is especially important to do so where that cynical conduct has produced a land use conflict that would reasonably have been avoided altogether by submitting an alternative plan. The second omitted factor is that, had Millgate respected the rights of the Trust by applying under section 84 before starting to build on the application site, it is likely that the developer would not have been able to satisfy the contrary to public interest jurisdictional ground under section 84. This is because Millgate would have been met with the objection that planning permission would be granted for affordable housing on the unencumbered land so that the upholding of the restriction would not be contrary to the public interest. It follows that the effect of Millgates cynical breach of covenant was to alter fundamentally the position in relation to the public interest. As Mr Jourdan expressed it, in a submission with which I agree, It is not in the public interest that a person who deliberately breaches a restrictive covenant should be able to secure the modification of the covenant in reliance on the state of affairs created by their own deliberate breach. By going ahead without first applying under section 84, Millgate put itself in the position of being able to present to the Upper Tribunal a fait accompli where the provision of affordable housing meant that it could (and did) satisfy the contrary to public interest jurisdictional ground. It is important to deter a cynical breach under section 84 but it is especially important to do so where, because the Upper Tribunal will look at the public interest position as at the date of the hearing, that cynical conduct will directly reward the wrongdoer by transforming its prospects of success under the contrary to public interest jurisdictional ground. The Upper Tribunal touched on the second of these factors in discussing the contrary to public interest jurisdictional ground: 106. It is no answer to the current wasteful state of affairs to say, as Ms Windsor did, that Millgate could have built their allocation of affordable housing on other land, or that it could now buy its way out of the problem by making a payment towards the provision of social housing elsewhere. Whether those would have been sufficient answers to Millgates case on public interest if we had been dealing with an application before any housing had been built on the site is not a question which arises. The question for the Tribunal is whether in impeding the occupation of the houses which now stand on the application land, and which are otherwise immediately available to meet a pressing social need, the covenants operate in a way which is contrary to the public interest. We are satisfied that they clearly do because it is not in the public interest for these houses to remain empty and the covenants are the only obstacle to them being used. This makes clear that at the jurisdictional stage the UT was, correctly, looking at matters as they then stood at the date of the hearing and not as they stood prior to the breach of covenant. But at the discretionary stage the importance of that change having been brought about by the developers cynical breach should have come back into the reasoning and should have been highly relevant. But that step in the reasoning taking into account, in the exercise of its discretion, the second of the two omitted factors was simply never taken by the Upper Tribunal. It might perhaps be counter argued that the second of those two omitted factors was obliquely referred to by the Upper Tribunal at the discretionary stage at para 115: If it was thought to be easier to secure a modification in favour of a completed development than for one which had not yet commenced the contract breaker would have a real incentive to press on even in face of strong objections by the beneficiaries of a covenant. Any developer who thinks in that way should think again or risk [a] rude awakening However, even if the second factor was here being referred to, it clearly cannot have been taken into account in reaching the decision because the decision directly contradicted the reasoning in that paragraph. The decision of the Upper Tribunal precisely would encourage developers to ignore covenants and to press on with a development even in the face of strong objections. If the Upper Tribunal had been taking that factor into account, an explanation for that contradiction would have been required. Mr Jourdan submitted that the Upper Tribunal was paying lip service to the warning it was giving in para 115. I agree. In truth, the Upper Tribunal ignored that factor in reaching its decision. As I have stressed in para 57, what makes this an exceptional case on the facts is the presence of the two omitted factors. The Upper Tribunals failure to take either into account in the exercise of its discretion constituted an error of law. Although my precise reasoning is different, I therefore agree with the Court of Appeal that (in relation to the fourth ground of appeal) the Upper Tribunal made an error of law by failing properly to take account of Millgates cynical conduct in the exercise of its discretion. My decision on that fourth ground of appeal is sufficient for the dismissal of this appeal. But in the light of the full submissions of Mr Hutchings and Mr Jourdan, I shall explain briefly in the next section why I respectfully disagree with the Court of Appeal that the Upper Tribunal made errors of law on the other two issues, which were the first and third grounds of appeal. 6. The other two issues (1) Applying Lawrence v Fen Tigers Ltd by analogy The first and successful ground of appeal to the Court of Appeal was that the Upper Tribunal had made an error of law by applying by analogy, in relation to the contrary to public interest jurisdictional ground in section 84(1)(aa), what Lord Sumption had said in Lawrence v Fen Tigers Ltd [2014] UKSC 13; [2014] AC 822, paras 155 to 161. That was a case concerned with the tort of private nuisance. The Supreme Court (with the leading judgment being given by Lord Neuberger) held that the defendants were committing a private nuisance by noise against the claimants who lived in a bungalow 850 yards away from the defendants speedway racing stadium. There was no appeal against the grant of a (prohibitory) injunction, should the continuing tort be established. However, the Supreme Court took the opportunity to lay down that, while an injunction should prima facie be ordered where a tort of nuisance is continuing, the strong primacy traditionally afforded to the injunction as a remedy for the tort of nuisance should be modified so that the public interest should always be a relevant consideration in deciding whether to grant an injunction for such a tort. In other words, the courts should be more willing than has traditionally been the case to award damages in lieu of an injunction in this context. Lord Sumption indicated that an even more radical rethink of the relationship between an injunction and damages in relation to the tort of nuisance might in due course be needed. Having earlier said, at para 160, that the traditional primacy afforded to an injunction was based mainly on the courts objection to sanctioning a wrong by allowing the defendant to pay for the right to go on doing it and that that seemed an unduly moralistic approach to disputes, he went on to say the following at para 161: The whole jurisprudence in this area will need one day to be reviewed in this court. There is much to be said for the view that damages are ordinarily an adequate remedy for nuisance and that an injunction should not usually be granted in a case where it is likely that conflicting interests are engaged other than the parties interests. In particular, it may well be that an injunction should as a matter of principle not be granted in a case where a use of land to which objection is taken requires and has received planning permission. However, at this stage, in the absence of argument on these points, I can do no more than identify them as calling for consideration in a case in which they arise. As regards Lord Sumptions emphasis on planning permission, the Upper Tribunal made clear that the existence of planning permission for the use of the application land for housing was a material consideration under the contrary to public interest jurisdictional ground in section 84(1)(aa). It also said this, at para 102: The fact that planning permission has been granted does not mean that private rights can necessarily be overridden, but it does reflect an objective assessment of appropriate land use which fully takes into account the public interest. Sales LJ, in the Court of Appeal, thought that that was an incorrect statement because one also needed to take into account the cynical conduct of the defendant in assessing the public interest at the jurisdictional stage. I have made clear earlier that I do not agree with Sales LJs wide interpretation of the contrary to public interest jurisdictional ground and I need say no more about that here. But as regards Lord Sumptions wider comments on the relationship between an injunction and damages, with respect I cannot agree with the Court of Appeal that the Upper Tribunal made an error of law by applying that approach by analogy. This is not because I disagree with what Sales LJ said, in characteristically powerfully reasoned paragraphs (paras 51 54), about Lord Sumptions wider views not being endorsed by the other Supreme Court justices and the important difference in context between remedies for the tort of private nuisance and an application under section 84 (although I would be inclined to accept that, at a high level of generality, useful parallels can be drawn). Rather the important point, as submitted by Mr Hutchings, is that the Upper Tribunal clearly did not take into account the wider comments of Lord Sumption. At para 107, the Upper Tribunal said that it was mindful of the traditional approach, and in particular the dictum of Douglas Frank QC in In re Collins Application (1975) 30 P & CR 527, 531, that for an application to succeed under the contrary to public interest jurisdictional ground it had to be shown that that interest is so important and immediate as to justify the serious interference with private rights and the sanctity of contract. It then said this: Whether that restrictive gloss remains the correct approach may require reconsideration in light of Carnwath LJs explanation of the policy underlying ground (aa) in Shephard v Turner and Lord Sumptions observations on the reconciliation of public and private rights in Lawrence v Fen Tigers Ltd, but it is not necessary to pursue that thought further at this time. We are satisfied that the public interest in play in this case is sufficiently important and immediate to justify the exercise of the Tribunals power under section 84(aa) to override the objectors private rights. (Emphasis added) The emphasised words make clear that the Upper Tribunal was not here applying Lord Sumptions wider comments. There is a subsidiary issue that it is convenient to deal with at this stage. The Court of Appeal thought that the Upper Tribunal had failed to apply section 84(1B) correctly because the planning permission granted did not support the Upper Tribunals view of the public interest. Section 84(1B) has been set out at paras 31 and 46 above. Putting to one side the Court of Appeals view on the relevance of Millgates conduct, which I have already dealt with, the point made by the Court of Appeal was this (at para 68): The development plan placed the application land in the Green Belt, thereby indicating that there was the usual strong presumption against its residential development as proposed by Millgate. The Upper Tribunal did not identify any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant area, let alone one which supported Millgates arguments regarding the public interest. While the Court of Appeal was correct that the Upper Tribunal did not appear to take into account, as subsection (1B) required it to do, any pattern of planning permissions, the Upper Tribunal did expressly refer to the words in subsection (1B); and, in its description of the facts, it made clear that the planning permission had here been granted, despite the application land being contrary to the development plan and in the Green Belt, because the local authority had decided that there were special circumstances which justified the grant of permission. Moreover, the Upper Tribunal set out (at para 25 of its description of the facts) what those circumstances were said to be (see para 16 above). In my view, while the Upper Tribunal should have taken into account any pattern of planning permissions, that was not a serious error of law given the planning permission that had actually been granted in this case; and it was certainly not a sufficient error to justify overturning the decision of the Upper Tribunal. (2) Ignoring (including in the exercise of the Upper Tribunals discretion) Millgates ability to satisfy its planning obligation by making alternative provision of equivalent affordable housing elsewhere This was the third and successful ground of appeal to the Court of Appeal. The Upper Tribunal had observed, at para 53, that the effect of the variation of Millgates section 106 planning obligation by the agreement of 9 February 2016 was that Millgate could secure release from its obligation to the Council to provide the outstanding 13 units of affordable housing on the application land by payment of 1,639,904, thus allowing [the Council] to provide equivalent affordable housing elsewhere. But although the Upper Tribunal considered the provision of affordable housing as important in deciding on the public interest, at both the jurisdictional and discretionary stages, the Court of Appeal took the view that this precise point was left out of account at both stages and that that constituted an error of law at both stages. I agree with the submission of Mr Hutchings that the Upper Tribunal at para 106 expressly did take account of this precise alternative but regarded it as outweighed by the waste of not using the affordable housing already built, and immediately available, on the application land. 106. It is no answer to the current wasteful state of affairs to say, as Ms Windsor did, that Millgate could now buy its way out of the problem by making a payment towards the provision of social housing elsewhere. Whether those would have been sufficient answers to Millgates case on public interest if we had been dealing with an application before any housing had been built on the site is not a question which arises. The question for the Tribunal is whether in impeding the occupation of the houses which now stand on the application land, and which are otherwise immediately available to meet a pressing social need, the covenants operate in a way which is contrary to the public interest. We are satisfied that they clearly do because it is not in the public interest for these houses to remain empty and the covenants are the only obstacle to them being used. (Emphasis added) This was an analysis at the jurisdictional stage but there is no reason to think that this point was then left out of account at the discretionary stage where the Upper Tribunal, at para 120, referred back to it being in the public interest not to waste resources by these houses remaining empty. Upper Tribunal as having made an error of law on this point. 7. Conclusions and re making the decision For the reasons I have given: In my view, therefore, the Court of Appeal was wrong to have regarded the (i) The Court of Appeal was correct to overturn the decision of the Upper Tribunal for its failure properly to take account of Millgates cynical breach in the exercise of its discretion (ground four of the grounds of appeal). But my reasoning in relation to that ground differs from the reasoning of the Court of Appeal: I have held that the Upper Tribunal erred in law by failing to take into account, as it should have done, the two relevant factors, concerned with the effect of Millgates cynical conduct, that I have termed the two omitted factors (see paras 58 59 above). (ii) The Court of Appeal was incorrect, as a matter of law, in overturning the Upper Tribunal on the other three grounds of appeal. That is, applying Lawrence v Fen Tigers Ltd by analogy (ground one); ignoring, at the jurisdictional stage, Millgates cynical breach while regarding as highly relevant the fact that, by the time of the application, 13 housing units had been built (ground two); and ignoring (including in the exercise of the Upper Tribunals discretion) Millgates ability to satisfy its planning obligation by making alternative provision of equivalent affordable housing elsewhere (ground three). (iii) Overall, because of my conclusion on (i), the appeal should be dismissed. Given the above conclusions, a further question arises. Should this matter be remitted back to the Upper Tribunal to exercise its discretion afresh in the light of this judgment or should this court exercise its power to re make the decision? The power to re make the decision is conferred by section 14(2)(b)(ii) and (4) of the Tribunals, Courts and Enforcement Act 2007. By this: (1) Subsection (2) applies if the relevant appellate court finds that the making of the decision concerned involved the making of an error on a point of law. (2) The relevant appellate court (a) may (but need not) set aside the decision of the Upper Tribunal, and (b) if it does, must either (i) (ii) remit the case to the Upper Tribunal , or re make the decision. In acting under subsection (2)(b)(ii), the relevant (4) appellate court (a) may make any decision which the Upper Tribunal could make if the Upper Tribunal were re making the decision and (b) may make such findings of fact as it considers appropriate. The Court of Appeal exercised its power to re make the decision by refusing the application. However, that was in the context of the Court of Appeal having decided that, on three separate grounds, the Upper Tribunal had not had jurisdiction to allow Millgates section 84 application. My reasoning has been that the Upper Tribunal has made no errors of law going to jurisdiction but did err in law by failing to take two relevant factors (the two omitted factors) into account in exercising its discretion. Nevertheless, I am satisfied that this Court should now re make the decision. I am especially influenced by the fact that the application under section 84 was issued by Millgate over five years ago (on 20 July 2015). Given the length of time that has elapsed and the corresponding uncertainty for the parties involved and for many others, including residents and potential residents of the 13 housing units and the patients and those working at the hospice I would regard it as a last resort to send the case back to the Upper Tribunal. Although I have in the forefront of my mind that this court is not a specialist tribunal, had the Upper Tribunal properly taken into account the two omitted factors in exercising its discretion, it would surely have concluded that the application to discharge or modify the restrictive covenants should be refused in this exceptional case. Moreover, that is the decision which, in my view, taking all relevant considerations into account and especially bearing in mind the cynical conduct of Millgate and the two omitted factors, is the correct decision. Therefore, exercising the discretion afresh, the decision of the Upper Tribunal is set aside and re made by refusing the application. I should add, finally, lest there be any confusion about this, that nothing that I have here said is determinative of how the courts will decide any claim by the Trust for a prohibitory injunction to enforce the restrictive covenant by stopping the 13 housing units being occupied or for a mandatory restorative injunction ordering the removal of the units in part or whole. Mr Jourdan pointed to the range of monetary remedies, going beyond conventional compensatory damages, that a refusal of the section 84 application would leave the Trust free to pursue. Not least given the cynical breach of the restrictive covenant and the difficulty of accurately assessing the Trusts loss, he suggested that these might include an account of profits (see Attorney General v Blake [2001] 1 AC 268) as well as negotiating damages (see Morris Garner v One Step (Support) Ltd [2018] UKSC 20; [2019] AC 649). I make no comment on that suggestion. But it is only realistic to recognise that the impact of this decision will plainly be to strengthen the Trusts hands in relation to any financial settlement of this dispute. |
Birmingham City Council (Birmingham) appeals against the order of the Court of Appeal (Mummery and Davis LJJ and Dame Janet Smith) dated 29 November 2011, whereby it dismissed Birminghams appeal against the order of Mr Colin Edelman QC, sitting as a deputy judge of the High Court, Queens Bench Division, dated 17 December 2010. The deputy judge had dismissed Birminghams application for a direction that the claims made against it by 174 claimants, joined as parties to the single action, should be struck out. The claimants allege that they are former employees of Birmingham. All except four of them are women. The claims, which were issued in the High Court on 30 July 2010, were founded on an alleged breach of the equality clause which, by section 1(1) of the Equal Pay Act 1970 (the Act), as substituted by section 8(1) of the Sex Discrimination Act 1975, was deemed to have been included in their contracts of employment. On 1 October 2010 the Act was repealed; and the provisions of it which this appeal requires the court to consider were replaced by provisions to similar effect in Chapter 3 of Part 5, and in particular in Chapter 4 of Part 9, of the Equality Act 2010. Under the Act an equality clause had effect in three different situations specified in section 1(2) at (a) to (c). The claimants allege that the second situation, specified at (b), applied to them, namely where the woman is employed on work rated as equivalent with that of a man in the same employment. Although section 1(1) and (2) identified the contracts of women as those in which an equality clause was to be included, the provisions applied equally to the contracts of men where the situation was converse: section 1(13). Hence the claims of the four men; but, in what follows, it will be convenient to refer only to the claims of the women. Section 1(2)(b), as substituted by section 8(1) of the 1975 Act, proceeded to provide that, where the second situation applied, the effect of the equality clause was that: (i) if (apart from the equality clause) any term of the womans contract determined by the rating of the work is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the womans contract shall be treated as so modified as not to be less favourable, and (ii) if (apart from the equality clause) at any time the term womans contract does not corresponding to a term benefiting that man included in the contract under which he is employed and determined by the rating of the work, the womans contract shall be treated as including such a term. include a The claimants allege that Birmingham employed them on work rated as equivalent with that of certain men in the same employment pursuant to the National Joint Council for Local Authorities Services (West Midlands Provincial Council) Manual Workers Handbook 1987, known as the Blue Book, and to a Job Evaluation Scheme referred to in it; but that their contracts did not provide for the payment of the substantial bonuses and other additional payments for which the contracts of the male comparators provided. They therefore claim sums equivalent to such payments pursuant to the terms of their contracts provided for by section 1(2)(b) (i) and (ii) of the Act. Birmingham has not yet filed a defence to the claims. It does not allege that the claimants are out of time in bringing such claims in the High Court: their claims are brought within six years of the date on which their alleged causes of action accrued and so fall within the time set by section 5 of the Limitation Act 1980. Whether Birmingham will seek to dispute that it employed the claimants or, if so, that their work was rated as equivalent with that of the male comparators and whether it will seek to prove pursuant to section 1(3) of the Act, as substituted by regulation 2(2) of the Equal Pay (Amendment) Regulations 1983 (SI 1983/1794), that any variation between the contracts was genuinely due to a material factor other than the difference of sex are all questions which remain to be seen. The claimants suggest that, were their claims to go forward, the real battle would lie in the quantification of their claims, which certainly appears complex, rather than in the establishment of Birminghams substantive liability to them. Were it not for one feature, the claims could have been presented by way of complaint to an employment tribunal: section 2(1) of the Act, as amended by paragraph 2 of Schedule 1 to the Sex Discrimination Act 1975 and section 1(2)(a) of the Employment Rights (Dispute Resolution) Act 1998. Such claims are usually brought in the tribunal, which offers to litigants many advantages not on offer in a court, including greater expertise in their determination (even, in a specified situation, provision to them free of charge of an expert report under section 2A(1)(b) of the Act, as inserted by regulation 3(1) of the 1983 Regulations), less cost and, in principle, faster resolution. Indeed, in the course of giving the only substantive judgment in the Court of Appeal, Mummery LJ, whose experience of this area of the law is unrivalled, observed that he had never previously encountered a claim under the Act which had been presented to a court rather than the tribunal. The feature which precludes the claimants from presenting their claims to the tribunal is that they would be out of time for doing so. They concede that Birmingham ceased to employ them on various dates between August 2004 and November 2008. Section 2(4)(a) of the Act provided that the tribunal could not determine a complaint in respect of the contravention of a term modified or included by virtue of an equality clause unless it was presented on or before the qualifying date; and section 2ZA(3) provided that in a standard case the qualifying date was the date falling six months after the last day on which the woman was employed in the employment. It is agreed that each of the present claims is a standard case, as defined in section 2ZA(2). The period of six months was extended to nine months in specified circumstances but, even had such existed, the extension would not have enabled these claims to be presented to the tribunal. Birminghams application to the court for a direction that the claims be struck out has been brought pursuant to section 2(3) of the Act. The subsection, as amended by section 1(2)(a) of the 1998 Act, provided as follows: Where it appears to the court in which any proceedings are pending that a claim or counterclaim in respect of the operation of an equality clause could more conveniently be disposed of separately by an employment tribunal, the court may direct that the claim or counterclaim shall be struck out; and (without prejudice to the foregoing) where in proceedings before any court a question arises as to the operation of an equality clause, the court may on the application of any party to the proceedings or otherwise refer that question, or direct it to be referred by a party to the proceedings, to an employment tribunal for determination by the tribunal, and may stay or sist the proceedings in the meantime. It will be convenient to describe the provision prior to the semi colon as the first part of the subsection and the provision following it as the second part. It was Birminghams case before the deputy judge that the claims should have been presented to the tribunal; that the reasons why each claimant had failed to present her claim in time to the tribunal were irrelevant; that the claims could more conveniently be disposed of by the tribunal notwithstanding that such disposal would be by way of immediate dismissal for want of presentation in time; and that in those circumstances the first part of section 2(3) conferred on him a discretion to strike out the claims which he should proceed to exercise. categorical terms, as follows: In dismissing the application the deputy judge expressed himself in On the true construction of section 2(3), it cannot be more convenient for a claim to be disposed of separately by an employment tribunal in circumstances where the. tribunal could not determine the claim on its merits but would be bound to refuse jurisdiction to deal with the claim because it was time barred. He added that, had his conclusion about the meaning of the word convenient been otherwise, he would have held that to strike out the claims in such circumstances would be to offend against the principle of equivalence under EU law, which I will address in para 32 below. Finally, said the deputy judge, he would have declined to exercise any discretion which might have arisen under the first part of the subsection. But in the Court of Appeal (as it does in this court) Birmingham put its case differently. By that stage it had conceded that the reasons why each claimant had failed to present her claim in time to the tribunal were relevant. It invited the court to rule that, except where a claimant could provide a reasonable explanation for her failure to do so, her claim should be struck out; and it sought an order that its application be remitted to the High Court for inquiry into the identity of such claimants (of whom it conceded that there would be some) as, by reference to such an exception, could successfully resist the striking out of their claims. In his judgment Mummery LJ held that the basic assumption behind the first part of section 2(3) was that both the court and the tribunal would have jurisdiction to decide the claim on its merits; that the purpose behind the provision was, in that context, to identify the forum more fitted for its resolution; that, in that Birmingham was not alleging that the claims represented an abuse of the process of the court, the reasons why the claims had not been made to the tribunal were irrelevant; and that the deputy judges decision had been correct. Nevertheless Mummery LJ expressed himself in terms more qualified than those used by the deputy judge: he said that, in the exercise of the discretion under the first part of the subsection, the fact that a complaint to the tribunal would be time barred would be no more than a circumstance of considerable weight in most cases. He added that it would be exceptional for the reasons for not presenting a complaint in time to the tribunal to be relevant to the exercise of the discretion but that, for example, they would be relevant where they were such as to render the claim made to the court an abuse of its process. As an aside, Mummery LJ addressed the word separately in the first part of the subsection, upon which nothing in the appeal turned; and he observed, helpfully, that Parliament may in particular have had in mind the presentation to the court of a mixed claim, of which one component was of breach of an equality clause and of which others were such as the tribunal had no jurisdiction to entertain. In the light of his conclusion Mummery LJ explained that he had no need to address the principle of equivalence. We may readily expostulate that it cannot be more convenient for a claim to be disposed of in a forum in which, at the outset, and without reference to its merits, it would be required to be dismissed. But the issue in this appeal is somewhat more complicated than that. What, asks Birmingham, was Parliaments purpose in providing a strict time limit for the presentation of claims to the tribunal if those who fail to comply with it can have their claims heard elsewhere? The suggested absence of any good answer to that question leads, says Birmingham, to a need for us to stifle our expostulation and, in a more measured way, to conclude that the immediate disposal in the tribunal of a time barred claim would be otherwise than more convenient only in the case of those claimants who were to provide a reasonable explanation for their failure to present their claims to it in time. Other than in nomenclature, the terms of section 2(3) of the Act did not change between enactment and repeal. It is necessary to look carefully at the original context of the subsection. The Act, although enacted on 29 May 1970, provided that in principle it should come into force on 29 December 1975; the purpose of the lengthy delay was to afford time to employers to adapt to its new requirements. Article 119 of the EEC Treaty, later renumbered article 141, was replaced by article 157 of the Treaty on the Functioning of the European Union, which now provides that: Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied. The scope of the earlier article was explained in article 1 of the Councils Equal Pay Directive No 75/117 adopted on 10 February 1975. Once the Act of 1970 was in force, the UK, which had become a member of the European Community on 1 January 1973, thereby discharged its obligations, at any rate in relation to Great Britain, under the article, as explained by the directive. But, as the date of its enactment shows, the Act was not originally a response to the need for the UK to discharge its Community obligations. It was the result of a long public campaign for equal pay for women on the part of feminists, trade unionists and fair minded citizens generally. Parliament resolved that the mechanism of the provision for equal pay for women should be by its very insinuation into their contracts of employment. Section 1(2) originally provided that It shall be a term of the contract under which a woman is employed. that she shall be given equal treatment with men. With effect from the date when the Act came into force, the section was radically recast by the Sex Discrimination Act 1975, which had been enacted in the interim. But the contractual mechanism was retained. The substituted section 1(1) thenceforward provided that: If the terms of a contract under which a woman is employed. do not include . an equality clause they shall be deemed to include one. In 1975 the employment tribunal, or industrial tribunal as it was called prior to August 1998, had no general jurisdiction to determine a claim that a contract of employment had been broken. Its general jurisdiction to do so was introduced only much later, in the wake of a suggestion made by Lord Browne Wilkinson in Delaney v Staples (trading as De Montfort Recruitment) [1992] 1 AC 687, 698B; it was achieved by the Industrial Tribunals Extension of Jurisdiction (England and Wales) Order 1994 (SI 1994/1623), and even then the jurisdiction was, as it remains, hedged about. Back in 1975 the jurisdiction of the tribunal, which had been established pursuant to the Industrial Training Act 1964, was limited to the determination of claims by employees of breach of specified statutory, non contractual, rights, for example to payment in the event of redundancy. In that Parliament intended that claims by women of breach of the equality clause in their contracts could be determined by the tribunal, it followed that jurisdiction to do so had specifically to be conferred on it by the Act. Such was achieved by section 2(1). Although another formulation of the subsection was substituted even before it came into force, the original formulation is worth noting. It provided that: . a claim for arrears of remuneration or damages in respect of a failure to comply with an equal pay clause may be referred to and determined by an industrial tribunal, and may be so referred either by the person making the claim or by the person against whom it is made. It is relevant to what follows at para 21 below to note the word referred: it may be seen that, pursuant to the Act as originally drawn, a woman referred, as opposed to presented, a claim to the tribunal. The unusual use of the verb appears to have been considered necessary in order also to encompass the employers right to seek from the tribunal a ruling in relation to a claim proposed to be made against it. Although it thus conferred on the tribunal jurisdiction to determine a claim of breach of contract in this regard, Parliament did not oust the jurisdiction of the court to determine such a claim. That there was concurrent jurisdiction in the tribunal and the court is plain from (among others) the subsection, namely section 2(3), which is central to this appeal; and, over the four subsequent decades, such has been frequently acknowledged and never doubted. Attention should now turn to the period of limitation provided by Parliament for the reference of a claim to the tribunal of breach of an equality clause. Its original provision was in section 2(4), as follows: No claim in respect of the operation of an equal pay clause relating to a womans employment shall be referred to an industrial tribunal otherwise than by virtue of subsection (3) above, if she has not been employed in the employment within the six months preceding the date of the reference. This provision remained in force until 19 July 2003, when, as supplemented by a new section 2ZA, as inserted by regulation 4 of the Equal Pay Act 1970 (Amendment) Regulations 2003 (SI 2003/1656), it was replaced by more sophisticated provisions which catered also for what were described as a concealment case, a disability case and a stable employment case. Fresh treatment of a stable employment case had been necessary in order to comply with the principle of effectiveness under EU law. Such is the principle which requires that the procedural rules for proceedings designed to ensure the protection of the rights which individuals acquire through the direct effect of Community law. are not framed in such a way as to render impossible in practice the exercise of rights conferred by Community law: Preston v Wolverhampton Healthcare NHS Trust, ECJ, (Case C78/98) [2001] 2 AC 415, para 31. One of the preliminary rulings of the ECJ in that case was that the application of section 2(4) to a stable employment case, as established for the purposes of domestic law, offended against the principle of effectiveness; the ruling was duly adopted by the House of Lords in Preston v Wolverhampton Healthcare NHS Trust (No 2) [2001] UKHL 5, [2001] 2 AC 455, paras 32 33 and the decision precipitated the reform. For a standard case the period of limitation remained as six months after the end of the employment. It is impossible to make a direct comparison between the period of limitation provided for the making of a claim (or, from 2003, a claim in a standard case) to the tribunal, namely six months from the end of the employment, and the period provided for the making of such a claim to the court, namely six years from the accrual of the cause of action. In that such claims can be made, and frequently are made, to the tribunal during the currency of the claimants employment, the period of limitation for making a claim to the tribunal is by no means as short as might at first appear. But there was another restriction, not strictly cast as a provision of limitation but having such effect, to which reference should be made. It does not aid comparison between the two periods because it applied equally to proceedings in the tribunal and to proceedings in court. It was section 2(5) and, as originally drawn, it provided as follows: A woman shall not be entitled, in proceedings brought in respect of a failure to comply with an equal pay clause (including proceedings before an industrial tribunal) to be awarded any payment by way of arrears of remuneration or damages in respect of a time earlier than two years before the date on which the proceedings were instituted. In Levez v TH Jennings (Harlow Pools) Ltd [2000] ICR 58 the employment appeal tribunal held, following a comparison with the ambit of the right of employees to make other contractual claims not reflective of Community law, that the period of only two years in section 2(5) offended against the principle of equivalence under EU law. In the Preston (No 2) case, cited at para 18 above, the House of Lords held, by way of adoption of another of the preliminary rulings of the ECJ in the same case, that, in relation at any rate to part time workers, mostly being women, who had been excluded from occupational pension schemes, the subsection also offended against the principle of effectiveness under EU law: see paras 10 to 12. The result was, in 2003, the replacement of the subsection, and its supplementation for England and Wales by section 2ZB, of which the effect was that, for the standard case (being, for this purpose, somewhat differently defined), a period of six years was substituted for that of two years. A striking feature of the limitation period of six months set by section 2(4) of the Act was that Parliament never made it extendable. For almost all of the many other claims which, by 2010, could be made to the tribunal, Parliament prescribed limitation periods which it permitted the tribunal to extend; in some cases to extend them insofar as it was just and equitable to do so and, in other cases in which it had not been reasonably practicable for the complaint to be presented in time, to extend them for such further period as the tribunal might consider reasonable: see Harvey on Industrial Relations and Employment Law, 2012 update, Division PI Practice and Procedure, para 84. It is strongly arguable that Parliament tolerated an unusually absolute time limit for the presentation to the tribunal of a claim under the Act only because it recognised that, were she to fall foul of that time limit, the claimant would nevertheless be likely to remain in time for making her claim in court. But I cannot resist one further piece of historical conjecture. It relates to the phrase otherwise than by virtue of subsection (3) above in the form in which section 2(4) remained in force until 2003 and which I have set out at para 18 above. Ones initial reaction such was certainly the reaction of highly experienced leading counsel at the hearing of this appeal is that the exclusion of the limitation period achieved by that phrase related to the second part of section 2(3), set out at para 8 above, namely to the ability of a court to refer to the tribunal a question as to the operation of an equality clause which arose in pending proceedings and to stay them in the meantime. It seems to me however that ones initial reaction might be wrong. In principle a reference by a court to a tribunal of a specific question raised in proceedings pending before it could not in any event fall foul of a period within which a claim had to be presented to the tribunal; so, on the initial analysis, the phrase would be redundant. Indeed, more specifically, the phrase was inserted into section 2(4) as an exception to the provision that [n]o claim shall be referred to [a] tribunal. (italics supplied). But the second part of section 2(3) did not provide for the reference of a claim; it provided for the reference of a question. It was, by contrast, the first part of the subsection which provided, albeit obliquely, for the reference of a claim, namely by the claimant to the tribunal as the intended sequel to the courts conclusion that her claim could more conveniently be disposed of there and to its consequent striking out. I recognise that judges can become dangerously enamoured of points introduced by themselves. So I venture only tentatively that, by the phrase introduced into section 2(4), Parliament intended to make entirely clear that there could never be circumstances in which a claimant could suffer the striking out of her claim in court on the basis that it could more conveniently be disposed of in the tribunal even though she would be time barred for presenting her claim there. The phrase, together therefore with this point, was swept away in 2003, when section 2(4) was replaced; but nothing suggests that, had such been Parliaments initial intention, it remained its intention no longer. In now contending that, except where they can provide a reasonable explanation for their failure to present their claims in time to the tribunal, the claims of the claimants should be struck out under section 2(3) of the Act, Birmingham relies heavily on observations made in the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 and on the decision of Slade J in Ashby v Birmingham City Council [2011] EWHC 424 (QB), [2012] ICR 1, in which she applied the observations to claims materially similar to the present. In the Spiliada case shipowners sued shippers for breach of contract in having loaded on to their ship a cargo of wet sulphur which had corroded it. The House of Lords held that the judge at first instance had rightly granted leave to serve the shippers out of the jurisdiction so that the action in England might proceed. The shippers had opposed leave on the basis that the shipowners should have sued them, if at all, in British Columbia, where any such action would by then have been time barred. Subject to three points of distinction which he identified at pp 480G 481E, Lord Goff, with whose speech the other members of the committee agreed, held that the principle which governs the grant of leave to serve out of the jurisdiction and the stay of the action on the ground of forum non conveniens was the same. It was, so he held at p 476C, whether, in the absence of special circumstances, the suggested alternative forum was appropriate for the trial of the action in the sense of being more suitable for all the parties and the ends of justice. But, at pp 476H 477A, he added a rider that, where the choice was between competing jurisdictions within a federal state, a strong preference should be given to the forum chosen by the claimant upon which, by its constitution, the state had conferred jurisdiction. which Birmingham relies. He observed, at pp 483E 484E: It is Lord Goffs treatment of a time bar in the alternative jurisdiction on Let me consider how the principle of forum non conveniens should be applied in a case in which the plaintiff has started proceedings in England where his claim was not time barred, but there is some other jurisdiction which, in the opinion of the court, is clearly more appropriate for the trial of the action, but where the plaintiff has not commenced proceedings and where his claim is now time barred. Now, to take some extreme examples, suppose that the plaintiff allowed the limitation period to elapse in the appropriate jurisdiction, and came here simply because he wanted to take advantage of a more generous time bar applicable in this country; or suppose that it was obvious that the plaintiff should have commenced proceedings in the appropriate jurisdiction, and yet he did not trouble to issue a protective writ there; in cases such as these, I cannot see that the court should hesitate to stay the proceedings in this country, even though the effect would be that the plaintiffs claim would inevitably be defeated by a plea of the time bar in the appropriate jurisdiction. Indeed a strong theoretical argument can be advanced for the proposition that, if there is another clearly more appropriate forum for the trial of the action, a stay should generally be granted even though the plaintiffs action would be time barred there. But, in my opinion, this is a case where practical justice should be done. And practical justice demands that, if the court considers that the plaintiff acted reasonably in commencing proceedings in this country, and that, although it appears that (putting on one side the time bar point) the appropriate forum for the trial of the action is elsewhere than England, the plaintiff did not act unreasonably in failing to commence proceedings (for example, by issuing a protective writ) in that jurisdiction within the limitation period applicable there, it would not, I think, be just to deprive the plaintiff of the benefit of having started proceedings within the limitation period applicable in this country. The appropriate order, where the application of the time bar in the foreign jurisdiction is dependent upon its invocation by the defendant, may well be to make it a condition of the grant of a stay, or the exercise of discretion against giving leave to serve out of the jurisdiction, that the defendant should waive the time bar in the foreign jurisdiction; this is apparently the practice in the United States of America. Lord Goff added, at pp 487H 488A, that, had he considered that the court of British Columbia was the appropriate forum, he would have appended such a condition to the refusal of leave. In the Ashby case Slade J heard an appeal against the decision of a circuit judge to strike out, pursuant to section 2(3) of the Act, claims brought in the county court by 14 women who were former employees of Birmingham and who alleged its breach of the equality clause in their contracts. The issue in the appeal was identical to the issue in the present proceedings in that, by the date of the issue of their claims in court, the women would have been time barred for presenting them to the tribunal. Following the hearing before Slade J but prior to the delivery of her judgment, the deputy judge gave his judgment in the present case; and it was brought to her attention. But she disagreed with it. She observed, at paras 71 and 78, that the fact that the claims would be time barred if presented to the tribunal did not preclude a conclusion that they could more conveniently be disposed of there. She suggested, at para 56, that assistance in the construction of section 2(3) was to be gained from the observations of Lord Goff in the Spiliada case and thus held, at para 78, that the reason why the women had not presented their claims in time to the tribunal had to be taken into account. She therefore allowed the womens appeal but without prejudice to the right of Birmingham to reapply to the county court for their claims to be struck out under the subsection if and insofar as it might wish to contend that in all the circumstances they had not reasonably explained their failure to present their claims in time to the tribunal. I agree with Mummery LJ in his judgment in the present proceedings, and, with respect to her, I disagree with Slade J in the Ashby case, about the relevance to the construction of section 2(3) of the observations of Lord Goff in the Spiliada case. The words which, by the subsection, Parliament has required us to apply to the facts before us are more conveniently. [I]ts statutory objective, said Mummery LJ of the subsection, is the distribution of judicial business for resolution in the forum more fitted for it. Lord Goff was required to consider a much broader canvas. He observed, at p 474E: I feel bound to say that I doubt whether the Latin tag forum non conveniens is apt to describe this principle. For the question is not one of convenience, but of the suitability or appropriateness of the relevant jurisdiction. However the Latin tag. is so widely used to describe the principle. that it is probably sensible to retain it. But it is most important not to allow it to mislead us into thinking that the question at issue is one of mere practical convenience. The proposition that an action brought inappropriately in England should sometimes not be allowed to proceed even though it can no longer be brought in the foreign jurisdiction in principle appropriate to it is in my view of no assistance in determining whether, in circumstances in which Parliament has specifically allowed a claimant to bring her entirely domestic claim in court, it could more conveniently be disposed of by the tribunal. No doubt in most cases it will be more convenient for the tribunal to dispose of a claim in respect of the operation of an equality clause, provided that it can still be brought there, rather than for the court to do so. If the claim can no longer be brought there, the effect of Birminghams submissions in this appeal, founded on the decision of Slade J, would be to convert the reasons why the claimant had failed to present her claim in time to the tribunal into the factor determinative of whether it be struck out by the court. But I do not regard the reasons for her failure as relevant in any way to the notion of convenience. In my view Birmingham aspires in effect to re write section 2(3); and to introduce into the law a principle which would in some cases in effect serve to shorten the period of limitation allowed by Parliament for the bringing of claims in court. A modified version of Birminghams submissions finds favour with Lord Sumption and Lord Carnwath. Whereas Birmingham contends for an inquiry limited to that single feature, namely the reasons for a claimants failure to present her claim in time to the tribunal, they consider that the proper operation of section 2(3) requires a multi factorial inquiry not just into that feature but into all others which might bear upon whether, in the interests of justice, a claim should be struck out; they would therefore remit the claims of the 174 claimants for individual consideration along such lines. I entirely understand the aspiration to attribute a greater degree of efficacy to the rules of limitation in sections 2(4) and 2ZA of the Act. On any view they lie curiously alongside the right to issue proceedings in court, governed by a rule of limitation which, in a number of cases albeit certainly not in all, will prove to be more indulgent to claimants. But in my respectful view the aspiration drives my two colleagues to treat section 2(3) with an unacceptable degree of violence. The adverb in the subsection is conveniently. Of course the disposal of a claim can be achieved by application of rules of limitation; but in my view the adverb qualifies the type of disposal addressed in the subsection and mandates a straightforward practical inquiry into the forum more convenient for investigation of the merits. It is analogous to the practical inquiry which attends the permission given to a claimant by rule 7.3 of the CPR to use a single claim form to start all claims which can be conveniently disposed of in the same proceedings. I would deprecate a multi factorial inquiry into what Lord Sumption neatly describes as the disembodied interests of justice in place of the inquiry for which, on the natural reading of the subsection, Parliament has provided. In Restick v Crickmore [1994] 1 WLR 420 the Court of Appeal considered five appeals by claimants who in the High Court had brought proceedings which were required to be brought in the county court and which the judges below had struck out even though the claimants had become out of time for bringing them in the county court. The decision of the Court of Appeal was that section 40(1) of the County Courts Act 1984 had given the judges a power, which they should have exercised, to transfer the proceedings to the county court instead of striking them out. It may have been a controversial construction of the subsection but it was a just decision. Stuart Smith LJ, with whom the other members of the court agreed, said, at p 427E G: The construction I prefer accords with the well established policy of the courts: provided proceedings are started within the time permitted by the Statute of Limitations, are not frivolous, vexatious or abuse of the process of the court and disclose a cause of action, they will not as a rule be struck out because of some mistake in procedure on the part of the plaintiff or his advisers. The ordinary sanction for failure to comply with the requirements will be in costs. The present claimants have a far stronger case than the appellants in the Restick group of cases for the effective survival of their claims in that they were never required to proceed in the tribunal. I would hold that the present claims cannot more conveniently be disposed of by the tribunal and that Birminghams invocation of section 2(3) of the Act was rightly rejected both by the deputy judge and by the Court of Appeal. I prefer the categorical terms favoured by the deputy judge to the qualified terms favoured by Mummery LJ. The latter referred to cases of abuse of process. Nothing can detract from the inherent jurisdiction of the court to strike out a claim in respect of the operation of an equality clause if it were to represent an abuse of its process; one example might be that of a claimant who had been invited to present a complaint in time to the tribunal but who had spurned the invitation in order to secure what the court considered to be an illegitimate advantage by bringing the claim before itself. But the subject of section 2(3) was not abuse of process; and I would hold, for the purpose both of the first part of the subsection and of its successor, namely section 128(1) of the Equality Act 2010, that a claim in respect of the operation of an equality clause can never more conveniently be disposed of by the tribunal if it would there be time barred. No doubt one aspect of Birminghams concern about the prospect that claims in respect of the operation of an equality clause may be brought against employers in court, rather than in the tribunal, relates to the courts general rule, which does not apply in the tribunal, to make an order for costs against the unsuccessful party. But the court may make a different order and, in deciding what order (if any) to make in respect of costs, it must have regard to all the circumstances, including the conduct of the parties: CPR r 44.3(4)(a). It is to this latter inquiry that the factor incorrectly urged as relevant to this appeal might well become relevant. The courts conclusion that, instead of bringing it in court, a claimant should, in all the circumstances, reasonably have presented her claim, in time, to the tribunal might well be relevant to its survey in relation to costs under the subrule: insofar as, had she done so, she would not have obtained an order for costs, such might well be relevant to the courts decision as to the appropriate order. Even in circumstances in which the presentation of a claim to the tribunal would be time barred, the power of the court under both the second part of section 2(3) of the Act and its successor, namely section 128(2) of the 2010 Act, to refer to the tribunal a question as to the operation of an equality clause still remains; and should not be forgotten. Nevertheless Parliament might well wish to consider introducing a relaxation of the usual limitation period for the presentation of a claim to the tribunal in cases in which a claim in respect of the operation of an equality clause has been brought, in time, before the court and, were it not for the effect of the usual limitation period, would more conveniently be disposed of by the tribunal. I have doubts about the value of assuming, contrary to the above, that the effect of section 2(3) of the Act is, as contended for by Birmingham, to preclude a hearing of the claimants claims on the merits even in court, save if they fall within the exception for which it now allows; and, upon that assumption, of proceeding to consider whether such an effect infringes the EU principle of equivalence. Such is the principle which requires that the procedural rules for proceedings designed to ensure the protection of the rights which individuals acquire through the direct effect of Community law [should be] not less favourable than those governing similar domestic actions: para 31 of the judgment of the ECJ in the Preston case, cited at para 18 above. But I will address the point, on which the court heard only limited argument, briefly. My view, contrary to that of the deputy judge, is that this is not a freestanding point: section 2(3) conferred upon the court a discretion and, were any exercise of the discretion in favour of a strike out to offend against the principle of equivalence, the obligation of the court would be not so to exercise it: Litster v Forth Dry Dock and Engineering Co Ltd [1990] 1 AC 546. So the point is linked to the proper exercise of the discretion, which was the deputy judges separate and final reason for dismissing Birminghams application. But the decision of the House of Lords in the Preston (No 2) case, cited at para 18 above, seems to me to place formidable difficulties in the path of the claimants invocation of the principle of equivalence. In the Preston litigation some 60,000 part time workers, mainly women, complained to the tribunal that their exclusion from their employers pension schemes infringed the equality clause introduced into their contracts by the Act. Acknowledging their own obligation to make the appropriate back dated contributions into them, they sought recognition of their entitlement to membership of the schemes, to be backdated over what, in some cases, had been their many years of employment. Test cases were identified in order to resolve preliminary issues in relation to the application to them of section 2(4) and (5) of the Act; and in Preston v Wolverhampton Healthcare NHS Trust (No 1) [1998] 1 WLR 280 the House of Lords referred three questions to the ECJ for preliminary rulings as to whether, in any of the three respects, the application of the subsections infringed the principles of equivalence or of effectiveness. I have referred, at paras 18 and 19 above, to two of the preliminary rulings of the ECJ. Its third (which did not concern cases of stable employment) was, at para 35, that the six months rule did not offend against the principle of effectiveness and, at para 49, that, in the light of the greater ability of the national court to identify a comparator, it was for that court to determine whether it offended against the principle of equivalence. Such was, therefore, an exercise which, upon the return of the case to it, the House of Lords conducted in Preston (No 2), cited at para 18 above. It determined that the rule did not offend against the principle of equivalence. Albeit with considerable hesitation on the part of three of its members, the committee decided that there was a sufficiently similar comparator in the form of an action under domestic law for damages by an employee against an employer for failure to pay to the trustees of a pension scheme on his or her behalf the sums for which the contract of employment had provided: para 22 of the speech of Lord Slynn. But the committee was not satisfied that the six months rule for a claim under the Act was less favourable than the six years rule which would apply to such an action: paras 24 to 31 of his speech. In particular he stressed, at para 30, that a claim brought in the tribunal within six months of the end of the employment might in some cases stretch much further back than six years from the date of the claim. The decision in Preston (No 2), which some might now consider border line but from which the court was not invited to depart, is therefore authority for the proposition that, in its application to what after 2003 was known as the standard case, the six months rule in section 2(4) of the Act did not offend against the principle of equivalence. The claimants concede that, were the subject of the present appeal to be the time limit for a claim to the tribunal, the decision would foreclose the point against them. But, in an argument accepted by the deputy judge, they suggest that the subject is, instead, the time limit for a claim to the court. I disagree. For Birmingham seeks, by the operation of section 2(3), in effect to import into the time limit for a claim to the court and subject to the exception for which it now makes allowance the time limit for a claim to the tribunal. The deputy judge proceeded first to note the suggested comparators in the present case, namely the men entitled under the express terms of their contracts to the additional payments, and then, for the purposes of the comparison, to imagine that Birmingham had refused to make such payments, with the result that the men had sued for them in court. He held that, by comparison with their position, the effect of Birminghams submissions about the proper application to the claimants of section 2(3) would offend against the principle of equivalence. But I discern no material difference between the deputy judges comparison and that made in relation to pension provision by the House of Lords in the Preston (No 2) case. I do not consider that Birminghams contentions, however flawed, offend against the principle of equivalence. I would dismiss the appeal. LORD SUMPTION (with whom Lord Carnwath agrees) The majority of the Court proposes to dismiss the appeal. I shall therefore be brief in explaining why, for my part, I would have allowed it. In bald summary, the decision of the deputy judge and the Court of Appeal frustrates the policy underlying the provisions of the Equal Pay Act relating to limitation. Since those provisions are an important part of the statutory scheme, I find it impossible to accept that this result can have been intended by Parliament. It is common ground that in principle the courts and the employment tribunals have concurrent jurisdiction to hear claims for breach of the statutory equality clause in a contract of employment. The issue on this appeal arises from the fact that Parliament has provided by sections 2(4) and 2ZA of the Equal Pay Act that in proceedings before an employment tribunal various limitation periods are to apply (depending on the type of case) which differ from those that would apply under the general law in proceedings before a court. Under the Act as originally enacted, there were three differences. First, the period was shorter, six months as opposed to six years. Second, it ran from the end of the end of the employment relationship, and not from the accrual of the cause of action. Third, there were no provisions for deferring the running of the period, such as those which would apply to proceedings in court under the Limitation Act 1980 and the Latent Damage Act 1986. Under the Equal Pay Act as it stood in 2005 (the relevant time for the purpose of this case), the position is exactly the same in a standard case like this one. But by that time the statutory scheme had been refined by amendment so as to defer the running of time in cases of concealment and disability. The question comes down to this. If a particular claim would be time barred before an employment tribunal but not before a court, is it open to a court to strike it out on the ground that it ought to have been brought before an employment tribunal within the period provided for by section 2(4)? Since the court has no power to transfer a case directly to the employment tribunal, and no one suggests that the present proceedings are an abuse of the courts process, this depends entirely on section 2(3). Section 2(3) empowers a court in which a claim under the equality clause is pending to strike it out if it could more conveniently be disposed of separately by an employment tribunal. Although the present question can fairly be described as turning on the construction of this provision, the issue is particularly difficult to resolve by reference to the mere language of the Act. The relevant provisions are poorly drafted, and a complex history of ill thought out amendments has contributed nothing to their coherence. This is therefore a case in which it is more than usually important to examine the underlying purpose of Parliament in (i) conferring jurisdiction on employment tribunals over equal treatment claims, and (ii) providing for special periods of limitation to apply to such claims in those tribunals. Employment tribunals (originally industrial tribunals) were established by the Industrial Training Act 1964, initially for the limited purpose of hearing appeals against the imposition of industrial training levies. Their jurisdiction has always been wholly statutory, but it has been progressively expanded over the past half century. At the time when the Equal Pay Act was originally passed in 1970, the main business of the tribunals was the determination of claims for statutory redundancy payments, a jurisdiction conferred on them in 1965. By the time that the Act came into force in substantially amended form in 1975, its jurisdiction also extended to unfair dismissal claims. By 1970, and even more by 1975, employment tribunals were well established as cheap, informal, expert tribunals, comprising predominantly lay members and operating under a simplified procedure, in which parties need not be legally represented (or indeed represented at all) and in which costs orders were not ordinarily made. These were, and remain, substantial advantages not just for parties appearing in them, but for the disembodied interests of justice. It can be assumed that they were significant factors in Parliaments decision, when enacting the Equal Pay Act 1970, to confer jurisdiction upon them in equal treatment cases. Their specialist expertise in employment practice was perhaps of particular value in these cases, because they commonly turned on an expert evaluation of the claimants job by comparison with a relevant comparator: see section 1(5). Notwithstanding these advantages, the courts jurisdiction was retained, but it follows from the criterion laid down by section 2(3) for striking out equal treatment claims brought in court that the draftsman envisaged that the courts jurisdiction would be invoked only if the subject matter of any particular claim made it the more convenient forum. The paradigm case (although not necessarily the only one) would be proceedings involving mixed claims arising out of the same employment relationship, some of which were within the jurisdiction of the employment tribunal, while others were not. Hence the reference to claims brought in court that could more conveniently be disposed of separately by an employment tribunal. Turning to the purpose of the special limitation provisions in the Act, it is right to make two points by way of introduction. The first is that issues of limitation are bedevilled by an unarticulated tendency to treat it as an unmeritorious procedural technicality. This is, I think, unjustified. Limitation in English law is generally procedural. But it is not a technicality, nor is it necessarily unmeritorious. It has been part of English statute law for nearly four centuries. It has generated analogous non statutory principles in equity. Some form of limitation is a feature of almost all other systems of law. And it has been accepted in principle in the jurisprudence of both the Court of Justice of the European Union and the European Court of Human Rights. Limitation reflects a fundamental and all but universal legal policy that the litigation of stale claims is potentially a significant injustice. Delay impoverishes the evidence available to determine the claim, prolongs uncertainty, impedes the definitive settlement of the parties mutual affairs and consumes scarce judicial resources in dealing with claims that should have been brought long ago or not at all. These considerations, which are common to most litigation, are particularly germane to equal treatment claims. The characteristics of a job are liable to change radically, especially at a time of economic upheaval, industrial rationalisation or technological advance. The selection of appropriate comparators and their comparative evaluation are inherently more uncertain exercises when they relate back several years to a state of affairs which may no longer exist. In addition, equal treatment claims are by their nature liable to affect large classes of employees of a particular firm and may therefore have important financial implications for the employer, which will be particularly disruptive if they arise out of the position of ex employees who left long ago. The second introductory point is that the dismissal of a claim on the ground that it is time barred is a disposal of the claim. Limitation is a defence. A dismissal on that ground is a judicial decision giving effect to that defence. It was submitted to us that the introductory words of section 2(4) (No determination may be made by an employment tribunal) mean that the provision is a limitation on the employment tribunals jurisdiction. There is authority that provisions in this form, or substantially similar, do go to jurisdiction: see, most recently, Radakovits v Abbey National Plc [2009] EWCA Civ 1346; [2010] IRLR 307. I am by no means convinced that this is correct, but it is unnecessary to decide the point because section 2(4) plainly gives rise to a defence in proceedings before an employment tribunal, even if it also operates as a limitation on the tribunals jurisdiction. The words cannot mean that the tribunal is disabled from determining whether the claim is time barred. The only consequence of treating section 2(4) as going to jurisdiction is therefore that the defence cannot effectually be waived. The legislative policy underlying section 2(4) of the Act, both in its original and its amended form, is clear. It is to confer a degree of protection on the employer. There is no other purpose that can be imputed to the legislature, and none was plausibly suggested in argument. In standard and stable employment cases the object was to restrict the employers exposure to equal treatment claims to those which were brought while the employment relationship still subsisted, or within a short time thereafter, so as to enable him to draw a line under any employment relationship at that point. Why were these provisions absolute? Unlike Lord Wilson (paragraph 20), I do not think that in the statute as originally enacted, the absolute character of this time bar was due to the availability of a concurrent jurisdiction in court which would not be affected by it. If this issue had been considered by the draftsman at all, he would surely have made specific provision for reconciling the two procedures. Likewise, I cannot, with respect, agree with his historical conjecture (paragraph 21) about the reason for exclusion from section 2(4) in its original form of a claim referred to an industrial tribunal by virtue of section 2(3). I agree that the drafting is unclear, but the exclusion seems most naturally to refer to the only form of reference for which provision is made by section 2(3), even if (as he rightly says) that is not strictly a reference of the claim as such. In any event, neither argument can arise on the terms of the Act as it has stood since its amendment in 2003. The absence of any provision for deferring the running of time in standard and stable employment cases is in my view more plausibly explained by the importance which the legislature attached to the time bar. At the time when the Equal Pay Act was passed, section 26 of the Limitation Act 1939 (now section 32 of the Limitation Act 1980) provided for the deferral of the running of a limitation period under the general law in cases of fraud and concealment. There was, however, no corresponding provision applicable to equal treatment claims under the Equal Pay Act, even in cases of concealment. Over the years Parliament has introduced other grounds of deferral into the general law of limitation. It is, however, notable that the possibility of deferring the running of time was not introduced into the Equal Pay Act until 2003, when it was amended by statutory instrument. Even then it was limited to two narrowly defined categories of case, namely those in which the facts giving rise to an equal treatment claim were deliberately concealed by the employer from the employee during the subsistence of the employment relationship, and those in which the employee was under a disability during the period of six months after the termination of the relationship or (in a concealment case) after the day on which she discovered the facts deliberately concealed from her. All of these provisions have been re enacted in substantially the same form by sections 120, 122 123 and 129 130 of the Equality Act 2010. Accordingly the three salient features of the Equal Pay Act for present purposes are: (i) that it provides in the public interest as well as in the interests of parties for particular categories of employment disputes to be referred to a specialised tribunal, applying a procedure particularly adapted to the hearing of such disputes, (ii) that it lays down in the interests of employers a highly restrictive regime of limitation for cases brought in the specialist tribunal, and (iii) that it contains a careful and qualified definition of the circumstances in which older claims can be brought in the specialist tribunal. Parliament cannot rationally be thought to have intended that a far less restrictive regime should apply at the unfettered option of the employee, by the simple device of bringing his claim in a court of general jurisdiction which is less appropriate to such claims because it has neither the same specialist experience nor the specially adapted procedures thought suitable for this class of case. Nonetheless, in conferring jurisdiction over equal treatment claims on employment tribunals Parliament left in being the jurisdiction that the ordinary courts had always had over contractual disputes arising out of employment. Moreover, the protection of section 2(4) is not available in equal treatment cases before the courts, because it is in terms confined to cases before the employment tribunal (compare section 2(5) in which the restriction on the period in respect of which damages may be awarded is applied to such claims wherever brought). The only rational answer to this conundrum lies in the application of section 2(3). If an action founded exclusively on a breach of the statutory equality clause were brought in court before the time limit had expired for bringing it in an employment tribunal, one would expect it to be struck out as a matter of course under section 2(3) so that it could be brought in the appropriate forum. It could, in the language of the subsection, more conveniently be disposed of by an employment tribunal. If the claim is brought in court after the tribunal time limit has expired, the test is exactly the same, but the circumstances are in one respect different. The decision whether to strike out will still depend on whether it can more conveniently be disposed of by an employment tribunal, but the employment tribunal will inevitably have to dismiss the claim because of the time bar. The Court of Appeal took the view that for this reason a claim could only very rarely be more conveniently disposed of in a tribunal which would be bound to dismiss it as time barred. They appear to have had in mind rare cases where the mere fact of bringing the claim in court could be characterised as an abuse of the courts process. In this court, the majority considers that a claim can never more conveniently be disposed of by an employment tribunal if it would be time barred there. With respect, I cannot accept either version. Both of them depend upon the proposition, which I understand to be accepted by the majority, that the notion of convenience in section 2(3) is directed only to the efficient distribution of judicial business between the available forums. I think that this is far too narrow a test, because it excludes the broader interests of justice which in my opinion should be decisive. Convenient is used in section 2(3) in a sense analogous to that which it has in the expression forum non conveniens. The question is whether the disposal of the claim in an employment tribunal is appropriate in the interests of justice: see Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, 474 475 (Lord Goff). I would accept without hesitation that the fact that the claim will be time barred in the employment tribunal is a highly relevant factor, but I cannot accept that it is conclusive or nearly so. As I have pointed out, the dismissal of a claim because it is time barred is a disposal. It may, depending on the circumstances, be a just disposal. I would not wish to press the analogy with forum non conveniens too far, for it is only an analogy. But, as Lord Goff pointed out in the Spiliada case, it is not necessarily unjust to require a claim to be heard in a jurisdiction where it would be time barred, if the nature of the case is such that that is the more appropriate jurisdiction: see pp 483 484. Indeed, the case for doing so is likely to be stronger where (i) the alternative and appropriate forum is another English forum, provided by law for this very class of case; and (ii) the court is seeking to give effect to the policy of the legislature in imposing a time bar on claims brought in the appropriate tribunal. In such cases, the justice to the claimant in having his claim determined by a court on its merits without regard to the time bar is exactly commensurate with the injustice to the employer of being deprived of a defence. Other relevant considerations which seem to me to bear on the justice of requiring the claim to be brought if at all in the employment tribunal include: whether the claimant acted reasonably in failing to bring his claim before the appropriate tribunal in time; whether the passage of time since the expiry of the tribunal time bar has made the issue substantially more difficult to determine justly; and whether the employer would be exposed to a substantial liability in costs in court which he would not have faced in the tribunal. The latter is likely to be a particularly significant factor in a case where the litigation is funded under a conditional fee agreement. It will be apparent that I have considerable sympathy for the approach adopted by Slade J in Ashby v Birmingham City Council [2012] ICR 1, although I would not limit the range of relevant factors to those which arose on the facts of the case before her. If, as I have suggested, the limitation provisions of the Equal Pay Act reflect the policy of the legislature as to the circumstances in which an employer ought to be exposed to stale claims, it must in my opinion be wrong to treat the only statutory mechanism available for giving effect to it as inapplicable in the precise circumstances which engage that policy. The view that court proceedings in support of an equal treatment claim should rarely or never be struck out where they would be time barred in an employment tribunal has the effect of making the statutory protection of the employer available to him only at the option of the employee. The effect is to deprive it of most of its content. Indeed, on this view, a claimant in a concealment or a disability case could bring his claim in an employment tribunal and, having failed to persuade the tribunal that he was entitled to defer the running of time, then bring precisely the same claim in court with the benefit of the ordinary limitation period of six years and the broader provisions for deferral. The employment tribunal, he would argue, had only decided upon the applicability of the tribunal time bar, which had no relevance to proceedings brought in another English jurisdiction. I find it difficult to derive any assistance on these points from Restick v Crickmore [1994] 1 WLR 420, to which both the Court of Appeal and Lord Wilson (paragraph 28) attach importance. In that case, the Court of Appeal criticised the decision of the judges below to strike out proceedings which should have been brought in the county court, in circumstances where they would have been time barred there. That was a decision about a very different statutory scheme, whose critical feature was the existence of a statutory power to transfer the proceedings to the county court instead of striking them out. Since a transfer would have preserved the plaintiffs limitation position, it was held to have been the appropriate course. I agree with the majority that to strike out the claim would not be inconsistent with the EU principle of equivalence, for the reasons given at paragraphs 32 34 of the judgment of Lord Wilson. I would for these reasons have allowed the appeal and remitted the case to the High Court to determine whether in the interests of justice it should be allowed to proceed there. |
The Preamble to the Hague Convention on the Civil Aspects of International Child Abduction (the Convention) states that its purpose is to protect children internationally from the harmful effects of their wrongful removal or retention. But under article 3 the taking or keeping of a child is only wrongful if it is in breach of rights of custody. The same applies under the Brussels II Revised Regulation (the Regulation), which complements and takes precedence over the Hague Convention as between all but one of the member states of the European Union. So what is meant by rights of custody? It might be thought that the meaning of a concept so central to the operation of both instruments would be well settled by now. But this is not even true within the United Kingdom. The Courts of Appeal in England and Wales and in Northern Ireland have taken different views. It therefore falls to this court to resolve the difference. If nothing else, the position should be the same throughout the United Kingdom. The concept of rights of custody would appear to have at least two functions. One is to identify those removals or retentions which are presumptively so harmful to the welfare of a child that the authorities must take swift action to return him to the country from which he has been taken or kept away. Many international removals of children will not be harmful to them at all, for example where their united parents take a well planned sabbatical in another country or even emigrate permanently. Other international removals may or may not be so harmful. The Convention draws a clear distinction between rights of custody and rights of access. It does not presume that removal or retention in breach of rights of access is so harmful that the child must instantly be returned. Another function of rights of custody, therefore, is to secure that long term decisions about the childs future are taken in the country where he was habitually resident immediately beforehand and not in the country to which he has been taken. The issue, therefore, is between two different approaches to the interpretation of the concept. Is it to be interpreted strictly and literally as a reference to rights which are already legally recognised and enforceable? Or is it to be interpreted purposively as a reference to a wider category of what have been termed inchoate rights, the existence of which would have been legally recognised had the question arisen before the removal or retention in question? The issue is well illustrated by the facts of the present case. The facts We are concerned with a little boy whom I shall call Karl. He was born in Lithuania on 13 March 2005 and so is now nine years old. His father and mother separated before he was born and his father has played no part in his life. From the time of his birth until his removal from Lithuania in March 2012 he lived with and was cared for by his maternal grandparents. His mother returned to work in the Lithuanian army shortly after his birth. There is an unresolved dispute of fact as to whether she remained based with the family for about a year after Karls birth. It is however clear that in May 2006 she moved to live and work in Northern Ireland with her then partner, leaving Karl in the sole care of her parents, and that she has lived there ever since. She and that partner had a child together in July 2010. Some time after that they separated and the mother now has another partner. There is also an unresolved dispute about the level of interest which the mother showed in Karl over the years. Between May 2006 and October 2011, she sent 28 payments to the grandmother totalling some 2,590. She was in contact with her family by telephone and by SKYPE but we do not know how often. The grandmother came to visit her once in Northern Ireland in 2006 but did not bring Karl with her. The mother visited the family once in Lithuania in November 2006 for five days or a week when Karl was 20 months old. Otherwise Karl had not seen her until she returned to Lithuania in February 2012 shortly before his seventh birthday. According to the solicitor working with the Official Solicitor in Northern Ireland, who interviewed Karl a year later, it was his firm belief that his grandmother was his mother. He was confused as to who the woman he spoke to on the computer (via SKYPE) was. His grandmothers evidence is that he referred to the mother as his mum from far away. In February 2012 his mother returned to Lithuania in order to take Karl with her to Northern Ireland, where she now had suitable accommodation, employment and a stable relationship. Her own evidence is that she knew that her parents would not agree to Karl moving to live with her. A friend had told her that her mother was taking preliminary steps to obtain legal custody of the child. A lawyer advised her that legal proceedings between her and her mother would be very protracted and costly. So she decided to take matters into her own hands. On 12 March 2012, as the grandmother was walking Karl home from school, the mother and her partner drew up beside them in a van and there was a tug of war which resulted in Karl being removed from his grandmother and taken away in the van. Again, there is a dispute of fact. The grandmother says that she heard the mother shouting pull him, pull him, a man jumped out of the van and grabbed the child. When she would not let him go, the van door was shut on her hand, injuring her. The mother says that her partner was driving the van and it was she who had the tug of war to remove Karl from his grandmothers grip. Either way, it was a shocking episode of which any mother should be deeply ashamed. Thereafter they travelled by car and ferry through Slovakia, Germany, France and England, arriving in Northern Ireland around 17 March 2012. Karl had to leave behind his country, his home, his toys and his clothes, his school and many other activities, and the grandparents with whom he had lived all his life. He was taken to a country he did not know, with a language he did not know, by a mother he scarcely knew, to live with her and a half sister and step father whom he had never met. After arriving in Northern Ireland, Karl had some contact with his grandparents by telephone and by SKYPE, but this was terminated by the mother later in 2012 and there has been no contact since then. Shortly after the removal, the grandmother contacted the Childrens Rights Division in her home city in Lithuania and a referral was made via Children and Families Across Borders to the local authority in Northern Ireland. A social worker undertook an assessment using the Understanding the Needs of Children in Northern Ireland (UNOCINI) framework, which was completed on 24 May 2012. Karl had been enrolled in school in April, after the Easter break. His behaviour during the first week had been very disturbed and the school had requested specialist support for this. Otherwise, the assessment was that the mother appeared to have good insight into the needs of her children, but that Karl had experienced a major change in his life, and would benefit from support in relation to the current language barrier and emotional support which would enable him to process his thoughts and feelings about the move. Nevertheless it was agreed that the case should be closed as the school had involved behaviour support. A letter from the head teacher in February 2013 reported that his behaviour since returning to school in September 2012 had been exemplary. He had very quickly mastered English and was making excellent academic and social progress. When the solicitor for the Official Solicitor interviewed Karl at his mothers home in April 2013, she found a little boy who presented as very young. He expressed a desire to stay with his mother in Northern Ireland. The solicitor concluded: [Karl] has experienced a situation where he was cared for by a grandmother, whom he believed was his mother, and had irregular contact with a woman with whom his relationship was unclear. He was subsequently abducted from his grandmother in an extremely frightening manner by a person whom he believed at the time was a stranger. He was removed from the country of his upbringing to a country where he struggled initially with the language. Contact with his grandparents, who had been his primary carers and the significant adults in his life, was brought to an abrupt end by his mother and he was informed that his grandparents had lied to him throughout his entire life. In light of the above, despite [Karls] assertion that he wants to remain with his mother, I have concerns about the emotional well being of this young boy and the impact of the traumatic events on his ability to formulate his wishes and feelings freely and without influence. It is entirely possible that [Karl] has suffered emotional harm and I would consider that it might be in his best interests for an expert assessment to be carried out in order to identify appropriate supports for him. The legal position in Lithuania These proceedings are unusual in that we have no formal evidence as to the legal position of the grandparents in Lithuanian law. The central authority in Lithuania has not supplied the central authority in Northern Ireland with a certificate or affidavit, such as is contemplated by article 8(f) of the Convention, concerning the relevant Lithuanian law. There has been no contact through liaison judges. The mothers legal advisers did attempt to obtain evidence of Lithuanian law but this could not be obtained within the tight time table for child abduction cases. No one suggests that at this late stage it would be appropriate for the court to exercise its power, under article 15 of the Hague Convention, to request that the grandparents obtain from the Lithuanian authorities a decision or other determination that the removal was wrongful within the meaning of article 3 of the Convention. We shall have to do the best we can with the limited material at our disposal. On 13 April 2005, when Karl was one month old, the mother signed a document authorising the grandmother to visit all medical institutions and hospitals with her son. On 20 April 2006, shortly before her move to Northern Ireland, the mother executed a notarised consent for Karl to travel to any foreign country together with the grandmother and/or the grandfather. On the same date, she also executed a notarised power of attorney, to be valid for ten years, authorising the grandmother to receive the passport of my minor son . ; to represent me at the Migration Service Passports subdivision and other state, legal and governmental institutions, companies and organisations; to receive and submit all necessary documents; to make applications on my behalf; to sign on my behalf and to perform all other actions in relation to this authorisation. On 10 January 2007, the Director of the City Municipality Administration for the city where the grandparents live made an order, pursuant to various articles of the Lithuanian Civil Code and Law on Child Benefits and in accordance with the Description of Care (Guardianship) Procedure of the City Child Crisis Centre. According to one of the translations we have, this order put Karl under temporary care (custody); appointed the grandmother as his carer (guardian); determined that the place of care (custody) should be the carers (guardians) place; and transferred the supervision of this temporary care (custody) to the City Child Crisis Centre. (The Lithuanian original also uses alternative terminology, globa (rupyba), and globeja (rupintoja); given the etymological similarity between rupyba and rupintoja, it may well be that custodian would be a closer translation than guardian, but that is by the way.) There matters stood until the mother returned to Lithuania in February 2012. On 20 February 2012, the Manager of the Childrens Rights Division of the City Administration issued a notice to the mother stating that, under an Order of the Social Security and Labour Minister, it is indicated in the children temporary care provision that temporary care terminates when the parents return from a foreign state and inform Childrens Rights Division about it. The mother had that day informed the Division that she had returned and would take her son into her own care. The temporary care was therefore held to be terminated on that date. On 2 March 2012, the mother issued applications to the notarys office to withdraw the two notarised consents which she had given on 20 April 2006. It would appear, therefore, that she was doing whatever she could to withdraw the parental authority which she had delegated to the grandmother in 2006. However, Karl obviously remained living with his grandparents. The grandmother says in her affidavit that a little earlier the child had begun to suffer from anxiety and was afraid of leaving the house. A psychologist had become involved through his school and had recommended that he be educated at home for a while. We do not know whether this was in any way related to the mothers return but it may have been completely unrelated. On 2 March 2012, the Manager of the Childrens Rights Division issued a notice to the grandfather, copied to the mother, headed Re: Request dated 20/02/12, but we do not know what that request was. The notice recounted events subsequent to that request. There was a meeting on 22 February 2012 in relation to the mothers contact with her son. A temporary contact order was agreed, for the mother to see Karl on Wednesday of each week between 15.30 and 17.00. A further meeting took place, attended by a psychologist from the family and childs welfare centre, on 27 February 2012. A psychiatrists certificate was also submitted on that date. The grandmother had said that the doctor forbade the child to have contact with other people except his family members, that he would not attend school for one to one and a half months and that he would be taught at home. The staff of the Childrens Rights Division spoke to the doctor on 27 February, who advised that the child should see the medical staff once a week and that he could have contact with his mother. They concluded that the temporary contact agreed on 22 February would not breach the childs interests and therefore recommended keeping it. The mother was required to attend the appointments with the psychologist. On 7 March 2012, the mother wrote to the Manager of the Childrens Rights Division informing her that she arrived for her contact visit with her son at the recommended time but that the child was not brought to the office for the visit. Thus it would appear that the Childrens Rights Division was still actively managing the dispute between the mother and the grandparents in what they saw as the best interests of the child on the basis that, for the time being at least, he would live with his grandparents. Nevertheless, after his abduction on 12 March, the grandmother was informed by the authorities that she had no rights. Hence the application transmitted on behalf of the grandparents by the central authority of Lithuania to the central authority of Northern Ireland on 19 November 2012 was not for the immediate return of a child who had been wrongfully removed from his country of habitual residence but for arrangements to be made for him to spend 30 days holiday a year with them at their expense. Unlike an application for return, such an application would not normally be accompanied by a certificate or affidavit concerning the relevant Lithuanian law relating to rights of custody. This may explain why we do not have one. These proceedings However, the originating summons issued by the grandparents in the High Court in Northern Ireland sought a declaration that Karl was being wrongfully retained in Northern Ireland in breach of their rights of custody and an order that he be returned forthwith. No doubt by that time the grandparents had been advised by their lawyers that there was case law in the Court of Appeal and High Court in England and Wales indicating that those courts would regard them as having rights of custody for purposes of the Hague Convention and that there was (at least) a realistic possibility that the High Court in Northern Ireland would take the same view. As it turned out, Maguire J in the High Court declined to follow the English case law, on the ground that it was inconsistent with two House of Lords decisions on the Convention and with one decision in the Court of Justice of the European Union on the Regulation. The Lord Chief Justice, Higgins and Coghlin LJJ in the Northern Ireland Court of Appeal took the same view: [2014] NICA 15. Therefore, in the interests of consistency within the United Kingdom, if nowhere else, it is necessary for this court to resolve the matter. The relevant provisions of the Convention and the Regulation The crucial provision of the Convention is article 3: The removal or retention of a child is to be considered wrongful where (a) it is in breach of rights of custody attributed to a person, an institution or any other body, either jointly or alone, under the law of the State in which the child was habitually resident immediately before the removal or retention; and (b) at the time of removal or retention those rights were actually being exercised, either jointly or alone, or would have been so exercised but for the removal or retention. The rights of custody mentioned in sub paragraph (a) above, may arise in particular by operation of law or by reason of a judicial or administrative decision, or by reason of an agreement having legal effect under the law of that State. Rights of custody are further defined in article 5(a), which provides that, for the purposes of the Convention, rights of custody shall include rights relating to the care of the person of the child and, in particular, the right to determine the childs place of residence; while rights of access are further defined in article 5(b), which provides that rights of access shall include the right to take a child for a limited period of time to a place other than the childs habitual residence. Rights of custody are respected by the obligation in article 12 to order the return of the child forthwith where he has been wrongfully removed or retained in terms of article 3, unless one of the limited exceptions provided for in articles 12 and 13 apply. Rights of access are respected through the arrangements in article 21 for securing their effective exercise. The Convention is supplemented as between the member states of the European Union (apart from Denmark) by the Regulation. Under article 60(e), this takes precedence over the Convention. The obligation to respect rights of custody by returning the child forthwith under article 12 of the Convention remains, subject to the limited exceptions in articles 12 and 13, but with some additional obligations in article 11 of the Regulation. The relevant definitions are contained in article 2 of the Regulation. Article 2(9) provides that: the term rights of custody shall include rights and duties relating to the care of the person of a child, and in particular the right to determine the childs place of residence; Article 2(11) provides that: the term wrongful removal or retention shall mean the childs removal or retention where: (a) it is in breach of rights of custody acquired by judgment or by operation of law or by an agreement having legal effect under the law of the Member State where the child was habitually resident immediately before the removal or retention; and (b) provided that, at the time of the removal or retention, the rights of custody were actually exercised, either jointly or alone, or would have been so exercised but for the removal or retention. It is most unfortunate that the wording of the Convention and Regulation are not identical. However, despite the difference in wording, the apparent intention of both instruments is that the attribution of rights of custody is to be determined according to the law of the country where the child was habitually resident immediately before his removal or retention. Further, article 3 of the Convention contemplates that rights of custody may arise in particular in three ways: by operation of law, by administrative or judicial decision, and by an agreement having legal effect. This does not rule out that such rights might arise in other ways (see the Explanatory Report by Professor E Perez Vera, para 67). By contrast, the list in article 2(11) of the Regulation appears exhaustive. Furthermore, a judicial or administrative decision in article 3 is intended in its widest sense (see Perez Vera, para 69). By contrast, a judgment is defined in article 2(4) of the Regulation as a judgment relating to parental responsibility pronounced by a court of a Member State. Given, however, that the whole thrust of the Regulation is to supplement and to strengthen the obligations laid down in the Convention, and that it would appear unlikely that the Regulation intended to cut down the possible sources of custody rights which are indirectly protected by the obligation to return the child, they should be construed consistently with one another wherever possible. The English cases on inchoate rights The line of cases begins with the majority decision of the Court of Appeal in Re B (A Minor)(Abduction) [1994] 2 FLR 249. The childs parents were not married to one another and by the law of Western Australia where they lived an unmarried father enjoyed no parental rights by operation of law. Nevertheless he had become the childs primary carer when the mother moved back to Britain, leaving the child in the shared care of the father and her mother. The father agreed to the grandmother bringing the child to Britain for a holiday but only on terms to be embodied in a consent order giving the parents joint guardianship and him sole custody. This was agreed by the mother and eventually approved by the Australian court but only after the mother had begun wardship proceedings in Wales. Waite LJ held that the term rights of custody was capable of being applied in a Convention context to describe the inchoate rights of those who are carrying out duties and enjoying privileges of a custodial or parental character which, though not yet formally recognised or granted by law, a court would nevertheless be likely to uphold in the interests of the child concerned (p 261B). In this case the fathers status was one which any court . would be bound to uphold; at least to the point of refusing to allow it to be disturbed abruptly or without due opportunity of a consideration of the claims of the childs welfare merely at the dictate of a sudden reassertion by the mother of her official rights. Staughton LJ agreed with Waite LJ but he also accepted evidence that under the law of Western Australia parents could make valid agreements as to the custody or guardianship of their children which would be binding without a court order. Peter Gibson LJ dissented on the ground that rights must mean more than de facto rights. The agreement between father and mother did not confer rights of custody when the child left Australia and (under the authority of Re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, see para 42 below) a young child in the sole lawful custody of his mother had the same habitual residence as she did, which was now in Wales. Re B was an incoming case, where England and Wales was the requested state. The concept of inchoate rights of custody has been deployed in several later cases, both incoming and outgoing, in the High Court of England and Wales where, of course, the decision in Re B is binding. In Re O (Child Abduction: Custody Rights) [1997] 2 FLR 702, another incoming case, the facts were not unlike those of the present case. A German mother had left her German daughter in the care of the maternal grandparents in Germany. They had taken sole responsibility for the child for over a year and had started custody proceedings in the German court. But before these could be heard the mother kept the child, who was staying with her for the weekend, and brought her to England. The grandmother obtained a provisional custody order in Germany and orders from the High Court in England, under both the Convention and the inherent jurisdiction of the High Court, for the immediate return of the child. Cazalet J thought the non exhaustive wording may arise in article 3 of the Convention (see para 19 above) was important. He asked himself whether the mother could properly be said to have agreed to the child making her home with the grandmother or whether some situation arose whereby the grandparents were carrying out duties and enjoying the privileges of a custodial or parental character which the court would be likely to uphold in the interests of the child concerned (p 709). While he had some doubts about whether there was any such agreement he had no doubt that the grandparents had joint custodial rights within the provisions of Waite LJs definition (p 710). Re G (Abduction: Rights of Custody) [2002] 2 FLR 703 was an outgoing High Court case in which Sumner J declared that the paternal grandmother in whose care the child had been left by the mother had rights of custody as defined in Re B, so that it was in breach of those rights for the mother to retain the child (and take her to South Africa) during an agreed holiday in this country. In Re G, Sumner J also declared that the unmarried father, who had joined the household after the child had been left with the grandmother, had rights of custody. Many of the cases have concerned unmarried fathers who do not have rights of custody by operation of law in the country where the child is habitually resident but who have nevertheless played a role in the childs care. In Re W; Re B (Child Abduction: Unmarried Father) [1999] Fam 1, which concerned two different outgoing cases, I suggested that removing a child who is habitually resident here would be wrongful under the Convention if (a) the unmarried father has parental responsibility either by agreement or court order (or, it should now be added, by operation of law); (b) there is a court order in force prohibiting it; (c) there are relevant proceedings pending in a court in England and Wales; or (d), following Re B, where the father is currently the primary carer for the child, at least if the mother has delegated such care to him (p 20). The facts of Re W fell within (c), but those of this Re B fell within none of these categories, as the mother had a residence order with no prohibition on removing the child from the jurisdiction and the father had only a contact order. Re J (Abduction) (Declaration of Wrongful Removal) [1999] 2 FLR 653 was another outgoing case which fell within category (c); but I doubted whether the concept of inchoate rights could be extended to an unmarried father, who was living with and sharing care of the child with the mother in the way that mothers and fathers living under the same roof commonly do, because that would be difficult to reconcile with the House of Lords decision in Re J (pp 659 660) (see para 42 below). In Re C (Child Abduction) (Unmarried Father: Rights of Custody) [2002] EWHC 2219 (Fam), [2003] 1 FLR 252, where the facts were similar, Munby J agreed with my formulation at (d), so long as it is understood as also applying to a case of shared primary care with someone other than the mother (para 41). Like me, he held that there was nothing in the authorities to suggest that an unmarried father (or anyone else) could acquire rights of custody while the mother who had sole legal rights remained the primary carer, whether alone or sharing it with the father (para 37). He pointed out that the common thread running through the Re B cases was the mother had left the scene and abandoned the care of the child to someone else (para 36). Baron J also followed this approach in Re J (Abduction: Acquiring Custody Rights by Caring for the Child) [2005] 2 FLR 791, holding that the mother had not abandoned the child or delegated sole care to the father during the periods when he had been in the fathers care and thus that the father did not have rights of custody within the Re B principle. In Re F (Abduction: Unmarried Father: Sole Carer) [2002] EWHC 2896 (Fam), [2003] 1 FLR 839, an outgoing case, there was doubt about whether the mothers former partner, and father of her three older children, was in fact the father of her youngest child, who had been left by the mother in his sole care (there were no pending proceedings when the child was abducted because his legal aid application had been lost). Dame Elizabeth Butler Sloss P held that he had inchoate rights of custody, whether or not he was in fact the father, there being a reasonable prospect that a court would grant him a residence order. Reunite, to whom this court is most grateful for their erudite and dispassionate intervention, has drawn our attention to the treatment of the concept of inchoate rights in other states parties to the Hague Convention. In summary, the concept has received enthusiastic support in New Zealand: in the family court in Anderson v Paterson [2002] NZFLR 641; in the High Court on appeal from the family court in M v H [Custody] [2006] NZFLR 623; and by Baragwanath J in the Court of Appeal in Fairfax v Ireton [2009] 3 NZLR 289. These were all cases of unmarried fathers who did not have guardianship rights under New Zealand law, but were enjoying regular contact with their children by agreement with the mother, so the question of inchoate rights was combined with the question of rights acquired by an agreement having legal effect. In the Ontario Superior Court of Justice in Canada, in Courtney v Springfield [2008] CanL II 35920 (ON SC), unreported, Mackinnon J applied the English concept of inchoate rights when deciding whether two children had been wrongfully removed from England and Wales. Both children had been placed with a same sex couple as foster parents and adopted by the abducting party alone because joint adoptions by same sex partners were not then permitted in English law. A shared residence order had been made in relation to one of the children but not the other. Nevertheless the left behind party had been their primary carer while the couple lived together. Following their separation the children had at first spent roughly equal time with each party, and then two days a week with the left behind party, who had also continued her parental involvement in the childrens activities and schooling. MacKinnon J held that it was not necessary to have been the primary carer in order to have inchoate custody rights within the meaning of Re B (para 56). We do not know whether the same approach might be adopted in relation to children habitually resident in Canada, although in VW v DS [1996] 2 SCR 108, the Supreme Court held that the concept of custody must be given a large and liberal interpretation as a narrow reading would contradict the very object of the implementing legislation. On the other hand, the Supreme Court of Ireland, in HI v MG [2000] 1 IR 110, held by a majority of four to one that the Hague Convention did not provide protection for inchoate rights of custody. The mother and father had gone through an Islamic ceremony of marriage in the state of New York which was not valid in US law. An unmarried father had no legal status and no rights of custody under New York law unless conferred by court order. So although the family had been living together for some five and a half years, until shortly before the mother obtained a temporary order of protection and removed the child to Ireland, and the father had already begun proceedings for a visitation order, the father did not have rights of custody within the meaning of the Convention. Barron J, dissenting, held that The reality is that the Hague Convention is not concerned with legal rights under the law of habitual residence but with rights which were actually being exercised and . which the courts of that state would not totally disregard as having no legal effect within that state (p 140). Citing the Re B line of authorities with approval, he concluded that when the party entitled to the legal rights enters into an agreement whether by words or conduct whereby the de facto exercise of those rights is passed to another whether solely or jointly with the possessor of the rights such rights so passed arise within the meaning of article 3 of the Hague Convention (p 146). The Re B concept of inchoate rights was applied as a back up reason by Morgan J in the Family Court of Australia in State Central Authority v LJK [2004] FamCA 724. The child had been born before the parents were married and the mother had obtained a consent order in Australia making her solely responsible for the childs care. But then she had returned to the United States with the child and married the father. Morgan J held that the marriage had nullified the Australian order and so the father had rights of custody by operation of law. But if he was wrong about that, he would have held that the father had inchoate rights within the Re B principle. In MW v Director General of the Department of Community Services [2008] HCA 12, (2008) 244 ALR 205, the High Court of Australia, by a majority of four to one, overturned an order made in the family court that a child be returned to New Zealand. The unmarried father had not established that he was a joint guardian under New Zealand law and his access order did not give him a right of veto over the childs removal. Hence he had no rights of custody. Kirby J dissented on both points. But despite the length and erudition of the judgments, there is no mention of the concept of inchoate rights or of the New Zealand decisions (para 28 above) which would have recognised such a father as having them. The diligence of Reunite, and indeed the other parties, has not unearthed any helpful United States authority on this issue, or indeed any authority from a non common law country. The upshot is that England and Wales have embraced the concept of inchoate rights both for incoming (requested) and outgoing (requesting) abduction cases. New Zealand has recognised it for outgoing (requesting) cases. Canada has recognised it for an incoming (requested) case from England and Wales, thus as part of our law but not necessarily theirs. Australia has recognised it for an incoming (requested) case from the USA but failed even to consider it in an incoming (requested) case from New Zealand. Ireland has expressly refused to recognise it in an incoming (requested) case from the United States. An agreement having legal effect This third source of rights of custody is explained thus in Professor Perez Veras Explanatory Report, para 70: In principle, the agreements in question may be simple private transactions between the parties concerning the custody of their children. The condition that they have legal effect according to the law of the State of habitual residence was inserted during the Fourteenth Session in place of a requirement that it have the force of law as stated in the Preliminary Draft. The change was made in response to a desire that the conditions imposed upon the acceptance of agreements governing matters of custody which one convention seeks to protect should be made as clear and as flexible as possible. As regards the definition of an agreement which has legal effect in terms of a particular law, it seems that there must be included within it any sort of agreement which is not prohibited by such a law and may provide a basis for presenting a legal claim to the competent authorities. (emphasis supplied) As already noted, there is also some New Zealand authority on when rights of custody may arise by virtue of an agreement having legal effect in New Zealand. Section 18 of the New Zealand Guardianship Act 1968 expressly provided that an agreement between the father and mother of a child as to the custody or upbringing of or access to a child was valid, although not to be enforced if the court was of the opinion that this would not be for the welfare of the child. In Dellabarca v Christie [1999] 2 NZLR 548, the Court of Appeal pointed out that this was originally enacted so as to nullify the common law rule that an agreement by a father to part with custody was void as contrary to public policy. While holding that there was no such agreement on the facts of that case, they were inclined to doubt the trial judges view that it would not have had legal effect for the purpose of article 3 of the Convention. This was followed up by the High Court in M v H (para 28 above), holding that such agreements did not have to be in writing and if established on the evidence would have legal effect for the purpose of article 3. By the time of Fairfax v Ireton (para 28 above), section 18 had been replaced by section 40 of the Care of Children Act 2004, which did not in terms state that such agreements were valid, and did provide that they could not be enforced as such, but that some or all of their terms could be embodied in a court order which could be enforced in the usual way. The Court of Appeal held that such an agreement did have legal effect for the purpose of article 3. Reunite have conducted a comprehensive search of the law reports in England and Wales, revealing 59 cases in the Family Law Reports where the phrase an agreement having legal effect appears, but only one in which its meaning was specifically considered. In Hunter v Murrow (Abduction: Rights of Custody) [2005] EWCA Civ 976, [2005] 2 FLR 1119, there had been an article 15 request to the courts of New Zealand which (unsurprisingly in the light of the above) had replied that a father enjoying regular and frequent contact with the child by informal agreement with the mother did have rights of custody and therefore that the childs removal to England and Wales had been wrongful. Nevertheless, both the English High Court and the Court of Appeal held that it was not: the English perception of the autonomous law of the Hague Convention (para 29) was that rights of access could not, without more, amount to rights of custody: citing the then most recent cases of Re V B (Abduction: Custody Rights) [1999] 2 FLR 192 and Re P (Abduction Consent) [2004] EWCA Civ 971, [2004] 2 FLR 1057 (paras 23 24). The case is therefore of very little help in determining what is meant by an agreement having legal effect. It is worth considering the answer which might be given by the English courts were an equivalent request to be made of them. Indeed, in Re W; Re B (para 25 above) I was invited on behalf of the father in B to hold that the parties had agreed that the mother could not take the child out of the jurisdiction except for short periods. I was unable to spell out any such agreement from the known facts and evidence. Moreover (pp 161 162): Even if I had done so, I would have had difficulty in bringing it even within the wide definition given by Professor Perez Vera. The common law does not permit parents to surrender their parental responsibilities (and see also the Children Act 1989, section 2(9)) nor does it recognise or enforce private agreements about the upbringing of children. It regards such agreements as contrary to public policy (see Barnardo v McHugh [1891] AC 388; see also A v C [1985] FLR 445). It cannot be suggested, therefore, that any such agreement could be enforced. But neither does it provide a basis for presenting a legal claim to the competent authorities. The father could at any time have applied for parental responsibility or prohibited steps orders: his basis for doing so would have been his relationship to the child rather than any alleged agreement with the mother. Of course, had they earlier made a parental responsibility agreement under section 4 of the Children Act 1989, that would have been an excellent example of rights of custody arising from an agreement having legal effect in our law. That was a brief and some might think inadequate summary of the position in English law. The common law rule was indeed that a married father could not surrender his parental rights by agreement, but that was modified by a provision in the Custody of Infants Act 1873 similar to that in section 18 of the New Zealand Guardianship Act. An agreement contained in a separation deed between husband and wife was not invalid by reason only that it provided for the father to give up custody or control of the child to the mother; but no court should enforce such an agreement if it would not be of benefit to the child to do so. In the famous case of Re Besant (1879) 11 Ch D 508, it was held not to be for the benefit of a little girl to enforce the agreement in a separation deed between her parents that she should live with her mother for 11 months of the year. Annie Besant had not only published atheistical books but also co operated with Charles Bradlaugh in publishing a pamphlet on birth control which the court considered obscene. In Barnardo v McHugh [1891] AC 388, the common law rule was also applied to an agreement between the mother of an illegitimate child and Dr Barnardo that she would leave the boy in his care for 12 years. To this extent, unmarried mothers were treated as on a par with married fathers. When the Guardianship Act 1973 at last gave married mothers the same rights and authority as married fathers, section 1(2) repeated the rule that any agreement to give up such rights was unenforceable, but again made an exception for agreements between husband and wife which were to operate only while they were separated; but even those agreements were not to be enforced if it would not be for the benefit of the child to give effect to it. Section 85(2) of the Children Act 1975 enacted the common law rule, providing that, subject to section 1(2) of the 1973 Act, a person cannot surrender or transfer to another any parental right or duty he has as respects a child. Both provisions were repealed by the Children Act 1989, section 2(9) of which provides that A person who has parental responsibility for a child may not surrender or transfer any part of that responsibility to another but may arrange for some or all of it to be met by one or more persons acting on his behalf. Section 2(10) provides that the person with whom any such arrangement is made may himself be a person who already has parental responsibility for the child concerned. Thus any explicit recognition of agreements between parents has gone, no doubt because the court could always decline to enforce them if they were not for the childs benefit, but (again as in New Zealand) the whole thrust of the Act was to encourage parents to make their own arrangements for their childrens future without seeking the intervention of the courts unless it was needed (see, for example, section 1(5)). Whether section 2(9) and (10) amount to giving such arrangements legal effect for the purpose of article 3 of the Hague Convention must await a fuller argument and more careful consideration than it was given in Re W; Re B. But one obvious problem is that there would appear to be nothing to prevent the parent from unilaterally rescinding the delegation before the abduction. The only other relevant case found by Reunite is the US decision in Shalit v Coppe 182 F 3d 1124 (9th Circuit 1999). The question was whether an agreement between the parents that the child would live in Israel for three years had legal effect in Israeli law such as to give the father rights of custody and make the mothers removal of the child to Alaska wrongful in Convention terms. The US Court held that it did not, because Israeli law specifically provided that agreements between parents were subject to the approval of the court. Thus it is difficult to reconcile the English cases on inchoate rights with the concept of an agreement having legal effect, unless that concept is given an extremely wide meaning. Although they all had a basis in the voluntary delegation or abandonment of the child to the care of the people from whom the child had been taken, it could not be said that such delegation had the effect of a legally binding agreement which could not be revoked without the approval of a court. The abduction, and the steps leading up to it, were the clearest possible evidence that the delegation had been revoked. Can inchoate rights be reconciled with Re J and other cases? As will already be apparent, the courts in England and Wales have tried hard to reconcile the concept of inchoate rights recognised in Re B, Re O, Re G and Re F (paras 23, 24 25, 27, above) with the decision of the House of Lords in Re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, as well as with the careful distinction drawn in the Convention between rights of custody and rights of access. Like Re B, Re J concerned a little boy born in Western Australia to unmarried parents. Their relationship had its ups and downs, its separations and its reconciliations (Lord Donaldson of Lymington MR, p 566), but they were living together in their jointly owned home when the mother brought the child to live permanently in England without telling the father of her plans. Under the law in Western Australia, an unmarried father had no right to the custody or guardianship of the child unless and until a court made an order in his favour. The Family Court of Western Australia made a sole custody order in his favour after the mother had left and followed this with a declaration that removing the child was wrongful. The House of Lords held that this was not correct. Although there was no doubt that, while the mother and father were living together with J in their jointly owned home in Western Australia, the de facto custody of J was exercised by them jointly, the legal rights of custody, including the right to decide where the child should live, belonged to the mother alone (Lord Brandon of Oakwood, p 577). Further, retaining the child in England after the court order in the fathers favour was not wrongful because by that time the child had become habitually resident in England and Wales. In Re B, Peter Gibson LJ was unable to distinguish the de facto rights exercised by the father in that case from the de facto rights exercised by the father in Re J. Waite LJ, on the other hand, distinguished it on the basis that the mother had delegated the primary care of the child to the father and the grandmother, and any court would be bound to uphold his status at least in the short term. All the cases in which inchoate rights have been recognised in this country, Re B itself, Re O, Re G and Re F, are cases in which the person with legal rights of custody had abandoned the child or delegated his primary care to others. The cases in which inchoate rights have not been recognised are cases in which the person with legal rights of custody continues to have the primary care of the child, either alone, as in Re W; Re B, Re C, and Re J [2005] (paras 25 and 26 above) or jointly with the other parent, as in Re J [1990]. However, the courts in Northern Ireland found themselves unable to reconcile inchoate rights with Re J and also with an observation of mine in the House of Lords in Re D (Abduction: Rights of Custody) [2006] UKHL 51, [2007] 1 AC 619. On their divorce in Romania, the mother had been granted a custody order and the father an access order. Following a request under article 15, the courts in Romania had held that the fathers rights did not include a right to veto the mothers bringing the child to England, did not amount to rights of custody and that the removal was not wrongful. In reaching the same conclusion, I observed (para 38): I would not, however, go so far as to say that a parents potential right of veto could amount to rights of custody. In other words, if all that the other parent has is the right to go to court and ask for an order about some aspect of the childs upbringing, including relocation abroad, this should not amount to rights of custody. To hold otherwise would be to remove the distinction between rights of custody and rights of access altogether. It would also be inconsistent with the decision of this House in Re J [1990] 2 AC 562. There an unmarried father had no parental rights or responsibility unless and until a court gave him some; but he did, of course, have the right to go to court to seek an order. Re D was not a case where mother and father were sharing the primary care of the child. Still less was it a case in which the mother had delegated the primary care of the child to the father. It was a clear case of the distinction between rights of access and rights of custody. The cases on inchoate rights were not cited to the House, no doubt because none of the experienced counsel appearing in the case considered them relevant. But they can readily be reconciled. The final case relied upon in the courts of Northern Ireland was the decision of the Court of Justice of the European Union in McB v E (Case C 400/10ppn) [2011] All ER (EC) 379. This concerned an unmarried couple who had three children together and lived in Ireland. The mother left the family home with her children and fled to a refuge. The father prepared an application to the Irish court in order to obtain rights of custody but the mother took the children to England before this could be served upon her. The father brought proceedings in England under the Convention and the Regulation for the return of the children to Ireland. The English court requested that he obtain a determination from the Irish court under article 15. The High Court held that he had no rights of custody at the time of the childrens removal. On his appeal, the Supreme Court of Ireland referred this question to the CJEU: Does [the Regulation], whether interpreted pursuant to article 7 [of the Charter of Fundamental Rights] or otherwise, preclude a member state from requiring by its law that the father of a child who is not married to the mother shall have obtained an order of a court of competent jurisdiction granting him custody in order to qualify as having custody rights which render the removal of that child from its country of habitual residence wrongful for the purpose of article 2(11) of that Regulation? The CJEU answered that question in the negative (para 44). While article 2(9) gave an autonomous meaning to the rights of custody, it followed from article 2(11) (see para 21 above) that the Regulation does not determine who has such rights of custody as may render the removal wrongful within the meaning of article 2(11), but refers that question to the law of the member state where the child was habitually resident immediately before the removal. It was the law of that member state which determines the conditions under which the natural father acquires rights of custody within the meaning of article 2(9). That law may provide that his acquisition of such rights is dependent upon his obtaining a judgment from the national court (para 43). This was not affected by article 7 of the Charter (which is the equivalent of article 8 of the European Convention on Human Rights) because it was sufficient for that purpose that the father had the right to go to court to seek rights of custody (paras 55 and 57, applying Guichard v France, (Application No 56838/00), 2 September 2003, unreported and B v United Kingdom [2000] 1 FLR 1, in the European Court of Human Rights). It is not surprising, therefore, that the courts of Northern Ireland took the view that, if the Regulation throws the attribution of rights of custody entirely onto the law of the member state where the child was habitually resident, there is no room for the concept of inchoate rights. The father had made the rather different argument that the Charter gave inchoate rights to those who could make an application to the court, but the CJEU rejected that (see para 47). Given that this too is a case between member states of the European Union, however, McB v E does present a difficulty for the grandparents. The answer may depend upon precisely what question is left entirely to the law of that member state. Discussion The dilemma presented by this case is summed up neatly in the Perez Vera Report, para 9: The Convention reflects on the whole a compromise between two concepts, different in part concerning the end to be achieved. In fact one can see in the preliminary proceedings a potential conflict between the desire to protect factual situations altered by the wrongful removal or retention of a child, and that of guaranteeing, in particular, respect for the legal relations which may underlie such situations. The Convention has struck a rather delicate balance in this regard. On the one hand, it is clear that the Convention is not essentially concerned with the merits of custody rights (article 19), but on the other hand it is equally clear that the characterisation of the removal or retention of a child as wrongful is made conditional on the existence of a right of custody which gives legal content to a situation which was modified by those very actions which it is intended to prevent. (emphasis supplied) Thus it is not enough that this was, as the Official Solicitor forcefully argues on behalf of Karl, a classic example of the sort of conduct which the Convention was designed to prevent and to remedy. Looked at from his point of view, he was wrested away from the person he regarded as his mother, who had looked after him for the whole of his life, by one person whom he scarcely knew, if he recognised her at all, and another whom he did not know at all; he was taken away from his familiar home, his clothes and his toys, his school and his country; he was taken over land and sea to a place which he did not know, where they speak a language which he did not know, to live with people whom he did not know, and to go to a new school. Small wonder that his behaviour in the first few weeks there was deeply disturbed. These were indeed the harmful effects referred to in the preamble to the Convention. But that is not enough. We are looking for the existence of a right of custody which gives legal content to the situation which was modified by the abduction. The second question, therefore, is where are we looking for this right? Some terms and provisions in an international treaty have an autonomous meaning, a meaning independent of that which they would be given in the domestic laws of any of the states parties. Those terms are meant to be interpreted and applied consistently among all the states parties. Where, as with the Convention, there is no supra national body responsible for its interpretation, the task falls to the national court. But, as Lord Steyn explained in R v Secretary of State for the Home Department, Ex p Adan [2001] 2 AC 477, 517, in doing so, it must search, untrammelled by notions of its national legal culture, for the true, autonomous and international meaning of the treaty. And there can be only one true meaning. There can now be no doubt that the content of the rights of custody protected by the Convention has its own autonomous meaning. The second conclusion of the Second Special Commission to Review the Operation of the Convention (held 18 21 January 1993) was that The key concepts which determine the scope of the Convention are not dependent for their meaning upon any single legal system. Thus the expression rights of custody, for example, does not coincide with any particular concept of custody in a domestic law, but draws its meaning from the definitions, structure and purposes of the Convention. This conclusion was more recently reaffirmed by the Sixth Meeting of the Special Commission (held 1 10 June 2011). It was for this reason that England and Wales was able to conclude, from an early stage, that a right to veto the childs relocation abroad (what the Americans call a ne exeat right) was a right of custody for the purpose of the Convention, even if its purpose was to support rights of access rather than to protect rights of custody, a view which is now widely shared among member states: see C v C (Abduction: Rights of Custody) [1989] 1 WLR 654; Re D (Abduction: Rights of Custody) [2007] 1 AC 619, especially the discussion by Lord Hope at paras 8 to 19; and, now, Abbott v Abbott 560 US 000 (2010) in the United States. It was also for that reason that Dyson LJ, in Hunter v Murrow (above, para 36) divided the question of whether the father had rights of custody into two. The first, which he called the domestic law question, was what rights the father had in national law. The second, which he called the Convention question, was whether those rights were to be characterised as rights of custody for the purposes of the Convention. To which question are the inchoate rights recognised in Re B the answer? There is a suggestion, in the written submissions from Reunite, that the Hague Conference, in its INCADAT database, may see them as falling within the first, the domestic law question. It is, of course, the case that their existence has been recognised in outgoing as well as incoming cases in England and Wales; and that MacKinnon J was persuaded that they were part of our national law in Courtney v Springfield (para 29 above). But in my view there can be no doubt that the concept was developed as an answer to the second question: in Re B, the Court was asking itself whether the position of the father amounted to rights of custody for the purposes of the Convention, not whether the national law of Western Australia would so regard it. Again, in outgoing cases such as Re W; Re B (para 25 above), the court was not suggesting that these were rights recognised for domestic law purposes, but whether they were rights which in English law were recognised for Convention purposes. If it is indeed a Convention question, then the answer should be the same in all member states. Yet we face the very real difficulty that there is very little support for such an expansive view of rights of custody among the other states parties to the Convention. Once again, the courts of England and Wales, in their enthusiasm to support the object and purposes of the Convention, have pushed at the boundaries. However they have done so for many years now, albeit in a very narrow category of cases, without apparent objection from the rest of the Hague community. One reason may be that it is apparent from the Perez Vera report that, although there must be some legal content to the factual situation disrupted by the abduction, the listed sources of that legal content were not intended to be exhaustive, thus favouring a flexible interpretation of the terms used, which allows the greatest possible number of cases to be brought into consideration (para 67). Another reason may be that the English approach is entirely consistent with the two fundamental purposes of the Convention, to protect children from the harmful effects of international abduction and to secure that disputes about their future are determined in the state where they were habitually resident before the abduction. Does the decision of the CJEU in McB v E (paras 46 47 above) constitute an insuperable obstacle to our continuing to take that approach? After anxious consideration I have reached the view that it does not. The CJEU stressed that, in the Regulation as in the Convention, the concept of rights of custody is an autonomous one (para 41). It must follow that its content is not to be determined by reference to the laws of individual member states, even if the question of who enjoys such rights is left to them. The CJEU were asked whether the Regulation precluded a member state from providing in its own law that the acquisition of rights of custody by a childs father depended upon his obtaining a judgment from a national court. They were not asked whether the Regulation precluded a requesting state from regarding whatever legal situation the father might be in as being within the autonomous concept of rights of custody for the purpose of the Regulation. If a strictly limited category of so called inchoate rights fall within that concept for the purpose of the Convention, there is no reason why they should not do so for the purpose of the Regulation, which is intended to strengthen rather than weaken the implementation of the Convention. As it happens, the father in McB v E would not have fallen within the Re B concept, as at the very highest he was sharing care with the mother. How then may the people who possess that strictly limited category of rights be defined, consistently with the principles and purposes of the Convention and the Regulation? In my view the continuum as described in Re B is imprecise. It risks disrupting the important distinctions drawn in the Convention between rights of custody and rights of access and between those who do and those who do not have something which can plausibly be termed a right. I would define such people thus. (a) They must be undertaking the responsibilities, and thus enjoying the concomitant rights and powers, entailed in the primary care of the child. Thus, for example, our law recognises the obvious truth that people who are actually looking after a child, even if they do not have parental responsibility, may do what is reasonable in all the circumstances of the case for the purpose of safeguarding and promoting the childs welfare (Children Act 1989, s 3(5)). (b) They must not be sharing those responsibilities with the person or persons having a legally recognised right to determine where the child shall live and how he shall be brought up. They would not then have the rights normally associated with looking after the child. (c) That person or persons must have either abandoned the child or delegated his primary care to them. (d) There must be some form of legal or official recognition of their position in the country of habitual residence. This is to distinguish those whose care of the child is lawful from those whose care is not lawful. Examples might be the payment of state child related benefits or parental maintenance for the child. And (e) there must be every reason to believe that, were they to seek the protection of the courts of that country, the status quo would be preserved for the time being, so that the long term future of the child could be determined in those courts in accordance with his best interests, and not by the pre emptive strike of abduction. Those requirements are consistent with the twin purposes of the Convention. First, they protect the child from the harmful effects of international child abduction by recognising that he should not be peremptorily removed from their care. Second, they enable the courts of the childs habitual residence to determine where his long term future should lie. It is possible to analyse them in terms of an agreement having legal effect, but only if the unilateral (and usually clandestine) decision of the abducting parent is not seen as effective to revoke that agreement. Applying the principle to the facts How then does such a concept apply in this case? The grandparents had for many years undertaken the responsibilities entailed in the primary care of the child. They had exercised all the decision making rights and powers associated with that. Until days before the abduction they had done so with the benefit of some specific authorisations granted by the mother. The mother had undoubtedly delegated the care of her son to them. For most of that period the grandmothers status had been officially recognised. Had it not been for what appears to have been the automatic cancellation of that status on the mothers notification of her return, there would have been no problem at all in ascribing rights of custody to the grandmother. There would have been no need to involve any concept of inchoate rights. But it seems to me that her position did still have some legal content after that order was revoked. The Childrens Rights Division, which appears to have been the competent authority for this purpose, was monitoring and controlling the situation of the child. An order was agreed on 22 February and confirmed on 27 February that the mother should have weekly contact with the child. Obviously this was on the basis that it was in the best interests of the child to remain living with his grandparents for the time being. The question for the authorities was whether, given the childs fragile psychological condition, it was in his best interests to be reintroduced to his mother. It can also be concluded from the legal advice which the mother was given that had either she or the grandmother taken legal proceedings the status quo would have been preserved while these were resolved. I conclude, therefore, that the grandmothers status did constitute rights of custody in relation to Karl on the day when he was removed for the purpose of the Convention and the Regulation. Her status had legal content derived from the decisions taken by the competent authorities in the light of the mothers previous delegation of primary care to her. It had not been deprived of all content by the mothers notice to the authorities (which may or may not have been communicated to the grandmother). Thus to take him out of the country without her consent was in breach of those rights and wrongful in terms both of the Convention and the Regulation. Conclusion It follows that the appeal must be allowed. It also follows that this court is obliged, pursuant to article 12 of the Convention and article 11 of the Regulation, to order that the child be returned to Lithuania forthwith. The mother has not yet sought to raise any of the exceptions to that obligation contained in article 13 of the Convention; nor does the possible exception in article 12 for children who have become settled in the country to which they have been abducted apply, as these proceedings were begun less than a year after the abduction. This is not, however, the result for which the Official Solicitor contends on behalf of the child. While strongly arguing that this was indeed a wrongful removal, which should be recognised as such by this court, she submits that there should be a reconsideration of the childs position and the effect of another move upon him after two years of living with his mother and her family. This submission, with all respect to her, is trying to have it both ways and ignores the binding effect of article 12 of the Convention and article 11 of the Regulation. This court cannot allow the inevitable effect of the passage of time involved in the appellate process (however expedited) to affect its decision. However, although they have given instructions to pursue this appeal, it may be that this is also what the grandparents would prefer. In her second affidavit, the grandmother states that if the court in Northern Ireland is satisfied that it is in Karls best interests to remain in Northern Ireland with the mother, then they would be willing to consider allowing this, but only on condition that proper contact arrangements are put in place and incorporated in a court order which could be enforced against the mother. Despite all that has passed, she may still be prepared to consider an agreed solution along those lines and the mother, of course, now has every incentive to do so. The mother has indeed brought this situation upon herself, and more importantly upon her son, not only by her cruel and high handed actions in taking the law into her own hands, but also by her insensitive handling of the relationship between her son and the people whom he had regarded as his parents for so long. She has cut off all contact between them and appears to have poisoned his mind against them by suggesting that they lied to him. She should now be doing her best to put that right. Otherwise, the only conceivable way of getting this case back before the High Court in Northern Ireland would be if the mother were to seek permission, even at this late stage, to raise one of the exceptions in article 13 to the courts obligation to order the return of the child. We have not heard argument upon whether this is even possible, given the stage which the proceedings have reached. But were the mother to make such an application, and were the High Court to grant her such permission, it would be necessary to stay this courts order until the case could be heard. All these matters would be better dealt with by the High Court in Northern Ireland. Accordingly, I would direct that if within 21 days the mother applies to the High Court for permission to apply for the child not to be returned, pursuant to article 13 of the Convention, the order of this court is to be stayed until the matter is mentioned, on the first available date, before the Family Division Judge in the High Court in Northern Ireland. Should he permit the mother to make her application, and I am very far from suggesting that he should, he should also have power to stay the order of this court until the matter is determined. It goes without saying that the time table for hearing and determining the whole matter should be very tight. There is one final comment. Cases like this are mercifully rare and ought to be rarer still. This is because the High Court retains its inherent jurisdiction to order the immediate return of a child who has been removed from his country of habitual residence. That jurisdiction is governed by the best interests of the child. But it has long been recognised that there are situations in which those interests are best served by a swift return to his home country for his future to be decided there. Indeed, in cases within the European Union, jurisdiction to determine matters of parental responsibility remains with the country of habitual residence unless and until the child acquires a new habitual residence. There are therefore cases, and this is one, in which it is appropriate to allow an application under the inherent jurisdiction to proceed hand in hand with an application under the Hague Convention (as in fact happened in Re O, para 24 above, where Cazalet J made return orders under both). The Family Division in Northern Ireland may therefore wish to reconsider its practice of automatically postponing such applications until the Hague case has been determined. I consider that the court should have dismissed the appeal. LORD WILSON The grandparents need to establish that on 12 March 2012 they had rights of custody in relation to Karl. But in my view they face an insuperable difficulty. For on 20 February 2012 the Childrens Rights Division of the Social Security Department of Klaipeda City Municipal Administration in Lithuania revisited the order dated 10 January 2007 by which it had invested temporary care of Karl in them or, to be more accurate, in the grandmother. Its order dated 20 February was as follows: RE: TERMINATION OF TEMPORARY CARE Under the Order 28.05.2007 of the Social Security Minister it is indicated in the children temporary care provision that temporary care terminates when the parents return from a foreign state and inform Childrens Rights Division about it. [The mother] informed Childrens Rights Division on 20.02.2012 that she came back from abroad and she will take her son into her own care. Referring to the Order stated above and considering that [the mother] did inform about the return, [Karls] temporary care is held to be terminated from 20.2.2012. There are grounds for suspecting that, in the translation of the order into English, that last date has been wrongly typed as 20 February and should have read 28 February 2012. But whether it took effect immediately or eight days later, the order dated 20 February terminated the legal entitlement of the grandparents to care for Karl even on a temporary basis. Why? Because the mother will take her son into her own care. I cannot accept that the grandparents had rights of custody in relation to Karl after the order for temporary care of him was terminated. I am convinced that the effect of the order dated 20 February 2012 was that they no longer had rights of custody. Lady Hales ingenious conclusion otherwise seems to me to be strained. She relies in particular, at para 59, on the agreed order for the mothers contact with Karl dated 22 February 2012. The courts limited understanding of the order for contact largely derives from the notice to the grandfather dated 2 March 2012. This refers to a meeting on 22 February between the mother and the grandmother in the presence of the child psychologist and to the arrangement of a contact visit on Monday 27 (or possibly Wednesday 29) February; and it makes a recommendation, as of 2 March, that temporary contact on Wednesdays should be maintained. In one of her affidavits the grandmother casts light on these arrangements: she says that on 22 February the psychologist recommended that [the mother] take her time to get to know her son. I infer that the temporary contact order reflected the mothers acceptance at that time of the advice that she should get to know Karl again through some contact visits prior to taking him into her care. I cannot infer that its effect was to invest the grandparents with the rights of which the termination order, made almost simultaneously, clearly deprived them. Lady Hale suggests at para 59 above that the corollary of the temporary contact order agreed on 22 February 2012 was the mothers acceptance that Karl should continue to reside temporarily with the grandparents. She also suggests that, had any dispute about his future been presented to it, a Lithuanian court would have directed that he should continue to reside with them pending its resolution. I agree with both of Lady Hales suggestions but I do not accept the significance which she attaches to them. The search is for rights of custody in the grandparents. The mothers apparent concession that, presumably only for a few weeks, she should delay her removal of Karl from the home of the grandparents says nothing about rights of custody other than her own. And a courts usual concern to maintain a child in his existing environment pending its resolution of a dispute about his future reflects its usual inability to resolve a dispute immediately and a resultant concern that a childs initial move might later fall to be reversed. Take a father without parental responsibility who, following a period of contact, refuses to return an adolescent child to the mother on the basis that the child refuses to return to her. A court in the UK is likely to order the mother not to seek to remove the child from the fathers home pending its urgent inquiry but it does not thereby invest the father with anything which in Convention terms could be described as rights of custody. Lady Hale has conducted a valuable tour dhorizon of the doctrine of inchoate rights and concludes that it is by reference to the doctrine that the grandparents establish that on 12 March 2012 they had the requisite rights. I will explain why I agree with much, but not all, of Lady Hales analysis of the doctrine. But it will be essential to bear in mind that, as Lady Hale accepts at para 24, the inchoate rights must be rights of custody. Can the inchoate rights of a childs carer to prevent, for a few weeks, his removal by a person who on any view had rights of custody amount to inchoate rights of custody? In my view the closest scrutiny falls to be given to any deconstruction of the doctrine which yields an affirmative answer. Article 3 of the Convention provides that rights of custody may arise in particular in any of three ways, namely by operation of law or by reason of a judicial or administrative decision or by reason of an agreement having legal effect under the law of the state of the childs habitual residence: see para 19 above. Article 2.11 of the Regulation provides that rights of custody are acquired in any of the same three ways, albeit described in slightly different terms, but it omits the words may arise in particular: see para 21 above. My view is that the omission was deliberate. I infer that it reflects a study of Convention jurisprudence which gave no support for the view that rights of custody could arise otherwise than in one of the three ways and therefore a conclusion that the words were redundant and productive only of confusion. At all events my view is that the doctrine of inchoate rights, first articulated in the courts of England and Wales, reflects a legitimate application of the third of the prescribed ways in which rights of custody may arise, namely by an agreement having legal effect. Usually the agreement will be express and if, as Professor Perez Vera explains in the passage of her report quoted at para 34 above, it provides a basis for presenting a legal claim to the competent authorities, it will have the requisite legal effect. Even in the absence of an express agreement, however, it may, in certain unusual circumstances, be proper to infer from the conduct of a person with rights of custody that she (or he) has agreed that another person should not just help to care for the child nor even care single handedly for him but should have rights of custody over him. If in those circumstances there is a likelihood that, had it been asked to do so, a court in the state of habitual residence would have given legal effect to the inferred agreement by investing that other person with rights of custody, one can properly conclude that that other person had rights of custody even though they were inchoate. The words of the Regulation seem to me to allow no wider principle. The crux of Lady Hales judgment lies in para 59 above, where she identifies five requirements which must be satisfied before persons can be held to have had inchoate rights of custody. She says: (a) that they must be undertaking the responsibilities, and thus enjoying the concomitant rights and powers, entailed in the primary care of the child; (b) that they must not be sharing these responsibilities with the person having a legally recognised right to determine where the child shall live and how he shall be brought up; (c) that that person must have either abandoned the child or delegated his primary care to them; (d) that there must be some form of legal or official recognition of their position in the country of habitual residence; and (e) that there must be every reason to believe that, were they to seek the protection of the courts of that country, the status quo would be preserved for the time being so that the long term future of the child could be determined in those courts in accordance with his best interests and not by the pre emptive strike of abduction. Respectfully, I agree with (a), (b) and (c) above; discern no logical need for (d); and disagree with (e). In my view (e) sets the bar too low. For it fails to reflect the fact that the search is for rights of custody (defined in article 2.9 of the Regulation as including in particular the right to determine the childs place of residence) rather than a right to continue to care for a child in a specified place on an interim basis pending the resolution of proceedings. So my formulation of the requirement at (e), which I would re label as the requirement at (d), would be that there is a likelihood that, had it been asked to do so, a court in the state of habitual residence would have inferred from the facts in (a), (b) and (c) an agreement that the carers should have rights of custody and would by virtue of the agreement have proceeded to invest them with such rights. It is also important to remember, as Reunite points out, that the inquiry is not into whether the carers had at some earlier stage had rights of custody but whether they had them at the time of the childs removal. In my view it follows that the facts required at (a), (b) and (c) must have existed immediately prior to the removal and that the hypothesis at (d) is of an application to the court at that same point. No doubt the unilateral removal of the child amounts to revocation of the requisite agreement but the inquiry is of course into its subsistence immediately prior thereto. It will be easy to understand the basis of my conclusion that the grandparents in the present case had no inchoate rights of custody on 12 March 2012 nor at any time after 20 February 2012. In respect of the period from that date onwards it cannot be said, for the purposes of the fact required at (c), that the mother abandoned Karl; and I doubt that it can be said that she was continuing to delegate his primary care to the grandparents. On any view, however, no court at any time after 20 February could have inferred an agreement on her part that the grandparents should have rights of custody or, by virtue of any agreement, could have invested them with such rights. I am clear that the Lithuanian authorities were correct to advise the grandmother immediately after Karls removal that she had no rights in respect of him. There is no need for this court to shoe horn into the Convention a case, like the present, which (so I consider) does not naturally fit into it. The risk is that it thereby distorts the domestic jurisprudence relating to the Convention; sets it at odds with the international jurisprudence; and compromises the need for a swift and straightforward inquiry into the existence of rights of custody. I would develop Lady Hales final comment in para 64 above. The grandparents case was tailor made for a prompt application for an order for Karls immediate return to their care pursuant to the inherent jurisdiction of the High Court recently reaffirmed by this court in In re L (A Child) (Custody: Habitual Residence), [2013] UKSC 75, [2013] 3 WLR 1597, at para 28 (Lady Hale). The courts inquiry would then have been into the best interests of Karl but who knows? its early conclusion might well have been that they were served by his immediate return to Lithuania on the basis that, irrespective of whether they retained jurisdiction under the Regulation, its courts were better placed to conduct the full inquiry. The unsuitability of the present proceedings is further exemplified by the unusual order which Lady Hale proposes, namely that the mother should be afforded a limited opportunity (a) to seek to raise a defence under article 13 of the Convention to the grandparents application for an order for Karls return to Lithuania and (b) therefore also to apply to the High Court for a stay of the order for return which, so Lady Hale concludes, this court should make. This court would, I respectfully suggest, turn elementary procedural rules on their head if it were to indorse the possibility that a defence to an application might be raised notwithstanding that an order granting it had already been made. Were the possible defence apt, I would have expected this court to decline to make the substantive order for Karls return and to remit the grandparents application for re determination in the light of this courts rulings. But would such a defence be apt? The basis of it is the following submission of the Official Solicitor: It did take almost one year before the grandparents made the application under the Convention and now another year has passed. If this Court decides the case by recognising [that] a wrongful removal has taken place, there should be a reconsideration of the childs position and the effect of another move upon him after two years of living with his mother and family, including a half sibling. Expert evidence may be necessary and further enquiries can be made on behalf of the child about re establishing relationships with his home country, his grandparents and how he feels now. In other words the Official Solicitor unsurprisingly calls for a welfare inquiry prior to any return of Karl to Lithuania. The courts proposed response is that the only possible vehicle for inquiry would be a contention on the part of the mother pursuant to article 13 of the Convention that there is a grave risk that Karls return would expose him to psychological harm or otherwise place him in an intolerable situation and, conceivably also, that he objects to being returned and has attained an age and degree of maturity at which it is appropriate to take account of his views. I consider, however, that the identified vehicle is not fit for its purpose. Article 11.3 of the Regulation requires a member state to determine an application under the Convention expeditiously and, save in exceptional circumstances, within six weeks of its issue. The grandparents application has already been on foot for more than a year. In my view it would be contrary to principle for the mother to be allowed at this stage to raise a defence which would apparently be based to a substantial extent on the consequences for Karl of the existing delay in determination of the application and which would be productive of significant further delay. The determination of an application under the Convention remains an exercise only in choosing the forum for the welfare inquiry in accordance with its rules and a defence under article 13 impacts only on that choice. Irrespective of whether the mother could now establish the facts specified in article 13, the ultimate determination of the grandparents application, if reopened, can only be either that Karl should be returned to Lithuania (where it would surely now be increasingly difficult to conduct the welfare inquiry) or that he need not be returned to Lithuania (being an order which would entirely fail to address what at first sight is the most glaring shortcoming in the current arrangements for Karl, namely the absence of contact between him and the grandparents). On my analysis of inchoate rights of custody, the way forward would, by contrast, have been clear. If, as I consider to be the case, the grandparents lacked rights of custody on 12 March 2012, their application would correctly have been dismissed. Under article 16 of the Convention the dismissal would have opened the door to an entitlement in the High Court in Northern Ireland to conduct a welfare inquiry in respect of Karl. The grandparents would therefore have proceeded to seek leave to apply for an order for contact, or if so advised for an order for residence, in respect of Karl under article 10 (2)(b) of the Children (Northern Ireland) Order 1995, 1995 No.755 (N.I.2). |
This reference, made by the Counsel General for Wales, raises for determination whether the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill is within the legislative competence of the National Assembly for Wales (the Welsh Assembly). The issues involved are novel and important, and the Counsel General was right to recognise them as such and to make the present reference with a view to resolving them. The reference has been well presented and argued on both sides. The Bill contains in section 1 its own overview. It (a) imposes liability on persons by whom or on whose behalf compensation payments are made to or in respect of victims of asbestos related diseases to pay charges in respect of National Health Service services provided to the victims as a result of the diseases; (b) makes provision for the certification of the amount of the charges to be paid, for the payment of the charges, for reviews and appeals and about information; (c) extends insurance cover of liable persons to their liability to pay the charges. Liability to pay NHS charges arises under section 2 where a compensation payment is made to or in respect of a person (the victim) in consequence of any asbestos related disease suffered by the victim. It is imposed on the person who is or is alleged to be liable to any extent in respect of such disease and by whom or on whose behalf the compensation payment is made after the Bill comes into force. It is convenient to describe such a person as the compensator. The liability is to reimburse the Welsh Ministers in respect of any relevant Welsh NHS services provided to the victim as a result of the disease, in an amount set or amounts out in, or determined in accordance with, regulations under section 6(2) and specified in a certificate to be issued by the Welsh Ministers subject to any limit fixed by regulations under section 6(5)(a). The Bill contains extensive provisions requiring sufferers, compensators and others to provide information (section 12), requiring compensators to apply for and the Welsh Ministers to issue certificates specifying the relevant charges arising under section 2 in accordance with regulations and reduced where appropriate to reflect any contributory fault on the part of the sufferer (section 6) as well as regulating other matters, such as the time for payment of charges (section 7), the recovery of charges (section 8), the review of certificates (section 9), appeals against certificates (section 10 and 11) and cases in which compensators make lump sum or periodical payments (section 13). Section 14 deals with the liability of insurers. It provides: (1) Where the liability or alleged liability of the person by whom or on whose behalf a compensation payment is made is, or (if established) would be, covered to any extent by a policy of insurance, the policy is to be treated as covering the persons liability under section 2. (2) Liability imposed on the insurer by subsection (1) cannot be excluded or restricted. (5) This section applies in relation to policies of insurance issued before (as well as those issued after) the date on which this section comes into force. (6) References in this section to policies of insurance and their issue include references to contracts of insurance and their making. Section 15 provides: (1) The Welsh Ministers must, in the exercise of their functions under the National Health Service (Wales) Act 2006, have regard to the desirability of securing that an amount equal to that reimbursed by virtue of section 2 is applied, in accordance with that Act, for the purposes of research into, treatment of, or other services relating to, asbestos related diseases. (2) The Welsh Ministers must report annually to the National Assembly for Wales on the application of amounts equal to sums reimbursed by virtue of section 2. The Bill in these circumstances has the following characteristics: (i) First, by section 2, it imposes a novel statutory or quasi tortious liability towards the Welsh Ministers on compensators (defined as set out in para 3 above). a. This liability is a liability for pure economic loss which does b. not exist and has never existed at common law. It does not reflect any liability which the compensator had to the victim, since the victim has no liability to the Welsh Ministers to meet any economic loss the Welsh Ministers may have suffered. c. The liability exists whether the compensation is paid to the victim with or without admission of liability; the Counsel General in written submissions states that a key point is that it is a necessary condition of the Bill attaching to insurers that there must be liability established or conceded. But a payment without admission of liability does not in law or even de facto amount to a concession of liability. d. The liability is based on future compensation payments made in respect of actual or potential wrongs, the operative elements of which were committed many decades ago, though the victims are or will only suffer the consequences and the Welsh National Health Service will only have to bear the hospitalisation costs in the future. (ii) Second, by section 14, the Bill imposes a new contractual liability on the liability insurers of compensators (typically employers liability insurers such as those involved in the Trigger litigation: Durham v b. c. d. BAI (Run Off) Ltd [2012] UKSC 14, [2012] 1 WLR 867) to cover any liability which such compensators have as a result of section 2. a. It imposes this new liability on any insurer whose policy would to any extent cover the compensator for any liability which the compensator has or would (if established) have towards the victim. It imposes it irrespective of any policy exclusion or restriction. It imposes it in relation to policies issued before as well as after the date section 14 comes into force and so in relation to policies issued and covering events occurring many decades ago. It does all this although indeed no doubt because such liability insurers would not otherwise be likely to have to answer for any charges levied under section 2. This is clear on any reading of the typical employers liability policy wordings summarised in annex A to my judgment in the Trigger case. In essence, such policy wordings cover employers liability in damages for claims by actual or former employees suffering injury or disease. They are, furthermore, triggered by the original exposure to asbestos during the course of the insurance, not by the imposition of charges under section 2 as a result of compensation payments made, with or without admission of liability, long after the expiry of the policy period. (iii) Third, section 15 provides that the Welsh Ministers must, in the exercise of their functions under the National Health Service (Wales) Act 2006 (the NHS (Wales) Act), have regard to the desirability of securing that an amount equal to that reimbursed by virtue of section 2 is applied, in accordance with that Act, for the purposes of research into, treatment of, or other services relating to, asbestos related diseases. The Bill thus imposes new liabilities on compensators in respect of past conduct and on liability insurers under past insurance contracts. The Counsel General stresses that compensators would only incur such liabilities as a result of their making future compensation payments to or in respect of victims of asbestos related diseases who suffer future hospitalisation; and that insurers would only incur such liabilities under such contracts upon such compensation payments being made and then only if such contracts would to some extent cover any liability which the compensator might have towards the asbestos related disease sufferer to make such compensation payments. The Bill is thus not retrospective in the fullest sense, but it does significantly restructure both the consequences of actual or possible negligence or breach of statutory duty committed long ago by compensators, and the terms of and liabilities attaching under insurance policies also underwritten years ago to cover any such negligence or breach of duty. Unsurprisingly, in view of the identity of the interveners, the Association of British Insurers, the primary focus of submissions before the Supreme Court has been on section 14 of the Bill. But, inevitably, attention has also had to be given to the aim and effect of other provisions of the Bill, particularly section 2, which is directed to compensators. The question referred to the court subdivides into two more specific issues: whether the Bill, and in particular, but not exclusively, section 14, falls within section 108(4) and (5) of the Government of Wales Act 2006 (GOWA), which in turn depends in this case upon whether it relates to Organisation and funding of national health service in paragraph 9 of Part 1 of Schedule 7 to GOWA an issue on which section 15 has a potential bearing; and whether, if it does fall within section 108(4) and/or (5), it is nonetheless outside the Welsh Assemblys competence by virtue of section 108(6), read with section 158(1), on the ground that it is incompatible with the Convention rights scheduled to the Human Rights Act 1998. It is logical to take these issues in that order, since section 108(6) operates as a restriction on the Assemblys legislative competence in respect of matters which fall within section 108(4) and/or (5). The Counsel General must however succeed on both issues in order to make good his submission that the Bill is within the Assemblys legislative competence. The issue whether the Bill falls within section 108(4) and/or (5) was not originally raised by the interveners or therefore addressed in the Counsel Generals written case. It was nonetheless raised squarely in the interveners written case, and has been covered by oral submissions and written notes on both sides. Competence under section 108(4) and (5) Consequent upon the referendum held in 2011 under section 105(1) of GOWA, the competence of the Welsh Assembly is no longer determined by section 94 read with Schedule 5 to the Act. Section 94 has, along with the rest of Part 3 of the Act, ceased under section 106(1) to have effect. Instead the Welsh Assembly has (since 5 May 2011: see The Government of Wales Act 2006 (Commencement of Assembly Act Provisions, Transitional and Saving Provisions and Modifications) Order 2011 No 1011 (W.150)) had the expanded legislative competence provided by sections 108 and 109 read with Schedule 7. Under section 108(3) a provision is only within the Assemblys legislative competence if it falls within subsection (4) or (5). A provision falls within section 108(4) if it relates to one or more of the subjects listed under any of the headings in Part 1 of Schedule 7 and does not fall within any of the exceptions specified in that Part of that Schedule . A provision falls within section 108(5) if (a) it provides for the enforcement of a provision (of that or any other Act of the Assembly) which falls within subsection (4) or a provision of an Assembly Measure or it is otherwise appropriate for making such a provision effective, or (b) it is otherwise incidental to, or consequential on, such a provision. The relevant matter specified in Part 1 of Schedule 7 on which reliance is placed to establish competence to enact the Bill is para 9 headed Health and health services and reading: Promotion of health. Prevention, treatment and alleviation of disease, illness, injury, disability and mental disorder. Control of disease. Family planning. Provision of health services, including medical, dental, ophthalmic, pharmaceutical and ancillary services and facilities. Clinical governance and standards of health care. Organisation and funding of national health service. Exceptions Abortion. Human genetics, human fertilisation, human embryology, surrogacy arrangements. Xenotransplantation. Regulation of health professionals (including persons dispensing hearing aids). Poisons. Misuse of and dealing in drugs. Human medicines and medicinal products, including authorisations for use and regulation of prices. Standards for, and testing of, biological substances (that is, substances the purity or potency of which cannot be adequately tested by chemical means). Vaccine damage payments. Welfare foods. Health and Safety Executive and Employment Medical Advisory Service and provision made by health and safety regulations. The critical phrase is Organisation and funding of national health service. The questions arise, firstly, whether this covers the imposition of a statutory liability on compensators who were or are alleged to have been wrongdoers, and, secondly, if it does, whether it also covers the amendment of any insurance contracts which would cover such compensators to any extent for any liability they had to the sufferers of the relevant asbestos related disease, so as to make the relevant insurers answer for any compensation payment made irrespective otherwise of the terms of the insurance contract. These questions raise for consideration the vires of the core elements of the Bill under section 108(4) and para 9. But, if the conclusion is that section 2 does, but section 14 does not, fall within section 108(4) and para 9, then the question still arises whether section 14 can be regarded as providing for the enforcement of that provision or as being otherwise appropriate for making such a provision effective or otherwise incidental to, or consequential on, such a provision within section 108(5). On behalf of the interveners, Mr Michael Fordham QC submits that para 9 gives general competence to regulate the Welsh NHS, the services which it provides and the standards its meets, but that it lacks, noticeably, any provision enabling charging for such services. The phrase Organisation and funding of national health service concerns, in his submission, the allocation by the Welsh Ministers of monies to fund the Welsh NHS and their control of spending by the Welsh NHS of any other monies available to it under (now) section 175 of the NHS (Wales) Act, enacted by the United Kingdom Parliament on 8th November 2006, just over three months after GOWA. He submits that there is nothing in para 9 to suggest any wider meaning. More specifically, on the interveners case, para 9 gives general competence in areas such as those dealt with specifically in Chapter 6 (Finance) of Part 11 of the NHS (Wales) Act. Chapter 6 provides that the Welsh Ministers are to decide what funds to allot to Special Health Authorities, what directions to give or conditions to attach regarding such funds (section 171) and what duties and resource limits to impose on such Authorities (sections 172 and 173). It further identifies what funding the Welsh Ministers must in each financial year provide to each Local Health Board (section 174) and the financial duties and resource limits to which such Boards are subject (sections 175 and 176) and makes further provision about the expenditure of such Boards (section 177 and Schedule 8). Exercising the competence provided in these areas, the Welsh Assembly has by the National Health Service Finance (Wales) Act 2014 recently amended section 175, to provide for each Local Health Board to balance its expenditure and income in each three year accounting period, rather than in respect of each financial year as originally enacted. But what para 9 is not, Mr Michael Fordham QC submits, is a provision which itself enables the Welsh Assembly to impose (or authorise the Welsh Ministers to impose) charges on anyone either for Welsh NHS services or on any other basis. It is common ground that the Welsh Ministers do not have (and the Welsh Assembly does not have and cannot confer) general fiscal powers, an exception noted expressly in relation to economic development in paragraph 4 of Part 1 of Schedule 7 GOWA. The Welsh Government has large spending powers, but its funding of the services it supports is, at present, fundamentally dependent on the United Kingdoms block grant. The Welsh Assembly has limited powers or control in respect of business rates and council tax, in which connection the reference to Local government finance in paragraph 12 of Schedule 7 is relevant. That paragraph gives competence (subject to exceptions which I need not set out here) in respect of the Constitution, structure and areas of local authorities. Electoral arrangements for local authorities. Powers and duties of local authorities and their members and officers. Local government finance. The framework within which business rates and council tax are charged is provided by the Local Government Finance Act 1988, as amended in 1992 and 2012. Such taxes are payable to the relevant local government authorities, not to the Welsh Ministers. The reference to Local government finance enables the Welsh Assembly, for example, to determine the level of business rates or limit council tax increases chargeable under these statutes (though, under the block grant system, this does not appear to affect the overall level of funding available to the Welsh Government). But, it cannot on any view be read as a general power enabling the Welsh Assembly to raise funds in any way it may decide, even if such funds are ear marked for use to support local government activities. In support of a generous interpretation of the concept of Organisation and funding of national health service, the Counsel General drew attention to the previous legislative competence under section 94 and Schedule 5 of GOWA, to enact measures relating to the red meat industry in relation to increasing efficiency or productivity, improving marketing, improving or developing services or ways in which the industry contributes to sustainable development. This was treated by the Welsh Assembly as enabling the enactment of the Red Meat Industry (Wales) Measure 2010, permitting the imposition of a levy to meet expenditure incurred on such objectives. He points out that that measure was not challenged. Equally, this means that there is no authority throwing light on its competence. The argument in favour of a generous interpretation can be further advanced, as Lord Thomas notes, by the consideration that the Welsh Assembly is undoubtedly entitled to expend monies out of the block grant on matters covered by other paragraphs of Schedule 7, such as para 5 covering education, training and the careers service, which do not make any specific reference to finance or funding. The specific reference to funding in para 9 may therefore suggest an intention to cover matters other than mere allocation of funds. I do not on the other hand find any assistance in the exception to para 9 relating to the regulation of prices of human medicines and medicinal products. Schedule 8 to the NHS (Wales) Act contains provisions relating to the reimbursement of any remuneration referable to the cost of drugs which is paid by any Local Health Board in any year. The exception in para 9 appears simply to make clear that the Welsh Assembly has no competence to regulate the price of such drugs. It does not to my mind carry either sides argument on the present issues. The language of paragraph 9 of Schedule 7 addresses matters all closely linked to the internal organisation and the delivery of national health services promoting health, preventing, treating and alleviating (or controlling) disease, illness, injury, disability or mental disorder, providing services, governance and standards of care and finally organisation and funding of national health service. A natural inference is, I think, that funding was also seen as closely linked with the internal organisation and delivery of health services. As background to an understanding of para 9, it is not, I consider, inadmissible to take note of the position regarding charging for health services as it was under the National Health Service Act 1977 in force when GOWA was passed and as it was re enacted, in relation to Wales, by the NHS (Wales) Act 2006, passed three months after GOWA was enacted, and still in force. A fundamental tenet of the National Health Service from its outset has been that the services it provides should be free of charge, except where any relevant statutory provision expressly provides for the making and recovery of charges: section 1(2) of the National Health Service Act 1946, section 1(2) of the National Health Service Act 1977, and, now, in relation to Wales, section 1(3) of the NHS (Wales) Act 2006, described as an Act to consolidate certain enactments relating to the health service, among which were necessarily the National Health Service Act 1977 so far as it concerned Wales. Section 1(3) provides that the services provided must be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed. The Counsel General addressed submissions to the question whether in context this refers only to enactments by the Westminster Parliament, or whether it extends to the Welsh Assembly. I have no difficulty in accepting that it extends to the latter, but it does not itself confer competence. Competence to provide for such charges must be found elsewhere. Within the NHS (Wales) Act itself there are provisions which do expressly confer on the Welsh Ministers power to make regulations providing for the making and recovery of charges prescribed in respect of the supply under that Act of drugs, medicines or appliances except for a patient who is resident in hospital or in respect of pharmaceutical services: see sections 121 and 122. These, as the Counsel General points out, are the successors to the powers to make or remit prescription charges formerly existing under sections 77, 83, 83A (as inserted by section 14(1) of the Social Security Act 1988) and 126(4) of the National Health Service Act 1977, which powers were then devolved to the Welsh Assembly by Schedule 1 to the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), under the Government of Wales Act 1998. Section 126(1) of the 1977 Act was also amended by section 6 of the National Health Service Reform and Health Care Professions Act 2002 to provide expressly that regulations made under the 1977 Act might be made by an instrument made by the Welsh Assembly. It was pursuant to the powers so devolved and conferred that the Welsh Assembly enacted its flagship reform, The National Health Service (Free Prescription and Charges for Drugs and Appliances) (Wales) Regulations 2007 (SI 2007/121 W11), which abolished prescription charges with effect from 1st April 2007. By the same token, if it were so decided, prescription charges could now be restored by regulations made by the Welsh Ministers under sections 121 and 122. But section 122 would in terms prevent their imposition in respect of a patient resident in hospital. Another provision of the same Act enables the Welsh Ministers to recover in respect of accommodation in single rooms or small wards which is not needed by any patient on medical grounds: section 137. On the Counsel Generals case, the coming into force on 5 May 2011 of paragraph 9 of Schedule 7 of GOWA gives the Welsh Assembly competence to override or vary the scheme which existed under the 1977 Act when GOWA was passed and was consolidated in relation to Wales three months later by the NHS (Wales) Act by imposing charges on any basis which can be said to contribute to funding the Welsh NHS (with the sole qualification that the exception from para 9 would preclude it regulating the prices of Human medicines and medicinal products). The schemes of the National Health Service Acts and of GOWA are legally separate, and nothing in principle prevents the conclusion which he advocates. Against such a conclusion, it may however be said that it gives rise to duplication of competences, with the Welsh Assembly having legislative competence in areas where the Welsh Ministers have delegated powers under the NHS (Wales) Act, and that it gives para 9 an extended scope of uncertain width, when its more obvious aim is the allocation to health boards and other health authorities or professionals of resources available to the Welsh Ministers and the Welsh National Health Service, rather than the raising of revenue. I do not consider that the essentially budgetary, accounting, auditing and macro financial provisions of Part 5 (sections 117 145) of GOWA are by themselves a necessary answer to this point. In these circumstances, although I see the force of the Counsel Generals submission that organisation and funding in para 9 goes beyond allocation of resources, I prefer to approach the present appeal on an assumption, rather than deciding, that para 9 is, at least to some extent, capable of covering the raising of monies, for example by levying charges for services. But this cannot, in my opinion, mean that para 9 confers on the Welsh Assembly a general power to raise monies, even if they are to a greater or lesser extent hypothecated to the Welsh Health Service (as to which, see further para 28 below). The key question is whether, on the assumption I am making, GOWA provides legislative competence for the imposition of liabilities on compensators and insurers, and to this I therefore turn. Section 108(7) provides that For the purposes of this section the question whether a provision of an Act of the Assembly relates to one or more of the subjects listed in Part 1 of Schedule 7 (or falls within any of the exceptions specified in that Part of that Schedule) is to be determined by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. The expression relates to, used in section 108(4), has been examined in the context of the Scotland Act, where it is by section 29(3) given a definition identical to that in section 108(7) of GOWA. But it is used in the Scotland Act 1998 to define not the competence conferred to the devolved Parliament, but the competence reserved to the Westminster Parliament. Despite this difference, there is no reason to give the words a different meaning in the two pieces of legislation. The expression involves words of neutral meaning, used to define the parameters of competence. In a Scottish context, it was considered by the Supreme Court in Martin v Most [2010] UKSC 10, 2010 SC (UKSC) 40, paras 15 and 49 and in Imperial Tobacco Ltd v Lord Advocate [2012] UKSC 61, 2013 SLT 2, para 16. In Martin v Most Lord Walker said that the expression was familiar in this sort of context, indicating more than a loose or consequential connection, and the language of section 29(3), referring to a provisions purpose and effect, reinforces that (para 49). In Imperial Tobacco, Lord Hope, in a judgment with which all other members of the court agreed, endorsed Lord Walkers approach that the expression indicates something more than a loose or consequential connection (para 16). In a Welsh context, the test adopted in both these authorities was referred to with approval in the recent decision in In re Agricultural Sector (Wales) Bill [2014] UKSC 43; [2014] 1 WLR 2622, para 50, where the Supreme Court added that As the section requires the purpose of the provision to be examined it is necessary to look not merely at what can be discerned from an objective consideration of the effect of its terms. 27. The provision of health services and the organisation and funding of the Welsh Health Service clearly cannot permit the Welsh Assembly to raise monies generally, by relying on the fact that any monies raised from any source increase the funds available for all its spending, including spending on the Health Service. The question is whether the position is different if the monies raised can be said to be specifically intended or hypothecated to provide funds for use in the Health Service. But, if that were sufficient, it would be difficult to see any real limit to the persons on whom or basis on which such charges might be imposed, provided only that the charges were levied on that express basis. The reality is also that, unless the charges are for research, treatment or other services which would not otherwise be undertaken or provided by the National Health Service, even a hypothecated charge is in substance no different from a general charge boosting the Welsh Governments resources. In these circumstances, any raising of charges permissible under para 9 would have, in my opinion, to be more directly connected with the service provided and its funding. The mere purpose and effect of raising money which can or will be used to cover part of the costs of the Welsh NHS could not constitute a sufficiently close connection. In the case of prescription or other charges to users of the Welsh NHS service, a direct connection with the service and its funding exists, in that users are directly involved with and benefitting by the service. In the case of charges under section 2, the argument would have to be that a sufficient connection can be found in the actual or alleged wrongdoing that led to a compensator making a compensation payment to or in respect of a sufferer from an asbestos related disease. But that is at best an indirect, loose or consequential connection. The expression organisation and funding of national health service could not, in my opinion, have been conceived with a view to covering what would amount in reality to rewriting the law of tort and breach of statutory duty by imposing on third persons (the compensators), having no other direct connection in law with the NHS, liability towards the Welsh Ministers to meet costs of NHS services provided to sufferers from asbestos related diseases towards whom such third persons decide to make a compensation payment for liability which may or may not exist or have been established or admitted. I add that, even if (contrary to my view) hypothecation were the test of part of the test of competence, section 15(1) of the Bill does not achieve it in terms. Under section 15, the Welsh Ministers must have regard to the desirability of expending amounts equalling the charges levied under section 2 on research into, treatment of, or other services relating to, asbestos related diseases. If what is desirable is achieved, then, whether or not the expenditure on such research, treatment or other services would anyway have occurred, the effect would be to cover part of the Welsh Ministers budget 28. for NHS services. But what is desirable is not necessarily achievable or achieved. Lord Thomas suggests (para 90) that the effect of para 9 would anyway be to confine the use of any monies raised to the Health Service, even if they were not used in relation to asbestos related diseases. But for the reasons already given, para 9 cannot in my opinion permit the Welsh Ministers to raise money in any way they choose even if the only purpose for which the monies raised can be used is on the Welsh NHS. 29. Even if a different view were to be taken about the existence of a sufficient connection in the case of section 2, I have no doubt that section 14 would fall outside the Welsh Assemblys legislative competence. It is argued that, assuming that section 2 falls within section 108(4) GOWA, then section 14 falls within section 108(5). That was also the basis on which the Presiding Officer made her statement of compatibility regarding section 14. But in my opinion it is not sustainable. The provisions of sections 5 13, summarised in para 3 above, could all be capable of being regarded as providing for the enforcement of, or otherwise appropriate for making effective, or incidental or consequential on, the provision contained in section 2, whereby compensators must pay the Welsh Ministers charges for NHS services provided to sufferers. But section 14 is directed to an entirely different relationship, that between compensators and their liability insurers. The only basis on which it could be argued to provide for enforcement of section 2, or be otherwise appropriate for making it effective, or be incidental or consequential on it, is financial. Without section 14, compensators required to pay under section 2 may lack the funds to do so. But section 108(5) is not, in my opinion, directed to or wide enough to cover what amounts to a separate scheme for the provision of financial recourse against third party insurers by the compensators who are primarily affected by the scheme introduced under section 108(4), as opposed to provisions enhancing the legal enforceability or, maybe, even the practical effectiveness of the scheme as against compensators. In law and practice, section 2 is part of a coherent, enforceable and effective scheme, irrespective of the financial means of compensators. And section 14 is just as incapable of being regarded as incidental or consequential to section 2. The limited role of the words incidental to, or consequential on is clear from Martin v Most 2010 SC (UKSC) 40. In that case, Lord Rodger at para 128 spoke of the kinds of modifications which are obviously necessary to give effect to a piece of devolved legislation, but which raise no separate issue of principle, contrasting these with other provisions which were independent and deal with distinct aspects of the situation. This guidance was adopted as being of assistance in the context of GOWA in Attorney General v National Assembly for Wales Commission [2012] UKSC 53, [2013] 1 AC 792, at paras 50 53 by Lord Neuberger, with the agreement of three other members of the court, while Lord Hope, with whom the same three members also agreed, distinguished at para 83 between, on the one hand, provisions which are merely subsidiary to other provisions and have consequences which can be seen to be minor or unimportant in the context of the Act as a whole and, on the other, provisions with an end and purpose of their own. 30. Section 14 clearly raises important issues of principle separate from sections 2 13. Unlike compensators, insurers are neither actual nor alleged wrongdoers. The rationale which exists for imposing liability for NHS charges on compensators does not apply to insurers. The rationales of imposing liability on insurers towards compensators are no doubt (i) that this favours the Welsh Ministers prospects of making a financial recovery under section 2, and (ii) perhaps also that it lessens the blow for, and is likely to avoid objections by, compensators, or at least those who remain solvent and had arranged liability insurance. But legislation imposing on insurers new contractual liabilities under old insurance policies years after they were made engages obvious and important general principles. None of the provisions of section 108(5) could in my opinion justify section 14, and the Bill would be outside the legislative competence of the Welsh Assembly on this ground also. 31. Lord Thomas suggests (paras 96 98) that any doubt about competence can be resolved by reference to the consideration that, if the present legislation had imposed charges in respect of National Health Service services on National Health Service patients generally or on victims of asbestos related diseases specifically, then neither the compensators nor their insurers could have had any complaint. The compensator would then have had to meet them, as any other loss, and they would have been recoverable from any liability insurer of the compensator subject to the terms of cover. This is a submission on which the Counsel General also relies in relation to the case under A1P1 (to which I turn later in this judgment), in which context Mr Michael Fordham QC for the interveners accepts that, if this is what had occurred, the compensators and insurers would have no case under A1P1. Their possessions would not have been disturbed, because what happened would have been within the scope of the legal obligations which they had incurred under the existing law of tort and the insurance contracts into which they had entered. 32. However, in the context of competence, reference to what might or might not have been done by other routes is in my view both irrelevant and detrimental for the coherent development and application of provisions of the kind contained in the devolution legislation. Either the Welsh Assembly has competence to do what it proposes, or it does not. It cannot confer competence on itself by hypothesising (however accurately) that it might legitimately have chosen a different route. The fact would remain that it had not chosen the right route. Questions of competence depend on whether what 33. is done is permitted, not on whether something which has not been done would have been permitted. I know of no authority for a contrary proposition, which would seem to me not only novel but confusing, deleterious and likely to give rise to extensive difficulties and arguments in application. The scenario in the present case also appears an unreal one. The suggested alternative route has not been used, and it seems highly improbable that it would be attempted. The National Health Service is a prized asset throughout the United Kingdom, founded on the basic principle of free care according to needs. Imposing NHS hospitalisation charges on sufferers of asbestos related diseases would seem even less thinkable than charging patients generally. It was also suggested that charges might be imposed on sufferers only insofar as such sufferers were able to recover from others in respect of them. This is not in fact what the Bill proposes it makes compensators liable in the first instance, although it aims to assist those with relevant insurance to recover under it and to do so also overrides or varies the insurance terms as far as necessary. The suggested scenario does not therefore match the Bill; it would be artificial and would highlight the reality that what were in reality being imposed were liabilities on compensators and insurers, not on victims. But in any event it is irrelevant, for the basic reason that competence must be judged by reference to what the Bill proposes, not by reference to some different scheme the competence to enact which would have to be assessed in the light of its own terms. 34. For all these reasons, I conclude that the Bill falls outside the legislative competence of the Welsh Assembly, in that it does not relate to any of the subjects listed in paragraph 9 of Part 1 of Schedule 7 to the Government of Wales Act 2006, and I would answer the Counsel Generals reference accordingly. Does the Bill infringe A1P1? 35. In the light of the conclusion I have reached in paras 27, 30 and 34, this issue does not strictly arise for decision. But it has been fully argued, and involves a disagreement about the applicable principles which has general importance. I will therefore express my views on it. For this purpose, it is necessary to assume, contrary to my conclusion in para 34, that the Bill falls within section 108(4) and/or (5) of GOWA. The question is whether, on that basis, it is compatible with the Convention rights scheduled to the Human Rights Act 1998 as required by section 108(6)(c). The relevant right allegedly infringed is article 1 of Protocol No 1 (A1P1). This reads: Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. 36. The relevant NHS costs and compensation payments will be incurred only in the future, once the Bill is in force. But the liability or alleged liability which under section 2 triggers the Welsh Ministers right to recover in respect of them arises from exposure to asbestos which occurred decades ago. The effect of the Bill is therefore to impose on compensators, in the first instance, and their insurers, in the second instance, burdens which have not previously existed. The interveners submit that the Bill would thus deprive both employers and their insurers of their previous legal freedom from exposure to the relevant charges and of their possessions in the form of the assets they would have to use to discharge the new liabilities imposed by the Bill. 37. The Counsel General for Wales submits, in response, that it is not free from doubt whether A1P1 is engaged in these circumstances. Focusing only on the insurance position, his written case argues that a contract of insurance operates at the individual level, not at the level of the balance sheet of the insurer. The essence of insurance is however the pooling of risks and premia. The bottom line of an insurers balance sheet depends upon the rating and writing of individual contracts, which in their totality make up its underwriting book. All individual contracts are a piece of the whole, a part of the main. Any additional liability imposed on a category of policy will feed through into the balance sheet. The complex inter relationship between payments out and past, current and future premium receipts, and (since 1969) compulsory employers insurance for broadly defined liabilities, to which the Counsel General also refers, cannot obscure this simple truth. 38. The Counsel General points out, correctly, that insurers could have had no complaint if the sufferer had decided to use and had the means or insurance to cover hospitalisation in a private hospital. The sufferer could then have held the compensator liable and the compensator could in turn have looked to any insurer he had. That is true, but the liability would have arisen by a conventional route, and the likelihood or unlikelihood of its arising is something which compensators and their liability insurers could assess and factor into their accounts and plans. In reality, the likelihood of liability arising by this route must always have been small. 40. 39. The Counsel General also points out, correctly, that neither the compensators nor their insurers could have had any complaint if the present legislation had imposed the charges on the sufferer. The compensator would then have had to meet them, as any other loss, and they would have been recoverable from any liability insurer of the compensator subject to the terms of cover. In such circumstances, Mr Michael Fordham QC for the interveners accepts that the compensators and insurers would have no case under A1P1. Their possessions would not have been disturbed, because what happened would have been within the scope of the legal obligations which they had incurred under the existing law of tort and the insurance contracts into which they had entered. However, for reasons already noted in paras 32 and 33 above, this scenario is also an unreal one. It has not, and would never have, occurred. The further suggestion that charges might be imposed on sufferers only insofar as such sufferers were able to recover from others in respect of them seems equally remote. If any of these remote scenarios was to be treated as conceivable, it would fall within the exposure accepted by those causing victims to suffer asbestos related diseases and the risks accepted by their liability insurers. But it does not mean that either employers or employers liability insurers are taken to accept other, yet further risks, deriving from the positive intervention of the legislature, cutting across the ordinary law of tort and the agreed policy terms. The present case must again be judged by what the legislature has actually chosen to do no doubt because it concluded that this was necessary rather than by reference to remote contingencies, the non adoption of which by the legislature tends to confirm their unreality. In my opinion, and in agreement on this point with Lord Thomas (paras 103 104), A1P1 is engaged as regards both compensators and their liability insurers. Both are affected and potentially deprived of their possessions, in that the Bill alters their otherwise existing legal liabilities and imposes on them potentially increased financial burdens arising from events long past and policies made long ago. A persons financial resources are capable of being possessions within the meaning of A1P1, as Lord Hope of Craighead put it in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868, para 25; the question is whether the alleged victim is a member of a class of people who risk being directly affected by the legislation, rather than subject to some purely hypothetical risk: paras 25 26, with reference to Burden v United Kingdom (2008) 47 EHRR 857, para 34. Lord Hopes judgment on these points carried the support of all members 41. 42. of the House: paras 73, 85 90, 109 114 and 177, with Lord Reed noting at para 111 that the Convention was intended to guarantee rights that were practical and effective and that the Convention concept of a victim was correspondingly broad. In AXA, the Scottish Parliament had by the Damages (Asbestos related Conditions) (Scotland) Act 2009 Act reversed the House of Lords decision in in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281 that pleural plaques did not constitute damage for the purposes of a claim for breach of tortious or statutory duty. The effect was to make employers liable for loss not previously recoverable occurring as a result of long past breaches of duty. Employers insurers challenged the statute because of the additional burden which could thus fall on them. It was objected that they were not victims for the purposes of the Convention rights. The objection failed: paras 23 28 per Lord Hope, para 73 per Lord Brown of Eaton under Heywood, paras 85 90 per Lord Mance, paras 109 114 per Lord Reed and para 177 per all three other members of the Court agreeing with Lord Hope and Lord Reed. Lord Brown regarded the answer to the objection as clear almost beyond argument (para 73). Lord Reed and I pointed out that the logical consequence of the argument (had it been accepted) would have been that the true or only persons with victim status were employers: paras 110 and 190. 43. The position under the present Bill is a fortiori to that which existed in AXA. The Bill is clearly directed at both compensators and insurers, but it is also expressly directed at insurers as well as compensators. Moreover it imposes liabilities on both not only in conjunction with existing liabilities, but in addition to them. It does so in the case of compensators by making it irrelevant whether the compensation reflects any actual or admitted liability. It does so in the case of insurers by making them liable in circumstances where the insurance cover which they granted would not apply. For all these reasons, both compensators and insurers are in my opinion entitled to be regarded as victims for the purposes of A1P1. General principles under A1P1 44. The European Court of Human Rights has examined the application of A1P1 in a number of cases. These are all cases at an international level, in which the margin of appreciation had therefore an important potential role. We are concerned with the domestic application of the Convention. The margin of appreciation does not apply. Instead, the issue is with what intensity we should review the Bill and what deference is due or weight attaches to the legislatures view as to the appropriateness of the Bill: see per Lord Reed in AXA [2012] 1 AC 868, 131, R (Huitson) v Revenue and Customs Comrs [2011] EWCA Civ 893, [2012] QB 489, 85. 46. 45. The general principles according to which a court will review legislation for compliance with the Convention rights scheduled to the Human Rights Act 1998 have been comprehensively reviewed in recent case law, particularly Bank Mellat v Her Majestys Treasury (No 2) [2013] UKSC 39, [2014] AC 700, paras 68 76 per Lord Reed, with whose observations in these paragraphs Lord Sumption, Lady Hale, Lord Kerr and Lord Clarke agreed at para 20 and Lord Neuberger agreed at para 166, and R (Nicklinson) v Ministry of Justice (CNK Alliance Ltd intervening) [2014] UKSC 38, [2014] 3 WLR 200. There are four stages, which I can summarise as involving consideration of (i) whether there is a legitimate aim which could justify a restriction of the relevant protected right, (ii) whether the measure adopted is rationally connected to that aim, (iii) whether the aim could have been achieved by a less intrusive measure and (iv) whether, on a fair balance, the benefits of achieving the aim by the measure outweigh the disbenefits resulting from the restriction of the relevant protected right. The European Court of Human Rights has however indicated that these stages apply in relation to A1P1 with modifications which have themselves been varied over the years. Initially, in Handyside v United Kingdom (1976) 1 EHRR 737, para 62, followed in Marckx v Belgium (1979) 2 EHRR 330, para 63, the court said that the State was the sole judge of necessity for the purposes of deciding whether a deprivation of property was in the public interest. That no longer represents the position on any view. But the Counsel General for Wales and Mr Michael Fordham QC disagree as to the current position. The Counsel General submits that the court will at each of the four stages of the analysis respect the legislatures judgment as to what is in the public interest unless that judgment be manifestly without reasonable foundation: James v United Kingdom (1986) 8 EHRR 123, para 46. Mr Michael Fordham QC on the other hand submits that this passage was or, at least in subsequent authority, has been restricted in application to the first or at all events the first to third stages. In my opinion, Mr Michael Fordham QC is basically correct on this issue, at least as regards the fourth stage which presently matters, although that does not mean that significant weight may not or should not be given to the particular legislative choice even at the fourth stage. In James itself, the court went on in paras 47 49 to address the question whether the aim of the legislation was a legitimate one in principle concluding that the United Kingdom Parliaments belief in the existence of a social injustice was not such as could be characterised as manifestly unreasonable. But, turning in para 50 to the means chosen to achieve the aim, it then said: 47. This, however, does not settle the issue. Not only must a measure depriving a person of his property pursue, on the facts as well as in principle, a legitimate aim in the public interest, but there must also be a reasonable relationship of proportionality between the means employed and the aim sought to be realised (see, amongst others, and mutatis mutandis, the above mentioned Ashingdane judgment (1985) 7 EHRR 528, 57). This latter requirement was expressed in other terms in the Sporrong and Lnnroth judgment by the notion of the fair balance that must be struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights ((1982) 5 EHRR 35, para 69). The requisite balance will not be found if the person concerned has had to bear an individual and excessive burden (para 73). Although the court was speaking in that judgment in the context of the general rule of peaceful enjoyment of property enunciated in the first sentence of the first paragraph, it pointed out that the search for this balance is . reflected in the structure of article 1 (P1 1) as a whole (para 69). 48. Later authority confirms the principle governing the validity of the means chosen to achieve the aim is one of fair balance. The court has developed the distinction introduced in James. The court will accept the legislatures judgment as to what is in the public interest unless that judgment is manifestly without reasonable foundation. But an interference with peaceful enjoyment of possession must nevertheless strike a fair balance between the demands of the public or general interest of the community and the requirements of the protection of the individuals fundamental rights : see eg AGOSI v United Kingdom (1986) 9 EHRR 1, at paras 48 and 52, Gasus Dosier und Frdertechnik v Netherlands (1995) 20 EHRR 403, at para 62, Pressos Cia Naviera SA v Belgium (1995) 21 EHRR 301, at para 35 (covering in the public interest, with a footnote reference to James) and paras 36 44 (covering proportionality of the interference), Bck v Finland (2004) 40 EHRR 48, at paras 53 and 55, Grainger v United Kingdom (Application No 34940/10) (unreported) 10 July 2012, at paras 35 and 36 and, most recently, Paulet v United Kingdom The Times, 19 May 2014; [2014] ECHR 477, at para 63 (citing AGOSI). 49. Pressos and Bck are of particular interest in the present reference as cases of retrospective interference. In Pressos legislation removed retrospectively the tortious right to compensation which shipowners had, on the basis of longstanding Belgian Supreme Court authority, enjoyed. The Belgian government invoked the enormous financial implications of such liability (para 40), but the court said: 43. The financial considerations cited by the Government and their concern to bring Belgian law into line with the law of neighbouring countries could warrant prospective legislation in this area to derogate from the general law of tort. Such considerations could not justify legislating with retrospective effect with the aim and consequence of depriving the applicants of their claims for compensation. Such a fundamental interference with the applicants rights is inconsistent with preserving a fair balance between the interests at stake. 50. In Bck retrospective legislation had granted relief to impecunious debtors allowing them to write down their debts very substantially on the basis of a greatly reduced payment schedule. The retrospective nature of this legislation meant that a special justification [was] required for such interference with existing contracts. It was however remedial social legislation and in particular in the field of debt adjustment, it must be open to the legislature to take measures affecting the further execution of previously concluded contracts in order to attain the aim of the policy adopted (para 68). The striking amount of the reduction was justified by the consideration that the debt was already worth much less than its nominal value and any claim to recover it had already been rendered highly precarious before the debt adjustment for reasons not attributable to the State (paras 69 70). 51. Domestic law is to like effect. Lord Hope in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868 addressed separately the issues of Legitimate aim (paras 29 33) and Proportionality (paras 34 41). Only in relation to the former did he identify the relevant test as being whether the legislatures choice as to what was in the public interest was manifestly unreasonable, citing in this connection James, 8 EHRR 123, at para 46. In relation to proportionality, he applied the fair balance test, citing Sporrong and Lnnroth and Pressos. Lord Reeds judgment contains the same distinction in paras 124 125 and 126 128. Save for Lord Brown, all the other four members of the court including myself were content to agree with Lord Hopes and Lord Reeds judgments on this aspect. However, Lord Brown at paras 80 and 83 took a different, rolled up approach to the issues of legitimate aim and proportionality. His approach would, if adopted, 52. 53. support the Counsel Generals approach that any challenge on either score must, to succeed, show that the measure was manifestly without reasonable justification. If Lord Browns judgment is read in this way, he was in a minority on the point and his view on it does not in my opinion represent the law. I conclude that there is Strasbourg authority testing the aim and the public interest by asking whether it was manifestly unreasonable, but the approach in Strasbourg to at least the fourth stage involves asking simply whether, weighing all relevant factors, the measure adopted achieves a fair or proportionate balance between the public interest being promoted and the other interests involved. The court will in this context weigh the benefits of the measure in terms of the aim being promoted against the disbenefits to other interests. Significant respect may be due to the legislatures decision, as one aspect of the margin of appreciation, but the hurdle to intervention will not be expressed at the high level of manifest unreasonableness. In this connection, it is important that, at the fourth stage of the Convention analysis, all relevant interests fall to be weighed and balanced. That means not merely public, but also all relevant private interests. The court may be especially well placed itself to evaluate the latter interests, which may not always have been fully or appropriately taken into account by the primary decision maker. It is also clear that The European Court of Human Rights scrutinises with particular circumspection legislation which confiscates property without compensation or operates retrospectively. In the case of confiscation, it will normally be disproportionate not to afford reasonable compensation, and a total lack of compensation will only be justifiable in exceptional circumstances. In the case of retrospective legislation, special justification will be required before the court will accept that a fair balance has been struck: paras 48 49 above. The Counsel General in his written case (paras 89 and 126) himself states that It is of course accepted, as the case law makes clear, that there is a need for special justification where a statutory provision has retrospective effect, while maintaining that this is present in the circumstances of this case. 54. At the domestic level, the margin of appreciation is not applicable, and the domestic court is not under the same disadvantages of physical and cultural distance as an international court. The fact that a measure is within a national legislatures margin of appreciation is not conclusive of proportionality when a national court is examining a measure at the national level: In re G (Adoption: Unmarried Couple) [2008] UKHL 38, [2009] AC 173; R (Nicklinson) v Ministry of Justice [2014] 3 WLR 200, at paras 71, 163 and 230, per Lord Neuberger, Lord Mance and Lord Sumption. However, domestic courts cannot act as primary decision makers, and principles of institutional competence and respect indicate that they must attach appropriate weight to informed legislative choices at each stage in the Convention analysis: see AXA, para 131, per Lord Reed, R (Huitson) v Revenue and Customs Comrs [2011] EWCA Civ 893, [2012] QB 489, at para 85. But again, and in particular at the fourth stage, when all relevant interests fall to be evaluated, the domestic court may have an especially significant role. 55. To put a legislative measure in context, domestic courts may (under a rule quite distinct from that in Pepper v Hart [1993] AC 593) examine background material, including a white paper, explanatory departmental notes, ministerial statements and statements by members of parliament in debate: Wilson v First County Trust Ltd (No 2) [2003] UKHL 40, [2004] 1 AC 816. But care must at the same time be taken not to question the sufficiency of debate in the United Kingdom Parliament, in a way which would contravene article 9 of the Bill of Rights. In Wilson, at para 67, Lord Nicholls of Birkenhead put this point as follows (para 67): Lack of cogent justification in the course of parliamentary debate is not a matter which counts against the legislation on issue of proportionality. The court is called upon to evaluate the proportionality of the legislation, not the adequacy of the ministers exploration of the policy options or of his explanations to Parliament. The latter would contravene article 9 of the Bill of Rights. The court would then be presuming to evaluate the sufficiency of the legislative process leading up to the enactment of the statute. 56. There is in this connection a potential tension. If, at the fourth stage when the court is considering whether a measure strikes a fair balance, weight attaches to the legislative choice, then the extent to which the legislature has as the primary decision maker been in or put in a position to evaluate the various interests may affect the weight attaching to its assessment: see Belfast City Council v Miss Behavin Ltd [2007] UKHL 19, [2007] 1 WLR 1420, at paras precedent actually applies, and, if it does not, the same assistance cannot be obtained from the legislative choice as might otherwise be the case. Application of A1P1 to the present reference 57. I have already concluded that the Bill engages A1P1, and addressed the Counsel Generals argument that there are other means by which compensators and insurers might have become or been made liable to bear hospitalisation costs, without altering the laws of tort and contract in the way undertaken by the Bill. More generally, the Counsel General also submits that insurers (as well no doubt as compensators) run a considerable risk of unforeseen exposure, and that this is particularly so in relation to asbestos related diseases, as recent decades have shown. Accepting that as correct, it is, however, no justification for the retrospective imposition of further exposure, which they could legitimately expect could not and would not fall upon them. They could legitimately expect this not only when issuing their original policies, but also when considering their reserves for incurred but as yet unreported claims, as any long tail insurer must do regularly for accounting and solvency purposes and must no doubt also do when considering what, if any, reinsurance or further reinsurance it should from time to time purchase. I note in parenthesis, because no such points were developed before us and I do not therefore rely on them, that it is unclear what insurance policies could or would be caught by the Bill. The Bill is limited to Welsh NHS services, but it purports to apply to all insurance contracts issued to compensators. The proper law of such contracts might be English or Scottish or even foreign, and any indemnity might be due for performance outside, rather than in, Wales. It is not clear to me how Welsh legislation could affect a Scottish or foreign policy, and it might be arguable whether it could affect an English policy due for performance in (say) London. Another point on which the Bill is silent is reinsurance. Having imposed on insurers uncovenanted liabilities, the Bill leaves insurers to make whatever recovery they can under any reinsurances which may be in wide enough terms, without alteration, to cover such new liabilities. 59. The Counsel General relies on the Supreme Courts reasoning as well as the decision in the AXA case. The Counsel General and Mr Michael Fordham QC differ in their analysis of this reasoning. The Counsel General relies upon Lord Hopes identification in paras 37 38 of a special feature of that case as being that the business in which insurers are engaged and in pursuance of which they wrote the policies that will give rise to the obligation to indemnify is a commercial venture which is inextricably associated with risk (para 38). Lord Hope went on to point out that phrases such as bodily injury or disease might expand as medical knowledge and circumstances changed, that new diseases might become familiar, as occurred with asbestos related diseases, and that the number, nature and value of claims were always liable to develop in ways that were unpredictable. Lord Hope was addressing the expansion of insurance liabilities by conventional routes, including the relaxed approach to causation taken in cases such as Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 23, [2003] 1 AC 32 and the Trigger litigation, and using that as a stepping stone for consideration of the issue before the Supreme Court in AXA which was whether a legislative reversal of the prior House of Lords decision in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281 could be similarly categorised. 60. Lord Hopes words commanded the agreement of a majority of other members of the court, but I do not accept the Counsel Generals submission that this means that there was disagreement between him and the judgments of either Lord Brown or myself in this area. Lord Hope was careful to make clear in para 40 that the case was not one where the law was settled the Scottish Parliament was restoring a position which might well have represented the law. He also stressed at para 37 that the liability imposed by the Act depended on establishing negligence and preserved all other defences, other than the single question whether pleural plaques are as such actionable. Consistently with this, Lord Brown at para 83 made clear that the case turned on the absence of any legitimate expectation as to the irrecoverability of damages for pleural plaques, rather than on the fact that the appellants as insurers are in a business inevitably associated with risks and unpredictable events. I expanded this point at para 91, when I said: Retrospectivity. The key to this issue is not in my view that insurance is a contract against risks. There are always limits to the contingencies upon which insurers speculate, provided by the terms and conditions of the policy. Further, insurers are normally entitled to expect that the liabilities, which their insured employers incur arising out of and in the course of [their] employment and which they insured under the specimen copy policy to which I have referred, will be liabilities capable of existing in law at the time of the occurrence during the relevant employment from which such liabilities arise. Hence, the present challenge to the 2009 Act is based on the fact that it retrospectively converts into harm actionable in law physical changes which (it has been held in Rothwell ) were not otherwise such, in the hope or expectation that the relevant policies will respond to that development. 61. As the outcome of AXA itself shows, the mere fact that legislation changes the pre existing law retrospectively does not make it incompatible with A1P1. Lord Brown was in AXA (para 78) exercised in this connection by a possible distinction between the power of the courts to adapt and develop (ie change) the law (albeit within well recognised constraining limits) to accord with what the judges consider to be the contemporary demands of justice and the position of the legislature. But the answer to this concern appears to me to lie at least generally in Lord Browns own words adapt and develop and well recognised limits. The common law moves, so far as possible, incrementally and, when some greater shift takes place, it can be expected to be based on some general social consensus that it is appropriate. Common law courts have themselves accepted the possibility of prospective overruling, with express reference to its potential utility in a Convention context: In re Spectrum [2005] UKHL 41, [2005] 2 AC 680 and A v HM Treasury (JUSTICE intervening) [2010] UKSC 5, [2010] 2 AC 534, 693 694, at para 17 per Lord Hope. As this implies, common law jurisprudence must itself take account of the principle that special justification is required for retrospective changes upsetting legitimate expectations. 62. That failure to do this may contravene Convention rights has recently been underlined by the European Court of Human Rightss decision in del Ro Prado v Spain (Application No 42750/09) (unreported) given on 21 October 2013. In that case, the periods to be served under various prison sentences had, in accordance with previous case law stemming from a decision of the Spanish Supreme Court dating in 1994, been ordered in 2000 to be combined and capped at 30 years. However, in 2006 the Spanish Supreme Court in its Parot judgment (STS 197/2006) departed from this previous case law, holding that the sentences should be viewed individually, with the result that the applicants release date was refixed by the Audiencia Nacional in 2008 to expire at a date some nine years later than it would have done. The Strasbourg Court adopted a test of foreseeability (para 130), holding that at the time when the applicant was convicted, detained and notified of the decision to combine the sentences and set a maximum term of imprisonment, she could not have foreseen to a reasonable degree that the method used to apply remissions of sentence for work done in detention would change as a result of a departure from case law by the Supreme Court in 2006 and that the new approach would be applied to her. Her detention after the expiry of the combined period of 30 years was accordingly unlawful under article 5(1) of the Convention, and Spain was ordered both to compensate her and to ensure her release. Whether the issue of retrospectivity arises in a statutory or common law context, there are therefore potential constraints which reflect the legitimate expectations of those affected. 63. The Counsel General submits that AXA was a stronger case for treating the legislation as incompatible than the present, yet the Supreme Court did not do so. I do not accept the Counsel Generals analysis. The Scottish statute in issue in AXA affected all outstanding and future claims, and the present Bill on its face also affects all future compensation payments made in respect of outstanding and future claims. But the two differ in other important respects: a. The Scottish statute was passed to rectify a perceived injustice directly affecting those suffering from asbestos related diseases, and was in this very real sense social remedial legislation. Despite the Counsel Generals contrary submission, the same cannot in my opinion be said of the Bill. It has no effect on sufferers from asbestos related diseases. Its purpose is to transfer the financial burden of costs of their hospitalisation from the Welsh Ministers to compensators and their insurers. b. The Scottish statute was passed to restore the legal position as it had been understood at first instance for some decades, and it might well have been accepted as being at the highest instance. The present Bill aims to change a well understood position which has existed since the NHS was created, by introducing a new right of recourse which has never previously existed, though it is one which Parliament could at or at any time since the creation of the NHS have decided to introduce without any legal problem in relation to future events giving rise to liability claims against compensators (and so to liability insurance claims by compensators against their liability insurers). c. The Scottish statute built on established legal principles, requiring liability to exist before compensators could be compelled to meet claims for pleural plaques and for insurance cover to exist before such compensators could recover from their liability insurers. This was one of the two points stressed by Lord Hope in AXA, as I have mentioned in the preceding paragraph. The Bill bypasses such principles, making the liability of compensators dependent simply on the payment of compensation, even if made without admission of liability and making the liability of insurers arise independently of the terms of the insurance policies issued, by reference to the fact of payment of such compensation, provided such policies would to some extent cover any liability which such compensators would, if it were established, have had. 64. The first of these points requires further treatment. The Counsel General submits that, although the Bill has no effect on sufferers from asbestos related diseases, it is a measure passed as a matter of economic and social policy, in relation to which the Welsh Assembly should be recognised as having a wide area of appreciation and discretionary judgment: see Huitson [2012] QB 489, at para 85 per Mummery LJ. He also cites in support the Houses decision in Wilson [2004] 1 AC 816. Both these were cases where the relevant legislation had retrospective aspects. But in both there were directly applicable and compelling social interests militating in favour of retrospectivity. Wilson concerned consumer protection legislation regarding the enforceability of loan agreements which failed correctly to state the amount of credit. Huitson concerned legislation protecting a grave challenge to the public exchequer, posed by wholly artificial tax arrangements taking advantage of double taxation treaties to avoid the payment of United Kingdom tax by United Kingdom residents. The arrangements were anyway doubtfully legal and such residents had no legitimate expectation that they could avoid such tax. 65. Although the Bill would either save the Welsh Ministers money or add to their resources, it is not shown that it would achieve a directly applicable or compelling social or economic interest comparable with those involved in these previous cases. Section 15 of the Bill contains the specific enjoinder that the Ministers should have regard to the desirability of equivalent sums being made available for research into, treatment of or other services relating to asbestos related diseases, but it is not shown that any such sums so expended would add to existing sums already being spent in these areas, or resolve any exceptional social or economic problem. It is common knowledge that the funding of the National Health Service is under increasing strain throughout the United Kingdom, and it may be so even more in Wales than elsewhere, but that is a different level of general problem to any shown on the authorities to be relevant in the present context. 66. The Counsel General maintains that special justification exists for the retrospectivity involved in the Bill because, without it, the Bill cannot achieve its legitimate policy aim. That is a circular submission, which, if accepted, would eliminate the important balancing stage of the proportionality exercise identified by Lord Reed in Bank Mellat (para 43 above) by Lord Hope in AXA (para 49 above) and by the Strasbourg Court in its case law (paras 44 48 above). As a matter of legislative policy it could be thought appropriate by the relevant legislature that the Welsh NHS should be able to recover hospitalisation costs from those whose breach of tortious or statutory duty caused them to be incurred. But that is, as I have noted, a provision which could have been made by the United Kingdom when or at any time since the NHS was introduced. It is a provision which would no doubt have been proportionate if introduced in relation to future exposure to asbestos and future insurance contracts. But rewriting historically incurred obligations to impose it in relation to future Welsh NHS costs is a quite different step. It is a step for which, on the authorities and as the Counsel General accepts, special justification is necessary, and none is shown. I therefore conclude that, even assuming the Bill to satisfy section 108(4) and/or (5), it falls outside the legislative competence of the Welsh Assembly. 67. Lord Thomas attaches great weight to the judgment of the Welsh Assembly that this is a measure which should in the interests of Wales be enacted. I agree that weight should be given to the Welsh Assemblys judgment. But it is the courts function, under GOWA, to evaluate the relevant considerations and to form its own judgment, on the issue both of legislative competence and of consistency with the Convention rights. I would arrive at the conclusions I have, even if the background to the Bill had consisted of a full presentation and appreciation of its implications by those responsible for promoting and passing the legislation. My conclusion is merely reinforced by the consideration that this does not appear to have been the case. Rather, the Bill was seen as a mere extension in degree of a United Kingdom measure which had already been accepted in principle by the United Kingdom Parliament despite its retrospectivity. The measure in question is the Health and Social Care (Community Health and Standards) Act 2003. This applies to enable the recovery from compensators of costs of hospitalisation incurred by the National Health Service in consequence of any injury, whether physical or psychological: section 150(1) and (2). Injury is specifically defined as not including any disease: section 150(5). The exclusion of disease was in the light of strong representations about the retrospective implications of covering disease, and a lead time of (in the event) three years was allowed before the Act came into force in relation to injury, following representations that a lead time of two or more years was required to allow insurers to re rate policies to cover the relative short tail exposure arising from injury. In short, the 2003 Act shows the United Kingdom Parliament concerned not to legislate in a manner which was to any significant extent retrospective. 68. The 2003 Act was explained by the Health and Social Care Committee which reported on the Bill for the Welsh Assembly in March 2013 as not differing in principle on the question of retrospectivity, though it was said that due to the lengthy latency period for asbestos related diseases, compared with the immediacy of accidental injuries, there may well be a difference in scale between the functions of the two pieces of legislation; that is the degree of retrospectivity will be greater in the Bill than the 2003 Act (para 98). Nevertheless, the Committee went on to add that it was content that the Bill will not apply to compensation payments that have already made [sic] and that it is inevitable that insurance claims arise for matters and amounts that could not be fully foreseen when the original policies were taken out. We believe that is the nature of the insurance business. (para 99). 69. The Committees assessment of the Bill as no different in principle, but only different in degree, from the 2003 Act does not reflect the very real and substantial difference in both aim and effect of the two measures. The Committees final comment in para 99 would, if carried to a logical conclusion, justify any retrospective re writing of any insurance contract, and, for the reasons which I gave in AXA, is not a justification for imposing on compensators and insurers unforeseen and unforeseeable new obligations which they had no opportunity to assess, rate or make reserves to cover. Conclusion 70. It follows from the above that I regard the Bill as outside the legislative competence of the Welsh Assembly under both section 108(4) and section 108(5) GOWA, and, had I reached a contrary conclusion on that, as outside its legislative competence under section 108(6)(c). I would answer the Counsel Generals reference to that effect. LORD THOMAS: (with whom Lady Hale agrees) Introduction 71. I agree with the result set out in the judgment of Lord Mance on the referred question, namely whether the National Assembly for Wales (the Welsh Assembly) had legislative competence to impose the liabilities set out in the Bill on insurers under section 14 of the Bill. However, as my reasons for reaching that conclusion are much narrower and as I have reached a different conclusion on other issues, I will set out my own views. 72. The original challenge to the legislative competence of the Welsh Assembly was the contention by the Association of British Insurers that section 14 of the Bill was incompatible with the Convention rights of insurers under article 1 of Protocol 1 (A1P1) and therefore infringed section 108(6)(c) of the Government of Wales Act 2006 (GOWA 2006). The Association of British Insurers subsequently raised in their written case the further issue as to whether the legislative competence conferred on the Welsh Assembly under section 108(4) and (5) to pass primary legislation included competence to impose the liabilities set out in the Bill on insurers and others. 73. It became apparent as the argument developed that, although the question referred by the Counsel General was limited to the legislative competence of the Welsh Assembly to enact section 14 of the Bill which related only to insurers, the issues also necessarily encompassed the position of those within section 2 whose alleged negligence or breach of statutory duty in the past had caused asbestos related diseases. As those within section 2 will in the overwhelming number of cases be the employers of those who are suffering from asbestos related diseases, it is convenient to refer to those within section 2 as employers. It is important to note that it is by no means clear that any employer or any other person encompassed within section 2 objected to the provisions of the Bill which imposed liability on them. Certainly no argument was advanced before the court by anyone instructed on behalf of any such person. The argument was solely advanced by the Association of British Insurers to protect their own interests. The legislative background 74. It has been clear since at least the late 1970s that the majority of persons suffering from asbestos related diseases are employees of industrial enterprises who contracted the disease whilst in such employment. If the negligence or breach of statutory duty of their employer caused the injury giving rise to the disease, the employer will be liable for damages as a tortfeasor. Those damages will include medical expenses incurred by the employee if, for example, the employee has incurred them by seeking private treatment or required a level of care not provided under the National Health Service. The employer, if insured under the usual form of employers liability policy, will be entitled to recover an indemnity for such damages under the policy, subject to the terms of the policy and any permitted limits or deductibles. 75. However, as the National Health Service in the United Kingdom (NHS) has, since its establishment under the National Health Service Act 1946, provided care on the basis of the service being free of charge at the point of delivery, the cost of medical treatment and of long term care has for the overwhelming majority of those suffering from asbestos related diseases been met from the financial allocation made by the State to the NHS. That cost has therefore been a charge to the general revenue of the State rather than being met by the tortfeasor, namely the employer whose negligence brought about the disease, and by the insurers of that employer. It is in reality a state benefit provided by the State to such employers and their insurers which relieves them of some of the consequences of the employers wrongdoing as a tortfeasor. 76. 77. 78. In 2006, separate legislative provision was made by the United Kingdom Parliament for the National Health Service in Wales by the National Health Service (Wales) Act 2006 (the NHS (Wales) Act), a consolidating Act which replaced the National Health Service Act 1977 and set out a framework for the National Health Service in Wales (the Welsh NHS). The Act was enacted by the United Kingdom Parliament at a time when the Welsh Assembly did not have legislative competence to pass primary legislation. In 2013, about two years after the provisions of Part 4 of the GOWA 2006 came into effect, conferring on the Welsh Assembly competence to enact primary legislation in defined areas, the Bill referred was enacted as primary legislation by the Welsh Assembly. On my analysis of the provisions of the Bill, it should be seen as having two distinct aims. (i) The first and central aim of the Bill is to withdraw the requirement that the Welsh NHS continue the delivery of the benefit to employers and their insurers of not having to meet the cost of medical treatment and care of an employee where the employers are responsible for causing asbestos diseases as tortfeasors. It is intended that the costs of medical treatment and long term care of such employees incurred by the Welsh NHS after the coming into force of the Bill are to be met by employers responsible at any time in the past for causing asbestos related diseases and by the employers insurers, rather than being met out of the monies generally provided by the Welsh Government to the Welsh NHS out of the block grant allocated by Her Majestys Treasury to the Welsh Assembly. (ii) The second, but necessarily subsidiary, aim is to establish machinery for collection of the costs which is as simple and as efficient as possible and causes those with asbestos related diseases the least stress. It is intended that the machinery would enable employers to recover under their employers liability policy the sums payable by way of charges to the Welsh NHS which would have been payable if the liability for such charges had been imposed on the employees and recovered in the conventional way as damages from the employers. It is against that short summary of the background that I turn to consider the issues of legislative competence under section 108 (4) and (5) and in respect of A1P1. It is important to underline two points at the outset. (i) The basis of the view I have formed is that the Bill has the two distinct objectives which I have set out and which it is necessary to analyse separately. (ii) Secondly, it is necessary in such an analysis first to consider the liability of the employer. That is because the effect of the Bill on the liability of insurers under their employers liability policies depends on an examination of the two distinct objectives of the Bill as they affect any employer who has the benefit of employers liability insurance. My approach was not the central focus of the argument, particularly because the only challenge was from the insurance industry and not from any of the employers. However because the procedure to refer a question to this court operates as a direct reference resulting in a final decision without the benefit of a prior decision of another court and because the effect of the judgment of Lord Mance, as the view of the majority of the court, is far reaching and final, it is necessary to set out my own analysis. The position of employers under section 2 of the Bill (1) Legislative competence under section 108(4) and (5) (a) The legislative competence to fund the Health Service under section 108(4) and (5) and Schedule 7 79. The legislative competence of the Welsh Assembly to enact primary legislation extends to legislating afresh by a new Act of the Welsh Assembly or by amending by means of a new Act of the Welsh Assembly a statute previously enacted by the United Kingdom Parliament. Its competence to do so, apart from compliance with the Convention on Human Rights, is set out in section 108(4) and (5) of the GOWA 2006 and the 20 headings enumerating specific competence set out in Part 1 of Schedule 7. These provisions which operate on a conferred powers model were recently considered and explained in In re Agricultural Sector (Wales) Bill [2014] UKSC 43, [2014] 1 WLR 2622. 80. The relevant heading in Part 1 of Schedule 7 is Heading 9: Health and health services: Promotion of health. Prevention, treatment and alleviation of disease, illness, injury, disability and mental disorder. Control of disease. Family planning. Provision of health services, including medical, dental, ophthalmic, pharmaceutical and ancillary services and facilities. Clinical governance and standards of health care. Organisation and funding of national health service. 81. Although none of the exceptions listed under this heading is relevant, it is clear from the whole of Part 1 of Schedule 7 and the exceptions under other headings that no general competence in relation to taxation is conferred on the Welsh Assembly. 83. 82. The main issue in relation to the specific competence under section 108(4) and (5) to impose charges on employers for the services in providing medical treatment and long term care of employees is therefore whether the Bill relates to the Organisation and funding of national health service. There are two relevant meanings which the term funding might ordinarily bear (1) raising funds or (2) allocating funds. Interpreting the GOWA 2006 by giving the words their ordinary meaning in their context, I consider that this term has the first of those meanings raising funds for the Welsh NHS by, for example, charging for the services it provides. I do not consider that it has the second of those relevant meanings the provision and allocation to the Welsh NHS of the monies made available to the Welsh Consolidated Fund under sections 118 120 of the GOWA 2006. The extensive powers to allocate expenditure from that Fund are governed by sections 124 to 129. It would therefore be unnecessary to include in Schedule 7 a specific power referable to the Welsh NHS. This is not done elsewhere in Part 1 of Schedule 7; for example, another important part of the expenditure of the Welsh Assembly is expenditure on education, but there is no reference under Heading 5 education and training to funding. This strongly supports the interpretation of the phrase funding of National Health Service in the context in which it appears in the GOWA 2006 as having the first of these meanings. 84. The submission to the contrary advanced on behalf of the Association of British Insurers (clearly summarised in paras 15 and 16 of the judgment of Lord Mance) was that organisation and funding of national health service should be construed by reference to the subordinate legislative powers conferred under the NHS (Wales) Act and effectively limited to those powers. It is necessary to examine the background in some detail. 85. Prior to the first phase of devolution in 1999 (as explained at para 19 of the judgment in In re Agricultural Sector (Wales) Bill [2014] 1 WLR 2622, section 1(2) of the National Health Service Act 1977 provided that: The services so provided must be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment whenever passed. 86. Sections 77 to 83A of that Act (as amended prior to 1999) enabled charges to be made for specified services; the powers to set prescription and other charges were set out in section 77. These were exercisable by the Secretary of State by subordinate legislation. Under the National Assembly for Wales (Transfer of Functions) Order 1999, the powers of the Secretary of State under the National Health Service Act 1977 were simply transferred to the Welsh Assembly, as under the first phase of devolution the Welsh Assembly only had the power to make subordinate legislation. In 2006, the UK Parliament consolidated the legislation in relation to the NHS. It enacted for the National Health Service in England the National Health Service Act 2006 and for Wales the NHS (Wales) Act 2006. The powers under section 77 of the National Health Service Act 1977 (as amended) were re enacted in section 121 of the NHS (Wales) Act as powers to make subordinate legislation. Section 1(2) was re enacted as section 1(3). 87. The NHS (Wales) Act was enacted by the United Kingdom Parliament in 2006 three months after the enactment of the GOWA 2006; the provisions of Part 4 and Schedule 7 of the GOWA 2006 conferring on the Welsh Assembly competence to pass primary legislation required a referendum before such competence would take effect. The legislative competence of the Welsh Assembly under the GOWA 2006 was at first limited under Part 3 and Schedule 5 to what was described as the second phase of Welsh devolution in paras 24 26 of the judgment in In re Agricultural Sector (Wales) Bill. Primary legislative provision relating to the Welsh NHS could only therefore be made by the United Kingdom Parliament, unless specific powers were granted to the Welsh Assembly to pass an Assembly Measure under Part 3. 88. Whilst the competence of the Welsh Assembly was limited under the second phase of Welsh devolution, it was entirely appropriate to consider Part 3 and Schedule 5 of the GOWA 2006 and the NHS (Wales) Act together. It followed that during the currency of the second phase of Welsh devolution amendments to prescription charges were made under subordinate legislation under section 121 of the NHS (Wales) Act. It was through these powers that the National Health Service (Free Prescription and Charges for Drugs and Appliances) (Wales) Regulations 2007 were by the Welsh Assembly made as subordinate legislation constrained by the terms of the NHS (Wales) Act 2006. 89. However, since Part 4 and Schedule 7 has come into effect after the referendum and has brought about the third phase of Welsh devolution, the Welsh Assembly may within the competence conferred by Part 4 and Schedule 7 amend legislation passed by the United Kingdom Parliament prior to March 2011 or supplement it by new primary legislation. 90. The construction advanced on behalf of the Association of British Insurers sought to limit the primary legislative competence of the Welsh Assembly in the third phase of devolution under Part 4 and Schedule 7 by reference to the powers originally conferred by legislation of the United Kingdom Parliament on the Secretary of State to make subordinate legislation and continued under the first and second phases of Welsh devolution. Viewed against the background I have set out, I cannot accept the submission. 91. First the GOWA 2006 and in particular Part 4 and Schedule 7 should, in my view, be construed by reference to the other terms of the GOWA 2006 and not by reference to other statutes of the United Kingdom Parliament such as the NHS (Wales) Act. The position is, in my view, no different to that set out in para 42 of the judgment in In re Agricultural Sector (Wales) Bill with respect to interpreting the legislative competence of the Welsh Assembly. That has to be determined by an interpretation of the terms of Part 4 and Schedule 7 and not by reference to the way in which functions may have been distributed between the United Kingdom Parliament and United Kingdom Ministers on the one hand and the Welsh Assembly on the other hand in the first and second phases of Welsh devolution. 92. Second, although the provision in section 121 of the NHS (Wales) Act was necessary to enable the Welsh Assembly to exercise subordinate legislative powers before it received primary legislative competence, once it received primary legislative competence, I see no reason to hold that the powers under the GOWA 2006 should remain so limited. Although the provisions of the National Health Service Act 1977 and the NHS (Wales) Act set out detailed provisions setting out what could be done by secondary legislation and what required primary legislation, there is nothing to suggest that Parliament intended these to be of relevance once the Welsh Assembly acquired primary legislative powers. 93. Third, there is a clear distinction between exercising general tax raising powers and charging for services provided by the NHS. A specific cost can be attributed to the services. The funds so raised can then be used to defer the costs of those services rather than utilising the grant provided to the Welsh Consolidated Fund. Thus it is entirely consistent with the grant to the Welsh Assembly of primary legislative powers in respect of health under Heading 9, that the Welsh Assembly was given competence to vary the NHS (Wales) Act and to charge for services provided without being constrained by the terms of that Act. If on the interpretation of Heading 9 in its context in the GOWA 2006, funding means raising funds, then it was open to the Welsh Assembly either to amend the provisions of the NHS (Wales) Act which restrict the services for which a charge can be made or to enact primary legislation which imposes charges for services as an enactment within the scope of section 1(3) of the NHS (Wales) Act: 94. The services so provided must be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed. The terms of the NHS (Wales) Act are not, in my view, therefore relevant to limiting the meaning of Heading 9. I consider for these reasons that funding has the meaning I have set out in para 83 which I have derived from an interpretation of the terms of the GOWA 2006 without reference to the NHS (Wales) Act. In principle, therefore, the Welsh Assembly has competence to enact legislation that makes provision for charging for services by way of the treatment and long term care of those with asbestos related diseases provided that the moneys so raised are used exclusively for the Welsh NHS. (b) Charging employees who can recover from their employers 96. As I have set out, the first and central aim of the Bill is to transfer the cost of medical treatment and care of an employee from the State to the employer in circumstances where the cost would be recoverable as a recognised head of damages from the employer as a tortfeasor. I do not see what objection there could be in law, given my views of legislative competence, to a scheme where the Welsh NHS would have imposed charges directly on such an employee and the employee would have recovered such charges from the employer. 95. 97. 98. 99. Such a scheme would have been analogous to the scheme for Road Traffic accidents set out in the Republic of Irelands Health Amendment Act 1986. In my view, the Welsh Assembly could also have made provision in such a scheme which ensured that the employee with an asbestos related disease, though liable for the charges, did not have to pay until reimbursed or indemnified by the employer or the employers insurers. Moreover, the employers liability insurers would have had to indemnify the employer under a standard form liability policy when the employer was called on to pay the charges by way of damages. It is argued on behalf of the Association of British Insurers that such a scheme would be politically objectionable, but I cannot accept that submission. The Welsh Assembly would, in my view, be seen simply as taking steps to change the position of employers so that for the future they would actually meet the costs of treatment and care of a very serious disease which they had caused through their negligence or breach of statutory duty at some time in the past, rather than that cost continuing to be carried by the State. It is difficult to see what political objections there could be to such a scheme in withdrawing the State benefit to employers and their insurers and providing more funds to the Welsh NHS. The benefits of such a scheme for the Welsh NHS would be no different to the machinery proposed by the Bill, though it would be more expensive to administer and undoubtedly risk causing stress to the persons suffering from asbestos related diseases. I therefore consider that the Welsh Assembly could, either by amendment to the NHS (Wales) Act or by separate legislation, have permitted the Welsh NHS to charge employees for treatment if they suffered from an asbestos related disease as a result of the negligence or breach of statutory duty of the employer. Such a scheme would have achieved the first and central aim of the Bill. No part of the liability of the employers or their insurers would have been re written; they might simply become liable on ordinary principles if their liability to the employee for the asbestos related disease was established. (c) The machinery provided for in the Bill Instead of achieving the first and central aim of the Bill by such a scheme, the Bill seeks to achieve its aims by choosing machinery which can be seen as a better way of collecting such charges directly from employers by imposing liability for such charges on the employers: (i) Sections 2 and 3 impose liability to pay the charges for treatment by the Welsh NHS directly on any employer who is or is alleged to be liable to any extent in respect of the asbestos related disease. (ii) The charges can only be recovered if incurred after the coming into force of the Bill. (iii) The liability only arises if a payment of compensation in respect of the asbestos related disease is made to the employee after the coming into force of the Bill. (iv) Section 5 provides the means by which Welsh Ministers certify the amount of the charges. (v) Section 15 provides that Welsh Ministers must have regard to the desirability of securing that an amount equal to the funds it received through these payments is spent on research or treatment of asbestos related diseases. 100. As the Welsh Assembly has, in my view, competence to impose such charges directly upon the employees, I can see no objection to the competence of the Welsh Assembly under the provisions of section 108(4) and (5) and Heading 9 of Part 1 of Schedule 7 in imposing such charges directly on the employers to achieve the aims of the Bill. Lord Mance suggests (para 33) that it is not relevant to consider in the context of legislative competence what might have been done. Although I agree that what might have been done may not generally be relevant, that is not the analysis I have set out. I have simply sought by this means to demonstrate that in reality, the imposition of direct liability on employers is no more than machinery for the collection of charges for services which, on my interpretation of Heading 9 of Schedule 7 the Welsh Assembly has legislative competence to impose. 101. If charges are to be imposed for NHS services in the Welsh NHS, then, in my view, the monies collected have to be used to fund the Welsh NHS, as that is the sole purpose for which there is legislative competence to raise funds by way of the imposition of charges. Section 15 requires Ministers, in the exercise of their functions under the NHS (Wales) Act to have regard to the desirability that an amount equal to the monies raised are applied for the purposes of research into, treatment of, or other services relating to, asbestos related diseases. Is that sufficient? In my view it is. In the context of the duties under the NHS (Wales) Act, the provision does no more than to require Ministers to have regard to the desirability of applying the monies so collected specifically in relation to asbestos diseases within the work of the Welsh NHS. It does not permit them to use it for any purpose other than for the Welsh NHS. 102. I thus consider that there is legislative competence under section 108(4) and (5) to impose charges under section 2 directly on employers. (d) Is there retrospectivity in respect of the liability imposed on employers? 103. Although the charges which can be recovered are only those that are incurred after the coming into force of the Bill and the liability to pay Ministers arises only where a compensation payment is made after the coming into force of the Bill, there is an element of retrospectivity in the imposition of the machinery of direct liability on employers. The liability imposed, though only in respect of future charges, is retrospective, as it is a new liability owed directly to Welsh Ministers which arises only by reason of negligence or breach of statutory duty which had occurred prior to the coming into force of the Bill. It is not simply an obligation to make future payments to an employee in respect of a recognised head of damages for an established liability, as would be the case if the machinery adopted had been to impose charges directly on the employees and recovery been obtained from employers. In the case of the employers, prior to the Bill, they would have had no such direct liability to Welsh Ministers. Thus the second aim and effect of the Bill has an element of retrospectivity. 104. I therefore agree with Lord Mance that imposing such direct liabilities retrospectively can be viewed as amounting to the deprivation of the possessions of the employers (and others within section 2) so as to engage A1P1. (2) The effect of A1P1 (a) The applicable principles under A1P1 105. I gratefully adopt the summary of the general principles applicable to A1P1 set out at paras 44 to 53 of Lord Mances judgment. The paragraphs trace the development in the increase in the jurisdiction of the judicial branch of the State and of the Strasbourg Court under A1P1 to review the judgement of a legislative branch of the State in relation to the legislation it has enacted. I agree that in the light of the judgments in AXA General Insurance Ltd v Lord Advocate [2011] UKSC 46, [2012] 1 AC 868 there are two separate questions which arise. These are: (i) Can it be said that the judgement of the Welsh Assembly was manifestly unreasonable in its decision to legislate first to make employers bear the future cost of medical treatment of a disease they had caused rather than such costs being borne by the State and secondly to impose machinery that creates a new direct liability? This can be properly described as the issue of legitimate aims. (ii) Was a fair balance struck, in the judgement of the court, between the demands of the general interest of the community and the requirements of the protection of the employers fundamental rights? This can properly be described as the issue of proportionality. (b) Was the Welsh Assembly entitled to view the Bill as having legitimate aims? 106. I turn therefore to consider the first question. I have set out the main and subsidiary aims of the Bill at para 77. Those aims must be viewed in the social and economic context of Wales and the legislative competence of the Welsh Assembly to which I have referred: (i) Since the establishment of the NHS in the United Kingdom in 1946, the general expectation has been that it would provide medical treatment and care free at the point of delivery, subject to limited exceptions, such as prescription charges. However, it does not follow from that general expectation that a legislature with responsibility for the NHS cannot change the extent to which its services are funded by the State so that they are not free at the point of delivery. Indeed, charges for NHS services (such as prescription charges) have been imposed or increased on many occasions. In Wales there was a concentration of heavy industry. Wales, along with some other parts of the United Kingdom, has a long and direct experience of serious industrial diseases, such as pneumoconiosis, and their devastating effect on employees. It has long been seen as a matter of social justice that proper compensation and care be provided at the expense of employers in those industries to those suffering from such diseases through negligent acts and breach of statutory duty. Given the period of time that elapses after exposure to asbestos before the disease (ii) manifests itself, it cannot be an objection that the wrongdoing occurred many years ago. (iii) The cost of the provision of health services through the Welsh NHS is an escalating cost. One of the reasons is the effect of serious industrial diseases caused by the concentration of heavy industry and the past negligence and breach of statutory duty by employers. The cost of the Welsh NHS is now a very significant part of the expenditure of the Welsh Assembly which has to be met out of the overall grant to the Welsh Assembly by HM Treasury, as described at para 83 above. There can be little doubt that provision of finance for the Welsh NHS and the Welsh NHS continued ability to provide the requisite health services out of monies made available to it out of the grant to the Welsh Assembly by Her Majestys Treasury is a matter of pressing legitimate concern to the Welsh Assembly. 107. Taking into account this context, I consider that the first and central aim of making the employer (when a tortfeasor) pay for the cost of treating the disease caused by it, is an aim which the Welsh Assembly, as a democratically elected legislature within its area of primary legislative competence, is entitled to reach and has an entirely reasonable foundation. (i) Given the choices which are open to a democratically elected legislature in how the escalating overall cost of health care is to be met and taking account of the very long period of time before an asbestos related disease caused by the employer manifests itself, the Welsh Assembly has to make a judgement. It must be entitled to consider in such circumstances which benefits and services it is to continue to provide free of charge. I cannot therefore see a reason why it is not open to the Welsh Assembly to make a judgement that there is a real social and economic need to withdraw the benefit of free medical treatment and care and impose charges on the employers in industries where negligence or breach of statutory duty has occurred in the past. (ii) The fact that the consequences of such wrongdoing take years to manifest themselves and the escalating cost of treating and caring for those suffering from the diseases can indeed be seen as providing a justification for the Welsh Assembly, in the context I have set out, in withdrawing the benefit hitherto provided and allowing the cost to be borne by those tortfeasors in the same way that those tortfeasors bear the other costs of their wrongdoing which has brought about the diseases. (iii) I cannot therefore see a basis for contending that the Welsh Assembly is not reasonably entitled to reach a judgement that there is a strong public interest in doing so. Nor can I see the basis for questioning as reasonable the judgement of the Welsh Assembly that it would be desirable that the funds so raised would directly benefit those suffering from asbestos related diseases. (iv) Choices have to be made in setting overall policy in relation to the level of service, treatment and care to be provided by a national health service, the funding of such services and the services in respect of which charges are to be made. These are choices of social and economic policy which in my view can and should only be made by the Welsh Assembly as a democratically elected legislature. (v) The Welsh Assembly is also entitled to make the judgement that instead of a scheme which would have involved levying a charge on employees and collecting it from the employers through a scheme of the type I have described at paras 96 98, machinery for direct collection would confer a further benefit on those suffering from asbestos related diseases by relieving them of further worry and stress. (vi) That public interest can therefore be seen as reflecting choices of social and economic policy and of social justice in Wales which may be different to the views of social and economic policy and social justice reasonably held in other parts of the United Kingdom or by other people. As these choices are being exercised in matters within the primary legislative competence of the democratically elected Welsh Assembly, the Welsh Assembly is, in my view, reasonably entitled to adopt such choices and views for Wales. 108. For these reasons therefore the Welsh Assemblys objective in making the tortfeasor pay rather than the public as a whole is a choice which can properly be regarded as having an economic and social purpose. This is clearly an objective on which different views can reasonably be held. However, it is in every respect pre eminently a political judgement in relation to social and economic policy on which it is for the legislative branch of the State to reach a judgement. The judicial branch of the State should not therefore question this first and central aim of the Bill, as there are manifestly reasonable grounds for reaching the view which the Welsh Assembly has reached: AXA General Insurance Ltd v Lord Advocate at para 49 and following. (c) No objection could be taken to charges being claimed by employees from employers 109. If the Welsh Assembly had imposed charges directly on employees as I have set out at paras 96 98 and thus limited the Bill to the first and central aim, there could, in my view, be no question of any rights of employers being affected in any impermissible way. The employers may have had an expectation that the cost of medical treatment and care of a disease caused by their wrongdoing in the past would always be met by the State through the NHS budget rather than by them; and that they would therefore continue to enjoy a benefit from the State in respect of their past wrongdoing. 110. However, such an expectation gave them no legitimate expectation giving rise to legal rights. A legislature would not be constrained by A1P1 from enacting primary legislation to make them liable for future payments in respect of their past wrongdoing as were made after the coming into force of the Bill because it was doing no more than withdrawing a benefit to which employers had no entitlement to enjoy for an unlimited period of time. Thus, even though the obligation to make such payments arose out of a liability to the employee that had arisen in the past, there would be no issue of retrospectivity. (i) The payments would be in respect of a recognised head of damages caused by an asbestos related disease or condition for which liability under existing law had been incurred. The position is, in my view, different to that in AXA General Insurance Ltd v HM Advocate. The Damages (Asbestos related Conditions) (Scotland) Act 2009 imposed liability for a condition, asymptomatic pleural plaques, where it had been declared by the courts that there was no liability under existing law. The Bill in the Welsh Assembly has imposed no new liability in respect of responsibility for the asbestos related disease or condition. The Bill is premised on existing liability for the disease, the existing consequent liability to pay damages and an existing well recognised head of damages, namely medical treatment and care. (ii) The payments would only be payments made after the coming into force of the Bill. (iii) The payments could not be recovered in cases where a settlement had been made of the liability incurred by the employer, as the liability would have been discharged. 111. Thus the first and central aim of the Bill in making the employer bear the responsibility for the cost of medical treatment and care could have been achieved without any objection of retrospectivity on the part of the employer. (d) The limited retrospectivity 112. It is evident therefore from the terms of the Bill viewed in its legislative context that the provisions contained in sections 2, 3 and 5 which give rise to retrospectivity were drafted in a way necessary to achieve the second and subsidiary aim of the Bill, namely to provide the best machinery to collect the charges for NHS Services incurred as a result of the enactment of the first and central aim of the Bill. 113. I have already set out my view that the first and central aim of the Welsh Assembly as to the public interest was an aim which it was open to the Welsh Assembly to adopt as a legitimate aim. It is therefore my view that the Welsh Assemblys second aim in seeking to provide machinery to recover the costs of treatment in the best manner possible can properly and reasonably be judged to be a legitimate aim. It is not one manifestly without reasonable foundation. (e) The approach to proportionality 114. I therefore turn to the second question in relation to A1P1 the issue of proportionality. I agree with Lord Mance that the issue of proportionality is, on the established case law, an issue where the court must itself determine whether the interference by the legislature strikes a fair balance between the benefits to be derived from the public interest of the community and the requirements of the protection of the individuals fundamental rights. In my view, for reasons which I explain at paras 118 126 below, it is an essential part of the balancing exercise that the court accords great weight to the judgement of the legislature as to the public interest, provided that the judgement is not manifestly without reasonable foundation, as I have concluded in respect of the Bill, it is. It is then necessary, whilst according great weight to the judgement of the legislature as to the public interest, for the court to weigh all the factors to determine whether the legislation achieves a fair or proportionate balance between the public interest being promoted (together with the benefits to be derived therefrom) and any infringements of the rights of other interests, including private interests. As the Counsel General accepted, special justification is required where there is retrospectivity. (f) The detriment to employers arising from the Bill 115. The first perceived detriment to the employer is the imposition of direct liability. However, as I have set out at para 110, there could be no legitimate expectation which would have stood in the way of the first and central aim of the Welsh Assembly if the Bill had set out a scheme under which the Welsh NHS charged the employee suffering from the disease and that employee obtained recovery from the employer liable for causing the disease. It is difficult to see therefore how a Bill that encompassed the second aim through providing machinery for the recovery of payment directly from the employer in principle infringes any legitimate expectation or imposes any significant detriments beyond that which the employer would have incurred if he had to pay to the employee by way of damages the charges imposed by NHS Wales. The charges imposed under the Bill will be no greater, and may be less, than the actual cost to NHS Wales of the treatment and care. 116. The second perceived detriment is that the liability of the employer for the payments does not merely arise if negligence or breach of statutory duty is established. The liability for the payments arises if compensation is paid where negligence or breach of statutory duty is alleged, but not admitted, as would be the case under most forms of settlement agreement. However, there is, in my view, no material detriment. The liability to make the payment directly to Ministers only arises in respect of settlements made after the coming into force of the Bill. The employer will know that if any settlement is made, then a direct liability will arise for future medical charges. This would not be any different in its effect to what would be claimed by the employee from the employer if the charges were imposed on the employee in cases where there had been no settlement. The employer would, in deciding whether to settle after the coming into force of the Bill, therefore have to take into account the potential direct liability to Ministers in the same way as the employer would have to take into account potential claims for payments to reimburse an employee for medical charges imposed by the Welsh NHS. This again is the case because the Bill in its effects does no more than provide machinery for the collection of charges which it imposes. 117. The third perceived detriment is the exposure of employers to a direct liability to Ministers in respect of which they would not be indemnified by their policies of employers liability insurance. It has been properly assumed in the argument before the court that the direct liability imposed on employers is not a liability for which there would be an indemnity under the policy; I agree with the view of Lord Mance at para 5(ii) that it is not a liability which would be indemnified under the ordinary form of employers liability policy. However, for the reasons I set out at paras 130 132 below, I consider that there is legislative competence in a manner that would not infringe A1P1 under section 108(4) and (5) to make provision so that insurers would be liable to pay under their policies charges recovered through the machinery of the Bill. Such charges would have been recoverable if the Bill had been confined to its first and central aim of making employers pay for the cost of NHS medical care and treatment through the conventional route of imposing the charges on the employee who would recover the sums as a recognised head of damages from the employer. It is also important to note that some employers, such as the nationalised industries, did not carry insurance and therefore this head of detriment would not apply to them. (g) The weight to be accorded to the public interests as perceived by the Welsh Assembly 118. In considering the public interest, as I have reached the view that the judgement of the Welsh Assembly on the legislative choices open to it as expressed in the Bill, is a judgement that it was reasonable for it to reach (and certainly not manifestly without reasonable foundation), I would accord great weight to the Welsh Assemblys judgement, not simply weight as Lord Mance states at para 67. I do not dispute that, on the present development of the case law, at a domestic level, a margin of appreciation is not applicable. Nonetheless, as a domestic court within the constitutional structure of the United Kingdom, a United Kingdom court should attach great weight to informed legislative choices as expressed in the legislation. This is particularly so where the judgement is made, as it is in this case, on matters of social and economic policy: see para 131 of the judgment of Lord Reed in AXA General Insurance v Lord Advocate. 119. Although the Welsh Assembly is a body, like the Scottish Parliament and Northern Ireland Assembly, to which section 9 of the Bill of Rights does not apply, I would find it difficult to make any logical distinction in the context of the United Kingdoms devolved constitutional structure between these legislatures and the United Kingdom Parliament in according weight to the evaluation of the different choices and interests in respect of matters which are within the primary competence of the legislatures. 120. Under the devolution settlements, in areas where legislative competence has been devolved, the Assemblies and the Scottish Parliament, as the democratically elected bodies with primary legislative competence, have to exercise the same legislative choices as the United Kingdom Parliament would have to exercise in areas of legislative competence which it has not devolved. 121. Although this is an issue which it may not be desirable to have to consider at the present time, the issue plainly arises as to how the court is to treat the judgement of the Welsh Assembly, in contradistinction to the United Kingdom Parliament, in relation to a matter of social and economic policy such as the funding of a national health service. 122. I cannot see why in principle the United Kingdom Parliament in making legislative choices in relation to England (in relation to matters such as the funding of the NHS in England) is to be accorded a status which commands greater weight than would be accorded to the Scottish Parliament and the Northern Ireland and Welsh Assemblies in relation respectively to Scotland, Northern Ireland and Wales. As each democratically elected body must be entitled to form its own judgement about public interest and social justice in matters of social and economic policy within a field where, under the structure of devolution, it has sole primary legislative competence, there is no logical justification for treating the views of one such body in a different way to the others, given the constitutional structure that has been developed. The judgement of each must have the same effect and force. Although the weight to be accorded to the judgement of these legislative bodies will vary according to the matter in issue, there is no reason in determining weight to treat the judgement of the Scottish Parliament, the Northern Ireland Assembly and the Welsh Assembly in any way different to the United Kingdom Parliament. 123. I do not consider the judgments in Belfast City Council v Miss Behavin Ltd [2007] UKHL 19, [2007] 1 WLR 1420 assist. The case concerned the judgement of a municipality, not a legislature enacting primary legislation. I therefore consider that the judgement of the Welsh Assembly in relation to social and economic policy underpinning primary legislation enacted by it should not be treated in any way different to the judgement of the United Kingdom Parliament underpinning primary legislation enacted by it. 124. In the present case, as I have concluded that the view taken by the Welsh Assembly is a view which is reasonably open to it as a view of the public interest and of social justice on a matter of social and economic policy, I therefore consider great weight should be attached to the legislative choice made by the Welsh Assembly as expressed in the Bill enacted by it as primary legislation within its competence. It must follow therefore that the judgement of the Welsh Assembly as to the public interest and social justice should be preferred on matters of social and economic policy to a judicial view of what it regards as being in the public interest and representing social justice. 125. I have reached the views I have set out as to the judgement reached by the Welsh Assembly by the analysis I have set out of the terms of the Bill in its overall context, following the approach of Lord Nichols of Birkenhead at para 67 of his judgment in Wilson v First County Trust (No 2) [2003] UKHL 40, [2004] 1 AC 816. 126. I have not done so by an analysis of the reports and debates in the Welsh Assembly. There are, in my view, considerable constitutional dangers, if the judicial branch of the State in the United Kingdom assumes the role of examining the debate in any of the legislative branches of the State in the United Kingdom in relation to primary legislation it is considering and then passing judgment on the quality of the debate, the evidence received, the reasons expressed in the debate and whether in the opinion of the judicial branch of the State the legislative branch of the State has put itself in a proper position to evaluate the differing interests. Such an approach might be viewed as being more in the nature of an evaluation by a higher court of the judgment of a lower court on an appeal where the exercise of a discretion is being examined. The better course, in my view, is to examine the legislation itself in its context, as I have set out. (h) The benefits to be derived from the provisions of the Bill 127. In my view, the Bill in imposing the charges directly on the employers does no more than provide machinery which makes it easier and more effective to recover the costs of medical care and treatment in respect of which employers as tortfeasors would be liable as part of the ordinary measure of damages. This would follow as a consequence of the Welsh Assembly no longer continuing the provision of a State benefit to such tortfeasors by providing such treatment at the cost of the State. The assessment of the overall public good in charging such costs for the future and the machinery employed are matters on which it is for the Welsh Assembly to make the choice and judgement. (i) Conclusion 128. Weighing up the detriment to the private interests which I have set out and the public interest and the benefits to be derived therefrom, in my view, a fair and proper balance has been struck as regards the position of employers. The element of retrospectivity in the Bill is, as regards employers, limited to providing machinery for the collection of a head of damages which a legislative body is entitled to ask the employer to bear as a tortfeasor instead of the State bearing the cost itself. The special justification which the Counsel General accepted was required, has been established, given the social and economic policy in dealing with the present consequences of past wrongdoing by employers by discontinuing a benefit to the wrongdoer. There is, in my view, therefore no excessive burden for employers to bear and no violation of the fundamental rights of the employers under A1P1 as regards the machinery adopted of imposing direct liability on employers under section 2 of the Bill. I would have reached the same view if the Welsh Assembly was not able to protect the insurance position of the employers, given the weight that I consider should be attached to the judgement of the Welsh Assembly in a matter of social and economic policy and the limited nature of the retrospectivity. The position of insurers (a) The extent of the liability imposed on insurers under section 14 of the Bill 129. Section 14 imposes liability for the payments made under section 2 of the Bill on the insurers of those within section 2 who are liable to any extent in respect of an asbestos related disease (described by me as an employer). Section 14(2) prevents the insurer from excluding or restricting that liability. Section 14(5) makes clear that the section applies to policies issued before the Bill comes into force. As I have set out at para 117, there would be no liability under the policy for the direct liability imposed by section 2. Thus section 14 was intended to ensure that the direct liability imposed on employers would be met by their insurers. (b) Legislative competence under section 108(4) and (5) 130. The Counsel General contended that the competence to enact such a provision was contained in section 108(5)(a) and (b) either under (a) as a provision for the enforcement of another provision or which would make another provision effective or under (b) as a provision incidental to or consequential on such a provision. 131. The scope of section 108(5)(b) and a similar provision in the Scotland Act 1998 has been considered in Martin v Most [2010] UKSC 10, 2010 SC (UKSC) 40, at paras 40 and 123 and Attorney General v National Assembly for Wales Commission [2012] UKSC 53, [2013] 1 AC 792, at paras 49 53 and 83. The approach which has been adopted is, in summary, to identify the primary purpose of the main provision of the Bill to which the provision in question is incidental or consequential and then to form a judgement on whether the provision in question is subsidiary to that primary purpose and has no end in itself. In the light of that approach to section 108(5)(b), it seems to me that a similar approach should be adopted in relation to section 108(5)(a), namely to identify the primary purpose of the main provision and then form a view on whether the provision in question is intended for the enforcement of the main provision or to make it effective and has no end in itself. 132. The primary purpose of the imposition of direct liability under section 2 of the Bill is to provide machinery for the collection of charges imposed by the Welsh NHS for medical treatment and care which would have fallen on employers as tortfeasors in the circumstances I have set out. In my view, section 14 of the Bill is intended to have no purpose other than to ensure that the machinery operated in such a way that employers can claim from their insurers as if the charges had been reimbursed to the employees as a recognised head of damage. It has no other purpose or end in itself. It is intended as part and parcel of the scheme that provided machinery for collection. 133. However, the terms of section 14 go much further. When subsections (1) to (3) are read together, I agree with Lord Mance that they have the effect of extending the liability under the employers liability insurance policy to an extent greater than the liability would have been if any charges payable to the Welsh NHS had been paid as damages by the employer to the employee. In my view, the provisions would override deductibles and policy limits, as the effect of the provision as drafted is to extend the policy to indemnify the employer for all liability under section 2, if the policy provides cover to any extent. In my view, therefore, section 14 as drafted goes beyond what would be permissible under section 108(5)(a) and (b). (c) The retrospective nature of the provision 134. In whatever way section 14 is drafted, even if limited in the way I have indicated, section 14 would retrospectively amend any policy which the employer has to indemnify the employer against his liability for asbestos related disease by extending it to provide indemnity for payments made to Ministers for charges payable to the Welsh NHS. The imposition of such liabilities retrospectively, in my view, could be seen as the deprivation of the possessions of insurers, so as to engage A1P1. (d) Legitimate aim and retrospectivity 135. As I have set out, the aim of the Welsh Assembly in relation to the position of insurers is to provide protection to employers by amending insurance policies so that they provide cover in relation to the imposition of direct liability under section 2. Imposing direct liability is, for the reasons I have given in essence the provision of machinery for the collection of charges for which the employers would have been liable to the employees once the Welsh NHS withdrew free treatment and care and imposed charges. 136. In my view, the position of insurers must be seen in the light of the two aims of the Bill. If the Bill had been limited to its first and central aim and a scheme of the kind I have described at paras 96 98 enacted, insurers would ordinarily have been liable under the ordinary form of policy to indemnify employers for the charges payable by them to the employees. There would have been no need for the legislation to amend any policy as it would have had to indemnify employers on its existing terms. The only ground on which the Association of British Insurers, as representing the interests of the insurance industry, could therefore have sought to avoid such a liability would be the contention that it was impermissible for a State to change its policy of providing medical care free at the point of delivery and instead charge employers for the consequences of their past wrongdoing. It would have to be contended that the insurance industry had a legitimate expectation that the States policy in relation to providing a benefit to them by funding the future cost of medical care could not be changed in respect of past wrongdoing. 137. I have set out in relation to employers why I take the view that there is no legitimate interest which prevents the Welsh Assembly withdrawing for the future its funding of medical treatment and care for asbestos related diseases which have been caused by the employers past wrongdoing. Clearly in making reserves for known claims and IBNR (incurred but not reported claims) and in preparing their accounts and in making their reinsurance arrangements, insurers will have assumed that the State would go on providing free medical treatment and care for employees who did not choose private treatment and thus provide them with a benefit. However, I cannot see how that could give rise to a legitimate expectation on the part of those who insure employers against the consequences of their past wrongdoing that the State would not be entitled to change its policy for charging and withdrawing the benefit enjoyed by wrongdoers, particularly where the consequences of the wrongdoing take many years to become apparent. In my view, insurers therefore have no legitimate interest which prevents a State changing its charging policy for health care and replacing care free at the point of delivery with the imposition of charges. If insurers have, contrary to my view, a legitimate interest, then the ambit of their interest would need further analysis, as a State has, particularly in times of budgetary stringency, a real interest in amending its charging policy, as it does, for example, in relation to prescriptions. 138. It follows therefore, as it does in the case of employers, that the element of retrospectivity is limited to the machinery for collection. I have set out at para 133, my view that section 14 goes much further than providing an indemnity for collecting sums that would otherwise have been payable by the employer as damages as a tortfeasor. I can see no justification in the balancing exercise under A1P1 for extending the liability of insurers under section 14 further than the indemnity which insurers were bound to provide under their policies if the indemnity had been called upon to indemnify the sums which would have been payable by the employers as damages. (e) Conclusion in relation to insurers 139. It is for that reason, I have come to the conclusion that section 14 as drafted, besides being beyond the competence under section 108(4) and (5), infringes A1P1. However if section 14 had been limited in the way I have suggested, I would have considered it as a provision that achieved a fair balance under A1P1. That is because the retrospectivity would have been limited to providing an indemnity solely in respect of the machinery of collection of sums that would have been otherwise due under the insurance policies if the charges imposed by the Welsh Assembly had been payable by way of damages by the employers as tortfeasors in the ordinary way. 140. For the reasons I have given, insurers, just as employers, have no legitimate interest which protects them against the withdrawal of the State benefit conferred in the provision of free medical treatment and care for diseases caused by negligence or breach of statutory duty, irrespective of whether that negligence or breach of statutory duty occurred in the past, particularly in circumstances where the consequences of such wrongdoing take many years to become manifest. 27, 37 and 46 47, per Lord Rodger, Lady Hale and Lord Mance. That was a case involving subordinate legislation, to which article 9 of the Bill of Rights does not apply. Perhaps in the light of article 9 there is a relevant distinction between cases concerning primary legislation by the United Kingdom Parliament and other legislative and executive decisions. It is, I think, unnecessary to go further into this difficult area on this reference. On any view, if the admissible background material shows that the Bill was put before and passed by the Welsh Assembly on the basis of a supposed analogy or precedent, it must be possible to consider whether that analogy or 58. |
These appeals raise the question as to the test which is to be applied when considering whether a gay person who is claiming asylum under the Convention relating to the Status of Refugees 1951, as applied by the 1967 Protocol (the Convention) has a well founded fear of persecution in the country of his or her nationality based on membership of that particular social group. The need for reliable guidance on this issue is growing day by day. Persecution for reasons of homosexuality was not perceived as a problem by the High Contracting Parties when the Convention was being drafted. For many years the risk of persecution in countries where it now exists seemed remote. It was the practice for leaders in these countries simply to insist that homosexuality did not exist. This was manifest nonsense, but at least it avoided the evil of persecution. More recently, fanned by misguided but vigorous religious doctrine, the situation has changed dramatically. The ultra conservative interpretation of Islamic law that prevails in Iran is one example. The rampant homophobic teaching that right wing evangelical Christian churches indulge in throughout much of Sub Saharan Africa is another. The death penalty has just been proposed in Uganda for persons who engage in homosexual practices. Two gay men who had celebrated their relationship in a public engagement ceremony were recently sentenced to 14 years imprisonment in Malawi. They were later pardoned in response to international pressure by President Mutharika, but he made it clear that he would not otherwise have done this as they had committed a crime against the countrys culture, its religion and its laws. Objections to these developments have been greeted locally with derision and disbelief. The fact is that a huge gulf has opened up in attitudes to and understanding of gay persons between societies on either side of the divide. It is one of the most demanding social issues of our time. Our own government has pledged to do what it can to resolve the problem, but it seems likely to grow and to remain with us for many years. In the meantime more and more gays and lesbians are likely to have to seek protection here, as protection is being denied to them by the state in their home countries. It is crucially important that they are provided with the protection that they are entitled to under the Convention no more, if I may be permitted to coin a well known phrase, but certainly no less. Background The appellants are both gay men. HJ, who is 40 years old, is an Iranian. He claimed asylum on arrival in the United Kingdom on 17 December 2001. He practised homosexuality in Iran and has continued to do so in the United Kingdom. HT, who is 36 years old, is a citizen of Cameroon. He claimed asylum following his arrest at Gatwick on 19 January 2007. He had presented a false passport while in transit to Montreal. He too is a practising homosexual. Both appellants claim that they have a well founded fear that they would be persecuted if they were to be returned to their home countries. The Secretary of State for the Home Department (the respondent) refused asylum in both cases. HJs appeal against that decision was dismissed by the Asylum and Immigration Tribunal on 15 August 2005. On 26 July 2006 the Court of Appeal remitted his case to the Tribunal for reconsideration: J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 73. On 8 May 2008, following reconsideration, his appeal remained dismissed. HTs appeal to the Tribunal was dismissed on 29 October 2007. Reconsideration was ordered on 14 November 2007 on the ground that the Tribunal might have made an error of law in the test to be applied to a gay person seeking asylum. But on 5 June 2008 Senior Immigration Judge Warr held that the earlier determination was not flawed, and he did not proceed to a reconsideration of the evidence. The appellants appealed against these decisions to the Court of Appeal. On 10 March 2009 the Court of Appeal (Pill and Keene LJJ and Sir Paul Kennedy) dismissed both appeals: [2009] EWCA Civ 172. The Secretary of State accepted that practising homosexuals are a particular social group for the purposes of article 1A of the Convention. The issue was how those who had a well founded fear of persecution could be identified. It was said by counsel for the appellants to be whether it was an answer to a claim for refugee status for the applicant to be required to conceal his sexual identity in order to avoid harm of sufficient severity as to amount to persecution the proposition being that to impose such a requirement was incompatible with the Convention. For the Secretary of State it was submitted that the issue always was whether the applicant could reasonably be expected to tolerate the need for discretion on return: para 7. The Court of Appeal applied the test stated by Maurice Kay LJ in J v Secretary of State for the Home Department [2007] Imm AR 73, para 16, where he said that the tribunal would have to ask itself whether discretion was something that the applicant could reasonably be expected to tolerate, not only in the context of random sexual activity but in relation to matters following from, and relevant to, sexual identity in the wider sense. In HJs case the Court of Appeal held that the Tribunal were entitled to conclude on the evidence that HJ could reasonably be expected to tolerate conditions in Iran: [2009] EWCA Civ 172, para 31. In HTs case there was finding that he would be discreet on return to Cameroon. The question whether he could reasonably be expected to tolerate a life involving discretion was not raised. The Court of Appeal held that there were no facts on which a decision on that matter could be based but that the Tribunal were entitled to find that HT had not established that there was a real risk of persecution in the future: paras 44, 45. In this court Mr Bourne for the Secretary of State submitted that the test of whether the appellants should have refugee status was correctly stated by the Court of Appeal in J v Secretary of State for the Home Department [2007] Imm AR 73, that it was correctly applied by the Tribunal in both cases and that the Court of Appeal was right to dismiss the appeals. Mr Husain QC for HJ said that the test as stated in J v Secretary of State for the Home Department is misconceived. He submitted that it is contrary to the ordinary meaning of the definition of refugee in the Convention, and the objects and purposes of the treaty, to deny a refugees claim on the basis that he was required to suppress or surrender his protected identity to avoid the persecution that would ensue if that identity were to be disclosed. Miss Carss Frisk QC for HT too disputed the test in Js case. She submitted that if the applicant could show that he had a well founded fear of persecution he was entitled to refugee status. He should not be required to demonstrate that concealment of his identity was something that he could not reasonably be expected to tolerate. She also said that HT ought to succeed on the facts in any event because of what happened to him in Cameroon. Background Article 1A(2) of the Convention provides that a refugee is a person who owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, unwilling to avail himself of the protection of that country Amongst the benefits that a person who satisfies that definition enjoys under the Convention is the prohibition of expulsion or return. Article 33(1) provides: No Contracting State shall expel or return (refouler) a refugee in any manner whatsoever to the frontiers of territories where his life or freedom would be threatened on account of his race, religion, nationality, membership of a particular social group or political opinion. To a large extent the meaning of the definition in article 1A(2) is common ground. It treats membership of a particular social group as being in pari materia with the other Convention reasons for persecution: Fornah v Secretary of State for the Home Department [2006] UKHL 46, [2007] 1 AC 412, para 20, per Lord Bingham of Cornhill. There is no doubt that gay men and women may be considered to be a particular social group for this purpose: Islam v Secretary of State for the Home Department; R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 643 644, per Lord Steyn. As Lord Rodger points out in para 42, regulation 6(1)(e) of the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525) recognises as clearly as can be that a group based on a common characteristic of sexual orientation may be included in a particular social group that is in need of international protection. The group is defined by the immutable characteristic of its members sexual orientation or sexuality. This is a characteristic that may be revealed, to a greater or lesser degree, by the way the members of this group behave. In that sense, because it manifests itself in behaviour, it is less immediately visible than a persons race. But, unlike a persons religion or political opinion, it is incapable of being changed. To pretend that it does not exist, or that the behaviour by which it manifests itself can be suppressed, is to deny the members of this group their fundamental right to be what they are of the right to do simple, everyday things with others of the same orientation such as living or spending time together or expressing their affection for each other in public. The Convention does not define persecution. But it has been recognised that it is a strong word: Sepet and Bulbul v Secretary of State for the Home Department [2003] UKHL 15, [2002] 1 WLR 856, para 7, per Lord Bingham. Referring to the dictionary definitions which accord with common usage, Lord Bingham said that it indicates the infliction of death, torture or penalties for adherence to a belief or opinion, with a view to the repression or extirpation of it. Article 9(1)(a) of the EC Council Directive 2004/83/EC on minimum standards for the qualification and status of third country nationals or stateless persons as refugees (the Qualification Directive) states that acts of persecution must (a) be sufficiently serious by their nature or repetition as to constitute a severe violation of basic human rights or (b) be an accumulation of various measures, including violations of human rights which is sufficiently severe as to affect an individual in a similar manner as mentioned in (a). In Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473, para 40, McHugh and Kirby JJ said: Persecution covers many forms of harm ranging from physical harm to the loss of intangibles, from death and torture to state sponsored or condoned discrimination in social life and employment. Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. To constitute persecution for the purposes of the Convention the harm must be state sponsored or state condoned. Family or social disapproval in which the state has no part lies outside its protection. As Professor J C Hathaway in The Law of Refugee Status (1991), p 112 has explained, persecution is most appropriately defined as the sustained or systemic failure of state protection in relation to one of the core entitlements which has been recognised by the international community. The Convention provides surrogate protection, which is activated only upon the failure of state protection. The failure of state protection is central to the whole system: Horvath v Secretary of State for the Home Department [2001] 1 AC 489, 495. The question is whether the home state is unable or unwilling to discharge its duty to establish and operate a system for the protection against persecution of its own nationals. The reference in the preamble to the Universal Declaration of Human Rights of 1948 shows that counteracting discrimination was a fundamental purpose of the Convention. Article 2 states: Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Lord Steyn emphasised this point in Islam v Secretary of State for the Home Department; R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 639. He also drew attention to the first preamble to the Declaration, which proclaimed the inherent dignity and the equal and inalienable rights of all members of the human family. No mention is made of sexual orientation in the preamble or any of its articles, nor is sexual orientation mentioned in article 1A(2) of the Convention. But coupled with an increasing recognition of the rights of gay people since the early 1960s has come an appreciation of the fundamental importance of their not being discriminated against in any respect that affects their core identity as homosexuals. They are as much entitled to freedom of association with others of the same sexual orientation, and to freedom of self expression in matters that affect their sexuality, as people who are straight. The guarantees in the Universal Declaration are fundamental to a proper understanding of the Convention. But the Convention itself has, as the references in para 12 show, a more limited purpose. It is not enough that members of a particular social group are being discriminated against. The contracting states did not undertake to protect them against discrimination judged according to the standards in their own countries. Persecution apart, the Convention was not directed to reforming the level of rights prevailing in the country of origin. Its purpose is to provide the protection that is not available in the country of nationality where there is a well founded fear of persecution, not to guarantee to asylum seekers when they are returned all the freedoms that are available in the country where they seek refuge. It does not guarantee universal human rights. So the conditions that prevail in the country in which asylum is sought have no part to play, as matter of legal obligation binding on all states parties to the Convention, in deciding whether the applicant is entitled to seek asylum in that country: Januzi v Secretary of State for the Home Department [2006] UKHL 5, [2006] 2 AC 426, paras 16, 46. As Laws LJ said in Amare v Secretary of State for the Home Department [2005] EWCA Civ 1600, [2006] Imm AR 217 para 31: The Convention is not there to safeguard or protect potentially affected persons from having to live in regimes where pluralist liberal values are less respected, even much less respected, than they are here. It is there to secure international protection to the extent agreed by the contracting states. Thus international protection is available only to those members of the particular social group who can show that they have a well founded fear of being persecuted for reasons of their membership of it who, owing to that fear, are unwilling to avail themselves of the protection of their home country. Those who satisfy this test cannot be returned to the frontiers of a territory where their life or freedom would be threatened on account of their membership of that group: article 33(1). To be accorded this protection, however, the test that article 1A(2) sets out must first be satisfied. As Lord Bingham of Cornhill said in Januzi v Secretary of State for the Home Department [2006] 2 AC 426, para 5, the words owing to well founded fear of being persecuted for reasons of membership of a particular social group in the definition of refugee express a causative condition which governs all that follows. Well founded fear: the causative condition In situations such as those presented by these appeals the fact that members of the particular social group are persecuted may not be seriously in issue. In Iran, where the death penalty exists, persons have been hanged simply because they are gay. In Cameroon homosexuality is illegal and the sanctions for it include sentences of up to five years imprisonment. Although prosecutions are rare, homosexuals are liable to be denounced and subjected to acts of violence and harassment against which the state offers no protection. But the situation in the country of origin is only the beginning, not the end, of the inquiry. The Convention directs attention to the state of mind of the individual. It is the fear which that person has that must be examined and shown to be well founded. In cases where the fear is of persecution for reasons of religion or political opinion, it may be necessary to examine the nature and consequences of any activity that the applicant claims he or she may wish to pursue if returned to the country of nationality. It will not be enough for the person merely to assert that persons who are of that religion or political opinion are liable to be persecuted. The question is, what will the applicant actually do, and does what he or she will in fact do justify the fear that is complained of? INLR 1, 7 8 Simon Brown LJ said: In Ahmed (Iftikhar) v Secretary of State for the Home Department, [2000] In all asylum claims there is ultimately a single question to be asked: is there a serious risk that on return the applicant will be persecuted for a Convention reason? The critical question [is]: if returned, would the asylum seeker in fact act in the way he says he would and thereby suffer persecution? If he would, then, however unreasonable he might be thought for refusing to accept the necessary restraint on his liberties, in my judgment he would be entitled to asylum. Nobody has suggested that there is anything wrong with these observations, as far as they go, and I would respectfully endorse them. They contain two propositions which the Secretary of State in this case accepts, and which I do not think can be disputed. The first is that attention must be focused on what the applicant will actually do if he is returned to his country of nationality. The second is that the fact that he could take action to avoid persecution does not disentitle him from asylum if in fact he will not act in such a way as to avoid it. That is so even if to fail or to refuse to avoid it would be unreasonable. In Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473, para 40, per McHugh and Kirby JJ said that persecution does not cease to be persecution for the purposes of the Convention because the harm can be avoided by taking avoiding action within the country of origin. I am inclined to think that this proposition, as stated, expresses the point too broadly. But I would accept it as accurate if at the end there were added the words which the applicant will in fact not take. Of course, I do not mean by this that persecution ceases to be persecution if those at risk of being persecuted can and do eliminate the harm by taking avoiding action. That is a different point, with which their Honours go on to deal later in the same paragraph. How to define the test for its application is the issue in this case: see paras 21 and 22. It has been recognised, of course, that an applicant may be required to live in a place of relocation within his country of origin so long as it would not be unduly harsh for him to be required to do so: Januzi v Secretary of State for the Home Department [2006] 2 AC 426. As Lord Bingham explained in para 7, the Convention does not expressly address the situation where, within his country of nationality a person has a well founded fear of persecution at place A, where he lived, but not at place B, where he could reasonably be expected to relocate. But that situation may reasonably be said to be covered by the causative condition to which he referred in para 5. A person will be excluded from refugee status if under all the circumstances it would be reasonable to expect him to seek refuge in another part of the same country. Persons seeking refuge from the process known as ethnic cleansing, for example, may be refused asylum on the basis that there are other parts of the country of their nationality where they may live without being persecuted: see also R (Yogathas) v Secretary of State for the Home Department [2002] UKHL 36, [2003] 1 AC 920, para 40; the UNHCR Handbook, para 91. Mr Bourne suggested that an analogy could be drawn between internal relocation, or internal flight as it is sometimes less happily called: see R (Yogathas) v Secretary of State for the Home Department [2003] 1 AC 920, para 6. Mr Husain submitted in his written case that applicants who are gay and who avoid persecution by a modification of their behaviour may be said on return to have taken internal flight within the self to avoid persecution. Mr Bourne submitted that any such analogy supported the respondent. The analogy, as he expressed it in his written case, was put this way. A person to whom geographical internal flight is available is not a refugee unless it would be unduly harsh to take such flight. So a person who will, if necessary, take the metaphorical flight of hiding his sexuality is not a refugee unless it would be intolerable for him to do so. Examples were referred to of situations that might demonstrate the logic of this approach. They were said to include situations where the applicant would be discreet, there would be no real risk that he would come to the attention of the authorities and suffer persecution and the consequences of his discretion were objectively reasonable for him to be expected to tolerate. He would have no well founded fear of persecution and not be a refugee even if the reason why he would be discreet was because, or partly because, he feared persecution. This submission takes me to the core of the issue between the parties and to the question whether the test in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 stands up to examination. But I think that the suggested analogy with internal relocation can be dismissed at once as incompatible with the principles of the Convention. The objection to it is that it assumes that the applicant will be prepared to lie about and conceal his sexual orientation when he moves to the place of relocation. Unless he does this he will be no better off than he would be if he did not relocate at all. The misconception lies in the idea that he will be willing and able to make a fresh start when he moves to somewhere where he is not known. In Hysi v Secretary of State for the Home Department [2005] EWCA Civ 711, [2005] INLR 602 the Court of Appeal held that the tribunal had not assessed the consequences of expecting the applicant to lie and dissemble in the place of relocation about his ethnic origins. He would have to be a party to the long term deliberate concealment of the truth, living in continuing fear that the truth would be discovered: para 37. There is no place, in countries such as Iran and Cameroon, to which a gay applicant could safely relocate without making fundamental changes to his behaviour which he cannot make simply because he is gay. The submission that it is proper to examine the question whether it would be objectively reasonable for the applicant to be expected to tolerate some element of concealment I would prefer not to use the word discretion, as this euphemistic expression does not tell the whole truth when he is returned to the country of his nationality cannot be dismissed so easily. Behaviour which reveals ones sexual orientation, whether one is gay or straight, varies from individual to individual. It occupies a wide spectrum, from people who are naturally reticent and have no particular desire to establish a sexual relationship with anybody to those who wish, for various reasons, to proclaim in public their sexual identity. Social and family disapproval of overt sexual behaviour of any kind, gay or straight, may weigh more heavily with some people than others. Concealment due to a well founded fear of persecution is one thing. Concealment in reaction to family or social pressures is another. So one must ask why the applicant will conduct himself in this way. A carefully nuanced approach is called for, to separate out those who are truly in need of surrogate protection from those who are not. The test in J's case In J v Secretary of State for the Home Department [2007] Imm AR 73 the applicant was of Iranian nationality. The Asylum and Immigration Tribunal found that he was a practising homosexual, but that his relationship with his partner in Iran was discreet and that his homosexual practices there had never been such that his own homosexual activity was reasonably likely to result in adverse attention from the authorities. It was held that the tribunal had fallen into error by not asking why the applicant had acted discreetly, especially as the appellant said in his witness statement that he was forced to hide his relationship and was not able to live openly with his partner as he wanted to do. The case was remitted to the tribunal for further reconsideration. In para 16 Maurice Kay LJ gave the following directions to the tribunal: It will have to address questions that were not considered on the last occasion, including the reason why the appellant opted for discretion before his departure from Iran and, by implication, would do so again on return. It will have to ask itself whether discretion is something that the appellant can reasonably be expected to tolerate, not only in the context of random sexual activity but in relation to matters following from, and relevant to, sexual identity in the wider sense recognised by the High Court of Australia (see the judgment of Gummow and Hayne JJ at para 83). This requires consideration of the fact that homosexuals living in a stable relationship will wish, as this appellant says, to live openly with each other and the discretion which they may feel constrained to exercise as the price to pay for the avoidance of condign punishment will require suppression of many aspects of life that related to, or informed by, their sexuality (ibid, para 81). This is not simply generalisation; it is dealt with in the appellants evidence. [Emphasis added] Buxton LJ, making the same point, said in para 20 that the applicant might have to abandon part of his sexual identity in circumstances where failure to do so exposed him to the extreme danger that the country guidance indicated: The Tribunal may wish to consider whether the combination of those two circumstances has an effect on their decision as to whether the applicant can be expected to tolerate the situation he may find himself in when he returns to Iran. [Emphasis added] The passages which I have italicised lie at the heart of the argument. For the Secretary of State, Mr Bourne submitted that there were two major questions that had to be addressed: (1) what will the situation be on return, and (2) in these circumstances is there a real risk of persecution? The inquiry in regard to the first question was directed to how the applicant will conduct himself and how others will react to this. He accepted that a finding that the applicant will in fact be discreet on return to the country of his nationality is not the end of the inquiry. The question that then had to be asked, he said, was whether opting for discretion itself amounted to persecution. The threshold between what was and was not persecution was marked by what he could reasonably be expected to tolerate. As in the case of internal flight, it was what he could not reasonably be expected to tolerate that amounted to persecution. As the references to it in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 indicate, the Court of Appeal in that case sought guidance from the decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473. Among the passages from that judgment that are quoted is para 40, where (setting out the paragraph in full) McHugh and Kirby JJ said: The purpose of the Convention is to protect the individuals of every country from persecution on the grounds identified in the Convention whenever their governments wish to inflict, or are powerless to prevent, that persecution. Persecution covers many forms of harm ranging from physical harm to the loss of intangibles, from death and torture to state sponsored or condoned discrimination in social life and employment. Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. But persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. The Convention would give no protection from persecution for reasons of religion or political opinion if it was a condition of protection that the person affected must take steps reasonable or otherwise to avoid offending the wishes of the persecutors. Nor would it give protection to membership of many a particular social group if it were a condition of protection that its members hide their membership or modify some attribute or characteristic of the group to avoid persecution. Similarly, it would often fail to give protection to people who are persecuted for reasons of race or nationality if it was a condition of protection that they should take steps to conceal their race or nationality. [Emphasis added] It was the appearance in this paragraph of the sentence which I have italicised that led Maurice Kay LJ to use almost the same words when he was framing his directions in para 16. This can be seen from his quotation of it in para 11 of his judgment, where he said that it had been adopted in Z v Secretary of State for the Home Department [2005] Imm AR 75, para 12, Amare v Secretary of State for the Home Department [2006] Imm AR 217, para 27 and RG (Colombia) v Secretary of State for the Home Department [2006] EWCA Civ 57, [2006] Imm AR 297, para 16. Para 40 of the judgment in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473 is not entirely easy to follow. The Convention does not permit, or indeed envisage, applicants being returned to the countries of their nationality on condition that they take steps to avoid offending their persecutors. The use of the phrase a condition of protection seems to overlook the fact that it is the country in which asylum is sought that is being appealed to for protection, not the country of the applicants nationality. But the flaw in the sentence in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 to which the appellants take objection is indicated by the sentence that immediately follows it. It makes the point that persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. In para 50, which the Court of Appeal did not quote in Js case, McHugh and Kirby JJ said: In so far as decisions in the Tribunal and the Federal Court contain statements that asylum seekers are required, or can be expected, to take reasonable steps to avoid persecutory harm, they are wrong in principle and should not be followed. The same point was made with perhaps greater force by Gummow and Hayne JJ in para 82, where they said: Saying that an applicant for protection would live discreetly in the country of nationality may be an accurate description of the way in which that person would go about his or her daily life. To say that a decision maker expects that that person will live discreetly may also be accurate if it is read as a statement of what is thought likely to happen. But to say that an applicant for protection is expected to live discreetly is both wrong and irrelevant to the task to be undertaken by the Tribunal if it is intended as a statement of what the applicant must do. The references in the judgments of Maurice Kay and Buxton LJJ in J v Secretary of State for the Home Department [2007] Imm AR 73, paras 16 and 20 to what the applicant could be expected to do when he returned do not fit happily with the approach indicated in some parts of the judgment in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473 which they said they were following. The explanation for this may perhaps lie in para 10 of the judgment in Js case, where Maurice Kay LJ said: In our jurisdiction Buxton LJ demonstrated in Z v SSHD [2005] Imm AR 75 that the approach of the High Court of Australia had in turn been influenced by English authority, particularly Ahmed v SSHD [2000] INLR 1. Having referred to the judgment of Simon Brown LJ in Ahmed, he said at para 16: It necessarily follows from that analysis that a person cannot be refused asylum on the basis that he could avoid otherwise persecutory conduct by modifying the behaviour that he would otherwise engage in, at least if that modification was sufficiently significant to place him in a situation of persecution. In para 11 Maurice Kay LJ added this comment: That brief extract is particularly helpful because it brings together the principle articulated by the High Court of Australia and the underlying need for an applicant to establish that his case contains something significant in itself to place him in a situation of persecution. The principle which the Court of Appeal should have taken from the judgment of the High Court of Australia is that it would be wrong to say that an applicant for protection was expected to live discreetly if it was intended as a statement of what the applicant must do: Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473, para 82. The test of whether the situation he may find himself in on return was one that he could reasonably be expected to tolerate was introduced to address the high threshold that has to be crossed between what does and what does not amount to persecution. But the way the test was expressed in para 16 of Js case suggests that the applicant will be refused asylum if it would be reasonable to expect him to be discreet even if he is unwilling or unable to do this. That is a fundamental error. It conflicts with Simon Brown LJs observation in Ahmed (Iftikhar) v Secretary of State for the Home Department [2000] INLR 1, 8 that, however unreasonable the applicant might be thought for refusing to accept the necessary restraint on his liberties, he would be entitled to asylum. I would hold that the test in para 16 of Js case is not accurately expressed and should no longer be followed. For the reasons that Sir John Dyson gives, I would reject the reasonably tolerable test. As this was the test that the Court of Appeal applied to these appeals, its decision to dismiss them was mistaken and must be set aside. Comparative jurisprudence The Court was referred to a number of decisions in Australia, New Zealand, South Africa, the United States and Canada. I do not think that they reveal a consistent line of authority that indicates that there is an approach which is universally accepted internationally. The Australian cases that are of interest are those that post date the decision in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473. They are NALZ v Minister for Immigration and Multicultural Affairs [2004] FCAFC 320; NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 29, (2005) 79 ALJR 1142, and SZATV v Minister for Immigration and Citizenship [2007] HCA 40, (2007) 233 CLR 18. In NALZ the Federal Court was divided on the question how the principles set out S395/2002 should be applied. The applicant was an Indian national who was refused refugee status by the tribunal because he could avoid future arrest by not engaging in the activity that would attract persecution. The majority, Emmett and Downes JJ, held that this was not an impermissible approach. Madgwick J thought that the tribunal had fallen into the error identified in S395/2002 because it had not asked itself what the applicant would in fact do. In NABD the High Court was again divided in its identification of the relevant legal principles. It did not reach the question whether a test of what was reasonably tolerable could be applied. It is worth noting however that McHugh J stressed the need for a rigorous and careful examination of the applicants specific characteristics and circumstances. In SZATV the question was whether the tribunal was right to deny asylum on the ground that it would be reasonable for the applicant, a journalist whose fear was of persecution on grounds of political opinion, to relocate to another part of the country of his nationality and do construction work there. The High Court on this occasion was unanimous in holding that the tribunal had failed to address itself to what might reasonably be expected of the applicant with respect to his relocation if he were to be returned. I think that the single most important message to emerge from these cases is the need for a careful and fact sensitive analysis. The New Zealand case is Refugee Appeal No 74665/03 [2005] INLR 68, in which the judgment of the New Zealand Refugee Status Appeals Authority was written by Rodger Haines QC. It contains an impressive analysis of the relevant principles, and it is impossible to do full justice here to what it contains. The passages that are of particular interest are to be found from paras 92 and following. The point made by Sachs J in National Coalition for Gay and Lesbian Equality v Minister of Justice 1999 (1) SA 6, para 130 that to require an applicant to engage in self denial was to require him to live in a state of self induced oppression was approved and adopted: para 114. The decision of the High Court of Australia in S395/2002 is analysed in paras 116 124. Haines is critical of its approach on the ground that it concentrates on an evaluation of the risk rather than being, as it is put in para 124, located in the persecution element. The New Zealand approach, it is said, places international human rights standards at the centre of the being persecuted analysis in the belief that this provides a principled and disciplined framework for analysis. The significance of this distinction becomes apparent at the end of the judgment when, without any detailed analysis of the causative condition by examining what will actually happen on return, the conclusion is reached in a few sentences that the applicant was at risk of serious harm simply because he was gay: para 132. In Karouni v Gonzales (2005) 399 F 3d 1163 the US Court of Appeals upheld an appeal by an applicant who claimed that he had a well founded fear of persecution on return to Lebanon because he was gay. It applied the principle, which the Secretary of State in this case accepts, that he should not be required to change his sexual identity, as it was a fundamental characteristic and an integral part of human freedom. Several Canadian cases were referred to by Mr Bourne in support of his proposition that the tribunal must look at what the applicant will, rather than could, do if he were to be returned: Case no 02751 of 9 January 2007 (unreported) 16 February 2007; Atta Fosu v Canada (Minister of Citizenship and Immigration) [2008] FC 1135 and Okoli v Minister of Citizenship and Immigration [2009] FC 332. In Atta Fosu, for example, the Federal Court held that it was impermissible to require a person to deny or hide his sexuality when there was no evidence that he could, or was even prepared to, keep it secret. What is missing from these cases, especially those from Australia and New Zealand, is clear and consistent guidance as to the way the fact finding tribunals should go about their task. Useful advice is set out in A Guide to Refugee Law in Australia, prepared by the Legal Service Section of the Refugee Review Tribunal and the Migration Review Tribunal, pp 10.25 10.26. But it is not authoritative. The test as stated in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 does not fit well with some of the dicta in these cases, and with the recommendation in the Guide that asylum seekers are not required, and cannot be expected, to take reasonable steps to avoid persecutory harm or to live discreetly so as to avoid it. But I have already concluded that it should be departed from. The test This brings me to the test that should be adopted by the fact finding tribunals in this country. As Lord Walker points out in para 98, this involves what is essentially an individual and fact specific inquiry. Lord Rodger has described the approach in para 82, but I would like to set it out in my own words. It is necessary to proceed in stages. (a) The first stage, of course, is to consider whether the applicant is indeed gay. Unless he can establish that he is of that orientation he will not be entitled to be treated as a member of the particular social group. But I would regard this part of the test as having been satisfied if the applicants case is that he is at risk of persecution because he is suspected of being gay, if his past history shows that this is in fact the case. (b) The next stage is to examine a group of questions which are directed to what his situation will be on return. This part of the inquiry is directed to what will happen in the future. The Home Offices Country of Origin report will provide the background. There will be little difficulty in holding that in countries such as Iran and Cameroon gays or persons who are believed to be gay are persecuted and that persecution is something that may reasonably be feared. The question is how each applicant, looked at individually, will conduct himself if returned and how others will react to what he does. Those others will include everyone with whom he will come in contact, in private as well as in public. The way he conducts himself may vary from one situation to another, with varying degrees of risk. But he cannot and must not be expected to conceal aspects of his sexual orientation which he is unwilling to conceal, even from those whom he knows may disapprove of it. If he fears persecution as a result and that fear is well founded, he will be entitled to asylum however unreasonable his refusal to resort to concealment may be. The question what is reasonably tolerable has no part in this inquiry. (c) On the other hand, the fact that the applicant will not be able to do in the country of his nationality everything that he can do openly in the country whose protection he seeks is not the test. As I said earlier (see para 15), the Convention was not directed to reforming the level of rights in the country of origin. So it would be wrong to approach the issue on the basis that the purpose of the Convention is to guarantee to an applicant who is gay that he can live as freely and as openly as a gay person as he would be able to do if he were not returned. It does not guarantee to everyone the human rights standards that are applied by the receiving country within its own territory. The focus throughout must be on what will happen in the country of origin. (d) The next stage, if it is found that the applicant will in fact conceal aspects of his sexual orientation if returned, is to consider why he will do so. If this will simply be in response to social pressures or for cultural or religious reasons of his own choosing and not because of a fear of persecution, his claim for asylum must be rejected. But if the reason why he will resort to concealment is that he genuinely fears that otherwise he will be persecuted, it will be necessary to consider whether that fear is well founded. (e) This is the final and conclusive question: does he have a well founded fear that he will be persecuted? If he has, the causative condition that Lord Bingham referred to in Januzi v Secretary of State for the Home Department [2006] 2 AC 426, para 5 will have been established. The applicant will be entitled to asylum. It should always be remembered that the purpose of this exercise is to separate out those who are entitled to protection because their fear of persecution is well founded from those who are not. The causative condition is central to the inquiry. This makes it necessary to concentrate on what is actually likely to happen to the applicant. As Lord Walker says in para 88, the inquiry is directed to what will happen in the future if the applicant is returned to his own country. An approach which disregards what is in fact likely to occur there in the case of the particular applicant is wrong and should not be adopted. The facts of these cases Applying the guidance in J v Secretary of State for the Home Department [2007] Imm AR 73 to HJs case, the Asylum and Immigration Tribunal said that the issue was whether the need for him to live discreetly would itself constitute persecution. The evidence of suppression of aspects of his life in Iran was limited. It concluded that to live a private life discreetly would not cause significant detriment to his right to respect for private life and that it would not involve suppression of many aspects of his sexual identity. Noting that enforcement of the law against homosexuality in Iran is arbitrary, it said that the evidence did not show a real risk of discovery or of adverse action against homosexuals who conduct their homosexual activities discreetly. It found on the evidence that the level of seriousness for international protection had not been reached. HJ could reasonably be expected to tolerate the position in Iran on any return: para 46. In the Court of Appeal Pill LJ said that in his judgment the test stated in para 16 of Js case by reference to S395/2002 complied with the standard required by the Convention and that the findings of the tribunal were findings that they were entitled to make on the evidence: para 31. In HTs case the Tribunal found that he would be discreet on return to Cameroon. In the Court of Appeal Pill LJ said that the groundwork for a further finding that he could not reasonably be required to be discreet in Cameroon or to tolerate a life involving discretion there was not established: para 44. He upheld the Tribunals decision on the ground that it was entitled to find that the first panel did not err in law in finding that a single attack on HT followed a one off incident of him being seen by a neighbour kissing another man with whom he had a three year relationship in his garden. Miss Carss Frisk pointed out that there was no finding that his behaviour with the other man was a one off incident. He was the victim of a single attack involving serious violence by way of mob justice following the garden incident. Instead of helping him, the police joined in the assault. But he had had two homosexual relationships. The second had lasted for a period of five years. The problem had started when neighbours spotted what he and his partner were doing in the garden. The Tribunal said that he could move to another part of Cameroon where his sexual identity was unknown. But it is plain that to be effective against the risk of persecution, which is present everywhere in that country, he would have to lie about and conceal his sexuality. The Tribunal did not assess the effects on him of suppressing his sexual identity. Conclusion I am not confident that the tribunals would have come to the same conclusion if they had approached the facts in the way I have suggested in paras 35 36. It was suggested by the appellants that this court should make a reference of a question arising under the Qualification Directive to the Court of Justice of the European Union under article 267 TFEU (formerly article 234 EC). But the point that was said to require a reference was not clearly identified, and I would reject that suggestion. I would allow these appeals and set aside the orders of the Court of Appeal. I would remit both cases to the Tribunal, for further reconsideration in HJs case and for reconsideration in the case of HT, in the light of the guidance given by this Court. LORD RODGER A gay man applies for asylum in this country. The Secretary of State is satisfied that, if he returns to his country of nationality and lives openly as a homosexual, the applicant will face a real and continuing prospect of being beaten up, or flogged, or worse. But the Secretary of State is also satisfied that, if he returns, then, because of these dangers of living openly, he will actually carry on any homosexual relationships discreetly and so not come to the notice of any thugs or of the authorities. Is the applicant a refugee for purposes of the United Nations Convention relating to the Status of Refugees 1951 (the Convention)? The answer is Yes. Article 1A(2) of the Convention declares that a refugee is a person who, owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country. The appellants, HJ, from Iran, and HT, from Cameroon, are gay men who both claim to be outside their country of nationality owing to a well founded fear of being persecuted for reasons of being gay. At one time there would have been debate as to whether homosexuals constitute a particular social group for the purposes of the Convention. But, in more recent years, it has come to be accepted that, at least in societies which discriminate against homosexuals, they are indeed to be regarded as a particular social group. See, for instance, R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 644G 645A, per Lord Steyn, and at p 663, per Lord Millett (dissenting). Indeed regulation 6(1)(e) of the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525) really puts the point beyond doubt by providing that, subject to an exception which is not relevant for present purposes, a particular social group might include a group based on a common characteristic of sexual orientation. The Secretary of State therefore accepts that, in the case of Iran and Cameroon, homosexuals do indeed form a particular social group, of which HJ and HT are members. The approach in HJ In the case of HJ, the Asylum and Immigration Tribunal observed, at para 9 of its determination, that It is accepted that for a person to be openly gay in Iran would attract a real risk of persecution (see in particular RM and BB (Homosexuals) Iran [2005] UKAIT 00117). The issue therefore is whether the need for the appellant to be discreet about his sexuality on return to Iran would itself constitute persecution within the meaning of the Refugee Convention. The Tribunal went on to hold, at para 25, that It remains clear, as it was at the time of RM and BB, that those who confess to homosexual acts or are convicted by whatever means are at real risk as they face condign punishment. But, in its view, the evidence fell well short of showing that surveillance had reached such levels that Iranian citizens who engaged in homosexual activities in private ran a real risk of discovery. It remained the case, as the Tribunal had concluded in RM and BB, at para 124, that, given the legal context in which homosexuals operate in Iran, it can be expected that they would be likely to conduct themselves discreetly for fear of the obvious repercussions that would follow. The Tribunal in the present case summarised the position at para 44: We acknowledge that the way in which he is able to live as a gay man in the UK is preferable for him and we are satisfied that this informs his view that it is impossible for him to return to Iran. We acknowledge too that the appellant is now much more aware of the legal prohibitions on homosexuals in Iran and the potential punishments for breach of those prohibitions. On any return, to avoid coming to the attention of the authorities because of his homosexuality he would necessarily have to act discreetly in relation to it. We are satisfied that as a matter of fact he would behave discreetly. On the evidence he was able to conduct his homosexual activities in Iran without serious detriment to his private life and without that causing him to suppress many aspects of his sexual identity. Whilst he has conducted his homosexual activities in the UK less discreetly, we are not persuaded that his adaptation back to life in Iran would be something he could not reasonably be expected to tolerate. We consider that as a matter of fact he would behave in similar fashion as he did before he left Iran and that in doing so he would, as before, be able to seek out homosexual relationships through work or friends without real risk to his safety or serious detriment to his personal identity and without this involving for him suppression of many aspects of his sexual identity. Having analysed the evidence in more detail in para 45, the Tribunal referred to the test laid down by Buxton LJ in J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 73, at para 20. (The test is set out at para 48 below.) The Tribunal added, at para 46: The circumstances to be tolerated are the inability to live openly as a gay man as the appellant can in the UK. The part of sexuality to be abandoned is on the evidence also the ability to live openly as a gay man in the same way the appellant can do elsewhere. To live a private life discreetly will not cause significant detriment to his right to respect for private life, nor will it involve suppression of many aspects of his sexual identity. Enforcement of the law against homosexuality in Iran is arbitrary but the evidence does not show a real risk of discovery of, or adverse action against, homosexuals who conduct their homosexual activities discreetly. The position has not deteriorated since RM and BB [2005] UKAIT 00117. On the evidence we find the appellant can reasonably be expected to tolerate the position on any return. The approach in HT In the case of HT it is agreed that, following an occasion when he was seen kissing his then (male) partner in the garden of his home, the appellant was attacked by a crowd of people when leaving church. They beat him with sticks and threw stones at him. They pulled off his clothes and tried to cut off his penis with a knife. He attempted to defend himself and was cut just above the penis and on his hand. He was threatened with being killed imminently on the ground that you people cannot be changed. Police officers arrived and demanded to know what was going on and why the crowd were assaulting him. They were told it was because he was gay. One of the policemen said to the appellant How can you go with another man? and punched him on the mouth. The policemen then kicked him until he passed out. As a result of the injuries which he received he was kept in hospital for two months. After that, he was taken home by a member of his church who told him that he feared for his life and safety if he remained in Cameroon. This man made travel arrangements for HT who flew to the United Kingdom via another European country. In HTs case the Tribunal was of the view that in some respects the position in Cameroon was not dissimilar from the position in Iran and it was the view of the Tribunal that there might be difficulties for someone openly professing his homosexuality. A homosexual relationship carried on in private, however, was considered by the Tribunal not to create a reasonable degree of likelihood of persecution. (The Tribunals information about the position in Iran appears to have been taken from the admissibility decision of the European Court of Human Rights in F v United Kingdom (Application No 17341/03), 22 June 2004, unreported.) Because people in the area where he lived before leaving Cameroon knew that he was gay, the Tribunal contemplated that, in addition to conducting any relationship in private, HT would move to another part of the country where he would not be known. On reconsideration, the Senior Immigration Judge held, at para 15 of his determination, that Should the appellant choose to relocate it would be relatively safe for him to practice [sic] his sexual orientation in private and not come to the attention of the authorities. In both cases, therefore, the findings of the Tribunal are to the effect that, if the appellant were to return to his country of origin, he would be at risk of persecution if he were openly homosexual, but he would be unlikely to come to the attention of the authorities or to suffer harm, if he were to conduct any relationship in private. The test adopted by the Court of Appeal The question, whether in such circumstances an applicant has a well founded fear of persecution, seems to have been considered by the Court of Appeal for the first time in Z v Secretary of State for the Home Department [2004] EWCA Civ 1578, [2005] Imm AR 75. The court had been referred to the decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. Buxton LJ accepted that the judgments in that case contained a number of statements to the effect that, if an applicants way of life would be subjected to persecution in his home country, he cannot be denied asylum on the basis of a conclusion that he could avoid that persecution by modifying that way of life. Having referred to paras 40 and 43 of the judgment of McHugh and Kirby JJ, Buxton LJ continued, at paras 15 16: 15. Mr Kovats for the Secretary of State pointed out that where avoiding action is forced on the subject, that case only falls under the Refugee Convention if it results in a condition that can properly be called persecutory, in that imposes on the subject a state of mind or conscience that fits with the definition of persecution given by McHugh and Kirby JJ in paragraph 40 of their judgment, and in line with English authority already quoted: Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. That no doubt is the level of interference that McHugh and Kirby JJ had in mind when speaking of threats and menaces in the passage cited in para 14 above. 16. Although S395 was presented to the court that granted permission in this appeal as a new departure in refugee law, and for that reason justifying the attention of this court, in truth it is no such thing. McHugh and Kirby JJ, at their paragraph 41, specifically relied on English authority, Ahmed v SSHD [2000] INLR 1. It has been English law at least since that case, and the case that preceded it, Danian v SSHD [1999] INLR 533, that, in the words of the leading judgment of Simon Brown LJ at pp 7G and 8C D: in all asylum cases there is ultimately a single question to be asked: is there a serious risk that on return the applicant would be persecuted for a Convention reason.the critical question: if returned, would the asylum seeker in fact act in the way he says he would and thereby suffer persecution? If he would, then, however, unreasonable he might be thought for refusing to accept the necessary restraint on his liberties, in my judgment he would be entitled to asylum. It necessarily follows from that analysis that a person cannot be refused asylum on the basis that he could avoid otherwise persecutory conduct by modifying the behaviour that he would otherwise engage in, at least if that modification was sufficiently significant in itself to place him in a situation of persecution. If the IAT in our case refused Mr Z asylum on the basis that he was required to avoid persecution they did not respect the jurisprudence of Ahmed. Buxton LJs formulation of the position, as he derived it from Simon Brown LJs statement in Ahmed v Secretary of State for the Home Department [2000] INLR 1, 7, was quoted by Maurice Kay LJ in J v Secretary of State for the Home Department [2007] Imm AR 73, at para 11. He added that it was particularly helpful because it brings together the principle articulated by the High Court of Australia and the underlying need for an applicant to establish that his case contains something sufficiently significant in itself to place him in a situation of persecution. Maurice Kay LJ went on to say, at para 16, that the Tribunal will have to address questions that were not considered on the last occasion, including the reason why the appellant opted for discretion before his departure from Iran and, by implication, would do so again on return. It will have to ask itself whether discretion is something that the appellant can reasonably be expected to tolerate, not only in the context of random sexual activity but in relation to matters following from, and relevant to, sexual identity in the wider sense recognised by the High Court of Australia (see the judgment of Gummow and Hayne JJ at para 83). This requires consideration of the fact that homosexuals living in a stable relationship will wish, as this appellant says, to live openly with each other and the discretion which they may feel constrained to exercise as the price to pay for the avoidance of condign punishment will require suppression in respect of many aspects of life that related to or informed by their sexuality (Ibid, para 81). Buxton LJ added, at para 20: The question that will be before the AIT on remission will be whether the applicant could reasonably be expected to tolerate whatever circumstances are likely to arise were he to return to Iran. The applicant may have to abandon part of his sexual identity, as referred to in the judgment of Gummow and Hayne JJ in S, in circumstances where failure to do that exposes him to the extreme danger that is set out in the country guidance case of RM and BB. The Tribunal may wish to consider whether the combination of those two circumstances has an effect on their decision as to whether the I would accept both submissions. applicant can be expected to tolerate the situation he may find himself in when he returns to Iran. In his judgment on the present appeals Pill LJ held, at para 31, that the test stated in para 16 of Maurice Kay LJs judgment in J v Secretary of State complies with the standard required by the Refugee Convention. He added that it is an appropriate and workable test. Pill LJ considered that in the case of HJ the Tribunal had plainly understood the test and that their conclusion that he could reasonably be expected to tolerate conditions in Iran was firmly based on the evidence in the case, considered in the context of the in country evidence. On that ground he dismissed the appeal. Keene LJ and Sir Paul Kennedy agreed. The appellants take this fairly well established case law of the Court of Appeal head on. They contend that the Court of Appeal test is incompatible with the definition of refugee in article 1A(2) of the Convention and is based on a misunderstanding of the decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. The rationale of the Convention For someone to be a refugee within the terms of article 1A(2) of the Convention, he must be outside his country of nationality owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion. In effect, the Convention proceeds on the basis that people should be allowed to live their lives free from the fear of serious harm coming to them because of their race, religion, nationality, membership of a particular social group or political opinion. Countries which sign up to the Convention recognise, however, that we do not live in an ideal world and that, in fact, there are many countries where persecution for these reasons does indeed take place. In such countries either agents of the state carry out the persecution themselves or, at least, the state does not offer adequate protection against individuals and groups who carry it out. Of course, diplomatic and other pressures may be exerted on states in the hope of improving the situation. But, in the meantime, the signatories to the Convention do not wash their hands of those at risk: in effect, they agree that, by giving the victims asylum, they will afford them the protection from persecution which their country of origin should have afforded them but did not. See, for example, La Forest J in Canada (Attorney General) v Ward [1993] 2 SCR 689, 709: At the outset, it is useful to explore the rationale underlying the international refugee protection regime, for this permeates the interpretation of the various terms requiring examination. International refugee law was formulated to serve as a back up to the protection one expects from the state of which an individual is a national. It was meant to come into play only in situations when that protection is unavailable, and then only in certain situations. In Horvath v Secretary of State for the Home Department [2001] 1 AC 489, 495D G, Lord Hope of Craighead quoted this passage with approval and adopted Professor Hathaways description of the protection as surrogate or substitute protection. At the risk of repetition, the importance of this analysis for present purposes is that it proceeds on the basis that, so far from permitting or encouraging its agents to persecute the applicant for one of the protected grounds, the home state should have protected him from any persecution on that ground. The underlying rationale of the Convention is therefore that people should be able to live freely, without fearing that they may suffer harm of the requisite intensity or duration because they are, say, black, or the descendants of some former dictator, or gay. In the absence of any indication to the contrary, the implication is that they must be free to live openly in this way without fear of persecution. By allowing them to live openly and free from that fear, the receiving state affords them protection which is a surrogate for the protection which their home state should have afforded them. The applicant who would not take steps to avoid persecution The Secretary of State accepts accordingly that an applicant is entitled to the protection of the Convention if he could avoid suffering any actual harm by modifying his behaviour (say, by conducting himself discreetly) on his return to his home state but would not in fact choose to do so. English authority for this approach in the field of religion is to be found in the judgment of Simon Brown LJ in Ahmed (Iftikhar)v Secretary of State for the Home Department [2000] INLR 1. The applicant was an Ahmadi, who, if returned to Pakistan, would still have been vocal in his proclamation of Ahmadi beliefs, for which he would have suffered persecution. Simon Brown LJ observed, at p 7: It is one thing to say that it may well be reasonable to require asylum seekers to refrain from certain political or even religious activities to avoid persecution on return. It is quite another thing to say that, if in fact it appears that the asylum seeker on return would not refrain from such activities if, in other words, it is established that he would in fact act unreasonably he is not entitled to refugee status. The same point is made, with considerably more elaboration, in the judgment of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. They begin by pointing out, at p 489, para 40, that persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. In the remainder of para 40 they point out that, if the position were otherwise, the Convention would not protect those who chose to exercise their right, say, to express their political opinion openly. Similarly, the Convention would not protect those who chose to live openly as gay men rather than take the option of living discreetly. Their Honours added, 216 CLR 473, 489 490, para 41: History has long shown that persons holding religious beliefs or political opinions, being members of particular social groups or having particular racial or national origins are especially vulnerable to persecution from their national authorities. The object of the signatories to the Convention was to protect the holding of such beliefs, opinions, membership and origins by giving the persons concerned refuge in the signatory countries when their country of nationality would not protect them. It would undermine the object of the Convention if the signatory countries required them to modify their beliefs or opinions or to hide their race, nationality or membership of particular social groups before those countries would give them protection under the Convention. They concluded the paragraph by citing the passage from Simon Brown LJ in Ahmed v Secretary of State for the Home Department [2000] INLR 1, 7, which I have quoted at para 54 above. The applicant who would conduct himself discreetly In Ahmed Simon Brown LJ was tackling the case of an applicant who could take steps to avoid persecution on his return, but who would not do so. The present appeals concern a completely different kind of applicant: the applicant who, on his return, would act discreetly to avoid the harm which would come to him if he were to live openly as a gay man. In the passage from Ahmed which I cited at para 54 above, Simon Brown LJ appears to have envisaged that it might, in some sense, be reasonable to require applicants to refrain from certain political or even religious activities to avoid persecution on return. But, in his conspicuously clear argument on behalf of the Secretary of State in the present case, Mr Bourne accepted that neither the Secretary of State nor a tribunal had any power to require a gay applicant to act discreetly on his return to his country of nationality in order to avoid persecution. Both of them might, of course, purport to decide the case on the assumption that the applicant would do so. But counsel accepted that neither the Secretary of State nor any tribunal could reject an application for asylum on the basis of an assumption that the gay applicant would act discreetly and so avoid, say, being beaten up or worse. He might or might not. It would be a question of fact, depending on the circumstances of the individual case. Although counsel for the Secretary of State was at pains to draw this distinction between assuming that the applicant would act discreetly to avoid persecution and finding that this is what he would in fact do, the distinction is pretty unrealistic. Unless he were minded to swell the ranks of gay martyrs, when faced with a real threat of persecution, the applicant would have no real choice: he would be compelled to act discreetly. Therefore the question is whether an applicant is to be regarded as a refugee for purposes of the Convention in circumstances where the reality is that, if he were returned to his country of nationality, he would have to act discreetly in order to avoid persecution. The question is not confined to cases where fear of persecution is the only reason why the applicant would act discreetly. In practice, the picture is likely to be more complicated. A fear of persecution is by no means the only reason why an applicant might behave discreetly if he were returned to his country of nationality. For example, he might not wish to upset his parents or his straight friends and colleagues by revealing that he is gay; in particular, he might worry that, if the fact that he was gay were known, he would become isolated from his friends and relatives, be the butt of jokes or unkind comments from colleagues or suffer other discrimination. Indeed, in a society where gay men are persecuted, it is quite likely that the prevailing culture will be such that some of an applicants friends, relatives and colleagues would react negatively if they discovered that he was gay. In these circumstances it is at least possible that the only real reason for an applicant behaving discreetly would be his perfectly natural wish to avoid harming his relationships with his family, friends and colleagues. The Convention does not afford protection against these social pressures, however, and so an applicant cannot claim asylum in order to avoid them. So if, having considered the facts of any individual case, the Secretary of State or a tribunal concluded that the applicant would choose to behave discreetly on his return simply to avoid these social pressures, his application for asylum would fall to be rejected. He would not be a refugee within the terms of article 1A(2) of the Convention because, by choosing to behave discreetly in order to avoid these social pressures, the applicant would simultaneously choose to live a life in which he would have no well founded fear of being persecuted for reasons of his homosexuality. A similar point arose, in the context of religion, in NABD of 2002 v Minister of Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1142, discussed at para 70 below. Having examined the relevant evidence, the Secretary of State or the tribunal may conclude, however, that the applicant would act discreetly partly to avoid upsetting his parents, partly to avoid trouble with his friends and colleagues, and partly due to a well founded fear of being persecuted by the state authorities. In other words the need to avoid the threat of persecution would be a material reason, among a number of complementary reasons, why the applicant would act discreetly. Would the existence of these other reasons make a crucial difference? In my view it would not. A Jew would not lose the protection of the Convention because, in addition to suffering state persecution, he might also be subject to casual, social anti semitism. Similarly, a gay man who was not only persecuted by the state, but also made the butt of casual jokes at work, would not lose the protection of the Convention. It follows that the question can be further refined: is an applicant to be regarded as a refugee for purposes of the Convention in circumstances where the reality is that, if he were returned to his country of nationality, in addition to any other reasons for behaving discreetly, he would have to behave discreetly in order to avoid persecution because of being gay? It is convenient to use a phrase such as acting or behaving discreetly to describe what the applicant would do to avoid persecution. But in truth he could do various things. To take a few examples. At the most extreme, the applicant might live a life of complete celibacy. Alternatively, he might form relationships only within a circle of acquaintances whom he could trust not to reveal to others that he had gay relationships. Or, he might have a gay partner, but never live with him or have him to stay overnight or indulge in any display of affection in public. Or the applicant might have only fleeting anonymous sexual contacts, as a safe opportunity presented itself. The gradations are infinite. Suppose the Secretary of State or the tribunal were satisfied that, if the applicant took some such precautions, he would be unlikely to suffer any actual harm. Would the applicant then have no well founded fear of persecution by reason of being gay and so be unable to claim asylum under the Convention? Surely not. As already explained in para 53 above, so far as the social group of gay people is concerned, the underlying rationale of the Convention is that they should be able to live freely and openly as gay men and lesbian women, without fearing that they may suffer harm of the requisite intensity or duration because they are gay or lesbian. Their home state should protect them and so enable them to live in that way. If it does not and they will be threatened with serious harm if they live openly, then most people threatened with persecution will be forced to take what steps they can to avoid it. But the applicants country of nationality does not meet the standard of protection from persecution which the Convention envisages simply because conditions in the country are such that he would be able to take, and would in fact take, steps to avoid persecution by concealing the fact that he is gay. On the contrary, the fact that he would feel obliged to take these steps to avoid persecution is, prima facie, an indication that there is indeed a threat of persecution to gay people who live openly. His country of nationality is therefore not affording him the necessary level of protection. So the receiving country should. For this reason, in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473, 493, para 51, McHugh and Kirby JJ emphasise that a tribunal will fall into error if it fails to ask why an applicant would act discreetly if he were returned to his home state. That question will be particularly important where the evidence shows that, before leaving his country and applying for asylum, the applicant lived discreetly. Their Honours explained, at p 490, para 43: In cases where the applicant has modified his or her conduct, there is a natural tendency for the tribunal of fact to reason that, because the applicant has not been persecuted in the past, he or she will not be persecuted in the future. The fallacy underlying this approach is the assumption that the conduct of the applicant is uninfluenced by the conduct of the persecutor and that the relevant persecutory conduct is the harm that will be inflicted. In many perhaps the majority of cases, however, the applicant has acted in the way that he or she did only because of the threat of harm. In such cases, the well founded fear of persecution held by the applicant is the fear that, unless that person acts to avoid the harmful conduct, he or she will suffer harm. It is the threat of serious harm with its menacing implications that constitutes the persecutory conduct. Their Honours went on to apply that approach to the decision of the tribunal in that case, at p 493, paras 51 53: 51. Central to the Tribunals decision was the finding that the appellants had not suffered harm in the past because they had acted discreetly. Because the Tribunal assumed that it is reasonable for a homosexual person in Bangladesh to conform to the laws of Bangladesh society, the Tribunal failed to determine whether the appellants had acted discreetly only because it was not possible to live openly as a homosexual in Bangladesh. Because of that failure, the Tribunal, unsurprisingly, failed to give proper attention to what might happen to the appellants if they lived openly in the same way as heterosexual people in Bangladesh live. 52. The Tribunal did find, however, that to attempt to live openly as a homosexual in Bangladesh would mean to face problems ranging from being disowned by ones family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police. That finding appears to be based on an acceptance of the evidence of Mr Khan, the Executive Director of the Naz Foundation. In its reasons, the Tribunal recorded Mr Khan as saying: [T]he consequences of being identified as homosexual vary enormously, from acceptance and tolerance, to harassment, physical abuse or expulsion from the community. Most of the harassment of males who have sex with males takes the form of extortion by local police and hustlers who threaten to expose them to their families if they do not cooperate. 53. The Tribunals findings on the attitude of Bangladesh society and the statements of the appellants indicate that they were discreet about their relationship only because they feared that otherwise they would be subjected to the kinds of discrimination of which Mr Khan spoke. If the Tribunal had found that this fear had caused them to be discreet in the past, it would have been necessary for the Tribunal then to consider whether their fear of harm was well founded and amounted to persecution. That would have required the Tribunal to consider what might happen to the appellants in Bangladesh if they lived openly as a homosexual couple. Would they have suffered physical abuse, discrimination in employment, expulsion from their communities or violence or blackmail at the hands of police and others, as Mr Khan suggested were possibilities? These were the sorts of questions that the Tribunal was bound to consider if it found that the appellants discreet behaviour in the past was the result of fear of what would happen to them if they lived openly as homosexuals. Because the Tribunal assumed that it is reasonable for a homosexual person in Bangladesh to conform to the laws of Bangladesh society, however, the Tribunal disqualified itself from properly considering the appellants claims that they had a real fear of persecution if they were returned to Bangladesh. In short, the fact that the applicants would act discreetly and so not be subjected to violence if returned to Bangladesh did not mean that they did not have a well founded fear of persecution on their return. Rather, the tribunal had to go on to ask itself why they would act discreetly. If it was because they would suffer serious harm if they lived openly as a homosexual couple, then they would have a well founded fear of persecution since it is the right to live openly without fear of persecution which the Convention exists to protect. The other justices in the majority, Gummow and Hayne JJ, described the tribunals error in this way, 216 CLR 473, 503, para 88: The Tribunal did not ask why the appellants would live discreetly. It did not ask whether the appellants would live discreetly because that was the way in which they would hope to avoid persecution. That is, the Tribunal was diverted from addressing the fundamental question of whether there was a well founded fear of persecution by considering whether the appellants were likely to live as a couple in a way that would not attract adverse attention. That the Tribunal was diverted in that way is revealed by considering the three statements in its reasons that are referred to earlier: first, that it is not possible to live openly as a homosexual in Bangladesh; secondly, that [t]o attempt to [live openly] would mean to face problems; and, thirdly, that Bangladeshi men can have homosexual affairs or relationships, provided they are discreet. Nowhere did the Tribunal relate the first and second of these statements to the position of the appellants. It did not consider whether the adverse consequences to which it referred sufficed to make the appellants fears well founded. All that was said was that they would live discreetly. Again, the point is that the tribunal should have considered why the appellants would live discreetly if they were returned to Bangladesh. In particular, it should have asked whether they would live discreetly because that was the way they would hope to avoid persecution. If so, then the tribunal should have considered whether the adverse consequences sufficed to make the appellants fears of persecution well founded. The decision of the High Court is accordingly powerful authority, which I would respectfully follow, for the proposition that, if a person has a well founded fear that he would suffer persecution on being returned to his country of nationality if he were to live openly as a gay man, then he is to be regarded as a refugee for purposes of the Convention, even though, because of the fear of persecution, he would in fact live discreetly and so avoid suffering any actual harm. The High Court has followed the same line of reasoning in subsequent cases. Application of the High Courts approach in Appellant S395/2002 In NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1142 the appellant, who had converted to Christianity, would face persecution if he returned to Iran. He argued that the tribunal had fallen into the same kind of error as the tribunal in S395/2002 v Minister for Immigration by attaching significance to a supposed difference between discreet and confrontational behaviour. By a majority (McHugh and Kirby JJ dissenting), the High Court dismissed his appeal. In doing so, they did not reject the approach in S395/2002 v Minister for Immigration. Rather, applying that approach, they held that the appeal failed on the facts. As Hayne J (one of the majority in S395/2002) and Heydon J explained, at para 168: At no point in its chain of reasoning did the Tribunal divert from inquiring about whether the fears which the appellant had were well founded. It did not ask (as the Tribunal had asked in Appellant S395/2002) whether the appellant could avoid persecution; it asked what may happen to the appellant if he returned to Iran. Based on the material the Tribunal had, including the material concerning what the appellant had done while in detention, it concluded that were he to practise his faith in the way he chose to do so, there was not a real risk of his being persecuted. In SZATV v Minister for Immigration and Citizenship (2007) 233 CLR 18 the appellant had worked as a journalist in Chernovtsy in Ukraine. Due to his political views he had been subjected to a systematic campaign of harassment, including physical maltreatment. The Refugee Review Tribunal none the less rejected his claim for asylum on the ground that he could return to a different part of Ukraine where he would not be known, and work in the construction industry. He would not then come to the notice of the authorities. Allowing his appeal, at p 28, para 28, Gummow, Hayne and Crennan JJ referred to the analysis in para 40 of the judgment of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473, 489, where they had criticised the idea that an applicant would not suffer persecution for his homosexuality if he could avoid it by living discreetly. Similarly, in SZATV, the tribunal had gone wrong by approaching the issue on the footing that it would not be unreasonable for the appellant to relocate within Ukraine and obtain work which would not involve the expression to the public of his political opinions. In other words, he would avoid persecution by giving up the very right to express his political opinions without fear of persecution which the Convention is designed to protect. Again, the decision is consistent with the approach in Appellant S395/2002 v Minister for Immigration. The same approach has been followed in New Zealand. In Refugee Appeal No 74665/03, [2005] INLR 68 at para 124, the New Zealand Refugee Status Appeals Authority considered that its own approach and the approach of the High Court of Australia in Appellant S395/2002 converged on the same point, namely that refugee status cannot be denied by requiring of the claimant that he or she avoid being persecuted by forfeiting a fundamental human right. The difference between the High Court and the Authority which the Authority considered could be important in certain cases was that it preferred to use a human rights framework in order to determine the limits of what an individual is entitled to do and not to do. That approach might, for instance, be relevant if an applicant were claiming asylum on the ground that he feared persecution if he took part in a gay rights march. I respectfully see the attractions of that approach. But no such issue arises in the present appeals and I prefer to leave the point for consideration in a case where it might be of practical effect. For present purposes I take the decision of the Authority, based on a particularly full and impressive analysis of the relevant materials, as clear support for the High Court of Australias approach that an applicant cannot be denied asylum on the basis that he would, in fact, take effective steps, by suppressing his sexual identity, to avoid the harm which would otherwise threaten him. The Court of Appeal: living discreetly as persecution Under reference to the case law of the Court of Appeal set out above at paras 47 49, the Secretary of State argued, however, that if the applicant would actually live discreetly and avoid the danger, then he would have no real fear of persecution unless he could not reasonably be expected to tolerate that situation, viz, having to conceal his sexual identity, and all the restrictions which that would entail, in circumstances where failure to do so would expose him to extreme danger. In other words the basis for claiming asylum would be a well founded fear that he would find it intolerable to live discreetly to avoid the danger. Something of the same idea can be seen in the argument which Mosley J considered in Sadeghi Pari v Canada (Minister of Citizenship and Immigration) 2004 FC 282, para 29: The meaning of persecution is generally defined as the serious interference with a basic human right. Concluding that persecution would not exist because a gay woman in Iran could live without punishment by hiding her relationship to another woman may be erroneous, as expecting an individual to live in such a manner could be a serious interference with a basic human right, and therefore persecution (internal citations omitted). In my view, the approach adopted by the Court of Appeal is unsound. I leave on one side my reasoning so far and also the obvious point that the Court of Appeals test seems to require the applicant to establish a form of secondary persecution brought on by his own actions in response to the primary persecution. In my view the core objection to the Court of Appeals approach is that its starting point is unacceptable: it supposes that at least some applications for asylum can be rejected on the basis that the particular applicant could find it reasonably tolerable to act discreetly and conceal his sexual identity indefinitely to avoid suffering severe harm. The New Zealand Refugee Status Appeals Authority observed in Re GJ [1998] (1995) INLR 387, 420 that sexual orientation is either an innate or unchangeable characteristic or a characteristic so fundamental to identity or human dignity that it ought not be required to be changed (emphasis in the original). So, starting from that position, the Convention offers protection to gay and lesbian people and, I would add, bisexuals and everyone else on a broad spectrum of sexual behaviour because they are entitled to have the same freedom from fear of persecution as their straight counterparts. No one would proceed on the basis that a straight man or woman could find it reasonably tolerable to conceal his or her sexual identity indefinitely to avoid suffering persecution. Nor would anyone proceed on the basis that a man or woman could find it reasonably tolerable to conceal his or her race indefinitely to avoid suffering persecution. Such an assumption about gay men and lesbian women is equally unacceptable. Most significantly, it is unacceptable as being inconsistent with the underlying purpose of the Convention since it involves the applicant denying or hiding precisely the innate characteristic which forms the basis of his claim of persecution: Atta Fosu v Canada (Minister of Citizenship and Immigration) 2008 FC 1135, para 17, per Zinn J. At the most basic level, if a male applicant were to live discreetly, he would in practice have to avoid any open expression of affection for another man which went beyond what would be acceptable behaviour on the part of a straight man. He would have to be cautious about the friendships he formed, the circle of friends in which he moved, the places where he socialised. He would have constantly to restrain himself in an area of life where powerful emotions and physical attraction are involved and a straight man could be spontaneous, impulsive even. Not only would he not be able to indulge openly in the mild flirtations which are an enjoyable part of heterosexual life, but he would have to think twice before revealing that he was attracted to another man. Similarly, the small tokens and gestures of affection which are taken for granted between men and women could well be dangerous. In short, his potential for finding happiness in some sexual relationship would be profoundly affected. It is objectionable to assume that any gay man can be supposed to find even these restrictions on his life and happiness reasonably tolerable. It would be wrong, however, to limit the areas of behaviour that must be protected to the kinds of matters which I have just described essentially, those which will enable the applicant to attract sexual partners and establish and maintain relationships with them in the same way as happens between persons who are straight. As Gummow and Hayne JJ pointed out in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473, 500 501, para 81: Sexual identity is not to be understood in this context as confined to engaging in particular sexual acts or, indeed, to any particular forms of physical conduct. It may, and often will, extend to many aspects of human relationships and activity. That two individuals engage in sexual acts in private (and in that sense discreetly) may say nothing about how those individuals would choose to live other aspects of their lives that are related to, or informed by, their sexuality In short, what is protected is the applicants right to live freely and openly as a gay man. That involves a wide spectrum of conduct, going well beyond conduct designed to attract sexual partners and maintain relationships with them. To illustrate the point with trivial stereotypical examples from British society: just as male heterosexuals are free to enjoy themselves playing rugby, drinking beer and talking about girls with their mates, so male homosexuals are to be free to enjoy themselves going to Kylie concerts, drinking exotically coloured cocktails and talking about boys with their straight female mates. Mutatis mutandis and in many cases the adaptations would obviously be great the same must apply to other societies. In other words, gay men are to be as free as their straight equivalents in the society concerned to live their lives in the way that is natural to them as gay men, without the fear of persecution. This is not to give any false or undue prominence to the applicants sexuality or to say that an individual is defined by his sexuality. It is just to accept that sexual identity is inherent to ones very identity as a person: Hernandez Montiel v Immigration and Naturalisation Service, 225 F 3d 1084, 1093 (9th Cir 2000), per Tashima J. A E Housman showed many of the hallmarks of genius both as a textual critic and as a poet; Alan Turing was a mathematical genius. Not only may these talents have been at least as significant to their identity as their homosexuality, but the individuals themselves may well have thought so too. That does not matter in the context of persecution. As the Nazi period showed all too clearly, a secular Jew, who rejected every tenet of the religion and did not even think of himself as Jewish, was ultimately in as much need as any Orthodox rabbi of protection from persecution as a Jew. Similarly, an applicant for asylum does not need to show that his homosexuality plays a particularly prominent part in his life. All that matters is that he has a well founded fear that he will be persecuted because of that particular characteristic which he either cannot change or cannot be required to change. Another way of pointing to essentially the same basic defect in the approach of the Court of Appeal is to say that a tribunal has no legitimate way of deciding whether an applicant could reasonably be expected to tolerate living discreetly and concealing his homosexuality indefinitely for fear of persecution. Where would the tribunal find the yardstick to measure the level of suffering which a gay man far less, the particular applicant would find reasonably tolerable? How would the tribunal measure the equivalent level for a straight man asked to suppress his sexual identity indefinitely? The answer surely is that there is no relevant standard since it is something which no one should have to endure. In practice, of course, where the evidence showed that an applicant had avoided persecutory harm by living discreetly for a number of years before leaving his home country, the tribunal would be tempted to fall into error. The tribunal would be liable to hold that the evidence showed that this applicant, at least, must have found his predicament reasonably tolerable in the past and so would find it reasonably tolerable if he were returned to his country of nationality. But, in truth, that evidence would merely show that the applicant had put up with living discreetly for fear of the potentially dire consequences of living openly. I would therefore hold that the tests formulated by Maurice Kay LJ and Buxton LJ in J v Secretary of State for the Home Department [2007] Imm AR 73, at paras 16 and 20, and applied by Pill LJ in this case, are wrong in principle, unworkable and inconsistent with the way that article 1A(2) of the Convention has been interpreted and applied in other authorities. As can be seen from the passage from Z v Secretary of State for the Home Department [2005] Imm AR 75 quoted at para 47 above, Buxton LJ seems to have thought that he was following the approach of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. That was, quite simply, a misunderstanding. As the cross heading above para 40 of their judgment showed, at this point in their judgment their Honours were considering the position of a gay person who would live openly. They first explained that persecution could take a variety of forms, and then observed, in the sentence quoted by Buxton LJ, that to count as persecution the harm had to be intolerable. But this is just a general description of what counts as persecution. As I have explained, in paras 55 and 56 above, the remainder of para 40 of their Honours judgment contains not the slightest hint of the approach favoured by the Court of Appeal. That approach should not be followed in future. The approach to be followed by tribunals When an applicant applies for asylum on the ground of a well founded fear of persecution because he is gay, the tribunal must first ask itself whether it is satisfied on the evidence that he is gay, or that he would be treated as gay by potential persecutors in his country of nationality. If so, the tribunal must then ask itself whether it is satisfied on the available evidence that gay people who lived openly would be liable to persecution in the applicants country of nationality. If so, the tribunal must go on to consider what the individual applicant would do if he were returned to that country. If the applicant would in fact live openly and thereby be exposed to a real risk of persecution, then he has a well founded fear of persecution even if he could avoid the risk by living discreetly. If, on the other hand, the tribunal concludes that the applicant would in fact live discreetly and so avoid persecution, it must go on to ask itself why he would do so. If the tribunal concludes that the applicant would choose to live discreetly simply because that was how he himself would wish to live, or because of social pressures, e g, not wanting to distress his parents or embarrass his friends, then his application should be rejected. Social pressures of that kind do not amount to persecution and the Convention does not offer protection against them. Such a person has no well founded fear of persecution because, for reasons that have nothing to do with any fear of persecution, he himself chooses to adopt a way of life which means that he is not in fact liable to be persecuted because he is gay. If, on the other hand, the tribunal concludes that a material reason for the applicant living discreetly on his return would be a fear of the persecution which would follow if he were to live openly as a gay man, then, other things being equal, his application should be accepted. Such a person has a well founded fear of persecution. To reject his application on the ground that he could avoid the persecution by living discreetly would be to defeat the very right which the Convention exists to protect his right to live freely and openly as a gay man without fear of persecution. By admitting him to asylum and allowing him to live freely and openly as a gay man without fear of persecution, the receiving state gives effect to that right by affording the applicant a surrogate for the protection from persecution which his country of nationality should have afforded him. The Secretary of State should, of course, apply the same approach when considering applications of this type. Although I have, for the most part, concentrated on the position of gay men, the Secretary of State and tribunals should approach applications concerning lesbian women in the same way. These appeals I add a comment on the case of HT. The tribunal rejected his application on the ground that, on his return to Cameroon, he could go to live in another part of the country and live discreetly there. In that event he would have no real fear of persecution. But there appears to have been nothing in the evidence to suggest that there was any area of Cameroon where gay men could live openly without any fear of persecution. So in no sense would the applicant be returning to a part of the country where the state would protect him from persecution. In effect, therefore, the tribunal was simply saying that his application should be rejected because, on return, he could take steps to avoid persecution by conducting himself discreetly. For the reasons which I have given, that approach is inconsistent with the very aims of the Convention. In effect, the tribunal made the same error as the tribunal in SZATV v Minister for Immigration and Citizenship (2007) 233 CLR 18, discussed at para 71 above. For these reasons I would allow both appeals and remit matters to the respective tribunals for reconsideration in the light of the approach which I have outlined. LORD WALKER I agree with the reasoning and conclusions in Lord Rodgers judgment. But in view of the importance of this appeal I will add some observations in my own words. After all the carefully researched debate that the Court has heard and participated in (we have had 23 bundles of authorities containing 250 different items) there is, as has often been noted, ultimately a single question: does the claimant asylum seeker have a well founded fear of being persecuted, if returned to his own country, for reasons falling within article 1A(2) of the Convention? As it was put by Simon Brown LJ in Secretary of State for the Home Department v Iftikar Ahmed [2000] INLR 1, cited by McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 (2003) 216 CLR 473 para 42 : [I]n all asylum cases there is ultimately but a single question to be asked: is there a serious risk that on return the applicant would be persecuted for a Convention reason? If there is, then he is entitled to asylum. This single question is however complex (McHugh J in Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225, 256) described it as a compound conception which nevertheless needs to be interpreted as a totality). It is not directed at ascertaining past facts (though findings as to events asserted by the claimant to have happened in the past will always be relevant, and often crucial). Instead it is directed at predicting what would or might happen in the future if (contrary to his wishes) the claimant is returned to his own country. Here too his evidence as to his own state of mind (in particular his intentions and his apprehensions in an eventuality which he earnestly hopes to avoid) will always be relevant. But his evidence may have to be treated with caution because of his strong personal interest in the outcome of his claim. Moreover the inquiry is by no means wholly subjective. The need for the claimants fear to be well founded introduces a very important objective element. Different jurisdictions have taken different approaches to evaluating what Professor James C Hathaway has called the threshold of concern (Hathaway, The Law of Refugee Status (1991) pp 75 80). When that work was published the test approved by the House of Lords in R v Secretary of State for the Home Department Ex p Sivakumaran (and conjoined appeals) [1988] AC 958 was that there should be a reasonable degree of likelihood (Lord Keith at p 994) or real and substantial danger (Lord Templeman at p 996) or a real and substantial risk (Lord Goff at p 1000) of persecution for a Convention reason. This remains the test. The editors of Macdonald, Immigration Law and Practice 7th ed (2008) prefer the expression real risk, citing the Court of Appeal in MH (Iraq) v Secretary of State for the Home Department [2007] EWCA Civ 852, a real as opposed to a fanciful risk. Risk is in my view the best word because (as explained in the next paragraph) it factors in both the probability of harm and its severity. In understanding the practical implications of the test it is important to note that in Sivakumaran Lord Keith quoted Lord Diplocks remarks in R v Governor of Pentonville Prison, Ex p Fernandez [1971] 1 WLR 987, 994 (an extradition case) as to the relative gravity of the consequences of the courts expectation being falsified either in one way or in the other and Lord Templeman referred to his own similar remarks in R v Secretary of State for the Home Department Ex p Bugdaycay [1987] AC 514, 537. Where life or liberty may be threatened, the balance of probabilities is not an appropriate test. As Sedley LJ said in Batayav v Secretary of State for the Home Department [2003] EWCA Civ 1489, [2004] INLR 126 para 38: If a type of car has a defect which causes one vehicle in ten to crash, most people would say that it presents a real risk to anyone who drives it, albeit crashes are not generally or consistently happening. Getting away from metaphor, I suppose that it may be debatable whether a gay man would be at real risk of persecution (in the Convention sense) if, on returning to his own country, he would face a one in ten risk of being prosecuted and made to pay a fine, or sent to prison for a month. But if he would face a one in ten risk of being prosecuted and sentenced to death by public hanging from a crane there could be only one answer. The notion that a gay man could (and so, some might say, should) avoid trouble by adopting a discreet lifestyle (or leading an entirely celibate life) is not limited to the context of asylum law. It is the way in which hundreds of thousands of gay men lived in England before the enactment of the Sexual Offences Act 1967. But it has assumed particular importance in asylum law since gays and lesbians have become generally recognised as a particular social group for Convention purposes. Jenni Millbank has described this development (which she terms discretion reasoning) in From discretion to disbelief: recent trends in refugee determinations on the basis of sexual orientation in Australia and the United Kingdom (2009) 13 IJHR 391, 393 394 (most references omitted): At its baldest, discretion reasoning entailed a reasonable expectation that persons should, to the extent that it is possible, co operate in their own protection, by exercising self restraint such as avoiding any behaviour that would identify them as gay; never telling anyone they were gay; only expressing their sexuality by having anonymous sex in public places; pretending that their partner is a flatmate; or indeed remaining celibate. This approach subverted the aim of the Refugees Convention that the receiving state provide a surrogate for protection from the home state by placing the responsibility of protection upon the applicant: it is he or she who must avoid harm. The discretion approach also varied the scope of protection afforded in relation to each of the five Convention grounds by, for example, protecting the right to be openly religious but not to be openly gay or in an identifiable same sex relationship. The idea of discretion reflects broader social norms concerning the proper place of lesbian and gay sexuality, as something to be hidden and reluctantly tolerated, a purely private sexual behaviour rather than an important and integral aspect of identity, or as an apparent relationship status. The discretion approach explicitly posited the principle that human rights protection available to sexual orientation was limited to private consensual sex and did not extend to any other manifestation of sexual identity (which has been variously characterised as flaunting displaying and advertising homosexuality as well as inviting persecution). Thus for example in 2001 the Federal Court of Australia held that the Iranian Penal Code prohibiting homosexuality and imposing a death penalty did place limits on the applicants behaviour; the applicant had to avoid overt and public, or publicly provocative homosexual activity. But having to accept those limits did not amount to persecution. (Nezhadian v Minister for Immigration and Multicultural Affairs [2001] FCA 1415, para 12). On appeal, the full Federal Court endorsed the view that public manifestation of homosexuality is not an essential part of being homosexual (WABR v Minister for Immigration and Multicultural Affairs [2002] FCAFC 124, para 23). The discretion approach thus has had wide reaching ramifications in terms of framing the human rights of lesbians and gay men to family life, freedom of association and freedom of expression as necessarily lesser in scope than those held by heterosexual people. This approach has been brought to an end, for the purposes of Australian asylum law, by the majority decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473. The High Court divided by four to three in favour of allowing the appeal and remitting the case (though the tribunal to which the case was remitted decided that S395/2002 and his co applicant S396/2002 were not gay after all this fact, recorded by Jenni Millbank in her article, is reflected in its title). The minority (Gleeson CJ and Callinan and Heydon JJ) considered that the tribunal had not erred in law. The majority consisted of McHugh and Kirby JJ who joined in one judgment, and Gummow and Hayne JJ who joined in another. I find the joint judgment of Gummow and Hayne JJ illuminating and compelling. Lord Hope and Lord Rodger have quoted parts of paras 81 and 82 but I think it helpful to set out the whole section (paras 78 83) which appears under the heading Discretion and being discreet: The central question in any particular case is whether there is a well founded fear of persecution. That requires examination of how this applicant may be treated if he or she returns to the country of nationality. Processes of classification may obscure the essentially individual and fact specific inquiry which must be made. The dangers of arguing from classifications are particularly acute in matters in which the applicants sexuality is said to be relevant. Those dangers lie within the notions of discretion and being discreet: terms often applied in connection with some aspects of sexual expression. To explain why use of those terms may obscure more than they illuminate, it is useful to begin by considering Convention reasons other than membership of a social group defined in terms of sexual identity. If an applicant holds political or religious beliefs that are not favoured in the country of nationality, the chance of adverse consequences befalling that applicant on return to that country would ordinarily increase if, on return, the applicant were to draw attention to the holding of the relevant belief. But it is no answer to a claim for protection as a refugee to say to an applicant that those adverse consequences could be avoided if the applicant were to hide the fact that he or she holds the beliefs in question. And to say to an applicant that he or she should be discreet about such matters is simply to use gentler terms to convey the same meaning. The question to be considered in assessing whether the applicants fear of persecution is well founded is what may happen if the applicant returns to the country of nationality; it is not, could the applicant live in that country without attracting adverse consequences. It is important to recognise the breadth of the assertion that is made when, as in the present case, those seeking protection allege fear of persecution for reasons of membership of a social group identified in terms of sexual identity (here, homosexual men in Bangladesh). Sexual identity is not to be understood in this context as confined to engaging in particular sexual acts or, indeed, to any particular forms of physical conduct. It may, and often will, extend to many aspects of human relationships and activity. That two individuals engage in sexual acts in private (and in that sense discreetly) may say nothing about how those individuals would choose to live other aspects of their lives that are related to, or informed by, their sexuality. Saying that an applicant for protection would live discreetly in the country of nationality may be an accurate general description of the way in which that person would go about his or her daily life. To say that a decision maker expects that that person will live discreetly may also be accurate if it is read as a statement of what is thought likely to happen. But to say that an applicant for protection is expected to live discreetly is both wrong and irrelevant to the task to be undertaken by the Tribunal if it is intended as a statement of what the applicant must do. The Tribunal has no jurisdiction or power to require anyone to do anything in the country of nationality of an applicant for protection. Moreover, the use of such language will often reveal that consideration of the consequences of sexual identity has wrongly been confined to participation in sexual acts rather than that range of behaviour and activities of life which may be informed or affected by sexual identity. No less importantly, if the Tribunal makes such a requirement, it has failed to address what we have earlier identified as the fundamental question for its consideration, which is to decide whether there is a well founded fear of persecution. It has asked the wrong question. Addressing the question of what an individual is entitled to do (as distinct from what the individual will do) leads on to the consideration of what modifications of behaviour it is reasonable to require that individual to make without entrenching on the right. This type of reasoning, exemplified by the passages from reasons of the Tribunal in other cases, cited by the Federal Court in Applicant LSLS v Minister for Immigration and Multicultural Affairs, leads to error. It distracts attention from the fundamental question. It leads to confining the examination undertaken (as it was in LSLS) merely to considering whether the applicant had a well founded fear of persecution if he were to pursue a homosexual lifestyle in [the country of nationality], disclosing his sexual orientation to the extent reasonably necessary to identify and attract sexual partners and maintain any relationship established as a result. That narrow inquiry would be relevant to whether an applicant had a well founded fear of persecution for a Convention reason only if the description given to what the applicant would do on return was not only comprehensive, but exhaustively described the circumstances relevant to the fear that the applicant alleged. On its face it appears to be an incomplete, and therefore inadequate, description of matters following from, and relevant to, sexual identity. Whether or not that is so, considering what an individual is entitled to do is of little assistance in deciding whether that person has a well founded fear of persecution. Lord Rodger, in paras 78 80 of his judgment, adds a vivid commentary which illustrates and brings to life the general message conveyed by this part of the judgment of Gummow and Hayne JJ. There is a similar message in the joint judgment of McHugh and Kirby JJ (especially paras 40 43). But I have to say, with great respect to those two very distinguished judges, that I have difficulty with some of the reasoning in para 43, and in particular the sentence, It is the threat of serious harm with its menacing implications that constitutes the persecutory conduct. I think that this sentence (together with the unexceptionable comment in para 40 that harm is persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it) have contributed to the Court of Appeal straying into error in J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 1 paras 16 and 20, an error which was followed in this case: [2009] EWCA Civ 172, paras 11, 12, 31 and 44. In the present case Pill LJ referred, at para 10 of his judgment, to what counsel had described as the Anne Frank principle. That is of course a reference to the Jewish girl who was hidden in an attic in Amsterdam for more than two years, but ultimately discovered by the Nazis and sent to a concentration camp, where she died. The conditions which she had to endure, confined in an attic away from the normal pleasures of childhood and in constant fear of discovery, were certainly severe enough to be described as persecution. But in the context of a claim to asylum under the Convention this approach may be an unnecessary complication, and lead to confusion. The essential question in these cases is whether the claimant has a well founded fear of persecution as a gay man if returned to his own country, even if his fear (possibly in conjunction with other reasons such as his familys feelings) would lead him to modify his behaviour so as to reduce the risk. There are some countries in which a gay couple who lived together quite openly, and made no attempt to conceal their affection, even in public places, would be inviting persecution (an expression used in R v Secretary of State for the Home Department, Ex p Binbasi [1989] Imm AR 595, p 4). That is an unfortunate expression. Some people who risk martyrdom have complex motivation and appear to others to be stubborn and wrong headed. (John Donne, who was born a Catholic and knew a lot about persecution from his own familys experiences, wrote a prose work entitled Pseudo Martyr, published in 1610, deploring the intransigence of some loyal Catholics.) But neither the most courageous nor the most timorous forfeit protection as asylum seekers if, in their different ways, they satisfy the test of a well founded fear of persecution because of their sexuality. I respectfully concur in para 82 of Lord Rodgers judgment, setting out the approach to be followed by tribunals in cases of this sort. It involves (as Gummow and Hayne JJ put it in S395, para 78) an essentially individual and fact specific inquiry. It will often be a difficult task since much of the relevant evidence will come from the claimant, who has a strong personal interest in its outcome. For these reasons, and for the fuller reasons given by Lord Rodger, I would allow both appeals and remit them to the tribunal for reconsideration in the light of Lord Rodgers judgment. LORD COLLINS I agree that the appeal should be allowed for the reasons given by Lord Rodger and that the approach to be followed by tribunals should be as he proposes in paragraph [82] of his judgment. In the context of cases such as this, the use of the words discretion and discreetly tends to obscure the point that what is really involved is concealment of sexual orientation. The relevant question is whether the applicant has a well founded fear of being persecuted for reasons of membership of a particular social group: Refugee Convention, article 1A(2). Persecution is sustained or systemic failure of state protection in relation to one of the core entitlements which has been recognised by the international community, or an affront to internationally accepted human rights norms, and in particular the core values of privacy, equality and dignity: Horvath v Secretary of State for the Home Department [2001] 1 AC 489, 495; Amare v Home Secretary [2005] EWCA Civ 1600, [2006] Imm AR 217, [17]. The test of reasonable tolerability adopted by Buxton LJ in Z v Secretary of State for the Home Department [2004] EWCA Civ 1578, [2005] Imm AR 75 at [17], and applied by Maurice Kay LJ in J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 73 at [16], and Pill LJ in the present case at [31] was based on a misunderstanding of the passage in the judgment of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration [2003] HCA 71,(2003) 216 CLR 473, at [40], when they said: [40] Persecution covers many forms of harm ranging from physical harm to the loss of intangibles, from death and torture to state sponsored or condoned discrimination in social life and employment. Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. But persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. The Convention would give no protection from persecution for reasons of religion or political opinion if it was a condition of protection that the person affected must take steps reasonable or otherwise to avoid offending the wishes of the persecutors. Nor would it give protection to membership of many a particular social group if it were a condition of protection that its members hide their membership or modify some attribute or characteristic of the group to avoid persecution. Similarly, it would often fail to give protection to people who are persecuted for reasons of race or nationality if it was a condition of protection that they should take steps to conceal their race or nationality. The idea of reasonable toleration was plainly being mentioned in the context of what amounts to persecution and not in the context of what they described as taking avoiding action or where members of the group hide their membership or modify some attribute or characteristic of the group to avoid persecution. If a person would have to conceal his sexual identity because of a well founded fear of persecution, he does not cease to have that well founded fear even if the concealment will be successful: see also NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 29, (2005) 216 ALR 1; SZATV v Minister for Immigration and Citizenship [2007] HCA 40, (2007) 233 CLR 18; Refugee Appeal No 74665/03 [2005] INLR 68 (NZ Refugee Status Appeals Authority, Mr Haines QC). A similar, though not identical, approach has been adopted in Canada and the United States. Thus in Atta Fosu v Canada (Citizenship and Immigration) 2008 FC 1135 (Federal Court of Canada, Zinn J) it was held that to say that an internal flight alternative existed if the homosexual refugee claimant lived a discreet existence, was to say that it was not an internal flight alternative. The applicant was a Ghanaian citizen who claimed to fear persecution by the police and the family of his former same sex partner, on the basis of his homosexuality. The immigration board found that the applicant could live as a homosexual, discreetly, in the city of Accra, and therefore that an internal flight alternative existed for the applicant and therefore held that no determination on his identity as a homosexual needed to be made. The court held that the decision was unreasonable because it required the applicant to deny or hide the innate characteristic which formed the basis of his claim of persecution. See also Sadeghi Pari v Canada (Minister of Citizenship and Immigration), 2004 FC 282. In the United States it was said in Karouni v Gonzales, 399 F 3d 1163, 1173 (9th Cir 2005) that by arguing that the homosexual applicant could avoid persecution by living a life of celibacy in Lebanon, the Attorney General was essentially arguing that the law required him to change a fundamental aspect of his human identity. See also, for a full discussion of the suggestion that applicants could hide their religion to avoid persecution, Kazemzadeh v US Attorney General, 577 F 3d 1341 (11th Cir 2009), following Iao v Gonzales, 400 F 3d 530, 532 (7th Cir 2005), Zhang v Ashcroft, 388 F 3d 713, (9th Cir.2004); Woldemichael v Ashcroft, 448 F 3d 1000 (8th Cir 2006). These principles also answer the Anne Frank question which is discussed in the case law and which was the subject of argument on this appeal. In Win v Minister for Immigration and Multicultural Affairs [2001] FCA 132, a political opinion case, the Minister argued that the Tribunal was only required, under the terms of the Convention, to consider whether the applicants would be punished for their political opinions; and that since the applicants had claimed to have operated clandestinely in the past and gave no indication that they would not do so in the future, it was appropriate for the Tribunal merely to ask what the prospects were that the authorities would discover their activities in the future. Madgwick J said (at [18]): upon the approach suggested by counsel for the [Minister], Anne Frank, terrified as a Jew and hiding for her life in Nazi occupied Holland, would not be a refugee: if the Tribunal were satisfied that the possibility of her being discovered by the authorities was remote, she would be sent back to live in the attic. It is inconceivable that the framers of the Convention ever did have, or should be imputed to have had, such a result in contemplation. In this case the Secretary of State argued that had Anne Frank escaped to the United Kingdom, and had it been found (improbably, as the Secretary of State recognised) that on return to Holland she would successfully avoid detection by hiding in the attic, then she would not be at real risk of persecution by the Nazis, and the question would be whether permanent enforced confinement in the attic would itself amount to persecution. Simply to re state the Secretary of States argument shows that it is not possible to characterise it as anything other than absurd and unreal. It is plain that it remains the threat to Jews of the concentration camp and the gas chamber which constitutes the persecution. SIR JOHN DYSON SCJ On the findings of the tribunals, HJ and HT would have a well founded fear of persecution if, on return to Iran and Cameroon respectively, they were to live openly as gay men. Their claims for asylum failed because it was found that on their return they would conceal their sexual orientation and live discreet lives. I agree that these appeals should be allowed for the reasons given by Lord Rodger. In view of the importance of the issues, I would like to add a few words of my own. How can a gay man, who would have a well founded fear of persecution if he were to live openly as a gay man on return to his home country, be said to have a well founded fear of persecution if on return he would in fact live discreetly, thereby probably escaping the attention of those who might harm him if they were aware of his sexual orientation? It is well established that in asylum cases it is necessary for the decision maker to determine what the asylum seeker will do on return: see Ahmad v Secretary of State for the Home Department [1990] Imm AR 61. Thus, the asylum seeker who could avoid persecution on his return, but who (however unreasonably) would not do so is in principle a refugee within the meaning of the Convention. At first sight, therefore, it might be thought that this should lead to the conclusion that, if a gay man would live discreetly on return and thereby avoid being harmed or persecuted on account of his sexual orientation, he could not have a well founded fear of persecution within the meaning of article 1A(2) of the Convention. I shall call this the prima facie interpretation. But none of the parties to this appeal argues for this interpretation, although their reasons for not doing so differ fundamentally. Reasons why the prima facie interpretation must be rejected The Convention must be construed in the light of its object and purpose, which is to protect a person who owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country. If the price that a person must pay in order to avoid persecution is that he must conceal his race, religion, nationality, membership of a social group or political opinion, then he is being required to surrender the very protection that the Convention is intended to secure for him. The Convention would be failing in its purpose if it were to mean that a gay man does not have a well founded fear of persecution because he would conceal the fact that he is a gay man in order to avoid persecution on return to his home country. A purposive approach to the meaning of refugee was adopted by McHugh and Kirby JJ in the S395/2002 decision (2003) 216 CLR 473, at para 41 where they said: The object of the signatories to the Convention was to protect the holding of such beliefs, opinions, membership and origins by giving the persons concerned refuge in the signatory countries when their country of nationality would not protect them. It would undermine the object of the Convention if the signatory countries required them to modify their beliefs or opinions or to hide their race, nationality or membership of particular social groups before those countries would give them protection under the Convention. Like Lord Rodger, I would follow this approach which has been substantially followed in Australia. I do not find it necessary to examine the Australian authorities to which we were referred. It is perhaps sufficient to refer to the paper by Jenni Millbank From discretion to disbelief: recent trends in refugee determinations on the basis of sexual orientation in Australia and the United Kingdom (2009) 13 (2 3) IJHR 391 414. This paper explores the impact of the S395/2002 decision on the refugee jurisprudence of Australia and the United Kingdom five years on. It shows that the reasoning of the majority judgments is being generally applied in Australia, but that there has been a clear shift away from discretion towards disbelief as the major area of contest in decisions since S395 and S396, with a significant increase in decisions where the applicants claim to actually being gay, lesbian, or bisexual is outright rejected. The somewhat different analysis of the problem adopted in New Zealand also leads to a rejection of the prima facie interpretation and to the same overall conclusion that a persons claim to refugee status is not to be denied even if on return he will act discreetly in order to avoid being persecuted. On this analysis, which is expounded very fully in the leading case of Refugee Appeal No 74665/03 [2005] INLR 68, the emphasis is on the fact that refugee status cannot be denied to a person who on return would forfeit a fundamental human right in order to avoid persecution. Like Lord Rodger, I see the attractions of this approach. It gives due weight to the fact that the Convention must be interpreted in accordance with its broad humanitarian objective and having regard to the principles, expressed in the preamble, that human beings should enjoy fundamental rights and freedoms without discrimination and that refugees should enjoy the widest possible exercise of these rights and freedoms: see per Lord Bingham in Fornah v Secretary of State for the Home Department [2007] 1 AC 412 at para 10. An interpretation of article 1A(2) of the Convention which denies refugee status to gay men who can only avoid persecution in their home country by behaving discreetly (and who say that on return this is what they will do) would frustrate the humanitarian objective of the Convention and deny them the enjoyment of their fundamental rights and freedoms without discrimination. The right to dignity underpins the protections afforded by the Refugee Convention: see Canada (AG) v Ward [1993] 2 SCR 689, approving Professor Hathaway, Law of Refugee Status, 1991, p 108: The dominant view, however, is that refugee law ought to concern itself with actions which deny human dignity in any key way, and that the sustained or systemic denial of core human rights is the appropriate standard. A particular attraction of the New Zealand approach is that, as was said at [2005] INLR 68, para 120 of the decision delivered by RPG Haines QC, it facilitates a determination of: whether the proposed action by the claimant is at the core of the right or at its margins and whether the prohibition or restriction imposed by the state is lawful in terms of international human rights law. If the proposed action is at the core of the right and the restriction unlawful, we would agree that the claimant has no duty to avoid the harm by being discreet or complying with the wishes of the persecutor. If, however, the proposed activity is at the margin of the protected interest, then persistence in the activity in the face of the threatened harm is not a situation of being persecuted for the purposes of the Refugee Convention. The individual can choose to carry out the intended conduct or to act reasonably or discreetly in order to avoid the threatened serious harm. None of these choices, however, engages the Refugee Convention. It is open to question how far the distinction between harmful action at the core of the right and harmful action at its margin is of relevance in cases of persecution on grounds of immutable characteristics such as race and sexual orientation. But it is a valuable distinction and there may be more scope for its application in relation to cases concerning persecution for reasons of religion or political opinion. There is a yet further analysis that may be adopted which leads to the conclusion that the prima facie interpretation should be rejected. This is that, if a person will conceal his true identity and protected status out of a well founded fear that he will otherwise be persecuted, he will nevertheless continue to have a well founded fear of persecution even if, by concealing his true identity, he may succeed in avoiding serious harm. As McHugh and Kirby JJ said in S395/2002 at para 43: In manyperhaps the majority ofcases, however, the applicant has acted in the way that he or she did only because of the threat of harm. In such cases, the well founded fear of persecution held by the applicant is the fear that, unless that person acts to avoid the harmful conduct, he or she will suffer harm. It is the threat of serious harm with its menacing implications that constituted the persecutory conduct. In other words, the threat of serious harm and the fear of it will remain despite the avoiding behaviour. In Win v Minister for Immigration and Multicultural Attains (2001) FCA 132, at para 18 Madgwick J said: upon the approach suggested by counsel for the respondent, Anne Frank, terrified as a Jew and hiding for her life in Nazi occupied Holland would not be a refugee: if the Tribunal were satisfied that the possibility of her being discovered by the authorities was remote, she would be sent back to live in the attic. It is inconceivable that the framers of the Convention ever did have, or should be imputed to have had, such a result in contemplation. Even if it could be imagined that Anne Frank, as an asylum seeker, would not objectively have been at risk of being discovered in the attic, she would nevertheless have had a well founded fear of the threat of serious harm, a fear not eliminated by her decision to conceal her identity as a Jew and live in the attic. The Secretary of States solution: the reasonable tolerability test The Secretary of State recognises that it cannot have been intended that Convention protection should be denied to those who feel compelled to take extreme measures to avoid persecution. She does not, therefore, espouse the prima facie interpretation. Her case is that, if the measures that an asylum seeker would take on return to avoid persecution are not reasonably tolerable, then that of itself would amount to persecution. I cannot accept this. First, the phrase being persecuted in article 1A(2) refers to the harm caused by the acts of the state authorities or those for whom they are responsible. The impact of those acts on the asylum seeker is only relevant to the question whether they are sufficiently harmful to amount to persecution. But the phrase being persecuted does not refer to what the asylum seeker does in order to avoid such persecution. The response by the victim to the threat of serious harm is not itself persecution (whether tolerable or not) within the meaning of the article. Secondly, the test of what is reasonably tolerable is vague and difficult to apply. Is it a subjective test? Or does the word reasonably import the idea of the reasonable victim? If so, how for example would a decision maker determine whether it is reasonably tolerable to a person to conceal his or her sexual orientation or race? These are difficult questions which those who framed the Refugee Convention surely cannot have intended decision makers to address. On the Secretary of States test, it would seem that a person who feels compelled to conceal his or her protected status, but does not feel strongly about it and does not find the concealment intolerable is denied the protection of the Convention; whereas the person who does feel strongly about it and finds the concealment intolerable has the benefit of its protection. This differential treatment of the tolerant and the intolerant is unfair. It is an unprincipled and improper basis for deciding whether a person should or should not be accorded refugee status. The decision by the AIT in HJs case shows just how unsatisfactory the Secretary of States test is. The AIT comprised three very experienced immigration judges who endeavoured faithfully to apply the reasonable tolerability test prescribed for them by the Court of Appeal. They found at para 44 of their Determination that for 16 years HJ had been able to conduct his homosexual activities in Iran without serious detriment to his private life and without that causing him to suppress many aspects of his sexual identity (my emphasis). They concluded at para 45 that he would behave in the same way on his return to Iran and that it was difficult to see on the evidence that a return to that way of living can properly be characterised as likely to result in an abandonment of the appellants sexual identity. They said that he had been able to express his sexuality albeit in a more limited way than he can do elsewhere. Finally, they said at para 46: To live a private life discreetly will not cause significant detriment to his right to respect for private life, nor will it involve suppression of many aspects of his sexual identity. I do not understand by what yardstick the AIT measured the tolerability of these limitations and concluded that they were reasonably tolerable. True, HJ had endured them for 16 years, but that did not make them tolerable, let alone reasonably tolerable to him. He had endured them because the alternative was the real risk that he would face severe punishment at the hands of the state authorities. In short, there was no basis on which the tribunal could properly conclude that the fact that HJ had to conceal his identity as a gay man was reasonably tolerable to him. I wish to make it clear that I am not seeking to criticise the tribunal, but rather to show the nature of the task that they were asked to perform. Thirdly, the Secretary of State seeks to draw a distinction between the decision maker (i) requiring the asylum seeker to act discreetly on return and (ii) making a finding that the asylum seeker will in fact act discreetly on return. It is said that the former is impermissible and irrelevant to whether the asylum seeker has a well founded fear of persecution, whereas the latter is not only permissible but highly relevant. But as Lord Rodger points out, this is an unrealistic distinction. Most asylum seekers will opt for the life of discretion in preference to persecution. This is no real choice. If they are returned, they will, in effect, be required to act discreetly. Fourthly, the Secretary of States test, as formulated by the Court of Appeal in Z v Secretary of State for the Home Department [2004] EWCA Civ 1578, [2005] Imm AR 75 and applied in subsequent decisions of the Court of Appeal is based on a misunderstanding of two authorities. The test is founded entirely on these authorities and is not supported by any independent reasoning. The first misunderstanding is of para 40 of the judgment of McHugh and Kirby JJ in S395/2002. The sentence relied on by Buxton LJ is: Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. This sentence comes in a passage which is dealing with persecution generally. The paragraph then goes on to say that persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. The sentence relied on by Buxton LJ is saying nothing about the quality or effect of action taken to avoid persecution. The second misunderstanding is of the true effect of what Simon Brown LJ said in Ahmed v Secretary of State for the Home Department. What he said at p 7 of his judgment (quoted by Lord Rodger at para 54 above) was that an asylum seeker would have a well founded fear of persecution if he could avoid persecution on his return, but would choose not to do so (case A). He did not address either expressly or by implication the question whether an asylum seeker would have a well founded fear of persecution if on his return he would act discreetly to avoid the persecution that he would suffer if he lived openly (case B). A conclusion on case A sheds no light on the correct answer to case B. Fifthly, there is no support for the Court of Appeal approach in any other jurisprudence. This is important in view of the implicit rejection of it in a number of other jurisdictions, including at least Australia and New Zealand, and the fact that it is desirable that, so far as possible, there should be international consensus on the meaning of the Convention. For all these reasons, I would reject the reasonable tolerability test. I should add that in his judgment in the present case, Pill LJ said at para 32 that in determining whether suppression was reasonably tolerable for an individual: . a degree of respect for social norms and religious beliefs in other states is in my view appropriate. Both in Muslim Iran and Roman Catholic Cameroon, strong views are genuinely held about homosexual practices. In considering what is reasonably tolerable in a particular society, the fact finding Tribunal is in my view entitled to have regard to the beliefs held there. Even if I had accepted the reasonable tolerability test, I would not have felt able to agree with this passage. It would have been necessary to conduct the assessment by reference to objective human rights standards, and not by reference to the social mores of the home country. As Lord Hoffmann said in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 655E: The findings of fact as to discrimination have not been challenged. They cannot be ignored merely on the ground that this would imply criticism of the legal or social arrangements in another country. The whole purpose of the Convention is to give protection to certain classes of people who have fled from countries in which their human rights have not been respected. In Refugee Appeal No 74665/03, the New Zealand Status Appeals Authority stated at para 112: We do not accept that the domestic law of the country of origin or cultural relativity can override international human rights norms in the refugee determination context. I agree. Conclusion It follows that the AIT in HJs case applied the wrong test, although they are not to be criticised for having done so. His appeal must be allowed and his case remitted to a fresh tribunal. The tribunal in HTs case did not apply the reasonably tolerability test. But they dismissed HTs appeal on the basis that he could relocate to a different part of Cameroon, presumably on the basis that he would act discreetly there. Their conclusion is flawed for the simple reason that they seem to have thought that the mere fact that HT had acted discreetly in the past and would do so in the future was determinative of the issue. That was an error of law. His appeal must also be allowed and his case remitted to a fresh tribunal. As regards guidance for immigration judges in the future, I agree with what Lord Rodger has said at para 82. |
It is not often that, as in this case, the question of the construction of a charterparty arises in the Chancery Division. The issue between the parties is whether one of them is an Affiliate of the charterer for the purposes of provisions in a charterparty by which both the owner and the charterer agreed to indemnify and hold each other harmless (including in the case of the charterer its Affiliates) in relation to certain liabilities. The charterparty provides (in clause 1): In this Charter Agreement the following words and expressions shall have the meanings hereby assigned to them except where the context otherwise requires: a) Affiliate means any subsidiary of the Charterer or a company of which the Charterer [is] a Subsidiary or a company which is another Subsidiary of a company of which the Charterer is a Subsidiary. For the purposes of this definition Subsidiary shall have the meaning assigned to it in Section 736 of the Companies Act 1985. By clause 1.2 a reference to any statute or statutory provision is to include a reference to any amendment, extension, consolidation or replacement thereof. Although for the purposes of this dispute the relevant provisions are to be found in the Companies Act 1985 (as amended by the Companies Act 1989) identical provisions are re enacted by the Companies Act 2006, and the issue on this appeal is of some general importance. The statutory definition of subsidiary is incorporated by reference in other legislation (e.g. Transport Act 2000, section 65; Enterprise Act 2002, section 223; Energy Act 2004, section 196). Incorporation of the statutory definition in commercial contracts (of which this case is an example) is very common. In this case it has had an unexpected result which has arisen through a combination of two factors. The first factor is that, as will be seen, the statutory definition of subsidiary in important respects uses the term member which normally connotes the person on the share register. The second factor flows from a difference between English and Scots law and practice relating to the holding of shares by way of security: under Scots law and practice the mortgagee is registered as the holder of the shares, by contrast with the position in England, where commonly an equitable charge by way of deposit of the share certificate will constitute the security. As Lord Hope and Lord Rodger explain fully in their judgments, under Scots law the only way in which a fixed security over shares can be taken is by fiduciary transfer of the shares to the creditor (fiducia cum creditore). The security is known as a share pledge, under which registration of the creditor as holder of the shares constitutes the security. The unexpected result may be (if the Court of Appeal was right) that, in the somewhat unusual circumstances of this case, a company which would otherwise undoubtedly be the subsidiary of another company ceased to be so when the shares in the former company were charged by the latter company to a Scottish bank. To oversimplify considerably, a major question on the appeal is whether, for the purposes of the statutory provision and the contract, the putative holding company remained a member notwithstanding that the shares which it owned were charged to, and registered in the name of, the mortgagees nominee company. The facts The charterparty was entered into on February 4, 1994. The owner was Farstad Shipping A/S (Farstad) and the charterer was then called Aberdeen Service Company (North Sea) Ltd (Asco UK Ltd or the Charterer). The chartered vessel was the Far Service (the Vessel) and the charter was, initially, for 5 years with an option to extend for up to a further 5 years. The Vessel was to supply and/or assist and/or service offshore installations. The charter in fact continued until at least December 2005. The charterparty contained mutual exceptions and indemnities to lay out a regime allocating risk and responsibility in respect of the main types of liability situations that might arise as between Farstad and the Charterer. In particular Farstad was to defend and hold harmless the Charterers, its Affiliates and Customers, in respect of any loss or damage to the Vessel or to other property of Farstad (clause 33.5). Asco UK Ltd is a wholly owned subsidiary of what is now called ASCO plc, formerly ASCO Group plc (ASCO), a major oil and gas logistics company. Enviroco Ltd (Enviroco) carries on business (inter alia) in the industrial cleaning of ships. Until 1999 it too was a wholly owned subsidiary of ASCO. In November 1999, in connection with a joint venture with Stoneyhill Waste Management Ltd (Stoneyhill), the shares in Enviroco were converted into equal numbers of A and B ordinary shares with ASCO retaining the A shares and Stoneyhill holding the B shares. The effect of the amended Articles of Association was that ASCO had the right to appoint a majority of directors. In addition, pursuant to an agreement with Stoneyhill, ASCO was entitled to exercise a majority of the voting rights in Enviroco. The A shares were registered in the name of ASCO and the B shares were registered in the name of Stoneyhill. ASCO and Enviroco are both registered in Scotland, and in May 2000 ASCO executed a Deed of Pledge, governed by Scots law, in favour of the Bank of Scotland (the Bank), for itself and as agent and Security Trustee for a syndicate of banks, to secure facilities granted or to be granted by some of the banks. By the Deed of Pledge ASCO pledged, charged and assigned to the Bank the A ordinary shares held by it in Enviroco, and agreed to register, or procure the registration of the shares in the name of the Bank or its nominees until the secured liabilities were repaid. The shares were then registered in the name of Bank of Scotland Branch Nominees Ltd (the Nominee). The Deed of Pledge provided that until the security became enforceable the full voting and other rights and powers in respect of the Shares were exercisable by ASCO and that ASCO would be appointed as proxy in relation to the voting of the shares until the security was enforced. No voting rights or other powers were exercised by the Bank or the Nominee, all dividends were paid to ASCO and the security was never enforced. The proceedings On July 7, 2002 Enviroco was employed to clean the oil tanks of the Vessel. While the tanks were being cleaned by Envirocos employees, a fire occurred in the engine room causing substantial damage to the Vessel and the death of an Enviroco employee. On March 26, 2007 Farstad issued proceedings in Scotland claiming damages from Enviroco amounting to approximately 2.7 million in respect of losses allegedly suffered by Farstad as a consequence of the incident in 2002. Enviroco sought to rely on the mutual exception and indemnity clauses on the basis that it was an Affiliate of Asco UK Ltd because each of them was a subsidiary of ASCO. The principal issue is whether the fact that, in accordance with Scottish practice, the shares in Enviroco were registered in the name of the Banks nominee company has the result that Enviroco was not a subsidiary of ASCO at the relevant time and therefore not an Affiliate for the purposes of the charterparty. In December 2007 Enviroco issued these proceedings in England seeking a declaration that on the true and proper construction of the charterparty Enviroco was an Affiliate of the Charterer. Subsidiaries: the statutory definitions There are many situations in which company law takes account of groups of companies: see Gower and Davies, Principles of Modern Company Law, 8th ed. 2008, para 9 16. They include financial reporting, the control of transactions between a company and its directors, or of the purchase of a companys own shares. It is plainly important and necessary to define what is meant by a subsidiary for these and other purposes. There is a special definition for accounting purposes in section 1162 and schedule 7 of the 2006 Act, previously in section 258 and schedule 10A of the 1985 Act (inserted by the Companies Act 1989). The definition for general purposes is in section 1159 and schedule 6 of the 2006 Act, previously in sections 736 and 736A of the 1985 Act as amended by the Companies Act 1989. Greene Committee and the Companies Acts 1928 and 1929 The Companies Act 1928 was the first to deal with the definition of subsidiary, by amending the Companies Acts 1908 to 1917 prior to their consolidation into the Companies Act 1929. The terms holding company and subsidiary were defined for the purpose of new accounting provisions in sections 122 to 128 of the 1929 Act, which gave effect to the recommendations of the Company Law Amendment Committee (the Greene Committee), 1926, Cmd 2657. Section 127 of the 1929 Act (re enacting section 40 of the 1928 Act) provided that a company would be deemed to be a subsidiary company of another company if the latter held shares, directly or through a nominee, and (a) the amount of the shares so held was more than 50% such as to entitle the shareholder to more than 50% of the voting power; or (b) the shareholder had power (other than under security documents) to appoint the majority of the board. Where a company the ordinary business of which included lending held shares in another company as security only, no account was to be taken of the shares so held in determining if that other company was a subsidiary: section 127(2). The provisions made no use of the concept of member. Cohen Committee in 1945 and the Companies Acts 1947/1948 The Cohen Committee on Company Law Amendment recommended in 1945 (Cmd 6659) a revised definition of holding company and subsidiary, where there existed either (a) control of the subsidiary through the board of directors and ownership (direct or indirect) of shares in the subsidiary, or (b) beneficial ownership (direct or indirect or through subsidiaries) of more than half of the subsidiarys equity share capital. The recommendations also envisaged that, as before, shares held as security only by a company the ordinary business of which included lending would continue to be left out of account. The Committees focus was on the beneficial ownership of shares and not on the status of membership. The changes made by the Companies Act 1947 (consolidated in the Companies Act 1948) were in terms different from those proposed by the Cohen Committee, and introduced the concept of membership into that part of the definition which related to control of composition of the board. By section 154(1)(a) of the 1948 Act a company was deemed to be a subsidiary of another if, but only if, (a) that other either (i) is a member of it and controls the composition of its board of directors, or (ii) holds more than half in nominal value of its equity share capital Special provision was made to deal with shares held by nominees or by way of security in section 154(3)(b),(c),(d), the broad effect of which was that shares held or powers exercisable were to be treated as held or exercisable by the beneficial owner or by the grantor of the security. The Jenkins Committee, the Companies Act 1967, and the Companies Act 1985 as originally enacted The Jenkins Committee (Company Law Committee, 1962, Cmnd 1749) recommended that there should be an amended definition of subsidiary based solely on membership and control (i.e. the first part of the formula in the 1948 Act) because the definition in the 1948 Act could result in a company being a subsidiary of two other companies, and because non voting and restricted voting equity shares had become more common with the result that a company might own a majority of shares without controlling the composition of the board: paras 149 150 and 156. But this part of the Jenkins Committees proposals was not adopted in the Companies Act 1967, with the consequence that the definition in the 1948 Act continued to apply. As originally enacted, section 736(1) of the original 1985 Act was in the same terms as section 154(1) of the 1948 Act, with the provisions dealing with nominees and mortgagees now in section 736(4). The European Communitys Seventh Council Directive on consolidated accounts and the changes to the 1985 Act The Seventh Council Directive on consolidated accounts (83/349/EEC of June 13, 1983) required changes in the subsidiary/holding company definition used for accounting purposes. The Companies Act 1989, which implemented the Directive, introduced a new subsidiary/holding company definition for accounting purposes in sections 258 and 259 and schedule 10A (now section 1162 and schedule 7 of the 2006 Act). Section 258(2) defined the parent undertaking/subsidiary undertaking by reference to four alternative criteria, two of which used the concept of membership: section 258(2)(b) (it is a member of the undertaking and has the right to appoint or remove a majority of its board of directors) and section 258(2)(d) (it is a member of the undertaking and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the undertaking). Section 258(3) provided that an undertaking was to be treated as a member of another undertaking (b) if any shares in that other undertaking are held by a person acting on behalf of the undertaking or any of its subsidiary undertakings. Schedule 10A contained provisions explaining and supplementing those in section 258. They included provisions (paras 7 and 8) that rights held by a person as nominee for another were to be treated as held by that other and that rights attached to shares held by way of security were to be treated as held by the person providing the security. The 1989 Act also amended the subsidiary/holding company definition in section 736, with supplementary provisions in section 736A (now section 1159 and schedule 6 of the 2006 Act). Sections 736 and 736A were similar, but not identical, to section 258 and schedule 10A. In particular, with some minor drafting differences, section 736 contained three of the four criteria in section 258(2) (that is, all except the criterion of dominant influence by virtue of the memorandum or articles or of a control contract: section 258(2)(c), and see also section 258(4) for the criteria of actual dominant interest and unified management). Section 736A contained provisions which were similar to (in the case of nominees) or identical to (in the case of shares held as security) to those in schedule 10A. But one important difference for the purposes of this appeal is that sections 736 and 736A contained no equivalent to section 258(3) deeming an undertaking to be a member if shares in the putative subsidiary were held by a person acting on behalf of the undertaking. So far as material to this appeal, sections 736 and 736A of the 1985 Act provide: 736 Subsidiary, holding company and wholly owned subsidiary (1) A company is a subsidiary of another company, its holding company, if that other company (a) holds a majority of the voting rights in it, or is a member of it and has the right to appoint or (b) remove a majority of its board of directors, or (c) is a member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it, (3) 736A Provisions supplementing section 736 In this section company includes any body corporate. (1) The provisions of this section explain expressions used in section 736 and otherwise supplement that section. (2) In section 736(1)(a) and (c) the references to the voting rights in a company are to the rights conferred on shareholders in respect of their shares to vote at general meetings of the company on all, or substantially all, matters. (3) In section 736(1)(b) the reference to the right to appoint or remove a majority of the board of directors is to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters; and for the purposes of that provision a company shall be treated as having the right to (a) appoint to a directorship if (i) a persons appointment to it follows necessarily from his appointment as director of the company, or (ii) the directorship is held by the company itself; and (b) a right to appoint or remove which is exercisable only with the consent or concurrence of another person shall be left out of account unless no other person has a right to appoint or, as the case may be, remove in relation to that directorship. (5) Rights held by a person in a fiduciary capacity shall be treated as not held by him. (6) Rights held by a person as nominee for another shall be treated as held by the other; and rights shall be regarded as held as nominee for another if they are exercisable only on his instructions or with his consent or concurrence. (7) Rights attached to shares held by way of security shall be treated as held by the person providing the security (a) where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with his instructions; (b) where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in his interests. (12) In this section company includes any body corporate. The decisions below and the appeal No reliance was placed by Enviroco on section 736(1)(a) or (b), but it was common ground that ASCO controls alone, pursuant to an agreement with other shareholders or members [i.e. Stoneyhill], a majority of the voting rights in Enviroco, which would therefore be a subsidiary of ASCO within section 736(1)(c) if ASCO were a member of Enviroco. Mr Gabriel Moss QC sitting as a Deputy Judge in the Chancery Division held that: (a) as a matter of contractual interpretation, Enviroco was an Affiliate of the Charterer notwithstanding that ASCOs shares in Enviroco had been pledged to the Bank of Scotland by a method which involved the registration of the shares in the name of the Nominee as a member of Enviroco by way of security; and (b) a company remained a holding company of its subsidiary within the meaning of section 736(1)(b) and 736(1)(c) even after it had given all of its shares as security to a lender and the lender or its nominee had been registered as holder of the shares as part of the perfection, protection or enforcement of its security. The Court of Appeal (Mummery, Longmore and Patten LJJ) allowed an appeal by Farstad and held that the definition provision in clause 1(a) of the charterparty was an unequivocal direction that the statutory definition was to be applied, and that Enviroco was not a subsidiary of ASCO within sections 736 and 736A of the 1985 Act, because: (1) by providing that the putative holding company is to be a member of the subsidiary, both sections 736(1)(b) and (c) require the putative holding company actually to be a member of the subsidiary within the definition of member of a company in section 22 of the 1985 Act, that is, to be registered as a member; (2) that requirement could not be satisfied by virtue of the attribution provisions in sections 736A(6) and 736A(7); and (3) sections 736 and 736A had to have the same meaning when applied to the charterparty so that no different construction was available in the commercial context. Envirocos arguments on the appeal to this Court are these. It puts at the forefront an argument on policy. It says that the version of section 736 introduced by the 1989 Act was intended to bring the definition of holding company and subsidiary into line with the new definitions of parent undertaking and subsidiary undertaking introduced by section 258. It cannot have been the intention of Parliament, in enacting a new and stricter definition of holding company and subsidiary, to enable easy evasion of the statutory restrictions imposed on holding and subsidiary companies by the use of nominees, or to displace those restrictions by the use of ordinary security arrangements with ordinary lending institutions. From that basis Enviroco goes on to put two separate arguments for the conclusion that Enviroco is a subsidiary of ASCO. The first is that ASCO is a member within the meaning of section 736(1)(c). The second is that the attribution provisions of section 736A(6) and (7) have the same effect. The first argument is developed in this way. The reference to member in section 736(1)(c) (and in section 736(1)(b)) does not require the putative parent company to be named in the subsidiarys register of members since sections 736 and 736A expressly apply not only to companies (companies formed and registered under the Companies Acts) which have a register of members, but also to all other forms of body corporate, whether or not incorporated in Great Britain, and whether or not they have any register of members or equivalent, and so the use of the word member in the two subsections could not have been intended to denote or require entry on a register of members. The effect of the original section 736 of the 1985 Act was that the putative parent company was not required to be on the register, and Parliament did not intend, and did not legislate for, any change in that regard in 1989. The reference to member is intended to refer to the holding of rights of membership (as distinct from the holding of shares, a concept of no application in the case of bodies corporate without any share capital, such as companies limited by guarantee) rather than actual entry on the register. The second argument is that the attribution provisions in sections 736A(6) and (7) attribute to the putative holding company the membership rights enjoyed by a nominee for the holding company (section 736A(6)) or by a chargee holding shares charged by the putative holding company (section 736A(7)), so that it is the holding company which has those rights and is thereby the member for the purposes of section 736. The meaning of member and the attribution provisions Members Section 22 of the 1985 Act (now section 112 of the 2006 Act), provides: Definition of member (1) The subscribers of a companys memorandum are deemed to have agreed to become members of the company, and on its registration shall be entered as such in its register of members. (2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, is a member of the company. That definition applies to all bodies corporate which are formed and registered under the legislation. Enviroco is a company formed and registered under the 1985 Act. The starting point is that the definition of member in what is now section 112 of the 2006 Act (section 22 of the 1985 Act for the purposes of this appeal) reflects a fundamental principle of United Kingdom company law, namely that, except where express provision is made to the contrary, the person on the register of the members is the member to the exclusion of any other person, unless and until the register is rectified: In re Sussex Brick Company [1904] 1 Ch 598 (retrospective rectification of register did not invalidate notices). Ever since the Companies Clauses Consolidation Act 1845 and the Companies Act 1862 membership has been determined by entry on the register of members. The companies legislation proceeds on that basis and would be unworkable if that were not so. Among the many provisions relating to members are these: (1) a member will be bound by alterations in the companys articles, subject to specified exceptions (section 25, 2006 Act); (2) there are elaborate provisions relating to the register of members (sections 113 et seq), including a duty to keep an index of members (section 115) and rights to inspect and require copies (sections 116 121), and documents in hard copy form must be sent to a member at his address as shown in the register of members (schedule 5, Part 2); (3) a subsidiary cannot be a member of its holding company (section 136); (4) elaborate provision is made for voting by members, by proxies appointed by members, and by joint holders (sections 281 et seq); (5) the company must send its annual accounts and report to every member (section 423); (6) unlawful distributions may be recovered from a member who knows or has reasonable grounds for believing that it is unlawfully made (section 847(2)). For those and other purposes the legislation makes it clear that the member is the person on the register, and where it is necessary to apply the legislation to persons who are not on the register, special provision is made. Thus where the shares are bearer shares, special provision is made to allow the bearer to be deemed to be a member (section 122(3)). So also the right of a member to bring a derivative claim or present an unfair prejudice petition is expressly extended to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law (sections 260(5) and 994(2)). There is no basis for construing section 736(1)(c) (or section 736(1)(b)), taken alone, in any different sense. There is no equivalent, either in section 736 or section 736A, to the deeming provision in section 258(3)(b) where, for accounting purposes, an undertaking is to be treated as a member of another undertaking if shares in the latter are held on its behalf. The absence of such a provision is indicative, although not decisive, and, as will be seen, the reason for its absence is a matter for conjecture only. The attribution provisions The second argument is that the effect of attribution provisions in sections 736A(6) and (7) is to attribute to ASCO the membership rights enjoyed by the Nominee. In effect this argument amounts to much the same thing as saying that they are to be read as if section 258(3)(b) were part of section 736A. Section 736A(6) provides that rights held by a person as nominee for another shall be treated as held by the other, and section 736A(7) provides in principle that rights attached to shares held by way of security shall be treated as held by the person providing the security. These are in substantially the same terms as schedule 10A, paras 7 and 8, supplementing section 258. Neither of these provisions says anything about membership. They are concerned with rights, not status, and plainly refer back to the voting rights and the right to appoint or remove the board in section 736(1)(a) (c), and their elaboration in sections 736A(2) and (3), which provide, respectively, that in section 736(1)(a) and (c) the references to voting rights are to rights conferred on shareholders in respect of their shares, and in section 736(1)(b) the reference to appoint or remove a majority of the board is to the right to appoint or remove directors holding a majority of voting rights. Those are the rights held or rights attached to shares. The fact that the similar provisions in schedule 10A, paras 7 and 8 were supplemented by section 258(3) is a strong, but not decisive, additional reason for not construing sections 736A(6) and (7) in the way for which Enviroco contends. The argument from history Nor is there anything in the history of the legislation to affect these conclusions. It is true that from the 1947 Act until the 1985 Act special attribution provisions dealt with nominees and mortgagees in such a way as to treat the beneficial owner/person providing the security as a member where necessary, but there is no secure basis for using those provisions to interpret the amendments made by the 1989 Act. Enviroco uses the Parliamentary history of the 1989 Act relating to what became sections 258 and 736 736A in two ways, the second much more elaborate than the first. The first argument is that the fact that it was never suggested that the introduction of the requirement of membership in section 736(1) was a change in the law supports an inference that no change was intended. The second argument is based on what happened in the passage of the 1989 Companies Bill through its committee stages in the House of Lords and the House of Commons. In the House of Lords amendments were made in the Bill both to what became section 258 and sections 736 and 736A, which included a provision (draft section 736(5)(d)), which was identical to what became section 258(3) (undertaking shall be treated as a member of another undertaking (b) if any shares in that other undertaking are held by a person acting on behalf of the undertaking . ). Then substantial amendments were introduced at the committee stage in the House of Commons to include provisions which became the attribution provisions in schedule 10A (supplementing section 258) and sections 736A(6) and (7). At that time the deemed membership provision in what became section 736A was deleted, but not the equivalent provision in what became section 258(3). Nevertheless, speaking for the Government, Mr Maude in the House of Commons and Lord Fraser of Carmyllie in the House of Lords said that the definition of subsidiary in what became sections 258 and 736 overlapped, and that the amendments were designed to ensure that where they overlapped, they do so perfectly: see Hansard (HC Debates), 22 June 1989, Standing Committee D, col 473 and Hansard (HL Debates), 9 November 1989, col 1020. Enviroco argues that the overall effect is that the draftsman took the view that the membership deeming provision in both the earlier drafts of sections 258 and 736/736A was unnecessary in the light of the attribution provisions in what became schedule 10A, paras 7 and 8 and (in the same terms) section 736A(6), (7), but by oversight it was not deleted from what became section 258(3). It is true that, in the unusual situation of the present case, where ASCO has turned Enviroco into a joint venture company and where it has charged the shares to a Scottish bank, the legislation does lead to a result which is certainly odd and possibly absurd. But there is no relevant ambiguity in section 736 and no clear statement which casts any light on any question of interpretation which arises on this appeal. The ministerial statements fall far short of a case for the application of even the most generous application of Pepper v Hart [1993] AC 593. The drafting history (to the extent it may be looked at: cf Ward v Commissioner of Police of the Metropolis [2005] UKHL 32, [2006] 1 AC 23, at 27) does not throw any light on the reason for the omission from section 736 or section 736A of a provision equivalent to section 258(3). It does seem likely that there was an error. The ministerial statements do not assist on the question whether the deeming provision was incorrectly omitted from sections 736 and 736A, or incorrectly retained in section 258(3). The more likely explanation is that it was incorrectly omitted from section 736A. There is therefore no clear basis on which the court must be abundantly sure that there is a drafting error of the nature which the Court can correct: Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586 at 592. The exercise which Enviroco would require from the Court would be an impermissible form of judicial legislation. Enviroco has made much of the danger of evasion of statutory regulation which could occur if the Court of Appeals construction were right, and the Deputy Judge and Longmore LJ were troubled by this. The problem of construction has been recognised by textwriters for some time (especially Gore Browne on Companies, 44th ed (1986), vol 1, Supplement 45, pp 1.019 1.020, para 1.6.1), but no material was put forward to suggest that advantage had been taken, in the 20 years or so since the provisions were enacted, of what was described by Enviroco as a loophole. If there were such material, or if there had been an error, then the relevant provisions of the 2006 Act, section 1159 and schedule 6, could be amended by regulation, subject to negative resolution, under the power given to the Secretary of State in section 1160. That would be a legitimate route, by contrast with the exercise, which Enviroco in effect asks this Court to undertake, of judicial re drafting of sections 736 and 736A. Contractual construction Nor is there any basis for construing the definition differently because it is incorporated in a contract. The starting point is that if the terms of a statute are incorporated into a contract by reference, the contract has to be read as if the words of the statute are written out in the contract and construed, as a matter of contract, in their contractual context: see Adamastos Shipping Co Ltd v Anglo Saxon Petroleum Co Ltd [1959] AC 133, 152, 184. It is true that it is likely that, if they had addressed their minds to it, the parties would not have envisaged that a subsidiary would cease to be so merely because the shares in it were charged to a Scottish bank. But the Court is in no position to re write the contract for the parties. Thus if the parties had been alive to the possibility and had been presented with it, it is by no means clear that Farstad would have been willing to exempt from liability a sister company of the Charterer which was only 50% owned by ASCO. This is not a case in which it can be said that applying the wording of section 736 flouts business commonsense: The Antaios [1985] AC 191, 201. Nor is it a case in which it could be said that something must have gone wrong with the language: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 913; Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, at [15]. Nor is there anything in the factual matrix to suggest that the words of section 736 and 736A have a different meaning or construction in the charterparty from the meaning that they would have in the statutory context. For those reasons I would dismiss the appeal. LORD HOPE I agree with Lord Collins and Lord Rodger that the appeal must be dismissed. I wish to add only a brief footnote to what Lord Rodger has said about the position in Scots law. The question whether there was any room for a difference of view between English and Scots law as to the effect of the entry of a person on the register of a company as a member was considered in Elliot v Mackie & Sons Ltd; Elliot v Whyte 1935 SC 81. In that case the trustees and executors of the deceased founder of a well known private company had executed transfers of shares in favour of two of their number and a third party to enable them to qualify as directors of the company under the articles. This was because the trustees and executors wished to have an adequate representation on the board of directors of the company. The certificates were endorsed to make it plain that the transfers were purely nominal and done only in order to enable the transferees to qualify as directors, the beneficial interest remaining in the transferors. This initiative was objected to by some of the beneficiaries under the deceaseds testamentary settlement. They maintained, among other things, that registration of the transfers was ultra vires of the company because the companys articles provided that shares must be held by a director in his own name and right, and that the register should be rectified because the transferees names had without sufficient cause been entered in the register. The argument that registration of the transfers was ultra vires of the company because the shares were not held in the transferees own right as they had no beneficial interest in them was rejected. It was still the practice in Scotland at that time for notice of trusts to be taken in company registers. But Lord President Clyde did not think that this made the relation between the registered trustee and the company in any way different from that which existed in the case of other shareholders. Applying the law as summarised by Lord President Inglis in Muir v City of Glasgow Bank (1878) 6 R 392, 399, he said that the trustee has the full right of property in the shares and consequently incurs personally the full liabilities of a shareholder: 1935 SC 81, 90. He then added these words, at pp 90 91: The matter is one in which it is most undesirable to have different interpretations, north and south of the Border, of an expression in common use in the articles of companies whose affairs are regulated by a legislative system which is intended to apply, generally, to both countries; and, whatever view might have been taken had the matter arisen rebus integris I think it is too late to open a question which (in England) authority and practice, and (in Scotland) practice conform to that authority, has closed. The expression in common use to which this passage refers is the provision in the companys articles that the qualification was the holding of a certain number of shares in the directors own name and right. But the underlying point which determined the issue was the effect of the entry of the transferees names on the register as members of the company, as to which the law on both sides of the Border is the same. The fact that the certificates on the back of the transfers disclosed that the transfers were purely nominal was insufficient to prevent shares that were actually held in trust from constituting a directors qualification. As Lord Morison said, at p 92, it was of no concern to the company whether the shareholder was the owner of the shares which he held, or whether third parties were the owners or had interests in them. These statements of the law have never been questioned, and I am in no doubt that the same reasoning must be applied in this case. The transaction which led to the entry of Bank of Scotland Branch Nominees Ltd on the register of members of Enviroco Limited in place of Asco Group plc was the agreement between Asco and the Bank of Scotland which led to the transfer to the Bank by Asco of all its shares in Enviroco in security of its obligations to the Bank. The terms of that agreement were set out in the Deed of Pledge, which makes it plain that as between the parties to it this was a transaction in security. But so far as Enviroco itself and all third parties are concerned, Asco must be taken to have transferred to the Bank absolutely and without any qualification all the rights of membership attached to the shares that were previously vested in Asco. It was deprived of those rights as soon as the entry of its name on the register was replaced by that of Nominees. The problem that the Charterpartys use of the statutory definition of subsidiary to define the word affiliate has given rise to is due to the fact that Scots law insists that, to create a security over shares, the holder of the security the mortgagee, in other words must be entered as a member in the register of shareholders of the company. This requirement can be traced back to the rule expressed in the Latin brocard traditionibus, non nudis pactis, transferuntur rerum dominia. Equitable transfers are not recognised in Scots law. A mere agreement will not do. Something more is needed to make the agreement effective in a question with third parties. As a general rule this consists of the taking of possession of the security subjects in a way that is appropriate to their nature and characteristics. Enviroco was a company incorporated in Scotland with its registered office in Aberdeen. The lex situs of its shares was Scotland: Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 WLR 387, per Staughton LJ at p 405. So Scots law governed what was required to create a security over them. The Bank was entitled to insist upon the delivery into its hands of an instrument of transfer, so that Nominees could be entered in the register of members of Enviroco in place of Asco. The fact that the way the law of Scotland works as to the granting of rights in security over shares in a Scottish company is different from the way security rights may be created over shares under English law must be taken together with its consequences. However much one might have wished that effect might be given in Scots law to the fact that the entry of the Nominees in the companys register as a member of the company although ex facie absolute was truly in security only, this is no longer if it ever was possible. I have not been able to trace any Scots authority that would support such an argument and, for the reasons referred to in Elliot v Mackie & Sons, I think that it would stand no chance of being successful. I agree with the judgment of Lord Collins. I add a short comment on the LORD RODGER effect of the form of security granted by Asco over its shares in Enviroco. As Lord Collins has explained, the critical question is whether, on 7 July 2002, when the fire occurred on the MV Far Service, Enviroco was a subsidiary of Asco plc (Asco) in terms of section 736(1)(c) of the Companies Act 1985 (the 1985 Act). For subsection (1)(c) to apply, Asco had to be a member of Enviroco on that date. Unquestionably, Asco had at one time been a member of Enviroco, but on 11 May 2000 Asco entered into a Deed of Pledge with the Bank of Scotland (the Bank) in order to secure certain obligations and liabilities of Asco to the Bank and certain other lenders. Although the agreement was described as a Deed of Pledge, the security which it created did not depend on the transfer of possession of the security subjects. Rather, in terms of clause 2(A), Asco pledged, charged and assigned all its shares in Enviroco to the Bank. By clause 3(A), until the relevant liabilities had been discharged in full, Asco had to register, or procure the registration of, the shares in the name of the Bank or its nominees and it had to procure that the Bank or its nominees remained the registered holder of the shares until the relevant liabilities had been so discharged. In short, the security was to be created by transferring title in the shares to the Banks nominees. This would give the Banks nominees a real right in the shares in the event of Ascos insolvency. Asco took the steps required by clause 3(B) of the Deed of Pledge, with the result that on 18 May 2000 the register of members of Enviroco was amended to remove the name of Asco and to add the name of the nominees of the Bank as a member. When this was done, Bank of Scotland Branch Nominees Ltd (Nominees) appeared on the register as a member, holding the shares which had previously been held by Asco when it was a member. Ex facie the register, therefore, Asco was no longer a member of Enviroco and had been replaced by Nominees. Of course, if and when Asco discharged its relevant liabilities, under clause 11 of the Deed, the Bank was required to transfer or cause its nominees to transfer all of the shares in Enviroco back to Asco. At that point which had not been reached by 7 July 2002 Asco would have been restored to the register of members and the register would have been altered to show Asco as holding the shares in Enviroco. As at 7 July 2002, however, Asco did not appear on the register of members of Enviroco and Nominees did. Prima facie, therefore, Enviroco was not a subsidiary of Asco in terms of section 736(1)(c) of the 1985 Act since Asco was not a member of Enviroco. I respectfully agree with Lord Collins analysis, at paras 4143, of section 736A and with his conclusion that nothing in that section expands the expression member in section 736(1)(c) or supplements, or in any way affects, the requirement that the parent should be a member of the subsidiary. It follows that the appeal must fail for the reasons which Lord Collins gives, unless it can be said that, since the purpose of Ascos transfer of the shares to Nominees was to make Nominees holder of the shares in security only, according to Scots law Asco was to be regarded as remaining, in substance, a member of Enviroco for all purposes except giving effect to the security. It is only right to point out that no such argument was advanced by counsel for Enviroco at the hearing of the appeal rightly, in my view. It is, of course, the case that, under clause 5(A) of the Deed of Pledge, for the most part Asco retained the right to exercise all the powers pertaining to the shares. But the mechanism adopted to achieve this confirms that the powers themselves were actually vested in Nominees. For instance, so far as the voting rights are concerned, the arrangement was that, until the security became enforceable, the Bank was to secure that Nominees appointed Asco to act as its proxy in relation to the voting of the shares. Asco was, in effect, to be constituted a procurator in rem suam for this purpose. This arrangement had to be made precisely because Asco was not a member of Enviroco and so could not vote at general meetings of the company; by contrast, Nominees was a member and so would be entitled to vote in respect of the shares. The arrangement ensured that Asco was able to exercise the right to vote, as agreed in clause 5(A), even though it was not a member of Enviroco. There do not appear to be any Scottish cases which discuss the position of a creditor to whom shares have been transferred in security. But in Gloag and Irvine, Law of Rights in Security Heritable and Moveable and Cautionary Obligations (1897), p 505, Mr Irvine pointed out that, by going upon the register, the security holder renders himself liable in all the obligations of a member of the company in terms of the articles of association. The security holder is registered individually, and individually he is liable. The author went on, at p 506, to refer to the well known decisions of the First Division and of the House of Lords as to the position of trustees who were members of the City of Glasgow Bank when it went into liquidation, due to the fraud of its directors, in October 1878. The liability of members was unlimited. Under reference to the decision of the House of Lords in Lumsden v Buchanan (1865) 4 Macq 950, Lord President Inglis summarised the relevant law in Muir v City of Glasgow Bank (1878) 6 R 392, 399: Persons becoming partners of a joint stock company, such as the Western Bank, and being registered as such, cannot escape from the full liabilities of partners either in a question with creditors of the company or in the way of relief to their copartners, by reason of the fact that they hold their stock of the company in trust for others, and are described as trustees in the register of partners and the other books and papers of the company. (At that time, under Scots law it was permissible in certain cases for entries on the register to describe members as trustees.) The decision of the First Division holding the trustees fully liable as contributories was upheld by the House of Lords: (1879) 6 R (HL) 21. Mr Irvine rightly saw that the same reasoning must apply to a security holder who is entered on the register of members of a company in respect of the shares transferred to him. The decisions in Muir and similar cases arising out of the liquidation of the City of Glasgow Bank brought ruin on many people who had merely held shares as trustees. The decisions therefore indicate with remorseless clarity that anyone who is entered on the register of a company as a member in any capacity is quite simply a member, with all the relevant rights and liabilities. That being so, on July 7 2002 Nominees was in all respects the relevant member of Enviroco holding the shares transferred to it. There is therefore no room for the view that, somehow, under Scots law Asco rather than Nominees should be regarded as the member of Enviroco because Asco had transferred its shares to Nominees in security only. Mr Irvine went on, Law of Rights in Security, pp 506 507, to identify a number of corresponding drawbacks for the debtor that result from granting a security which depends on transferring the shares to the security holder. The present case draws attention to another drawback for certain companies which grant such a security. In all the circumstances the appeal must fail for the reasons given by Lord Collins. LORD MANCE For the reasons given by Lord Collins, supplemented by those given by Lord Hope and Lord Rodger, I agree that this appeal should be dismissed. LORD CLARKE I was initially attracted by the appellants case. On any sensible view of the facts Enviroco was throughout a subsidiary of Asco. However, I have reluctantly concluded that there is no escape from the conclusion stated by Lord Hope at para 58 that, when Asco transferred its shares to Nominees, it must be taken to have transferred them absolutely and without any qualification of all the rights of membership attached to the shares that were previously vested in Asco. It was deprived of those rights as soon as the entry of its name on the register was replaced by that of Nominees. I am persuaded by Lord Hope and Lord Rodger that under Scots law, as Lord Rodger puts it at para 69, anyone who is entered on the register of a company is quite simply a member, with all the relevant rights and liabilities. Moreover, that is so, even where, as here the shares have been transferred to Nominees in security only. I also agree with Lord Collins for the reasons he gives that, try as one might, there is no basis upon which it is legally possible to reach any other conclusion as a matter of construction of sections 736 or 736A of the 1985 Act as amended. While I agree with him that it looks likely that the omission from those sections of a provision equivalent to section 258(3) was an error, I also agree with him that the correction of it would amount to impermissible judicial legislation. As Lord Collins explains at para 50, it could have been done in the 20 years or more since the 1989 Act and it could now be done by regulation. For the reasons given by Lord Collins, Lord Hope and Lord Rodger I too would dismiss the appeal. |
By this appeal Mr and Mrs Hancock seek to show that the redemption of the loan notes, issued to them in connection with the sale of their shares in their company, Blubeckers Ltd, fell outside the charge to capital gains tax (CGT) by virtue of the exemption in section 115 of the Taxation of Chargeable Gains Act 1992 (TCGA) for disposals of qualifying corporate bonds (QCBs). QCBs are essentially sterling only bonds (see TCGA, section 117). The noteworthy feature for present purposes of the redemption process was that, following the reorganisation, some of the loan notes issued as consideration were converted into QCBs. TCGA confers rollover relief on the disposal of securities as part of a reorganisation, ie it brings securities issued as consideration into charge for CGT purposes but defers the tax until their subsequent realisation. This is less favourable to the taxpayer than the exemption in TCGA, section 115. The roll over provisions constitute a carve out from the exemption in TCGA, section 115. They extend to certain conversions involving QCBs. The appellants seek to fall outside that carve out (and thus within the exemption in TCGA, section 115). The Court of Appeal (Lewison, Kitchin and Floyd LJJ) rejected the appellants claim: [2017] 1 WLR 4717. They considered that, although the wording of the carve out could be read literally in favour of the taxpayers, that result would be contrary to Parliaments intention. Therefore, the appellants claim for relief failed. Instead, they were entitled to rollover relief deferring tax to redemption. The legislative and factual framework in more detail For CGT purposes, there must be a relevant disposal of a relevant asset by persons chargeable to tax resulting in a gain which is chargeable for capital gains tax purposes. In this case, the appellants undoubtedly made a gain when they exchanged their shares in Blubeckers Ltd for redeemable loan notes (with a provision for an earn out under which further loan notes would, as in the event happened, be issued, dependent on the performance of the business). This transaction was a reorganisation under TCGA, section 126. Rollover relief was available under TCGA, section 127. The appellants structured the disposal of their Blubeckers shares in three stages. Stage 1 was the exchange of Blubeckers shares for Lionheart notes, which, being convertible into foreign currency, were not QCBs. At Stage 2, the terms of some of those notes were varied so that they became QCBs. At Stage 3, both sets of notes (QCBs and non QCBs) were, together and without distinction, converted into one series of secured discounted loan notes (SLNs), which were QCBs. The SLNs were subsequently redeemed for cash. It is said to be the result of the completion of Stages 2 and 3 that the appellants are not chargeable to CGT. The exact nominal amount of loan notes converted into QCBs does not matter in that, on the appellants argument, it was sufficient if the QCB element of the conversion was the smallest denomination (say 1). Rollover relief is available for reorganisations resulting in the issue of securities such as shares. TCGA, section 132, as amended by section 88(2) of the Finance Act 1997, by extending that relief to a conversion of securities, following a reorganisation, in or out of a QCB, equates the relief for such a conversion with that available for a reorganisation of share capital: 132(1) Sections 127 to 131 shall apply with any necessary adaptations in relation to the conversion of securities as they apply in relation to a reorganisation (that is to say, a reorganisation or reduction of a companys share capital). (3) For the purposes of this section and section 133 (a) conversion of securities includes any of the following, whether effected by a transaction or occurring in consequence of the operation of the terms of any security or of any debenture which is not a security, that is to say a conversion of securities of a company (i) into shares in the company, and (ia) a conversion of a security which is not a qualifying corporate bond into a security of the same company which is such a bond, and (ib) a conversion of a qualifying corporate bond into a security which is a security of the same company but is not such a bond, and (ii) a conversion at the option of the holder of the securities converted as an alternative to the redemption of those securities for cash, and (iii) any exchange of securities effected in pursuance of any enactment (including an enactment passed after this Act) which provides for the compulsory acquisition of any shares or securities and the issue of securities or other securities instead, (b) security includes any loan stock or similar security whether of the Government of the United Kingdom or of any other government, or of any public or local authority in the United Kingdom or elsewhere, or of any company, and whether secured or unsecured. The purpose of TCGA, sections 127 to 131, referred to in the opening line of section 132, is to provide that there is no disposal of shares at the time of the reorganisation, and for further matters, such as the allocation of the consideration between different classes of security, part disposals, unpaid calls and indexation. The key points to note in these provisions, which it is not necessary to set out, are (1) that a conversion as defined is to receive the same relief as a reorganisation, ie rollover relief, even if it involves QCBs whose disposal is otherwise outside the charge to CGT; and (2) that emphasis is given to the aggregation of the securities into a single asset: section 127 provides that both the original holding, taken as a single asset, which the holder disposes of under the reorganisation, and the consideration securities, also taken as a single asset, are treated as the same asset with the same acquisition date as the original holding. We are not concerned with sections 133 or 134. To ensure that the conversion of, or into, QCBs on a reorganisation is within the charge to CGT on the same basis as the issue of other securities on a reorganisation, ie on the basis that the holder is entitled to rollover relief, section 116(1) provides that the disposal will result in rollover relief where sections 127 to 130 would apply, and (these are the critical words which this court must construe): (b) [Limb A] either the original shares would consist of or include a qualifying corporate bond and the new holding would not, or [Limb B] the original shares would not and the new holding would consist of or include such a bond; (words in square brackets added) Floyd LJ, giving the first judgment in the Court of Appeal, called the first possible scenario in section 116(1)(b), Limb A, and the alternative scenario, Limb B. I will do the same. The effect of section 116(1)(b) is that, where the new holding following conversion includes QCBs, Limb A cannot apply. The question here is whether Limb B applies: the appellants contend that Limb B also cannot apply because the (aggregate) original holding prior to conversion included QCBs. The reasoning of the Upper Tribunal and the Court of Appeal The Upper Tribunal, allowing an appeal from the First tier Tribunal, held that the conversion of securities at the third stage comprised separate transactions in relation to each share converted. As the First tier Tribunal had pointed out, the relief under section 116 for QCBs had been intended to promote the market in sterling bonds and so the interpretation favoured by the appellants would go well beyond that objective. The Upper Tribunal also noted that in TCGA, section 132 Parliament had defined conversion in relation to transactions involving QCBs separately in relation to each security (see para 4 above). The Upper Tribunal also rejected HMRCs argument based on WT Ramsay Ltd v Inland Revenue Comrs [1982] AC 300, but we are not concerned with that as HMRC has not appealed against that ruling. The appellants appealed to the Court of Appeal. They repeated their argument that Stage 3 constituted a single conversion of the loan notes (including QCBs) into QCBs, and so neither limb of TCGA, section 116(1)(b) applied. HMRC responded that Stage 3 was not one transaction but two: the first transaction (the conversion of the non QCBs into QCBs) fell within Limb A and the second (the conversion of the QCBs into SLNs, which were also QCBs) was outside section 116(1)(b), but (as appears from para 12 of Floyd LJs judgment) the appellants accepted that the variation of the terms of these loan notes at Stage 2 was a conversion which carried rollover relief so that, when those bonds were redeemed, a charge to CGT on the held over gain on these bonds was triggered. Seeking guidance as to the correct approach on statutory interpretation Floyd LJ (at para 45 of his judgment) cited, among other authorities, a passage from the judgment of Neuberger J in Jenks v Dickinson [1997] STC 853, concerning QCBs and the predecessor of TCGA. That case raised the issue whether a provision which extended the meaning of QCBs with retrospective effect relieved the taxpayer of an intervening accrued tax charge on the sale of shares into which the securities which had retrospectively become QCBs had been converted. Neuberger J held that it did not. In the passage cited by Floyd LJ, Neuberger J held that the taxpayers construction was: contradictory to the evident purpose of the relevant statutory provisions, viewed as a whole, viz that capital gains made on [QCBs] should be exempt from tax, whereas capital gains made on shares should be subject to tax. In the circumstances, principle, common sense, and authority show that the court is entitled, and indeed bound, to . adopt some other possible meaning if it exists (to quote Lord Reid: see [Luke v Inland Revenue Comrs] [1963] AC 557, 579). Floyd LJ pointed out that section 132 did not give as an example of a (single) conversion a conversion of different classes of bonds (para 65). The process of applying sections 127 to 131 as required by the opening words of section 132 allowed for necessary adaptations (para 63), and so there could be aggregation of securities for the purposes of some conversions but not others. The effect of the appellants argument would be that the non QCBs would escape the charge to CGT. This was contradictory to the evident purpose of the statutory scheme. The conversion of the two classes of loan notes could and should therefore be treated separately (para 68). The words or include (providing the option of a single conversion) did not mean that there could be such a conversion (para 69). The statutory fiction in section 127 had to be restricted to avoid an unintended result (para 70). The additional words or include were an isolated drafting anomaly: the appellants argument would produce an even greater anomaly (para 71). The wording of section 116(3) and (4) which use the word constitute was consistent with the conclusion that mixed conversions were not within section 116(1)(b) (para 73). Lewison LJ agreed. He gave additional reasons. He placed greater weight on the purposive approach holding that necessary adaptations could include adaptations necessary to give effect to the policy of the statutory scheme (para 82). He too applied Jenks (para 84) and Luke v Inland Revenue Comrs (para 88). This enabled him to disregard the words or include in section 116 in the circumstances of this case. Kitchin LJ agreed with both judgments. Submissions on this appeal Mr Michael Sherry, for the appellants, repeats the arguments on interpretation that were considered by the Court of Appeal in their judgment. He compares section 116 with section 135, which I have not mentioned above as it deals with another form of reorganisation to which Parliament has also directed that sections 127 to 131 should apply with necessary adaptations, so that the fact that it may favour the single asset approach would not be determinative in relation to section 116. A new factor on which he relies is the absence of any statutory provision for apportioning consideration where, as here, the QCBs and non QCBs have been converted together without any allocation of the price. But that is a matter of mechanics and no doubt the allocation could be established by evidence. Mr Sherry emphasises the principle against taxation without clear words (the clear words principle), which can be found in the speech of Lord Wilberforce in Ramsay [1982] AC 300, 323: A subject is only to be taxed upon clear words, not upon intendment or upon the equity of an Act. Any taxing Act of Parliament is to be construed in accordance with this principle. What are clear words is to be ascertained upon normal principles: these do not confine the courts to literal interpretation. There may, indeed should, be considered the context and scheme of the relevant Act as a whole, and its purpose may, indeed should, be regarded: see Inland Revenue Comrs v Wesleyan and General Assurance Society (1946) 30 TC 11, 16 per Lord Greene MR and: Mangin v Inland Revenue Comr [1971] AC 739, 746 per Lord Donovan. The relevant Act in these cases is the Finance Act 1965, the purpose of which is to impose a tax on gains less allowable losses, arising from disposals. So, submits Mr Sherry, it goes too far to treat the transaction in issue as two conversions. There was here a single conversion and that was the legal nature of what has happened. But the answer to his reliance on the passage set out above from the speech of Lord Wilberforce in Ramsay is that the clear words principle is not infringed if, fairly and properly construed, no doubt remains as to the meaning of section 116(1)(b). Moreover, there is no question of re characterising the parties transaction. It is simply a matter of deciding what is a conversion for the purposes of the statutory scheme. Mr Michael Gibbon QC, for HMRC, submits that the Court of Appeals interpretation is principled and uses a conventional approach. The statutory scheme as so construed is fair to taxpayers generally and coherent. Discussion It is common ground that, if the conversion at Stage 3 involved separate conversions of the QCBs and the non QCBs, the appeal must fail. The question whether there was a single conversion or two separate conversions must be a question of applying the provisions of TCGA to the facts. The answer is not mandated in the appellants favour by the fact that they utilised a single transaction. Plainly, section 116(1)(b) contemplates the possibility of a single transaction which involves a pre conversion holding of both QCBs and non QCBs, and this, coupled with the fact that the Court of Appeals interpretation renders the words or include appearing in section 116(1)(b) otiose are powerful arguments in support of the appellants construction. However, the appellants interpretation result would be inexplicable in terms of the policy expressed in these provisions, which is to enable all relevant reorganisations to benefit from the same rollover relief. Taxpayers could avoid those provisions with extreme ease if the appellants are right. There would be nothing to prevent them from using the occasion of a minimal conversion (say 1 nominal QCB) following a reorganisation and obtaining relief from CGT which was plainly contrary to and inconsistent with that which was intended to apply to a conversion connected to a reorganisation. In reality, by looking to the fiscal policy behind the scheme, both Floyd and Lewison LJJ applied a purposive approach. I need not say more about the purposive approach in general, save that Lewison LJ seemed to draw a distinction between the policy of TCGA in its entirety and that part of the Act which deals with corporate reorganisations (para 82). This is not easy to follow as the policy of the Act does not materially add to the policy of the relevant sections for present purposes. Floyd and Lewison LJJ did not give any meaning to the words or include in section 116(1)(b), but as I see it this was appropriate because in section 132(3), as the Upper Tribunal pointed out, it is clear that the intention of Parliament was that each security converted into a QCB should be viewed as a separate conversion (which amounts to the same thing as regarding the conversion in this case as consisting of two conversions, one of QCBs and one of non QCBs). Moreover, it is not an objection that section 127 contemplates a single asset (see para 5 above), because Parliament has required sections 127 to 131 to be applied with necessary adaptations. In those circumstances the clear words principle is observed in the present case. Floyd and Lewison LJJ also relied on the principle in Luke v Inland Revenue Comrs [1963] AC 557. This enables the court, when interpreting a statute, to adopt (my words) a strained interpretation in place of one which would be contrary to the clear intention of Parliament. This principle in Luke can apply even to a tax statute. The clear words principle relied on by Mr Sherry does not, as Lord Wilberforce pointed out, confine the courts to a literal interpretation. However, the circumstances in which the principle in Luke can be applied must be limited, for example, to those where there is not simply some inconsistency with evident Parliamentary intention but some clear contradiction with it. Moreover, the intention of Parliament must be clearly found on the wording of the legislation. The particular issue in Luke illustrates the nature of this principle: on the ordinary meaning of the Income Tax Act 1952, section 161, enacted to prevent tax avoidance by employers meeting expenses for their employees, a director became liable to be taxed as part of his remuneration on the cost of repairs executed by his employer on a house which he had leased from his employer at a fair rent when the repairs were those for which the landlord would normally be responsible (and had agreed to be responsible). This was clearly an unreasonable result, and the intention to produce such a result could not be imputed to Parliament. The House by a majority of 3:2 held that the expenditure was within an exemption for expenditure by a company on additions to its own assets, although this provision had to be read in a somewhat broad brush way to produce that result. At p 578, Lord Reid called it any port in a storm. The principle was used in that case to prevent the unreasonable imposition of a tax charge. In this case it is invoked in like circumstances in favour of HMRC to prevent the imputation to Parliament of an intention to produce an irrational result. It has not been argued that it can only apply in favour of the taxpayer and in Jenks (above, para 10) Neuberger J applied it to the disbenefit of the taxpayer. Nothing in this judgment detracts from the principle in Luke but in my judgment, it is unnecessary to consider its application in this case because, as explained in para 23 above, the construction of the relevant provisions is clear without resort to it. In summary, using Lewison LJs mixed but vivid metaphor ([2017] 1 WLR 4717, para 89), on the true interpretation of TCGA section 116(1)(b), the potential gain within the non QCBs was frozen on conversion and did not disappear in a puff of smoke. I would dismiss this appeal. |
This is a remarkable case in more than one respect. The appeal depends upon whether the Court is bound to stay action 2006 Folio 815 (the 2006 proceedings) under Article 27 of Regulation 44/2001 of the Council of the European Union (the Regulation) and, if not, whether it should do so under Article 28. Before Burton J (the judge), the respondents expressly disclaimed any intention to rely upon Article 27 but relied upon Article 28 in support of a submission that the court should stay the 2006 proceedings in favour of proceedings in Greece. The judge refused to grant a stay and gave summary judgment for the appellants against the respondents. The judge granted the respondents permission to appeal to the Court of Appeal on various grounds, including a ground based on Article 27. The Court of Appeal (Longmore, Toulson and Rimer LJJ) held that it was bound to stay the action under Article 27. It also gave some consideration to Article 28 but held that it was not necessary to reach a final conclusion in that regard because of its decision under Article 27. It declined to consider the issues relevant to summary judgment on the ground that, if there was to be a stay, those issues should be determined by the courts in Greece. The facts and the 2006 proceedings I can take the relevant events from the judgment of Longmore LJ in the Court of Appeal. He in turn took them from the judgment of the judge. On 3 May 2006 the vessel Alexandros T sank and became a total loss 300 miles south of Port Elizabeth, with considerable loss of life. Her owners were Starlight Shipping Company (Starlight). They made a claim against their insurers, who denied liability on the basis that the vessel was unseaworthy with the privity of the assured, namely Starlight. The insurers also said that Starlight had failed properly to report and repair damage to the vessel in accordance with Class Rules. Starlight, through their solicitors Messrs Ince & Co, made a number of serious allegations against the insurers which fell into two categories, as summarised by Longmore LJ at para 4: (1) allegations of misconduct by the insurers and their underwriters involving alleged tampering with and bribing of witnesses, in particular the bosun, a Mr Miranda, to give false evidence, coupled with other allegations of spreading false and malicious rumours (described for some reason as malicious scuttlebutt) against Starlight in the course of purported investigation of their claims; and (2) deliberate failure by the insurers to pay up under the policy, said to have had consequential financial impact upon Starlight, and to have led to substantial recoverable loss and damage. The insurers also relied upon material non disclosure. Those allegations were made before the issue of proceedings and, in particular, in a letter dated 18 July 2006 from Ince & Co to the insurers solicitors, who were Hill Dickinson LLP, then Hill Taylor Dickinson, whom I will together call HD. On 15 August 2006 Starlight issued the 2006 proceedings in the Commercial Court against various insurers. The first four defendants have been described as the Company Market Insurers (CMI) and the fifth to seventh defendants as the Lloyds Market Insurers (LMI). The policies issued by both the CMI and the LMI contained exclusive jurisdiction clauses. They provided for English law and each party expressly agreed to submit to the exclusive jurisdiction of the Courts of England and Wales. Overseas Marine Enterprises Inc (OME) were identified in the policies as managers. In paras 5 to 8 of his judgment Longmore LJ spelled out in some detail issues between the parties in the 2006 proceedings. It is plain that the points raised by Ince & Co to which I have referred were both pleaded and central to the issues between the parties in those proceedings. Thus, in para 7 Longmore LJ referred to a witness statement in which Mr Crampton of Lax & Co, who were now acting for Starlight, asserted that the allegations made by the insurers in defence of the claim were based on false evidence which they had obtained from the bosun. He also relied upon significant payments said to have been made to the bosun on behalf of the insurers in this connection. In addition, a witness statement was introduced in support of a proposed amendment of the claim form alleging that Starlight had sustained losses beyond the measure of indemnity in the relevant policy. It was alleged that, but for the failure of the insurers to pay under the policy, Starlight would have purchased a replacement vessel and had lost between US$ 45 million and US$ 47.7 million by way of increased capital cost and chartering losses. However, on 14 December 2007, Tomlinson J refused to allow the amendment on the basis of the decision of the Court of Appeal in Sprung v Royal Insurance [1999] Lloyds Rep IR 111, approving the decision in The Italia Express (no. 2) [1992] 2 Lloyds Rep 281. As Longmore LJ explained in para 1, as a matter of English law, an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim.1 The law deems interest on sums due under a policy to be adequate compensation for late payment; this is so, even if an insurer deliberately 1 Toulson LJ noted at paras 74 and 75 that the present state of English law was criticised by the Law Commission and the Scottish Law Commission in para 2.87 of a joint consultation paper on Insurance Law; Post Contract Duties (LCCP201/SLCDP152) published on 20 December 2011. The Commissions have provisionally proposed that the law should be reformed. withholds sums which he knows to be due under a policy. If parties agree that English law is to apply to a policy of insurance, this principle is part of what they have agreed. English law, moreover, gives no separate contractual remedy to an insured who complains that an insurer has misconducted himself before settling a claim. In either case the remedy of the insured is to sue the insurer and, if no settlement is forthcoming, proceed to judgment. The trial was fixed for 14 January 2008. The settlements On 13 December 2007, which was the day before the hearing before Tomlinson J referred to above, the 2006 proceedings had been settled between Starlight and OME and the LMI for 100% of the claim, but without interest and costs, in full and final satisfaction of the claim. It was a term of the settlement agreement that Starlight would obtain a stay by way of a Tomlin Order, and a Tomlin Order by consent between Starlight and the LMI was accordingly made on 20 December 2007, backdated to 14 December, in these terms: Save for the purposes of carrying into effect the terms agreed between the Claimant and the Fifth to Seventh Defendants, all further proceedings between the Claimant and the Fifth to Seventh Defendants shall be stayed with effect from 14 December 2007 or such earlier date as may be agreed between the parties or otherwise ordered hereafter. A similar settlement agreement dated 3 January 2008 was made between Starlight and OME and the CMI and a similar Tomlin Order was made on 7 January 2008, but with immediate effect. In each settlement agreement the Assured were defined as being [OME] and Starlight as Managers and/or Owners and/or Associated and/or Affiliated Companies for their respective right and interest in the ship Alexandros T. The CMI settlement agreement then provided: 1. Each Underwriter agrees to pay on or before 18 January 2008 their due proportions of the sum of US$16m being 100% of their due proportions of the sum insured being 50% of the US$32m without interest or costs. 2. The Assured and Claimant agree to accept the EURO equivalent of each Underwriters due proportion of US$16m in full and final settlement of all and any claims it may have under Policy No 302/CF 000220Z against the Underwriters in relation to the loss of Alexandros T, including all claims for interest and costs (including in respect of all costs orders made to date in the proceedings) but without effect to any other insurance policy in which each Underwriter may be involved. 3. The Assured and Claimant agree to Indemnify each Underwriter against any claim that might be brought against it by any of the Assureds or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under Policy No 302/CF000220Z. 4. Following the signing of this agreement, and in consideration of the promises herein, the Claimant and the Underwriters will apply to stay the Proceedings as against the Underwriters, the Proceedings to be stayed for all purposes save for the purposes [of] carrying the terms agreed herein into effect, such stay to have effect from the first obtainable date after 27 December 2007 5. Following the due and proper payment by the Underwriters of the amount specified in paragraph 1 above, the Assured and Claimant and the Underwriters agree to file a consent order dismissing the Proceedings, with no order as to costs. 6. This agreement is subject to English law and to the exclusive jurisdiction of the High Court in London. 2. The underwriters agree to pay on or before 24 December 2007 the sum of US$8M being 100% of their due proportions of the sum insured being 25% of US$32m without interest or costs 3. The Assured and claimant agree to accept the EURO equivalent of US$8M in full and final settlement of all and any claims it may have under Policy No against the Underwriters signing below in relation to the loss of Alexandros T 4. The Assured and Claimant agree to indemnify the underwriters signing below against any claim that might be brought against them by any of the Assureds or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under Policy The LMI settlement agreement provided in similar but not identical terms: 5. This agreement is subject to English law and the jurisdiction of the High Court of London. The Greek proceedings After setting out the terms of the settlement agreements, Longmore LJ wryly observed at the end of para 12 of his judgment that one might have expected that to be that, but it was not to be. He described what then happened in paras 13 to 15. More than three years later, in April 2011, nine sets of Greek proceedings, in materially identical form, (Greece 1), were issued by Starlight, by OME, by their co assureds under an associated Fleet Policy and by individual officers of those companies, against the LMI and the CMI, some of their employees or underwriters, and HD and some of their partners and employees (the HD defendants). The claims are for compensation for loss of hire and loss of opportunity by Starlight totalling approximately US$ 150 million and for pecuniary compensation due to moral damage amounting to 1 million. The claims also include similarly substantial claims by the other claimants in respect of alleged acts, all done unlawfully and in breach of good faith for the alleged purpose of avoiding the performance by the defendants of their legal obligations. All the claims rely upon breaches of the Greek Civil and Criminal Code. However the factual allegations, which Longmore LJ noted had been said by the judge to be entirely familiar, include the allegation that the appellants were responsible for using false affidavits of witnesses (primarily Mr Miranda) with intention to harm the claimants, described thus by Mr Crampton in a statement summarising the Greek claims: The underwriters pursued this criminal effect by intentionally fabricating false evidence with the purpose that the underwriters (who were responsible for the payment of insurance indemnity for the vessel) avoid paying this insurance indemnity, contrary to their contractual obligations and their legal obligations and in particular contrary to the provisions of the insurance contract, providing for the timely payment of the insurance indemnity. They also include the claim that the appellants were asserting and disseminating false information to third parties, although they were aware of their falsity, damaging the claimants reputation and credibility with the purpose that the underwriters (who were responsible for the payments of the insurance indemnity for the vessel) avoid paying the insurance indemnity, contrary to their contractual obligation and their legal obligation and in particular contrary to provisions of the insurance contract providing for the timely payment of the insurance indemnity Mr Crampton then turned to what he called the [i]ntentional fabrication of false evidence for defrauding the English court and [t]he moral instigation alternatively complicity of the underwriters to perjury and on the defrauding of the court by the underwriters. He summarised the position in this way in paragraph 20 of his witness statement: The essence of the complaint against the Defendants in the Greek proceedings concerns the allegation that the Defendants obtained false evidence in Greece from the bosun of the Alexandros T, Aljess Miranda This evidence was then deployed in these proceedings in England and also in the Greek proceedings. There is a substantial section of the Greek pleadings relating to the financial consequences of the failure by the insurers to comply with their obligations under the policy and the way in which they allegedly handled the investigations. In a further set of proceedings, known as Greece 2, two additional heads of loss are claimed by Starlight and OME, arising out of substantially the same allegations. As Longmore LJ put it in para 15, in apparent recognition of the problem raised by the fact that such claims had either not been brought in England or had been ruled out as a matter of English law by Tomlinson J, Mr Crampton, in paragraph 27 of his witness statement, explained that the claims are advanced in two ways in the Greek pleadings: first, that as a result of the underwriters intention to avoid payment of the insurance indemnity, eventually resulting in late payment of the policy proceeds, the claimants missed the opportunity to use the policy proceeds to invest in three vessels (not just the one referred to in the 2006 proceedings); and, secondly, that, as a result of the defendants actions in acquiring the false evidence of Mr Miranda, his clients were not able to insure the vessels and without insurance they would not have been able to trade them and could not purchase them. He stated that his clients would amend their pleadings prior to the hearing of the disputes in Greece so as to clarify this head of claim, such that no claim is made in respect of the late payment of the policy proceeds. The expert evidence from the defendants is that it is not possible to amend the pleadings in the Greek courts, but, treating the proposed draft amendment, which he exhibited, as a clarification, it did not seem to the judge that it in any way cured the defect, if defect there was. It is further said that the insurance of the three potential new vessels was rendered impossible, since all the London insurers refused to quote for the vessels because of the refusal of the defendant underwriters to quote for them and because of the defamatory accusations spread as to the unseaworthiness of the Alexandros T. All these allegations arise out of the alleged manner in which the defendants handled Starlight's claim in respect of the Alexandros T, and, even though the consequences and the consequential losses have expanded, and the claim for moral damages has been included, and although it seems that Starlight now rely on an expanded affidavit of Mr Miranda, the allegations, even though put into the context of Greek law, were said by the judge to be materially identical to those made prior to the settlement agreement. The acts complained of are all said to have constituted delicts under Greek law akin to the torts of defamation and malicious falsehood under English law. The present position Since the issue of the Greek proceedings, as Longmore LJ explained in para 16 (and the judge at his para 14), the insurers have taken further steps and brought further proceedings in England as follows. By applications issued in the 2006 proceedings on 25 July and 3 August 2011, the CMI and the LMI respectively sought, pursuant to the Tomlin Orders (if necessary after lifting the stay imposed by them) summary relief pursuant to CPR Part 24 by way of declarations and damages against Starlight. The LMI, because permission was given to them to join OME as a third party, also sought summary relief pursuant to Part 24 against OME (which filed an acknowledgment of service and a defence) to enforce the LMI settlement agreement, to which it also was a party. In addition, fresh proceedings (2011 Folio 702) were commenced by the LMI, without prejudice to their case that sufficient relief could and would be obtained in the 2006 proceedings, against both Starlight and OME, and, after an acknowledgment of service and defence were filed, an application was made under Part 24 for similar relief to the claim in the 2006 proceedings. The LMI also brought fresh proceedings (2011 Folio 1043) against Starlight's co assured and, again after acknowledgments of service and defence had been filed, sought declaratory relief and damages for breach of the exclusive jurisdiction clause in their insurance policies, by virtue of the issue of the Greek proceedings by those co assured. Also in fresh proceedings (2011 Folio 894), the CMI brought claims against OME and the same co assured in respect of similar claims for breach of the exclusive jurisdiction clause in the policy, and in respect of OME by reference to breach of the terms of the settlement agreement. Judgment in default was entered by the CMI against all those defendants on 26 October (amended on 14 November) 2011. Those proceedings are not the subject of this appeal and no issue therefore currently arises with respect to them. Finally, and by separate application, the HD defendants were joined as defendants in the 2006 proceedings so that, in due course, they too might be able In summary, the claims made in the various proceedings are these. to claim relief by seeking declaratory relief within the original proceedings. Starlight and their associates applied to stay both the 2006 proceedings in their current form and 2011 Folios 702 and 1043. (a) The 2006 proceedings. (1) The CMI claim against Starlight and, through Part 20 proceedings, against OME (i) a declaration that the Greek claims fall within the terms of the release in the CMI settlement agreement; (ii) a declaration that the bringing of the Greek claims was a breach of the release in the settlement agreement; (iii) damages for breach of the release in the settlement agreement; (iv) a declaration that the bringing of the Greek claims was a breach of the jurisdiction clauses in the settlement agreement and the policies; (v) damages for breach of the jurisdiction clauses in the policies and CMI settlement agreement; and (vi) an indemnity under clause 3 of that agreement in respect of claims brought by Starlight and/or its associated companies in the various Greek proceedings; (2) the LMI claim against Starlight (i) declarations that the LMI settlement agreement settles any claim against them by Starlight in respect of the loss of the Alexandros T and covers Starlights claims in the Greek proceedings (para 3); (ii) a declaration that Starlight is in breach of that agreement in bringing the Greek proceedings; (iii) damages for breach of the settlement agreement; and (iv) a declaration that the agreement entitles the LMI to an indemnity against Starlight in respect of the matters covered by the indemnity, which includes all claims by Starlight and its associated companies in the Greek proceedings; and (3) the LMI claims against OME by Part 20 proceedings: (i) like relief to that which the LMI claim against Starlight, as summarised above; and possibly (ii) damages for breach of the exclusive jurisdiction clause in the policy, although this claim is not repeated among the prayers. (b) Action 2011 Folio 702. The LMI claim against Starlight and OME: (i) declarations that the LMI settlement agreement settles any claim against them by Starlight and/or OME in respect of the loss of the Alexandros T and covers Starlights and/or OMEs claims in the Greek proceedings; (ii) damages for breach of that agreement; (iii) damages for breach of the jurisdiction clause in the policy; and (iv) damages for breach of the jurisdiction clause in the settlement agreement. (c) Action 2011 Folio 1043. The LMI claim against five of Starlights co assureds for breach of their policy jurisdiction clauses. The decisions of the judge and the Court of Appeal The insurers sought to enforce the settlement agreements referred to in the Tomlin Orders and, in a judgment handed down on 19 December 2011, having refused a stay under Article 28, the judge held that they were entitled to summary judgment for (inter alia) a declaration that the matters sought to be raised in Greece were part of the settlement of the claim and that Starlight (and OME) are bound to indemnify the insurers against any costs incurred and any sums that may be adjudged against them in the Greek proceedings. As stated above, the Court of Appeal held that it was bound to stay the 2006 proceedings and 2011 Folio 702 and 1043 under Article 27, made no final determination of the position under Article 28 and declined to consider the issues of summary judgment. The Court of Appeal also held that it was not too late for the respondents to rely upon Article 27 or Article 28. The issues In this Court the appellants challenge the correctness of the Court of Appeals conclusion under Article 27 and, on the respondents cross appeal, submit that the judge was correct to refuse a stay under Article 28. If the appellants succeed under both articles, the case will have to be remitted to the Court of Appeal to consider the respondents appeal from the summary judgment granted by the judge. Article 27 The questions for decision under Article 27 are whether, in the events which happened, the Court of Appeal was wrong to hold that it was not too late for the respondents to rely upon Article 27, whether the proceedings in Greece and the proceedings in England involve the same cause of action, whether they are between the same parties and which court was the court first seised. For reasons which will appear, I will defer consideration of the too late point until after consideration of the other issues. Article 27 must be construed in its context. The immediate context of Articles 27 and 28 is that they form part of Section 9 of Chapter II of the Regulation, which must be read in the light of Recitals 2 and 15 of the preamble. It is apparent from Recital 2 that the Regulation aims, in the interests of the proper functioning of the internal market, to put in place: Provisions to unify the rules of conflict of jurisdiction in civil and commercial matters and to simplify the formalities with a view to rapid and simple recognition and enforcement of judgments from Member States bound by this Regulation. Recital 15 provides: In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States. There must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending. For the purposes of this Regulation that time should be defined autonomously. The mechanism referred to in Recital 15 is provided by Section 9 of Chapter II of the Regulation, which includes Articles 27 and 28: Section 9 Lis pendens related actions Article 27 1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court. Article 28 1. Where related actions are pending in the courts of different member states, any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. 3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Article 29 Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court. Article 30 For the purposes of this Section, a court shall be deemed to be seised: 1. at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant, or 2. if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court." The Regulation is the successor to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (the Brussels Convention), in which the equivalent provisions to Articles 27 and 28 were Articles 21 and 22 respectively. The Court of Justice of the European Union (the CJEU) has held that the principles developed in its case law with regard to Articles 21 and 22 of the Brussels Convention apply equally to Articles 27 and 28 of the Regulation: see Folien Fischer AG v Ritrama SpA (Case C 133/11) [2013] QB 523 at paras 31 and 32. The CJEU was of course previously the European Court of Justice (ECJ). Although some of the decisions to which I refer were made by the ECJ, for simplicity I will refer to all the European decisions as those of the CJEU. The CJEU has laid down a number of general principles which are of some importance. They include the important principle that a court in a Member State must not grant an anti suit injunction to restrain the bringing or continuing of proceedings in another Member State, whether to restrain an abuse of process or to restrain proceedings brought or continued in breach of an exclusive jurisdiction clause: see eg Turner v Grovit (Case C 159/02) [2005] 1 AC 101 and West Tankers Inc v Allianz SpA (The Front Comor) (Case C 185/07) [2009] 1 AC 1138. They also include the following, with specific reference to Articles 27 and First, the purpose of Article 27 is to prevent the courts of two Member States from giving inconsistent judgments and to preclude, so far as possible, the non recognition of a judgment on the ground that it is irreconcilable with a judgment given by the court of another Member State: Gubisch Maschinenfabrik KG v Palumbo (Case C 144/86) [1987] ECR 4861 at para 8. Second, the objective of Article 28 is to improve co ordination of the exercise of judicial functions within the European Union and to avoid conflicting and contradictory decisions, thus facilitating the proper administration of justice: see eg The Tatry (Case C 406/92) [1999] QB 515 at paras 32, 52 and 55 and Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32, per Lord Saville at 39F H. The CMI claims: same causes of action? 28. It is convenient to consider first the position of the CMI claims. The first specific question is whether the 2006 proceedings involve the same cause or causes of action as the Greek proceedings, by which I mean Greece 1 and Greece 2. The principles of EU law which are relevant to the determination of this question are in my opinion clear. They have been considered in a number of cases in the CJEU and are essentially as submitted on behalf of the CMI. They may be summarised in this way. i) ii) iii) iv) The phrase "same cause of action" in Article 27 has an independent and autonomous meaning as a matter of European law; it is therefore not to be interpreted according to the criteria of national law: see Gubisch at para 11. In order for proceedings to involve the same cause of action they must have "le mme objet et la mme cause". This expression derives from the French version of the text. It is not reflected expressly in the English or German texts but the CJEU has held that it applies generally: see Gubisch at para 14, The Tatry at para 38 and Underwriting Members of Lloyds Syndicate 980 v Sinco SA [2009] Lloyd's Rep IR 365, per Beatson J at para 24. Identity of cause means that the proceedings in each jurisdiction must have the same facts and rules of law relied upon as the basis for the action: see The Tatry at para 39. As Cooke J correctly stated in JP Morgan Europe Ltd v Primacom AG [2005] 2 Lloyd's Rep 665 at para 42, The expression 'legal rule' or 'rule of law' appears to mean the juridical basis upon which arguments as to the facts will take place so that, in investigating 'cause' the court looks to the basic facts (whether in dispute or not) and the basic claimed rights and obligations of the parties to see if there is co incidence between them in the actions in different countries, making due allowance for the specific form that proceedings may take in one national court with different classifications of rights and obligations from those in a different national court. Identity of objet means that the proceedings in each jurisdiction must have the same end in view: see The Tatry at para 41, Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV (Case C 111/01) [2003] ECR I 4207 at para 25, Primacom at para 42 and Sinco at para 24. v) The assessment of identity of cause and identity of object is to be made by reference only to the claims in each action and not to the defences to those claims: see Gantner at paras 24 32, where the CJEU said this in relation to Article 21 of the Brussels Convention: . in order to determine whether two claims brought between the same parties before the courts of different Contracting States have the same subject matter, account should be taken only of the claims of the respective applicants, to the exclusion of the defence submissions raised by a defendant. See also to similar effect Kolden Holdings Ltd v Rodette Commerce Ltd [2008] 1 Lloyd's Rep 434, per Lawrence Collins LJ at para 93 and Research in Motion UK Ltd v Visto Corporation [2008] 2 All ER (Comm) 560, per Mummery LJ at para 36. vi) It follows that Article 27 is not engaged merely by virtue of the fact that common issues might arise in both sets of proceedings. I would accept the submission on behalf of the CMI that this is an important point of distinction between Articles 27 and 28. Under Article 28 it is actions rather than claims that are compared in order to determine whether they are related. vii) After discussing Gubisch, The Tatry, Sarrio, The Happy Fellow [1998] 1 Lloyds Rep 13 and Haji Ioannou v Frangos [1999] 2 Lloyds Rep 337, Rix J summarised the position clearly and, in my opinion, accurately in Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 Lloyds Rep 692 at 697: It would appear from these five cases, of which the first two were in the European Court of Justice, and the latter three in the domestic Courts of England, that, broadly speaking, the triple requirement of same parties, same cause and same objet entails that it is only in relatively straightforward situations that art 21 bites, and, it may be said, is intended to bite. After all, art 22 is available, with its more flexible discretionary power to stay, in the case of related proceedings which need not involve the triple requirement of art 21. There is no need, therefore, as it seems to me, to strain to fit a case into art 21. The European Court, when speaking in Gubisch (at para 8) of the purpose, in the interests of the proper administration of justice within the European Community, of preventing parallel proceedings in different jurisdictions and of avoiding in so far as it is possible and from the outset the possibility of irreconcilable decisions, was addressing arts 21 and 22 together, rather than art 21 by itself. Thus a prime example of a case within art 21 is of course where party A brings the same claim against party B in two jurisdictions. Such a case raises no problem. More commonly, perhaps, the same dispute is raised in two jurisdictions when party A sues party B to assert liability in one jurisdiction, and party B sues party A in another jurisdiction to deny liability, or vice versa. In such situations, the respective claims of parties A and B naturally differ, but the issue between them is essentially the same. The two claims are essentially mirror images of one another. Gubisch and The [Tatry] are good examples of this occurrence. On the other hand, Sarrio v KIA is a case where the same claimant was suing the same defendant on different bases giving rise to different issues and different financial consequences, and where liability on one claim did not involve liability (or non liability) on the other. Haji Ioannou v Frangos illustrates the situation where even though the cause is the same, and even though there is some overlap in the claims and issues, nevertheless different claims, there the proprietary claim to trace, may raise sufficiently different issues of sufficient importance in the overall litigation for it to be concluded that the objet differs. The authority of The Happy Fellow at first instance may be somewhat shaken by the reservations expressed by Lord Justice Saville on appeal, but it too may be said to illustrate the process of analysing the claims and issues in the respective proceedings to identify whether they are the same. Where, for instance, there is no dispute over a shipowners right to limit should he be found liable (a separate question, which need not even be resolved at the time when a limitation action is commenced or a decree given), I do not for myself see why it should be held that the liability action and the limitation action involve the same cause of action for the purposes of art 21. How do these principles provide an answer to the question whether the 2006 proceedings involve the same cause or causes of action as the Greek proceedings? It is necessary to consider the claims advanced by the CMI and the LMI separately and, in the case of each cause of action relied upon, to consider whether the same cause of action is being relied upon in the Greek proceedings. In doing so, the defences advanced in each action must be disregarded. The essential question is whether the claims in England and Greece are mirror images of one another, and thus legally irreconcilable, as in Gubish and The Tatry, in which case Article 27 applies, or whether they are not incompatible, as in Gantner, in which case it does not. Thus in Gantner a claim for damages for repudiation of a contract and a claim for the price of goods delivered before the repudiation could both have succeeded and the fact that a set off of the damages would make the price less beneficial to the seller did not make them incompatible. And in Maersk Olie & Gas A/S v Firma M de Haan en W De Boer (Case C 39/02) [2004] ECR I 9657 owners of a vessel which damaged a pipeline (owned by Maersk) sought a declaration that they were entitled to limit their liability under the 1957 International Convention relating to the Limitation of Liability of Owners of Sea going Ships and the Dutch legislation that gave effect to it and that a limitation fund be established. Maersk subsequently commenced proceedings in Denmark claiming compensation for damage to the pipeline. The CJEU held that the causes of action were not the same: see paras 35 to 39. The CJEU underlined both the principle in Gantner that account should be taken only of the claims and not of the defences advanced and the principle in The Tatry that the cause of action comprised both the facts and the legal rule invoked as the basis of the application. It held on the facts, at para 38, that: the unavoidable conclusion is that, even if it be assumed that the facts underlying the two sets of proceedings are identical, the legal rule which forms the basis of each of those applications is different. The action for damages is based on the law governing non contractual liability, whereas the application for the establishment of a liability limitation fund is based on the 1957 Convention and the Netherlands legislation which gives effect to it. The CJEU thus distinguished Gantner and The Tatry on the basis that in those cases, by contrast, the claim brought in the second set of proceedings mirrored that brought in the first set. What then is the position on the facts? The CMI advance the claims referred to in para 18 above under three heads, each of which relies upon provisions either of the CMI settlement agreement or the policies. It is convenient to consider the claims under the three heads in this order: indemnity, exclusive jurisdiction and release. Indemnity claims These are based on clause 3 of the settlement agreement set out above. The claims are simple. By clause 3 the Assured as defined agreed to indemnify the CMI against any claim that might be brought against them by any of the Assureds or the Claimants associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under the relevant policy. The CMI say that the Greek proceedings are in respect of such claims and that they are entitled to be indemnified against the consequences of those proceedings. They say that that claim under clause 3 does not give rise to the same claim or cause of action as any claim or cause of action in the Greek proceedings. They say that, on the contrary, it assumes that the Greek proceedings will proceed and that the claimants in Greece may succeed. I would accept that submission. In my opinion, none of the causes of action relied upon in the Greek proceedings has identity of cause or identity of object with the CMIs claim for an indemnity. As to cause, the subject matter of the two claims is different. The former are claims in tort (or its Greek equivalent) and the claim for an indemnity is a claim in contract. As to object, that of the Greek proceedings is to establish a liability under Greek law akin to tort, whereas, as for example in the case of a claim on an insurance policy, the object of the CMIs claim is to establish a right to be indemnified in respect of such a liability. Further, whereas Starlight and its co assureds and the individual officer claimants in the Greek proceedings are seeking each to recover its or his own loss, the indemnity clause will, if the indemnity claim is otherwise good, entitle the CMI to recover from Starlight not just any sum awarded in Greece to Starlight, but also any sums awarded to any of Starlights co claimants. So the object of the English indemnity claim against Starlight differs from, and is in fact much wider than, the object of Starlights claim in the Greek proceedings. Moreover, the claim for an indemnity in the 2006 proceedings in England does not interfere in any way with the Greek proceedings or vice versa. There is no attempt in Greece to impugn the settlement agreements or the indemnity agreements contained in them. The respondents do not assert, for example, that the indemnities do not apply to some or all of the Greek claims. I would determine this point in favour of the CMI on this simple basis. The CMIs cause of action for an indemnity under clause 3 of the settlement agreement is not the same cause of action as any of the causes of action relied upon in Greece, which are tortious. The respective causes of action have neither the same object (le mme objet) nor the same cause (la mme cause). Exclusive jurisdiction clauses The same is in my opinion true of the CMIs claims that the respondents have brought the proceedings in Greece in breach of the exclusive jurisdiction clauses in the settlement agreement and/or in the insurance policies. Clause 6 of the settlement agreement expressly provides that it is subject to English law and the exclusive jurisdiction of the High Court in London. The CMI say that, in bringing the Greek proceedings, the respondents are in breach of clause 6 and that they are entitled to damages as a result. They do not seek an anti suit injunction to restrain the Greek proceedings. They simply seek a declaration that the claims brought by Starlight and OME in Greece 1 and Greece 2 fall within the scope of the settlement agreement. Moreover the respondents do not assert in the Greek proceedings that the settlement agreements do not preclude the bringing of their claims in Greece. It may be that the reason they do not advance that argument is that they would be met with the response that a dispute as to the meaning and effect of the settlement agreements is subject to the English jurisdiction clause so that the court in Greece would have to decline jurisdiction. However that may be, they do not in fact advance the argument. It follows that in this respect too the Greek proceedings are not the mirror image of the English proceedings or vice versa and that the cause or causes of action based on an alleged breach of clause 6 of the CMI settlement agreements are not the same cause or causes of action as are advanced by the respondents in Greece. They do not have le mme objet et la mme cause. As I see it, the position is the same in the case of the alleged breach of the exclusive jurisdiction clauses in the insurance policies. There is an established line of cases in England to the effect that claims based on an alleged breach of an exclusive jurisdiction clause or an arbitration clause are different causes of action from claims for substantive relief based on a breach of the underlying contract for the purposes of Article 21 of the Brussels Convention and Article 27 of the Regulation: see eg Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 WLR 588 per Steyn LJ (giving the judgment of the Court of Appeal) at 595H 596C; Alfred C Toepfer International GmbH v Molino Boschi Sarl [1996] 1 Lloyds Rep 510 per Mance J at 513; Toepfer International GmbH v Socit Cargill France [1997] 2 Lloyds Rep 98, per Colman J at 106; Sinco per Beatson J at paras 50 and 54; and WMS Gaming Inc v Benedetti Plus Giocolegale Ltd [2011] EWHC 2620 (Comm) per Simon J at para 32. Those cases support the conclusion that the claims of the CMI in the 2006 proceedings for breach of the exclusive jurisdiction clauses in the insurance policies (or indeed in the settlement agreement) do not involve the same cause or causes of action within the meaning of Article 27 as the respondents claims in (or akin to) tort in the Greek proceedings. I understand that this point has been reserved for decision by the Court of Appeal but, as I see it at present, nothing in the relief sought by the CMI offends the principle of mutual trust and confidence which underlies the Regulation: see eg Erich Gasser GmbH v MISAT Srl (Case C 116/02) [2005] QB 1. The CMI do not seek to stop the Greek proceedings or to restrain Starlight and OME from pursuing them. They merely seek declarations as to the true position under the settlement agreements which are both governed by English law and subject to the exclusive jurisdiction of the English courts and under the clauses in the insurance contracts which also provide for the exclusive jurisdiction of the English courts. This has the advantage that the courts with exclusive jurisdiction decide what is the true meaning of the settlement agreements and the jurisdiction clauses. Release The same is also, in my opinion, true of the claims based on what are called the release provisions in the CMI settlement agreement. It is said that the provision that the sums agreed to be paid under the CMI settlement agreement are to be paid in full and final settlement of all and any claims it may have under the policy precludes the payment of any further sums arising out of the loss of the vessel insured. It is said that, in the light of the agreement, the CMI are entitled to a declaration that the Greek claims fall within the terms of the agreement, that they are entitled to a declaration that the bringing of those claims is a breach of the agreement and that they are entitled to damages for that breach. The question is whether these claims involve le mme objet et la mme cause as the claims in the Greek proceedings. In my opinion they do not for the same reasons as in the case of the claims for an indemnity and the claims arising out of the exclusive jurisdiction clauses. The Greek claims are claims in tort and these are contractual claims. The factual bases for the two claims are entirely different. Moreover the object of the two claims is different. This is to my mind clear in the case of the claims for damages for breach of the release provisions in the settlement agreements and for a declaration that the bringing of the Greek claims is a breach of the settlement agreement. The nature of the claims is almost identical to the nature of the claims for breach of the jurisdiction agreements. In both cases the alleged breach is the bringing of the claims in Greece. Moreover, like the claims for an indemnity, the claim for damages for breach of the settlement agreement assumes that the claims in Greece may succeed. Is the position different in respect of the claim for a declaration that the Greek claims fall within the terms of the release in the settlement agreements? In my opinion the answer is no. All these claims have the same thing in common. It is that the legal basis for the claims in Greece is different from the legal basis of the claims in England. In Greece the legal basis for the claims is tortious, whereas in England the legal basis of the claims is contractual. It is thus not a case like Gubisch, where, as the CJEU put it at para 15, the same parties were engaged in two legal proceedings in different Contracting States which were based on the same cause of action, that is to say the same contractual relationship. The cause was therefore the same. Equally the objet of the actions was the same, namely to determine the effect if any of the contract. As the CJEU put it at para 16, the action to enforce the contract was aimed at giving effect to it, while the action for its rescission or discharge was aimed precisely at depriving it of any effect. The question whether the contract was binding lay at the heart of the two actions. That is not true here because the object of the English action is to enforce the contract, whereas the object of the Greek proceedings is to establish a different liability in tort. Lord Mance takes a different view in one respect. So far as the claims for damages for breach of the releases in the settlement agreements, the claims for a declaration and damages for breach of the jurisdiction clauses and the claims for indemnities are concerned, there is no difference between us. However, so far as the claims for a declaration that the Greek claims fall within the terms of the release in the settlement agreements is concerned, Lord Mance takes a different view. He notes in para 140 the terms in which the claims are pleaded. The formulation in paragraph 18(a) above, which was adopted by the respondents, is in fact derived from the declaration made by the judge. However, to my mind nothing turns on this difference. Moreover, I do not see that it makes any difference that the respondents discharged their obligations under the settlement agreements. The critical point is that on the facts here the legal basis of the claims in tort in Greece is different from the legal basis of the contractual claims in England. It is true that, if successful, a declaration that the tortious claims have been settled or released will or may afford the appellants a defence to the Greek proceedings but the cases show that defences are irrelevant. Viewed through the perspective of the claims, the two claims are not the mirror image of one another. Even if (contrary to my view) the two sets of proceedings had in this respect le mme objet they did not have la mme cause, whereas the cases show that, in order to involve the same cause of action, they must have both le mme objet et la mme cause. The position would be different if the CMI were to advance a claim in the English proceedings claiming a declaration that they are not liable to the respondents in Greece. That claim would be the mirror image of the claims being brought by the respondents in Greece and would fall within the principles laid down in Gantner and The Tatry. In fact, after the judge had delivered his judgment, the CMI did, as I understand it, make an application for such a negative declaration in the light of the fact that Starlight and OME had commenced Greece 2. We were told that in the event the application was never determined and that the CMI do not pursue it. It has been confirmed that any such claim has now been abandoned. For these reasons, subject to a possible reference to the CJEU discussed in paras 58 59 below, I would hold that Article 27 does not apply to any of the causes of action advanced by or against the CMI. I appreciate that, in reaching these conclusions I have reached a different view from that of the Court of Appeal. Before I express my reasons, I should say that I suspect that the focus of the argument in the Court of Appeal was somewhat different from that in this Court. The reasons are I think twofold. First, in para 40 of his judgment Longmore LJ distinguished Sinco on the basis that the difference between this case and that is that in that case, in contradistinction to this, there was no settlement agreement which could, as he put it, supposedly deny the Greek claimants the right to bring proceedings at all. I do not see that as correct. As explained above, the CMI do not seek to deny the respondents the right to commence proceedings in Greece but merely say that the causes of action in the two sets of proceedings are different. The second point is perhaps more significant. In para 46 Longmore LJ correctly notes that the CMIs case is that the bringing of the Greek proceedings is a breach of the jurisdiction clauses in the policies and a breach of the terms of the settlement agreement and, again correctly, states that the primary relief claimed by the CMI in England is a declaration that Starlight will be liable to indemnify the CMI against any costs incurred in the Greek proceedings and any liability in those proceedings. I have already given my reasons for concluding that those are different causes of action from the causes of action in tort relied upon by the respondents in Greece. They are not a mirror image of one another. As I see it, the Court of Appeal treated the question as a broad one focusing on the overall result in each jurisdiction. This can be seen from paras 47 to 50 of Longmore LJs judgment. In paras 46 and 47 he summarised the claims of both the CMI and the LMI. He then said this at paras 48 and 49: 48. It is clear that the first 3 paragraphs of the LMI application are in terms an assertion that LMI are not liable in respect of the claims in Greece. CMI's allegation that the Greek claimants are in breach of the settlement agreements is in effect a similar assertion. It may be said that there are other causes of action in the English proceedings which are not exactly mirror images of the allegations in the Greek proceedings but to the extent that they are not, they are essentially the same in the sense that the key assertion in Greece is that there are non contractual claims and the key assertion in England is that those non contractual claims have been compromised by the settlement agreements. The claims for damages and indemnity are in any event parasitic on the central contention that, once a settlement had been reached, all matters in issue had been compromised. It is, of course, elementary that Article 27 has regard to causes of action rather than proceedings and that is why it is necessary to concentrate on the allegations relating to the settlement agreement. It is certainly the case that there is a considerable risk of inconsistent judgments if one of the sets of proceedings is not stayed and the rationale behind Article 27 therefore favours a stay if the Greek court was the court first seised. 49. I therefore conclude that, in so far as the English proceedings assert non liability by reason of the settlement agreements, there is an identity of issues and the respective causes of action are the same. To the extent that allegations are made in England that the Greek parties are in breach of the settlement agreements or in breach of the exclusive jurisdiction clauses in either the insurance policy or the settlement agreements themselves (and that they should therefore indemnify the insurers for the cost of the Greek proceedings) they are parasitic and dependent on the basic cause of action in England for a declaration of non liability. They cannot proceed in their own right until the underlying question of the ambit of the settlement agreements as a defence to the Greek actions in tort has been resolved. In my opinion that analysis is not consistent with the principles laid down by the CJEU set out above. As already stated, those principles require a comparison of the claims made in each jurisdiction and, in particular, consideration of whether the different claims have le mme objet et la mme cause without regard to the defences being advanced. As I see it, Article 27 involves a comparison between the causes of action in the different sets of proceedings, not (as in Article 28) the proceedings themselves. In para 48 Longmore LJ recognises that there are causes of action in the English proceedings which are not (as he puts it) exactly mirror images of the allegations in the Greek proceedings but says that, to the extent that they are not, they are essentially the same in the sense that the key assertion in Greece is that there are non contractual claims and the key assertion in England is that those non contractual claims have been compromised by the settlement agreements. And at the end of para 49 he says that the claims in England cannot proceed in their own right until the underlying question of the ambit of the settlement agreements as a defence to the Greek action in tort has been resolved. I respectfully disagree with that approach. It focuses on the nature of the settlement agreements as a defence to the Greek action in tort, which the authorities in the CJEU show is irrelevant. Given the fact that defences are irrelevant, the analysis cannot involve a broad comparison between what each party ultimately hopes to achieve. The analysis simply involves a comparison between the claims in order to see whether they have the same cause and the same object. In so far as Andrew Smith J treated the question as a broader one in Evialis SA v SIAT [2003] 2 Lloyds Rep 377 I respectfully disagree with him, although, as Beatson J observed in Sinco at para 50, Evialis was distinguishable on the facts because the insured had brought a substantive claim in the English proceedings in addition to their claim in the Italian proceedings, which rendered the former a mirror image of the latter. This case can be distinguished on the same basis, at least in the case of the CMIs claims. I also note in connection with Sinco that at para 40 Longmore LJ observed that the difference between that case and this was that in that case there was no settlement agreement which could supposedly deny the right of the Greek claimants to bring proceedings at all. For the reasons I have given I would respectfully disagree with that approach. A settlement agreement might be a defence to a claim. It could not deny the right of the Greek claimants to bring proceedings at all. For these reasons I would hold that Article 27 has no application to the case of the CMI. Moreover, subject to one point discussed at paras 58 59 below, I would not order a reference to the CJEU on this question because the relevant principles are clearly set out in its jurisprudence and are acte clair. In these circumstances, where none of the causes of action in the English proceedings is the same as the causes of action in the Greek proceedings, it is not necessary in the case of the CMI to consider the other issues which might arise, namely the position in relation to other parties and which court was the court first seised for the purposes of Article 27. The LMI claims: same causes of action? Save possibly for two points, the position of the LMI is essentially the same as in the case of the CMI. The first point is that the jurisdiction clause in clause 5 of the LMI settlement agreement differs from that in clause 6 of the CMI settlement agreement in that it does not expressly provide for the exclusive jurisdiction of the High Court in London but merely for the jurisdiction of the High Court in London. However, subject to its detailed provisions, Article 23 of the Regulation provides that, where parties have agreed that a court or the courts of a Member State shall have jurisdiction, that court or those courts shall have jurisdiction and, moreover, that such jurisdiction shall be exclusive unless the parties have agreed otherwise. The question whether the parties had agreed otherwise was discussed by the judge at paras 19 to 23 of his judgment, where he held that the parties had not agreed otherwise and that clause 5 of the LMI was an exclusive jurisdiction clause. No appeal was brought against that part of the judges ruling. The second point is this. I had understood during the argument that the LMI were seeking a negative declaration of the kind which the CMI were not. It now appears that I was mistaken. I understand that the LMI had indicated an intention of doing so if the CMI proceeded with an application for permission to do so but, since they did not, nor did the LMI, who have now expressly stated that, like the CMI, they will not do so. As I see it, in these circumstances the position of the LMI is the same as that of the CMI. The causes of action advanced in England in the 2006 action and in 2011 Folio 702, as summarised on behalf of the LMI, are claims by the LMI against Starlight and OME based on clauses 3, 4 and 5 of the LMI settlement agreement. Those advanced in 2011 Folio 1043 are claims by the LMI against the co assureds to enforce the English jurisdiction clause in the insurances. Since, on this basis, the relief sought by the LMI is not a declaration of non liability, the conclusions and reasoning set out above on the question whether the causes of action are the same apply to it. It follows that I would allow the appeals of both the CMI and the LMI on the Article 27 point. However these conclusions are subject to the question whether any of the issues discussed above should be referred to the CJEU. Left to myself, I would not refer any of them because the principles of European law are clear and the only question is how they should be applied in the instant case. However, Lord Mance has arrived at a different view from me on the question whether Article 27 applies to the claims by both the CMI and the LMI for a declaration that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled. In short he is of the view that those claims are essentially for declarations of non liability. In these circumstances, I have reached the conclusion that the position is the same as I previously considered it to be when I thought that the LMI were seeking a declaration of non liability. That is that, unless the CMI and the LMI abandon those claims within 14 days, we should refer the question whether the claims for those declarations involve the same cause of action as the claims in Greece within the meaning of Article 27. Lord Neuberger has also given reasons why, absent such abandonment, this question should be referred. On the other hand, if the CMI and the LMI do abandon those claims, I would allow both their appeals under Article 27 and refuse a mandatory stay of the proceedings under it. If they do not abandon those claims, I would allow the appeals under Article 27 in respect of the other claims but refer the question referred to above to the CJEU and defer a decision on that issue until the CJEU has determined the question. Seisin under Article 27 It is not I think in dispute (and is in any event correct) that a court is only seised of claims by or against new parties from the date that those parties are added to the proceedings. In relation to the 2006 proceedings, the English court was only seised of claims against OME once OME was joined to the proceedings on 20 September 2011 and, for example, to the extent that the LMI in action 2011 Folio 702 are seeking declarations relying on the settlement agreement as a settlement of or defence to Starlight's and OME's claims in the Greek proceedings, the English courts were only seised of that action in 2011. It follows that, in each of those cases the court first seised was the Greek court and not the English court, and that, to the extent that the LMI advance claims for a declaration that the Greek claims fall within the terms of the release in the settlement agreement or that under the agreement the tort claims have been settled, unless the English court is the court first seised, they will be entitled to a stay under Article 27. The same is essentially true of the CMI claims. The question is which court is first seised of what in circumstances where some of the claims brought in England are different from and based on different causes of action from those brought in Greece and one of them in each case, namely the claim for the declaration or declarations referred to above, is based on the same cause of action. The approach of the parties is starkly different. It is submitted on behalf of the appellants that the answer is to be found in the language of Articles 27 and 30 and is that the court first seised is that in which the proceedings were first brought and that the court remains the court first seised of the proceedings even where those proceedings are subsequently amended by the addition of new claims or otherwise. It is submitted on behalf of the respondents, by contrast, that if a new claim is added by amendment, the court is seised of the proceedings so far as that amendment is concerned when the amendment is made and not at the time of the institution of the original, unamended proceedings. It seems to me that there is considerable force in the appellants analysis of the language of the Regulation but the respondents case has support both in the English cases and in the textbooks. In the course of this judgment I will consider the issues (interesting as they are) only briefly because I have reached the conclusion that, if the appellants persist in their claims for the declarations referred to in paras 58 and 59 above and this issue is critical for the resolution of the appeal, the proper course is to refer the question to the CJEU. The case for the appellants can be summarised thus. Article 27 is concerned with proceedings involving the same cause of action. So, for the purposes of deciding whether to grant a stay of its proceedings under Article 27, the court must compare the cause or causes of action in each set of proceedings. It is Article 30 that determines when the court is deemed to be seised and, by Article 30(1), it provides that (subject to the limited exceptions at the end of Article 30(1) and in Article 30(2)), it is deemed to be seised when the document instituting the proceedings or an equivalent document is lodged with the court. Where the question is which of two courts is first seised, the two dates on which the courts are deemed to be seised are compared and the court deemed to be seised first is the court first seised. The appellants also rely upon the transitional provisions in Article 66, which they say support the proposition that proceedings have only one date upon which they are instituted and is inconsistent with the idea that they can have several such dates as and when new claims are added by amendment. The appellants say that in this case the answer is that the English court was the court first seised because the Greek court was not seised until some five years later. They say that this is a simple rule which is easy to apply and that there is no warrant in the language of the Regulation for concluding that it was intended that the court should be seised anew each time a new claim is added by amendment, which would be complicated and unnecessary and give rise to endless interlocutory disputes. The appellants criticise Longmore LJ for asking in para 52 whether it can be said that the English court was first seised of the relevant causes of action now pursued in Greece and for noting that Article 27 only has regard to "causes of action" rather than proceedings. They say that that is inconsistent with Articles 27 and 30 because Article 27(1) uses the word "proceedings" twice and it is used again in Article 30(1). They recognise that for the purpose of deciding whether there is le mme objet or la mme cause the court must look to the claims made but, for the purpose of deciding which court is deemed to be "first seised" under Article 27, the autonomous test in Article 30 is applied. Finally, they say that Article 30 does not mention "causes of action" and that the Court of Appeal overlooked the word "proceedings" used twice in Article 27, and did not refer to Article 30 at all. Moreover, although the word "proceedings" is not defined in the Regulation, it appears nearly 50 times in the Regulation used as a word of general application. The uses of the word show that issues or causes of action (or claims) may change during the course of the "proceedings". The appellants further criticise Longmore LJ in the Court of Appeal by reference to paras 53 and paras 64 66. They contrast the reference in para 53 to Article 27 having regard only to causes of action rather than proceedings, with the reference in para 64, with apparent approval, to this quote from the judgment of Saville LJ in The Happy Fellow at pages 17 18: article 21 is concerned with proceedings and article 22 with actions. The questions are whether the proceedings involve the same cause or object or whether the actions are related. It is thus a misreading of the Convention to ask which Court is first seised of issues which are or might be raised within the proceedings or actions. If such were the case, then the articles would achieve precisely the opposite of their intended purpose which is, to achieve the proper administration of justice within the Community . " Saville LJ was there considering the position under what is now Article 28. However the appellants say that the word action in Article 28 means the same as proceedings in Article 27 and that Longmore LJ was correct in paras 64 66 and wrong in para 53. Although the appellants case has to my mind the merit of simplicity and of the avoidance of time consuming and expensive satellite litigation, the respondents say that it is simplistic and contrary to both principle and authority. It is fair to say that there is considerable support in the authorities and the text books for the proposition that the new claims added to the 2006 proceedings, which were founded on the Greek proceedings and thus made second in time, were new claims, that the English court should be regarded as seised of them only when they were added to the 2006 proceedings and that the Greek court was the court first seised within the meaning of Article 27. In the important case of FKI Engineering Ltd v Stribog Ltd [2011] 1 WLR 3264, which was itself a case on Article 28, the Court of Appeal considered Article 27 and a number of cases decided under it. At para 84 Rix LJ said that the essence of the cases was that, where the same cause of action or the same parties are introduced only by way of service, or amendment, the relevant proceedings are only brought at the time of such service or amendment, not at the time of the institution of the original, unamended proceedings. Neither Mummery LJ nor Wilson LJ expressed a different view. The respondents also rely upon Sinco per Beatson J at paras 61 to 68 and, in that connection, upon this comment in Briggs on Civil Jurisdiction and Judgments, 5th edition, 2009 at para 2.235, page 327, note 1: In [Sinco] the proposition that an English court was first seised of a claim for damages for breach of a jurisdiction clause, which could only have been brought before the English court after the objected to proceedings were instituted before the foreign court, was rather challenging. And in Research in Motion UK Ltd v Visto Corporation [2007] EWHC 900 (Ch), Lewison J said at para 19: It is also common ground that the counterclaim is to be treated as an action in its own right for the purposes of the judgment regulation. It seems to me that once RIM's English non infringement action is out of the way the only relevant proceedings are Visto's counterclaim and the Italian proceedings. Of those two, the Italian court is plainly the first seised. Indeed it cannot be otherwise since the very fact of the Italian claim is part of the foundation of the counterclaim. The respondents rely upon Briggs at para 2.235, where, as I read it, their case is supported, although some doubts are expressed as to the desirability of this approach. The respondents also relied upon the 15th edition, 2012 of Dicey, Morris and Collins on The Conflict of Laws at paras 12 060 and 12 069, where they say this: 12 060. Each lis between a plaintiff and a defendant has to be considered individually to determine which court was seised of it first in time, and article 27 applied accordingly. 12 069. Where a claim form which has been issued and served is amended by the addition of an additional claim, or by the introduction of a claim or counterclaim against another party, the material question is whether the date of seisin in respect of the additional claim is the date on which the amended claim form is reissued (which may, depending on the circumstances, be only after obtaining the permission of the court), or the date of the original issue. As it is difficult to see how a court can be said to be seised of a claim which has not been made and does not appear in the claim form, it cannot be correct that as long as a claim form has been issued and served, the court already has temporal priority over any issue which may later be added by amendment. It would follow from a conclusion that the court is not seised of the new claim until the amended claim form is reissued that the defendant may be able to pre empt the amendment by commencing an action of his own in another Member State. The court seised with such pre emptive proceedings will obviously be regarded as being seised later than the court before which the original action was brought, but institution of the later action may serve to prevent the proposed, and now duplicative, amendment of the original action; and there is no basis in the Regulation for refusing to give effect to a use of the rules which might be characterised as sharp practice. Finally, the respondents rely upon Fentiman on International Commercial Litigation, 2010, at para 11.27: Principle suggests that an amended claim arising from the same facts as the original claim might be consolidated with the original claim for the purposes of Article 30 but not where the facts arose subsequently. In the latter case it does no violence to the expressions 'actions' or 'proceedings' to differentiate the claims. While these expressions of view undoubtedly provide strong support for the respondents submissions, some of them seem to me to be expressed in a somewhat tentative way and I am not sure that the textbook writers grapple with the points made by the appellants on the language of the Regulation. However that may be, as indicated earlier, I am of the opinion that this issue is by no means acte clair and, if the appellants maintain their claim or claims in England for a declaration that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled, I would refer an appropriate question to the CJEU before forming a concluded view with regard to the applicability to that claim or claims. If they abandon them, I would hold that the respondents are not entitled to a stay under Article 27, refuse them a mandatory stay in respect of all the claims and allow the appellants appeal. Article 28 The question whether those claims which are not within Article 27 should be stayed depends upon whether they should be stayed under Article 28. As stated above, in the exercise of his discretion the judge refused the respondents application for a stay under Article 28. The appellants say that he was right to do so. The respondents case is that the English court was second seised for the purpose of Article 28 and that a stay should be granted as a matter of discretion. Seisin under Article 28 It is plain from the express terms of Article 28(1) that the discretion in Article 28 is limited to any court other than the court first seised. It follows that, if the English court was first seised, it has no discretion to stay. Article 28 moreover applies to related actions pending in the courts of different member states and, by Article 28(3), actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. It is not in dispute in these appeals that the various proceedings are related proceedings for the purposes of Article 28 and I would in any event so hold. The questions remain whether the actions are pending, whether the English court is the court first seised and, if it is not, how the discretion should be exercised. In Stribog the Court of Appeal considered the correct approach to Article 28. It held that two questions arise, namely (1) whether the two sets of proceedings are related, taking account of any amendments which have been made at the time of the enquiry and (2) which set of proceedings were commenced first? Rix LJ expressed the position clearly at paras 119 and 120. He explained that it is only when there are related and pending actions in separate member states that Article 28 comes into issue. The question whether they are related is, as he put it, the Article 28(3) question. He then said: 119. The question of when seisin occurs and thus which of the courts is the court first seised is the article 30 question. FKIs submission in effect seeks to roll the two questions together and ask: which of the two courts is the first to be seised of an action which at the time of its seisin was a related action? This is the concept of the first related action, a concept found in neither article 28 nor article 30. Stribog on the other hand asks: once you have found two related and pending actions and seek to stay one of them, invoking article 28, which of the two courts was the first to achieve seisin of one or other of those actions? 120. In my judgment, the latter question is the correct one, and is to be preferred to the former . See also per Mummery LJ at paras 40 to 44, where he stressed in particular that the question is whether the court concerned is seised of an action and not of a particular issue in an action. He also stressed that the time at which the comparison between the two actions is made is the time of the hearing of the application for the stay. Wilson LJ noted at paras 132 134 that Mummery and Rix LJJ asked the relevant questions in a slightly different order: Mummery LJ asked which court was first seised in a pending action before asking whether the actions were related, whereas Rix LJ preferred to ask them in the reverse order. Wilson LJ said that he did not see why the order matters but that Rix LJ seemed to have the terminology of Article 28 on his side. I agree. The question whether the actions are pending is closely related to the question whether the English court remains first seised. The respondents say that there was no action pending in England when the Greece 1 proceedings were commenced. In the alternative they say that, if the original action is still alive, the English court is not first seised because the claims now brought are entirely new claims, which they say should be equated with new proceedings. I will consider these points in turn. On the first point, the appellants say, by contrast, that the 2006 proceedings are still on foot, and thus pending, having been stayed but not finally concluded. I would accept the appellants submissions. The settlement agreements were in this respect in identical terms. It was a term of them that Starlight would obtain a stay by way of Tomlin Orders. The orders were both in the same terms, which are standard in such cases, and (as quoted in para 7 above) provided that save for the purposes of carrying into effect the terms agreed all further proceedings shall be stayed. It appears to me that, on the true construction of those orders, the actions remained unstayed for the purposes of carrying into effect the terms agreed and were otherwise stayed. As I see it, in so far as the actions remained unstayed, it follows that the court remained seised of them, presumably at least until there was no longer any need for the terms agreed to be carried out. It is plain from the language of Article 28(1) that the court first seised means the court first seised of the action, which must mean first seised of the proceedings, not of particular claims or causes of action within the proceedings. It seems to me to follow that, in so far as the appellants are seeking to enforce the provisions of the settlement agreements, as they are, the English court remains first seised. I arrive at this conclusion by a construction of Article 28(1) and of the Tomlin Order. The appellants were able to pursue these claims without issuing further proceedings. In this regard I would accept the analysis of the judge at paras 24 to 29. I would adopt the analysis of Sir Andrew Morritt V C in Bargain Pages Ltd v Midland Independent Newspapers Ltd [2003] EWHC 1887 (Ch) and I would not follow the reasoning of the Court of Appeal in Hollingsworth v Humphrey, (1987) CAT 1244. What then of the parts of the actions which are stayed under the Tomlin Orders? These would include the claims for breach of the exclusive jurisdiction clauses in the policies of insurance, which do not depend upon the terms of the settlement agreements. The appellants rely upon principles developed by the English courts as a matter of English, not European, law. However, this is in my opinion a permissible approach. Article 30 of the Regulation provides for the circumstances in which a court is deemed to be seised. I recognise of course that the concept of seisin is an autonomous European law device but Article 30 does not make express provision for the circumstances in which it ceases to be seised. In these circumstances, it seems to me to be appropriate for national courts to have regard both to the nature of seisin in European law and to their own procedural rules in deciding whether their courts are no longer seised of a particular set of proceedings. The appellants rely upon the decision of the Court of Appeal in Rofa Sport Management AG v DHLK International (UK) Ltd [1989] 1 WLR 902, where the Court of Appeal held that a stay of proceedings is not equivalent to a dismissal or discontinuance and therefore that an action in which all further proceedings have been stayed, even if by consent of all parties after a settlement, remains in being. See in particular per Neill LJ at 909H to 910D and 911A C. He concluded that, for the sake of clarity and certainty, the word stay in an order should not be treated as a possible equivalent of a dismissal or discontinuance. Although the action cannot continue without an order of the court, nor can it, he said, be regarded as dead in the same way as an action which has been dismissed or discontinued by order. I agree. The reasoning in Rofa supports the conclusion that in circumstances in which the 2006 proceedings have been stayed and not dismissed or discontinued the court remains seised of them. It is not and could not be disputed that the court was seised of the proceedings in accordance with Article 30 when the claim form in the 2006 proceedings was issued. It is not suggested that the appellants failed to take any of the steps referred to in Article 30(1) or (2) which would have nullified that effect. The question is whether anything happened subsequently from which it can be inferred that the court was no longer seised. I would answer that question in the negative. Although Rofa was not a decision on the construction of the Regulation, the correct approach is to consider whether anything occurred which could lead to the conclusion that the approach adopted there should not be applied to the stay incorporated in the Tomlin Orders and, if not, whether there is anything which leads to the conclusion that the court is not still seised of the proceedings. I would answer both those questions in the negative. Although it is true that the CMI settlement agreements contained a provision that, on payment of the settlement sum, the parties would file a consent order dismissing the proceedings, no such consent order was made or filed. The LMI settlement agreement does not contain any such provision. In all these circumstances, I can see no sensible basis upon which it can be said that the English court is no longer seised of the proceedings. There remain significant disputes arising out of the settlement agreements and the insurances. The second point taken on behalf of the respondents under this head is that, even if the original action is still alive, the claims now brought are new claims, which should be equated with, or treated as, new proceedings. They rely upon this dictum of Rix LJ in Stribog at para 129: Seventhly, there is nothing in the ECJ or English jurisprudence to support the judges approach in this case. It is possible that the introduction of entirely new causes of action or parties is to be recognised as the bringing of entirely new proceedings, so that the timing of seisin (the article 30 question) has to be looked at from that point of view, as occurs for the purposes of article 27. Even so, it is not clear to me that in this connection article 27 and article 28 work in the same way: for article 27 is worded in terms of the bringing of actions with the same parties and the same cause of action (Where proceedings are brought in the courts) whereas article 28 is worded in terms of the pendency of related actions (Where related actions are pending in the court) (emphasis added). That emphasises that the article 28 question is asked with relation to pending actions, and not, as the article 27 question is asked, with relation to the bringing of actions. In any event, the judge is in my respectful judgment mistaken to think that any amendment is analogous to the bringing of new causes of action or the addition or substitution of new parties. For my part, I would not accept that approach as applied to Article 28. In para 68 above I referred to the statement of Rix LJ at para 84 of Stribog. In para 63 of his judgment in the instant case Longmore LJ quoted para 84, where Rix LJ said that, where proceedings are amended to add new claims, the court is only seised of the relevant proceedings so far as the new claims are concerned at the time of the amendment. Immediately after the quote, Longmore LJ correctly pointed out that those observations were made in relation to Article 27 and not Article 28. He then quoted the second sentence from the above quotation from para 129 of Rix LJs judgment. Longmore LJ then asked whether this tentative expression of view in relation to "the introduction of entirely new causes of action" being tantamount to "the bringing of entirely new proceedings" means, for the purpose of this case, that the Greek courts are to be regarded as first seised of the relevant related action? He said at para 64 that, in his opinion it did not. He gave two reasons. He said that in the first place Rix LJ had already quoted the passage from the judgment of Saville LJ in The Happy Fellow which I set out in para 66 above. At para 65 Longmore LJ said that, in the second place, Rix LJ provided his tentative response to his tentative view in the remainder of paragraph 129 which he then quoted. That response is to my mind telling. Longmore LJ then expressed his conclusion at para 66. He expressed doubt about Rix LJs distinction between entirely new causes of action as opposed to partially new causes of action. However that may be, his conclusion seems to me to be contained in the last two sentences of para 66: As Saville LJ said in The Happy Fellow it is a misreading of Article 28 to ask which court is first seised of issues; it must likewise be wrong in an Article 28 context to ask which court is first seised of causes of action. That is Article 27 territory because, for the purpose of Article 28, one has to ask which court is first seised of an action, not a cause of action and, still less, an issue. On that basis Longmore LJ concluded at para 67 that, if the original English action and the subsequent Greek actions are related, as he concluded they are, it was the English court that was the court first seised. I agree. First, the contrary view seems to me to be inconsistent with the two stage approach to Article 28 adopted in Stribog. As Longmore LJ observed at para 66, in the context of Article 28 it is wrong in principle to ask which court is first seised of a cause of action, because Article 28 is concerned with related actions as a whole. Secondly, I would accept the appellants submission that on the facts of this case the claims now brought are not (as Rix LJ put it) entirely new. On the contrary, applying the broad and common sense approach favoured by Lord Saville in Sarrio, the claims now brought by the appellants are unquestionably related to the original action within the meaning of Article 28. I would only add in conclusion that it seems to me that it would be very odd indeed if a court which is seised of proceedings and stays those proceedings by way of a Tomlin order on the express terms that it retains jurisdiction to take further steps by way of implementation or policing of the order were prevented from exercising that jurisdiction, either by lifting the stay or otherwise, on the ground that it was no longer seised of the proceedings. It seems to me to be at least arguable that those steps should properly be treated as part of the existing proceedings. They might perhaps be treated as part of the same procedural unit as discussed by the CJEU in Purrucker v Vallz Prez (No 2) (Case C 296/10) [2011] Fam 312 at para 80. The case was on very different facts but was concerned with two paragraphs in a regulation which were identical to Articles 27 and 30 of the Regulation. In any event to treat the enforcement action as something entirely new seems to me to be wrong. It is never easy to decide what is an entirely new claim, what is a new claim and what is an expansion of an old claim. These claims are not new or entirely new because they are brought by way of enforcement of the outcome of the original dispute, in the same way as execution on a money judgment. In these circumstances it makes sense to hold that these claims, which largely arise out of the settlement agreements, arise out of the attempts made by the respondents to avoid the effect of those agreements and, in particular, the exclusive jurisdiction agreements. This solution would, as I see it, be consistent with the overall policy of the Regulation to avoid a multiplicity of proceedings. However, I can see that there is scope for argument under this head and, if the issue of first seised were critical to the decision, it might be appropriate to refer an appropriate question to the CJEU. I therefore turn to the issue of discretion on the assumption that the English court is second seised for the purposes of Article 28. Discretion On that assumption, the question arises whether the action or actions should be stayed as a matter of discretion. The judge held that no such stay should be granted. Given that the shape of the case has changed considerably since the matter was before the judge, it appears to me that this Court should consider for itself whether to grant a stay. I have reached the clear conclusion that it should not. I have reached that conclusion essentially for the reasons advanced on behalf of the appellants. They may be summarised in this way. In Owens Bank Ltd v Bracco (Case C 129/92) [1994] QB 509, at paras 74 79, Advocate General Lenz identified a number of factors which he thought were relevant to the exercise of the discretion. They can I think briefly be summarised in this way. The circumstances of each case are of particular importance but the aim of Article 28 is to avoid parallel proceedings and conflicting decisions. In a case of doubt it would be appropriate to grant a stay. Indeed, he appears to have approved the proposition that there is a strong presumption in favour of a stay. However, he identified three particular factors as being of importance: (1) the extent of the relatedness between the actions and the risk of mutually irreconcilable decisions; (2) the stage reached in each set of proceedings; and (3) the proximity of the courts to the subject matter of the case. In conclusion the Advocate General said at para 79 that it goes without saying that in the exercise of the discretion regard may be had to the question of which court is in the best position to decide a given question. On the facts here those questions can be considered together. As I see it, the issues are not dissimilar from those considered by Cooke J in Primacom at para 65, where he said this: Even if I had found that these two sets of proceedings and the German proceedings were related within the meaning of article 28, 'the strong presumption' which 'lies in favour of the applicant' on an application for a stay would be overridden here by virtue of the terms of the SSFA. Although the ECJ decision in Gasser means that a stay is mandatory where article 27 applies, there is no reason why weight should be given to that decision in the context of article 28, where a discretion is given to the court, the jurisdiction of which has been agreed by the parties as exclusive. It is nothing to the point that an English court could not have issued an anti suit injunction to prevent the German proceedings (as per C 159/02 Turner v Grovit [[2005] 1 AC 101]). The injustice of giving precedence to proceedings brought in breach of an exclusive jurisdiction clause where the parties have agreed that England is the appropriate forum is self evident. To breach the clause and to gain the benefit of priority for the German courts by such breach offends justice, where the court has a discretionary decision to make. In my opinion, similar considerations apply here. Although the true construction of the settlement agreements and the question whether Starlight and OME are in breach of them is ultimately a matter for the court which finally determines the summary judgment application or for the court at trial, there is a strong argument (to put it no higher) that the Greek proceedings have been brought by Starlight and OME in breach of the settlement agreements, which are subject to the exclusive jurisdiction of the English courts and/or in breach of the exclusive jurisdiction clauses in the insurance contracts. I would reject the submission that those considerations are impermissible in the light of the decision in Gasser. It was there held that, if the criteria for ordering a mandatory stay under Article 27 are satisfied, then the court second seised must stay its proceedings even if the court second seised has jurisdiction under an exclusive jurisdiction clause falling within Article 23. That conclusion was reached on the basis that, under Article 27, where there are two sets of proceedings which involve the same cause of action and the same parties, the court second seised is obliged to order a stay. The Regulation only permits one set of proceedings to continue. The position is quite different under Article 28, which clearly contemplates that where there are two related sets of proceedings they may proceed in parallel. That conclusion follows from the proposition that the grant of a stay is discretionary and not mandatory. In these circumstances, I can see no reason why, in exercising that discretion under Article 28, the court second seised should not take into account the fact that the parties had previously agreed (or arguably agreed) an exclusive jurisdiction clause in favour of that court. On the contrary, depending upon the circumstances of the particular case, that seems to me to be likely to be a powerful factor in support of refusal of a stay. After all, Recital 14 expressly provides: The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation. There is a close relationship between the claims in England and the subject matter of the claims in Greece. The natural court to consider the issues raised by the CMI and the LMI is the High Court in England because they raise contractual questions governed by English law and because it is at least arguable that the parties have agreed that they should be decided by the High Court, where the proceedings are more advanced than in Greece. After all, the judge granted summary judgment as long ago as December 2011. The court in Greece will then have the benefit of the decision of the court which, in the Advocate Generals language, is in the best position to decide these issues. Once there is a final judgment of the English courts, it will be recognisable in Greece, as elsewhere in the EU and will assist the Greek court. In this way, the principles of mutual trust upon which the Regulation is founded will be respected and there will be no risk of irreconcilable judgments. In these circumstances I would uphold the decision of the judge in refusing a stay under Article 28. There is no need for a reference to the CJEU because the question I would have referred does not arise given my conclusion on the exercise of discretion. It was at one time suggested that there is a referable question as to whether Article 28 gives the court second seised a choice between staying the proceedings under Article 28(1) and declining jurisdiction under Article 28(2). However, that suggestion was abandoned before the hearing. I would in any event have rejected it as unarguable. There is no support whatever for it in the language of Article 28 and none of the sources referred to supports the conclusion. The discretion is to stay or not to stay under Article 28(1) and to decline or not to decline jurisdiction under Article 28(2). The Court may thus both refuse to stay and refuse to decline jurisdiction. As the Advocate General explained in Bracco, all depends upon the circumstances. Too late? The remaining question is whether the Court of Appeal was wrong to reject submissions made on behalf of the appellants that it was too late for the respondents to rely upon Article 27. This is another part of the case where the facts seem to me to be startling. The appeal on this point is brought by the LMI and not the CMI but it is I think accepted that, if the appeal succeeds, the CMI will be able to take advantage of it. The most important point raised by this part of the appeal is whether the courts had a discretion to hold that the LMI should not be permitted to rely upon various procedural acts and omissions on the part of the respondents in response to their attempt at a late stage to rely upon Article 27 of the Regulation or whether, once the point was brought to its attention, the Court of Appeal was bound to consider Article 27 (as quoted at para 24 above) because it expressly provides that, where the conditions are satisfied any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. I have reached the conclusion that the answer is that the appellants were entitled to rely upon the acts or omissions of the respondents and that, having regard to what had happened before Judge Mackie QC and the judge, the Court of Appeal was not bound to take the point of its own motion. Moreover, subject to a possible reference, I would hold that the Court of Appeal should have considered the acts or omissions of the respondents and have held that it was too late for the respondents to rely upon Article 27. The question of the scope of the Court of Appeals duty to take the point of its own motion in circumstances of this kind is however an important point on the construction of Article 27 and, if it were necessary for the determination of the appeal, I would refer it to the CJEU. However, if the LMI abandon their claim or claims for a declaration of non liability a reference will not be necessary for the determination of the appeal. If they do not, my present view is that it will. The relevant chronology, which I take from the Statement of Facts and Issues, is briefly as follows. I will omit references to the CMI proceedings, in which the applications were heard at the same time as those in the LMI proceedings. By application notice dated 3 August 2011, the LMI applied for wide ranging relief against Starlight to enforce the LMI settlement agreement. By application notice dated 18 August 2011 the LMI sought permission to join OME and to serve OME out of the jurisdiction. As explained earlier, the LMI commenced 2011 Folio 702 against Starlight and OME in order to enforce the LMI settlement agreement. They also commenced 2011 Folio 1043 only against the co assureds, which was an action founded solely on the exclusive jurisdiction clause in the policies. On 20 September 2011 the LMI obtained permission from Judge Mackie QC to issue a Part 20 claim against OME in 2006 Folio 815 and, lest it be needed, to serve that Part 20 claim form and the claim forms in 2011 Folios 702 and 1043 out of the jurisdiction and to serve them on Lax & Co in London. The applications were supported by a witness statement by their solicitor, Mr Zavos, in which he referred both to possible stays under Article 27 and Article 28 giving reasons why stays should not be granted. The orders gave notice to each of Starlight, OME and the co assureds that: You may apply within seven days after the date of service of this Order on you to have the Order set aside or varied. This time limit does not apply to an application to dispute the jurisdiction of the Court in respect of which the procedure in CPR Part 11 as modified by CPR Part 58 applies No such application was made. Starlight did not serve evidence within the time provided in the CPR. However, on 4 November 2011 they served evidence which included an express request by Mr Crampton of Lax & Co that the relief sought by the appellants on the merits be denied, alternatively that the matter be referred to a full trial, with provision for disclosure and exchange of witness and expert evidence. On 7 November Starlight, OME and the co assureds each filed a defence on the merits in the relevant action, having first obtained an extension of time for doing so. Each of the defences included a paragraph which stated: The claims in the Greek Proceedings fall outside the jurisdiction clause in the policy and the jurisdiction clause in the Settlement Agreement. It is respectfully denied therefore that the High Court of Justice of England and Wales has jurisdiction to determine the claims in the Greek Proceedings The grounds on which Starlight, OME and the co assureds opposed the appellants claims and applications for summary relief, were in summary that the claims brought in the Greek proceedings (1) did not fall within the scope of the releases contained in the LMI settlement agreement or the CMI settlement agreement; (2) did not fall within the scope of the indemnities contained in the settlement agreements; and (3) did not fall within the scope of the jurisdiction clauses contained in the settlement agreements or in the policies. Following service of the defences, the LMI applied for summary judgment in all the actions and all the applications were fixed to be heard on 28 and 29 November at the same time as the application for summary relief against Starlight in the 2006 proceedings. In their skeleton argument prepared for those hearings, which were served on 23 November 2011, the LMI included the following: 71. There has been no application for a mandatory stay under Article 27 of the Judgments Regulation in respect of the [LMIs] claims to enforce the jurisdiction clause in the contract of insurance, and to enforce the terms of the [LMI] Settlement Agreement. This is (no doubt) because the claims are different claims from the claims advanced by the Assureds in Greece. On 25 November 2011, Starlight, OME, and the co assureds, through their former counsel, James Drake QC and Emma Hilliard, provided their skeleton argument to the court, which expressly disavowed any application under Article 27, in these terms: 69. It is well established that in order for Article 27 to operate there must, when comparing the two sets of proceedings in issue, be three identities: of parties, of cause, and of objet: see generally Briggs & Rees, Civil Jurisdiction and Judgments (5th ed 2009) at paras 2 227 to 2 231. 70. Starlight does not here contend that there is here an identity of cause and objet between the Greek proceedings and the Insurers applications. Although designed to preclude in so far as possible, and from the outset a clash of verdicts, the operation of Article 27 (as distinct from Article 28) is highly restricted in its actual operation. Comparison must be made between the claims made in the two actions, regardless of possible defences, to see whether they proceed on essentially the same facts and under the same rule of law. In the footnotes they referred to the cases I have discussed earlier, including Gubisch, Gantner and The Tatry. It is thus plain that before the matter came before the judge the respondents had made a clear and reasoned decision not to rely upon Article 27. Moreover, there is no reason to think that the judge did not consider the points they made and accept them. They relied only on Article 28. They did so pursuant to an application made by application notice dated 24 November 2011. However that application was out of time. So, by further application notices in each action dated 28 November 2011, the respondents applied for permission to make the Article 28 application out of time, and for relief from sanctions pursuant to CPR Part 3. The sanction referred to was that imposed by CPR Part 11, which provides that a defendant who files an acknowledgment of service and fails to apply to the court within the time allowed under the CPR for an order declaring that it has no jurisdiction or should not exercise any jurisdiction which it may have, is to be treated as having accepted that the court has jurisdiction to try the claim: CPR rule 11(5). As stated in para 19 above, the judge dismissed the stay application under Article 28 and held that the appellants were entitled to summary judgment. He held that (1) each of the claims made by Starlight, OME, and the co assureds against the appellants in Greece is in breach of the exclusive English jurisdiction agreement in the policies; (2) each of the claims made by Starlight and OME against the appellants in Greece is in breach of the jurisdiction agreements in the settlement agreements which provide for exclusive English jurisdiction; (3) each of the claims made by Starlight and OME against the appellants in Greece is in breach of the terms of the settlement agreements; (4) each of Starlight, OME and the co assureds is liable in damages to the insurers for breach of contract and under Section 50 of the Senior Courts Act 1981; and (5) each of Starlight and OME is bound to indemnify and hold the insurers harmless against each of the claims in the Greek proceedings pursuant to the indemnities in the settlement agreements. The judge handed down his judgment on 19 December 2011 and fixed 2 February 2012 for the hearing of consequential applications. In the meantime, on 7 December 2011 Thomas Cooper had replaced Lax & Co as the respondents solicitors. On 24 January 2012 draft grounds of appeal were served which included for the first time reliance on Article 27. They were considered in a somewhat amended form by the judge. The judge granted permission to appeal on a number of grounds including the Article 27 point. As to that he said that he would not have given permission on that point alone, as he put it, not least because the Article 27 case could become the subject of an independent application at first instance at any time hereafter. He recognised that this would have the effect of turning the Court of Appeal into a first instance court but concluded that it could be argued without the need for further evidence and without a great addition of time. In the Court of Appeal the appellants relied upon the provisions of CPR Part 11, but the Court of Appeal held that it did not apply because applications under Articles 27 and 28 are not challenges to the jurisdiction. It further held that it was bound to take the Article 27 point of its own motion. The LMI say that the Court of Appeal was wrong on both points. CPR Part 11 provides, so far as relevant as follows: (1) A defendant who wishes to (a) dispute the court's jurisdiction to try the claim; or (b) argue that the court should not exercise its jurisdiction, may apply to the court for an order declaring that it has no such jurisdiction or; should not exercise any jurisdiction which it may have. (2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10. (3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the courts jurisdiction. (4) An application under this rule must (a) be made within 14 days after filing an acknowledgment of service; and (b) be supported by evidence. (5) If the defendant (a) files an acknowledgment of service; and (b) does not make such an application within the period specified in paragraph (4), he is to be treated as having accepted that the court has jurisdiction to try the claim. (6) An order containing a declaration that the court has no jurisdiction or will not exercise its jurisdiction may also make further provision including (a) setting aside the claim form; (b) setting aside service of the claim form; (c) discharging any order made before the claim was commenced or before the claim form was served; and (d) staying the proceedings. In an action in the Commercial Court such as this CPR 11(4) is varied by CPR 58.7(2) so that the application under CPR 11(1) must be made within 28 days after filing an acknowledgment of service and not 14 days. As I understand it acknowledgments of service were filed in each case. The position under CPR Part 11 is different from the position under the former Rules of the Supreme Court, under which the equivalent rule, namely RSC Order 12 rule 8(1), did not include an application for a stay. By contrast CPR 11(1)(b) applies to an application for an order that the court should not exercise its jurisdiction. An application for a stay is precisely that. An application for a stay under Article 27 is thus an application within CPR 11(1)(b). The applicant must file an acknowledgment of service and must make an application within 28 days. The respondents did not do that. Nor did they seek an extension of time to so do within the CPR. It is arguable that the effect of CPR 11(5) is that their failure to do so means that they are treated as accepting that the court both has jurisdiction and that it is free to exercise it. The difficulty is that the wording of paragraph (5) may only relate to the existence of the jurisdiction rather than the exercise of it. This point was left open in Texan Management Ltd v Pacific Electric Wire & Cable Company Ltd [2009] UKPC 46 at paras 68 and 69. However that may be, the LMI rely upon the voluntary submission to the jurisdiction evidenced by the acknowledgment of service and the service of a defence. They also rely upon the clear and unequivocal statement of the respondents position in their skeleton argument before the judge. It is plain from the terms of the concession quoted at para 106 above that serious thought had been given to the question both of whether to make the concession and of the basis on which it was to be made. In these circumstances, unless there is some rule of European law to the contrary, it appears to me that the Court of Appeal should have considered whether, in the exercise of their discretion to permit argument on a new point, they should exercise that discretion in favour of the respondents or not. Moreover, it appears to me that, given the clear basis on which the concession was made and, given that the judgment had proceeded on that basis, the Court of Appeal should have held that it had a discretion under CPR rule 11(1) to permit an application under the rule to be made out of time but should have refused to exercise it. However it is said that on the true construction of Article 27, the court, including on these facts the Court of Appeal, has a duty to consider the application of Article 27 of its own motion whenever the point is taken. This strikes me as extremely improbable. I would accept the submissions of the LMI in this respect. The CJEU has recognised the importance of national rules of procedure. Thus, for example, in Shevill v Presse Alliance SA (Case C 69/93) [1995] 2 AC 18 the CJEU said: 35. the object of the [Brussels] Convention is not to unify the rules of substantive law and of procedure of the different contracting states, but to determine which court has jurisdiction in disputes relating to civil and commercial matters in relations between the contracting states and to facilitate the enforcement of judgments: see Kongress Agentur Hagen G.m.b.H vs Zeehaghe B.V. (Case C 365/88) [1990] E.C.R. 1 1845, 1865, para. 17. 36. Moreover, the court has consistently held that, as regards procedural rules, reference must be made to the national rules applicable by the national court, provided that the application of those rules does not impair the effectiveness of the Convention: paragraphs 19 and 20 of [Kongress Agentur Hagen G.m.b.H. vs Zeehaghe B.V. (Case C 365/88) [1990] E.C.R. 1 1845]." I would accept the LMIs submission that Article 27 is part of European law and overrides national law which is incompatible with it. It does not however follow from this proposition that English procedural rules were overridden. A national procedural rule must not impair the effectiveness of Article 27. It must not render the exercise of rights conferred by EU law impossible or excessively difficult: Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595, [1985] 2 CMLR 658. This is the principle of effectiveness, which involves considering whether the rule can operate consistently with Article 27, or whether it is incompatible with it. The procedural rule should not be less favourable than those governing similar domestic actions, which is the principle of equivalence: see eg Interfact Ltd v Liverpool City Council [2011] QB 744, Kapferer v Schlank and Schlick GmbH (Case C 234/04) [2006] ECR I 2585 at paras 19 to 22, Kbler v Austria (Case C 224/01) [2004] QB 848; and Eco Swiss China Time Ltd v Benetton International NV (Case C 126/97) [1999] ECR I 3055. I refer only to Interfact, where the Court of Appeal refused to exercise its discretion to allow cases to be reopened under CPR 52.17, so as to give a remedy for infringement of a provision of European law. Lord Judge CJ, delivering the judgment of the Court of Appeal, said : 41 In general, EU law does not require national courts to disapply their own procedural rules in order to secure the vindication of EU rights. In Kapferer v Schlank & Schick GmbH the Austrian Supreme Court was seised of an appeal in which the respondent had failed to lodge within the time stipulated a respondent's notice taking a point on jurisdiction under the Brussels Convention. The court referred to the Court of Justice the questions whether it was, nevertheless, bound to take the point of EU law of its own motion and whether EU law required a national court to review and set aside a final judicial decision in circumstances where it later became apparent that the decision of the court was in breach of EU law. The Court of Justice held that a national court is not so bound 44 . [Kapferer] establishes as a matter of general principle that EU law does not require a national court to reopen a final judicial decision, even if failure to do so would make it impossible to remedy an infringement of a provision of EU law: see the Kapferer case, at para 21; Amministrazione dell'Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl (Case C 2/08) [2009] ECR I 7501, para 23; Asturcom Telecommunicaciones SL v Rodrguez Nogueira (Case C 40/08) [2010] 1 CMLR 865 para 37. 49. The Court of Justice has upheld national time limits and limitation periods on grounds of legal certainty and the need to ensure finality in decision making, even though the effect has been to preclude enforcement of an EU law right: see, for example, Palmisani v Istituto Nazionale della Previdenza Sociale (INPS) (Case C 261/95) [1997] ECR I 4025; Fantask A/S v Industriministeriet (Ehrvervsministeriet) (Case C 188/95) [1997] ECR 1 6783. Finally, I would accept these submissions made by the LMI. Under English law a final judgment on the merits should not be set aside without very solid grounds: Brown v Dean [1910] AC 373 at 374, per Lord Loreburn. Interest republicae ut sit finis litium. This is part of the common tradition of the legal systems of the Member States: Rewe Zentralfinanz eG and Rewe Zentral AG v Landwirtschaftskammer fr das Saarland (Case C 33/76) [1976] E.C.R. 1989. As quoted above, in Interfact the Court of Appeal rejected the argument that, where an appellate court has a discretion to exercise under national procedural law to allow a final judgment to be challenged on appeal, it must exercise that discretion so as to remedy the infringement of EU law. In my judgment, there is no sensible basis upon which it can be said that the time limit under CPR 11(4), which can in an appropriate case be extended under CPR 3.1(2)(a), is contrary to EU law. The time limit satisfies the principle of equivalence because it is the same rule that applies in all cases. It fulfils a legitimate aim, namely making sure that points going to whether the proceedings are to be tried on their substantive merits in England are taken promptly and without unnecessary costs. It satisfies the principle of legal certainty because parties need to know where they stand. The absence of a time limit would allow a litigant to take the point years afterwards. Moreover, the time limit does not render the right to apply for a stay under Article 27 (or Article 28) impossible or excessively difficult to exercise. It allows sufficient time for the point to be raised, especially given the express rule permitting an extension of time in appropriate cases. As to the expression of its own motion in Article 27, there are a number of different parts of the Regulation that have a similar provision. On the facts here the potential for a stay under Article 27 was before the courts on at least two occasions. The position was explained to Judge Mackie QC on the without notice application referred to above. There is no reason to think that he did not give consideration to the position. More importantly perhaps the position was explained to the judge in the skeleton arguments to which I have referred. He was given both reasons and authority on the question whether a stay should be granted under Article 27. It seems to me that the judge was entitled to accept those submissions, which were made on the respondents behalf by experienced counsel and solicitors. For these reasons I would hold that the Court of Appeal should have refused to allow the respondents to rely upon Article 27 in the Court of Appeal. That said, I would accept that the meaning and effect of the duty to consider Article 27 of its own motion are matters of some potential importance and I have (somewhat reluctantly) reached the conclusion that they are not acte clair. I would therefore refer an appropriate question to the CJEU if it were necessary in order to resolve the appeal. If the appellants abandon the claims to the declarations referred to in paras 58 and 59 above, such a reference will not be necessary because, for the reasons given above, I would allow the appeals under Article 27 in their entirety. It seems to me that rather different considerations apply to Article 28 and that the Court of Appeal were entitled to consider Article 28 as part of the appeal from the decision of the judge who had considered it in detail. CONCLUSIONS For these reasons I would invite the CMI and the LMI to consider whether they wish to pursue their claims for declarations (referred to in paras 58 and 59 above) that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled. As Lord Neuberger observes, those are the claims described in para 18(a)(1)(i), 18(a)(2)(i) and 18(b)(i) above. They should indicate their position within 14 days of this judgment being handed down. If they persist in their claims, some limited questions should be referred to the CJEU as described above. The decision whether to stay those claims would then await the result of the reference, although I would allow the appeal under Article 27 in respect of the other claims. If they abandon them, I would allow all the appeals of both the CMI and the LMI under Article 27. I would in any event dismiss the respondents cross appeal under Article 28 and I would hold that their application for a stay under Article 28 should be refused as a matter of discretion. The parties should make written submissions on the form of order and costs within 21 days of the handing down of this judgment. Finally, I would like to thank all counsel and solicitors for their assistance in this unusual and in some respects difficult case. LORD NEUBERGER Subject to one point, I entirely agree with Lord Clarkes reasoning and conclusions. The one point concerns the issue discussed in paras 44 46 and 58 59 of Lord Clarkes judgment and in Lord Mances judgment. That issue is whether (i) LMIs claim in England for a declaration that the Greek claims have been settled, and (ii) CMIs claim in England for a declaration that the Greek claims were compromised (the English declaration claims, described in para 18(a)(1)(i), 18(a)(2)(i) and 18(b)(i) of Lord Clarkes judgment) should be stayed under Article 27. In my view, if that issue remains live, it should be referred to the CJEU, as I do not regard it as acte clair. I see the force of Lord Clarkes view that the English declaration claims do not have le mme objet et la mme cause, if one gives that expression a very narrow effect. I also accept that, particularly in the light of the existence of Article 28, there is good reason to give Article 27 a relatively narrow meaning, as Rix J pointed out in Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 Lloyds Rep 692, 697. I also accept that the decisions of the CJEU cited by Lord Clarke at paras 26 28 of his judgment support the contention that Article 27 has a relatively narrow ambit of application. However, it is also important to appreciate that the fundamental purpose of Article 27, as explained by the CJEU, is to ensure that judgments obtained in one member state are enforceable in other member states, and that the consequence of this is that one should avoid mutually inconsistent judgments. The purpose of Article 27 is to help achieve that end. It seems to me that, if the Greek court were to give Starlight and OME judgment for a particular sum in respect of its Greek claims, and the English court were to give judgment in favour of LMI and CMI in the form of a declaration that those very claims have been settled or compromised, the two judgments would be incompatible as a matter of principle and logic. It is not possible for a court to award a claimant damages in respect of a claim which has been compromised with the defendant. To put the point another way, to say that a defendant currently owes a claimant damages in respect of a claim which the defendant has settled or compromised with the claimant involves an illogicality. Accordingly, it seems to me that there is a real case for saying that the English declaration claims should be stayed. The difference between the English declaration claims and CMIs and LMIs claims in England for an indemnity and damages for breach of the settlement agreements (the English indemnity and damages claims, as described in paras 18(a)(1)(iii), (v) and (vi), 18(a)(2)(iii) and (iv) and 18(b)(ii), (iii) and (iv) of Lord Clarkes judgment) may appear to be relatively small, but I believe that there is a crucial distinction, as a result of which it is acte clair that the English damages and indemnity claims do not fall foul of Article 27. The crucial difference is that, if those claims were successful, they could not lead to inconsistent judgments in England and Greece. I accept that, if they were successful, the English indemnity and damages claims could be fairly said to neutralise, at any rate in commercial terms, any benefit to Starlight and OME of a judgment in the Greek claims. However, crucially in my view, success for LMI and CMI in the English indemnity and damages claims would not be logically inconsistent in any way with success for Starlight in the Greek claims. It is not inconsistent (although it is commercially pointless) to say that a defendant is liable to pay a claimant a sum by way of damages, while the claimant is bound to indemnify the defendant in respect of the whole of that sum (or is bound to pay an equivalent sum to the defendant). Indeed, the indemnity is not merely logically consistent with the liability: it is positively meaningless without the liability for damages, and the liability for damages, though rendered nugatory by the indemnity, is not logically inconsistent with the indemnity. LORD MANCE General I am in substantial but not complete agreement with the reasoning and conclusions reached in the course of the judgment prepared by Lord Clarke, although, ultimately, as will appear, we agree on the proper disposition of these appeals. The differences between Lord Clarke and myself relate to the significance and operation of article 27 of the Council Regulation (EC) No 44/2001 (the Brussels Regulation) with regard to the respondents Greek claims. I have no difficulty in agreeing with Lord Clarkes conclusions regarding the English claims made by CMI and LMI for damages for (i) breach of the exclusive jurisdiction clauses in the Settlement Agreements and insurance policies and (ii) indemnity under clauses 3 and 4 of the respective Settlement Agreements. Such claims do not assert that there is no tort liability because of the Settlement Agreements. They assert (i) that the respondents are claiming in the wrong jurisdiction and (ii) that the respondents have agreed to indemnify them in respect of any tort claims (valid or not) by the respondents themselves as well as by others arising from the loss of the vessel. However, I do not accept the reasoning by which Lord Clarke reaches his conclusions with regard to these claims for damages and the further release claims (as Lord Clarke conveniently calls them) which he addresses in paras 40 to 59 of his judgment. This difference becomes important in relation to the first head of the release claims, as I shall show. One strand of Lord Clarkes reasoning is that the English claims based on the Settlement Agreements cannot be the mirror image of the Greek tort claims, because they involve contract and tort claims and cannot constitute the same cause of action: para 34, third sentence, para 41, second and third sentences and para 43, second and last sentences. Another strand is that it is relevant or conclusive that the English and Greek claims do not interfere with each other, and, in particular, that the Greek claims do not impugn the settlement agreements: para 35, first and second sentences and para 37, in its entirety. Neither of these strands of reasoning is in my opinion sustainable, for reasons which I will explain. The release claims The release claims need a little analysis. There are three heads. The first head is summarised by the respondents themselves and by Lord Clarke (para 18(a)) as involving claims for declarations that the Greek claims fall within the terms of the release. But this head is in fact pleaded by LMI as a claim for a declaration that the Greek claims have been settled (application notice, para (1) 1 and 3), while CMI plead that the Greek claims were compromised (particulars of additional claim, para 10) and follow this with a claim for a declaration that the Greek claims fall within clause 2 of the CMI Settlement Agreement (particulars of additional claim, para 27(a)). These are clear statements (right or wrong as they may prove to be) that the Greek claims have been settled or compromised within the terms of the Settlement Agreements. The second and third heads are claims for a declaration that the bringing of the Greek claims was a breach of the release in each of the Settlement Agreements and for damages for such breach. They must stand or fall together. They raise different considerations from the first head. The first head of release claim The English claims that the Greek claims have been settled or were compromised are in my opinion mirror images of the Greek tort claims. The English pleas mean, and can only mean that the English claimants are not liable for the Greek tort claims. The legal effect of these English statements is (under English eyes and, I am confident, European law) that the Greek claims are no more. If an English court were to give a judgment to that effect, and there was no prior Greek judgment or other reason for non recognition, the Greek court ought under the Brussels Regulation to accept it. It cannot make any difference to the application of article 27 that the reason for non liability is a contractual settlement agreement. The only point of enforcing the contract is to show that there are no valid Greek tort claims. The Greek claims aim to enforce tort liabilities. The first head of the English claims aims to establish that there are no such valid tort liabilities, because they have been settled. The Greek and English claims cannot stand together. The concepts used in article 27 (such as cause of action or the concept of same object which one must read into the English text) are autonomous European concepts: Gubisch v Palumbo Case 144/86, [11] and The Tatry Case C 406/92, [47]. In the latter case, the European Court of Justice said that the cause of action comprises the facts and the rule of law relied on as the basis of the action and that the object of the action for the purposes of article [27] means the end the action has in view [39] [41]. An analysis of the cases helps to understand what was meant. Gubisch v Palumbo happened to concern a situation where the mirror image claims were in a general sense contractual. The German claim was for the price of machinery delivered. The later Italian claim by the buyer was, firstly, that there was no liability because he had revoked his offer before it had reached the seller for acceptance strictly, this was not a contractual claim, but a claim that there was no contract and, secondly, that, if there was a contract, his consent was vitiated and the contract should be set aside for mistake or on the ground of the sellers fraud, or, thirdly, that any contract had been discharged on account of the sellers late delivery. Both the question referred and the Court of Justices summary of the facts embraced all three aspects of the Italian claim: see e.g. judgment [2] and [4]. The subsequent reasoning and the answer given refer to mirror image claims, one seeking enforcement, the other seeking rescission or discharge, of a contract: see [13] and [15] and the Courts answer. The Court said [17] that it must be held that the two actions have the same subject matter, for that concept cannot be restricted so as to mean two claims which are entirely identical. The absence of express reference at these points to the first Italian claim (that no contract had ever been concluded) cannot mean that the Court was drawing any distinction between that claim and the other two. On the contrary, the inference is that it saw it as posing no different issue. It could not have made any difference to the Court of Justices conclusions if, instead of or in addition to some or all of the pleas actually made in the Italian proceedings, the Italian claimants had alleged that the contract had been rescinded or discharged under some separate subsequent agreement, whether, for example, by novation or by some compromise relating to the parties past dealings or outstanding issues. Nor, in a situation in which concurrent contract and tort claims are possible (see e.g. Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145), could it be crucial to the application of article 27 whether the foreign claim was being pursued in contract or tort, when the later English claim asserted a settlement agreement wide enough to cover both. Lord Clarke cites at para 28(iii) a useful encapsulation by Cooke J in JP Morgan Europe Ltd v Primacom AG [2005] 2 Lloyds Rep 665, [42], of the meaning of the expression legal rule or rule of law which the Court of Justice used in The Tatry Case C 406/92, [39]. Cooke J suggested that, in investigating cause, it was necessary, after looking at the basic facts, to look at the basic claimed rights and obligations of the parties. Here, the basic claimed rights and obligations of the parties are, in Greece, that the English claimants are liable in tort, and, in England, under the first head which asserts that the Greek claims have been settled, that there is no or no further liability for the Greek claims. The way in which article 27 was applied in The Tatry is also of interest. Having said that the cause of action comprises the facts and the rule of law relied on as the basis of the action [39], the Court of Justice went on: 40 Consequently, an action for a declaration of non liability, such as that brought in the main proceedings in this case by the shipowners, and another action, such as that brought subsequently by the cargo owners on the basis of shipping contracts which are separate but in identical terms, concerning the same cargo transported in bulk and damaged in the same circumstances, have the same cause of action. Here, the English claim that the Greek claims fall within the release and have been settled or compromised concerns, and seeks to negative, the same tort claims as the Greek actions seek to enforce. It can make no difference that the Greek claimants have not sought, pre emptively, to refer to, address or impugn in their Greek claims a possible defence (the Settlement Agreements) that might be raised in the Greek proceedings. One would not expect them to do so, any more than the German claimants in Gubisch v Palumbo addressed or would be expected to address every or any of the multiple arguments that the Italian claimants later deployed. The fact that the English claims do not seek directly to interfere with the Greek claims is also irrelevant. It would anyway be impermissible to claim in England an injunction restraining the Greek proceedings, but, quite apart from that, article 27 and the principle in Gubisch v Palumbo do not depend upon one set of proceedings seeking directly to prevent another. They derive from the principle that Member States must recognise each others judgments, and the aim of avoiding inconsistent judgments. As to the same object, the end which the Greek and English proceedings have in view is the same in each case, to decide the issue of liability for the torts alleged in Greece. That this is what is meant by the same object is clear from both Gubisch v Palumbo and The Tatry. The matter is directly addressed in the latter case in paras 42 to 45: 42 The question accordingly arises whether two actions have the same object when the first seeks a declaration that the plaintiff is not liable for damage as claimed by the defendants, while the second, commenced subsequently by those defendants, seeks on the contrary to have the plaintiff in the first action held liable for causing loss and ordered to pay damages. 43 As to liability, the second action has the same object as the first, since the issue of liability is central to both actions. The fact that the plaintiff's pleadings are couched in negative terms in the first action whereas in the second action they are couched in positive terms by the defendant, who has become plaintiff, does not make the object of the dispute different. 44 As to damages, the pleas in the second action are the natural consequence of those relating to the finding of liability and thus do not alter the principal object of the action. Furthermore, the fact that a party seeks a declaration that he is not liable for loss implies that he disputes any obligation to pay damages. 45 In those circumstances, the answer to the fifth question is that, on a proper construction of Article 21 of the Convention, an action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same cause of action and the same object as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss. The reference in [44] to a partys claim for a declaration of non liability implying that it disputes any obligation to pay damages is equally applicable to the present English claims that the Greek tort claims fall within the release or have been settled or compromised. The English claims imply that the Greek claims are disputed. In short, the issue of liability is central to both the Greek and the English proceedings here, as it was to the Dutch and English proceedings in The Tatry. Not merely the same cause of action but also the same object is involved in the present case, as it was in The Tatry. The two sets of proceedings would, if pursued to judgment, lead to judgments which were legally and directly incompatible. It is therefore necessary under article 27 to consider whether it is the Greek or the English courts which fall in this connection to be regarded as first seised. The second and third heads of the release claims The second and third heads are more elusive. Claims for a declaration that the bringing of the Greek claims was a breach, and for damages for the breach, of the release in the Settlement Agreements may on one view be seen as little different from the claims made under the first head. But I have come to the conclusion that this would be wrong. The second and third heads postulate, and for present purposes at least we must accept, that the releases contain some positive continuing promise which the respondents by their Greek claims are now breaching. The terms of the releases were in each case (clause 2 in the case of CMI, clause 3 in the case of LMI) that the respondents would accept underwriters due proportion of the relevant payment in full and final settlement of all and any claims it may have under Policy no. against the Underwriters in relation to the loss of Alexandros T. One must make the assumption, for present purposes, that the Greek tort claims fall within this agreement. The difficulty is that the agreement was performed, in the sense that there was not merely an accord, but an accord and satisfaction. All policy claims were thus not just agreed to be settled, but they actually were settled, and, if and to the extent that that is the nature of the second and third heads of English release claim, they would not in reality differ from the first head. The question therefore arises, what if any outstanding promise could there be left to perform which the second and third heads claim to enforce? I have come to the conclusion that the acceptance of the sums paid in full and final settlement involves, certainly very arguably, a continuing outstanding promise not further to pursue claims of the nature identified in clauses 2 and 3 respectively. Even after the settlement, the pursuit of such claims could cause CMI and LMI loss. Most obviously, such loss could consist in the costs of defending the Greek claims. If they let the Greek proceedings go undefended, it could, subject to issues arising from the potential recognition of any Greek judgment under the Brussels Regulation, include the amount of any judgment awarded against them in the Greek proceedings. Likewise potentially, though subject to additional questions arising from any potential issue estoppel or application of the rule in Henderson v Henderson (1843) 3 Hare 100, even if they unsuccessfully defended the Greek claims. The consequences Accordingly, the second and third heads of release claims, analysed as I have analysed them, are outside the scope of article 27. As regards the first head, the remaining issue is whether the Greek or the English courts fall for the relevant purpose to be regarded as first seised. In so far as the first head of release claims was added into the pre existing English proceedings by an amendment made after the Greek proceedings were begun, is it to be viewed discretely as a new claim of which the English court is second seised? Or does it fall to be viewed as part, by amendment, of a single set of English proceedings commenced well before any Greek proceedings? I agree with Lord Clarke at para 60 that a court is only seised of claims by or against new parties from the date that those parties are added to the proceedings. In relation to the 2006 proceedings, the English court was only seised of claims against OME once OME was joined to the proceedings on 20 September 2011 and, as against OME therefore, the English courts were only seised of the first head of release claims made by CMI and LMI in 2011. Since the first head of release claims is in my opinion the mirror image of the Greek tort claims, article 27 must, on that basis, apply to preclude the pursuit of the first head of release claims as against OME in England. The respondents submit that article 27 also applies to preclude the pursuit in the English proceedings of the first head of claim against Starlight, which was party to the English proceedings from their outset. The Court of Appeal accepted this submission. CMI and LMI challenge it. Lord Clarke has in his paras 61 to 71 set out and discussed the respective submissions. To my mind, the sense of the Regulation as well as the case law and the academic guidance all point in one direction. The chronological priority contemplated by the Regulation cannot be gained, or subverted, by the addition by amendment of a new claim in proceedings otherwise second brought (any more than it can be affected by the addition of new claimants or defendants, as Lord Clarke accepts: para 60). To the authorities under the current Regulation to which Lord Clarke refers, I would only add that similar thinking is to be found under the predecessor provisions of Article 21 and 22 of the Brussels Convention in the decisions at both levels in Grupo Torras SA v Shekh Fahad Al Sabah [1995] 1 Lloyds Rep 374, 418 419 (Mance J) and [1996] 1 Lloyds Rep 7, 24 (CA). Conclusion It follows that the conclusions I would reach, were all the issues to be finally decided now, would be that: The first head of English release claims would be precluded under i) article 27, having regard to what I conclude are in this respect the prior Greek claims. ii) All the remaining heads are outside the scope of article 27 and are permissible. It is however necessary to consider whether these conclusions are founded on principles of European law which are so clear that no reference to the Court of Justice is required. A reference to the Court of Justice In relation to the conclusion expressed in para 161ii, we are all in agreement in our conclusions. Any differences in reasoning regarding article 27 are irrelevant, and no reference is necessary. As to para 161i, Lord Clarke would reach the opposite conclusion to that which I have expressed and he considers in the light of my judgment that a reference is called for, if the English appellants persist in their first head of release claims. With the latter view I agree. The differences between Lord Clarkes and my reasoning are not, I believe, simple differences regarding the application to facts of clear principles of European law. I might by myself have thought that all the relevant principles of European law were clear, but I certainly do not dissent from the proposition that the differences, being material to our respective conclusions, require a reference. If the appellants wish to persist in, rather than abandon, the first head of release claims, there should accordingly be a reference as Lord Clarke suggests. Ultimately, therefore, although by different reasoning, Lord Clarke and I arrive at the same conclusions regarding the appropriate disposition of these appeals. |
Indirect taxes have always posed particular problems of enforcement, which account for the wide powers of investigation and seizure conferred by statute on the Commissioners charged with their collection. The exercise of these powers has given rise to dispute ever since Johnsons Dictionary offered its famous definition of excise in 1755 (a hateful tax, levied by wretches), and its author was threatened by the Commissioners with a libel action. The powers of the Commissioners of Customs and Excise were originally contained in a large number of enactments dealing with different aspects of an exceedingly complex legal scheme. The first modern consolidation was the Customs and Excise Act 1952 (the 1952 Act). The system is currently administered by Her Majestys Commissioners of Revenue and Customs under the Customs and Excise Management Act 1979 (the 1979 Act), which re enacts much of the 1952 Act, with substantial amendments. Some significant amendments have been made to the Act by the Finance Act 2013, but these were not in force at the relevant times, and we therefore refer throughout this judgment to the Act as it stood before they were made. These two appeals are about the circumstances and the manner in which customs officers are empowered to detain goods on which duty has not been paid, or may not have been paid. The Eastenders appeal In the Eastenders appeal, customs officers entered Eastenders warehouses and inspected consignments of alcoholic goods found there. They were acting under section 118C(2) of the 1979 Act, which authorises customs officers to enter and inspect business premises which they have reasonable cause to believe are being used in connection with the supply, importation or exportation of goods chargeable with excise duty and to inspect any goods found there. Section 118C(2) was repealed by the Finance (No 3) Act 2010 and replaced by other provisions, but we refer to the Act as it stood at the material time. Under section 118B, the officers may also require the production of documents. Eastenders employees were unable to provide documentary evidence, such as purchase invoices, demonstrating that duty had been paid on the goods. Inspection of such documents as were produced indicated that duty might not have been paid. The officers decided to detain the goods pending the outcome of further enquiries into the question whether the appropriate duties had been paid: in particular, enquiries into the supply chains relating to the goods. The goods remained on Eastenders premises pending the outcome of those enquiries but were subject to a direction given under section 139(5) of the 1979 Act, in terms of which the Commissioners can direct the manner in which any thing detained under the customs and excise Acts must be dealt with pending the determination as to its forfeiture or disposal. In subsequent correspondence, the Commissioners stated that the goods had been detained under section 139, subsection (1) of which empowers the Commissioners or their officers to seize or detain any thing liable to forfeiture under the customs and excise Acts. By virtue of section 49, things liable to forfeiture include any dutiable goods imported without payment of duty. Following their enquiries, the Commissioners seized most of the detained goods and returned the remainder. All of the seized goods were subsequently condemned as forfeited, and no issue arises about those. The present appeal relates to the goods which were detained but were subsequently returned, the officers enquiries having proved inconclusive. Eastenders applied, as the owners of the goods in question, for judicial review of the decision to detain them. The judge, Sales J, found that the officers had reasonable grounds to suspect that duty had not been paid on the goods that were detained. It was also found that the detention of the goods had not exceeded a reasonable period of time. Those findings were not challenged on appeal. In these circumstances, Sales J held that the Commissioners had acted lawfully in detaining the goods, on the basis that they had the power to detain goods for a reasonable time, pending enquiries as to whether duty had been paid, where they had reasonable grounds to suspect that the goods might be liable to forfeiture. Sales J considered that that power was conferred by section 139(1) of the 1979 Act. No other possible source of the power had been suggested. The application for judicial review was therefore dismissed: [2010] EWHC 2797 (Admin); [2011] 1 WLR 488. The Court of Appeal by a majority (Elias and Davis LJJ, Mummery LJ dissenting) reversed that decision. They held that section 139(1) applied only where goods were actually liable to forfeiture, and it had not been established that the goods in question were so liable. A declaration was accordingly granted that the goods not liable to forfeiture were unlawfully detained: [2012] EWCA Civ 15; [2012] 1 WLR 2067. There was again no contention that the power to detain goods on suspicion might be derived from any source other than section 139(1). It was subsequently decided that Eastenders could not be awarded costs, by reason of section 144(2) of the 1979 Act, which provides, in substance, that where a court holds that a seizure or detention was unlawful, no award of damages or costs may be made against the Commissioners if the court is satisfied that they acted on reasonable grounds: [2012] EWCA Civ 689; [2012] 1 WLR 2912. The Commissioners appeal to this court against the first decision. Eastenders were refused permission to appeal against the second decision. The point in relation to costs has however been argued in the First Stop appeal, as we shall explain, and whatever we decide about it must necessarily apply in both appeals. The First Stop appeal In the First Stop appeal, customs officers entered a warehouse and retail premises used by First Stop. They were acting under section 112(1) of the 1979 Act, which authorises customs officers to enter the premises of revenue traders as defined in section 1 of the Act (in substance, persons who deal in goods liable to excise duty) and to search for and examine any goods or materials connected with that trade. Under section 112A, inserted by the Finance (No 3) Act 2010, that power includes the power to examine documents. At the retail premises, the officers seized a small quantity of spirits on the ground that the duty paid stamps on them were defective. They also detained a much larger quantity of alcoholic drinks, whose provenance was unclear, while enquiries were made into the question whether duty had been paid. One of the directors of First Stop was informed by an officer that the goods were being detained pending further enquiries into their duty status. Written notices were provided stating that the goods had been detained pending evidence of duty status (CEMA 1979, section 139). Most of the detained goods were subsequently seized. The remainder were returned to First Stop. Condemnation proceedings in respect of the seized goods remained pending at the time of the hearing of these appeals. First Stop were granted permission to apply for judicial review of the detention of those goods which were still detained, pending the outcome of enquiries, about four months after their initial detention. By the time the application was heard, all of those goods had been seized. The application came before Singh J after the decision of the Court of Appeal in Eastenders. The judge gave a total of three judgments on different issues which arose from the application. In the first, he held that the detention of the goods had been unlawful, since the reason given for the detention was the need for investigation, and it followed in his view from the decision of the Court of Appeal in Eastenders that goods could not lawfully be detained under section 139(1) of the 1979 Act for that purpose. That was so even if the goods might subsequently be found to be liable to forfeiture: in his view, goods could not lawfully be detained under section 139(1) for the purpose of ascertaining whether the power to detain them had been conferred by that provision: [2012] EWHC 1106 (Admin). In a second judgment, Singh J held that section 144(2) did not protect the Commissioners against an award of costs, on the basis that the reason given for detaining the goods, being unlawful, could not amount to reasonable grounds within the meaning of that provision: [2012] EWHC 2191 (Admin). In his third judgment, Singh J was concerned with the seizure notices. The question was whether a statement in the notices that no evidence of UK duty payment has been provided was a sufficient statement of the grounds for seizing the goods as liable to forfeiture. The judge held that it was: [2012] EWHC 2975 (Admin). All three judgments were appealed to the Court of Appeal. They allowed the Commissioners appeal against the first two judgments. Beatson LJ, in a judgment with which Lewison and Jackson LJJ agreed, accepted that the judges view that the power to detain under section 139(1) must not only exist, but must be exercised for the purpose intended by Parliament, gained powerful support from general principles of public law, but concluded that it was inconsistent with the judgments of the majority of the court in the first judgment in the Eastenders case. The court also considered that it followed from the first judgment in the Eastenders case that there was no duty to give reasons for the detention of goods under section 139(1). In their view, the effect of the Eastenders decision was that if the goods were in fact liable to forfeiture, detention for a reasonable time was lawful under section 139(1) irrespective of any reason that might have been given. The appeal against Singh Js second judgment, relating to section 144(2), was allowed on the ground that the judges decision was inconsistent with the decision of the Court of Appeal in its second judgment in the Eastenders case: [2013] EWCA Civ 183. First Stop appeal to this court against both decisions. The Court of Appeal upheld Singh Js third judgment, and no appeal on the adequacy of the notice of seizure is before us. It follows that in this case, as in Eastenders, we are directly concerned only with the power of detention. The statutory scheme We have referred to the provisions of the 1979 Act that were central to the judgments below, namely sections 139(1) and 144(2). Before considering the effect of these provisions, it is necessary to say something more about them, and about the broader statutory scheme of which they are part. The 1979 Act confers extensive powers on the Commissioners. These include the express power to examine goods and documents relating to goods, or to require information about them. This power is conferred by many provisions of the 1979 Act, the relevant provision depending on the location of the goods and sometimes their type. In particular, section 112(1) confers on customs officers a power to enter the premises of revenue traders, such as First Stop, and to inspect the premises and search for, examine and take account of any goods or materials belonging to or in any way connected with that trade. By virtue of section 112A, the power conferred by section 112 includes power to inspect any business documents that are on the premises. Section 118C(2) applies where an officer has reasonable cause to believe that any premises are used in connection with the supply, importation or exportation of dutiable goods and that such goods are on the premises. It confers on the officer the power, exercised in the Eastenders case, to enter and inspect the premises and inspect any goods found on them. A number of the powers conferred by the 1979 Act are expressly exercisable when the relevant officer has reasonable grounds for believing or suspecting something. Section 118C(2) is an example. There are many others. Thus under section 84, which is concerned with unlawful signals to smugglers, an officer may board a ship, aircraft or vehicle or enter a place from which he has reasonable grounds for suspecting that a signal is being or is about to be sent; under section 113, officers are empowered to break open premises where they have reasonable grounds to suspect that secret pipes or other conveyances are being used for goods subject to excise duty; under section 138, a person may be detained if there are reasonable grounds to suspect that he has committed [an] offence under the customs and excise Acts; under section 161, an officer may enter and search any place where there are reasonable grounds to suspect that property liable to forfeiture is being kept or concealed; and under sections 163 and 164 there are corresponding powers to stop and search vehicles, vessels or persons suspected of being involved in breaches of the customs and excise legislation. The 1979 Act contains many sections providing for the forfeiture of property, including property whose importation is prohibited, property in respect of which duty has been evaded, or property (such as vehicles or vessels) which have been used for the purpose of infringements of various kinds. For present purposes, the relevant power of forfeiture is conferred by section 49, which can be treated as the paradigm case. It provides, among other things, that goods chargeable upon their importation with customs or excise duty which are imported without payment of that duty shall, subject to specified exceptions, be liable to forfeiture. Section 139 of the 1979 Act contains provisions relating to the detention and seizure of goods. Section 139(1) provides: Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majestys armed forces or coastguard. It can be seen that section 139(1) confers two distinct powers on the Commissioners, a power of seizure and a power of detention. Neither power is expressly said to be exercisable on the basis of reasonable grounds for suspicion or belief. In this respect they differ from some of the other powers to which we have referred. The effect of seizure is apparent from other provisions of the 1979 Act. It is the first stage of a statutory process leading to forfeiture. The process is governed by Schedule 3, to which effect is given by section 139(6). Paragraph 1 of Schedule 3 requires the Commissioners to give notice of the seizure of any thing as liable to forfeiture, and of the grounds for it, except in cases governed by paragraph 2. The exceptional cases are broadly speaking those in which the seizure was carried out in the presence of the relevant interested party. Under paragraph 3, the owner of the goods has one month from the date of the notice (or the date of seizure in a case within paragraph 2) in which to serve a notice claiming that anything seized as liable to forfeiture is not so liable. If no notice is served within that period, then the seized goods are deemed to have been duly condemned as forfeited (paragraph 5). If, on the other hand, a notice is served, the Commissioners must take proceedings for condemnation in the High Court or a magistrates court, and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited (paragraph 6). If the court holds that the goods were not liable to forfeiture, paragraph 17 provides for the Commissioners to tender to the owner a sum representing their value. The owner may then accept the tender, in which case he shall not be entitled to maintain any action on account of the seizure, detention, sale or destruction of the thing. Or he may reject it, in which case the assumption is that such a right of action will remain available. There are no corresponding provisions relating to the power to detain goods. Indeed, until the Act was amended in 2013, it contained no provisions at all dealing with the procedure for detaining property or its consequences. There can, however, be little doubt about what detention involved, even before the amendment. Detention is a temporary assertion of control over the goods, which does not necessarily involve any seizure with a view to ultimate forfeiture. What is the purpose of detaining goods without seizing them? The obvious answer is to enable the goods to be examined, or secured pending investigations which might lead to their seizure later. This was the view of the Court of Common Pleas in Jacobsohn v Blake and Compton (1844) 6 Man. & G 919; 13 LJ CP 89, a case to which we shall return, and of the majority of the Court of Appeal in Gora v Customs and Excise Commissioners [2003] EWCA Civ 525; [2004] QB 93. In his judgment in the Eastenders case, at para 30, Sales J said this: It does not require much imagination to see that there may be many cases in which there is uncertainty when HMRC officers inspect goods whether duty has been paid on them or not, and to see that in such cases the effective and fair implementation of the relevant tax and its associated enforcement regime will require that goods are held for a period while investigations are carried out in an effort to remove that uncertainty. In general (and without seeking to level criticism against the claimants in the present cases), Parliament cannot have intended that an owner of goods should be able, just by obfuscating and creating uncertainty at the point of inspection in relation to his supply chain and whether duty has or has not been paid, to avoid the full rigour of the machinery for the enforcement of payment of taxes, including by forfeiture of goods on which duty has not been paid. We agree. We have already pointed out that neither the power of seizure nor the power of detention conferred by section 139(1) is expressly said to be exercisable on the basis of reasonable grounds for suspicion or belief. However, the reasonableness of the exercise of those powers does come into it by virtue of section 144, which provides: 144.(1) Where, in any proceedings for the condemnation of any thing seized as liable to forfeiture under the customs and excise Acts, judgment is given for the claimant, the court may, if it sees fit, certify that there were reasonable grounds for the seizure. (2) Where any proceedings, whether civil or criminal, are brought against the Commissioners, a law officer of the Crown or any person authorised by or under the Customs and Excise Acts 1979 to seize or detain any thing liable to forfeiture under the customs and excise Acts on account of the seizure or detention of any thing, and judgment is given for the plaintiff or prosecutor, then if either (a) a certificate relating to the seizure has been granted under subsection(1) above; or (b) the court is satisfied that there were reasonable grounds for seizing or detaining that thing under the customs and excise Acts, the plaintiff or prosecutor shall not be entitled to recover any damages or costs and the defendant shall not be liable to any punishment. Where an officer detains property under section 139(1) because he reasonably considers that it is liable to forfeiture, section 144(2) assumes that that he may be liable if he turns out to be wrong about that, but protects him against an order for financial relief. Liable to forfeiture The first question on these appeals concerns the condition for the exercise of the power of seizure or detention under section 139(1), that the property should be liable to forfeiture. Does this mean that it must actually be liable to forfeiture? Or is it enough that the relevant officer believed or suspected that it was liable to forfeiture? Or that he wished to investigate whether it was or not? We consider that the answer to this is straightforward. The right to seize or detain property under section 139(1) is dependent on that property actually being liable to forfeiture under one of the various forfeiture provisions of the Act. This turns on the objectively ascertained facts, and not on the beliefs or suspicions of the Commissioners or their officers, however reasonable. Our reasons are as follows: (1) Throughout the 1979 Act, the draftsman has said in terms when statutory powers may be exercised on the basis of suspicion or belief rather than objective fact. A particularly striking example is section 138, which is the power corresponding to section 139 relating to the detention of persons who are liable to be detained under the Customs and Excise Acts. The power of detention is exercisable if there are reasonable grounds to suspect that the person has committed an offence. The omission of any such language from section 139 must have been deliberate. (2) The expression liable to forfeiture is used in no less than thirty sections of the 1979 Act. It would be wearisome to go through them all to make exactly the same point, which is that they are almost all sections providing that property is liable to forfeiture in defined circumstances, or in some cases providing that it is not to be liable to forfeiture in defined circumstances when it otherwise would be. In these sections, the words can only refer to actual liability to forfeiture. In all of the other sections in which the expression is used, with the possible exception of sections 139(1) and 144(2), it is equally clear that the reference is to an actual liability to forfeiture. (3) In section 139(1) it is a precondition for both seizure and detention that the goods should be liable to forfeiture. There is no difference in the way that the precondition applies to the two measures. In relation to seizure, the expression must mean actually liable to forfeiture, since seizure puts in train the procedural provisions of Schedule 3, which is wholly concerned with the condemnation of property as forfeit. On the face of it, therefore, the expression must mean the same when applied to detention. The same point can be made about the use of the expression in relation to both seizure and detention in section 144(2). (4) More generally, if liable to forfeiture does not mean actually liable to forfeiture, it is difficult to discern what it can sensibly be thought to mean. The Commissioners submission is that it refers to goods of a kind legally capable of being forfeited. This would mean that all dutiable goods were liable to forfeiture. While that is a linguistically possible meaning of the words, it is hardly the natural one. Its adoption would have the effect of conferring on customs officers a power to detain any goods which were in law dutiable, subject to no restrictions whatever other than those arising from the general principles of public law. So far as the 1979 Act is concerned, it would not even be necessary for the Commissioners to show that there were reasonable grounds for suspicion or belief. (5) Section 144(2), as we have pointed out, assumes that where property has been detained which turns out not to be actually liable to forfeiture, the Commissioners or their officers may be held liable in an action in tort. It confers an immunity in that event from an award of damages and costs if they acted reasonably. If the Commissioners or their officers were entitled to detain goods under section 139(1) on reasonable suspicion, the situation envisaged in this provision could not arise. The action would fail on liability and no immunity from damages and costs would be required. Some difficulties This interpretation of section 139(1), although in our opinion correct, would nevertheless have troubling implications if the Commissioners and their officers had no other power to detain goods. The resultant difficulties include the following: (1) As we have explained, and as Sales J recognised in the passage which we have cited, it is obviously essential to the effective implementation of the laws governing customs and excise that customs officers should be able to detain goods so as to enable them to be examined and secured pending investigations which might lead to their subsequent seizure. Sales J at first instance and Mummery LJ in the Court of Appeal inferred from that practical necessity (i) that Parliament must have intended that customs officers should have the power to detain goods where they reasonably suspect that the goods may be liable to forfeiture and require to make further inquiries, and (ii) that Parliament must therefore have intended section 139(1) to be construed as conferring such a power. The second proposition must be rejected; but the argument in support of the first proposition remains a powerful one. (2) On the hypothesis that the only power of detention is that conferred by section 139(1), and if that provision is interpreted as we consider it must be, it follows that the detention of goods is unlawful whenever the goods are not in fact liable to forfeiture. If that is so, then the detention of goods on the basis of suspicion is unlawful in all cases where the suspicion turns out to be unfounded. In the nature of things, that will be the position in a proportion of cases, even where reasonable grounds for suspicion exist. The customs officers may then be liable in damages for their interference with rights of property unless they can bring themselves within the scope of section 144(2). Even where section 144(2) applies, it only protects the officers against financial relief. (3) A further difficulty with an approach based upon an acceptance that customs officers will behave unlawfully, but will be protected from liability by section 144(2), concerns its compatibility with EU law and the Human Rights Act 1998. Under EU law, the detention of goods by customs officers may require to be justifiable as an interference with the free movement of goods: something which would scarcely be possible if the interference was unauthorised by law, or if that law failed to comply with the EU principle of legal certainty. (4) In relation to the Human Rights Act, the detention of goods by customs officers is an interference with the peaceful enjoyment of possessions within the meaning of article 1 of Protocol No 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms: see for example Islamic Republic of Iran Shipping Lines v Turkey (2007) 47 EHRR 573. As such, it must be in accordance with law, and must therefore be authorised by domestic law. Furthermore, the domestic law must meet the requirement of legal certainty. If customs officers are not authorised to detain goods which are not actually liable to forfeiture, or to detain goods for the purpose of investigation into whether they are liable to forfeiture, it follows that their doing so is unlawful by virtue of the Human Rights Act as well as under the common law. (5) The proposition that the only power of detention possessed by customs officers is that conferred by section 139(1) also raises a further difficulty. As we shall explain, there was no statutory provision in respect of detention, corresponding to section 139(1), until 1952. Can it possibly have been the position, prior to 1952, that the Commissioners and their officers had no power to secure goods, where there were reasonable grounds to suspect that they were liable to forfeiture and investigations had to be carried out, other than by pre empting the outcome of such investigations by seizing the goods and setting condemnation proceedings in train, at the risk of behaving unlawfully and incurring a liability in damages? As we have explained, the contrary was the view of the Court of Common Pleas in Jacobsohn v Blake and Compton. In view of these difficulties, it appears to us to be necessary to consider the legislative background, and some relevant authorities, in greater detail. The background to the 1979 Act Statutory regimes providing for the appointment of customs officers and vesting them with powers have existed for centuries. A thoroughgoing reform of the statute book was carried out in 1825, when almost all the statutes regulating the administration of customs and excise which were then in force, going back to the reign of Richard II, were repealed by the Act 6 Geo IV c 105, and new provisions were enacted in their place by several Acts, including the Acts 6 Geo IV c 107 and c 108. A further consolidation took place in 1833, when the 1825 legislation was repealed and replaced by a number of Acts, including the Acts 3 and 4 Will IV c 52 (An Act for the General Regulation of the Customs) and c 53 (An Act for the Prevention of Smuggling). This legislation, like that of 1825, made provision for the detention of persons: see the Act 3 and 4 Will IV c 53, sections 48 53. It also made provision for the seizure of goods which were liable to forfeiture: see the Act 3 and 4 Will IV c 53, section 32, which is a predecessor of section 139(1) of the 1979 Act. Provision was also made in respect of proceedings brought by the owners of goods which had been seized. In particular, the defendant was protected from liability in damages or costs if there had been probable cause for the seizure: see the Act 3 and 4 Will IV c 53, section 102, which is a predecessor of section 144(2) of the 1979 Act. The only statutory reference to the detention of goods at that time was made in a different context. The Act 3 and 4 Will IV c 52 required importers of goods to deliver a bill of entry of the goods, containing specified information about them. Goods which were not properly described in the bill were forfeited: section 20. Where the duty payable depended on the value of the goods, that also had to be stated. Section 22 provided that if upon examination it shall appear to the officers of the customs that such goods are not valued according to the true value thereof, it shall be lawful for such officers to detain and secure such goods, and to take such goods for the use of the Crown, the importer being paid compensation based upon his own valuation. Section 133 distinguished between goods being seized as forfeited, or detained as under valued. Then as now, the legislation conferred extensive powers upon customs officers, including a plethora of powers of entry, search and examination. The 1833 legislation was in force at the time of the case of Jacobsohn v Blake and Compton (1844) 6 Man & G 919; 13 LJ CP 89, which is one of the few reported decisions in this area of the law, and the only one which contains a detailed consideration of the relevant principles. The case was brought by the owner of a consignment of cutlery against two customs officers. The officers had examined the goods when they were landed in order to determine the duty payable (the precise statutory power under which they did so is not stated in the report: there are a number of possibilities), and had then decided to detain them, because of a suspicion that they contravened a statutory prohibition on the importation of cutlery of foreign manufacture bearing the names of British manufacturers resident in the United Kingdom, and were therefore liable to forfeiture. The officers refused to release the goods until the matter had been considered by the Commissioners. After a period of about five months, the Commissioners agreed to release the goods on payment of the duty, and the goods were duly released. An action for damages was then brought, on the basis that the detention had been unlawful. There was no express statutory basis for the detention of the goods, since they were not detained as under valued. The jury was directed to return a verdict for the defendants, and that direction was upheld by the Court of Common Pleas. Tindal CJ is reported at pp 925 926 of Manning and Grangers report as stating: [T]he defendants merely took possession of the goods, in the execution of their duty as custom house officers, for the purpose of examination. When the goods were examined certain marks were found upon them, which induced the defendants to think they were prohibited; and they said they must detain them; and then, on a subsequent application on the part of the plaintiff for the delivery of the goods, the answer was that they were detained and would be prosecuted as seizures. It appears, therefore, that the defendants originally detained the goods under a real and honest doubt that they were subject to forfeiture: whether that doubt was well grounded, is not now the question. There has been no abuse of authority on their part. The goods remained, during the whole time of the examination, in the same custody in which they were, in the first instance, legally detained. The latter part of that passage is reported slightly differently in the Law Journal report at p 90: There has been no abuse of the process which the defendants had to execute, and things remain in the same position during the whole time the goods were under examination. The implication, in both reports of the judgment, is that the process of examination was not completed until the necessary enquiries had been carried out. His Lordship left open the question whether an action might have been brought if the goods had been detained for an unreasonable time. The other judgments similarly emphasized that the officers had been acting within their authority. Coltman J stated at p 926: The defendants were custom house officers acting under an authority given them by law. It was their duty to examine the goods in question, in order to ascertain to what duty they were liable, or whether or not they were subject to forfeiture. If the goods had been afterwards detained by them for a time more than reasonable for the examination, that might have been an abuse of their authority so as to render them liable in another form of action. But it appears to me there is no ground for saying they did more than detain the goods for a reasonable time, in order that the question as to the liability of the goods to forfeiture might be submitted to the proper authorities. (In relation to the second sentence in that passage, Coltman J is reported in the Law Journal report as saying that the officers were acting under an authority given them by law to examine the goods to see whether they were liable to duty, and that I think they had also a right to examine them, to see whether they were liable to forfeiture or not). Cresswell Js judgment at pp 927 928 was to the same effect: The goods were taken by the plaintiff's agent to the proper place for the examination of them by the defendants in the regular discharge of their duty as custom house officers. Upon their examination, all that the defendants did was, to detain them, till it could be ascertained whether or not they were liable to forfeiture. Here, there was no act of trespass, either actually, or impliedly from any subsequent abuse of authority. In the present appeals, it was argued on behalf of Eastenders and First Stop that the ratio of the Jacobsohn case was confined to the situation where imported goods had been taken to a customs warehouse: the officers were entitled to decline to allow the goods to leave the warehouse until the appropriate duty had been paid. So understood, it was argued, the case had no application to cases such as the present appeals, where goods which were inside the country might be liable to forfeiture. The argument that the plaintiff could not insist upon the delivery of imported goods from a customs warehouse, so long as the duty remained unpaid, was indeed one of the arguments advanced on behalf of the officers at the trial of the case, but it does not appear to have been argued on appeal, and only the judgment of Erskine J at p 927 adverts to the point: The goods were landed and taken possession of by the defendants in the discharge of their duty, for the purpose of their being examined. Upon their being partially examined there appeared to be sufficient ground for the defendants to doubt whether they were authorised to receive the duty upon them. All that the defendants did was merely to decline to receive the duty upon them. The subsequent declaration made by them was not a declaration that what they had done amounted to a seizure, but merely a statement that, the matter being under the consideration of the commissioners, the goods could not be given up to the plaintiff. Erskine Js reference to the goods being partially examined, prior to the making of enquiries of the Commissioners, is consistent with the approach adopted in the other judgments. In any event, in the light of the other judgments, the ratio of the decision cannot be said to have been based on the non payment of duty on imported goods. In a related submission, it was argued on behalf of Eastenders and First Stop that the decision in Jacobsohn was based on a technical aspect of the law of trespass: since the officers had lawful possession of the goods initially for the purpose of examination, their subsequent detention of the goods did not involve any transfer of possession, and therefore could not amount to trespass. This argument also was advanced on behalf of the officers at the trial of the case, but it was not accepted. The court recognised that possession which was initially lawful might be rendered unlawful by an abuse of the authority under which possession had been taken, following the Six Carpenters Case (1610) 8 Co Rep 146. Hence the emphasis laid in the judgments upon the absence of any abuse of authority: as Cresswell J said, there was no trespass, either actually, or impliedly from any subsequent abuse of authority. As is clear from the passages in the judgments which we have cited, the majority of the court accepted that the detention of the goods was lawful because there had been no abuse of authority on the part of the officers; and there had been no such abuse because their authority to examine the goods in order to determine the duty payable, or (by implication) whether the goods were liable to forfeiture, carried with it, by necessary implication, an authority to detain the goods for such time as was reasonably necessary in order to make that determination. Where the determination required the making of enquiries, going beyond an inspection of the goods themselves, it was lawful to detain the goods for such time as was reasonably necessary to make those enquiries. The practical importance, and good sense, of the approach adopted in the Jacobsohn case to the scope of an examination of goods can be illustrated both by the facts of that case and by the facts of the present appeals. In that case, as we have explained, the statutory prohibition was on the importation of cutlery of foreign manufacture bearing the names or marks of British manufacturers resident in the United Kingdom. Some of the cutlery in question was impressed with the words Watson, Barbican, Norton Folgate, and some with the words Daniel Lutter, extra patent silver steel. A visual examination alone could not enable the officers to know where the cutlery had been manufactured, or whether Watson and Lutter were British manufacturers resident in the United Kingdom. In the present appeals, as counsel for Eastenders submitted, the question whether beer or wine is liable to forfeiture as not duty paid will not be resolved by gazing at the goods, for whatever length of time. It will only be resolved by examining the paper trail back to the point of duty payment. As we have explained, the power of detention which was held to exist in Jacobsohn was not expressly conferred by the customs and excise legislation, but arose by necessary implication from the officers statutory power to examine goods for the purpose of determining the duty payable or whether they were liable to forfeiture. It was not conditional upon the goods being liable to forfeiture: as Tindal CJ observed, whether the officers suspicions were well grounded was not the question. It was sufficient, in order for the power of detention to be lawfully exercised, that the officers should have, in the words of Tindal CJ, a real and honest doubt that the goods were liable to forfeiture. The protection from liability in damages or costs which was conferred on customs officers where goods had been mistakenly seized as liable to forfeiture had nothing to do with such detention, and did not feature in the case: since the detention of the cutlery was impliedly authorised by statute, it could not constitute a tort. The approach adopted in the case of Jacobsohn is consistent with the approach to a statutory power of examination which was taken more recently in the case of R v Secretary of State for the Home Department, Ex p Labiche [1991] Imm AR 263, a decision of the Court of Appeal concerned with immigration. The immigration legislation gave immigration officers the power to examine any person entering the United Kingdom, and required that a person examined by an immigration officer should be given notice, granting or refusing leave to enter the United Kingdom, not later than 12 hours after the conclusion of his examination. The appellant had been given a notice refusing leave more than 12 hours after being interviewed by an immigration officer, and argued that the notice was out of time. The Court of Appeal disagreed. Fox LJ, with whom Butler Sloss LJ and Sir Roualeyn Cumming Bruce agreed, said at p 268 that the examination cannot terminate until (a) necessary inquiries by the immigration officer or the Secretary of State have been completed and (b) the immigration officer has received the directions of the Secretary of State. The approach adopted to the concept of examination in this context was the same, mutatis mutandis, as that adopted in Jacobsohn. It is also relevant to note the earlier customs case of Irving v Wilson (1791) 4 Durn & E 485. That action was brought in the Court of Kings Bench for the recovery of money had and received by customs officers. The officers had stopped a cart containing goods which required a permit, without which they were liable to forfeiture. The carrier did not have a permit, but told the officers that the goods formed part of a larger consignment, and that a permit for the entire consignment was with the remainder of the consignment, some miles behind. The officers waited some time, but the remainder of the consignment did not appear. The officers then seized the goods. When the remainder of the consignment eventually arrived, and the permit was produced, those goods also were seized. The officers then refused to restore the goods until a payment had been made by the owner. He succeeded in his action for the recovery of the payment. The significance of the case in the present context arises not from that decision, but from some of the observations made. Ashurst J noted at p 486 that the goods were not liable to seizure, but also stated at pp 486 487 that the defendants acted right in stopping the goods at first; but when the permit came up, there was no pretence to detain them. The implication appears to be that it was lawful to detain the goods while there were reasonable grounds for suspecting that they might be liable to forfeiture. Lord Kenyon CJ similarly distinguished at p 486 between the initial detention and the subsequent seizure, stating that whatever ground of probability there was for stopping the first cart, yet after the matter was cleared up, there was no pretence for making a seizure. Returning to the history of the legislation, following the 1833 consolidation a further consolidation took place in 1845, when generally similar provision was made by the Act 8 and 9 Vict c 86 and the Act 8 and 9 Vict c 87. The next consolidation, in the Customs Consolidation Act 1853, amalgamated in a single Act the provisions formerly contained in separate statutes dealing with the regulation of customs and the prevention of smuggling. It also amalgamated, in section 223, the previously separate provisions in respect of the seizure of goods liable to forfeiture, on the one hand, and the detention of suspected offenders, on the other hand. The consequence was that a reference to detention appeared for the first time in a provision dealing with the seizure of goods. Generally similar provisions were contained in the next consolidation statute, namely the Customs Consolidation Act 1876. Section 202 again dealt in a single provision with the seizure of goods liable to forfeiture and the detention of persons. The provisions dealing with legal proceedings were drafted, as previously, on the basis that claims would be brought by the owners of goods which had been seized as liable to forfeiture; and section 267, protecting officers from liability, applied only where the goods had been seized. The final consolidation prior to the 1979 Act was effected by the Customs and Excise Act 1952. Like the earlier legislation, the 1952 Act conferred on customs officers extensive powers of investigation. The Act reverted to the separate treatment of the detention of persons, in section 274, and the seizure of goods, in section 275. Section 275(1) however retained the reference to detention which had appeared in section 223 of the 1853 Act and section 202 of the 1876 Act, and provided in subsection (1) that any thing liable to forfeiture under the customs or excise Acts may be seized or detained by any officer or constable or any member of Her Majestys armed forces or coastguard. That provision is almost identical to section 139(1) of the 1979 Act. The 1952 Act also extended the scope of the protection from liability given to customs officers, by providing in section 280(2) that there should be no civil or criminal liability on account of the seizure or detention of any thing liable to forfeiture if the court were satisfied that there were reasonable grounds for seizing or detaining that thing. That provision is almost identical to section 144(2) of the 1979 Act. The effect of section 275(1) of the 1952 Act was to create an express statutory power to detain goods which were liable to forfeiture. Such a power is clearly distinct from the power to detain as part of the process of examination, and has a different purpose and different legal consequences. It was and is available only where goods are liable to forfeiture, whereas the power of detention discussed in the case of Jacobsohn is available where there are reasonable grounds for suspecting that goods are so liable. The power of detention conferred by section 275(1) of the 1952 Act, and now contained in section 139(1) of the 1979 Act, is an alternative to the seizure of the goods in question, but differs from seizure in that it is temporary in nature and does not trigger the commencement of proceedings for the condemnation of the goods. As Elias LJ suggested in the Eastenders case, there could be circumstances in which goods were considered to be liable to forfeiture but in which the Commissioners might not wish to embark at once upon a procedure leading to the condemnation of the goods, for example where the breach of the law was capable of correction. Detention under section 139(1), unlike detention for the purpose of investigation, would require, and would attract, the protection afforded by section 144(2). The important question for present purposes is whether, when Parliament created the power to detain goods liable to forfeiture, it by implication abolished the power of detention which had previously been held to arise by necessary implication from statutory powers of examination. In our view no such implication follows, for several reasons. (1) Temporally, the powers are distinct: the process of examination precedes the reaching of a conclusion whether goods are liable to forfeiture. In terms of purpose, the powers are equally distinct. The purpose for which the power to detain, as an incident of examination, may be exercised is to enable the officers to retain control over the goods temporarily until they have arrived at a conclusion as to the duty payable or as to whether the goods are liable to forfeiture. The purpose for which goods may be detained after such a conclusion has been reached is plainly different, and would appear to be as Elias LJ suggested. There is therefore no necessary implication that the enactment of a power to detain goods liable to forfeiture entailed the abrogation of the existing power to detain as part of the process of examination. (2) It is difficult to conceive why Parliament should have conferred upon the Commissioners and their officers a wider range of intrusive investigatory powers than any other public body, but should at the same time have chosen to deprive them of a means of preventing goods from being disposed of until they have completed their examination and decided whether the goods should be seized. Why depart from an approach long approved by the courts? Why, moreover, should Parliament have conferred on the Commissioners more extensive powers to detain persons (in section 138 of the 1979 Act) than to detain goods? (3) The 1952 Act was a consolidation Act with amendments. There is nothing in the report of the Committee reporting on the Bill (Report of the Committee on the Draft Customs and Excise Bill (1951), Cmd 8453), or in the notes on clauses prepared by Parliamentary counsel, included as an appendix to the report, to indicate that Parliament intended the 1952 Act to have the effect of restricting the existing powers of detention possessed by customs officers. We turn now to consider the present appeals in the light of these general observations. The Eastenders case In the Eastenders case, there is no dispute that the officers were entitled to inspect the goods in question in accordance with section 118C(2) of the 1979 Act, and to require the production of documents under section 118B. It is also not in dispute that, as Sales J found, the officers had reasonable grounds to suspect that duty had not been paid on the goods. The officers were unable to fulfil the object of the inspection, by determining whether the appropriate duties had been paid, without making further enquiries into the provenance of the goods. They detained the goods while those enquiries were made. It is not in dispute that the period during which the goods were detained did not exceed a reasonable period of time. In the present appeal, counsel for the Commissioners submitted that section 118C(2) of the 1979 Act authorised the detention of the goods until the statutory inspection had been completed, and further submitted, in the light of the Jacobsohn case, that there was, and had always been, a power to detain goods pending determination of whether or not they were liable to forfeiture. It was however their primary contention that the inspection of the goods came to an end when the goods had been visually examined, and that their subsequent detention must therefore be justified under section 139(1). For the reasons we have explained at paras 35 37, we consider that that approach is based upon an unduly narrow understanding of what may be involved in an inspection in such circumstances. As we have explained at para 23, we consider that the majority of the Court of Appeal were correct in their construction of section 139(1). They were therefore correct to hold that, since the goods were not in fact liable to forfeiture, their detention did not fall within the scope of section 139(1). It does not however follow that the officers had no power to detain the goods for the purpose of investigating their duty status. Since the officers were carrying out a lawful inspection of the goods for the purpose of determining whether the appropriate duties had been paid, and had reasonable grounds to suspect that duty had not been paid, they were in our view entitled by virtue of section 118C(2) to detain the goods for a reasonable period in order to complete the enquiries necessary to make their determination. The First Stop Case In the First Stop case, there is no dispute that the officers were entitled to examine the goods in question in accordance with section 112 of the 1979 Act, and to require the production of documents under section 112A. The officers were unable to fulfil the object of the examination, by determining whether the appropriate duties had been paid, without making further enquiries into the provenance of the goods. They detained the goods while those enquiries were made. They appear to have had reasonable grounds for suspicion that duty had not been paid, and the contrary has not been argued. It has not been argued that the period during which the goods were detained exceeded a reasonable period of time. As in the Eastenders appeal, it was submitted on behalf of the Commissioners that the power of examination conferred by section 112 permitted the Commissioners to detain the goods for the purpose of their examination, and that there was a power to detain the goods pending determination of whether or not they were liable to forfeiture. These were again, however, conceived to be distinct powers, on the assumption that the examination of the goods came to an end when they had been visually inspected. It was therefore the Commissioners primary contention that the power to detain the goods after that point must have some other source, section 139(1) being the only candidate. As in the Eastenders appeal, we consider however that the examination was not completed until the necessary enquiries had been made, and that the power of examination impliedly included an ancillary power of detention for a reasonable time while those enquiries were made. Counsel for First Stop submitted that this approach to the case was not open to the Commissioners, since they had expressly referred to section 139(1) as the legal basis of the detention of the goods: see para 8 above. We are unable to accept that submission. The lawfulness of the detention of the goods depends upon whether the Commissioners possessed the power to detain them, not on whether they accurately identified the statutory source of that power. The reasons given to First Stop for the detention of the goods (pending further enquiries into their duty status), although certainly not expansive, were sufficient to enable them to exercise their rights, as indeed they did. As we have explained, section 144(2) of the 1979 Act confers a protection against liability in damages or costs. It applies where any proceedings are brought against the Commissioners, a law officer of the Crown or any person authorised by or under the [1979 Act] to seize or detain any thing liable to forfeiture under the customs and excise Acts on account of the seizure or detention of any thing, and judgment is given for the plaintiff or prosecutor. In the circumstances of the Eastenders and First Stop cases, judgment should not have been given for the claimants: on a proper understanding, the detention of their goods had been lawful, and their applications for judicial review should therefore have been dismissed. Section 144(2) was therefore not applicable. The court should have exercised its ordinary discretion in relation to the costs of the proceedings. It is unnecessary to decide whether, in any event, section 144(2) applies where goods are detained otherwise than under section 139(1). It follows that the points that were raised by First Stop (and which Eastenders also sought to raise) in relation to the compatibility of section 144(2) with Convention rights do not arise. It also follows, however, that the decisions on costs in both cases were made on a mistaken basis. No court has been addressed on the issue of costs in these cases on the basis that the court possessed its ordinary discretion. In the circumstances, it is appropriate that the decisions on costs should be set aside and the matter re considered by this court on the proper basis. Disposition For these reasons, we would allow the Commissioners appeal in the Eastenders case, and dismiss the first of the appeals brought by First Stop. The appeal in relation to costs should be allowed. The decision of the Court of Appeal in relation to costs in the Eastenders case should also be set aside. The parties should be invited to make submissions on the issue of costs in this court and the courts below. |
This appeal raises a short question on the operation by the respondent Commissioners (HMRC) of the Construction Industry Scheme under the Finance Act 2004 (the Act). The appellant company (the company) was registered for gross payment under the scheme. As is now accepted, it failed to comply with the requirements of the scheme without reasonable excuse. In consequence, on 30 May 2011, HMRC exercised their power under the Act to revoke its registration. In doing so, they took no account of the likely effect of their action on the companys business. The company contends that this represented a failure to take account of a material consideration, in breach of both domestic public law, and of the European Convention on Human Rights (the Convention). Factual background The facts are set out in detail in the judgment of Henderson LJ in the Court of Appeal: [2016] EWCA Civ 1160. A summary is sufficient for present purposes. The company is a family run business of water well engineers, started in 1972. In 2011 it had about 25 employees, and an annual turnover of about 4.4m, much of it derived from contracts with a small number of major customers. It was first registered for gross payment in about 1984, and its registration was regularly reviewed thereafter. It first failed a review in July 2009, when its registration was cancelled, and the same occurred in June the following year; but on both occasions the registration was reinstated by HMRC following an appeal. Between August 2010 and March 2011 the company was late in making PAYE payments on seven occasions, the delays being generally of a few days, but on one occasion of at least 118 days. This led to a further review and to the cancellation which is the subject of the present proceedings. The companys appeal succeeded before the First tier Tribunal (FTT) ([2012] UKFTT 639 (TC)), but that decision was not upheld by the Upper Tribunal ([2015] UKUT 0392 (TCC)) or the Court of Appeal ([2016] EWCA Civ 1160). It now appeals to this court with permission given by the court itself. By section 67(5) of the Act, the cancellation does not take effect until the final determination of the appeal. The FTT accepted the companys evidence that major customers would be likely to withdraw work if it lost its gross payment status. It found that at the time of HMRCs decision cancellation would have been likely to lead to the loss of around 60% of the companys turnover, and the dismissal of about 80% of its employees, and that recovery would be expected to take about ten years. The FTT also recorded that in July 2011 significant changes were made to the companys PAYE systems, with the result that payments thereafter were always made on time. We have no information as to what has happened to the business in the period since 2011, nor as to the likely effect of the loss of its status if this appeal fails, and the cancellation now takes effect. In that event, the company would not be able to re apply for one year after the cancellation takes effect: section 66(8). The legislation As Henderson LJ noted, the overall structure and purpose of the legislation has remained broadly the same since the inception of the statutory scheme some 45 years ago. He cited Ferris Js description of the background in Shaw v Vicky Construction Ltd [2002] EWHC 2659 (Ch); [2002] STC 1544: in 3. In the absence of the statutory provision with which this appeal is concerned Vicky would be entitled, like any other sub contractor, to be paid the contract price in accordance with its contract with the contractor without any deduction in respect of its own tax liability. However it became notorious that many sub contractors engaged industry the construction disappeared without settling their tax liabilities, with a consequential loss of revenue to the exchequer. 4. In order to remedy this abuse Parliament has enacted legislation, which goes back to the early 1970s, under which a contractor is obliged, except in the case of a sub contractor who holds a relevant certificate, to deduct and pay over to the Revenue a proportion of all payments made to the sub contractor in respect of the labour content of any sub contract. The amount so deducted and paid over is, in due course, allowed as a credit against the sub contractor's liability to the Revenue The relevant provisions in the present case are contained in the Finance Act 2004, Part 3 Chapter 3 Construction Industry Scheme. The main operative provisions are section 61, which provides for deductions on account of tax from contract payments as defined; and section 60 which excludes from the definition payments made to a person registered for gross payment when the payment is made. Registration of sub contractors is governed by sections 63 and 64. Section 63 provides that if HMRC are satisfied that the relevant requirements of sections 63 and 64 are satisfied in respect of a company, it must be registered for gross payment; but, if not, it must be registered for payment under deduction. Henderson LJ rightly observed (para 23) that the registration provisions are highly prescriptive, HMRC having no discretion at this stage; and that payment under deduction is the default position. The detailed requirements for registration of a company are set out in Part 3 of Schedule 11. Again these requirements were rightly described by Henderson LJ as highly prescriptive (paras 27 28). Relevant in the present case is para 12 which sets out The compliance test. This generally requires the company to have complied, in the qualifying period of 12 months preceding the application, with all obligations imposed on it under the Tax Acts or the Taxes Management Act 1970. This is subject to certain exceptions prescribed by regulations for failures to be treated as satisfying the relevant condition (prescribed minor failures, as Henderson LJ described them) (para 12(2)). Also a company that has failed to comply is treated as satisfying the condition if HMRC are of the opinion that the company had a reasonable excuse for the failure to comply and that it complied without unreasonable delay after the excuse had ceased (para 12(3)). The company must also have paid required social security contributions during the qualifying period (para 12(4)); and have complied with specified obligations under the Companies Act 1985 (para 12(5)). Paragraph 13 enables the Treasury by order, subject to approval in draft by the House of Commons, to vary the conditions for registration for gross payment. Section 66 provides for cancellation of registration for gross payment: (1) The Board of Inland Revenue may at any time make a determination cancelling a persons registration for gross payment if it appears to them that if an application to register the person for gross (a) payment were to be made at that time, the Board would refuse so to register him, (b) he has made an incorrect return or provided incorrect information (whether as a contractor or as a sub contractor) under any provision of this Chapter or of regulations made under it, or (c) he has failed to comply (whether as a contractor or as a sub contractor) with any such provision As is common ground, the use of the word may in section 66(1) imports an element of discretion, by contrast with the mandatory words of section 63. The dispute is as to its scope. Where registration for gross payment is cancelled under section 66(1), the person must be registered for payment under deduction (section 66(6)). As already noted, he may not reapply for registration for gross payment for one year after the cancellation takes effect (section 66(8)), but the effect of the cancellation is suspended pending determination of an appeal (section 67(5)). By section 67 a person aggrieved by cancellation of registration may appeal by notice given to HMRC within 30 days. Provision for HMRC review or determination by the tribunal are set out in sections 49Aff of the Taxes Management Act 1970. A favourable conclusion on HMRC review is treated as if it were an agreement for settlement under section 54, and so equivalent to a determination of the appeal (section 49F(2)). As already seen, the first two cancellations were disposed of in this way. However, on the third occasion, HMRC maintained its position and the appeal accordingly was referred to the tribunal. Section 102 of the 1970 Act gives HMRC a general power in their discretion [to] mitigate any penalty. It is not however suggested that cancellation of registration can be treated as a penalty within this provision. under Article 1 of the First Protocol to the Convention (A1P1): In the alternative, the company relies on its right to protection of property Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. The decisions below As already noted, the FTT allowed the appeal, holding that HMRC had been wrong not to take account of the likely impact on the companys business. The tribunal described section 66 as giving a general unfettered discretion to take account of the impact on a business of cancellation. It thought that HMRC must have itself have taken some account of such factors in its decisions on the two reviews, even though no specific reasons were given. It saw good reasons for the distinction between registration and cancellation, because of the serious implications of cancellation for an existing business (paras 60 62). As already noted, the Upper Tribunal and the Court of Appeal took a different view. It is unnecessary to repeat their detailed reasoning. Henderson LJ approach is encapsulated in the following passage: 60. As a matter of first impression, I cannot find any indication in this tightly constructed statutory scheme that Parliament intended HMRC to have the power, and still less a duty, to take into account matters extraneous to the CIS regime, when deciding whether or not to exercise the power of cancellation in section 66(1). By matters extraneous to the CIS regime I mean in particular, in the present context, matters which do not relate, directly or indirectly, to the requirements for registration for gross payment, and to the objective of securing compliance with those requirements. My preliminary view, therefore, is that consideration of the financial impact on the taxpayer of cancellation would fall well outside the intended scope of the power. He found nothing in the submissions to displace that first impression. In particular, he saw no difficulty in explaining the discretion given by section 66, as compared with the registration provisions, given the highly prescriptive nature of the regime: It seems to me entirely appropriate, and a substantial protection for the registered person, that HMRC should then be given a discretion whether or not to exercise the power of cancellation, even in cases where the condition in section 66(1)(a) is satisfied. The Upper Tribunal gave two examples, in para 64 of the UT Decision, quoted above, of cases where HMRC might properly exercise such discretion in the taxpayers favour, without travelling outside what I would regard as the proper scope of the power. It needs to be remembered, in this connection, that the reasonable excuse exception does not apply to all the requirements of the compliance test, and in the absence of any discretion even a single minor failure to pay national insurance contributions on the due date, or a minor failure to comply with one of the Companies Act requirements, would be fatal, even if there were a reasonable excuse for the non compliance. Similarly, the rigid structure of Regulation 32 itself leaves no scope for the exercise of any discretion, even if the relevant test was failed by a narrow margin, the amount involved was relatively small, and although (when viewed in isolation) there was no reasonable excuse for the non compliance, there was nevertheless good reason to suppose that it would not be repeated. I therefore remain unpersuaded that there is any need to broaden the scope of the discretion conferred by section 66(1) in order to provide it with any worthwhile content. (para 63) In respect of the alternative argument under the Convention, Henderson LJ noted (para 37) that it was common ground before the Court of Appeal that both registration for gross payment, and the contractual right to payment of the contract price, constituted possessions for the purposes of A1/P1. However, he did not accept that any interference with those possessions was disproportionate: Given the practical and cash flow advantages of registration for gross payment, it is always probable that cancellation of the registration will seriously affect the taxpayer's business. Far from being exceptional, such consequences are likely to be the norm, and taxpayers must be taken to be well aware of the risks to their business which cancellation will bring. In individual cases, of which this may perhaps be one, the result may seem harsh; but a degree of harshness in a regime which is designed to counter tax evasion, and where continued compliance is within the power of the sub contractor, cannot in my view be characterised as disproportionate. Both deterrence, and ease of compliance, are important factors which help to make the CIS scheme as a whole clearly compliant with A1P1 (para 80) The submissions in this court The company (by Mr Chacko and Miss Boyd of Counsel) argue that the discretion given by section 66 should be taken at face value. It is in terms unfettered, and there is nothing to indicate an intention to exclude consideration of the practical effect of cancellation. Absent a contrary indication, they submit, the consequences of the exercise of a power must be assumed to be a relevant consideration. They contrast, for example, Schedule 56, para 9 to the Finance Act 2009, which provides for mitigation of certain penalties in special circumstances, but specifically excludes consideration of the taxpayers ability to pay. If Parliament had wished to limit the scope of the discretion under section 66 it would have used express words. There was no logical dividing line between the scope of the discretion accepted as permissible by the Court of Appeal, and that argued for by the company. Nor was a broader discretion inconsistent with the proper exercise of HMRCs statutory functions, as illustrated for example by the wide discretion accepted as appropriate in the context of customs penalties: see Denley v Revenue and Customs Comrs [2017] UKUT 340 (TCC), paras 13 14. Such a discretion also reflects the well established proposition that removal of an advantageous trading status has a more serious impact on a business than refusal to grant the status in the first place. They cite the common law principle of proportionality as applied in the well known case of R v Barnsley Metropolitan Borough Council, Ex p Hook [1976] 1 WLR 1052, 1057, where Lord Denning MR said: [T]here are old cases which show that the court can interfere by certiorari if a punishment is altogether excessive and out of proportion to the occasion It is quite wrong that the Barnsley Corporation should inflict upon [Mr Hook] the grave penalty of depriving him of his livelihood. That is a far more serious penalty than anything the magistrates could inflict. He is a man of good character, and ought not to be penalised thus In the alternative, as in the courts below, they rely on A1/P1. As was accepted before the Court of Appeal, they submit that cancellation clearly involves an interference with the possessions represented by (at least) the sub contractors entitlement to the full contract price or the bundle of rights inherent in registration. Although the article preserves the right of the state to enforce such laws as it deems necessary to secure the payment of tax, that is still subject to the requirement of proportionality. They rely on the words of Lord Phillips MR in Lindsay v Customs and Excise Comrs [2002] EWCA Civ 267; [2002] 1 WLR 1766, para 52: Under Article 1 of the First Protocol to the Convention such deprivation will only be justified if it is in the public interest. More specifically, the deprivation can be justified if it is to secure the payment of taxes or other contributions or penalties. The action taken must, however, strike a fair balance between the rights of the individual and the public interest. There must be a reasonable relationship of proportionality between the means employed and the aim pursued I would accept [counsels] submission that one must consider the individual case to ensure that the penalty imposed is fair. However strong the public interest, it cannot justify subjecting an individual to an interference with his fundamental rights that is unconscionable. They rely to the same effect on the necessary balance as described by Lord Reed in Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700, para 74: whether, balancing the severity of the measures effects on the rights of the persons to whom it applies against the importance of the objective, to the extent that the measure will contribute to its achievement, the former outweighs the latter. This it is submitted can only be done by assessing the severity of the consequences for the particular individual in question, even if the legislative scheme taken as a whole is proportionate. For HMRC Mr Eadie QC generally supports the reasoning of the Court of Appeal. In respect of the Convention, he does not accept that cancellation involves an interference with a possession for the purposes of A1P1. The subcontractors right to payment of the contract price is in law subject to the limits imposed by the statutory scheme. Similarly, any benefits from registration flow from the statutory scheme and are subject to its conditions, including the risk of cancellation. He relies on the distinction drawn by the Strasbourg court in JA Pye (Oxford) Ltd v United Kingdom (2006) 43 EHRR 3 (the same point did not arise in the Grand Chamber: (2008) 46 EHRR 45). At para 51 the court considered the circumstances in which a legislative provision is to be regarded as an incident of, or limitation on, the applicants property right at the time of its acquisition. It explained: Article 1 does not cease to be engaged merely because a person acquires property subject to the provisions of the general law, the effect of which is in certain specified events to bring the property right to an end, and because those events have in fact occurred. Whether it does so will depend on whether the law in question is properly to be seen as qualifying or limiting the property right at the moment of acquisition or, whether it is rather to be seen as depriving the owner of an existing right at the point when the events occur and the law takes effect. It is only in the former case that article 1 may be held to have no application. (Emphasis added) The present case, Mr Eadie submits, comes clearly into the former category. The power of cancellation for non compliance is an intrinsic part of the possession from the moment of acquisition; its exercise cannot engage the article. In any event, he submits, it is clearly within the wide margin allowed by the Convention in fiscal matters: see Gasus Dosier und Frdentechnik GmbH v Netherlands (1995) 20 EHRR 403, para 59. National & Provincial Building Society v United Kingdom (1997) 25 EHRR 127, para 80. The Strasbourg court has also made clear that the margin may extend to the adoption by the state of general measures which apply to pre defined situations regardless of the individual facts of each case even if this might result in individual hard cases: Animal Defenders International v United Kingdom (2013) 57 EHRR 21, para 106. Discussion Attractively though the appeal has been argued, I have no doubt that the Court of Appeal reached the right conclusion, substantially for the reasons they gave. Apart from the Convention, the companys submission comes down to a short point: that is, given the existence of a discretion in section 66, it must in the absence of any specific restriction be treated as an unfettered discretion. That to my mind overlooks the basic principle that any statutory discretion must be exercised consistently with the objects and scope of the statutory scheme. Like Henderson LJ, I cannot read the power as extending to matters which do not relate, directly or indirectly, to the requirements for registration for gross payment, and to the objective of securing compliance with those requirements (para 60). He rightly emphasised the highly prescriptive nature of the scheme. This starts with the narrowly defined conditions for registration in the first place, among which the record of compliance with the tax and other statutory requirements is a mandatory element, allowing no element of discretion. The same conditions are brought into the cancellation procedure by section 66. The mere fact that the cancellation power is not itself mandatory is unsurprising. Some element of flexibility may be desirable in any enforcement regime to allow for cases where the failure is limited and temporary (even if not within the prescribed classes) and poses no practical threat to the objectives of the scheme. It is wholly inconsistent with that tightly drawn scheme for there to be implied a general dispensing power such as implied by the companys submissions. Turning to A1/P1 I see force in Mr Eadies submission that, even accepting that rights conferred by registration amount to possessions, they cannot extend beyond the limits set by the legislation by which they are created. However, I find it unnecessary to rest my decision on that point, since I have no doubt that the Court of Appeal were right to hold that any interference was proportionate. Once it is accepted that the statute does not in itself require the consideration of the impact on the individual taxpayer, there is nothing in A1/P1 which would justify the court in reading in such a requirement. Registration is a privilege conferred by the legislation, which has significant economic advantages, but it is subject to stringent conditions and the risk of cancellation. The impact on the company is no different in kind from that which is inherent in the legislation. I agree entirely with Henderson LJ that the exercise of the power within the scope of the statutory framework comes well within the wide margin of appreciation allowed to the state for the enforcement of tax. For these reasons, I would dismiss the appeal. |
This case is concerned with a marine insurance policy on cargo dated 5 July 2005, which incorporated the Institute Cargo Clauses (A) of 1 January 1982. The policy covered all risks of loss or damage to the subject matter insured except as provided in Clauses 4, 5, 6 and 7 Clause 4.4 excluded loss, damage or expense caused by inherent vice or nature of the subject matter insured from the cover provided by the policy. The subject matter of the insurance was the oil rig Cendor MOPU. This oil rig had been laid up in Galveston, Texas. In May 2005 it was purchased by the respondents (the assured under the policy) for conversion into a mobile offshore production unit (MOPU) for use in the Cendor Field off the coast of East Malaysia. The insurance covered the loading, carriage and discharge of the oil rig on the towed barge Boabarge 8 from Galveston in the United States to Lumut in Malaysia. The total sum covered was Malaysian Ringgits 38m (US$10m) with a deductible of US$1m. The premium was US$378,000. The oil rig, originally called the Odin Liberty, was built in Singapore in 1978. It is what is called a self elevating mat supported jack up rig, consisting of a watertight working platform called the jackhouse, which can be moved (jacked) up and down three legs extending to the seabed, according to the sea depth at the drilling location. There is a mat at the bottom of the legs that sits on the seabed when the rig is in operation. The legs are massive tubular structures, made of welded steel cylindrically shaped, with an outside diameter of 12 feet and a length of 312 feet. Each weighed 404 tons. The jacking system worked by engaging steel pins into what were called pinholes in the legs. These pinholes were apertures some 16 inches wide and 10 inches high. Each leg had 45 sets of pinholes at 6 foot intervals. The rig was carried on the barge with its legs in place above the jackhouse, so that the legs extended some 300 feet into the air. The voyage began on 23 August 2005. On 10 October 2005 the tug and barge arrived at Saldanha Bay, just north of Cape Town. There some repairs were made to the legs and the voyage resumed on 28 October. North of Durban on the evening of 4 November 2005, the starboard leg broke off at the 30 foot level and fell into the sea. The following evening the forward leg broke off at the same level, and some 30 minutes later the port leg broke off at the 18 foot level. Both these legs also fell into the sea. It is the loss of the three legs that is the subject matter of the claim under the policy. The loss resulted from metal fatigue in the three legs. Fatigue is a progressive cracking mechanism resulting from repeated or fluctuating (cyclic) stresses each at a level lower than that required to cause fracture of an uncracked component. Generally, there are three stages to the fatigue failure of any component, namely initial cracking, propagation of the cracking and finally complete fracture. The initial cracking occurs in regions of stress raising features, such as corners or notches, where stresses are concentrated. In the present case, the corners of the pinholes were stress raising features. The initial fatigue cracks occurred there and then propagated until they reached a point where they were subjected to what was described as a leg breaking stress that completely fractured the weakened leg. Once the first leg had failed, the stresses on the remaining legs increased. The stresses in the present case were generated from the effect that the height and direction of the waves had on the pitching and rolling motion of the barge and thus on the legs. It was common ground that what the barge experienced was within the range of weather that could reasonably have been contemplated for the voyage. That the legs of the rig were at risk of fatigue cracks during the voyage was known from the outset and the legs were inspected at Galveston by experts appointed by the assured and approved by the insurers. It was a condition of the policy that the appointed surveyors Noble Denton approved the arrangements for the tow. These surveyors issued a Certificate of Approval on 23 August 2005. In this certificate they required that the legs be reinspected when the barge reached Cape Town (roughly the half way point) for crack initiation in way of the six levels of pinholes above the mat; so that remedial work could be undertaken should it be found necessary. When the rig was examined at Saldanha Bay it was found that there had occurred a considerable degree of fatigue cracking around the pinholes; and some repairs were made in order to reduce the stress concentrations in these areas. Self evidently, however, the repairs did not prevent the final failure of the legs a few days later. The insurers rejected the claim for the loss of the legs and the matter came for trial before the Commercial Court. At the trial one of the arguments advanced by the insurers was that the loss was the inevitable consequence of the voyage, and that since insurance was against risks, not certainties, they were under no liability for the loss of the legs. The judge, Blair J, [2009] 2 All ER (Comm) 795, rejected this argument, concluding at para 87 that the failure of the legs as this rig was towed round the Cape was very probable, but it was not inevitable. As he put it: a developed crack would not, on its own, have been sufficient to cause one of the legs to come off. That required in addition a leg breaking or final straw stress that finally fractured the weakened steel. As Mr Colman [one of the experts called at the trial] put it, youve got to catch it just right, if you want to make it actually fail all the way round. The insurers do not challenge the judges conclusion. One of the arguments advanced by the assured at the trial was that the loss resulted from the failure to effect adequate repairs at Saldanha Bay. This argument too was rejected by the trial judge, on the grounds that the loss occurred despite the repairs and not because of them. The assured does not challenge this conclusion. What Blair J decided was that the insurers had proved that the proximate cause of the loss was the fact that the legs were not capable of withstanding the normal incidents of the insured voyage from Galveston to Lumut, including the weather reasonably to be expected. In his judgment this meant that the cause of the loss was inherent vice within the meaning of the policy and that accordingly the insurers were not liable for the claim. The Court of Appeal [2010] 1 Lloyds Rep 243, para 64 took a different view and concluded that the proximate cause of the loss was an insured peril in the form of the occurrence of a leg breaking wave, which resulted in the starboard leg breaking off, leading to greater stresses on the remaining legs, which then also broke off. The insurers now appeal to the Supreme Court. Both at first instance and in the Court of Appeal, the judges expressed their task as seeking to find the proximate cause of the loss. The reason for this is to be found in the Marine Insurance Act 1906, which was entitled An Act to codify the Law relating to Marine Insurance. Section 55(1) of this Act provides that: Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against. In general terms therefore, whether or not a loss is covered by a marine policy depends on ascertaining its proximate cause. Although there were some authorities before the Marine Insurance Act 1906 that appeared to proceed upon the basis that the relevant cause was that closest in time to the loss, it is now well settled that this is not the test for proximate cause: Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350. The proximate cause is that which is proximate in efficiency; and, as Bingham LJ put it in T M Noten BV v Harding [1990] Lloyds Rep 283, 286 287: Unchallenged and unchallengeable authority shows that this is a question to be answered applying the common sense of a business or seafaring man. It was common ground between the parties that it was for the insurers to prove that the loss was proximately caused by inherent vice or nature of the subject matter insured. The central issue before this court was as to the meaning of this exception to the cover. Although in the present case, as pointed out above, this exception is spelt out in the Institute Cargo Clauses, it also appears in section 55(2)(c) of the Marine Insurance Act 1906, which provides: Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils. It is not suggested that the exception under consideration bears a different meaning from that in the Marine Insurance Act 1906, though if there are two proximate causes, one of which is covered and the other which is (as here) specifically excepted, it appears settled that the loss is not recoverable under the insurance: Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 57; J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyds Rep 32. In the present case the two remaining candidates for proximate cause are perils of the seas, in the form of the stresses put upon the rig by the height and direction of the waves encountered by the barge, and inherent vice or nature of the subject matter insured. Both parties to this appeal relied upon the definition of inherent vice or nature of the subject matter insured given by Lord Diplock in Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyds Rep 122. In that case a cargo of soya beans was insured against risks of heating, sweating and spontaneous combustion. The goods arrived in a heated and deteriorated condition. The insurers denied liability on the grounds that the proximate cause of the damage was inherent vice or nature of the subject matter insured, for which they were not liable under section 55(2)(c) of the Marine Insurance Act 1906; and that the cover only extended to heating, sweating or spontaneous combustion brought about by some external cause. The House of Lords decided that as a matter of construction the policy did otherwise provide within the meaning of the opening words of section 55(2)(c) so that the perils of heating, sweating and spontaneous combustion arising from inherent vice or nature of the subject matter insured were covered. It was in this context that Lord Diplock, at p 126, stated that: This phrase (generally shortened to inherent vice) where it is used in section 55(2)(c) refers to a peril by which a loss is proximately caused; it is not descriptive of the loss itself. It means the risk of deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty. The insurers submitted that applying this definition to the present case, the first question was whether at Galveston, assuming the ordinary course of the contemplated voyage, without any intervening adverse fortuity, the rig had within itself internally the risk of deterioration, which they described as the inherent vice at Galveston; while the second question was whether the inherent vice at Galveston was the proximate or one of the proximate causes of the loss. They submitted that Lord Diplock had made it clear that it was not enough to negative inherent vice to have some external fortuity. The external fortuity had to intervene so that it negatived causation of the loss by the unfitness of the goods which existed on shipment. In the present case, it was submitted, the actual sea conditions, albeit themselves fortuities, were within the range that could reasonably have been contemplated for the voyage. In other words, it was submitted that those sea conditions occurred in and as part of the ordinary course of the contemplated voyage. The submission was, therefore, that there had been no intervention of any fortuitous external accident or casualty, so that the loss was proximately caused by the inherent vice at Galveston. The insurers sought support for these submissions from some passages from the judgment of Donaldson LJ in the court below in the same case ([1982] 1 Lloyds Rep 136, 150); from the decision of the Court of Appeal in T M Noten BV v Harding [1990] 2 Lloyds Rep 283; and from the decision of the British Columbia Court of Appeal in Nelson Marketing International Inc v Royal and Sun Alliance Insurance Co of Canada (2006) 57 BCLR (4th) 27. There is nothing to suggest that Lord Diplock was in agreement with the definition of inherent vice suggested by Donaldson LJ, namely that a loss is proximately caused by inherent vice if the natural behaviour of the goods is such that they suffer a loss in circumstances in which they are expected to be carried. Such a definition pays scant regard as to how and in what circumstances the loss occurred. In T M Noten BV v Harding [1989] 2 Lloyds Rep 527; [1990] Lloyds Rep 283 industrial leather gloves were shipped from Calcutta to Rotterdam. On arrival the good were found to be wet, stained, mouldy and discoloured. The judge at first instance (Phillips J) decided that the damage had been caused by moisture, which had been absorbed by the goods in the humid atmosphere of Calcutta and had then evaporated and condensed on the top of the container, before falling back on the goods and damaging them. Phillips J decided that the proximate cause of the damage was external to the goods, even if a characteristic of the goods had helped to create that external cause; and that accordingly the defence of inherent vice failed. The Court of Appeal overruled this decision. As already observed, it was in this case that Bingham LJ made clear that the ascertainment of the proximate cause was a question to be answered applying the common sense of a business or seafaring man. The answer that the Court of Appeal gave was that the goods deteriorated as a result of their natural behaviour in the ordinary course of the contemplated voyage, without the intervention of any fortuitous external accident or casualty. The damage was caused because the goods were shipped wet. It is noteworthy that in that case it was accepted on behalf of the assured that if the damage complained of had been caused by excessive moisture in the gloves, but without the intervening process of condensation on the roof of the containers, the position would have been different. Bingham LJ described this suggested distinction as owing more to the subtlety of the legal mind than to the commonsense of the mercantile. This case therefore is one where, applying commonsense, the proximate cause of the damage was the moisture in the cargo, and the fact that it evaporated from the cargo before condensing and falling back on the cargo was neither here nor there. There was, as Bingham LJ pointed out, no untoward or unusual event of any kind. It was not unusually hot in Calcutta or particularly cold in Rotterdam. There was, on the evidence, no combination of fortuitous events, and the defendant never undertook to insure the plaintiffs against the occurrence of hot and humid weather in Calcutta during the monsoon.: p 289. The British Columbia Court of Appeal in Nelson Marketing International Inc. v Royal and Sun Alliance Insurance Co of Canada 57 BCLR (4th) 27 followed this decision in a case where shipments of laminated truck flooring were damaged by moisture absorbed by the flooring in the course of manufacture, which on the voyage had evaporated and condensed in circumstances which were not established to be other than what was expected in the ordinary course of the voyages in question. There was no fortuitous external occurrence causing the deterioration. As Lowry JA put it, at p 35: Rather, on the evidence adduced, it was attributable to the nature of the subject matter of the insurance. In the two cases under discussion, there was simply no external fortuitous event or series of events which could sensibly be described as the proximate cause of the damage. In my judgment these cases do not provide authority for the proposition that inherent vice or nature of the subject matter insured is established by showing that the goods in question were not capable of withstanding the normal incidents of the insured voyage, including the weather reasonably to be expected. What they do establish is that where the only fortuity operating on the goods comes from the goods themselves, the proximate cause of the loss can properly be said to be the inherent vice or nature of the subject matter insured and so (in the absence of provisions to the contrary) falls outside the cover. However, the case that is authority for the proposition contended for by the insurers is the decision of Moore Bick J in Mayban General Insurance v Alstom Power Plants Ltd [2004] 2 Lloyds Rep 609. In that case the cargo was a transformer, which was seriously damaged by the violent movements of the vessel due to the action of the wind and sea. However, Moore Bick J held that goods tendered for shipment must be capable of withstanding the forces that they can ordinarily be expected to encounter in the course of the voyage and that if the conditions encountered by the vessel were no more severe than could reasonably have been expected, the conclusion must be that the real cause of the loss was the inherent inability of the goods to withstand the ordinary incidents of the voyage. The judge went on to find that the conditions encountered were neither extreme nor unusual in the sense that they were encountered often enough for mariners to regard them as a normal hazard. He accordingly held that the insurers were not liable for the damage, since the cover excluded loss damage or expense caused by inherent vice or nature of the subject matter insured. In the present case Blair J regarded this case as applying the correct test; the Court of Appeal declined to do so. In my judgment Mayban General Insurance v Alstom Power Plants was wrongly decided. It should be noted that it was apparently common ground between the parties to that case that an inability of the cargo to withstand the ordinary perils of the seas amounted to inherent vice, so that the meaning of inherent vice was not argued out. Furthermore, none of the authorities on the meaning of perils of the seas was cited to the judge. The assured submitted, in my judgment correctly, that the effect of applying the test adopted by Blair J would be to reduce much of the purpose of cargo insurance, for the cover would then only extend to loss or damage caused by perils of the seas that were exceptional, unforeseen or unforeseeable, and not otherwise. This, it was submitted, would go far to frustrate the very purpose of all risks cargo insurance, which is to provide an indemnity in respect of loss or damage caused by, among other things, all perils of the seas. Blair J rejected this submission on the grounds that the real question was as to the proximate cause of the loss; and that the approach of Moore Bick J did not entail that in order to qualify as a peril of the sea, the weather had to be extraordinary. However, although of course the proximate cause of the loss or damage is indeed the real question, this does not to my mind answer the point made by the assured, which is that on the test adumbrated by Moore Bick J, the assured is not covered in respect of loss or damage to cargo caused by unexceptional or foreseen or foreseeable perils of the seas. Put another way, the ordinary form of all risks cargo insurance would, if Moore Bick J was right, not provide cover for losses attributable to the unseaworthiness of the cargo ie loss or damage caused by the inability of the cargo to withstand the ordinary perils of the seas. The reasons for this are as follows. According to section 39 of the Marine Insurance Act 1906, seaworthiness means reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured. The meaning of perils of the seas in the Act is contained in the Rules for construction of policy contained in Schedule 1, where the phrase is defined as referring only to fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves. Thus section 55(2)(c) of the 1906 Act (and the Institute Cargo Clauses) make clear that ordinary wear and tear caused by the sea (or otherwise) is something for which the insurer does not provide cover. It is to be noted that the word ordinary attaches to action not to wind and waves, so that if the action of the wind or sea is the proximate cause of the loss, a claim lies under the policy notwithstanding that the conditions were within the range which could reasonably have been anticipated: the Miss Jay Jay [1985] 1 Lloyds Rep 264, 271. Section 39 of the 1906 Act implies a warranty into a policy covering a vessel for a voyage, that at the beginning of the voyage the vessel shall be seaworthy for the purpose of the particular adventure insured. The effect of the warranty is that if the vessel is not seaworthy the insurer is not liable for any loss or damage, whether or not that was proximately caused by the unseaworthiness. In a time policy there is no such implied warranty, though under section 39(5) where the ship is sent to sea in an unseaworthy state with the privity of the assured, the insurer is not liable for any loss attributable to unseaworthiness. Of course, as Mustill J pointed out in the Miss Jay Jay, at p 272, where an unseaworthy vessel sinks entirely through its own inherent weakness, rather than from the operation of a peril of the seas which it should have been able to withstand, the insurer will also not be liable. As to goods, section 40(1) of the 1906 Act provides that in a policy on goods or other moveables there is no implied warranty that the goods or moveables are seaworthy. Although seaworthiness is not defined in this section, there is no reason to suppose that it bears a different meaning from that in section 39: E D Sassoon & Co v Western Assurance Co [1912] AC 561. Under the 1906 Act therefore, the fact that the goods are not reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured, does not automatically deprive the assured of cover. There is no equivalent to the provisions relating to time policies, where loss or damage attributable to unseaworthiness at the outset known to the assured is excluded. The provisions of the 1906 Act do not fit easily with the proposition that inherent vice or nature of the subject matter insured means that unseaworthy goods are not covered against loss or damage attributable to that unseaworthiness. The effect of that proposition would be that whereas the ship owner under a time policy would be covered against loss attributable to the unseaworthiness of the vessel at the outset to which he was not privy, the cargo owner would not be covered against loss attributable to unseaworthiness of the cargo, whether or not he was privy to the fact that the cargo was unseaworthy. There is nothing in the 1906 Act or in the preceding authorities which to my mind lends support to such a distinction. Furthermore, if inherent vice or nature of the subject matter insured did include unseaworthiness, then, contrary to section 39(5), the insurer could escape liability under a time policy for loss and damage attributable to unseaworthiness even if the assured was not privy to that unseaworthiness. Our attention was drawn to a number of authorities relating to the meaning of perils of the seas, as well as other cases relating to the question of inherent vice or nature of the subject matter insured. I can find nothing in those authorities which lend support to the test applied by Blair J. On the contrary, cases such as Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55 and the Miss Jay Jay make clear that perils of the seas are not confined to cases of exceptional weather or weather that was unforeseen or unforeseeable; while inherent vice or nature of the subject matter insured has never (before the decision in Mayban [2004] 2 Lloyds Rep 609) previously been defined as encompassing any fortuitous external accident or casualty that was unexceptional or foreseen or foreseeable. In these circumstances I do not accept the construction put by the insurers on the definition given by Lord Diplock in Soya v White [1983] 1 Lloyds Rep 122, 126. In my judgment what Lord Diplock was saying, as the assured submitted, was that where goods deteriorated, not because they had been subjected to some external fortuitous accident or casualty, but because of their natural behaviour in the ordinary course of the voyage, then such deterioration amounted to inherent vice or nature of the subject matter insured. As already noted, Blair J held that the real question was as to the proximate cause of the loss. In this he was correct. The question is one of fact, to be decided on common sense principles. Where in my view the judge erred was in giving the phrase inherent vice or nature of the subject matter insured too wide a meaning and, as the other side of the coin, giving the risk of perils of the seas too narrow a meaning, by in effect including in the former and excluding from the latter external fortuities that were unexceptional or which were foreseen or foreseeable; and then answering the question of fact on this erroneous basis. All or virtually all goods are susceptible to loss or damage from the fortuities of the weather on a voyage; this does not mean that such loss or damage arises from the nature of the goods; it arises from the fact that the goods have encountered one of the perils of the seas. In my judgment in the present case the proximate cause of the loss, applying commonsense principles, was not inherent vice nor indeed ordinary wear or tear or the ordinary action of the wind and waves, but an external fortuitous accident or casualty of the seas. This took the form of the rolling and pitching of the barge in the sea conditions encountered catching the first leg at just the right moment to produce stresses sufficient to cause the leg to break off, thereby leading to increased stresses on the remaining legs and their subsequent breakage. It remains to note that if, as the insurers submitted, and Blair J held, the proximate cause of the loss was inherent vice because the legs were not capable of withstanding the normal incidents of the insured voyage from Galveston to Lumut, including the weather reasonably to be expected, it difficult to see how the case could be one where there were two proximate causes, since ex hypothesi it would be the inability of the legs to withstand the stresses, not the stresses themselves, that would be the proximate cause. Thus in my judgment this is not a case in which it could be concluded that there was more than one proximate cause of the loss. For these reasons I would dismiss this appeal. LORD MANCE Introduction In the Victorian era, the proximate cause in marine insurance was readily associated with the last cause in point of time: see eg Thompson v Hopper (1856) 6 E & B 172, 937; Dudgeon v Pembroke (1877) 2 App Cas 284; in the parallel bill of lading context, Thomas Wilson, Sons & Co v Owners of the cargo per the Xantho (The Xantho) (1887) 12 App Cas 503, 514, per Lord Bramwell; J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyds Rep 264, 271 per Mustill J, as well as Fault and Marine Losses [1988] LMCLQ 310 (Sir Michael Mustill). The modern focus on the real efficient cause was finally established at the highest level after the enactment of the Marine Insurance Act 1906, in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350. From that moment, the proximate cause became a matter of judgment and less easy to identify with certainty. Lord Saville has outlined the facts. On the present appeal, the rival candidates as cause of the loss of the three legs of the oil rig Cendor MOPU are, on the one hand, a fortuitous external accident or casualty falling within the concept of all risks of loss or damage in clause 1 of the relevant Institute Cargo Clauses (A) (the respondent insureds case) and, on the other hand, inherent vice of the rig within clause 4.4 of the Clauses (the appellant insurers case). In the alternative, if both can and should be regarded as concurrent causes, insurers submit that the respondents claim must fail, because clause 4.4 is a specific exclusion. This point may not have been clearly identified below, but it is essentially one of law, and insurers are in my view entitled to argue it. By inherent vice, insurers do not mean some characteristic of the rig which was bound to lead to the loss of its legs. Inevitability is not the test of inherent vice, just as lack of inevitability is no proof of a fortuitous external accident or casualty. Inevitability is excluded in this case by Blair Js finding that the failure and consequent loss of the legs was, although very probable, . not inevitable ([2009] 2 All ER (Comm) 795, paras 89 and 104). So it is unnecessary to discuss whether and to what extent there exists a further principle of insurance law, that loss which is inevitable is irrecoverable. If both parties know that loss is inevitable, there may be no risk or insurance at all, although in endowment insurance the risk lies in the uncertainty when death will occur. If the assured alone knows that the loss is inevitable, one would expect him to fail, if only on grounds of non disclosure. If neither party knows, then inevitability resulting from inherent characteristics of the goods will, in the absence of express provision, bar recovery on the grounds of inherent vice. Whether inevitability resulting from outside causes will do so seems an open question. Would it be an answer to war risks insurers to prove that an insurance on cargo was placed at a time when the cargo was already on an aircraft in flight with a timed bomb due to go off in ten minutes in its cargo hold? Such questions do not require further examination here. Putting insurers case at its highest, it may be argued that, because the insured rig was unable to withstand all bad weather conditions which it would foreseeably meet during the insured venture, the assured cannot recover in respect of the resulting loss of or damage to the rig legs. If presented as a rule of law or even of evidence, this would make lack of fitness for the insured venture (or lack of cargoworthiness) a condition precedent to recovery for loss or damage which would not have been suffered had the goods been fit for the venture. This would be a coherent thesis, but it finds possible support in only one decision, and that recent: Mayban General Insurance Bhd v Alstom Power Plants Ltd [2004] 2 Lloyds Rep 609 (Moore Bick J). Its acceptance would place a stringent limit on the scope of marine insurance cover, which could not infrequently lead to disputes about the fitness of cargo to travel, and leave CIF buyers in doubt about whether to look to their insurers or sellers or both, quite possibly in different fora. Mindful no doubt of this, Mr Steven Gee QC does not advance any so definite proposition of law. In his submission, unfitness for the foreseeably bad weather conditions on the voyage is no more than a powerful pointer towards a conclusion that loss or damage occurring as a result of such conditions was proximately caused by inherent vice. When Moore Bick J said in Mayban, at para 21, that, if the conditions encountered by the vessel were no more severe than could reasonably have been expected, then the conclusion must be that the real cause of the loss was the inherent inability of the goods to withstand the ordinary incidents of the voyage, he had in context only been stating a commonsense conclusion. In every such case, it was a matter of evidence and judgment whether the loss or damage was due to the peril of the sea or the inherent characteristic or vice of the cargo or both. Here, Blair J had taken that approach and had found that, Taking the evidence as a whole, . the proximate cause of the loss was the fact that the legs were not capable of withstanding the normal incidents of the insured voyage , including the weather reasonably to be expected (para 111). There was no basis upon which to disturb this assessment of the facts. The Marine Insurance Act 1906 The statutory background includes provisions dealing directly with the fitness of the vessel in the case of hull insurance (section 39) and of the goods and carrying vessel in the case of cargo insurance (section 40). Section 40(1) provides that that there is no implied warranty that the goods or moveables insured are seaworthy, while section 40(2) provides that there is an implied warranty that the carrying ship is, at the commencement of the voyage, not only seaworthy as a ship, but also reasonably fit to carry the goods or moveables to the contemplated destination. The historical origins and rationale of these differing approaches need not detain us, though, looking at them through modern eyes, one could suggest reasons why they might have been framed in a reverse sense, ie to have provided for a warranty of the goods seaworthiness and no warranty of the ships seaworthiness. However that may be, modern cargo clauses very substantially modify section 40(2), providing (in the case of the present Clauses) by clause 5(2) that insurers waive any breach of the implied warranties which section 40(2) contains, unless the assured or their servants are privy to such [un]seaworthiness or unfitness, and for good measure also excluding by clause 5(1) any loss or damage arising from unseaworthiness or unfitness of the vessel at the time of loading of the insured goods where the assured or their servants are so privy. In circumstances where the Act addresses the subject of initial unseaworthiness or unfitness of both the goods and the carrying vessel by express provisions, but leaves the parties free to vary and supplement such provisions as they may wish, it might be thought odd if such unseaworthiness or unfitness could also be a direct test of insurers liability for any particular loss or damage under the separate heading of inherent vice, dealt with in section 55(2)(c). The answer advanced by Mr Gee for the insurers is that there is a great difference between a warranty, which, from the moment of its breach, discharges from all liability for any loss or damage whether or not causatively linked (Bank of Nova Scotia v Hellenic Mutual War Risks Underwriting Association (Bermuda) Ltd (The Good Luck) [1992] 1 AC 233) and a qualification or exclusion which only affects loss or damage arising from the matters covered by the qualification or exclusion. A historical riposte might then be that the famously and sometimes unfairly stringent principles governing insurance warranties were themselves the product of the Victorian view of causation referred to in para 56 of this judgment. If the only relevant cause is the last cause in time, then a prior breach of a simple contractual obligation regarding fitness could have been regarded as irrelevant. Hence, the development of the concept of a warranty which, if broken, automatically discharged from liability for loss or damage, irrespective of how such loss or damage was in law to be regarded as caused. Even prior to the 1906 Act, however, it is clear that thinking had developed in at least some areas. In case of deliberate casting away, the law looked behind the immediate cause of loss. Another, more relevant here, instance is crystallised in section 39(5), providing that, in a time policy on a ship, there is no implied warranty of seaworthiness at any stage of the adventure, but that, where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness. The Act thus recognised in relation to hull insurance the possibility of excluding liability for what would otherwise have been loss or damage by the immediate cause of a peril of the sea, where the loss or damage could, more remotely, be attributed to unseaworthiness of the vessel to which the assured was privy. When the Act was passed, the language loss attributable to unseaworthiness catered for the Victorian reluctance to look behind the last cause in time to any previous cause. How far the word attributable now allows regard to be had to causes which would, under modern conceptions, not be regarded as proximate appears undecided, and may in turn depend upon how far modern conceptions of proximity can, in cases of unseaworthiness, lead the eye back beyond the immediate cause to initial unseaworthiness as the real, dominant or effective cause. That is of course the essential issue in this case. However, it can, I think, still be said that the express treatment of the subject of seaworthiness in hull insurance in section 39(5) highlights the absence of any like provision in respect of cargo insurance and so the oddity of treating section 55(2)(c) as, in effect, containing such a provision when it refers to inherent vice. The oddity is further highlighted under the present Clauses, when one considers the careful restriction in clauses 5.1 and 5.2 of the relevance of breaches of the implied warranties of seaworthiness and fitness of the vessel to circumstances where the assured was privy to such breaches. Under the rules for the construction of an SG policy in the form set out in Schedule 1 to the 1906 Act or other like form: The term perils of the seas refers only to fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves. The present policy was not in or in like form to the SG policy form, but it covered only fortuitous accidents or casualties, not the ordinary action of the winds and waves or other elements: T M Noten BV v Harding [1990] 2 Lloyds Rep 283 (see further paras 62 63 below). The term inherent vice, introduced in section 55(2)(c) to define the scope of marine cover, is not statutorily defined, but Mr Gee relies upon the definition advanced by Lord Diplock in Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyds Rep 122, 126: It means the risk of deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty. Under this definition, the critical questions are what are meant by the ordinary course of the contemplated voyage and the intervention of any fortuitous external accident or casualty. Mr Gee submits that the ordinary course of the contemplated voyage includes all foreseeable weather conditions; on this basis, the triggering by foreseeably bad weather of goods unfitness for the insured adventure, giving rise to loss or damage of the goods, occurs in the ordinary course of the voyage, and there is nothing that can or should be described as a fortuitous external accident or casualty. Mr Gordon Pollock QC for the assured submits, in contrast, that, if goods are lost by what would otherwise be an insured peril, in particular a peril of the seas, then there is a fortuitous external accident or casualty and, by the same token, an event outside the ordinary course of the contemplated voyage. It is, he submits, no answer to this that the fortuity consisted in weather conditions of a foreseeably unfavourable kind, which the goods were not fit to withstand. It will be observed that, applied to Lord Diplocks definition: (i) Mr Gees submission would effectively reintroduce the idea of a condition precedent of fitness, which (as I have noted in paras 52 53 above) Mr Gee actually disclaims, while (ii) Mr Pollocks submission effectively means that any intervening fortuitous external accident or casualty will preclude a conclusion that inherent vice was the cause of loss, a submission which does not reconcile with the Court of Appeal authority of J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyds Rep 32. The danger of treating judicial dicta as if they constituted statutory definitions is well known, and it will be necessary to consider intermediate possibilities between these two positions. The case law It is clear from Lord Diplocks language (risk of deterioration) in Soya v White, [1983] 1 Lloyds Rep 122, 126, from the subject matter of that case and from authority cited to the House in it (identified by Mr Gees diligent research from the printed case prepared by Robert Alexander QC and Bernard Rix for insurers) that the focus there was on the simple case of cargo having some inherent tendency on shipment which simply manifested itself under ordinary conditions of carriage, for example a tendency to effervesce and generate the fire which consumed it (Boyd v Dubois (1811) 3 Camp 133). In such a case, there is nothing more than the development of the cargos inherent characteristic. Such a case was clearly also in the forefront of the courts mind in Koebel v Saunders (1864) 17 CB (NS) 71, where Willes J said, at p 78, that in the case of an insurance on goods, it is no answer to say that they were in an unfit condition to be shipped, unless it is shewn that the loss arose from that unfitness. Byles J, at p 79, described the more ordinary instances of loss of goods by some inherent vice or weakness as consisting of fruit, flour, or rice, which are liable to heat or perish on the voyage. But he also referred to the less ordinary instances of tender animals unfit to bear the agitation of the sea, gun cotton, or the like. Mr Gee relies upon Byles Js reference to tender animals unfit to bear the agitation of the sea as indicating that inherent vice includes unfitness to withstand foreseeably unfavourable weather conditions. This puts too much weight on a passing reference. It is not clear that by the agitation of the sea, Byles J had anything in mind beyond the ordinary action of the wind and waves. If he did, his dictum stands in contrast with the decisions in Lawrence v Aberdein (1821) 5 B & Ald 107 and Gabay v Lloyd (1825) 3 B & C 793. In both cases, recovery was allowed in respect of death of or injury to animals violently occasioned by storm and consequent agitation of the seas. An exception warranted free from mortality was interpreted as excluding only indirect loss from natural causes which could, but for such a warranty, have been treated as produced by perils of the seas, for example being driven off course with consequent exhaustion of the ships provisions leading to the animals starvation. The court noted that insurers contrary suggestion largely undermined the point of taking out any insurance on the animals at all. Not surprisingly, there was no suggestion in either of these cases that the death was due to the animals own inability to withstand the voyage. Each side can draw some possible support for their respective positions from N E Neter & Co Ltd v Licenses and General Insurance Co Ltd [1944] 1 All ER 341. A cargo of casks and bags of china clay out turned damaged, as a result of the stoving in of the casks on a voyage during which there had been heavy weather. Tucker J dismissed the claim on the ground that the plaintiffs had not proved that the proximate cause of the loss was the rough weather. It appeared to him equally consistent with defects in the casks, accidents during loading, bad stowage, rough weather, or accidents during or after discharge (p.343). But he went on to say that, had it been shown to be the heavy weather, he would have held there to have been a loss by perils of the sea, even though there was nothing abnormal or unexpected in the weather on such a voyage in the month in which it occurred. He said: Having regard to Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser & Co (1887) 12 App Cas 484, the Xantho case (1887) 12 App Cas 503, and Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518, and the recent Privy Council decision in Canada Rice Mills, Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55, I think it is clearly erroneous to say that, because the weather was such as might reasonably be anticipated, there can be no peril of the seas. There must, of course, be some element of the fortuitous or unexpected to be found somewhere in the facts and circumstances causing the loss, and I think such an element exists when you find that properly stowed casks, in good condition when loaded, have become stoved in as a result of the straining and labouring of a ship in heavy weather. It is not the weather by itself that is fortuitous; it is the stoving in due to the weather, which is something beyond the ordinary wear and tear, of the voyage. This appears to me to be something which could not be foreseen as one of the necessary incidents of the adventure. It was an accident which might happen, not an event which must happen, to quote the language of Lord Herschell in the Xantho. The general description of perils of the sea assists Mr Pollock, but the dictum that on the facts the stoving in of the casks was due to such a peril, they being in good condition when loaded is consistent with Mr Gees case for insurers. It may be regarded as a precursor of the reasoning and decision in Mayban [2004] 2 Lloyds Rep 609. In contrast, I do not think that Donaldson LJs remarks about inherent vice in Soya v White [1982] 1 Lloyds Rep 136, 150 on which Mr Gee also relied, bear or assist on the present issue. I agree in this respect with what Lord Clarke says in paras 123 125. Insurers rely strongly on T M Noten BV v Harding [1990] 2 Lloyds Rep 283, a case of all risks insurance on the Institute Cargo Clauses (All Risks). The decision shows that inherent vice can embrace a predisposition to injury by a train of events that is, firstly, not purely internal and, secondly, depends upon a combination of external events that it foreseeable, but by no means certain to occur. Lack of inevitability is, as I have said (para 51 above), no proof that there was in the insurance sense a fortuitous external accident or casualty. The damage to the gloves in Noten occurred because, on loading in their cartons into their container, they had a moisture content reflecting the humidity of the Calcutta atmosphere, and because the container was in Rotterdam discharged into a markedly colder atmosphere, where it cooled, setting up convection currents within the container which carried moist air from the gloves to the container roof where the air condensed, falling back down in droplets onto the cartons of gloves and damaging them. The Court of Appeal held that there was no untoward or unusual event of any kind, no combination of fortuitous events, and the defendant never undertook to insure the plaintiffs against the occurrence of hot and humid weather in Calcutta during the monsoon (p 289, per Bingham LJ). The same thought was expressed by Roche J in Whiting v New Zealand Insurance Co Ltd (1932) 44 Lloyds Rep 179, 180, when he said: Moist atmosphere is not an accident or incident that is covered. It is more or less a natural test or incident which the goods have to suffer and which the underwriter has not insured against. That being so, the insurers submit that there was also nothing unusual about the weather conditions or leg breaking wave in this case, and the real cause of the loss of the three legs was their unfitness to withstand weather conditions which were ordinary and foreseeable incidents of the insured voyage. In Noten v Harding [1990] 2 Lloyds Rep 283 the damage occurred in conditions and a way which were both foreseeable and entirely ordinary. The damage was not covered because the conditions under which it occurred were entirely ordinary atmospheric conditions, the gloves essentially damaged themselves under such conditions through their own moisture content, and it was not sensible to describe them as having sustained any fortuitous external accident or casualty at all in the sense required under all risks cover. In the present case, the gradual exhaustion of the legs fatigue strength under the ordinary action of wind and waves during the voyage and the consequent development of cracking can be analysed in similar fashion (see further at para 81 below). In contrast, the sudden breakage of the first leg, followed by that of the other two legs, is much more readily understood as involving a marine accident or casualty. It was neither expected nor contemplated. It only occurred under the influence of a leg breaking wave of a direction and strength catching the first leg at just the right moment, leading to increased stress on and collapse of the other two legs in turn. Each of the three legs was lost in turn overboard to the bottom of the sea. Such a combination of events was, the judge found, very probable, but it was not inevitable (para 87). The chain of events has many of the characteristics of a loss by perils of the sea. The questions which remain bearing on the appropriateness of such a classification relate to (i) the evident probability that the rig would meet a leg breaking wave and (ii) the undoubted fact, on the judges findings, that the root problem was the unfitness of the legs for the insured venture, in that they lacked sufficient fatigue strength to withstand the stresses imposed by the ordinary motion of the seas and were thus exposed to the very considerable risk of a leg breaking wave hitting the rig at the right moment. I will return to these questions later in this judgment (paras 81 86 below). In Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser & Co (1887) 12 App Cas 484, 502 Lord Macnaghten noted that: In marine insurance it is above all things necessary to abide by settled rules and to avoid anything like novel refinements or a new departure. This rule of conservatism can be carried too far. Nevertheless, the absence of any clear authority for insurers approach prior to Mayban [2004] 2 Lloyds Rep 609 is striking. It seems unlikely to have been due to unquestioning acceptance, by insurers and assureds alike, of the correctness of that approach. This is, I think, even less likely when one examines the hull insurance and carriage by sea cases, upon which the court received instructive submissions. The hull insurance and carriage by sea cases In Dudgeon v Pembroke (1877) 2 App Cas 284, a vessel insured under a time policy from 22 January 1872 sailed on 3 February 1872 from London for Gothenburg, arriving on 7 February but taking on more water than would be expected. She set out again for London with a cargo of oats on 11 February, but started to labour and take on so much water in a heavy rolling sea on 12 February that her fires had to be put out and, when her pumps eventually became clogged with oats, she grounded on the Yorkshire coast and was lost. The defendant underwriter argued that she went to sea without being fit to encounter the ordinary risks of going to sea, not the extraordinary risks of storms, that a policy of insurance was only a contract of indemnity against risks which could not be foreseen, or by ordinary care be provided against and that there was on this basis no loss by perils of the sea: pp 289 290. Lord Penzance, after recording that in a time policy there is no implied warranty of seaworthiness, turned to the argument that the vessels unfitness to encounter the perils of the sea prevented the loss being regarded as one by perils of the sea. Dismissing it, he said, at pp 295 296: It will at once occur to your Lordships, upon the raising of such a question, that it applies as much and as fully to a voyage policy as to a time policy. If a loss proximately caused by the sea, but more remotely and substantially brought about by the condition of the ship, is a loss for which the underwriters are not liable, then, quite independently of the warranty of seaworthiness, which applies only to the commencement of the risk (in its several gradations, as Erle J in Thompson v Hopper 6 E & B 172, 181 called them), the underwriters would be at liberty, in every case of a voyage policy to raise and litigate the question whether, at the time the loss happened, the vessel was, by reason of any insufficiency at the time of last leaving a port where it might have been repaired, unable to meet the perils of the sea, and was lost by reason of that inability. If that be the law, my Lords, the underwriters have been signally supine in availing themselves of it. The materials for such a defence must have existed in countless instances, and yet there is no trace of it in any case which has been brought to your Lordships notice, still less any decision upholding such a doctrine. Mr Pollock, understandably, relies on this passage. In Dudgeon v Pembroke, counsel for the underwriter relied before the House, as Mr Gee does before the Supreme Court, upon Fawcus v Sarsfield (1856) 6 E & B 192. In that case, the vessel, leaking water, put into a port to be repaired in circumstances where she had, on sailing from Liverpool, been unseaworthy and unsound, and did not encounter any more severe weather than is usual and ordinary on such a voyage or than a ship reasonably fit for the voyage could have encountered without damage or injury: and . the necessity for her going into port to be repaired arose from the defective state of the ship when she sailed (p 204). The vessels owner sought to recover the expense occasioned by reason of putting into the port for repairs. The Court of Queens Bench accepted the defendant underwriters plea and dismissed the claim. Mr Gee relies upon this as indicating that unseaworthiness can outweigh in significance the impact of subsequent perils of the seas. That in my view reads too much into the decision. The Court of Queens Bench was at pains to emphasise that the arbitrator had found most explicitly that [the loss] did not arise from any peril insured against, but from the vice of the subject of insurance and that the only answer attempted by the plaintiff was that the unseaworthiness might have arisen from some peril in an antecedent voyage , part of an adventure of which the voyage stated in the declaration and plea was a continuation. Rejecting this latter suggestion, the court said that it was quite clear, from the finding of the arbitrator, that the adventure did begin at Liverpool: that this was the first voyage; and that the unseaworthiness arose from the vice of the thing insured, and not from the perils of the sea in any antecedent part of the adventure (p 205). Lord Penzance must, as Mr Gee points out, have been familiar with Fawcus v Sarsfield, having been counsel in it for the underwriter in his earlier incarnation as Mr Wilde. In Dudgeon v Pembroke he was exact in his loyalty to the basis on which it was decided. He noted that it was a case of partial loss in which the decision followed from the arbitrators finding, and that there was therefore a total absence . of all authority for the proposition advanced by the underwriter in Dudgeon v Pembroke. At first instance in Dudgeon v Pembroke (1874) LR 9 QB 581, 596 Blackburn J had understood underwriters plea in Fawcus v Sarsfield as an allegation that the loss was from wear and tear, aggravated by the original bad state of the vessel and said that, on that basis, the plea was no doubt good. In J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1985] 1 Lloyds Rep 264 (Mustill J) and [1987] 1 Lloyds Rep 32 (CA), Fawcus v Sarsfield has been treated as a case of debility or loss disassociated from any peril of wind or water, even if these form the immediate context of the loss, and constitute the immediate agency (for example, the percolation of water through an existing flaw in the hull) by which the loss takes place (per Mustill J, p 272); and see per Slade LJ, p 41. But, whether the case is described as wear and tear or inherent vice, the arbitrators finding in Fawcus v Sarsfield was treated as the end of the matter, and is explicable on the basis that nothing that occurred during the voyage could be called a peril of the sea, accident or fortuity. The case does not help insurers on the present appeal. Thomas Wilson, Sons & Co v Owners of the cargo per the Xantho (The Xantho) (1887) 12 App Cas 503 involved a claim under a bill of lading for non delivery of goods lost by reason of a collision between the Xantho as carrying vessel and another vessel. The owners of the Xantho relied upon an exception of perils of the sea. Cargo owners maintained that To bring a case within perils of the sea, there must be some extraordinary violence of the elements, something inevitable or overwhelming (p 507), so that, even if the only cause of the collision was the negligence of the other vessel, the owners of the Xantho could have no defence. The House emphatically rejected this submission, saying that it was beyond question that if a vessel strikes upon a sunken rock in fair weather and sinks, this is a loss by perils of the sea and that every loss by incursion of the sea, due to a vessel coming accidentally (using that word in its popular sense) into contact with a foreign body, which penetrates it and causes a leak, is a loss by a peril of the sea (p 509, per Lord Herschell). It said that in this respect the meaning of the phrase was the same in the case of a bill of lading as in a marine policy (p 510), although in the case of a bill of lading fault of the shipowner leading to the vessel succumbing to a peril of the sea may, depending upon the terms of carriage, disentitle the shipowner to the protection of such an exception. There are statements in the speech of Lord Bramwell which may be taken to suggest that any entry of water in sufficient quantities to sink a vessel is axiomatically a peril of the sea (see eg pp 513 514). These go too far, as illustrated by E H Sassoon & Co v Western Assurance Co [1912] AC 561, where an insurance claim for damage to a cargo of opium failed because the damage was due the percolation of sea water through the rotten hull of a wooden hulk moored in a river and used as a store, as well as, more recently, Rhesa Shipping SA v Edmunds (the Popi M) [1985] 1 WLR 948. A fortuitous external accident or casualty, whether identified or inferred, is necessary, but it need not be associated with extraordinary weather. Lord Buckmaster put the matter as follows in the Privy Council in Grant, Smith and Co v Seattle Construction and Dry Dock Co [1920] AC 162, 171 172: It is not desirable to attempt to define too exactly a marine risk or a peril of the sea, but it can at least be said that it is some condition of sea or weather or accident of navigation producing a result which but for these conditions would not have occurred. . It is just as though a vessel, unfit to carry the cargo with which she was loaded, through her own inherent weakness, and without accident or peril of any kind, sank in still water. In such a case recovery under the ordinary policy of insurance would be impossible. An insurance against the perils of the sea or other perils is not a guarantee that a ship will float, and in the same way in the present case had such a policy been effected it would not have covered a loss inevitable in the circumstances due to the unfitness of the structure, and entirely disassociated from any peril by wind or water. In Mountain v Whittle [1921] AC 615, the insured vessel, a houseboat, was towed alongside a tug some seven and half miles to Northam. Her topside seams were leaky and defective. The breast wave thrown up by the two vessels caused water to mount up against the seams and enter and sink the houseboat. Some four feet of water entered in 100 minutes towing at a moderate speed. Mountain v Whittle establishes that it is no necessary answer to a claim for loss by perils of the sea that the loss only occurred because the vessel was unseaworthy. Indeed, after negativing the existence of any warranty or defence under section 39(5) of the 1906 Act, Lord Birkenhead LC, with whose speech Viscount Haldane and Viscount Cave agreed, turned without further consideration of unseaworthiness to the question whether the vessel had met with any peril of the sea (p 618 619). On this point, it was noted that the fact that loss caused by the entrance of sea water is not necessarily a loss by perils of the seas (p 626, per Viscount Finlay). In the event, the House upheld concurrent decisions of the courts below that the breast wave amounted to a peril of the seas just as must as if it had been occasioned by a high wind (p 626), and that sinking by such a wave was a fortuitous casualty; whether formed by passing steamers or between tug and tow, it was beyond the ordinary action of wind and wave, or the ordinary incidents of such towage (pp 630 631, per Lord Sumner). But the speeches also describe the breast wave as of unusual size (p 619, per Lord Birkenhead), as wash of an extraordinary character (pp 626 627, per Viscount Finlay) and as exceptional (p 630, per Lord Sumner), and Viscount Finlay delivered a dictum that There must be some special circumstance such as heavy waves causing the entrance of the sea water to make it a peril of the seas (p 626). The extent to which a peril of the sea must involve extraordinary weather was considered in Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375. The High Court of Australia was concerned with a loss which occurred a few hours after leaving port in calm seas and for no apparent reason, after rapid entry of water into the insured vessels engine room. The judge had found that there was no latent defect (eg in the pipe work) and that the vessel was seaworthy on leaving port. The High Court held that, in these circumstances, there was an inference of some unidentified accident or fortuitous event. Since Rhesa Shipping Co SA v Edmunds (The Popi M), more attention might have been given, in this jurisdiction at all events, to a finding that no cause had been shown to be more probable than not. Leaving that aside, in a judgment with which all other members of the High Court concurred, Mason J rejected Visc Finlays dictum as a statement of principle, saying (p 385): The old view that some extraordinary action of the wind and waves is required to constitute a fortuitous external accident or casualty is now quite discredited (The Xantho (1887) 12 App Cas, 509). It is true that in Mountain v Whittle [1921] 1 AC 615, 626 Viscount Finlay spoke of the need for the insured to show some special circumstance such as heavy waves causing the entrance of the sea water to make it a peril of the sea, but his Lordships remark was directed to the facts of that case. Had it not been for the magnitude of the tugs breast wave, the loss would have been attributed to wear and tear or to the ordinary action of the wind and waves. The severity of the weather required for a loss by perils of the sea was further considered, at first instance, in Frangos v Sun Insurance Office Ltd (1934) 49 Ll L Rep 354. A 36 year old vessel insured under a time policy sank en route from Cardiff to Istanbul. Insurers alleged that unseaworthiness was a, if not the sole, cause, relying on the fact that really the weather was not very severe and that there was a series of happenings with regard to this old ship which were not naturally accounted for by the weather which prevailed (p 358). Roche J accepted that the vessel may not have been seaworthy in various respects, including in the area of the afterpeak tank and/or No 4 hold (p 368). However, being satisfied that there was weather prevailing which, although not extraordinary, was nothing like the calm weather of a harbour, or anything of that sort, he found that the immediate cause of the springing of the leak was the labouring of the ship, that water then entered the hold and afterpeak, causing the coal cargo to shift and the vessel to list, and leading to the entry of water into the engine room which sank the vessel. He regarded the case as governed by Dudgeon v Pembroke, because even though it is doubtful in this case, as in that case, whether the vessel was, in fact, seaworthy or not, yet a loss caused by perils of the sea is within the policy, though it might not have occurred but for the concurrent action of some other cause which is not within the policy, the other cause which is not within the policy being unseaworthiness (p 359). Finally, in J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyds Rep 32, a yacht insured under a time policy suffered damage due to delamination of her hull on a voyage from Deauville to Hamble in sea conditions markedly worse than average, but not so bad as to be exceptional (p 270). She had been ill designed and ill made (p 272). If properly designed and built according to the manufacturers description, she would have made the passage without damage (p 270). It was hard to look at the facts without being struck by the idea that the root of all the trouble was the act of [her manufacturers] in putting into circulation a boat which was wholly unfit for its purpose (p 270). Nevertheless, the owner recovered for the hull damage both before Mustill J and in the Court of Appeal. In a key, but controversial, passage on the law, Mustill J said this, at p 271: Second, as to causation. It may be that the doctrine of proximate cause has undergone some reassessment since the days when the most important cases on the present topic were decided. In those days the ultimate cause was more readily identified as the proximate cause than might be the case today. Nevertheless, it is clearly established that a chain of causation running (i) initial unseaworthiness, (ii) adverse weather; (iii) loss of watertight integrity of the vessel; (iv) damage to the subject matter insured is treated as a loss by perils of the seas, not by unseaworthiness: see, for example, Dudgeon v Pembroke . and Frangos v Sun Insurance Office . Mustill J went to say that: . the immediate cause was the action of adverse weather conditions on an ill designed and ill made hull. The cases show that this is sufficient to bring the loss within the words of a time policy in the standard form (p 272). In Fault and Marine Losses [1988] LMCLQ 310, 350 footnote 101, Sir Michael Mustill later commented extra judicially that A severe critic might wonder whether the trial judge had in mind just what had happened to the doctrine of causation since Dudgeon v Pembroke. This itself may however be too severe, in view of Mustill Js express mention of that change in the passage at p 271 cited above. Further, it might be thought relevant that the 1906 Act, crystallising statutorily the concepts of perils of the seas and inherent vice, was enacted against the background of the Victorian authorities, and before the definitive emergence of the modern conception of proximity (see para 49 above). In the Court of Appeal in the Miss Jay Jay the legal position was, however, analysed in different terms. The court rejected a submission that any prior unseaworthiness could be disregarded as irrelevant, but it interpreted the passage on p 271 in Mustill Js judgment consistently with that rejection. It understood him as having been concerned simply to identify whether perils of the sea were a proximate cause of the loss, not as suggesting that unseaworthiness, followed by a loss due to a peril of the seas, can never be relevant: [1987] 1 Lloyds Rep 32, 37, 41 per Lawton and Slade LJJ. The question on this basis was whether on the evidence the unseaworthiness of the cruiser due to the design defects was such a dominant cause that a loss caused by the adverse sea [conditions] could not fairly and on commonsense principles be considered a proximate cause at all (p 37, per Lawton LJ). Slade LJ took the same view, regarding it as clear on a commonsense view of the facts that both these two causes were . equal, or at least nearly equal, in their efficiency in bringing about the damage (p 40). That being so, the court referred to the general principle of insurance law that, where there are two proximate causes of a loss, one insured under and the other not expressly excluded from the policy, the assured will be able to recover: see p 40, per Slade J. Slade LJ (at p 41) also distinguished cases of debility, where the ordinary action of wind and waves leads to damage, as cases where the action of wind and waves is treated as the sole proximate cause of the damage, citing in this connection Fawcus v Sarsfield 6 E & B 192. Another way of looking at such cases is that there is no accident or fortuity. Analysis law Standing back, it is clear that the hull cases lend no support by analogy to a submission that, where a cargo is unfit for the insured venture, then loss or damage which would have been avoided but for such unfitness, falls to be regarded as a loss due to inherent vice, rather than due to any marine peril which may have triggered and exploited the unfitness. Mr Gee submits that Lord Diplocks reference [1983] 1 Lloyds Rep 122, 126 to the risk of deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage is wide enough to cover any case where the goods are unfit to withstand any weather conditions which may foreseeably be encountered on the voyage. Only extraordinary weather conditions overwhelming goods fit to withstand all foreseeable vicissitudes would on this basis attract cover. This is clearly not the law in hull insurance, as all the cases show; and, if that is right, then I see no reason why it should be the law in cargo insurance, particularly when the concept of inherent vice is introduced into the 1906 Act by section 55(2)(c) covering both types of marine cover. Mr Gees more developed submission is more difficult to meet, and has support in the Court of Appeals approach in the Miss Jay Jay [1987] 1 Lloyds Rep 32. It is that it is in any case a matter of common sense judgment, whether initial unfitness or the intervention of a subsequent peril or both is or are the proximate cause(s) of loss. Despite Slade LJs differentiation of pure debility cases, the Court of Appeal was not presumably suggesting that, where initial unseaworthiness or unfitness and unfavourable weather conditions beyond the ordinary action of wind and waves have both played a role, the court must always treat both as equal or nearly equal proximate causes. That would have been to recognise a rule of law different in formulation, but nonetheless of a type that the court held that Mustill J would have been wrong to introduce. There is high authority for the proposition that the real or dominant cause is to be ascertained by applying the common sense of a business or seafaring man: see eg T M Noten BV v Harding [1990] 2 Lloyds Rep 283, 287 per Bingham LJ. In Noten v Harding, common sense was applied to identify the point in a single process, not involving any obvious fortuity, which represented the cause. In circumstances like those in the Miss Jay Jay or the present case, two separate causes may be identified, initial unfitness and a peril of the seas through which it works, and it is unclear how in practice they would be weighed and balanced. This is highlighted by Mustill Js comment in the Miss Jay Jay [1985] 2 Lloyds Rep 264, 270, cited in para 69 above, that it was hard to look at the facts without being struck by the idea that the root of all the trouble was the act of [her manufacturers] in putting into circulation a boat which was wholly unfit for its purpose. Yet, in the Miss Jay Jay the finding that the weather was markedly worse than average but not so bad as to be exceptional sufficed to make perils of the sea an equal cause: see p 41 [1987] 1 Lloyds Rep 32, 41 per Slade J. I am not attracted to a solution which depends upon identifying gradations of adverse weather conditions. More fundamentally, if Lord Diplocks formulation in Soya v White [1983] 1 Lloyds Rep 122, 126 is correct, then it is difficult to find in it any place for the weighing exercise that is suggested by the Court of Appeals approach in the Miss Jay Jay. If inability to withstand foreseeably bad weather conditions does not prevent damage sustained as a result being attributed to perils of the sea, (i) that must be because Lord Diplocks reference to the ordinary course of the contemplated voyage was not intended to embrace the weather conditions foreseeable on such a voyage, but was rather used as a counterpoint to a voyage on which some fortuitous external accident or casualty occurred and (ii) there is no apparent limitation in Lord Diplocks qualification without the intervention of any fortuitous external accident or casualty in other words, on the face of it, anything that would otherwise count as a fortuitous external accident or casualty will suffice to prevent the loss being attributed to inherent vice. On this interpretation, Lord Diplock was laying down a test which appears to me consistent with the reasoning in Dudgeon v Pembroke 2 App Cas 284, the Xantho 12 App Cas 503, Grant Smith and Co and McDonnell Ltd v Seattle Construction and Dry Dock Co [1990] AC 162 and of Mustill J in the Miss Jay Jay [1985] 2 Lloyds Rep 264. It fits with Tucker Js identification in Neter [1944] All ER 341, 343 of the stoving in due to the weather, which is something beyond the ordinary wear and tear, of the voyage as something which could not be foreseen as one of the necessary incidents of the adventure. It fits with the definition in the 1906 Act of perils of the seas as not including the ordinary action of the winds and waves, a definition which draws attention to the question whether the winds and waves have had some extraordinary effect, rather than whether they were extraordinary in themselves. On this basis, it would only be if the loss or damage could be said to be due either to uneventful wear and tear (or debility) in the prevailing weather conditions or to inherent characteristics of the hull or cargo not involving any fortuitous external accident or casualty that insurers would have a defence. In the scheme of the 1906 Act, that would not appear to me surprising, bearing in mind the case law against the background of which the Act was enacted and the juxtaposition in section 55(2)(c) of ordinary wear and tear, ordinary leakage and breakage with inherent vice or nature of the subject matter insured as well as with any injury to machinery not proximately caused by maritime perils. While not myself attempting any exact definition, ordinary wear and tear and ordinary leakage and breakage would thus cover loss or damage resulting from the normal vicissitudes of use in the case of a vessel, or of handling and carriage in the case of cargo, while inherent vice would cover inherent characteristics of or defects in a hull or cargo leading to it causing loss or damage to itself in each case without any fortuitous external accident or casualty. Ultimately, I am persuaded that authority and principle do point to the correctness of Lord Diplocks definition, and that it bears the meaning indicated by points (i) and (ii) in the preceding paragraph. If this exposes insurers to risks which they are not prepared to accept, they may of course seek to provide otherwise, either by special provision or by amendment of the standard clauses upon which most hull and cargo insurance is now underwritten. Analysis the facts My real concern on the present appeal has been whether the loss claimed did not fall within even the restricted test which I have stated in the previous two paragraphs. The case comes close to the line. It is helpful to start with the position before the first leg fell. Mr Pollock went so far as to submit that, even the cracking of the legs which occurred on passage across the Atlantic and which necessitated repair in South Africa constituted a fortuitous external accident or casualty outside the ordinary course of the contemplated voyage, for which the assured could have sought to recover under the insurance, apart from the deductible of RM 3.8m each and every loss. I would not accept that there could have been any such insurance claim, any more than the Court of Appeal did: see the reference in this connection to normal wear and tear in para 64 of Waller LJs judgment. So far as appears, the cracking was the simple product of the exhaustion of the fatigue life of the legs on passage under the influence of the ordinary action of the wind and waves, and did not therefore involve any fortuitous external accident or casualty. It was also a risk that was expected as likely to materialise during the voyage (see paras 85 86 below), and one which it cannot sensibly have been thought that insurers would take on. The critical question is therefore whether the sudden fracturing and loss of the three legs overboard into the Pacific falls into a different category or was no more than a loss due to their inherent vice. Mr Gee is entitled to say that, on this point, considerable respect is due to Blair Js assessment of the facts, so long as he directed himself by reference to the right test and considerations. Blair J formed a judgment about the proximate cause, treating the facts as raising two possible candidates. On the one hand, he recorded that once a lot of the fatigue life had been used up and there were cracks everywhere, then all you need is probably the two, three, four metre sea states that the Cape waters can provide, and that the agreed range of wave heights demonstrates that waves in excess of three metres were in fact regularly experienced during the second stage of the voyage (para 49). On the other hand, he noted that a developed crack would not itself have been sufficient to cause one of the 300 feet high legs to come off, but that that required in addition a leg breaking or final straw stress that finally fractured the weakened steel. As Mr Colman [insurers expert] put it: . remember we have a leg which is 12 feet in diameter, a circumference of about 40 feet. So even quite a lot of these little cracks still leave a very large amount of good steel an inch and a half thick. This isnt light plate; this is very heavy steel, and thats an enormously strong structure. So youve got to catch it just right, if you want to actually make it fail all the way round (paras 48 and 87). Once one leg failed, the circular motions of the others and the stresses to which they were subjected increased, and their failure was accelerated. Blair J also described the weather as being within the range that could reasonably have been contemplated (albeit the claimants expert puts it at the upper end) (para 110), a description covering all foreseeable weather conditions, including those sufficient to give rise to a loss by perils of the sea. Finally, Blair J chose as the relevant proximate cause the unfitness of the rig for the voyage, because in his view (para 111): The real problem lay with the inherent inability of the legs to withstand the normal incidents of the voyage. As [Mr Colman] put it I dont think that these legs were ever going to make it round the Cape. That in my opinion is the reality of this case. Close though these statements come to it, the judge was not actually addressing the question how far the emergence of a leg breaking wave striking at just the right moment in the first legs circular movement and leading to fracture and loss of a leg could be regarded as an entirely normal event, still less how far the resulting loss of any of the legs could be regarded as an equivalent to wear and tear or debility. To my mind, however, the bare recital of what happened is difficult to fit into any normal conception of what Lord Diplock [1983] 1 Lloyds Rep 122, 126 described as deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage. As I noted earlier in this judgment (para 64), the loss had many obvious characteristics which one would associate with a fortuitous marine accident or casualty, and that, in my opinion, is how the loss of the rigs three legs can and should be seen. I add this. Although, as Mr Gee urged, the meaning of inherent vice will, at least normally, be the same in principle under all marine policies, its application in any particular case must depend upon the nature and characteristics of the goods being insured and of the insured venture. Here, I note that the assured was asked, before the policy was placed, to state, under the heading Rig History, whether the rig had previously experienced any buckling of its legs, and it disclosed that the port aft leg had indeed experienced buckling during a previous dry tow in 1996 (also in fact off South Africa). Originally, insurers maintained and pleaded that this had not been disclosed, but the plea was abandoned. It appears that insurers sight of the relevant email disclosing the information was in fact noted on the placement slip. It was, furthermore, made an express condition of the insurance that Survey Clause or Pre Shipment Survey including Loading and Unloading, Tow Out to be supervised by approved and nominated Surveyor. Noble Denton has been nominated and approved. Noble Denton duly surveyed the rig for insurers before it sailed on the voyage from Galveston. It was well recognised that stresses would be imposed on the legs by virtue of the motion of the waves, and Noble Denton sought to establish the legs remaining fatigue life. In a report on 23 August 2005, Noble Denton concluded that the legs in way of the pinholes might have insufficient fatigue live left to undertake the full tow to Lumut, and required that the legs be re inspected in South Africa and remedial work be undertaken there as found necessary. Fatigue life is assumed to be expended when a damage ratio of unity (1.0) is achieved. At the time of the 23 August report, the damage ratio was thought to be well below unity. But before the rig arrived in South Africa, experts acting for the assured had completed calculations which led to a spectral analysis dated 21 September 2005, in which the damage ratio was now put at 2.13, well above unity. An unsatisfactory feature of this case, as the judge said (para 28) is that this report never reached Noble Denton, before they concluded that the rig could commence the second stage of its voyage from South Africa. The judge also found that the joint inspection in South Africa did not cover the set of pinholes at the 18 foot level, and that the only repairs were to pinhole corners where a crack had actually initiated (para 78). However, he found that the latter omissions were not relevant, in that, whatever repairs were or could practicably have been carried out in South Africa would have made no difference (para 83). Whether disclosure of the spectral analysis of 21 September to Noble Denton could and would have made any difference does not appear. No suggestion has in any event been made that this is of any relevance to the scope or validity of the cover. What does appear from the above is that the parties appreciated both the need to put into a South African port for inspection and the likelihood that some cracking would there be found and some repairs would have to be undertaken. That reinforces the conclusion which I have already drawn that the cost of such inspection and repairs could not be covered. But it also appears that the parties attention was closely focused on the overall risk of carrying the rig with its three legs protruding over 300 foot into the air in circumstances which could, depending upon a range of uncertainties, lead to the loss of one or more of the legs. In the event, the rig suffered the further loss of all three legs, not just because cracking appears to have developed further or sooner than expected, but ultimately only after the first, and then each other, leg was caught, in just the right way, by a leg breaking wave. To hold that the insurance did not cover such a loss, if it materialised, would seem to deprive it of much of its utility. These considerations support a conclusion that there is no incongruity in treating the loss of the three legs overboard which the rig actually experienced as involving fortuitous external accidents or casualties insured under this all risks insurance, rather than as due to inherent vice. In common with the Court of Appeal, although not entirely for the same reasons, I would therefore reach that conclusion. Concurrent causes I add some words with regard to the submission made by insurers to meet the hypothesis, which I have not accepted, that the loss should be attributed to two equal or nearly equal proximate causes, in the form of both inherent vice and perils of the seas. Assuming that to be possible, the question would then have arisen as to the effect of the express exception of inherent vice contained in clause 4.4 of the Institute Cargo Clauses (A). It was said in the Miss Jay Jay [1987] 1 Lloyds Rep 32, 40 that, if there were two causes, one of which was expressly excluded, then the assured would fail; and reference was made in this connection to dicta in P Samuel & Co Ltd v Dumas [1924] AC 431, 467 per Lord Sumner and to Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 57, 75. I would wish to leave open the applicability of this approach in the present context. First, clause 4.4 on the face of it simply makes clear the continuing relevance in the context of all risks cover of the limitation on cover against perils of the sea provided by section 55(2)(c). There seems to me some oddity in treating clause 4.4 as leading to a fundamentally different result from that which would have applied had section 55(2)(c) alone been in question. Second, the focus of the cases cited in the Miss Jay Jay and of the more recent case of Midland Mainline Ltd v Eagle Star Insurance Co Ltd [2004] 2 Lloyds Rep 604 was upon true exceptions which took out of cover against an insured risk a specific type of situation giving rise to such risk. The present hypothesis is of two concurrent risks arising independently but combining to cause a loss. While it may be that the same principle applies (as the Court of Appeals dicta in the Miss Jay Jay suggest), I would at least wish to hear argument on that. I need not go further into this aspect, upon which I have formed no concluded views. Conclusion For the reasons I have given, I would also dismiss this appeal. LORD COLLINS I agree that the appeal should be dismissed for the reasons given by Lords Saville, Mance and Clarke. The policy covered all risks of loss or damage to the subject matter insured except as provided in clauses 4, 5, 6 and 7 The exclusion from cover in clause 4.4 was loss, damage or expense caused by inherent vice or nature of the subject matter insured. Section 55(1) of the Marine Insurance Act 1906 provides: Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against. By section 55(2)(c) of the Act: Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils. The two inter related questions are whether the loss was proximately caused by a peril insured against, namely perils of the seas, or whether cover is excluded because the failure occurred as a result of the inherent vice in the rig. The excessive sophistication of the argument on this appeal has been caused by treating Lord Diplocks definition of in Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyds Rep 122, 126, as if it were a statutory provision. In that case a cargo of soya beans arrived in a heated and inherent vice deteriorated condition. It was insured against risks of heating, sweating and spontaneous combustion. It was held by the House of Lords that the policy did otherwise provide within section 55(2)(c) so that the perils of heating, sweating and spontaneous combustion arising from inherent vice or nature of the subject matter insured were covered. Lord Diplock said (at p 126) that: This phrase (generally shortened to inherent vice) refers to a peril by which a loss is proximately caused; it is not descriptive of the loss itself. It means the risk of deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty. It would seem that this definition was derived in part (without attribution) from British and Foreign Marine Insurance Co Ltd v Gaunt [1921] 2 AC 41: see p 47 per Lord Birkenhead LC, quoting from the unreported judgment of Rowlatt J at first instance, which was reversed on the facts. The question of the effect of weather conditions did not arise in Soya GmbH Mainz Kommanditgesellschaft v White and the printed cases on that appeal suggest that they did not form any part of the argument. In this case the policy was for all risks, which included perils of the seas. At common law and under rule 7 of Schedule 1 to the Marine Insurance Act 1906, perils of the seas refers only to fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves. The reason is that the purpose of insurance is to afford protection against contingencies and dangers which may or may not occur; it cannot properly apply to a case where the loss or injury must inevitably take place in the ordinary course of things: Paterson v Harris (1861) 1 B & S 336, 353, per Cockburn CJ. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen: Thomas Wilson Sons & Co v Owners of the Cargo per the Xantho (1887) 12 App Cas 503, 509, per Lord Herschell. Prior to the abolition of juries in civil cases, the question whether the loss was caused by perils of the sea or inherent vice would have been a question for the jury: see, eg, Dudgeon v Pembroke (1874) LR 1 QB 581. Today what was the real or dominant cause or proximate cause is a question to be answered applying the common sense of a business or seafaring man: T M Noten BV v Harding [1990] 2 Lloyds Rep 283, 286 287, per Bingham LJ. In that case industrial leather gloves shipped from Calcutta to Rotterdam were found on arrival to be wet, stained, mouldy and discoloured. It was held, applying Lord Diplocks formula, that the gloves deteriorated as a result of their natural behaviour in the ordinary course of the contemplated voyage, without the intervention of any fortuitous external accident or casualty (at p 288). The damage was caused because the gloves were shipped wet, and on the evidence there was no combination of fortuitous events, and the insurers never undertook to insure the plaintiffs against the occurrence of hot and humid weather in Calcutta during the monsoon (at p 289). A comparable case (involving unseaworthiness in hull insurance) on the other side of the line was J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1985] 1 Lloyds Rep 264, affd [1987] 1 Lloyds Rep 32. A yacht was insured under a marine policy for loss or damage directly caused by (inter alia) external accidental means (which was treated as being materially the same as perils of the seas: p 272). The yacht suffered damage in the Seine estuary on a voyage from Deauville to Hamble. The sea conditions in the Seine estuary were such as a person navigating in those waters could have anticipated that he might find and the conditions were markedly worse than average, but not so bad as to be exceptional (p 270). The yacht was in such a condition, by reason of defects in design and construction (which were held to be latent defects), as to be unseaworthy for the passage, but it would have been able to survive if the sea conditions had been no worse than usual. If properly designed and built according to the manufacturers description, the yacht would have made the passage without suffering damage. Mustill J held that the loss was due to the fortuitous action of the wind and waves. The weather was not exceptional but the immediate cause was the action of adverse weather conditions on an ill designed and ill made hull (p 272). The decision was affirmed in the Court of Appeal on the basis that there were two proximate causes, namely unseaworthiness due to design defects and an adverse sea. Where there were two concurrent and effective causes, and one was within the policy, the insurers had to pay. Both Lawton and Slade LJJ treated the exercise as one of the application of a commonsense view of the facts: pp 37, 39 40. Slade LJ approved (at 38) Mustill Js statement that the word accidental made explicit what was in any event implicit, namely that there was no recoverable loss in the absence of a fortuitous event. There is nothing in the decision of the Court of Appeal which is inconsistent with Mustill Js approach or (making due allowance for the fact that it was not an inherent vice case) with Lord Diplocks formulation. In the present case the failure of the legs happened as a result of the effect of the height and direction of the waves on the pitching and rolling motion of the barge and therefore on the steel legs. It was known from the outset that the legs of the rig were at risk of fatigue cracks during the voyage. The weather which the barge experienced was within the range of weather which could reasonably have been contemplated for the voyage. The sudden breakage of the first leg, followed by that of the other two legs occurred under the influence of a leg breaking wave of a direction and strength catching the first leg at just the right moment, leading to increased stress on and collapse of the other two legs in turn. The failure was, Blair J found, very probable, but it was not inevitable. Even though the failure occurred, in Lord Diplocks phrase, in the ordinary course of the contemplated voyage the way in which it occurred was fortuitous. The proximate cause was the result of a fortuity, and not the susceptibility of the legs to crack as a result of metal fatigue. LORD CLARKE Lord Saville has set out the relevant facts and I will not repeat them. I agree with him that the appeal should be dismissed. I set out the essential reasons which have led me to that conclusion because this is an unusual case on the facts and raises an issue of some general importance in the law of marine insurance. The question is whether on the facts found by the judge, the (or a) proximate cause of the loss of the rig was inherent vice or nature of the subject matter insured within the meaning of clause 4.4 of the Institute Cargo Clauses (A). That is because loss so caused is specifically excluded by clause 4.4. The same expression is used in section 55 of the Marine Insurance Act 1906 (the Act), which provides, so far as material: (1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against. (2) In particular, (c) Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils. It is common ground that, if the loss was proximately caused by inherent vice or nature of the subject matter insured, the insurers are not liable even if the loss was also proximately caused by a peril insured against: see eg the cases referred to by Lord Saville at para 19 above. On the facts, there were as I see it, two physical causes of the loss, the physical state of the rig and the leg breaking stress caused by the state of the sea at the time the first leg fractured. The judge held that the state of the sea was within the range of weather that could reasonably have been contemplated on the voyage. It was thus an ordinary incident of the voyage. However, the judge also held that, although the failure of the legs was probable, what the Court of Appeal called a leg breaking wave was not inevitable. The insurers do not challenge this finding. As I read his judgment, the judge held (or would have held) that, but for his conclusion that the proximate cause of the loss was inherent vice, the loss was proximately caused by a fortuity and was thus within the all risks cover in the policy. The Court of Appeal expressly considered whether, even if the loss was not inevitable, the loss was caused by ordinary wear and tear and thus not recoverable under the policy. It held that, on the judges findings of fact, the loss was not caused by ordinary wear and tear but by a fortuity and thus (subject to the correct approach to inherent vice) by a peril insured against, the cover in this case being against all risks. As Waller LJ (with whom Carnwath and Patten LJJ agreed) put it at [2010] 1 Lloyds Rep 243, para 64, it was not that the legs simply suffered severe metal fatigue and cracking, which would be fair wear and tear, but that the rig met what proved to be a leg breaking wave which was not bound to occur in the way that it did on any normal voyage round the Cape of Good Hope. The fortuity was the occurrence of the leg breaking stress which caused the loss of the legs. For my part, I would accept that analysis. As Lord Mance puts it at para 64, the sudden breakage of the first leg only occurred under the influence of a leg breaking wave of a direction and strength catching the first leg at just the right moment, leading to increased stress on and collapse of the other two legs in turn. It is common ground that all risks cover includes cover in respect of loss or damage caused by perils of the seas. On the approach of the Court of Appeal, the leg breaking stress and the loss of the legs were proximately caused by a peril of the seas because the expression perils of the seas is defined in para 7 of the Rules for Construction of Policy in Schedule 1 to the Act as follows: The term perils of the seas refers only to fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves. Mustill J made the position clear in J J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1985] 1 Lloyds Rep 264, 271 in these terms: The cases make it quite plain that if the action of the wind or sea is the immediate cause of the loss, a claim lies under the policy notwithstanding that the conditions were within the range which could reasonably have been anticipated. All that is needed is (in the words of Lord Buckmaster in Grant, Smith & Co v Seattle Construction and Dry Dock Co [1920] AC 162, 171: some condition of sea or weather or accident of navigation producing a result which but for these conditions would not have occurred. Mustill J then referred to a number of well known cases to the same effect: Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518, 527, Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55 and N E Neter & Co Ltd v Licenses and General Insurance Co Ltd (1944) 77 Ll L Rep 202, 205. The Miss Jay Jay went to the Court of Appeal but these principles were not affected by its decision: see [1987] 1 Lloyds Rep 32. Thus, on the facts of a particular case, the loss or damage may be caused by ordinary wear and tear or by the ordinary action of the wind and waves, as those expressions are used section 55(2)(c) of the Act and in para 7 of Schedule 1 to the Act respectively. In such a case the loss or damage may not be inevitable but will nevertheless be irrecoverable. The cases make it clear that, at any rate in a perils of the seas case, the critical question is whether or not the conditions of the sea were such as to give rise to a peril of the seas which caused some fortuitous accident or casualty. It is important to note that the cases show that it is not the state of the sea itself which must be fortuitous but rather the occurrence of some accident or casualty due to the conditions of the sea. Some of the cases and, indeed, some of the academic writings discuss how adverse the sea conditions have to be to be capable of amounting to a peril of the seas: see, for example Mustill J in the Miss Jay Jay and Professor Howard Bennetts article entitled Fortuity in the Law of Marine Insurance [2007] LMCLQ 315, 330 331. It seems to me that such a discussion is rarely fruitful, since the question in each case is whether the sea conditions were such as to have caused a fortuitous accident or casualty. It is not necessary to discuss this issue further in the instant case because the effect of the judges findings of fact as interpreted by the Court of Appeal was that the failure of the legs was not inevitable or caused by ordinary wear and tear or the ordinary action of the winds and waves but, subject to his conclusions on inherent vice, fortuitous. As I see it, the above analysis is entirely consistent with that of Lord Mance. It follows from it that the insured are entitled to recover under the policy unless the damage was caused by inherent vice or nature of the subject matter insured within the meaning of section 55(2)(c) of the Act and clause 4.4 of the Institute Cargo Clauses (A). Put another way, the question is whether the physical condition of the leg constitutes inherent vice or nature of the subject matter insured. Both parties rely upon the meaning given to that expression by Lord Diplock in Soya Gmbh Mainz Kommanditgesellschaft v White [1983] 1 Lloyds Rep 122, where the issue was whether inherent vice was a peril insured against, in so far as it consisted of a tendency for the cargo to become hot, to sweat or to combust spontaneously. It was held that it was. It was further held that deterioration from heat and sweat in the course of the voyage was not inevitable. Lord Diplocks summary of the facts included the statement that no incident was shown to have occurred upon the voyage whereby the moisture content present in the bulk on shipment had been increased from any external source. Lord Diplock said, at pp 125 126: The facts as I have summarized them for the purpose of determining the question of construction of the HSSC policy in the instant case, assume that the loss resulting from the deterioration of the soya beans during the voyage was proximately caused by the inherent vice or nature of the subject matter insured. This phrase (generally shortened to inherent vice) where it is used in section 55(2)(c) refers to a peril by which a loss is proximately caused; it is not descriptive of the loss itself. It means the risk of the deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous accident or casualty. By HSSC policy Lord Diplock meant a policy covering heat, sweat and spontaneous combustion: p 124. It was submitted by the insured that the last few words of that quotation at pp 125 126 are critical to the definition of inherent vice. It was submitted that it follows from Lord Diplocks definition that, where a peril of the seas is a proximate cause of the damage, there is no inherent vice because inherent vice refers to the inherent condition of the goods that is the sole cause of loss or damage. Otherwise the words without the intervention of any fortuitous external accident or casualty would be given no meaning. It would have been sufficient to say that inherent vice means the risk of the deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage. By contrast, it was submitted by the insurers that Lord Diplock was distinguishing between (1) a loss caused by the internal state of the goods initially on shipment and (2) a loss caused by an external accident or fortuity in the course of the voyage. They emphasized Lord Diplocks references to (1) the risk of deterioration of the goods shipped and (2) without the intervention of any fortuitous external accident or casualty (emphases added). It was submitted that, applying Lord Diplocks definition, two questions arise on the facts of this case: first, whether at Galveston, assuming the ordinary course of the contemplated voyage, without any intervening adverse fortuity (including weather, wind and waves), the rig had within itself internally the risk of deterioration, which the insurers called the inherent vice at Galveston; and second, whether the inherent vice at Galveston was the or a proximate cause of the loss of the legs, which they called the causation issue. The insurers invited an affirmative answer to both questions. They submitted in essence that there was here inherent vice because the rig was not fit to withstand the wind and waves which might reasonably be contemplated on the voyage. They submitted that on the causation issue there were to be taken into account the nature and severity of the unfitness and whether there was some external accident or fortuity which (a) caused the loss of the legs and (b) prevented the inherent vice at Galveston from being causative, as either the sole proximate cause or one of two proximate causes. It was accepted that the stress caused by the leg breaking wave was a fortuity but it was submitted it was no more than a fortuity to be expected in the ordinary course of the contemplated voyage and thus, as it was put in the insurers case a fortuity within the risk of inherent vice. For my part, I prefer the approach of the insured. In my opinion, there are a number of problems with the insurers approach. The first is that their approach fails to give effect to the natural meaning of the words without the intervention of any fortuitous external accident or casualty (emphasis added). The distinction between different types of external fortuity, namely on the one hand fortuities to be expected in the ordinary course of the contemplated voyage or fortuities within the risk of inherent vice and on the other hand exceptional fortuities, is in my view inconsistent with the use of the word any in Lord Diplocks definition of inherent vice. The second problem with the insurers approach is that it appears to me that the natural meaning to be given to Lord Diplocks definition is that, if there is an intervention of any fortuitous external accident or casualty the law treats the loss as caused by that fortuitous external accident or casualty and not by inherent vice. In referring to any fortuitous accident or casualty, Lord Diplock must I think have had in mind the definition of perils of the seas in Schedule 1 to the Act which I have quoted above, namely that it refers only to fortuitous accidents or casualties of the seas. Moreover, there is no reason to think that he did not fully appreciate that perils of the seas include perils caused, as Mustill J put it [1985] 1 Lloyds Rep 259, 271, by conditions within the range which could reasonably have been anticipated. Although the statutory definition of perils of the seas was not referred to in Soya v White [1983] 1 Lloyds Rep 122, which did not involve perils of the seas, Lord Diplock would clearly have had it in mind in formulating his definition. As I see it, by in effect invoking the statutory definition of perils of the seas, he was defining inherent vice in opposition to perils of the seas, thereby avoiding any overlap between the insured risk and the excluded risk. Thus where, as here, a proximate cause of the loss was perils of the seas, there was no room for the conclusion that the loss was caused by inherent vice. To my mind that conclusion is supported by the authorities, with the exception of certain dicta of Donaldson LJ in the Court of Appeal in Soya GmbH v White [1982] 1 Lloyds Rep 136 and of the decision of Moore Bick J in Mayban v General Insurance BHD v Alstom Power Plants Ltd [2004] 2 Lloyds Rep 609. In para 70 of his judgment in the Court of Appeal in the instant case Carnwath LJ quoted this passage from the second edition of Arnoulds Treatise on the Law of Marine Insurance and Average (1857), vol II, pp 782 783: the underwriter is not liable for that loss or deterioration which arises solely from a principle of decay or corruption inherent in the subject insured, or, as the phrase is, from its proper vice As Carnwath LJ observed, such views remain relevant because of the fact that the Act was a codifying statute and Arnoulds approach, with its emphasis on something inherent in the subject matter insured, as opposed to the impact of external factors, has proved remarkably resilient over the ensuing 150 years. This is not to say that external factors are entirely irrelevant when determining whether there was inherent vice, as for example (as Carnwath LJ said at para 70) atmospheric conditions hastening the deterioration of the gloves in T M Noten BV v Harding [1990] 2 Lloyds Rep 283. I agree with Waller LJ (at para 56) that inherent vice can be a cause even though some outside agency may have played a part, as for example the motion of the waves in Byles Js example (in Koebel v Saunders (1864) 17 CB(NS) 71, 79) of a cargo of tender animals which were unfit to bear the agitation of the sea. I also agree with Waller LJ that Arnould almost certainly intended his definition to be understood as meaning that inherent vice would be the sole cause where any other outside causative factor would not be a peril insured against. That is in essence what Lord Diplocks definition amounts to, at any rate in the context of perils of the seas. Both parties relied upon the decision of the Court of Appeal in Noten [1990] 2 Lloyds Rep 283 but in my opinion it provides support for the submissions made on behalf of the insured. The issue in Noten arose out of wet damage to gloves stowed in containers. The claim was under an all risks warehouse to warehouse policy. The gloves had been stowed in the containers in a wet condition. The cause of the damage was the condensation on the inside of the top of the containers and falling on to the gloves. The gloves had absorbed moisture from the humid atmosphere in Calcutta, had either lost or gained a little moisture within the containers in the course of the voyage to Rotterdam and were damaged in Rotterdam as a result of the containers being discharged into a temperature markedly colder than the temperature in the mass of the gloves. The containers then cooled which in turn caused a convection of air currents which led to the condensation and thus to moisture falling on the gloves. The judge, Phillips J [1989] 2 Lloyds Rep 527, held that the insured were entitled to recover on the basis that the damage was caused by the dropping of water from an external source. The Court of Appeal [1990] 2 Lloyds Rep 283, in which Bingham LJ gave the only substantive judgment, allowed the insurers appeal. His reasoning may be summarised in this way. The question was what was the real or dominant cause of the damage, which was to be answered applying the common sense of a business or seafaring man, whom Bingham LJ described as a hypothetical oracle: p 287. Such a person would not understand how the water which caused the damage could be regarded as coming from a source external to the goods but would regard the gloves as the obvious and sole source of the water. He asked himself this question. If, then, the damage was proximately caused by the excessively moist condition of the gloves when shipped, given the conditions in which they were and were expected to be carried, was that caused by an insured peril or was it within the exception of inherent vice or nature of the goods? Bingham LJ directed himself by reference to section 55(2)(c) of the Act and set out Lord Diplocks definition of inherent vice in Soya v White and then quoted from para 782 of volume II of 16th edition of Arnoulds Law of Marine Insurance and Average (1981), which has echoes of the second edition quoted above, as follows: Upon the same ground, the underwriter is not liable for that loss or deterioration which arises solely from a principle of decay or corruption inherent in the subject insured, or, as the phrase is, from its proper vice; as when fruit becomes rotten, or flour heats, or wine turns sour, not from external damage, but entirely from internal decomposition. Accordingly, where meat shipped at Hamburg became putrid through delay on the voyage occasioned by tempestuous weather, and was necessarily thrown into the sea, it was held to be no loss within the meaning of the policy. So, if spontaneous combustion is generated by the effervescence or other chemical change of the thing insured, arising from its having been put on board wet or otherwise damaged, the underwriter is not liable; but it lies upon him to show clearly that the fire really arose from this cause. The suggestion has sometimes been made that inherent vice means the same thing as damage that must inevitably happen, but this is not so. The distinction is between damage caused by any external occurrence, and damage resulting solely from the nature of the thing itself. Damage from inherent vice may be just as capricious in its incidence as damage caused by perils of the seas. Bingham LJ then expressed his conclusion thus at p 288: If the factual cause of the damage to these gloves has been correctly identified, then I think it plain that that was an excepted peril under these policies. The goods deteriorated as a result of their natural behaviour in the ordinary course of the contemplated voyage, without the intervention of any fortuitous external accident or casualty. The damage was caused because the goods were shipped wet. For the reasons already given I regard it as immaterial that the moisture travelled round the containers before doing the damage complained of. Those conclusions seem to me to support the insureds case in this appeal. As Arnould put it, the distinction is between damage caused by any external occurrence and damage resulting solely from the thing itself. On the facts Bingham LJ concluded that the goods deteriorated as a result of their natural behaviour in the ordinary course of the contemplated voyage, without the intervention of any fortuitous external accident or casualty. He was there applying Lord Diplocks definition and it is plain that, if he had held, as the judge had done, that there was such a fortuitous event, the defence would have failed because it could not then have been said that the damage resulted, in Arnoulds phrase, solely from the nature of the thing itself. Bingham LJ, in rejecting an alternative basis upon which the claim was put, further emphasized (at p 289) the importance of establishing a fortuity if the insured was to succeed. It seems plain that Bingham LJ and (through him) the Court of Appeal were adopting Arnoulds test, so that if damage resulted from the fortuity there could be no inherent vice. An application to the instant case of the analysis of the Court of Appeal in Noten would in my opinion lead to the conclusion that the insured are entitled to succeed on the basis of the fortuitous leg breaking stress found by the judge. Both parties placed some reliance on the decision of the Court of Appeal of British Columbia in Nelson Marketing International Inc v Royal & Sun Alliance Insurance Co of Canada (2006) 57 BCLR (4th) 27. The facts are similar to those in Noten. The claim was under an all risks marine insurance in respect of wet damage to a shipment of laminated hardwood flooring. The laminated wood had absorbed moisture while awaiting shipment in Malaysia. The heat to which the flooring was exposed during the course of the voyage caused the moisture to escape from within the wood and to condense on the surface of the flooring under the plastic covering. The judge at first instance held that the insured were entitled to recover on the basis that, although the moisture that damaged the flooring was internal to the flooring, the external environmental conditions in the holds of the vessels caused the damage. The Court of Appeal allowed the insurers appeal. In setting out the relevant principles to be applied, Lowry JA, who gave the only substantive judgment, referred to the passages in Noten set out above. He then summarised the correct approach at para 13 of his judgment as follows: Thus, to succeed on a claim under an all risks cargo policy, the insured must establish, by direct evidence or by inference to be drawn from the available evidence, that an external fortuitous occurrence caused the deterioration of the cargo as distinct from the cargo having simply succumbed to the ordinary incidents of the voyage because of the cargos inherent nature or susceptibility. It followed from this, he continued at para 23, that the issue is only whether what did cause the loss was fortuitous and not attributable to the inherent nature of the flooring. There being no evidence that the conditions in the vessels constituted a fortuitous occurrence, he concluded that the loss was attributable to the nature of the wood cargo. As I see it, Nelson provides further support for the insureds case that the critical distinction is between damage caused by an external fortuity and damage resulting solely from the intrinsic nature of the insured goods. Reliance was however placed on the obiter dicta of Donaldson LJ in Soya v White [1982] 1 Lloyds Rep 136. They appear in a part of his judgment in which he gave reasons for differing from the judgment of Lloyd J [1980] 1 Lloyds Rep 491 at first instance on causation. At p 150, Donaldson LJ set out part of that judgment and said this: I fully accept his finding that the cause of the loss was the condition under which the soya beans were carried, but I disagree with his conclusion that this does not constitute a loss proximately caused by inherent vice. As I have said, in my judgment a loss is proximately caused by inherent vice if the natural behaviour of the goods is such that they suffer a loss in the circumstances in which they are expected to be carried. This is the test under a contract of affreightment and the shipowner in this case could have pleaded inherent vice in answer to a claim for damage to the cargo. In holding that inherent vice is only proved if the soya beans could not withstand any normal voyage of that duration, the judge was introducing a different concept, namely that of certainty of loss. That is [a] quite different defence. It is in any event subject to the qualification that it must be a certainty which is, or should be, known at least to the assured. The insurers relied upon the proposition that inherent vice was proved if the natural behaviour of the cargo was such that it suffered a loss in the circumstances in which it was expected to be carried. Lord Diplock did not express a view upon that proposition, save to say that the only point of difference between the judgments at first instance and in the Court of Appeal related to an issue of causation which, on the view taken by the House of Lords, did not arise and upon which no argument was heard. In these circumstances Lord Diplock did not express a view upon the above passage one way or the other. As it seems to me, Donaldson LJ was not considering the issue which arises on this appeal. He was not considering a definition of inherent vice in the terms subsequently stated by Lord Diplock, with the agreement of the other members of the House. In so far as his approach is inconsistent with Lord Diplocks definition as explained above, I would not accept it. The same is true of the reasoning of Moore Bick J in Mayban [2004] 2 Lloyds Rep 609, in which cargo in the form of a transformer was damaged in the course of a voyage. The transformer was insured under a policy which, like this one, covered all risks and was subject to the Institute Cargo Clauses (A) terms. As the judge observed at para 97 in a passage quoted by Waller LJ at para 21, Moore Bick J said at his para 21: It was common ground that the immediate cause of the damage to the transformer in the present case was the violent movement of the vessel due to the actions of the wind and sea. These in themselves were certainly events of a fortuitous nature and they were external to the cargo, but were they the real cause of the loss? The action of the winds and waves is, of course, an inevitable incident of any voyage and is therefore a hazard to which all goods carried by sea are necessarily exposed. Goods tendered for shipment must therefore be capable of withstanding the forces that they can ordinarily be expected to encounter in the course of the voyage and these may vary greatly depending on the route and the time of year. In a case such as the present, therefore, the competing causes, namely, perils of the sea and inherent vice, are to a large extent opposite sides of the same coin. If the conditions encountered by the vessel were more severe than could reasonably have been expected, it is likely that the loss will have been caused by perils of the sea (though even then there might be evidence that the goods would have suffered the same degree of damage under normal conditions). If, however, the conditions encountered by the vessel were no more severe than could reasonably have been expected, the conclusion must be that the real cause of the loss was the inherent inability of the goods to withstand the ordinary incidents of the voyage. Moore Bick J further said, at para 26, that the relatively short periods of high wind encountered on the passage were neither extreme nor even unusual in the sense that they are encountered often enough for mariners to regard them as a normal hazard, concluding that a cargo that could not withstand exposure to conditions of that kind could not be regarded as fit for the voyage. In the result, he held that the loss was caused by the inability of the transformer to withstand the ordinary conditions of the voyage rather than by the occurrence of conditions which it could not reasonably have been expected to encounter. The insured submitted that Moore Bick J was wrong to hold that, if the conditions encountered by the vessel were no more severe than could reasonably have been expected, the conclusion must be that the real cause of the loss was the inherent inability of the goods to withstand the ordinary incidents of the voyage and was thus inherent vice. I would accept that submission. It does not appear that the principles were in issue before the court and the only cases cited were British and Foreign Marine Insurance Co Ltd v Gaunt [1921] 2 AC 41, Soya v White [1983] 1 Lloyds Rep 122 and Noten [1990] 1 Lloyds Rep 283. In particular, the cases which examine the correct approach to perils of the seas, notably the Miss Jay Jay [1985] 1 Lloyds Rep 264 and the cases referred to by Mustill J (see above), were not referred to. If they had been, I am confident that Moore Bick J would have held that the damage was caused by perils of the seas, that it was not a case of inherent vice and that it was within the scope of the all risks cover. The 16th edition of Arnoulds Law of Marine Insurance and Average was published in 1981 and referred, at para 782, to the decision of Lloyd J in Soya v White [1980] 1 Lloyds Rep 491. A third volume of the 16th edition was published in 1997 and contained a discussion of both Soya v White and Noten, at paras 217 224. It noted at para 222 that Donaldson LJ and Lord Diplock attached significantly different meanings to inherent vice. As I read the text, it preferred the approach of Lord Diplock. The 17th edition was published in 2008. In the first two paras of para 22 25 it reproduced the paras from volume II of the 16th edition quoted above (para 116). It then quoted the parts both of the speech of Lord Diplock and of the judgment of Donaldson LJ referred to above and stated that the concept of inherent vice was defined in somewhat different terms but this time said that there was no reason to suppose that Lord Diplock disagreed with Donaldson LJs approach or that he intended to give the concept of inherent vice a narrower meaning than had been indicated in the Court of Appeal. Para 22 25 concluded by saying that Arnould's view, which had been supported in subsequent editions, that a loss can only be said to be caused by inherent vice when it is solely due to the nature or condition of the insured property had, therefore, now to be qualified. Para 22 26 was in these terms: After Soya v White (above), inability to withstand the ordinary incidents of the voyage is clearly an appropriate test of inherent vice. It can no longer be said that inherent frailty is to be distinguished from inherent vice, or that the concept of inherent vice is necessarily inapplicable where external factors have contributed to the loss or damage to the insured. Inherent vice will afford a defence where the sole cause of loss is the internal decomposition or deterioration of the subject matter insured, unless the policy otherwise provides. This is the case envisaged under section 55(2)(c) of the Act. Where the loss results both from the inability of the insured ship or cargo to withstand ordinary incidents of the voyage and from some fortuitous but not unusual external occurrence, it may sometimes be appropriate to conclude that inherent vice was so much the dominant cause that it ought to be viewed as the sole proximate cause of loss; but, in many cases, the appropriate conclusion will be that the loss was due to a combination of causes of approximate equal efficiency. In those circumstances, if the external cause is an insured peril and if there is no express exclusion of inherent vice, the assured will be able to recover; if there is an express exclusion of inherent vice, the claim under the policy will be defeated. Those conclusions undoubtedly support the case for the insurers in this appeal, although it is right to say that in a footnote to the first part of the passage that I have italicised, Arnould refers to Mayban [2004] 1 Lloyds Rep 609, contrasts the hull cases which it notes were not cited in Mayban and says that the controversial result of the case, if applied generally, is that it would restrict the scope of cover in respect of heavy weather damage under the Institute Cargo Clauses (A) to wholly exceptional weather conditions. In doing so it quotes from Bennett, Law of Marine Insurance 2nd ed (2006), para 15.54. The footnotes also refer to the Miss Jay Jay [1985] 1 Lloyds Rep 264. Like the Court of Appeal, I have reached the conclusion that the analysis in para 22 26 of the 17th edition is wrong and that the analysis in volume II of the 16th edition (and in earlier editions) is to be preferred. In reaching my conclusions I have been much assisted by the article by Professor Bennett [2007] LMCLQ 315 referred to above, especially at p 346, where he said that section 55(2)(c) of the Act operates not as an implied contractual exclusion but as a clarification on the scope of cover. As he put it, it amplifies the proximate cause rule articulated in section 55(1) and provides an example of a circumstance of a loss not proximately caused by a peril insured against. If the approach of the insurers is correct, there is loss as a result of inherent vice where loss or damage is caused by the inability of the cargo to withstand the ordinary perils of the sea, or put another way, by the unseaworthiness of the cargo, since (as Lord Saville has noted at para 38) seaworthiness is defined by section 39 of the Act as being reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured. I agree with Lord Saville, for the reasons he gives at paras 40 to 43 above, that the provisions of sections 39 and 40 of the Act do not sit easily with the insurers submissions. There was some discussion in the course of argument about what were called the hull cases. However they were cases of hull insurance in which the issue was usually whether the unseaworthiness of the vessel or an insured peril was the proximate cause of the loss or damage. The meaning of inherent vice was not addressed. So they are of no assistance on the issue in this appeal, save perhaps to note that they support the approach to perils of the seas discussed above. In so far as they are relevant, I agree with the analysis of Lord Mance at para 66 et seq. The approach of the insured seems to me to have the virtue of simplicity. The sole question in a case where loss or damage is caused by a combination of the physical condition of the insured goods and conditions of the sea encountered in the course of the insured adventure is whether the loss or damage is proximately caused, at least in part, by perils of the seas (or, more generally, any fortuitous external accident or casualty). If that question is answered in the affirmative, it follows that there was no inherent vice, thereby avoiding the causation issues that arise where there are multiple causes of loss, one of which is an insured risk and one of which is an uninsured or excluded risk. The approach also seems to me to accord with commonsense, at any rate in a case like this. It would be commercially unacceptable if cover for loss arising as a result of the interaction of perils of the seas and the nature of the goods were reduced to situations where the conditions of the sea were not reasonably foreseeable. As Professor Bennett puts it, at p 348 of his article: assureds do not procure insurance against losses that they consider fanciful. Rather, it is precisely because commercial experience indicates a certain level of probability of a particular type of loss that the reasonable person considers insurance a sensible and prudent investment. If, however, goods have to be fit to withstand reasonably foreseeable perils or the loss will be considered to be proximately caused by the inherent vice of the goods, or at least not by a risk within the meaning of the all risks insuring clause, much of the point of cargo insurance disappears. All risks cover would be confined to loss or damage occasioned only by wholly unusual perils or wholly unusual examples of known perils. This can be seen on the facts of this case. Both the insured and the insurers appreciated that there were potential risks of fatigue failure as a result of a combination of the fatigue strength of the rigs legs and the stresses induced by the sea conditions, which would of course depend upon the weather conditions. It was because of such risks that the insurers insisted upon the rig being inspected by Noble Denton at Galveston and being subsequently inspected at Cape Town, where (as Lord Saville explains) fatigue cracking was found and repairs carried out. Fatigue failure was thus one of the risks which both parties had in mind and which it seems to me to be fair to say that both parties intended should be the subject of the insurance. I mention this not as part of a conclusion which depends upon the particular arrangements made in this case but as an indication of what commercial men would have expected. For these reasons I too would dismiss this appeal. In doing so, I would stress two matters. The first is that this seems to me to be a most unusual case. The critical finding of the judge was that the leg breaking stress was fortuitous and was caused by a peril of the seas. It is important to note that if, in this case and contrary to the findings of the judge, the casualty had been bound to occur the insured would have failed. (I express no view on the interesting questions raised by Lord Mance at the end of para 51 above). The second is that, as I see it, the insured would not have been entitled to recover in respect of the cost of repairing every fatigue crack but only in respect of the loss of the legs because only the latter has been held to be caused by a peril insured against. It is a reasonable inference that some cracking was bound to occur. This point is not however relevant to the issues between the parties if, as the judge noted, quantum is not in dispute. CONCLUSION For the reasons I have given, I agree with Lord Saville and Lord Mance that the appeal should be dismissed. LORD DYSON For the reasons given by Lord Saville, Lord Mance, Lord Collins and Lord Clarke, I agree that this appeal should be dismissed. |
These appeals concern the impact of a cap on housing benefit (HB), in cases of deemed under occupation of social sector housing, on those with disabilities and on women living in sanctuary scheme accommodation. The cap was imposed by Regulation B13 of the Housing Benefit Regulations 2006 (SI 2006/213) (Reg B13). Reg B13 was introduced with effect from 1 April 2013, by way of amendment of the 2006 Regulations by the Housing Benefit (Amendment) Regulations 2012 (SI 2012/3040), as further amended by the Housing Benefit (Amendment) Regulations 2013 (SI 2013/665). It was a politically controversial matter, described as either a bedroom tax or removal of the spare room subsidy according to political viewpoint. Its merits are not a matter for the court, nor is there any challenge to the legality of the cap as it applies in general. The issues before the court are narrower. The appeals are from two judgments of the Court of Appeal, differently constituted, in judicial review proceedings. The claimants either have disabilities, or live with dependent family members who have disabilities, or live in what are known as sanctuary scheme homes (accommodation specially adapted to provide protection for women at severe risk of domestic violence). They are all tenants of registered social landlords and they all receive or received HB. They challenge the validity of Reg B13, as it applies to them, on equality grounds. More specifically, they contend that there has been a violation of their rights under article 14 of the European Convention on Human Rights (ECHR), taken with article 8 and/or article 1 of the First Protocol (A1P1) and in As case that there has been a breach by the Secretary of State of the Public Sector Equality Duty (PSED) under the Equality Act 2010. They are supported in their challenges by the Equality and Human Rights Commission (EHRC), which was given permission to intervene. In the first set of proceedings, issued by MA and others, some of the claims (including MAs claim) were resolved. When the case reached the Court of Appeal the claims remaining in issue were those of Jacqueline Carmichael, Richard Rourke, Mervyn Drage, JD and James Daly. Their claims were rejected by the Divisional Court (Laws LJ and Cranston J) [2013] EWHC 2213 (QB); [2013] PTSR 1521, and the Court of Appeal (Lord Dyson MR, Longmore and Ryder LJJ) [2014] EWCA Civ 13; [2014] PTSR 584. The other appeal arises from proceedings brought separately by A and the Rutherford family. Their claims were dismissed at first instance by different judges, but their appeals were heard together, and both succeeded in the Court of Appeal (Lord Thomas of Cwmgiedd CJ and Tomlinson and Vos LJJ) [2016] EWCA Civ 29. A, who is in a sanctuary scheme, succeeded under article 14 on the ground of sex discrimination, but failed in her claim under the Equality Act. The Rutherfords succeeded under article 14 on the ground of disability discrimination. The Secretary of State is the respondent in the MA case and is the appellant in relation to A and the Rutherfords. (In the case of A, there is a cross appeal against the rejection of her Equality Act claim.) The key facts relating to the individual claimants are summarised in appendix 1 to this judgment. Housing benefit and Regulation B13 HB is a means tested benefit provided under section 130 of the Social Security Contributions and Benefits Act 1992 and subordinate regulations. (It is due to be replaced eventually by Universal Credit, which is in the process of being rolled out across parts of the United Kingdom.) Its purpose is to help claimants with their rental costs. There is a prescribed mechanism for determining in each case the appropriate maximum housing benefit (AMHB). Section 130A of the 1992 Act, as inserted by section 30(2) of the Welfare Reform Act 2007 and amended by section 69(3) of the Welfare Reform Act 2012, allows regulations to provide for the amount of the claimants rental liability to be taken into account in calculating the AMHB to be less than the actual liability. The AMHB is calculated by reference to the eligible rent. Reg B13 provides for adjustment of the eligible rent and AMHB in the area of social sector housing. The relevant parts are as follows: (1) The maximum rent (social sector) is determined in accordance with paras (2) to (4). (2) The relevant authority must determine a limited rent by (a) determining the amount that the claimants eligible rent would be in accordance with regulation 12B(2) (b) where the number of bedrooms in the dwelling exceeds the number of bedrooms to which the claimant is entitled in accordance with paras (5) to (7), reducing that amount by the appropriate percentage set out in para (3); (3) The appropriate percentage is (a) 14% where the number of bedrooms in the dwelling exceeds by one the number of bedrooms to which the claimant is entitled; and (b) 25% where the number of bedrooms in the dwelling exceeds by two or more the number of bedrooms to which the claimant is entitled. (4) Where it appears to the relevant authority that in the particular circumstances of any case the limited rent is greater than it is reasonable to meet by way of housing benefit, the maximum rent (social sector) shall be such lesser sum as appears to that authority to be an appropriate rent in that particular case. (5) The claimant is entitled to one bedroom for each of the following categories of person whom the relevant authority is satisfied occupies the claimants dwelling as their home (and each person shall come within the first category only which is applicable) (a) Act); (b) (ba) a child who cannot share a bedroom; (c) (d) (e) two children of the same sex; two children who are less than ten years old; a child a couple (within the meaning of Part 7 of the a person who is not a child; (6) The claimant is entitled to one additional bedroom in any case where (9) a relevant person is a person who requires (a) overnight care; or (b) a relevant person is a qualifying parent or carer. In this regulation relevant person means the claimant; (a) the claimants partner; (b) a person (P) other than the claimant or the (c) claimants partner who is jointly liable with the claimant or the claimants partner (or both) to make payments in respect of the dwelling occupied as the claimants home; (d) Ps partner. A person who requires overnight care is defined in Reg 2(1) in terms which have the effect of not including any child. HB is payable at a reduced rate to claimants with an income above the applicable amount: Social Security Contributions and Benefits Act 1992, section 130(1). Regulations determine the applicable amount and what income is to be taken into account. The applicable amount is set at a level which is intended to cover a claimants basic living needs other than rent. Discretionary Housing Payments There is also a statutory scheme for enabling Discretionary Housing Payments (DHPs) to be made to persons who are entitled to HB and/or council tax benefit: Child Support, Pensions and Social Security Act 2000, section 69. As the title indicates, such payments are discretionary. The scheme is funded by central government and administered by local authorities. By the terms of the Discretionary Financial Assistance Regulations (SI 2001/1167), made under section 69 of the 2000 Act, an award may be made for such period as the authority considers appropriate in the particular circumstances of the case, and the authority is required to give reasons for its decision. There is no statutory right of appeal, but such decisions are in principle subject to judicial review. The practice is for the Department of Work and Pensions to make an annual DHP grant to local authorities in respect of their anticipated expenditure. Equality rights Two sets of equality rights are in issue: a) under article 14 of the ECHR, taken together with article 8 and/or A1P1, and b) under the Equality Act 2010. Article 14 provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The claimants other than A contend that Reg B13 operates so as to cause unlawful disability discrimination. It is common ground that disability falls within other status. A contends that Reg B13 operates so as to cause unlawful sex discrimination. Article 8 protects private and family life. A1P1 protects rights in respect of property and possessions, and it is common ground that HB falls within its scope. Section 149 of the Equality Act is headed Public Sector Equality Duty. It provides in part: (1) A public authority must, in the exercise of its functions, have due regard to the need to eliminate discrimination ; (a) (b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; (c) (3) Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to remove or minimise disadvantages suffered by persons (a) who share a relevant protected characteristic that are connected to that characteristic; (b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it; Disability and sex are among the protected characteristics set out in section 149(7) of the Equality Act. Evolution of Regulation B13 The evolution of Reg B13 is described in detail in the judgments given in the case of MA and others by the Divisional Court (paras 20 to 33) and the Court of Appeal (paras 15 to 36). Paragraphs 20 to 33 of the judgment of Laws LJ in the Divisional Court are reproduced at appendix 2 to this judgment. In summary, as part of its policy for curbing public expenditure the government aimed to ensure that social sector tenants of working age who were occupying premises with more bedrooms than they required should, wherever possible, move into smaller accommodation. It was recognised at an early stage that a policy based purely on numbers of rooms and occupants would cause problems for some with disabilities, and there was a debate within government and Parliament about how such problems should be addressed. The government initially decided that, rather than creating general exceptions for persons with disabilities (or certain categories of persons with disabilities), their needs should be met as necessary through a scheme of discretionary housing payments based on individual assessments. Regulation B13 as first introduced by SI 2012/3040 did not include para 6 (The claimant is entitled to one additional bedroom in any case where (a) the claimant or the claimants partner is (or each of them is) a person who requires overnight care; or (b) the claimant or the claimants partner is (or each of them is) a qualifying parent or carer.) This para was added by SI 2013/665. The EHRC correctly pointed out in its written case, para 8, that there has been a change in the structure of the under occupation criteria now contained in Reg B13. When under occupation criteria were first introduced, the provision for determining the number of bedrooms required by a household depended entirely on the number of occupants, their ages and sexes, and whether any of them were a couple. Para 6 contains provision for some disability related need. The result is a composite provision, structured on the basis of a non disabled norm but with provision for certain classes of disability related need. Parts of Reg B13 in its current form owe their origin to the decision of the Court of Appeal in Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117. This arose from a provision in Reg 13D(3) of the Housing Benefit Regulations 2006 (introduced by regulation 7 of the Housing Benefit (Local Housing Allowance and Information Sharing) Amendment Regulations 2007 (SI 2007/2868) and amended by regulation 2(6) of the Housing Benefit (Amendment) Regulations 2010 (SI 2010/2835) which came into force on 1 April 2011), in similar terms to Reg B13(5). The court heard appeals in three cases. In Burnip and a second case the claimants were adults with disabilities who required the presence of a carer throughout the night. By the time that the matter reached the Court of Appeal, there had been a legislative amendment which met those cases (by allowing an additional bedroom where the claimant or claimants partner required overnight care). The third case, Gorry v Wiltshire County Council, concerned a family including two children of the same sex who suffered from severe disabilities which made it inappropriate for them to share a bedroom. The court held that in each case there had been discrimination under article 14, because Reg B13 had a disparate adverse impact on persons with disabilities, and that the discrimination had not been justified. The court recognised that DHPs had a valuable role to play but it did not consider that they provided an adequate response to the problem in the types of case with which the court was concerned. The reasons for the courts decision that the discrimination was not justified were given by Henderson J, with whom Maurice Kay LJ (para 23) and Hooper LJ (para 25) agreed. Henderson J emphasised (para 64) that he was not suggesting a general exception from the normal bedroom test for disabled people of all kinds. The exception, he said, was sought only for a very limited category of claimants, namely those whose disability was so severe that an extra bedroom was needed for a carer to sleep in, or in cases like that of Mr Gorry where separate bedrooms were needed for children who, in the absence of disability, could reasonably be expected to share a room. He observed that such cases were by their nature likely to be relatively few in number, easy to recognise, not open to abuse and unlikely to undergo change or need regular monitoring. He added that the fact that Parliament had now legislated for cases like that of Mr Burnip could be viewed as recognition by Parliament of the justice of such claims. Ten months later, Reg B13 was amended to insert para (5)(ba), which covered Mr Gorrys case. In reaching this conclusion the court applied the test whether the Secretary of Judgments under review In the MA proceedings the Court of Appeal accepted that Reg B13 had a discriminatory effect on some people with disabilities, but it held that the discrimination was justified, primarily because the Secretary of State was entitled to take the view that it was not practicable to exempt an imprecise class of persons to whom the bedroom criteria would not apply because they needed extra bedroom space by reason of disability. The DHP scheme had the benefit of flexibility and was also appropriate because the nature of a persons disability and disability related needs may change over time. States policy was manifestly without reasonable foundation. The court rejected the argument that the case of Mrs Carmichael, who needed to sleep in a separate room from her husband on account of her disability, was materially indistinguishable from the Gorry situation of children who were unable to sleep in the same room, which had now been catered for by the new provision contained in Reg B13(5)(ba). The court held that the Secretary of State was entitled to provide greater protection for a child than an adult because the best interests of a child are a primary consideration, citing R (JS) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2013] EWHC 3350, paras 42 to 46 (Elias LJ). The court also rejected the allegation of a breach of the PSED. It emphasised (para 83) that the principal question in relation to the PSED is not whether the decision (or outcome) is justifiable, but whether, in the process leading to the making of the decision, the decision maker had due regard to the relevant considerations, citing the review of the case law by McCombe LJ in R (Bracking) v Secretary of State for Work and Pensions [2013] EWCA Civ 1345, [2014] EqLR 60, para 26. It upheld the finding of the Divisional Court that the effects of the HB cap were properly considered. In the proceedings relating to A and the Rutherford family, the Court of Appeal held that the situation of the Rutherford family, who included a child with disabilities requiring an overnight carer on certain days of the week, was indistinguishable from that of an adult with disabilities requiring an overnight carer, to which the decision in Burnip and Reg B13(6) applied. As explained at para 7, a child who requires overnight care does not come within the statutory definition of a person who requires overnight care. The court held that the reasoning in Burnip applied also in the case of A, a female victim of domestic violence living in accommodation adapted under a sanctuary scheme, because the category of persons in such schemes was limited to a relatively small number of victims (albeit growing), who were easy to identify, not liable to abuse the scheme, unlikely to undergo change and not in need of regular monitoring. The court therefore held that there had been a breach of article 14 in both cases. As to the PSED, the court held that the Secretary of State had properly considered the questions of disability based discrimination and gender based discrimination. Did the courts apply the right test? The primary contention of the claimants in MA is that the Divisional Court and the Court of Appeal applied the wrong test in asking themselves whether the discriminatory treatment about which the claimants complained was manifestly without reasonable foundation. In a case involving disability discrimination, weighty reasons for justification were required. It was wrong, they submitted, to see the case as one involving a matter of general economic or social policy, to which the manifestly without reasonable foundation test was appropriate. No objection was being raised to the general policy of Reg B13. The objection was to the application of the policy in a way which unjustifiably discriminated against a group of people with disabilities. The Divisional Court and the Court of Appeal based their approach on the judgment of Lady Hale, with which the other members of the court agreed, in Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545. It is necessary to set out the relevant passage at some length: 15. The proper approach to justification in cases involving discrimination in state benefits is to be found in the Grand Chambers decision in Stec v United Kingdom (2006) 43 EHRR 1017. The benefits in question were additional benefits for people who had to stop work because of injury at work or occupational disease. They were entitled to an earnings related benefit known as reduced earnings allowance. But on reaching the state pension age, they either continued to receive reduced earnings allowance at a frozen rate or received instead a retirement allowance which reflected their reduced pension entitlement rather than reduced earnings. Women suffered this reduction in benefits earlier than men because they reached state pension age at 60 whereas men reached it at 65. 16. The court repeated the well known general principle that A difference of treatment is, however, discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. (para 51) However, it explained the margin of appreciation enjoyed by the contracting states in this context, at para 52: The scope of this margin will vary according to the circumstances, the subject matter and the background. As a general rule, very weighty reasons would have to be put forward before the court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. On the other hand, a wide margin is usually allowed to the state under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the court will generally respect the legislatures policy choice unless it is manifestly without reasonable foundation. 17. The phrase manifestly without reasonable foundation dates back to James v United Kingdom (1986) 8 EHRR 123, para 46, which concerned the compatibility of leasehold enfranchisement with article 1 of the First Protocol. In the Stec case 43 EHRR 1017, the court clearly applied this test to the states decisions as to when and how to correct the inequality in the state pension ages, which had originally been introduced to correct the disadvantaged position of women. Similarly, the decision to link eligibility for reduced earnings allowance to the pension system was reasonably and objectively justified, given that this benefit is intended to compensate for reduced earning capacity during a persons working life: para 66. The Grand Chamber applied the Stec test again to social security benefits in Carson v United Kingdom (2010) 51 EHRR 369, para 61, albeit in the context of discrimination on grounds of country of residence and age rather than sex. 18. The same test was applied by Lord Neuberger of Abbotsbury (with whom Lord Hope of Craighead, Lord Walker of Gestingthorpe and Lord Rodger of Earlsferry agreed) in R (RJM) v Secretary of State for Work and Pensions [2009] AC 311, which concerned the denial of income support disability premium to rough sleepers. Having quoted para 52 of the Stec case 43 EHRR 1017 he observed, at para 56, that this was an area where the court should be very slow to substitute its view for that of the executive, especially as the discrimination is not on one of the express, or primary grounds. He went on to say that it was not possible to characterise the views taken by the executive as unreasonable. He concluded, at para 57: The fact that there are grounds for criticising, or disagreeing with, these views does not mean that they must be rejected. Equally, the fact that the line may have been drawn imperfectly does not mean that the policy cannot be justified. Of course, there will come a point where the justification for a policy is so weak, or the line has been drawn in such an arbitrary position, that, even with the broad margin of appreciation accorded to the state, the court will conclude that the policy is unjustifiable. 19. Their Lordships all stressed that this was not a case of discrimination on one of the core or listed grounds and that this might make a difference. In R (Carson) v Secretary of State for Work and Pensions [2006] 1 AC 173, both Lord Hoffmann and Lord Walker drew a distinction between discrimination on grounds such as race and sex (sometimes referred to as suspect) and discrimination on grounds such as place of residence and age, with which that case was concerned. But that was before the Grand Chambers decision in the Stec case 43 EHRR 1017. It seems clear from Stec, however, that the normally strict test for justification of sex discrimination in the enjoyment of the Convention rights gives way to the manifestly without reasonable foundation test in the context of state benefits. The same principles were applied to the sex discrimination involved in denying widows pensions to men in Runkee v United Kingdom [2007] 2 FCR 178, para 36. If they apply to the direct sex discrimination involved in the Stec and Runkee cases, they must, as the Court of Appeal observed, at para 50, apply a fortiori to the indirect sex discrimination with which we are concerned. Lady Hale added (para 22) that the fact the test is less stringent than the weighty reasons normally required to justify sex discrimination did not mean that the justifications put forward should escape careful scrutiny. On analysis the discrimination may be found to lack a reasonable basis. What Lady Hale said in the context of sex discrimination applies equally to disability discrimination, as Lord Dyson MR rightly held in the present case (para 59). Lord Dyson also emphasised that the fact that the court should apply the manifestly without reasonable foundation test, and should exercise considerable caution before interfering with the scheme approved by Parliament, did not lessen the need for careful scrutiny of the reasons advanced by the Secretary of State in justification of the scheme (para 60). In the present case counsel for the claimants pointed out that in Humphreys the unsuccessful appellant did not argue for anything other than the test established in the Stec and RJM cases (para 20). It is therefore necessary to ask whether there is good reason to depart from what Lady Hale said in that case. The fundamental reason for applying the manifestly without reasonable foundation test in cases about inequality in welfare systems was given by the Grand Chamber in Stec (para 52). Choices about welfare systems involve policy decisions on economic and social matters which are pre eminently matters for national authorities. The claimants seek to counter that point by arguing that this case involves no challenge to a decision of that kind. They have no quarrel with the policy of Reg B13. Their complaint is at a lower level and involves no question of economic or social judgment. Their complaint is simply that the manner of implementation of the policy discriminates against a vulnerable group, and that it is right to require weighty reasons to justify the discrimination rather than the broader policy itself. Rejecting that argument, Lord Dyson MR said (paras 54 to 55) that although the precise detail and scope of the Regulations may not be matters of high policy in themselves, they formed an integral part of a high policy decision and could not be dismissed as technical detail; that the law in this area would suffer from undesirable uncertainty if the test were to vary according to whether the challenge were to high level policy or lower level policy; and that there was no hint of such a distinction in the European or domestic case law. It was argued before this court that the rationale for the approach in Humphreys does not apply in the present case. In Humphreys the challenge was to a rule of the Child Tax Credit Regulations 2002 (SI 2002/2007) that there should be a single payment of child tax credit (CTC) for any child, and that it should be made to the parent with the main responsibility for the child. The revenue accepted that the scheme was indirectly discriminatory against men, but the court found that there was objective justification. The purpose of CTC was to help with meeting the needs of the household with primary responsibility for the childs care. A choice had to be made whether, and if so how, the CTC should be split where parents had separated. The fact that men were less likely to receive CTC than women was not related to their gender in such a way as to show a lack of equal respect. It reflected the fact that men were more likely to be non resident parents, and therefore less likely to need the CTC. The decision that there should be a single payment of CTC in respect of any child was a necessary part of achieving the governments economic and social policy. By contrast, it was said that Reg B13 bears unequally on those with disabilities because of their need in many cases for larger accommodation and it is not necessary for it to do so. I will come on to consider the group of people who have a particular medical need for an additional bedroom, but the argument which I am presently considering goes too far. The claimants objections to Reg B13 relate to their social as well as medical needs. The broad question which faced the Secretary of State in relation to Reg B13 and its potential impact on those with disabilities was whether to try to deal comprehensively with all problems of those who have any kind of disability (including social needs not dissimilar to those of other groups) within the precise rules of the regulation, or whether to accommodate them by a linked system of discretionary benefits. This is in my view a clear example of a question of economic and social policy, integral to the structure of the welfare benefit scheme, and it would not be appropriate to depart from the courts normal approach. Otherwise, it would be too easy for a skilled lawyer to circumvent the general rule by couching the discrimination complaint in terms of an attack on matters of detail. I accept that examples can be found of state benefit cases where European courts have spoken of a need for weighty reasons to justify discrimination. The decision of the Grand Chamber in Andrejeva v Latvia (2009) 51 EHRR 28 is one such example. Latvian state pension rules discriminated against the applicant on grounds of her nationality. The Strasbourg court said that while a wide margin of appreciation is usually allowed to the state under the Convention when it comes to measures of economic or social strategy, in a case where nationality was the sole criterion for differential treatment very weighty reasons would have to be put forward to justify it. In that case there was, on the face of it, no reasonable foundation for such discrimination, and in those circumstances it was for the state to produce a good reason to justify it. In the language of Lady Hale in Humphreys, on careful scrutiny the discrimination had no reasonable justification. Other examples cited in argument included Zeman v Austria (Application No 23960/02, 29 June 2006); Luczak v Poland (Application No 77782/01, 27 November 2007), Markin v Russia (2002) 56 EHRR 8 and Vrountou v Cyprus (App No 33631/06, 13 October 2015). None of them contain a statement of general principle inconsistent with Humphreys. I would affirm what was said in Humphreys in the passage cited above. It follows that in this case the courts have applied the correct test. The next question is whether they misapplied it. Has the test been misapplied? As a fall back to their argument that the wrong test has been applied, the claimants in MA contend that the courts below failed to give the Reg B13 scheme sufficiently careful scrutiny and that, as a matter of principle, the availability of DHPs could not justify a reduction in the HB to which persons suffering from disabilities would be entitled but for Reg B13. The impact of Reg B13 on those with disabilities was considered by the government and Parliament in depth. This is apparent from Laws LJs resume of the evolution of the policy (appendix 2). The reasons for the decision not to apply a general exemption from Reg B13 for those suffering from disabilities, but instead to make good the shortfall in cases where it would be inappropriate to expect someone with a disability to move house (or make good the shortfall by other means such as taking a lodger), were also explained in witness statements by Beverley Walsh, a senior civil servant in the Department of Work and Pensions. The essential point she made was that the impact of Reg B13 on those with disabilities was not uniform, but depended to a large degree on the nature and extent of their disabilities, as well as on their personal and social circumstances (such as whether they relied heavily on a local support network and whether suitable alternative accommodation was available, particularly if their present accommodation had been adapted to meet their individual needs). Some with disabilities would be significantly affected by the cap based on bedroom criteria; others would be no more affected than someone without disability. In MA the Divisional Court and the Court of Appeal concluded after careful scrutiny that the Secretary of States decision to structure the scheme as he did was reasonable. In general terms I agree. There was certainly a reasonable foundation for the Secretary of States decision not to create a blanket exception for anyone suffering from a disability within the meaning of the Equality Act (which covers anyone who has a physical or mental impairment that has a more than minimal long term effect on the ability to do normal daily activities) and to regard a DHP scheme as more appropriate than an exhaustive set of bright line rules to cover every contingency. However, that is not the end of the matter, for there are some people who suffer from disabilities such that they have a transparent medical need for an additional bedroom. Burnip and Gorry were in that category. Even before the decision in those cases there had been an amendment of the Regulations to include one additional bedroom in any case where the claimant or the claimants partner is a person who requires overnight care (or in any case where both of them are). Burnip was such a case. Gorry was a case where children required separate bedrooms for disability reasons. In those cases, which were rightly identified by the Court of Appeal as ones where the individuals medical condition was easy to recognise and gave rise to the need for a separate bedroom, there was no reasonable cause to apply the same cap on HB as if the bedrooms were truly under occupied. (Henderson J said that such cases were likely to be few, but I do not see that as a significant factor in itself.) That brings me to the cases of Jacqueline Carmichael and the Rutherford family. They are counterparts to Gorry and Burnip respectively. Mrs Carmichael cannot share a bedroom with her husband because of her disabilities. Her position is directly comparable to that of the Gorry children, who could not share a bedroom because of their disabilities. But Mrs Carmichael is caught by Reg B13 because para (5)(ba), which was introduced to meet the Gorry situation is confined to a child who cannot share a bedroom. The Rutherfords need a regular overnight carer for their grandson who has severe disabilities. Their position is comparable to that of Mr Burnip, who needed an overnight carer. But the Rutherfords are caught by Reg B13 because para (6)(a), which covers the Burnip situation, does not extend to a child who requires overnight care. There is no reasonable justification for these differences. The Court of Appeal in MA was persuaded (para 79) that there was an objective reasonable justification for treating Mrs Carmichael less favourably than a child in like circumstances, because the best interests of children are a primary consideration. I can see that there may be some respects in which differential treatment of children and adults regarding the occupation of bedrooms may have a sensible explanation. Expecting children to share a bedroom is not the same as expecting adults to do so. But I cannot, with respect, see a sensible reason for distinguishing between adult partners who cannot share a bedroom because of disability and children who cannot do so because of disability. And the same applies also to distinguishing between adults and children in need of an overnight carer. There is also an ironic and inexplicable inconsistency in the Secretary of States approach in the Carmichael and Rutherford cases which Lord Thomas CJ exposed in the latter at para 73: He [the Secretary of State] justified the distinction between making provision for a bedroom for disabled children but not for disabled adults by reference to the best interests of the child and explained the different treatment on that basis. On that basis, it seems to us very difficult to justify the treatment within the same regulation of carers for disabled children and disabled adults, where precisely the opposite result is achieved; provision for the carers of disabled adults but not for the carers of disabled children. Lord Thomas CJ added that the court accepted that DHPs were intended to provide the same sum of money, but it was not persuaded that this justified the different treatment of children and adults in respect of the same essential need within the same regulation. I agree. I would therefore dismiss the Secretary of States appeal in the Rutherford case, but I would allow Mrs Carmichaels appeal and would hold that in her case there has been a violation of article 14, taken with article 8. (In these circumstances A1P1 adds nothing and does not require further consideration.) The other claimants in MA are James Daly, Mervyn Drage, JD and Richard Rourke. Mr Daly occupies a two bedroom property. His severely disabled son, Rian, stays with him regularly, but he is not within the list of those who qualify for a bedroom under Reg B13(5) because he spends less than half his time with his father. This has nothing to do with the fact of his disability. Mr Daly may have a powerful case for a DHP award, so that he can continue to pay his rent from state benefits for Rians sake, but I accept the Secretary of States argument that he has no proper basis for challenging the HB and DHP structure on equality grounds. Mr Drage is the sole occupier of a three bedroom flat, which is full of accumulated papers. He suffers from an obsessive compulsive disorder. His hoarding of papers is no doubt connected to his mental illness, but that is very far from showing that he has a need for three bedrooms. It is not unreasonable for his claim for benefit to cover his full rent to be considered on an individual basis under the DHP scheme. JD lives with his adult daughter, AD, who is severely disabled, in a specially constructed three bedroom property. They have no objective need for that number of bedrooms. Because the property has been specially designed to meet her complex needs, there may be strong reasons for JD to receive state benefits to cover the full rent, but again it is not unreasonable for that to be considered under the DHP scheme. Richard Rourke and his step daughter live in a three bedroom property. One of the bedrooms is used for the storage of equipment. It is another example of a case where it is not unreasonable for Mr Rourkes claim for benefit sufficient to cover the whole of the rent to be considered on an individual basis under the DHP scheme. I would therefore dismiss the claims of the MA claimants, other than Mrs Carmichael, that they have suffered unlawful disability discrimination. Sanctuary schemes A and her son live in a three bedroom house. A has said in a witness statement that when she moved there she only needed a two bedroom property, but that there was a shortage of two bedroom properties and she accepted the offer of a three bedroom property. This was prior to the events giving rise to her need for protection under the sanctuary scheme, which led to its adaptation to provide a high level of security, but the adaptations did not involve using the third bedroom. There is no objective need for her to have three bedrooms, one of which is unoccupied, but she is understandably loath to move (even if suitable alternative accommodation could be found and made appropriately secure), because she has lived in her present property for many years, she knows her neighbours well and she feels safe where she is. Those are powerful reasons, but they have nothing to do with the number of bedrooms. Many other people may have very strong reasons for continuing to live in a larger property than they currently need in terms of size. The Court of Appeal said in As case that while it had great sympathy with the Secretary of States arguments for saying that it fell into the broad class for which DHPs were appropriate, Burnip obliged the court to hold otherwise (paras 54 to 55). Like Burnip, A fell into an easily recognisable class few in number. I have already said that I do not see the likely number of people affected as a critical factor in itself (para 42). To favour those in a small group with strong societal reasons for staying in a bigger property than they need over those in a larger group with equally strong or possibly stronger reasons would be truly irrational. The distinction between Burnip and A is that in Burnip there was a transparent medical need for an additional bedroom, whereas A has no need for a three bedroom property. As case for staying where she is, strong as that case would appear to be, has nothing to do with the size of the property; Mr Burnips case had everything to do with the size of the property and its ability to accommodate a carer. Notwithstanding my considerable sympathy for A and other women in her predicament, I would allow the Secretary of States appeal in As case. I add that for as long as A, and others in a similar situation, are in need of the protection of sanctuary scheme housing, they must of course receive it; but that does not require the court to hold that A has a valid claim against the Secretary of State for unlawful sex discrimination. Lady Hale has reached a different conclusion. She considers that Reg 13B operates so as to discriminate against women such as A who are victims of gender based violence, in breach of their rights under article 14 taken with article 8 of the ECHR. Lady Hales starting point is that while A has no need for more bedroom space than is allowed for under Reg B13(5), she has a different type of need, that is, a need to stay where she is because it has been adapted as part of a scheme to provide her with a safe haven. Lady Hale says that her case cannot be equated with other people who may have a compelling case for staying where they are, because even if such people have a status for the purpose of article 14, their cases would need individual evaluation (para 78). I agree that not everybody who could make out a strong case for remaining where they are could necessarily be fitted into a relevant status. An everyday example would be a person who lives close to and is the primary carer for an elderly parent, who is dependent on that person for being able to continue to live in the elderly parents own home. Whether the parent would be able to bring himself or herself within articles 8 and 14 in such circumstances would be debatable. But the carer may be able to show a powerful case that there is a need for her to live where she does, even if she happens to have a spare bedroom; and that, leaving aside humanitarian considerations, the cost of state care for the parent would be likely far to exceed any saving by reducing the carers HB. I agree also with Lady Hale about the need for individual evaluation, and it was this consideration which primarily led the Secretary of State to decide that cases of need for reasons unconnected with the size of the property should be dealt with through the DHP scheme. Take also the case of JD and AD (referred to in para 53). Just as in As case, their property has been specially adapted to provide AD with an environment where she can live in safety. Lady Hales observation (in para 76) that because of its special character, it will be difficult (if not impossible) for her to move elsewhere and would certainly put the State to further expense may equally be said of AD, but the court is unanimous that it is not unreasonable for JD and ADs need for housing benefit to be considered under the DHP scheme, notwithstanding the differences between HB and DHP to which Lady Hale has referred in para 77 ADs disabilities are at the severe end of the spectrum, but there can be degrees of disability, and the alterations to a property to accommodate the persons needs may be on a larger or smaller scale. These are matters which the Secretary of State may legitimately say require individual evaluation. Such examples could be multiplied, but the point remains the same. It was recognised from the time that Reg B13 was mooted that there will be some people who have a very powerful case for remaining where they are, on grounds of need unrelated to the size of the property. For reasons explained in the evidence (to which I have referred in para 40), it was decided not to try to deal with cases of personal need unrelated to the size of the property by general exemptions for particular categories but to take account of them through DHPs. Lady Hale has observed that it has not been demonstrated that there would be insuperable practical difficulties in drafting an exemption from Reg B13 for victims of gender based violence who are in a sanctuary scheme and who need for that reason to stay where they are. In her witness statement on behalf of the Secretary of State in As case, Ms Walsh drew an analogy between adaptations made to properties for persons with disabilities and adaptations made under sanctuary schemes. She made the point that the type of adaptations made and their cost is likely to vary from case to case, and by implication that they may be more easy or less easy to replicate. These factors would be relevant in considering the strength of the case for saying that the person concerned needs to stay where they are. A herself has emphasised that she regards the support of neighbours and family as critical, and that may well be so. But that is a personal factor which may not necessarily apply, or apply to the same degree, to other victims of domestic violence. It is also a factor which may apply as strongly to the elderly or persons with disabilities. So while I agree that there would have been no insuperable practical difficulty in drafting an exemption from the size criteria for victims of gender violence who are in a sanctuary scheme and who need for that reason to stay where they are, deciding whether they really needed to stay in that particular property would at least in some cases require some form of evaluation. I leave aside the question debated in the evidence about whether some people in a sanctuary scheme might safely be able to make use of a spare room by taking in someone else such as a family member. Likewise I do not suppose that there would be insuperable practical difficulties in drafting exemptions to meet other categories of people who may justifiably claim to have a need to remain where they are for reasons unconnected with the size of the accommodation, but this would again require an evaluative process. Lady Hale considers that there is a further point of distinction between As case and ADs case in that the state has a positive duty to provide effective protection to victims of gender based violence. I do not think it necessary for present purposes to go into a comparative analysis of the duty of the state to A and AD, because I do not see that the duty to victims of gender based violence mandates the means by which such protection is provided. A has not established that the adoption of Reg B13 has deprived her, or is likely to deprive her, of a safe haven. Ultimately, whether the Secretary of State could practicably have adopted a different approach is surely not the test. I have understood the court to be unanimous that the test is that laid down in Humphreys, to which I have referred. Applying that test, and recognising the need for careful scrutiny, I do not consider that the approach taken by the Secretary of State was manifestly without reasonable foundation. Public Sector Equality Duty As Lord Dyson MR said, the PSED is a duty on the part of a public authority to follow a form of due process, that is, an obligation to have due regard to the need to eliminate discrimination, and advance equality of opportunity, between those with and without a relevant protected characteristic. (See para 24 above.) In relation to those with disabilities, the Divisional Court and the Court of Appeal in the MA case reached the concurrent conclusion on the evidence that the Secretary of State had fulfilled the duty. Lord Dyson MR, at para 91, accepted that it was not sufficient for a decision maker to have a vague awareness of his legal duties. Rather, he must have a focused awareness of the duties under section 149 of the Equality Act and, in a disability case, their potential impact on people with disabilities. On the history of events (see appendix 1) and the evidence, especially of Beverley Walsh, the courts were well entitled to reach the conclusion that they did. In relation to sex discrimination, in June 2012 the Department of Work and Pensions published an updated Equality Impact Assessment which considered the impact on those likely to be affected and their distribution, including by gender. It did not address the group of those within sanctuary schemes. The Court of Appeal concluded in As case at para 59: It is clear that the Secretary of State did address the question of gender based discrimination. Those within the sanctuary schemes who would be adversely affected by Regulation B13 were in fact few in number. It was not in the circumstances a breach of the PSED to fail to identify in the Equality Impact Assessment this very small group of those within the sanctuary schemes who had a need for an extra room; this was a very tiny and specific group. I agree but I would make a further and more fundamental point. As As case illustrates, there is no automatic correlation between being in a sanctuary scheme and having a need for an extra bedroom. The reason that A has three bedrooms is not that she needs three bedrooms, but that no two bedroom properties were available when she first moved there. As I have said (at paras 56 to 58) her reasons for wanting to stay where she is are strong but unrelated to the size of the property. The fact that people may have strong personal or social reasons for wanting to stay in their property for reasons unrelated to the number of bedrooms (of which A is one example in her particular circumstances) was recognised and was planned to be taken account of through DHPs. Lady Hale takes a different view on this issue, as she does on the issue of discrimination under articles 8 and 14 of the ECHR, but no useful purpose would be served by going back over the ground which separates us. I would therefore dismiss As cross appeal under the Equality Act. Appendix 1: Factual Summaries Cases concerning adults with disabilities 1. Mrs Carmichael lives with her husband in a two bedroom flat. She has spina bifida, hydrocephalus, double incontinence, inability to weight bear and recurring pressure sores. Her husband is her full time carer. She needs a special bed with an electronic mattress. She also needs a wheelchair beside the bed. Her husband cannot share the same bed, and there needs to be adequate space for her husband and nurses to attend to her needs. There is not enough space for him to have a separate bed in the same room. Their rent was previously met in full by HB, but this was reduced by 14% under Reg B13. The shortfall is presently covered by an award of DHP. 2. Richard Rourke is a widower and lives with his step daughter in a three bedroom bungalow. Both have disabilities. They each occupy one bedroom and the third is used to store equipment. His rent was met in full by HB, but this was reduced by 25% under Reg B13 on the basis that he is under occupying two bedrooms. (The fact that one bedroom is occupied on a part time basis by his stepdaughter appears to have been overlooked, but that is not the basis of his legal challenge in these proceedings.) 3. Mervyn Drage lives on his own in a three bedroom flat. He has significant mental health problems including obsessive compulsive disorder. He does not sleep in any of his bedrooms, which are all full of papers that he has accumulated. His rent used to be met in full by HB, but this was reduced by 25% under Reg B13. 4. JD lives with her adult daughter, AD, in a specially constructed three bedroom property. AD has cerebral palsy with quadriplegia, learning difficulties, double incontinence and she is registered blind. She requires 24 hour care and support. JD provides full time care for her. The rent was met by a combination of HB and other statutory benefits. The HB was reduced by 14% under Reg B13. The shortfall is presently covered by an award of DHP. Cases concerning children with disabilities 5. James Daly is the father of Rian, a child who has severe disabilities. Rian is a full time wheel chair user and has other health problems including incontinence. He requires help with all aspects of daily living. Rians parents are separated and they share his care. Rian stays with his father every weekend, at least one day during the week and for part of school holidays. Mr Daly occupies a two bedroom property. His rent used to be met in full by HB. This was reduced by 14% under Reg B13. 6. Susan Rutherford is the grandmother of a teenage boy, Warren, who suffers from profound mental and physical disability. He requires 24 hour care by two people. He has been looked after by his grandmother since he was a few months old. She has been helped by her husband, Paul, since their marriage some years ago. They live in a three bedroom house adapted for their accommodation. Respite care is provided by carers who stay overnight two nights a week. Without that help Warrens grandparents would not be able to cope and he would have to go into a care home. The rent for the property used to be met in full by HB, but this was reduced by 14% under Reg B13. Sanctuary scheme accommodation 7. A lives in a three bedroom house with her son, who was conceived by her as a result of rape by a man with whom she had been in a relationship for a brief period. He has been exceptionally violent towards her and made threats regarded by the police as serious. Under a sanctuary scheme her property has been adapted to provide a high level of security and she receives on going security monitoring. Her rent used to be met in full by HB, but this was reduced by 14% under Reg B13. The shortfall is covered by an award of DHP. R (MA and others) v Secretary of State for Work and Pensions Appendix 2: Extract from the Judgment of Laws LJ [2013] PTSR 1521, paras 20 33 EVOLUTION OF THE POLICY 20. The proposed bedroom criteria measure was announced by the government in the 22 June 2010 budget: 2010 Budget Responsibility, freedom, fairness: a five year plan to re build the economy (HC 61). It is plain from the published budget statement that this and other welfare reforms were part and parcel of the Governments deficit reduction strategy, though other justifications, in terms of enterprise and fairness, were also claimed (reforming the welfare system to reward work para 1.31; tackle welfare dependency and unaffordable spending para 1.92). Against that general background I may turn to the evidence concerning the manner and extent of the consideration given by the Government, as the prospective policy was elaborated over time, to the needs of the disabled. (1) OFFICIALS ADVICE 21. In a submission to the Minister for Welfare Reform of 20 August 2010 it was acknowledged that [there] are likely to be a number of social sector tenants who cannot be found suitable alternative social sector accommodation of the right size, and specific reference is made to those caring full time for a disabled person . On 21 January 2011 officials recorded the ministers agreement that any exemptions eg because the claimant is unable to work due to a disability, should be contingent on their landlord being unable to offer any suitable sized accommodation, and the minister was asked to consider other groups as possible candidates for exemption. By 12 August 2011 it was being said there was a strong case for exempting disabled claimants where significant adaptations have been made to their properties. It was suggested that the minister announce a 20m per annum increased DHP package for . 2013/14 and 2014/15, funded by an increase in the planned reduction rates from 23% to 25%. At paras 6 15 of the officials paper of 12 August 2011 there is a detailed discussion of the background and the options available see also Annex A to the paper. It includes the statement, at para 9, that [there] is a strong case for an exemption from the size criteria measure for disabled people living in adapted accommodation or properties that have been specially suited to their needs. In Annex A the officials canvassed arguments for their recommendation of an increase to the DHP pot (DHPs are payable, as Henderson J observed in Burnips case [2013] PTSR 117, para 46, from a capped fund). 22. From August 2011 onwards there was a consistent view within government that the most workable solution to the difficulties for the disabled arising from the impact of the bedroom criteria was an increase in what could be made available through DHPs. In response to the paper of 12 August 2011, the minister had asked for more information on the likely reaction of the Treasury and the lobby (a shorthand for various interested groups). In a paper of 2 September 2011 officials note that the lobby had singled out those living in significantly adapted accommodation as a group which should be exempted. They indicate (para 4) that they have given consideration to the possibility of exempting this group and other hard cases, and state: trying to define significantly adapted accommodation for exemption purposes would not be workable. Such an exemption would be difficult and expensive to deliver effectively, especially within universal credit. It would either be too broad brush or leave out many other, equally deserving cases. We therefore recommend in our submission of 12 August increasing the DHP pot by 20m in 2013/14 and 2014/15. This approach would enable local authorities to make decisions at a local level about which cases should be prioritised for financial help to meet any shortfall caused by this measure. The officials note, however, at para 7: A DHP approach is likely to attract criticism for lacking the certainty . that only an exemption would appear to be able to offer in these cases . this approach may produce inconsistencies in the way individual cases are treated across different parts of the country. At para 8 the officials refer to a survey carried out by them, to which 56 local authorities and housing associations had responded, and which (together with meetings with various stakeholders) is helping to inform our approach to implementation as well as highlighting the pressure points most likely to be raised in the Lords Committee stages of the Welfare Reform Bill. They set out ten key bullet points from the survey. Three of them were: For those providers questioned there appears to be a shortage of both one bed homes and much larger four+ homes. The majority of providers allocate homes to underoccupying households to a certain extent. It is more common in smaller two bed homes than bigger homes. Most authorities allocate to underoccupiers most commonly for disabled needs and due to lack of suitable stock. 23. On 29 September 2011 officials informed the minister that the Treasury declined to agree the proposed means of funding the suggested DHP package, and accordingly suggested a revised approach: that the HB reduction rates be revised upwards, to 14% and 25% for one and two excess bedrooms respectively, and [that] we use the increased level of savings to provide a 25m DHP package to mitigate the impact of this measure in a targeted way. In the same document they report amendments received from two members of the House of Lords which proposed six categories of case for exemption from the reductions. The officials set out arguments against these proposals, of which the first was affordability (most of these would significantly erode savings). Then, at para 16 this appears: DHPs provide a targeted means of mitigating the impact of this measure from a limited funding pot. It is also in line with a localised approach which will allow local authorities to take into account the circumstances of individual households. More detail is given in the Annex to the submission of 29 September 2011. Thus: 18. Although the discretionary nature of DHPs can run the risk of uncertainty for individuals, it does have a number of advantages: It would enable LAs to provide additional help to claimants based upon a local level decision about need. It would deliver mitigation in a targeted way that ensures limited funds are not wasted on cases where the shortfall can be met by the individual . We will also allocate this money to local authorities in a way that broadly reflects need in relation to the impact of this measure. At para 20 of the Annex the officials state: Based on average weekly losses from the size criteria, 25m annual funding [sc the proposed DHP package] would be sufficient to remove approx 35,000 claimants from the impacts of the social sector size criteria. At para 21: We will monitor demand for DHPs in relation to this measure and how they are being used by local authorities. (2) CHILDRENS COMMISSIONERS PAPER 24. In January 2012 the Childrens Commissioner (established by the Children Act 2004) published a Child Rights Impact Assessment of the Welfare Reform Bill. I should refer briefly to this given Ms Markus submissions on section 149 of the [Equality Act 2010] and the PSED. In section 2 the commissioner opines that the proposed reductions in HB in the public sector will have deleterious effects on children: Such penalties are likely to have a particular impact on disabled children, where spare rooms may be needed for equipment storage and/or overnight carers, unless they are excluded from the Bill. We understand that the DWPs intention is to make provision for overnight carers where this is required; however, the [equality impact assessment] says that there will be provision for a bedroom for overnight carers for the claimant or their partner, but does not mention carers for children. Children waiting for an adoptive family . will also be affected, as will children whose care is shared by separated parents [Other examples are given]. (3) EQUALITY IMPACT ASSESSMENT AND THE JULY AND AUGUST 2012 CIRCULARS 25. In June 2012 the Department for Work and Pensions (DWP) published an updated equality impact assessment on the proposed size criteria for HB. Para 9 refers to the proposal, as it had become, to add 30m per year to the DHP fund from 2013 14, stating that it was expected to mitigate some of the impacts of the measure, in particular the effects on disabled people and those with foster caring responsibilities. Paras 20 21 describe the departments ongoing discussions with stakeholders. Paras 22 et seq offer a breakdown of the numbers of HB claimants thought likely to be affected (660,000 altogether), the distribution of losses among them (from 5 to 25 and over per week), the numbers who might float off HB altogether, tenure types (as between local authority and housing association tenants), regional distribution of those affected, and distribution by reference to family circumstances and gender. There is specific reference to disabled persons, who are accepted, at para 42, as more likely to be affected by the introduction of size criteria, and there is a prediction, at paras 43 44, that 56% 63% of those affected will be disabled, depending on the sense attributed to disability. Para 59 describes the departments plans for monitoring and evaluation of the policys effects. 26. In July 2012 Circular HB/CTB A4/2012 was issued to local authorities. The background to the 2012 Regulations is explained, and the effect of the changes summarised. Para 9 reacts to the judgments in Burnips case [2013] PTSR 117, which it will be recalled had been handed down on 15 May 2012. The circumstances of the first two claimants, who needed the presence of carers throughout the night, are dealt with in the Regulations (the closing words of Regulation 13D(3), identical as I have said to B13(5) for those renting in the public sector). The circular concentrated on the third case in the appeal from Burnips case, that of Mr Gorry: 9. Due [sic] to [the decision in Burnips case] those whose children are said to be unable to share a bedroom because of severe disabilities will be able to claim [HB] for an extra room from the date of the judgment, 15 May 2012. However it will remain for local authorities to assess the individual circumstances of the claimant and their family and decide whether their disabilities are genuinely such that it is inappropriate for the children to be expected to share a room. This will involve considering not only the nature and severity of the disability but also the nature and frequency of care required during the night, and the extent and regularity of the disturbance to the sleep of the child who would normally be required to share the bedroom. This will come down to a matter of judgment on the facts. DHPs are addressed later in the circular. At that stage the extra 30m was aimed specifically at two groups: Disabled people living in accommodation that has been substantially adapted to their needs, . [and] Foster carers including those between foster placements (para 52). This follows: 54. There are many reasons, as well as those mentioned in para 52, why it may not be appropriate for someone with a disability to either move house or make up any shortfall in rent themselves. A good example of this may be an individual or family who rely heavily on a local support network. In circumstances such as these it may be appropriate to use the DHP fund to make up the shortfall in their rent. Then after describing various means by which affected persons might be able to make up the shortfall caused by the reduction in their HB, this appears: 67. For those claimants who cannot cover a reduction in [HB] from their own resources and who have a compelling case for remaining in their current accommodation, there is the DHP fund . 27. On 1 August 2012 Circular HB/CTB A6/2012 was issued. It was specifically concerned with the Burnip case: more particularly with facts such as those of Mr Gorrys appeal. It indicated, at para 2, that the DWP had sought permission to appeal the decision to the Supreme Court. The advice given in para 9 of Circular HB/CTB A4/2012 was replicated in para 8. Para 7 also had this: When a claimant says that their children cannot share a bedroom, [local authorities] should expect to be provided with sufficient medical evidence to satisfy themselves that these factors [sc claimed severe disability] are sufficiently weighty in the individual case to make it inappropriate for the children to share a bedroom on a continual basis. Only in such circumstances will they be justified in making an exception to the normal application of the size criteria and granting HB on the basis of an additional bedroom. (4) CIRCULAR HB/CTB U2/2013 28. Circular HB/CTB U2/2013was issued on 12 March 2013. As I have foreshadowed it is material to the third ground of challenge (the deployment of guidance to prescribe the means of calculating the appropriate maximum HB). It indicated, at para 5, that the Secretary of State did not propose to pursue the appeal (or prospective appeal) in Burnips case [2013] PTSR 117. This follows: 6. This means that from the date of the Court of Appeal judgment on 15 May 2012, local authorities (LAs) should allow an extra bedroom for children who are unable to share because of their severe disabilities following the guidelines as set out in paras 7 to 10 below. 7. When a claimant says that their children are unable to share a bedroom, it will be for LAs to satisfy themselves that this is the case, for example, a claim is likely to be supported by medical evidence and many children are likely to be in receipt of disability living allowance (DLA) for their medical condition. In addition LAs must consider not only the nature and severity of the disability, but also the nature and frequency of care required during the night, and the extent and regularity of the disturbance to the sleep of the child who would normally be required to share the bedroom. In all cases this will come down to a matter of judgement on facts of each individual case. 8. It should be noted that the judgment does not provide for an extra bedroom in other circumstances, for example, where the claimant is one of a couple who is unable to share a bedroom or where an extra room is required for equipment connected with their disability. (5) THE DHP GUIDANCE MANUAL, APRIL 2013 29. This document of April 2013 (the Discretionary Housing Payments Guidance Manual) (the DHP Guidance Manual) contains very full guidance as to the use of DHPs. It reminds authorities, at para 1.10, that their DHP funds are cash limited. It reviews the whole scheme. It canvasses the possibility of allowing applications in advance from persons affected by the HB, at paras 4.5 6, and making an award not limited in time to a disabled claimant likewise affected, at para 5.3. A Good Practice Guide is included in the DHP Guidance Manual. It contains a substantial discussion of the HB. It states: 1.10 The Government has provided additional funding towards DHPs following the introduction of the benefit cap. This additional funding is intended to support those claimants affected by the benefit cap who, as a result of a number of complex challenges, cannot immediately move into work or more affordable accommodation. in living Specific types of case are then enumerated, at para 1.11, and carefully discussed, and worked examples are given. I should note these passages: 2.5 For claimants specially adapted accommodation, it will sometimes be more cost effective for them to remain in their current accommodation rather than moving them into accommodation which needs to be adapted. We therefore recommend that local authorities identify people who fall into this group and invite a claim for DHPs. 2.7 The allocation of the additional funding for disabled people broadly reflects the impact of this measure and the additional funding needed to support this group. However, due to the discretionary nature of the scheme, LAs should not specifically exclude any group affected by the removal of the spare room subsidy or any other welfare reform. It is important that LAs are flexible in their decision making. Other types of case discussed include adopters (paras 2.9 11) and foster carers, in particular (para 2.13) carers for two or more unrelated foster children. 30. At paras 5.4 5.5 the Good Practice Guide poses a series of practical questions under two heads, The households medical circumstances, health or support needs and Other circumstances. The bullet points under the latter head (13 in number) demonstrate a series of different cases, none of them necessarily involving disability, in which the claimant may encounter particular difficulty or hardship in seeking alternative accommodation in response to the reduction in his/her HB which the local authority may think it right to consider in deciding whether to make an award of DHP. I will just set out the first two instances: Is the claimant fleeing domestic violence? This may mean they need safe accommodation on an emergency basis so the concept of having time to shop around for a reasonably priced property is not appropriate. Does the household have to live in a particular area because the community gives them support or helps them contribute to the district? (6) STATEMENTS IN PARLIAMENT 31. I turn next to the parliamentary debates on the 2012 Regulations. It will be recalled that the Regulations were subject to the affirmative resolution procedure. On 15 October 2012 in the House of Lords the Parliamentary Under Secretary of State, Lord Freud, referred to the 30m addition to the DHP fund for 2013 14, of which 5m was to be earmarked for foster carers. Concern was expressed in the debate as to the dramatic consequences that these regulations will have for disabled people. Lord Freud stated (Hansard (HL Debates) 15 October 2012, col GC485): As noble Lords will remember, the 30m is divided so that 25m is to cover people with significant adaptations. We estimate that there are around 35,000 claimants, particularly wheelchair users, who have accommodation adapted to their needs . The core question, raised by [Lord McKenzie and Lady Hollis] was whether there is suitable accommodation. I know it is a concern. Clearly, it varies across the country. This is not about making people move into it. Many will prefer to stay. What will happen in practice is that there will be a very varied effect on individuals. One can tier up the problems and end up with someone in a very difficult position. We had some examples today. This is exactly where we would expect the DHP to come into effect. A lot of people will decide that they will have enough money or that they will be able to take in a lodger or take extra work. Those are the kind of decisions that we expect to happen in the marketplace. There will, of course, be a residue of bigger problems. 32. In the House of Commons on 16 October 2012 the minister, Mr Webb, answered a question about what the position would be where a disabled or elderly tenant had had adaptations made to his accommodation. He said: We looked at whether we could simply exclude any house that had had any adaptation done to it. It quickly became apparent that there is a spectrum of adaptations . Trying to define in legislation that this or that type of adaptation was or was not exempt was very complex. Rather than having a blanket exemption for a ramp or a stair rail, we have allocated money to local authorities [sc the 30m DHP], which broadly matches what we think would be the cost of protecting people in the circumstances that the Hon gentleman had described . 33. At Prime Ministers Questions on 7 March 2013 the Prime Minister stated that people with severely disabled children are exempt [from the bedroom criteria]: Hansard (HC Debates) 6 March 2013, col 949. On 12 March 2013 the Secretary of State, in a written ministerial statement, referred to the DHP Guidance to be issued the following month (and which I have described above) and indicated that he would closely monitor and adjust the implementation of the policy . to ensure that the needs of these groups [ priority groups other than foster carers and armed forces personnel] are effectively addressed in the longer term: Hansard (HC Debates) 12 March 2013, col 10WS. LADY HALE: (dissenting in the A case) (with whom Lord Carnwath agrees) It is perhaps unfortunate that two very different sorts of case, raising very different issues about the removal of the spare room subsidy, should have been dealt with together. As Lord Toulson has demonstrated, the disability cases are about whether people need extra space because of their disability. The link between the number of bedrooms for which housing benefit is paid and their needs is direct and obvious. The regulation denies them the benefit they need to pay for the amount of space they need. The case of A, and others like her in sanctuary schemes, is different. Her need is not for space but to stay where she is. The effect of the regulation is to deny her the benefit she needs in order to stay in the accommodation she needs. In my view this is unjustified discrimination against her on grounds of her sex. But the reasons are quite different from the reasons in the disability cases. It has been recognised for a long time, both nationally and internationally, that the State has a positive obligation to provide effective protection for vulnerable people against ill treatment and abuse, not only from agents of the State but also from private individuals. The aim of such protection is effective deterrence: prevention of the abuse taking place at all is a far more effective remedy than punishment or compensation after the event. Several of the Convention rights may be violated by the failure to provide effective protection. Thus, in the well known case of X and Y v The Netherlands (1985) 8 EHRR 235, the failure of the authorities to provide the protection of the criminal law for a mentally disabled young woman against sexual abuse was a violation of the right to respect for private life under article 8. In Z v United Kingdom (2001) 34 EHRR 3, the failure to provide the protection of the child care system for a family of children against prolonged neglect by their parents was a violation of their right not to be subjected to ill treatment under article 3. In Opuz v Turkey (2009) 50 EHRR 28, the failure to provide the protection of the criminal law or a safe haven scheme for a wife against repeated violent attacks by her husband was a violation of her rights under article 3. Significantly, in Opuz v Turkey, the court also recognised that this failure was a breach of article 14, the right to the equal enjoyment of the Convention rights, because gender based violence such as this has been internationally recognised as a form of discrimination against women. The court quoted, among other things, article 1 of the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) which defines discrimination as: [A]ny distinction, exclusion or restriction made on the basis of sex which has the effect or purpose of impairing or nullifying the recognition, enjoyment or exercise by women, irrespective of their marital status, on a basis of equality of men and women, of human rights and fundamental freedoms in the political, economic, social, cultural, civil or any other field. Obviously, to deny women protection against gender based violence, such that they cannot live an equal life with men, is discrimination against them in the enjoyment of their fundamental rights. As the United Nations Commission on Human Rights put it, in resolution 2003/45: [A]ll forms of violence against women occur within the context of de iure and de facto discrimination against women and the lower status accorded to women in society and are exacerbated by the obstacles women often face in seeking remedies from the state. It is greatly to the credit of the United Kingdom that domestic law began to develop more effective remedies against gender based violence in the 1970s, following the recognition of the problem in the Report of the House of Commons Select Committee on Violence in Marriage (1974 75) HC 553. It was widely recognised that the criminal law is often an ineffective remedy. The shocking facts of Ms As case, not unlike the shocking facts of Opuz v Turkey, but with a far more robust response from the criminal justice system, show all too clearly that there is a class of dangerous and determined abusers who will not be put off by the criminal law, however effectively it is deployed. Parliaments of all political persuasions have recognised that what is needed are, firstly, ways of getting the abuser out of the home, beginning with the Domestic Violence and Matrimonial Proceedings Act 1976 and now contained in Part IV of the Family Law Act 1996, together with the Domestic Violence, Crime and Victims Act 2004, and secondly, ways of getting alternative accommodation for the victim, beginning with the Housing (Homeless Persons) Act 1977 and now contained in Part VII of the Housing Act 1996. Sanctuary schemes are a further development. They recognise the positive obligation of the State to provide a safe haven for a comparatively small number of victims who are at risk of really serious violence. The state has provided Ms A with such a safe haven. It allocated her a three bedroom house when she did not need one. That was not her choice. It later fortified that house and put in place a detailed plan to keep her and her son safe. Reducing her housing benefit by reference to the number of bedrooms puts at risk her ability to stay there. Because of its special character, it will be difficult if not impossible for her to move elsewhere and that would certainly put the State to yet further expense. Given these very special circumstances, I am tempted to regard this as an interference with her and her sons right to respect for their home. But in any event, denying her the benefit she needs in order to be able to stay there is discrimination in the sense described in Thlimmenos v Greece (2000) 31 EHRR 154: treating her like any other single parent with one child when in fact she ought to be treated differently. Indeed, the appellant does not seriously dispute that Ms A needs to stay where she is. The Secretary of State accepts that she needs to stay in a sanctuary scheme and probably in this very house. The justification suggested for the interference, or the discrimination, is the availability of discretionary housing payments to make up the shortfall in her rent. But if the discretionary housing payment scheme is not good enough to justify the discrimination against the Rutherford and Carmichael households, it is not good enough to justify the discrimination against Ms As household either. Its deficiencies were acknowledged in the Court of Appeals decision in Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117, para 46. They are well summed up by Mr Drabble QC on behalf of the Rutherford and Carmichael families: it is discretionary, cash limited and produces less certainty; it has a stricter means test; it offers different and less attractive routes of judicial challenge; it can be onerous to make applications; and it encourages short term, temporary and conditional awards. For a woman in a sanctuary scheme to have to endure all those difficulties and uncertainties on top of the constant fear and anxiety in which she lives cannot be justified. This is not a question of the allocation of scarce public resources: it is rightly acknowledged that public resources will have to meet this need one way or another. Obviously, her circumstances may change, just as the size of any household, and the age and sex of its members may change. The housing benefit scheme already caters for such changes. It could cater for a relevant change in her circumstances. Nor has it been demonstrated that there are insuperable practical difficulties in the way of drafting an exception to the size criteria in regulation B13 to cater for victims of gender based violence who are in sanctuary schemes and need for that reason to stay where they are. Such cases cannot be equated with other people who would prefer to stay where they are, even if they have quite a compelling case for doing so, such as carers for older people who need to stay near their support networks or even disabled people living in specially adapted accommodation, like JD and AD. In the first example, it is not clear that this group would constitute a status for article 14 purposes. But even if it did, their needs will require individual evaluation, perhaps in the context of a social care needs assessment, before it is clear that staying where they are is the right or only solution. Such an evaluation can only take place in the context of the discretionary housing payment scheme, despite its disadvantages. But if the need is clearly established, then it would be irrational to refuse to meet it. In the second example, the disability is indeed a status for article 14 purposes, and I have found the case of JD and AD an extremely difficult one and have been tempted to dissent in their case too. But the distinction between them and the victims of the sex discrimination entailed in gender based violence, is that the state has a positive obligation to provide effective protection against gender based violence and for this small group of victims this is the only way to make that protection effective. I would reach this conclusion without consideration of the public sector equality duty. However, I cannot accept that it was properly complied with in this case. The Secretary of State was required to have due regard to the need to (a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act; (b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it (Equality Act 2010, section 149(1)). Advancing equality of opportunity involves having due regard, in particular, to the need to (a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic; (b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it; (section 149(3)). The Equality Impact Statement prepared in June 2012 addressed the impact on gender in three paragraphs, noting that more women than men would be affected by the size criteria, because there are more female than male housing benefit claimants, but concluding that there was no differential impact by gender. There was nothing about women who are victims of gender based violence or those within sanctuary schemes. The Court of Appeal concluded that because there would be very few in sanctuary schemes who would be adversely affected by regulation B13, it was not a breach of the public sector equality duty to fail to identify them (para 59). Although gender based violence is recognised by the European Court of Human Rights and elsewhere as a form of discrimination against women, it is perhaps unlikely to be a form of discrimination prohibited by the 2010 Act, which I take to be the scope of section 149(1)(a) of that Act. But it is undoubtedly a disadvantage suffered by people, namely women, who share a relevant protected characteristic within the meaning of section 149(3)(a) and produces needs that are different from those of people who do not share it within the meaning of section 149(3)(b). This brings it within the need to enhance equality of opportunity to which due regard is to be had under section 149(1)(b). In my view, therefore, the public sector equality duty requires public authorities at least to consider the impact of their decisions and actions on the victims of gender based violence. This is not much to ask. People in sanctuary schemes may be small in number but victims of gender based violence are many. Public authorities should take their needs into account when developing their policies. They are likely to make better decisions as a result. And they will be able to explain them better. I would therefore dismiss the appeal of the Secretary of State in Ms As case and allow her cross appeal. I agree with Lord Toulsons judgment on the disability cases. |
Section 3C of the Immigration Act 1971 extends a persons leave to remain pending determination of an application to vary the period of leave, provided that the application is made before the expiry of the original leave. The principal issue raised by these three appeals is how section 3C applies where an application is made in time, but is procedurally defective for some reason. In two cases (Mr Iqbal and Mr Mirza) the defect related to non payment of fees; in the third case (Ms Ehsan), failure to provide biometric information. Statutory provisions Section 3C at the material time, as substituted by section 118 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) (and amended by section 11 of the Immigration, Asylum and Nationality Act 2006), read as follows: 3C Continuation of leave pending variation decision (1) This section applies if (a) a person who has limited leave to enter or remain in the United Kingdom applies to the Secretary of State for variation of the leave, (b) the application for variation is made before the leave expires, and (c) for variation having been decided. the leave expires without the application (2) The leave is extended by virtue of this section during any period when (a) decided nor withdrawn, . the application for variation is neither (3) Leave extended by virtue of this section shall lapse if the applicant leaves the United Kingdom. (4) A person may not make an application for variation of his leave to enter or remain in the United Kingdom while that leave is extended by virtue of this section. (5) But subsection (4) does not prevent the variation of the application mentioned in subsection (1)(a). (6) The Secretary of State may make regulations determining when an application is decided for the purposes of this section; Procedure and fees Section 50 of the Immigration, Nationality and Asylum Act 2006 (the 2006 Act) enabled the Secretary of State to lay down in immigration rules requirements for the procedure for applications, including the use of specified forms, and provision about the manner in which a fee is to be paid; and to make provision for the consequences of failure to comply. Section 51 enabled her by order to require an application to be accompanied by a specified fee, and to make regulations specifying the amount of the fee, and making provision about the consequences of failure to pay a fee (section 51(3)(d)). The relevant rules (which to this extent were in the same form at the time of the three applications) required an application to be on a specified form, and to comply with certain requirements including: any specified fee in connection with the application or claim must be paid in accordance with the method specified in the application form, separate payment form and/or related guidance notes, as applicable, (rule 34A(ii)). Rule 34C provided: Where an application or claim in connection with immigration for which an application form is specified does not comply with the requirements in paragraph 34A, such application or claim will be invalid and will not be considered. The relevant statutory instruments in respect of fees (in Mr Iqbals case) were the Immigration and Nationality (Fees) Order 2011 and the Immigration and Nationality (Fees) Regulations 2011 (the 2011 Order and the 2011 Regulations). Regulation 37 of the 2011 Regulations provided: Consequences of failing to pay the specified fee 37. Where an application to which these Regulations refer is to be accompanied by a specified fee, the application is not validly made unless it has been accompanied by that fee. Earlier but equivalent provisions applied at the time of Mr Mirzas application. Biometric information The power to require biometric information was derived from regulations made under section 5 of the UK Borders Act 2007 (the 2007 Act). Section 7 (Effect of non compliance) provided that regulations under section 5 must include provision about the effect of failure to comply with a requirement of the regulations (section 7(1)), and: (2) In particular, the regulations may require or permit an application for a biometric (a) immigration document to be refused; require or permit an application or claim in (b) connection with immigration to be disregarded or refused; (c) leave to enter or remain in the United Kingdom; (d) a notice under section 9; [penalty notice] require the Secretary of State to consider giving require or permit the cancellation or variation of (e) provide for the consequence of a failure to be at the discretion of the Secretary of State. At the time of Ms Ehsans application, the Immigration (Biometric Registration) Regulations 2008 (regulation 3) provided that a person subject to immigration control must apply for the issue of a biometric immigration document where certain conditions were satisfied, as they were in her case. Regulation 23 provided that on failure to comply the Secretary of State may take any of the actions specified in paragraph (2): (2) The actions specified are to refuse an application for a biometric immigration (a) document; (b) disregard the person's application for leave to remain; (c) remain; and (d) refuse the person's application for leave to cancel or vary leave to enter or remain. Regulation 23 was amended from 29 February 2012, (inter alia) to substitute for sub paragraph (2)(b) the following: treat the persons application for leave to remain as (b) invalid The facts Javed Iqbal Mr Iqbal was granted entry clearance in January 2007 to come to the UK as a student, extended thereafter to 30 April 2011. In October 2010 his wife was allowed entry as a dependant until the same date. On 19 April 2011 he applied for further leave to remain as a student at William Shakespeare College. Unaware that the fee had been recently increased, he paid the old fee (29 short). By letter dated 26 April, received by him on 2 May 2011, his application was rejected by the Secretary of State as invalid for that reason. On 6 May 2011 he resubmitted his application for leave to remain as a student at the same college. In October 2011, before the application had been determined, he sought and received confirmation from the Secretary of State that he was free to alter the named educational institution. On 2 May 2012 he varied his application to name the Equinox College, having obtained a Confirmation of Acceptance for Studies (CAS) from that college. However, the colleges sponsor licence was revoked on 16 May 2012, with the result that his CAS became invalid. If he had been entitled to extension of leave under section 3C, he would have been given 60 days in which to identify another approved institution. This concession was not available because the new application had been made after his leave had expired. On 18 March 2013 his application was refused because he had failed to identify an approved college. His notice of appeal to the First tier Tribunal was rejected because, not having leave to remain at the time of the relevant application, he had no right of appeal. He then commenced the present judicial review proceedings, for which following refusal by the Upper Tribunal, permission was granted by the Court of Appeal. Muhammad Mirza Mr Mirza entered the country on 27 July 2002 under a student visa which was in due course extended until 31 March 2009. He made an application to extend leave on 27 March 2009, which was rejected in error but resubmitted on 4 April 2009. On 24 April 2009 the Secretary of State attempted unsuccessfully to take the 295 application fee from the bank details provided by Mr Mirza. His application was rejected for non payment of the fee. On 1 April 2012, following completion of his studies, he submitted a further application to remain as a Tier 1 (Post Study Work) Migrant. On 10 December 2012 his application was refused because he did not meet the relevant requirements of the rules, primarily that: (1) he did not have leave to remain as a student or a Tier 4 Migrant between 1 September 2010 and 17 March 2012; and (2) his application for further leave to remain as a Tier 1 (Post Study Work) Migrant was made more than 12 months after obtaining the relevant qualification, awarded on 17 March 2011. He applied for judicial review of the Secretary of States decision. Following refusal of permission in the High Court permission was granted by the Court of Appeal. Humaira Ehsan Ms Ehsan arrived on 8 March 2011 with entry clearance as a Tier 4 (General) student valid until 28 December 2011. On 23 December 2011 she made an application for further leave as a Tier 4 (General) student. The Secretary of State thereafter wrote requesting her to make an appointment to provide certain biometric information. By letter dated 24 February 2012 she was told that, unless she booked and attended an appointment within 17 days, or provided a reasonable explanation for failure to do so, her application would be rejected as invalid. In a letter dated 26 March 2012 she was told that her application was being returned as invalid because of her failure to make and attend an appointment for providing biometric information. On 3 April 2012 she submitted a new application for leave to remain as a Tier 4 (General) student. On 21 April 2012 the Secretary of State wrote asking her to make an appointment to provide biometric information within 15 days, which she did. In September 2012 the college which had sponsored her had its licence revoked. On 9 January 2013 her application for further leave was rejected on the grounds that she had not obtained the necessary number of points, no points being attributable to the now invalid CAS. Had her leave been extended under section 3C, she would have been able to take advantage of the 60 day concession to find a replacement institution. She sought judicial review, which following refusal of permission by the High Court, was allowed by the Court of Appeal. The issues in the Court of Appeal The nature of the issues, and the positions of the parties, have shifted markedly during the progress of these cases through the courts. In the Court of Appeal, departing from the position taken before the Upper Tribunal, the appellants (through Mr Malik of counsel) contended that an application which was invalid under the regulations was still effective to engage the automatic extension provisions. The Secretary of State did not contend otherwise, even though (as counsel accepted on her behalf) this represented a change from her position in previous cases. Instead as Elias LJ explained (para 22) she now relied on the next stage, that is the effect of the Secretary of States notice rejecting such an application as invalid, which she submitted should be treated as a decision on the application, thereby bringing the leave to an end under section 3C(2)(a). Although the Secretary of State has now reverted to her previous position, it is right to refer to the policy reasons which led to the interpretation advanced by her in the Court of Appeal. The submissions on her behalf spoke of the strong policy reasons for the Secretary of States re examination of her previous approach, leading to her favoured interpretation as presented in that court: First, at the point at which the application is made, neither the Secretary of State nor the applicant will know for sure whether or not their application is valid. Applications may be made in good faith and believed to be valid, yet be invalid. This may have significant adverse consequences for bona fide applicants: for example, he may have continued working whilst waiting for a response from the Home Office on the application (as section 3C leave continues the leave the person has, on the same terms) but unbeknownst to him and his employer, this constituted illegal working because in fact his application was invalid. Second, the previous view that section 3C leave was not triggered by an invalid application has become very complex and difficult to understand both for applicants and caseworkers, giving rise to uncertainty in an area where it is important to be able to readily work out whether a person has had their leave extended pursuant to section 3C or not. Third, the previous view that section 3C leave was not triggered by an invalid application has become increasingly difficult in practice where the requirements for validity can arise after the application is made: for example the need to enrol biometric information. This adds a further layer of complexity and uncertainty to that which should be readily ascertainable This approach led in turn to the need to find some means of bringing the extended leave to an end. Otherwise, as Elias LJ pointed out, it would be possible for someone with limited leave to submit a defective application, and thereby secure an extension of time, which would become in effect indefinite because no valid decision could be made bringing it to an end (para 24). It was for this reason that the Secretary of State was constrained to argue that the rejection of the application as invalid could itself be treated as a decision on the application for that purpose. The Court of Appeal held, contrary to the primary submissions of both parties, that section 3C did not extend to an application which was not validly made in accordance with the rules (para 30). Elias LJ (with whom the other Lord Justices agreed) addressed his reasoning primarily to the case of Mr Iqbal, the other two being treated as covered by the same principles. He noted (para 14) that this had hitherto been assumed to be the effect of the rules, by all including the Court of Appeal (see JH (Zimbabwe) v Secretary of State for the Home Department [2009] EWCA Civ 78; [2009] Imm AR 499, para 35). He held that the powers in sections 50 and 51 of the 2006 Act to provide for the consequences of procedural failure gave sufficient Parliamentary endorsement for that position (para 30). He rejected as wholly unsustainable the Secretary of States argument that notification of invalidity could constitute a relevant decision for the purposes of section 3C, since the context clearly required a determination of the application, not its rejection or a decision that there is no valid application (paras 31 32). He also rejected a separate argument for Mr Iqbal that the procedure in his case was unfair, because of the failure to notify him of the defect in time for him to correct it before the expiration of leave. This submission relied on comments of the Upper Tribunal in Basnet v Secretary of State for the Home Department [2012] UKUT 113; [2012] Imm AR 673, relating to an argument that in this respect personal applications were treated more favourably than applications by post. Elias LJ accepted that in practical terms a personal applicant had the advantage that a defect could be more quickly remedied, but short of unreasonable delay (which the Upper Tribunal had not found) there was no obligation on the Secretary of State to prioritise cases where lack of the appropriate fee might be fatal (para 39). In this court, Mr Malik renews the argument that the word application in section 3C is unqualified by reference to any procedural requirements in subsequent regulations, and should not be interpreted by reference to them. He points to the strong policy arguments for that interpretation, previously recognised by the Secretary of State, to which he adds the fact that overstaying is a criminal offence for the applicant, and may result in a penalty for his employer (1971 Act section 24; 2006 Act section 15). He does not shrink from the possible consequence that leave may be extended indefinitely, but submits that the answer is in the hands of the Secretary of State by appropriate amendments to the regulations or if necessary to section 3C itself. He also points out that the application will be treated as withdrawn if the applicant applies for return of his passport to travel outside the common travel area (rule 34J). Legislative history Both parties have relied to some extent on the history of the legislative provisions in support of their respective cases. A brief account is therefore necessary. The need for a statutory mechanism to extend the right to remain pending a final decision on an application to vary was identified as a result of the decision of the House of Lords in Suthendran v Immigration Appeal Tribunal [1977] AC 359. The House held that the then right of appeal (under 1971 Act section 14) only arose if the applicant had leave at the date of both the application to vary and the notice of appeal. This problem was answered by the Immigration (Variation of Leave) Order 1976 (the 1976 Order), article 3 of which provided that where a person with limited leave to remain applies before the expiry of that period for variation, the duration of the leave would be extended for 28 days after the date of the decision or withdrawal of the application. Section 14(1) of the 1971 Act gave protection against removal while an appeal was pending. No formality was laid down for an application to vary. It was regarded as sufficient that there should be a request in unambiguous terms for a variation of leave (see Macdonald Immigration Law and Practice 4th ed (1995) p 83). In 1996 changes to the Immigration Rules introduced a requirement for applications for variation to be made on a prescribed form accompanied by specified documents and provided that An application for such a variation made in any other way is not valid. (HC395 rule 32). Rule 32 was challenged in judicial review proceedings by the Immigration Law Practitioners Association (ILPA), on the grounds that immigration rules under section 3(2) of the 1971 Act could not be used to change the law made by the 1976 Order. The challenge failed, even though the court accepted that under the new rule someone who does not make an application in the prescribed form would find that his application will not be valid so that he then becomes an overstayer and is thus subject to the criminal and other consequences that flow from that status. (R v Secretary of State for the Home Department, Ex p Immigration Law Practitioners Association [1997] Imm AR 189, 191 per Collins J) Both section 14 of the 1971 Act and the 1976 Order were replaced by provisions in the Immigration and Asylum Act 1999 with similar effect. They included the insertion into the 1971 Act of a new section 3C, providing for the extension of leave, but again depending on the making of an application before the expiry of leave. The 1999 Act also introduced for the first time power to make regulations for payment of fees, and provided for the consequences of failure to pay. Section 5(2) provided that where a fee was payable in connection with an application of a particular kind no such application is to be entertained by the Secretary of State unless the fee has been paid in accordance with the regulations. This section was not brought into force until 1 April 2003, and regulations imposing the first fees came into effect on 1 August 2003. Section 165 of the 1999 Act also inserted a new section 31A into the 1971 Act, giving power to prescribe by regulation the form of an application. Section 31A provided that where a form was prescribed the application must be made in that form, but it said nothing about the consequences of non compliance. No regulations were made at that time. As from 1 April 2003, section 3C of the 1971 Act was replaced (by 2002 Act section 118) by a new version taking the form set out earlier in this judgment (para 2). This version, subject to minor amendment by section 11 of the 2006 Act (not relevant to this appeal), was current at the time of the present applications. It differed from the previous version, in that the statutory extension of leave continued during the time when an appeal was pending, and came to an end upon the applicant leaving the country. The 2002 Act also introduced a new unified appeal structure with rights of appeal from an immigration decision as defined by section 82 of that Act (Part 5 of the 2002 Act). It appears to be common ground that there was no right of appeal against a decision on an application made after expiry of leave to remain. Section 31A of the 1971 Act was amended by the insertion of a new subsection (3A): (3A) Regulations under this section may provide that a failure to comply with a specified requirement of the regulations invalidates an application, (a) (b) does not invalidate an application, or invalidates an application (c) in specified circumstances (which may be described wholly or partly by reference to action by the applicant, the Secretary of State, an immigration officer or another person). As from 1 August 2003 (the same date as the first fees regulations), the Immigration (Leave to Remain) (Prescribed Forms and Procedures) Regulations 2003 (the 2003 Forms Regulations) set prescribed forms (regulations 3 9) and laid down prescribed procedures (regulation 11) for various types of application. Regulation 12 provided that failure to comply with certain procedural requirements would only invalidate the application if the applicant did not provide a satisfactory explanation and comply within 28 days of being notified of the failure. These regulations were amended or replaced on a number of occasions in similar form until 2007. Section 31A of the 1971 Act and section 5 of the 1999 Act were repealed by the 2006 Act. The relevant provisions of that Act, and of the subordinate legislation have already been set out (paras 3ff above). Finally, the UK Borders Act 2007 enabled the Secretary of State to make regulations requiring those subject to immigration control to apply for a document recording biometric information, and providing for its use in immigration procedures. Again the relevant provisions have been set out above (paras 6 7). Mr Malik relies on the original interpretation of the term application, as it appeared in the 1976 Order, as requiring no more than a request in unambiguous terms. He submits that there is no reason to interpret the same word any differently in the equivalent provisions in later statutory enactments, including the 2002 Act. There is no indication that Parliament intended the meaning of that word to be restricted by reference to later provisions relating to fees or biometric information which were not in contemplation at the time. The Secretary of State in turn relies on the decision of Collins J in the ILPA case as recognising the consequences of an invalid application, an analysis which should be taken as entrenched in subsequent legislation in similar form. Discussion I have found this a troubling case. It is particularly disturbing that the Secretary of State herself has been unable to maintain a consistent view of the meaning of the relevant rules and regulations. The public, and particularly those directly affected by immigration control, are entitled to expect the legislative scheme to be underpinned by a coherent view of their meaning and the policy behind them. I agree with the concluding comments of Elias LJ (para 49) on this aspect, and the overwhelming need for rationalisation and simplification. The problem is only too vividly demonstrated by the course of the arguments in this case. The policy concerns which underlay the Secretary of States position in the Court of Appeal were and remain very real. They should have been apparent to the Department at least since 1996, when judgment was given in the ILPA case. Against that background, there was surely a need to introduce some measure of flexibility to ensure that bona fide applicants were not unduly penalised for simple mistakes which could be readily corrected. There have been some examples of flexibility. Thus the 2003 Forms Regulations provided that particular procedural requirements should not result in invalidity in the event of a satisfactory explanation and compliance within 28 days. We have been given no explanation for the more rigid approach adopted in respect of fees. Although Parliament did not place any restriction on the power of the Secretary of State to provide for the consequences of failure, that did not absolve her of responsibility for achieving a fair balance between the competing policy considerations. There was some discussion in argument of the extent to which the Departments guidance to officers allowed for a degree of flexibility in the operation of the rules. After the hearing the Treasury Solicitor has helpfully submitted a note on relevant parts of the guidance on Specified application forms and procedures. It seems that this has proved to be a more onerous task than anticipated because of the number of versions in force at various times. The guidance does recognise a measure of discretion to depart from requirements of the rules in particular cases. Thus in version 6.0 of the guidance valid from 9 May 2012 there is a section headed Discretion (p 46). This explains for example that, if an application received more than three months ago does not meet the specified form requirements, you must use discretion and accept it as valid, since otherwise the applicant might be unfairly disadvantaged by rejection at that stage. On the other hand: You must not use discretion and accept an application as valid if a specified fee has not been paid. This difference is explained as due to the fees requirement being in the regulations rather than the rules. Whatever the logic of that distinction, it is not suggested by either side that it throws any light on the issue before us. We must accordingly decide the present appeals within the legislation as it stands, there being no challenge to the legality or rationality of the relevant rules and regulations. The issues have to be approached by the application of the ordinary principles of statutory interpretation. They start from the natural meaning of the words in their context. On that basis I have no doubt that, at least in respect of Mr Iqbal and Mr Mirza, the Court of Appeal reached the correct conclusion. There is no ambiguity in the words of regulation 37 of the 2011 Regulations. It provides in terms that if an application is not accompanied by the specified fee the application is not validly made. In ordinary language an application which is not validly made can have no substantive effect. There is nothing in the regulation to exclude section 3C from its scope. Nor is there anything in the history of the provisions to support a different approach. It is true that, at the time of the enactment of section 3C in its present form by the 2002 Act, Parliament could not have had in contemplation the relevant provisions of the 2006 Act or the regulations made under it. However, that is nothing in point. The powers given by Parliament in the later Act were made within the same legislative framework as the 2002 Act. In the absence of any limitation on the scope of the powers given to the Secretary of State to prescribe the consequences of procedural failure, there is no reason to exclude section 3C. That is not, as Mr Malik argues, to allow the executive to alter the interpretation of the primary legislation, but rather to determine the scope of the powers given to the executive by Parliament in the later statute. Conversely, the reasoning of Collins LJ in the ILPA case shows a clear understanding of the practical implications of invalidity, which formed part of the background of the new legislation, and must be assumed to have been taken into account by the drafters of the legislation, both primary and secondary. I also agree with the Court of Appeals rejection of Mr Iqbals separate ground of appeal based on alleged unfairness. The comments of the Upper Tribunal in Basnet while deserving respect cannot be treated as laying down a universal rule. It is unfortunate that he was caught out by a recent change in the level of fees. But it is not suggested that there was any failure by the Secretary of State to publicise the change. It was announced in Parliament on 28 February 2011. News items were published on the UK Border Agency website, and the new fees were set out in the relevant application form. There has been no challenge to the finding of the Upper Tribunal that the Secretary of State responded with reasonable promptness. The problem arose because the application had been made very close to the expiry of leave and left no time for correction. It follows that the appeals of Mr Iqbal and Mr Mirza must be dismissed. I find more difficulty with the case of Ms Ehsan. Mr Malik did not, as I understood him, rely on any material distinction between the applicable provisions in the three cases. However, there is a potentially important difference. The obligation to pay the fee arises at the time of the application. There is no conceptual difficulty in providing that an application unaccompanied by a fee is invalid from the outset. The requirement to apply for biometric information arises only at a later stage, on receipt of a notice from the Secretary of State. Thus in Ms Ehsans case the application was made in December 2011, but it was not until the following February that she was required to make an appointment. Even then it was accepted that there might be a reasonable explanation justifying further delay. It is difficult to see any reason why a failure at that stage should be treated as retrospectively invalidating the application from the outset, and so nullifying the previous extension under section 3C of her leave to remain. There appears to be nothing in section 7 of the 2007 Act to support such retrospective effect. The revised version of regulation 23(2)(b) (which was in force at the time of the March decision to reject her application as invalid) does no more than give the Secretary of State power to treat the application as invalid. There might be some question as to how that wording relates to the terms of section 7(2), but as I have said there was no challenge to its validity. In any event there is no reason to read it as having retrospective effect. The natural reading, which is consistent with the statutory purpose, is to give power to invalidate the application as from the time of the decision, but not before. However, this reading would not help Ms Ehsan herself. Even if her leave was treated as continuing until the date of the Secretary of States decision on 26 March 2012, it would not assist her in respect of her new application made on 3 April 2012. Conclusion For the reasons given above I would dismiss the three appeals and uphold the orders of the Court of Appeal. |
The Global Santosh was time chartered on terms that the vessel should be off hire during any period of detention or arrest by any authority or legal process, unless the detention or arrest was occasioned by any personal act or omission or default of the Charterers or their agents. She was arrested as a result of a dispute between the receiver of the cargo and a party who appears to have been a sub sub charterer, and which had nothing to do with the owners or the ship. The question which arises on this appeal is whether the arrest can be regarded as having been occasioned by the time charterers agents in the sense in which that word is used in the proviso. The answer to this question turns on the language of the particular charter party, but it has wider implications of some importance. Arbitrators appointed under the terms of the time charter have held by a majority that it cannot. The matter comes before the courts on an appeal under section 69 of the Arbitration Act 1996. The facts The facts can be taken from the arbitrators award and the agreed statement of facts and issues. By a time charter party dated 11 September 2008, NYK chartered the vessel Global Santosh to Cargill for one time charter trip intention cement via Sweden to West Africa Nigeria. Intended cargo bulk cement. Duration 35 days without guarantee. The charter was on the Asbatime form, which was a variation of the New York Produce Exchange 1946 form. There were a number of typed additional clauses. Against the side note Sublet the charter reads at lines 31 33: Charterers shall have liberty to sublet the vessel for all or any part of the time covered by this Charter, but Charterers shall remain responsible for the fulfilment of this Charter. By clause 8, NYK undertook that the master would be under the orders and directions of [Cargill] as regards employment and agency, and Cargill undertook to perform all cargo handling at their expense. There are no less than three off hire clauses. The printed form includes an off hire clause (clause 15) in standard terms covering loss of time from deficiency and/or default and/or strike or sabotage by officers or crew or deficiency of stores, fire, breakdown of, or damages to, hull, machinery or equipment, grounding. detention by average accidents to ship or cargo unless resulting from inherent vice, quality or defect of the cargo, dry docking for the purpose of examination or painting bottom, or by any other similar cause whatsoever preventing the full working of the vessel. Typed clause 48 is a further off hire clause which largely overlaps with clause 15. It relates to loss of time either in port or at sea, deviation from the course of the voyage or putting back whilst on voyage, by reason of breakdown of machinery, collision, stranding, fire or any other accident or damage to the vessel, or dry docking or periodical survey, or sickness or accident to the Master, Officers, Crew or any person on board the vessel other than persons travelling by the Charterers requests or by reason of sending stowaway or salvage, or by reason of the refusal of the Master, Officers or Crew to do their duties, or any Owners matters. Typed clause 49 is an additional off hire clause relating specifically to detention resulting from capture, seizure or arrest. It provides: Should the vessel be captured or seizured [sic] or detained or arrested by any authority or by any legal process during the currency of this Charter Party, the payment of hire shall be suspended until the time of her release, unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents. Any extra expenses incurred by and/or during the above capture or seizure or detention or arrest shall be for Owners account. (emphasis added) On 18 August 2008, before they entered into the time charter, Cargill had entered into a voyage charter party as disponent owner with Sigma Shipping Ltd (Sigma) as charterer, under which the performing vessel was to be nominated. Cargill nominated the Global Santosh. Pursuant to Cargills orders, the vessel carried a cargo of bulk cement from Slite in Sweden to Port Harcourt in Nigeria. The cargo was one of six shipments of cement sold by Transclear SA to IBG Investments Ltd on C & FFO terms under a sale contract dated 14 December 2007. IBG was named as the notify party in the relevant bill of lading, which also named the discharge port as Port Harcourt (Ibeto Jetty). The majority arbitrators held that it seemed likely that Transclear was the sub charterer of the vessel but, whether by way of charter from Sigma or by a more indirect link, was not apparent. The FO element of the sale terms stands for free out. Under free out sale terms, the buyers/receivers (here, IBG) undertake to perform, or procure and pay for the performance of, the unloading of the cargo from the carrying vessel. By the sale contract between Transclear and IBG demurrage was payable by IBG to Transclear for delay in discharge beyond the laytime agreed in that contract and Transclear was purportedly granted a lien over the cargo in respect of unpaid demurrage. The contractual position as regards cargo handling was accordingly as follows. By clause 8 of the time charter Cargill undertook to perform all cargo handling at their expense. It follows that, as between Cargill and NYK, it was for Cargill to perform the discharge operation at its expense. As between Cargill and Sigma, it was for Sigma to do so. In fact, neither Cargill nor Sigma themselves carried out any discharging obligations. They were left to others. It appears that it was ultimately IBGs obligation, owed to Transclear under the contract of sale, to carry it out. The vessel arrived at Port Harcourt on 15 October 2008 with a cargo of 30,324 metric tons of cement in bulk (the cargo) and tendered notice of readiness at 0635 hours local time on the same date. However, as the majority arbitrators held at para 9 of their reasons, due to congestion at Port Harcourt, she was instructed to remain at Bonny Town Anchorage. The congestion was caused at least in part by the breakdown of IBGs off loader. No discharge operations took place at the anchorage, and the vessel did not proceed to a berth until 18 December 2008. During that period the vessel remained on hire under the charter and Cargill continued to pay hire. The vessel did not in fact berth on 18 December because she was turned away by the port authority and ordered to return to Bonny Town inner anchorage. The authority gave those instructions pursuant to an order dated 17 December 2008 (the day before) made by the Federal High Court of Nigeria. The majority arbitrators did not spell the facts out in any greater detail than to say at para 11 of their reasons (as amplified in para 36) that the order arose from an application brought by Transclear to secure a claim for demurrage against IBG, that what should have been arrested was the cargo, but that by an obvious mistake the order directed the arrest of the vessel. The arbitrators added that the order and subsequent notice of arrest of the same date expressly prohibited any and all persons from interfering with and/or attempting to discharge the cargo. Accordingly, the master returned to the anchorage and waited for the arrest to be lifted. On 18 December 2008, Cargill gave these orders to the master in writing: Dear captain Good Day. Pls do not commence cargo disch until you get written confirmation from us. Pls call me back once you receive this message. Best Regards. Ritesh Chandra. Subsequently, an agreement in respect of the outstanding demurrage was reached between Transclear and IBG which allowed the vessel to berth and discharge her cargo. Following the issuance of an appropriate order by the presiding judge of the Court of Nigeria authorizing the cargos release, discharging operations began at 2230 hours (local time) on 15 January 2009 and were completed at 2235 hours (local time) on 26 January 2009. Cargill withheld hire for the period of arrest but recommenced the payment of hire when actual discharge began. Cargill relied on clause 49 of the charter to justify non payment of hire but, in answer, NYK relied on the proviso unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents. The majority arbitrators held that the proviso did not apply and that the vessel was off hire during the period when she was under arrest. On 23 May 2012, Hamblen J granted NYK leave to appeal under section 69 of the Arbitration Act 1996 on the question whether the arrest or detention of a time chartered vessel by or because of the acts or omissions of sub contractors, involved to perform the time charterers charter party obligations, fall within the meaning of an off hire clause excluding time from off hire if occasioned by any personal act or omission or default of the Charterers or their agents. The proviso Loss of time due to the arrest or detention by authority of a time chartered vessel is a long standing problem, aggravated by the difficulty in obtaining compensation for an arrest or detention which proves to be unjustified or is made in support of a claim which fails. The problem is increasingly dealt with by express provision. Clause 49 of this charter party is a typed clause, but variants of it are in common use. The main purpose of such clauses is to protect the time charterer. The proviso for cases where the arrest or detention is occasioned by the charterer or its agents is generally narrowly construed, and cases in which it applies are not necessarily expected to arise very often. The classic cases for its application are those in which the vessel is arrested in legal proceedings or detained by authority on account of some characteristic of the cargo that the charterer has caused to be shipped or something that the charterer has ordered the vessel to do under the employment clause. Even these cases will often give rise to difficult questions of causation. Agency The extension of the proviso to acts of the time charterers agents adds an additional layer of difficulty. There was in this case no personal default on the part of Cargill as time charterers. Their obligation under clause 8 to perform all cargo handling at their expense did not import any duty to handle cargo at any particular time, provided that they redelivered the ship at the end of the time charter term with no cargo on board. It follows that to avail themselves of the proviso to clause 49, NYK must rely on an act or omission of Transclear or IBG, as the parties to the dispute which occasioned the arrest. Strictly speaking, an agent is a person authorised by the principal to perform some act on his behalf. Neither Transclear nor IBG was an agent of Cargill in this sense. They had no contractual or other legal relationship with Cargill. However, neither party to this appeal contends that the proviso applies only to agents in the strict legal sense. Even where a time chartered ship is traded for the time charterers own account, cargo handling on discharge may be carried out by an independent contractor or a receiver acting for his own account. But the essence of a time charter on these terms is that the vessel will not necessarily be traded for the time charterers own account. The ship may be sub let, as lines 31 33 of this time charter envisage. If so, the chain of contracts may comprise one or more sub time charters or voyage charters and/or a bill of lading. Their terms will not necessarily be back to back in the relevant respects with those of the time charterer. In such cases, the charter operates as a contract under which rights are enjoyed and obligations performed vicariously. The extension of the proviso to the time charterers agent is intended to accommodate that state of affairs. The legal implications of such arrangements have more often been assumed than considered. The two decisions which have most fully addressed the point are the decision of the Court of Appeal in Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyds Rep 136 and the decision of Colman J in Merit Shipping Co Inc v T K Boesen A/S (The Goodpal) [2000] 1 Lloyds Rep 638. In The Mediolanum, the question arose in the context of the safe port warranty in the New York Produce Exchange form of time charter. The charterers had contracted to provide and pay for fuel. They ordered her to a safe port but she was directed to an unsafe place in that port by the refinery with whom the charterer had contracted for the supply of bunkers. Kerr LJ, delivering the judgment of the court, said at p 140: Although, in relation to the charterers, the refinery was in the position of an independent contractor, we naturally accept that for the purposes of the charterers obligation, under clause 2 of the charter party, to provide the fuel, the refinery was the agent of the charterers as between the charterers and the owners. The reason is that, in that respect, the refinery was used by the charterers in order to perform one of the charterers' obligations under the contract. The charterer was nevertheless held not to be in breach of the safe port warranty because even on the assumption that the refinerys authority as agent extended to designating a bunkering place, it was not at fault in designating this particular bunkering place. In Trade Star Lines Corp v Mitsui & Co Ltd (The Arctic Trader) [1996] 2 Lloyds Rep 449, the legal status of the shipper was considered in the context of an argument about the implication of terms. The details of the argument do not matter. Evans LJ, delivering the judgment of the court, observed at p 459: It is clear, in our judgment, that when the time charterer instructs the master, pursuant to the employment provisions of clause 8, to receive certain cargo on board, and the cargo is loaded at the charterers expense, although under the supervision and maybe at the risk of the shipowner, then the cargo is loaded by or on behalf of the charterer for the purposes of the charter party, and a third party shipper should be regarded as the charterers agent accordingly. In The Goodpal, the ship had been time chartered and then sub chartered for a time charter trip to two successive ports of discharge. The sub charterer ordered the vessel to discharge a specified quantity of cargo at the first port of discharge, but the receivers ordered him to discharge more than that quantity. As a result, there was a short outturn at the second port, which led to the arrest of the ship at the suit of the consignee there. The question was whether the head charterer was liable for the short delivery on the footing that the receivers orders at the first port were given as their agents. Colman J analysed the position as follows, at pp 642 643: In order to test the frequently repeated assertion that, for the purposes of the incidence of the rights and obligations of the parties to a time charter, whether on the NYPE or most other forms, the shipper or receiver, as the case may be, is to be treated as the charterers agent, it is necessary to identify certain basic and, as I believe, long established principles upon which time charters work. (iv) The process of loading the cargo is usually carried out and paid for by the shippers. In as much as express provision is made for the loading to be under the supervision of the master, he is entitled in his discretion to intervene to require loading to be carried out in such a way that the seaworthiness of the vessel is not put at risk. (v) When the vessel is ordered by the charterers to proceed to a loading port to load a particular cargo and the process of loading is carried out by the shippers, they are availing themselves of the facility contractually derived either directly or indirectly from the charterers of being permitted to place their cargo on board the vessel for carriage to the port of discharge. They are in one sense the agents of the time charterers, as described in the passage cited earlier in this judgment from The Arctic Trader, sup, but only to the extent that it is to them that the charterers have delegated the process of loading. Within that limited area their acts or omissions are, so far as the owners are concerned, the acts and omissions of the charterers and their knowledge of the condition of the goods is to be imputed to the charterers. (viii) Just as the charterer can make available to a third party shipper the facility to load the vessel, so also there can be extended to a third party receiver the facility to discharge the cargo at the designated discharging port. Once again, the receiver is in the position of a delegate of the charterer and in that limited sense can be described as the charterers agent. If therefore he permits the vessel to be discharged in such a way as to damage the ship or other cargo on board, the charterers are obliged to indemnify the owners for loss and damage so caused. Colman J went on to hold that the time charterers of The Goodpal were not responsible contractually for the order given by the receivers at the first port of discharge, because their agency could not extend to cargo which was not consigned to them but destined for other consignees at the second port. The only relevant instructions were received from the receivers at the first discharge port who could not reasonably have been thought by anybody to be standing in the position of the charterers in relation to the balance of the cargo to be loaded at the second discharge port. (p 644) As these observations, all from experienced specialists in the field, show, references in a time charter to acts of the charterers agents in the course of performance cannot necessarily be limited to persons doing those acts on his behalf in the strict legal sense of the term, or indeed to those standing in any direct legal relationship with him. As between the owner and the time charterer, the rights of the time charterer are made available to those further down the contractual chain, and some at least of the time charterers obligations are satisfied by the acts of subcontractors. As Colman J put it, the persons ultimately carrying out the relevant cargo handling operation (loading or discharging) are availing themselves of the facility contractually derived either directly or indirectly from the charterers. They are, to that extent, the agents of the time charterers in the sense in which that word is employed in a provision such as clause 49. The issue Under the time charter of the Global Santosh, Cargill enjoyed the facility of directing where and (within the limits of the possible) when to discharge. The parties who were ultimately entitled to the benefit of that facility were those interested in the cargo, namely Transclear and IBG. It is common ground that they were for that purpose agents of Cargill. Nobody suggests that the mere fact that they were Cargills agents for that purpose means Cargill is responsible for anything that they might do which results in the detention of the ship. The reason is that not everything that a subcontractor does can be regarded as the exercise of a right or the performance of an obligation under the time charter. There must be some nexus between the occasion for the arrest and the function which Transclear or IBG are performing as agent of Cargill. If, for example, Transclear or IBG had caused the vessel to be arrested in support of a claim to a proprietary interest in it, it is accepted that she would have gone off hire. The position would have been the same if they had caused her to be arrested in support of a cargo claim in connection with a sister ship. On the same principle, it was held in The Goodpal that the owners claim against the time charterer failed because, although the receiver at the first port of discharge was the agent of the time charterer for certain purposes, those purposes did not extend to the particular acts by which he caused the problem. In the present case, the right under the time charter whose exercise by Transclear and IBG is said to have occasioned the arrest is the right to call for the discharge of the cargo, and the relevant obligation under the time charter was the obligation to carry out the discharge operation. It is not disputed that Transclear and IBG exercised that right and performed that obligation as agent for Cargill. The real question concerns the scope of that agency. To what acts or omissions did it extend? The scope of the agency This issue is a great deal more difficult than it is in the simple case where the vessel has been arrested because of something that the vessel has been ordered to do under the employment clause. It is a measure of that difficulty that the courts below have given divergent answers to it. The appeal from the arbitrators award was heard in the first instance by Field J. In summary, he considered that Cargill were responsible for any act or omission or default in the course of the performance by the delegate of the delegated task, ie in the course of discharging: [2013] 1 Lloyds Rep 455, para 19. He held that Transclears arrest of the cargo and the vessel was not done as part of the performance of the discharging operation, and was irrelevant. However, he considered that IBGs failure to discharge the cargo within the laydays allowed by its contract of sale with Transclear and its failure to pay the resultant demurrage arising under that contract, were omissions in the course of their performance of the discharging operation. This was because it was Cargill after all who set in train the process of delegation and gave delegating parties a free hand to agree terms with delegates (para 23). He therefore allowed the appeal, but remitted the award to the arbitrators to determine whether the failure to pay demurrage could be regarded as the cause of the arrest and the resultant delay. Both parties appealed to the Court of Appeal, which dismissed both the appeal and the cross appeal. The substantive judgment was given by Gross LJ, with whom Gloster LJ and Sir Stanley Burnton agreed: [2014] 2 Lloyds Rep 103. They substantially affirmed Field Js order, but on different grounds and with a variation to the terms of the remission to the tribunal. Gross LJ rejected the requirement imported by the judge that the act or omission causing the delay must occur in the course of performance of the delegated task. He also disputed the relevance of the demurrage terms agreed between Transclear and IBG. But he took a wider view than Field J of the scope of the agency of Transclear and IBG. He sought the answer in the basic distinction pointed out by Rix LJ in Hyundai Merchant Marine Co Ltd v Furnace Withy (Australia) Pty (The Doric Pride) [2006] All ER (Comm) 188, para 33, between matters such as the management of the vessel and its crew which lay within the owners sphere of responsibility, and the trading arrangements for the use of the vessel which lay within the charterers sphere of responsibility. In Gross LJs view, the delay caused to the vessel in this case fell within Cargills sphere because NYK was not involved in the dispute between Transclear and IBG, which did not arise out of anything that the ship was alleged to have done or failed to do, but only to IBGs alleged failure to pay demurrage under a contract with which NYK were not concerned. Gross LJ considered that the dispute arose out of Cargills trading arrangements concerning the vessel. (para 41). By this I take him to have meant that by sub chartering to Sigma, Cargill made possible trading arrangements between parties further down the chain of contracts under which such disputes might arise. I regret that I am unable to accept the reasoning of either of these judgments. On the facts found by the arbitrators, which I have summarised, I think that their conclusion was correct. The time charter did not specify what cargo handling operations were to occur, but under clause 8, Cargill was required to perform or procure to be performed whatever cargo handling operations occurred. This imported a right to direct the vessel in accordance with Sigmas requirements and indirectly those of Transclear and IBG. It also imported an obligation to ensure that cargo handling was done properly and to pay for it. But, as I have observed, as between themselves and NYK, Cargill had no contractual obligation to procure the vessel to be discharged at any particular time, and no contractual interest in the timing of the operation. They were obliged to pay hire regardless of when it occurred. That was subject to clause 49, but the off hire event for which clause 49 provided was the capture, seizure or arrest of the vessel, irrespective of any effect on discharge. Transclear and IBG did have obligations as to the timing of discharge, which arose from the laytime and demurrage provisions of their contract of sale, but neither NYK nor Cargill was a party to that contract. This state of affairs gives rise, as it seems to me, to two problems for NYKs claim in these proceedings. The first is that the effect of these arrangements, as between NYK and Cargill, was that such cargo handling operations as occurred, although carried out by IBG, were carried out on Cargills behalf, at their orders and expense under clause 8 of the time charter. It was the vicarious exercise of a right of Cargill under the time charter, which Cargill indirectly made available to IBG. But the defective performance of cargo handling operations is one thing. An absence of cargo handling operations is another. Whatever its cause, IBGs failure to discharge the cargo between the giving of notice of readiness on 15 October 2008 and the commencement of discharge on 15 January 2009 cannot meaningfully be regarded as the vicarious exercise by IBG of some right of Cargill under the time charter. IBG were doing nothing in this period, as far as the vessel was concerned, and were therefore doing nothing on behalf of Cargill. Their inactivity could be relevant to the question of responsibility posed by clause 49 only if it amounted to the vicarious breach of some obligation of Cargill under the time charter, which it did not. It follows that any responsibility of Cargill under the time charter for IBGs acts or omissions in the conduct of cargo handling operations at the port of discharge, extended only to acts or omissions in the actual performance of those operations while they were in progress. Field J thought otherwise, because the laydays under IBGs purchase contract began with the service of the notice of readiness three months earlier and, by sub chartering the vessel to Sigma, Cargill had set in train the chain of transactions which culminated in the appropriation of the cargo of the Global Santosh to that contract. Like Gross LJ in the Court of Appeal, I do not think that the terms of IBGs purchase contract have any bearing on the present issue. We are not concerned with the question whether the delay was a breach of the purchase contract. The question is whether IBG, by omitting to discharge at any time before 15 January 2009, were vicariously exercising rights or vicariously infringing obligations under the time charter between NYK and Cargill. That can only depend on the terms of the time charter. The second difficulty in NYKs way is that we are not in this case concerned with responsibility for delay generally, but with responsibility for loss of time caused by the arrest of the vessel. The arrest was occasioned by a dispute between Transclear and IBG about demurrage. Incurring or enforcing a liability for demurrage under a sub contract could not possibly be regarded as the vicarious exercise of any facility made available to Cargill under the time charter. It remains to consider the wider basis on which the matter was dealt with in the Court of Appeal. Gross LJ asked himself whether the arrest was occasioned by matters lying within the owners or the time charterers sphere of responsibility. If it was occasioned by matters lying within the time charterers sphere of responsibility, ie those relating to the charterers employment of the vessel, then it was in principle within the scope of the functions delegated down the chain of contracts. I do not find this distinction helpful in the present context. It is no doubt true that the proviso to clause 49 is broadly speaking concerned with matters for which the time charterer may be regarded as responsible. But that does not tell us what those matters are. Where the range of matters for which the time charterer is responsible depends on what functions he has delegated to a subcontractor, it is as I have pointed out necessary to identify the extent of the delegation. Gross LJ seems to have regarded the delegation as extending to everything that arose out of Cargills trading arrangements concerning the vessel. The only sense in which the arrest of the Global Santosh can be said to have been occasioned by Cargills trading arrangements concerning the vessel, is that by sub chartering her to Sigma Cargill made it possible for Transclear and IBG to become involved further down the chain. That in turn provided the occasion for their dispute to lead to the arrest and detention of the vessel. What this amounts to is that anything that the sub charterers or receivers may choose to do which results in the arrest of the vessel, becomes the responsibility of the time charterer if the occasion for doing it would not have arisen but for their having come in at the tail end of a chain of contracts which the time charterer initiated. Such a test is impossible to justify, since it depends simply upon the status of the sub charterer or receiver, and would not necessarily require any nexus between the acts leading to the arrest and the performance of functions under the time charter. At para 40(ii), Gross LJ thought that the agency would not extend to some act of a sub charterer or receiver which was wholly extraneous or unrelated to sub letting under the [sub charter] or inconsistent with its scheme. This must of course be correct, but it is difficult to see how it can be accommodated within the basic principle which Gross LJ adopted. It is right to add that clause 49 does not readily lend itself to the dichotomy suggested by Gross LJ. While the other off hire clauses in Cargills time charter (clauses 15 and 48) relate broadly to matters relating to the owners management of the vessel which prevent him from making the contractual services available to the time charterer, this is not true of clause 49. Capture, seizure or arrest will not necessarily lie within the spheres of responsibility of either party. In The Doric Pride, supra, from which Gross LJ derived his dichotomy, Rix LJ was concerned with a proviso for cases where the capture, seizure or detention arose from the charterers choice of loading or discharging port, and it was in that context that he made the observations cited by Gross LJ. Conclusion dismiss NYKs appeal under section 69 of the Arbitration Act 1996. I would allow the appeal, set aside the orders of both courts below and LORD CLARKE: (dissenting) I have reached a different conclusion from that reached by Lord Sumption. I would dismiss the appeal. I gratefully adopt the account of the facts given by Lord Sumption in paras 1 to 11 of his judgment. The question for decision is whether the vessel was off hire during the period when she was under arrest and unable to discharge as a result (as Lord Sumption puts it) of a dispute between the receiver of the cargo and a party who appears to have been a sub sub charterer which had nothing to do with the owners of the ship. That depends upon whether the owners can show that the arrest was occasioned by any personal act or omission or default of the Charterers or their agents within the meaning of clause 49 of the charter. It is common ground that Transclear and IBG were for some purposes the agents of the Cargill within clause 49. As Lord Sumption puts it at para 22, the right under the time charter whose exercise by Transclear and IBG is said to have occasioned the arrest of the vessel is the right to call for the discharge of the cargo. The relevant obligation under the time charter was the obligation to carry out such discharging obligations as should be required. As Lord Sumption says, it is not disputed that Transclear and IBG exercised that right and performed that obligation as agent for Cargill. The real question, he says, concerns the scope of that agency. To what acts or omissions did it extend? Approaching the matter in that way, I am of the opinion that the answer is that it extends to the operation of the vessel from the time that notice of readiness was given (or perhaps earlier) until the completion of discharge. Throughout that time the vessel was complying with the orders of the charterers (ie Cargill) as to proceeding to a berth, waiting to discharge and subsequently discharging. If she had been arrested by Transclear or IBG in the course of the discharging operations themselves there could surely be no doubt that they would be treated as the agents of Cargill. To my mind the same is true of an arrest during the period during which she was waiting to discharge. The true construction of the charter, like the construction of any contract, depends on the language used by the parties construed in its context and having regard to the commercial purpose of the clause. In the case of arrest, one would surely expect the vessel to be off hire if she is arrested by reason of some act or default of her owners or, as a result of some event associated with the vessel or her owners. Here, the arrest had nothing to do with NYK. It was a detention or arrest at the instance of Transclear by reason of an alleged failure by IBG to pay demurrage under the agreement between Transclear and IBG. Why then should the vessel be off hire in circumstances where it is common ground (a) that she was not off hire by reason of an earlier failure of IBG to provide a working offloader and (b) the arrest was not caused either by any act or omission on the part of NYK or by any event associated with the owners or the ship? It is convenient to repeat here clauses 8 and 49 of the charter: 8. Prosecution of Voyages The Captain shall prosecute his voyages with due despatch, and shall render all customary assistance with ships crew and boats. The Captain (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to perform all cargo handling at their expense under the supervision of the Captain, who is to sign the bills of lading for cargo as presented in conformity with mates or tally clerks receipts. However, at Charterers option, the Charterers or their agents may sign bills of lading on behalf of the Captain always in conformity with mates or tally clerks receipts. All bills of lading shall be without prejudice to this Charter and the Charterers shall indemnify the Owners against all consequences or liabilities which may arise from any inconsistency between this Charter and any bills of lading or waybills signed by the Charterers or their agents or by the Captain at their request. 49. Capture, Seizure, Arrest Should the vessel be captured or seizured or detained or arrested by any authority or by any legal process during the currency of this Charter Party, the payment of hire shall be suspended until the time of her release, unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents. Any extra expenses incurred by and/or during the above capture or seizure or detention or arrest shall be for Owners account. Notice of readiness was tendered at 0635 hours local time on 15 October 2008. It seems to me to be a reasonable inference that the notice of readiness was communicated to all of Cargill, Sigma, Transclear and IBG. The next step was for the discharge of the cargo. I would accept that it was not the duty of Cargill as charterers to discharge the cargo at any particular time but, in accordance with lines 31 33 of the charter, they remained responsible for the fulfilment of the charter notwithstanding that the vessel was sub chartered. Moreover, by clause 8, it was agreed that the master would be under the orders and directions of the Charterers as regards employment and agency; and the charterers [were] to perform all cargo handling at their expense. It is common ground that the vessel remained on hire during the period between her arrival on 15 October and 18 December 2008 when she was instructed to proceed to a berth for discharging. In the meantime she was simply waiting at Bonny Town Anchorage. The delay was caused by congestion which was caused at least in part by the breakdown of IBGs offloader and thus by the failure of those responsible for the discharge to arrange for the discharging. Under the charter that was of course Cargill, even though the delay was in fact caused in part by IBG. It seems to me that in these circumstances it is appropriate to regard IBG as the agents of Cargill during this period for the purposes of the charter, even though they were not agents in the classic Bowstead sense of being appointed by Cargill to perform a particular act or class of act. As I see it that is why it is correctly accepted that Cargill continued to pay hire for the period of delay and was obliged to do so. In these circumstances it was or would have been appropriate to regard IBG as the agents of Cargill in respect of the delay caused by congestion which was in turn caused by the breakdown of their unloader. I appreciate that there is no clause similar to clause 49 expressly putting the vessel off hire in that period. But why is that so? The answer must be that the parties appreciated that there was no sensible basis for including the breakdown of sub charterers discharging equipment as an off hire event. That was surely because it was accepted on all sides that (as stated above) the scheme of the time charter was that the vessel would be on hire throughout the time charter period unless there was some reason associated with the vessel or her owners why they should not receive hire during a particular period. I agree that it is necessary for the owners to show that the particular acts which caused the vessel to be arrested were done in the capacity of Cargills agents, ie by way of vicarious enjoyment of Cargills contractual rights or vicarious performance of its obligations, pursuant to its express rights under clause 8 to give orders and directions as to employment and agency. Further (by reason of lines 31 33) it had a right to sub charter the vessel under the charter and did so by sub chartering to Sigma, which in turn sub contracted in some way with Transclear and/or IBG. I would accept the way the owners put their case as follows. Cargill were enabled to generate the string of contracts referred to above and thus engage the involvement of both Transclear and IBG to discharge the vessel by virtue of the express liberty to sublet the vessel granted by the charter with NYK. Under that liberty, Cargill were expressly to remain responsible for the fulfilment of the charter. Cargill could delegate the performance of the charter to sub contractors but could not delegate responsibility. The precise form and terms of the sub contracts which could be concluded pursuant to the liberty to sub let were a matter entirely for Cargill and their sub contractors, so long as they did not amount to a breach of the charter. Thus Cargill were entitled to conclude the voyage charter with Sigma (imposing discharge functions and obligations on Sigma) and Sigma (or their intermediate sub contractors) were entitled to conclude a voyage charter or a sale contract with Transclear (equally imposing discharge functions and obligations on Transclear) and in turn Transclear were entitled to conclude a sale contract with IBG (imposing discharge functions and obligations on IBG). The arrest was intimately linked to the discharge functions thus delegated in turn to both Transclear and IBG. IBGs failure to discharge the vessel properly (ie within the laytime stipulated in the sale contract) led to it incurring a demurrage liability to Transclear, but, because IBG then failed to discharge the lien on the cargo for that claim, Transclear sought security for it by the arrest of the cargo and (as it transpired) also the arrest of the vessel. The arrest prevented discharge of the cargo. Quite apart from the novelty of a ship being arrested for a claim for demurrage, it is noteworthy that there was no claim against the vessel or NYK as her owners. In these circumstances, while I agree with Lord Sumption in his para 27 that Cargill had no contractual obligation to the owners NYK to procure that the vessel be discharged at any particular time, I do not think that it is right to say that they had no contractual interest in the timing of the operation. As Lord Sumption observes, they had a contractual obligation to pay hire, so that the longer the delay before discharge the more hire would have to be paid. It seems to me to be a reasonable inference that Cargill were either aware of the arrangements between Sigma and Transclear or were aware that it was open to Sigma to make arrangements with Transclear (and Transclear with IBG). In such circumstances they were certainly aware of the demurrage provisions in their sub charter with Sigma (and must know whether they had a claim for demurrage). Equally they must have known that there was a real possibility of similar provisions down the line of sub charters. As I see it, it is reasonable to hold that they must have appreciated that there might well be liabilities for demurrage down the line. I do not think that it is fair to say (as Lord Sumption does) that the chain might have included a quite different sort of contract to which Cargill were not a party and of which they would not necessarily have had any knowledge. It seems to me that it must have been clear to Cargill that there was every possibility that there would be sub sub charters on voyage terms and that some party other than them (or indeed Sigma) would ultimately be responsible. Further, Lord Sumption draws a distinction between defective performance of the cargo handling operations on the one hand and the absence of cargo handling operations on the other. He says this, in the context of what he calls the first problem facing NYK arising out of the arrangements: 28. The first is that the effect of these arrangements, as between NYK and Cargill, was that such cargo handling operations as occurred, although carried out by IBG, were carried out on Cargills behalf, at their orders and expense under clause 8 of the time charter. It was the vicarious exercise of a right of Cargill under the time charter, which Cargill indirectly made available to IBG. But the defective performance of cargo handling operations is one thing. An absence of cargo handling operations is another. Whatever its cause, IBGs failure to discharge the cargo between the giving of notice of readiness on 15 October 2008 and the commencement of discharge on 15 January 2009 cannot meaningfully be regarded as the vicarious exercise by IBG of some right of Cargill under the time charter. IBG were doing nothing in this period, as far as the vessel was concerned, and were therefore doing nothing on behalf of Cargill. Their inactivity could be relevant to the question of responsibility posed by clause 49 only if it amounted to the vicarious breach of some obligation of Cargill under the time charter, which it did not. It follows that any responsibility of Cargill under the time charter for IBGs acts or omissions in the conduct of cargo handling operations at the port of discharge, extended only to acts or omissions in the actual performance of those operations while they were in progress. As stated above, and as Lord Sumption accepts in para 8, the vessel was not off hire during the period between 15 October and 18 December because of delay caused by defects in IBGs unloader. That must be because at that time IBG was acting as the agent of Cargill because there was a sufficient causal nexus between the delay caused by congestion and the failure of IBG to provide an unloader for the purpose of discharging the cargo, which was of course the obligation of Cargill under the charter which had been delegated to others. It is an example of the point made by Lord Sumption in the first sentence of his para 28. The delay arose out of the vicarious exercise of the discharging operations by IBG carried out on Cargills behalf. It was the vicarious exercise of a right of Cargill under the time charter, which Cargill indirectly made available to IBG. The distinction between the defective performance of cargo handling operations and the absence of cargo handling operations altogether seems to me to be too narrow. It would surely logically lead to the conclusion that NYK should not be paid hire while waiting to discharge because of breakdown of IBGs offloader. The reason why it is not so suggested is surely that the charter is drawn up on the basis that the vessel will be on hire while carrying out the owners obligations under the charter. Those obligations include waiting to discharge cargo in accordance with the orders and directions of [Cargill] as regards employment and agency in clause 8. The whole period of waiting during the period of congestion, including that caused by the breakdown of the IBGs offloader falls within clause 8. That makes commercial sense for the reason already given, namely that the delay arose out of the vicarious exercise of the discharging operations by IBG carried out on Cargills behalf. As I see it, the discharging operations include the period of waiting after the notice of readiness and the period of actual discharge because the vessel is throughout complying with the charterers orders under clause 8. Moreover, the vessel was also complying with Cargills instructions in their letter to the master of 18 December (para 9) when she did not commence cargo discharge because of the court order obtained by Transclear. For these reasons, I do not think that it is right to distinguish between the time when the vessel is waiting for discharge and the time when she is in fact discharging. In both cases the vessel is engaged in the actual performance of the owners obligations and/or in the performance of the owners rights. The vessel is waiting as instructed by the charterers or their agents, who include for this purpose sub charterers and those who become responsible for discharge, as for example here Transclear and IBG. This analysis seems to me to lead to the conclusion that, when the vessel was instructed not to commence discharging in Cargills letter to the master quoted above as a result of the order of the court in Nigeria, she was complying with charterers orders under clause 8. Moreover when Transclear took action to delay cargo discharge which resulted in the detention of the vessel (albeit as a mistake) its claim arose out of arrangements made (or not made) for the discharge of the vessel as between itself and IBG. I respectfully disagree with Lord Sumption when he says that the responsibility of the charterers after the service of the notice of readiness was limited to acts or omissions in the actual performance of cargo handling operations. It extended throughout the period when the vessel, as stated above, was acting under the orders and directions of [Cargill] as regards employment and agency. That was throughout the period when she was at anchor waiting for instructions to discharge the cargo, when she remained at anchor after the order of the Court, and thereafter when she proceeded to a berth and discharged the cargo. It seems to me to be of some significance that (as quoted above) the proviso in clause 49, which reads unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents, expressly covers personal omissions and defaults of the charterers agents. Nothing in clause 49 requires a positive act that is a specific breach of the charter, whether vicarious or otherwise. As I see it, the failure to discharge within the laydays in the sub charter or sub sub charters (or the like) entered into by or with the authority of Cargill are omissions or defaults of the charterers agents within clause 49. An absence of cargo handling operations is just as much defective performance of them. Further, in his para 30 Lord Sumption says that the second difficulty in NYKs way is that we are not in this case concerned with responsibility for delay generally, but with responsibility for loss of time caused by the arrest of the vessel. An arrest occasioned by incurring or enforcing a liability for demurrage under a sub charter could not possibly be regarded as the vicarious exercise of any facility made available to Cargill under the time charter. I respectfully disagree. As stated above, it seems to me that the cause of the arrest of the vessel was action taken by Transclear as a result of a failure of IBG to discharge the vessel within the lay days. It makes no difference that this was a failure as between IBG and Transclear. That failure was a failure on the part of an agent of the charterers, whether IBG or Transclear, or indeed Sigma, to discharge the vessel timeously, with the result that the vessel was arrested and delayed. On this basis I would hold that the failure to discharge the cargo was caused by the acts or omissions of the charterers agents and that when the vessel was arrested by Transclear she was arrested by the charterers agents within the meaning of clause 49. This makes commercial sense because (as stated earlier) there is no reason why the vessel should be off hire for a reason outside the control of the vessel or her owners. On the contrary, she should be on hire and clause 49 construed accordingly. After all, the charter expressly provided at lines 31 33 that the charterers had liberty to sublet the vessel but that Charterers shall remain responsible for the fulfilment of the charter. It may well be that the charterers have rights over against Sigma on the basis that IBG and Transclear were delegates of Sigmas discharge functions under the sub charter between Cargill and Sigma. We are not however concerned with those, although it would to my mind be bizarre if Cargill were entitled to demurrage at a time when the vessel was off hire, so that Cargill were not paying hire to the owners. As I see it, the purpose of clause 49 is achieved by carving out of the clause the case of arrest occasioned by any personal act or omission or default of the Charterers or their agents. For the reasons I have given, I would hold that Transclear and/or IBG were for this purpose the agents of Cargill when the vessel was arrested because the arrest was closely related to the discharge of the cargo and there is no suggestion that the vessel or her owners were in any way responsible. The owners had no control over the process of delegation or sub delegation. The delegation included delegation of the obligation to discharge, which was ultimately passed to IBG. But IBG did not perform it at all. Looking at the matter from the perspective of the commercial risks involved, it was Transclear who subcontracted with IBG. The demurrage dispute was entirely a matter between those two parties. Why should the owners be responsible for non performance of the obligation, in circumstances where it had no way of assessing the commercial risks attaching to the delegation? As it turned out, those commercial risks crystallised into IBGs failure to secure Transclears claim. This had nothing to do with NYK. In all these circumstances there is no good commercial reason why the vessel should not remain on hire. I agree with Lord Sumption in para 21 that nobody suggests that the mere fact that Transclear and IBG were for some purposes agents of Cargill means that Cargill is responsible for anything they might do which results in the detention of the ship. I further agree that that is because not everything a subcontractor does can be regarded as the exercise of a right or the performance of an obligation under the time charter. I agree that, if Transclear or IBG had caused the vessel to be arrested in support of a claim to a proprietary interest in it or in support of a cargo claim in connection with a sister ship, the vessel would have gone off hire. It appears to me that in those cases the proviso in clause 49 would not have applied because the arrest would not have been occasioned by Cargill or their agents because neither Transclear nor IBG would have caused the arrest in their capacity as Cargills agents. The vessel would therefore have gone off hire under clause 49. By contrast, on the facts here, Transclear did occasion the arrest in their capacity as Cargills agent for the reasons explained above. I recognise that my construction of clause 8 (and clause 49) is wider than that proposed by Lord Sumption. However, I do not think that it is as wide as that of the Court of Appeal. The essence of my view is that stated in para 43 above. Cargill were in charge of the discharging operations, which they arranged though Sigma, Transclear and IBG. The vessel was throughout under the orders of the charterers. A decision to this effect makes sense and will not open the floodgates. Finally, I do not regard my view as inconsistent with any of the decided cases. In The Mediolanum a refinery was engaged by charterers as an independent contractor but was held by Kerr LJ (in the passage quoted by Lord Sumption in para 16) to be the agent of the charterers because it was used by the charterer to perform one of the charterers obligations under the contract. The claim failed for an unconnected reason, namely that the refinery was not responsible for designating the particular bunkering place. The decision in The Arctic Trader (referred to by Lord Sumption in para 17) carries the issue no further. In The Goodpal in the passages from the judgment of Colman J quoted at para 18 he referred to the position of the shippers and receivers as agents of charterers in connection with the process of loading and discharging respectively. As Lord Sumption observes, Colman J held that the time charterers were not responsible contractually for the order given by the charterers at the first port of discharge because their agency could not extend to cargo which was not consigned to them but for other consignees at the second port. He quotes this passage: The only relevant instructions were received from the receivers at the first discharge port who could not reasonably have been thought by anybody to be standing in the position of the charterers in relation to the balance of the cargo to be loaded at the second discharge port. I would entirely accept those statements as applied in that case. There is in my opinion no conflict between any of those principles and those which I would apply in this case. For the reasons given above I would hold that the vessel was on hire throughout and would dismiss the appeal. |
There are three cases before the Court, two on appeal from the Court of Appeal of England and Wales and one from the Inner House of the Court of Session in Scotland. This judgment deals with the two English cases, while a separate judgment will deal with the Scottish case. The issue common to all three is the scope for judicial review by the High Court or Court of Session of unappealable decisions of the Upper Tribunal established under the Tribunals, Courts and Enforcement Act 2007 (the 2007 Act). It is no longer argued on behalf of the Government that such decisions are not amenable to judicial review at all. But it is argued that they are only reviewable in exceptional circumstances. The claimants argue that no such limit exists. The debate, therefore, has focussed upon the effect of the creation of a wholly new and integrated tribunal structure under the 2007 Act. The cases It has been helpful to hear three different cases together, all raising essentially the same question in different contexts. In all of them the claimant failed in an appeal to the First tier Tribunal set up under the 2007 Act and was refused permission to appeal to the Upper Tribunal against that decision both by the First tier Tribunal and by the Upper Tribunal. In all three the claimant seeks a judicial review of the refusal of permission to appeal by the Upper Tribunal. In R (Cart) v The Upper Tribunal, Mr Cart appealed to the Social Security and Child Support Tribunal (whose jurisdiction has since been taken over by the First tier Tribunal) against the refusal of the Child Support Agency (whose functions have since been taken over by the Child Maintenance and Enforcement Commission) to revise a variation in the level of child maintenance to be paid to his ex wife for the support of their children. His appeal was dismissed in October 2007. He applied for permission to appeal to the Child Support Commissioners. In June 2008, Commissioner Jacobs gave him permission to appeal on three grounds but refused him permission to appeal on a fourth. The functions of the Child Support Commissioners were then taken over by the Administrative Appeals Chamber of the Upper Tribunal. Following a hearing in January 2009 the Upper Tribunal, consisting of the Senior President, Carnwath LJ, and Tribunal Judge Jacobs (as the Commissioner had now become) dismissed his appeal on the three grounds for which permission had been given and declined permission to reopen the fourth: [2009] UKUT 62 (AAC). Mr Cart sought judicial review of the Upper Tribunals refusal of permission to appeal on the fourth point. It was agreed that the amenability of the Upper Tribunal to judicial review should be determined as a preliminary issue. In December 2009, the Divisional Court dismissed his claim for judicial review, holding that this was only available in exceptional circumstances: [2009] EWHC 3052 (Admin), [2010] 2 WLR 1012. In July 2010, the Court of Appeal dismissed his appeal, reaching the same result but by a different route: [2010] EWCA Civ 859; [2011] 2 WLR 36. It will be necessary to return to their reasoning in due course. Mr Cart now appeals to this Court. R (MR (Pakistan)) v The Upper Tribunal concerns a native of Pakistan who has been in the United Kingdom since June 2007. At that stage he had a multi visit visa valid until June 2009. In March 2010 he applied for asylum on the basis of his conversion to Christianity. This was refused in April 2010. His appeal to the Immigration and Asylum Chamber of the First tier Tribunal was dismissed less than two weeks later. His application to the First tier Tribunal for permission to appeal to the Upper Tribunal was refused in May and his application to the Upper Tribunal was refused only days later by Ouseley J, sitting as a judge of the Upper Tribunal. MR sought judicial review of Ouseley Js decision. Permission to apply was granted by Judge Nicholas Cooke QC, sitting as a High Court Judge. But at the hearing of the claim in December 2010, Sullivan LJ determined a preliminary issue concerning the amenability of the Upper Tribunal to judicial review in accordance with the decision of the Court of Appeal in Cart and dismissed the claim: [2010] EWHC 3558 (Admin). He granted a certificate under section 12 of the Administration of Justice Act 1969, so that the appeal against his decision could leap frog over the Court of Appeal and be heard by this Court together with the appeals in Cart and Eba. In Eba v Advocate General for Scotland, Ms Eba appealed to the Social Entitlement Chamber of the First tier Tribunal against the refusal of her claim for disability living allowance. Her appeal was also refused, as were her applications both to the First tier Tribunal and to the Upper Tribunal for permission to appeal to the Upper Tribunal against that refusal. Ms Ebas petition for judicial review of each of those decisions was dismissed by the Lord Ordinary, who followed the reasoning of the Divisional Court in Cart: [2010] CSOH 45, 2010 SLT 547. She reclaimed that refusal, on the ground that judicial review was not so limited. The Advocate General cross appealed on the ground that the Upper Tribunal was not amenable to judicial review at all. The First Division refused the cross appeal but allowed Ms Ebas reclaiming motion on the basis that the supervisory jurisdiction of the Court of Session was not so limited and that, notwithstanding the decision of the Court of Appeal in Cart, it did not follow that the result should be the same in Scotland: [2010] CSIH 78; 2010 SLT 1047. The First Division granted the Advocate General permission to appeal to this Court. Conveniently, however, we heard first the arguments of all three claimants, Mr Richard Drabble QC for Mr Cart, Mr Jonathan Mitchell QC for Ms Eba, and Mr Manjit Gill QC for MR, followed by oral arguments for two of the interveners, Mr Michael Fordham QC for the Public Law Project, and Mr James Mure QC for the Lord Advocate, followed by Mr James Eadie QC for the Secretaries of State for Justice and for the Home Department and the Child Maintenance and Enforcement Commission and Mr David Johnston QC for the Advocate General for Scotland. Mr Alex Bailin QC and others also made helpful written submissions on behalf of the intervener JUSTICE. It has been particularly useful to be able to look at the issues in the context of the two jurisdictions, social security (including for this purpose child support) and immigration and asylum, which together make up the great bulk of the business of the new tribunal system, and in the context of the supervisory jurisdiction of the higher courts in both Scotland and England and Wales. The judgment in Eba will deal with the supervisory jurisdiction of the Court of Session in Scotland while this judgment will deal with the supervisory jurisdiction of the High Court in England and Wales. The tribunal systems with which we are concerned, both before and after their restructuring in the 2007 Act, however, are common to both parts of the United Kingdom, and in many contexts also to Northern Ireland. The tribunal system One of the most important and controversial features of the development of the legal system in the 20th century was the creation and proliferation of statutory tribunals separate from the ordinary courts. Mostly they were set up to determine claims between an individual and the state to war pensions, to social security benefits, to immigration and asylum, to provision for special educational needs, to be released from detention in a psychiatric hospital, against the refusal or withdrawal of licences or approvals to conduct certain kinds of business, for the determination of liability to direct and indirect taxation, for compensation for compulsory purchase and so on. In some instances, they were set up to adjudicate upon statutory schemes, generally those which modified what would otherwise be an ordinary contractual relationship between private persons between employer and employee or between landlord and tenant of residential property. These jurisdictions were and remain very diverse. The subject matter can range from liability to VAT or entitlement to performing rights or the price of leasehold enfranchisement, which can be worth millions of pounds, to the amount of weekly means tested benefits or war pensions entitlement, which may be worth only a few pounds at a time but may mean a great deal to the claimants involved and to others like them. The judiciary, also, could and still can be very diverse, ranging from seconded High Court judges or senior Queens Counsel to fee paid part timers from a great variety of legal professional backgrounds. In many cases, tribunals also had and still may have members who were not legally qualified but had other professional qualifications or experience which was particularly suited to the subject matter of the claim. Some had single tier structures, some with and some without a right of appeal to the High Court or Court of Appeal. Some had two tier structures with their own appellate tier, again with or without a right of appeal to the High Court or Court of Appeal. But in general these tribunal systems shared some common characteristics. They were set up by statute to administer complex and rapidly changing areas of the law. Their judges were expected to know this law without having to have lawyers for the parties to explain it to them. Their members were expected to have relevant expertise or experience in the subject matter of the dispute, not only so that they would be able to adjudicate upon factual issues without the help of lawyers for the parties, but also so that the parties could feel confident that the overall balance of the panel (for example between employers and employees) would produce impartial results. Their procedures were also tailored to the subject matter of the dispute and they were not bound by the technical rules of evidence. While legal representation was common in those tribunals where large sums of money were at stake, and latterly in mental health review tribunals where personal liberty was at stake, the original expectation in most tribunals was that people would not need representation, or could be helped by specialist non lawyer representatives. In theory, therefore, the respective roles of the tribunal and the parties were rather different from their roles in the ordinary courts. The tribunal was more than a neutral referee before whom each party was expected to lay out all the material necessary to decide the case for the judge to choose which he preferred (compare Bingham, The Rule of Law, 2010, p 89). In general, this diverse specialism was regarded as a strength rather than a weakness, although the concomitant lack of legal aid in almost all tribunals was regretted by those who saw the benefits which skilled representation could bring. However, another feature of these tribunal systems was more controversial. They were mostly resourced and administered by whichever Department of State was responsible for the statutory scheme in question, rather than by the Department which was responsible for the administration of justice in the ordinary courts. This led to fears that they were not, or at least were not seen to be, sufficiently independent of those sponsoring Departments. The Department may have seen the independence and expertise of the tribunals as an integral part of the proper administration of a statutory scheme which was designed to bring certain benefits to the people. But others may have feared that they were simply accomplices with the Department in denying to claimants the benefits which were properly theirs. In between these two extremes, there might well be a perceived risk that the tribunals would be more inclined to accept the Departmental view of what the law was, rather than an alternative view which was more favourable to the claimant or taxpayer or whomever. The system was greatly improved by the Tribunals and Inquiries Act 1958, following the Report of the Franks Committee on Administrative Tribunals and Inquiries in 1957 (Cmnd 218), with its insistence on openness and accountability to the higher courts. In particular, provision was made in section 9 for appeals to the High Court which could be applied to any specified tribunal; and all (save two) previous exclusions of judicial review were abrogated by section 11. The Franks Committee was firm that the prerogative orders were clearly necessary in cases where questions of jurisdiction are involved and in cases where no provision is made for appeals on points of law. Accordingly no statute should contain words purporting to oust those remedies (para 117). A later improvement was to strengthen the leadership of particular tribunal systems by introducing a presidential structure, headed by a High Court or Circuit Judge. The final solution, following the Report of Sir Andrew Leggatt, Tribunals for Users One System, One Service (TSO, March 2001), was to transfer the administration of tribunals to the Ministry of Justice and to set up a new, integrated tribunal structure to take over the jurisdiction of most, but not all, of the existing systems under the 2007 Act. But before turning to the effect of that Act, it is necessary to see how judicial review was employed under the old system. Judicial review in its modern form, of course, is the product of two developments. One was the integration and simplification of the procedures for obtaining the former prerogative writs of certiorari, prohibition and mandamus or declaratory relief, in the revised Order 53 of the Rules of the Supreme Court, introduced in 1978 following the recommendations of the Law Commissions Report on Remedies in Administrative Law (1976, Law Com No 73). The other was the vigorous development of the substantive law, most notably of course in Anisminic v Foreign Compensation Commission [1969] 2 AC 147. Mr Fordham, for the Public Law Project, rightly reminds us that the remedy of certiorari had long been available to quash the decision of an inferior court or tribunal for error of law on the face of the record: see R v Northumberland Compensation Appeal Tribunal, Ex p Shaw [1952] 1 KB 338. There the tribunal had wrongly interpreted the service to be taken into account in assessing the applicants compensation for loss of office. There was no right of appeal against its decisions. The Attorney General had argued that certiorari would only lie to prevent a tribunal exceeding its jurisdiction. Both the Divisional Court and the Court of Appeal emphatically disagreed. This was not to assume an appellate function which had not been given to it; the court had an inherent jurisdiction to control all inferior tribunals, not in an appellate capacity, but in a supervisory capacity. This control extends not only to seeing that the inferior tribunals keep within their jurisdiction, but also to seeing that they observe the law. The control is exercised by means of a power to quash any determination by the tribunal which, on the face of it, offends against the law. The Kings Bench does not substitute its own views for those of the tribunal, as a Court of Appeal would do. It leaves it to the tribunal to hear the case again . : see Denning LJ, at pp 346 7. Singleton LJ lamented the lack of a right of appeal on a point of law, which he thought would save a great deal of time and trouble in deciding whether certiorari would lie: see pp 345 6. No doubt such views were influential when the Franks Committee came to recommend such a right. Then came Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, where not only was there no right of appeal from the Commissions decisions but there was also an express provision in the Foreign Compensation Act 1950 that those decisions shall not be called in question in any court of law (s 4(4)). This provision was one of the two expressly excepted from the general abrogation of such clauses in section 11 of the 1958 Act. In holding that, nevertheless, it was not effective to oust the jurisdiction of the High Court to set aside a decision which was a nullity, and that a decision made in error of law was a nullity, the House of Lords effectively removed the distinction between error of law and excess of jurisdiction. Where there was a right of appeal, of course, an aggrieved party would be expected to use that rather than judicial review. Judicial review was always a remedy of last resort. However, where there was no such right, there are numerous examples, at the highest level, of resort to judicial review to correct an error of law made by an inferior tribunal. Two will suffice. In Re Woodling, Woodling v Secretary of State for Social Services [1984] 1 WLR 348, the question of law was whether cooking meals was attention in connection with bodily functions for the purpose of attendance allowance. It reached the House of Lords by way of judicial review of the refusal of the Social Security Commissioner to grant leave to appeal from the decision of the Attendance Allowance Board. Significantly for the cases before this Court, the Board and the Commissioner were bound by an earlier decision of the Court of Appeal (R v National Insurance Commissioner, Ex p Secretary of State for Social Services [1981] 1 WLR 1017) excluding cooking; and when it was suggested to the Commissioner that this decision was wrong he indicated that he could add nothing to his earlier refusal of leave. (The challenge failed in the House of Lords, their lordships taking the view that attention in connection with bodily functions referred to things which the fit man normally does for himself, it not occurring to them that this might include cooking his own meals.) That was a social security case. R v Immigration Appeal Tribunal, Ex p Bakhtaur Singh [1986] 1 WLR 910 was an immigration case. The claimants appeal against the decision of the Secretary of State to deport him failed before the adjudicator and the Immigration Appeal Tribunal refused leave to appeal to that Tribunal. The case reached the House of Lords by way of judicial review of that refusal. The issue was whether the public interest in paragraph 154 of the Immigration Rules could include the interests of the Sikh community as well as the public interest in maintaining effective immigration control. Once again, the adjudicator had considered himself bound by dicta in an earlier High Court case (R v Immigration Appeal Tribunal, ex p Darsham Singh Sohal [1981] Imm AR 20). Thus the principle was firmly established that the unappealable decisions of inferior tribunals, including the refusal of leave to appeal, were amenable to judicial review on all the usual grounds. Indeed, in some cases, judicial review was considered a more appropriate remedy, even though statute provided another way of correcting errors of law: in Bone v Mental Health Review Tribunal [1985] 3 All ER 330, for example, Nolan J thought judicial review preferable to the power of a mental health review tribunal to state a case for the opinion of the High Court and the case stated procedure fell into disuse. However, the availability of judicial review was seen as a particular problem in the context of immigration and asylum appeals. In the Nationality, Immigration and Asylum Act 2002, s 101(2), Parliament introduced a form of statutory review of the refusal by the Immigration Appeal Tribunal of permission to appeal to that Tribunal. This was conducted by a single High Court judge without either an oral hearing or any appeal from his decision. It was therefore much swifter than the standard judicial review process, which involves the possibility of both written and oral submissions before both a High Court judge and a Lord Justice of Appeal. In R (G) v Immigration Appeal Tribunal [2005] 1 WLR 1445, the Court of Appeal held that, although the introduction of this new statutory procedure did not remove the judicial review jurisdiction, the new procedure was an adequate and proportionate protection for the claimants rights and it was therefore a proper exercise of the courts discretion to decline to entertain an application for judicial review of issues which were or could have been the subject of statutory review. Lord Phillips MR observed, at para 20: The consideration of proportionality involves more than comparing the remedy with what is at stake in the litigation. When Parliament enacts a remedy with the clear intention that this should be pursued in place of judicial review, it is appropriate to have regard to the considerations giving rise to that intention. The satisfactory operation of the separation of powers requires that Parliament should leave the judges free to perform their role of maintaining the rule of law but also that, in performing that role, the judges should, so far as consistent with the rule of law, have regard to legislative policy. The same approach was adopted when the Asylum and Immigration (Treatment of Claimants et cetera) Act 2004 collapsed the former two tier appellate structure into one. If the Asylum and Immigration Tribunal refused to order the reconsideration of a decision, the aggrieved party could ask the High Court to review the matter on paper and its decision was final (2002 Act, s 103A). The Tribunals, Courts and Enforcement Act 2007 Part 1 of the 2007 Act established the new unified tribunal structure which was recommended in the Leggatt Report. There is a First tier Tribunal, which is organised into chambers according to subject matter, each with its own President. It consists of its judges and other (non lawyer) members. There is an Upper Tribunal, also organised into chambers according to subject matter, each with its own President. With one exception, the Upper Tribunal Presidents are all High Court judges, but this is not a statutory requirement. It too consists of its judges and other (non lawyer) members. While most of the tribunal judiciary are specifically appointed to that role, all the judges in the ordinary courts, from the Lords Justices of Appeal to the District Judges in the Magistrates Courts, are automatically judges of both the First tier and Upper Tribunals. The whole is presided over by the Senior President of Tribunals, who shares the responsibility for organising the chambers with the Lord Chancellor (see s 7). The Senior President is currently a Lord Justice of Appeal, but the Act provides two routes to appointment: the first is that the Lord Chancellor and heads of the judiciary in England and Wales, Scotland and Northern Ireland all agree to recommend an appeal court judge for appointment; and only if that process does not produce a result does the second route, selection by the Judicial Appointments Commission, which is not limited to appeal court judges, apply (see Schedule 1, para 2(5)). Parliament has therefore expected, but not insisted, that the Senior President be an appeal court judge. The new structure may look neat but the diversity of jurisdictions accommodated means that it is not as neat as it looks. Thus, for example, the jurisdiction of the Special Commissioners of Income Tax and the VAT and Duties Tribunal has been assigned to the First tier Tribunal, although the importance of the decisions they make and the expertise of their judiciaries is, and should be, at least the equivalent of that of the Social Security Commissioners, who as appellate judges are assigned to the Upper Tribunal. Section 3(5) provides that The Upper Tribunal is to be a superior court of record. The Upper Tribunal has in fact three different roles. First, it may be the tribunal of first instance. Thus, for example, the Lands Chamber has both the first instance and appellate jurisdictions of the former Lands Tribunal; the Administrative Appeals Chamber has the jurisdiction of the former Transport Tribunal; and the Tax and Chancery Chamber has the jurisdiction of the former Financial Services and Markets Tribunal. Thus some first instance jurisdictions have been transferred to the Upper Tribunal whereas others of equivalent importance and difficulty, particularly in the tax field, have been transferred to the First tier Tribunal. Second, and this is a major innovation in the 2007 Act, it may exercise a statutory jurisdiction which is the equivalent of the judicial review jurisdiction of the High Court in England and Wales or Northern Ireland (ss 15, 16, 17). This only applies if certain conditions are met, the most important of which is that the application falls within a class specified in a direction given by the Lord Chief Justice or his nominee with the consent of the Lord Chancellor under Part 1 of Schedule 2 to the Constitutional Reform Act 2005 (s 18(6)). Once such a direction has been given, any application for judicial review or permission to apply for judicial review which is made to the High Court in that class of case must be transferred to the Upper Tribunal (Senior Courts Act 1981, s 31A(2)). The High Court also has power to transfer judicial review cases of other kinds to the Upper Tribunal if it appears just and convenient to do so (1981 Act, s 31A(3)). Similar provision is made in Scotland, in that judicial review cases in a specified class must, and others may, be transferred from the Court of Session to the Upper Tribunal (2007 Act, s 20(1)). The difference is that the application must first be made to the Court of Session, whereas in England and Wales and Northern Ireland applications in the specified classes should be made direct to the Upper Tribunal. Third, and probably most important, there is a right of appeal to the Upper Tribunal on any point of law arising from a decision made by the First tier Tribunal other than an excluded decision (s 11(1), (2)). This right may only be exercised with the permission of either the First tier or the Upper Tribunal (s 11(3), (4)). Section 11(5) lists the decisions which are excluded from the right of appeal. These include decisions of a description specified in an order made by the Lord Chancellor (s 11(5)(f)). The current list is contained in the Appeals (Excluded Decisions) Order 2009, as amended in 2010 to take account of the inclusion of immigration and asylum appeals within the new structure. There is a right of appeal to the Court of Appeal, in England and Wales or Northern Ireland, or the Court of Session in Scotland, on any point of law arising from a decision made by the Upper Tribunal other than an excluded decision (s 13(1), (2)). Excluded decisions include any decision of the Upper Tribunal on an application under section 11(4)(b) (application for permission or leave to appeal) (s 13(8)(c)). These appeals also require permission either from the Upper Tribunal or, if refused by the Upper Tribunal, from the relevant appellate court (s 13(3), (4), (5)). Where this would be a second tier appeal (that is, an appeal from the decision of the Upper Tribunal on appeal from the First tier Tribunal), the Lord Chancellor has exercised the power granted to him by section 13(6) to order that permission shall not be granted unless (a) the proposed appeal would raise some important point of principle or practice; or (b) there is some other compelling reason for the relevant appellate court to hear the appeal (Appeals from the Upper Tribunal to the Court of Appeal Order 2008, SI 2008 No 2834, art 2). Equivalent provision has been made for appeals from the Upper Tribunal to the Court of Session in Scotland by rule 41.59 of the Act of Sederunt (Rules of Court of Session 1994) 1994 (inserted by SSI 2008 No 349). These criteria are, of course, those applicable to a second tier appeal from a court to the Court of Appeal in England and Wales under section 55(1) of the Access to Justice Act 1999. It is worth noting that both the First tier Tribunal and the Upper Tribunal have power to review their own decisions, but this power does not apply to excluded decisions (see ss 9(1) and 10(1) respectively). This means that the Upper Tribunal has no power to review its own decision to refuse permission to appeal to the Upper Tribunal, even if it is convinced that that decision was wrong (compare the facts of Re Wooding, para 19 earlier). There is no express provision in the 2007 Act which makes any attempt to limit or remove the supervisory jurisdiction of the High Courts of England and Wales or Northern Ireland and the Court of Session in Scotland to review the decisions of the Upper Tribunal. It is nevertheless argued, and both the Divisional Court and the Court of Appeal held, that in the light of the system introduced by the 2007 Act the exercise of that jurisdiction should be limited to certain exceptional cases. Before turning to the possible approaches available to this Court, it is worth noting the various ways in which that argument has been put in the course of these proceedings. The developing argument The Cart case was heard by the Divisional Court along with two cases involving the Special Immigration Appeals Commission (SIAC). As does section 3(5) of the 2007 Act, section 1(3) of the Special Immigration Appeals Commission Act 1997 provides that SIAC shall be a superior court of record. The Governments primary case was that this made both tribunals immune from judicial review. This is not surprising, given that the same view had been expressed, of the Employment Appeal Tribunal, by Morison J in Chessington World of Adventures Ltd v Reed [1998] ICR 97, and by Sedley LJ in R v Regional Office of the Employment Tribunals (London North), Ex p Sojorin (unreported), 21 February 2000, and at para 6.31 of the Leggatt Report, and of the Upper Tribunal itself in de Smiths Judicial Review 6th ed (2007), para I 093. Nevertheless the argument was comprehensively demolished by Laws LJ, with whom Owen J agreed, in a typically subtle and erudite judgment, to which the following brief summary cannot do justice. It was a constitutional solecism to consider that merely to designate a body a superior court of record was sufficient to preclude judicial review. This could only be done by the most clear and explicit language and not by implication, still less by what was effectively a deeming provision. The rule of law requires that statute law be interpreted by an authoritative and independent judicial source: . the need for such an authoritative judicial source cannot be dispensed with by Parliament. This is not a denial of legislative sovereignty, but an affirmation of it . The requirement of an authoritative judicial source for the interpretation of law means that Parliaments statutes are always effective; . (para 38). That source was the High Court. This was not because it was a superior court of record but because it was a court of unlimited jurisdiction. Other courts and tribunals, having a limited jurisdiction, were not that source and were susceptible to judicial review by the High Court. Unreviewable courts of limited jurisdiction were exceptional. In the light of that comprehensive demolition, Mr Eadie has not since tried to rebuild the argument. He does not need to do so, because (in relation to the Upper Tribunal but not to SIAC) he has succeeded on his secondary case, that judicial review is only exercisable in rare and exceptional cases. Laws LJ accepted the argument on the basis that the newly constituted Upper Tribunal was the alter ego of the High Court within the areas covered by the tribunal system: it constituted an authoritative, impartial and independent judicial source for the interpretation and application of the relevant statutory tests. The rule of law did not require that it be subject to review for error of law within its jurisdiction: it had the final power to interpret for itself the law it must apply (para 94). But in the grossly improbable event that [Upper Tribunal] were to embark upon a case which was frankly beyond the four corners of its statutory remit there was no reason why the High Court should not correct it. With more caution, he accepted that it might also intervene where there has been a wholly exceptional collapse of fair procedure: something as gross as actual bias on the part of the tribunal (para 99). Laws LJ recognised that if the Upper Tribunal were in truth the alter ego of the High Court the logical consequence would be that it was wholly immune from the supervision of the High Court. The Government therefore pursued that argument before the Court of Appeal. Sedley LJ, giving the judgment of the court, rejected it: . the [Upper Tribunal] is not an avatar of the High Court at all: far from standing in the High Courts shoes, . , the shoes the [Upper Tribunal] stands in are those of the tribunals it has replaced (para 19). But he agreed that the supervisory jurisdiction of the High Court, well known to Parliament as one of the great historic artefacts of the common law, runs to statutory tribunals both in their old and in their new incarnation unless ousted by the plainest possible statutory language. There is no such language in the 2007 Act (para 20). Nevertheless, it did not follow that judicial review should be available on the full panoply of grounds which had been developed over the last half century. Judicial review had always been a remedy of last resort. As the Court of Appeal had recognised in R (Sivasubramaniam) v Wandsworth County Court [2003] 1 WLR 475, permission would not be granted where satisfactory alternative recourse existed, whether or not it had been exhausted. The scope of judicial review was a matter of principle, not discretion. But it could be changed to keep pace with other changes. The complete reordering of administrative justice was such a change: The tribunal system is designed to be so far as possible a self sufficient structure, dealing internally with errors of law made at first instance and resorting to higher appellate authority only where a legal issue of difficulty or of principle requires it. By this means serious questions of law are channelled into the legal system without the need of post Anisminic judicial review. (para 30) Two principles needed to be reconciled: one was the relative autonomy which Parliament had invested the tribunals as a whole and the Upper Tribunal in particular; the other was the constitutional role of the High Court as guardian of the standard of legality and due process from which the Upper Tribunal was not exempt (para 35). There was a true jurisprudential difference between an error of law made in the course of an adjudication which a tribunal is authorised to conduct and the conducting of an adjudication without lawful authority. For the former, no system of law can guarantee to be infallible. But [o]utright excess of jurisdiction by the [Upper Tribunal] and or denial by it of fundamental justice, should they ever occur, are in a different class: they represent the doing by the [Upper Tribunal] of something that Parliament cannot possibly have authorised it do so (para 36). Thus, by this rather different route, the Court of Appeal in Cart arrived at the same practical conclusion as had both the Divisional Court in Cart and the Court of Appeal in Sivasubramaniam [2003] 1 WLR 475. Sivasubramaniam was, of course, dealing with the new system of civil appeals brought in under the Access to Justice Act 1999 in response to the Bowman Report (1997). For the first time, virtually all appeals from a district judge to a circuit judge in a county court required permission to appeal. Refusal of permission by the circuit judge meant that there was no way, other than by judicial review, of having the case scrutinised by a High Court judge. However, while judicial review was not ousted, the Court of Appeal considered the new scheme provided the litigant with fair, adequate and proportionate protection against the risk that the judge of the lower court may have acted without jurisdiction or fallen into error (para 54). Permission to apply for judicial review should therefore not be granted except in very rare cases where it was sought on the ground of jurisdictional error in the narrow, pre Anisminic sense, or procedural irregularity of such a kind as to constitute a denial of the applicants right to a fair hearing (para 56). In R (Sinclair Gardens Investments (Kensington) Ltd) v Lands Tribunal [2005] EWCA Civ 1305, [2006] 3 All ER 650, essentially the same approach was applied to the refusal, by a non lawyer member of the Lands Tribunal, of permission to appeal from a determination of a Leasehold Valuation Tribunal relating to residential service charges. Thus the mere fact that a decision by the Lands Tribunal was obviously wrong in law was not enough to justify its being judicially reviewed (para 56); although there might be exceptional circumstances other than those identified in Sivasubramaniam which would justify this, for example where there were conflicting decisions in Leasehold Valuation Tribunals which cried out for definitive resolution (para 57). On the other hand, in Sivasubramaniam itself, the Court of Appeal had recognised the special features of the asylum jurisdiction which justified the former practice of unrestricted judicial review of refusals of leave to appeal. In MR (Pakistan), therefore, Mr Manjit Gill argued that those special features justified making an exception to the principles adopted by the Court of Appeal in Cart. Sullivan LJ disagreed. The immigration and asylum jurisdiction was not the only one in which claimants might be unrepresented, or particularly vulnerable, or where fundamental human rights were involved, or where the law was complex. There was no principled justification for maintaining a historical exemption: one of the basic purposes of the 2007 Act was to unify the procedures of the many and disparate tribunals which had been gathered into the new structure. It would be a significant invasion of the coherence of the new system to maintain such a historical exemption (para 53). The field of choice in this Court The way in which the argument has developed through the proceedings which are now collected before us enables us to be clear on three points. First, there is nothing in the 2007 Act which purports to oust or exclude judicial review of the unappealable decisions of the Upper Tribunal. Clear words would be needed to do this and they are not there. The argument that making the Upper Tribunal a superior court of record was sufficient to do this was killed stone dead by Laws LJ and has not been resurrected. Second, it would be completely inconsistent with the new structure introduced by the 2007 Act to distinguish between the scope of judicial review in the various jurisdictions which have now been gathered together in that new structure. The duties of the Senior President, set out in section 1(2), clearly contemplate that the jurisdictions will retain their specialist expertise, so that one size does not necessarily fit all; but the relationships of its component parts with one another and with the ordinary courts are common to all. So too must be the principles adopted by the High Court in deciding the scope of judicial review. Third, the scope of judicial review is an artefact of the common law whose object is to maintain the rule of law that is to ensure that, within the bounds of practical possibility, decisions are taken in accordance with the law, and in particular the law which Parliament has enacted, and not otherwise. Both tribunals and the courts are there to do Parliaments bidding. But we all make mistakes. No one is infallible. The question is, what machinery is necessary and proportionate to keep such mistakes to a minimum? In particular, should there be any jurisdiction in which mistakes of law are, either in theory or in practice, immune from scrutiny in the higher courts? In the course of oral argument before the Court it became clear that there were three possible approaches which the Court could take. First, we could accept the view of the courts below in Cart and MR that the new system is such that the scope of judicial review should be restricted to pre Anisminic excess of jurisdiction and the denial of fundamental justice (and possibly other exceptional circumstances such as those identified in Sinclair Gardens). Second, we could accept the argument, variously described in the courts below as elegant and attractive, that nothing has changed. Judicial review of refusals of leave to appeal from one tribunal tier to another has always been available and with salutary results for the systems of law in question. Third, we could adopt a course which is somewhere between those two options, and was foreshadowed by Dyson LJ (with the enthusiastic support of Longmore LJ) in R (Wiles) v Social Security Commissioner [2010] EWCA Civ 258 but rejected by the Court of Appeal in Cart, namely that judicial review in these cases should be limited to the grounds upon which permission to make a second tier appeal to the Court of Appeal would be granted. (i) The exceptional circumstances approach The approach of the Divisional Court and Court of Appeal would lead us back to the distinction between jurisdictional and other errors which was effectively abandoned after Anisminic. It is a distinction which lawyers can readily grasp. As Denning MR put it in Shaws case [1952] 1 KB 338, 346, A tribunal may often decide a point of law wrongly whilst keeping well within its jurisdiction. There are, however, several objections to reviving it. First, we would not in fact be turning the clock back to the days before Anisminic because, as we have seen, certiorari was available to correct errors of law on the face of the record made by tribunals of limited jurisdiction. We would be re introducing a distinction which had become relevant for the most part only where judicial review was expressly excluded, which it is not here. Secondly, the distinction was given its quietus by the majority in Anisminic not least because the word jurisdiction has many meanings ranging from the very wide to the very narrow. By the narrow original sense both Lord Reid and Lord Pearson meant that the tribunal had asked itself the wrong question. But, as Lord Reid explained, a tribunal does this if it does any of the things which would ordinarily render its decision susceptible to judicial review (at p 171). And, as Lord Pearson observed, there has been evolution over the centuries and there have been many technicalities. There have also been many border line cases (at p 195). And Lord Wilberforce did not find the expressions asking the wrong question or applying the wrong test wholly satisfactory, although he agreed that such decisions were a nullity (at p 210). If the approach of the Court of Appeal in Cart is maintained we may expect a return to some of the technicalities of the past. Thirdly, as Lord Wilberforce pointed out (at p 207), it does of course lie within the power of Parliament to provide that a tribunal of limited jurisdiction should be the ultimate interpreter of the law which it has to administer: the position may be reached, as the result of statutory provisions, that even if they make what the courts might regard as decisions wrong in law, these are to stand. But there is no such provision in the 2007 Act. There is no clear and explicit recognition that the Upper Tribunal is to be permitted to make mistakes of law. Certain decisions are unappealable and for the most part there are obvious practical reasons why this should be so. But this does not mean that the tribunal must always be permitted to make errors of law when making them. The consideration which weighed most heavily with the Court of Appeal in Sivasubramaniam was proportionality. There must be a limit to the resources which the legal system can devote to the task of trying to get the decision right in any individual case. There must be a limit to the number of times a party can ask a judge to look at a question. The Court of Appeal took the view that, in the sorts of cases coming before the district judges in the county courts, it was enough if both the district judge and the circuit judge could detect no arguable case that the district judge had gone wrong. There was no need, save in the two extreme and exceptional cases identified, for a High Court judge to take another look especially as, under the current judicial review procedures, it would then be possible for the case to be looked at another four times. This approach accepts that a certain level of error is acceptable in a legal system which has so many demands upon its limited resources. Some might question whether it does provide sufficient protection against mistakes of law. In the ordinary courts, unlike the new tribunal system, there may be an appeal on a point of fact as well as law. It makes sense to limit such appeals to those with a real prospect of success. But judicial review is not such an appeal. The district judge and the circuit judge may both have gone wrong in law. They may work so closely and regularly together that the latter is unlikely to detect the possibility of error in the former. But at least in the county courts such errors are in due course likely to be detected elsewhere and put right for the future. The county courts are applying the ordinary law of the land which is applicable in courts throughout the country, often in the High Court as well as in the county courts. The risk of their developing local law is reduced although by no means eliminated. But that risk is much higher in the specialist tribunal jurisdictions, however expert and high powered they may be. As a superior court of record, the Upper Tribunal is empowered to set precedent, often in a highly technical and fast moving area of law. The judge in the First tier Tribunal will follow the precedent set by the Upper Tribunal and refuse permission to appeal because he is confident that the Upper Tribunal will do so too. The Upper Tribunal will refuse permission to appeal because it considers the precedent to be correct. It may seem only a remote possibility that the High Court or Court of Appeal might take a different view. Indeed, both tiers may be applying precedent set by the High Court or Court of Appeal which they think it unlikely that a higher court would disturb. The same question of law will not reach the High Court or the Court of Appeal by a different route. There is therefore a real risk of the Upper Tribunal becoming in reality the final arbiter of the law, which is not what Parliament has provided. Serious questions of law might never be channelled into the legal system (as Sedley LJ put it at para 30) because there would be no independent means of spotting them. High Court judges may sit in the Upper Tribunal but they will certainly not be responsible for all the decisions on permission to appeal, nor is it possible for the Upper Tribunal to review its own refusals, even when satisfied that they are wrong in law. Furthermore, it appears to be accepted that full judicial review of the unappealable decisions of the First tier Tribunal, and possibly of excluded decisions of the Upper Tribunal other than the refusal of permission to appeal, remains available. It is difficult to spell out a principled basis for such anomalies. In short, while the introduction of the new system may justify a more restricted approach, the approach of the Court of Appeal in Cart is too narrow, leaving the possibility that serious errors of law affecting large numbers of people will go uncorrected. (ii) The status quo ante but which? Mr Drabble, together with (in the rather different context of Scotland) Mr Mitchell, makes a powerful case for the status quo, by which he means the position obtaining in the social security system before the 2007 Act. The Social Security Commissioners were a highly skilled body of senior lawyers, thoroughly steeped in the intricacies of social security law, yet they could occasionally fail to detect the possibility of error in a social security tribunals decision for example because both were following an authoritative decision of the High Court or Court of Appeal which had stood for some time. Judicial review of the refusal of leave enabled such questions of law, often important to a great many people, to be examined in the higher courts to the benefit of the jurisdiction in question. It is, after all, the object of the benefits system to get things right to pay people the benefits to which Parliament has said that they are entitled, not a penny more but also not a penny less. He also rightly points out that nothing much has changed. The Social Security Commissioners are now judges of the Upper Tribunal but they are (mostly) the same people doing the same job. The new structure has followed the model of the previous social security adjudication system. What is so different that it justifies the removal of a right from which each party in a social security claim could benefit, the Department as well as the individual claimant? Mr Manjit Gill makes essentially the same argument in immigration and asylum cases. They too had a two tier appellate structure with the possibility of judicial review of unappealable decisions until the 2002 Act. The 2002 Act introduced the alternative form of statutory review, but it still gave access to a High Court judge. The 2004 Act collapsed the two tier structure into one, but provided an equivalent form of statutory review giving access to a High Court judge. Now, as Sullivan LJ put it in FA (Iraq) and PD (India) v Secretary of State for the Home Department [2010] EWCA Civ 827, at para 1, The wheel has come full circle. Once again there is a two tier appellate structure with a right of appeal with permission on a point of law from the First tier to the Upper Tribunal and a further right of appeal, with permission, to the Court of Appeal. The only change from the old two tier structure is the introduction of the limited grounds for a second tier appeal to the Court of Appeal. The statutory reviews introduced by the 2002 and 2004 Acts have been abolished. Hence, he argues, in that system too we are now back where we began and there is no reason to restrict the availability of judicial review of unappealable decisions. But it is impossible to leave out of account the reasons why those statutory reviews were introduced. It is not difficult to dress up an argument as a point of law when in truth it is no more than an attack upon the factual conclusions of the first instance judge. In most tribunal cases, a claimant will have little to gain by pressing ahead with a well nigh hopeless case. He may have less money than he otherwise would, but he will not have to leave the country and may make another claim if circumstances change. But in immigration and asylum cases, the claimant may well have to leave the country if he comes to the end of the road. There is every incentive to make the road as long as possible, to take every possible point, and to make every possible application. This is not a criticism. People who perceive their situation to be desperate are scarcely to be blamed for taking full advantage of the legal claims available to them. But the courts resources are not unlimited and it is well known that the High Court and Court of Appeal were overwhelmed with judicial review applications in immigration and asylum cases until the introduction of statutory reviews. Mr Gills answer is that under the new system the burden on the High Court and Court of Appeal is to be reduced by transferring judicial review applications relating to the refusal of the Secretary of State to treat new representations as a fresh claim to the Upper Tribunal (see the announcement made by Lord McNally, Hansard (HL), 3 March 2011, col WS120). But this, of course, does not address the perceived burden resulting from attempts to achieve a judicial review of the decisions of the Tribunal itself. Mr Fordham, in particular, argues that there is no need to introduce further restrictions upon judicial review. The courts have already adopted principles of judicial restraint when considering the decisions of expert tribunals. As long ago as R v Preston Supplementary Benefits Appeal Tribunal, Ex p Moore [1975] 1 WLR 624, before the creation of the unified social security appeal tribunals with a common right of appeal to the Commissioners, Lord Denning MR observed, at pp 631 2, that the courts should leave the tribunals to interpret the Supplementary Benefits Act in a broad reasonable way, according to the spirit and not the letter. But it was important that cases raising the same points should be dealt with in the same way, so the courts should be prepared to consider points of law of general application. Individual cases of particular application should be left to the tribunals. More recently, in Cooke v Secretary of State for Social Security [2001] EWCA Civ 734, [2002] 3 All ER 279, paras 15 17, I (with the agreement of both Clarke LJ and Butterfield J) urged appropriate caution in giving permission to appeal from the Social Security Commissioners, because of their particular expertise in a highly specialised area of the law, where it was quite probable that . the Social Security Commissioner will have got it right. Those observations have been referred to many times since, not least by Dyson LJ in R (Wiles) v Social Security Commissioner [2010] EWCA Civ 258, paras 53 54, where he said this: Thus, in seeing whether it can detect some error of law by the commissioner who has refused leave to appeal, the reviewing court should not be astute to find such error. This is a further reason why there need be no real concern that the established approach to judicial review in these cases would lead to an opening of the floodgates. It is, however, fair to say that this restraint has found more favour in some contexts than in others. Although it was adopted in the asylum context in AH (Sudan) v Secretary of State for the Home Department [2007] UKHL 49, [2008] AC 678, at para 30, the courts are also well aware of the anxious scrutiny required in asylum cases and of the particular difficulties facing the tribunals in this jurisdiction. Had they adopted the same restraint in asylum as in social security cases, it might not have been thought necessary to introduce the statutory review procedures. Ironically, therefore, the more troubling the context, the more necessary it has seemed to limit the availability of judicial review. The real question, as all agree, is what level of independent scrutiny outside the tribunal structure is required by the rule of law. The mere fact that something has been taken for granted without causing practical problems in the social security context until now does not mean that it should be taken for granted forever. Equally the fact that the courts have hitherto found it difficult to deter repeated or unmeritorious applications in immigration and asylum cases does not mean that such applications should become virtually impossible. There must be a principled but proportionate approach. (iii) The second tier appeals criteria An important innovation in the 2007 Act was the power given to the Lord Chancellor in section 13(6), to prescribe the same criteria for the grant of permission to appeal from the Upper Tribunal to the Court of Appeal as apply to second tier appeals in the courts of England and Wales. These have now been prescribed for second tier appeals from the Upper Tribunal in all three jurisdictions. (It was the previous lack of such criteria which led to the remarks about restraint in Cooke.) This gives, at the very least, an indication of the circumstances in which Parliament considered that questions of law should be, as Sedley LJ put it, channelled into the legal system. In Wiles, Dyson LJ considered that there was much to be said for applying the same criteria to judicial review of a Social Security Commissioners refusal of permission to appeal to himself (para 48). This would reflect the fact that (i) the issues that arise . may affect the lives not only of the individual claimant, but also of many others who are in the same position, some of whom are among the most vulnerable members of our society; and (ii) the issues may be of fundamental importance to them, sometimes making the difference between a reasonable life and a life of destitution (para 47). This proposal was warmly endorse[d] by Longmore LJ (para 79). It was, however, expressly rejected by Sedley LJ in Cart, because the new tribunal structure is something greater than the sum of its parts. It represents a newly coherent and comprehensive edifice designed, among other things, to complete the long process of divorcing administrative justice from departmental policy, to ensure the application across the board of proper standards of adjudication, and to provide for the correction of legal error within rather than outside the system (para 42). While all of this is true, it seems to me to do little justice to the independence and expertise of the tribunal judiciaries in the old system and to over estimate what has changed in the new. There must be some risk that the amalgamation of very different jurisdictions in the new chambers will dilute rather than enhance the specialist expertise of their judges and members. Mental health and special educational needs, for example, are similar in some ways but very different in others. It would be difficult to say that bringing them together has reduced the capacity for error although of course we all hope that it has not been increased. The claimants accept that if there is to be any restriction on the availability of judicial review, this approach would be far preferable to that of the Court of Appeal in Cart. Their main objection is that it would deprive the parties of the second substantive hearing to which they would have been entitled if the Upper Tribunal had spotted the error and given permission to appeal. Another objection is that it would leave uncorrected those errors of law which do not raise an important point of principle or practice and where there is no other compelling reason for the court to hear the case. But no system of decision making is perfect or infallible. There is always the possibility that a judge at any level will get it wrong. Clearly there should always be the possibility that another judge can look at the case and check for error. That second judge should always be someone with more experience or expertise than the judge who first heard the case (it is to be hoped that the new structure will not perpetuate the possibility, exemplified in Sinclair Gardens, that a non lawyer member might be entrusted with deciding whether a tribunal chaired by a legally qualified tribunal judge had gone wrong in law, but this is left to the good sense of the Senior President rather than enshrined in the legislation). But it is not obvious that there should be a right to any particular number of further checks after that. The adoption of the second tier appeal criteria would lead to a further check, outside the tribunal system, but not one which could be expected to succeed in the great majority of cases. Conclusion For all those reasons, together with those given by Lord Dyson (in this case) and Lord Hope (in Eba), the adoption of the second tier appeals criteria would be a rational and proportionate restriction upon the availability of judicial review of the refusal by the Upper Tribunal of permission to appeal to itself. It would recognise that the new and in many ways enhanced tribunal structure deserves a more restrained approach to judicial review than has previously been the case, while ensuring that important errors can still be corrected. It is a test which the courts are now very used to applying. It is capable of encompassing both the important point of principle affecting large numbers of similar claims and the compelling reasons presented by the extremity of the consequences for the individual. It follows that the approach in Sinclair Gardens should no longer be followed. If this approach is adopted, the Civil Procedure Rules Committee might also wish to consider the scope for stream lining the procedure for considering applications for permission to apply for judicial review of these decisions. I agree with Lord Phillips that it would be totally disproportionate to allow the four stage system of paper and oral applications to both the High Court and the Court of Appeal in such cases. The previous procedures for statutory reviews in immigration and asylum cases showed that there is nothing inherently objectionable in a paper procedure, particularly if there has been an oral hearing of the first application for permission to appeal. But, in agreement with Lord Clarke, it seems to me that this is a matter for the rules committee rather than for this Court to determine. In the result, however, there is clearly nothing in Mr Carts case to bring it within the second tier appeal criteria. The tribunal considered very carefully whether he had been prejudiced by the failure of the Secretary of State to give him notice of the application to vary and it was clear that he had not, so any difference of approach to whether prejudice was necessary would not affect the result. The same is true of the case of MR (Pakistan). As Ouseley J said in refusing permission to appeal to the Upper Tribunal, crucial to the decision was the finding that the applicant was not a genuine convert to Christianity. The question of how a genuine convert would be treated did not arise. I would therefore dismiss the appeals in the cases of Cart and MR (Pakistan) but on a different basis from that adopted in the Divisional Court and the Court of Appeal. LORD PHILLIPS I have had the benefit of reading the judgment of Lady Hale, which illuminates the background to the English appeals, and the issues that are raised by them. I have also had the benefit of reading the judgment of Lord Hope in the Scottish appeal. His conclusions are in harmony with those of Lady Hale. I am in agreement with both judgments. My own contribution is essentially by way of emphasis, directed largely to the fundamental issue of principle raised by these appeals. That is whether the courts should apply a principle of proportionality when deciding whether to accede to an application to judicially review a decision of the Upper Tribunal. For the reasons that follow I have decided that they should, but that, at least in England and Wales, the needs of proportionality also require changes in the Civil Procedure Rules (CPR). Introduction In March 2001 a Committee chaired by Sir Andrew Leggatt delivered a report (the Leggatt Report) to the Lord Chancellor on the delivery of justice through tribunals. The Committee was confronted with 70 different administrative tribunals employing about 3,500 people and handling nearly one million cases a year. The Leggatt Report made recommendations for bringing these tribunals into a single Tribunals System. In July 2004 a Government White Paper accepted the broad thrust of those recommendations. Parliament then implemented this by enacting the Tribunals, Courts and Enforcement Act 2007 (TCEA). A striking feature of the tribunals system created by the TCEA is the creation of two tiers, a First tier Tribunal and an Upper Tribunal. Appeals lie from the First tier Tribunal to the Upper Tribunal. Carnwath LJ was appointed the first Senior President of the new system. In his article Tribunal Justice a New Start in [2009] Public Law 48 he commented of the Upper Tribunal that it would be operating in parallel with the existing Administrative Court and would become the principal agency for judicial review of the legality of tribunal decisions. He suggested that there was scope for rethinking the traditional allocation, as between courts and tribunals, of responsibilities for definitive interpretation of substantive law, including human rights law, in specialist fields. These three conjoined appeals raise a single issue. This is the extent to which decisions of the Upper Tribunal are properly subject to judicial review by the Administrative Court in England and Wales and the Court of Session in Scotland. That issue calls for a review of the roles of the legislature, the executive and the judiciary in maintaining the rule of law in this country. The rule of law requires that the laws enacted by Parliament, together with the principles of common law that subsist with those laws, are enforced by a judiciary that is independent of the legislature and the executive. Laws LJ, in paras 43 to 51 of his judgment in Cart [2009] EWHC 3052 (Admin), has summarised the history of the role of the courts from 1066 to 1873 in upholding and developing the law. In particular, he has described the growth of the supremacy under the common law of the court of the Kings Bench as a court of unlimited jurisdiction with the power by means of the prerogative writs to supervise the other courts, described as inferior courts of record. The Judicature Act 1873 marked the assumption by Parliament of responsibility for the infrastructure necessary for the administration of justice. A new hierarchy of courts was created, including a High Court and a Court of Appeal. The common law powers of the Kings Bench were vested in the High Court. The creation of a Court of Appeal provided, however, an alternative means of reviewing errors of law on the part of inferior courts and, in particular, the County Court, which replaced the use of the prerogative writs. Since 1873 there has been a series of statutes dealing with the administration of justice, of which the Supreme Court Act 1981 (now the Senior Courts Act 1981) was particularly significant. Section 4 of that Act defined the composition of the High Court. Section 19 provided that the High Court should continue to exercise the jurisdiction that it enjoyed prior to the 1981 Act. Thus the common law powers of judicial review were preserved. Section 31 of the 1981 Act provided for rules of court to be made governing the procedure to be followed on an application for judicial review and required the leave of the High Court to be obtained for such an application. Part 54 of the CPR gives effect to that requirement. At the same time as making provision for the structure of the general court system, Parliament created tribunals to adjudicate on disputes in specialised areas and a number of specialist courts. A common theme can be identified in relation to most of these, as well as in relation to the general court system. The possibility of at least one appeal is desirable in order to address the possibility of error of law on the part of the court or tribunal first seised of the matter. Legislation dealing with the court system in general and with specialist courts and tribunals usually makes provision for appeals. Prior to 1999 there was growing concern that rights of appeal in civil proceedings were over generous with the result that the pursuit of appeals that lacked merit was resulting in unnecessary delay and consumption of limited judicial resources. Lord Woolfs final report on Access to Justice published in July 1996 reached a similar conclusion on this topic to that subsequently reached by the Bowman Report published in September 1997. Both concluded that civil appeals served both a private and a public purpose. The private purpose was to correct an error, unfairness or wrong exercise of discretion leading to an unjust result. The public purpose was to ensure public confidence in the administration of justice and, in appropriate cases, to clarify and develop the law, practice and procedure and to help maintain the standards of first instance courts and tribunals. Many of the existing provisions for appeals failed, however, to have regard to proportionality. Rights of appeal should be proportionate to the grounds of complaint and the subject matter of the dispute. More than one level of appeal would not normally be justified unless an important point of principle or practice was involved. The Bowman Report led to provisions in the Access to Justice Act 1999 which resulted in a new Part 52 of the CPR to replace the provisions of the Rules of the Supreme Court dealing with, inter alia, appeals to the High Court from lower courts and tribunals and appeals to the Court of Appeal. Section 54 of the 1999 Act provided that rules of court could introduce a requirement that any right of appeal be exercised only with permission. It further provided that no appeal could be made against a decision of a court to give or refuse permission, albeit that rules of court might provide for the making of a further application for permission to that court or another court. CPR 52.3 introduced a permission requirement in relation to appeals from lower courts, but not from tribunals, albeit that it stated that other enactments might require permission for particular appeals. CPR 52.3(6) provides that permission to appeal may only be given where the court considers that the appeal would have a real prospect of success or where there is some other compelling reason why the appeal should be heard. CPR 52.13(2) provides that in the case of a second appeal to the Court of Appeal the court will only give permission to appeal if the appeal raises an important point of principle or practice or there is some other compelling reason for the court to hear it. The power of the High Court to conduct judicial review subsists alongside these statutory provisions for appeal. It is not, however, the practice of the Court to use this power where a satisfactory alternative remedy has been provided by Parliament. Where this is not the case the power of judicial review is a valuable safeguard of the rule of law. It is one which the judges guard jealously. The decision of the House of Lords in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 finessed what, on its face, appeared to be an attempt by Parliament to exclude judicial review of the decisions of the Commission. Since that case Parliament has not purported, as it might have done, expressly to preclude the exercise by the High Court of the power of judicial review. At paras 39 to 40 of his judgment in Cart Laws LJ stated that the general principle was clear: The rule of law requires that statute should be mediated by an authoritative and independent judicial source; and Parliaments sovereignty itself requires that it respect this rule. None of this, of course, is to say that Parliament may not modify, sometimes radically, the procedures by which statute law is mediated. It may impose tight time limits within which proceedings must be bought. It may provide a substitute procedure for judicial review, as it has by a regime of statutory appeals in fields such as town and country planning, highways, and compulsory purchase: where, however, the appeal body remains the High Court. It may create new judicial authorities with extensive powers. It may create rights of appeal from specialist tribunals direct to the Court of Appeal. The breadth of its power is subject only to the principle I have stated. The proposition that Parliamentary sovereignty requires Parliament to respect the power of the High Court to subject the decisions of public authorities, including courts of limited jurisdiction, to judicial review is controversial. Hopefully the issue will remain academic. Before the Divisional Court in Cart the Secretary of State contended that, by enacting in section 3(5) of TCEA that the Upper Tribunal should be a superior court of record, Parliament had rendered its decisions immune from judicial review. The Divisional Court rejected that submission, and it has not been pursued. The issue before this Court relates to the principles that should govern the exercise of the power judicially to review the decisions of the Upper Tribunal. The appellants in the English appeals, supported by JUSTICE as intervener, adopt the same approach as the Lord Advocate in the Scottish Appeal and contend that judicial review should be permitted whenever there is an arguable case that the Upper Tribunal has made any error of law. The Secretary of State submits that the statutory provisions for appeal in the TCEA meet the requirements of the rule of law in all ordinary circumstances. Judicial review of the Upper Tribunal is only appropriate in exceptional circumstances, which do not exist in any of the appeals before the Court. The issue of principle raised by these appeals is thus whether, and on what basis, the right to judicial review of a decision of the Upper Tribunal should be restricted. All three appeals have, however, an important common factor. Each arises out of the refusal of the Upper Tribunal to give permission to appeal to it from a decision of the First tier Tribunal or, in the case of Cart, of the Tribunal whose functions have been taken over by the First tier Tribunal. In each of the English cases a claim for judicial review of the Upper Tribunals decision was dismissed on the ground that this could only be justified in exceptional circumstances. In the Scottish case a similar application was granted, and the Advocate General appeals against the decision granting the application for judicial review. It became apparent in the course of argument that the appellants in the English cases were particularly aggrieved that they had been denied the right to have their appeals heard. Because there was no right to appeal to the Court of Appeal from the Upper Tiers refusal to give permission to appeal, they had only had one substantive hearing. Mr Gill QC for MR accepted that it was this fact, rather than the status of the tribunal that had refused permission to appeal, that gave rise to his principal complaint. There have already been a number of decisions of lower courts in which it has been held appropriate to circumscribe the right to judicial review. The appellants in the English appeals submit that they were wrongly decided and I propose first to consider them. Next I shall consider the recommendations made by the Leggatt Report in relation to the availability of judicial review. After that I shall examine the extent to which Parliament gave effect to those recommendations. Finally I shall answer the issue of principle posed above, with specific reference to the individual appeals. Restrictions on the right to judicial review The first of a series of cases in which the court held that there was a right to judicial review which was restricted involved two appeals by the same appellant in relation to two unsuccessful applications for judicial review. In R (Sivasubramaniam) v Wandsworth County Court; R (Sivasubramaniam) v Kingston upon Thames County Court (Lord Chancellors Department intervening) [2002] EWCA Civ 1738, [2003] 1 WLR 475, which I shall hereafter refer to as Siva, the applicant brought bizarre claims before two district judges. Each had been dismissed. Applications for permission to appeal were dismissed in each case by a county court judge. In the latter, but not the former, case he could have appealed to the Court of Appeal. He did not do so. He applied in each case to the High Court for permission to claim judicial review. His applications were dismissed. He appealed against the dismissals to the Court of Appeal. In the second case the Court of Appeal refused the application on the ground that there had been a satisfactory alternative remedy. The Court rejected the submission by the respondents that section 54(4) of the Access to Justice Act ousted judicial review of the decision of the county court judge. It held, however, at para 48: Under the 1999 Act, and the rules pursuant to it, a coherent statutory scheme has been set up governing appeals at all levels short of the House of Lords. One object of the scheme is to ensure that, where there is an arguable ground for challenging a decision of the lower court, an appeal will lie, but to prevent court resources being wasted by the pursuit of appeals which have no prospect of success. The other object of the scheme is to ensure that the level of judge dealing with the application for permission to appeal, and the appeal if permission is given, is appropriate to the dispute. This is a sensible scheme which accords with the object of access to justice and the Woolf reforms. It has the merit of proportionality. To permit an applicant to bypass the scheme by pursuing a claim for judicial review before a judge of the Administrative Court is to defeat the object of the exercise. We believe that this should not be permitted unless there are exceptional circumstances and we find it hard to envisage what these could be. So far as the first case was concerned, the Court adopted a similar approach. It held: 54 This scheme we consider provides the litigant with fair, adequate and proportionate protection against the risk that the judge of the lower court may have acted without jurisdiction or fallen into error. The substantive issue will have been considered by a judge of a court at two levels. On what basis can it be argued that the decision of the judge of the appeal court should be open to further judicial review? The answer, as a matter of jurisprudential theory, is that the judge in question has limited statutory jurisdiction and that it must be open to the High Court to review whether that jurisdiction has been exceeded. But the possibility that a circuit judge may exceed his jurisdiction, in the narrow pre Anisminic sense, where that jurisdiction is the statutory power to determine an application for permission to appeal from the decision of a district judge, is patently unlikely. In such circumstances an application for judicial review is likely to be founded on the assertion by the litigant that the circuit judge was wrong to conclude that the attack on the decision of the district judge was without merit. The attack is likely to be misconceived, as exemplified by the cases before us. We do not consider that judges of the Administrative Court should be required to devote time to considering applications for permission to claim judicial review on grounds such as these. They should dismiss them summarily in the exercise of their discretion. The ground for so doing is that Parliament has put in place an adequate system for reviewing the merits of decisions made by district judges and it is not appropriate that there should be further review of these by the High Court. This, we believe, reflects the intention of Parliament when enacting section 54 (4) of the 1999 Act. While Parliament did not legislate to remove the jurisdiction of the High Court judicially to review decisions of county court judges to grant or refuse permission to appeal, we do not believe that Parliament can have anticipated the spate of applications for judicial review that section 54 (4) appears to have spawned. 55 Everything that we have said should be applied equally to an application for permission to claim judicial review of the decision of a judge of the county court granting permission to appeal. We are not aware that such an application has yet been made. Exceptional circumstances 56 The possibility remains that there may be very rare cases where a litigant challenges the jurisdiction of a circuit judge giving or refusing permission to appeal on the ground of jurisdictional error in the narrow, pre Anisminic sense, or procedural irregularity of such a kind as to constitute a denial of the applicant's right to a fair hearing. If such grounds are made out we consider that a proper case for judicial review will have been established. The Court commented on the fact that permission to claim judicial review was regularly given in relation to refusals by the Immigration Appeal Tribunal of permission to appeal to the tribunal against decisions of special adjudicators. The Court observed at para 52 that on the face of it judicial review of such decisions might seem anomalous, but explained the practice as follows: There are, in our judgment, special factors which fully justify the practice of entertaining applications for permission to claim judicial review of refusals of leave to appeal by the tribunal. In asylum cases, and most cases are asylum cases, fundamental human rights are in play, often including the right to life and the right not to be subjected to torture. The number of applications for asylum is enormous, the pressure on the tribunal immense and the consequences of error considerable. The most anxious scrutiny of individual cases is called for and review by a High Court judge is a reasonable, if not an essential, ingredient in that scrutiny. In Gregory v Turner [2003] EWCA Civ 183; [2003] 1 WLR 1149 the Court of Appeal followed Siva when it refused an application for judicial review of the decision of a circuit judge who refused permission to appeal from the decision of a district judge, despite the fact that there were grounds for concluding that the district judge had fallen into error. At para 46 Brooke LJ explained the reason for what might appear to be an injustice: In his Interim Report on Access to Justice (1995), Section I, Chapter 4, paras 5 and 6 Lord Woolf highlighted the tensions that exist between a desire to achieve perfection and a desire to achieve a system of justice which is not inaccessible to most people on grounds of the time and cost involved. He quoted tellingly from a 1970 broadcast by Lord Devlin: is it right to cling to a system that offers perfection for the few and nothing at all for the many? Perhaps: if we could really be sure that our existing system was perfect. But of course it is not. We delude ourselves if we think that it always produces the right judgment. Every system contains a percentage of error; and if by slightly increasing the percentage of error, we can substantially reduce the percentage of cost, it is only the idealist who will revolt. Both Siva and Gregory v Turner involved attempts to review decisions of the County Court. In R (on the application of Sinclair Gardens Investments (Kensington) Ltd) v Lands Tribunal [2005] EWCA Civ 1305; [2006] 3 All ER 650 the Court of Appeal applied the same reasoning to the scheme laid down by Parliament for leasehold valuation. The statutory scheme in that case provided for an appeal from the Leasehold Valuation Tribunal to the Lands Tribunal provided that one or the other gave permission to appeal. Both having refused permission, a landlord sought permission to review the decision of the Lands Tribunal to refuse permission to appeal. The application was refused and the landlord appealed to the Court of Appeal. The Court dismissed the appeal. Giving the only reasoned judgment, Neuberger LJ said this: 56 I do not accept that the mere fact that a decision of the Lands Tribunal refusing permission to appeal was obviously wrong in law would be sufficient to justify its being judicially reviewed. Such a basis for judicial review would fly in the face of the conclusion and reasoning in Sivasubramaniams case and in Gregory v Turner, which appear to me to be applicable in this case for the reasons given above. Before permission to seek judicial review could be granted, it would not be enough to show that the refusal of permission to appeal was plainly wrong in law. It would also have to be established that the error was sufficiently grave to justify the case being treated as exceptional. 57 I think it is appropriate to say, that there could, in my view, be cases, which would be wholly exceptional, where it would be right to consider an application for judicial review of such a decision on the basis of what could be said to be an error of law. A possible example would be if the Lands Tribunal, despite being aware of the position, refused, without any good reason, permission to appeal on a difficult point of law of general application, which had been before a number of different LVTs which had taken different views on it, and which cried out for a definitive answer in the public interest. In that connection, it seems to me that one could say that it was not so much the point of law itself which justified judicial review, but more the failure of a public tribunal to perform its duty to the public, as well as what one might call its duty to the parties in that particular case. In Siva the Court of Appeal recognised that there were special circumstances that justified judicial review of decisions of the Immigration Appeal Tribunal that refused permission to appeal to it. Parliament then intervened by section 101(2) of the Nationality, Immigration and Asylum Act 2002 to provide for a statutory review, to be carried out by a High Court judge on paper, of such refusals. In R(G) v Immigration Appeal Tribunal [2004] EWCA Civ 1731, [2005] 1 WLR 1445 the Court of Appeal endorsed the view of Collins J at first instance that it was Parliaments intention that this should provide a satisfactory alternative to judicial review, thereby avoiding the delay that was involved in the four stage process of the latter. The Court of Appeal held that the statutory regime provided adequate and proportionate protection of the asylum seekers rights and that it was, accordingly, a proper exercise of the courts discretion to decline to entertain an application for judicial review of issues which had been, or could have been the subject of statutory review. The Court stated at para 20: The consideration of proportionality involves more than comparing the remedy with what is at stake in the litigation. Where Parliament enacts a remedy with the clear intention that this should be pursued in place of judicial review, it is appropriate to have regard to the considerations giving rise to that intention. The satisfactory operation of the separation of powers requires that Parliament should leave the judges free to perform their role of maintaining the rule of law but also that, in performing that role, the judges should, so far as consistent with the rule of law, have regard to legislative policy. This approach was followed by the Court of Appeal in R (F (Mongolia)) v Asylum and Immigration Tribunal [2007] 1 WLR 2523 in relation to the new review procedure introduced under the Asylum and Immigration (Treatment of Claimants, etc Act) 2004 see Lady Hales judgment at para 31. This series of cases was considered by the Court of Appeal in Wiles v Social Security Commissioner [2010] EWCA Civ 258, when considering an appeal against the refusal to grant judicial review of the decision of a social security commissioner refusing permission to appeal from a decision of the Social Security Appeal Tribunal under the regime that pre dated the TCEA. Giving the leading judgment, Dyson LJ held at para 43 that it was impossible to find in the relevant legislation any indication that Parliament intended to oust, or even to limit, the jurisdiction to grant judicial review. That jurisdiction had been exercised in social security cases for nearly thirty years. In the light of this it would not be right to curtail it. But for this, however, Dyson LJ would have favoured applying the same criteria to an application for judicial review as was applied by the court when considering an application for permission to bring a second appeal, as set out at para 70 above. The Leggatt recommendations The Leggatt Report recommended a two tier tribunal system, describing the upper tier as the appellate Division. There would be a comprehensive and systematic right of appeal from first tier tribunals to the appellate Division, and from there to the Court of Appeal. In these circumstances the Report recommended that the right of judicial review should be excluded 6.30. This recommendation had regard to the waste of scarce resources involved where judicial review was available in parallel with statutory rights of appeal to a tribunal and to the huge number of judicial review applications in immigration and asylum cases, most of which were unsuccessful 6.27. The Report commented, erroneously, that this goal could be achieved by making the appellate Division a superior court of record 6.33. It recommended, however, an express statutory exclusion of judicial review 6.34. Parliaments response Parliament made the Upper Tribunal a superior court of record see section 3(5) of the TCEA. Although the Government argued in Cart that this meant that its decisions were not susceptible to judicial review see Lady Hales judgment at para 30 it does not follow that this was Parliaments intention, or indeed the Governments intention in promoting the Act. In the Home Office Consultation Paper on immigration appeals, Fair Decisions; Faster Justice, of 12 August 2008 it was stated at para 23 that the Government had been advised that except in the most exceptional circumstances decisions of the Upper Tribunal would not be subject to judicial review. What must, I believe, be beyond doubt is that it was Parliaments intention that the two tier structure set up by the TCEA would provide a statutory right of appeal in relation to decisions of tribunals that would, in most cases, provide a satisfactory alternative to judicial review. Discussion It is now common ground that the fact that the Upper Tribunal is a superior court of record does not render its decisions immune from judicial review. The issue raised by these appeals falls into two parts: (i) is it right to impose restrictions on the grant of judicial review in relation to decisions of the Upper Tribunal? (ii) If it is, what restrictions should be imposed? It was submitted on behalf of the English appellants, with support from the Public Law Project represented by Mr Fordham QC as intervener, that the courts had taken a wrong turning in the recent series of cases that had imposed restrictions on the grant of judicial review. There was no justification for departing from the long established practice of the court to entertain a claim for judicial review whenever there were reasonable grounds for contending that an inferior court had made an error of law. The Scottish respondent contended that the Court of Session had rightly applied the ordinary principles of judicial review to a decision of the Upper Tribunal. Mr Eadie QC, responding to the English appeals, and Mr Johnston QC, for the Advocate General for Scotland, submitted that Parliament had by the TCEA deliberately set up a self sufficient structure dealing internally with errors of law and that, in accordance with Parliaments intention, applications for judicial review should only be entertained in exceptional circumstances. I am in no doubt that the submissions of the English appellants should be rejected. The administration of justice and upholding of the rule of law involves a partnership between Parliament and the judges. Parliament has to provide the resources needed for the administration of justice. The size and the jurisdiction of the judiciary is determined by statute. Parliament has not sought to oust or fetter the common law powers of judicial review of the judges of the High Court and I hope that Parliament will never do so. It should be for the judges to decide whether the statutory provisions for the administration of justice adequately protect the rule of law and, by judicial review, to supplement these should it be necessary. But, in exercising the power of judicial review, the judges must pay due regard to the fact that, even where the due administration of justice is at stake, resources are limited. Where statute provides a structure under which a superior court or tribunal reviews decisions of an inferior court or tribunal, common law judicial review should be restricted so as to ensure, in the interest of making the best use of judicial resources, that this does not result in a duplication of judicial process that cannot be justified by the demands of the rule of law. Lady Hale observes in para 51 of her judgment, that the real question in this appeal is what level of independent scrutiny outside the tribunal structure is required by the rule of law. To this question I would add the two words if any. I add those two words because if the court is to entertain applications for judicial review of the decisions of the Upper Tribunal this will require a High Court or Deputy High Court judge to consider every such application, however stringent may be the criteria for granting permission. For the reasons given by Lady Hale in para 47 of her judgment, the stringency of the criteria that must be demonstrated will not discourage a host of applications in the field of immigration and asylum which are without any merit. Thus the first question is whether there is justification for imposing this burden on the High Court. My initial inclination was to treat the new two tier tribunal system as wholly self sufficient. It is under the presidency of a judge who is likely to be a member of the Court of Appeal, and High Court judges can and will sit in the Upper Tribunal. There is considerable flexibility in the system in relation to the administration and composition of the Upper Tribunal. Can it not be left to the Senior President, in consultation with the President of the Queens Bench Division and other judicial colleagues to ensure that the tribunal judiciary is so deployed as to ensure the appropriate degree of judicial scrutiny of decisions of the lower tier? Having considered, however, the judgment of Lady Hale, who has great experience in this field, and those of other members of the Court, I have been persuaded that there is, at least until we have experience of how the new tribunal system is working in practice, the need for some overall judicial supervision of the decisions of the Upper Tribunal, particularly in relation to refusals of permission to appeal to it, in order to guard against the risk that errors of law of real significance slip through the system. What would, however, be totally disproportionate, is that this judicial supervision should extend to the four stage system of paper and oral applications first to the Administrative Court and then, by way of appeal, to the Court of Appeal, to which the ordinary judicial review procedure is subject. What are first required are readily identifiable criteria for the grant of permission to seek judicial review. That these exist should be capable of demonstration by paper applications, and my firm view is that applications for judicial review should be restricted to a single paper application, unless the court otherwise orders. This is, however, a matter for the Civil Procedure Rule Committee. As to the criteria, I have been persuaded, for the reasons given by Lady Hale, that the test laid down by the Court of Appeal in Siva is not the most satisfactory, and that the test governing second appeals in the courts of England and Wales should be adopted. For these reasons I endorse the conclusions reached by Lady Hale. I consider, however, that the procedural change, the possibility of which she contemplates in paragraph 58 of her judgment, will prove a necessity. I concur in the order that she proposes at para 60. LORD HOPE AND LORD RODGER For the reasons given by Lady Hale, Lord Phillips and Lord Dyson, we would make the order proposed by Lady Hale. LORD BROWN The critical issue raised by these appeals is the scope of the High Courts supervisory jurisdiction over a particular but important category of unappealable decisions of the Upper Tribunal, namely those by which the Upper Tribunal refuses leave to appeal to it from a First tier Tribunal decision. Having had the advantage of reading in draft the detailed judgments of Lord Phillips, Lord Hope (in Eba), Lady Hale and Lord Dyson, and respectfully agreeing with all of them as I do, there is singularly little that I wish to add. Really the only point I am concerned to emphasise is that our decision on these appeals to adopt the second appeals approach when deciding whether or not to permit a judicial review challenge in these cases cannot properly be regarded as in any way contrary to principle. The point can be simply made. The very fact that Parliament, by section 13(6) of the 2007 Act, has prescribed the same criteria for the grant of permission to appeal from the Upper Tribunal to the Court of Appeal as apply to second tier appeals in the courts of England and Wales destroys any possibility of an absolutist argument to the effect that the rule of law requires, post Anisminic (Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147), unrestricted judicial review over all unappealable decisions of courts or tribunals of limited jurisdiction to ensure that they are not permitted, unsupervised by the higher courts, to commit errors of law. The second tier appeals approach expressly contemplates that some Upper Tribunal decisions, even though erroneous in point of law, will be refused leave to appeal on the basis that they raise no important point of principle or practice and that there is no other compelling reason to hear them. Understandably, it has never been suggested that, following a refusal of leave to appeal on this basis, the underlying decision is nonetheless judicially reviewable for error of law. If, then, the rule of law allows certain errors of law in substantive decisions of the Upper Tribunal on appeal from the First tier Tribunal to go uncorrected, why as a matter of principle should it not similarly allow this in respect of decisions of the Upper Tribunal refusing leave to appeal to itself from the First tier Tribunal? True it is, of course, that the refusal of leave to appeal will have deprived the party refused of a second substantive hearing. Realistically, however, the very fact that he was refused leave to appeal to the Upper Tribunal (by both tribunals) tends to indicate the unlikelihood of there having been a genuinely arguable error of law in the first place. And certainly this situation calls no less for a proportionate answer to the question arising as to the required scope of the Courts supervisory jurisdiction to safeguard the rule of law. The rule of law is weakened, not strengthened, if a disproportionate part of the courts resources is devoted to finding a very occasional grain of wheat on a threshing floor full of chaff. For the reasons given in the other judgments to which I have referred (together with the reasoning above if, indeed, it adds anything to what others have said), I too would make the order proposed and leave it to the Rules Committee to decide how precisely to stream line the procedure for considering applications for permission to apply for judicial review in this class of case. LORD CLARKE I entirely agree with paras 1 to 50 of Lady Hales judgment, which set out the relevant history and issues with great clarity. I also agree with her that the real question in this appeal is what level of independent scrutiny outside the tribunal structure is required by the rule of law. It was common ground between the parties that at least some judicial scrutiny was required. It is, as I see it, a matter for the courts to determine what that scrutiny should be. I am not persuaded that judicial review requires the same degree of scrutiny in every case. All depends upon the circumstances. The circumstances have been described in detail by both Lady Hale and Lord Phillips as regards England and, in the Eba case, by Lord Hope as regards Scotland. The relevant circumstances include the following. The tribunal structure provides for the Upper Tribunal, as a superior court of record, to review the decision of the First tier tribunal. As Lord Phillips observes at para 91, the new system is under the presidency of a judge who is likely to be a member of the Court of Appeal and High Court judges can and will sit in the Upper Tribunal. Further scrutiny of a decision by the Upper Tribunal refusing permission to appeal is only needed in case something has gone seriously wrong. I agree with Lady Hale, Lord Phillips and Lord Dyson (and with Lord Hope in Eba) that adequate scrutiny will be provided if the High Court applies the same test as is applied by the Court of Appeal in the case of a second appeal. As Lord Phillips observes at para 70, in such a case the Court of Appeal will only give permission to appeal under CPR 52.13(2) if the appeal raises an important point of principle or practice or there is some other compelling reason for the court to hear it. My experience as Master of the Rolls was that such a test worked well for second appeals. On the one hand it limited the number of appeals and thus the expenditure of excessive resources while, on the other hand, it enabled the court to hear cases raising an important point and cases where there was some other compelling reason to do so. In that way the court has been able to deal with cases where something has gone seriously wrong. In my opinion the same would be true in the case of a proposed challenge to a refusal of permission to appeal by the Upper Tribunal. I agree with Lady Hale at para 57 that such an approach would be both rational and proportionate. I also agree with Lord Phillips at para 86 that there can be no doubt that Parliament intended that the two tier tribunal structure would provide a statutory right of appeal in relation to decisions of lower tier tribunals which would, in most cases, provide a satisfactory alternative to judicial review. Finally I agree with Lord Phillips at para 94 that the second appeals test should be adopted in preference to the approach laid down in Siva. The question which then arises is whether the application for permission to apply for judicial review should be dealt with wholly on paper or whether, if it was refused on paper, there should be a right to renew the application orally. There would then be a further question whether, if the application was refused at the first instance, it would be open to the applicant to apply to the Court of Appeal for permission to appeal and, if so, what the procedure should be. I agree with Lord Phillips at para 93 that it would be totally disproportionate to provide for the four stage system of paper and oral applications to which the ordinary judicial review procedure is subject. Although there is much to be said for his view that the application should be determined on paper unless the court otherwise orders, I also agree with him that this is a matter for the Civil Procedure Rules Committee. For these reasons I concur with the order proposed by Lady Hale at para 60. LORD DYSON Introduction It is common ground (and rightly so) that the Tribunals, Courts and Enforcement Act 2007 (TCEA) does not oust the courts jurisdiction to grant judicial review of unappealable decisions of the Upper Tribunal (UT). What is in issue is the scope of this jurisdiction. The Divisional Court and the Court of Appeal described it in similar terms. Laws LJ in the Divisional Court said ([2010] 2 WLR 1012, para 99) that it was limited to exceptional cases where there was an excess of jurisdiction in the narrow pre Anisminic sense ([1969] 2 AC 147) or where there has been a wholly exceptional collapse of fair procedure. Sedley LJ, delivering the judgment of the Court of Appeal, adopted at [2011] 2 WLR 36, para 42 what he described as the Sivasubramaniam model ([2003] 1 WLR 475) ie excess of jurisdiction in the pre Anisminic sense or procedural irregularity of such a kind as to constitute a denial of the applicants right to a fair hearing Sivasubramaniam para 56. This is the scope of the jurisdiction for which Mr Eadie QC (in Cart) and Mr Johnston QC (in Eba) contend. Like Lady Hale, I shall refer to it as the exceptional circumstances approach. On the other hand, Mr Drabble QC (supported by Mr Fordham QC and Mr Bailin QC) in Cart and Mr Mitchell in Eba submit that there is no justification for any restriction in the scope of the judicial review jurisdiction: it should in principle be available in all cases of legal error; and Mr Manjit Gill QC in MR (Pakistan) makes the same submission in the particular context of immigration and asylum cases. The exceptional circumstances approach I agree with Lady Hale that, for the reasons that she gives, the exceptional circumstances approach is not justified. As Mr Fordham points out, there are objections to it both in principle and in practice. As regards principle, the concept of jurisdictional error in the pre Anisminic sense (where, for example, a tribunal embarks on a case that is beyond its statutory remit) was used to indicate that a decision was so fundamentally flawed as to be a nullity, so that judicial review could be granted notwithstanding the existence of a statutory ouster. There is no statutory ouster in the present context. Even if there were, the importance of Anisminic is that it showed that a material error of law renders a decision a nullity so that the decision is in principle judicially reviewable. It is difficult to see any principled basis for holding that only jurisdictional errors of law by the UT should be judicially reviewable. In practical terms, it is immaterial to the victim of an error of law whether it is a jurisdictional error or should be differently classified. Non jurisdictional error may be egregious and obvious. Laws LJ accepted (para 99) that on the exceptional circumstances approach a decision which gets it wrong, even extremely wrong will not justify judicial review, whereas if the issue can be classified as jurisdictional, mere error will suffice. Thus a non jurisdictional error of law on a point of general public importance (for example, an important point of statutory interpretation) would not be amenable to judicial review; whereas a one off jurisdictional error of no general significance would be. Such a distinction does not promote the rule of law. In my view, as a matter of principle, there is no justification for drawing the line at jurisdictional error. Lady Hale has referred to the problem of practice. The distinction between jurisdictional error and other error is artificial and technical. I agree with what the editors of De Smiths Judicial Review 6th ed, (2007) state at para 4 046: It is, however, doubtful whether any test of jurisdictional error will prove satisfactory. The distinction between jurisdictional and non jurisdictional error is ultimately based on foundations of sand. Much of the super structure had already crumbled. What remains is likely quickly to fall away as the courts rightly insist that all administrative actions should be simply, lawful, whether or not jurisdictionally lawful. Unrestricted judicial review In my view, the case for retaining unrestricted judicial review is more formidable. There are a number of strands to the argument. First, there is nothing to indicate that Parliament intended to restrict the High Courts previous jurisdiction over unappealable decisions of tribunals. Although the TCEA made substantial changes to the organisation of tribunals, it is contended that these do not justify the court, as a matter of judicial policy, making a major change to the scope of judicial review. The High Courts supervisory jurisdiction to correct any error of law in unappealable decisions of the predecessors of the UT has been beneficial for the rule of law. There is a real risk that the exclusion of judicial review will lead to the fossilisation of bad law such, for example, as that which was corrected in Woodling v Secretary of State for Social Services [1984] 1 WLR 348 (see para 19 of Lady Hales judgment). There are also risks in restricting the judicial review jurisdiction in relation to errors of law in unappealable decisions of tribunals in cases involving fundamental rights and EU law. In such cases, if the UT makes an error of law in refusing permission to appeal, the consequences for the individual concerned may be extremely grave. Indeed, in Sivasubramaniam itself, the Court of Appeal recognised the existence of special factors which fully justify the practice of entertaining applications for permission to claim judicial review of refusals of leave to appeal by the [immigration appeal tribunal] (para 52). In asylum cases, fundamental human rights are in play, often including the right to life and the right not to be subjected to torture. Secondly, as Lady Hale says (para 49), the courts have established a principle of judicial restraint when considering decisions of expert tribunals. If this principle towards decisions of the UT is respected (as it should be), then judicial review of unappealable decisions provides a system of justice which is proportionate and appropriate to protect the rule of law. Further restrictions on the scope of judicial review are unnecessary. Finally, in so far as a floodgates argument is relied on by the respondents to justify restricting the scope of judicial review, this should be resisted. First, there is no evidence of a floodgates problem in relation to any tribunals except in the field of immigration and asylum. Secondly, this is in any event not a legitimate basis for the courts to restrict the scope of judicial review as a matter of judicial policy where Parliament, in enacting the TCEA, decided not to do so for itself. As Lord Bridge said in Leech v Deputy Governor of HMP Parkhurst [1988] AC 533 at 566C: In a matter of jurisdiction it cannot be right to draw lines on a purely defensive basis and determine that the court has no jurisdiction over one matter which it ought properly to entertain for fear that acceptance of jurisdiction may set a precedent which will make it difficult to decline jurisdiction over other matters which it ought not to entertain. Historically, the development of the law in accordance with coherent and consistent principles has all too often been impeded, in diverse areas of the law besides that of judicial review, by the courts fear that unless an arbitrary boundary is drawn it will be inundated by a flood of unmeritorious claims. Despite their apparent strength, I cannot accept these arguments. The TCEA has made a major change to the order of things. It implemented many of the recommendations of the committee chaired by Sir Andrew Leggatt, Tribunals for usersOne System, One Service (2001). The committees terms of reference included a review of the delivery of justice through tribunals to ensure that there are fair, timely, proportionate and effective arrangements for handling those disputes, within an effective framework for decision making which encourages the systematic development of the area of law concerned, and which forms a coherent structure, together with the superior courts, for the delivery of administrative justice. As stated in the overview of its report, the committee considered that its proposals would give to tribunals a collective standing to match that of the Court System and a collective power to fulfil the needs of users in the way that was originally intended (para 8). The report contains many proposals which were designed to meet that overall objective. Para 6.16 is important: These arrangements will create for the first time a complete structure of appellate tribunals, covering all tribunal jurisdictions. As we explain in further detail in paragraphs 6.376.38 below, the President of each Division will be a judge, often a senior one. All members will be experts, specialising in the jurisdiction of the Division or Divisions in which they sit. They will also be trained to conduct hearings in the distinctive enabling approach common to all tribunals. For all these reasons, we think the time has come for a change in the relationship between tribunals and the courts. Hitherto, tribunal decisions have in general not set precedents. In some tribunals, there have been arrangements to identify individual cases as carrying particular weight or authority, which future tribunals are normally expected to observe. We do not think that will suffice to give the greater coherence and consistency that we would recommend in the Tribunals System. We therefore wish to see systematic arrangements for the setting of precedent. We think that this should lead to changing the relationship between tribunals and the supervisory jurisdiction of the High Court. There is also a section of the report (paras 6.27 to 6.36) headed The place of judicial review. It notes (para 6.27) that the proportion of immigration and (mostly) asylum cases in applications for permission for judicial review in 1999 was approaching two thirds of the total. While the great majority of them were unsuccessful, they demonstrated the waste of scarce resources which can arise from problems in the relationship between tribunals and courts. It states (para 6.31) that the EAT and the Transport Tribunal have been designated as superior courts of record and as such have a status formally equivalent to that of the High Court and therefore escape judicial review. Others do not. Para 6.32 states that the aim of the new appellate Division would be to develop by its general expertise and the selective identification of binding precedents, a coherent approach to the law. It would be comparable in authority to the High Court so far as tribunals are concerned. For that reason, it would be inappropriate to subject the Presidents of the appellate Division to review by another judge of equal status. The report considers two ways of excluding judicial review. One is by constituting all the appeal tribunals as a superior court of record, but this is rejected for the reasons stated in para 6.33. The other is to exclude judicial review by express statutory provision (para 6.34). It is this proposal that is recommended, the advantage being said to be that it would preserve a clear distinction between the new System and the courts. It is true that this last proposal was not accepted by Parliament. But it is clear that the Leggatt committee proposed that judicial review of decisions by what was to become the UT should be excluded altogether because they thought that their proposals for restructuring and enhancing the tribunal system and the resultant change in the relationship between the tribunals and the courts meant that judicial review was no longer necessary. Since Parliament adopted the main thrust of the committees proposals, the views of the committee as to the significance of those changes for the relationship between the tribunals and the courts are entitled to respect. The fact that Parliament did not accept the recommendation to exclude judicial review of unappealable decisions of the UT does not mean that it rejected the committees view that there had been a significant change in the structure of the tribunal system such as might justify a reappraisal of the scope of the judicial review jurisdiction. As I shall explain, the Government certainly did not disagree with that view and there is no reason to think that Parliament disagreed with it either. It merely means that Parliament was not willing to adopt the controversial suggestion that judicial review should be excluded altogether. An insight into the thinking of Government and Parliament is to be found in the Government White Paper: Transforming Public Services: Complaints, Redress and Tribunals presented to Parliament in July 2004 (Cm 6243). At para 7.27, the paper stated that it was intended to strengthen the UT by the secondment of circuit judges and, for cases of sufficient weight, High Court judges with relevant expertise. Para 7.28 stated: With this structure the only possible role for judicial review in the High Court would be on a refusal by the first and second tier to grant permission to appeal. It is this possible route to redress which has caused so much difficulty for both the Immigration Appellate Authorities and the Courts. When permission to appeal has been refused by both tiers, and provided that the tribunal appellate judiciary are of appropriate quality, as we intend that they should be, there ought not to be a need for further scrutiny of a case by the courts. However, complete exclusion of the courts from their historic supervisory role is a highly contentious constitutional proposition and so we see merit in providing as a final form of recourse a statutory review on paper by a judge of the Court of Appeal. Thus a consequence of giving effect to the Leggatt report was to bring about a strategic reorganisation of the tribunals system by making it more coherent and improving its expertise and standing. I agree with the views expressed in the Leggatt report and the 2004 White Paper that the changes demanded a reappraisal of the scope of judicial review. Parliament refused to undertake it. The task of deciding the scope of the judicial review jurisdiction falls therefore to be performed by the courts. It follows that the fact that in the pre TCEA era there was unrestricted availability of judicial review of refusals of permission to appeal by appeal tribunals is not of itself a good reason for holding that that situation should survive the enactment of the TCEA. It is for the court to decide in the post TCEA world whether any and, if so, what restrictions should be placed on the availability of judicial review. I accept that any restrictions call for justification. Prima facie, judicial review should be available to challenge the legality of decisions of public bodies. Authority is not needed (although much exists) to show that there is no principle more basic to our system of law than the maintenance of rule of law itself and the constitutional protection afforded by judicial review. But the scope of judicial review should be no more (as well as no less) than is proportionate and necessary for the maintaining of the rule of law. The status and functions of the UT to which I have already referred are important here. In my view, there are three reasons why unrestricted judicial review of unappealable decisions of the UT is neither proportionate nor necessary for maintaining the rule of law. First, there is the status, nature and role of the UT to which I have already referred. Secondly, the TCEA gives those who wish to challenge the decision of a First tier Tribunal (FTT) the opportunity to have the decision scrutinised on several occasions: first when the FTT decides whether or not to review its decision under section 9(1) and (2); second, if the FTT decides not to review its decision, when it decides whether or not to grant permission to appeal to the UT under section 11(4)(a); third, if the FTT refuses permission to appeal, when the UT decides whether or not to grant permission to appeal under section 11(4)(b). The UT initially decides this on the papers. In certain categories of case, there is a right to renew the application at an oral hearing (Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698) rules 22(3) and (4); in any event, the UT has the power, if it considers it appropriate to do so, to hold an oral hearing to decide permission (ibid, rules 5(1) and 5(3)(g)). The third reason involves the issue of resources. There is no doubt that immigration and asylum cases have presented huge problems for the justice system. The relevant history is summarised at paras 46 and 47 of Lady Hales judgment. It is singled out for particular mention in the 2004 White Paper as having caused so much difficulty for both the Immigration Appellate Authorities and the Courts. The adoption of unrestricted judicial review of refusals of permission to appeal by the Upper Tribunal (Immigration and Asylum Chamber) would involve a return to the position under the Immigration Act 1971 and the Asylum and Immigration Appeals Act 1993 when the courts were inundated with unmeritorious applications for judicial review of refusals by the Immigration Appeal Tribunal of decisions of the special adjudicator. Parliament recognised the existence of the problem and sought to overcome it successively by enacting Nationality, Immigration and Asylum Act 2002 and the Asylum and Immigration (Treatment of Claimants etc) Act 2004 (see para 21 of Lady Hales judgment). It cannot have been intended by Parliament when it enacted the TCEA that there should, in effect, be a return to the situation that obtained before the enactment of the 2002 Act. Mr Gill does not suggest that this was Parliaments intention. His point is simply that, in the absence of the plainest express words to restrict the courts historical role of supervising statutory tribunals of limited jurisdiction, it is unconstitutional for the courts to limit that role. Recognising that a return to the pre 2002 Act days would be unlikely to commend itself to this court as necessary and proportionate for the maintenance of the rule of law, Mr Gill suggested in his reply, as an alternative to his principal submission, that judicial review should lie in cases where there was clear and obvious error and where the prospects of success were strong as opposed to real. One can readily sympathise with the argument that problems that are peculiar to the immigration and asylum cases should not determine the scope of judicial review in all other cases. It seems that the courts have not been inundated with unmeritorious applications for judicial review of the refusal of leave to appeal from other tribunals. But Sullivan LJ was right, for the reasons that he gave at paras 51 to 53 of his judgment in MR (Pakistan), to hold that the same approach should be applied to permission decisions made by the Immigration and Asylum Chamber of the Upper Tribunal as they do to decisions made by other chambers. In the light of the unified tribunal structure created by the TCEA, there should be a unified approach as to the grounds, if any, on which a judicial review of decisions of the UT can be sought. It would be contrary to the unifying purpose of the TCEA for a different approach to be adopted depending on the subject matter of the decision being appealed. I accept that floodgates arguments must be examined with care. But they cannot be ignored, particularly in the light of the experience in the immigration and asylum field. As Lord Phillips says, judicial resources are limited. It is clear from the general acceptance of the Leggatt report and from the terms of the 2004 White Paper that Parliament intended that there should not be a return to the pre 2002 Act days in immigration and asylum cases when the courts were overwhelmed with unmeritorious judicial review claims. If the floodgates argument were the only point militating against unrestricted judicial review, I doubt whether it would be enough. But it does not stand alone. The various factors to which I have drawn attention (in particular, the reorganisation of the tribunal system) lead me to conclude that it is not necessary or proportionate for the maintaining of the rule of law to allow unrestricted judicial review of unappealable decisions of the UT. For these reasons, I would hold that unrestricted judicial review is not necessary for the maintenance of the rule of law and is not proportionate. The second tier appeals approach It follows from what I have said so far that the court must find another solution. The problem with the exceptional circumstances approach is that, although it recognises the need to restrict the scope of judicial review, it does so in a way which creates its own problems and does not target arguable errors of law of general importance. The problem with unrestricted judicial review is that it captures all arguable errors of law without discriminating between them notwithstanding the countervailing factors to which I have referred. In R (Wiles) v Social Security Commissioner [2010] EWCA Civ 258, I suggested that there was much to be said for applying (by analogy) the criteria for the grant of permission by the UT to the Court of Appeal. Section 13(6) of the TCEA provides that permission shall not be granted unless (a) the proposed appeal would raise some important point of principle or practice; or (b) there is some other compelling reason for the relevant appellate court to hear the appeal. These criteria are identical to those that apply to any second appeal in the courts: see section 55(1) of the Access to Justice Act 1999. It seems to me that the second appeal criteria approach offers a number of advantages. First, and obviously, it does not suffer from the defects of the two alternatives that I have rejected. Secondly, and positively, it ensures that errors on important points of principle or practice do not become fossilised within the UT system. An individual who has been unsuccessful before the FTT will be able to raise an important point of law in the courts if the UT refuses to grant permission to appeal to itself. As explained by the Court of Appeal in Uphill v BRB (Residuary) Ltd [2005] 1 WLR 2070, it is not enough to point to a litigants private interest in the correction of error in order to obtain permission for a second appeal. Permission will only be given where there is an element of general interest, which justifies the use of the courts scarce resources: see also Zuckerman on Civil Procedure 2nd ed, (2006) para 23.139. It follows that, if the law is clear and well established but arguably has not been properly applied in the particular case, it will be difficult to show that an important point of principle or practice would be raised by an appeal. The position might be different where it is arguable that, although the law is clear, the UT is systematically misapplying it: see, for example, Cramp v Hastings Borough Council [2005] 4 All ER 1014. Thirdly, the second limb of the test (some other compelling reason) would enable the court to examine an arguable error of law in a decision of the FTT which may not raise an important point of principle or practice, but which cries out for consideration by the court if the UT refuses to do so. Care should be exercised in giving examples of what might be some other compelling reason, because it will depend on the particular circumstances of the case. But they might include (i) a case where it is strongly arguable that the individual has suffered what Laws LJ referred to at para 99 as a wholly exceptional collapse of fair procedure or (ii) a case where it is strongly arguable that there has been an error of law which has caused truly drastic consequences. The second appeal criteria have been in force in the courts since October 2000. The exceptional nature of the test is well understood. A perusal of the commentary in Civil Procedure (2011) (The White Book) on CPR 52 r 13(2)(a) and (b) suggests that the application of the second appeals test has not caused difficulty. That also accords with the experience of Lord Clarke. It also accords with mine. I agree with others that rules should be made by the Civil Procedure Rule Committee (CPRC) to govern the exercise of the judicial review jurisdiction of unappealable decisions of the UT. The mistakes of the past should not be repeated. A fair but streamlined system should be introduced with an emphasis on applications being made and dealt with on paper. Ultimately, however, it will be for the CPRC, taking account of the judgments of this court and after due consultation, to decide what is the appropriate procedure to adopt. In practice, there is little if any substantive difference between an appeal on a point of law and judicial review, although each may, of course, be subject to different procedural conditions. Parliament has shown a liking for the second appeal criteria in second appeals and in particular in the tribunal context of appeals from the UT to the Court of Appeal. It can at least be said that to import those criteria into the judicial review jurisdiction in the present context does not go against the grain of the TCEA. More positively, in my view the second tier appeals approach provides a proportionate answer to the question: what scope of judicial review of unappealable decisions of the UT is required to maintain the rule of law? For these reasons, as well as those given by Lady Hale and Lord Phillips (in Cart) and by Lord Hope (in Eba), I would allow these appeals on the jurisdictional issue. But, in agreement with them, I would dismiss the appeals in both cases as well as in MR (Pakistan). |
This is a reference made by the Attorney General for England and Wales (the Attorney General) under section 112 of the Government of Wales Act 2006 (the 2006 Act) for a determination on whether sections 6 and 9 of the Local Government Byelaws (Wales) Bill 2012 are within the legislative competence of the National Assembly for Wales (the Assembly). The background to the reference Following a referendum held in 1997, the Government of Wales Act 1998 (the 1998 Act) set out the initial devolution settlement for Wales. This included the establishment of the Assembly, a body corporate which had the legal responsibility for discharging the devolved executive and legislative functions. Sections 21 and 22 of the 1998 Act governed the functions of the Assembly, and they included provisions for transferring functions vested in a Minister of the Crown to the Assembly, by Order in Council. Schedule 2 to the 1998 Act set out the fields of functions which were to be devolved to the Assembly in the first such Order in Council, including [t]he environment and [l]ocal government. The first Order in Council making such provision was the National Assembly for Wales (Transfer of Functions) Order 1999, SI 1999 No 672 (the 1999 Order). The Assemblys legislative powers were limited, and a White Paper, Better Governance for Wales (Cm 6582) published in June 2005, proposed increasing those powers in three respects: (i) giving the Assembly wider powers to make subordinate legislation; (ii) allowing the United Kingdom Parliament (Parliament) to confer enhanced legislative powers on the Assembly in relation to specified matters in devolved fields; and (iii) following a referendum, enabling the Assembly to make laws in all devolved fields without recourse to Parliament. These proposals were adopted by Parliament, and implemented by the 2006 Act. Part 1 of the 2006 Act re-enacts many of the provisions of the 1998 Act, but it omits any reference to the Assembly being a corporate body. Section 45 establishes the Welsh Assembly Government, which comprises the First Minister, the Welsh Ministers, the Counsel General to the Welsh Assembly Government and the Deputy Welsh Ministers. Section 46 provides for the First Minister to be appointed by Her Majesty. Sections 48 and 50 confer on the First Minister the power to appoint, with the approval of Her Majesty, the Welsh Ministers and the Deputy Welsh Ministers from among the Assembly members. Sections 56 to 92 make provision about the functions of the First Minister, the Welsh Ministers, and the Counsel General. Part 3 of, and Schedule 5 to, the 2006 Act contain what were anticipated to be transitional provisions regarding the Assemblys powers with effect from the day after the Assembly election in 2007. They were intended to be replaced by the Assembly Act provisions, contained in Part 4 of, and Schedule 7 to, the 2006 Act. These provisions are intended, inter alia, to give the Assembly primary legislative powers for certain areas, and are provided by section 105 to come into force pursuant to an order made by Welsh Ministers following a referendum. That referendum duly took place, and the Welsh Ministers duly made the order contemplated, as a consequence of which the provisions of Part 3 and Schedule 5 lapsed, and the provisions of Part 4 and Schedule 7 took effect, on 5 May 2011. As a result of this, the Assembly has power to make primary legislation, which powers are delimited by provisions which identified the extent of the Assemblys legislative competence. If there is an issue as to whether a Bill, or a provision in a Bill, passed by the Assembly exceeds that competence, the issue can be referred to this court under the terms of section 112 of the 2006 Act. The first Bill to be passed by the Assembly under its new power was the Local Government Byelaws (Wales) Bill 2012 (the Bill), the aim of which is to simplify procedures for making and enforcing local authority byelaws in Wales. Certain provisions of the Bill, in particular section 6 and section 91, are intended to remove the need for the confirmation of byelaws by the Welsh Ministers or by the Secretary of State. Section 6 (through Part 1 of Schedule 1 to the Bill) refers to certain specific enactments (the scheduled enactments) which currently require confirmation, and section 9 would empower the Welsh Ministers to add to those enactments. The Secretary of States consent to the inclusion of these two sections in the Bill was sought. She was prepared to agree to section 6 of the Bill (section 6), because she was content to give up her right to confirm byelaws made under the specific provisions identified in Part 1 of Schedule 1 to the Bill, but she was not prepared to agree to the inclusion of section 9 of the Bill (section 9). The Assembly nonetheless proceeded to pass the Bill with sections 6 and 9 in their 1 What would be, or become, sections of a Statute enacted by the UK Parliament are conventionally referred to as clauses in the Bill until it becomes a Statute. However, in this judgment, I follow the language used in Standing Orders 26 and 26A of the National Assembly for Wales (June 2012), which deal with Acts of the Assembly, and refer to sections of a Bill. original form. The Attorney General then referred to this court the question whether sections 6 and 9 were outwith the Assemblys legislative competence. The parties who were identified as respondents to the reference were (i) the National Assembly for Wales Commission, representing the Assembly, and (ii) the Counsel General, both of whom appeared before us. The Assembly was represented by Mr Rhodri Williams QC, with Ms Rebecca Stickler, and the Counsel General, Mr Theodore Huckle QC, was assisted by Mr Clive Lewis QC. The Attorney General for Northern Ireland, Mr John Larkin QC (who appeared with Mr David McAlister) also appeared, having been permitted to intervene, as the issues raised by this reference have potential implications for the extent of the legislative competence of the Northern Ireland Assembly under the Northern Ireland Act 1998. I propose first to explain the position (under the Local Government Act 1972 and the 1999 Order) relating to the confirmation of many of the byelaws identified in Schedule 1 to the Bill, following which I will identify the relevant provisions of the Bill and of the 2006 Act. Having set the scene, as it were, I will then discuss certain preliminary issues, following which I will address the central issue on this reference. Finally, I must deal with certain procedural issues which have arisen on this reference. The Local Government Act 1972 and the 1999 Order The power to make byelaws is conferred by a host of statutes, mostly on local authorities and similar bodies. Many of those statutes contain specific provisions whereby a byelaw must be confirmed by some other body or person (normally the Secretary of State or another Minister of the Crown), but many do not. The Local Government Act 1972 (the 1972 Act), as its long title states, includes many provisions concerning local government and the functions of local authorities in England and Wales. Section 236 of the 1972 Act (section 236) is entitled Procedure, etc, for byelaws. Subsection (1) explains that, subject to certain exceptions (irrelevant for present purposes), the section appl[ies] to byelaws to be made by a local authority under this Act and to byelaws made by a local authority under any other enactment and conferring on the authority a power to make byelaws and for which specific provision is not otherwise made. Section 236(3) sets out the technical requirements for a local authority making a byelaw (under its common seal or, where there is no seal, under the hands and seals of two members). Subsections (3), (4) and (5) of section 236 make reference to confirmation of a byelaw, and subsection (7) states that [t]he confirming authority may confirm, or refuse to confirm, any byelaw submitted under this section. Crucially for present purposes, section 236(11) is in these terms: In this section the expression the confirming authority means the authority or person, if any, specified in the enactment (including any enactment in this Act) under which the byelaws are made, as the authority or person by whom the byelaws are to be confirmed, or if no authority or person is so specified, means the Secretary of State. The effect of this provision is that, where a statutory provision giving the local authority the power or duty to make the byelaw either so provides or is silent as to the existence or identity of a confirmatory body or person, before any byelaw made under that provision by a local authority can be effective, the Secretary of State has to confirm the byelaw. The National Assembly for Wales (Transfer of Functions) Order 1999 The 1998 Act provided in section 22(1) that: Her Majesty may by Order in Council (a) provide for the transfer to the Assembly of any function so far as exercisable by a Minister of the Crown in relation to Wales, (b) direct that any function so far as so exercisable shall be exercisable by the Assembly concurrently with the Minister of the Crown, or (c) direct that any function so far as exercisable by a Minister of the Crown in relation to Wales shall be exercisable by the Minister only with the agreement of, or after consultation with, the Assembly. The 1999 Order was made pursuant to that provision, and was concerned with transferring a large number of functions of Ministers of the Crown to the Assembly. It did this by identifying each specific function which was to be so transferred. In some cases, there had to be qualifications to, and in other cases there had to be exceptions from or variations to, the transfer of functions. Thus, article 2 of the 1999 Order is to this effect: Schedule 1 to this Order shall have effect as follows (a) except as provided [below], all functions of a Minister of the Crown under the enactments specified in Schedule 1 are, so far as exercisable in relation to Wales, transferred to the Assembly; (b) where so directed in Schedule 1 functions exercisable by a Minister of the Crown shall, so far as exercisable in relation to Wales, be exercisable by the Assembly concurrently with the Minister; (c) it is directed that (except in the case of functions which are exercisable by the Assembly jointly with a Minister of the Crown) .. Schedule 1 to the 1999 Order sets out Enactments Conferring Functions Transferred by Article 2. The list of those enactments includes the 1972 Act, in respect of which it is expressly directed that the functions of the Secretary of State under section 236(11) shall be exercisable by the Assembly concurrently with the Secretary of State. The Local Government Byelaws (Wales) Bill 2012 Section 1 is entitled Overview, and it is in these terms, so far as relevant: This Act - (a) reforms procedures for making byelaws in Wales, including removing a requirement for confirmation of byelaws by the Welsh Ministers; . (d) restates for Wales a general power to make byelaws. Section 2 delimits the powers of a county or county borough to make byelaws, which must be for the good rule and government of the whole or any part of its area or to prevent nuisances in its area. Section 3 defines legislating councils, which extends to counties, county borough councils, community councils, National Park authorities in Wales, and the Countryside Council for Wales. Sections 4 and 5 deal with the powers of legislating authorities and the Welsh Ministers to revoke byelaws. Section 6 is entitled Byelaws not requiring confirmation, and the first two subsections are in these terms: (1) This section applies to byelaws made by a legislating authority under the enactments listed in Part 1 of Schedule 1 . (2) Before it makes a byelaw, an authority must (a) publish on the authoritys website an initial written statement which describes the issue which the authority thinks may be addressed by making a byelaw; (b) consult any person who the authority thinks is likely to be interested in, or affected by, the issue. The remaining six subsections set out the procedural requirements which a legislating authority must then satisfy before making a byelaw not requiring confirmation. These requirements include considering responses to the subsection (2) consultations, publishing on its website a further statement, followed by notice of the intention to make the byelaw, and then the draft byelaw, ensuring that the draft byelaw is available for inspection to those who want to see it, and making the byelaw within six months of the date of the notice of intention. Part 1 of Schedule 1 to the Bill has the same heading as section 6, and sets out what I call the scheduled enactments, which are specific sections of certain statutes, including a number of sections in respect of which it is common ground between all parties that section 236(11), as varied by the 1999 Order, applies. Most of these sections are in the Public Health Act 1936, and they include, for example, byelaw-making powers in relation to preventing the occurrence of nuisances from snow, filth, dust, ashes and rubbish (section 81), for regulation of sanitary conveniences (section 87), for regulating management of, and charges for, the use of mortuaries and post-mortem rooms (section 198), and regulating baths, washhouses, swimming baths and bathing places (section 223). Section 7 is concerned with Byelaws requiring confirmation, which subsection (1) explains are byelaws made by a legislating authority under any enactment other than those listed in Part 1 of Schedule 1, subject to exceptions set out in subsection (2), namely to the extent that the statutory power under which a particular byelaw is made makes different provision in relation to the requisite procedure. Subsections (3) to (9) then set out procedures which have to be followed by the legislating authority, which are similar to those in subsections (2) to (7) of Section 6. Subsections (10) to (12) of section 7 provide as follows: (10) The confirming authority may confirm, or refuse to confirm, any byelaw submitted to it under this section. (11) For the purposes of this Act, the confirming authority is (a) the person specified in the enactment under which the byelaws are made as the person who is to confirm the byelaws, or (b) if no person is specified, the Welsh Ministers. (12) The functions of the Welsh Ministers under subsection (11)(b) are exercisable concurrently with the Secretary of State. Section 8 is concerned with formalities for making byelaws. Section 9 is headed Power to amend Part 1 of Schedule 1, and is in these terms: The Welsh Ministers may by order amend Part 1 of Schedule 1 by adding to or subtracting from the list of enactments, or by amending the type of authority that may make byelaws without confirmation. Sections 10 and 11 are concerned with enforcement of byelaws, and sections 12 to 16 (and Part 2 of Schedule 1) with fixed penalty notices. Sections 18 to 23 are headed Miscellaneous and general, and only section 20, which is entitled Consequential amendments and incorporates Schedule 2, needs to be mentioned. Schedule 2 sets out a number of Minor and consequential amendments to other statutes. Paragraph 9(3) amends section 236, effectively limiting its ambit in local authorities to England. Paragraph 17 amends the 1999 Order, inter alia, by deleting the words directing that the functions of the Secretary of State under section 236(11) shall be exercisable by the Assembly concurrently with the Secretary of State. The question whether any of the provisions of the Bill are within the competence of the Assembly must be judged by reference to the 2006 Act, to which I now turn. The Government of Wales Act 2006 The provisions of the 2006 Act which are directly relevant for present purposes are in Part 4 and Schedule 7. The provisions which are of central importance are section 108, and paragraph 1 of Part 2, and paragraph 6 of Part 3, of Schedule 7. Section 108 is entitled Legislative competence and subsections (1) to (3) provide as follows: (1) Subject to the provisions of this Part, an Act of the Assembly may make any provision that could be made by an Act of Parliament. (2) An Act of the Assembly is not law so far as any provision of the Act is outside the Assemblys legislative competence. (3) A provision of an Act of the Assembly is within the Assemblys legislative competence only if it falls within subsection (4) or (5). It is common ground that subsections (4) and (5) present no problems for the Bill in the present case. Subsection (4) requires every provision in an Act of the Assembly to relate to one or more of the subjects listed in Part 1 of Schedule 7, which every provision in the Bill does. Subsection (6) states: (6) But a provision which falls within subsection (4) or (5) is outside the Assemblys legislative competence if (a) it breaches any of the restrictions in Part 2 of Schedule 7, having regard to any exception in Part 3 of that Schedule from those restrictions, . . Part 2 of Schedule 7 is headed General Restrictions, and the first of those restrictions is in paragraph 1, which is headed Functions of a Minister of the Crown, and is in these terms: (1) A provision of an Act of the Assembly cannot remove or modify, or confer power by subordinate legislation to remove or modify, any pre-commencement function of a Minister of the Crown. (3) In this Schedule pre-commencement function means a function which is exercisable by a Minister of the Crown before [5 May 2011]. Part 3 of Schedule 7 is headed Exceptions from Part 2, the first of which is in paragraph 6, which has a very similar heading to paragraph 1 of Part 2, and states: (1) Part 2 does not prevent a provision of an Act of the Assembly removing or modifying, or conferring power by subordinate legislation to remove or modify, any pre-commencement function of a Minister of the Crown if (a) the Secretary of State consents to the provision, or (b) the provision is incidental to, or consequential on, any other provision contained in the Act of the Assembly. I must also refer to section 112(1), which explains how this reference arises. It empowers the Counsel General or the Attorney General to refer the question whether a Bill, or any provision of a Bill, would be within the Assemblys legislative competence to the Supreme Court for decision. Pending such a reference, a Bill cannot be given Royal Assent see section 115. It is also appropriate to refer to section 154, which provides: (1) This section applies to (b) any provision of an Act of the Assembly, or a Bill for such an Act, which could be read in such a way as to be outside the Assemblys legislative competence, (2) The provision is to be read as narrowly as is required for it to be within competence or within the powers, if such a reading is possible, and is to have effect accordingly . Preliminary issues: the meaning of concurrently While the central issue on this reference is whether section 6 and section 9 are outside the legislative competence of the Assembly, there are two preliminary points which have been debated and which need to be resolved before turning to that central issue. First, there is the question of what is meant by the direction in the 1999 Order that the functions of the Secretary of State under section 236(11) shall be exercisable by the Assembly concurrently with the Secretary of State. Three possible interpretations were aired. The first interpretation, which arose in argument, is that the Assembly is to exercise each of the functions, but needs the Secretary of States agreement before it does so. The second and third interpretations both involve the Assembly and the Secretary of State each having the right to exercise the functions. The second interpretation, favoured by Mr Williams for the Assembly, is that, in relation to any particular function, it is, as a matter of law, only the Assembly or, as the case may be, the Secretary of State who can exercise the function. The third interpretation, favoured by Mr Jonathan Swift QC (who appeared with Ms Joanne Clement for the Attorney General) and by the Counsel General, is that, subject to the normal public law principle of rationality, it is open to either the Secretary of State or the Assembly to exercise any of the functions. I have reached the clear conclusion that the third of these interpretations is correct. First, the natural meaning of concurrently in a provision such as the 1999 Order, which involves two persons or entities having concurrent functions, is that they each have the right to exercise the functions separately. The primary meaning of the word concurrent is running with rather than agreeing. And it would involve implying some qualification to the provision, if only one of the two persons or entities could exercise any particular function. Indeed, if each function could only be exercised by the Assembly or the Secretary of State, it would be the antithesis of their having concurrent power. Secondly, the notion that the Assembly can exercise any of the functions, but only with the consent of the Secretary of State, would effectively mean that there is no difference between concurrent functions and joint functions. That is unlikely as the 1999 Order refers in a number of places to joint exercise of functions, including in article 2(c). That point is reinforced when one looks at section 22(1) of the 1998 Act, under which the 1999 Order was made: subsection (b) deals with concurrently exercisable functions, and subsection (c) is concerned with functions exercisable by the Secretary of State with the agreement of the Assembly. Thirdly, Craies on Legislation 10th ed, (2012) supports the notion that the concept of concurrent power to exercise functions has an established meaning in legislation. At para 3.12.6, it is stated that [w]here a function is vested in two Ministers concurrently, either may perform it, acting alone, on any occasion. While no case law is cited in support of this proposition, such an unequivocal statement in a respected book on the subject deserves respect, and is likely to be familiar to those responsible for drafting statutes. Fourthly, it seems far more sensible and consistent with the purpose of the Welsh devolution legislation to conclude that it was intended that the Assembly and the Secretary of State were each intended to have the power to exercise the concurrent functions, and that it was to be left to their good sense to decide which should exercise a particular function in a particular case. As Lord Carnwath said during argument, the courts should only be involved where normal public law principles justify quashing a particular exercise of a function on the ground that it should not have been exercised by the particular person or entity. Preliminary issues: does any question of legislative competence arise? The Attorney General for Northern Ireland contends that the instant reference is, in effect, misconceived, at least in relation to section 6, because that section would not have the effect which the Attorney General contends, namely removing any right vested in the Secretary of State to confirm byelaws. He puts this point in two ways. The first way in which the argument is put is that Section 6 itself does not remove any right. I will discuss that point when considering the central issue on this reference. However, even if it is right, it could be no more than a technical point, as there can be no doubt but that paragraphs 9 and 17 of Schedule 2 to the Bill indubitably remove the Secretary of States right to confirm byelaws under section 236(11). Accordingly, the first way of putting the Attorney General for Northern Irelands point goes nowhere in substantive terms (albeit that it has some relevance to the central issue, and it gives rise to a procedural point which Lord Hope discusses in his judgment). The second way in which the Attorney General for Northern Ireland puts his case is that section 236(11) states in terms that it applies only to those byelaws for which there is no statutory provision for confirmation by someone other than the Secretary of State. Accordingly, runs the argument, section 236(11) specifically contemplates, and therefore effectively permits, a subsequent statutory provision conferring the confirmatory function, in respect of any byelaw to which section 236(11) currently applies, on some other person or entity. This argument is ingenious, but I would reject it. It seems to me clear that the effect of section 236(11) was to confer a function on the Secretary of State, and the Bill, if it becomes an Act, will remove that function from the Secretary of State in relation to the scheduled enactments, and accordingly, paragraph 1 of Part 2 of Schedule 7 to the 2006 Act appears to be engaged. The fact that the function concerned was conferred by a default statutory provision, which specifically envisages that there may be legislation which transfers the function to someone else, does not alter the fact that the confirmatory function of the Secretary of State falls within the ambit of paragraph 1(3) of Part 2 of Schedule 7. The central issue on this reference: Section 6 of the Bill It is common ground between the original parties to this reference that section 6 is within paragraph 1 of Part 2 of Schedule 7 to the 2006 Act, in that it would have the effect of remov[ing] [a] pre-commencement function of a Minister of the Crown, namely the Secretary of States role in confirming (or refusing to confirm) byelaws made under the statutory provisions which are (i) scheduled enactments, and (ii) provisions to which section 236(11) applies. On that basis the only issue is whether, as the Counsel General contends (with the support of Mr Williams and the Attorney General for Northern Ireland), the section can be saved on the basis that, in so far as it would remove the pre- commencement function, it would be within paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act, as it is incidental to, or consequential on, [an] other provision contained in the [Bill]. However, as already mentioned, the Attorney General for Northern Ireland challenges the otherwise agreed proposition that section 6 would remove the Secretary of States confirmatory role under section 236(11) in relation to any scheduled enactments. He makes the point that section 1 only refers to the confirmatory powers of the Welsh Ministers, not to the Secretary of States powers, and that no part of section 6 refers to his powers either. In my view, this point highlights the way in which the Bill is structured, and, more importantly for present purposes, it tends to support the argument advanced by the Counsel General, namely that the removal by the Bill of the Secretary of States power to confirm byelaws under section 236(11) is indeed incidental to, or consequential on one of the principal purposes of section 6 of the Bill, which is, as section 1 states, to remove the requirement for confirmation by the Welsh Ministers, as part of the overall streamlining and modernising of the way in which byelaws are made in Wales. The answer to the question whether a particular provision in an enactment is incidental to, or consequential on another provision, obviously turns on the facts of the particular case. The answer may to some extent be a question of fact and degree, and it should turn on substance rather than form, although, of course, in any well drafted Bill, the substance will be reflected in the form, at least in relation to that sort of question. Assistance on the point may be gleaned from what was said in this court in Martin v Most [2010] UKSC 10; [2010] SC (UKSC) 40, about paragraph 3(1)(a) of Schedule 4 to the Scotland Act 1998, which permits the Scottish Parliament to modify the law on reserved matters if, inter alia, the modification is incidental to, or consequential on, provision made which does not relate to reserved matters. There is a close similarity between those words and the words in paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act, and the two provisions are concerned with similar material. However, they are found in different statutes, and one must therefore be wary of assuming that they have precisely the same effect, as context is so crucially important when interpreting any expression, perhaps particularly an expression as potentially fact-sensitive as incidental to, or consequential on. Nonetheless, I consider that the approach adopted in that case is of assistance here. In a brief passage at [2010] UKSC 10, paragraph 40, Lord Hope described a point as important in explaining why it was not incidental or consequential on provisions found elsewhere in the enactment. Lord Rodger described certain amendments as falling within paragraph 3(1)(a) of Schedule 4 to the Scotland Act 1998, if they raise[d] no separate issue of principle, and were safely stowed away in a schedule in paragraph 93. He referred back to that observation at paragraph 128, where he described paragraph 3(1)(a) of Schedule 4 to the Scotland Act 1998 as intended to cover the kinds of minor modifications which are obviously necessary to give effect to a piece of devolved legislation, but which raise no separate issue of principle. He contrasted them with other provisions which were independent and deal with distinct aspects of the situation. Section 6 of the Bill plainly is intended to have the effect of removing the need for confirmation by the Welsh Ministers of any byelaw made under the scheduled enactments. That is a primary purpose of the Bill, as is clear from reading the provisions quoted above, both in itself and for the purpose of streamlining and modernising the making of byelaws. I consider that, applying the approach of Lord Hope and Lord Rodger in Martin v Most [2010] UKSC 10, the removal of the Secretary of States confirmatory powers by the Bill in relation to the scheduled enactments would be incidental to, and consequential on, this primary purpose. In summary form, I reach this conclusion because of the following combination of circumstances, of which points (i) and (iv) are particularly telling. (i) The primary purpose of the Bill cannot be achieved without that removal, (ii) the Secretary of States confirmatory power is concurrent with that of the Welsh Ministers, (iii) the confirmatory power arises from what is in effect a fall-back provision, (iv) the scheduled enactments relate to byelaws in respect of which the Secretary of State is very unlikely indeed ever to exercise his confirmatory power, (v) section 7 of the Bill reinforces this conclusion, and (vi) the contrary view would risk depriving paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act of any real effect. The first of these reasons is obvious. One of the streamlining and modernising purposes of the Bill would be undermined if the Secretary of States confirmatory function remained in respect of any of the scheduled enactments. There would be no point in removing the Welsh Ministers confirmatory function in relation to the scheduled enactments unless the Secretary of States concurrent function was also disposed of. Indeed, the notion that the Assembly would intend to remove the Welsh Ministers confirmatory function while retaining that of the Secretary of State is bizarre. Secondly, there is attraction in the point that the Secretary of States confirmatory function has become redundant on the basis that, as Lord Clarke put it, the enactment by the Assembly of section 6(1) amounted to a blanket confirmation in advance by the Welsh Ministers of any future byelaw made under the scheduled enactments, provided the procedures laid down by sections 6(2) to (8) are complied with. While a blanket confirmation in advance of any byelaw cannot be a valid exercise of the Welsh Ministers confirmatory function, the argument highlights the oddity of the Secretary of States confirmatory power surviving the removal of the Welsh Ministers confirmatory power. Thirdly, there is the fact that the confirmatory function bestowed on the Secretary of State by section 236(11) is really a default function. The confirmatory function is only given to the Secretary of State if no other statute (including one passed after the 1972 Act) confers the function on any other body or person. To my mind, that feature tends to support the notion that it is not, to use Lord Hopes word in Martin v Most [2010] UKSC 10, paragraph 40, an important function. Thus, the point made by the Attorney General for Northern Ireland assists my conclusion. Fourthly, and most crucially, the scheduled enactments concern byelaws whose nature is such that it would be for the Welsh Ministers, rather than the Secretary of State, to confirm them. This is because they are very much directed to local, small-scale (but important) issues. That point is strongly supported by the fact that it appears that, since the 1999 Order came into force, it has always been the Welsh Ministers, rather than the Secretary of State, who have exercised the confirmatory function in relation to byelaws made under any of the scheduled enactments. It seems to me that, in those circumstances, given the purpose of section 6, and the purpose of the Bill as explained in section 1, it would be positively perverse if the Secretary of State should retain the confirmatory function when the Welsh Ministers have disclaimed their confirmatory function. It was not suggested by Mr Swift that there were any circumstances envisaged by the Secretary of State in which she would wish to exercise her confirmatory function in relation to the scheduled enactments. In practical terms, this conclusion is supported by the fact that the only reason the Secretary of State did not consent to section 6 had nothing to do with the contents of that section or of Schedule 1, but with the inclusion of section 9 in the Bill. Fifthly, as pointed out by Lord Reed, the provisions of section 7 of the Bill give some support for this conclusion. It establishes new concurrent powers in relation to byelaws (other than the scheduled enactments) which previously fell within section 236(11). Where subsections (11)(b) and (12) of section 7 apply, the confirmatory power of the Welsh Ministers is exercisable concurrently with that of the Secretary of State. This reinforces the argument that the Secretary of States confirmatory function under section 236(11) is redundant as a result of the enactment of sections 6 and 7. Finally, it is important, as the Counsel General argued, to arrive at a conclusion which gives a provision such as paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act some real effect. It is difficult to think of circumstances in which it would have effect if it does not apply to section 6. Mr Swift suggested that, if it did not apply to section 6, it could still apply in a case where the Assembly abolished a statutory provision for byelaws altogether. I do not find that very persuasive. First, if he is right in the present case, it suggests that the provision can apply in a more extreme type of case than the present case, but not in the present case. Secondly, I am not convinced that it would be necessary to remove a power to confirm byelaws in relation to a given activity if the power to make byelaws in relation to that activity was abolished. The central issue on this reference: section 9 of the Bill Section 9 of the Bill would have the effect of enabling the Welsh Ministers to add to (and to subtract from) the scheduled enactments, which would then become subject to the section 6 procedure, rather than the section 7 procedure. As already explained, the crucial difference for present purposes between the two procedures is the requirement under section 7 for confirmation of the byelaw by Welsh Ministers and/or the Secretary of State or other Minister of the Crown (depending on the statutory provision under which the byelaw is made) see, in particular, section 7(10) to (12). The Attorney Generals argument is that section 9 would confer power on the Welsh Ministers by subordinate legislation to remove or modify pre- commencement function[s] of a Minister of the Crown. Accordingly, he argues, by virtue of section 108(6)(a) of, and paragraph 1(1) of Part 2 of Schedule 7 to, the 2006 Act, the section is outside the legislative competence of the Assembly. If section 9 is to be interpreted as giving the Welsh Ministers power to add to the scheduled enactments any enactment which gives the Secretary of State or another Minister of the Crown a confirmatory function in relation to byelaws, then I would accept that argument. However, there could be no objection to the section, if the scope of the power it would confer on the Welsh Ministers was limited to byelaws made under enactments which currently satisfy one of two requirements. Those requirements are that the enactment concerned (i) identifies the Welsh Ministers, and not a Minister of the Crown, as having the confirmatory power, or (ii) identifies a Minister of the Crown as having the confirmatory power, but the removal of that power would be incidental or consequential within the meaning of paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act. The basis for requirement (i) is self-evident, and the basis for requirement (ii) is the same as that for concluding that section 6 is within the legislative competence of the Assembly. Although it is perfectly true that there are no express words in section 9 which limit its scope in this way, I am satisfied that it does have such a limited effect. That is because of the simple legal principle, identified by Lord Reed, embodied in the Latin maxim nemo dat quod non habet. Given that the jurisdiction of the Assembly is limited to removing, or delegating the power to remove, functions of Ministers of the Crown when the removal satisfies the requirements of paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act, the Assembly cannot confer a wider power on Welsh Ministers. Accordingly, the wide words of section 9 must be read as being circumscribed in their scope so as to render the section valid. The same conclusion can be arrived at by invoking section 154(2) of the 2006 Act. It would not be permissible to invoke that statutory provision if it was inconsistent with the plain words of section 9. However, it would, in my view, be permissible to invoke it to limit the apparently unlimited and general effect of that briefly expressed section. Such an interpretation is consistent with the thrust of the Bill as a whole, and it does not conflict with any other provision in the Bill. And that point is reinforced by the fact that all the currently scheduled enactments satisfy requirements (i) or (ii). Some procedural issues I have read in draft the judgment to be given by Lord Hope. He discusses certain practical issues in paragraphs 85 to 100, and I agree with what he says. I should add that I also agree with his further observations at paragraphs 71 to 84. Conclusion For these reasons, I would make a declaration on the reference that the Assembly had the legislative competence to enact sections 6 and 9 of the Bill. It should be added that, although this is a successful outcome for the Assembly and the Counsel General, it cannot be regarded as a setback in practical terms for the Secretary of State. Somewhat curiously, the conclusion I have reached as to the effect of section 9 is one which reflects the terms on which she was prepared to give her consent to Section 6 of the Bill. It is also right to say that, standing back, and considering the general purpose of the 2006 Act and the 1999 Order, this appears to be a sensible conclusion. As Lord Carnwath said, the desirability of streamlining and modernising the system for making byelaws is reflected in section 236A of the 1972 Act, which only applies to England, and was inserted by section 129 of the Local Government and Public Involvement in Health Act 2007. A similar system of modernising and streamlining the system in Wales is hard to object to. And, if that system removes the confirmatory function of the Secretary of State, or other Ministers of the Crown, but only where (i) the function is concurrently exercisable with Welsh Ministers, and (ii) the byelaws concerned would probably always be for the Welsh Ministers to confirm, it would be entirely consistent with the general thrust of the extended powers given to the Assembly and Welsh Ministers by Part 4 of, and Schedule 7 to, the 2006 Act. Finally, it is right to record that various other issues were canvassed in the written and oral arguments. They included the proper approach to the interpretation of the 2006 Act as a constitutional enactment, and whether certain statutory provisions mentioned in Part 1 of Schedule 1 were governed by section 236(11). Given my conclusions on the issues considered in this judgment, it is unnecessary to determine those other issues, and it therefore seems to me appropriate to leave them to be resolved if and when it is necessary to do so in a future appeal or reference. LORD HOPE (with whom Lord Clarke, Lord Reed and Lord Carnwath agree) I add this supplement to Lord Neubergers judgment, with which I am in full agreement, in order to do two things. The first is to make some general observations on the approach to issues about the legislative competence of the National Assembly for Wales in the light of the Scottish experience. The second is to provide guidance on some matters of practice which require clarification in the light of the way this reference has been dealt with. Background The making of this reference to the Supreme Court is a significant event in Welsh law. The Local Government Byelaws (Wales) Bill 2012 is the first Bill to have been passed by the Assembly. That in itself is important, as it has provided the Assembly with the first opportunity to put into practice its power to make laws. That power was given to it by section 107(1) of the Government of Wales Act 2006 (the 2006 Act) upon the coming into force on 5 May 2011 of the Assembly Act provisions in Part 4 of the Act. Now there is the making of the reference. This is an even more significant milestone than, in the words of Lady Cosgrove, the case of A v Scottish Ministers [2002] SC (PC) 63 was for Scotland: see para 2. In that case the first Act of the Scottish Parliament, the Mental Health (Public Safety and Appeals) (Scotland) Act 1999, received the Royal Assent 13 days after the Bill had been introduced in the Parliament as a matter of urgency. A restricted patient who was being detained in the State Hospital then challenged the Parliaments legislative competence on the ground that the Act was incompatible with his Convention rights. It took nearly two years before, after working its way through the devolution issues procedure, the challenge was finally dismissed by the Judicial Committee of the Privy Council. Here use is being made, for the first time, of the power that is given by section 112 of the 2006 Act to the Counsel General or the Attorney General to refer the question whether a Bill would be within the Assemblys legislative competence to the Supreme Court for decision before it is submitted for Royal Assent under section 115. A similar provision was included in section 33 of the Scotland Act 1998 (the 1998 Act) to ensure that the Lord Advocate and the law officers of the United Kingdom Government were content that Bills of the Scottish Parliament were within competence before they were submitted for Royal Assent under section 32 by the Presiding Officer. The Scottish Parliament has passed many Bills since that Act came into force. But none of them has been challenged before enactment by any of the relevant law officers. So there has not yet been an occasion for the making use in relation to any of its Bills of the power under section 33 for pre-legislative scrutiny. The reason why a reference has been made in this case, in contrast to the lack of use of the equivalent provision in Scotland, is likely to lie in differences between the systems that have been used to devolve legislative power to the devolved legislatures from the United Kingdom Parliament at Westminster and executive power to the devolved governments from Ministers of the United Kingdom Government. Under the Scottish system, the general power to make laws conferred on the Scottish Parliament by section 28 is subject to section 29 of the 1998 Act, which provides that an Act of the Scottish Parliament is outside its competence so far as, among other things, it relates to matters reserved to Westminster or is in breach of the restrictions in Schedule 4. A list of the reserved matters is set out in Schedule 5 to the 1998 Act. These provisions were accompanied by a general transfer of functions conferred on Ministers of the Crown to the Scottish Ministers by section 53, so far as these functions are exercisable within devolved competence. This difference of approach can be illustrated by comparing the restrictions on the powers of the Assembly under Part 2 of Schedule 7 to the 2006 Act, read together with the exceptions in Part 3, with the restrictions on the powers of the Scottish Parliament under Schedule 4 to the 1998 Act. The Assembly cannot remove or modify, or confer power by subordinate legislation to remove or modify, any pre-commencement function of the Minster of the Crown unless (a) the Secretary of State consents to the provision or (b) the provision is incidental to, or consequential on, any other provision contained in the Act of the Assembly: paragraph 1 of Part 2 read together with paragraphs 6(1)(a) and (b) of Part 3. The phrase incidental to, or consequential on is used in paragraph 3(1)(a) of Schedule 4 to the 1998 Act, which provides that the restriction on the power of the Scottish Parliament to modify, or confer power by subordinate legislation to modify, the law on reserved matters does not apply to modifications which are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters. But there is no reference here or anywhere else in the 1998 Act which defines devolved competence differently, to removing a pre-commencement function of a Minister of the Crown. A proper understanding of the effect of Schedule 7 to the 2006 Act, and of paragraph 6(1)(b) of Part 3 in particular, is of central importance to the resolution of the issue raised by this reference. So I think that it was entirely proper for the Attorney General to refer sections 6 and 9 of the Bill to this court for pre- legislative scrutiny under section 112 rather than raise the issue after its enactment as a devolution issue under section 149 and Schedule 9. Any delay in the submitting of a Bill which has been passed by the Assembly for Royal Assent is, of course, to be regretted. It was with that in mind that the hearing was given the earliest possible date in the courts programme. But it is to be hoped that it will be more than compensated for by the benefits that will come from the removal of uncertainty at the first opportunity as to whether sections 6 and 9 are within legislative competence. General principles It may be helpful to restate, in the Welsh context, some principles of general application that have guided the court when dealing with issues about the legislative competence of the Scottish Parliament. First, the question whether a Bill of the Assembly is within its legislative competence is a question of law which, if the issue is referred to it, the court must decide. The judicial function in this regard has been carefully structured. It is not for the judges to say whether legislation on any particular issue is better made by the Assembly or by the Parliament of the United Kingdom at Westminster. How that issue is to be dealt with has already been addressed by the United Kingdom Parliament. It must be determined according to the particular rules that section 108 of the 2006 Act and Schedule 7 have laid down. Those rules, just like any other rules, have to be interpreted. It is for the court to say what the rules mean and how, in a case such as this, they must be applied in order to resolve the issue whether the measure in question was within competence. Second, the question whether the Bill is within competence must be determined simply by examining the provisions by which the scheme of devolution has been laid out. That is not to say that this will always be a simple exercise. But, as Lord Walker observed in Martin v Most [2010] UKSC 10; 2010 SC (UKSC) 40, para 44 when discussing the system of devolution for Scotland, the task of the United Kingdom Parliament in relation to Wales was to define the legislative competence of the Assembly, while itself continuing as the sovereign legislature of the United Kingdom. It had to define, necessarily in fairly general and abstract terms, permitted or prohibited areas of legislative activity. The aim was to achieve a constitutional settlement, the terms of which the 2006 Act was designed to set out. Reference was made in the course of the argument in the present case to the fact that the 2006 Act was a constitutional enactment. It was, of course, an Act of great constitutional significance, and its significance has been enhanced by the coming into operation of Schedule 7. But I do not think that this description, in itself, can be taken to be a guide to its interpretation. The rules to which the court must apply in order to give effect to it are those laid down by the statute, and the statute must be interpreted like any other statute. But the purpose of the Act has informed the statutory language, and it is proper to have regard to it if help is needed as to what the words mean. Third, the question whether measures passed under devolved powers by the legislatures in Wales, Scotland and Northern Ireland are amenable to judicial review, and if so on what grounds, was considered in AXA General Insurance Company Ltd v Lord Advocate [2011] UKSC 46, [2012] 1 AC 868. The court in that case had the benefit of submissions by the Counsel General. It was common ground that, while there are some differences of detail between the 2006 Act and the corresponding legislation for Scotland and Northern Ireland, these differences do not matter for that purpose. The essential nature of the legislatures that the devolution statutes have created in each case is the same. But it has not been suggested that the Bill is the result of an unreasonable, irrational and arbitrary exercise of the Assemblys legislative authority. This case is concerned only with the question whether the Bill is outside competence under the provisions laid down by the statute. In the light of these principles the issue at the heart of the argument about section 6 of the Bill resolves itself into a simple question: what is meant by the phrase incidental to, or consequential on in paragraph 6(1)(b) of Part 3 of Schedule 7 to the 2006 Act? Section 6 would have the effect of removing a pre- commencement function of a Minister of the Crown. According to the rules that section 108 read together with Part 2 of Schedule 7 have laid down, a provision of an Act of the Assembly cannot do this unless it falls within one of the exceptions in paragraph 6 of Part 3. I agree with Lord Neuberger that section 6 falls within the exception in paragraph 6(1)(b). The words incidental to, or consequential on, any other provision contained in the Act of the Assembly make it clear that the interpretative exercise to which it points is one of comparison. How significant is the removal of the pre-commencement function, when it is seen in the context of the Act as a whole? If the removal has an end and purpose of its own, that will be one thing. It will be outside competence. If its purpose or effect is merely subsidiary to something else in the Act, and its consequence when it is put into effect can be seen to be minor or unimportant in the context of the Act as a whole, that will be another. It can then be regarded as merely incidental to, or consequential on, the purpose that the Bill seeks to achieve. The provision in question meets this test. So it is within competence. I also agree with what he says about section 9. On the face of it, the power that it gives to add or subtract from the list of enactments is open-ended. This, no doubt, is why the UK Government has thought it right to raise the question whether it too is within competence. But it falls to be read as narrowly as is required for it to be within competence, if such a reading is possible, and to have effect accordingly: see section 154(2). That can be done by reading it in a way that brings it within the exception in paragraph 6(1)(b) of Part 3 of Schedule 7. The Assembly does not have legislative competence to confer on the Welsh Ministers powers that are wider than those which have been given to it by the 2006 Act. So it will be open to the Welsh Ministers to add to the list of enactments in Part 1 of Schedule 1 to the Bill by removing a pre-commencement function of a Minister of the Crown without the consent of the Secretary of State only if it meets the test in paragraph 6(1)(b). I see no difficulty in reading section 9 in this way, and in holding that the power is to have effect subject to that limitation. So it too is within competence. Practice The method which the Attorney General used for the bringing of this reference was to file a Notice of Appeal in the form for applications for permission to appeal or appeals which is described as Form 1 in UKSC Practice Direction 7.3.2 and its Annex. It named the National Assembly for Wales as the only respondent and its Chief Legal Advisor, on whom the Notice of Appeal was served, as its solicitor. The Counsel General for Wales and the Attorney General for Northern Ireland were later joined as respondents at their own request. The use of this procedure raises two questions. The first is as to the correct procedure that should be adopted under Rule 41 of the Supreme Court Rules 2009 and Practice Direction 10 for the making of a reference under section 112 of the 2006 Act and its counterparts in Scotland and Northern Ireland. The second has two parts. First, was it appropriate for the Assembly to be called as a respondent to these proceedings? Second, what are the circumstances in which the Assembly, although not called as respondent, would have standing to appear in proceedings which raise questions as to the legislative competence of one of its enactments? The only previous example of a reference being made to the Supreme Court of a Bill passed by a devolved legislature is a reference that was made by the Attorney General for Northern Ireland in 2011. As was noted in AXA General Insurance Co Ltd v Lord Advocate [2012] 1 AC 868, para 15, he referred the question whether the Damages (Asbestos-related Conditions) (Northern Ireland) Bill was within the competence of the Northern Ireland Assembly for pre- enactment scrutiny under section 11 of the Northern Ireland Act 1998. He too used Form 1 for this purpose and the reference was served on the Northern Ireland Assembly, which was named on the form as the only respondent. The Northern Ireland Assembly responded by serving a notice of objection indicating its opposition to the grounds of the reference. It used the form which is described as Form 3 in Practice Direction 7.3.2 and its Annex. But the reference was withdrawn before the hearing of the appeal in AXA took place. So there was no opportunity for a discussion of the procedural issues in that case. (a) the reference procedure Rule 41 of the Supreme Court Rules 2009 (SI 2009/1603 (L17)) provides: (2) A reference made by the relevant officer is made by filing the reference and by serving a copy on any other relevant officer who is not already a party and who has a potential interest in the proceedings. [emphasis added] (3) A reference must state the question or issue to be decided by the Court. (4) The Registrar shall give notice of the question or issue to the appropriate relevant officer where that officer is not already a party to any proceedings. Rule 3(2) of the Supreme Court Rules defines the expression relevant officer as meaning, in relation to proceedings in England and Wales, the Attorney General and, in relation to proceedings that particularly affect Wales, the Counsel General to the Welsh Assembly Government. The procedure to be used in cases which raise devolution issues is dealt with in Practice Direction 10. It is pointed out in Practice Direction 10.1.3 that such a case can reach the Supreme Court in four ways, one of which is by way of a reference by a relevant officer. Practice Direction 10.1.4 repeats the definition of the expression relevant officer which is set out in Rule 3(2). The four ways in which a devolution issue may reach the Supreme Court are then dealt with under four separate headings. Practice Direction 10.2, under the heading references of a question by a relevant officer, states: 10.2.1 A reference of a question by a relevant officer is made by filing the reference, and serving a copy on any other relevant officer who is not already a party and who has a potential interest in the proceedings, within any time limits specified by the relevant statute. [emphasis added] 10.2.2 The reference should state the question to be determined with respect to the proposed Order in Council, proposed Assembly Measure or Bill to which the reference relates; whether it applies to the whole Order in Council, proposed Assembly Measure or Bill or to a provision of it, and the reference shall have annexed to it a copy of the Order in Council, Assembly Measure or Bill to which it relates. 10.2.3 Any relevant officer (other than the one making the reference) who wishes to participate in the proceedings shall within 7 days of service of the reference on him notify the Registrar and the other parties. Any relevant officer who gives notice automatically becomes a respondent to the proceedings. As these provisions make clear, the reference should be served on any other relevant officer. Those words are to be read together with the definition of the expression relevant officer in Rule 3(2) and Practice Direction 10.1.4. There ought not to have been any room for doubt that, in the case of a reference by the Attorney General of a Bill of the National Assembly for Wales, the Counsel General had a potential interest in the proceedings. So the reference should have been served on him. It should not have been served on the Assembly which is not referred to in any of these provisions. It is not a relevant officer. It should also be noted that, in contrast to what is set out in the part of Practice Direction 10 which deals with appeals to the Supreme Court (see Practice Direction 10.3.5), the procedure set out in Practice Direction 10.2 does not lay down any particular form for use in such proceedings: see also Practice Direction 10.4.1 for references by courts and Practice Direction 10.5.1 for direct references by a law officer. These Practice Directions do not refer to Form 1. That form is designed for use only for notices of appeal and applications for permission to appeal. As the wording of Practice Direction 7.3.2 makes clear, it is not designed for use in the case of references. Counsel for the Attorney General submitted that these provisions fail to identify who is the respondent to a section 112 reference, and that there is a lack of coherence in the combination of Rule 41 and Practice Direction 10. I do not think that this does justice to the provisions which I have quoted. They require service of the reference on any other relevant officer, and they provide that he will automatically become a respondent to the proceedings if he notifies the Registrar that he wishes to participate in them. The phrase any other relevant officer reflects the fact that section 112 does not state that there must be a respondent to a reference that is made under it. Circumstances can be envisaged where that would not be appropriate. It would, for example, be open to the Counsel General, to make a reference of a question about legislative competency in which no other relevant officer has an interest on the ground, for example, that a provision was incompatible with the Convention rights: see section 108(6)(c). The court will, of course, benefit from the argument of a contradictor. But it is not in a position to compel the appearance of a law officer who does not wish to participate. What it seeks to ensure is that any other relevant officer is notified. What then happens is up to the relevant officer. It should be understood therefore (a) that proceedings on a reference under section 112 of the 2006 Act and its counterparts in Scotland and Northern Ireland are proceedings sui generis and (b) that they should be served on, and only on, any other relevant officer in his capacity as a relevant officer, not as a respondent. He will become a respondent if, and only if, he notifies the Registrar that he wishes to participate. There is no requirement for the reference to be served on the National Assembly, although Practice Direction 10.2.6 states that it must be notified. Notification also should be given to the Clerk of the Assembly appointed under section 26. This is because it is her function to submit the Bill for Royal Assent under section 115. She may not do this if a reference has been made and not yet disposed of by the Supreme Court: section 115(2). The Presiding Officer has the same function in Scotland, and is under the same prohibition, with regard to Acts of the Scottish Parliament under section 32(2) of the 1998 Act; see, as regards Northern Ireland, section 11(2) of the Northern Ireland Act 1998. No form has been laid down for use in the case of references. So it is open to the law officer or court, on making the reference, to adopt whatever style and layout is thought to be most appropriate in the circumstances. The Registrar must however be provided with the following information for administrative purposes: (a) the names, addresses and contact details of the party making the reference and his legal representatives; (b) the names, addresses and contact details of any relevant officer on whom the reference has been served and his legal representatives; and (c) similar details of any person who has been notified. These details should be set out in a covering document, to which the reference and any accompanying documents should be attached. The Practice Directions are kept under continuous review and amended from time as required. Amendments are needed to take account of changes in the systems for devolution. For example, references to a Measure of the National Assembly for Wales in Practice Direction 10 are no longer appropriate as Part 3 of the 2006 Act has ceased to have effect. They will need to be deleted. Changes will be needed to take account of a new system for appeals to the Supreme Court in devolution questions arising in criminal cases under the Scotland Act 2012 which are classified as compatibility issues. Account will be also have to be taken of the points mentioned in this judgment. A revised version of the Practice Directions will be issued in due course. (b) participation of the Assembly The 2006 Act confers no legal personality on the National Assembly for Wales. Instead the National Assembly for Wales Commission was established by section 27, which does have legal personality. The Commission has the duty of providing the Assembly with the property, staff and premises required for its purposes: section 27(5). Further provisions about the Commission are set out in Schedule 2 to the 2006 Act. Among them is paragraph 4 which sets out its powers. These include, in particular, entering into contracts, charging for goods and services, investing sums not immediately required for its functions and accepting gifts: paragraph 4(2). There is no indication either in section 27 itself or in the Schedule that it was contemplated that either the Assembly or the Commission should have the right to institute, defend or appear in legal proceedings in which the legislative competence of a Bill passed by the Assembly was under scrutiny. Section 112(1) of the 2006 Act confers the function of referring a question about legislative competence on the Counsel General or the Attorney General. The Counsel General represents the interests of the Welsh Ministers on the one hand and the Attorney General represents the interests of the Ministers of the Crown on the other. So their positions under this provision can be regarded as reciprocal. Each can be taken to have the right to appear in proceedings raised by the other, which he can exercise if he wishes to do so. References to the right of the Counsel General to bring and defend proceedings are also to be found in Schedule 9: see, for example, paragraphs 4, 13, 14 and 30. No reference is made anywhere in such terms to the Assembly or the Commission. In Adams v Advocate General 2003 SC 171 a challenge was made by way of a petition for judicial review to the validity of the Protection of Wild Mammals (Scotland) Act 2002, which was an Act of the Scottish Parliament. Among the questions raised was whether the Act was outside the Parliaments legislative competence. The Advocate General for Scotland lodged answers in which she contended that the Scottish Parliament was the appropriate respondent and that, since proceedings instituted against the Parliament must be instituted against the Parliamentary corporation in terms of section 40(1) of the 1998 Act, the corporation ought to have been called as respondent. Lord Nimmo Smith rejected this contention: see para 31. He said that the proceedings were not proceedings against the Parliament within the meaning of section 40(1), as by the stage when they were brought the Act had passed out of its hands. Appearing as a contradictor did not appear to be one of the corporations functions, and it was clear from the scheme of the Act that the Lord Advocate, as the Scottish law officer acting in the public interest, was the appropriate person to perform that role. I would apply the same reasoning to a case where the challenge to legislative competence was made after a Bill had been enacted and become an Act of the Assembly. The situation in this case is different, as the Bill is still in the hands of the Clerk. So it cannot be said to have passed out of the hands of the Assembly. But the more important point is that appearing as a contradictor to a challenge of that kind is not one of the Commissions functions under the 2006 Act. The way that Act has set out its functions and those of the Counsel General must be respected. The appropriate person to represent the public interest in resisting a challenge of that kind is the Counsel General, whose functions include making appropriate representations about any matter affecting Wales: section 62. The scope that is given to him by that section makes any intervention by the Assembly or the Commission in such proceedings unnecessary. This is not to say that the Assembly or the Commission may not have standing to appear in proceedings in which such questions are raised. There may be cases where the views of the Assembly or the Commission, one way or the other, might be of assistance. In that event the court would be willing to give permission to these bodies, or either of them, to intervene under Rule 26 if it was asked to do so. This should not be regarded, however, as detracting from the rule that the appropriate person on whom such proceedings should be served is the Counsel General or, if the proceedings are brought by the Counsel General, the Attorney General. Conclusion For the reasons given by Lord Neuberger, I would determine this reference by declaring that sections 6 and 9 of the Local Government Byelaws (Wales) Bill 2012 are within the legislative competence of the Assembly. |
These appeals concern the statutory provisions governing the eligibility for compensation of persons convicted of a criminal offence where their conviction is subsequently quashed (or they are pardoned) because of the impact of fresh evidence. The provisions are contained in section 133 of the Criminal Justice Act 1988 (the 1988 Act) as amended by section 175 of the Anti social Behaviour, Crime and Policing Act 2014 (the 2014 Act). The central issue is whether they are compatible with the presumption of innocence as guaranteed by article 6(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953) (Cmd 8969) (the Convention). The factual background (1) Mr Hallams case Mr Hallam was convicted of murder, conspiracy to commit grievous bodily harm and violent disorder, following a gang fight in which another young man was killed. The case against him at his trial rested on identification evidence provided by two witnesses. The weaknesses in their evidence were such that independent supporting evidence was, in practice, essential. The only support was evidence from a Mr Harrington, denying that he had seen Mr Hallam either on the day of the murder or on the days surrounding it. That evidence was said to suggest that Mr Hallam had concocted a false alibi, since he had stated that he was with Mr Harrington at the time of the murder. Several years after the trial, the case was referred to the Court of Appeal Criminal Division (the CACD) by the Criminal Cases Review Commission on the basis that fresh evidence had been discovered. That evidence included photographs found on Mr Hallams mobile phone, showing him with Mr Harrington on the day after the murder. The phone had been seized from Mr Hallam at the time of his arrest but had not been examined. Hallett LJ, giving the judgment of the CACD, observed that this evidence changed the situation dramatically, in that the evidence relied upon by the prosecution to support the identifying witnesses, namely the evidence as to false alibi, had been significantly undermined ([2012] EWCA Crim 1158, para 75). She went on (para 76): we are now satisfied that any confidence that the appellant had lied and/or asked Harrington to concoct a false alibi was misplaced. Summarising the position (in para 77), the court noted that neither identifying witness had been particularly satisfactory, with their various accounts [containing] numerous inconsistencies and contradictions; and that there was other fresh evidence comprising information provided to the police by a witness named Gary Rees, which had not been disclosed to the defence at the time of the trial, to the effect that another man with the same first name as Mr Hallam was rumoured to be responsible for the murder. The CACD stated (para 77): The new information in relation to the messages from Gary Rees raises the possibility of greater collusion (in the sense of discussion) between the [identification] witnesses than the defence team knew at the time. It also potentially puts paid to [one of those witnesses] assertion that from the outset there were rumours that Sam Hallam was involved. Returning to the alibi, the court noted (para 78) that: We now know there is a real possibility that the appellants failed alibi was consistent with faulty recollection and a dysfunctional lifestyle, and that it was not a deliberate lie. The proper support for the Crowns case has fallen away. The CACD also held (para 79) that, given the terms of the judges direction, there was a possibility that the jury might not have realised that it was entitled to treat the evidence of another witness as potentially exculpatory of Hallam. In paras 80 and 83 it stated the conclusion that it drew from all the factors as follows: 80. In our judgment, the cumulative effect of these factors is enough to undermine the safety of these convictions. 83. Accordingly, the result is that the conviction is unsafe and it must be quashed. Earlier in its judgment, the CACD recorded at para 49 that counsel appearing for Mr Hallam had invited it to state that he was innocent of the offences. The court cited a passage in the judgment of Lord Judge CJ in R (Adams) v Secretary of State for Justice (JUSTICE intervening) [2011] UKSC 18; [2012] 1 AC 48, para 251, as setting out what Hallett LJ described as the courts powers in this respect. The court declined to make such a statement, observing that we were not satisfied it would be appropriate to use that power on the facts of this case. Mr Hallam spent seven years and seven months in prison prior to the quashing of his conviction. He applied for compensation under section 133 as amended. By letter dated 14 August 2014 the Secretary of State refused the application. The letter began by explaining the statutory test: Following the coming into force of section 175 of the Anti social Behaviour, Crime and Policing Act 2014, compensation under section 133 of the Act is only payable where a persons conviction has been reversed on the ground that a new or newly discovered fact shows beyond reasonable doubt that the person did not commit the offence. The letter continued: the Secretary of State does not consider that the new evidence before the court shows beyond reasonable doubt that Mr Hallam did not commit the offence. The Secretary of State explained: The CA [Court of Appeal] view was that the cumulative effect of [the fresh evidence] was enough to undermine the safety of your clients convictions which were quashed on that basis. However, the fresh evidence does not establish positively that your client was not at the murder scene We further note in this regard that, whilst the Court of Appeal quashed Mr Hallams convictions on the basis that they were unsafe, it expressly declined the invitation of Mr Hallams counsel to exercise its discretionary power (as identified by Lord Judge in Adams [2011] UKSC 18) to state that the new evidence demonstrated the factual innocence of the appellant. Two factors were therefore of particular importance: first, that as the CACD had found, the fresh evidence did not establish positively that Mr Hallam was not at the murder scene on the night in question, and secondly, that the CACD had declined to exercise what was described as its discretionary power to state that Mr Hallam was factually innocent. The letter concluded: It is important to emphasise that nothing in this letter is intended to undermine, qualify or cast doubt on the decision of the [Court of Appeal] to quash your clients convictions. Mr Hallam is presumed to be and remains innocent of the charges. His application has been rejected as it does not meet the statutory test for compensation under section 133 of the 1988 Act. (2) Mr Nealons case Mr Nealon was convicted of an attempted rape committed in August 1996. There was identification and description evidence from several witnesses which if accepted placed him in a club where the victim had previously been on the night of the offence, and near the scene of the attack. He denied that he had ever been to the club and gave evidence of an alibi. The victim gave evidence that the man who attacked her mauled her, tried to kiss her and put his hand inside her blouse over her bra. He was pulling at her tights and underwear. No DNA examination of her clothing was then carried out. The case was subsequently referred to the CACD by the Criminal Cases Review Commission on the basis of evidence of DNA found on an examination of her clothing carried out in 2010, nearly 14 years after the offence. A sample taken from the front of her blouse revealed a full male DNA profile from what was probably a saliva stain. It was not from Mr Nealon, but had been deposited by a man who was designated as the unknown male. Further probable saliva stains were detected on both cups of her bra. They too had not been deposited by Mr Nealon, but were consistent with the DNA of the unknown male. An examination of her skirt and tights disclosed a complex mixture of DNA, including DNA from an unknown woman, and was inconclusive. Evidence was adduced on behalf of the Crown that the attacker might not have transferred any DNA to the victims clothing. The victim was re interviewed in connection with the new investigation. She said that she had bought the blouse and bra either on the day of the attack or a day or two before. This was the first time she had worn either garment in public. She had been in a relationship with a male partner at the time, and could not recall any consensual contact with any other man since she bought the blouse and bra. DNA tests excluded the possibility that her partner, any of the officers involved in the investigation, any of the men who arrived at the scene of the attack shortly after it occurred, or any of the scientists involved in the original investigation, was the unknown male. It was argued by the Crown that the DNA might have been deposited on the blouse and bra at the time of their purchase or as a result of re distribution from other items, and might have nothing to do with the attack, particularly in the light of the victims evidence that she had hugged and kissed other men on that date, when she was celebrating her birthday. The CACD (Fulford LJ, Kenneth Parker J and Sir David Calvert Smith) concluded that the effect of the fresh evidence was to render the conviction unsafe, and that it should therefore be quashed: [2014] EWCA Crim 574. The central reasoning of the court is found in para 35 of the judgment delivered by Fulford LJ: the fresh evidence has not demolished the prosecution case. But its effect on the safety of this conviction is substantial. We are clear in our view that if the jury had heard that in addition to the weaknesses in the identification evidence, it was a real possibility that DNA from a single unknown male had been found in some of the key places where the attacker had mauled the victim (in particular, the probable saliva stain on the lower right front of Ms Es blouse and probable saliva stains on the right and left cups of Ms Es brassiere as well as other DNA material ) this could well have led to the appellants acquittal. No application was made for a retrial. Mr Nealon spent 17 years in prison prior to the quashing of his conviction. He applied for compensation under section 133 as amended. By letter dated 12 June 2014 the Secretary of State refused the application. After explaining the statutory test in the same terms as the letter sent to Mr Hallam, the letter continued: Although the new evidence shows that the DNA was from an unknown male, this does not mean that it undoubtedly belonged to the attacker. Expert evidence for the prosecution at the appeal stated it was plausible that the attacker transferred little or no DNA to the victims clothing during the commission of the offence, and that the DNA from the unknown male may not have been crime related. The Court of Appeal said that these arguments required serious consideration. It also found that the original jury had been entitled to convict your client on the basis of the existing identification evidence (which was not at issue in the appeal). Whilst the Court of Appeal decided, ultimately, that the jury may reasonably have reached the conclusion, based on the DNA evidence, that it was a real possibility that the unknown male and not the applicant was the attacker, the court was explicit that the fresh evidence did not demolish the prosecution evidence. In Mr Nealons case, as in Mr Hallams, the decision letter focused on the reasoning of the CACD: that it said that the argument that the DNA material might not have been crime related required serious consideration, that it found that the original jury had been entitled to convict on the basis of the existing identification evidence, and that it said that the fresh evidence did not demolish the prosecution evidence. On that basis, the Secretary of State stated: Having considered the judgment in the Court of Appeal, and your clients own submission, the Justice Secretary is not satisfied that your clients conviction was quashed on the ground that a new or newly discovered fact shows beyond reasonable doubt that your client did not commit the offence. The letter concluded in similar terms to that sent to Mr Hallam: Finally, it is important to emphasise that nothing in this letter is intended to undermine, qualify or cast doubt upon the decision to quash your clients conviction. You client (sic) is presumed to be and remains innocent of the charge brought against him. His application has been rejected because his case does not in the Justice Secretarys view meet the statutory test for compensation under section 133 of the Criminal Justice Act 1988. The statutory provisions Section 133(1) of the 1988 Act provides: (1) Subject to subsection (2) below, when a person has been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice, the Secretary of State shall pay compensation for the miscarriage of justice to the person who has suffered punishment as a result of such conviction or, if he is dead, to his personal representatives, unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. Section 133(2) requires an application for compensation under the section to be made within two years of the date on which the persons conviction is reversed or he is pardoned. Section 133(3) provides: (3) The question whether there is a right to compensation under this section shall be determined by the Secretary of State. Under section 133(5), the term reversed is to be construed as referring to a conviction having been quashed, inter alia, on an appeal out of time, or following a reference to the CACD by the Criminal Cases Review Commission. Section 133 was enacted to give effect to the United Kingdoms international obligations under article 14(6) of the International Covenant on Civil and Political Rights 1966 (the ICCPR), ratified by the United Kingdom in 1976. Article 14(6), in its English version, provides: When a person has by a final decision been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice, the person who has suffered punishment as a result of such conviction shall be compensated according to law, unless it is proved that the non disclosure of the unknown fact in time is wholly or partly attributable to him. There is a very similar provision in article 3 of Protocol No 7 to the Convention (A3P7), which the United Kingdom has not ratified. Section 133(1) restricts compensation to cases where a persons conviction has been reversed (or he has been pardoned: for the sake of brevity, I will focus from this point onwards on cases where convictions are reversed) on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. Convictions are not quashed in England and Wales on the ground that there has been a miscarriage of justice, but on the ground that they are unsafe: see further paras 25 et seq below. It was said in Adams, para 36, that the words on the ground that must, if they are to make sense, be read as in circumstances where, and that the Secretary of State must therefore determine whether a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. In deciding that question, the Secretary of State would have regard to the judgment of the CACD, but ultimately had to form his own conclusion. The term miscarriage of justice was not defined when section 133 was originally enacted. This resulted in a series of cases in which the courts sought to interpret the term, culminating in the decision of this court in Adams delivered on 11 May 2011. In that case, the court adopted four categories of case, of progressively wider scope, as a framework for discussion. They were: cases where the fresh evidence shows clearly that the defendant is cases where the fresh evidence so undermines the evidence against the 1) innocent of the crime of which he was convicted; 2) defendant that no conviction could possibly be based upon it; 3) cases where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant; and 4) cases where something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted. By a majority, the court held that the term miscarriage of justice covered all cases falling within category (2). It therefore included, but was not limited to, cases falling within category (1). The minority view was that the term was confined to category (1) cases. Section 133 was then amended, with effect from 13 March 2014, by section 175 of the 2014 Act, so as to confine the term miscarriage of justice to category (1) cases. Section 133(1) remained unaltered: it continued to be necessary for the conviction to be reversed on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. However, section 175 of the 2014 Act inserted section 133(1ZA) into the 1988 Act, providing a statutory definition of the term miscarriage of justice: (1ZA) For the purposes of subsection (1), there has been a miscarriage of justice in relation to a person convicted of a criminal offence in England and Wales or, in a case where subsection (6H) applies, Northern Ireland, if and only if the new or newly discovered fact shows beyond reasonable doubt that the person did not commit the offence (and references in the rest of this Part to a miscarriage of justice are to be construed accordingly). The words did not commit the offence can be read as synonymous in this context with the words is innocent used by this court in category (1) in Adams. The effect of section 133(1ZA) is therefore that there is a miscarriage of justice, for the purposes of section 133(1), only where the new or newly discovered fact shows beyond reasonable doubt that the case falls into category (1) recognised in Adams. As stated already however (para 17 above, and see paras 25 et seq below), the ground on which a conviction is quashed by the CACD is that it is unsafe. Section 133 has therefore to be understood as requiring compensation to be paid only where the Secretary of State determines that the CACD quashed the conviction in circumstances where fresh evidence shows beyond reasonable doubt that the person did not commit the offence. It was under section 133 as so amended that Mr Hallams and Mr Nealons applications for compensation were considered and refused by the Secretary of State. The present proceedings Mr Hallam and Mr Nealon contend that section 133(1ZA) is incompatible with article 6(2) of the Convention, which provides: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. They seek a declaration of incompatibility under section 4 of the Human Rights Act 1998. Their applications were rejected by the Divisional Court, comprising Burnett LJ and Thirlwall J: [2015] EWHC 1565 (Admin). The Divisional Court held that it was bound by Adams, and by the decision of the Court of Appeal in R (Allen) (formerly Harris) v Secretary of State for Justice [2008] EWCA Civ 808; [2009] 1 Cr App R 2, to hold that article 6(2) had no application to section 133, notwithstanding the more recent decision to the contrary by the Grand Chamber of the European Court of Human Rights in Allen v United Kingdom (2013) 63 EHRR 10. It further held that section 133 was in any event compatible with article 6(2), taking the view that the requirement that the Secretary of State be satisfied that the new or newly discovered fact showed beyond reasonable doubt that the person did not commit the offence could be distinguished from a requirement that the Secretary of State be satisfied of the persons innocence in a wider or general sense. On appeal, the Court of Appeal (Lord Dyson MR, Sir Brian Leveson P and Hamblen LJ) considered that it was bound by the decision in Adams to hold that article 6(2) was not applicable to section 133: [2016] EWCA Civ 355; [2017] QB 571. On the other hand, it also considered that the line of Strasbourg jurisprudence including and following the judgment in Allen v United Kingdom (2013) 63 EHRR 10 was so clear and constant that, if not bound by Adams, it would have followed it. The court also agreed with the Divisional Court, for the reasons which it had given, that section 133 was in any event compatible with article 6(2). The issues arising The central issue on this appeal can be split into two broad questions: 1) The first concerns the scope under English law of article 6(2) scheduled to the Human Rights Act 1998: in particular whether and how far it applies at all to decisions on, or the criteria for, the award of compensation under section 133 of the Criminal Justice Act 1988; this question requires us to consider inter alia whether this court should depart from its decision in Adams. 2) The second question, arising if and so far as article 6(2) is applicable in respect to such decisions or criteria, is whether the definition of miscarriage of justice in section 133(1ZA), introduced by section 175 of the Anti Social Behaviour, Crime and Policing Act 2014 is incompatible with article 6(2). Innocence in criminal proceedings Before addressing these questions directly, it is appropriate to discuss an underlying question, namely the place of innocence in criminal proceedings. In English law, as in many other legal systems, it is not the function of criminal proceedings to determine innocence. As Lady Hale stated in Adams, para 116: Innocence as such is not a concept known to our criminal justice system. We distinguish between the guilty and the not guilty. A person is only guilty if the state can prove his guilt beyond reasonable doubt. It is equally not the function of the CACD on an appeal (or on a reference by the Criminal Cases Review Commission, which is by statute treated as an appeal) to determine whether the appellant did or did not commit the offence. The question for the CACD is whether the conviction is unsafe. Section 2(1) of the Criminal Appeal Act 1968 provides that the CACD shall allow an appeal if they think that the conviction is unsafe. The court is then required by section 2(2) to quash the conviction. Section 2(3) provides that an order quashing a conviction shall, except where a retrial is ordered operate as a direction to the court of trial to enter, instead of the record of conviction, a judgment and verdict of acquittal. A successful appellant is therefore in the same position for all purposes as if he had actually been acquitted: R v Barron [1914] 2 KB 570, 574. That it is not the function of the CACD to make findings of innocence was emphasised by Lord Phillips in Adams. In his judgment, he expressed agreement with the position as put in the Canadian case of R v Mullins Johnson (2007) 87 OR (3d) 425, where the Court of Appeal of Ontario said: 23. There are not in Canadian law two kinds of acquittals: those based on the Crown having failed to prove its case beyond a reasonable doubt and those where the accused has been shown to be factually innocent. We adopt the comments of the former Chief Justice of Canada in The Lamer Commission of Inquiry Pertaining to the Cases of: Ronald Dalton, Gregory Parsons, Randy Druken, Annex 3, p 341: [A] criminal trial does not address factual innocence. The criminal trial is to determine whether the Crown has proven its case beyond a reasonable doubt. If so, the accused is guilty. If not, the accused is found not guilty. There is no finding of factual innocence since it would not fall within the ambit or purpose of criminal law. 24. Just as the criminal trial is not a vehicle for declarations of factual innocence, so an appeal court, which obtains its jurisdiction from statute, has no jurisdiction to make a formal legal declaration of factual innocence. The fact that we are hearing this case as a Reference under section 696.3(3)(a)(ii) of the Criminal Code does not expand that jurisdiction. The terms of the Reference to this court are clear: we are hearing this case as if it were an appeal. While we are entitled to express our reasons for the result in clear and strong terms, as we have done, we cannot make a formal legal declaration of the appellants factual innocence. In addition to the jurisdictional issue, there are important 25. policy reasons for not, in effect, recognising a third verdict, other than guilty or not guilty, of factually innocent. The most compelling, and, in our view, conclusive reason is the impact it would have on other persons found not guilty by criminal courts. As Professor Kent Roach observed in a report he prepared for the Commission of Inquiry into Certain Aspects of the Trial and Conviction of James Driskell, there is a genuine concern that determinations and declarations of wrongful convictions could degrade the meaning of the not guilty verdict: see p 39. To recognise a third verdict in the criminal trial process would, in effect, create two classes of people: those found to be factually innocent and those who benefited from the presumption of innocence and the high standard of proof beyond a reasonable doubt. Lord Hope and Lord Kerr spoke to similar effect in paras 95 and 172, while acknowledging that the CACD may in practice occasionally observe that the effect of the material considered in the course of the appeal is demonstrative of innocence, or make an observation to like effect: see per Lord Kerr, para 172. Lord Judge, in a dissenting judgment, agreed (para 250) that innocence is a concept to which the criminal process is not directed. Hence, he also accepted, the word innocent could have no place in section 133. But he went on in para 251 to say that a CACD was entitled to state that a defendant was innocent and that, if the evidence unmistakeably demonstrated that the appellant was in truth innocent the terms of the judgment should conscientiously reflect the true reasons for its decision that the conviction should indeed be quashed as unsafe. In relation to Mr Hallam, the CACD spoke of that passage in Lord Judges judgment as setting out the courts powers, and decided that it would not be appropriate to use that power in Mr Hallams case (see para 5 above). The Secretary of State referred to these statements in his own remarks (para 6 above). It should be made clear that the CACD does not possess any power to make formal findings or declarations of innocence. Nothing in the Lord Chief Justices judgment in Adams suggested that it did. It is not the CACDs role to determine whether the appellant is factually innocent. The question which it determines is whether the conviction is unsafe. When giving its decision on that question, the court will necessarily explain the reasons for its decision. What it is appropriate to say in that regard will depend to a large extent on the circumstances of the case. In practice, it is often necessary to carry out an assessment of the strength of the evidence as a whole, both inculpatory and exculpatory. If the court considers that the evidence plainly exonerates the appellant, then it is entitled to say so when giving its reasons for allowing the appeal. Sometimes the Crown will have accepted that this is so, and in that event the judgment will normally record that stance. In other cases the significance of the fresh evidence is contested, and in that event the court generally confines itself to the issue of safety. It follows that, although there are some cases in which the court may state in its judgment that the appellant has been exonerated, it is not the purpose of the appeal proceedings to determine whether that is the position, and in the great majority of cases the court does not enter into the fact finding exercise which would be necessary before such a statement might be made. The absence of any statement that the appellant has been exonerated does not therefore carry any implication concerning the appellants innocence. It is, therefore, highly undesirable that whether the CACD should say that the appellant is innocent of the crime of which he was convicted should become an issue in an appeal, as it became in Mr Hallams case. This is not only because the issue does not properly arise. As the Canadian court explained in the case of Mullins Johnson, it is also important that the significance of acquittals should not be degraded by the introduction of a practice of distinguishing in a criminal context between those who are factually innocent and those who merely benefit from the legal presumption of innocence: a distinction which section 133, in its amended form, can have the understandable but unfortunate effect of encouraging successful appellants to ask the CACD to draw. Cases in which the CACD expresses the view that an appellant was innocent should remain, as Lord Bingham and others have said, very rare. No adverse inference should be drawn from the courts unwillingness to express such a view. The application of section 133 is for the Secretary of State, not for the CACD quashing the conviction. The scope of article 6(2)? Article 6 is headed right to a fair trial and article 6(2) reads: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. In construing article 6(2), we must under section 2(1)(a) of the Human Rights Act take into account any relevant case law of the European Court of Human Rights (ECtHR). This sharpens what would anyway be our natural approach when construing provisions designed to incorporate domestically the provisions of a Convention binding on the United Kingdom internationally in senses fixed internationally by the decisions of a supra national court. But on any ordinary reading, whether by reference to the principles in the Vienna Convention on the Law of Treaties 1969 (Cmnd 4140) or domestic principles, article 6(2) is limited to the pre trial phases of any criminal accusation or proceedings. What constitutes a criminal charge or proceeding has, not surprisingly, been given an autonomous meaning by the ECtHR, so as to include for example military disciplinary or administrative motor traffic violations: see Engel v The Netherlands (No 1) (1976) 1 EHRR 647, paras 80 81 and zturk v Germany (1983) 6 EHRR 409, paras 46 54. But once any criminal charge or proceeding, read in that sense, has terminated in acquittal or discontinuance, there is, as Lord Wilson points out (para 86(c)), no basis for any mere presumption of innocence. The European Court of Human Rights (the ECtHR) has however taken the view that article 6(2) has a continuing relevance after acquittal or discontinuance. In this connection, it recently stated as its starting point these propositions: Without protection to ensure respect for the acquittal or the discontinuation decision in any other proceedings, the fair trial guarantees of article 6(2) could risk becoming theoretical and illusory. What is also at stake once the criminal proceedings have concluded is the persons reputation and the way in which that person is perceived by the public. See Allen v United Kingdom (2013) 63 EHRR 10, para 94. Nevertheless, analysing the Strasbourg case law up to 2011 in the course of giving the majority judgment in Serious Organised Crime Agency v Gale [2011] UKSC 49; [2011] 1 WLR 2760 on 26 October 2011, Lord Phillips was inclined to the view that all that the cases establish is that article 6(2) prohibits a public authority from suggesting that an acquitted defendant should have been convicted on the application of the criminal standard of proof and that to infringe article 6(2) in this way entitles an applicant to compensation for damage to reputation or injury to feelings. He was of this view, although, he noted, it involves a remarkable extension of a provision that on the face of it is concerned with the fairness of the criminal trial: Gale, para 34, and see also para 58 of his judgment in Adams delivered earlier in 2011. The ECtHR, without referring to the discussion in Gale, indicated in Allen v United Kingdom on 12 July 2013 that it does not view article 6(2) in so clear cut or limited a sense as Lord Phillips suggested. First, it has developed, as an initial test of the application of article 6(2), the theory of a link between, on the one hand, an acquittal or discontinuation of criminal proceedings and, on the other, certain other types of proceedings or claims not involving the pursuit of any criminal charge. A range of cases in which a link has or has not been detected is listed in the ECtHRs judgment in Allen, para 98. The original concept of a link was, presumably, to set some limit on the expansion of article 6(2) beyond its natural sphere. The ECtHR has however gone on to say that the link may exist either because of the perceived closeness of the subject matter or simply because of a choice of words used by a court in the other proceedings. So, ultimately, the question whether article 6(2) applies can simply depend on the words used. Second, where the link is held to exist, the ECtHR has drawn distinctions between (a) claims by a defendant for eg costs or compensation arising out of the termination in his or her favour of the criminal proceedings, and (b) claims by third party victims against a defendant who has been acquitted in criminal proceedings or against whom criminal proceedings have been discontinued. (For the purpose of any such distinction, at least some issues raised by the state would presumably need to be treated as being, in reality, claims by or in the interest of a third party, eg child care proceedings brought by the state.) In the former case, (a), the ECtHR has held that, where there has been an acquittal on the merits in a true sense (rather than a discontinuance or an outcome sharing features associated by the ECtHR with a discontinuance) any voicing of suspicion of guilt by the public authority against whom such a claim is made constitutes a violation of article 6(2): Sekanina v Austria (1994) 17 EHRR 221 and Allen v United Kingdom, paras 122 123. Even in a case of or similar to discontinuance, it appears, however, from para 128 of the ECtHRs judgment in Allen, as Lord Reed notes, that nothing must be said in a civil context which calls into question the innocence of the defendant in the criminal context. The rationale of any distinction between (true) acquittals and discontinuance is not easy to understand. If the presumption of innocence is the key, one would have thought it equally applicable in both situations, or possibly even more so in a situation where the state has not felt able to pursue any criminal charges at all and has therefore discontinued. Be that as it may be, the application of any such distinction is itself fraught with difficulties as is evident by a comparison of Sekanina itself with Allen. In Sekanina, the defendant was acquitted by the jury. The Code of Criminal Procedure required acquittal where the court finds that the alleged offence was not made out or that it has not been established that the accused committed the act of which [she] is accused. In contrast, the statutory condition for awarding costs and compensation in each case depended, in summary, on the absence of suspicion generated by the defendants conduct. The Austrian courts made a careful analysis of the circumstances, including the criminal court file, and concluded that this condition was not satisfied. The Austrian Court of Appeal said: In order to establish whether or not such suspicion subsists, it might be more useful to refer to the record of the jurys deliberations. The content of this record suggests rather that in the jurys opinion all suspicion had not been removed. However, as the court called upon to rule under the [1969] Act is not bound, in its assessment of the position as regards suspicion, by the verdict (of acquittal) at the trial, not even the record of the jurys deliberations is of decisive importance. After setting out a whole range of suspicious circumstances, the Court of Appeal concluded: Having had regard to all these circumstances, the majority of which were not disproved at the trial, the jury took the view that the suspicion was not sufficient to reach a guilty verdict; there was, however, no question of that suspicion being dispelled. The Austrian courts therefore distinguished between the acquittal and any entitlement to compensation. Nevertheless, the ECtHR said that it was of the opinion that Austrian legislation and practice nevertheless link the two questions the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue can be regarded as a consequence and, to some extent, the concomitant of the decision on the former (para 22). Bearing in mind the distinction drawn by the Austrian courts, the suggested consequence and concomitance are both elusive. However, they were only invoked to establish that article 6(2) was engaged, in the sense that it was open to the complainant to assert that it was potentially infringed at all. What was critical is whether it was actually infringed. Here, the ECtHR, after referring to that courts comprehensive list of items of evidence against Mr Sekanina and to the care with which that court had examined the witness statements, and reciting the passage from the Court of Appeals judgment, last set out, went on in the critical part of its judgment (para 30): Such affirmations not corroborated by the judgment acquitting the applicant or by the record of the jurys deliberations left open a doubt both as to the applicants innocence and as to the correctness of the Assize Courts verdict. Despite the fact that there had been a final decision acquitting Mr Sekanina, the courts which had to rule on the claim for compensation undertook an assessment of the applicants guilt on the basis of the contents of the Assize Court file. The voicing of suspicions regarding an accuseds innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits of the accusation. However, it is no longer admissible to rely on such suspicions once an acquittal has become final. It appears that the ECtHR not only disagreed with the Austrian Court of Appeals analysis of the trial and jury record, but also held it to be illegitimate, in terms of the Convention and in the context of compensation, for the Austrian courts to embark in the first place on any consideration whether suspicions remained in the light of the acquittal. Contrast the ECtHRs recent judgment in Allen, where the ECtHR upheld the decision of the Secretary of State and of the courts judicially reviewing his decision that it was legitimate to refuse compensation on the ground that the CACDs setting aside of Ms Allens conviction merely established was that the new evidence might have led the jury to a different result meaning that the conviction was unsafe. The jurys acquittal in Sekanina was evidently analysed as a true acquittal or exoneration, whereas the CACDs was not. But what then would be the position if a criminal judge or court were (as can happen) to acquit a defendant on the basis that the prosecution had not established its case to the requisite criminal standard and/or that the defendant was entitled to the benefit of the doubt? Why should such an outcome at first instance be treated any differently from the outcome before the CACD on appeal in Allen? And, if the two situations are alike, then the potential applicability of Sekanina must, in the light of Allen, be understood as severely limited in scope. Turning to claims by third party victims against a defendant after acquittal or discontinuance (case (b) referred in para 39 above), the ECtHRs position is that: regardless of whether the criminal proceedings ended in discontinuation or acquittal, the court has emphasised that while exoneration from criminal liability ought to be respected in the civil compensation proceedings, it should not preclude the establishment of civil liability to pay compensation arising out of the same facts on the basis of a less strict burden of proof. However, if the national decision on compensation were to contain a statement imputing criminal liability to the respondent party, this would raise an issue falling within the ambit of article 6(2) of the Convention (see Ringvold, cited above, para 38; Y, cited above paras 41 42; Orr, cited above, paras 409 and 51 ). See Allen v United Kingdom (2013) 63 EHRR 10, para 123. So at first sight claims by third party victims fall outside the scope of the approach the ECtHR has developed for issues arising between the state and a defendant against whom the state has unsuccessfully pursued a criminal charge, leading to acquittal or discontinuance. The qualification, contained in the second quoted sentence, may, according to its text, be read as corresponding with the view taken by Lord Phillips and others including myself in Gale, that is to say that a later civil court must not undermine an acquittal by suggesting that a person ought to have been convicted on the criminal onus: see para 37 above. But, if this is the direction in which the ECtHR is, as one would hope, moving, it is unfortunate that it was accompanied by the citation of problematic authorities discussed further in paras 49 53 below. Further, the current upshot, in the ECtHRs own words in Allen, is that: 125. It emerges from the above examination of the courts case law under article 6(2) that there is no single approach to ascertaining the circumstances in which that article will be violated in the context of proceedings which follow the conclusion of criminal proceedings. As illustrated by the courts existing case law, much will depend on the nature and context of the proceedings in which the impugned decision was adopted. 126. In all cases and no matter what the approach applied, the language used by the decision maker will be of critical importance in assessing the compatibility of the decision and its reasoning with article 6(2) . Although context is all in the law, this degree of vagueness about general principles is indicative of the uncertain and shifting ground onto which the ECtHRs expansion of the meaning and application of article 6(2) has led. Like Lord Phillips, with whose judgment in Serious Organised Crime Agency v Gale I concurred, I can however accept that, once criminal proceedings have concluded with acquittal, or, indeed, a discontinuance, no court should in civil or other proceedings express itself in terms which takes issue with the correctness of the criminal acquittal or discontinuance. Such an extension, achieving a degree of harmony with the approach in Strasbourg, seems at least workable and, of course, reflects what one would hope was anyway proper practice. But courts have often in contexts not involving the pursuit of a criminal charge and using tools and language appropriate to such contexts to engage with identical facts to those which have led to a criminal acquittal or discontinuance of criminal proceedings. In such circumstances, it is very commonly the case that the standard of proof will differ in the different contexts of criminal and other proceedings. It is, thus, entirely possible that a court may, in a context not involving the pursuit of any criminal charge, find on the balance of probabilities facts which could not be established beyond reasonable doubt in criminal proceedings. The question whether a link exists between the criminal and, say, civil proceedings then appears as a diversion from the real question. The ECtHR may itself be seen to accept that the concept of a link is not critical, because its statement that the words used may themselves create a sufficient link effectively collapses that concept into a consideration of the nature of the words. However, the question remains what nature of words is it permissible to use? The real test is, or should be, whether the court in addressing the civil claim has suggested that the criminal proceedings should have been determined differently. If it has, it has exceeded its role. If on the other hand, a court has, on the same facts as were in issue in criminal proceedings leading to an acquittal or discontinuance, determined a civil issue (or any issue other than a criminal charge) against the defendant, and has been confined itself to reasoning relevant to that issue, that means, as I see it, that it has applied the law, rather than infringed article 6(2). I do not believe that either the press or the public is wholly ignorant that the criminal standard of proof may on occasions lead to acquittal or discontinuance, in circumstances where the commission of the offence could be established on the balance of probabilities. There have been very well publicised cases both here and across the Atlantic. There is also a legitimate public interest in such cases being publicly decided and clearly, rather than obscurely, reasoned. Unfortunately, as it seems to me, the ECtHR has in a number of judgments condemned courts determining a civil issue for accurate descriptions of the elements of an offence constituting a tort simply because such elements also featured in past criminal proceedings. To require a civil court to tergiversate, by using words designed to obscure the fact that the law may find facts proved on a balance of probabilities which were not proved to the standard necessary for criminal conviction, does not assist either the law or the public or the defendant. Y v Norway (2003) 41 EHRR 87 is an example of a civil court being apparently expected, in the name of article 6(2), to adopt circumlocutions which do no service to transparency. Ringvold v Norway (Application No 34964/97), a judgment issued by the same section in the same constitution on the same day as Orr v Norway (Application No 31283/04), shows to what fine and unsatisfactory distinctions the past case law may lead. Lord Hughes sets out in his para 118 the circumstances in Orr v Norway. The ECtHRs reasoning there was that: although the concept of violence may not have been exclusively criminal in nature, the use made of it by the High Court in the particular context did confer criminal law features on its reasoning overstepping the bonds of the civil forum [sic]. A reading of the reasoning of the High Court, set out very fully, at para 9 in the report of Orr v Norway, shows the care actually taken by the High Court to explain the difference between the criminal proceedings and the civil claim. I will not set it out in full, but will take it as read and quote only the first and the last two paragraphs, where the High Court said: Despite the fact that [the applicant] has been acquitted of having, with intent or gross negligence, raped [Ms C], under Norwegian law, she has not thereby lost her possibility to claim compensation under the civil law on tort for the harmful act that she claims has taken place. Because other and weaker requirements of proof apply for establishing that an act has occurred under the civil law on tort than when there is question of imposing criminal liability for the same act, an award of compensation for pecuniary/non pecuniary damage would not in itself amount to setting aside the acquittal. The majority [. ] finds on the evidence that on the balance of probabilities it was clearly probable that [the applicant] understood that [Ms C] did not want sexual relations with him, but nonetheless forced coitus upon her by exercising such a level of violence [vold] that the act could be accomplished. There was no question of serious use of violence [alvorlig voldsbruk], only of overpowering by holding [Ms C]s arms. Even though the victim had different alternatives for escaping the situation, which she for different reasons did not find that she could use, this does not alter the basic character of the act which was wilful violation by the use of violence [vold]. Against the background of the majoritys finding that it has been established that on the balance of probabilities it was clearly probable that [the applicant], by the use of violence [vold] has gained [tiltvunget seg] sexual intercourse with [Ms C], the conditions for making an award of compensation have been fulfilled. [. ] I am unable to discern what the Norwegian High Court should, while fulfilling its civil role, have said in order to avoid conferring criminal law features on its reasoning and violating article 6(2). The High Court went to great pains to differentiate and so reconcile its treatment of the criminal and civil issues, and the element of violence, although common to both issues, was a critical element in any adjudication of the civil claim, both as to liability and quantum of compensation. The dissenting opinions of Judges Jebens, Nicolaou and Vaji appear unanswerable on these points. Many of the points I have so far made are also encapsulated in Judge De Gaetanos separate opinion in the case of Ashendon and Jones v United Kingdom (Application Nos 35730/07 and 4285/08) and his forceful and pragmatic remarks in his separate judgment in Allen v United Kingdom. I note also that in two more recent cases subsequent to Allen, in which the ECtHR recited the principles in Allen and concluded that a sufficient link existed for article 6(2) to be engaged, the ECtHR went on to accept the reasoning and language of the domestic courts as consistent with that article, although it had examined and relied on the same facts as had led to criminal acquittals. In the first case, Vella v Malta (Application No 69122/10) (11 February 2014) following acquittals on charges of theft and receiving, civil issues had arisen from third party claims to the relevant objects. In the second case, Mller v Germany (Application No 54963/08) (27 March 2014), the issue of the applicants safety for probationary release had led the court to form a view on facts occurring during a prior period of probation in respect of which the applicant had been charged and acquitted. Both these cases suggest that the ECtHR may be moving towards a limited view of any application of article 6(2) after acquittal, broadly consistent with that suggested by Lord Phillips in Gale: see paras 37 and 47 above. For my part, I would refuse to depart from Adams and Gale, or to follow the case law of the ECtHR, if and insofar as the ECtHR may in the past have gone further ie further than to preclude reasoning that suggests that the defendant in criminal proceedings leading to an acquittal or discontinuance should have been convicted of the criminal offence with which he was charged. On that basis alone, in my view, these appeals should be dismissed, since nothing in section 133(1ZA) or in the Secretary of States rejections of the appellants claims to compensation involves any such suggestion. Compatibility of section 133(1A) with article 6(2)? Assuming that I am wrong about that, and article 6(2) can have some wider application to claims not involving the pursuit of any criminal charge, the question still arises whether section 133(1ZA) is incompatible with article 6(2). The ECtHR in Allen v United Kingdom, para 128, identified the criteria for compensation stated in the original section 133 as being: put concisely, that the claimant had previously been convicted; that she had suffered punishment as a result; that an appeal had been allowed out of time; and that the ground for allowing the appeal was that a new fact showed beyond reasonable doubt that there had been a miscarriage of justice. It went on: The criteria reflect, with only minor linguistic changes, the provisions of article 3 of Protocol No 7 to the Convention, which must be capable of being read in a manner which is compatible with article 6(2). The court is accordingly satisfied that there is nothing in these criteria themselves which calls into question the innocence of an acquitted person, and that the legislation itself did not require any assessment of the applicants criminal guilt. The words beyond reasonable doubt appearing in the original section 133 were thus treated as an acceptable equivalent of the word conclusively appearing in A3P7. The Supreme Court in R (Adams) v Secretary of State for Justice [2011] UKSC 18; [2012] 1 AC 48 identified for domestic purposes the four categories of case which might be suggested to fall within section 133 in its original form, and which I have set out in para 18 above. The Supreme Court held in R (Adams) that section 133, as originally enacted, enabled compensation to be claimed in categories (1) and (2), but not categories (3) and (4). Allen v United Kingdom concerned what was, in the English domestic terms used in Adams, a category (3) case, ie a case where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant. The ECtHR also treated the case as having some features more akin to discontinuance than to acquittal on the merits (see para 39 above). However, that seems to have been so simply because the CACD confined itself to the basic test (whether the conviction was safe) which it was required by statute to apply, and because the Administrative Court and Court of Appeal, in the judicial review proceedings relating to the Secretary of States refusal of compensation, proceeded accordingly: see in particular para 134 in Allen, where the ECtHR said: The court does not consider that the language used by the domestic courts [ie the courts considering the judicial review of the Secretary of States refusal to pay compensation], when considered in the context of the exercise which they were required to undertake, can be said to have undermined the applicants acquittal or to have treated her in a manner inconsistent with her innocence. The courts directed themselves, as they were required to do under section 133 [of the 1988 Act], to the need to establish whether there was a miscarriage of justice. In assessing whether a miscarriage of justice had arisen, the courts did not comment on whether, on the basis of the evidence as it stood at the appeal, the applicant should be, or would likely be, acquitted or convicted. Equally, they did not comment on whether the evidence was indicative of the applicants guilt or innocence. They merely acknowledged the conclusions of the CACD, which itself was addressing the historical question whether, had the new evidence been available prior to or during the trial, there would nonetheless have been a case for the applicant to answer. They consistently repeated that it would have been for a jury to assess the new evidence had a retrial been ordered The ECtHR held in Allen that there had in these circumstances been nothing in the English courts treatment of the defendant under section 133 to undermine her acquittal or demonstrate a lack of respect for the presumption of innocence which she enjoyed, and so no violation. The ECtHR approached Allen on the basis of the language used by the English courts, rather than an examination of the meaning of section 133. Thus, it said (para 129), that: It was for the domestic courts to interpret the legislation in order to give effect to the will of the legislature and in doing so they were entitled to conclude that more than an acquittal was required in order for a miscarriage of justice to be established, provided always that they did not call into question the applicants innocence. The court is not therefore concerned with the differing interpretations given to that term by the judges in the House of Lords in R (Mullen) and, after the judgment of the Court of Appeal in the present case, by the judges in the Supreme Court in R (Adams). What the court has to assess is whether, having regard to the nature of the task that the domestic courts were required to carry out, and in the context of the judgment quashing the applicants conviction, the language they employed was compatible with the presumption of innocence guaranteed by article 6(2). Differing views had been expressed in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18; [2005] 1 AC 1 as to whether section 133 as originally enacted confined the right to compensation to category (1) cases, ie cases where the fresh evidence shows clearly that the defendant is innocent of the crime of which he was convicted. That was Lord Steyns view, with which Lord Bingham did not associate himself. The ECtHRs focus in Allen on the language used by the English courts was possible because it was not suggested in Allen that Ms Allens case fell into any category other than category (3): see further paras 67 69 below. The ECtHR did however give a strong clue as to its thinking on the potential consequences under article 6(2) of Lord Steyns construction of section 133, had the English courts relied on and applied that, when in para 133 it said: But what is important above all is that the judgments of the High Court and the Court of Appeal did not require the applicant to satisfy Lord Steyns test of demonstrating her innocence. The High Court in particular emphasised that the facts of R (Mullen) were far removed from those of the applicants case and that the ratio decidendi of the decision in R (Mullen) did not assist in the resolution of her case. The new section 133(1ZA) confines compensation to circumstances where a conviction is reversed by the CACD (or a pardon granted) on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice in the sense that it shows beyond reasonable doubt that the defendant did not commit the offence. It therefore confines compensation to cases within category (1), matching Lord Steyns view of its original meaning. Does this mean that we should declare it to be incompatible with article 6(2)? I readily acknowledge that this might at first sight appear to be the implication of the ECtHRs thinking in the passage cited above from para 133 of the ECtHRs judgment in Allen. But the point has never been directly before or decided by the ECtHR, and I am far from confident that its implications have been worked through in a manner which makes it acceptable, or that the ECtHR would conclude that section 133(1ZA) is incompatible if the question were argued out before it. The first matter that I would address is the clear understanding of the drafters of A3P7, which (although the United Kingdom has not ratified that Protocol) is clearly the origin of section 133: see para 16 above. That understanding appears in the Explanatory Memorandum which was prepared along with the draft Protocol by the Steering Committee for Human Rights, which submitted both documents together to the Council of Ministers on 22 November 1984, the date on which the Protocol was adopted. The Explanatory Memorandum makes clear that A3P7 contemplated just such a provision as now exists under English law in section 133(1ZA). It says: The intention is that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be acknowledgement that the person concerned was clearly innocent. The article is not intended to give a right of compensation where all the preconditions are not satisfied, for example, where an appellate, court had quashed a conviction because it had discovered some fact which introduced a reasonable doubt as to the guilt of the accused and which had been overlooked by the trial judge. The ECtHR in Allen addressed this by saying in para 133: However, the Explanatory Report itself provides that, although intended to facilitate the understanding of the provisions contained in the Protocol, it does not constitute an authoritative interpretation of the text (see para 71 above). Its references to the need to demonstrate innocence must now be considered to have been overtaken by the courts intervening case law on article 6(2). As para 71 sets out, the full text of the Explanatory Memorandum was to the effect that it . does not constitute an instrument providing an authoritative interpretation of the text of the Protocol, although it might be of such a nature as to facilitate the understanding of the provisions contained therein. As a statement of what the drafters actually intended by A3P7, one would have thought that the Explanatory Memorandum could not have been clearer. On what basis subsequent case law could silently overtake this clear original intention is not obvious. In what follows, however, I shall approach the construction of section 133 independently of the Explanatory Memorandum. It might have been thought that, both in its original and in its current form, section 133 (as also A3P7) makes any right to compensation entirely dependent on the ground on which the criminal court (here the CACD) reverses the conviction (or on which a pardon is granted). That would, if correct, have had two consequences. First, it would have marked another distinction from Sekanina, where the award of compensation depended on its face on an independent evaluation of the position by a civil court. Since compensation would then simply have depended on how the criminal court expressed itself, the principle that neither the state nor a later court dealing with a civil claim should say anything different from the criminal court acquitting the defendant could not apply at all. Second, it would have meant that the present appellants had no claim, since a reading of the grounds on which the CACD allowed their appeals indicates that in each case it did so simply because the newly discovered facts made their convictions unsafe. In other words, the CACDs actual decision was, as in Allen, simply that their cases fell domestically within category (3). correct. First, I note that section 133(3) provides that: I am not, however, prepared to accept such a construction of section 133 as The question whether there is a right to compensation under this section shall be determined by the Secretary of State. Second, Lord Phillips in R (Adams) proceeded on an opposite basis, without any contrary reservation being made by any of his fellow judges. On this basis, the Secretary of State is given an adjudicative role (subject of course, where necessary, to judicial review by the ordinary courts) in relation to the question whether a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. It is clear from Allen v United Kingdom that there is nothing wrong with a criminal court, when setting aside a conviction, confining itself (in accordance with its role explained in paras 26 to 34 above) to indicating that the new evidence, when taken with the evidence given at trial, created the possibility that a jury might properly acquit the defendant; or explaining that the evidence which was now available might, if it had been heard by the jury, have led to a different result; or expressing itself in terms which did not begin to carry the implication that there was no case for the applicant to answer; or indicating that there was no basis for saying on the new evidence that there was no case to go to a jury: see paras 131 132 in Allen. All these are ways of expressing a conclusion that a case falls within category (3). They amount to saying that some ground for suspicion remains. Yet it is clear from Allen that they are acceptable and that Sekanina does not have contrary effect. A central plank of the ECtHRs judgment in Allen is that there is nothing wrong with a refusal of compensation on the ground that the case falls within category (3). That is, as I read both the CACDs judgments, also the ground on which the CACD allowed both the present appellants appeals in the criminal proceedings, as well as the ground on which the Secretary of State disallowed their claims for compensation. It follows, as the other side of the coin from what I have already said, that the right to compensation can legitimately be expressed to depend upon whether (adopting the terminology in Adams) the conviction was set aside on a ground falling within category (1) or (2). Logically, a defendant wishing not merely to have a conviction set aside, but also wishing to recover compensation, must, unless the case is one of the rare cases (see paras 32 to 34 above) in which the CACD expresses its judgment setting aside the conviction in terms going further than a conclusion that the conviction is unsafe, persuade the Secretary of State to go further. In the rare case where the CACD does express itself in terms stating that the defendant is innocent, that will in practice be conclusive. The Secretary of State could not realistically go behind such a statement. But in other cases, where the CACD has merely determined that the conviction is unsafe, it must be open to the state to resist a defendants suggestion that the case falls within a different category that would entitle him to compensation, and for the Secretary of State to reach a conclusion on that basis. Otherwise, as soon as a defendant argues that the Secretary of State should go further than the CACD has gone and should view the circumstances as falling within a category for which the legislature has prescribed compensation, the state would have to accept this, and concede liability to pay compensation. This situation did not of course arise in Allen, because there was no attempt there by Ms Allen to bring her circumstances into any category other than that of category (3) within which the CACD had seen it as falling. A defendant seeking compensation after the setting aside of his or her conviction by the CACD may therefore be required to show that the circumstances were not merely such that his conviction was unsafe. Using the terminology in Adams, the circumstances must be shown to fall within a higher category, which must, necessarily (and using the terminology in Adams), be either category (1) or category (2), or, since the enactment of section 133(1ZA), category (1) alone. Is there, in terms of compliance with the Convention, any sensible distinction between categories (1) and (2)? Category (1) is no more than a subset of category (2). If it is legitimate for the state to require a defendant to show at least that his or her case falls within category (2), on what basis could it be illegitimate for the state to require a defendant to show that it falls within category (1)? Putting the matter the other way around, the ECtHR has in para 133 in Allen implied that there would be an objection to requiring a defendant to show that the case fell within category (1). But it has not (at least in terms) addressed category (2). It may be that the ECtHRs passing reference in para 133 to the inappropriateness of Lord Steyns test should be understood as embracing both categories (1) and (2). If so, then, as the preceding paragraph of this judgment shows, the effect would be largely to undermine the outcome of Allen itself. All that an applicant for compensation would need to do was assert this his or her claim fell into a higher category than category (3), and the state would be precluded from asserting the contrary, because to do so would be to infringe the presumption of innocence. A way out of this impasse might exist if a sensible distinction could in the context of the Convention be drawn between categories (1) and (2). The legislation, or the language of the courts, could then be amended to speak not of proof of innocence, but of proof that the new or newly discovered fact so undermined the case against the applicant that no conviction could possibly be based on it. But could reference to a case as falling within category (2) sensibly be distinguished from whatever may be thought to be the ambit of the ECtHRs implied objection to language bringing a case within category (1)? If, to use the ECtHRs further words in Allen, para 136, it demonstrates a lack of respect for the presumption of innocence which [a defendant] enjoys in respect of the criminal charge of which she has been acquitted to refuse compensation on the ground that the defendant has not shown innocence, it would presumably also demonstrate a lack of respect for the presumption of innocence to refuse it on the ground that the defendant had not shown that she was not only acquitted, but also that there was no evidence upon the basis of which she could possibly have been convicted. The two situations are distinct as a matter of domestic criminal law, and the legislature has distinguished between them for the purposes of compensation. But to distinguish between them in terms of the Convention and in relation to the question of infringement of the presumption of innocence, would seem to do no more than add another fine and unconvincing distinction, in an area where the application of the Convention already appears too full of unsatisfactory and unsatisfying distinctions and uncertainties. I cannot therefore see any logical basis on which section 133(1ZA) can or should be seen as incompatible in terms of article 6(2) of the Convention. As to the relationship between this court and the European Court of Human Rights jurisprudence, I am of course very conscious of what has been said by Lord Neuberger and myself in the passages cited by Lord Reed in his para 172. Like Lord Wilson, I would, however, draw attention to the further words of Lord Hughes and myself in R (Haney, Kaiyam and Massey) v Secretary of State for Justice [2014] UKSC 66; [2015] AC 1344, para 21, where we said that: The degree of constraint imposed or freedom allowed by the phrase must take into account is context specific, and it would be unwise to treat Lord Neuberger MRs reference to decisions whose reasoning does not appear to overlook or misunderstand some argument or point of principle or Lord Mance JSCs reference to some egregious oversight or misunderstanding as more than attempts at general guidelines, or to attach too much weight to his choice of the word egregious, compared with Lord Neuberger MRs omission of such a qualification. Conclusion Speaking for myself, I cannot regard the current state of European Court of Human Rights case law as coherent or settled on the points critical to this appeal. The second point has never been directly addressed; it is at most addressed indirectly by a passing dictum, uttered in a context in Allen where no detailed analysis was necessary because the point did not directly arise. I do not share Lord Wilsons view, in para 94(c) of his judgment, that it is over optimistic to suppose that the ECtHR will not think again in relation to article 6(2), generally or, at the least and critically, in relation to its dictum regarding Lord Steyns approach quoted in para 49 above. But, however that may be, I question whether the area of law currently under discussion is one where uniformity of approach is critical, even if the precise implications of the ECtHR case law were clear. In summary, I am, for the reasons given, persuaded that it would be inappropriate to introduce into English law an interpretation of article 6(2) going beyond that identified by Lord Phillips, as set out in paras 37 and 47 above. But, in any event and even if article 6(2) does have a wider application in respect of claims not involving any criminal charge, I am not persuaded that section 133(1ZA) can or should be regarded as incompatible with article 6(2). For all these reasons a declaration of incompatibility is in my opinion inappropriate. LADY HALE: In general, where it is clear that the European Court of Human Rights would find that the United Kingdom has violated the Convention in respect of an individual, it is wise for this court also to find that his rights have been breached. The object of the Human Rights Act 1998 was to bring rights home so that people whose rights had been violated would no longer have to go to the Strasbourg court to have them vindicated. I was initially disposed to think, for the reasons explained by Lord Reed, that the Strasbourg court would indeed find a violation in this case. However, I am persuaded that this is not as clear as once I thought it was, for several reasons. There are, of course, all the objections in principle to applying the presumption of innocence to any proceedings taking place after the criminal charge has been determined, either by acquittal or discontinuance, so eloquently voiced by Lord Wilson and Lord Hughes. But it is surely too late in the day for the Strasbourg court to revisit that whole question. Furthermore, as Lord Reed has demonstrated, all the arguments deployed by the majority in Adams in holding that article 6(2) was simply not engaged in section 133 cases have been comprehensively rejected by the Strasbourg court. I would therefore agree with him that article 6(2) is engaged in this case. However, it does not follow that the Strasbourg court would automatically find that it has been breached in this case. As Lord Mance explains (para 39), the Strasbourg court has drawn a distinction between (a) claims by a defendant for such things as costs or compensation arising out of the termination of a criminal case against him in his favour, either by acquittal or discontinuance, and (b) civil claims by or on behalf of third party victims against a former defendant in criminal proceedings which have been determined in his favour. In category (b) cases, where the parties are different, the standard of proof is different, the admissible evidence may also be different, and liability is not dependent upon criminal proceedings having been brought at all, the Strasbourg court has clearly accepted that the civil claim may be determined differently from the criminal proceedings without violating article 6(2). The important thing is the language adopted by the court when deciding the civil claim, as illustrated in the contrasting decisions in Ringvold v Norway (Application No 34964/97), and Y v Norway (2003) 41 EHRR 87. Lord Mance suggests that the real test is, or should be, whether the court in addressing the civil claim has suggested that the criminal proceedings should have been determined differently (para 47). I agree, and I share his regret that, in Orr v Norway (Application No 31283/04), judgment of 15 May 2008, the Chamber, by a narrow majority, appear to have asked more of the civil court than this. While accepting that an acquittal in criminal proceedings is no bar to a civil claim for compensation based on the same facts, they appear to have demanded that the court hearing the civil claim phrase its decisions in less than fully transparent language. This is contrary to the rule of law: courts must always be able to explain their decisions fully, clearly and honestly. The one thing they must avoid is suggesting, in civil proceedings, that the defendant should have been convicted of the criminal offence. But I take comfort from the fact that this was the decision of a Chamber of the court, and by the narrow margin of four to three. This is not a category (b) case, but Lord Mance detects signs that the Strasbourg court might also be prepared, despite the breadth of its language in Allen v United Kingdom (2013) 63 EHRR 10, to adopt an approach to category (a) cases which in practice requires merely that the court determining the defendants claim for costs or compensation refrain from any suggestion that he should have been convicted of the offence. There is enough in the evolution of the courts jurisprudence to suggest that, for the most part and with some limited exceptions, that is in fact what they are doing. If that were indeed to be the approach of the Strasbourg court to these cases, it might still be that the insistence on showing beyond reasonable doubt that the claimant did not commit the crime in section 133(1ZA) of the Criminal Justice Act 1988 will lead to a violation of article 6(2) in some cases where compensation is denied. But I am not convinced that it would always do so. An indication is the strong clue in para 133 of Allen in relation to Lord Steyns test (later adopted in section 133(1ZA)), quoted by Lord Mance at para 63. But, as he points out, the court was not addressing such a case in Allen, which was acknowledged to be a case in Adams category (3), where the conviction was quashed because it was unsafe in the sense that the fresh evidence meant that a jury might or might not have convicted. Provided that this is explained without suggesting that the defendant should have been convicted, there is no breach of article 6(2). The cases before us are also cases, like Allen, in which the fresh evidence rendered the conviction unsafe, in the sense that, had it been available at trial, a reasonable jury might or might not have convicted the defendant. The Grand Chamber found no violation in the case of Allen. In my view, the issue of incompatibility would be better addressed in a case which fell clearly within category (2), where it might be difficult to explain the difference between that and a category (1) case without casting doubt on the acquittal. But if it be right that the true question is whether the Secretary of State, or a court in judicial review proceedings, has suggested that the defendant ought to have been convicted, then it does not seem impossible to explain a refusal of compensation without doing this. Furthermore, where a particular statutory provision may or may not lead to a violation, it is not appropriate, in my view, to make a declaration of incompatibility in proceedings brought by an individual in respect of whom the Strasbourg court is unlikely to find a violation, as I believe these to be. I should add that my view of the appropriateness of making a declaration of incompatibility in this case has nothing to do with my view of the merits of the amendment to section 133. LORD WILSON: My view is that the present appeals place the court in a deeply uncomfortable position. We afford profound respect to the decisions of the ECtHR and recognise its unparallelled achievements in raising the standards according to which member states of the Council of Europe, undoubtedly including the UK, must treat their people. I am, however, persuaded that, in its rulings upon the extent of the operation of article 6(2) of the Convention, the ECtHR has, step by step, allowed its analysis to be swept into hopeless and probably irretrievable confusion. An analogy is to a boat which, once severed from its moorings, floats out to sea and is tossed helplessly this way and that. In what follows I seek to summarise my reasons for this grave conclusion: (a) The meaning of an article is to be collected from its terms in their context and in the light of its object and purpose: article 31(1)(c) of the Vienna Convention on the Law of Treaties, 1969 Cmnd 4140. (b) Paragraph 1 of article 6 distinguishes between civil rights and obligations and a criminal charge; and the language of para 3 of the article makes clear that it addresses the rights only of those subject to the latter, namely of [e]veryone charged with a criminal offence. Such is the context of para 2 of the article, which, like para 3, confers a right only on [e]veryone charged with a criminal offence. (c) When article 6(2) provides that everyone charged with a criminal offence shall be presumed innocent until proved guilty, its meaning, if collected in accordance with the Vienna Convention, can only be that everyone shall be presumed to be innocent for the purpose of the criminal law until proved to be so. Following an acquittal, the presumption has no further role. The acquitted defendant has no need for a mere presumption, potentially rebuttable, that he is innocent. For, subject to the remote possibility of a second criminal trial, it has become an irrebuttable fact that he is innocent for the purpose of the criminal law. The apparatus for punishment within the criminal law cannot be applied to him. (d) The trouble is that the ECtHR has divorced the word innocent from its context and, in the words of Judge De Gaetano in para 3 of his separate opinion in the Ashendon case, cited by Lord Mance in para 53 above, has launched article 6(2) into an orbit separate from that of the article. He there proceeded to call for a thorough re examination of its proper place in the article. (e) The entitlement of the ECtHR, referred to by Lord Mance in para 35 above, to give an autonomous meaning to the articles of the Convention is intended to override any distorted meaning ascribed to them contrary to the Vienna Convention by individual states, not to license the ECtHR to ascribe a distorted meaning to them: see paras 80 and 81 of its judgment in the Engel case, to which Lord Mance there refers. (f) As Judge Power said in para 7 of her strong separate opinion in the Bok case, cited by Lord Hughes in para 120 below, a reference to a violation of the presumption of innocence when a person is not or is no longer facing a criminal charge divorces the principle from its purpose. (g) The ECtHR has blurred the crucial distinction between guilt for the purposes of the criminal law and guilt for other purposes, determined on a different basis. (h) Following its removal of the presumption out of the orbit of article 6, the ECtHR has been required to explain its application in two main areas. (i) The first main area is that of civil claims, whether brought against acquitted defendants by their alleged victims or by the state in aid of protecting children or brought against unsuccessful prosecutors by acquitted defendants. A fair hearing of these civil claims, to which the claimants and the defendants (including the former prosecutors) are all entitled under article 6(1), will usually require a determination, by reference to probabilities, of facts not established beyond reasonable doubt in the criminal proceedings. (j) In the Y case, cited by Lord Mance in para 50 above, the applicant had been acquitted on appeal of homicide and sexual assault. The deceaseds parents sued him for compensation. Under Norwegian law they had to show that it was clear on the balance of probabilities that he had killed and sexually assaulted their daughter. In awarding compensation to them the Norwegian court, upheld on appeal, found it clearly probable that [the applicant] has committed the offences. The ECtHR held that the court had cast doubt on the correctness of his acquittal and had therefore violated article 6(2). (k) In the Orr case, also cited by Lord Mance in para 50 above, the ECtHR followed the decision in the Y case. It applied the presumption to a civil judgment in Norway that a man whom a jury had acquitted of raping a woman had nevertheless, on the balance of probabilities, when using a degree of violence, had sex with her without her consent and had thereby committed a tort against her for which he should pay damages. The ECtHR held that the judgment had violated the presumption of innocence because the use made in it of the concept of violence had conferred criminal law features on its reasoning: see the passage there quoted by Lord Mance. So the Norwegian court had apparently violated the presumption by fully explaining its factual findings: it should apparently have diluted its findings by omitting the finding that the man had used a degree of violence. There was a powerful dissenting opinion by Judge Jebens, who disputed that article 6(2) was even applicable to the civil judgment, let alone that it had been violated. (l) Are the conclusions of the ECtHR in the Y case and in the Orr case tenable? (m) The other main area is that of claims for compensation against the state by defendants for their detention in prison, whether on remand or otherwise, prior to their acquittal at trial or on appeal. (n) The Sekanina case, cited by Lord Mance in para 39 above, concerned the Austrian provision for payment of compensation to an acquitted defendant referable to his period in custody on remand if suspicion that he committed the offence was dispelled. The Austrian courts decision that the suspicion was not dispelled was held to be incompatible with the presumption. The problem for the ECtHR was that in the Englert and Nlkenbockhoff cases, cited by Lord Hughes in para 106 below, it had held that refusals of compensation based on suspicions of guilt were not incompatible with the presumption. In the event the court distinguished them on the basis that there the criminal proceedings had ended prior to their final determination on the merits. But why was this distinction relevant to the reach of the presumption? (o) Is the conclusion of the ECtHR in the Sekanina case tenable? (p) The decision in the Sekanina case was followed in the Hammern case, cited by Lord Reed in para 151 below. The significance of the latter lies in the striking assertion, at paras 41 and 42 of the judgment, that, although not even the courts autonomous concept of a criminal charge extended to the compensation proceedings, article 6(2) nevertheless applied to them. (q) The decision of the Grand Chamber in the Allen case, cited by Lord Mance in para 22 above, concerned, as do the present appeals, a different and more circumscribed provision in the UK in section 133(1) of the Criminal Justice Act 1988 for compensation to be paid to certain defendants ultimately acquitted on appeals out of time. As Lord Mance explains in para 16 above, the section was enacted to give effect to the UKs international obligations under article 14(6) of the International Covenant on Civil and Political Rights 1966 (the Covenant). The compensation is for punishment as a result of [a] conviction and the obligation to pay it arises upon the reversal of a conviction on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice. (r) It is noteworthy that article 14(2) of the Covenant provides for what it calls a right to be presumed innocent but is otherwise in precisely the same terms as article 6(2) of the Convention. Evidently the drafters of article 14 did not regard it as inconsistent to provide within it both for a presumption of innocence on the one hand and for an inquiry into whether an ultimately acquitted defendant had or had not been the victim of a miscarriage of justice on the other. Indeed in the WJH case, cited by Lord Hughes in para 121(vi) below, (s) the Human Rights Committee, established under the Covenant to monitor its implementation, decided that the presumption of innocence in article 14(2) applies only to criminal proceedings and not to proceedings for compensation. (t) In 1984 the Council of Europe decided to bring the Convention into line with article 14(6) of the Covenant by providing in article 3 of Protocol 7 a right to compensation for certain ultimately acquitted defendants in almost precisely the same terms. In para 25 of its explanatory report upon the protocol, which it said did not constitute an authoritative interpretation of its articles, the Steering Committee for Human Rights, appointed by the Council, suggested that the intention behind article 3 was to require compensation only in clear cases of miscarriage of justice, in the sense that there would be acknowledgment that the person was clearly innocent. The committees suggestion was inconsistent with any idea that a finding that an acquitted defendant was not clearly innocent would be incompatible with the presumption of innocence. (u) In the Allen case the applicant had ultimately been acquitted on appeal on the basis that fresh evidence might reasonably have affected the jurys decision. She complained that the UK courts had acted incompatibly with the presumption of her innocence by refusing to quash a decision that she had not established a miscarriage of justice and was therefore not entitled to compensation under section 133(1), then unamended, of the 1988 Act. The court at first instance had, for example, observed that there remained powerful evidence against her. The Grand Chamber sought to undertake an exhaustive review of the courts case law on the role of article 6(2) in various types of proceedings which take place after an acquittal; and by implication it approved all of the courts previous decisions. (v) First the Grand Chamber addressed the circumstances in which, after acquittal, article 6(2) applied. It reiterated in para 96 that the article might apply even when its words, given their autonomous meaning, did not apply. It suggested in para 94 that, after acquittal, the articles aim was two fold: to protect an acquitted defendant from being treated by a public authority as in fact guilty of the offence charged and, perhaps overlapping with his rights under article 8, to protect his public reputation. It held in para 103 that the article therefore required that he be treated as someone innocent in the eyes of the law, not just (so I interpolate) in the eyes of the criminal law. It concluded at para 105 that the article applied whenever the applicant demonstrated a link between the criminal proceedings and the subsequent proceedings. It exemplified the necessary link when in para 107 it turned to the facts of the Allen case: the link existed there because the resolution of the criminal proceedings in the appellate court had triggered the right to apply for compensation and because the requirements of section 133 required reference to the judgment of that court. (w) Then the Grand Chamber addressed the circumstances in which, if after an acquittal it applied to a later decision, article 6(2) had been violated. In para 122 it approved the decision in the Sekanina case that the voicing of suspicions of guilt in compensation proceedings would violate the article if the conclusion of the criminal proceedings had been a final determination on the merits, as opposed to their discontinuation; but in para 123 it held, without explanation, that the distinction did not apply to civil claims brought against acquitted defendants by alleged victims. Its conclusion at paras 125 and 126 was that there was no single approach to ascertainment of a violation; that much will depend on the nature and context of the subsequent proceedings; but that in every case the language used by the decision maker will be of critical importance. It proceeded to hold at para 136 that the terms in which the UK courts had rejected the applicants claim had not violated article 6(2). But at para 127 it had observed, without explanation, that the setting aside of her conviction in the appeal court had been more like a discontinuance than an acquittal on the merits, with the result (presumably) that the suspicions of guilt articulated by both domestic courts in the compensation proceedings did not constitute a violation. In the Allen case Judge De Gaetano again entered a separate opinion. (x) In para 3 he described the courts conclusion as being that it all depends on what you say and how you say it and in para 5 he reiterated his belief that article 6(2) had no application to compensation proceedings following acquittal. (y) With acute professional discomfort I ask: in relation to the circumstances in which article 6(2) applies and in which it is violated, are the conclusions of the Grand Chamber in the Allen case tenable? I turn to this courts duty under section 2(1)(a) of the Human Rights Act 1998 [the 1998 Act] to take into account any relevant judgment of the ECtHR. Inevitably there have been a number of observations in this court, and in the appellate committee which preceded it, that the duty to take account of such a judgment should almost always lead our domestic courts to adopt it. Particularly in the early years of the life of the 1998 Act, the UK courts were strikingly loyal to the judgments of the ECtHR notwithstanding the open texture of section 2(1)(a): see Krisch, The Open Architecture of Human Rights Law [2008] 71 MLR 183, 203. In R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295, the appellate committee perceived no need to confront, as problematic, the jurisprudence of the ECtHR in relation to the relevant article of the Convention, which was article 6(1). It applied it without apparent difficulty. But Lord Slynn of Hadley observed at para 26: In the absence of some special circumstances it seems to me that the court should follow any clear and constant jurisprudence of the European Court of Human Rights. If it does not do so there is at least a possibility that the case will go to that court, which is likely in the ordinary case to follow its own constant jurisprudence. What he there said was, of course, no part of the decision of the committee. It was, as he made clear, a purely personal observation, made in passing. No doubt, so far as it went, it was also a helpful observation. But Lord Slynn would no doubt have been surprised to learn that, partly as a result of remarks made by Lord Bingham of Cornhill at para 20 of his judgment in the Ullah case, cited by Lord Hughes in para 125 below, his observation has at times been regarded as part of what the committee had held; and no doubt surprised to learn that his adjectives have at times been treated as if found in a statute. Is the jurisprudence clear? Is the jurisprudence constant? In the present case one might well express doubt, as does Lord Hughes in para 126 below, about whether the jurisprudence is clear; but my view is that such an exercise would be inappropriate. The words with which Lord Slynn chose to describe a reasonable approach in that particular case should not, with respect to him, be subjected to so intimate an examination. On other occasions this court has expressed the proper approach to the jurisprudence of the ECtHR in different terms. In para 173 below Lord Reed quotes in particular from para 48 of the judgment of the court delivered by Lord Neuberger of Abbotsbury MR in the Manchester City Council case and from para 27 of the judgment of Lord Mance in the Chester case. In my view however the weight to be given to both quotations was correctly described by Lord Mance and Lord Hughes in their joint judgment in the Kaiyam case, cited by Lord Mance in para 72 above, as follows: 21. The degree of constraint imposed or freedom allowed by the phrase must take into account is context specific, and it would be unwise to treat Lord Neuberger MRs reference to decisions whose reasoning does not appear to overlook or misunderstand some argument or point of principle or Lord Mance JSCs reference to some egregious oversight or misunderstanding as more than attempts at general guidelines The context of the present appeals, to which the nature of this courts duty under section 2 is therefore specific, is a line of jurisprudence in the ECtHR which in my respectful view is not just wrong but incoherent. Our courts have not, to the best of my knowledge, previously been called upon to address a context of that sort. In In re McKerr [2004] UKHL 12, [2004] 1 WLR 807, Lord Hoffmann said: 63. Although people sometimes speak of the Convention having been incorporated into domestic law, that is a misleading metaphor. What the [1998] Act has done is to create domestic rights expressed in the same terms as those contained in the Convention. But they are domestic rights, not international rights. Their source is the statute, not the Convention. They are available against specific public authorities, not the United Kingdom as a state. And their meaning and application is a matter for domestic courts, not the court in Strasbourg. 64. This last point is demonstrated by the provision in section 2(1) that a court determining a question which has arisen in connection with a Convention right must take into account any judgment of the Strasbourg court. Under the Convention, the United Kingdom is bound to accept a judgment of the Strasbourg court as binding: article 46(1). But a court adjudicating in litigation in the United Kingdom about a domestic Convention right is not bound by a decision of the Strasbourg court. It must take it into account. I reluctantly agree with Lord Reed, for the reasons he gives in paras 183 to 191 below, that, if article 6(2) has the meaning ascribed to it by the ECtHR, in particular in the Allen case, section 133(1ZA) of the 1988 Act is incompatible with it. It follows that I am at present not persuaded by the ingenious suggestions to the contrary made by Lord Mance in paras 61 to 71 above and by Lord Hughes in paras 128 and 129 below. But I have come to the conclusion that this court should not adopt the meaning ascribed to article 6(2) by the ECtHR. I have been driven to the view that it should today dismiss the appeals. I hold in high professional regard our fellow judges in the ECtHR. I appreciate the desirability of a uniform interpretation of article 6(2) (a) (b) throughout the states of the Council of Europe. I regard as over optimistic the suggestion of the Secretary of State that (c) there is room for further constructive dialogue between this court and the ECtHR about the extent of the application of article 6(2). (d) to the ECtHR for a ruling that section 133(1ZA) violates article 6(2). I recognise the likelihood that the appellants could successfully apply (e) But I regard myself as conscientiously unable to subscribe to the ECtHRs analysis of the extent of the operation of article 6(2) and thus to declare to Parliament that its legislation is incompatible with it. LORD HUGHES: Narrowly stated, the question raised by the present appeals is whether the new section 133(1ZA) Criminal Justice Act 1988 is incompatible with article 6(2) of the European Convention on Human Rights (the presumption of innocence). That question can, however, only be answered in the context of the true scope of the presumption of innocence, which arises also in many other legal scenarios. This is a matter with which the Strasbourg court has been obliged to grapple over the past 30 years. The presumption of innocence is also central to the approach of all three UK jurisdictions to the criminal law, as it is to a great many other legal systems. Article 6(2) provides: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. There is no doubt that this governs the investigation of, and the trial of, criminal charges. Centrally, it means that the burden of proof in a criminal trial lies upon the prosecution to show that the accused is guilty rather than upon the accused to show that he is not. In most if not all European systems that rule is associated with a requirement that proof of a criminal offence must achieve a high standard before a defendant can be convicted usually described as proof beyond reasonable doubt. There is no occasion to examine this central core of article 6(2), which is not in issue in the present case. What is in issue arises, not for the first time, not from the plain meaning of a Convention right, but from the manner in which it has been extended, by way of judicial gloss, beyond the investigation and trial of criminal offences to legal situations where no charge remains pending and no trial is in contemplation. This gloss is referred to in the Strasbourg jurisprudence as the second aspect of article 6(2). Like other judicial glosses, this one has developed piecemeal. That is often the result of iterative consideration of individual cases, but that process needs also to provide the opportunity to stand back and to examine the logical and jurisprudential basis for the steps which have been taken. The second aspect of article 6(2) in the Strasbourg jurisprudence It appears from the Grand Chambers recent formulation of this second aspect of article 6(2) in Allen v United Kingdom (2013) 63 EHRR 10, that it has the features here set out. (a) By the time there is any occasion for this second aspect to arise, no one is, by definition, facing any criminal charge. It follows that although it is well understood that the concept of a criminal charge is, as used in the Convention, an autonomous one, its autonomous meaning has no relevance to the second aspect (para 96). (b) The general aim of the second aspect is to protect individuals who have been acquitted of a criminal charge, or in respect of whom criminal proceedings have been discontinued, from being treated by public officials and authorities as though they are in fact guilty of the offence charged. It is a protection of the reputation of the former accused. This is said to be necessary if the right guaranteed by article 6(2) is not to become theoretical and illusory (para 94). In summary: the presumption of innocence means that where there has been a criminal charge and criminal proceedings have ended in an acquittal, the person who was the subject of the criminal proceedings is innocent in the eyes of the law and must be treated in a manner consistent with that innocence. To this extent, therefore, the presumption of innocence will remain after the conclusion of criminal proceedings in order to ensure that, as regards any charge which was not proven, the innocence of the person in question is respected. (para 103) (c) Article 6(2), in its second aspect, applies and thus governs subsequent proceedings when there is a link between them and the previously concluded criminal proceedings. That link is likely to exist when the subsequent proceedings require examination of the prior criminal proceedings. This in turn is likely to be the case if any of four situations applies: (i) the court is obliged to analyse the criminal judgment; (ii) it has to engage in a review or evaluation of the evidence in the criminal file; (iii) it has to assess the applicants participation in some or all of the events leading to the criminal charge; or (iv) it has to comment on the subsisting indications of the applicants possible guilt (para 104). (d) Where the second aspect of article 6(2) thus applies, there is no single test for whether it has been infringed in the subsequent proceedings (para 125). But the language used by the decision maker will be of critical importance in assessing the compatibility of the decision and its reasoning with article 6(2) (para 126). Issues common to different legal questions The central reality which has to be addressed by any legal test for the scope of article 6(2) is that the same factual issues which have to be decided in a criminal trial or investigation in order to reach a verdict of guilty or not guilty, or a decision as to prosecution, may also have to be decided for other legal purposes. Those other legal purposes may well involve the person who was the accused in the criminal trial or investigation. The other legal purposes may be sequential to the criminal trial or investigation (for example an application for costs) or they may be separately constituted (for example professional disciplinary proceedings against the accused or child care proceedings concerning his children). Some legal systems may adjudicate upon those other legal purposes in combined criminal and civil proceedings, by permitting the complainant in the criminal trial also to make a claim for compensation as a civil party; other systems may adjudicate upon them separately. It is an axiomatic feature of some legal systems that the law recognises that the enhanced standard of proof required to justify conviction of a criminal offence and punishment by the state does not apply except to the verdict of guilty or not guilty. Elsewhere, the standard of proof is lower, often on the balance of probabilities. There is a well understood principled basis for this difference. In criminal proceedings the chief object is the punishment of the guilty. Where the state seeks against an individual a conviction and punishment the individual is entitled to the benefit of a reasonable doubt: thus acquittal may well be in dubio pro reo, rather than involve a positive finding that the act alleged was not performed. That this should be so is a proper reflection of the gravity of a criminal conviction. Where, on the other hand, the issue arises between citizens of equal standing before the law, the object is not punishment but compensation or vindication and it unfairly constrains the rights of the claimant if he can succeed only if all reasonable doubt is eliminated. Likewise, the object of professional disciplinary proceedings differs from that of criminal proceedings; where the objective is the protection of the public from unsuitable practitioners it is legitimate and principled to give that protection where it is demonstrated to be more likely than not that it ought to be provided. A fortiori, where the object of proceedings is the protection of the vulnerable, typically but not only children, the criterion for decision is the best interests of the vulnerable and to limit protective orders to cases where maltreatment has been proved beyond reasonable doubt would be inconsistent with that ruling principle. The three legal systems operating in the United Kingdom all depend upon this marked and principled difference between proof beyond reasonable doubt as a minimum for conviction and punishment and proof on the balance of probabilities in most other areas of adjudication. So do some other European systems, for example Norway: see Reeves v Norway (Application No 4248/02), 8 July 2004 and Orr v Norway (Application No 31283/04), 1 December 2008. The distinction between the two standards of proof may not be as clearly acknowledged in some other European systems (see for example the discussion by Kaplow (2012) 121 Yale Law Journal 738) but it is of course well understood and explained by the Strasbourg court in, for example, Orr v Norway at para 26. Once the difference in standard of proof is recognised, it is plain that those proceedings to which the civil standard apply simply cannot be governed also by the criminal standard, nor thus by the verdict of the criminal court, even if the same factual issues arise, and even if the evidence is the same. Discussions about the scope of article 6(2) must necessarily accommodate this fact. The Strasbourg jurisprudence in more detail The summary of the Strasbourg jurisprudence helpfully set out in Allen v United Kingdom (see para 99 above) might suggest an established and consistent two stage approach. First, that the concept of link is the test for the applicability of article 6(2) to proceedings. Second, that whilst there is no single test for whether, if applicable, that article is infringed, the critical question is whether the unconvicted accused is treated by a court or public body as if guilty and the language used will generally be of critical importance. The history shows that this is not quite how the cases have proceeded. It demonstrates that the court has grappled frequently with the inevitable tension between the desire to protect an unconvicted accused from having his acquittal undermined and the reality that the outcome of the criminal trial cannot govern all adjudication upon the same factual issues. The concept of link was not articulated in the early cases, and certainly not in the detailed terms now enunciated in Allen. That is perhaps because the early cases concerned claims for costs and/or compensation for detention on remand in systems such as Germany and Austria where those claims fell to be determined by the criminal courts, indeed sometimes by the same constitution which returned a verdict of guilty or not guilty. Minelli v Switzerland (1983) (Application No 8660/79) is an example, where the criminal court, in acquitting the accused, on the grounds of expiry of the relevant limitation period, also in the same judgment apportioned costs as between the private prosecutor and the accused. It took the view that both were partially at fault. As to the accused, it expressed the view that although he had a limited justified complaint against the prosecutor, the terms in which he had expressed it would have left him in all probability guilty of the criminal libel alleged, but for the limitation period. It was enough for the Strasbourg court to say that at the time when these conclusions were expressed the accused was still charged with a criminal offence (para 32). The next stage was a trio of German cases, all decided on the same day in 1987: Ltz v Germany (1988) 10 EHRR 182, Nlkenbockhoff v Germany (1988) 10 EHRR 163 and Englert v Germany (1991) 13 EHRR 392. All were cases in which the criminal proceedings had been discontinued, in Ltz because a limitation period had expired, in Nlkenbockhoff because the accused had died whilst appeal against conviction was pending, and in Englert because the much convicted accused was not likely to receive a significant addition to a sentence he was already serving. In each case, the local court, exercising a discretion plainly given to it by domestic legal rules, had declined either in whole or in part to make orders for costs and/or compensation for detention on remand. In each case the court had ruled in making that decision either that the accused would almost certainly have been convicted but for the technical bar which led to discontinuance (Ltz and Nlkenbockhoff) or was clearly more likely to have been convicted and had brought suspicion on himself (Englert). As in Minelli, the Strasbourg court referred to the fact that the decision on discontinuance accompanied that on costs etc, which it described as a consequence and necessary concomitant of the former (eg Ltz para 56). It then held as to infringement that such costs or compensation issues might raise an issue under article 6(2) if supportive reasoning, which cannot be dissociated from the operative provisions, amounts in substance to a determination of the accuseds guilt: Ltz para 60, repeated in the other cases. In all these cases, nevertheless, the court held that the language used had not infringed article 6(2) because it amounted to no more than voicing outstanding suspicion that the accused had committed the offences, rather than amounting to a finding of guilt (Ltz para 62, echoed in the other cases). That would appear to have been a plain recognition of the fact that to say of an accused that he might have committed the offence, or even that he probably did, is not to undermine his acquittal, and does not amount to attributing guilt to him. That is even more clearly the case in systems such as the English where an acquittal means no more than that guilt has not been proved to the high criminal standard, may well leave open the possibility that the accused might have committed the act, but establishes once and for all that he is unconvicted and cannot be punished. The origins of the concept of link, as adumbrated in due course many years later in Allen, may be the two cases of Sekanina v Austria (1993) 17 EHRR 221 and Rushiti v Austria (2001) 33 EHRR 56. Both concerned applications by accused who had been acquitted at trial for compensation for detention on remand. The domestic law provided that compensation was payable if the accused was acquitted and the suspicion that he committed the offence is dispelled. The local courts had held that despite acquittal, suspicion had not been dispelled; there had been a strong case, but the evidence had not been enough to convict. The Strasbourg court held both that article 6(2) applied and that it had been infringed. It held that although the court determining the compensation issue had done so some months after the acquittal, nevertheless Austrian legislation and practice link the two questions to such a degree that the decision on the latter issue can be regarded as a consequence, and to some extent the concomitant of the decision on the former. (Sekanina para 22, repeated in Rushiti). Although, as has been seen, the word concomitant had also appeared in the three German cases, there is nowhere any analysis of why it is appropriate. It may well be that the decision upon those issues could properly be described as sequential to the verdict, in the sense that a verdict of acquittal was a sine qua non of it, but it does not follow that it was a concomitant or had to run with the verdict; on the contrary the fact that the legal test was different surely meant that it did not run with the verdict. To say that article 6(2) made it run with the verdict would be to assume what was sought to be shown. Sekanina and Rushiti also broke new ground on the question of infringement. At paras 27 and 30 of Sekanina the court distinguished the three German cases, where the language used had been rather more forthright than in the instant case; it had spoken of it being nearly certain that the accused would have been convicted, rather than of suspicion not having been dispelled. The court held that the approach of the German cases to what had there been regarded as a recording of suspicion only applied to discontinuance cases and not to acquittals. At para 30 it said this: The voicing of suspicions regarding an accuseds innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits of the accusation. However it is no longer admissible to rely on such suspicions once an acquittal has become final. It is not immediately obvious why this should be so. There no doubt is a difference between discontinuance and acquittal, especially in systems (such as the English) where the first may sometimes be no bar to resumption of prosecution whereas the second virtually always is. But if the governing principle is the presumption of innocence in article 6(2) there seems no reason why that presumption should apply any the less to a person against whom a prosecution has been discontinued than to one who has been acquitted after trial. Both are equally entitled to claim that they cannot be convicted until proved guilty according to law. The reasoning in Sekanina and Rushiti is thus perhaps rather more pragmatic than dependent on the principle of the presumption of innocence. At all events, it is completely unexplained, either in these cases or later, and accordingly its frequent repetition since adds nothing to it. Since then the link proposition has indeed been oft repeated, generally in identical language, up to and including in Allen. But at no stage has the court gone back to principle to examine what the true scope of article 6(2) is, given the differing legal contexts in which the same facts may be adjudicated upon according to different tests and subject to different standards of proof. Nor are the cases consistent. In Moullet v France (Application No 27521/04), 13 September 2007, the court held that article 6(2) did not apply to disciplinary proceedings taken against a public official for bribery, although he had been acquitted (on limitation grounds) of that offence by the criminal court. It also held that in any event there was no breach, although the act of bribery in question in each set of proceedings was identical and his dismissal was explicitly grounded upon it. But in Vanjak v Croatia (Application No 29889/04), 13 January 2010 and iki v Croatia (Application No 9143/08), 15 July 2010 disciplinary proceedings against policemen were held to be linked to criminal prosecutions which had been abandoned, so that article 6(2) did apply; there is no sign that Moullet was referred to. The test for applicability appears, if anything, to have widened, since as the court recorded in Allen at para 102, these two cases of Vanjak and iki contain the opinion that following discontinuation of criminal proceedings (as well as following acquittal) the presumption of innocence requires that the lack of a persons criminal conviction be preserved in any other proceedings of whatever nature. These very wide words are not further reasoned, nor is the apparent departure from the German and Austrian cases explained, and in neither case was the statement necessary to the decision since the applicant failed in both cases on the grounds that the constituent elements of the disciplinary or employment complaints differed from the legal ingredients of the criminal charges which had been discontinued. There is no doubt that there are relatively recent decisions in the Strasbourg court which, if their approach to article 6(2) were applied to the present case, would result in a finding that section 133(1ZA) is incompatible with that provision. An example is Capeau v Belgium (2008) 46 EHRR 25. The accused had been investigated for suspected arson but discharged by the court on the grounds that there was insufficient evidence to commit him for trial. He claimed compensation for pre trial detention on remand. Under the local law, there was a right to such compensation either if the accused was exculpated by the criminal court (which he had not been) or if he established his innocence. The local law illustrates the variation across Europe of entitlement to compensation for pre trial detention on remand. The Belgian court refused the application for compensation on the grounds that the accused had not established his innocence. The Strasbourg court held that to refuse compensation could not by itself amount to a breach of article 6(2) but that the requirement that the accused prove his innocence did so. It concluded that this provision allowed doubt to attach itself to the correctness of the courts decision. But that last statement is surely not accurate. To say that someone has not proved himself eligible within the rules for compensation for detention is not, in any meaningful sense, the same as doubting the correctness of a decision that there was insufficient evidence to commit him for trial. Like some other general statements appearing in the article 6(2) cases, it demonstrates a reluctance to address the meaning of acquittal. It may be that in some legal systems an acquittal, and a fortiori a decision not to commit for trial, is a finding of positive exoneration, but in most it is not. It is especially unlikely to be so where the verdict is that of a jury which returns a binary verdict but does not deliver a judgment making individual findings of fact. In Mller v Germany (Application No 54963/08), 27 March 2014 the claimant was a life sentence prisoner after shooting his wife. He had sought early conditional release. He had recently been charged with assaulting and injuring another woman with an electric truncheon whilst on home leave, but the local criminal court had dismissed the charge without giving reasons. The execution of sentence court, fulfilling a role similar to that of the Parole Board in England, refused his application for conditional release on the grounds that he remained a serious risk to the public and particularly to women. He had become obsessed both with his wife and with the recently injured woman, and injuries had followed disappointment. The execution of sentence court had additional psychiatric evidence, but it specifically addressed the recent allegation of assault against the second woman, and explicitly disagreed with the criminal court, which it held had not adequately examined the evidence against the accused. It said in terms that the criminal offence which the applicant had committed towards the recent complainant woman, demonstrated the risk of violence. The Strasbourg court faithfully applied the general statement made in Allen and found in consequence that there was a sufficient link between the acquittal and the decision on conditional release. But it held that there was no breach of article 6(2): the execution of sentence court had not, it held, stated that the accused was guilty of a fresh offence. Rather it had based its conclusion on the prognosis of risk for the future. It must be said that this obviously correct outcome was reached in the teeth of the words used by the execution of sentence court. Certainly it had based its conclusion, correctly, on the prognosis of risk for the future, but it had arrived at that prognosis in large part because it expressed itself satisfied that the accused had committed the recent offence of which he had been acquitted. A set of principles which requires such specialised reasoning in order to justify an obviously correct conclusion that the assessment of risk involved no breach of article 6(2) puts in issue the basis of the principles. This case is a remarkable illustration of the consequences of the wide propositions which have developed in the courts jurisprudence as to article 6(2). It might be thought axiomatic that the assessment of the future risk posed by a convicted murderer whose conditional release is under consideration ought to be informed by all relevant information, and that to exclude material because it reveals the possibility of a criminal offence simply because there is not sufficient evidence to prove it beyond reasonable doubt is to court danger to the public. The much more logical basis for the outcome of the case is surely that a presumption of innocence has no place in such risk assessment. Article 6(2) has no application, for conviction and punishment are not in question. This is so even if on a different legal test and applying a different standard of proof, a conclusion is reached which includes a finding that acts amounting to an offence are relevant to that assessment. The accused in this case was not treated by the legal system as convicted of the alleged recent offence, nor was he punished for it. He was simply assessed as to the risk which he presented. The legal scenario which perhaps most plainly exposes the debate about the scope of article 6(2) is the civil claim for compensation made by a person who is or was a complainant in a criminal trial against the person who is or was the accused. It will of course sometimes be true that the legal constituents of the tort alleged are less exacting than those of the criminal offence (compare the disciplinary cases of Vanjak and iki mentioned in para 109 above). In other cases the issue in the criminal trial may be different because a defence is raised, such as mental disorder, which does not apply to a tort claim. But often the issues will be identical, and frequently the evidence relied upon will also be the same. A classic example is the claim by someone who says that she was raped by the accused. His case is either that the intercourse alleged did not take place or, more often, that it was consensual and/or that consent was to be implied from the complainants behaviour. He has been acquitted by the jury so it is known that the criminal standard of proof has not been achieved, but in the civil proceedings the standard is the balance of probabilities. Such cases are by no means unusual. Equally common, if not more so, are cases where a care order is sought by the Local Authority in relation to children (section 31 Children Act 1989). The test for such an order is that the child is at risk of significant harm attributable to inadequate parental care. There may be many different parental inadequacies relied upon, but a very common instance is the case which depends on an alleged risk of abuse, physical or sexual, by a parent or an associate of a parent, and where the risk is said to be proved by past abuse of this or another child. Such an alleged abuser may well also be prosecuted. If he is acquitted, on the criminal standard of proof, it is nevertheless incumbent on the family judge to investigate the allegation of past abuse in order to reach a conclusion about the level of future risk. All experienced care judges are familiar with such cases, and with the duty to find, one way or the other, on the balance of probabilities, whether the past abuse is made out despite acquittal in the criminal court. The treatment of such cases by the Strasbourg court cannot be described as consistent. OL v Finland (Application No 61110/00), 5 July 2005 is indeed a decision that article 6(2) did not apply to child care proceedings in which one of the strands of evidence advanced concerned an allegation against the father of sexual abuse, although the prosecutor had decided not to prosecute, taking the view that the evidence was insufficient. It is perfectly true that this decision contains the proposition that article 6(2) was not applicable and that there was no link between the two sets of proceedings because the care case was not a direct sequel to the criminal decision. But in that case, although the psychiatrists report had concluded that in all likelihood the father had abused his daughter, all that the care court had said was that it is unclear whether [the child] has been subjected to sexual abuse. This possibility cannot be excluded. It had then gone on to record other bases for making the care order, including the disturbed behaviour of the child and the mental illness of her mother which impeded her care. If the decision as to applicability meant that the Strasbourg court took a consistent line that article 6(2) had no application to claims for civil compensation, or to care proceedings, that would be one thing. But it is clear that it does not. In Ringvold v Norway (Application No 34964/97), 11 May 2003, the court held that article 6(2) was not applicable to the civil claim for compensation made by a victim alleging sexual abuse by an erstwhile accused who had been acquitted by the jury. It based that applicability decision in part on an absence of link (para 41) but held that this was because the outcome of the criminal proceedings was not decisive for the civil claim. This was to use link in an entirely different sense from the way in which it is explained in Allen at para 104. The court also based its applicability decision upon the language used in determining the civil claim (para 38). Yet it concluded that there was no applicability notwithstanding that the court had held that on the balance of probabilities it was clear that [the erstwhile accused] was the abuser (para 19). Then a year later in Reeves v Norway (Application No 4248/02), 8 July 2004, the accused had been tried in the criminal courts for arson and the insurers who had paid out after the fire had been joined as civil parties to claim compensation from her. The standard of proof differed between the two decisions required, just as it would in separate proceedings in England. She was convicted at trial but on appeal her conviction for arson was quashed, on the grounds that there was not the specific majority of appeal judges which was required by local law before it could be upheld. The award of damages to the insurers was however upheld, since enough of the judges agreed that arson had been proved against her on the balance of probabilities. The Strasbourg court held that there was no infringement of article 6(2). But this time it made the assumption that article 6(2) applied to the insurers claim. It also found that the judgment of one judge who acquitted the appellant of the crime but found that on the balance of probabilities there was a clear probability that the defendant is guilty of setting the fire as described in the indictment was at risk of infringing article 6(2) and could be saved from doing so only by treating the choice of words as an unfortunate slip rather than as an affirmation imputing criminal liability for arson. So this decision depended not on applicability, as in Ringvold, but on whether there was infringement. The decision appears to be a good example of the unsatisfactory manner in which the language used may be determinative of whether there is a breach of article 6(2), as propounded in Allen. Those decisions can conveniently be considered alongside Orr v Norway (Application No 31283/04), 15 May 2008, where the opposite result ensued. The accused was tried for rape of a work colleague. Her civil claim for compensation for the same rape was heard alongside the criminal trial. The jury acquitted of the crime. Next day the judges gave judgment for the complainant upon her civil claim. The applicable standards of proof differed, as they would in England, and the civil claim demanded a significantly less exacting standard, even if perhaps not a simple balance of probabilities. Giving judgment on the civil claim, the court held that on the relevant standard it was clearly probable that the accused had intercourse with the complainant, that it was without her consent, that he knew that it was, and that he had used sufficient force to overcome her lack of consent. The Strasbourg court did not treat a link between the criminal and civil proceedings as the test of whether article 6(2) applied or not; indeed it held that the fact that the two issues were tried together did not bring the civil part within the article. But it held that the language used did render article 6(2) applicable, and that it involved an infringement. At para 51 it held: 51. However, the court notes that, in its reasoning on compensation, the High Court majority based its finding that the applicant was liable to pay compensation to Ms C on a description of the facts giving details of such matters as the nature of the sexual contact, the applicants awareness of the absence of consent by Ms C, the degree of violence (vold) used by him to accomplish the act and his intent in this respect. In other words, it covered practically all those constitutive elements, objective as well as subjective, that would normally amount to the criminal offence of rape under article 192 of the Penal Code. It is true that, as stated in the case law quoted above, an acquittal from criminal liability does not bar a national court from finding, on the basis of a less strict burden of proof, civil liability to pay compensation in relation to the same facts. However, the court considers that, although the concept of violence may not have been exclusively criminal in nature, the use made of it by the High Court in the particular context did confer criminal law features on its reasoning overstepping the bonds of the civil forum (see Y, cited above, para 46). This is another good indication of the semantic examination which appears to be the basis of Strasbourgs decisions on the ambit of article 6(2). If, now, scenarios of this kind are tested against the Grand Chambers statements of principle in Allen at para 104 for which see para 99(c) above it would seem likely if not inevitable that article 6(2) would now be held to apply to such a civil claim for damages by a rape complainant, whether heard alongside the criminal trial or separately as it would be and is in any of the UK jurisdictions. The same would apply to care proceedings in which the issue was an allegation of abuse made against an acquitted accused. The judge trying such a civil claim, or such a care case, may well have to examine the evidence on the criminal file. He will certainly have to assess the accuseds participation in the events leading to the criminal charge. However, if article 6(2) really does apply to such a claim it is simply impossible for the judge in either kind of proceeding to give judgment after the accused has been acquitted. Semantic adjustment of his judgment is not an option. He has to make findings about the conflicting evidence on what occurred. He has to do so both for civil liability and to assess the level of damages. And the care judge must make findings of fact in order to justify his conclusion as to the risk of significant harm which the child faces. Neither can do other than make findings about whether the rape, or the abuse, took place. It matters not an ounce whether the judge calls it rape, or forced sexual intercourse, or abuse, and he cannot call it something which it is not. In a tort claim the tort about which he must make a finding is co terminous in most cases with the crime; even any plea of implied consent will correlate essentially with the criminal defence of reasonable belief in consent. In a care case, it is facts constituting criminal offences which justifies the making of the care order. If article 6(2) does indeed apply to such proceedings, complainants, or public care authorities, might well consider themselves better served by not making a complaint to the police. Such allegations are notoriously difficult for juries to decide, unless there is some independent evidence beyond the word of the only two people typically present. If article 6(2) applies, an acquittal, always a possibility, will bar a finding of rape in a subsequent civil case, and thus bar the claim for compensation, and similarly with a care decision. In the absence of a prosecution, article 6(2) would presumably become irrelevant. But the public interest is unequivocally in cases of this kind being properly investigated by the police, and, if the evidence offers a reasonable prospect of conviction, in their being brought to trial. The present case is not of course one of a civil claim for damages coming after a criminal prosecution. But consideration of such a case, together with the plain difficulties which have attended the Strasbourg courts conscientious efforts to extend the applicability of article 6(2), demonstrates that article cannot sensibly apply beyond the criminal trial and the investigation which precedes it. The objective of not undermining an acquittal which underlies the suggested gloss on article 6(2) see para 99(b) above can and should properly be maintained but it means that the acquitted accused must be recognised as unconvicted, immune from punishment by the state and from characterisation as a criminal, but not that he escapes all consequences of the ordinary application of his countrys rules as to evidence and the standard of proof outside criminal trials. Powerful pleas to that effect by Judge De Gaetano in both Ashendon and Jones v United Kingdom (2012) 54 EHRR 13 and Allen, and by Judge Power in Bok v The Netherlands (Application No 45482/06), 18 January 2011, properly reflect the correct analysis of article 6(2). This analysis of the scope of article 6(2) is, moreover, consistent with: (i) the wording of the article, which applies it to persons charged with a criminal offence; it is irrelevant that that expression has an autonomous meaning under the Convention since everyone agrees that the suggested second aspect of, or gloss upon, article 6(2) applies it to those who are not charged in any sense with a criminal offence; (ii) the marked and plainly deliberate difference made by the drafters of the Convention between article 6(1) (the determination of civil rights and obligations) on the one hand and articles 6(2) and (3) (rights of those charged with criminal offences); (iii) the co existence in article 14(2) ICCPR of a right in the same terms as article 6(2) of the ECHR with article 14(6) which gives a plainly more restricted right to compensation for certain kinds of miscarriage of justice; (iv) the similar co existence of article 6(2) with the provisions of article 3 Protocol 7, which mirrors article 14(6) ICCPR; (v) the fact that at the time article 6(2) was drafted alternative versions which would have applied it to everyone or would have provided that no one shall be held guilty were rejected in favour of the present formulation; (vi) the considered view of the UNHRC in WJH v The Netherlands (Communication 408/1990 [1992] UNHRC 25) that the presumption (at article 14(2) of the ICCPR) applies only to criminal proceedings and not to proceedings for compensation; the court in Allen referred to this conclusion but did not address it in its reasoning. Compensation for miscarriage of justice These same principles ought properly to govern instances where the erstwhile accused bears, under the local law, an onus of proof in proceedings which are separate from the criminal investigation and trial and in which he is at no risk of conviction or punishment. A simple example is the accused who, following acquittal which may well be in dubio pro reo brings an action for malicious prosecution against the police or other accuser. Of course it may be theoretically possible for a prosecution to be malicious even if the accused is guilty, but in most such cases it is an integral part of the claimants case that he was prosecuted when not guilty and that the defendant knew it. Such a claimant former accused necessarily bears the onus of proving his case, on the balance of probabilities, including his asserted innocence. No breach of article 6(2) is or could be involved, even if a link of the kind contemplated by Allen could be said to exist. Schemes for public compensation for those who are prosecuted but acquitted vary widely from legal system to legal system. Some systems provide for compensation for detention on remand; others, including the English, have no such regime. Where there is provision for compensation, the cases show that it is not unusual for there to be some qualification to universal availability. Sometimes the system gives the court a residual discretion to withhold compensation, as for example did the Dutch scheme considered in Baars v The Netherlands (2004) 39 EHRR 25. Others state the grounds on which it may be refused, as did the German scheme considered in Nlkenbockhoff. The Strasbourg court has been at pains to say in case after case that neither article 6(2) nor any other international rule gives an unqualified right to such compensation. The limited right which is recognised internationally is that stated, in more or less identical terms, in article 3 Protocol 7 to the ECHR, for those states which have acceded to it, and in article 14(6) of the International Covenant on Civil and Political Rights. This right is limited to those whose conviction is reversed or who is pardoned, and of those only where the reversal or pardon is on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice. So there is no right to compensation for those who are acquitted at trial. Nor does the right extend to the common case of a conviction quashed for error of law or of emphasis in the summing up, or for error of law, for example as to the admissibility of evidence, during the trial. Since the right to compensation is thus restricted, the test is plainly entirely different from the test of guilt or innocence at trial, and from the test of safety of the conviction on appeal. It follows, firstly, that proceedings seeking such compensation, although they are predicated upon there having been a conviction which has been quashed, so that a criminal prosecution with that outcome is a sine qua non for an award, are not part of the criminal process but rather are in aid of a distinct and limited civil right. For this reason, even if there existed a workable concept of link as a test for application of article 6(2), such a link would not exist between the quashing (reversal) of the conviction and the claim for compensation under section 133. The latter can only be said to be based on the former in the sense that the first condition of eligibility for compensation is that the conviction has been quashed. But to say that compensation is based on the quashing is to ignore the several other conditions of eligibility which must also be satisfied. Secondly it follows that it is for the claimant to show that he is within the statutory test; to that extent at least it must be common ground that he bears the onus of proof. Thirdly, it should be clear that the presumption of innocence has simply no place in such proceedings, for the simple reason that conviction and punishment are not in issue. It is easy to understand why section 133(1ZA) can at first sight be seen as a reversal of the criminal onus of proof, and thus as inconsistent with article 6(2). In reality, however, it is no such thing. By the time section 133(1ZA) comes into consideration the erstwhile accused is by definition no longer facing any criminal charge in any sense, whether the autonomous one applied in the Strasbourg jurisprudence or any other. His conviction has been quashed. He is in no danger of conviction or punishment. Nor is he in any danger of any official body treating him as if he were still convicted or liable to punishment. All that is happening is that he is seeking to bring himself within the (legitimately) restricted eligibility requirements for compensation. That does not put his guilt or innocence in issue; he remains unconvicted and unpunished whether eligible or not, and no one will be entitled to say, if he cannot prove on the balance of probabilities that he is eligible, that he is guilty; at most all anyone could say is that his exoneration has not conclusively been proved. The terms of article 14(6) of the ICCPR, which section 133 seeks to implement in English law, make plain that eligibility depends on it being conclusively shown that a miscarriage of justice has occurred. A decision that this has not conclusively been shown is not at all the same as a finding of guilt, nor does it in any sense undermine the quashing of the conviction. As the facts of Allen show, a conviction may well be quashed on the grounds that it is not safe, without any implicit or explicit finding as to guilt or innocence: see Allen at paras 127, 131 132 and 134 135. An English lawyer might baulk at the assertion in para 127 that the appellant in that case had not been acquitted on the merits since he or she would say that a decision that the conviction is unsafe is indeed a judgment on the merits, but the sense of the courts judgment is clear: those adjudicating on the question of compensation did not comment on whether, on the basis of the evidence as it stood at the appeal, the applicant should be, or would likely be, acquitted or convicted. Equally, they did not comment on whether the evidence was indicative of the applicants guilt or innocence. (para 134). This will be equally true whenever a claimant, seeking compensation after the enactment by Parliament of section 133(1ZA) fails the eligibility test which it creates. Taking account of the Strasbourg jurisprudence This courts obligation under section 2(1)(a) of the Human Rights Act 1998 is to take into account any judgment, decision, declaration or advisory opinion of the Strasbourg court. Its ultimate responsibility is to arrive at its own decision on those Convention rights which are given domestic legal effect by being incorporated into that statute. The history of the English courts rightly demonstrates a desire if at all possible to maintain consistency of approach with the Strasbourg court. That desire is reflected in the general proposition that an English court should in the absence of some special circumstances, follow any clear and constant jurisprudence of the Strasbourg court: R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323, para 20. I respectfully share that desire and the present judgment sets out to take account of the Strasbourg jurisprudence in some detail. In accordance with its usual practice, the Strasbourg court has often repeated, usually in identical language, the key propositions which are once again propounded in Allen and which are summarised at para 99 above. To the extent that they are oft repeated, they are no doubt constant. To say that they are clear is, on inspection, much more difficult. As appears from the brief survey above they create considerable difficulties in application, frequently leading either to inconsistent outcomes or to over sophisticated semantic analysis in an effort to achieve the right result. It seems to me incumbent on this court to stand back and re assess the a priori assumption that has been made that the presumption of innocence, and the critical requirement to respect acquittals or reversals of convictions, extends to preventing any comment by any court in any other proceedings of whatever nature (Vanjak) which assesses conduct which was in question also in the criminal proceedings. Proper respect for acquittal does not require this. It requires that the erstwhile accused is treated as acquitted, not that his conduct cannot fall for examination in other proceedings where the test is quite different from the criminal standard of proof. Outcome For these reasons, which substantially although not exactly overlap with those of Lords Mance and Wilson, I would dismiss these appeals. The correct analysis is that article 6(2) does not apply to section 133 claims for compensation. It certainly requires that in such claims, as in any other proceedings, the reversal of the conviction is treated as unquestioned. But it does not inject into the quite different section 133 test a presumption that the erstwhile accused did not commit the crime; it holds that he has not been proved to the strict criminal standard to be guilty. Nor therefore does article 6(2) apply so as to strike down the provision in section 133(1ZA) which makes clear that a claimant for compensation must accept the onus of bringing himself within the eligibility criteria laid down by Parliament. If, contrary to that clear view, it be held that this court is duty bound by the Strasbourg jurisprudence to hold that article 6(2) does apply to a section 133 claim, I would conclude with the Court of Appeal and Divisional Court below that to require a claimant to prove his case of eligibility is not a breach of it. That is because what article 6(2) (if it applies) preserves is the presumption of innocence in the sense of being a person who is acquitted, unconvicted and unpunishable. Innocence, in the context of the criminal law and of article 6(2), does not mean exonerated on the facts; it means unconvicted, not proved according to the governing standard of proof, accordingly not liable to punishment, and entitled to be treated as such. The new section 133(1ZA) does not require the claimant to prove that he has this status. This status (which appears to be what the courts below meant by innocence in a general sense) is already a given, once the conviction has been quashed by the Court of Appeal (Criminal Division). What the new section requires is that the claimant prove something different and additional, viz the condition of eligibility for compensation under the scheme established in England and Wales. I agree that the mere fact that the section requires exoneration as a result of a new or newly discovered fact would not prevent it from calling for proof of innocence, or from conflicting with the presumption of innocence, if innocence in the context of the presumption meant exonerated on the facts. But for the reasons explained, it does not and cannot. The difference is clearly stated by Sir Thomas Bingham MR in R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175, cited by Lord Dyson MR in the Court of Appeal below at para 49. This critical distinction between innocence as used in article 6(2) and exoneration on the facts might in one sense be said to be a semantic one, but if so the Strasbourg court has emphasised time and again that language (ie semantics) is for it the critical test of breach of article 6(2). In reality it is not a mere semantic distinction but reflects a fundamental principle of the criminal law, namely the strict enhanced standard of proof. It is not possible for the law simultaneously to erect a differential and enhanced standard of proof for criminal prosecutions, and then effectively to apply that standard not just to criminal trials but to other (indeed maybe to all) other adjudications upon the facts which led to the prosecution. Neither the suggested test of link nor the suggested test of language will work to determine the scope of article 6(2) in the face of this difficulty. Postscript: judgments in the Court of Appeal (Criminal Division) The form of judgments in the Court of Appeal when dealing with appeals against conviction is not the issue in the present case. It is, however, important that that court is not constrained in giving its reasons either for dismissing an appeal or for allowing it. I do not disagree with what Lord Mance says at paras 25 34. In summary: the test on an appeal against conviction is whether the conviction is (i) safe, not whether the appellant is demonstrated not to have committed the offence; (ii) for this reason, it is not appropriate for the court to regard itself as having a discretionary power to make a legally binding declaration of innocence, nor for argument before it to proceed, as it seems to have done in Hallam on the basis that it ought to consider whether to add such a declaration to its judgment; (iii) but as Lord Judge observed in Adams at para 251 (cited by Lord Mance at para 30), there can be few stronger reasons for concluding that a conviction is unsafe than that fresh evidence demonstrates plainly that the appellant did not commit the offence; such cases are not common but they may occur, as for example where new DNA evidence is agreed to exonerate the appellant; (iv) if such cases do occur, the court ought not to be constrained in giving its reasons for its conclusion in terms which make clear what the new evidence shows; this will on occasions be common ground between prosecution and defence; it would be unfair to the appellant, if this conclusion is clear, not to state it; (v) counsel for an appellant may sometimes submit to the court that not only is the conviction shown to be unsafe, but that indeed fresh evidence shows plainly that the appellant did not commit the offence; if that submission is made, it is for the court to decide what are the true reasons for its conclusion on the safety of the conviction and how to express them; argument geared to a contemplated later application for compensation is not, however, appropriate since that issue is not before the court. LORD LLOYD JONES: I agree with the judgment of Lord Mance and therefore limit myself to some brief observations on the position which has been reached in the Strasbourg jurisprudence in relation to the scope of application of article 6(2) ECHR after acquittal or discontinuance of criminal proceedings. I agree with Lord Mances analysis of the case law of the ECtHR. For the reasons he gives, I too would decline to follow that case law if and to the extent that it may have gone beyond precluding reasoning that suggests that a defendant in criminal proceedings leading to an acquittal or discontinuance should have been convicted of the criminal offence with which he was charged. In any event, I consider that the incompatibility of section 133(1ZA) with article 6(2) is not made out. The objection to the section as amended is, as I understand it, that it requires the Secretary of State to assess whether persons whose convictions are quashed because of fresh evidence have established by that evidence that they are innocent. The Strasbourg case law makes clear that there is nothing objectionable in resisting or refusing compensation on the ground that the case falls within category (3) ie where fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant. See ALF v United Kingdom (Application No 5908/12), 12 November 2013. That is also apparent from Allen, a category (3) case where it was not suggested that the case fell into a higher category. It must also follow from Allen that there is nothing objectionable in requiring a claimant seeking compensation to bring himself or herself within category (2) ie where the fresh evidence so undermines the evidence against the defendant that no conviction could possibly have been based upon it. This is the whole thrust of the decision in Allen. By the same token, there can be nothing objectionable in the state contending against such an outcome in the circumstances of a particular case. Yet it seems that the line is drawn in the Strasbourg case law at requiring a claimant to demonstrate his or her innocence ie to bring himself or herself within category (1), where the fresh evidence shows clearly that he or she is innocent of the crime. This is apparent from the observation in Allen (at para 133) that what is important above all is that the judgments of the High Court and the Court of Appeal did not require the applicant to satisfy Lord Steyns test [in Mullen] of demonstrating her innocence. The difficulty with this approach, as Lord Mance points out, is that category (2) subsumes category (1). It is, no doubt, possible to draw a distinction between category (1) and category (2) but I am, at present, unable to see why this should be significant in the present context. I can see no sensible basis on which it is held objectionable to require evidence which establishes innocence but not objectionable to require evidence which establishes that the claimant could not reasonably have been convicted. Moreover and to this I attach particular importance this specific issue has not yet been directly addressed or decided by the ECtHR. Having regard to the present unsettled state of ECtHR case law, therefore, I am not persuaded that section 133(1ZA) is incompatible with article 6(2). It seems to me that these are matters which require consideration by the ECtHR and which that court will be anxious to address. For these reasons I would refuse declarations of incompatibility and would dismiss the appeals. LORD REED: (dissenting) I am grateful to Lord Mance for setting out the background to these appeals and the issues arising. Issue 1: Is article 6(2) of the Convention applicable to decisions under section 133 of the Criminal Justice Act 1988? The terms of article 6(2) of the European Convention on Human Rights are set out in para 35 above. Read literally, the words charged with a criminal offence might suggest that the guarantee only applies in the context of pending criminal proceedings. But it has never been interpreted so narrowly. In the first place, the European court long ago adopted the position that the character of a procedure under domestic law cannot be decisive of the question whether article 6 is applicable, since the guarantees contained in that provision could otherwise be avoided by the classification of proceedings. The case law on article 6(1) has therefore made it clear that the concept of a criminal charge has an autonomous meaning, with the consequence that article 6(2) is applicable to proceedings which may not be classified as criminal under domestic law, provided that they satisfy the criteria developed in cases such as Engel v The Netherlands (No 1) (1976) 1 EHRR 647 and ztrk v Germany (1984) 6 EHRR 409. Secondly, it has also long been clear from the case law of the European court that the scope of article 6(2) is not limited to pending criminal proceedings as so defined, but extends in some circumstances to decisions taken by the state after a prosecution has been discontinued or after an acquittal. R (Adams) v Secretary of State for Justice The case law of the European court concerning the scope of article 6(2), prior to the judgment of the Grand Chamber in Allen v United Kingdom (2013) 63 EHRR 10, was considered by this court in the case of R (Adams) v Secretary of State for Justice (JUSTICE intervening) [2011] UKSC 18; [2012] 1 AC 48. The implication of the courts decision in that case is that article 6(2) has no application to section 133 of the Criminal Justice Act 1988 (the 1988 Act). The first question which arises in this appeal is whether this court should follow that decision, as the Secretary of State submitted, or should depart from it, as the appellants invited us to do, in the light of the decision in Allen v United Kingdom that article 6(2) applies to decisions taken under section 133. The judgments in Adams did not differentiate clearly between the question whether article 6(2) is applicable and the question whether it has been infringed. As a consequence, it is difficult to be certain which of the arguments accepted by the court were thought to bear on the former question, and which were concerned with the latter. The fullest analysis was carried out by Lord Hope, who based his conclusion at para 111 that article 6(2) had no impact on section 133 on three arguments, which were also advanced on behalf of the Secretary of State in the present proceedings. They can be discussed under the headings (a) lex specialis, (b) separate proceedings, and (c) not undermining the acquittal. It is necessary to consider each of these in turn. (a) Lex specialis Lord Hope considered that article 6(2) and article 3 of Protocol No 7 (A3P7) stood in the relation of lex generalis and lex specialis respectively, so that the maxim lex specialis derogat legi generali applied: that is to say, that where a legal issue falls within the ambit of a provision framed in general terms, but is also specifically addressed by another provision, the specific provision overrides the more general one. This was, with respect, a questionable conclusion, since article 6(2) and A3P7 are concerned with different issues: article 6(2) is concerned with the presumption of innocence, whereas A3P7 is concerned with the payment of compensation to persons whose convictions have been quashed, and is silent about the presumption of innocence. Since they concern different issues, they are capable of applying cumulatively, rather than it being necessary to apply one to the exclusion of the other. Lord Hope found support for the view that the maxim applied in the speech of Lord Steyn in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18; [2005] 1 AC 1. Referring to article 14(6) of the ICCPR, set out in para 16 above, and to article 14(2) (Everyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty according to law), Lord Steyn cited the report of the UN Human Rights Committee in WJH v The Netherlands (Communication No 408/1990) [1992] UNHRC 25, where the Committee said at para 6.2: With respect to the authors allegation of a violation of the principle of presumption of innocence enshrined in article 14(2), of the Covenant, the Committee observes that this provision applies only to criminal proceedings and not to proceedings for compensation; it accordingly finds that this provision does not apply to the facts as submitted. Lord Steyn took from this that article 14(6) is a lex specialis [which] creates an independent fundamental right governed by its own express limits (para 38). Whatever the merits of that view may be in relation to the ICCPR, it might be doubted whether it is of assistance in deciding the scope of article 6(2) of the Convention, since it depends on the Human Rights Committees statement that article 14(2) of the ICCPR applies only to criminal proceedings and not to proceedings for compensation. Whether that is true of article 6(2) is the very question in issue. In relation to that question, although Lord Steyn cited a number of European cases, such as Sekanina v Austria (1993) 17 EHRR 221, which demonstrated that article 6(2) could apply to proceedings for compensation, he concluded at para 44 that the European jurisprudence cited throws no light on the question, and that article 14(6) of the ICCPR (and therefore section 133 of the 1988 Act), are in the category of lex specialis and the general provision for a presumption of innocence does not have any impact on it. This analysis might be contrasted with that of Lord Bingham, who pointed out at para 10 that the fact that article 6(2) was not confined to criminal proceedings, as illustrated by Sekanina, indicated that the European court took a different approach from that taken by the Human Rights Committee in relation to article 14(2) of the ICCPR. In support of his conclusion, Lord Steyn also referred to the Explanatory Report to Protocol No 7, prepared by the Steering Committee for Human Rights appointed by the Council of Europe. In relation to A3P7, the report stated at para 25: The intention is that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be acknowledgement that the person concerned was clearly innocent. Lord Bingham, on the other hand, observed at para 9(4) and (5) that the Explanatory Report was prefaced with a statement that it did not constitute an instrument providing an authoritative interpretation of the text of the Protocol; that para 25 did not appear to be consistent with para 23, which suggested that a miscarriage of justice occurred where there was some serious failure in the judicial process involving grave prejudice to the convicted person; that the reference to innocent in para 25 was to be contrasted with the absence of any such word in A3P7; that the expressions used in the French and Spanish versions of A3P7 were not obviously apt to denote proof of innocence; and that a standard textbook on the Convention considered the interpretation of A3P7 put forward in para 25 to be too strict. The question whether section 133 of the 1988 Act fell within the ambit of article 6(2) of the Convention did not, however, have to be decided in Mullen. Lord Hope returned to it in Adams. He accepted Lord Binghams reasons for doubting whether Lord Steyn was right to find support for his view in the French text and in para 25 of the Explanatory Report, and therefore took a fresh look at the issue. His conclusion that section 133 fell outside the ambit of article 6(2) was based, as explained above, on the view that article 6(2) was excluded from applying within the scope of A3P7, since the latter was lex specialis relative to the lex generalis contained in the former. In forming that view, he relied on a passage in the courts judgment in Sekanina, in the section dealing not with applicability but with compliance. After explaining that article 6(2) does not guarantee a person charged with a criminal offence a right to compensation for detention on remand, the European court added at para 25: In addition, despite certain similarities, the situation in the present case is not comparable to that governed by article 3 of Protocol No 7, which applies solely to a person who has suffered punishment as a result of a conviction stemming from a miscarriage of justice. As explained above, A3P7 requires the payment of compensation to a person who has suffered punishment as a result of a conviction which is subsequently reversed on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice. As the court stated in para 25 of Sekanina, the situation of the applicant in that case was not comparable to that governed by A3P7: he was seeking compensation for having been remanded in custody pending a trial at which he was acquitted, whereas A3P7 applies to persons who have suffered punishment as a result of a conviction. That is all that the court said in the relevant passage. Lord Hope, however, read more into it, stating at para 111: the fact that the court was careful to emphasise in Sekanina v Austria, para 25 that the situation in that case was not comparable to that governed by article 3 of the Seventh Protocol is an important pointer to the conclusion that, as Lord Steyn put it in Mullen, para 44, article 14(6) and section 133 of the 1988 Act are in the category of lex specialis and that the general provision for a presumption of innocence does not have any impact on them. That conclusion (with which Lord Clarke disagreed: para 230) did not follow from Sekanina or from any other judgment of the European court, and the subsequent judgment of that court in Allen v United Kingdom has in my opinion demonstrated that it is incorrect. (b) Separate proceedings The second strand in Lord Hopes reasoning concerned the relationship between the determination of a claim under section 133 of the 1988 Act and the antecedent criminal proceedings. He stated at para 109 that the Strasbourg cases show that its jurisprudence is designed to protect the criminal acquittal in proceedings that are closely linked to the criminal process itself, and went on at para 111 to distinguish comments on the underlying facts of the case in subsequent proceedings of a different kind, such as a civil claim for damages. He illustrated the point by reference to Sekanina, noting that in its judgment the court said at para 22 that the Austrian legislation and practice linked the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue can be regarded as a consequence and, to some extent, the concomitant, of the decision on the former. Lord Hope concluded that the system laid down by article 14(6) of the ICCPR, and implemented by section 133, did not cross the forbidden boundary, stating at para 111: The procedure laid down in section 133 provides for a decision to be taken by the executive on the question of entitlement to compensation which is entirely separate from the proceedings in the criminal courts. This reasoning is also questionable. Although procedurally separate, compensation proceedings under section 133 are nevertheless based on the quashing of a conviction by the criminal courts, and are directed towards obtaining compensation for harm inflicted by the state as a direct consequence of that conviction. But for the outcome of the criminal proceedings, there could be no compensation proceedings. In the language used by the European court, the outcome of the criminal proceedings is therefore decisive for the compensation proceedings, since it is a prerequisite of a compensation claim that the conviction has been quashed. The time limit for bringing a claim is also directly linked to the conclusion of the criminal proceedings: a factor which was regarded as relevant in a series of cases concerned with compensation proceedings under Norwegian law, such as Hammern v Norway (Application No 30287/96) (unreported) given 11 February 2003, para 43. Furthermore, the decision whether to award compensation, even before the amendment of section 133, depended on an assessment of the circumstances in which the conviction was quashed, based on an examination and evaluation of the judgment of the Court of Appeal. In these circumstances, even prior to Allen v United Kingdom, the Strasbourg case law clearly indicated that the compensation proceedings were likely to be regarded as a sequel or, as it was put in Sekanina, a consequence and concomitant, of the criminal proceedings, and therefore within the ambit of article 6(2). (c) Not undermining the acquittal Finally, Lord Hope considered that a refusal of compensation under section 133, prior to its amendment, did not have the effect of undermining the acquittal in the criminal proceedings. That conclusion is consistent with that of the European court in Allen v United Kingdom and later cases. However, it goes to the question whether article 6(2) has been violated, not to the question whether it is applicable. Lord Phillips and Lord Kerr agreed with Lord Hope on this topic. Lord Judge CJ, with whom Lord Brown, Lord Rodger and Lord Walker agreed on this topic, also treated A3P7 as a lex specialis which ousted the application of article 6(2) to proceedings under section 133. In the present case, the courts below were therefore correct to take the view that they were bound by Adams to hold that article 6(2) was inapplicable. (2) Serious Organised Crime Agency v Gale Before turning to the more recent Strasbourg jurisprudence, it is also relevant to note the case of Serious Organised Crime Agency v Gale (Secretary of State for the Home Department intervening) [2011] UKSC 49; [2011] 1 WLR 2760, decided by this court a few months after Adams. The case concerned the question whether civil recovery proceedings under the Proceeds of Crime Act 2002, undertaken following the appellants acquittal of criminal charges, were compatible with article 6(2). In the course of his judgment, with which a majority of the court agreed, Lord Phillips was critical of the distinction which he perceived in the case law of the European court between claims for compensation brought by an acquitted defendant against the state under public law, and claims for compensation brought by an alleged victim against an acquitted defendant under the law of tort, commenting at para 32 that this confusing area of Strasbourg law would benefit from consideration by the Grand Chamber. Lord Dyson was less critical of the Strasbourg jurisprudence, and provided an illuminating analysis. As he noted, cases in which article 6(2) was held to apply to proceedings instituted after the discontinuation of criminal proceedings or following an acquittal included, first, cases in which there was a sufficiently close link between the criminal proceedings and the other proceedings to engage article 6(2), even if on an application of the usual Engel criteria the latter proceedings would be characterised as civil. Those cases were described in Ringvold v Norway Reports of Judgments and Decisions 2003 II, p 117, para 36 as concerning proceedings relating to such matters as an accuseds obligation to bear court costs and prosecution expenses, a claim for reimbursement of his (or his heirs) necessary costs, or compensation for detention on remand, matters which were found to constitute a consequence and the concomitant of the criminal proceedings. The focus of the inquiry was on whether the proceedings were the direct sequel or a consequence and the concomitant of the criminal proceedings: ibid, at para 41. As Lord Dyson stated at para 125: Claims by an accused person following a discontinuation or acquittal for costs incurred as a result of the criminal proceedings and claims for compensation for detention are paradigm examples of such proceedings. The link between such claims and the criminal proceedings is so close that article 6(2) applies to both of them. The claims for compensation flow from the criminal proceedings. But for these proceedings, there would be no claims. As Lord Dyson explained, civil claims for compensation, brought against the defendant under the law of tort, are not linked in that way to criminal proceedings. The victim of a civil wrong has a right to claim damages, in order to obtain a remedy for the harm which he or she has suffered, regardless of whether the defendant has been convicted or acquitted of a criminal offence arising out of the same facts. The victims claim is not dependent on the defendant being prosecuted at all. Furthermore, as the court pointed out in Ringvold, para 38, if civil compensation proceedings automatically fell within the ambit of article 6(2), that would have: the undesirable effect of pre empting the victims possibilities of claiming compensation under the civil law of tort, entailing an arbitrary and disproportionate limitation on his or her right of access to a court under article 6(1) of the Convention. A separate basis on which article 6(2) had been held to apply to proceedings instituted after the discontinuation of criminal proceedings or following an acquittal was that a sufficient link with the criminal proceedings was created by the language used by the court in the civil proceedings. An example was the case of Y v Norway (2003) 41 EHRR 87, where the civil court stated in its judgment that it found it clearly probable that the defendant had committed the offences against the claimant with which he was charged. The European court found that there had been a violation of article 6(2). Lord Dyson contrasted that case with Moullet v France (Application No 27521/04) (unreported) given 13 September 2007, where the applicant was a public official who had been charged with accepting bribes. The criminal proceedings were discontinued on the ground that they were time barred. The official was then dismissed on the basis that the evidence showed that he had taken bribes. That decision was challenged under administrative law, but was upheld by the Conseil dEtat on the ground that it had been based on accurate facts and on reasons which were not materially or factually incorrect. A complaint to the European court was unsuccessful. The court considered whether the Conseil dEtat used such language in its reasoning as to create a clear link between the criminal case and the ensuing administrative proceedings and thus to justify extending the scope of article 6(2) to cover the latter. It noted that the applicant was not formally declared guilty of the criminal offence of accepting bribes. The Conseil dEtat had confined itself to determining the facts without suggesting any criminal characterisation whatsoever In other words, the domestic authorities managed in the instant case to keep their decision within a purely administrative sphere, where the presumption of innocence the applicant relied on did not obtain. Similarly in Ringvold v Norway the court found that a domestic decision awarding compensation to a victim of sexual abuse, following the defendants acquittal, did not fall within the scope of article 6(2). Although the domestic court had found that there was evidence establishing that sexual abuse had occurred, and that, on the balance of probabilities, it was clear that the applicant was the abuser (para 19), it did not state, either expressly or in substance, that all the conditions were fulfilled for holding the applicant criminally liable with respect to the charges of which he had been acquitted (para 38). Lord Dyson commented at para 138 that the rationale of cases such as Y v Norway must be that if the domestic court chooses to treat civil proceedings as if the issue of criminal liability falls to be determined, then the fair trial protections afforded by article 6(2) should be respected. But if the decision in the civil proceedings is based on reasoning and language which go no further than is necessary for the purpose of determining the issue before that court and without making imputations of criminal liability, then the necessary link will not have been created. (3) Allen v United Kingdom An opportunity for the Grand Chamber to consider this area of the law arose soon after Gale, in the case of Allen v United Kingdom. The applicant had been convicted of manslaughter. Her conviction was later quashed on the basis that, although the Crown case against her remained strong, a jury which had heard the fresh evidence might have come to a different conclusion. In terms of the categories subsequently adopted in Adams, it was a category 3 case. Her application for compensation under section 133 as originally enacted was unsuccessful, and her application for judicial review of that decision was dismissed. On appeal, the Court of Appeal held that there had been no violation of article 6(2): R (Allen) (formerly Harris) v Secretary of State for Justice [2008] EWCA Civ 808; [2009] 1 Cr App R 2. As was pointed out, article 6(2) could not possibly mean that compensation necessarily followed the quashing of a conviction on the basis of fresh evidence, otherwise A3P7 could not be in the terms it was. More controversially, Hughes LJ, giving the judgment of the court, expressed the view, applying dicta of Lord Steyn in the case of Mullen, that the phrase miscarriage of justice in section 133 of the 1988 Act was restricted to cases where the defendant was demonstrably innocent of the crimes of which he had been convicted: a view which was subsequently disapproved by the majority of this court in Adams. When Allen reached the Grand Chamber of the European court, on a complaint directed not against the Secretary of States decision to refuse the applicants claim for compensation, but against the reasons given by the High Court and the Court of Appeal for dismissing her challenge to that decision, the European court was therefore considering section 133 in its unamended form. The Government contended that the complaint was inadmissible because article 6(2) had no application to decisions taken under section 133, as this court had held in Adams. The question whether section 133 fell within the scope of article 6(2) was therefore directly in issue. In deciding that question, the Grand Chamber court undertook a careful review of the courts case law, and considered the relationship between article 6(2) and A3P7. The Grand Chamber began its assessment by explaining the justification, in accordance with the most fundamental principles of the Convention case law, for giving article 6(2) a wider application than a literal reading of the text would suggest. As it explained at para 92: The object and purpose of the Convention, as an instrument for the protection of human beings, requires that its provisions be interpreted and applied so as to make its safeguards practical and effective. The need to ensure that the right guaranteed by article 6(2) is practical and effective entails that it cannot be viewed solely as a procedural guarantee in the context of a criminal trial, but has a second aspect (para 94): Its general aim, in this second aspect, is to protect individuals who have been acquitted of a criminal charge, or in respect of whom criminal proceedings have been discontinued, from being treated by public officials and authorities as though they are in fact guilty of the offence charged. In these cases, the presumption of innocence has already operated, through the application at trial of the various requirements inherent in the procedural guarantee it affords, to prevent an unfair criminal conviction being imposed. Without protection to ensure respect for the acquittal or the discontinuation decision in any other proceedings, the fair trial guarantees of article 6(2) could risk becoming theoretical and illusory. What is also at stake once the criminal proceedings have concluded is the persons reputation and the way in which that person is perceived by the public. The Grand Chamber reviewed how the courts jurisprudence in relation to the second aspect of article 6(2) had developed over time. In doing so, it did not attempt to justify or reconcile all of the decisions on their particular facts: a task which, in relation to some of the case law, might have been challenging. Instead, it sought to derive from the cases the underlying principles, and to explain how they had evolved. In some early cases in which the court had found article 6(2) to be applicable, despite the absence of a pending criminal charge, it had said that the judicial decisions taken following criminal proceedings, for example with regard to an obligation to bear court and prosecution costs, or compensation for pre trial detention or other adverse consequences, were consequences and necessary concomitants of, or a direct sequel to, the conclusion of the criminal proceedings. Similarly, in a later series of cases, such as Sekanina v Austria, it had concluded that Austrian legislation and practice link[ed] the two questions the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue could be regarded as a consequence and, to some extent, the concomitant of the decision on the former, so that article 6(2) applied to the compensation proceedings. Developing this idea in subsequent cases, such as Hammern v Norway, the court had found that the applicants compensation claim not only followed the criminal proceedings in time, but was also tied to those proceedings in legislation and practice, with regard to both jurisdiction and subject matter, creating a link between the two sets of proceedings with the result that article 6(2) was applicable. In cases such as Ringvold v Norway and Y v Norway, concerning the victims right to compensation from the applicant, who had previously been found not guilty of the criminal charge, the court had held that where the decision on civil compensation contained a statement imputing criminal liability, this would create a link between the two proceedings such as to engage article 6(2) in respect of the judgment on the compensation claim. The Grand Chamber also cited its decision in OL v Finland (Application No 61110/00) (unreported) given 5 July 2005, in which an appeal was brought against a child care order, made on the basis of a psychiatric report stating that it was highly probable that the child had been sexually abused by her father, after the public prosecutor decided not to bring charges. In dismissing the appeal, the domestic court stated: The public care order was based on the expert opinion resulting from the psychiatric examinations. However, it is unclear whether A has been subjected to sexual abuse. This possibility cannot be excluded, either. According to the examinations it is undisputed that A has become predisposed to sexuality, not suitable for a child of her age. It is also clear that living with a mentally ill mother has had negative effects on As psychical development . The European court dismissed the fathers complaint of a violation of article 6(2) as manifestly ill founded, observing: In this particular case, although the prosecutor did not prefer charges against the applicant, the decision to place A into public care was legally and factually distinct. Regardless of the conclusion reached in the criminal investigation against the applicant, the public care case was thus not a direct sequel to the former. Nor was a sufficient link between the two proceedings created by the language used by the domestic court: the impugned ruling of the Supreme Administrative Court in no way stated that the applicant was criminally liable with regard to the charges which the prosecutor had dropped. More recently, the court had expressed the view that following the discontinuation of criminal proceedings, the presumption of innocence required that the lack of a persons criminal conviction should be preserved in any other proceedings of whatever nature. It had also indicated that the operative part of an acquittal judgment must be respected by any authority referring directly or indirectly to the criminal responsibility of the person in question. The Grand Chamber then considered the specific context of judicial proceedings following the quashing of a conviction, giving rise to an acquittal, and stated at para 104: Whenever the question of the applicability of article 6(2) arises in the context of subsequent proceedings, the applicant must demonstrate the existence of a link, as referred to above [ie in the discussion of the previous case law], between the concluded criminal proceedings and the subsequent proceedings. Such a link is likely to be present, for example, where the subsequent proceedings require examination of the outcome of the prior criminal proceedings and, in particular, where they oblige the court to analyse the criminal judgment; to engage in a review or evaluation of the evidence in the criminal file; to assess the applicants participation in some or all of the events leading to the criminal charge; or to comment on the subsisting indications of the applicants possible guilt. The Grand Chamber next addressed the argument that article 6(2) did not apply to section 133 of the 1988 Act because the latter fell within the scope of A3P7, which was argued to be lex specialis: the argument accepted by a majority of this court in Adams. The Grand Chamber had earlier mentioned the UN Human Rights Committees communication in WJH v The Netherlands, which, as it noted, proceeded on the basis that article 14(2) of the ICCPR applied only to criminal proceedings. It also cited the Explanatory Report on Protocol No 7, including the passages to which Lord Bingham had referred in Mullen, observing at para 133 that the report itself provided that it did not constitute an authoritative interpretation of the text, and adding that the reports reference to the need to demonstrate innocence must now be considered to have been overtaken by the courts intervening case law on article 6(2). It concluded at para 105: Having regard to the nature of the article 6(2) guarantee outlined above, the fact that section 133 of the 1988 Act was enacted to comply with the respondent states obligations under article 14(6) ICCPR, and that it is expressed in terms almost identical to that article and to article 3 of Protocol No 7, does not have the consequence of taking the impugned compensation proceedings outside the scope of applicability of article 6(2), as argued by the Government. The two articles are concerned with entirely different aspects of the criminal process; there is no suggestion that article 3 of Protocol No 7 was intended to extend to a specific situation general guarantees similar to those contained in article 6(2). Indeed, article 7 of Protocol No 7 clarifies that the provisions of the substantive articles of the Protocol are to be regarded as additional articles to the Convention, and that all the provisions of the Convention shall apply accordingly. Article 3 of Protocol No 7 cannot therefore be said to constitute a form of lex specialis excluding the application of article 6(2). The lex specialis argument was therefore roundly rejected. The Grand Chamber then applied the general principles set out earlier in its judgment to the facts of Allen. It identified the relevant question as being whether there was a link between the concluded criminal proceedings and the compensation proceedings, having regard to the relevant considerations set out in para 104 of the judgment. In that regard, it stated at paras 107 108: 107. In this respect, the court observes that proceedings under section 133 of the 1988 Act require that there has been a reversal of a prior conviction. It is the subsequent reversal of the conviction which triggers the right to apply for compensation for a miscarriage of justice. Further, in order to examine whether the cumulative criteria in section 133 are met, the Secretary of State and the courts in judicial review proceedings are required to have regard to the judgment handed down by the CACD [the Court of Appeal Criminal Division]. It is only by examining this judgment that they can identify whether the reversal of the conviction, which resulted in an acquittal in the present applicants case, was based on new evidence and whether it gave rise to a miscarriage of justice. 108. The court is therefore satisfied that the applicant has demonstrated the existence of the necessary link between the criminal proceedings and the subsequent compensation proceedings. As a result, article 6(2) applied in the context of the proceedings under section 133 of the 1988 Act to ensure that the applicant was treated in the latter proceedings in a manner consistent with her innocence. The critical factors in establishing the necessary link between the decision of the Court of Appeal in the criminal proceedings, and the subsequent proceedings under section 133, were therefore that the quashing of the conviction was a prerequisite of proceedings under section 133, and that in order to arrive at a decision on the claim it was necessary for the Secretary of State to examine the judgment of the Court of Appeal so as to determine whether the criteria in section 133 were satisfied. That reasoning applies equally, if not a fortiori, to section 133 in its amended form. The only remaining question, therefore, in relation to the applicability of article 6(2) to decisions taken under section 133 as amended, is whether, as counsel for the Secretary of State submitted, this court should decline to follow the decision of the Grand Chamber. In counsels submission, our doing so would encourage, or stimulate, further dialogue where the issue could be reviewed and addressed in full. This courts approach to judgments of the European Court of Human Rights is well established. Section 2 of the Human Rights Act requires the courts to take into account decisions of the European court, not necessarily to follow them. In taking them into account, this court recognises their particular significance. As Lord Bingham observed in Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465, para 44: The Strasbourg court authoritatively expounds the interpretation of the rights embodied in the Convention and its protocols, as it must if the Convention is to be uniformly understood by all member states. Nevertheless, it can sometimes be inappropriate to follow Strasbourg judgments, as to do so may prevent this court from engaging in the constructive dialogue or collaboration between the European court and national courts on which the effective implementation of the Convention depends. In particular, dialogue has proved valuable on some occasions in relation to chamber decisions of the European court, where this court can be confident that the European court will respond to the reasoned and courteous expression of a diverging national viewpoint by reviewing its position. The circumstances in which constructive dialogue is realistically in prospect are not, however, unlimited. As Lord Neuberger of Abbotsbury MR explained in Manchester City Council v Pinnock (Secretary of State for Communities and Local Government intervening) [2010] UKSC 45; [2011] 2 AC 104, para 48: Where, however, there is a clear and constant line of decisions whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle, we consider that it would be wrong for this court not to follow that line. There is also unlikely to be scope for dialogue where an issue has been authoritatively considered by the Grand Chamber, as Lord Mance indicated in R (Chester) v Secretary of State for Justice [2013] UKSC 63; [2014] AC 271, para 27: It would have then to involve some truly fundamental principle of our law or some most egregious oversight or misunderstanding before it could be appropriate for this court to contemplate an outright refusal to follow Strasbourg authority at the Grand Chamber level. No circumstances of the kind contemplated in those dicta exist in the present case. The Grand Chambers conclusion was carefully considered, and was based on a detailed analysis of the relevant Strasbourg case law. It was consistent with a line of authorities going back decades. It was intended to provide authoritative guidance, and has been followed in numerous subsequent judgments, such as Cleve v Germany (Application No 48144/09) (unreported) given 15 January 2015, Kapetanios v Greece (Application Nos 3453/12, 42941/12 and 9028/13) (unreported) given 30 April 2015 and Dicle and Sadak v Turkey (Application No 48621/07) (unreported) given 16 June 2015. It did not involve any principle of English law, or any oversight or misunderstanding. On the contrary, it is the reasons given in Adams to support the conclusion that article 6(2) has no application to section 133 of the 1988 Act which, with respect, are less than compelling. The lex specialis argument is unpersuasive, for the reasons explained at paras 144 149 above, and those set out by the Grand Chamber at para 105 of its judgment. The separate proceedings argument is equally unpersuasive, as explained at para 151 above, and at para 107 of the Grand Chambers judgment. That is also the implication of Lord Dysons analysis in Gale, where he explained at para 125 (quoted in para 155 above) why claims by a defendant for compensation for detention are a paradigm example of proceedings which are sufficiently closely linked to criminal proceedings for article 6(2) to apply. The not undermining the acquittal argument bears on compliance with article 6(2), not on whether it is applicable. I recognise that the dicta which I have cited from Pinnock and Chester are not to be treated as if they had statutory force. Nevertheless, they are in my view persuasive. I find it difficult to accept that this court should deliberately adopt a construction of the Convention which it knows to be out of step with the approach of the European Court of Human Rights, established by numerous Chamber judgments over the course of decades, and confirmed at the level of the Grand Chamber, in the absence of some compelling justification for taking such an exceptional step. For my part, I can see no such justification. Conclusion on issue 1 For the reasons I have explained, I would hold that decisions taken under section 133 fall within the ambit of article 6(2). I would therefore depart from the decision in Adams in so far as it adopted the contrary view. Issue 2: Is section 133(1ZA) incompatible with article 6(2)? Once it has been established that there is a sufficient link between proceedings under section 133 and the antecedent criminal proceedings, the court must determine whether the presumption of innocence has been respected. The approach to be adopted to this question was the second area of the law which was reviewed by the Grand Chamber in Allen v United Kingdom. As the court observed, there is no single approach to ascertaining the circumstances in which article 6(2) will be violated in the context of proceedings which follow the conclusion of criminal proceedings. In particular, the court explained in para 121 that in cases concerning applications by a former accused for compensation or costs, where the criminal proceedings were discontinued, it had been held that a refusal of compensation or costs might raise an issue under article 6(2) if supporting reasoning which could not be dissociated from the operative provisions amounted in substance to a determination of the accuseds guilt, but that no violation had been found where domestic courts had described a state of suspicion without making any finding of guilt. In Sekanina, however, the court drew a distinction between cases where the criminal proceedings had been discontinued and those where a final acquittal judgment had been handed down clarifying that the voicing of suspicions regarding an accuseds innocence was conceivable as long as the conclusion of criminal proceedings had not resulted in a decision on the merits of the accusation, but that it was no longer admissible to rely on such suspicions once an acquittal had become final. In Sekanina, the domestic court rejected the applicants claim for compensation for detention, saying that, in acquitting him, the jury took the view that the suspicion was not sufficient to reach a guilty verdict, but there was, however, no question of that suspicions being dispelled (para 29). The European court said that this left open a doubt as to the correctness of the acquittal and was incompatible with the presumption of innocence. To give one other example, in cases involving civil compensation claims lodged by victims, regardless of whether the criminal proceedings ended in discontinuation or acquittal, the court had emphasised that while exoneration from criminal liability ought to be respected in the civil compensation proceedings, it should not preclude the establishment of civil liability to pay compensation arising out of the same facts on the basis of a less strict burden of proof. However, if the national decision on compensation were to contain a statement imputing criminal liability to the respondent party, this would raise an issue falling within the ambit of article 6(2). Turning to consider the circumstances in Allen itself, the court observed that the applicants conviction was quashed on the ground that it was unsafe, because new evidence might have affected the jurys decision had it been available at trial. The Court of Appeal did not itself assess all the evidence in order to decide whether guilt had been established beyond reasonable doubt. Nor had it ordered a retrial, since the applicant had already served her sentence. In these circumstances, although the quashing of the conviction resulted in a verdict of acquittal being entered, it was not an acquittal on the merits in a true sense. In that respect, the court contrasted the case with Sekanina and the similar case of Rushiti v Austria (2001) 33 EHRR 56, where the acquittal was based on the principle that any reasonable doubt should be considered in favour of the accused. The court observed, at para 127, that in this sense, although formally an acquittal, the termination of the criminal proceedings against the applicant might be considered to share more of the features present in cases where criminal proceedings have been discontinued. The court next considered whether the criteria laid down by section 133 as originally enacted were themselves incompatible with article 6(2). As it observed, there was nothing in the criteria which called into question the innocence of an acquitted person, and the legislation did not require any assessment of the applicants criminal guilt. The court next considered the approach adopted by the domestic courts in the case before it. They had been entitled under the Convention to conclude that more than an acquittal was required in order to establish a miscarriage of justice, provided always that they did not call into question the applicants innocence. In that regard, the court referred to the view expressed by Lord Steyn in Mullen (subsequently adopted by the minority in Adams) that a miscarriage of justice, within the meaning of section 133(1), would only arise where the person concerned was innocent, and that section 133 therefore required that the new or newly discovered fact must demonstrate the applicants innocence beyond reasonable doubt. The court observed that what is important above all is that the judgments of the High Court and the Court of Appeal did not require the applicant to satisfy Lord Steyns test of demonstrating her innocence. The difference in the present case is that the insertion of section 133(1ZA) into the 1988 Act has had the effect of introducing a test that the fresh evidence has to establish beyond reasonable doubt that the applicant did not commit the offence. In the present proceedings, the Divisional Court and the Court of Appeal considered this test to be compatible with article 6(2), since it did not require the applicant to establish his innocence, but imposed a narrower requirement, namely that he demonstrate that his innocence had been established by a new or newly discovered fact and nothing else, as the Court of Appeal stated at para 48. The refusal of an application under section 133 did not, therefore, in their view cast doubt on the persons innocence generally. The Court of Appeal observed that a focus on the new or newly discovered fact and nothing else was central to limiting eligibility for compensation to a narrower category of cases than the entire corpus of cases where a conviction was quashed. It also considered that the European courts observations about Lord Steyns test in Mullen were directed to the dangers of imposing a general requirement of having to demonstrate innocence, which was not what was required by section 133. I do not find this an easy question, but I have respectfully come to a different conclusion from the courts below. In the context of decisions made under the amended section 133, the distinction between a requirement that innocence be established, and a requirement that innocence be established by a new or newly discovered fact and nothing else, appears to me to be unrealistic. A person who can make a valid application under section 133 is, of necessity, someone whose conviction has been quashed because of the impact of a new or newly discovered fact: that follows from the terms of section 133(1). In most cases which satisfy that criterion, there will not be any other reason for the quashing of the conviction. A decision by the Secretary of State that the new or newly discovered fact does not establish the persons innocence does not, therefore, usually leave open a realistic possibility that he or she has been acquitted for some other reason, which that decision leaves unaffected. On the contrary, the implication of the decision is likely to be that, although the new or newly discovered fact has led to the quashing of the conviction, the persons innocence has not been established. The decision therefore casts doubt on the innocence of the person in question and undermines the acquittal. The idea that there is a meaningful distinction between assessing whether innocence has been established by a new or newly discovered fact, and assessing whether innocence has been established in a more general sense, also appears to me to be unrealistic for another reason. Normally, at least, the significance of a new piece of evidence can only be assessed in the context of the evidence as a whole. That is illustrated by the present cases. The photograph of Mr Hallam in Mr Harringtons company does not in itself tell one anything about his guilt or innocence of the murder. It is only when considered in the context of the alibi evidence that its significance becomes apparent. In Mr Nealons case, the presence of an unknown males DNA on the victims underwear tells one nothing in itself about Mr Nealons guilt or innocence of an attempted rape. It is only in the context of her evidence about the behaviour of her attacker and her contact with other males on the day in question, and the evidence of other witnesses eliminating the most likely alternative explanations of the presence of the DNA, that its significance can be assessed. There is no material difference, in these situations, between asking whether the applicants innocence has been established by the new or newly discovered fact, and asking whether his innocence has been established. The majority of this court have reached the same conclusion as the courts below, but for somewhat different reasons. As I understand their reasoning, they emphasise that, in Allen v United Kingdom, the Grand Chamber found no violation of article 6(2) in the judgment of the Court of Appeal upholding the refusal of compensation under section 133 in its original form to an applicant who, in terms of the domestic categories subsequently adopted in Adams, fell into category 3, and failed to fall into category 2. They consider that it must, or at least may, be equally compatible with article 6(2) to require the applicant to demonstrate that he falls into category 1. I accept that the implication of the decision in Allen v United Kingdom is that it is not necessarily incompatible with article 6(2) to refuse compensation under section 133 in cases falling within the category later described in Adams as category 3: that is to say, cases where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant. The effect of the decision of this court in Adams, confining compensation to cases in category 2 (where the fresh evidence so undermines the evidence against the defendant that no conviction could possibly be based upon it), has been held in later cases before the European court to be compatible with article 6(2): see, for example, ALF v United Kingdom (Application No 5908/12) (unreported) given 12 November 2013. It is not a violation of the presumption of innocence to say that a case falling within category 3 (or category 4: cases where something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted) does not constitute a miscarriage of justice. Nor is there any objection under article 6(2) to other criteria for the award of compensation that do not require the applicant to establish his or her innocence: for example, criteria precluding compensation where successful appeals are brought within time, or where convictions are quashed because of misdirections. The problem which arises under article 6(2) when compensation is confined to persons in category 1 cases where the fresh evidence shows clearly that the defendant is innocent of the crime of which he was convicted as under section 133 as amended, is quite specific. It is that it effectively requires the Secretary of State to decide whether persons whose convictions are quashed because of fresh evidence have established that they are innocent. In Allen, the Grand Chamber found at para 128 that there was nothing in the criteria set out in section 133 as it then stood which called into question the innocence of an acquitted person, and that the legislation itself did not require any assessment of the applicants criminal guilt. I doubt whether the same could be said of section 133 in its amended form. In cases falling within category 2, the person has received an acquittal on the merits, in the language used by the European court: the Court of Appeal has assessed all the evidence and has concluded that, allowing the defendant the benefit of any reasonable doubt, only a verdict of acquittal could reasonably be arrived at. The principle in Sekanina therefore applies, and it is no longer permissible to rely on suspicions regarding the defendants innocence, as the Secretary of State must do when refusing an application for compensation under the amended section 133 on the ground that the fresh evidence does not demonstrate the applicants innocence. Furthermore, the implication of para 128 of the European courts judgment in Allen a category 3 case is that even in cases where there has not been an acquittal on the merits in that sense, as may be the position in the present cases, it is nevertheless impermissible for the criteria for awarding compensation to [call] into question the innocence of an acquitted person or to require any assessment of the applicants criminal guilt. If the appellants criminal guilt is to be assessed, they are entitled under the Convention to the protections afforded in criminal proceedings, including the benefit of the presumption of innocence. So far as the European courts comments about Lord Steyns speech are concerned, the court appears to me to have understood that Lord Steyn required the applicants innocence to be established by a new or newly discovered fact. Its comments seem to me to provide some support for my conclusion. The critical question does not however turn on how the courts references to Lord Steyns speech are to be construed, but on how the approach to article 6(2) laid down by the court applies to section 133 in its amended form. For the reasons I have explained, the criterion laid down in section 133(1ZA) is in my opinion incompatible with article 6(2). Counsel for the Secretary of State submitted, however, that a violation of article 6(2) was avoided by means of the Secretary of States statement, in each of the decision letters, that nothing in the letter was intended to undermine, qualify or cast doubt upon the decision to quash the conviction, and that the applicant was presumed to be and remained innocent of the charge brought against him. I am unable to agree that this statement ensures that article 6(2) is respected. The application of a test which in substance infringes the presumption of innocence is not rendered acceptable by the addition of words intended to avoid a conflict with article 6(2), if the overall effect is nevertheless to undermine a previous acquittal. The point is illustrated by the case of Hammern v Norway, where the operation of a statutory test which required the applicant to prove that he did not perpetrate the acts forming the basis of the charges was incompatible with article 6(2), notwithstanding a statement in the decision that I should like to stress that the refusal of a compensation claim does not entail that the previous acquittal is undermined or that the acquittal is open to doubt. The European court commented at para 48 that it was not convinced that, even if presented together with such a cautionary statement, the impugned affirmations were not capable of calling into doubt the correctness of the applicants acquittal, in a manner incompatible with the presumption of innocence. That comment is equally apposite in the present case. Finally on this issue, counsel for the Secretary of State submitted that, in order for this court to find that section 133(1ZA) was incompatible with article 6(2), it would have to go significantly further than did the European court in Allen, contrary to the principle expressed in R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323, para 23. That argument cannot be accepted. The conclusion which I have reached is based on principles which were already well established before the case of Allen, and which received the approval of the Grand Chamber in that judgment. Conclusion on Issue 2 For these reasons, I conclude that the definition of a miscarriage of justice introduced by section 133(1ZA) of the 1988 Act is incompatible with article 6(2) of the Convention, and would have made a declaration to that effect. LORD KERR: (dissenting) Introduction I agree with Lord Reed that the appeals in these cases should be allowed and that the declaration of incompatibility which he proposes should be made. It is important to keep clearly in mind that the focus of the case is on the compatibility of section 133(1ZA) of the 1988 Act with article 6(2) of ECHR. The starting point for any discussion of this question must be whether the article is engaged by decisions taken under section 133. For the reasons so compellingly given by Lord Reed, such decisions do fall within the ambit of article 6(2). Inasmuch as the decision in Adams suggested otherwise, it should not be followed. In any event, as Lord Reed has demonstrated, the decision in that case conflated the questions whether article 6(2) was engaged and whether it had been breached. Lady Hale agrees that article 6(2) is engaged see para 77 of her judgment. Lord Mance in paras 35 53 of his judgment discusses whether article 6(2) should be applied to decisions taken under section 133. As he has pointed out, recent case law from the Strasbourg court has focused on the question whether there is a sufficient link between the impugned decision and the second aspect of the article 6(2) obligation. But, on Lord Mances analysis, the focus is not concerned with the question whether the article was engaged but rather on whether it has been violated. I do not construe his judgment, therefore, as suggesting that this species of decision lies outside the ambit of article 6(2). Lord Wilson agrees (albeit with reluctance) with Lord Reed, that, if article 6(2) has the meaning ascribed to it by the ECtHR, in particular in the Allen case, section 133(1ZA) of the 1988 Act is incompatible with it. Although he declines to follow the case law of Strasbourg on the question of the meaning of article 6(2), I detect nothing in his judgment which suggests that he would find that decisions made under section 133 did not fall within its ambit, if interpreted in accordance with that case law. Lord Hughes has said that article 6(2), in its second aspect, applies and thus governs subsequent proceedings when there is a link between them and the previously concluded criminal proceedings. In contrast to Lord Mance, it would appear that Lord Hughes considers that the existence of a link was prerequisite to the engagement of article 6(2). But, Lord Hughes judgment does not appear to me to be inconsistent with acceptance that the link is present where a decision under section 133 requires to be taken. At para 99(c) of his judgment Lord Hughes sets out four considerations said to be indicative of the likelihood of the existence of a link, all of which, apart possibly from the final one, seem to be present in this case. They are present where: (i) an analysis of the criminal judgment must be undertaken; (ii) where a review or evaluation of the evidence in the criminal file must take place; (iii) where there has to be an assessment of the applicants participation in some or all of the events leading to the criminal charge; and (iv) where comment must be made on the subsisting indications of the applicants possible guilt. Plainly, scrutiny of the criminal judgment must underpin any decision under section 133; likewise, a review of the evidence against an applicant is indispensable; and this must include an assessment of his participation in the events which led to the criminal charge. The only possible debate is as to whether comment on subsisting indications of the applicants possible guilt requires that a statement be made by the decision maker or merely that a judgment be reached by him on these questions: does contemporaneous information lead to the conclusion that the applicant has been fully exonerated; or that he could never have been properly convicted; or whether sufficient new material has been adduced which rendered the conviction unsafe on the basis that a jury might or might not have convicted him had such material been produced at his trial. It seems to me that the decision under section 133 will inevitably require a judgment to be made on those issues and, if that is what is required to meet Lord Hughes final criterion, the decision plainly comes within the ambit of article 6(2). Lord Lloyd Jones does not directly address the question of the engagement of article 6(2) as opposed to its possible violation but, as with Lord Wilsons judgment, I detect nothing in his judgment which is counter indicative of acceptance that article 6(2) is at least engaged by decisions made under section 133. In light of all this, it appears to me that there is general agreement among the members of the court or, at least, no overt dissent, that decisions made under section 133 fall within the ambit of article 6(2). The question to be concentrated upon, therefore, is whether the context set by section 133(1ZA) involves an inevitable conflict with the article. Put more simply, if a decision as to whether a person whose conviction has been quashed is to receive compensation only if he shows that he was innocent, is such a requirement compatible with article 6(2)? Innocence There has been much erudite discussion in the judgments of other members of the court about the nature of innocence and the inaptness of the criminal trial to investigate and pronounce upon the question whether a defendant is innocent, as opposed to not being proved to be guilty. I do not propose to add to that discussion beyond observing that, inevitably, there will be many who are charged with or tried on criminal offences who are truly innocent but are unable to establish their innocence as a positive fact. That undeniable circumstance must form part of the backdrop to the proper approach to the application of article 6(2) of ECHR. It seems to me that much of the jurisprudence on the second aspect of the sub article has been influenced, albeit perhaps not explicitly, by the dilemma that this presents. The opportunity to proclaim ones innocence and the right to benefit from the recognition and acceptance of that condition lies at the heart of much of the dispute in this case and much of the case law of the Strasbourg court on the subject. But an inevitable sub text is that establishing innocence as a positive fact can be an impossible task. This is especially so if conventional court proceedings do not provide the occasion to address, much less resolve, the issue. On the other hand, those who have been acquitted simply because the properly high standard for criminal conviction has not been met, but against whom real suspicions as to guilt remain, should not be able to shelter behind the shield of innocence that article 6(2) establishes. In particular, they should not be immune from civil suit from their victims when a less onerous burden of proof as to their involvement in the activity alleged in the criminal proceedings is involved. The Strasbourg jurisprudence It would be idle for me to recapitulate on the extensive examination of the case law of ECtHR that has been undertaken by the other members of the court. I consider that Lord Reed has convincingly demonstrated (in paras 161 175 of his judgment) that there is a clear and constant line of jurisprudence from that court which establishes that the relevant question is whether there was a link between the concluded criminal proceedings and the compensation proceedings, having regard to the relevant considerations set out in para 104 of the judgment in Allen. For the reasons that Lord Reed has given, I consider that such a link is clearly established. The relevant considerations in this context will, of course, include the circumstances of the applicants ultimate acquittal of the charge against him. If this is on the basis of a doubt as to whether he should have been acquitted, he will not be able to avail of the article 6(2) protection; if, on the other hand, he can show that he ought never to have been charged or convicted, he will. I do not agree with Lord Mances proposition that the real test is, or should be, whether the court in addressing the civil claim has suggested that the criminal proceedings should have been determined differently (para 47 of his judgment). There are two fundamental objections to that formulation of the test. The first is that it would cut out a swathe of deserving applicants when they have not been able to prove that they are innocent when they are in fact. The second is that their fate is determined on the phraseology which happened to be chosen by the court. Conclusion For these reasons and those much more fully expressed by Lord Reed, I would make the declaration of incompatibility which the appellants seek. |
An agreement to arbitrate disputes has positive and negative aspects. A party seeking relief within the scope of the arbitration agreement undertakes to do so in arbitration in whatever forum is prescribed. The (often silent) concomitant is that neither party will seek such relief in any other forum. If the other forum is the English court, the remedy for the party aggrieved is to apply for a stay under section 9 of the Arbitration Act 1996. The issue on this appeal is whether, if the other forum is a foreign jurisdiction outside the European rgime of the Brussels Regulation (EC) No 44/2001 and the Lugano Convention, the English court has any and if so what power to declare that the claim can only properly be brought in arbitration and/or to injunct the continuation or commencement of the foreign proceedings. (It is clear that injunctive relief in relation to foreign proceedings within the Brussels/Lugano space is impermissible under the Regulation and Convention: West Tankers Inc v Allianz SpA (formerly RAS Riunione Adriatica di Sicurta SpA) (The Front Comor) (Case 185/07) [2009] 1 AC 1138. By order dated 16 April 2010, Burton J granted the respondent, Aes Ust Kamenogorsk Hydropower Plant LLP (AESUK), such a declaration together with an injunction in relation to the bringing of proceedings against it by the appellant, Ust Kamenogorsk Hydropower Plant JSC (JSC): [2010] 2 All ER (Comm) 1033. By order dated 1 July 2011 the Court of Appeal dismissed JSCs appeal against the judges order: [2012] 1 WLR 920. The perhaps unusual feature is that AESUK has not commenced, and has no intention or wish to commence, any arbitration proceedings. Its contention is simply that JSC should not pursue or be free to pursue court proceedings against it. If JSC commences arbitration proceedings, then no doubt AESUK will defend them. Background AESUK is the current grantee and lessee of a 25 year concession granted by agreement dated 23 July 1997 entitling it to operate an energy producing hydroelectric plant in Kazakhstan. From 1997 to 2007, the concession was held by its parent or affiliate company, Tau Power BV. JSC is the current owner and grantor of the concession, having succeeded to the concessions original owner and grantor, the Republic of Kazakhstan. The concession agreement is governed by Kazakh law (clause 31), but contains a London arbitration clause (clause 32). It was common ground below and it remains common ground, at least for the purposes of this appeal, that this clause is governed by and to be construed in accordance with English law. It is therefore unnecessary to consider authority in this area such as C v D [2007] EWCA Civ 1282, Sulamrica Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638 and Arsanovia Ltd v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm). The arbitration clause provides in summary that, subject to provisions contained in clauses 17.8 and 17.9, any dispute or difference arising out of or in connection with any matter or thing in relation to the provisions of the concession agreement and the transactions contemplated by the parties that cannot be resolved by negotiation should be settled by arbitration in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce (the ICC) to be conducted in London. Relations between the owners and holders of the concession have for some years been fraught. Burton J summarised the history in paras 5 to 10 of his judgment, and it is unnecessary to repeat it here. Some salient facts suffice. First, during the period when it owned the concession, the Republic of Kazakhstan brought proceedings in Kazakhstan against AESUKs predecessors in title, Tau Power BV, and on 8 January 2004 obtained from the Kazakh Supreme Court a ruling that the arbitration clause was invalid. This was on two grounds: that the arbitration agreement included tariff disputes, which would put such disputes beyond the control of the Republic contrary to its public policy; and that the reference in clause 32 to the Rules of the ICC was not a reference to the ICC and left the arbitral body unspecified. Burton J and the Court of Appeal held that they were not bound by the Kazakh courts conclusions in relation to an arbitration agreement subject to English law, and that neither ground was sustainable. Tariff disputes were in fact outside the arbitration agreement, by reason of the reference to clauses 17.8 and 17.9, under which they fell to be dealt with by an expert; and the reference in clause 32 to the ICC was plainly sufficient to mean that any arbitration was to be by the ICC. There is no appeal to this Court in relation to these matters. On 12 June 2009 JSC brought proceedings against AESUK in the Specialist Inter District Economic Court of East Kazakhstan Oblast (the Economic Court), alleging that AESUK had failed to supply information concerning concession assets pursuant to a request duly made under the concession agreement. AESUKs application to stay these proceedings under the arbitration clause was dismissed on 28 July 2009 on the ground that the clause had been annulled by the Supreme Courts ruling of 8 January 2004. On 31 July 2009 AESUK issued proceedings before the English Commercial Court claiming declarations that the arbitration clause was valid and enforceable and a without notice interim anti suit injunction restraining JSC from pursuit of the proceedings before the Economic Court. AESUKs attempt to rely on this injunction in the Kazakh courts was rejected by the Economic Court on 5 August 2009 and on an appeal to the East Kazakhstan Regional Court on 11 September 2009. Both the Economic Court and the Regional Court also held that JSC was entitled to the information which it had requested. Meanwhile on 21 August 2009 the interim injunction granted by the English Commercial Court was continued by consent pending a challenge by JSC to the jurisdiction of the English courts and amended to provide that JSC would withdraw its request for information the subject of the Kazakh proceedings. However, despite being requested, JSC did not undertake either that it would not resubmit a request for information or that it would not commence further proceedings in Kazakhstan. Hence, the continuation of the present proceedings, leading to Burton Js and the Court of Appeals judgments and orders. Burton Js order The order dated 16 April 2010 giving effect to Burton Js judgment declares in paragraph 2 that JSC cannot bring, and orders in paragraph 3 that JSC is restrained from bringing the claim, the subject matter of the [Kazakhstan proceedings], or any other claim arising out of or in connection with any matter or thing in relation to the provisions of the Concession Agreement ., save only for [excepted matters], otherwise than by commencing arbitration proceedings in the International Chamber of Commerce in London and pursuant to its Rules. By its order dated 1 July 2011 giving effect to its judgment, the Court of Appeal simply dismissed the appeal against Burton Js order. In its terms and form, Burton Js order was and is a final order, as to both the declaration and the injunction which it granted. Indeed, in para 1 of his judgment, Burton J recorded that he was being asked to give final relief on AESUKs arbitration claim form, and in the final para 54 to 56 of his judgment, referring back to para 21, he concluded that AESUK was entitled to the grant of (limited) final declaratory and injunctive relief. In these paragraphs, he made clear that he regarded an injunction in the wording of his later order as limited in a way which would avoid any concern about usurpation or ouster of the jurisdiction of the arbitrators, if any arbitration were to take place, and would give the opportunity . for any proper challenge to be made to the jurisdiction of the arbitrators or the applicability of the arbitration clause. Rix LJ, giving the main judgment in the Court of Appeal with which his colleagues agreed, addressed the nature of the order made by commenting (para 108) that it might possibly be said that a binding declaration as to the existence of the arbitration agreement trespassed on the theoretical possibility that an arbitral tribunal might one day have to grapple with that very issue, that he did not himself think that it would do, but that he need not decide that question here, for the judge has been cautious not to give such a declaration and the operator [AESUK] as respondent in this appeal has not sought to go further than the judge has gone. Before the Supreme Court, both sides have in their submissions treated the judges order as a final order; and so in terms it is. Neither side has sought to have the order, if it stands, corrected or qualified. Appeals lie against orders, and parties are entitled and correct to take orders at their face value. Burton Js order was in terms a final order declaring that certain claims could only properly be pursued in arbitration, and restraining their pursuit in any other forum. If an arbitration were to be commenced, by either side, in the future, it would not, under Burton Js order, be open to the respondent to object to its commencement or to the jurisdiction of the arbitral tribunal by submissions which contradicted the terms of the declaration made and injunction ordered by Burton J. The Supreme Court can and should consider the order on that basis. Further, if the court has, consistently with the scheme of the Arbitration Act 1996, power to make any sort of declaration about arbitral jurisdiction, then Rix LJ was, in my view, right that there is no objection to its being a final and binding declaration. The issue The issue is therefore whether the English court has power to declare that the claim can only properly be brought in arbitration and/or to injunct the continuation or commencement of proceedings brought in any other forum outside the Brussels/Lugano rgime. Although Lord Goldsmith in his oral submissions laid some emphasis on the primacy of the declaratory relief claimed by AESUK and ordered by Burton J, in my opinion the claim and order for injunctive relief are more important. Before the court could order final injunctive relief, it had to conclude that there was a binding and applicable arbitration agreement as JSCs own case in fact correctly stated at para 67. The order for injunctive relief carried by itself the basis of an issue estoppel in any future proceedings, precluding JSC from denying the existence or validity of such an agreement. The rival submissions regarding the courts power turn primarily on the scope and effect of the Arbitration Act 1996. Mr Toby Landau QC for AESUK advances a simple case. Independently of that Act, the court has a general inherent power to declare rights and further, under section 37 of the Senior Courts Act (formerly the Supreme Court Act) 1981: The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so. Despite its generality, there are statements limiting the application of section 37 to two situations: (a) where one party can show that the other party has invaded, or threatens to invade, a legal or equitable right of the former for the enforcement of which the latter is amenable to the jurisdiction of the court, and (b) where one party to any action has behaved, or threatens to behave, in a manner which is unconscionable: South Carolina Insurance Co v Assurantie Maatschappij De Zeven Provincien NV [1987] AC 24, 40B D, per Lord Brandon, with whose speech Lord Bridge and Lord Brightman agreed without qualification. Lord Mackay and Lord Goff voiced a reservation as to whether section 37 should be so limited, and Lord Mustill in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, 362B left the point open. It is unnecessary to say more about this here, since, on Mr Landaus case, the first situation applies. JSC has invaded or is threatening to invade AESUKs legal right not to be sued in Kazakhstan. Absent any contrary reason, there is, AESUK submits, no reason why the court should not exercise both its declaratory powers and its powers under section 37. To do so would support the commitment to arbitration contained in the arbitration clause. In contrast, JSC although it invokes the supposed policy interests of international users of London arbitration opposes the deployment of such powers in order to frustrate the arbitration clause. The negative aspect of an arbitration agreement and exclusive choice of court clause At points in his submissions, Lord Goldsmith QC, representing JSC, suggested that any negative obligation inherent in an arbitration agreement is a mere ancillary to current or intended arbitral proceedings. As a matter of interpretation of a straightforward agreement to arbitrate disputes in a particular forum (like that in this case: para 7 above), there is no basis for any such limitation. The negative aspect of an arbitration agreement is a feature shared with an exclusive choice of court clause. In each case, the negative aspect is as fundamental as the positive. There is no reason why a party to either should be free to engage the other party in a different forum merely because neither party wishes to bring proceedings in the agreed forum. Nor is there any basis for treating the Arbitration Act 1996 as affecting the interpretation of an arbitration agreement in this respect, although it is JSCs case that the effect of the Act is to preclude the court from granting relief to enforce the negative aspect of an arbitration agreement unless and until arbitral proceedings are on foot or proposed (see para 29 et seq below). The case law also contains no support for JSCs argument that the negative aspect of an arbitration agreement is enforceable only when an arbitration is on foot or proposed. It is true that in most of the cases an arbitration was on foot, but none of the statements of principle identify this as relevant or critical. The case law is worth considering more closely not only to make this good, but also as background to a consideration of JSCs submissions on the effect of the Arbitration Act. Both prior to the Arbitration Act 1996 and indeed subsequently until the present case the negative aspect was well recognised, and it was well established that the English courts would give effect to it, where necessary by injuncting foreign proceedings brought in breach of either an arbitration agreement or an exclusive choice of court clause. Further, such relief was treated as the counterpart of the statutory power to grant a stay of domestic proceedings to give effect to an arbitration agreement. A stay is not made conditional upon arbitration being on foot, proposed or brought. If there is power under section 37 to injunct the commencement or continuation of foreign proceedings, no reason is evident why the exercise of this power should depend upon such a condition. In each case it is, on the face of it, for either party to commence any arbitration it wishes at any time, or not to do so. In Pena Copper Mines Ltd v Rio Tinto Co Ltd (1911) 105 LT 846, an English law contract provided for any matter in difference to be referred to arbitration under the Arbitration Act 1889 (and for an award to be a condition precedent to any liability in respect thereof), but Rio Tinto began Spanish court proceedings. No arbitration was on foot. The Pena company expressed itself perfectly willing to refer any dispute to arbitration, but that does not mean that it proposed to do so itself and no such condition was imposed upon it. After referring to the statutory power to stay which would have existed had Rio Tinto commenced English court proceedings, the Court of Appeal ordered Rio Tinto to desist from the Spanish proceedings. The arbitration clause involved, in Cozens Hardy MRs words, probably an express negative, but . certainly an implied negative, a contract that they will not sue in a foreign court (pages 850 851), and Rio Tintos conduct in suing in Spain was, in Fletcher Moulton LJs words, certainly contrary to their contractual duties (page 852). That an award was a condition precedent to any liability cannot have been decisive. By the 1990s it had come to be thought that the power to injunct foreign proceedings brought in breach of contract should be exercised only with caution, because English courts will not lightly interfere with the conduct of proceedings in a foreign court: see eg Sokana Industries Inc v Freyre & Co Inc [1994] 2 Lloyds Rep 57, 66, per Colman J. But in Aggeliki Charis Cia Maritime SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyds Rep 87, where the parties had agreed to arbitrate all disputes in London (an award not being a condition precedent to liability) and owners commenced such an arbitration while charterers sued in court in Venice, the Court of Appeal held, citing Pena Copper and other authority, that courts ought not to feel diffident about granting an anti suit injunction, if sought promptly. Without it the claimant would be deprived of its contractual rights in a situation where damages would be manifestly an inadequate remedy. The time had come, in Millett LJs words, to lay aside the ritual incantation that this is a jurisdiction which should only be exercised sparingly and with great caution. An injunction should be granted to restrain foreign proceedings in breach of an arbitration agreement on the simple and clear ground that the defendant has promised not to bring them. The principle was endorsed in the context of exclusive choice of court clauses by the House of Lords in Donohue v Armco Inc [2001] UKHL 64; [2002] 1 All ER 749, a decision recognising (para 24) that strong reasons are required to outweigh the prima facie entitlement to an injunction. In that case, a claim for fraud conspiracy was brought against Mr Donohue in New York in breach of an agreement providing for the exclusive jurisdiction of the English courts. Mr Donohue was refused an anti suit injunction because strong reasons (in the form of alleged participation in the alleged fraud of other New York defendants not party to any exclusive jurisdiction agreement) existed why the New York proceedings should continue. But the consideration that Mr Donohue had not commenced English proceedings on the substance of the matter played no part in the reasoning. Indeed the House recognised that he would continue to have a prima facie right to recover any damage he suffered in consequence of the continuation of the New York proceedings against him contrary to the exclusive jurisdiction clause: paras 36 and 48 per Lord Bingham and Lord Hobhouse. Lord Hobhouse also encapsulated the principle in Turner v Grovit [2001] UKHL 65; [2002] 1 WLR 107, when he said: 25 . Under English law, a person has no right not to be sued in a particular forum, domestic or foreign, unless there is some specific factor which gives him that right. A contractual arbitration or exclusive jurisdiction clause will provide such a ground for seeking to invoke the right to enforce the clause. The applicant does not have to show that the contractual forum is more appropriate than any other; the parties' contractual agreement does that for him. . 27 The applicant for a restraining order must have a legitimate interest in making his application and the protection of that interest must make it necessary to make the order. Where the applicant is relying upon a contractual right not to be sued in the foreign country (say because of an exclusive jurisdiction clause or an arbitration clause), then, absent some special circumstance, he has by reason of his contract a legitimate interest in enforcing that right against the other party to the contract. In the West Tankers case at first instance ([2005] EWHC 454 (Comm), paras 13, 59 and 72), Colman J referred to The Angelic Grace and Donohue v Armco, when granting a permanent injunction restraining the pursuit of the Italian legal proceedings which he had held to be in breach of a London arbitration agreement. That aspect of the decision was not questioned when the matter came before the Court of Appeal and the House of Lords, where Lord Hoffmann said, [2007] 1 Lloyds Rep 391, para 10: By section 37(1) of the Supreme Court Act 1981 the High Court has jurisdiction to grant an injunction (whether interlocutory or final) in all cases in which it appears to the court to be just and convenient to do so. The English courts have regularly exercised this power to grant injunctions to restrain parties to an arbitration agreement from instituting or continuing proceedings in the courts of other countries: see The Angelic Grace [1995] 1 Lloyd's Rep 87. He went on to refer to the courts power to grant an interim injunction under section 44, to which I revert below. The interpretation subsequently given to the Brussels Regulation by the Court of Justice in West Tankers (Case C 185/07) now means that an English court can no longer enforce contractual rights (or prevent oppression of the sort found to exist in Turner v Grovit) by injuncting a party within its jurisdiction from commencing or continuing proceedings in a foreign court within the Brussels/Lugano regime. But that limitation is irrelevant in this case. Unless the Arbitration Act 1996 requires a different conclusion, the negative aspect of a London arbitration agreement is therefore a right enforceable independently of the existence or imminence of any arbitral proceedings. The scheme of the Arbitration Act 1996 JSC submits that it is contrary to the terms, scheme, philosophy and parliamentary intention of the Arbitration Act 1996 for an English court to determine that foreign proceedings involve a breach of an arbitration agreement or issue either declaratory or injunctive relief on that basis other than when arbitral proceedings are on foot or proposed and only then under the provisions of the Act. The Arbitration Act contains a complete and workable set of rules for the determination of jurisdictional issues. The general rule is that the arbitral tribunal should consider jurisdictional issues in the first instance with the only exception to that general rule for a party asserting arbitral jurisdiction to be found in section 32. Unless and until one or other party commences an arbitration, the court should keep a distance. Any more general power contained in section 37 has been superseded by the Act, or should at least no longer be exercised. During the hearing before the Supreme Court there was discussion as to the extent to which JSC was submitting that there was no longer any jurisdiction to rely on section 37, or simply that it would be wrong in principle to do so, in a context such as the present. This discussion arose because, in the Court of Appeal, different counsel then appearing for JSC was, for good or bad reason, concerned that JSC should not descend into the arena of discretionary arguments and, as he saw it, risk submitting to the jurisdiction (para 91 of the judgment of Rix LJ). Counsel therefore confined his submissions to statutory or principled objection[s] to the jurisdiction of the court (para 94). The Supreme Court is content to accept that this leaves it open to JSC to argue now both that there is no longer any jurisdiction to exercise the power otherwise contained in section 37 and, alternatively, that it would be wrong in principle to do so in the present context, absent perhaps very special circumstances not here present. JSC points out correctly that the 1996 Act embodies, (from Mustill and Boyd, Commercial Arbitration: (2001) Companion Volume to 2nd Ed, preface endorsed by Lord Steyn) a new balancing of the relationships between parties, advocates, arbitrators and courts which is not only designed to achieve a policy proclaimed within Parliament and outside, but may also have changed their juristic nature: Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, [2006] 1 AC 221, para 17. The Act was also a response to international criticism that the Courts intervene more than they should in the arbitral process, thereby tending to frustrate the choice the parties have made to use arbitration rather than litigation as the means for resolving their disputes: Report on Arbitration of the Departmental Advisory Committee (DAC) 1996 (with Lord Justice Saville as its chair), paragraphs 20 22. This criticism was addressed by the third of the general principles with which the Act, unusually, begins: 1. General principles. The provisions of this Part are founded on the following principles, and shall be construed accordingly (a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense; (b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; (c) in matters governed by this Part the court should not intervene except as provided by this Part. JSCs submissions in this area give rise to two questions. The first is the extent to which it is correct to regard the 1996 Act as a complete and workable set of rules for the determination of all jurisdictional issues in all situations. The other is what is meant by the word should in section 1(c). As to the first, section 1(c) is limited to matters governed by this Part, and it is clear that the drafters of the Act were not attempting a complete code of arbitration law. The DAC Report 1996 stated expressly that The Bill does not purport to provide an exhaustive code on the subject of arbitration, but that they had sought to include what we consider to be the more important common law principles, whilst preserving all others, in so far as they are consistent with the provisions of this Bill (see clause 81). Clause 81 became section 81, reading Nothing in this Part shall be construed as excluding the operation of any rule of law consistent with the provisions of this Part in particular, any rule of law as to (a) matters which are not capable of settlement by arbitration; (b) the effect of an oral arbitration agreement; or (c) the refusal of recognition or enforcement of an arbitral award on grounds of public policy. The DAC Report instances confidentiality as another subject deliberately left outside the scope of the Act. The use of the word should in section 1(c) was also a deliberate departure from the more prescriptive shall appearing in article 5 of the UNCITRAL Model Law. Article 5 reads that In matters governed by this Law, no court shall intervene except where so provided in this Law. Article 5 had been the subject of forceful critique in A New Arbitration Act?, the 1989 report on the UNCITRAL Model Law by the DAC at a time when its chair was Lord Justice Mustill, who had also represented the United Kingdom at UNCITRAL. Even in matters which might be regarded as falling within Part 1, it is clear that section 1(c) implies a need for caution, rather than an absolute prohibition, before any court intervention. It is in these circumstances that the question now arises whether it is consistent with the 1996 Act for the English court to determine whether there is a valid and applicable arbitration agreement covering the subject matter of actual or threatened foreign proceedings and, if it holds that there is, to injunct the commencement or continuation of the foreign proceedings. JSC points to sections 32 and 72 of the Act as the means by which a challenge to the jurisdiction may, under certain conditions, be pursued during an arbitration and to section 67 as the means by which an award may be challenged for lack of jurisdiction. It submits, that, if AESUK convoked an arbitral tribunal, the arbitrators could rule on their jurisdiction under section 30, their ruling could be tested under sections 32, 67 and/or 72 and the court could in the meantime be asked to give interim relief under section 44. Sections 30, 32 and 72 and Kompetenz Kompetenz Section 30 provides that an arbitral tribunal may rule on its own substantive jurisdiction: 30 Competence of tribunal to rule on its own jurisdiction. (1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to (a) whether there is a valid arbitration agreement, (b) whether the tribunal is properly constituted, and (c) what matters have been submitted to arbitration in accordance with the arbitration agreement. (2) Any such ruling may be challenged by any available arbitral process of appeal or review or in accordance with the provisions of this Part. Section 30 reflects the principle of Kompetenz Kompetenz, discussed in Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2010] UKSC 46, [2011] 1 AC 763. In short, any tribunal convoked to determine a dispute may, as a preliminary, consider and rule upon the question whether the dispute is within its substantive jurisdiction, without such ruling being binding on any subsequent review of its determination by the court under sections 32, 67 or 72 of the 1996 Act. However, a tribunal cannot by its preliminary ruling that it has substantive jurisdiction to determine a dispute confer upon itself a substantive jurisdiction which it does not have. Absent a submission specifically tailored to embrace them (as to which there is no suggestion here), jurisdictional issues stand necessarily on a different footing to the substantive issues on which an award made within the tribunals jurisdiction will be binding. In Dallah, I put these points as follows (para 24): . Arbitrators (like many other decision making bodies) may from time to time find themselves faced with challenges to their role or powers, and have in that event to consider the existence and extent of their authority to decide particular issues involving particular persons. But, absent specific authority to do this, they cannot by their own decision on such matters create or extend the authority conferred upon them. Lord Collins said (para 84) that it does not follow, from the general principle that a tribunal has power to consider its own jurisdiction: that the tribunal has the exclusive power to determine its own jurisdiction, nor does it follow that the court of the seat may not determine whether the tribunal has jurisdiction before the tribunal has ruled on it. Nor does it follow that the question of jurisdiction may not be re examined by the supervisory court of the seat in a challenge to the tribunals ruling on jurisdiction. Still less does it mean that when the award comes to be enforced in another country, the foreign court may not re examine the jurisdiction of the tribunal. Section 32 enables the court to determine any question as to the substantive jurisdiction of a tribunal on the application of a party to arbitral proceedings, provided that the application is made by agreement of all the other parties or, subject to the court being satisfied of various matters, with the tribunals permission. Section 44 provides for the court to have for the purposes of and in relation to arbitral proceedings, and on the application of a party or proposed party to the proceedings, the same power of making orders about certain listed matters as it has for purposes of and in relation to legal proceedings. The listed matters include the making of an interim injunction, but, save in case of urgency, the court is only to act on an application made under section 44 with the permission of the tribunal or the agreement of the other parties to the arbitral proceedings. Section 72 permits a party alleged to be a party to arbitral proceedings but who takes no part in them to take his jurisdictional challenge directly to the court without waiting for the tribunal to address the matter. In support of its submissions, JSC relies upon cases in which commercial judges have refused to permit the pursuit of court proceedings for a declaration as to the existence of a binding arbitration clause brought by a claimant in current or proposed arbitration proceedings: ABB Lummus Global Ltd v Keppel Fels Ltd [1999] 2 Lloyds Rep 24; Vale do Rio Doce Navegaceo SA v Shanghai Bao Steel Ocean Shipping Co Ltd [2000] 2 All ER (Comm) 70. In Vale do Rio, Thomas J observed that it could not have been the intention that a party to a disputed arbitration agreement could obtain the decision of the courts on its existence without being subject to the restrictions contained in section 32 by the simple step of not appointing an arbitrator (para 53). Although he concluded (para 60) that the court had no jurisdiction to allow the application, earlier, in noting the change from shall to should in section 1(c), he had said that it is clear that the general intention was that the court should usually not intervene outside the specific circumstances specified in Part 1 of the 1996 Act (para 52). These cases have no direct bearing on the present situation. Here, no arbitration proceedings are on foot and AESUK does not intend or wish to institute any. Sections 30, 32, 44 and 72 of the Act are all in terms inapplicable. No arbitration tribunal exists to determine its own competence under section 30. The principle of Kompetenz Kompetenz or, in an anglicised version suggested by Lord Sumption, jurisdiction competence makes sense where a tribunal is asked to exercise a substantive jurisdiction and hears submissions at the outset as to whether it has such a jurisdiction. Even then, the court has the last word in establishing whether the substantive jurisdiction actually exists. But the principle has no application where no arbitration is on foot or contemplated. On JSCs case, a party wishing relief in relation to foreign proceedings brought or threatened contrary to an arbitration agreement, must however commence, or should be required to undertake to commence, an arbitration against the other party who is rejecting the existence or application of any arbitration agreement. Further, the only substantive relief that JSC could suggest might be sought in such an arbitration would be an order, within the power afforded by section 48(5)(a) of the 1996 Act, not to commence or continue any foreign proceedings; and the efficacy of any such order as arbitrators might make, in any such arbitration, if they held that they had jurisdiction, would depend upon the court determining for itself that the tribunal had jurisdiction, and then enforcing the tribunals order under either section 44 or section 66 of the Act with the backing of the courts contempt jurisdiction. In these circumstances, there is, in my opinion, every reason why the court should be able to intervene directly, by an order enforceable by contempt, under section 37. To do so cannot be regarded, in the DACs words, as intervene[ing] in the arbitral process, thereby tending to frustrate the choice the parties have made to use arbitration rather than litigation as the means for resolving their disputes. On the contrary, JSC has complete freedom of choice in relation to the arbitration agreement. In denying that the court has any relevant jurisdiction, JSC is seeking to benefit by AESUKs reliance on an arbitration agreement, while itself denying its existence. A party is entitled to benefit by the existence of an arbitration agreement, but normally only by asserting it, e.g. by commencing an arbitration or applying for a stay under section 9. Those must however be the last things that JSC is willing to do. As to section 32, there is no party to arbitral proceedings who could apply to the court to determine any question of arbitral jurisdiction, and there are no other parties or tribunal with whose consent or permission any such application would have to be made and no tribunal whose substantive jurisdiction could be the subject of such an application. Section 44 Similarly, the courts powers listed in section 44 are exercisable only for the purposes of and in relation to arbitral proceedings and depend upon such proceedings being on foot or proposed: see section 44(3). That alone is sufficient in my opinion to lead to a conclusion that section 44 has no bearing on the question whether section 37 empowers the court to restrain the commencement or continuation of foreign proceedings in the light of an arbitration agreement under which neither party wishes to commence an arbitration. I should however say something further about JSCs submission that section 44(2)(e) embraces the granting of an interim injunction to restrain the pursuit of foreign proceedings during a current or proposed arbitration. The careful limitation of the courts power to the granting of an interim injunction militates, he argues, against the existence of any general power to injunct foreign proceedings under section 37, even on an interim basis in relation to current or proposed arbitral proceedings, let alone on a permanent basis in their absence. It is helpful to set out section 44 in full: Court powers exercisable in support of arbitral proceedings. (1) Unless otherwise agreed by the parties, the court has for the purposes of and in relation to arbitral proceedings the same power of making orders about the matters listed below as it has for the purposes of and in relation to legal proceedings. (2) Those matters are (a) the taking of the evidence of witnesses; (b) the preservation of evidence; (c) making orders relating to property which is the subject of the proceedings or as to which any question arises in the proceedings (i) for the inspection, photographing, preservation, custody or detention of the property, or (ii) ordering that samples be taken from, or any observation be made of or experiment conducted upon, the property; and for that purpose authorising any person to enter any premises in the possession or control of a party to the arbitration; (d) the sale of any goods the subject of the proceedings; (e) the granting of an interim injunction or the appointment of a receiver. (3) If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets. (4) If the case is not one of urgency, the court shall act only on the application of a party to the arbitral proceedings (upon notice to the other parties and to the tribunal) made with the permission of the tribunal or the agreement in writing of the other parties. (5) In any case the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively. (6) If the court so orders, an order made by it under this section shall cease to have effect in whole or in part on the order of the tribunal or of any such arbitral or other institution or person having power to act in relation to the subject matter of the order. (7) The leave of the court is required for any appeal from a decision of the court under this section. Section 44(2) is the modern successor to the First Schedule to the Arbitration Act 1934 and section 12(6) of the Arbitration Act 1950 section 44(2)(e) corresponds with paragraph 8 of the First Schedule and section 12(6)(h) of the 1950 Act. The matters listed in section 44 are all matters which could require the courts intervention during actual or proposed arbitral proceedings. The power to grant an interim injunction is expressed in general terms, but is limited, save in cases of urgency, to circumstances in which either the tribunal permits an application to the court or all the other parties agree to this in writing. There is no power to grant a final injunction, even after an award. There is authority (not requiring review on this appeal) that section 44(3) can include orders urgently required pending a proposed arbitration to preserve or enforce parties substantive rights eg an order to allow inspection of an agents underwriting records or to submit a proposed transfer to a central bank: see Hiscox Underwriting Ltd v Dickson Manchester & Co Ltd [2004] 2 Lloyds Rep 438; Cetelem SA v Roust Holdings Ltd [2005] EWCA Civ 618; [2005] 1 WLR 3555. Such orders can be said to be for the purposes of and in relation to arbitral proceedings. But orders restraining the actual or threatened breach of the negative aspect of an arbitration agreement may be required both where no arbitration proceedings are on foot or proposed, and where the case is not one of urgency (and so not within section 44(3)). They enforce the negative right not to be vexed by foreign proceedings. This is a right of a different character both to the procedural rights with which section 44 is mainly, at least, concerned, and to the substantive rights to which the Hiscox and Cetelem cases hold that it extends. In Starlight Shipping Co v Tai Ping Insurance Co Ltd (The Alexandros T) [2007] EWHC 1893 (Comm); [2008] 1 All ER (Comm) 593, Cooke J addressed the inter relationship of section 44 of the 1996 Act and section 37 of the Senior Courts Act 1981 in a context where proceedings were being pursued in China in apparent breach of an arbitration agreement and where arbitral proceedings were also current. He treated both sections as potentially available, adding that the matters relevant under section 44 could also bear on, though not govern in the same way, the exercise of the general discretion under section 37 (para 29). He considered that the contractual right to have disputes referred to arbitration must be an asset falling within section 44(3). In the upshot, he gave interim relief under section 44, on the basis that the matter was urgent under section 44(3) because the arbitral tribunal would not be able to issue an award restraining the claimants in the Chinese proceedings from pursuing such proceedings speedily enough or, therefore, effectively under section 44(5). At the same time, he also made an interim order under section 37, pointing out inter alia that The difference between an order of this court and that of the arbitrators is that remedies for contempt are available if an order of this court should be breached (para 31). The better view, in my opinion, is that the reference in section 44(2)(e) to the granting of an interim injunction was not intended either to exclude the Courts general power to act under section 37 of the 1981 Act in circumstances outside the scope of section 44 of the 1996 Act or to duplicate part of the general power contained in section 37 of the 1981 Act. Where an injunction is sought to restrain foreign proceedings in breach of an arbitration agreement whether on an interim or a final basis and whether at a time when arbitral proceedings are or are not on foot or proposed the source of the power to grant such an injunction is to be found not in section 44 of the 1996 Act, but in section 37 of the 1981 Act. Such an injunction is not for the purposes of and in relation to arbitral proceedings, but for the purposes of and in relation to the negative promise contained in the arbitration agreement not to bring foreign proceedings, which applies and is enforceable regardless of whether or not arbitral proceedings are on foot or proposed. Colman J in Sokana Industries Inc v Freyre & Co Inc [1994] 2 Lloyds Rep 57 was correct on this point when he held that the courts power to make orders for the purpose of and in relation to a reference in section 12(6) of the Arbitration Act 1950 did not include the granting of relief consisting of either a final or an interim injunction to restrain an alleged breach of a London Chamber of Commerce arbitration agreement consisting in the commencement of proceedings in Florida. There was no power to serve the proceedings out of the jurisdiction on the defendants in Sokana Industries because it was not made under the Arbitration Act 1950 or . 1979. The current position is in my opinion different. Although Part 62 of the Civil Procedure Rules is divided into Parts, including Part I, headed Claims under the 1996 Act and Part II, headed Other Arbitration Claims, the text of these Parts indicates in my view that Part I relates to circumstances in which, if there were an arbitration, it would be subject to the 1996 Act, rather than to the old law, and that it covers matters relating to an arbitration agreement, independently of any arbitral proceedings. Thus, CPR62.2 provides: (1) In this Section of this Part arbitration claim means (a) any application to the court under the 1996 Act; (b) a claim to determine (i) whether there is a valid arbitration agreement; (ii) whether an arbitration tribunal is properly constituted; or what matters have been submitted to arbitration in accordance with an arbitration agreement; (c) a claim to declare that an award by an arbitral tribunal is not binding on a party; and (d) any other application affecting (i) arbitration proceedings (whether started or not); or (ii) an arbitration agreement. Under CPR62.5, governing service out of the jurisdiction, the court may give permission to serve an arbitration claim form out of the jurisdiction if (b) the claim is for an order under section 44 of the 1996 Act; or (c) the claimant (i) seeks some other remedy or requires a question to be decided by the court affecting an arbitration (whether started or not), an arbitration agreement or an arbitration award; and (ii) the seat of the arbitration is or will be within the jurisdiction or the conditions in section 2(4) of the 1996 Act are satisfied. I regard these provisions as wide enough to embrace a claim under section 37 to restrain foreign proceedings in breach of the negative aspect of an arbitration agreement. In circumstances where an arbitration claim includes under CPR62.2(d) any other application affecting (i) arbitration proceedings (whether started or not); or (ii) an arbitration agreement, the requirement in CPR62.5(c)(ii) that the seat of the arbitration is or will be within the jurisdiction must be read as satisfied if the seat of any arbitration, if any were to be commenced or proposed under the arbitration agreement, would be within the jurisdiction. In so far as Thomas J in Vale do Rio considered (para 59) that the predecessor to CPR62.2 (the then CPR PD 49G) included provisions equivalent to the present CPR62.2(1)(b),(c) and (d) out of an abundance of caution . to spell out the terms of the 1996 Act (or just possibly to cater for an oral arbitration agreement), I would respectfully disagree. Thomas J was in any event concerned with a point on the construction of the 1996 Act, which as he correctly said could not possibly be affected by the view taken of CPR PD 49G. His statement that the language might just possibly cater for an oral arbitration agreement itself opens the possibility, which I think correct, that the drafters were not confining themselves to issues, regarding arbitration agreements, arising under the provisions of 1996 Act. I add only that in the present case, although leave was in fact obtained under CPR PD 6B, paragraph 3.1(2) and CPR62.5(1)(b) and (c), the court would appear also to have had jurisdiction to give leave for service out of the jurisdiction under CPR PD 6B(6)(c), on the ground that, treating the arbitration agreement as the contract, the claim was made in respect of a contract where the contract . (c) is governed by English law. Section 9 Returning to the scheme of Part I of the 1996 Act, the principal focus is on the commencement, conduct, consequences and court powers with regard to an actual or proposed arbitration. In addition, Part I starts with sections 1 to 8 identifying the nature and certain features of the arbitration agreements to which it applies while sections 9 to 11 deal with stays of domestic legal proceedings where such an agreement exists. Section 9 runs contrary to JSCs general case, since it represents a situation in which the court, rather than the arbitral tribunal, rules in the first instance on arbitral jurisdiction, and does so bindingly. The Court of Appeal in Fiona Trust and Holding Corp v Privalov [2007] EWCA Civ 20; [2007] 1 All ER (Comm) 891, para 36 and Lightman J in Albon (t/a NA Carriage Co) v Naza Motor Trading Sdn Bhd (No 3) [2007] EWHC 665 (Ch); [2007] 2 All ER 1075, paras 14 to 20 correctly so held. However, JSC relies upon section 9, as supplementing its case on the general scheme of the 1996 Act and on the particular implications of sections such as sections 30, 32, 67 and 72, in another respect. Given that the court under section 9 determines the existence or otherwise of arbitral jurisdiction conclusively and at the outset, JSC points out that this is expressly provided by the Act. In contrast, the Act makes no reference to, and so it submits implicitly excludes, any power to injunct the commencement or continuation of foreign proceedings. I do not accept JSCs case on this point. Section 9 reflects, in domestic law, the requirement in article II(3) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (United Nations 1958) that: II.3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. Nothing in the New York Convention requires Contracting States to have in their law any equivalent power to that which section 37 includes in respect of foreign proceedings in breach of an arbitration agreement. The silence in Part 1 is in this respect unremarkable. Section 37 of the Senior Courts Act 1981 More generally, JSCs case depends upon a conclusion that the Arbitration Act 1996 either limits the scope, or as a matter of general principle qualifies the use, of the general power contained in section 37, so that it is no longer permissible to deploy section 37 to injunct foreign proceedings begun or threatened in breach of an arbitration agreement. Again, I cannot accept JSCs case. Section 37 is a general power, not specifically tailored to situations where there is either an arbitration agreement or an exclusive choice of court clause. To adopt words of Lord Mustill in the Channel Tunnel case, [1993] AC 334, 360E F, with reference to the relationship between section 37 and the previous arbitration legislation (the Arbitration Act 1950): Under section 37(1) by contrast the arbitration clause is not the source of the power to grant an injunction but is merely a part of the facts in the light of which the court decides whether or not to exercise a power which exists independently of it. The court may as a result need to be very cautious: in the exercise of its general powers under section 37 so as not to conflict with any restraint which the legislature may have imposed on the exercise of the new and specialised powers. (p 364B C). However, it is, in my opinion, entirely understandable that Parliament should not have thought to carve out from section 37 of the Senior Courts Act or to reproduce in the 1996 Act one aspect of a general power conferred by section 37. It cannot be deduced from the fact that it did not do so that it intended that the general power should never be exercised in any context associated with arbitration. On the contrary, it would be astonishing if Parliament should, silently and without warning, have abrogated or precluded the use by the English court of its previous well established jurisdiction under section 37 in respect of foreign proceedings commenced or threatened in breach of the negative aspect of an arbitration agreement. One would have expected the intended inapplicability of section 37 to have been made very clear in both the DAC Report and the Act. The 1996 Act does in Schedule 3 or 4 provide for other presently immaterial amendments or repeals in respect of provisions in what was the Supreme Court Act and is now the Senior Courts Act 1981. The Angelic Grace [1994] 1 Lloyds Rep 168 in particular was a highly prominent decision, expressed in emphatic terms during the very period when the DAC was preparing the Bill for the Act and its own report. Nothing in the DAC report of 1996 addresses either it or the long standing and well recognised jurisdiction which was its subject matter. Yet a regime under which the English court could no longer enforce the negative rights of a party to a London arbitration agreement by injunctive relief restraining foreign proceedings would have been, and would have been seen, as a radical diminution of the protection afforded by English law to parties to such an arbitration agreement. It would have aroused considerable interest and, no doubt, concern. The only sensible inference is that the drafters of the Act never contemplated that it could or would undermine the established jurisprudence on anti suit injunctions. It was only later that the Court of Justice in Luxembourg restricted the use of such injunctions; and then only in relation to foreign proceedings in the area covered by the Brussels/Lugano rgime and on the basis of the mutual trust affirmed to exist between courts within that regime. The interest and concern that this aroused witnesses to the interest that would have been aroused had the Bill or 1996 Act been seen as having any such radical intention or effect in relation to courts worldwide. The West Tankers case [2009] AC 1138 suggests that it did not occur to anyone until this case that it did. Conclusion The power to stay domestic legal proceedings under section 9 and the power to determine that foreign proceedings are in breach of an arbitration agreement and to injunct their commencement or continuation are in truth opposite and complementary sides of a coin. Subject to the recent European inroad, that remains the position. The general power provided by section 37 of the 1981 Act must be exercised sensitively and, in particular, with due regard for the scheme and terms of the 1996 Act when any arbitration is on foot or proposed. It is also open to a court under section 37, if it thinks fit, to grant any injunction on an interim basis, pending the outcome of current or proposed arbitration proceedings, rather than a final basis. But, for the reasons I have given, it is inconceivable that the 1996 Act intended or should be treated sub silentio as effectively abrogating the protection enjoyed under section 37 in respect of their negative rights under an arbitration agreement by those who stipulate for an arbitration with an English seat. In some cases where foreign proceedings are brought in breach of an arbitration clause or exclusive choice of court agreement, the appropriate course will be to leave it to the foreign court to recognise and enforce the parties agreement on forum. But in the present case the foreign court has refused to do so, and done this on a basis which the English courts are not bound to recognise and on grounds which are unsustainable under English law which is accepted to govern the arbitration agreement. In these circumstances, there was every reason for the English courts to intervene to protect the prima facie right of AESUK to enforce the negative aspect of its arbitration agreement with JSC. It follows that Burton J had jurisdiction under section 37 of the Senior Courts Act 1981 to make the order that he did, and that there was nothing wrong in principle with his exercise of his power to do so. The Court of Appeal was right so to conclude, and the appeal should be dismissed. |
Now that it is clear that the test for determining whether a child was habitually resident in a place is whether there was some degree of integration by her (or him) in a social and family environment there, may the court, in making that determination in relation to an adolescent child who has resided, particularly if only for a short time, in a place under the care of one of her parents, have regard to her own state of mind during her period of residence there in relation to the nature and quality of that residence? In my view this is the principal question raised by these appeals. The appeals are brought within proceedings issued by a mother against a father for the summary return of their four children from England to Spain pursuant to the Hague Convention on the Civil Aspects of International Child Abduction 1980 (the Convention) and to section 1(2) of the Child Abduction and Custody Act 1985 (the 1985 Act). The father is a UK national aged 47 and lives in the Thames Valley. The mother is a Spanish national aged 46 and lives in Madrid. The four children are T, a girl, who was born in August 2000 and is now aged 13; L, a boy, who was born in December 2002 and is now aged 11; A, a boy, who was born in November 2004 and is now aged 9; and N, a boy, who was born in December 2008 and is now aged 5. All four children were born in England. They are Spanish nationals and are presumably also UK nationals. They currently reside with the father. At all times until July 2012, when the relationship between the parents broke down, the family had lived in England and had gone for holidays to Spain in order, in particular, to see the maternal grandmother and the other maternal relations. On 24 July 2012 the mother took the four children to reside in Spain. They resided in Spain until 23 December 2012, when they returned to England for what was agreed between the parents to be no more than a holiday with the father which was to end on their return to Spain on 5 January 2013. But the children did not then return to Spain. They have remained in England ever since. In the mothers proceedings under the Convention for the summary return of the children to Spain, instituted on 21 January 2013, the father made an interlocutory application under rule 16.2 of the Family Procedure Rules 2010 (SI 2010/2955) for T to be made a second respondent and to be represented by a childrens guardian. On 12 April 2013 Cobb J dismissed the application. The same judge heard the mothers substantive application over three days in May 2013 and received oral evidence from the parents and from Ms Vivian, an officer in the High Court team of the Children and Family Court Advisory and Support Service (Cafcass). By a reserved judgment, [2013] EWHC 1383 (Fam), Cobb J explained his reasons for then ordering that all four children be forthwith returned to Spain. Four issues were raised for Cobb Js determination. First, the father disputed that the children had been habitually resident in Spain on the date of his retention of them in England, namely on 5 January 2013, and he therefore contended that the retention was not wrongful under article 3 of the Convention. He contended that they had not acquired a habitual residence in Spain at any time between 24 July 2012 and 5 January 2013 and, in particular, that he had not consented to their going to Spain for longer than a holiday in the summer 2012. The result (contended the father) was that they had never lost their habitual residence in England. Cobb J rejected these contentions. He found that in July 2012 the father had agreed with the mother that she should take the children to reside in Spain indefinitely and that, partly for that and partly for another reason which I will explain in paras 28 and 29, all four children had lost their habitual residence in England on or shortly after 24 July 2012, had acquired a habitual residence in Spain during the autumn 2012 and had continued to have it on 5 January 2013. The judge therefore held that the retention was wrongful under article 3. Second, the father contended, pursuant to article 13 of the Convention, that the three older children objected to being returned to Spain and had attained an age and a degree of maturity at which it was appropriate to take account of their views. Cobb J upheld the contention that T objected to being returned to Spain and had attained the requisite age (then 12 years and nine months) and degree of maturity. He found, by contrast, that, although L and A had also attained an age and a degree of maturity at which it was appropriate to take account of their views, their expressed wishes not to return to Spain had the character only of preferences rather than of objections. Third, the father contended, also pursuant to article 13, that there was a grave risk that the return of the children to Spain would place one or more of them in an intolerable situation. Cobb J rejected this contention. Fourth, the father contended that, insofar as Cobb J might have upheld either his second or third contentions in relation to any of the children, he should exercise the discretion thereby conferred on him by article 13 to decline to order the return of that child to Spain. Notwithstanding that he had indeed upheld the fathers second contention in relation to T, Cobb J decided not to exercise his resultant discretion to decline to order her to return to Spain. The father appealed to the Court of Appeal against Cobb Js order. But there were three further appellants, namely, T, L and A. Following Cobb Js order T had consulted a solicitor, who had concluded that she had sufficient understanding to give instructions in the matter; and L and A had consulted another solicitor, who had concluded that they too had sufficient understanding to give instructions. At an interlocutory hearing a single Lord Justice granted permission to all three of them to appeal against Cobb Js failure to make them parties to the proceedings. The Court of Appeal was later to express some doubt (which it put to one side) whether it was open to T to appeal against Cobb Js dismissal of an application made by the father rather than by herself. In fact, since she had been adversely affected by the dismissal, she did have the requisite status to bring an appeal: George Wimpey UK Ltd v Tewkesbury Borough Council [2008] EWCA Civ 12, [2008] 1 WLR 1649. But, on any view, the permitted appeal of L and A was highly problematic in that no one had suggested to Cobb J that they should become parties. On 1 August 2013 the Court of Appeal heard the appeals and on 15 August 2013 it handed down its judgments, [2013] EWCA Civ 1058. Black LJ delivered the substantive judgment and Hallett and Gloster LJJ agreed with it. It is against two of the orders which the court then made that the present appeals are brought. The Court of Appeal dismissed the appeals not only of L and A but also of T against Cobb Js failure (or, rather, in Ts case, his refusal) to make them parties to the proceedings. T now appeals against the dismissal in relation to her. This is the subsidiary appeal before the court. There were in effect three grounds of the fathers appeal to the Court of Appeal. First, he contended that Cobb J had been wrong to hold that the children had been habitually resident in Spain on 5 January 2013. He argued not only that the judge had been wrong to find that he had consented to their removal to Spain for longer than the summer holiday 2012; but also that, on the evidence, they had never been integrated in the Spanish environment to any significant degree and, more specifically, that the judge had failed to consider Ms Vivians reports of statements by the three older children to her that they had never considered that Spain had become their home. The Court of Appeal rejected this first ground of appeal. It is against its refusal to set aside the judges conclusion that the children had become habitually resident in Spain by 5 January 2013 that the father and T appeal. These are the primary appeals before the court. In rejecting the first ground the Court of Appeal held that the judge had not been wrong to find that the father had consented to the removal of the children for an indefinite period. There is no remaining issue in that specific regard: that the father consented to it is therefore now an established fact. The Court of Appeal also held that the judge had been entitled to find that the children had achieved some degree of integration in Spain; and, more specifically, that, insofar as their perceptions were relevant to their integration (which, without deciding, the court conceded was possible), Cobb J had sufficiently considered them. Second, the father contended that Cobb J had been wrong to characterise the wishes of L and A not to return to Spain as only preferences rather than as objections. The Court of Appeal rejected this ground. Third, the father contended that, having found that T objected to being returned to Spain and had attained the requisite age and degree of maturity, Cobb J had erred in deciding not to exercise his resultant discretion to decline to order her to return to Spain. The Court of Appeal upheld this ground. It concluded that, in exercising his discretion, the judge had failed to give sufficient weight either to the robustness of Ts objections or to the fact that until July 2012 she had always lived in England. The Court of Appeals conclusion that T should not be the subject of an order for return to Spain under the Convention created a new dimension to the inquiry in relation to the three younger children. For it precipitated a need to inquire whether there was a grave risk that their return to Spain would place them in an intolerable situation in that, for the first time in their lives, they would be separated from T. The Court of Appeal concluded that the evidence before it was too limited to enable it to determine this issue and that the proceedings should be remitted to a judge of the Family Division for its determination. All three of the younger children have been joined as parties to the remitted proceedings on the basis that, as are L and A in this court, they will be represented by Ms Vivian as their guardian. The further hearing is due to begin shortly. In addressing his application for permission to appeal to this court, Black LJ described the father as having been largely successful in the Court of Appeal. With respect, I do not accept that description. The difficulty for the father is that Spain is a fellow state of the European Union and that therefore, in the present proceedings, the provisions of Council Regulation (EC) No 2201/2003, commonly called Brussels II Revised (B2R), are grafted on to the provisions of the Convention and indeed, by article 60 of B2R and section 1(3) of the 1985 Act, take precedence over them. By recital 12 of B2R the Council observed that the best interests of a child are served by a general rule that the court of the state of her habitual residence should, in the first place, have jurisdiction to determine future arrangements for her. By recital 17 it accepted that under the Convention a state could decline to order a childs return to the state of her habitual residence in specific, duly justified, cases but then it added however, such a decision could be replaced by a subsequent decision by the court of the member state of habitual residence of the child prior to the wrongful removal or retention. In the body of B2R this was duly achieved by a combination of article 10, which provides for the continuing jurisdiction of the state of habitual residence following a wrongful removal or retention save in circumstances immaterial to the present case, and of article 11(8) which provides: Notwithstanding a judgment of non return pursuant to article 13 of the 1980 Hague Convention, any subsequent judgment which requires the return of the child issued by a court having jurisdiction under this Regulation shall be enforceable in accordance with section 4 of Chapter III below in order to secure the return of the child. Section 4 of Chapter III of B2R provides, by article 42(1), that, provided that the judge in the state of habitual residence shall have certified that the parties and, if appropriate, the child were given an opportunity to be heard and that he took account of the reasons for the refusal of the requested court to order the childs return under the Convention, there can be no facility for challenge in the requested state to his order for the childs return. His order enjoys procedural autonomy: Rinau v Rinau (Case C 195/08PPU) [2009] Fam 51, para 63. Thus B2R has added a dramatic further dimension to proceedings under the Convention in which the application is for the childs return to a fellow EU state. When, on whatever basis, it refuses an application under the Convention for return to a non EU state, a court in England and Wales will conventionally embark (or make clear to the unsuccessful applicant that it would be willing to embark) on a merits based inquiry into the arrangements which will best serve the welfare of the child; and it will reasonably anticipate, particularly in the light of the presence of the child here, that its decision will be fully enforceable. But when, by reference to article 13 of the Convention, it refuses an application for a childs return to an EU state, it is aware that an order for return, immune from challenge, may nevertheless be forthcoming from that state; and that therefore the order for non return may well provide no more than a breathing space. Prior to making the provision in article 11(8) of B2R, the Council will no doubt have considered the extra difficulty which faces the court of habitual residence in conducting a satisfactory merits based inquiry in circumstances in which the child is held abroad and the abducting parent, being also abroad, may decide not to participate or may be unable to fund participation. Practical concerns of this character were presumably overridden by the importance attached to the principle of the primacy of the court of habitual residence (recital 12), to the principle of mutual trust between the courts of member states (recital 21) and to the availability of a power in the court of habitual residence, in specified circumstances of fair width, to request another member state to assume jurisdiction if it considers such to be in the best interests of the child (article 15). What, at all events, prompts the father and T to bring the primary appeals to this court is their aspiration to secure, in relation to all the children, or at least to T, the reversal of the judges ascription to them of a habitual residence in Spain on 5 January 2013. For that would preclude an order of the Spanish court under article 11(8) of B2R (which, so the court is told, the mother has already evinced an intention to seek) or at any rate its enforceability in England, in relation to the children or at least to T. Ms Vivian wrote two reports, following two interviews with the three older children in February and April 2013, and she gave oral evidence to Cobb J. The courts direction to her had been to report on their wishes, feelings and, if any, objections, in relation to a return to Spain, and on their degree of maturity, so that it could better appraise the fathers defence under article 13. Inevitably, however, she sought to place her report on these matters in the context of what they said to her about the familys recent history. Ms Vivian reported that T, then aged 12 and a half, was confident and intelligent. T (so Ms Vivian reported) had a maturity beyond her years, which seemed to reflect her innate personality rather than to have been acquired in order to enable her to cope with recent difficulties. Ms Vivian reported that L, then aged ten, was bright, thoughtful and seemingly mature for his age and that A, then aged eight, was thoughtful and quite insightful but less confident than L. According to Ms Vivian, T told her that neither she nor the father had known that the mother was intending to take her and the boys to Spain until days prior to her departure in July 2012 and that it had been only when she started school in Spain that it had become clear to her that the mother intended that they should live there indefinitely. In her oral evidence the mother disputed Ts account and in my view it is important to note that Cobb J in effect rejected much of what T had said in that regard. He found that, well prior to the departure, the father, albeit reluctantly, had agreed to it and that, at least a week prior to it, T had known that she and the boys were leaving England indefinitely. Then, in my view relevantly to this courts despatch of these appeals, T and the older boys made statements to Ms Vivian about their life with the mother in Spain during the following five months. Ms Vivian reported that T said that: i) ii) iii) iv) v) vi) i) ii) iii) iv) she had hated it in Spain; they had not had a home of their own but only a temporary home in the flat of the maternal grandmother; they had attended poor schools which the mother had chosen only because they had been local and convenient; the mother had been pursuing an affair and had neglected them; Spain has never been home it is a bit unreasonable to say that; and she could not settle in Spain. he had liked Spain but not as much as England; he had really liked his school in Spain but also his school in England; they had not had a home of their own in Spain; the mother had given more attention to her boyfriend than to them; and Ms Vivian reported that L said that: v) life in Spain had felt weird because he had been away from his normal home for so long. Ms Vivian reported that A said that: i) ii) he had wanted to go to live in Spain but, once there, had realised that he had made the wrong decision; and he had not liked his school in Spain and had made no friends. Ms Vivians written summary of these statements was: During their time in Spain the children have reported that they have not settled and their mother has not, by their accounts, assisted them to do so. In her oral evidence she added: it was almost like they gave Spain a go and they didnt feel like it was home to them. Then Ms Vivian proceeded to address the current wishes and feelings of the three children. This part of her evidence is not of direct relevance to the present appeals. It is enough to say that T stated to Ms Vivian that she refused to go back to live in Spain and would physically resist any order that she should do so; and that L and A stated to her that, on 4 January 2013, they had hidden their passports behind a microwave in order to disable the father from sending them back to Spain on the following day and that they continued not to want to go back to Spain. It was Ms Vivians view, which Cobb J appeared largely to accept, that the father had not sought to manipulate the children into making these statements. In embarking upon his determination whether the children had become habitually resident in Spain by 5 January 2013, Cobb J suggested that the well known tests propounded in England and Wales (in R v Barnet London Borough Council, Ex p Nilish Shah [1983] 2 AC 309, 343, Lord Scarman) and in the Court of Justice of the European Union (the CJEU) (in Mercredi v Chaffe (Case C 497/10PPU) [2012] Fam 22, para 47) were overlapping and broadly consistent. Cobb J then proceeded to make a clear demarcation between the two older and the two younger children. He noted that the parents had never been married; that the father had been registered on the birth certificates of each of the children; but that the amendments made to section 4 of the Children Act 1989, of which the effect was to confer parental responsibility on a father who was thus registered, took effect only in relation to registrations after 1 December 2003. Cobb J therefore correctly concluded that the father had parental responsibility for A and N but not for T nor for L. Accordingly (reasoned Cobb J) the mother had the right to determine the habitual residence of T and L but English law required the fathers consent to any change on her part of the habitual residence of A and N. The judge then set out his reasons for finding that the father had unconditionally consented to the acquisition by A and N of habitual residence in Spain. In that sense, observed the judge, it is less important for me to look at the integration argument. He did however proceed to look at it and he concluded that all four children had achieved a significant degree of integration into their social and family environment in Spain. In particular he found that they had settled reasonably well into the grandmothers flat and had settled into their new schools. For these reasons he determined that by 5 January 2013 the children had become habitually resident in Spain. It was a singular misfortune for Cobb J to be required to make his determination of the issue of habitual residence (and for the Court of Appeal to be required to review it) so shortly prior to this courts issue, on 9 September 2013, of its judgments in A v A (Children: Habitual Residence) [2013] UKSC 60, [2013] 3 WLR 761. The court there held that: i) ii) iii) the test for the determination of habitual residence under the Convention, under B2R and under domestic legislation should be the same (para 35, Lady Hale); the test set out in the Nilish Shah case, cited above, should be abandoned (para 54(v), Lady Hale); and the test should be the one adopted by the CJEU in Proceedings brought by A (Case C 523/07) [2010] Fam 42, and affirmed by it in the Mercredi case, cited above, namely the place which reflects some degree of integration by the child in a social and family environment (para 54(iii) and (v), Lady Hale). In April 1981 Professor Prez Vera wrote the Explanatory Report referable to the Convention. In para 11, in a section entitled Object of the Convention, she explained that, whether the child was wrongfully removed from his or her state of habitual residence or was wrongfully retained outside it, the outcome was the same, namely that the child is taken out of the family and social environment in which its life has developed. It is satisfactory that, 30 years after the Convention was adopted, in a case (Proceedings brought by A, cited above) unrelated to the Convention, the CJEU should have formulated a test for habitual residence, which now falls to be applied as fully to Convention proceedings as to other proceedings, in terms so intriguingly close to what its signatories had in mind. At last I can begin to address the question set out in para 1. I doubt whether, even by reference to the former English concept of habitual residence, Cobb J was entitled to have stated so categorically that, having sole parental responsibility for them, the mother in July 2012 had the right to determine the habitual residence of T, then aged almost 12, and of L, then aged nine. It is true that in In re P (GE) (An Infant) [1965] Ch 568, 585 586, Lord Denning MR had been similarly categorical about the ordinary residence of a child of tender years who cannot decide for himself where to live, let us say under the age of 16. But in In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, 579, Lord Brandon had said that where a child of Js age is in the sole lawful custody of the mother, his situation with regard to habitual residence will necessarily be the same as hers. J was aged two and in In re M (Minors) (Residence Order: Jurisdiction) [1993] 1 FLR 495, 500, Balcombe LJ therefore took Lord Brandons proposition to apply only to young children. In my view even our old law left open and ajar the door to a conclusion that, no doubt in rare circumstances and perhaps particularly following the adoption by an older, mature, child of a residence in a different country with one parent, the latters habitual residence there might not necessarily render the childs residence there habitual. At all events what our courts are now required to do is to search for some integration on the part of the child in a social and family environment in the suggested state of habitual residence. In the Mercredi case, cited above, the CJEU said: 53 The social and family environment of the child, which is fundamental in determining the place where the child is habitually resident, comprises various factors which vary according to the age of the child. The factors to be taken into account in the case of a child of school age are thus not the same as those to be considered in the case of a child who has left school and are again not the same as those relevant to an infant. 54 As a general rule, the environment of a young child is essentially a family environment determined by the reference person(s) with whom the child lives, by whom the child is in fact looked after and taken care of. 55 That is even more true where the child concerned is an infant. An infant necessarily shares the social and family environment of the circle of people on whom he or she is dependent. In A v A, cited above, this court adopted the propositions in the two latter paragraphs. Lady Hale said, at para 54: (vi) The social and family environment of an infant or young child is shared with those (whether parents or others) on whom he is dependent. Hence it is necessary to assess the integration of that person or persons in the social and family environment of the country concerned. These propositions, which are carefully expressed to apply only to infants and young children, have an echo in observations made by the High Court of Australia in LK v Director General, Department of Community Services (2009) 237 CLR 582, as follows: 27 When speaking of the habitual residence of a child it will usually be very important to examine where the person or persons who are caring for the child live where those persons have their habitual residence. The younger the child, the less sensible it is to speak of the place of habitual residence of the child as distinct from the place of habitual residence of the person or persons upon whom the child is immediately dependent for care and housing. But if, as the writings about the Abduction Convention and like instruments repeatedly urge, the question of habitual residence of a child is one of fact, it is important not to elevate the observation that a child looks to others for care and housing to some principle of law like the (former) law of dependent domicile of a married woman. Where a child of any age goes lawfully to reside with a parent in a state in which that parent is habitually resident, it will no doubt be highly unusual for that child not to acquire habitual residence there too. The same may be said of a situation in which, perhaps after living with a member of the wider family, a child goes to reside there with both parents. But in highly unusual cases there must be room for a different conclusion; and the requirement of some integration creates room for it perfectly. No different conclusion will be reached in the case of a young child. But, where the child is older, in particular one who is an adolescent or who should be treated as an adolescent because she (or he) has the maturity of an adolescent, and perhaps also where (to take the facts of this case) the older childs residence with the parent proves to be of short duration, the inquiry into her integration in the new environment must encompass more than the surface features of her life there. I see no justification for a refusal even to consider evidence of her own state of mind during the period of her residence there. Her mind may possibly have been in a state of rebellious turmoil about the home chosen for her which would be inconsistent with any significant degree of integration on her part. In the debate in this court about the occasional relevance of this dimension, references have been made to the wishes views intentions and decisions of the child. But, in my opinion, none of those words is apt. What can occasionally be relevant to whether an older child shares her parents habitual residence is her state of mind during the period of her residence with that parent. In the Nilish Shah case, cited above, in which he propounded the test recently abandoned, Lord Scarman observed, at p 344, that proof of ordinary (or habitual) residence was ultimately a question of fact, depending more upon the evidence of matters susceptible of objective proof than upon evidence as to state of mind. Nowadays some might not accept that evidence of state of mind was not susceptible of objective proof; but, insofar as Lord Scarmans observation might be taken to exclude the relevance of a persons state of mind to her habitual residence, I suggest that this court should consign it to legal history, along with the test which he propounded. It follows that my answer to the question set out in para 1 is: yes. In the light of her age and of Ms Vivians assessment of her maturity, Ts assertions to Ms Vivian about her state of mind during her residence in Spain in 2012, set out in para 26 above, have at least some relevance to a determination whether her residence there was habitual. For they are relevant to whether she was integrated to some degree in a social and family environment there. But not even when, rather as a cross check against his earlier conclusion, Cobb J turned to consider Ts integration (and that of the boys) in Spain did he address her assertions to Ms Vivian. Indeed when, in a later section of his judgment, he addressed her assertions, his focus was on her hostility at that time, namely in 2013, towards a return to Spain. Nowhere did he give separate or any attention to what she had said about her state of mind when in Spain in 2012. The Court of Appeal was impressed by the fact that, in refusing to grant permission to the father to appeal, Cobb J observed that The stated wishes of the three older children to be in England now. did not affect their integration in Spain at the time. Cobb Js observation was correct. But what might have affected the integration at any rate of T was not her wishes when in England in 2013 but what she said about her state of mind when in Spain in 2012. No significant criticism can be levelled at Cobb J in these respects. It is true that, in the course of his unsuccessful submission that she should be made a party to the proceedings, the fathers counsel had suggested that T might have a perspective about her habitual residence different from that of the father; the judge had dismissed the suggestion as a purely speculative possibility. It is also true that, in his opening skeleton argument for the substantive hearing, the fathers counsel had submitted to Cobb J that the childrens own descriptions to Ms Vivian confirmed that they had never achieved integration in Spain. But no submission was made to the judge that he should scrutinise Ts specific assertions to Ms Vivian about her state of mind during her residence in Spain. Accordingly I would set aside the judges conclusion that T was habitually resident in Spain on 5 January 2013 and would remit that issue for fresh consideration in the High Court alongside its forthcoming consideration of the issue relating to the boys which was remitted to it by the Court of Appeal. Counsel for the father and T suggest that the court should go further and, in lieu of the judges conclusion, should substitute a conclusion that T remained habitually resident in England on 5 January 2013. I cannot accede to the suggestion. I perceive six objections to it: i) Ts various assertions to Ms Vivian about her state of mind when in Spain were incidental to an inquiry of which the focus was different. ii) Ts assertions were made after she had left Spain and may not deserve the weight which might attach, for example, to any emails or letters which she might have sent, or to any statements which she might have made on social networking sites, while she was there. Indeed Ts primary purpose was to communicate to Ms Vivian her strong objection to returning to Spain and her purpose may have coloured her descriptions of her state of mind when there. iii) iv) Cobb J has already rejected as inaccurate Ts identification to Ms Vivian of the time when she realised that the familys stay in Spain was intended to be indefinite. v) Since it is only in the proceedings in this court that the searchlight has directly shone on Ts statements to Ms Vivian about her state of mind when in Spain, the mother has had no opportunity to give evidence in response to them or, by counsel, to make detailed submissions about them. vi) Ts statements in that regard require to be weighed against the written and oral evidence which led Cobb J to find that T had achieved some degree of integration in Spain. In relation to her integration, the mother placed before the judge a substantial amount of evidence, including statements not only by herself but also by her mother, her sister and her two brothers and by Ts school in Spain, to which in these appeals no specific reference has been made; and in relation to it the mother also gave oral evidence, of which this court does not even have a transcript. Therefore I do not agree that this court is in a position to regard Ts statements to Ms Vivian as determinative of a conclusion that the mother cannot establish that T acquired a habitual residence in Spain. If the issue of Ts habitual residence in Spain is therefore to be remitted for determination in the High Court, should Cobb Js conclusion that the three boys were habitually resident there also be set aside so that that issue be likewise determined in the High Court? In my view this is the most difficult question posed by these appeals. When they were in Spain, none of the boys was an adolescent or had the maturity of an adolescent. It will be clear from my formulation of the question in para 1 above that in my view it is, in principle, the state of mind of adolescent children during their residence in a place that may affect whether it was habitual. Thus, although when considering the alleged objections of L and A to returning to Spain, Cobb J concluded that they had at least attained an age and a degree of maturity at which it was appropriate to take account of their views and although they made comments to Ms Vivian indicative of lack of integration on their part in Spain, I find it hard to imagine that a judges exploration of their state of mind could, on its own, alter the conclusion about their integration in Spain reached by Cobb J by reference to the other evidence before him. But there is another feature in play: it is the presence of their older sister, T, in the daily life of all three of the boys. Ms Vivian described the four children as a very close sibling group. There was a solidarity in the presentation of the three older children to her. When Cobb J addressed the integration of the children in Spain, he did so compendiously in relation to all four of them. In the fuller, more focussed, inquiry into Ts habitual residence, the High Court will no doubt receive evidence about the integration in Spain of the four children as a whole. Were it to conclude that T never lost her English habitual residence, the court would need at any rate to consider whether its conclusion could sit easily alongside a conclusion that, by contrast, the three boys acquired a habitual residence in Spain. In relation to their habitual residence, might Ts habitual residence in England (if such it was) be a counterweight to the obvious significance of the mothers habitual residence in Spain? It can be inconvenient for a judge at a remitted hearing to have to note that all options have not been left open to him. By a narrow margin, I find myself persuaded that the proper course is to set aside the finding of habitual residence in respect also of the three boys so that the issue can be reconsidered in relation to all four children. to decline to make T a party to the proceedings? In the Court of Appeal Black LJ observed, at para 36, that welfare considerations were by no means out of place in a determination whether a child should be joined as a party to family proceedings. But rule 16.2 of the Family Procedure Rules 2010 (the terms of which are in substance identical to those of its predecessor, namely rule 9.5(1) of the Family Proceedings Rules 1991 (S1 1991/1247)) provides that I turn to the subsidiary appeal: did Cobb J err in exercising his discretion (1) The court may make a child a party to proceedings if it considers it is in the best interests of the child to do so. On any view it is most unusual for the threshold criterion for the making of a case management decision to be a conclusion about a persons best interests. But the meaning of the rule is plain. The best interests of the child represent the threshold criterion and are not just a primary consideration as stated in paragraph 7.3 of Practice Direction 16A supplementary to Part 16 of the 2010 Rules. If, and only if, the court considers that it is in the best interests of the child to make her (or him) a party, the door opens upon a discretion to make her so. No doubt it is the sort of discretion, occasionally found in procedural rules, which is more theoretical than real: the nature of the threshold conclusion will almost always drive the exercise of the resultant discretion. Rule 16.2, set out above, governs the grant to a child of party status in family proceedings generally. There is no special provision in Part 16 of the Rules which governs the grant to a child of party status in proceedings under the Convention. Rule 16.4(1)(c) proceeds to provide that, without prejudice to other rules, and in particular to rule 16.6, a court which has granted party status to a child pursuant to rule 16.2 must appoint a childrens guardian for her. Rule 16.6 specifies most types of private law family proceedings in which, if the court so permits or if a solicitor considers that the child is capable of giving instructions, she can be a party without acting by a guardian. But the types of proceedings there specified do not include proceedings under the Convention. I cannot discern why, if and to the extent that it is appropriate in Convention proceedings for children to be made parties, the facility for some of them to act without a guardian has been blocked. In WF v FJ, BF and RF (Abduction: Childs Objections) [2010] EWHC 2909 (Fam), [2011] 1 FLR 1153, Baker J, in paras 21 and 22, described the exclusion of Convention proceedings from the predecessor of rule 16.6 as anomalous and a lacuna. At all events the result is that, had Cobb J made T a party to the proceedings, she would have been required to act by a guardian. Such is, however, a status which might have been conferred on her solicitor. In In re D (A Child) (Abduction: Rights of Custody) [2006] UKHL 51, [2007] 1 AC 619, Lady Hale, with the agreement of all other members of the House, stated at para 59 that children should be heard far more frequently in. Convention cases than has been the practice hitherto. It is clear from para 58 that, in so stating, Lady Hale had been influenced in particular by article 11(2) of B2R, which had come into force less than two years earlier and which obliged EU states to ensure that the child is given the opportunity to be heard during [Convention] proceedings unless this appears inappropriate having regard to his or her age or degree of maturity. In the In re D case Lady Hale proceeded, at para 60, to suggest that the obligation to hear children of an appropriate age would in most cases be satisfied by a report by a Cafcass officer of an interview with them; would sometimes require the judge in person to talk to them; and only in a few cases would require them to be made parties and thus to be legally represented. Lady Hale added: But whenever it seems likely that the childs views and interests may not be properly presented to the court, and in particular where there are legal arguments which the adult parties are not putting forward, then the child should be separately represented. In In re M (Children) (Abduction: Rights of Custody) [2007] UKHL 55, [2008] 1 AC 1288, Lady Hale amplified what she had said in the In re D case. In the In re M case the defendant mother had demonstrated that the children, then aged about 13 and 10, had become settled in [their] new environment in England for the purposes of article 12 of the Convention but the trial judge had nevertheless ordered them to be returned to Zimbabwe. Lady Hale observed in para 57 that a defence under article 12 that children had become settled in their new environment was rare. She suggested that it was the most child centric of all child abduction defences; that the separate point of view of the children alleged to have become settled was particularly important; and that (as this court is told has duly occurred) it should become routine for them to be made parties to the proceedings. One might have held an interesting debate with Lady Hale as to whether such a defence is more child centric than that in which the children are said to object to being returned to the requesting state for the purposes of article 13, being a category of children to whom she also there referred and to whom, she stressed, a grant of party status should not become routine. Lady Hale concluded: In all other cases [than those of alleged settlement], the question for the directions judge is whether separate representation of the child will add enough to the courts understanding of the issues that arise under the. Convention to justify the intrusion, the expense and the delay that may result. I have no difficulty in predicting that in the general run of cases it will not. When in 2007 Lady Hale identified these factors, the threshold criterion for granting party status to a child in proceedings under the Convention was, as now, whether it was in the childs best interests to do so. The intrusion of the children into the forensic arena, which enables a number of them to adopt a directly confrontational stance towards the applicant parent, can prove very damaging to family relationships even in the long term and definitely affects their interests. So does delay in the resolution of the issue whether they should be ordered to return, albeit perhaps only temporarily, to the requesting state. In what follows I must in no way be understood to suggest that it should become routine to join as parties to Convention proceedings children whose habitual residence in the requesting state is in issue. Nevertheless, as Thorpe LJ prefigured in Cannon v Cannon [2004] EWCA Civ 1330, [2005] 1 FLR 169, at para 55, there is an analogy between, on the one hand, an inquiry into some degree of integration of a child in the social and family environment of the requesting state during a short period of residence there and, on the other, an inquiry into a childs settlement in the environment of the requested state. To both inquiries an older child may in particular be able to contribute relevant evidence not easily given by either of the parents, namely about her state of mind during the period in question; see again the Cannon case, at para 61. When on 6 April 2011 the Rules came into force, the opportunity was taken to supplement Part 16 with Practice Direction 16A. Guidance is there given about the circumstances in which it is appropriate to grant party status to a child in family proceedings. The reader of it must again bear in mind that it is not focussed on Convention proceedings but much of it is directly apposite to them. Thus para 7.1 of the Practice Direction makes clear that a grant to a child of party status will be made only in cases which involve an issue of significant difficulty and thus only in a minority of cases. Consideration, so it suggests, should first be given to whether an alternative course might be preferable; and the suggestion is well reflected by the courts current practice of inviting an officer in the Cafcass High Court team to see the child before it decides whether to make her a party to Convention proceedings. Para 7.3 of the Practice Direction stresses that a grant to a child of party status may result in delay adverse to her welfare and of which account should therefore be taken. This factor has a particular relevance to Convention proceedings. The need for expedition is written into article 11.3 the Convention; and the aspiration, articulated in the same para, for determination within six weeks of issue is, in the case of EU states, stiffened by article 11.3 of B2R, which positively requires determination within that period save in exceptional circumstances. But it is para 7.2 of the Practice Direction which is of particular significance. It offers non prescriptive guidance about the circumstances which may justify a grant to a child of party status. The examples include, at (a) the case where a Cafcass officer favours the grant; at (d) the case where the childs views cannot adequately be communicated by a report; and at (e) the case where an older child is opposing a proposed course of action. The last example should not in my view be taken to endorse any routine grant of party status to older children objecting to their return to the requesting state in Convention proceedings. But the example most apt to the present case is at (b), namely where the child has a standpoint incapable of being represented by any of the adult parties. In my view the proper despatch of the subsidiary appeal follows in the slipstream of the courts despatch of the primary appeals. What Cobb J failed to address, and what therefore requires his conclusion about Ts habitual residence to be set aside, is her evidence, accurate or inaccurate, about her state of mind when in Spain in 2012. Such is evidence which, although the mother might have a valuable perspective on it, neither of the parents can give. In the language of para 7.2(b) of the Practice Direction T has a standpoint incapable of being represented by either of the adult parties. I conclude that she should have been granted party status and that the Court of Appeal should have allowed her appeal against Cobb Js refusal of it. A grant of party status to a child leaves the court with a wide discretion to determine the extent of the role which she should play in the proceedings. Although, unusually in Convention proceedings, Cobb J heard oral evidence from the parents as well as from Ms Vivian, it would surely have been inappropriate for him to receive oral evidence in court from T even if she had been a party to the proceedings. It is conceivable that, had he considered that her evidence might prove determinative yet needed to be further explored, Cobb J might have invited counsel, particularly counsel for the mother, to ask age appropriate questions of her otherwise than in court and recorded on video tape. In all probability however, the reasonable course would have been to confine Ts participation in the proceedings to i) the adduction of a witness statement by her, or of a report by her guardian, which was focussed upon her account of her residence in Spain including of her state of mind at that time; ii) her advocates cross examination of the mother; and iii) her advocates closing submissions on her behalf. Whether it would have been reasonable for Cobb J to have allowed T to be present in court during the hearing I cannot tell. It would have been for the guardian to decide which of the documents filed in the proceedings should be shown to T. In conclusion I stress the unusual features which give rise to the present appeals. In May 2011 Professor Lowe placed before the Hague Conference a document, No 8C, entitled A Statistical Analysis of Applications Made in 2008 Under the [Hague] Convention. He reported that, of the applications for return made to the Central Authority of England and Wales in 2008, 108 came before the courts, of which 93 resulted in orders for return and 15 resulted in dismissal. Of the 15 dismissals, only three were founded on a conclusion that the child had not been habitually resident in the requesting state. Although some of the 93 orders were no doubt made following unsuccessful submissions to the same effect, Reunite International Child Abduction Centre, an Intervener in these appeals, confirms that issues about the childs habitual residence in Convention proceedings are relatively rare. More importantly, however, the present appeals relate in particular to an older child resident with a parent only for a short time in the suggested state of habitual residence. These are the two features which, more than any others, have precipitated my various conclusions. LADY HALE (with whom Lord Sumption agrees) Lord Wilson has identified the principal question raised by these appeals in relation to an adolescent child: is her state of mind relevant to whether or not she has acquired a habitual residence in the place where she is living? He has answered that question yes and I entirely agree with that answer. However the question cannot be restricted to adolescent children. It also arises in relation to the two younger children, L and A. They are themselves parties to this appeal and are represented by their guardian. That guardian is the same Cafcass officer, Ms Vivian, who has interviewed the children twice in the proceedings. Before this court she has argued that they were not habitually resident in Spain on the relevant date. In my view, the answer to the question of principle has to be the same for all three children: their state of mind is relevant to whether or not they have acquired a habitual residence in the place where they are living. The logic which makes an adolescents state of mind relevant applies equally to the younger children, although of course the answer to the factual question may be different in their case. The logic flows from the principles adopted by the Court of Justice of the European Union in Proceedings brought by A (Case C 523/07) and Mercredi v Chaffe (Case C 497/10PPU) and now adopted by this Court in the recent cases of A v A [2013] UKSC 60, [2013] 3 WLR 761 and In re L (A Child) (Habitual Residence) [2013] UKSC 75; [2013] 3 WLR 1597. The first principle is that habitual residence is a question of fact: has the residence of a particular person in a particular place acquired the necessary degree of stability (permanent is the word used in the English versions of the two CJEU judgments) to become habitual? It is not a matter of intention: one does not acquire a habitual residence merely by intending to do so; nor does one fail to acquire one merely by not intending to do so. An illegal immigrant may desperately want to become habitually resident in this country, but that does not mean that he does so. A tax exile may desperately want to lose his habitual residence here, but that does not mean that he does so. Hence, although much was made of it in argument, the question of whether or not a child is Gillick competent is not the point. In the case of these three children, as of others, the question is the quality of their residence, in which all sorts of factors may be relevant. Some of these are objective: how long were they there, what were their living conditions while there, were they at school or at work, and so on? But subjective factors are also relevant: what was the reason for their being there, and what were their perceptions about being there? I agree with Lord Wilson (para 37) that wishes, views, intentions and decisions are not the right words, whether we are considering the habitual residence of a child or indeed an adult. It is better to think in terms of the reasons why a person is in a particular place and his or her perception of the situation while there their state of mind. All of these factors feed into the essential question, which is whether the child has achieved a sufficient degree of integration into a social and family environment in the country in question for his or her residence there to be termed habitual. It would be wrong to overlay these essentially factual questions with a rule that the perceptions of younger children are irrelevant, just as it was to overlay them with a rule (rejected in A v A) that a child automatically shares the habitual residence of the parent with whom he is living. The age of the child is of course relevant to the factual question being asked. As the CJEU pointed out in Mercredi v Chaffe, at para 53: The social and family environment of the child, which is fundamental in determining the place where the child is habitually resident, comprises various factors which vary according to the age of the child. The factors to be taken into account in the case of a child of school age are thus not the same as those to be considered in the case of a child who has left school and are again not the same as those relevant to an infant. Clearly, therefore, this is a child centred approach. It is the childs habitual residence which is in question. It is the childs integration which is under consideration. Each child is an individual with his own experiences and his own perceptions. These are not necessarily determined by the decisions of his parents, although sometimes these will leave him with no choice but to buckle down and get on with it. The tiny baby whose mother took him back to her home country in Mercredi v Chaffe was in a very different situation from any of the three children with whom we are concerned. The environment of an infant or very young child is (one hopes) a family environment and so determined by reference to the person with whom he lives. But once a child leaves the family environment and goes to school, his social world widens and there are more factors to be taken into account. Furthermore, where parents are separated, there may well be two possible homes in which the children can live and the children will be well aware of this. This may well affect the degree of their integration in a new environment. The quality of a childs stay in a new environment, in which he has only recently arrived, cannot be assessed without reference to the past. Some habitual residences may be harder to lose than others and others may be harder to gain. If a person leaves his home country with the intention of emigrating and having made all the necessary plans to do so, he may lose one habitual residence immediately and acquire a new one very quickly. If a person leaves his home country for a temporary purpose or in ambiguous circumstances, he may not lose his habitual residence there for some time, if at all, and correspondingly he will not acquire a new habitual residence until then or even later. Of course there are many permutations in between, where a person may lose one habitual residence without gaining another. I agree with Lord Wilson that Cobb J did not approach the question in the way in which he no doubt would have done had he had the benefit of this Courts decisions in A v A and In re L. He approached it very much from the point of view of parental rights. Under English law, the mother alone has parental responsibility for the two older children (only because the change in the law giving parental responsibility to all fathers named on the birth certificate only came into force later; we have no evidence as to what the position is under Spanish law). She could therefore change their habitual residence. The father does have parental responsibility for the two younger children, but Cobb J held that he had (albeit reluctantly) consented to their change in habitual residence. But it is not a question of the parents determining the habitual residence of their children. It is a question of the impact of the parental decisions about where they and the children will live upon the factual question of where the children habitually reside. That being so, I would allow the appeal to the extent of setting aside the judges decision that the three older children were habitually resident in Spain on the relevant date, which is 5 January 2013. On a different basis, namely that referred to by Lord Wilson in para 43 above, I would also set aside the judges decision in relation to N: that is the need for the judge at any rate to consider whether the four children were a unit with the result that the habitual residence of any or all of the older children might impact on the habitual residence of the others. The question then arises of whether the case should be sent back to the High Court for the decision to be taken afresh or whether it is open to this Court to take the decision on the basis of the evidence before us. Decide or remit? We were invited by both appellants and by the guardian to decide the matter ourselves. Lord Wilson has pointed to all the reasons why we should not do so (para 42). He is, of course, right to point out that the focus of Ms Vivians inquiries with the children was on the rather different issue of the childrens objections to return. But her oral evidence was that what all three of these children did, which is sort of unusual in my experience of doing Hague interviews, is that the children in their own ways were [talking] about Spain not really being their home, not really being their base. The children were raising the issue even if she was not. Lord Wilson is also right to point to the various reasons for being sceptical about what T, in particular, said to Ms Vivian. However, that is something which we too can take into account. Finally, the mother placed a great deal of evidence before the judge about the childrens lives in Spain (including entries from Ts facebook page). But while we can take the documentary material into account, we do not have a transcript of the oral evidence which she gave. My main concern has been that, if the case is sent back to the High Court, there would have to be further inquiries into the childrens states of mind during their time in Spain. I have grave doubts about whether that would be a fruitful exercise. What the children spontaneously offered when they were first interviewed by Ms Vivian is much more likely to be reliable than anything they can tell her now. They have not changed their minds about where they want to be. They are intelligent and articulate children. Almost every witness, whether adult or child, engages in a certain amount of (conscious or unconscious) manipulation of their recollection of past events to meet their present interests. It would be surprising if that did not happen here. And that would be damaging to the children and to their future relationship with their mother. It would be even more damaging if they were to be called to give evidence and it is not suggested that they should be. It was unfortunate that Ms Vivian was asked to interview them a second time and the children (L in particular) were clearly uncomfortable with this. It would not be in their best interests to be interviewed a third time but it would be wrong to decide the case afresh without doing so. Remitting the matter will also cause delay and further stress to all the family, which may well put further strain on the childrens relationship with their mother. If the matter were governed by the best interests of the children, therefore, I would hold that it is not in their best interests for us to remit the question of their habitual residence to be decided afresh in the High Court. But this matter is governed by the interests of justice, in reaching the right result in a fair manner. I have therefore carefully considered whether it is necessary, in the interests of justice to all parties, to remit the matter. Some common ground The question, it will be recalled, is whether the mother has established that these four children were habitually resident in Spain on 5 January 2013, the date when they were due to fly back there after the Christmas holiday. There are several factors which are relevant to them all: i) Their mother is Spanish, tri lingual in Spanish, French and English. Their father is English, but lived in Spain for much of his childhood and is bi lingual in Spanish and English. The children are also bi lingual. They have many maternal relatives living in Spain. ii) They are all Spanish citizens. We have no evidence about whether they are also entitled to British citizenship, although as their father is a British citizen, this seems likely. iii) Their parents met in Oxford in 1995 and soon began living together, originally in Oxford and latterly in a town in Oxfordshire, but they have never married. The family home is jointly owned by the father and another person. iv) All three children were born here, T on 27 August 2000, L on 4 December 2002, and A on 2 November 2004, as was their younger brother N, who was born on 29 December 2008. v) They lived all their lives here with their mother and father until 24 July 2012, when they flew to Spain with their mother. vi) They all attended school here until the end of the summer term 2012. The boys were at a Roman Catholic primary school. T had also attended that school for her primary education but for the past year she attended a distinguished independent secondary school. vii) They were accustomed to going to Spain for summer holidays with their mother and without their father. viii) The parents relationship had been unhappy for many years and finally broke down in the summer of 2012. The judge found that the father had (albeit reluctantly and in the hope that the situation might change) agreed to the mother taking the children to live in Spain. ix) The mother bought one way tickets for them all in June 2012. She did not take steps to remove the children from their schools and other activities until July. She did not enrol them in Spanish schools until September. They took only two suitcases with them, leaving many possessions behind in England to be sent on later. x) In Spain they lived with their maternal grandmother in a spacious apartment in a gated residential development in a prosperous neighbourhood near Madrid, with many of their maternal relatives near by. xi) They attended schools in the neighbourhood and achieved good results in their first term. xii) They were unsettled after their father visited for three days in early November, coinciding with As birthday. xiii) They came to England with their father for the Christmas holidays on 23 December 2012 and were due to return with him to Spain on 5 January 2013. They did not do so because the boys hid their passports behind the microwave and the father did not find them until it was too late. xiv) The father applied for a residence order in the Oxford County Court on 10 January 2013. The mother issued these proceedings on 22 January 2013. The children were interviewed twice by Ms Vivian, whose reports are dated 28 February 2013 and 7 May 2013. Against this common background, it is necessary to consider the perceptions of each of the children in turn. T was 12 years and 5 months old when she first saw Ms Vivian. She struck Ms Vivian as a confident, intelligent young girl, whose maturity seemed to me to be beyond her years. I think her mature presentation is a reflection [of] her innate intelligence and personality rather than something she has prematurely had to acquire as a coping strategy . She is clearly very intelligent, as is evidenced by her winning a bursary to the school which she attended before moving to Spain. She has wanted to go to Oxford University since the age of eight. The judge concluded that she objected to returning to Spain, within the meaning of article 13 of the Hague Convention, and the Court of Appeal concluded that he should have exercised his discretion not to order her return. She told Ms Vivian that she was not sure if the reason they went to Spain was for a holiday or not, because her mother had repeatedly threatened we would stay, always, we didnt believe her, or really know. She pointed out, correctly, that her mother had contacted her school on the last day of term, 11 July, when she was off ill from school, to tell them that T was not coming back. The mothers email exchange with the school is proof of that and that the school was unhappy that they had not been given the expected terms notice. The exchange also shows that the mother had not at that stage arranged an alternative school for T in Spain. T went on to tell Ms Vivian that when they went to Spain it wasnt clear to me what the plan was. Her mother had told her they were going to stay although she didnt really accept it, thought it wouldnt happen. Asked when it became clear that they had been taken to live in Spain, she said when we started school, I guess, not one moment. She told her solicitor that her mother had sent an email to the school on the last day of term to inform them that they were moving to Spain. The judge pointed out that T knew that she was leaving to go to Spain at least by 17 July, as is apparent from her facebook page for that day. The judge also found that her mother organised a party for her it was essentially a farewell party. T does not agree with that it was four friends round for an early birthday party. Be that as it may, it was because of the facebook page that the judge commented that this is not consistent entirely with what T told Ms Vivian, which is that she thought she may have been going to Spain for a holiday (para 34(v)(a)). The facebook page reads: Q to T: Are you leaving???!!! T to Q: Yep x. Q to T, successively: Whn?, Why?, Whn r u GOIN??. T to Q: on the 24th am leaving 2 spain who told u???. I would tell u 2 keep it secret but since its on my wall not really any point lol. Q to T: Gossip spreads fast . X. T to Q: lol I no bhut who????????? Q to T: Cant remember WE WILL ALL MISS U SO MUCH llxxx Will u come back? No answer is recorded but another friend writes Awww y r u leaving. Again no answer is recorded. The objective evidence records an extraordinary state of affairs. The mother left it until the very last day of term to withdraw her daughter from school. T was clearly not too happy about her friends knowing that she was leaving. This is consistent, both with the judges finding that by then, very late in the day, she knew her mothers plan was that they should move, and with her own account to Ms Vivian that she was not sure what the real situation was, partly because her mother had made similar threats before and partly because she herself did not really accept it. There are, of course, features about their life in Spain, emphasised in the mothers evidence, which point the other way. She was enrolled in a school, where she did reasonably well, although she herself did not think much of the education she was receiving there compared with her education in England. She made friends. She earned pocket money by teaching children English. But she told Ms Vivian that We have no house presumably because they were living with their grandmother and Spain is her mothers home not our home. Its not even home. Spain has never been home, it is a bit unreasonable to say that. Ms Vivian commented that she sees her home, life and future as being in England, that is where she was born and has lived all her life except for five months . She concluded: T regards England as her home; it has been her home throughout her childhood and formative years until the move to Spain last year. She acknowledges that she also has family in Spain and recognises that for her mother Spain is home, but she nonetheless feels that her own roots and those of her immediate family are here in this country. T said very similar things to her solicitor, that England was her home, that she has friends here and best friends that she has known for five or six years. Its just home. L was 10 years and 2 months old when he first saw Ms Vivian. He struck her as being a bright thoughtful boy; he seems to have carefully considered his situation and his own wishes and feelings. He seemed mature for his age, but maybe this is because he is a bright boy and is easily able to convey his thoughts. He missed his mum and wanted his parents to be back together again. Unlike T, he said that he knew he was going to Spain to live before they left, his mum and dad had told him a month before they left. Like T, he said that all those years she said that we were going one day. His view was that his father knew but he didnt agree but didnt want to take the situation to court. But he, L, had always wanted to stay here with his friends and family. He had liked it well enough in Spain, he really liked the school, but we dont have a house or anything there. He also told Ms Chadha, the solicitor who acted for the boys before the guardian took over, that he liked his school in Spain, the teachers and most of the people in his class. But he told Ms Vivian that he liked England more because this is where we live, our normal place and I want to live my life here. He was reluctant to come and talk to Ms Vivian a second time, but he was even clearer: In Spain it didnt feel right or like I was at home. When I got to England it felt cosy. Where I want to live. My house. I find it normal. A bit weird to go to another country where I have never lived for a long time. In Spain, it was not normal. Felt like a holiday really. Felt weird that I was not at my normal home for such a long time. When I went to Spain it didnt feel normal. I wanted to be in my normal house. L told Ms Chadha that it had been his idea to hide the passports. A confirmed that it was Ls idea but that he, A, had thought of hiding them behind the microwave. A was aged eight years and 3 months when he first met Ms Vivian. He seemed to her a thoughtful boy; he was quieter and less outwardly confident in his presentation than his older siblings but was able to answer my questions with clarity and careful thought. He used we a lot rather than I, and she wondered whether this was because of his being influenced to a degree by T. She did think, however, that A was reporting his own feelings, but was more conflicted about taking sides with one parent. He told her that when they went to Spain he knew they were going to live there. But when they got there he realised my actual life is here, where I was born. Unlike L, he had not liked his school in Spain, he had not made friends. He told the solicitor, Ms Chadha, that he had been bullied there, that the boys in his class were hitting him but he did not want to hit the boys back. L confirmed this. A told Ms Vivian that he wanted to stay where we live. Not going to another place where we dont like or feel it. We want to go where our home is. Home meant the place where we were born and living in. Discussion Ms Vivian did not get any sense that the children had been prevailed upon to remain here by their father. She thought that T had had a degree of influence on her brothers (in oral evidence she referred to T as a slightly bossy older sister). But this did not diminish the authenticity of the boys views in her mind. There seemed to be different accounts of the arrangements when they went to Spain in July 2012, but they felt that the decision had been taken by their mother without taking account of their wishes and feelings. They reported that they had not settled during their time in Spain and their mother had not helped them to do so. This had undoubtedly fed into their perception of Spain as not being where their home is. In her second report, she commented that their views remained consistent, both about England and about Spain: they may well be reporting a different experience to that their mother believes they had in Spain, but that does not invalidate what they have to say about their time in Spain and the sense they have made of that experience in comparison with their lives here in this country. It is very tempting to conclude from all this material that the children had not become integrated in a social and family environment during the five short months they were in Spain with their mother or (to use the term enracinement used by Professor Perez Vera in para 109 of her explanatory report on the Hague Convention when commenting on article 12) taken root there. But I have to accept that the question of their habitual residence was not approached in this way by any of the parties to the hearing before Cobb J. This is scarcely surprising, as this is the first case in which the question of principle has been squarely raised. There may well be other relevant material that they would wish to put before the court. In the interests of justice, they should all be given that opportunity. Policy It would indeed be a matter of concern if the swift return of children to their home countries could be frustrated by disputes about their habitual residence prompted by the childrens expressed wishes and feelings. Nor should children interviewed in Hague cases routinely be asked questions about their habitual residence. But in reality, as Lord Wilson explains, there are very few disputes about habitual residence. Most applications concern children who have been removed from the country where they have spent all or most of their lives by a parent who is returning to a country which she regards as home but they most definitely do not. Cases such as this, where children go to live with one parent in a country where they have never lived before and return after a few months to the country where they had always lived, are very rare. In cases concerning peripatetic families, who move from one country to another, the position may be unclear. If so, the perception of the children is at least as important as that of the adults in arriving at a correct conclusion as to the stability and degree of their integration. The relevant reality is that of the child, not the parents. This approach accords with our increasing recognition of children as people with a part to play in their own lives, rather than as passive recipients of their parents decisions. Conclusion The case will therefore be remitted to the High Court to decide whether any or all of the four children were habitually resident in Spain on 5 January 2013. If it turns out that any or all of the three boys were, it will also have to be decided whether to return them to Spain when their older sister, or any of their brothers, is not to return will place them in an intolerable situation. |
The issue in this case is whether Lloyds Banking Group (LBG) is entitled to redeem 3.3 billion of loan notes which would otherwise carry a relatively high rate of interest, namely over 10% per annum. The loan notes are contingent convertible securities (perhaps inevitably known as Cocos), and are formally described as enhanced capital notes, or the ECNs. The ECNs are potentially convertible into fully paid up shares in LBG, and they were issued in November 2009, at a time when LBG, like many other banks, was in dire need of recapitalisation in order to protect its capital position and to comply with regulatory requirements. Before turning to the terms on which the ECNs were issued, it is necessary to understand a little about the Regulations as at that time, and, in order to understand the issues on this appeal, it is necessary to set out some of those terms and then explain a few of the changes effected to the Regulations in 2013 and the way in which they were applied. The regulatory position when the ECNs were issued As at the time that the ECNs were issued, the capital requirements of financial institutions in the EU were governed by a 2006 Directive known as CRD I. This Directive was inevitably based on the current international banking accord, at that time the so called Basel II. The relevant regulatory authority in the United Kingdom at the time was the Financial Services Authority, the FSA. Under CRD I, the capital of financial institutions was arranged in tiers. The highest tier of capital was Core Tier 1, known as CT1; the next tier was divided into Upper Tier 2 Capital and Lower Tier 2 Capital. CT1 included, inter alia, paid up shares and retained earnings. Lower Tier 2 Capital included dated subordinated debt. The FSAs practice was to require a financial institution to maintain a minimum ratio of CT1 assets and in addition to pass certain stress tests, which involved subjecting the banks balance sheet to hypothetical challenging market situations. In November 2008, the FSA issued a Statement which described a Capital Framework which it intended to apply to all financial institutions. The November 2008 Statement explained that the FSA used as common benchmarks within this framework ratios of capital to risk weighted assets of total Tier 1 Capital of at least 8% and Core Tier 1 Capital, as defined by the FSA, of at least 4% after the stressed scenario. The November 2008 Statement also stated that the FSA will be addressing the longer term capital regime for deposit takers in a discussion paper in the first quarter of 2009, the expectation being that this document will form part of the wider review of the global regulatory environment, which the FSA along with the other regulatory authorities, will be participating in. From time to time, the FSA issued further Statements and Guidance. Thus, in May 2009, it issued a Statement indicating that it had [g]reatly increased the use of stress tests as an integral element of our ongoing supervisory approach. The May 2009 Statement also stated that the FSA expected UK banks to maintain Core Tier 1 Capital, as defined by the FSA, of at least 4% of Risk Weighted Assets after applying an FSA defined stress test. The Statement added that [t]his current framework will remain in place until the Basel accord, which is implemented through EU capital requirement directives, has been modified to reflect the lessons learned from recent events. The May 2009 Statement also explained that the stress tests look forward over five years but with greater detail over the first three and that the tests are used to identify if at any time in the next five years there is a danger that under the stress scenario the level of capital will fall below the 4% Core Tier 1 minimum. In September 2009, in response to transitional legislation issued by the EU to control the use by financial institutions of hybrid securities as capital, the FSA issued another Statement making it clear that the FSA will work to ensure the timing of the introduction of a new long term capital regime . The September 2009 Statement also stated that hybrid capital instruments must be capable of supporting Core Tier 1 by means of a conversion or write down mechanism at an appropriate trigger. Instruments with these characteristics could be seen as a form of contingent Core Tier 1 Capital. The issue of the ECNs Meanwhile, in March 2009, the FSA had stress tested LBG, and had found that it had a shortfall in its CT1 Capital, in the light of the 4% minimum requirement referred to in the November 2008 Statement. As a result, the FSA required LBG to demonstrate that it had raised at least 21 billion which could qualify as CT1 Capital. After considering alternative options, LBG decided to raise 13.5 billion by issuing new fully paid up shares through a rights issue, and 8.3 billion through the medium of the ECNs, to be issued in exchange for existing securities. These ECNs were intended to be Cocos which would satisfy what was said in the passage in the September 2009 Statement quoted at the end of para 7 above. This decision was duly implemented. The terms of the 8.3 billion ECNs were described in a so called Exchange Offer Memorandum. The exchange invited in that Memorandum was taken up, and the ECNs were issued and subscribed in a number of different series in December 2009. The ECNs were loan notes whose terms were contained in a Trust Deed, which included in Schedule 4 detailed Terms and Conditions (T&Cs). In very broad terms, the ECNs (i) carried interest at varying rates depending on the series, but averaging about 10.33% per annum, (ii) subject to points (iii) and (iv), were redeemable only at certain specified dates under clause 8(a) of the T&Cs, which, depending on the series, varied between 2019 and 2032, but (iii) could be redeemed early by LBG, albeit only on a so called Capital Disqualification Event under clauses 8(e) and 19 of the T&Cs, and (iv) were in the meantime potentially convertible into paid up shares in certain specified circumstances described in clause 7(a) of the T&Cs. Clause 7 of the T&Cs was concerned with Conversion of the ECNs. Clause 7(a) was headed Conversion upon Conversion Trigger, and clause 7(a)(i) provided that [i]f the Conversion Trigger occurs at any time, each ECN shall be converted into Ordinary Shares credited as fully paid. The Conversion Trigger was defined as occurring at any time when LBGs Consolidated [CT1] Ratio is less than 5 per cent. The 5% figure was 1% above the minimum 4% ratio required at the time by the FSA, as explained in the Statements cited in paras 5 and 6 above. The remainder of clause 7 was concerned with consequential machinery. Clause 8 of the T&Cs was headed Redemption and Purchase. Clause 8(a) provided for the ECNs to be redeemed on the relevant Maturity Date (which was a date which varied between 2019 and 2032 depending on the particular series of the ECN) [u]nless previously converted, redeemed or purchased and cancelled as provided in these Conditions. Clause 8(e) provided that [i]f a Capital Disqualification Event has occurred and is continuing, then [LBG] may redeem all, but not some only, of the ECNs at [a specified price]. Clause 19 of the T&Cs was headed Definitions. It provided that a Capital Disqualification Event is deemed to have occurred: (1) if at any time LBG is required under Regulatory Capital Requirements to have regulatory capital, the ECNs would no longer be eligible to qualify in whole or in part (save where such non qualification is only as a result of any applicable limitation on the amount of such capital) for inclusion in the Lower Tier 2 Capital of LBG on a consolidated basis; or (2) if as a result of any changes to the Regulatory Capital Requirements or any change in the interpretation or application thereof by the FSA, the ECNs shall cease to be taken into account in whole or in part (save where this is only as a result of any applicable limitation on the amount that may be so taken into account) for the purposes of any stress test applied by the FSA in respect of the Consolidated Core Tier 1 Ratio. Certain other definitions in clause 19 of the T&Cs are also of some relevance. Core Tier 1 Capital was defined as core tier one capital as defined by the FSA as in effect and applied (as supplemented by any published statement or guidance given by the FSA) as at 1 May 2009. Tier 1 Capital and Lower Tier 2 Capital were each defined as having the meaning given to it by the FSA from time to time. Regulatory Capital Requirements was defined as meaning any applicable requirement specified by the FSA in relation to minimum margin of solvency or minimum capital resources or capital. The FSA was defined elsewhere in the Trust Deed as including any governmental authority in the United Kingdom having primary supervisory authority with respect to LBG. The effect of this arrangement was that (a) the ECNs counted as Lower Tier 2 Capital so long as they were neither redeemed under clause 8 nor converted under clause 7, and (b) if the ECNs were converted under clause 7 they would count towards the CT1 Capital. That is because, as explained in para 4 above, CT1 Capital included paid up shares and Lower Tier 2 Capital included dated subordinated debt. If conversion was avoided, the current shareholders did not have their shareholdings diluted, but the ECN holders received a good rate of interest. And the conversion under clause 7 would only occur when LBGs CT1 Capital fell below 5% of risk weighted assets ie when it was getting near the minimum 4% set by the FSA. Subsequent relevant regulatory developments With effect from 1 April 2013, the FSA was replaced as the body responsible for the regulation and supervision of UK financial institutions by the Prudential Regulation Authority, the PRA (which is wholly owned by the Bank of England). So far as EU regulatory requirements are concerned, CRD I was succeeded in 2010 and 2011 respectively by CRD II and CRD III, but neither of them made any changes relevant for present purposes. However, CRD IV, which was published in June 2013, and followed the so called Basel III, made substantial changes. First, it replaced CT1 Capital with Common Equity Tier 1 capital (CET1 Capital), which is a significantly more restrictive category than was CT1 Capital. Secondly, it set the minimum core capital ratio at 4% CET1 from 1 January 2014, increasing to 4.5% CET1 from 1 January 2015. Thirdly, it introduced a new concept, Additional Tier 1 Capital, (AT1 Capital), which included contingently convertible loan stock, such as the ECNs. It provided that such stock would only qualify as AT1 Capital if the trigger for conversion was set at a CET1 ratio of at least 5.125%. In March 2013, the Financial Policy Committee of the Bank of England, the FPC, issued a news release recommending that the PRA should assess the current capital adequacy of financial institutions in accordance with the CRD IV and Basel III criteria, albeit subject to adjustments. In particular, it said that by the end of 2013, banks should hold capital falling within CET1 (as adjusted) equivalent to at least 7% of their risk weighted assets (a 7% adjusted CET1 ratio standard), which was, according to the evidence, equivalent to requiring LBG to have an unadjusted CET1 Capital ratio of 10%. In June 2013, the PRA announced that LBG needed to raise a total of 8.6 billion further capital in order to meet the new 7% adjusted CET1 ratio standard. In August 2013, the PRA published a consultation paper, which dealt with the eligibility of Cocos and other convertible instruments to count as core capital. It stated that if financial institutions issue AT1 instruments, the PRA expects them to set AT1 triggers at a level higher than 5.125% CET1. By contrast, and crucially for present purposes, the evidence in this case establishes that the effect of the terms of the ECNs is that conversion of the ECNs into fully paid up LBG shares would only be triggered if LBGs CET1 ratio fell to 1%, which is, of course, far below the minimum required by the PRA under its 2013 Regulatory regime. In December 2013, the PRA published a Supervisory Statement effectively confirming as requirements what had been trailed by the FPC and the PRA earlier that year. In anticipation of the requirements in the December 2013 Supervisory Statement, LBG had substantially strengthened its capital position by the end of 2013. This involved a number of steps, including offering to exchange up to a maximum of 5 billion of the ECNs for new Cocos which would qualify as AT1 Capital, on the basis that they would convert to paid up shares if LBGs adjusted CET1 Capital ratio fell to 7% or lower. As explained in the supporting memorandum issued by LBG, the 7% conversion trigger was selected because of statements by the PRA that a conversion trigger of 5.125% may not convert in time to prevent the failure of a firm and that it expects major UK firms to meet a 7% CET1 ratio determined in accordance with CRD IV. 5 billion of the ECNs were duly exchanged for these new Cocos in March and April 2014. In April 2014, the Bank of England announced that, in relation to stress testing, the previous CT1 4% capital ratio would be replaced by a hurdle rate of a ratio of 4.5% of CET1 to risk weighted assets, although a stress test outcome was not dependent on a simple pass/fail exercise. In December 2014, the PRA reported that LBGs CET1 ratio at the end of 2013 was 10.1% and that its minimum stressed ratio in the stress test was 5%. The ECNs were not taken into account in either assessment. That was inevitable, as Gloster LJ pointed out in her judgment in the Court of Appeal, because LBG remained above the minimum capital threshold in that stress test in that its CET1 ratio did not fall below 4.5% by reason of the strength of its capital position without any need to take into account the ECNs, the conversion trigger point for which was well below the new CET1 capital pass ratio. These proceedings On 16 December 2014, LBG announced that the ECNs had not been taken into account in the December 2014 stress test and accordingly a Capital Disqualification Event (hereafter a CDE) had occurred under para (2) of the definition in clause 19 of the T&Cs, and accordingly LBG was entitled to redeem the outstanding 3.3 billion ECNs in accordance with clause 8(e) of the T&Cs. The consent of the PRA to the redemption was required and was duly obtained. However, BNY Mellon Corporate Trustee Services Ltd (the Trustee), as trustee for the holders of the ECNs under the Trust Deed mentioned in para 10 above, challenged LBGs claim to be entitled to redeem the outstanding ECNs. Hence these proceedings, in which LBG contends that a CDE has occurred, so that it can redeem the outstanding ECNs, and the Trustee denies that a CDE has occurred. LBG argues that a CDE has occurred because para (2) of the definition of a CDE in clause 19 of the T&Cs (the Definition) is satisfied. LBGs case is that as a result of [a change] to the Regulatory Capital Requirements or any change in the interpretation or application thereof by the FSA, namely the implementation of CRD IV through the 2013 Supervisory Statement, the ECNs [have ceased] to be taken into account for the purposes of any stress test applied by the [PRA] in respect of the Consolidated Core Tier 1 Ratio, as is evidenced by the stress tests carried out in 2014 in respect of LBGs financial position as at December 2013. The Trustee raises two arguments why this contention is wrong. First the Trustee contends that the December 2014 stress test was not in respect of the Consolidated Core Tier 1 Ratio, as specified in para (2) of the Definition; rather, it was a stress test in respect of a CET1 ratio. Secondly and alternatively, the Trustee contends that the fact that the ECNs were not taken into account in the December 2014 stress test when assessing the Tier 1 Ratio is not enough to trigger a CDE; in order for para (2) of the Definition to apply, the ECNs must be disallowed in principle from being taken into account for the purposes of the Tier 1 Ratio before para (2) of the Definition can be invoked by LBG. At first instance, Sir Terence Etherton C, in a clear and careful judgment, rejected the Trustees first argument, but accepted the Trustees second argument [2015] EWHC 1560 (Ch). Accordingly, he found in favour of the Trustee and held that the ECNs were not redeemable under clause 8(e) of the T&Cs. For reasons given in a very full judgment in the Court of Appeal, Gloster LJ agreed with Sir Terence on the first argument but disagreed with him on the second argument; Briggs LJ agreed with Gloster LJ for reasons given in a short judgment, and Sales LJ agreed with Gloster LJ. Accordingly, LBG won in the Court of Appeal, who concluded that the ECNs were redeemable under clause 8(e) of the T&Cs [2015] EWCA Civ 1257. The Trustee now appeals to the Supreme Court. The proper approach to interpretation Much of the argument before us was given over to the question whether, when construing the Trust Deed, and in particular the T&Cs, the Court of Appeal had been entitled to take into account statements in the substantial Exchange Offer Memorandum and in the lengthy letter from the chairman of LBG which accompanied it, and indeed the details of the statements and other documents issued by the FSA in 2008 and 2009. Over the past 20 years or so, the House of Lords and Supreme Court have given considerable (some may think too much) general guidance as to the proper approach to interpreting contracts and indeed other commercial documents, such as the Trust Deed in this case. What, if any, weight is to be given to what was said in other documents, which were available at the time when the contract concerned was made or when the Trust Deed in question took effect, must be highly dependent on the facts of the particular case. However, when construing a contract or Trust Deed which governs the terms upon which a negotiable instrument is held, as in the present case, very considerable circumspection is appropriate before the contents of such other documents are taken into account. In this connection, it is worth repeating the remarks of Lord Collins (with whom Lord Hope and Lord Mance agreed) in In re Sigma Finance Corp (in administrative receivership) [2010] 1 All ER 571, paras 36 and 37. Having pointed out that the trust deed in that case concerned debt securities issued to a variety of creditors, who hold different instruments, issued at different times, and in different circumstances, Lord Collins, at para 37, said [c]onsequently this is not the type of case where the background or matrix of fact is or ought to be relevant, except in the most generalised way. More generally, he said: Where a security document secures a number of creditors who have advanced funds over a long period it would be quite wrong to take account of circumstances which are not known to all of them. In this type of case it is the wording of the instrument which is paramount. The instrument must be interpreted as a whole in the light of the commercial intention which may be inferred from the face of the instrument and from the nature of the debtors business. As Mr Dicker QC points out on behalf of the Trustee, the same point was made by Lord Macmillan when giving the decision of the Privy Council in Egyptian Salt and Soda Co Ltd v Port Said Salt Association Ltd [1931] AC 677, 682. Disapproving the trial judges reliance on surrounding circumstances at the time when the memorandum was framed, Lord Macmillan said that the purpose of the memorandum is to enable shareholders, creditors and those who deal with the company to know what is its permitted range of enterprise, and for this information they are entitled to rely on the constituent documents of the company and that the intention of the framers of the memorandum must be gathered from the language in which they have chosen to express it. (See also the observations of Lord Hoffmann to much the same effect in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988, para 36, Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715, para 74, and Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, para 40). In the present case, the Trust Deed, and in particular those parts of clauses 7, 8 and 19 of the T&Cs which fall to be construed, cannot be understood unless one has some appreciation of the regulatory policy of the FSA at and before the time that the ECNs were issued. That is self evident from the provisions of clause 19 which are set out in paras 13 and 14 above. Accordingly, I consider that at least the general thrust and effect of the FSA regulatory material published in 2008 and 2009 can be taken into account when interpreting the T&Cs. That would also accord with good sense: while the individual purchasers of the ECNs may not by any means all have been sophisticated investors, it is appropriate to assume that most of them would have had advice from reasonably sophisticated and informed advisers before they purchased such moderately complex financial products. The Exchange Offer Memorandum and the letter from the LBG chairman present more difficulties, and the answer may depend on whether such documents would have been known about or in the minds of subsequent purchasers of the ECNs, a point on which there was no evidence, so far as I am aware. As it is, I do not consider that the terms of the Exchange Offer Memorandum or the letter from the LBG chairman take matters any further in this case. In my view, once one has in mind the general thrust and effect of the FSA regulatory approach in 2009, as summarised in paras 4 to 7 above, coupled with the commercial purpose of the ECNs as summarised in para 15 above, it is simply unhelpful on the facts of this case to cast ones eyes further than the T&Cs when resolving the issues on this appeal. I now turn to those two issues. The first issue: did the possibility of a CDE fall away following CRD IV? I have no hesitation in agreeing with Sir Terence Etherton and the Court of Appeal in their conclusion that the reference to the Consolidated Core Tier 1 in para (2) of the Definition should, in the events which have happened, be treated as a reference to its then regulatory equivalent ie in the current context the Common Equity Tier 1 Capital. Etherton C and the Court of Appeal considered that this conclusion involves a departure from the strictly literal meaning of the definition of Core Tier 1 Capital in clause 19, but they concluded that such a departure was justified because it was clear that something has gone wrong with the language and [it was] clear what a reasonable person would have understood the parties to have meant, applying the test laid down by Lord Hoffmann in Chartbrook, para 25. The reasons given by Gloster LJ in para 85 of her judgment for departing from what she considered was the literal meaning of the closing words of para (2) of the Definition were based on the arguments of Mr Miles QC. They were, in summary, that (i) it was notorious at the time of the issue of the ECNs that the regulatory requirements as to financial institutions capital would be strengthened and changed, (ii) it was envisaged in the T&Cs, in particular in clause 19, that expressions such as Regulatory Capital Requirements and Core Tier 1 Capital could change their meaning; (iii) indeed, it was inherent in the terms of the Definition that this was so; (iv) it was obvious that changes of substance might lead to changes of nomenclature; and (v) one of the essential features of the ECNs was that, if necessary, they could be converted into LBG core capital, whatever expression was used to define it. Gloster LJ concluded that, given these points, coupled with the existence of the ECN maturity dates, it made no commercial sense to limit the reference to Core Tier 1 Capital in para (2) of the Definition to CT1 Capital, as opposed to holding that it could, in the events which had happened (as summarised in paras 16 to 20 above), apply to CET1 Capital. She also considered that the error would have been obvious to a reasonable addressee of the Exchange Offer Memorandum. She referred in this connection to another observation of Lord Collins in Sigma, where, in para 35, he said that in complex documents such as the Exchange Offer Memorandum, there are bound to be ambiguities, infelicities and inconsistencies and had gone on to warn against an over literal interpretation of one provision without regard to the whole, which may distort or frustrate the commercial purpose. Subject to one point, I have no hesitation in agreeing with the analysis as summarised in paras 35 to 37 above. My only doubt is as to whether this conclusion really does involve a departure from the literal meaning of the closing words of para (2) of the Definition, not least in the light of the definitions of Core Tier 1 Capital and Tier 1 Capital in clause 19. It may involve a departure from the literal meaning, but, if it does, it is on the basis of a rather pedantic approach to interpretation. I do not, however, propose to discuss the point further: it is completely arid. I would add, however, that if the Trustees argument was correct, it seems to me that LBG would have had a powerful basis for saying that this appeal should be dismissed rather than allowed. That is because, as a matter of language at least, LBG could say that para (2) of the Definition applied on the grounds that the ECNs had, on any view cease[d] to be taken into account for the purposes of any stress test applied by the FSA in respect of the Consolidated Core Tier 1 Ratio, because that ratio was no longer being used by the FSA. The second issue: have the ECNs ceased to be taken into account? The critical question raised by the second issue is whether, as LBG contends, in the light of the regulatory changes and events as described in paras 17 24 above, the ECNs [have] cease[d] to be taken into account in whole or in part for the purposes of any stress test applied by the [PRA] in respect of [what I will call the Tier 1] ratio. To put the point slightly differently, the question is whether the implementation of CRD IV by the PRA through the new Capital Requirements summarised in paras 17 to 21 above, and applied as described in paras 23 and 24 above, entitle LBG to say that a CDE has occurred because para (2) of the Definition has been satisfied. The nature of the dispute on this second issue was very well expressed by Briggs LJ in para 114 in the Court of Appeal, in these terms: In order to resist early redemption of the ECNs is it sufficient that they continue to be taken into account for some purpose or purposes in the stress test now applied by the [PRA], which in my view they do, or must they play a part in enabling LBG to pass that test, which they clearly no longer do, because of the change in the Regulatory Capital Requirements which had the effect of elevating the pass ratio to a level above the Conversion Trigger. I also agree with what Briggs LJ said in the next paragraph of his judgment, namely that this is a difficult question to resolve, and I find it unsurprising that Sir Terence and the Court of Appeal took different views, and indeed that there is a difference of view in this court. LBG argues that the essential point is that the Regulatory Capital Requirements changed in 2013 with the consequence that the ECNs could no longer be taken into account in assisting LBG in passing the stress test, because the conversion trigger under the terms of the ECNs was at a level lower than the minimum required by the PRA, as explained in para 20 above, and, in any event, the PRA did not in any way rely on the ECNs when conducting its stress tests on LBG in 2014. By contrast, the Trustees argument is that, notwithstanding the regulatory changes in 2013, the ECNs can continue to be taken into account as part of the Tier 1 Capital by automatically converting into paid up shares in LBG, albeit that this would only occur when the CET1 Capital ratio fell to 1%. I prefer LBGs argument, as advanced by Mr Howard QC, for the following reasons. First, it appears to me that the Trustees argument does not give full weight to the phrase any stress test in respect of the [Tier 1] Ratio. I accept that, under the new Regulations introduced in 2013, the ECNs could be taken into account in a stress test, and I accept that there could be circumstances in which the ECNs could convert into ordinary shares so as to become part of Tier 1 capital. However, if and when a stress test is applied to see if LBG satisfies the Tier 1 Ratio, it appears to me that the vital point is that, under the Regulations introduced in 2013, the ECNs cannot be taken into account so as to do the very job for which their convertibility was plainly designed, namely to enable them to be converted before the regulatory minimum Tier 1 Ratio is reached. That, to my mind, is what the expression taken into account for the purposes of any stress test in respect of the [Tier 1] Ratio is concerned with. Secondly, the question which has to be asked under para (2) of the Definition is whether the ECNs have cease[d] to be taken into account for the specified purpose. This is in marked contrast with the wording of para (1) of the Definition, where the question is whether the ECNs are no longer eligible to qualify for the purpose specified in that paragraph. It seems to me that eligibility to qualify depends on what the Regulations say, whereas being taken into account depends more on what happens in practice no doubt pursuant to the Regulations. That view is reinforced by the fact that para (1) is based simply on the requirements of Regulatory Capital Requirements, whereas para (2) is also based on any changes to the Regulatory Capital Requirements or any change in the interpretation or application thereof. It seems to me that the way on which the Trustee puts its case, as summarised in para 44 above, is ultimately concerned with the eligibility of the ECNs for the purpose described in para (2) of the Definition, whereas LBG can fairly rely on the fact that the ECNs were not, as a matter of fact (and it does not signify whether it was due to the terms of the 2013 Regulations, or the PRAs application of those Regulations) invoked for the purpose described in para (2) see para 24 above. Thirdly, if the Trustees interpretation is correct, it is very difficult to envisage circumstances in which it could have been thought that para (2) of the Definition could ever be invoked. The notion that fully paid up share capital could ever be excluded from the definition of Tier 1 Capital (whether CT1, CET1, adjusted CET1 or any other possible definition) seems fanciful. Accordingly, it is hard to see how the parties could have envisaged that a Coco, ie a loan note which automatically converted into paid up share capital, could be excluded, in the sense that the Trustees case requires, from being taken into account for the purposes of any stress test in respect of the [Tier 1] Ratio. While some of them are not without force, the arguments which have been raised against LBGs case do not persuade me the other way. There is, I accept, some force in the point that, if LBGs reading of para (2) of the Definition is correct, it must have been foreseeable when the ECNs were issued that a CDE would be likely to occur in the not too distant future. That is because it was well known that the capital requirements of financial institutions were to be strengthened (see paras 5 to 7 above), and so, runs the argument, it must have been appreciated that the minimum permitted Tier 1 Ratio was likely to go above the equivalent of a CT1 ratio of 5%. There are, however, two answers to this point. First, it was by no means certain that the increased capital requirements would involve increasing the minimum Tier 1 Ratio above the equivalent of a CT1 ratio of 5%. Apart from anything else, the new requirements could have retained or only slightly increased this minimum, while introducing a new intermediate tier between what was CT1 and Upper Tier 2: that that is not a fanciful possibility is demonstrated by the actual introduction of the new concept of AT1 Capital (see para 17 above). Quite apart from this, the notion that it must have been perceived as likely that the ECNs would be redeemable well before their respective maturity dates is not a particularly surprising proposition, especially as clause 8(e) operated not as an automatic redemption, but merely gave rise to an option in LBG to redeem. The expression Capital Disqualification Event does not strike me as an inapt description of what has happened on LBGs case. Thus, the effect of the change in the Regulations in 2013 and the application of those changed Regulations in 2014 can fairly be said to have disqualified the ECNs from having the potentially saving effect on the Tier 1 Ratio which they were intended to have, and could properly have had under the Regulations as they stood in 2009. The argument that the 2013 Regulations have not made any difference because the ECNs might not have ensured that LBG had a sufficiently high Tier 1 Ratio even under the 2009 Regulations appears to me to involve a mischaracterisation of LBGs case. That case is not that the convertibility of the ECNs could be guaranteed to save the day under the 2009 Regulations. It is that their convertibility could be invoked to increase the Tier 1 Ratio before that ratio had fallen below the minimum under the 2009 Regulations of a CT1 Capital ratio of 4%. Thus, in 2009, the convertibility of the ECNs had the ability to enable LBG to keep above the minimum Tier 1 Ratio, whereas that was no longer possible under the 2013 Regulations. The force of the point is underlined by the PRAs requirement in 2013 that the Tier 1 Ratio conversion trigger for any qualifying Cocos should be at least 5.125% (see paras 17 and 19 above). I am also unimpressed with the point that, on LBGs argument, the ECNs may be redeemed under clause 8(e) because they have cease[d] to be taken into account on one stress test (as in 2014), notwithstanding that they might have been taken into account on a subsequent stress test. Such a possibility is inherent in para (2) of the Definition, whatever meaning one gives it. Thus, if para (2) is simply concerned with the ECNs eligibility to convert into Tier 1 Capital, as the Trustee contends, and the Regulations were changed to provide that they could no longer do so (highly improbable to say the least, as already pointed out), it could always be said that the Regulations might change back. It is said that LBGs case leads to arbitrary results, as it may depend on the practices and assumptions of the PRA when applying a particular stress test or set of stress tests. There are two answers to that. The first is that, on the facts of this case, that is not a fair charge: given that the minimum Tier 1 Ratio has changed so that the ECNs cannot convert to Tier 1 capital until that capital has fallen below, indeed substantially below, the permissible minimum as a result of the changes effected by the 2013 Regulations, para (2) of the Definition applies. Quite apart from that, given the reference to the application of the Regulations by the FSA for the purposes of any stress test applied by the FSA, it is inherent in para (2) that the PRAs practices could determine whether the paragraph is satisfied. Finally, there is also some force in the argument that the wording of para (2) of the Definition is not wholly clear and that, in the event of doubt, it should be construed against LBG, as the person responsible for drafting the Trust Deed, the proferens. The closing words in respect of the Tier 1 Ratio are inherently imprecise: identifying the precise ambit of the expression in respect of frequently leads to arguments. However, the contra proferentem rule is very much a last refuge, almost an admission of defeat, when it comes to construing a document, and, in this case, for the reasons which I have attempted to give in paras 45 52 above, I do not think that it is necessary, or indeed appropriate, to resort to it in this case. Conclusion Accordingly, I would dismiss the Trustees appeal, on the basis that I consider that a Capital Disqualification Event has arisen under para (2) of the Definition of that expression in clause 19 of the T&Cs. LORD SUMPTION: (dissenting) (with whom Lord Clarke agrees) This case is of considerable financial importance to the parties but raises no questions of wider legal significance. There is therefore no point in dissenting at any length. But since I would have held that that these securities are not redeemable, I should, however briefly, explain why. The notes are contingent share capital. Their immediate purpose as far as Lloyds Banking Group was concerned was to enable it to satisfy the FSA at the time of their issue that it would have a ratio of Consolidated Core Tier 1 Capital to risk weighted assets of at least 4% in a hypothetical stressed scenario. Consolidated Core Tier 1 Capital included ordinary shares but not loan notes. The issue of these notes did not therefore actually strengthen the Banks Tier 1 Capital. But because they would automatically convert to ordinary shares if in the hypothetical stress scenario the ratio fell to within one percentage point above the then minimum, they assisted the Bank to satisfy its regulators. The effect of the subsequent regulatory changes was that the definition of top tier capital was tightened up and the required ratio of adjusted top tier capital (Common Equity Tier 1) to risk weighted assets was increased to 7%. This meant that the notes were no longer as useful to the Bank, because if its affairs deteriorated it would fail a stress test long before the trigger for conversion was reached. From the investors point of view, however, that did not matter, provided that the Bank remained solvent. The attraction of the notes for them lay in their long maturity date and high coupon, both features that were critical to their market value. The notes are redeemable if as a result of regulatory changes they cease to be taken into account for the purposes of any stress test in respect of the Consolidated Core Tier 1 Ratio (for which, now read the Common Equity Tier 1 Capital ratio). The question is whether being taken into account means (i) that in the hypothetical stress scenario they would convert and play a part in enabling the Bank to pass the stress test; or (ii) that they must be eligible, in the sense that notwithstanding their status as Lower Tier 2 Capital the regulator would treat them as top tier capital in the hypothetical event of the Banks affairs deteriorating to the point where the conversion trigger was attained, so that the stress scenario can be modelled on that basis. The difference is that (i) depends on how the Bank fared in an actual stress test, whereas (ii) turns on the regulators rules and practices for conducting such tests. Sir Terence Etherton concluded that (ii) was correct, because the definition is not looking at the happenstance of the particular strength of LBGs capital and the particular composition of its capital at any one particular moment of time in the context of a particular stress test imposed by the regulator at that time, but at the position as a matter of principle (para 46). I think that he was right. In the first place, it was always implicit in the terms that the notes might be irrelevant to the Banks ability to pass a stress test. Whether or not there were changes to the regulatory capital requirements, the Banks capital position might be strong enough to meet the minimum top tier capital ratio even if the notes did not convert. Or it might be so weak that the notes would not save the situation even if they did convert. If the notes would not necessarily play a part in enabling the Bank to pass a stress test in the situation obtaining when they were issued, I cannot see why it should be supposed that the parties intended to allow early redemption if the same situation obtained as a result of a change in regulatory capital requirements. The situation introduced by such a change is no different in principle from the situation that existed before. The change might make it more or less likely that the notes would be critical to the outcome of a stress test, but there is no change in the way that the scheme works. Secondly, a test dependent on how the notes affected the outcome of an actual stress test would be wholly uncertain. Stress testing is not a fixed or ascertainable concept. Its outcome will depend not just on the rules and practises of the regulator, but on what the hypothetical conditions assumed in a particular stress test are, on where the regulator pitches the stress test hurdle (not necessarily the same as the minimum regulatory top tier capital ratio), and what is the value and composition of the Banks assets at the time of the test. Moreover the hypothetical stress scenario will test the strength of the Banks capital over a substantial period of time, during which it may fail the test throughout or for a day or two. The significance of that will be a question of regulatory judgment. It is not just a simple question of pass or fail. Of course, the regulatory changes which actually occurred mean that the notes will in practice make little difference to the outcome on any reasonably foreseeable view about these matters. But although it was anticipated that there would be a tightening of the capital adequacy requirements, the details were not known at the time that the securities were issued, and the terms cannot be construed in the light of the subsequent changes. Thirdly, nothing in the definition of a Capital Disqualification Event supports the suggestion that it was intended to depend on the part played by the notes in enabling the Bank to pass an actual stress. The clauses title is concerned with disqualification, ie with a state of affairs in which the notes are no longer eligible in principle to perform their function as contingent capital. As regards Lower Tier 2 Capital, dealt with in sub clause (1), this is clear from the reference to capital being eligible to qualify. The only reason why the word eligible is not used in sub clause (2) of the definition, dealing with top tier capital, is that whereas the status of Lower Tier 2 Capital depends simply on whether it satisfies the relevant regulations, the status of top tier capital depends on the practices and judgments of regulators as well, a context in which it was appropriate to speak of the securities being taken into account, rather than being eligible. These were long dated securities, which cannot have been intended to be redeemed early except in some extreme event undermining their intended function and requiring their replacement with some other form of capital. The function of the notes was to be available to boost the Banks top tier capital in the hypothetical event that the ratio of top tier capital to risk weighted assets fell below the conversion trigger. They have always served that function and still do. Whether that function remains as important to the Bank as it was in 2009 is irrelevant. |
The Refugee Convention was drafted for a world scarred by long years of war crimes and other like atrocities. There remain, alas, all too many countries where such crimes continue. Sometimes those committing them flee abroad and claim asylum. It is not intended that the Convention will help them. However clearly in need of protection from persecution an asylum seeker may be, he is not to be recognised as a refugee where there are serious reasons for considering that (a) he has committed a crime against peace, a war crime, or a crime against humanity, as defined in the international instruments drawn up to make provision in respect of such crimes. So states article 1F(a) of the Convention (and, for good measure, article 12(2)(a) of the Qualification Directive (2004/83/EC) this being implemented into domestic law by Regulations 2 and 7(1) of the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525)). It is the Courts central task on the present appeal to determine the true interpretation and application of this disqualifying provision. Who are to be regarded as having committed such a crime (war criminals as I shall generally refer to them) within the meaning of article 1F(a)? More particularly, assuming that there are those within an organisation who clearly are committing war crimes, what more than membership of such an organisation must be established before an individual is himself personally to be regarded as a war criminal? It is common ground between the parties (i) that there can only be one true interpretation of article 1F(a), an autonomous meaning to be found in international rather than domestic law; (ii) that the international instruments referred to in the article are those existing when disqualification is being considered, not merely those extant at the date of the Convention; (iii) that because of the serious consequences of exclusion for the person concerned the article must be interpreted restrictively and used cautiously; and (iv) that more than mere membership of an organisation is necessary to bring an individual within the articles disqualifying provisions. The question is, I repeat, what more? As need hardly be stated, only if the decision maker in respect of a particular application for asylum correctly identifies and answers this question will he be in a position to decide, in all but the clearest cases, whether there are serious reasons for considering the asylum seeker to be disqualified as a war criminal under article 1F(a). The particular context within which the question arises on the present appeal can be comparatively briefly stated. A substantially fuller description of the facts can be found in the judgment below. The respondent is a 28 year old Sri Lankan Tamil. In 1992, at the age of 10, he became a member of the Liberation Tigers of Tamil Eelam (LTTE), the following year joining the LTTEs Intelligence Division. At 16 he became team leader of a nine man combat unit, at 17 the leader of a 45 man platoon, on each occasion engaging in military operations against the Sri Lankan army, and on each being wounded. At 18 he was appointed to lead a mobile unit responsible for transporting military equipment and other members of the Intelligence Division through jungles to a point where armed members of the Division could be sent in plain clothes to Colombo. He continued to do this for some three years from September 2000 until early 2004 except for some two and a half months (from late April to early July 2002) when he was appointed one of the chief security guards to Pottu Amman, the Intelligence Divisions leader, whom he accompanied as a trusted aide on visits to the LTTE District Leader, Colonel Karuna, and other prominent LTTE members. From early 2004 to September 2006 he served as second in command of the combat unit of the Intelligence Division. In October 2006 he was sent incognito (in plain clothes and under an assumed name) to Colombo to await further instructions. In December 2006 he learned that his presence in Colombo had been discovered and arrangements were made for him to leave the country. On 7 February 2007 he arrived in the UK and two days later applied for asylum. The respondents application (and a subsidiary application for humanitarian protection based on the fear of mistreatment if returned) was refused on 14 September 2007 solely by reference to article 1F(a). The core of the appellant Secretary of States reasoning appears in paragraphs 34 and 35 of the decision letter: 34 . [I]t is considered that you continued [during the six year period from the respondents 18th birthday until he left the intelligence wing of the LTTE] to operate within the LTTE and even gained promotions. This shows that you were a voluntary member of the LTTE. In this regard the case of Gurung [2002] UKIAT 04870 (starred) has been considered in which it was determined that voluntary membership of an extremist group could be presumed to amount to personal and knowing participation, or at least acquiescence, amounting to complicity in the crimes in question. 35. Accordingly, it is concluded that your own evidence shows voluntary membership and command responsibility within an organisation that has been responsible for widespread and systemic war crimes and crimes against humanity. From the evidence you have provided it is considered that there are serious reasons for considering that you were aware of and fully understood the methods employed by the LTTE. By virtue of section 83 of the Nationality, Immigration and Asylum Act 2002, the appellants decision was unappealable: the respondent had been granted only six months leave to enter. The respondent therefore sought judicial review. Leave was eventually granted and an order made for the substantive challenge to be heard by the Court of Appeal. On 30 April 2009, following a single days hearing on 25 February, the Court of Appeal quashed the appellants decision: [2009] EWCA Civ 364; [2010] 2 WLR 17. Toulson LJ gave the sole reasoned judgment with which Waller LJ, Vice President of the Court of Appeal Civil Division, and Scott Baker LJ simply agreed. In his lengthy and (right or wrong) impressive judgment, Toulson LJ disapproved certain aspects of the guidance given in the starred tribunal case of Gurung (on which the Secretary of State had relied), criticized parts of the UNHCRs approach, and reached the following main conclusions: Para 119: . [I]n order for there to be joint enterprise liability: (1) there has to have been a common design which amounted to or involved the commission of a crime provided for in the statute; (2) the defendant must have participated in the furtherance of the joint criminal purpose in a way that made a significant contribution to the crimes commission; and (3) that participation must have been with the intention of furthering the perpetration of one of the crimes provided for in the statute. Para 123: . I conclude that the Secretary of State failed to address the critical questions. Given that it was the design of some members of the LTTE to carry out international crimes in pursuit of the organisations political ends, [the Secretary of State] acted on a wrongful presumption in para 34 of the decision letter that the claimant, as a member of the LTTE, was therefore guilty of personal and knowing participation in such crimes, instead of considering whether there was evidence affording serious reason for considering that he was party to that design, that he had participated in a way that made a significant contribution to the commission of such crimes and that he had done so with the intention of furthering the perpetration of such crimes. The fact that he was a bodyguard of the head of the intelligence wing . shows that he was trusted to perform that role, but not that he made a significant contribution to the commission of international crimes or that he acted as that persons bodyguard with the intention of furthering the perpetration of international crimes. Reference was made by the Secretary of State . to his command responsibilities in a combat unit, but there was no evidence of international crimes committed by the men under his command for which he might incur liability under article 28. His own engagement in non criminal military activity was not of itself a reason for suspecting him of being guilty of international crimes. That reference to article 28 is to the Rome Statute of the International Criminal Court (the ICC Statute) which Toulson LJ (at para 115) had said, correctly in my view, should now be the starting point for considering whether an applicant is disqualified from asylum by virtue of article 1F(a) and upon which Toulson LJ had already drawn in stating his view (at para 119, set out above) of the constituents of joint enterprise liability. It is convenient to go at once to the ICC Statute, ratified as it now is by more than a hundred States and standing as now surely it does as the most comprehensive and authoritative statement of international thinking on the principles that govern liability for the most serious international crimes (which alone could justify the denial of asylum to those otherwise in need of it). Although (by article 5) the ICC Statute confers on the Court (established by article 1) jurisdiction also with respect to the crime of genocide and (once provision is adopted to define it) the crime of aggression, it is crimes against humanity and war crimes to which article 1F(a) is directed. Crimes against humanity are defined in article 7 which lists a series of criminal acts and states them to be crimes against humanity when committed as part of a widespread or systematic attack directed against any civilian population, with knowledge of the attack. Article 8 defines war crimes by reference to an extensive list of wrongful acts and confers jurisdiction on the Court in respect of such crimes in particular when committed as part of a plan or policy or as part of a large scale commission of such crimes. The requirement that the listed criminal acts are widespread (the chapeau requirement as it has been called) needs no further consideration here nor, indeed, is it necessary to consider the detailed criminal acts listed. On the evidence before her the Secretary of State was amply entitled to conclude that the LTTE in general, and the Intelligence Division in particular, were guilty of widespread such criminal acts and atrocities, the most obvious perhaps being suicide bombings, attacks upon civilians, assassinations, kidnappings and the forcible recruitment of children. I can therefore pass at once to articles 25 and 30 of the ICC Statute, those most central to the issue now before the Court. Article 25 (headed Individual criminal responsibility) includes within its provisions: 3. In accordance with this Statute, a person shall be criminally responsible and liable for punishment for a crime within the jurisdiction of the Court if that person: (a) Commits such a crime, whether as an individual, jointly with another or through another person, regardless of whether that other person is criminally responsible; (b) Orders, solicits or induces the commission of such a crime which in fact occurs or is attempted; (c) For the purpose of facilitating the commission of such a crime, aids, abets or otherwise assists in its commission or its attempted commission, including providing the means for its commission; (d) In any other way contributes to the commission or attempted commission of such a crime by a group of persons acting with a common purpose. Such contribution shall be intentional and shall either: (i) Be made with the aim of furthering the criminal activity or criminal purpose of the group, where such activity or purpose involves the commission of a crime within the jurisdiction of the Court; or (ii) Be made in the knowledge of the intention of the group to commit the crime; . Article 30 (headed Mental element) provides: 1. Unless otherwise provided, a person shall be criminally responsible and liable for punishment for a crime within the jurisdiction of the Court only if the material elements are committed with intent and knowledge. 2. For the purposes of this article, a person has intent where: (a) In relation to conduct, that person means to engage in the conduct; (b) In relation to a consequence, that person means to cause that consequence or is aware that it will occur in the ordinary course of events. 3. For the purposes of this article, knowledge means awareness that a circumstance exists or a consequence will occur in the ordinary course of events. Know and knowingly shall be construed accordingly. I should also refer briefly to article 28 under the heading Responsibility of commanders and other superiors. Essentially this provides that military commanders and other superiors shall be criminally responsible for crimes committed by forces under their effective command and control, or subordinates under their effective authority and control, as a result of their failure to exercise proper control over such forces or subordinates, where they knew or should have known that such crimes were being or were about to be committed and where they failed either to take all necessary and reasonable measures to prevent them or subsequently to submit them to the competent authorities for investigation and prosecution. I would mention at this stage two other international instruments. First, the Qualification Directive (2004/83/EC) which provides a common standard for the application of the Refugee Conventions requirements across the EUs 27 Member States. As already noted, article 12(2)(a) precisely mirrors article 1F(a) itself. Article 12(3), however, provides in addition that article 12(2) applies to persons who instigate or otherwise participate in the commission of the crimes or acts mentioned therein. The effect of article 12(3) has been helpfully considered by the German Federal Administrative Court in BVerwG 10C 48.07, judgment dated 14 October 2008: 21. In the case of the activities of terrorist organisations in particular, the question additionally arises as to attribution. Under Article 12(3) of Directive 2004/83EC, the reasons for exclusion also apply to persons who instigate or otherwise participate in the mentioned crimes or acts. Thus the person seeking protection need not have committed the serious non political crime himself, but he must be personally responsible for it. This must in general be assumed if a person has committed the crime personally, or made a substantial contribution to its commission, in the knowledge that his or her act or omission would facilitate the criminal conduct (see Paragraph 18 of the UNHCR Guidelines). Thus this principle covers not only active terrorists and participants in the criminal sense, but also persons who perform advance acts in support of terrorist activities. 22. In this Courts opinion, all three prerequisites of fact are met in the case of a person who actively supported the armed struggle of a terrorist organisation. Paragraph 18 of the UNHCR Guidelines On International Protection: Application of the Exclusion Clauses: Article 1F of the 1951 Convention relating to the Status of Refugees (the paragraph there referred to) reads: 18. For exclusion to be justified, individual responsibility must be established in relation to a crime covered by Article 1F. In general individual responsibility flows from the person having committed, or made a substantial contribution to the commission of the criminal act, in the knowledge that his or her act or omission would facilitate the criminal conduct. The individual need not physically have committed the criminal act in question. Instigating, aiding and abetting and participating in a joint criminal enterprise can suffice. The other important international instrument to be noted is the Statute of the International Criminal Tribunal for the former Yugoslavia (ICTY), articles 2 5 of which define comparatively succinctly the war crimes which it governs. Article 7 then sets out the principles for determining individual criminal responsibility. These include: 1. A person who planned, instigated, ordered, committed or otherwise aided and abetted in the planning, preparation or execution of a crime referred to in articles 2 to 5 of the present Statute, shall be individually responsible for the crime. 2. [Article 7(2) is concerned with Heads of State or Government, or responsible government officials.] 3. [Article 7(3) is concerned with the criminal responsibility of superiors for the criminal acts of their subordinates and is comparable, therefore, to article 28 of the ICC Statute.] 4. The fact that an accused person acted pursuant to an order of a Government or of a superior shall not relieve him of criminal responsibility, but may be considered in mitigation of punishment if the International Tribunal determines that justice so requires. As was noted by the court below, the principles on which a person may incur criminal responsibility through participation in a joint criminal enterprise essentially, therefore, responsibility pursuant to article 7(1) of the ICTY Statute have been considered by the ICTY Appeals Chamber in a series of cases. These begin with Prosecutor v Tadic, 15 July 1999, (1999) 9 IHRR 1051 where the Chamber identified from the post World War II war crimes jurisprudence about common criminal purpose three distinct categories of collective criminality. First, the usual sort of joint enterprise case where all the co defendants have the same criminal intent and each plays a part in executing the crime (paras 196 201). Second, the so called concentration camp cases where all those in authority who participate in enforcing the repressive system are to be regarded as co perpetrators of the war crime of ill treatment really a variant of the first category as the Chamber itself recognised (paras 202 203). Third, cases where the principal offender commits an offence outside the common design but where the defendant foresaw and knowingly took the risk of its occurrence (para 204) the standard basis for secondary liability for joint enterprise criminality under domestic law. Describing the actus reus for each of the 3 categories of collective criminality the Chamber noted (para 227): (iii) Participation of the accused in the common design involving the perpetration of one of the crimes provided for in the Statute . need not involve commission of a specific crime under one of those provisions (for example, murder, extermination, torture, rape, etc) but may take the form of assistance in, or contribution to, the execution of the common plan or purpose. Turning then to the required mens rea the Chamber said (para 228): By contrast, the mens rea element differs according to the category of common design under consideration. With regard to the first category, what is required is the intent to perpetrate a certain crime (this being the shared intent on the part of all co perpetrators). With regard to the second category (which, as noted above, is really a variant of the first), personal knowledge of the system of ill treatment is required (whether proved by express testimony or a matter of reasonable inference from the accuseds position of authority), as well as the intent to further this common concerted system of ill treatment. For my part I have not found the Tadic three part categorisation of collective criminality especially helpful. The third category has no present relevance: it is not suggested here that the Tamils war crimes were committed outside the common design of such part of the LTTEs (or its Intelligence Divisions) organisation as were directly responsible for them. Such crimes were clearly committed intentionally as a means of furthering their aims. As for category 2, this, as Tadic itself recognises, is just an illustration of how category 1 liability may be engaged, a particular case of joint enterprise criminal responsibility. The real question is how category 1 applies in a case like this. More recently, in Prosecutor v Brjanin (unreported) 3 April 2007, the ICTY Appeals Chamber re asserted that, although the accused need not have performed any part of the actus reus of the crime, he had to have participated in furthering the common purpose at the core of the criminal enterprise and not every type of conduct would amount to a significant enough contribution to the crime for this to create criminal liability (para 427) JCE [joint criminal enterprise] is not an open ended concept that permits convictions based on guilt by association (para 428). (The later ICTY Tribunal decision in Prosecutor v Krajinik (unreported) 17 March 2009 considered by the court below at paras 45 51 appears to me of little assistance here: Krajiniks criminal liability was based upon high governmental responsibilities, a very different factual scenario from what we are considering here.) It is convenient next to turn to Gurung v Secretary of State for the Home Department [2003] Imm AR 115, the starred decision of the IAT (under its President, Collins J) on which the Secretary of States refusal decision was based in the present case. It is necessary, I fear, to cite it at some length. It was, after all, the only case to which the decision letter referred. Having noted (at para 102) that in many article 1F cases an adjudicator will be faced with evidence that an individual is a member of an organisation committed to armed struggle or the use of violence as a means to achieve its political goals, the Tribunals judgment continued: 104. The Tribunal has consistently stated that mere membership of such organisations is not enough to bring an appellant within the Exclusion Clauses: In the light of previous case law and the further materials now before us, we would highlight two further principles that should be borne in mind when considering complicity. 105. One is that it would be wrong to say that an appellant only came within the Exclusion Clauses if the evidence established that he has personally participated in acts contrary to the provisions of Art 1F. If the organisation is one or has become one whose aims, methods and activities are predominantly terrorist in character, very little more will be necessary. We agree in this regard with the formulation given to this issue by UNHCR in their post September 11, 2001 document, Addressing Security Concerns without Undermining refugee Protection: UNHCRs Perspective, at paragraph 18: Where, however, there is sufficient proof that an asylum seeker belongs to an extremist international terrorist group, such as those involved in the 11 September attacks, voluntary membership could be presumed to amount to personal and knowing participation, or at least acquiescence amounting to complicity in the crimes in question. In asylum procedures, a rebuttable presumption of individual liability could be introduced to handle such cases. Drawing up lists of international terrorist organisations at the international level would facilitate the application of this procedural device since such certification at the international level would carry considerable weight in contrast to lists established by one country alone. The position of the individual in the organisation concerned, including the voluntariness of his or her membership, as well as the fragmentation of certain groups would, however, need to be taken into account. 106. That complicity in this type of case should be sufficient to bring an appellant within the Exclusion Clauses is necessary in order to adequately reflect the realities of modern day terrorism. The terrorist acts of key operatives are often possible only by virtue of the infrastructure of support provided by other members who themselves undertake no violent actions. As the US Court of Appeals, Ninth Circuit noted in McMullen v INS (1986) 788 F2d 591 at 599: We interpret both the convention and the [A]ct to permit deportation of individuals who commit serious, non political crimes, and we have concluded that this includes terrorist acts against ordinary citizens. We refuse to interpret these documents to apply only to those who actually pulled the trigger, because we believe that this interpretation is too narrow. In our judgment, the only reasonable interpretation of the exception is that it encompasses those who provide the latter with the physical, logistical support that enables modern, terrorist groups to operate. 107. Likewise the Tribunal noted in Ozer (10922, May 1994) when considering the appeal of a person who had voluntarily joined and supported Dev Sol which, with reference to objective country materials on Turkey was described as then being an illegal party dedicated to violence, . then it is no use his asserting that he does not support its policy or methods. If he does not endorse a central policy of the party he should not be a member of it: in any event his membership and contribution to the life of the party is indirect support for its violent acts. 108. The other principle to be borne in mind is that whilst complicity may arise indirectly, it remains essential in all cases to establish that the appellant has been a voluntary member of such an organisation who fully understands its aims, methods and activities, including any plans it has made to carry out acts contrary to Art 1F. Thus for example it would be wrong to regard the mere fact that an appellant has provided a safe house for LTTE combatants as sufficient evidence that he has committed an excludable offence. If, however, he has transported explosives for LTTE combatants in circumstances where he must have known what they were to be used for, there may well be a serious 1F issue. 109. We would also observe that international criminal law and international humanitarian law, which in our view should be the principal sources of reference in dealing with such issues as complicity, adopt similar although more detailed criteria in respect of those who for the purpose of facilitating an international crime aid, abet or otherwise assist in its commission or its attempted commission, including providing the means for its commission (see Art 25 of the International Criminal Court Statute and Art 7(1) of the ICTY Statute as analysed in the case of Tadic Case No. IT 94 1 T, 7 May 1997). Of course such reference will need to bear in mind the lower standard of proof applicable in Exclusion Clause cases. 110. However, as the passage just cited from UNHCR highlights, even when complicity is established the assessment under Art 1F must take into account not only evidence about the status and level of the person in the organisation and factors such as duress and self defence against superior orders as well as the availability of a moral choice; it must also encompass evidence about the nature of the organisation and the nature of the society in which it operates. Such evidence will need to include the extent to which the organisation is fragmented. 111. Observing as we do that in certain past Tribunal cases, Karthirpillai (12250) being an unhappy example, adjudicators and the Tribunal have not always taken a contextual approach, we think it useful to consider cases along a continuum. 112. On the one end of the continuum, let us postulate an organisation that has very significant support amongst the population and has developed political aims and objectives covering political, social, economic and cultural issues. Its long term aims embrace a parliamentary, democratic mode of government and safeguarding of basic human rights. But it has in a limited way or for a limited period created an armed struggle wing in response to atrocities committed by a dictatorial government. In such a case an adjudicator should be extremely slow to conclude that an appellants mere membership of such an organisation raises any real issue under Art 1F, unless there is evidence that the armed actions of this organisation are not in fact proportionate acts which qualify as non political crimes within Art 1F(b) and, if they are not, that he has played a leading or actively facilitative role in the commission of acts or crimes undertaken by the armed struggle wing. 113. At the other end of this continuum, let us postulate an organisation which has little or no political agenda or which, if it did originally have genuine political aims and objectives, has increasingly come to focus on terrorism as a modus operandi. Its recruitment policy, its structure and strategy has become almost entirely devoted to the execution of terrorist acts which are seen as a way of winning the war against the enemy, even if the chosen targets are primarily civilian. Let us further suppose that the type of government such an organisation promotes is authoritarian in character and abhors the identification by international human rights law of certain fundamental human rights. In the case of such an organisation, any individual who has knowingly joined such an organisation will have difficulty in establishing he or she is not complicit in the acts of such an organisation. Before coming to consider the correctness or otherwise of those paragraphs it is to be noted that the UNHCR have consistently followed the approach adopted in paragraph 18 of their post 9/11 Addressing Security Concerns without Undermining Refugee Protection: UNHCRs Perspective of 29 November 2001 (referred to in paragraphs 105 and 110 of Gurung as above). Indeed, as recently as 8 December 2009, in a letter to the parties following the Court of Appeals judgment in this case, their Representative, Roland Schilling, stated (at page 5): In some instances, depending on the organisations purposes, activities, methods and circumstances, individual responsibility for excludable acts may be presumed if membership is voluntary, and when the members of such groups can be reasonably considered to be individually responsible for acts falling within the scope of article 1F(a). For example, this would be the case where such activities involve indiscriminate killings or injury of the civilian population, or acts of torture, or where the person concerned is in control of the funds of an organisation that s/he knows is dedicated to achieving its aims through such violent crimes; or if the individual concerned contributed to the commission of excludable crimes by substantially assisting the organisation to continue to function effectively in pursuance of its aims. However, caution must be exercised when such a presumption arises, as due consideration needs to be given to the individuals involvement and role, including his/her position; the voluntariness of his/her membership; his/her personal involvement or substantial contribution to the criminal act in the knowledge that his/her act or omission would facilitate the criminal conduct; his/her ability to influence significantly the activities of the group or organisation; and his/her rank and command responsibility. Mr Schillings letter concludes: The exclusion clauses are intended to deny refugee status to certain persons who otherwise qualify as refugees but who are undeserving of refugee protection on account of the severity of the acts they committed. It is important that the rigorous legal and procedural standards required of an exclusion analysis outlined above are followed carefully. UNHCR shares the legitimate concern of States to ensure that there is no impunity for those responsible for crimes falling within article 1F(a) of the 1951 Convention. Care needs to be taken to ensure a rigorous application in line with international refugee principles whilst avoiding inappropriate exclusion of refugees. In particular, in cases involving persons suspected of being members of, associated with, or supporting an organisation or group involved in crimes that may fall under article 1F(a), where presumption of individual responsibility for excludable acts may arise, a thorough and individualised assessment must be undertaken in each case. Due regard needs to be given to the nature of the acts allegedly committed, the personal responsibility and involvement of the applicant with regard to those acts, and the proportionality of return against the seriousness of the act. The court below examined a number of domestic cases concerning article 1F, cases for the most part decided by the AIT. To my mind the most assistance is to be found in the Court of Appeals judgment in KJ (Sri Lanka) v Secretary of State for the Home Department [2009] EWCA Civ 292, a case concerning a Tamil whose surveying and reconnaissance work in support of LTTE military operations enabled these more accurately to target the Sri Lankan forces. Although the appellant was never involved in any conflict causing injury or death to civilians, the AIT nevertheless held him disqualified from refugee protection by reference to article 1F(c) it was common ground that acts contrary to the purposes and principles of the United Nations included acts of terrorism such as the deliberate killing of civilians holding the appellant must have known the type of organisation he was joining, its purpose and the extent to which the organisation was prepared to go to meet its aims. Stanley Burnton LJ, giving the leading judgment allowing the appeal, said: 37. The application of article 1F(c) will be straightforward in the case of an active member of [an] organisation that promotes its objects only by acts of terrorism. There will almost certainly be serious reasons for considering that he has been guilty of [relevant] acts . 38. However, the LTTE, during the period when [the appellant] was a member, was not such an organisation. It pursued its political ends in part by acts of terrorism and in part by military action directed against the armed forces of the Government of Sri Lanka. The application of article 1F(c) is less straightforward in such a case. A person may join such an organisation, because he agrees with its political objectives, and be willing to participate in its military actions, but may not agree with and may not be willing to participate in its terrorist activities. Of course, the higher up in the organisation a person is the more likely will be the inference that he agrees with and promotes all of its activities, including its terrorism. But it seems to me that a foot soldier in such an organisation, who has not participated in acts of terrorism, and in particular has not participated in the murder or attempted murder of civilians, has not been guilty of acts contrary to the purposes and principles of the United Nations. At this point in the judgment it seems to me worth noting that the court on this appeal has essentially three tasks. The first, and easiest, is to decide whether the Court of Appeal was right to quash the refusal decision and remit the case for redetermination by the Secretary of State. Secondly and less easily we must decide on the correctness of the principles laid down in Gurung and make such criticisms of its approach as seem appropriate. Our third and to my mind altogether more difficult task is to decide whether the Court of Appeal was right to interpret war crimes liability under article 1F(a) as narrowly as para 119 of Toulson LJs judgment appears to do, essentially so as to encompass no more than joint enterprise liability akin to that in respect of domestic law crimes (extended where appropriate, when crimes go beyond the scope of the joint enterprise). To some extent, of course, these three questions inter relate. I shall seek, however, to address them separately. (1) Should the Secretary of States decision be quashed? Although I wondered at the hearing whether, realistically, the Secretary of State could properly not have found on the facts of this case serious reasons for considering the respondent to be a war criminal, I have not thought it right to allow the Secretary of States appeal on this basis. The plain fact is that, whatever view one takes on questions 2 and 3, the Secretary of States reasoning in the decision letter is insupportable. It could not be said of the LTTE nor even, on the available evidence, of its Intelligence Division that as an organisation it was (it seems inappropriate in the light of recent events in Sri Lanka to continue speaking of the LTTE in the present tense) predominantly terrorist in character (Gurung para 105) or an extremist international terrorist group (para 18 of the UNHCRs Perspective, quoted in the same para 105). There was accordingly no question of presuming (consistently with Gurung) that the respondents voluntary membership of this organisation amount[ed] to personal and knowing participation, or at least acquiescence, amounting to complicity in the crimes in question as para 34 of the decision letter stated. Nor was the respondents command responsibility within the organisation a basis for regarding him as responsible for war crimes. As Toulson LJ pointed out (para 123 of his judgment), the respondents command was of a combat unit and there was never any suggestion here of article 28 liability. Nor, of course, as Stanley Burnton J noted in KJ (Sri Lanka), is military action against government forces to be regarded as a war crime. Surely the better case against the respondent arises from the three years when he led a mobile unit transporting military equipment and personnel through the jungle so that members of the Intelligence Division could go armed in plain clothes to Columbo. As para 108 of Gurung concluded: If, however, he has transported explosives for LTTE combatants in circumstances where he must have known what they were to be used for, there may well be a serious 1F issue. (2) The Gurung approach As noted at para 93 of Toulson LJs judgment, the appellant below did not on the surface challenge the guidance given by the IAT in Gurungs case. There are, however, criticisms to be made of it and it should not in future be accorded the same oracular standing as it seems hitherto to have enjoyed. In the first place, it is unhelpful to attempt to carve out from amongst organisations engaging in terrorism a sub category consisting of those whose aims, methods and activities are predominantly terrorist in character, and to suggest that membership of one of these gives rise to a presumption of criminal complicity: very little more will be necessary (Gurung para 105). True it is that this approach finds support from the quoted paragraph 18 of the UNHCRs post 9/11 Perspective and, indeed, from a line of Canadian authority commencing with the decision of the Canadian Federal Court of Appeal in Ramirez v Canada (Minister of Employment and Immigration) (1992) 89 DLR (4th) 173, 180 where to MacGuigan JA it seem[ed] apparent . that where an organisation is principally directed to a limited, brutal purpose, such as a secret police activity, mere membership may by necessity involve personal and knowing participation in persecutorial acts. Rather, however, than be deflected into first attempting some such sub categorisation of the organisation, it is surely preferable to focus from the outset on what ultimately must prove to be the determining factors in any case, principally (in no particular order) (i) the nature and (potentially of some importance) the size of the organisation and particularly that part of it with which the asylum seeker was himself most directly concerned, (ii) whether and, if so, by whom the organisation was proscribed, (iii) how the asylum seeker came to be recruited, (iv) the length of time he remained in the organisation and what, if any, opportunities he had to leave it, (v) his position, rank, standing and influence in the organisation, (vi) his knowledge of the organisations war crimes activities, and (vii) his own personal involvement and role in the organisation including particularly whatever contribution he made towards the commission of war crimes. No doubt, as Stanley Burnton LJ observed in KJ(Sri Lanka), at para 37, if the asylum seeker was an active member of [an] organisation that promotes its objects only by acts of terrorism, [t]here will almost certainly be serious reasons for considering that he has been guilty of [relevant] acts. I repeat, however, the nature of the organisation itself is only one of the relevant factors in play and it is best to avoid looking for a presumption of individual liability, rebuttable or not. As the present case amply demonstrates, such an approach is all too liable to lead the decision maker into error. The second major criticism to be made of Gurung relates to its introduction (at paras 111 113) of the idea of a continuum for war crimes cases. The reality is that there are too many variable factors involved in each case, some militating one way, some the other, to make it helpful to try to place any given case at some point along a continuum. But more troublingly still, the tribunal in these paragraphs introduces considerations which properly have no place at all in determining how article 1F applies. Whether the organisation in question is promoting government which would be authoritarian in character or is intent on establishing a parliamentary, democratic mode of government is quite simply nothing to the point in deciding whether or not somebody is guilty of war crimes. War crimes are war crimes however benevolent and estimable may be the long term aims of those concerned. And actions which would not otherwise constitute war crimes do not become so merely because they are taken pursuant to policies abhorrent to western liberal democracies. (3) The correct approach to article 1F There can be no doubt, as indeed article 12(3) of the Qualification Directive provides, that article 1F disqualifies not merely those who personally commit war crimes but also those who instigate or otherwise participate in the commission of [such] crimes. Article 12(3) does not, of course, enlarge the application of article 1F; it merely gives expression to what is already well understood in international law. This is true too of paragraphs (b), (c) and (d) of article 25(3) of the ICC Statute, each of which recognises that criminal responsibility is engaged by persons other than the person actually committing the crime (by pulling the trigger, planting the bomb or whatever) who himself, of course, falls within article 25(3)(a). Paragraph (b) encompasses those who order, solicit or induce (in the language of article 12(3) of the Directive, instigate) the commission of the crime; paragraph (c) those who aid, abet, or otherwise assist in its commission (including providing the means for this); paragraph (d) those who in any other way intentionally contribute to its commission (paras (c) and (d) together equating, in the language of article 12(3) of the Directive, to otherwise participat[ing] in the commission of the crime). All these ways of attracting criminal liability are brought together in the ICTY Statute by according individual criminal responsibility under article 7(1) to anyone who planned, instigated, ordered, committed or otherwise aided and abetted in the planning, preparation or execution of the relevant crime. The language of all these provisions is notably wide, appreciably wider than any recognised basis for joint enterprise criminal liability under domestic law. That, it seems to me, is what the German court was saying, at para 21 of the BverwG judgment (cited at para 14 above) when holding that the exclusion covers not only active terrorists and participants in the criminal sense, but also persons who perform advance acts in support of terrorist activities. It must surely be correct to say, as was also said in that paragraph, that article 1F disqualifies those who make a substantial contribution to the crime, knowing that their acts or omissions will facilitate it. It seems to me, moreover, that Mr Schilling, the UNHCR Representative, was similarly correct to say in his recent letter that article 1F responsibility will attach to anyone in control of the funds of an organisation known to be dedicated to achieving its aims through such violent crimes, and anyone contributing to the commission of such crimes by substantially assisting the organisation to continue to function effectively in pursuance of its aims. This approach chimes precisely with that taken by the Ninth Circuit in McMullen (see para 106 of Gurung cited above): [Article 1F] encompasses those who provide [the gunmen etc] with the physical, logistical support that enable modern, terrorist groups to operate. Of course, criminal responsibility would only attach to those with the necessary mens rea (mental element). But, as article 30 of the ICC Statute makes plain, if a person is aware that in the ordinary course of events a particular consequence will follow from his actions, he is taken to have acted with both knowledge and intent. (I would for this reason reject the respondents criticism of the omission from paragraph 21 of the German courts judgment of any separate reference to intent; that ingredient of criminal responsibility is already encompassed within the Courts existing formulation). Similarly, and I think consistently with this, the ICTY Chamber in Tadic defines mens rea in a way which recognises that, when the accused is participating in (in the sense of assisting in or contributing to) a common plan or purpose, not necessarily to commit any specific or identifiable crime but to further the organisations aims by committing article 1F crimes generally, no more need be established than that the accused had personal knowledge of such aims and intended to contribute to their commission. Returning to the judgment below with these considerations in mind, I have to say that paragraph 119 does seem to me too narrowly drawn, appearing to confine article 1F liability essentially to just the same sort of joint criminal enterprises as would result in convictions under domestic law. Certainly para 119 is all too easily read as being directed to specific identifiable crimes rather than, as to my mind it should be, wider concepts of common design, such as the accomplishment of an organisations purpose by whatever means are necessary including the commission of war crimes. Put simply, I would hold an accused disqualified under article 1F if there are serious reasons for considering him voluntarily to have contributed in a significant way to the organisations ability to pursue its purpose of committing war crimes, aware that his assistance will in fact further that purpose. It would not, I think, be helpful to expatiate upon article 1Fs reference to there being serious reasons for considering the asylum seeker to have committed a war crime. Clearly the Tribunal in Gurung (at the end of para 109) was right to highlight the lower standard of proof applicable in exclusion clause cases lower than that applicable in actual war crimes trials. That said, serious reasons for considering obviously imports a higher test for exclusion than would, say, an expression like reasonable grounds for suspecting. Considering approximates rather to believing than to suspecting. I am inclined to agree with what Sedley LJ said in Yasser Al Sirri v Secretary of State for the Home Department [2009] EWCA Civ 222, para 33: [the phrase used] sets a standard above mere suspicion. Beyond this, it is a mistake to try to paraphrase the straightforward language of the Convention: it has to be treated as meaning what it says. In the result I would dismiss this appeal but vary the order below to provide that in re determining the respondents asylum application, the Secretary of State should direct himself in accordance with this Courts judgments, not those of the Court of Appeal. LORD HOPE There is always a risk, as one court after another seeks to formulate the principles that are to be applied in the interpretation of an international instrument, of making things worse, not better. A misplaced word here or there can make all the difference between an interpretation that will be respected internationally because it accords with the true purpose of the instrument and one that will not. Counsel for the Secretary of State said that until the judgment of the Court of Appeal in this case there was a significant degree of international consensus as to the correct approach to article 1F(a) of the Refugee Convention. This was built largely on the jurisprudence of the Canadian courts as explained by the Immigration Appeal Tribunal in the starred case of Gurung v Secretary of State for the Home Department [2002] UKIAT 4870, [2003] Imm AR 115. The Tribunals formulation was referred to with approval in Nagamany v Canada (Minister of Citizenship and Immigration), 2005 FC 1554, where the judge said that it provided excellent information as to how a decision maker should approach a case involving that article. It was adopted by the UNHCR in their Background Note on Article 1F of the 1951 Convention relating to the Status of Refugees of 4 September 2003: para 61, fn 61. And it was followed by the Court of Appeal in MH (Syria) v Secretary of State for the Home Department [2009] EWCA Civ 226, [2009] 3 All ER 564 and KJ (Sri Lanka) v Secretary of State for the Home Department [2009] EWCA Civ 292: see also DKN v Asylum and Immigration Tribunal [2009] CSIH 53. Counsel submitted that the Court of Appeal in this case failed to explain why it was departing from that approach, and that the scope of article 1F(a) and the complicity doctrine was correctly stated in Gurung. Like Lord Brown, I think that the guidance given in Gurung is not without its difficulties. The Tribunal was, of course, right to stress that mere membership of an organisation that is committed to the use of violence for political ends is not enough to bring an appellant within the exclusion clauses: para 104. As Toulson LJ observed in the Court of Appeal in this case, everyone is agreed on this point: [2009] EWCA Civ 364, [2010] 2 WLR 17, para 98. The complicity doctrine, too, is well established in international law: McMullen v INS (1986) 788 F2d 591, 599; Ramirez v Canada (Minister of Employment and Immigration) (1992) 89 DLR (4th) 173, 178 180 per MacGuigan JA; the Rome Statute of the International Court, article 25(3)(c) and (d) and article 30; Prosecutor v Tadic 15 July 1999, ICTY; Prosecutor v Krajinik 17 March 2009, ICTY. The problem lies in formulating what more is needed to bring the person within article 1F(a). How close does the person need to get to these activities for the protection of the Convention not to apply to him? The Tribunals mistake, it respectfully seems to me, was to say that if the organisation was or has become one whose aims, methods and activities are predominantly terrorist in character very little more will be necessary: para 105. As the Tribunal explains later in the same paragraph, this proposition was based on the formulation by the UNCHR in their post 9/11 document Addressing Security Concerns without Undermining refugee Protection, para 18. But it is a dangerous doctrine. It leads people to think, as the Secretary of State did in this case, that voluntary membership of such a group gives rise to a presumption of personal and knowing participation, or at least acquiescence, amounting to complicity: para 34. It diverts attention from a close examination of the facts and the need for a carefully reasoned decision as to precisely why the person concerned is excluded from protection under the Convention. It is true that the Tribunals invitation to consider cases along a continuum reduces the force of the very little more will be necessary dictum at one end of it: para 112. But it reinforces it at the other end: para 113. Here too the Tribunals approach is liable to mislead. Even in the case of the extremist organisation that is envisaged in para 113, joining it will not be enough to suggest complicity or that little more is required for it to be presumed. This mistaken approach tends to infect the whole length of the continuum. As Toulson LJ said in the Court of Appeal, para 114, the continuum approach takes the decision makers eye off the really critical question whether the evidence provides serious reasons for considering the applicant to have committed the actus reus of an international crime with the requisite mens rea. It invites a less clearly focused judgment. That was the trap that the Secretary of State fell into in this case. I would therefore reject the Secretary of States submission that the complicity doctrine was correctly stated in Gurung. The Court of Appeals criticisms of it seem to me to be well founded. This leads inevitably to the question whether the approach which it sought to put in its place should be endorsed by this court. Appeals judgment, where Toulson LJ said: I have no difficulty with the formulation in para 115 of the Court of The starting point for a decision maker addressing the question whether there are serious reasons for considering that an asylum seeker has committed an international crime, so as to fall within article 1F(a), should now be the Rome Statute. The decision maker will need to identify the relevant type or types of crime, as defined in articles 7 and 8,; and then to address the question whether there are serious reasons for considering that the applicant has committed such a crime, applying the principles of criminal liability set out in articles 25, 28 and 30 and any other articles relevant to the particular case. Article 12(3) of the Qualification Directive 2004/83/EC and article 7(1) of the ICTY Statute are founded on the same principles, which are wider than those that apply in domestic law for joint enterprise criminal liability. As the German Federal Administrative Court said in BVerwG 10C 48.07, para 21: Thus this principle covers not only active terrorist and participants in the criminal sense, but also persons who perform advance acts in support of terrorist activities. Had Toulson LJ stopped at para 115 I would not have been disposed to find fault with his judgment. As it is, he went on to give further guidance to the decision maker which, as Lord Brown has indicated in para 38, appears to have been drawn too narrowly. He was careful to base what he said on the provisions of the Rome Statute. But the guidance was more elaborate than it needed to be. He used the word participation, which does not appear in the relevant articles of the Rome Statute. It tends to suggest a closer connection with the criminal act than the international law principle requires. The German Administrative Court, in para 21 of its judgment, used the words personally responsible to express what, in international law, is the underlying concept: Thus the person seeking protection need not have committed the serious non political crime himself, but he must be personally responsible for it. This must in general be assumed if a person has committed the crime personally, or made a substantial contribution to its commission, in the knowledge that his or her act or omission would facilitate the criminal conduct. The court then added, by way of further explanation, the sentence which I have quoted in para 47, above. The words substantial contribution indicate what is needed to attach personal responsibility for what was done. I agree with Lord Brown that the German courts formulation encompasses the mental element that is required by article 30 of the Rome Statute: para 36, above. Lord Brown puts the test for complicity very simply at the end of para 38 of his judgment. I would respectfully endorse that approach. The words serious reasons of considering are, of course, taken from article 1F itself. The words in a significant way and will in fact further that purpose provide the key to the exercise. Those are the essential elements that must be satisfied to fix the applicant with personal responsibility. The words made a substantial contribution were used by the German Administrative Court, and they are to the same effect. The focus is on the facts of each case and not on any presumption that may be invited by mere membership. For these reasons, and those given by Lord Brown with which I entirely agree, I would dismiss the appeal. I would make the order that Lord Brown proposes. LORD RODGER I agree with the judgment of Lord Brown. For the reasons which he gives, and for the further reasons of Lord Hope and Lord Kerr, I would dismiss the appeal but vary the order below, as Lord Brown proposes. LORD WALKER I am in full agreement with the judgment of Lord Brown. For the reasons that he gives, and for these further reasons given by Lord Hope and Lord Kerr, I would dispose of this appeal in the manner that Lord Brown proposes. LORD KERR For the reasons given by Lord Brown with which I am in complete agreement, I too would dismiss this appeal and vary the order of the Court of Appeal in the manner that he has suggested. As Lord Brown has said, the critical question is what more is required beyond mere membership of an organisation which commits war crimes for a person to be excluded from the protection of the Refugee Convention. It was suggested for the Secretary of State that in the case of an organisation which was not exclusively terrorist (in the sense that their only modus operandi was the commission of war crimes or crimes against humanity) the presence of the further necessary element apart from membership was to be determined by the examination of six factors: the nature of the organisation; the method of recruitment to it; the opportunity to leave it; the position and rank enjoyed by the individual concerned; the length of time that he had spent in the organisation; and his knowledge of the organisations atrocities. I would be reluctant to accept that this list of factors provides the invariable and infallible prescription by which what I have described as the critical question is to be answered. What must be shown is that the person concerned was a knowing participant or accomplice in the commission of war crimes etc. The evaluation of his role in the organisation has as its purpose either the identification of a sufficient level of participation on the part of the individual to fix him with the relevant liability or a determination that this is not present. While the six factors that counsel identified will frequently be relevant to that evaluation, it seems to me that they are not necessarily exhaustive of the matters to be taken into account, nor will each of the factors be inevitably significant in every case. One needs, I believe, to concentrate on the actual role played by the particular person, taking all material aspects of that role into account so as to decide whether the required degree of participation is established. The nature of the participation required has been described in various ways in the cases that Lord Brown has considered in his judgment. In an Amicus Curiae Brief of Professor Antonio Cassese and members of the Journal of International Criminal Justice on Joint Criminal Enterprise Doctrine (for Case File No 001/18 07 2007 ECCC OCIJ) (2009) 20 CLF 289 it was suggested that the participation should be such as allowed the institution to function or that it allowed the crimes to be perpetrated or that it was an indispensable cog. In Prosecutor v Krajinik 17 March 2009 it was stated that what matters in terms of law is that the accused lends a significant contribution to the crimes involved in the [joint common enterprise] (para 696). Common to all these expositions is that there should be a participation that went beyond mere passivity or continued involvement in the organisation after acquiring knowledge of the war crimes or crimes against humanity. The Canadian cases to which Lord Brown has referred seem for the most part to at least imply that the participative element involves either a capacity to control or at least to influence events. They appear to contemplate a minimum requirement that the mind of the individual be given to the enterprise so that some element of personal culpability is involved. A notable exception to this theme is to be found in the obiter statements in paragraph 16 of the judgment in Ramirez v Canada (Minister of Employment and Immigration) (1992) 89 DLR (4th) 173 where it is suggested that voluntary knowing participation can be assumed from membership of a brutal organisation. These statements have not been relied on by the Secretary of State in this case and, in my judgment, wisely so. The broad thrust of authority in this area is to contrary effect. A focus on the actual participation of the individual, as opposed to an assumption as to its significance from mere membership, appears to me to accord more closely with that general trend and with the spirit of articles 25 and 30 of the ICC Rome Statute and article 12 (3) of Council Directive 2004/83/EC. No consideration of the respondents personal role was undertaken here, however. While it is true that the Secretary of State required only to be satisfied that there were serious grounds for considering that he had been involved in the relevant criminal activity, some examination of the respondents actual involvement was needed. This inevitably involved recognition of the ingredients of the offences in which he was said to be complicit and of what it was about the known behaviour of the respondent that might be said to bring him to the requisite level of participation. I do not consider that it is necessary to show that he participated (in the sense that this should be understood) in individual crimes but his participation in the relevant criminal activity can only be determined by focusing on the role that he actually played. Only in this way can a proper inquiry be undertaken into the question whether the requirements of articles 25 and 30 of the ICC Rome Statute have been met. It is true that an extensive rehearsal of some relevant facts is to be found in the earlier part of the decision letter but there is nothing to indicate that this in fact played a part in the Secretary of States analysis. Indeed, a review of the sources which the author of the letter used to compose it indicates the contrary to be the case. It is clear that the facts were culled from the War Crimes Unit report and that the statement of the reasons for the decision was replicated from the legal annexe. The latter document stated that Gurung had held that voluntary membership of an extremist group could be presumed to amount to personal and knowing participation, or at least acquiescence amounting to complicity. In effect therefore the Secretary of State was being invited to decide as a matter of automatic consequence that membership of the Intelligence Division of LTTE equated to complicity. This implicitly (at least) suggested that no consideration of the personal responsibility of the respondent was required and indeed that it was not appropriate to inquire into it beyond acknowledging that the respondent was a member of the Intelligence Division. |
On 22 November 2007, three brothers, Patrick Mackle, Plunkett Jude Mackle (commonly known as Jude) and Benedict Mackle, all pleaded guilty to the offence of being knowingly concerned in the fraudulent evasion of duty on goods contrary to Section 170(2)(a) of the Customs & Excise Management Act 1979. In a separate trial, on 18 November 2008, Henry McLaughlin pleaded guilty to a similar offence. He was also convicted of a second offence, on his plea of guilty, but that is not relevant to this appeal. On 13 December 2007 Deeny J sentenced Patrick Mackle to three years imprisonment, suspended for a period of five years. Jude Mackle and Benedict Mackle were sentenced to two and a half years imprisonment. Again that sentence was suspended for five years. At a later hearing, on 29 October 2008, confiscation orders were made in respect of each of the defendants as follows: Patrick Mackle 518,387.00; Jude Mackle and Benedict Mackle 259,193.00 each. The aggregate sum produced by these three amounts was equal to the amount of duty and Value Added Tax which had been evaded. The confiscation orders were made with the consent of each of the Mackle brothers. Henry McLaughlin was sentenced by Weatherup J on 19 November 2008 to one years imprisonment suspended for two years. The judge also imposed a serious crime prevention order for a period of five years. A confiscation order for 100,000 was made against Mr McLaughlin on the same date. This sum, taken together with other confiscation orders made against co defendants, represented the total amount of duty and VAT said to have been evaded. The confiscation order against Mr McLaughlin was also made with his consent. The facts (the Mackles) On 16 January 2003 a cargo ship, MV Hyundai Fortune, arrived in Southampton from Malaysia. Customs officers carried out routine screening of a container on board the ship. It was found to contain cigarettes. (Subsequently, it transpired that the cigarettes had been manufactured in the United Kingdom. They had been exported without duty having being paid on them.) The container was not intercepted at this stage. It was allowed to proceed to its destination. It was taken first from Southampton to Belfast docks on the MV Celtic King on 25 January 2003. It was then collected at Belfast by a haulier on 27 January 2003 and taken to premises at Ballynakilly Road, Coalisland, County Tyrone. On the same date, police and customs officers went to the premises to which the container had been delivered. There they found Jude Mackle and his brother Benedict unloading boxes from the container. They were being assisted by two other men. It was discovered that the boxes which were being unloaded contained cigarettes. These had been concealed under wooden flooring in the container. All four men were interviewed by police officers. They were subsequently charged with revenue offences. Patrick Mackle was the owner of the premises where the cigarettes were being unloaded. He was not present when the police were at the premises on 27 January 2003 but he later presented himself to police and on 25 April 2003 he voluntarily attended Musgrave Street Police Station in Belfast for interview. On that date he was released on bail. He returned on 3 July 2003 for further interview. Following this interview he was also charged with revenue offences. The facts (Mr McLaughlin) On 16 November 2005 police officers went to premises at 194 Battleford Road, Armagh. There they discovered 10,434,620 cigarettes stored in two sheds. They also found 4,999,920 cigarettes loaded on a lorry, hidden amongst a consignment of peat moss. They arrested three persons who were at the premises. These persons were subsequently charged with revenue offences in relation to the cigarettes. Henry McLaughlin was not present when the police were at Battleford Road. He had no known connection to the premises there. On 20 July 2006, however, Mr McLaughlins home was searched by police officers. Large amounts of cash in different currencies were found. The total value of the cash amounted to something in the order of 65,000. Various documents including documentation relating to the sale and distribution of cigarettes were found. Mr McLaughlin was subsequently interviewed and charged in relation to the items that had been found in his house and in relation to the cigarette seizure on 16 November 2005. It is accepted that the lorry which had been found at Battleford Road loaded with the cigarettes had stopped at the Mr McLaughlin's premises earlier on 16 November 2005. It is also accepted, however, that he was not present at that time. The proceedings against the Mackles (i) The Rooney hearing Each of the Mackle brothers was prosecuted on a single count to which he pleaded guilty, as described in para 1 above. That plea was entered after evidence had been given over the course of a number of days. It also followed what is known as a Rooney hearing (Attorney General's Reference No 1 of 2005; In re Rooney (Bernard Philip Mary) and others [2005] NICA 44; [2006] NI 218). The purpose of a Rooney hearing is to obtain from the trial judge an indication of the possible sentence in the event that a plea of guilty is entered. In the course of the Rooney hearing, counsel on behalf of Patrick Mackle asserted that he had not been the organiser of this matter. Counsel for the Crown submitted that Patrick Mackle had played . a role in the organisation of this operation. He suggested that conclusions about the extent of the organisational role would depend on the inferences which the court might ultimately draw and on the extent to which primary facts are established. Understandably, since he did not, in the event, hear all the evidence, the judge did not express a conclusion on the precise role that Patrick Mackle had played. He did say, however, that he was satisfied that he had played some part in the organisation of the evasion of the duty on the cigarettes. In giving an indication of the possible sentence to be imposed the judge said that he would propose to sentence Patrick Mackle on the basis that he is not a ringleader but has some limited organising role in the matter. In relation to Jude and Benedict Mackle, their counsel urged on the judge during the Rooney hearing that they had been merely labourers in the unloading of the cigarettes. In response to those submissions, counsel for the Crown said this: the prosecution position is that there is no evidence which suggests anything contrary to the submissions made by counsel on their behalf in this application. So for the purpose of this application I have no contrary submissions. On the hearing of the appeal before this court, Mr McCollum QC, for the respondent, drew our attention to the fact that in his submissions to the trial judge he had emphasised that the statement that the prosecution had no evidence to counter the claims made by counsel for Jude and Benedict Mackle had been made for the purpose of the Rooney application. This did not amount to a concession, he said, concerning the value of any benefit which they had received for the purpose of the subsequent confiscation proceedings. This aspect of the case will be considered in greater detail below. In giving his indication of sentence in relation to Jude and Benedict Mackle, Deeny J said that he considered there were no aggravating features in their cases. Since playing a part in the organisation of this type of criminal activity is well recognised as an aggravating feature, it is to be presumed that the judge had accepted that neither of these appellants had performed such a role. (ii) The sentencing hearing In opening the case to the trial judge for the purpose of sentencing, Crown counsel said that if all the prosecution evidence had been given, certainly at its height it would have suggested an organisational role by Mr Patrick Mackle. Counsel who then appeared for Patrick Mackle submitted that there was no suggestion on the evidence of the accused having had any hand, act or part in the financing, funding, importation or other organisational contribution. The judge concluded that since Patrick Mackle had asked his brothers to carry out the unloading of the cigarettes and since this had taken place at Patrick Mackles yard, he had a limited organising role. He noted that the prosecution had accepted the appellants plea of guilty on the basis that he was not the ringleader in the enterprise. He (the judge) considered that it was appropriate to sentence Patrick Mackle on that basis. In relation to Jude and Benedict Mackle, counsel for the Crown told the judge that the prosecution had no evidence to suggest that they were involved in any capacity other than as assisting in the unloading of the container. Unsurprisingly, this statement was highlighted by counsel for the two appellants in their pleas in mitigation and appears to have been accepted by the judge in choosing the sentence that should be imposed on them for he distinguished the role that they had played from the more serious part that their brother, Patrick, had had in the enterprise. (iii) The confiscation proceedings A prosecutors statement in respect of each of the Mackle brothers was prepared by Roisin McMullan, an officer of HM Revenue and Customs. In each of the statements Ms McMullan asserted that the benefit obtained by each of the Mackle brothers was the full amount of the duty which had been evaded. At the confiscation hearing on 29 October 2008 the only evidence as to benefit presented to the court was a witness statement prepared by Ms McMullan dated 14 November 2006. This was appended to the prosecutors statements. The witness statement also referred to the total excise duty as constituting the benefit which had been obtained. At the outset of the confiscation hearing, prosecuting counsel announced that the parties had reached agreement as to the amount of benefit that each defendant had received and that each would consent to a confiscation order for that amount. In these circumstances no examination was undertaken of the basis of the apportionment of the total sum to be confiscated. It is quite clear, however, that this was directly related to the duty which Revenue and Customs had calculated to have been evaded. The proceedings against Mr McLaughlin There was no Rooney hearing in Mr McLaughlins case. The sentencing and confiscation hearings took place at the same time. In his mitigation plea, counsel for Mr McLaughlin suggested that there was no evidence that he had been involved in the actual importation of the cigarettes. Mr McLaughlin had played, counsel said, what could be described as a supporting role in what happened. In sentencing Mr McLaughlin, Weatherup J referred to the decision of the Court of Appeal in England and Wales in the case of R v Czyzewski [2003] EWCA Crim 2139; [2004] 1 Cr App R (S) 289 in which a number of possible aggravating features in fraudulent evasion of duty cases were considered. The first of these was playing an organisational role. Weatherup J plainly must have accepted counsel for the appellants submission on this aspect because he said that neither this nor, indeed, any other aggravating feature was present. The amount of duty evaded in the case of Mr McLaughlin and his two co defendants was something just short of 730,000. The total recoverable amount (i.e. the amount of benefit which the three accused were said to have obtained) was, by agreement, fixed at the same sum. One co defendants benefit (and therefore the amount recoverable from him) was said to be 500,000; anothers was fixed at 129,968.61 (although in his case since it was agreed that the available amount was nil, the confiscation order was fixed at nil). The confiscation amount ordered to be recovered from Mr McLaughlin was 100,000, fixed so as to make up the balance of the duty evaded. All of this was done by agreement and, again, there was no investigation before the judge of the basis on which the total sum was apportioned or how the respective benefits to each of the defendants was estimated. The only indication of the value of the benefit to the defendants was the amount of the duty evaded. The Court of Appeals judgment Appeals by the Mackle brothers and by Mr McLaughlin and one of his co accused, Aidan Grew, against the confiscation orders made in their cases were heard together by the Court of Appeal (Morgan LCJ, Girvan and Coghlin LJJ). Delivering the judgment of the court, Girvan LJ identified the two principal issues as (i) whether the appellants had consented to the making of the consent orders on an incorrect legal basis (and that therefore the trial judges had likewise wrongly made the orders); and (ii) whether the orders having been made on consent, the appellants were in any event bound by them. On the first of those issues, Girvan LJ considered the effect of the decision of the Court of Appeal in R v Chambers [2008] EWCA Crim 2467. He held that, in light of that decision, if the appellants were not participants in the actual importation of the cigarettes, they would not be liable for the duty on them and thus could not be said to have obtained a pecuniary advantage for the purposes of the Tobacco Products Regulations 2001 (para 26). This was not an end of the matter in Girvan LJs estimation, however, for at para 27 he said this: Where, a defendant is knowingly involved in the evasion of duty on smuggled cigarettes after importation and comes into possession of the smuggled cigarettes with knowledge of the evasion and as part of a joint enterprise to take advantage of the economic advantages flowing from the evasion of the duty at the point of importation he may gain a financial advantage flowing from his participation in the ongoing enterprise. Girvan LJ observed in para 29 of the judgment that it was not in dispute that the appellants had engaged in criminal conduct. The critical issue was, therefore, whether they had benefited from that conduct. He acknowledged that this depended on whether they had obtained property as a result and in connection with the offences. Drawing on an example that he had earlier given of the pecuniary advantage that could be obtained by a person to whom goods had been passed by the actual importer of the goods, he concluded that the profitability in the criminal enterprise in both cases arose from the evasion of the duty. He then said (at para 35): This criminal enterprise involved a number of participants acting together playing different roles in the furtherance of the joint enterprise. The pleas of guilty by the appellants make clear their acceptance of the fact that they played a role in the enterprise, thus evidencing participation in that joint enterprise. A proper inference that could have been drawn from the pleas is that in playing their different roles the appellants and each of them were involved in the handling and processing of the cigarettes to advance the purposes of the joint enterprise. To so handle and process them they had to obtain them at different stages of the process. As R v Green shows receipt of goods by one on behalf of several defendants can be regarded as receipt for all. The joint actions of the appellants, at least arguably, involved possession and control of the cigarettes by those involved in the participation and the enterprise. On the basis of this analysis Girvan LJ held that it would have been open to a court to conclude that each of the appellants had obtained property in connection with their admitted criminal conduct or obtained a pecuniary advantage as a result of that conduct. He considered, however, that it was not only unnecessary for the trial judges in these cases to consider whether the appellants had obtained property or a pecuniary advantage in this way (which was, of course, a different basis from that which the prosecution had proffered), it would have been inappropriate for them to do so. This was because the appellants had consented to the making of the orders, having received legal advice. Having reviewed commentary on the effect of consent orders in confiscation proceedings in Millington and Sutherland Williams on the Proceeds of Crime, 3rd ed (2010), at para 11.21 and considered decisions of the Court of Appeal in R v Bailey [2007] EWCA Crim 2873 and R v Hirani [2008] EWCA Crim 1463, Girvan LJ stated that the court had concluded that, even if the appellants were incorrectly advised to consent to the confiscation orders, they were bound by the orders made on consent. He went on to say, however, that it had not been shown that the sentencing judges made the consent orders on an incorrect legal or factual basis because the factual basis on which the orders were made arose from the admissions made by the appellants that, on the facts, they had received a benefit from their criminal conduct. The appellants having made those admissions, there was no reason for the judges to go behind them. The appellants applied for permission to appeal to this court against the decision of the Court of Appeal. That application was refused but the Court of Appeal certified that the following points of law of general public importance arose from its judgment: 1. Is a defendant who pleaded guilty to being knowingly concerned in the fraudulent evasion of duty and who consents, with the benefit of legal advice, to the making of a confiscation order in an agreed amount in circumstances which make clear that he does not require the Crown to prove that he obtained property or a pecuniary advantage in connection with the charged criminal conduct bound by the terms of the confiscation order? 2. Does a defendant who knowingly comes into physical possession of dutiable goods in respect of which he knows the duty has been evaded and plays an active role in the handling of those goods so as to assist in the commercial realisation of the goods benefit from his criminal activity by obtaining those goods for the purposes of section 158 of the Proceeds of Crime Act 2002? On 30 October 2012 this court gave permission to the appellants to appeal. The statutory framework Section 170(2) of the Customs and Excise Management Act 1979 provides: Without prejudice to any other provision of the Customs and Excise Acts 1979, if any person is, in relation to any goods, in any way knowingly concerned in any fraudulent evasion or attempt at evasion (a) of any duty chargeable on the goods; he shall be guilty of an offence under this section and may be detained. Excise duty on tobacco is payable by virtue of section 2(1) of the Tobacco Products Duty Act 1979 (as amended by Finance Act 1981, Sch 19, Pt III) which provides that tobacco products imported into or manufactured in the United Kingdom are subject to a duty of excise at the rates shown in a table in Schedule 1 to the Act. Such duty becomes payable at an excise duty point. Section 1(1) of the Finance (No 2) Act 1992 provides that: the Commissioners may by regulations make provision, in relation to any duties of excise on goods, for fixing the time when the requirement to pay any duty with which goods become chargeable is to take effect (the excise duty point). By section 1(3) of the 1992 Act, regulations made under the section may provide for the excise duty point for any goods to be at such times as may be prescribed. Under section 1(4) where regulations prescribe an excise duty point for any goods, they may also make provision (a) specifying the person or persons on whom the liability to pay duty on the goods is to fall at the excise duty point and (b) where more than one person is to be liable to pay the duty, specifying whether the liability is to be both joint and several. Regulation 12(1) of the Tobacco Products Regulations 2001 (SI 2001/1712) provides that the excise duty point for tobacco products is the time when the tobacco products are charged with duty. In relation to imported tobacco, therefore, the excise duty point arises at the point of importation into the United Kingdom because, by virtue of section 2(1) of the Tobacco Products Duty Act 1979, that is the point when duty becomes chargeable. In the case of the Mackles the excise duty point arose when the ship carrying the cigarettes entered the limits of the port at Southampton Docks see section 5(2)(a) of the Customs and Excise Management Act 1979 which provides that, where the goods are brought by sea, the time of their importation shall be deemed to be the time when the ship carrying them comes within the limits of a port; R v White [2010] EWCA Crim 978, [2010] STC 1965 at para 57 and R v Bajwa (Naripdeep) [2011] EWCA Crim 1093, [2012] 1 WLR 601, para 32. The excise duty point in respect of the cigarettes involved in Mr McLaughlins case is unknown. By virtue of regulation 13(1) of the 2001 Regulations the person liable to pay the duty is the person holding the tobacco products at the excise duty point. But regulation 13(2) provides that the persons described in regulation 13(3) are jointly and severally liable to pay the duty with the person holding the tobacco products at the excise duty point (ie, the person specified in regulation 13(1)). Included in this group are the occupier of the registered premises in which the tobacco products were last situated before the excise duty point (regulation 13(3) (a)); any registered excise dealer (RED) to whom the tobacco products were consigned (regulation 13(3) (b)); and any person who caused the tobacco products to reach an excise duty point (regulation 13(3) (e)). None of the categories of person described in regulation 13(3) fits the circumstances of the Mackle brothers or Mr McLaughlin. There is no evidence that they held the tobacco products at the excise duty point. Nor is there evidence that they caused the tobacco products to reach the excise duty point. In this connection it should be noted that the Court of Appeal in White held (correctly in my view) that regulation 13(3) (e) must be interpreted in conformity with section 1(4) of the Finance (no. 2) Act 1992, so that a person who has caused the tobacco products to reach an excise duty point is not liable for the duty unless he has retained a connection with the goods at the excise duty point. As Aikens LJ said at para 39 of Bajwa the upshot of the relevant decisions on regulation 13 is that a person cannot be liable to pay duty on tobacco imported by sea in a ship unless one of two conditions is satisfied. Either he must be holding the tobacco at the excise duty point, or he must both have caused the tobacco products to reach the excise duty point and he must also have retained a connection with the goods at that point. The 2001 Regulations provide a sharp and (for the purposes of this case) pertinent contrast with their predecessor, the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 (SI 1992/3135). The 1992 Regulations provided that a significantly wider number of categories of person were liable for import duty than are liable under the 2001 Regulations. Firstly, by virtue of regulation 5(1) of the 1992 Regulations, the person liable to pay the duty in the case of an importation of excise goods from another member state was the importer of the excise goods. More relevantly for this case, however, was the provision in regulation 5(3) of the 1992 Regulations that among the categories of person who would be jointly and severally liable with the importer of the goods for the duty was any consignee of the excise goods. For a discussion of the constricting of the classes of individual liable for duty on tobacco products which the 2001 Regulations introduced, see R v Khan [2009] EWCA Crim 588, para 2. Despite the fact that the 1992 Regulations were disapplied in relation to tobacco products by regulation 28 of the 2001 Regulations, the significant narrowing of the categories of person liable for excise duty on imported tobacco which was brought about by the 2001 Regulations was not immediately appreciated by the revenue authorities. Indeed it was not until a sharp eyed lawyer in the Asset Forfeiture Division of the Revenue and Customs Prosecutions Office, reviewing a draft judgment in the case of R v Chambers [2008] EWCA Crim 2467, noticed that the Crown in that case had relied on the 1992 Regulations which, as she knew, had been superseded by the 2001 Regulations (so far as tobacco products were concerned) that the true picture began to emerge. A trilogy of decisions of the House of Lords in R v May [2008] UKHL 28, [2008] AC 1028, R v Green [2008] UKHL 30, [2008] AC 1053 and Jennings v Crown Prosecution Service [2008] UKHL 29, [2008] AC 1046, had established that the evasion by a smuggler of duty or VAT constitutes, for the purposes of confiscation proceedings, the obtaining of a pecuniary advantage only if he personally owes that duty or VAT. Giving effect to those decisions, the Court of Appeal in Chambers held that a day labourer who had merely assisted in unloading contraband tobacco did not obtain a benefit by way of a pecuniary advantage in the form of the evasion of excise duty since he was not himself under a liability for the payment of that duty. Toulson LJ, delivering the judgment of the court, said at para 52: On the hearing of the appeal Mr Cammerman accepted, in our judgment correctly, that the appellant would only have obtained a benefit by way of a pecuniary advantage in the form of the evasion of excise duty if he was himself under a liability for the payment of that duty which he dishonestly evaded. To help somebody else to evade the payment of duty payable by that other person, within intent to defraud, is no less criminal, but in confiscation proceedings the focus is on the benefit obtained by the relevant offender. An offender may derive other benefits from helping a person who is under a liability for the payment of duty to avoid that liability, eg by way of payment for the accessory's services, but that is another matter. In order to decide whether the offender has obtained a benefit in the form of the evasion of a liability, it is necessary to determine whether the offender had a liability which he avoided. In the present case that turns on whether the appellant was liable for the payment of excise duty on the relevant goods under the relevant Regulations. As observed in para 22 above, the Court of Appeal in the present cases accepted that if the appellants were not participants in the actual importation of the cigarettes, they would not be liable for the duty on them and could not therefore be said to have obtained a pecuniary advantage. Although this was expressed conditionally, it is clear that the Court of Appeal must have proceeded on the basis that the appellants could not have been liable for payment of excise duty under regulation 13 of the 2001 Regulations. No evidence had ever been presented of the appellants having held the cigarettes at the excise duty point or of their having caused them to reach that point, while retaining a connection with them. Liability for payment of Value Added Tax is, for present purposes, coterminous with liability to pay customs duty on imported goods from outside the European Union. Section 1(1) of the Value Added Tax Act 1994 provides that VAT shall be charged (inter alia) on the importation of goods from places outside the member states. Section 1(4) provides that VAT on the importation of goods from places outside the member states shall be charged and payable as if it were a duty of customs. Thus, whoever has liability for the payment of customs duty on goods imported from outside the EU also has a liability to pay the VAT arising on their import. Provisions relating to confiscation in Northern Ireland The offence to which the Mackles pleaded guilty occurred before 24 March 2003. The relevant confiscation legislation in their case, therefore, was the Proceeds of Crime (Northern Ireland) Order 1996 (SI 1996/1299). Article 2(6) of this Order provided that a person who obtains property, or derives a pecuniary advantage, as a result of or in connection with the commission of an offence has benefited from the offence. Article 2(7) provided that any property obtained and any pecuniary advantage derived by a person as a result of or in connection with the commission of an offence was his benefit from the offence. Article 2(7)(c) stated that the value of the benefit was the value of the property or a sum of money equal to the value of the pecuniary advantage or the aggregate of the values of the property and money. Mr McLaughlins offence took place after the coming into force of the Proceeds of Crime Act 2002 (POCA). Section 156(4)(a) and (c) provides that if a defendant has been convicted of an offence before the Crown Court, it must be determined whether he has a criminal lifestyle. If it is not concluded that he has such a lifestyle (and that was the position in relation to all the appellants in this appeal) the court must decide whether the convicted person has benefited from his particular criminal conduct. If it is determined that he has so benefited, the court must decide on the recoverable amount, and make an order (a confiscation order) requiring him to pay that amount. The recoverable amount for the purposes of section 156 is an amount equal to the defendant's benefit from the conduct concerned: section 157(1). But by section 157(2), if the defendant shows that the available amount (as defined in section 159) is less than the recoverable benefit, the recoverable amount is the available amount, or a nominal amount, if the available amount is nil. This is the provision by which one of Mr McLaughlins co accused had the recoverable amount in his case fixed at nil. Section 224(4) and (5) of POCA are in similar terms to article 2(6) and (7) of the 1996 Order. The basis on which the appellants were said to have benefited from their offences The prosecution statements prepared by Ms McMullan in respect of the Mackle brothers were identical in all material respects. And the basis on which the appellants were said to have benefited from their criminal conduct was likewise identical. It was also unequivocal. In respect of each appellant, she asserted that the benefit was 1,036,775.77, a figure made up of evaded tobacco product duty of 845,596.37 and evaded VAT of 191,179.40. It is clear from Ms McMullans calculations that confiscation was sought against each appellant on the basis that they had derived a pecuniary advantage in the total amount of duty/VAT evaded. This renders academic Mr McCollums argument (referred to in para 12 above) that he had not made any concession about the value of the benefit to the Mackles so far as concerned the confiscation proceedings. The plain and inescapable fact is that the case made by the prosecution was that the appellants had obtained a benefit in the form of evasion of the duty. No other form of benefit was advanced or even mooted. The same holds true for the case made against Mr McLaughlin. No suggestion was made that he had derived a benefit from his criminal conduct other than by the evasion of the excise duty and VAT. Indeed, on the evidence presented, it is difficult to see how any other case could have been made. Nothing in the prosecution case suggested a physical connection between Mr McLaughlin and the cigarettes. And, as in the case of the Mackles, the total amount of the benefit that Mr McLaughlin and his co accused were said to have obtained was calculated solely by reference to the amount of the evaded duty. The respondent in its printed case has asserted that there was no evidence before the Court of Appeal that the appellants had been wrongly advised as to the effect of the 2001 Regulations. It has also been stated that the respondent has not accepted that incorrect advice was given. It is claimed that it was incumbent on the appellants to make an application to adduce fresh evidence before the Court of Appeal, or for that court to inquire of trial counsel as to the nature of the advice that was given before any conclusion could be reached about the basis on which the appellants consented to the confiscation orders. This argument misses the essential point in my view. This is that the only basis on which the appellants were said to have obtained a benefit was that they had evaded the duty and VAT payable. No other possible basis of benefit was canvassed. An acceptance that they had obtained a benefit on that account inevitably involved a mistake of law. No evidence is needed to establish that proposition. On the hearing of the appeal Mr McCollum suggested that the benefit which the appellants had obtained was the equivalent of the evaded duty. The cigarettes had a saleable value which was enhanced, he claimed, by the duty that had been evaded. Even if it could be established that the saleable value of the cigarettes had been increased by precisely the amount of the evaded duty (and that seems, at best, highly questionable), the important point is that this is not the basis on which the case against the appellants was presented on the confiscation proceedings. Moreover, the saleable value of the contraband tobacco (as distinct from the alleged pecuniary advantage from evasion of a legal liability, which was the basis of the prosecutions claim in the proceedings) would be a benefit to the appellants only if they obtained the property as a result of or in connection with the commission of the crime. I return to this point at para 59. If they did not obtain the property, its value, whether enhanced or not, would not be a benefit to them. The prosecution had firmly espoused the case that the benefit obtained by the appellants took the form of a pecuniary advantage derived from evasion of the duty on the cigarettes. This basis of benefit was accepted uncritically by the sentencing judges. It is not altogether surprising that they should have done so. The confiscation orders were not only made on consent; they were the product of discussions between the parties. Unlike the position in Revenue and Customs Prosecutions Office v Mitchell [2009] EWCA Crim 214; [2009] 2 Cr App R (S) 463, (to which reference will be made at para 51 below) the appellants had not indicated disagreement with the amount which the revenue authorities claimed was the benefit that they had obtained. As the Mitchell case demonstrates, however, sentencing judges should be astute to ensure that they are satisfied that agreements on the amount to be recovered by way of confiscation orders are soundly based. In any event, it is clear that the basis on which both judges accepted that the appellants had benefited by their criminal conduct was that they had evaded duty on the cigarettes. As is now apparent, because their liability to pay duty could not be established, this was not a correct legal basis on which to find that the appellants had obtained a benefit. Is a consent to a confiscation order made under a mistake of law binding? As noted at para 24 above the Court of Appeal held that, even if the appellants were incorrectly advised to consent to the confiscation orders, they were bound by the orders made on consent. Unfortunately, it appears that the court was not referred to the decisions of the House of Lords in R v Emmett [1998] AC 773 and the Court of Appeal in R v Bell [2011] EWCA Crim 6 on this question. In Emmett a confiscation order had been made by consent under the Drug Trafficking Offences Act 1986 following the appellants plea of guilty to being knowingly concerned in the importation of a controlled drug contrary to section 170(2) of the Customs and Excise Management Act 1979. The Court of Appeal certified the question whether it was open to the defendant to appeal against the order on the ground that his acceptance of the prosecutions case as to his liability was based on either a mistake of law or a mistake of fact. Section 3 of the 1986 Act provided: Where(a) there is tendered to the Crown Court by the prosecutor a statement as to any matters relevant to the determination whether the defendant has benefited from drug trafficking or to the assessment of the value of his proceeds of drug trafficking; and (b) the defendant accepts to any extent any allegation in the statement, the court may, for the purposes of that determination and assessment, treat his acceptance as conclusive of the matters to which it relates. It had been argued by the prosecution in Emmett that the effect of this section was that an appeal such as the appellant sought to advance was implicitly excluded. That argument was rejected by Lord Steyn (with whom the other members of the Appellate Committee agreed). At pp 782 783 he said: Earlier in this century it may not have been possible to put forward as a ground of appeal that the plea of guilty arose from a mistake of law or fact of the defendant: R v Forde [1923] 2 KB 400, 403, per Avory J. Nowadays it is clear that as a matter of jurisdiction the Court of Appeal has power in such a case to consider an argument that the plea of guilty was induced by a fundamental mistake of law or fact: see R v Boal [1992] QB 591 (a mistake of law); R v Lee (Bruce) [1984] 1 WLR 578, 583E (a mistake of fact) and Blackstone's Criminal Practice, 7th ed. (1997), pp. 1512 1514, para. D22.12. Given that the powers of the Court of Appeal extend to cases when a plea was entered on a mistaken view of the law or fact, it is difficult to see what rational basis there could be to exclude such a right of appeal under section 3(1). Even drug traffickers have rights and they, too, are entitled to justice. It is to be remembered that under POCA the court must itself decide whether the convicted person has benefited from his particular criminal conduct. The power to make a confiscation order arises only where the court has made that determination. A defendants consent cannot confer jurisdiction to make a confiscation order. This is particularly so where the facts on which such a consent is based cannot as a matter of law support the conclusion that the defendant has benefited. On the other hand, if it is clear from the terms on which a defendant consents to a confiscation order, that he has accepted facts which would justify the making of an order, a judge, provided he is satisfied that there has been an unambiguous acceptance of those facts from which the defendant should not be permitted to resile, will be entitled to rely on the consent. This is so not because the defendant has consented to the order. It is because his acceptance of facts itself constitutes evidence on which the judge is entitled to rely. Provided the acceptance of the facts is unequivocal, and particularly where it is given after legal advice which proves to be sound, the judge need not mount a further investigation. It should be emphasised, however, that this is because the judge can in those circumstances himself be satisfied on the evidence that the basis for making a confiscation order has been made out. The proper discharge by a judge of his statutory duty to satisfy himself that a defendant has benefited by his criminal conduct is well illustrated by the case of Mitchell (referred to above at para 47). In that case the respondent had pleaded guilty to an offence under section 170(2) of the 1979 Act. The goods involved were tobacco products. In subsequent confiscation proceedings the prosecution claimed that the respondent had benefited in respect of the tobacco and had obtained a pecuniary advantage by evading the excise duty payable. The respondent contended that the only benefit he had received from the offence was 100 paid to him in cash for helping to load the tobacco. The lawyers acting on behalf of the respondent accepted that, whatever his real benefit might have been as a matter of fact, under the terms of POCA, he obtained the benefit alleged by the prosecution. Troubled about the correctness of this concession, the sentencing judge, Recorder Males QC, declined to act on it. After considering the position and hearing argument, he made a confiscation order against the respondent for 100, the amount that he had claimed to have received for his services as a loader. The Court of Appeal not only endorsed this approach, it paid tribute to the way in which the Recorder had dealt with the case. In Bell, confiscation orders were made in respect of evaded duty on tobacco products smuggled into the United Kingdom for resale. The prosecution had wrongly claimed benefit in the sum of the evaded duty as a pecuniary advantage although (it transpired) the defendants could not in law be liable for it. The defendants had consented to confiscation orders in those sums. On their appeal against the confiscation orders the prosecution argued that because the defendants had consented to the orders, they were bound by them. It was submitted that it was for the defendants to spot the error and having not done so, leave to appeal should be refused. This submission was forthrightly rejected by Hooper LJ, who delivered the judgment of the court. Stating that the arguments were neither convincing nor attractive, Hooper LJ said at para 14: In our view it would be a grave injustice not to grant leave in cases such as the present cases on the basis that there has been a previous misconception as to the state of the law, there would be a substantial injustice if we did not grant leave. On the same basis it would be manifestly unfair to require the appellants in this case to be bound by their consent to the confiscation orders when, as pointed out in para 45 above, the only possible explanation for the consent was that it was given under a mistake of law. The Court of Appeal in para 40 of its judgment had suggested that the appellants were, on advice, prepared to consent to confiscation orders by way of a compromise of the legal issues that arose as between them and the Crown in respect of the confiscation applications and that they knew perfectly well what their respective roles were in the joint enterprises and what was likely to emerge if they contested the applications for the confiscation orders. This suggests that the court had concluded that there were tactical reasons for consenting to the orders which were not associated with the erroneous belief that the appellants were legally liable to pay the duty and VAT. But there was no evidence to support such a conclusion. On the contrary, the court had been told by the legal representatives of the appellants that the lawyers who had appeared for them on the confiscation proceedings had wrongly advised them that they were liable for the duty and VAT. No challenge to that claim was made by the Crown nor was it contended that evidence was required to show that wrong advice had in fact been given. Since the only basis on which it had been claimed against the appellants that they had benefited was that they were liable for the duty and VAT, the obvious, indeed the only, inference to be drawn was that they had agreed to the consent orders because they believed that they were indeed liable on that basis. The prosecution had firmly committed itself to that unique case. If the appellants had contested the sole basis on which the prosecution claimed that they had benefited viz that they had evaded duty for which they were liable, there is no reason to suppose that this would have exposed them to the risk of disadvantageous evidence which was entirely unconnected with the case that the prosecution had advanced. A finding that there were reasons for the appellants consenting to the confiscation orders other than that they had been advised that they were liable to pay the duty which had been evaded inevitably involves a measure of speculation. I would therefore re formulate the first certified question so as to properly reflect the particular circumstances of this case; in its amended form the question reads, Is a defendant precluded from appealing against a confiscation order made by consent on the ground that the consent was based on a mistake of law, as a result of wrong legal advice and I would answer that question, no. The second certified question By way of preamble to consideration of the second certified question, it should be noted that the reason the Court of Appeal dismissed the appeals was that, in its estimation, an alternative basis from that advanced by the Crown existed whereby the appellants could be found to have benefited from their admitted criminal conduct. This circumstance, taken together with the consent to the confiscation orders, was deemed sufficient to refuse to allow the appeals. Where the original basis on which a confiscation order was made is no longer viable, a decision to confirm the order on different grounds must be made with great care and only when it is clear that the person against whom it is to be made has had ample opportunity to address the altered grounds on which it is proposed to make the order. Of course, it may be clear on the established or admitted facts that those who were made subject to a confiscation order on the erroneous basis that they were liable to pay the excise duty under regulation 13(1), are in fact liable under regulation 13(2) because they caused the goods to reach the excise duty point or because they had obtained the value of the goods themselves: see, in this context, R v Khan [2009] EWCA Crim 588 at para 8. In such circumstances it would be wrong to quash the confiscation order if it is plain that the order would have been made if the proper basis of liability had been correctly identified. It is apparent that the Court of Appeal in the present case did not regard the appellants as having obtained a benefit on either of the two bases considered in Khan. There was no evidence that they had caused the tobacco to reach the excise duty point and no basis on which it could be said that they had received the benefit of the cigarettes themselves. The court followed a different route. It said, firstly, (at para 27) that those who come into possession of goods knowing that duty on them has been evaded and, as part of a joint enterprise, take advantage of the economic advantages flowing from the evasion of the duty may gain a financial advantage flowing from their participation in the ongoing enterprise. Secondly, the Court of Appeal found that the joint actions of the appellants, at least arguably, involved possession and control of the cigarettes by those involved in the participation and the enterprise. (para 35 emphasis added). It is to be noted that the Court of Appeal concluded that these were possible alternative bases on which it might be concluded that the appellants had obtained a benefit. It decided that it was unnecessary and inappropriate for the sentencing judges to examine these alternative bases of liability because of the appellants consent to the making of confiscation orders. For the reasons given above, I do not consider that the trial judges could in these cases be relieved of their duty to be satisfied that the appellants had in fact obtained a benefit. It follows that I consider that, if these alternative bases of liability were viable, they would have had to be considered by the judges making the confiscation orders and that it would have been necessary that the appellants have a proper opportunity to address the different foundation on which the confiscation orders might be made against them. On that account, I do not consider that the Court of Appeals affirmation of the orders made can be upheld. The second certified question is based on the premise that a defendant has had physical possession of the goods and played an active role in the handling of them. What is meant by possession of goods for the purpose of confiscation proceedings and the significance of a finding as to the degree of possession involved has exercised the courts in England and Wales on a number of occasions. It again appears that not all of those cases can have been cited to the Court of Appeal since some of them have not been referred to in the judgment. In May, dealing with the requirement under the 1986 Drug Trafficking Offences Act that a defendant be shown to have benefited from his criminal conduct, at para 15 Lord Bingham said: under the 1986 Act the first question was always whether, on the facts (and allowing permissible inferences) the defendant had benefited by receipt of any payment or other reward, which a mere intermediary might possibly not. It does not necessarily follow from the mere possession of drugs that a person is not a mere minder or custodian: see R v J [2001] 1 Cr App R (S) 273; R v Johannes [2002] 2 Cr App R (S) 109. In other words, it is not to be assumed that because someone has handled contraband, even if that is in the course of a joint criminal enterprise, he has, on that account alone, benefited from that possession. This reasoning applies to the concept of obtaining benefit in both the 1996 Order and POCA. At para 48 of May Lord Bingham set out a number of principles to be followed by courts dealing with applications for confiscation orders. The first of these was that the relevant legislation is intended to deprive defendants of the benefit they have gained from relevant criminal conduct, whether or not they have retained such benefit, within the limits of their available means. It does not provide for confiscation in the sense understood by schoolchildren and others, but nor does it operate by way of fine. Later, in the same para, Lord Bingham observed that mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property. The House of Lords returned rather more explicitly to this theme in Jennings. In that case (as in May) the relevant provision was section 71(4) of the Criminal Justice Act 1988 which, among other things provided that a person benefits from an offence if he obtains property as a result of or in connection with its commission. At para 13 Lord Bingham said: In its opinion in R v May the committee endeavoured to explore the meaning of section 71(4). The focus must be and remain on the language of the subsection. The committee regards the meaning of the subsection as in substance the same as the equivalent provisions of the drug trafficking legislation. There is a real danger in judicial exegesis of an expression with a plain English meaning, since the exegesis may be substituted for the language of the legislation. It is, however, relevant to remember that the object of the legislation is to deprive the defendant of the product of his crime or its equivalent, not to operate by way of fine. The rationale of the confiscation regime is that the defendant is deprived of what he has gained or its equivalent. He cannot, and should not, be deprived of what he has never obtained or its equivalent, because that is a fine. This must ordinarily mean that he has obtained property so as to own it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else. (emphasis added) At para 14 Lord Bingham dealt with the question of whether a person who contributes to property being obtained by another might be said to have obtained benefit from it. He said that a persons acts may contribute significantly to property being obtained without his obtaining it. a person benefits from an offence if he obtains property as a result of or in connection with its commission, and his benefit is the value of the property so obtained, which must be read as meaning obtained by him. The focus must be, as Lord Bingham has said, on what benefit the defendant has actually gained. Simply because someone has embarked on a joint criminal enterprise, it does not follow that they have obtained an actual benefit. Being engaged in a conspiracy does not, of itself, establish that each conspirator has obtained the property which is the product of the conspiracy. Thus in R v Sivaraman [2008] EWCA Crim 1736, [2009] 1 Cr App R (S) 469, at para 12 (6) the Court of Appeal said: Where two or more defendants obtain property jointly, each is to be regarded as obtaining the whole of it. Where property is received by one conspirator, what matters is the capacity in which he receives it, that is, whether for his own personal benefit, or on behalf of others, or jointly on behalf of himself and others. This has to be decided on the evidence: Green, para 15. By parity of reasoning, two or more defendants may or may not obtain a joint pecuniary advantage; it depends on the facts. In the subsequent case of R v Allpress [2009] EWCA Crim 8, [2009] 2 Cr App R (S) 58, an argument that the judgment in Sivaraman on this point was wrong was firmly rejected: see para 30. In delivering the judgment of the Court of Appeal (the Vice President, Hughes LJ, Toulson LJ, Rafferty J and Maddison J) Toulson LJ dealt with two misconceptions that had also featured in Sivaraman. At para 31 he said this: In Sivaraman the court also addressed two misconceptions which subsequent cases suggest may still be common. One was that in assessing benefit in a conspiracy case each conspirator is to be taken as having jointly obtained the whole benefit obtained by the conspiracy. A conspiracy is not a legal entity but an agreement or arrangement which people may join or leave at different times. In confiscation proceedings the court is concerned not with the aggregate benefit obtained by all parties to the conspiracy but with the benefit obtained, whether singly or jointly, by the individual conspirator before the court. The second misconception is a variant of the first. It is that anybody who has taken part in a conspiracy in more than a minor way is to be taken as having a joint share in all benefits obtained from the conspiracy. This is to confuse criminal liability and resulting benefit. The more heavily involved a defendant is in a conspiracy, the more severe the penalty which may be merited, but in confiscation proceedings the focus of the inquiry is on the benefit gained by the relevant defendant. In the nature of things there may well be a lack of reliable evidence about the exact benefit obtained by any particular conspirator, and in drawing common sense inferences the role of a particular conspirator may be relevant as a matter of fact, but that is a purely evidential matter. Two assumptions must be guarded against, therefore. Firstly, it is not to be assumed that because one has handled contraband one has had possession of it in the manner necessary to meet the requirements of the relevant legislation. Secondly, participation in a criminal conspiracy does not establish that one has obtained a benefit as Toulson LJ said, this is to confuse criminal liability with resulting benefit. The Court of Appeal in the present case did not examine the evidence with a view to ascertaining whether the appellants could be shown to have had possession of the cigarettes in such a way as is contemplated by the legislation. Before a confiscation order could be made in any of the appellants cases, such an examination must take place. In its absence the Court of Appeals decision cannot be upheld. Furthermore, the courts conclusion that the appellants could be considered to have obtained a benefit simply because they admitted participation in a joint criminal enterprise cannot, in the light particularly of the decisions in Sivaraman and Allpress, be accepted. I would therefore answer the second certified question, Not necessarily. Playing an active part in the handling of goods so as to assist in their commercial realisation does not alone establish that a person has benefited from his criminal activity. In order to obtain the goods for the purposes of section 156 of POCA 2002 or article 8 of the Proceeds of Crime (Northern Ireland) Order 1996, it must be established by the evidence or reasonable inferences drawn therefrom that such a person has actually obtained a benefit. On an appeal against sentence the Court of Appeal has power under section 10(3) of the Criminal Appeal (Northern Ireland) Act 1980 to quash the sentence passed by the Crown Court and pass such other sentence as is authorised by law. Section 10(3A) of the 1980 Act (as inserted by the Coroners and Justice Act 2009, section 141(2)) provides that where the Court of Appeal exercises its power under subsection (3) to quash a confiscation order, the court may, instead of passing a sentence in substitution for that order, direct the Crown Court to proceed afresh under the relevant enactment. Section 33(3) (as substituted by the Constitutional Reform Act 2005, section 40, Schedule 9, para 33(4)(b)) provides that, for the purpose of disposing of an appeal under this Part of the Act, the Supreme Court may exercise any powers of the Court of Appeal. I would therefore quash the confiscation orders and remit the cases to the trial courts to proceed afresh in light of this judgment. |
Two appeals are before the Court by prisoners who were convicted of murder and sentenced to life imprisonment. In the case of the appellant Peter Chester, the tariff period fixed expired many years ago, but he has not yet satisfied the Parole Board that it is no longer necessary for the protection of the public that he should be confined. In the case of the appellant George McGeoch, the sentencing judge fixed a punishment part of 13 years which expired on 7 October 2011, but he has committed various intervening offences including violently escaping from lawful custody in 2008 for which he received a seven and a half year consecutive sentence. The result is that the earliest date on which McGeoch could be considered for parole is July 2015. Both the appellants claim that their rights have been and are being infringed by reason of their disenfranchisement from voting. Chesters claim for judicial review was issued in December 2008 and relates to voting in United Kingdom and European Parliamentary elections. It relies on Article 3 of Protocol No 1 (A3P1) as incorporated into domestic law by the Human Rights Act 1998 and directly on European Union law. Burton J and the Court of Appeal (Lord Neuberger MR, Laws and Carnwath LJJ), [2010] EWCA Civ 1439, [2011] 1 WLR 14346, dismissed Chesters claim. They held that it was not the courts role to sanction the government for continuing delay in implementing the European Court of Human Rights decision in Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 or to repeat the declaration of incompatibility issued by the Scottish Registration Appeal Court in Smith v Scott 2007 SC 345 or issue advice as to the form which compatible legislation might take. They held that European Union law raises no separate issue. McGeochs claim for judicial review was issued in February 2011 and related to voting in local municipal and Scottish Parliamentary elections. It relies solely on European Union law. The Extra Division dismissed the petition on the ground that European Union law only conferred a right to vote in municipal elections in a Member State on European Union citizens residing in a Member State of which they were not nationals. It also considered that Scottish Parliamentary elections were not for this purpose municipal elections. Before the Extra Division McGeoch was refused permission to amend to include a complaint relating to voting in European Parliamentary elections, but a corresponding amendment was permitted by the Supreme Court by order of 15 October 2012. The following summarises my conclusions: (A) Human Rights Act In respect of Chesters claim under the Human Rights Act, which only relates to elections to the European and United Kingdom Parliaments (para 2), I would decline the Attorney Generals invitation to this Court not to apply the principles in Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 (Hirst (No 2)) and Scoppola v Italy (No 3) (2012) 56 EHRR (paras 34 35) (Scoppola), but also decline to make any further declaration of incompatibility with the Convention rights (paras 39 42). (B) European law a. In respect of McGeochs and Chesters claims under European law, which can at most relate to elections to the European Parliament and municipal authorities (paras 9, 45 and 46), I conclude that European law does not incorporate any right to vote paralleling that recognised by the European Court of Human Rights in its case law or any other individual right to vote which is engaged or upon which, if engaged, they are able to rely (paras 46 47, 58, 59, 63 64 and 68). b. Had European law conferred any right to vote on which McGeoch and Chester can rely: i. the only relief that might have been considered would have been a generally phrased declaration that the legislative provisions governing eligibility to vote in European Parliamentary and municipal elections in the United Kingdom were inconsistent with European Community or Union law but that would not have appeared appropriate in the particular cases of Chester and McGeoch (para 72); ii. the general ban on voting in European Parliamentary and municipal elections could not have been disapplied as a whole (para 73); iii. it would not have been possible to read the RPA section 3 or EPEA section 8 compatibly with European law (para 74); iv. the Supreme Court could not itself devise a scheme or arrangements that would or might pass muster with European law; that would be for Parliament (para 74); vs neither of the appellants could have had any arguable claim for damages in respect of any breach of European law which may be involved in RPA section 3 and/or EPEA section 8 (paras 82 83). (C) European Court of Justice The resolution of these appeals does not necessitate a reference to the European Court of Justice. In so far as it raises issues of European law for determination, they are either not open to reasonable doubt or involve the application by this Court to the facts of established principles of European law (para 84). (D) Both appeals fall therefore, in my opinion, to be dismissed (para 85). Legislation Entitlement to vote in parliamentary and local government elections in the United Kingdom is governed by the Representation of the People Act 1983 (RPA). Section 1, as substituted by section 1 of the Representation of the People Act 2000, provides that: (1) A person is entitled to vote as an elector at a parliamentary election in any constituency if on the date of the poll he (a) is registered in the register of parliamentary electors for that constituency; (b) is not subject to any legal incapacity to vote (age apart); (c) is either a Commonwealth citizen or a citizen of the Republic of Ireland; and (d) is of voting age (that is, 18 years or over). Section 2 provides in similar terms in relation to local government elections, but with the addition in (c) of the words or a relevant citizen of the Union, to meet the requirements of what is now article 22(1) TFEU. Section 3 of the Act, as amended by section 24 of and paragraph 1 of Schedule 4 to the Representation of the People Act 1985, disenfranchises serving prisoners, providing: Disfranchisement of offenders in prison etc (1) A convicted person during the time that he is detained in a penal institution in pursuance of his sentence or unlawfully at large when he would otherwise be so detained is legally incapable of voting at any parliamentary or local government election. (2) For this purpose (a) convicted person means any person found guilty of an offence (whether under the law of the United Kingdom or not), . , but not including a person dealt with by committal or other summary process for contempt of court; (c) a person detained for default in complying with his sentence shall not be treated as detained in pursuance of the sentence The effect of the last words of section 3(2)(a) and of section 3(2)(c) is to exclude persons imprisoned for contempt of court or default in paying a fine. Entitlement to vote in European Parliamentary elections is provided domestically by the European Parliamentary Elections Act 2002 (EPEA). For present purposes section 8(2) and (3) are relevant, and they confer such entitlement on a person: (2) . if on the day of the poll he would be entitled to vote as an elector at a parliamentary election in a parliamentary constituency wholly or partly comprised in the electoral region, and (a) the address in respect of which he is registered in the relevant register of parliamentary electors is within the electoral region, or (b) his registration in the relevant register of parliamentary electors results from an overseas elector's declaration which specifies an address within the electoral region. The disenfranchisement enacted by RPA section 3 is thus extended to apply to European Parliamentary elections. Under the Scotland Act 1998, section 11(1), the persons entitled to vote as electors at an election for membership of the Scottish Parliament in any constituency are those who on the day of the poll would be entitled to vote as electors at a local government election in an electoral area falling wholly or partly within the constituency. In effect, RPA section 3 is extended to Scottish Parliamentary elections. A3P1 reads: The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. The European Parliament is for this purpose a legislature within the meaning of A3P1: see Matthews v United Kingdom (1999) 28 EHRR 361. So too is clearly the Scottish Parliament, under the devolution arrangements instituted by the Scotland Act, giving it wide ranging legislative authority. Lord Hope described as such in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868, para 46: The Scottish Parliament takes its place under our constitutional arrangements as a self standing democratically elected legislature. Its democratic mandate to make laws for the people of Scotland is beyond question. Acts that the Scottish Parliament enacts which are within its legislative competence enjoy, in that respect, the highest legal authority. The United Kingdom Parliament has vested in the Scottish Parliament the authority to make laws that are within its devolved competence. The conclusion that the Scottish Parliament is a legislature within A3P1 was a conclusion implicitly accepted by the European Court of Human Rights in McLean and Cole v United Kingdom (Application Nos 12626/13 and 2522/12) (unreported) given 11 June 2013, and was shared by Lord Reed in the Extra Division in the present case (para 29 of his judgment). Conversely, a local government body or municipal authority is not part of a legislature in the United Kingdom within A3P1: McLean and Cole v United Kingdom. Under European Union law, as it stands since 1 December 2009 when the Treaty of Lisbon came into force, a wide range of provisions is potentially relevant. Articles 6, 10 and 14 TEU provide: COMMON PROVISIONS . 6.1. The Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union of 7 December 2000, as adapted at Strasbourg, on 12 December 2007, which shall have the same legal value as the Treaties. The provisions of the Charter shall not extend in any way the competences of the Union as defined in the Treaties. The rights, freedoms and principles in the Charter shall be interpreted in accordance with the general provisions in Title VII [Articles 5154] of the Charter governing its interpretation and application and with due regard to the explanations referred to in the Charter, that set out the sources of those provisions. 6.3. Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Unions law. PROVISIONS ON DEMOCRATIC PRINCIPLES . 10. 1. The functioning of the Union shall be founded on representative democracy. 10.2. Citizens are directly represented at Union level in the European Parliament. Member States are represented in the European Council by their Heads of State or Government and in the Council by their governments, themselves democratically accountable either to their national Parliaments, or to their citizens. 10.3. Every citizen shall have the right to participate in the democratic life of the Union. Decisions shall be taken as openly and as closely as possible to the citizen. 10.4. Political parties at European level contribute to forming European political awareness and to expressing the will of citizens of the Union. PROVISIONS ON THE INSTITUTIONS . 14.3. The members of the European Parliament shall be elected for a term of five years by direct universal suffrage in a free and secret ballot. The pre Lisbon Treaty predecessor of article 14.3 was article 190.1 and 190.4, reading: 190.1 The representatives in the European Parliament of the peoples of the States brought together in the Community shall be elected by direct universal suffrage. 4 The European Parliament shall draw up a proposal for elections by direct universal suffrage in accordance with a uniform procedure in all Member States or in accordance with principles common to all Member States. To give effect to article 190.4 the Council of Ministers agreed the Act concerning the election of the representatives of the European Parliament by direct universal suffrage, annexed to Council Decision 76/787/ECSC, EEC, Euratom of 20 September 1976 (0J 1976 L 278, p 1), as amended by Council Decision 2002/772/EC, Euratom of 25 June 2002 and 23 September 2002 (OJ 2002 L 283, p 1) (the 1976 Act), which continues to apply in the post Lisbon Treaty era. The 1976 Act provides inter alia by what is now article 7: Subject to the provisions of this Act, the electoral procedure shall be governed in each Member State by its national provisions. These national provisions, which may if appropriate take account of the specific situation in the Member States, shall not affect the essentially proportional nature of the voting system. Voting in European Parliamentary and municipal elections is dealt with more specifically by Articles 20 and 22 TFEU in a Part headed Non discrimination and Citizenship of the Union: 20.1. Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall be additional to and not replace national citizenship. 2. Citizens of the Union shall enjoy the rights and be subject to the duties provided for in the Treaties. They shall have, inter alia: (a) the right to move and reside freely within the territory of the Member States; (b) the right to vote and to stand as candidates in elections to the European Parliament and in municipal elections in their Member State of residence, under the same conditions as nationals of that State; (c) the right to enjoy, in the territory of a third country in which the Member State of which they are nationals is not represented, the protection of the diplomatic and consular authorities of any Member State on the same conditions as the nationals of that State; (d) the right to petition the European Parliament, to apply to the European Ombudsman, and to address the institutions and advisory bodies of the Union in any of the Treaty languages and to obtain a reply in the same language. 22.1. Every citizen of the Union residing in a Member State of which he is not a national shall have the right to vote and to stand as a candidate at municipal elections in the Member State in which he resides, under the same conditions as nationals of that State. This right shall be exercised subject to detailed arrangements adopted by the Council, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament; these arrangements may provide for derogations where warranted by problems specific to a Member State. 2. Without prejudice to Article 223(1) and to the provisions adopted for its implementation, every citizen of the Union residing in a Member State of which he is not a national shall have the right to vote and to stand as a Candidate in elections to the European Parliament in the Member State in which he resides, under the same conditions as nationals of that State. This right shall be exercised subject to detailed arrangements adopted by the Council, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament; these arrangements may provide for derogations where warranted by problems specific to a Member State. Article 52 of the Charter of Fundamental Rights (CFR) deals with the Charters scope and interpretation: 1. Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. 2. Rights recognised by this Charter for which provision is made in the Treaties shall be exercised under the conditions and within the limits defined by those Treaties. 3. In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection. 4. In so far as this Charter recognises fundamental rights as they result from the constitutional traditions common to the Member States, those rights shall be interpreted in harmony with those traditions. 5. The provisions of this Charter which contain principles may be implemented by legislative and executive acts taken by institutions, bodies, offices and agencies of the Union, and by acts of Member States when they are implementing Union law, in the exercise of their respective powers. They shall be judicially cognisable only in the interpretation of such acts and in the ruling on their legality. 6. Full account shall be taken of national laws and practices as specified in this Charter. 7. The explanations drawn up as a way of providing guidance in the interpretation of this Charter shall be given due regard by the courts of the Union and of the Member States. The CFR includes the following provisions: Article 39 Right to vote and to stand as a candidate at elections to the European Parliament 1. Every citizen of the Union has the right to vote and to stand as a candidate at elections to the European Parliament in the Member State in which he or she resides, under the same conditions as nationals of that State. 2. Members of the European Parliament shall be elected by direct universal suffrage in a free and secret ballot. Article 40 Right to vote and to stand as a candidate at municipal elections Every citizen of the Union has the right to vote and to stand as a candidate at municipal elections in the Member State in which he or she resides under the same conditions as nationals of that State. The Explanations relating to the CFR, referred to in article 6.1 TEU, state that article 39 CFR: applies under the conditions laid down in the Treaties, in accordance with Article 52(2) of the Charter. Article 39(1) corresponds to the right guaranteed in Article 20(2) [TFEU] (cf. also the legal base in Article 22 [TFEU] for the adoption of detailed arrangements for the exercise of that right) and Article 39(2) corresponds to Article 14(3) [TEU]. Article 39(2) takes over the basic principles of the electoral system in a democratic state. The Explanations state further that article 40 CFR: corresponds to the right guaranteed by Article 20(2) [TFEU] (cf. also the legal base in Article 22 [TFEU] for the adoption of detailed arrangements for the exercise of that right). In accordance with Article 52(2) of the Charter, it applies under the conditions defined in these Articles in the Treaties. European Convention on Human Rights The general significance of A3P1 was summarised by Lord Collins in a judgment with which all members of the Court agreed in R (Barclay) v Lord Chancellor and Secretary of State for Justice [2009] UKSC 9, [2010] 1 AC 464, para 52. I need only to set out parts of his summary, omitting also some of the case references: 53. First, article 3 of the First Protocol enshrines a characteristic principle of an effective democracy. 54. Second, although article 3 is phrased in terms of the obligation of the contracting states to hold elections which ensure the free expression of the opinion of the people rather than in terms of individual rights, article 3 guarantees individual rights, including the right to vote and the right to stand for election . 55. Third, there is room for implied limitations on the rights enshrined in article 3, and contracting states must be given a wide margin of appreciation in this sphere: Mathieu Mohin v Belgium (1987) 10 EHRR 1, para 52; Yumak v Turkey (2008) 48 EHRR 61, para 109(ii). 56. Fourth, the content of the obligation under article 3 varies in accordance with the historical and political factors specific to each state; . 57. Fifth, article 3 is not (by contrast with some other Convention rights, such as those enumerated in articles 8 to 11) subject to a specific list of legitimate limitations, and the contracting states are therefore free to rely in general in justifying a limitation on aims which are proved to be compatible with the principle of the rule of law and the general objectives of the Convention: Yumak, para 109 (iii); Tanase v Moldova (Application No 7/08) (unreported) given 18 November 2008, para 105. 58. Sixth, limitations on the exercise of the right to vote or stand for election must be imposed in pursuit of a legitimate aim, must not be arbitrary or disproportionate, and must not interfere with the free expression of the opinion of the people in the choice of the legislature: Yumak, para 109(iii) to (iv). 59. Seventh, such limitations must not curtail the rights under article 3 to such an extent as to impair their very essence, and deprive them of their effectiveness. They must reflect, or not run counter to, the concern to maintain the integrity and effectiveness of an electoral procedure aimed at identifying the will of the people through universal suffrage. Any departure from the principle of universal suffrage risks undermining the democratic validity of the legislature and the laws which it promulgates: Mathieu Mohin, para 52; Yumak, para 109(iv). The European Court of Human Rights has expressed its attitude to the exclusion or limitation of prisoners voting rights in well known decisions. Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 and Scoppola v Italy (No 3) (2012) 56 EHRR 663 each came first before a simple Chamber of seven judges and then before a Grand Chamber composed of 17 judges. Hirst (No 2) was a claim regarding his disenfranchisement from voting in United Kingdom Parliamentary and local elections brought by a prisoner serving a life sentence in England for manslaughter on the ground of diminished responsibility, whose tariff period had expired without his release. Scoppola was a claim relating to disenfranchisement under Italian law brought by a prisoner serving a sentence of 30 years imprisonment for murder, attempted murder and other offences. In between these two decisions came Greens and MT v United Kingdom (2010) 53 EHRR 710, in which a simple Chamber applied the principles in Hirst (No 2) to complaints of ineligibility to vote in both European and United Kingdom Parliamentary elections. More recently simple Chambers have applied the principles in Hirst (No 2) and Scoppola in Anchugov and Gladkov v Russia (Application Nos 11157/04 and 15162/05) (unreported), 4 July 2013, and Syler v Turkey (Application No 29411/07) (unreported), 17 September 2013. In Greens the Strasbourg Court gave the United Kingdom six months to introduce legislative proposals to amend RPA section 3, a period subsequently extended first pending the decision in Scoppola and then to six months after the Grand Chamber decision in Scoppola, delivered 22 May 2012. A draft Bill was published for pre legislative scrutiny on 22 November 2012 (Cm 8499) and a joint select committee was established to undertake this and to report by 31 October 2013. As envisaged in Hirst (No 2), para 83, the United Kingdom government has continued in this regard to liaise with the Committee of Ministers of the Council of Europe, which has on 6 December 2012 accepted the draft bill and the establishment of the committee as a legitimate means of implementing the judgment in Greens, and at its meeting on 26 September 2013, noted with interest that the pre legislative scrutiny by the committee was now due to be completed by 31 October 2013, underlined the urgency of bringing the legislative process to a conclusion, urged the United Kingdom authorities to provide information on the proposed legislative timescale without further delay and decided to resume examination of the progress made at a meeting in December 2013. This ongoing process was in June 2013 noted by the Strasbourg Court in its judgment in McLean and Cole, paras 36 37, where the Court concluded that, in its light, there was nothing to be gained from examining applications concerning future elections at this time (para 37). In Hirst (No 2), Greens and Scoppola the European Court of Human Rights acknowledged the width of the margin of appreciation, or the wide range of policy alternatives, which States enjoy in relation to voting rights (Hirst (No 2), para 78, Greens, para 114 and Scoppola, para 83). In both Hirst (No 2) and Scoppola the Grand Chamber acknowledged that disenfranchisement of convicted serving prisoners may be considered to pursue the aims of preventing crime and enhancing civic responsibility and respect for the rule of law (Hirst (No 2), paras 74 75 and Scoppola, para 90). In Hirst (No 2) the Grand Chamber (upholding the earlier Chamber) held that the United Kingdoms ban on prisoner voting was a general, automatic and indiscriminate restriction on a vitally important Convention right which fell outside any acceptable margin of appreciation and was incompatible with A3P1 (para 82). A powerfully constituted minority of the Grand Chamber (including its President and future President) dissented. It took as its test whether the restrictions on prisoner voting impair the very essence of the right to vote or are arbitrary (para O III5), and it pointed out that the Court should be very careful not to assume legislative functions and that there was little consensus in Europe about whether or not prisoners should have the vote (para O III6). It noted that a multi party Speakers Conference on Electoral Law in 1968 had unanimously recommended that convicted persons should not be entitled to vote, and that the RPA had been amended in 2000 only to permit remand prisoners and unconvicted mental patients to vote. As to the majority comment that there was no evidence of substantive debate in Parliament about the ban on convicted prisoners voting, the minority disagreed, on the basis that it was not for the Court to prescribe the way in which national legislatures carry out their legislative functions, and it must be assumed that the RPA reflects political, social and cultural values in the United Kingdom (para O III7) In Scoppola the United Kingdom intervened and the Attorney General appeared before the Grand Chamber to ask that it reconsider Hirst (No 2). But, in its judgment the Grand Chamber said (para 96) that it reaffirmed the principles set out by the Grand Chamber in the Hirst (No 2) judgment, in particular the fact that when disenfranchisement affects a group of people generally, automatically and indiscriminately, based solely on the fact that they are serving a prison sentence, irrespective of the length of the sentence and irrespective of the nature or gravity of their offence and their individual circumstances, it is not compatible with [A3P1]. However, the Grand Chamber (reversing the simple Chamber) found no contravention in relation to the Italian law in issue in Scoppola. The only dissent, by Judge Thr Bjrgvinsson, related to this conclusion. The Italian law was held compatible with the Convention because disenfranchisement applied only to sentences of three or more years, and lasted for only five years in the case of sentences of three to five years, though for life in the case of longer sentences. The Grand Chamber said that As a result, a large number of convicted prisoners are not deprived of the right to vote (paras 106 and 108). Furthermore, any prisoner could, three years after completing his sentence, apply for rehabilitation, which would be granted upon his displaying consistent and genuine good conduct and would terminate any ancillary penalties and other penal effect of the conviction including disenfranchisement (Scoppola, paras 38 and 109). The Grand Chamber specifically rejected the Chamber view that any decision to deprive a prisoner of the vote should be taken by a court, saying (para 99): While the intervention of a judge is in principle likely to guarantee the proportionality of restrictions on prisoners' voting rights, such restrictions will not necessarily be automatic, general and indiscriminate simply because they were not ordered by a judge. Indeed, the circumstances in which the right to vote is forfeited may be detailed in the law, making its application conditional on such factors as the nature or the gravity of the offence committed. Judge Thr Bjrgvinsson dissented because in his view the Grand Chamber judgment in Scoppola offer[ed] a very narrow interpretation of the Hirst judgment which stripped it of all its bite (para OI 16). In particular, the Grand Chamber had in his view overlooked significant elements of the reasoning in Hirst (No 2), notably the absence of any direct link between the facts of the individual case and the ban on voting, the bluntness of the Italian legislation, just like the UK legislation, and the absence of evidence that either the legislature or the courts had weighed the proportionality of the ban (para 0I 13). Should the Supreme Court follow the Strasbourg case law? On the present appeal, the Attorney General (withdrawing a concession of incompatibility made in the courts below) has made a fresh challenge to the principles endorsed by the European Court of Human Rights in Hirst (No 2) and Scoppola. He points out, correctly, that the Supreme Court is, under section 2(1) of the Human Rights Act, obliged only to take into account any judgment or decision of the European Court of Human Rights when determining a question which has arisen in connection with a Convention right. In R v Horncastle [2009] UKSC 14, [2010] 2 AC 373, para 11 Lord Phillips said that The requirement to take into account the Strasbourg jurisprudence will normally result in the domestic court applying principles that are clearly established by the Strasbourg court. There will, however, be rare occasions where the domestic court has concerns as to whether a decision of the Strasbourg court sufficiently appreciates or accommodates particular aspects of our domestic process. In such circumstances it is open to the domestic court to decline to follow the Strasbourg decision, giving reasons for adopting this course. This is likely to give the Strasbourg court the opportunity to reconsider the particular aspect of the decision that is in issue, so that there takes place what may prove to be a valuable dialogue between the domestic court and the Strasbourg court. In Manchester City Council v Pinnock [2010] UKSC 45, [2011] 2 AC 104, para 48 Lord Neuberger summarised the position: This court is not bound to follow every decision of the European court. Not only would it be impractical to do so: it would sometimes be inappropriate, as it would destroy the ability of the court to engage in the constructive dialogue with the European court which is of value to the development of Convention law: see e g R v Horncastle [2010] 2 AC 373. Of course, we should usually follow a clear and constant line of decisions by the European court: R (Ullah) v Special Adjudicator [2004] 2 AC 323. But we are not actually bound to do so or (in theory, at least) to follow a decision of the Grand Chamber. As Lord Mance pointed out in Doherty v Birmingham City Council [2009] AC 367, para 126, section 2 of the 1998 Act requires our courts to take into account European court decisions, not necessarily to follow them. Where, however, there is a clear and constant line of decisions whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle, we consider that it would be wrong for this court not to follow that line. In relation to authority consisting of one or more simple Chamber decisions, dialogue with Strasbourg by national courts, including the Supreme Court, has proved valuable in recent years. The process enables national courts to express their concerns and, in an appropriate case such as R v Horncastle, to refuse to follow Strasbourg case law in the confidence that the reasoned expression of a diverging national viewpoint will lead to a serious review of the position in Strasbourg. But there are limits to this process, particularly where the matter has been already to a Grand Chamber once or, even more so, as in this case, twice. It would have then to involve some truly fundamental principle of our law or some most egregious oversight or misunderstanding before it could be appropriate for this Court to contemplate an outright refusal to follow Strasbourg authority at the Grand Chamber level. The Attorney Generals submissions to us in this case have to be considered in that light. Parliament has required this Court to take into account Strasbourg case law (Human Rights Act, section 2(1)(a)) and, So far as it is possible to do so, to read and give effect to legislation in a way which is compatible with the Convention rights (section 3(1)). Parliament has given this Court, if satisfied that a provision of primary legislation is incompatible with a Convention right, power to make a declaration of that incompatibility (section 4). The Act itself contemplates that domestic legislation may not match this countrys international obligations as established by case law of the European Court of Human Rights. It is against this background that the Supreme Court must consider whether the Attorney General has made good his case that the Court should refuse to follow and apply the approach taken by the European Court of Human Rights in Hirst (No 2) and Scoppola. The Attorney General took issue with any description of Hirst (No 2) and Scoppola as a clear and consistent line of decisions. But, whatever else may be said about their reasoning or its outcome, they both clearly stand for the core proposition, directly applicable to the current general ban on convicted prisoners voting, quoted in paras 20 and 22 above. At the heart of the Attorney Generals submissions lies the wide margin of appreciation which States have in this area, and the variety of legislative attitudes in other States, some according with the United Kingdoms. These were matters which the European Court of Human Rights acknowledged, but in the Attorney Generals submission failed to respect. In support of his submission the Attorney General makes a number of points. First, the area is one where there is room (in Laws LJs words in the Court of Appeal, [2010] EWCA Civ 1439, [2011] 1 WLR 1436, para 32) for deep philosophical differences of view between reasonable people. In circumstances where the Grand Chamber accepted as a legitimate aim of disenfranchisement enhancing civic responsibility and respect for the rule of law (Scoppola, para 90), the United Kingdom was, as a participatory democracy, entitled to withhold the vote from those serving sentences for offences sufficiently serious to justify such a sentence, including those who, after their tariff period, could not satisfy the Parole Board that it was no longer necessary for the protection of the public that they should be confined (Crime (Sentences) Act 1997, section 28(6)(b)). Secondly, the Grand Chamber in Hirst (No 2) (para 79) attached some significance to a suggested lack of evidence that Parliament [had] ever sought to weigh the competing interests or to assess the proportionality of a blanket ban on the right of a convicted prisoner to vote, adding only: It may perhaps be said that, by voting the way they did to exempt unconvicted prisoners from the restriction on voting, Parliament implicitly affirmed the need for continued restrictions on the voting rights of convicted prisoners. Nonetheless it cannot be said that there was any substantive debate by members of the legislature on the continued justification in light of modern day penal policy and of current human rights standards for maintaining such a general restriction on the right of prisoners to vote. The majority in Scoppola did not mention this factor, as Judge Thr Bjrgvinsson, dissenting, pointed out at paras OI 09 and OI 15. Nevertheless, the Attorney General submits that it is relevant that Parliament has, since Hirst (No 2), conducted three formal debates, in Westminster Hall on 11 January 2011, in the Commons on 10 February 2011, when MPs voted 234 to 22 to maintain the status quo, and again in the Commons on 22 November 2012, after the Lord Chancellor introduced a draft Bill, the outcome of which is not yet determined. Mindful of the injunction in the Bill of Rights 1688 That the Freedome of Speech and Debates or Proceedings in Parlyament ought not to be impeached or questioned in any Court or Place out of Parlyament, the Attorney General did not suggest that we should seek to evaluate the quality of the debate in Parliament. But he relied upon the fact of debate and the continuation following it of the ban on prisoner voting as underlining his submission that the Convention rights should be understood and applied in a way respecting the choice made by the institution competent to make such choices in a democracy. He pointed out that the Court in its recent decision in Animal Defenders International v United Kingdom (Application No 48876/08, 22 April 2013) demonstrated the considerable weight that it was prepared to attach to exacting and pertinent reviews, by both parliamentary and judicial bodies, of the complex regulatory regime governing political broadcasting in the United Kingdom and to their view that the general measure [prohibiting religious or political advertising on radio and television] was necessary to prevent the distortion of crucial public interest debates and, thereby, the undermining of the democratic process (para 116). Thirdly, the Attorney General argues, it was fallacious to treat the United Kingdom ban as affecting a group of people generally, automatically and indiscriminately, simply because the ban was based solely on the fact that they are serving a prison sentence, irrespective of the length of the sentence and irrespective of the nature or gravity of their offence and their individual circumstances. Any rule of law affects a group of people defined by its terms. If a group is rationally defined, there is no reason why there should necessarily be exceptions. As the Grand Chamber pointed out in relation to the Italian legislation in Scoppola (para 106), so also in the United Kingdom a sentencing court takes into account the nature and gravity of the offence as well as individual circumstances when deciding in the first place whether any and if so what sentence of imprisonment is required. As a result, only 8% of convicted offenders go to prison in England, 15% in Scotland. The group affected is confined to convicted prisoners and so excludes those in prison on remand awaiting trial as well as hospital detainees. Further, within the group of convicted prisoners, the ban does not extend to those in prison for contempt or default in paying fines. Despite the Attorney Generals forceful submissions, I do not consider that it would be right for this Court to refuse to apply the principles established by the Grand Chamber decisions in Hirst (No 2) and Scoppola consistently with the way in which they were understood and applied in those decisions. The Grand Chamber in Scoppola was prepared to give the Italian legislator a greater margin of manoeuvre than one would have expected from its previous decision in Hirst (No 2). But this was on the basis that the Italian law did not involve a blanket ban in respect of all or almost all convicted prisoners. It excluded those convicted of minor offences (involving less than three years imprisonment), and it had a two step gradation in the length of the ban according to whether the sentence was for less or for more than five years imprisonment. As a result a large number of convicted prisoners had the vote. Furthermore, there was the possibility of rehabilitation for consistent and genuine good conduct displayed for three years after release. Nothing in Scoppola therefore suggests that the Grand Chamber would revise its view in Hirst (No 2) to the point where it would accept the United Kingdoms present general ban. There is on this point no prospect of any further meaningful dialogue between United Kingdom Courts and Strasbourg. I would also reject the suggestion that the Supreme Court should refuse to apply the principles stated in the Strasbourg case law in the present circumstances. Deep though the philosophical differences of view between reasonable people may be on this point, it would in my opinion exaggerate their legal and social importance to regard them as going to some fundamental substantive or procedural aspect of our law: see the citation from Pinnock in para 26 above. While the diversity of approach in this area within Europe derives from different traditions and social attitudes, it makes it difficult to see prisoner disenfranchisement as fundamental to a stable democracy and legal system such as the United Kingdom enjoys. It is possible to argue, as the Canadian Supreme Court did in Sauv v Canada (No 2) [2002] 3 SCR 519 that the objective of promoting civic responsibility and respect for the law may be undermined, rather than enhanced, by denying serving prisoners the right to vote. The haphazard effects of an effectively blanket ban are certainly difficult to deny. As the Grand Chamber observed in Hirst (No 2) (para 77) it includes a wide range of offenders and sentences, from one day to life and from relatively minor offences to offences of the utmost gravity. The Grand Chamber may have had in mind that, although minor offences involve shorter periods of disenfranchisement, the effect is more likely to be haphazard, depending as it must upon the timing of elections. Application of the principles in Hirst (No 2) and Scoppola This brings me to the effect of the principles in Hirst (No 2) and Scoppola in the present cases. Chesters claim, which relates to voting in European Parliamentary elections, is based directly on the Convention rights as well as on EU law. The first question is therefore whether he is a victim capable of bringing a claim against the respondents under the Human Rights Act. Section 7 of the Act provides: (1) A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may (a) bring proceedings against the authority under this Act in the appropriate court or tribunal, or (b) rely on the Convention right or rights concerned in any legal proceedings, but only if he is (or would be) a victim of the unlawful act. (3) If the proceedings are brought on an application for judicial review, the applicant is to be taken to have a sufficient interest in relation to the unlawful act only if he is, or would be, a victim of that act. (4) If the proceedings are made by way of a petition for judicial review in Scotland, the applicant shall be taken to have title and interest to sue in relation to the unlawful act only if he is, or would be, a victim of that act. (7) For the purposes of this section, a person is a victim of an unlawful act only if he would be a victim for the purposes of Article 34 of the Convention if proceedings were brought in the European Court of Human Rights in respect of that act. In Hirst (No 2), the majority rejected a submission by the United Kingdom Government that the Chamber had assessed the compatibility of the legislation with the Convention in the abstract without consideration of whether removal of the vote from the applicant as a person convicted of a serious offence and sentenced to life imprisonment disclosed a violation. It said (para 72) that Hirsts complaint was in no sense an actio popularis. He was directly and immediately affected by the legislative provision of which complaint is made and in these circumstances the Chamber was justified in examining the compatibility with the Convention of such a measure, without regard to the question whether if the measure had been framed otherwise and in a way which was compatible with the Convention, the applicant might still have been deprived of the vote. It would not in any event be right for the Court to assume that, if Parliament were to amend the current law, restrictions on the right to vote would necessarily still apply to post tariff life prisoners or to conclude that such an amendment would necessarily be compatible with Article 3 of Protocol No 1. This was another point on which the minority disagreed, observing the Courts task was not normally to review the relevant law and practice in abstracto and that it was in our opinion, difficult to see in what circumstances restrictions on voting rights would be acceptable, if not in the case of persons sentenced to life imprisonment (para O III8). Taking the majority approach, Chester is a victim for the purposes of section 7 of the Human Rights Act, but this means that he satisfies a pre condition to, not that he is necessarily entitled to any particular relief in, a complaint about the general disenfranchisement of prisoners from voting in United Kingdom and European Parliamentary elections which results from EPEA section 8(2) and (3), read with RPA section 3. He claims a declaration that both RPA section 3 and EPEA section 8(2) are incompatible with A3P1. (I note that, in contrast, under European Union law, his primary submission in relation to EPEA section 8(2) is that it can be rendered compatible with European Union law by reading in an additional right to vote in European Parliamentary elections if necessary to comply with European Union law.) The incompatibility of RPA section 3 with A3P1 was recognised by the Registration Appeal Court in Smith v Scott 2007 SC 345, which made a declaration of incompatibility. That declaration was properly made in the case of a convicted person sentenced to five years imprisonment for being concerned with supply of controlled drugs. It entitled the Government to use the remedial order provisions contained in section 10 of the Human Rights Act. The Government decided not to do this. The issue is now however before the United Kingdom Parliament and under active consideration in the light of the decisions in Hirst (No 2), Greens and Scoppola. Further, it is clear from Greens (para 18 above) and the Attorney General accepts that EPEA section 8 is, in relation to European Parliamentary elections, as incompatible with A3P1 as RPA section 3 is, in relation to United Kingdom Parliamentary elections. A declaration is a discretionary remedy, both generally and under the Human Rights Act 1998, section 4 (4). There is in these circumstances no point in making any further declaration of incompatibility. On this I am in agreement with both Burton J at first instance, [2009] EWHC 2923 (Admin), and the Court of Appeal, [2010] EWCA Civ 1439, [2011] 1 WLR 1436. The Strasbourg Courts own decision in McLean and Cole to defer consideration of applications concerning future elections in the light of the ongoing Parliamentary process is also consistent with this view. Further, it can, I consider, now be said with considerable confidence that the ban on Chesters voting is one which the United Kingdom Parliament can, consistently with the Convention right, and would maintain, whatever amendments it may be obliged to make or may make to allow any prisoners detained for different reasons or periods to vote. In the original Chamber decision in Hirst (2004) 38 EHRR 825, reference was made to the continuation of the ban on voting after the expiry of the tariff period in the case of a life prisoner as an additional anomaly (para 49). Nevertheless, the Chamber went on to say that it could not speculate as to whether Hirst, whose tariff had expired, would still have been deprived of the vote even if a more limited restriction on the right to [sic] prisoners to vote had been imposed, which was such as to comply with the requirements of [A3P1] (para 51). It is notable that the majority in the Grand Chamber in Hirst (No 2) did not endorse this reference in para 49 of the simple Chambers judgment to an additional anomaly, saying only that it would not in any event be right for the Court to assume that, if Parliament were to amend the current law, restrictions on the right to vote would necessarily still apply to post tariff life prisoners or to conclude that such an amendment would necessarily be compatible with [A3P1] (para 72). Only in a concurring opinion of Judge Caflisch did he raise the point, going so far as to say that this may be the essential point for the present case (para O 17(d)). His opinion does not appear to have been shared by other judges, and must now in any event be seen in the light of the decision in Scoppola, accepting that a lifelong ban on voting by prisoners sentenced for five or more years was legitimate. The additional fact that it was subject to removal after three years had elapsed from release, provided that the offender has displayed consistent and genuine good behaviour does not appear to have been critical to this conclusion; but, however that may be, it points strongly in favour of a view that it can be legitimate to withhold a prisoners voting rights until satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. The Grand Chambers reasoning in its very recent decision in Vinter v United Kingdom (Application Nos 66069/09, 130/10 and 3896/10; 9 July 2013), which post dated submissions in this case, is also worth noting for its explanation of detention during a post tariff period by reference to core aims of imprisonment: 108. First, a life sentence does not become irreducible by the mere fact that in practice it may be served in full. No issue arises under Article 3 if a life sentence is de jure and de facto reducible . In this respect, the Court would emphasise that no Article 3 issue could arise if, for instance, a life prisoner had the right under domestic law to be considered for release but was refused on the ground that he or she continued to pose a danger to society. This is because States have a duty under the Convention to take measures for the protection of the public from violent crime and the Convention does not prohibit States from subjecting a person convicted of a serious crime to an indeterminate sentence allowing for the offenders continued detention where necessary for the protection of the public . Indeed, preventing a criminal from re offending is one of the essential functions of a prison sentence . This is particularly so for those convicted of murder or other serious offences against the person. The mere fact that such prisoners may have already served a long period of imprisonment does not weaken the States positive obligation to protect the public; States may fulfil that obligation by continuing to detain such life sentenced prisoners for as long as they remain dangerous . [case references omitted] emphasised in Hirst (No 2) that In Greens, the Court noted (para 113) that the Grand Chamber had there are numerous ways of organising and running electoral systems and a wealth of differences, inter alia, in historical development, cultural diversity and political thought within Europe which it is for each contracting state to mould into their own democratic vision. The Court recalls that its role in this area is a subsidiary one: the national authorities are, in principle, better placed than an international court to evaluate local needs and conditions and, as a result, in matters of general policy, on which opinions within a democratic society may reasonably differ, the role of the domestic policy maker should be given special weight. See also Scoppola, para 83 and Syler, para 33. Within the domestic legal context, it is now therefore for Parliament as the democratically elected legislature to complete its consideration of the position in relation to both RPA section 3 and EPEA section 8. There is no further current role for this Court, and there is no further claim, for a declaration or, in the light of the incompatibility, for damages which the appellant Chester can bring. European law I turn to the position under European Community and now Union law. Before Burton J and the Court of Appeal, and reflecting no doubt the argument before those courts, any claim under European Union law by Chester was treated as effectively consequential on the incompatibility of the ban with A3P1, and attracted no separate analysis. Bearing in mind the date of Chesters claim for judicial review (December 2008), he is also unable to rely upon European law as it stands after 1 December 2009 under the TEU and TFEU, as a result of the Treaty of Lisbon. This difficulty is not overcome by maintaining that his claim related to forthcoming elections. It still required to be viewed in the light of the law when it was brought. At that date, the Charter of Fundamental Rights did not have direct legal force, so that there was no equivalent of article 6.1 TEU. The predecessor of article 6.3 TEU was article 6.2 of the pre December 2009 TEU reading: The Union shall respect fundamental rights, as guaranteed by the [Human Rights] Convention and as they result from the constitutional traditions common to the Member States, as general principles of Community law. The predecessor of article 14.3 TEU was article 190.1 and 4 of the Treaty on the European Community (EC), set out in para 11 above. Article 22.1 and 22.2 had a precise equivalent in article 19.1 and 19.2 EC, but the predecessor of article 20 was article 17 EC, reading simply: 17.1 Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall complement and not replace national citizenship. 2. Citizens of the Union shall enjoy the rights conferred by this Treaty and shall be subject to the duties imposed thereby. McGeochs claim under European Union law was on the other hand issued in early 2011 and relates to voting in local as well as Scottish and European Parliamentary elections. It therefore opens up all possible avenues for exploration under current European Union law. However, there is nothing in European Union law which can entitle McGeoch to complain in respect of his inability to vote in Scottish Parliamentary elections. European Union law refers in various contexts, which have already been set out in this judgment, to voting in European Parliamentary elections and in municipal elections, and to no other elections. It is obvious that Scottish Parliamentary elections fall within neither category: see also what I have already said in para 9 above. That municipal elections are local government elections at a lower level of government, closer to people and with a more direct responsibility for service delivery, is furthermore consistent with the nature of the units found (though in the case of Scotland, not yet updated) in the annex to Council Directive 94/80/EC, which lays down detailed arrangements for the exercise of the right to vote and stand in municipal elections by Union citizens residing in a Member State of which they are not nationals. The submissions under European Union law are put at various different levels. Mr Aidan ONeill QC for McGeoch concentrated upon articles 20 and 22 TFEU, read with articles 39 and 40 CFR. Mr Southey for Chester adopted Mr ONeills submissions, but relied in addition upon the more general provisions of articles 6.3 (or its predecessor article 6.2 in the pre December 2009 TEU), 10 and 14.3 TEU (or the latters predecessor articles 190.1 and 4 EC). In his submission, the effect of these articles was, at the least, to incorporate into European Union law in relation to voting in European Parliamentary elections the principles recognised under Strasbourg case law (Hirst (No 2) and Scoppola) in relation to national legislatures. Quite possibly, he submitted, their effect may even be to lead the Court of Justice to go further than Strasbourg case law by prohibiting on a more extensive basis any limitations on the democratically based universal suffrage to which the Treaties refer. If Mr Southeys wider submission with regard to the wholesale importation into European Community or Union law of the Strasbourg jurisprudence regarding the right to vote were valid, it would be surprising to find no hint of this in any Court of Justice judgment. That is particularly so with regard to Case C 145/04 Spain v United Kingdom [2006] ECR I 7917 and Case 300/04 Eman and Sevinger v College van Burgemeester en Wethouders van den Haag [2006] ECR I 8055, despite the difference in the actual issues. Mr Southeys submission would also mean that a case such as Matthews v United Kingdom (1999) 28 EHRR 361 could, now at least, be pursued in either of two parallel forums. Spain v United Kingdom and Eman and Sevinger The judgments in Spain v United Kingdom and Eman and Sevinger were both issued on the same day (12 September 2006) following an opinion of Advocate General Tizzano (dated 6 April 2006) which had covered both cases. The judgments contain discussion of the scope and effect of European Treaty law which bears on both Mr Southeys wider and Mr ONeills narrower submissions. In Spain v United Kingdom the first issue was whether it was legitimate under European law for the United Kingdom to extend the franchise in European Parliamentary elections to qualifying Commonwealth citizens, as well as European Union citizens, registered in the Gibraltar register. The Court held (para 78) that, in the then current state of Community law the definition of the persons entitled to vote and to stand as a candidate in elections to the European Parliament falls within the competence of each Member State in compliance with Community law, and that Articles 189 EC, 190 EC, 17 EC and 19 EC do not preclude the Member States from granting that right to vote and to stand as a candidate to certain persons who have close links to them, other than their own nationals or citizens of the Union resident in their territory. In the course of its reasoning, the Court said: Articles 189 EC and 190 EC do not expressly and precisely state who are to be entitled to the right to vote and to stand as a candidate for the European Parliament. 66 [Article 19 EC] is confined to applying the principle of non discrimination on grounds of nationality to the exercise of that right, by providing that every citizen of the Union residing in a Member State of which he is not a national is to have the right to vote and to stand as a candidate in elections to the European Parliament in the Member State in which he resides, under the same conditions as nationals of that State. 76 . Article 19(2) EC . is confined, as pointed out in paragraph 66 above, to stating a rule of equal treatment between citizens of the Union residing in a Member State so far as concerns that right to vote and stand for election. While that provision, like Article 19(1) EC relating to the right of Union citizens to vote and to stand as a candidate at municipal elections, implies that nationals of a Member State have the right to vote and to stand as a candidate in their own country and requires the Member States to accord those rights to citizens of the Union residing in their territory, it does not follow that a Member State in a position such as that of the United Kingdom is prevented from granting the right to vote and to stand for election to certain persons who have a close link with it without however being nationals of that State or another Member State. The Court also referred to the provisions of the 1976 Act (paras 67 to 69). In paras 90 to 97 the Court of Justice addressed Spains second plea that the United Kingdom had, in the arrangements made to enable the Gibraltar electorate to vote, gone further than required to comply with the European Court of Justices judgment in Matthews v United Kingdom. It recited in this connection that it was the United Kingdoms obligation to comply with Matthews and that in the light of the case law of the European Court of Human Rights and the fact that that Court has declared the failure to hold elections to the European Parliament in Gibraltar to be contrary to [A3P1] ., the United Kingdom cannot be criticised for adopting the necessary legislation. In Eman and Sevinger the Court was concerned with the legitimacy under European Union law of a provision of Dutch law which conferred the right to vote in European Parliamentary elections upon Dutch nationals residing in the Netherlands or abroad except in Aruba and the Netherlands Antilles. After repeating (para 45) that in the current state of Community law, the definition of the persons entitled to vote and to stand for election falls within the competence of each Member State in compliance with Community law, the Court opened a possible role for European law in the instant case by continuing It must, however, be ascertained whether that law precludes a situation such as that in the main proceedings, in which Netherlands nationals residing in Aruba do not have the right to vote and to stand as a candidate in elections to the European Parliament. In relation to articles 189 and 190 EC, the Court repeated its words in para 65 of Spain v United Kingdom. It also repeated (para 53) that Article 19(2) EC is confined to applying the principle of non discrimination on grounds of nationality to that right to vote and stand for election, by stipulating that every citizen of the Union residing in a Member State of which he is not a national is to have the right to vote and to stand as a candidate in elections to the European Parliament in the Member State in which he resides, under the same conditions as nationals of that State. The Court further noted that the European Court of Human Rights had accepted that the right to vote might be limited by reference to residence. However, the Court found in the principle of equal treatment or non discrimination, which is one of the general principles of Community law a basis for comparing the position of a Netherlands national resident in the Netherlands Antilles or Aruba and one residing in a non member country (paras 57 58) and for concluding that the Dutch Government had not demonstrated an objective justification for the different treatment of these two persons (para 60). Earlier in its judgment, the Court of Justice had observed that A3P1 did not apply to Aruba; unlike the case with Gibraltar, the European Treaties have no application there, so the European Parliament could not be regarded as the Aruba legislature (para 48). But the Courts decision was based on the fact that the complainants held Dutch nationality and were as such citizens of the Union under article 17(1) EC, and entitled to enjoy the rights conferred by the Treaty under article 17(2). They succeeded under the general European legal principle of non discrimination. In Spain v United Kingdom the Court was thus concerned with Gibraltar which is within the territorial scope of both the Community and the European Convention on Human Rights, but with voting rights which the United Kingdom had conferred on persons who were not United Kingdom nationals for the purposes of Community law. The Court had nonetheless to consider the nature of the United Kingdoms obligation to extend the franchise in European Parliamentary elections to Gibraltar. In Eman and Sevinger, the Court was concerned with Aruba which is outside the territorial scope of the Community, but within the territorial scope of the European Convention on Human Rights (by the combination of declarations dated 29 November 1954 and 24 December 1985 deposited by the Netherlands with the Council of Europe), and with voting rights which had been withheld from persons who were citizens of the European Union. What is notably absent from the Court of Justices judgments in both Spain v United Kingdom and Eman and Sevinger is any suggestion that, by reason of article 6.2 of the pre December 2009 TEU and articles 17 and 190 EC, the European Treaties confer on citizens of the Union an individual right to vote, the scope and conditions of which must be measured by reference to the principles established in European Court of Human Rights jurisprudence, such as Hirst (No 2) and Scoppola. If available, that could have been advanced as a reason why it was obligatory under European Community law for the United Kingdom to take steps to enable the Gibraltar electorate to vote. Instead, the reason given was the United Kingdoms Council of Europe obligations to comply with Strasbourg decisions: see para 49 above. Likewise, in Scoppola there was no suggestion that as Union citizens the claimants were under Community law entitled to enjoy an individual right to vote, complying with the principles established by European Court of Human Rights jurisprudence. Advocate General Tizzano in his opinion for these two cases had adopted much broader reasoning which the Court in its judgments was careful not to endorse. He would have inferred from Community principles and legislation as a whole . that there is an obligation to grant the voting rights in question to citizens of the Member States and, consequently, to citizens of the Union (para 67), deriving this (para 69) from the principles of democracy on which the Union is based, and in particular, to use the words of the Strasbourg Court, the principle of universal suffrage which has become the basic principle in modern democratic States [FN: Eur. Court H.R. Mathieu Mohin and Clerfayt v Belgium, judgment of 2 March 1987 . , Hirst v United Kingdom (No 2), . 30 March 2004] and is also codified within the Community legal order in Article 190(1) EC and Article 1 of the 1976 Act, which specifically provide that the members of the European Parliament are to be elected by direct universal suffrage. He went on to say that this general guidance was also confirmed by the fact that the right in question is a fundamental right safeguarded by [A3P1], and to mention in a footnote that the text of article 6(2) need merely be borne in mind (paras 70 to 71). Turning to Spains second criticism, Advocate General Tizzano also derived from his conclusion that individual voting was a fundamental right of citizens of the Union a converse conclusion that it was illegitimate for the United Kingdom to deviate to any greater extent from its statement in what was then Annex II of the 1976 Act that The United Kingdom will apply the provisions of this Act only in respect of the United Kingdom. As stated in para 49 above, the Court of Justice adopted quite different reasoning and reached an opposite conclusion, based simply on the United Kingdoms obligation to give effect to the European Court of Human Rights ruling in Matthews. The Court of Justice did not therefore endorse Advocate General Tizzanos broad approach, or import the Strasbourg jurisprudence into the general provisions of Community and Union law referring to voting in European Parliamentary elections. There was good reason for this. Eligibility to vote is under the Treaties and the 1976 Act a matter for national Parliaments, one of considerable national interest. There is no sign that the European Commission has ever sought to involve itself in or take issue with voting eligibility in Member States or specifically with the restrictions on prisoner voting which apply in a number of such States. The Strasbourg jurisprudence operates as the relevant control, albeit one that has itself proved in some respects controversial. It would not only unnecessarily duplicate that control at the European Community or Union level, it could also lead to further conflict and uncertainty. Hence the Court of Justice in Eman and Sevinger confined its reasoning to a well established core principle of Treaty law, that of non discrimination, in that case between different categories of Dutch national, to which I shall return (paras 60 64 below). Further, even in the form into which they have been shaped by the Treaty of Lisbon, it is notable that such provisions as the European Treaties contain concerning individual voting rights are notably limited in scope. They relate to the core Treaty concerns of equality between nationals or Union citizens and freedom of movement within the European Union (see para 59 below). For all these reasons, I reject Mr Southeys wider submission set out in (paras 46 47 above). Articles 20.2 and 22 TFEU In Mr ONeills submission, the changes effected by the Treaty of Lisbon significantly altered the Treaty position considered in Spain v United Kingdom and Eman and Sevinger. In those cases article 19 EC was explained as confined to stating rules of equal treatment requiring Union citizens residing in Member States of which they were not nationals to be able to vote and stand in municipal as well as European Parliamentary elections under the same conditions as nationals. The same must apply to the current equivalent, article 22 TFEU. But Mr ONeill relies upon the introduction of the new article 20.2(b). This, he submits, is a self standing provision, expressly conferring the individual right to vote on citizens of the Union in respect of European Parliamentary and municipal elections. In my opinion, it is clear that that is not the effect of article 20.2(b). As its opening sentence proclaims, article 20 deals with the enjoyment of rights provided in the Treaties. What follow are some of the basic rights so enjoyed. They all have a supra national element. Article 20.2(b) is thus expressly limited to recording the existence of the right of Union citizens to vote and stand in municipal and European Parliamentary elections in their Member State of residence under the same conditions as nationals of that State. The omission of express reference to the fact that this is dealing with citizens resident in a State other than that of their nationality is entirely understandable in the context of what was intended as a concise summary. That fact is anyway implicit. The detailed Treaty provisions regarding the rights to which article 20.2(b) refers are contained in article 22.1 and 22.2, which would on Mr ONeills case in fact be not only redundant but also positively misleading in their limitation to the situation of residence in a Member State other than that of nationality. The position is further confirmed by articles 39 and 40 CFR, which again would be positively misleading in their limitation to that situation, and by the Explanations to the CFR which explicitly equate articles 20.2 and 22: see para 16 above. There is no basis for or likelihood in Mr ONeills supporting submission that article 20.2(b) was expressly aimed at, in effect, endorsing Advocate General Tizzanos views as to where European Union law was or should go in conferring individual rights. Had that been remotely intended, quite different explicit language would have been used. Non discrimination The other limb of Mr ONeills submissions involves reliance on the principle of non discrimination applied in Eman and Sevinger. The infringement there consisted in unequal treatment by Dutch law in relation to voting in European Parliamentary elections by Netherlands nationals in comparable situations. The most fundamental area in which this principle has always manifested itself is in relation to discrimination on the grounds of nationality: see article 7 of the original EEC Treaty, now article 18 TFEU, which provides: Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on the grounds of nationality shall be prohibited. But the principle has achieved much wider application. Article 13.1 EC (now substantially reproduced as article 19.1 TFEU) provides: Without prejudice to the other provisions of this Treaty and within the limits of the powers conferred by it upon the Community, the Council . may take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Article 13 has been responsible for some well known, if in some respects controversial case law. The Court of Justice has accepted that, although the Treaty contemplates that the general principle of non discrimination underlying article 13 will be implemented by directives, Member States will be bound thereby to discontinue, disregard or set aside measures so far as they involve discrimination on a basis contrary to article 13 at least after the time for transposition of such a directive: Case C 555/07 Kkkdeveci v Swedex GmbH & Co KG [2010] 2 CMLR 33, para 61 and perhaps even when legislating in the area of the directive during the period for transposition: Case C 144/04 Mangold v Helm [2005] ECR I 9981. However, for the general principle of non discrimination to apply, the context must fall within the scope of Community or now Union law: see Mangold, para 75, Case C 427/06 Bartsch v Bosch und Siemens Hausgerte (BSH) Altersfrsorge GmBH [2008] ECR I 7245, para 25, Kkkdeveci, para 23, Case C 147/08 Rmer v Freie und Hansestadt Hamburg [2013] CMLR 11, para 70, and Craig and de Burca, EU Law: Text, Cases and Materials [OUP: 4th ed, 2008, p 891]. The only difficulty about Eman and Sevinger is to identify the link with European law, once one has rejected the conclusion that European law recognises all EU citizens as having under European law an individual right to vote in European Parliamentary elections (paras 56 to 58 above). The general principle was simply stated to be applicable in a context where, and on the basis that, Netherlands nationals, who were under article 17.1 EC Union citizens, were being treated unequally in comparable situations in relation to European Parliamentary elections, having regard to the difference in treatment of Netherlands nationals resident, on the one hand, in the Netherlands Antilles and Aruba and, on the other hand, in other non EU member countries: see in particular paras 45, 56 to 58 of the Courts judgment. It is however a general principle of Strasbourg law under article 14 of the Convention that additional rights falling within the general scope of any Convention right for which the state has voluntarily decided to provide must in that event be provided without discrimination: Belgian Linguistics Case (No 2) (1968) 1 EHRR 252, 283, R (Clift) v Secretary of State for the Home Department [2006] UKHL 54, [2007] 1 AC 484, paras 12, 17 18. This principle in my opinion clearly underlies Eman and Sevinger. As the Court noted (para 53), article 19 EC (now article 22 TFEU) only covered nationals resident in another Member State. But the Dutch legislator had chosen to extend the right to vote to its nationals resident outside any Member State but not in the Dutch Antilles or Aruba. There was no justification for this different treatment of comparable situations in a context which fell within the scope of European law, that is voting by nationals residing outside their own member state. Supporting this is also the consideration that the Court accepted that the definition of the persons entitled to vote and to stand falls within the competence of each Member State in compliance with Community law (Spain v United Kingdom, para 78, Eman and Sevinger, para 45). If the qualification in compliance with Community law were meant to require scrutiny by reference to European Community law of all national limitations affecting European Parliamentary elections for their non discriminatory quality even where no other link with European law was established other than that the elections were European Parliamentary elections, that could, depending upon the intensity of the scrutiny, effectively erode the general principle that the Court was accepting. Position if the principle of non discrimination had been engaged This brings me to consideration of the nature and intensity of the scrutiny which would be required, if (contrary to my conclusion in paras 63 64) the principle of non discrimination were to be viewed as all embracing in the manner advocated by Mr ONeill and Mr Southey. In both Strasbourg and Luxembourg case law, discrimination issues are customarily described as involving a two stage process, consisting of first the identification of an appropriate comparator and then, if one is found, examination of the justification for any difference in treatment: see e.g. Edward and Lane, European Union Law (EE, 2013) para 6.125, citing numerous authorities. The exercise as presented is neither a unitary nor an entirely open one, or a court would in every case be required to ascertain the differences between two different situations and ask whether, assessing such differences and their significance as best it could, it considered the differences in their treatment to be fair or justified. There must be basic comparability before the court embarks on considering justification. Thus, in Eman and Sevinger itself the Court observed (para 57) that the principle of equal treatment or non discrimination, which is one of the general principles of Community law, requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified The principle was reiterated in Case C485/08 P, Gualtieri v European Commission [2010] ECR I 3009, para 70 with reference to Eman and Sevinger as well as other cases including Case C 227/04 P Lindorfer v Council of the European Union [2007] ECR I6767. As the Court noted in Case C 267/06 Maruko v Versorgungsanstalt der deutschen Bhnen [2008] ECR I 1757, para 73, it is for the national court to determine whether two persons are in a comparable position. That does not however mean an identical position. The referring court in Maruko identified a gradual movement towards recognising equivalence of life partnership and marriage, meaning that, although the two were not identical, persons of the same sex could be regarded as being in a situation comparable to that of spouses so far as concerns the survivors benefit at issue in that case. The Court of Justice in Case 147/08 Rmer v Freie und Hansestadt Hamburg approved that approach, saying: 41 Accordingly, the existence of direct discrimination, within the meaning of the Directive, presupposes, first, that the situations being weighed up are comparable. 42 In that regard, it should be pointed out that, as is apparent from the judgment in Maruko at [67][73], first, it is required not that the situations be identical, but only that they be comparable and, secondly, the assessment of that comparability must be carried out not in a global and abstract manner, but in a specific and concrete manner in the light of the benefit concerned. Gualtieri was an appeal from the General Court and provides a contrasting example. The claimant complained that she received a lower daily allowance on the basis of the proximity of her spouses residence to her place of secondment than she would have done if she had been single, but living in a de facto union. The Court upheld the General Courts conclusion that the two situations were not comparable, saying: 75 . it must be observed that, although de facto unions and legally recognised unions, such as marriage, may display similarities in certain respects, those similarities do not necessarily mean that those two types of union must be treated in the same way. 76 In those circumstances, the decision to apply the criterion of matrimonial legal status appears neither arbitrary nor manifestly inappropriate in relation to the objective of reducing the allowances paid to SNEs [national experts seconded to the Commission] when they are in a situation in which it can be assumed that they bear fewer costs and disadvantages on account of their matrimonial status. Applying these principles to the present case, I do not regard convicted prisoners serving their sentence as in a comparable position either to free persons or to remand prisoners awaiting trial. They have a very different status, to which it is evident that very different considerations may apply and which are capable at least of giving rise to very different arguments. It follows that, assuming that the general principle of non discrimination applies under European Union law to eligibility to vote in European Parliamentary elections, there is in my view no basis for its application in the context of a complaint that convicted prisoners are discriminated against by reference to free persons or remand prisoners. The position assuming contrary conclusions I have concluded that the appellants are not entitled to invoke European law, because, firstly, it confers no individual right by reference to which the Strasbourg case law of Hirst (No 2) and Scoppola could be relevant (paras 58 and 59) and, secondly, the general principle of non discrimination recognised in Eman and Sevinger is not engaged (paras 63 64) or, if it is engaged, does not assist the appellants (para 68). In what follows, I will, for completeness, consider the position assuming opposite conclusions on all these points. If European law recognises an individual right to vote in European Parliamentary and/or municipal elections, I would reject Mr Southeys submission that it would or might go further than the Strasbourg case law in allowing convicted prisoners the vote. Court of Justice jurisprudence pays close attention to and, with very few exceptions, follows Strasbourg jurisprudence. Examples of divergence are few and far between, although one may, ironically, have occurred in a sequel to Eman and Sevinger concerning the right to vote in elections for the Kingdom of Holland, in so far as it is arguable that the Strasbourg court went less far in Sevinger and Eman v Netherlands (2007) 46 EHRR 179 than the Court of Justice did in Eman and Sevinger itself: see an instructive case note by Professor Leonard F M Besselink on this Strasbourg authority in (2008) 45 CMLR 787. In the present case, I reject in particular the submission that the Court of Justice might return to the theme suggested in Frodl v Austria (2010) 52 EHRR 267, para 34 by reference to Hirst (No 2), para 82 that it is essential that any disenfranchisement of a convicted prisoner be ordered on a case by case basis by a judge, rather than be pre determined by an otherwise appropriate legislative scheme. This suggestion was very clearly, and for very obvious reasons, rejected by the Grand Chamber in Scoppola v Italy, paras 99 100, a rejection which the simple Chamber in Anchugov, para 107, took pains to reiterate; see also (though coupled with a reference to judicial interventions being likely to guarantee the proportionality of restrictions on prisoners voting rights) Syler, para 39. The majority in the European Court of Human Rights in Hirst (No 2) found a violation because Hirst was directly and immediately affected by the legislative provision of which complaint is made and that the Chamber was justified in examining the compatibility with the Convention of such a measure, without regard to the question whether, if the measure had been framed otherwise and in a way which was compatible with the Convention, the applicant might still have been deprived of the vote (para 72). But it regarded the finding of a violation as just satisfaction and awarded no damages. As the Court said in Kkkdevici, para 51, it is for a national court, in applying national law, to provide, within the limits of its jurisdiction, the legal protection which individuals derive from European Union law and to ensure the full effectiveness of that law, disapplying if need be any provision of national legislation contrary to that principle (see, to that effect, Mangold, para 77). In the present cases, on the assumptions (contrary to my conclusions), first, that European law recognises an individual right to vote paralleling in substance that recognised in the Strasbourg case law of Hirst (No 2) and Scoppola, and, second, that the view taken by the majority of the Grand Chamber in Hirst (No 2) regarding standing to claim a general declaration were to be transposed into European law, the only relief that could be considered under domestic law would be a generally phrased declaration that the legislative provisions governing eligibility to vote in European Parliamentary and municipal elections in the United Kingdom were inconsistent with European Union law. Thereafter, it would be for the United Kingdom Parliament to address the position and make such legislative changes as were considered appropriate. But, for reasons paralleling those given in paras 40 42 above, it appears improbable that the Convention rights would, even when viewed through the prism of European Union law, involve or require the granting of declarations in the abstract at the instance of claimants like both Chester and McGeoch, detained in circumstances summarised in para 1 above, from whom the United Kingdom Parliament could legitimately, and it seems clear would, under any amended legislative scheme still withhold the vote. I reject the submission that the Supreme Court could or should simply disapply the whole of the legislative prohibition on prisoner voting, in relation to European Parliamentary and municipal elections, thereby making all convicted prisoners eligible to vote pending fresh legislation found to conform with European Union law. It is clear from both Hirst (No 2) and Scoppola that, under the principles established by those cases, a ban on eligibility will be justified in respect of a very significant number of convicted prisoners. Nor would it have been possible to read the RPA section 3 or EPEA section 8 compatibly with European law; the legislation is entirely clear and it would flatly contradict the evident intention of the United Kingdom, when enacting it, to read into it or to read it as subject to some unspecified scheme or set of qualifications allowing some unspecified set of convicted prisoners to vote under some unspecified conditions and arrangements. It would also be impossible for the Supreme Court itself to devise an alternative scheme of voting eligibility that would or might pass muster in a domestic or supra national European Court. Equally, the Court could not determine or implement the practical and administrative arrangements that would need to be made to enable any convicted prisoners eligible under any such scheme to have the vote. Such matters would be beyond its jurisdiction. In the domestic constitutional scheme, any scheme conferring partial eligibility to vote on some convicted prisoners is quintessentially a matter for the United Kingdom Parliament to consider, determine and arrange. In the passage quoted in para 72 above, the Court of Justice made clear that it is only within the limits of its jurisdiction that a national court can be expected to provide the legal protection that European Union law requires. That being so, the creation of any new scheme must be a matter for the United Kingdom Parliament. That does not necessarily conclude this Courts role under European law. The principles established in Case C 6/90 Francovich v Italian Republic [1992] IRLR 84 and Joined Cases C 46/93 and C 48/93 Brasserie du Pecheur SA v Federal Republic of Germany and R v Secretary of State for Transport, Ex p Factortame Ltd (No 4) [1996] QB 404 require domestic courts, under certain conditions, to order their State to make good any loss caused by breach of European Union law, even where the breach consists in legislation incompatible with that law. After these decisions by the Court of Justice, the principles stated by that Court were examined and applied domestically by the House of Lords in R v Secretary of State, Ex p Factortame Ltd (No 5) [2000] 1 AC 524. Neither Chester nor McGeoch has set out, supported with evidence or pursued any claim for damages in the courts below. Both now seek to claim damages, still without any supporting evidence, and, if necessary, to have their cases remitted for further determination in this regard. I will however put on one side without deciding the question whether either should be given leave to enable them at this late stage to raise any damages claim, and consider the nature and application of the relevant principles, assuming that such claims were to be permitted. An important factor in determining whether liability in damages may exist under European law is the width of the discretion available to the legislator: see Ex p Factortame, paras 44 to 46. In this respect the Court equated the position of the Community and national legislators (para 47). A strict (meaning more limited) approach was taken towards the liability of the Community (or therefore of national legislators) in the exercise of legislative activities. This was explained (para 45) as due to two considerations: 45. First, even where the legality of measures is subject to judicial review, exercise of the legislative function must not be hindered by the prospect of actions for damages whenever the general interest of the Community requires legislative measures to be adopted which may adversely affect individual interests. Secondly, in a legislative context characterized by the exercise of a wide discretion, which is essential for implementing a Community policy, the Community cannot incur liability unless the institution concerned has manifestly and gravely disregarded the limits on the exercise of its powers As the Court went on to point out, the national legislature like the Community institutions does not systematically have a wide discretion when it acts in a field governed by Community law (para 46). It depends on the nature of the European law or principle being implemented. However, in the context of eligibility to vote, it is clear that national legislatures have a wide discretion. Where a wide legislative discretion of this nature exists, three conditions govern the incurring of any liability on account of the legislative choices made by the State pursuant to such discretion. These were explained in Ex p Factortame as follows: 51 In such circumstances, Community law confers a right to reparation where three conditions are met: the rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious, and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties. 52 First, those conditions satisfy the requirements of the full effectiveness of the rules of Community law and of the effective protection of the rights which those rules confer. 53 Secondly, those conditions correspond in substance to those defined by the Court in relation to Article 215 in its case law on liability of the Community for damage caused to individuals by unlawful legislative measures adopted by its institutions. 55 As to the second condition, as regards both Community liability under Article 215 and Member State liability for breaches of Community law, the decisive test for finding that a breach of Community law is sufficiently serious is whether the Member State or the Community institution concerned manifestly and gravely disregarded the limits on its discretion. 56 The factors which the competent court may take into consideration include the clarity and precision of the rule breached; the measure of discretion left by that rule to the national or Community authorities; whether the infringement and the damage caused was intentional or involuntary; whether any error of law was excusable or inexcusable; the fact that the position taken by a Community institution may have contributed towards the omission, and the adoption or retention of national measures or practices contrary to Community law. 57 On any view, a breach of Community law will clearly be sufficiently serious if it has persisted despite a judgment finding the infringement in question to be established, or a preliminary ruling or settled case law of the Court on the matter from which it is clear that the conduct in question constituted an infringement. These principles were reiterated in Case 392/93 R v HM Treasury, Ex p British Telecommunications plc [1996] QB 615, an example of a case where the Court of Justice held that the breach had not involved a manifest and grave disregard of European law, and Case 278/05 Robins v Secretary of State for Work and Pensions [2007] ICR 779, where the Court emphasised the importance of the breadth of the legislative discretion in that case and the fact that the provisions of the relevant directive did not make it possible to establish with any precision the level of pension protection which it required. Turning to apply these principles to the present cases, I make the twin assumptions (again contrary to my conclusions) that (a) European Union confers rights to vote on individual citizens of the Union, subject to the United Kingdoms legislative discretion to introduce limitations, but that (b) the present general prohibition on prisoner voting is contrary to principles paralleling those stated by the Strasbourg court in Hirst (No 2) and Scoppola and/or the general European Union principle of equality or non discrimination. On those assumptions, the second and third conditions for any personal claim arise for consideration. The second condition is that the breach was sufficiently serious. This in turn depends, under European law, upon whether Parliament, the relevant United Kingdom authority, can be said manifestly and gravely to have disregarded the limits on its discretion. This must be judged taking into consideration the clarity and precision of the rule breached; the measure of discretion left by that rule to the national or Community authorities; whether the infringement and the damage caused was intentional or involuntary; whether any error of law was excusable or inexcusable (para 77 above). In relation to voting by convicted prisoners, the United Kingdom legislature enjoyed a wide margin of discretion. Further, this is in a context where there has been and remains a considerable lack of certainty about what the parameters of that discretion may be. This is evident from a reading of the Strasbourg case law, particularly the two Hirst judgments, the Chamber judgment in Frodl v Austria (2010) 52 EHRR 267 and the Grand Chamber judgment over ruling the Chamber judgment in Scoppola v Italy, in which the European Court of Human Rights has sought to identify the relevant considerations and to apply them to particular facts. Accordingly, it is clearly very arguable that this condition is not met. I will not however say more about the application of the second condition in this case, in view of one further factor, which I prefer to leave open. The test stated in the European authorities postulates some degree of examination of the conduct of the relevant national authority. Since the relevant United Kingdom authority is here Parliament in enacting and continuing in force the relevant legislation, an assessment of some of these matters (particularly whether the infringement was intentional or involuntary, excusable or inexcusable) may threaten conflict with the constitutional principle enshrined in the Bill of Rights 1688 that domestic courts in the United Kingdom ought not to impeach or question proceedings in Parliament. To avoid this, it may perhaps be necessary to approach a claim for damages in a case like the present on an objective basis, without regard to what has actually happened or been said in Parliament. The decision in R v Secretary of State, Ex p Factortame (No 5) [2000] 1 AC 524 does not appear to throw any light on this problem, because there does not seem there to have been any call to consider Parliamentary debates. On any view, however, the fact of Parliamentary activity, referred to in Greens and continuing, can no doubt be taken into account. The third condition is that there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties. In relation to both the second and the third conditions, it must in my opinion be relevant to have regard to the particular position of the present appellants. The questions are whether, in refusing them the vote, the United Kingdom has manifestly and gravely disregarded the limits on its discretion and whether they have sustained damage directly caused by the United Kingdoms breach of an obligation owed to give each of them a right to vote. In Strasbourg case law, according to the majority in Hirst (No 2), a claimant can complain that the law in general is incompatible with the Convention rights, without showing that it was or would have been incompatible with such rights to deprive him in particular of the vote. But to award a convicted prisoner damages without showing that European Union law required him, rather than some other prisoner or prisoners, to have the vote would be positively inconsistent with the conditions stated in Francovich and Ex p Factortame. On that basis, I consider that any claim for damages by McGeoch and Chester must on any view fail. McGeoch is still serving the punishment part of his sentence resulting from the combination of his life and consecutive fixed term sentence. There can, in the light of Scoppola, be no question about the United Kingdoms entitlement to deprive a prisoner in his position of the vote. Chester is in his post tariff period of his life sentence, but it is notable that the European Court of Human Rights deliberately refrained from endorsing the original Chamber view or Judge Caflischs concurring minority view (para 40 above) that there is a critical distinction between the tariff and post tariff period. Further, in Scoppola, the Strasbourg court accepted that disenfranchisement could continue for life in the case of sentences of five years or more. This was subject only to the right, three years after release, to apply for rehabilitation, which would be granted upon his displaying consistent and genuine good conduct: see para 22 above. The requirement to display good conduct in order to regain voting rights was thus regarded as not only relevant, but acceptable. The Strasbourg court accepted as a legitimate aim enhancing civic responsibility and respect for the rule of law. Continuing detention for a period lasting so long as necessary for the protection of the public (paras 30 and 40 above) can be no less relevant and acceptable as a criterion for continuing deprivation of the right to vote during that period. The underlying consideration, that the offender is not fully rehabilitated or ready to participate responsibly in the countrys democratic life, is the same in each case. This is underlined by the passage from the Grand Chambers recent decision in Vinter quoted in para 41 above. Conclusions My conclusions on the issues argued on this appeal are summarised in para 4 above. It remains only to consider whether the resolution of this appeal necessitates a reference to the European Court of Justice. This depends upon whether it depends upon the determination of any question of European law which is open to reasonable doubt under the principles stated in Case 283/81 CILFIT Srl v Ministry of Health [1982] ECR 3415 and recently discussed in this Court in X v Mid Sussex Citizens Advice Bureau [2012] UKSC 59, [2013] ICR 249. In my opinion, the conclusions of European law reached in paras 45, 58, 59 and 63 64 are acte clair, and they are by themselves sufficient to resolve the appeals. Were it necessary for the decision of these appeals, I would also regard the conclusions in para 70 as acte clair. The further conclusions (again not necessary for the resolution of these appeals) reached in other paras are matters for this Court to determine, applying established principles of European law where relevant. In the circumstances, I do not consider that any reference to the Court of Justice is called for. It follows that, in my opinion, both appeals should be dismissed. LADY HALE (with whom Lord Hope and Lord Kerr agree) Prisoners voting is an emotive subject. Some people feel very strongly that prisoners should not be allowed to vote. And public opinion polls indicate that most people share that view. A YouGov poll in November 2012 found that 63% of respondents said that no prisoners should be allowed to vote, 15% said that those serving sentences of less than six months should be allowed to vote, 9% said that those serving less than four years should be allowed to vote, and 8% said that all prisoners should be allowed to vote. A YouGov poll in January 2011 which asked the same questions produced respective figures of 69%, 6%, 3% and 8%. This suggests that public opinion may be becoming more sympathetic to the idea, with 32% now favouring some relaxation in the present law, but there is still a substantial majority against it. It is not surprising, therefore, that in February 2011 elected Parliamentarians also voted overwhelmingly against any relaxation of the present law. In such circumstances, it is incumbent upon the courts to tread delicately. As I shall explain, in my view it is now clear that the courts should not entertain a human rights claim on behalf of Mr Chester or, indeed, of Mr McGeoch had he made one. Both are serving sentences of life imprisonment for murder. Mr Chester was sentenced to life imprisonment for the murder of his niece, with a tariff of 20 years which expired in October 1997. The Parole Board has not yet found him suitable for release on licence. Mr McGeoch was also sentenced to life imprisonment for murder, with a tariff of 13 years which expired in October 2011; but he has had further convictions for serious offences committed while in prison and is currently serving seven and a half years for violently escaping from prison in 2008. I do not consider that the human rights of either were violated by the Electoral Registration Officers refusal to register them on the electoral roll. Their claims under European Union law are another story, because they raise novel arguments which require to be resolved. On those claims I have nothing to add to the judgment of Lord Mance, with which I agree. Of course, in any modern democracy, the views of the public and Parliamentarians cannot be the end of the story. Democracy is about more than respecting the views of the majority. It is also about safeguarding the rights of minorities, including unpopular minorities. Democracy values everyone equally even if the majority does not: Ghaidan v Godin Mendoza [2004] 2 AC 557, para 132. It follows that one of the essential roles of the courts in a democracy is to protect those rights. It was for that reason that Lord Bingham took issue with the argument of a previous Attorney General, Lord Goldsmith, in A v Secretary of State for the Home Department [2005] 2 AC 68, para 42: I do not . accept the distinction which he drew between democratic institutions and the courts. It is of course true that the judges in this country are not elected and are not answerable to Parliament. But the function of independent judges charged to interpret and apply the law is universally recognised as a cardinal feature of the modern democratic state, a cornerstone of the rule of law itself. The Attorney General is fully entitled to insist on the proper limits of judicial authority, but he is wrong to stigmatise judicial decision making as in some way undemocratic. The present Attorney General has wisely not suggested any such thing. He recognises that it is the courts task to protect the rights of citizens and others within the jurisdiction of the United Kingdom in the ways which Parliament has laid down for us in the Human Rights Act 1998. But insofar as he implied that elected Parliamentarians are uniquely qualified to determine what the franchise should be, he cannot be right. If the current franchise unjustifiably excludes certain people from voting, it is the courts duty to say so and to give them whatever remedy is appropriate. More fundamentally, Parliamentarians derive their authority and legitimacy from those who elected them, in other words from the current franchise, and it is to those electors that they are accountable. They have no such relationship with the disenfranchised. Indeed, in some situations, they may have a vested interest in keeping the franchise as it is. To take an obvious example, we would not regard a Parliament elected by an electorate consisting only of white, heterosexual men as uniquely qualified to decide whether women or African Caribbeans or homosexuals should be allowed to vote. If there is a Constitution, or a Bill of Rights, or even a Human Rights Act, which guarantees equal treatment in the enjoyment of its fundamental rights, including the right to vote, it would be the task of the courts, as guardians of those rights, to declare the unjustified exclusion unconstitutional. Given that, by definition, Parliamentarians do not represent the disenfranchised, the usual respect which the courts accord to a recent and carefully considered balancing of individual rights and community interests (as, for example, in R (Countryside Alliance) v Attorney General [2007] UKHL 52, [2008] AC 719 and R (Animal Defenders International) v Secretary of State for Culture, Media and Sport [2008] UKHL 15, [2008] AC 1312, both upheld in Strasbourg for that very reason) may not be appropriate. Of course, the exclusion of prisoners from voting is of a different order from the exclusion of women, African Caribbeans or homosexuals. It is difficult to see how any elected politician would have a vested interest in excluding them (save just possibly from local elections in places where there are very large prisons). The arguments for and against their exclusion are quite finely balanced. On the one hand, unlike women, African Caribbeans and homosexuals, prisoners share a characteristic which many think relevant to whether or not they should be allowed to vote: they have all committed an offence deemed serious enough to justify their removal from society for at least a while and in some cases indefinitely. While clearly this does not mean that all their other rights are forfeited, why should they not for the same time forfeit their right to take part in the machinery of democracy? Hence I see the logic of the Attorney Generals argument, that by deciding that an offence is so serious that it merits a custodial penalty, the court is also deciding that the offence merits exclusion from the franchise for the time being. The custody threshold means that the exclusion, far from being arbitrary and disproportionate, is tailored to the justice of the individual case. One problem with that argument is that it does not explain the purpose of the exclusion. Any restriction of fundamental rights has to be a proportionate means of pursuing a legitimate aim. Is it simply an additional punishment, a further mark of societys disapproval of the criminal offence? Or is it rather to encourage a sense of civic responsibility and respect for democratic institutions? If so, it could well be argued that this is more likely to be achieved by retaining the vote, as a badge of continuing citizenship, to encourage civic responsibility and reintegration in civil society in due course. This is indeed, as Laws LJ observed in the Court of Appeal, a matter on which thoughtful people can hold diametrically opposing views. A more concrete objection to the Attorney Generals argument is that the custody threshold in this country has never been particularly high. As Lord Bingham of Cornhill CJ observed in R v Howells [1999] 1 WLR 307, 310, deciding when an offence is so serious that only a custodial sentence can be justified is one of the most elusive problems of criminal sentencing. Between 1992 and 2002, the custodial sentencing rate rose from 5% to 15% in the magistrates courts and from 44% to 63% in the Crown Court (for an overview of sentencing trends in the last 20 years, see Ministry of Justice, The Story of the Prison Population 1993 2012, 2013). Some of the rise may be accounted for by the greater seriousness of the offences coming before the courts, but this cannot be the whole explanation. There are many people in prison who have not committed very serious crimes, but for whom community punishments are not available, or who have committed minor crimes so frequently that the courts have run out of alternatives. Also, the threshold has varied over time in accordance with changes in penal policy which have nothing to do with electoral policy: what, for example, are we to make of the ups and downs in the legislative popularity of suspended sentences? Exactly the same crime may attract an immediate custodial sentence and disenfranchisement at one time or a suspended sentence without disenfranchisement at another. Moreover, the custody threshold has traditionally varied as between different parts of the United Kingdom, with a significantly greater use of imprisonment in Scotland than in England and Wales (although this is diminishing). The sentencing regimes are different in England and Wales, Scotland and Northern Ireland, but the exclusion from voting is the same. All of this suggests an element of arbitrariness in selecting the custody threshold as a unique indicator of offending so serious as to justify exclusion from the democratic process. To this may be added the random impact of happening to be in prison on polling day and the various reasons why someone who has been sentenced to a period of imprisonment may not in fact be in prison on that day. He may, as Lord Clarke points out, be on bail pending an appeal; or he may be released early under electronic monitoring. Then there is the situation of mental patients. All those who are detained in hospital as a result of an order made in a criminal court, apart from those on remand, are also disenfranchised (Representation of the People Act 1983, section 3A(1),(2)). This includes patients who have been found unfit to plead or not guilty by reason of mental disorder, whose culpability may be very different from that of convicted prisoners. There is no equivalent of the custody threshold (as long as the offence is punishable with imprisonment) and no correlation between the seriousness of the offence and the length of time that the patient will be detained in hospital. I mention these additional matters to explain why, in common with Lord Clarke, I have some sympathy for the view of the Strasbourg court that our present law is arbitrary and indiscriminate. But I acknowledge how difficult it would be to devise any alternative scheme which would not also have some element of arbitrariness about it. The Strasbourg court, having stepped back from the suggestion in Frodl v Austria (2010) 52 EHRR 267 that exclusion from the franchise requires a judicial decision in every case and approved the Italian law in Scoppola v Italy (No 3) (2012) 56 EHRR 663, must be taken to have accepted this. However, I have no sympathy at all for either of these appellants. I cannot envisage any law which the United Kingdom Parliament might eventually pass on this subject which would grant either of them the right to vote. In Hirst v United Kingdom (No 2) (2005) 42 EHRR 849, the Strasbourg court declined to conclude that applying the ban to post tariff life prisoners would necessarily be compatible with article 3 of the First Protocol. But it seems clear from the decision in Scoppola v Italy (No 3) that Strasbourg would now uphold a scheme which deprived murderers sentenced to life imprisonment of the right to vote, certainly while they remained in prison, and probably even after they were released on licence, as long as there was then a power of review. Hence I cannot see how Mr Chester can sensibly have a claim to a remedy under the Human Rights Act. It may be, as Lord Mance has concluded, that he qualifies as a victim for the purpose of section 7 of the Human Rights Act. But this is only in the sense that, as the majority of the Grand Chamber in Hirst (No 2) held, he was directly affected by the law in question. This justified that court, in the majority view, examining the compatibility of the law with the Convention, irrespective of whether he might justifiably have been deprived of the vote under some other law. A strong minority, including the then President, Judge Wildhaber, and his successor, Judge Costa, pointed out that this was not the usual practice of the court (para OIII8): The Court has consistently held in its case law that its task is not normally to review the relevant law and practice in abstracto, but to determine whether the manner in which they were applied to, or affected, the applicant gave rise to a violation of the Convention. It is, in our opinion, difficult to see in what circumstances restrictions on voting rights would be acceptable, if not in the case of persons sentenced to life imprisonment. Generally speaking, the Court's judgment concentrates above all on finding the British legislation incompatible with the Convention in abstracto. We regret that despite this focus it gives the states little or no guidance as to what would be solutions compatible with the Convention. Since restrictions on the right to vote continue to be compatible, it would seem obvious that the deprivation of the right to vote for the most serious offences such as murder or manslaughter, is not excluded in the future. Either the majority are of the view that deprivations for the post tariff period are excluded, or else they think that a judge has to order such deprivations in each individual case. We think that it would have been desirable to indicate the correct answer. In other words, it would have been in accordance with the consistent practice of the court for the majority to indicate in precisely what way Mr Hirsts rights had been violated by the law in question. It seems to me that the courts of this country should adopt that sensible practice when considering the application of the various remedies provided by the Human Rights Act. In this case, there can be no question of Mr Chester having a cause of action under section 6(1) of the Human Rights Act. The Electoral Registration Officer for Wakefield refused his application for inclusion on the electoral roll. But in my view that could not have been incompatible with his Convention rights, because (at least following Scoppola v Italy) the Convention does not give him the right to vote. But even if it was incompatible, the public authority could not have acted differently, because of the provisions of the Representation of the People Act, and so by virtue of section 6(2)(a) the act was not unlawful. Nor is there any question of our reading and giving effect to the Act in a way which is compatible with the Convention rights, in accordance with our duty under section 3(1). No one has suggested that it would be possible to do so in a case such as this. It is obvious that any incompatibility can only be cured by legislation and the courts cannot legislate. But even if we could, we would only seek to read and give effect to the statute in a way which was compatible with the rights of the individual litigant before us. As, in my view at least, the ban on voting is not incompatible with the rights of this particular litigant, a reading which was compatible with the rights of a completely different litigant would do him no good. That leaves the possibility of a declaration of incompatibility under section 4(2) of the Human Rights Act. This applies in any proceedings in which a court determines whether a provision of primary legislation is compatible with a Convention right. This does appear to leave open the possibility of a declaration in abstracto, irrespective of whether the provision in question is incompatible with the rights of the individual litigant. There may be occasions when that would be appropriate. But in my view the court should be extremely slow to make a declaration of incompatibility at the instance of an individual litigant with whose own rights the provision in question is not incompatible. Any other approach is to invite a multitude of unmeritorious claims. It is principally for that reason that I would decline to make a declaration of incompatibility on the application of either Mr Chester or (had he made one) Mr McGeoch. Indeed, in my view the courts should not entertain such claims. It is otherwise, of course, in borderline cases. In those circumstances it seems to me unnecessary to express a view on whether we should follow or depart from the substance of the decision in Hirst v LORD CLARKE I agree that these appeals should be disposed of as proposed by Lord Mance and Lord Sumption. I also agree with the reasoning of both Lord Mance and Lord Sumption, subject to this. I would be less critical than Lord Sumption of the decisions of the European Court of Human Rights to which they refer. The reasoning of the Strasbourg Court has very recently been summarised in Anchugov and Gladkov v Russia (Application Nos 11157/04 and 15162/05), 4 July 2013, at paras 93 100. In particular, in para 100 it distinguished between Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 and Scoppola v Italy (No 3) (2012) 56 EHRR 663 in this way: 100. The principles set out in the Hirst (No 2) case were later reaffirmed in the Scoppola (No 3) [GC] judgment. The Court reiterated, in particular, that when disenfranchisement affected a group of people generally, automatically and indiscriminately, based solely on the fact that they are serving a prison sentence, irrespective of the length of the sentence and irrespective of the nature or gravity of their offence and their individual circumstances, it was not compatible with Article 3 of Protocol No 1 (see Scoppola (No 3) [GC], cited above, para 96). The Court found no violation of that Convention provision in the particular circumstances of this latter case however, having distinguished it from the Hirst (No 2) case. It observed that in Italy disenfranchisement was applied only in respect of certain offences against the State or the judicial system, or offences punishable by a term of imprisonment of three years or more, that is, those which the courts considered to warrant a particularly harsh sentence. The Court thus considered that the legal provisions in Italy defining the circumstances in which individuals may be deprived of the right to vote show[ed] the legislatures concern to adjust the application of the measure to the particular circumstances of [each] case, taking into account such factors as the gravity of the offence committed and the conduct of the offender (ibid, para 106). As a result, the Italian system could not be said to have a general automatic and indiscriminate character, and therefore the Italian authorities had not overstepped the margin of appreciation afforded to them in that sphere (ibid, paras 108 and 110). On the facts the Court held at para 101 that the position in Russia was very similar to that in Hirst (No 2), namely that the applicants were stripped of their right to vote by virtue of a provision of the Russian Constitution which applied to all persons convicted and serving a custodial sentence, irrespective of the length of their sentence and of the nature or gravity of their offence and their individual circumstances. The Court compared Hirst (No 2) at para 82 with Scoppola (No 3) at paras 105 110. The Court said at para 102 that it was prepared to accept that the relevant measure pursued the aims of enhancing civic responsibility and the respect for the rule of law and ensuring the proper functioning and preservation of civil society and the democratic regime and that those aims could not, as such, be excluded as untenable or incompatible with A3P1. The essence of the Courts decision is set out in para 103. It rejected the Governments arguments on the issue of proportionality, reiterating the point made in para 82 of Hirst (No 2), that, although the margin of appreciation is wide, it is not all embracing and added: the right to vote is not a privilege; in the twenty first century, the presumption in a democratic State must be in favour of inclusion and universal suffrage has become the basic principle. In the light of modern day penal policy and of current human rights standards, valid and convincing reasons should be put forward for the continued justification of maintaining such a general restriction on the right of prisoners to vote as that provided for in Article 32(3) of the Russian Constitution (ibid, para 79). Further, at para 105 the Court emphasised the fact that the Russian constitution imposed a blanket ban on all those imprisoned, from two months, which is the minimum period of imprisonment following conviction in Russia, to life and from relatively minor offences to offences of the utmost seriousness. At para 106 it stressed that, as in the United Kingdom, there was no evidence that, when deciding whether to impose a custodial sentence, the court should take into account the fact that the sentence would involve disenfranchisement, so that there was no direct link between the facts of a particular case and the loss of the right to vote. It recognised in para 107 that removal of the right to vote without an ad hoc judicial decision does not of itself give rise to a violation but, in response to an argument that the adoption of the Russian constitution was preceded by extensive public debate, it observed that the Government had submitted no relevant materials to support it. In doing so, it expressly followed an almost identical conclusion in para 79 of Hirst (No 2). As I see it, the thrust of the conclusions in the Strasbourg cases is that a blanket ban is disproportionate and indiscriminate, at any rate without detailed analysis of the problem because, as it is put at para 82 of Hirst (No 2), the ban applies automatically to all prisoners irrespective of the nature and gravity of the relevant offence or the individual circumstances of the particular offender. It thus applies to those sentenced to very short sentences and operates in an arbitrary way for two reasons. First, it applies in the same way to a person sentenced to 28 days or 28 years. Yet there is clearly an enormous gulf in terms of culpability between those sentenced to 28 days for, say, persistent shoplifting and those sentenced to 28 years for a very serious offence. Secondly, whether a person loses the right to vote depends upon the chance that the relevant person happens to be in prison on a particular day, by comparison perhaps with a co defendant who received an identical sentence but is on bail pending appeal. Moreover, it is difficult to see how it can be proportionate to deprive a person of a vote which is relevant to the governance of the state for a period of five years in circumstances where that person may be in prison for no more than 14 days. I appreciate that, wherever the line may be drawn, there may be an element of arbitrariness as to the choice and effect of a particular line. But there seems to me to be much to be said for the Strasbourg Courts approach to a blanket ban, at any rate absent detailed consideration of the pros and cons of such a ban. However that may be, I agree that this Court should follow the now settled jurisprudence in the Strasbourg Court for the reasons given by Lord Mance and Lord Sumption. Since writing the above, I have read the judgment of Baroness Hale in draft and would simply like to add that I agree with it. LORD SUMPTION (with whom Lord Hughes agrees) I agree with the orders proposed by Lord Mance, for all of the reasons that he gives in his judgment as well as those given in the judgment of Lady Hale. I wish to add my own observations on one question only, namely whether we should apply the principles stated by the European Court of Human Rights in Hirst (No 2) and Scoppola. It is an issue which raises in an acute form the potential conflict between the interpretation of the European Convention on Human Rights by the European Court of Human Rights and the processes by which alone laws are made in a democracy. The conflict arises from the requirement of the European Court of Human Rights that the United Kingdom should amend the Representation of the People Act 1983 so as to give at least some convicted prisoners the right to vote in national and local elections, something for which there is at present only negligible support in the House of Commons and very little among the public at large. If democracy is viewed as a system of decision making by those answerable to the electorate (as opposed to a system of values thought to be characteristic of democracies), this is bound to be a matter of real concern. Of course, as Lady Hale has pointed out, it does not follow that a democracy can properly do whatever it likes, simply by virtue of the democratic mandate for its acts. The protection of minorities is a necessary concern of any democratic constitution. But the present issue has nothing whatever to do with the protection of minorities. Prisoners belong to a minority only in the banal and legally irrelevant sense that most people do not do the things which warrant imprisonment by due process of law. In any democracy, the franchise will be determined by domestic laws which will define those entitled to vote in more or less inclusive terms. The right to vote may be based on citizenship or residence, or a combination of the two. There will invariably be a minimum voting age and may be other conditions of eligibility, such as mental capacity. In the United Kingdom, the right to vote at parliamentary and local government elections is enjoyed by Commonwealth citizens and citizens of the Republic of Ireland aged over 18, who are on the electoral roll, and not subject to any legal incapacity to vote. Inclusion on the electoral roll depends on current (or in some cases recent) residence. The only legal incapacity of any significance relates to convicted prisoners. Section 3(1) of the Representation of the People Act 1983 provides that convicted prisoners are legally incapable of voting at any parliamentary or local government election. There are limited exceptions for those committed for contempt of court or detained for default of compliance with another sentence (such as a fine). Section 8(1) and (2) of the European Parliamentary Elections Act 2002 apply the same rules of eligibility to elections for the European Parliament. These provisions are entirely clear. There is no way in which they can be read down so as to allow voting rights to any category of convicted prisoners other than those falling within the specified exceptions. The exclusion of convicted prisoners from the franchise is not a universal principle among mature democracies, but neither is it uncommon. Information provided by the Foreign Office in answer to a parliamentary question (updated to July 2012) indicates that at least 18 European countries including Denmark, Finland, Ireland, Spain, Sweden and Switzerland have no restrictions on voting by prisoners. Bulgaria, Estonia, Georgia, Hungary, Japan, Liechtenstein, Russia and the United States ban all convicted prisoners from voting, as do two of the seven Australian states. In some countries such as France disenfranchisement is reserved for those convicted of certain particularly serious offences, and in others such as Belgium for cases in which the prisoner is sentenced to a period of imprisonment exceeding a given threshold. In France, the Netherlands and Belgium disenfranchisement is an additional penalty imposed as a matter of judicial discretion. In other countries, such as Germany and Italy, it is automatic in specified cases. In Belgium, Italy and some jurisdictions of the United States, the loss of voting rights may continue even after a prisoners release. It is apparent that this is not a question on which there is any consensus. From a prisoners point of view the loss of the right to vote is likely to be a very minor deprivation by comparison with the loss of liberty. There are no doubt prisoners whose interest in public affairs or strong views on particular issues are such that their disenfranchisement represents a serious loss, just as there are prisoners (probably more numerous) whose enthusiasm for active sports makes imprisonment a special hardship. The severity of a sentence of imprisonment for the convicted person will always vary with a wide variety of factors whose impact on him or her will inevitably be arbitrary to some degree. It has been said, for example, that disenfranchisement may bear hardly on someone sentenced to, say, a short period of imprisonment which happens to coincide with a general election. For some prisoners, this will no doubt be true. But I decline to regard it as any more significant than the fact that it may coincide with a special anniversary, a long anticipated holiday or the only period of fine weather all summer. Article 3 of the First Protocol to the Human Rights Convention provides that the contracting parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. In 2005, the Grand Chamber of the European Court of Human Rights held in Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 that a blanket restriction on voting by all prisoners violated article 3 of the First Protocol. In Greens and MT v United Kingdom (2010) 53 EHRR 710, the European Court of Human Rights delivered a pilot judgment on a large number of petitions by convicted prisoners which sought damages for the denial of their rights under article 3 of the First Protocol, consequent upon the decision in Hirst. The court refused to make an award of damages, but directed that the United Kingdom should bring forward, within six months of the date upon which the present judgment becomes final, legislative proposals intended to amend the 1983 Act and, if appropriate, the 2002 Act in a manner which is Convention compliant and effectively stayed further proceedings on pending petitions of the same kind until the expiry of that period. The deadline was subsequently extended by the European Court until six months after the judgment of the Grand Court in another case, Scoppola v Italy (No 3) (2012) 56 EHRR 663, in which the United Kingdom government proposed to intervene to make submissions about the correctness of Hirst. However, the judgment in that case, which was delivered on 22 May 2012, reaffirmed both the reasoning and the decision in Hirst. The deadline imposed by the Strasbourg Court expired in November 2012. In December 2006, in the light of the decision in Hirst, the Government published a consultation paper setting out two alternative proposals for amending section 3 of the Representation of the People Act. One was to enfranchise prisoners sentenced to less than a specified term, which would be low. , such as one year in prison. The other was to allow sentencers a discretion on whether the franchise should be withdrawn in the particular case. A further consultation paper was published in April 2009 summarising responses to the first paper and seeking views on the approach to be adopted. The Government indicated its own preference for an automatic restriction of the franchise based on the seriousness of the offence, as reflected in the length of the sentence. On 20 December 2010, after the decision of the European Court of Human Rights in Greens and MT, the Government announced that it would propose to Parliament that offenders sentenced to a term of imprisonment of less than four years would have the right to vote in parliamentary and European Parliament elections, unless the sentencing judge directed otherwise. Subsequently, the question of prisoners voting rights was debated twice. There was a Westminster Hall adjournment debate on 10 January 2011, at which many members of the House of Commons expressed strong opposition to enfranchising any prisoners. A month later, on 11 February 2011, there was an all day debate on the floor of the House of Commons on a motion put forward jointly by senior backbench MPs from both sides of the House, that legislative decisions of this nature should be a matter for democratically elected lawmakers; and supports the current situation in which no sentenced prisoner is able to vote except those imprisoned for contempt, default or on remand. This motion was carried by 234 votes to 22, both front benches abstaining. On 22 November 2012 the Government published the Voting Eligibility (Prisoners) Draft Bill (Cm 8499), setting out three options, (a) a ban on voting by prisoners sentenced to four years imprisonment or more, (b) a ban for prisoners sentenced to more than six months imprisonment, or (c) a general ban, i.e. a restatement of the present position. The explanatory memorandum accompanying the draft Bill pointed out that option (c) could not be regarded as compatible with the Convention. The draft Bill is currently being considered by a joint Select Committee of both Houses. For the moment, however, the only reasonable conclusion that can be drawn from this history is that there is no democratic mandate for the enfranchisement of convicted prisoners. It is an international obligation of the United Kingdom under article 46.1 of the Convention to abide by the decisions of the European Court of Human Rights in any case to which it is a party. This obligation is in terms absolute. The remainder of article 46 contains provisions for its collective enforcement by the institutions of the Council of Europe. Many states have written constitutions which give automatic effect in domestic law to treaties to which they are party. Constitutional provisions of this kind are generally accompanied by provisions giving the legislature a role in the ratification of treaties. But the making of treaties in the United Kingdom is an exercise of the royal prerogative. There was no legal requirement for parliamentary scrutiny until the enactment of Part 2 of the Constitutional Reform and Governance Act 2010, although pursuant to an undertaking given to Parliament in April 1924 treaties were in practice laid before Parliament and there was a recognised constitutional convention (the so called Ponsonby Rule) that this should be done. The result of the constitutional status of treaties in the United Kingdom is that they are not a source of rights or obligations in domestic law unless effect is given to them by statute: R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 747 748 (Lord Bridge of Harwich), 762 (Lord Ackner); R v Lyons [2003] 1 AC 976; In re McKerr [2004] 1 WLR 807, para 25 (Lord Nicholls of Birkenhead), para 48 (Lord Steyn), para 63 (Lord Hoffmann), para 80 (Lord Rodger of Earlsferry) and para 90 (Lord Brown of Eaton under Heywood). The Human Rights Act 1998 might have given direct legal effect to interpretations of the Human Rights Convention by the Strasbourg Court, or required the executive to give effect to them by statutory instrument. Both techniques were employed in relation to EU law by the European Communities Act 1972. But, as is well known, its drafting was a compromise designed to make the incorporation of the Convention into English law compatible with the sovereignty of Parliament. Neither of these techniques was therefore adopted. Under section 10 of and Schedule 2 to the Act, the Crown has a power but not a duty to amend legislation by order so as to conform with the Convention where there are compelling reasons for doing so, but this is subject to prior parliamentary approval under the positive resolution procedure (there are special provisions in urgent cases for an order to be made with provisional effect subject to such a resolution being passed). It follows that the interpretation of the Convention by the Strasbourg Court takes effect in English law only by decision of the English courts. Section 2(1) of the Act provides that a United Kingdom court determining a question which has arisen in connection with a Convention right must take into account any judgment, decision or declaration of the European Court of Human Rights. For this purpose Convention rights are those set out in those of its provisions to which effect is given by the Act, i.e. articles 2 to 12 and 14 of the Convention, articles 1 to 3 of the First Protocol and article 1 of the Thirteenth Protocol: see section 1(1) and (2). Whatever may be meant by taking into account a decision of the Strasbourg Court, it is clearly less than an absolute obligation. The international law obligation of the United Kingdom under article 46.1 of the Convention goes further than section 2(1) of the Act, but it is not one of the provisions to which the Act gives effect. In the ordinary use of language, to take into account a decision of the European Court of Human Rights means no more than to consider it, which is consistent with rejecting it as wrong. However, this is not an approach that a United Kingdom court can adopt, save in altogether exceptional cases. The courts have for many years interpreted statutes and developed the common law so as to achieve consistency between the domestic law of the United Kingdom and its international obligations, so far as they are free to do so. In enacting the Human Rights Act 1998, Parliament must be taken to have been aware that effect would be given to the Act in accordance with this long standing principle. A decision of the European Court of Human Rights is more than an opinion about the meaning of the Convention. It is an adjudication by the tribunal which the United Kingdom has by treaty agreed should give definitive rulings on the subject. The courts are therefore bound to treat them as the authoritative expositions of the Convention which the Convention intends them to be, unless it is apparent that it has misunderstood or overlooked some significant feature of English law or practice which may, when properly explained, lead to the decision being reviewed by the Strasbourg Court. In R v Horncastle [2010] 2 AC 373 at para 11, Lord Phillips of Worth Matravers, with the agreement of the rest of this court, rejected the submission that it should hold itself to be bound by a clear statement of principle of the European Court on the precise issue that was before it: The requirement to take into account the Strasbourg jurisprudence will normally result in the domestic court applying principles that are clearly established by the Strasbourg court. There will, however, be rare occasions where the domestic court has concerns as to whether a decision of the Strasbourg court sufficiently appreciates or accommodates particular aspects of our domestic process. In such circumstances it is open to the domestic court to decline to follow the Strasbourg decision, giving reasons for adopting this course. This is likely to give the Strasbourg court the opportunity to reconsider the particular aspect of the decision that is in issue, so that there takes place what may prove to be a valuable dialogue between the domestic court and the Strasbourg court. In Manchester City Council v Pinnock (Nos 1 and 2) [2011] 2 AC 104, para 48, Lord Neuberger MR, again with the agreement of the whole court, expanded on this statement: This court is not bound to follow every decision of the European court. Not only would it be impractical to do so: it would sometimes be inappropriate, as it would destroy the ability of the court to engage in the constructive dialogue with the European court which is of value to the development of Convention law: see e.g. R v Horncastle [2010] 2 AC 373. Of course, we should usually follow a clear and constant line of decisions by the European court: R (Ullah) v Special Adjudicator [2004] 2 AC 323. But we are not actually bound to do so or (in theory, at least) to follow a decision of the Grand Chamber. As Lord Mance pointed out in Doherty v Birmingham City Council [2009] AC 367, para 126, section 2 of the 1998 Act requires our courts to take into account European court decisions, not necessarily to follow them. Where, however, there is a clear and constant line of decisions whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle, we consider that it would be wrong for this court not to follow that line. It follows that the exceptionally delicate issues presently before the court cannot be resolved by summarily applying the decisions of the European Court of Human Rights in Hirst and Scoppola. It is necessary to consider the basis on which the Strasbourg Court approached the relevant features of our domestic law. What is the rationale of the statutory rule excluding convicted prisoners from the franchise? In his Second Treatise of Government (1690), John Locke considered that because (as he saw it) all social obligations were ultimately founded upon implicit contract, a criminal, having repudiated that contract, had no rights. He had repudiated the collective security which was the purpose of the social contract and returned to the pre existing state of nature in which force was the only law. It followed, Locke thought, that he may be destroyed as a lion or tyger, one of those wild savage beasts, with whom men can have no society nor security. The same view was taken by others who identified the social contract as the foundation of the state, including Thomas Hobbes and Jean Jacques Rousseau. It is tempting to regard the present British rule about prisoners voting rights as a distant reflexion of this view, and plenty of commentators have succumbed to the temptation. But like most rhetoric, this is misleading. The disenfranchisement of convicted prisoners is not and never has been a form of outlawry, or civil death (the phrase sometimes used to describe the current state of the law on prisoners voting rights). On the contrary, until the 1960s, it was mainly the incidental consequence of other rules of law. In the first place, until 1870, convicted felons automatically suffered the confiscation of their real property, as a result of which they could not meet the property qualification which at that time was part of United Kingdom electoral law. The Forfeiture Act 1870 abolished the rule of confiscation. But section 2 partially preserved its effect on the franchise by providing that those sentenced for treason or felony to a period of imprisonment exceeding one year could not vote in parliamentary elections until they had served their sentence. This remained the position until the Criminal Law Act 1967 abolished the distinction between felonies and misdemeanours and amended section 2 of the Act of 1870 so that it applied only to those convicted of treason. Secondly, section 41(5) of the Representation of the People Act 1918 provided that an inmate in any prison, lunatic asylum, workhouse, poorhouse, or any other similar institution was not to be treated as resident there. This had the unintended effect of excluding from registration not only convicted prisoners, but prisoners on remand, an anomaly which was not corrected until the Representation of the People Act 2000 allowed remand prisoners to be treated as residing in the place where they were in custody. Thirdly, even those prisoners who before 1969 were eligible to vote were generally unable in practice to do so because of the absence of the necessary administrative arrangements. Except in the case of servicemen, postal voting was not introduced until the Representation of the People Act 1948, and was not available generally until the Representation of the People Act 2000. The modern law on this subject can be said to date from the Speakers Conference on Electoral Reform, which sat from 1965 to 1968 and issued its final report in February 1968 (Cmnd 3550). The conference was a non partisan body drawn from all parties in the House of Commons and meeting under the chairmanship of the Speaker. It gave systematic consideration to all aspects of electoral law including the franchise and, apparently for the first time, the question of prisoners voting rights. Only its conclusions, not its reasons, were published, but the final report records that it considered evidence and documentation from many sources. It unanimously recommended that all convicted prisoners should be ineligible to vote. This recommendation was accepted, and effect was given to it by section 3 of the Representation of the People Act 1969. The rationale of the exclusion of convicted prisoners from the franchise is as complex as the rationale for imprisonment itself. Section 142(1) of the Criminal Justice Act 2003 provides: Any court dealing with an offender in respect of his offence must have regard to the following purposes of sentencing (a) (b) (c) (d) the punishment of offenders, the reduction of crime (including its reduction by deterrence), the reform and rehabilitation of offenders, the protection of the public, and the making of reparation by offenders to persons affected by (e) their offences. All of these factors, except in the earlier period for (e), have been features of sentencing policy for very many years. For my part, I doubt whether the disenfranchisement of convicted prisoners can realistically be regarded as an additional punishment or a deterrent, and it may at least arguably be said to work against the reform and rehabilitation of the offender. But in my opinion, it has a more fundamental rationale. All criminal law, and penal policy in particular, has an important demonstrative function, which underlies all five of the statutory sentencing factors. The sentencing of offenders, and imprisonment more than any other sentence, is a reassertion of the rule of law and of the fundamental collective values of society which the convicted person has violated. This does not mean that the offender is disenfranchised because he is unpopular. Nor does it mean that he is regarded as having lost all civil rights or all claims against society, which is why the expression civil death is inappropriate. The present rule simply reflects the fact that imprisonment is more than a mere deprivation of liberty. It is a temporary reclusion of the prisoner from society, which carries with it the loss of the right to participate in societys public, collective processes. Similar principles appear to underlie the exclusion of convicted offenders from the franchise in the many other jurisdictions which practise it, whether on an automatic or a discretionary basis, and in particular those in which the suspension or abrogation of voting rights may be imposed independently of a prison sentence or continue after a term of imprisonment has been served. Fundamental to this approach, and to the automatic character of the exclusion of convicted prisoners from the franchise is the principle that sentences of imprisonment are imposed only for the more serious offences. This has always been a central feature of sentencing policy. Currently, section 152 of the Criminal Justice Act 2003, repeating previous statutory provisions and the long standing practice of the Court of Appeal (Criminal Division) provides: (2) The court must not pass a custodial sentence unless it is of the opinion that the offence, or the combination of the offence and one or more offences associated with it, was so serious that neither a fine alone nor a community sentence can be justified for the offence. The only exceptions relate either to a very few grave offences where the sentence is prescribed (such as murder, some firearms offences, repeated violence or Class A drug trafficking) or to a separate sentencing regime for dangerous repeat offenders. The section also provides that it does not apply in cases where the offender has refused to accept or comply with the conditions on which some lesser sentence would have been imposed. These principles are broadly reflected in the composition of the prison population. As Lord Mance has pointed out, only 8 per cent of persons convicted of an offence in England and 15 per cent in Scotland are sentenced to imprisonment. A statistical breakdown of the prison population as at 30 September 2010 suggests that 85% of prisoners serving sentences of less than five years were convicted of violent or sexual offences, robbery, burglary, theft, handling, fraud, forgery or drug offences. No doubt the threshold of seriousness for the passing of a sentence of imprisonment will vary in practice from one country to another. Different offences will perfectly properly be regarded as having more serious implications for some societies than for others. The United Kingdom is widely thought to have a relatively low threshold, but I am not aware that any comprehensive comparative study has been carried out which takes account of the underlying patterns of criminality. Although article 3 of the First Protocol is in unqualified terms, the jurisprudence of the Strasbourg Court has acknowledged from the outset that the right to vote may be subject to limitations of a kind which is familiar in the case law governing other Convention rights. The limitations must pursue a legitimate aim by proportionate means and must not be such as to impair the essence of the right: see Mathieu Mohin and Clerfayt v Belgium (1988) 10 EHRR 1, para 52; Matthews v United Kingdom (1999) 28 EHRR 361, para 63. It has generally been held that the essence of the right is not impaired if it does not thwart the free expression of the opinion of the people as a whole: see Holland v Ireland (Application No 24827/94) (unreported) 14 April 1998. It follows that the exclusion of certain categories of person from the franchise may be compatible with the Convention notwithstanding that as far as those persons are concerned the exclusion is total while it lasts. The case law has consistently emphasised that these are matters on which the state enjoys a wide margin of appreciation. In Hirst this was said to reflect the numerous ways of organising and running electoral systems and a wealth of differences, inter alia, in historical development, cultural diversity and political thought within Europe which it is for each Contracting State to mould into its own democratic vision (para 61). The United Kingdom government argued before the Strasbourg Court in Hirst that the objective of disenfranchisement was to serve as an additional punishment. The court accepted that that was a possible rationalisation, and regarded it as a legitimate objective, compatible with article 3 of the First Protocol. The rule was nevertheless held to be incompatible because it was disproportionate, essentially as it was an automatic blanket ban imposed on all convicted prisoners which was arbitrary in its effects and could no longer be said to serve the aim of punishing the applicant once his tariff (that period representing retribution and deterrence) had expired (para 76). The court considered the governments argument that the exclusion affected only those convicted of crimes serious enough to warrant a custodial sentence, and the very similar argument put forward by an intervener that imprisonment was the last resort of criminal justice. They appear to have rejected this argument on the facts, observing that sentences of imprisonment are imposed for a wide range of offenders and for periods from one day to life, and that because disenfranchisement was automatic the sentencer had no opportunity to assess its proportionality in any particular case (paras 77, 80). The court considered that the absolute character of the rule disenfranchising convicted prisoners and its application to all convicted prisoners put it beyond the states margin of appreciation. They were fortified in this conclusion by their view that there was no evidence that Parliament had weighed the proportionality of a general exclusion. The court referred to the Speakers Conference of 1965 1968, and the Home Office working party of 1998 1999, and acknowledged that Parliament might be said implicitly to have endorsed their conclusions: Nonetheless [they concluded] it cannot be said that there was any substantive debate by members of the legislature on the continued justification in light of modern day penal policy and of current human rights standards for maintaining such a general restriction on the right of prisoners to vote. (para 79). The court concluded as follows, at para 82: Therefore, while the court reiterates that the margin of appreciation is wide, it is not all embracing. Further, although the situation was somewhat improved by the Act of 2000 which for the first time granted the vote to persons detained on remand, section 3 of the 1983 Act remains a blunt instrument. It strips of their Convention right to vote a significant category of persons and it does so in a way which is indiscriminate. The provision imposes a blanket restriction on all convicted prisoners in prison. It applies automatically to such prisoners, irrespective of the length of their sentence and irrespective of the nature or gravity of their offence and their individual circumstances. Such a general, automatic and indiscriminate restriction on a vitally important Convention right must be seen as falling outside any acceptable margin of appreciation, however wide that margin might be, and as being incompatible with article 3 of Protocol No 1. Scoppola v Italy (No 3) (2012) 56 EHRR 663 was directly concerned with the automatic lifetime exclusion from the franchise which was the consequence under Italian law of the imposition of a sentence of life imprisonment. However, the United Kingdom rule was indirectly in question, because the Grand Chamber reviewed the decision in Hirst and the British government intervened to make submissions about it. The Chamber had held that the Italian rule violated article 3 of the First Protocol because of its automatic character. The Grand Chamber held that it was compatible with the Convention. It found that the rule pursued the legitimate aim of preventing crime and enhancing civil responsibility and respect for the rule of law (para 90). Turning to proportionality, it held that notwithstanding the statements in Hirst the test of proportionality did not require that disenfranchisement should be discretionary. It could be automatic, provided that the principles governing its imposition were sufficiently related to the gravity of the offence. The provisions of the relevant Italian law were held to be proportionate, unlike the English rule, because they disenfranchised only those convicted of particularly serious offences and those sentenced to the longer terms of imprisonment. Subject to the point about the absence of judicial discretion, the Grand Chamber reaffirmed the decision in Hirst. Accordingly, the Strasbourg Court has arrived at a very curious position. It has held that it is open to a Convention state to fix a minimum threshold of gravity which warrants the disenfranchisement of a convicted person. It has held that the threshold beyond which he will be disenfranchised may be fixed by law by reference to the nature of the sentence. It has held that disenfranchisement may be automatic, once a sentence above that threshold has been imposed. But it has also held that even with the wide margin of appreciation allowed to Convention states in this area, it is not permissible for the threshold for disenfranchisement to correspond with the threshold for imprisonment. Wherever the threshold for imprisonment is placed, it seems to have been their view that there must always be some offences which are serious enough to warrant imprisonment but not serious enough to warrant disenfranchisement. Yet the basis of this view is nowhere articulated. It might perhaps have been justified by a careful examination of the principles of sentencing in the United Kingdom, with a view to demonstrating that they involve the imprisonment of some categories of people for offences so trivial that one could not rationally suppose them to warrant disenfranchisement. That would be an indictment not just of the principle of disenfranchisement but of the sentencing principles themselves. However, no such exercise appears to have been carried out. I confess that I also find it surprising that the Strasbourg Court should have concluded in Hirst that the United Kingdom Parliament adopted the present rule per incuriam, so to speak, in 1969, without properly considering the justification for it as a matter of penal policy. The absence of debate to which the court referred reflects the attention which had already been given to the issue by the Speakers Conference, and the complete consensus on the appropriateness of the voting ban. Without the decisions in Hirst and Scoppola, I would have held that the question how serious an offence has to be to warrant temporary disenfranchisement is a classic matter for political and legislative judgment, and that the United Kingdom rule is well within any reasonable assessment of a Convention states margin of appreciation. However, the contrary view has now been upheld twice by the Grand Chamber of the European Court of Human Rights, and is firmly established in the courts case law. It cannot be said that the Grand Chamber overlooked or misunderstood any relevant principle of English law. The problems about the view which the court ultimately came to were fairly pointed out in both cases in the course of argument. Whatever parliamentary consideration may or may not have been given to the issue in 1969, it has undoubtedly received a great deal of parliamentary attention more recently, in debates which were drawn to the Grand Chambers attention in Scoppola but made no difference to its view. There is no realistic prospect that further dialogue with Strasbourg will produce a change of heart. In those circumstances, we would be justified in departing from the case law of the Strasbourg Court only if the disenfranchisement of convicted prisoners could be categorised as a fundamental feature of the law of the United Kingdom. I would regard that as an extreme suggestion, and in agreement with Lord Mance I would reject it. A wider and perhaps more realistic assessment of the margin of appreciation would have avoided the current controversy. But it would be neither wise nor legally defensible for an English court to say that article 3 of the First Protocol has a meaning different from that which represents the settled view of the principal court charged with its interpretation, and different from that which will consequently apply in every other state party to the Convention. |
These three appeals raise questions as to the circumstances in which the Parole Board (the board) is required to hold an oral hearing. One of the appeals (that of the appellant Osborn) concerns a determinate sentence prisoner who was released on licence but then recalled to custody. The other appeals (those of the appellants Booth and Reilly) concern indeterminate sentence prisoners who have served their minimum terms. reached. In order to comply with common law standards of procedural i) fairness, the board should hold an oral hearing before determining an application for release, or for a transfer to open conditions, whenever fairness to the prisoner requires such a hearing in the light of the facts of the case and the importance of what is at stake. By doing so the board will also fulfil its duty under section 6(1) of the Human Rights Act 1998 to act compatibly with article 5(4) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, in circumstances where that article is engaged. It is impossible to define exhaustively the circumstances in which an ii) oral hearing will be necessary, but such circumstances will often include the following: a) Where facts which appear to the board to be important are in dispute, or where a significant explanation or mitigation is advanced which needs to be heard orally in order fairly to determine its credibility. The board should guard against any tendency to underestimate the importance of issues of fact which may be disputed or open to explanation or mitigation. b) Where the board cannot otherwise properly or fairly make an independent assessment of risk, or of the means by which it should be managed and addressed. That is likely to be the position in cases where such an assessment may depend upon the view formed by the board (including its members with expertise in psychology or psychiatry) of characteristics of the prisoner which can best be judged by seeing or questioning him in person, or where a psychological assessment produced by the Ministry of Justice is disputed on tenable grounds, or where the board may be materially assisted by hearing evidence, for example from a psychologist or psychiatrist. Cases concerning prisoners who have spent many years in custody are likely to fall into the first of these categories. c) Where it is maintained on tenable grounds that a face to face encounter with the board, or the questioning of those who have dealt with the prisoner, is necessary in order to enable him or his representatives to put their case effectively or to test the views of those who have dealt with him. d) Where, in the light of the representations made by or on behalf of the prisoner, it would be unfair for a paper decision made by a single member panel of the board to become final without allowing an oral hearing: for example, if the representations raise issues which place in serious question anything in the paper decision which may in practice have a significant impact on the prisoners future management in prison or on future reviews. In order to act fairly, the board should consider whether its iii) independent assessment of risk, and of the means by which it should be managed and addressed, may benefit from the closer examination which an oral hearing can provide. iv) The board should also bear in mind that the purpose of holding an oral hearing is not only to assist it in its decision making, but also to reflect the prisoners legitimate interest in being able to participate in a decision with important implications for him, where he has something useful to contribute. v) The question whether fairness requires a prisoner to be given an oral hearing is different from the question whether he has a particular likelihood of being released or transferred to open conditions, and cannot be answered by assessing that likelihood. vi) When dealing with cases concerning recalled prisoners, the board should bear in mind that the prisoner has been deprived of his freedom, albeit conditional. When dealing with cases concerning post tariff indeterminate sentence prisoners, it should scrutinise ever more anxiously whether the level of risk is unacceptable, the longer the time the prisoner has spent in prison following the expiry of his tariff. vii) The board must be, and appear to be, independent and impartial. It should not be predisposed to favour the official account of events, or official assessments of risk, over the case advanced by the prisoner. viii) The board should guard against any temptation to refuse oral hearings as a means of saving time, trouble and expense. ix) The boards decision, for the purposes of this guidance, is not confined to its determination of whether or not to recommend the prisoners release or transfer to open conditions, but includes any other aspects of its decision (such as comments or advice in relation to the prisoners treatment needs or the offending behaviour work which is required) which will in practice have a significant impact on his management in prison or on future reviews. Paper decisions made by single member panels of the board are x) provisional. The right of the prisoner to request an oral hearing is not correctly characterised as a right of appeal. In order to justify the holding of an oral hearing, the prisoner does not have to demonstrate that the paper decision was wrong, or even that it may have been wrong: what he has to persuade the board is that an oral hearing is appropriate. xi) oral hearing if it is in doubt whether to do so or not. xii) The common law duty to act fairly, as it applies in this context, is influenced by the requirements of article 5(4) as interpreted by the European Court of Human Rights. Compliance with the common law duty should result in compliance also with the requirements of article 5(4) in relation to procedural fairness. xiii) A breach of the requirements of procedural fairness under article 5(4) will not normally result in an award of damages under section 8 of the Human Rights Act unless the prisoner has suffered a consequent deprivation of liberty. In applying this guidance, it will be prudent for the board to allow an The legislative framework Section 239(2) of the Criminal Justice Act 2003 (the 2003 Act) provides that it is the duty of the board to advise the Secretary of State with respect to any matter referred to it by him which is to do with the early release or recall of prisoners. This includes advising on licence conditions: R (Brooke) v Parole Board [2008] EWCA Civ 29; [2008] 1 WLR 1950, para 47. Section 239(5) permits the Secretary of State to make rules with respect to the proceedings of the board. Section 239(6) permits the Secretary of State to give the board directions as to the matters to be taken into account by it in discharging its functions under Chapter 6 of Part 12 of the 2003 Act, which concerns the release, licences and recall of determinate sentence prisoners, or under Chapter II of Part II of the Crime (Sentences) Act 1997 as amended (the 1997 Act), which concerns the release, licences and recall of indeterminate sentence prisoners. It will be necessary to return to the rules and directions which were in force at the material time. Determinate sentence prisoners who are serving a sentence of 12 months or more are automatically entitled to be released on licence at the halfway point in their sentence: section 244 of the 2003 Act. Section 254 confers on the Secretary of State the power to revoke the licence and to recall the prisoner to prison. There is no obligation on the Secretary of State to consult the board before doing so, and any direct challenge to the Secretary of States decision to revoke a licence can only be made by way of an application for judicial review. At the material time, section 255C(4) of the 2003 Act (as inserted by the Criminal Justice and Immigration Act 2008) imposed a duty upon the Secretary of State to refer the recalled prisoners case to the board. Section 255C(5) provided that, where on such a reference the board recommended the prisoners immediate release, the Secretary of State must give effect to that recommendation. In relation to indeterminate sentence prisoners, section 28(5) of the 1997 Act imposes a duty on the Secretary of State to release the prisoner as soon as he has served the tariff part of his sentence and the board has directed his release. Section 28(6) prohibits the board from giving such a direction unless it is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. The Rules The rules in force at the material time were the Parole Board Rules 2004 as amended by the Parole Board (Amendment) Rules 2009 (the rules): those currently in force, the Parole Board Rules 2011 (SI 2011/2947), contain analogous provisions. The rules applied where an indeterminate sentence prisoners case was referred to the board for a decision as to whether he should be released. It is common ground between the parties that they had no application where a determinate sentence prisoners case was referred, following his recall, for a decision as to whether he should be re released. The rules therefore applied in the cases of the appellants Booth and Reilly, but not in the case of the appellant Osborn. The rules made provision for the listing of the prisoners case, following which the Secretary of State was required to serve on the board, and on the prisoner or his representative, specified information and reports. The prisoner was then required to serve on the board and on the Secretary of State any representations about his case that he wished to make. Rule 11 provided for the initial consideration of a prisoners case by a single member of the board, without a hearing. It provided: 11. (1) Within 14 weeks of the case being listed, a single member panel shall consider the prisoners case (sic) without a hearing. 11. (2) The single member panel must either (a) decide that the case should receive further consideration by an oral panel, or (b) make a provisional decision that the prisoner is unsuitable. 11. (3) The decision of the single member panel shall be recorded in writing with reasons, and shall be provided to the parties within a week of the date of the decision. It was implicit in rule 11(2) that an oral hearing would always be held before an indeterminate sentence prisoner was released. Rule 12 was headed Provisional decision against release, and applied where a decision was taken under rule 11(2)(b). It provided: 12. (1) In any case where the single member panel has made a provisional decision under rule 11(2)(b) that the prisoner is unsuitable for release, the prisoner may request an oral panel to give consideration to his case with a hearing. 12. (2) Where the prisoner does so request consideration of his case with a hearing, he must serve notice to that effect, giving full reasons for the request on the board and the Secretary of State within 19 weeks of the case being listed. 12. (3) If no notice has been served in accordance with paragraph (2) after the expiry of the period permitted by that paragraph, the provisional decision shall become final and shall be provided to the parties within 20 weeks of the case being listed. The rules were silent as to how requests for an oral hearing were to be decided and by whom. Where a decision was made under rule 11(2)(a) or a hearing was ordered pursuant to a request under rule 12(2), Part 4 of the rules applied. Provision was made for such matters as the prisoners attendance at the hearing, the submission of documentary evidence and the calling of witnesses. In relation to the procedure to be followed at the hearing, rule 19 provided that the panel was required so far as possible to make its own enquiries in order to satisfy itself of the level of risk of the prisoner. The parties were entitled to appear and be heard and to take such part in the proceedings as the panel thought fit. They were permitted to hear each others evidence, put questions to each other, call any witnesses whom the board had authorised to give evidence, and put questions to any witness or other person appearing before the panel. After all the evidence had been given, the prisoner was to be given a further opportunity to address the panel. Under the rules as introduced in 2004, an indeterminate sentence prisoner was entitled under rule 12(1), in any case where a single member panel had made a provisional decision under rule 11(2)(b), to require a three member oral panel to give consideration to his case with a hearing. This right was taken away by the Parole Board (Amendment) Rules 2009 (SI 2009/408), which came into effect on 1 April 2009. There is a difference between the position in England and Wales following that amendment and the position in the rest of the United Kingdom, where indeterminate sentence prisoners (and some other categories of prisoner) remain entitled to an oral hearing: see the Parole Board (Scotland) Rules 2001 (SSI 2001/1315) rule 20, and the Parole Commissioners Rules (Northern Ireland) 2009 (SR 2009 No 82), rule 17(2). The directions At the time when the appellants cases were considered by the board, the directions given by the Secretary of State in relation to determinate sentence prisoners recalled to prison, such as the appellant Osborn, stated that the assumption is that the board will seek to re release the prisoner or set a future re release date in all cases where it is satisfied that the risk be safely managed in the community (sic). The board was required to consider a number of matters, including the likelihood of the offender complying with the requirements of probation supervision. In assessing that likelihood, the board was required to consider the offenders conduct during the licence period to date. In relation to indeterminate sentence prisoners such as the appellants Booth and Reilly, the board was required by the relevant directions to consider a number of matters, including whether the prisoner had made positive and successful efforts to address the attitudes and behavioural problems which led to the commission of the index offence, the nature of any offences against prison discipline which he had committed, his attitude and behaviour to other prisoners and staff, any medical, psychiatric or psychological conditions, particularly if there was a history of mental instability, and any indication of predicted risk as determined by a validated actuarial risk predictor model, or any other structured assessments of risk and treatment needs. Other directions assumed that the board had the power to recommend the transfer of indeterminate sentence prisoners to open conditions, and to give directions relating to the exercise of that power. Practice determinate sentence prisoners recalled to custody In relation to determinate sentence prisoners recalled to custody, such as the appellant Osborn, the practice of the board, following the decision of the House of Lords in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350, was to grant an oral hearing to any prisoner who requested one following a provisional decision. That practice changed in February 2007, when the board published a notice stating that it would require reasons from the prisoner when applying for an oral hearing, and would grant such applications only where it appeared to the board that a hearing was necessary and fell within the ambit of the House of Lords ruling. The practice followed by the board in relation to such prisoners is set out in unpublished guidance to panels. That guidance states: All recalled prisoners are initially considered by a paper panel. That panel can decide whether to send the case to an oral hearing. An oral hearing will normally be granted in three sets of circumstances: 1. where the prisoner disputes the circumstances of the recall and the facts of the recall are central to the question of risk and re release; or 2. where the prisoner argues that the recall incident was not justified for some reason, or was not as serious as alleged and this affects the assessment of risk; 3. any case where the assessment of risk requires live evidence from the prisoner and/or witnesses. Where the prisoner asks for an oral hearing, the panel should: Consider whether it is possible to decide the issues and release on the papers; Otherwise, send the case for an oral hearing Where a prisoner submits representations challenging his or her recall the panel should: Consider whether it is possible to decide the issues and release on the papers; or Refuse the representations . or Send the case to an oral hearing. This should only be done when the panel is unable to decide the issues on the papers and concludes that they can only be determined after hearing oral evidence. (emphasis in original) Practice indeterminate sentence prisoners Historically, as I have explained, indeterminate sentence prisoners were entitled to an oral hearing. Following the amendment of the rules in 2009, guidance was issued which was in force at the material time. It stated: Decisions on oral hearings will be taken by the ICM [Intensive Case Management] member. The member will consider this in all cases, regardless of whether the prisoner has requested one. An oral hearing will normally be granted in two sets of circumstances: 1. Where the ICM member considers there is a realistic prospect of release or a move to open conditions; or 2. In any case where the assessment of risk requires live evidence from the prisoner and/or witnesses. This would include a case where a progressive move is not a realistic outcome, but where live evidence is needed to determine the risk factors. It is envisaged that this will be a rare step to take and would normally only be necessary where experts disagreed about a risk factor; for example, whether or not there was a sexual element to an offence that needed exploring. It is only intended to apply this principle where there is a dispute about whether an issue is a risk factor at all, not necessarily whether it has been addressed or not. An oral hearing will not be granted where there is no realistic prospect of release or open conditions, but where such outcomes are requested by the prisoner, detailed reasons will be given for refusing, in particular where the prisoner is already in category C or D. This guidance is thoroughly illogical. First, if an oral hearing will normally be granted in two sets of circumstances, the first being that there is a realistic prospect of release or a move to open conditions, it cannot be correct to say that an oral hearing will not be granted where there is no prospect of release or open conditions: if that were true, the second alternative would not exist. Secondly, if, applying the guidance, the board has been able to conclude that there is no realistic prospect of release or a move to open conditions, then it is difficult to see how it can nevertheless consider that the assessment of risk requires live evidence. The facts Michael Osborn The appellant Osborn was convicted in 2006 of putting people in fear of violence by harassment, and possession of an imitation firearm, during an incident when he was said to have brandished the imitation firearm at the home of his estranged wife. He received a sentence of six years imprisonment, the custodial element of which expired on 20 February 2009, when he was released on licence. He was assessed as presenting a very high risk of harm, and was placed under surveillance from the point of his leaving prison. He was recalled to custody the same day, after arriving at the hostel where he was to live 20 minutes after the time when he was required by his licence conditions to be there, having visited an address at a village in Staffordshire en route. His licence was revoked the same day. He was informed by the Ministry of Justice that he had been recalled to prison because it had been reported by the probation service that he had breached a condition of his licence by failing to confine himself to an address approved by his supervising officer during the hours of a curfew. He was informed that his licence had been revoked by the Secretary of State for Justice because in view of the offences for which he was originally sentenced, the risk suggested by his offending history and his behaviour as described in the breach report completed by the probation service, the Home Secretary (sic) was no longer satisfied that it was right for him to remain on licence. The appellants case was then listed before the board, which was provided with a request for recall report or recall pack, written with a view to justifying the recall, and a report for review of re release. These documents, prepared by the Ministry of Justice or its agencies, contained accounts of events prior to and after his release by his offender manager, a line manager and a senior manager, all of whom agreed that he could not be safely released. In particular, the offender manager raised concerns about the appellants willingness to comply with licence conditions. He reported that the appellant had stated to him, before being released, his refusal to comply with the requirements of his licence, initially challenging whether he should be required to reside at approved premises, and also challenging the extent of an exclusion zone. The offender manager had also received information that on the day of his release, when reminded that he could not have access to firearms, the appellant had said not for another two hours. He was reported to have said that he would be back in prison shortly after he had done what he needed to do. It was also reported that shortly before the appellant had left the address which he had visited en route to the hostel he had telephoned the hostel manager to tell her that he would be late, saying falsely that he was on the A38. On returning to his car he had removed and rearranged items in the boot. This gave rise to concern in view of his comment about access to firearms. He was also reported to have told the hostel manager earlier that week that he could not share a room as he had a multi personality disorder. In view of this reported statement, the offender manager considered it crucial that the prisoner should undergo a full psychiatric assessment before being considered for release. In a letter dated 6 April 2009, the appellants solicitors made representations to the board in support of his release, attaching a handwritten statement in which the appellant provided a detailed account of the events of the day on which he had been released and recalled to custody. He maintained that there had been a delay in his release while the prison waited for the surveillance team to arrive, and that the hostel manager had in consequence agreed to a 30 minute extension of the deadline for his getting there. He had arrived at the hostel before that deadline expired. He had stopped in the village in order to drop off his sister in law, who was one of the passengers in the car in which he had been collected from prison. The solicitors accepted that the appellant had expressed initial concerns about the licence conditions, but said that he had now been advised of the proper channels for challenging such conditions and understood that they were binding. They stated that he had demonstrated in custody that he could behave well, and that he could be expected to comply with his licence. They maintained that any risk could be safely managed within the community, as probation reports indicated. His previous offending, before the index offence, had taken place when he was 16 or 17 years of age. He was now 37. His record within prison had been good: he held trusted employment and was adjudication free. His risk level had been altered to very high on the day before his release, by his recently appointed offender manager, without a proper review or assessment, so as to enable the surveillance and emergency recall to be arranged. The solicitors also said that the offender managers report had only been received that day, and that they had not been able to obtain the appellant's comments on the allegations made against him. They noted that the offender manager had stated that the appellant was devoid of any victim sympathy/awareness, but commented that he had had very little contact with their client. They confirmed that the appellant suffered from mental health problems, but said that the probation service was fully aware of them. It was understood that the prison service had also been aware of them throughout the appellants incarceration, and that he had remained in contact with the psychiatric nurse at his current prison until being signed off. On 22 April 2009 the appellants case was considered by a paper panel comprising an anonymous member of the board, who decided to make no recommendation that he should be released. In its written decision, the panel noted the nature of the index offence and the previous record. It summarised the offender managers account of the appellants attitude towards the licence conditions and of events on the date of release. The removal and rearrangement of items in the car boot were again linked to the alleged comment about access to firearms. The panel stated that it had considered representations dated 2 March 2009 submitted by the appellants legal advisers. It was noted that those representations provided no explanation for the appellants detour to the village. The risk assessments were noted, including the assessment of a lack of victim empathy. It was noted that the hostel was unwilling to accommodate the appellant, and that report writers considered that other approved premises were unlikely to offer him accommodation until his motivation to comply improved. The panel referred to the appellants apparent unwillingness to comply with the requirements of licence supervision: an important finding based on the account of events provided by the offender manager. It was concluded that the assessment of risk was such that it could not be safely managed within the community. The panel does not appear to have considered the letter from the appellants solicitors dated 6 April 2009 or the appellants statement, enclosed with that letter. The appellant was notified of the decision by a standard form letter from the Ministry of Justice (not the board) dated 24 April 2009. The letter informed him that he was entitled to request an oral hearing within 14 days. His solicitors did so, by letter dated 28 April 2009. In the letter, they pointed out that the appellants statement did not appear to have been taken into account. They commented that the panel had relied on information which had not been disclosed to them and which they had not had an opportunity to consider, such as the information about the availability of hostel accommodation. They requested directions that specified witnesses and written documentation should be available at the oral hearing. The proposed witnesses included the hostel manager, who could confirm the appellants account of the telephone calls and could give evidence about the availability of a hostel place; the prison officer who was the source of the allegations about the appellants statements on the day of his release; the minutes of the body responsible for altering the appellants risk level the day before his release; the appellants sister in law, whom he claimed to have dropped off in the village; the offender manager; and a psychologist, in case his evidence should be necessary. In a further letter dated 13 May 2009 the solicitors reiterated that the appellant disputed the allegations made against him by the offender manager. By a decision dated 5 June 2009 the request for an oral hearing was refused by another anonymous single member panel. The decision stated that the panel had seen the oral hearing request from the prisoner/solicitor, together with the paper recall panel decision dated 22.4.09 and the dossier they reviewed. The decision then stated that the request for an oral hearing had been refused for the following reasons: Michael Osborn's solicitor's representations dated 27/5/09 and 28/4/09 dispute parts of the behaviour on the day of release which led to recall (eg Mr Osborn's detour) as well as brandishing a firearm in the index offences. This panel has carefully considered the full dossier and concludes that the disputed facts are not central either to the recall decision or the panel's risk assessment of the panel (sic) on 22/4/09; Mr Osborn's denial of the index offences was known to the panel already. So far as appears from the decision, this panel proceeded on the basis of the same material as had been before the earlier panel, with the addition of two subsequent letters from the appellants solicitors. There is no indication that the letter dated 6 April, or the appellants statement, were taken into account. The appellants claim that the time when he was due to arrive at the hostel had been extended does not appear to have been considered. The fact that the appellant disputed many of the allegations made against him, and the potential bearing of that dispute upon the assessment of risk, do not appear to have been taken into account. Langstaff J dismissed the appellants application for judicial review ([2010] EWHC 580 (Admin)). The judge considered that the facts in the appellants case were only minimally in contention, that the focus of the letter dated 28 April 2009 had been on matters which were peripheral to the decision made, and that the bulk of the letter indicated a desire to ask questions about matters of fact which were not in dispute and did not have any relevance to the risk to the public on re release. On appeal to the Court of Appeal ([2010] EWCA Civ 1409, [2011] UKHRR 35), where the case was considered together with that of the appellant Booth, Carnwath LJ (with whom Sedley and Moses LJJ agreed) accepted that there was some force in the submission that, contrary to the understanding of the judge, there were significant factual disputes on matters relevant to the decision (para 45). He considered however that the judge was right to consider that the boards decision on release did not ultimately depend on resolution of these issues (para 47). The lack of information about the appellants current mental health status and the recommendation that a full psychiatric assessment should be carried out, combined with the very high risk of harm should he re offend, provided ample reason for not allowing release (ibid). The appellant was eventually allowed an oral hearing in November 2010. His application for release was refused. The facts John Booth The appellant Booth received a discretionary life sentence in 1981 for attempted murder, with a minimum term of six and a half years. The conviction concerned the attempted murder by strangulation of an elderly woman in a train compartment. He has remained in custody ever since, save for a short period in 1993, when he was released but recalled after three months. Psychiatric treatment has continued throughout his sentence. Although he has progressed to open conditions on various occasions, he has failed on each occasion in that setting, most recently in 2003. In July 2009 the appellants case was referred to the board by the Secretary of State under section 28 of the 1997 Act, to consider whether or not it would be appropriate to direct the appellants release. If the board did not consider it appropriate to direct release, it was invited to advise the Secretary of State whether the appellant should be transferred to open conditions. If the board made such a recommendation, it was invited to comment on the degree of risk involved. It was also invited to advise the Secretary of State on the continuing areas of risk that needed to be addressed. The dossier provided to the board included reports from the deputy lifer manager, the appellants offender supervisor, and a psychologist in training. The appellant was described in the dossier as a very institutionalised man who, if not encouraged, would be satisfied to remain in custody for the remainder of his life. The referral letter, following the standard form, requested the board to give full reasons for its decision or recommendation, but also stated that the board was not being asked to comment on or make any recommendation about any specific treatment needs or offending behaviour work required. Notwithstanding that statement, it is apparent from the papers concerning the appellants Booth and Reilly that in practice the board may comment on treatment needs and on the offending behaviour work required. It is indeed difficult for it to avoid doing so, if it is to give reasons for its decisions and recommendations which address the matters that it is required by the Secretary of States directions to consider, and if it is to comply with the request for advice about areas of risk that need to be addressed. It also appears that such comments may have an impact on the prisoners management in prison and on the courses offered to him, as one would expect. The appellant subsequently received from the board a letter in a standard tick box form, dated 21 October 2009. It stated: The Parole Board has decided not to direct your release (or recommend your transfer to open conditions if applicable). This is a decision taken on the papers and the full decision is attached. The letter continued: You can appeal the decision and ask for a full oral hearing before a panel of the Parole Board if you believe that there are significant and compelling reasons for this. You have four weeks (28 days) from the date of this letter to decide if you wish to lodge an appeal. This letter mischaracterises the nature of the single member decision, the rights of the prisoner following the making of such a decision, and the function of the board at that stage under rules 11 and 12. The implication of the letter is that the board has decided that the prisoner should not be released or recommended for transfer to open conditions, subject to a right of appeal. The prisoner is requested by the form either to signify his acceptance of that decision or to put forward reasons why he does not accept it: in other words, his grounds of appeal. The reference to compelling reasons implies that there is a significant onus on the prisoner. As I have explained, however, the decision made by the single member under rule 11(2)(b) is merely provisional. Where a provisional decision is made, the prisoners entitlement under rule 12(1) is not to appeal against that decision, but to request an oral panel to give consideration to his case with a hearing. The board then has to consider that request. If it grants the request, the matter is then considered by an oral panel de novo, as I have explained. Enclosed with the letter was the decision taken by an anonymous intensive case management (ICM) member. It stated: A single Parole Board member reviewed your case on the papers on the 14th October 2009. The Parole Board is empowered to direct your release if it is satisfied that it is no longer necessary for the protection of the public that you continue to be detained. The member was not so satisfied and does not direct release; nor recommend transfer to open conditions. There was nothing in the decision to indicate its provisional nature. The decision summarised the appellants history as set out in the dossier, and stated: In order to improve your ability to cope the thinking skills programme (TSP) has been recommended for you and this was considered a good starting point in order to start addressing your risk and to deal with your long term problems of dealing with stress The report by the psychologist reports that you have made progress with your coping skills as evidenced by your current behaviour as compared to the severe difficulties you have had in the past. The concern, however, is that you have little awareness of what may unsettle you in the future and that your relapse prevention strategies rely solely on professional support. The report states you do not see it as your responsibility to change but for others to look after you. The psychologist recommends the TSP for you In order to fully benefit from this programme it is suggested that some 1:1 work with the treatment team would be needed before you started the programme No report writers are in a position to recommend release or a progressive move to open conditions for you. You feel you may benefit from a direct release to Box Tree Cottage which offers a high level of supportive accommodation for offenders but it is felt that such plans are somewhat premature for you although the offender manager and the psychologist have not ruled out this type of progression in the longer term. In response to the letter, the appellants solicitors requested an oral hearing by letter dated 17 November 2009. They stated that the appellants was a complex case. Since his last review, he had been working on a one to one basis with a psychiatrist in the prison on cognitive skills, and was currently covering some of the elements of the thinking skills programme. He had completed work to reduce his risk since his last review. He had not had any adjudications. He had had successful releases on temporary licence. His application for release might therefore be successful. He would require psychiatric intervention when released. This needed to be considered at an oral hearing. His probation officer was currently arranging for him to visit Box Tree Cottage, which provided accommodation with psychiatric support on hand. It was likely that he would request direct release to that accommodation. By letter dated 19 November 2009, headed Appeal against Paper Decision, the board informed the appellant that the appeal has been refused. The letter stated: The ICM assessor's duty is to consider whether the grounds of the appeal are justified and if an oral hearing would make any material difference to the paper hearing decision. The implication of that statement is that a decision which was taken before any representations were received from the prisoner should be reconsidered only if representations subsequently made demonstrated that an oral hearing would result in a different decision. The letter continued: The criteria for granting an oral hearing is (sic) where the member considers there is a realistic chance of release or open conditions and where the assessment of risk requires live evidence to determine the risk factors. In Mr. Booth's case the offender manager, the offender supervisor and the prison psychologist all agree on the current risk factors which are thinking skills deficits and anger management issues and that interventions need to be completed to address these risk factors. They all conclude that Mr. Booth is unsuitable for release or open conditions. There is no evidence or argument put forward in the representations which persuades the ICM assessor that an oral hearing is justified. The paper decision is therefore final. The decision does not explain why the points made on behalf of the appellant in the letter dated 17 November 2009 had been discounted by the anonymous ICM assessor, beyond reiterating the contrary opinions of the offender manager, the offender manager and the prison psychologist. Langstaff J refused permission to apply for judicial review ([2010] EWHC 1335 (Admin)). He held that the board had been entitled to take the view that there was no realistic likelihood of immediate release or transfer to open conditions. On appeal ([2010] EWCA Civ 1409), Carnwath LJ agreed with the judge, holding that although the points raised on Mr Booths behalf might be relevant to his future handling in custody, there was (it was said) no dispute about the need for him to remain in custody for the time being. Since (it was said) that was the question for the board, they could properly form the view that there was no practical possibility of an oral hearing changing that position for the time being (para 50). The facts James Reilly The appellant Reilly was convicted in 2002 of offences of robbery, attempted robbery and possession of an imitation firearm, relating to the attempted robbery of a post office and the robbery of another post office. He had 19 previous convictions, two of which were for robbery. He received an automatic life sentence with a minimum term of six years and eight months, which expired in September 2009. During the course of his sentence he was transferred to Northern Ireland, but remained subject to the jurisdiction of the board under section 28 of the 1997 Act. By letter dated 3 March 2009 the board notified the appellant that he was being considered for release. He was told that he would receive a copy of his dossier and would have 28 days to submit written representations. The board would consider his case and notify him of its decision whether to grant an oral hearing. He would then have 28 days to decide whether he accepted the decision or whether he wished to appeal the decision. On 19 March 2009 the appellants solicitors replied, requesting an oral hearing and indicating that the appellant would be legally represented. On 29 April 2009 they wrote to the board, drawing to its attention that they had not yet received the dossier. On 8 May 2009 the solicitors were informed by the board that the appellant had a target month for oral hearing of September 2009, and that it had not yet received the dossier. On 21 May 2009 the solicitors wrote to the prison authorities requesting confirmation that the dossier had been submitted to the board. On 3 June they learned that a copy of the dossier had been provided to the appellant, but not to them. At some point in about June 2009 the appellant received an undated letter from the board, in the standard form described in para 33. Like the similar letter addressed to the appellant Booth, it informed the appellant that the board had decided not to direct his release or to recommend his transfer to open conditions, and that he could appeal the decision and ask for a full oral hearing. Enclosed with the letter was an undated and anonymous decision. It took as its starting point a pre tariff review carried out by the board in 2006, which stated that the appellant needed to show a sustained period of good behaviour, and that he was working on drug relapse prevention and undertaking specified courses. In relation to the first of these, the panel noted that since 2007 the appellant had been adjudicated upon for matters including possession of unauthorised articles, attempted assault on staff, damaging prison property, possession of a knife, disobeying orders and abusive behaviour. He had failed a number of drug tests. He had undertaken one of the relevant courses with apparent success, but the drug tests indicated that he had been unable to translate this work into positive action. Given the drug test results, he was unsuitable for the other recommended course. The panel concluded that there was more work to be done, particularly in relation to the use of violence, and that the appellant would need to demonstrate that he could maintain his behaviour and motivation before less secure conditions could be considered. By letter dated 10 July 2009 the appellants solicitors requested an oral hearing. They pointed out, first, that the panel had not had before it any representations from the appellant. Secondly, they noted that the major reservations in the panels decision reflected the comments in the dossier about the appellants prison record and failed drug tests. They submitted that the appellants adjudication record did not on examination indicate an unacceptable risk. The charge of possession of unauthorised articles related to items from the tuck shop. The charge of attempted assault concerned his flicking a sock in the direction of a prison officer. The charge of damaging prison property concerned a torn bed sheet. Possession of a knife concerned a knife which the appellant had removed from another prisoner in order to avoid an incident. In relation to disobeying orders, the appellant had objected to being in the vicinity of heavy machinery in the prison workshop as he was epileptic. Following the adjudication he worked instead in another part of the prison. The charge of abusive behaviour had been dismissed. In relation to the drugs tests, during the relevant periods the appellant had been prescribed medications which might account for the results. It was submitted that the appellant had progressed sufficiently to be seriously considered for open conditions. It was believed that the necessary remaining courses could be accessed by prisoners in such conditions. Not all the report writers had commented on the appropriateness of open conditions. By letter dated 20 July 2009, headed Appeal Against Paper Decision, the appellant was notified that his appeal had been refused. The letter, whose author was unidentified, stated: The appeal has been refused on the grounds that while individual adjudications may have explanations there still remains significant offending behaviour work for you to carry out, particularly with regard to instrumental violence. Until such work is successfully completed, the risk of reconviction or of causing serious harm cannot be regarded as reduced. No report writers recommend a move to open or release at this review. This panel endorses the view that no recommendation can be made at this time and the appeal is refused. The paper decision is therefore final. The letter did not address the possibility that the recommendations of the report writers had been influenced by the appellants history of adjudications and failed drug tests, to which they had referred, or the possibility that the boards independent assessment might be affected if the appellants explanations were accepted. Nor did it address the possibility, raised in the appeal, that any further courses might be undertaken in open conditions. There is no indication that the explanation put forward for the failed drug tests was taken into account. By letter dated 23 July 2009 the appellant was informed that the Secretary of State agreed with the panels recommendation for the reasons which it gave, and considered that a number of risk factors were outstanding and required further work. In particular, the appellant needed to address his behaviour and drug use in prison over a sustained period. It appears from the latter conclusion, which did not form part of the appeal decision, that the Secretary of State may have been proceeding on the basis of the paper decision, which had become final. On an application for judicial review, Treacy J held that the board had acted in breach of its common law duty to act fairly, and incompatibly with the appellants Convention rights under article 5(4), in failing to provide him with an oral hearing ([2010] NIQB 46). In a subsequent judgment ([2010] NIQB 56), Treacy J decided that the appropriate remedy was the award of certiorari to quash the boards decision. He declined to make an award of damages under section 8 of the Human Rights Act, noting that it was agreed that the appellant could not establish that he had been deprived of liberty as a result of the decision, and concluding that any frustration or distress which he might have suffered was not of such intensity as to justify an award of damages. An appeal against the first of these decisions was allowed by the Court of Appeal in Northern Ireland ([2011] NICA 6). The court followed the approach which had been adopted by the Court of Appeal of England and Wales in the cases of the appellants Osborn and Booth, and concluded that, since the factual issues highlighted by the appellants solicitors were not of critical importance, it followed that the board could fairly conclude that an oral hearing would not assist it in its determination of the relevant issue. The appellant was eventually allowed an oral hearing in May 2011. His application for release was refused. Domestic law and Convention rights The submissions on behalf of the appellants focused on article 5(4), and paid comparatively little attention to domestic administrative law. As I shall explain, that approach does not properly reflect the relationship between domestic law (considered apart from the Human Rights Act) and Convention rights. The guarantees set out in the substantive articles of the Convention, like other guarantees of human rights in international law, are mostly expressed at a very high level of generality. They have to be fulfilled at national level through a substantial body of much more specific domestic law. That is true in the United Kingdom as in other contracting states. For example, the guarantee of a fair trial, under article 6, is fulfilled primarily through detailed rules and principles to be found in several areas of domestic law, including the law of evidence and procedure, administrative law, and the law relating to legal aid. The guarantee of a right to respect for private and family life, under article 8, is fulfilled primarily through rules and principles found in such areas of domestic law as the law of tort, family law and constitutional law. Many other examples could be given. Article 5, in particular, is implemented through several areas of the law, including criminal procedure, the law relating to sentencing, mental health law and administrative law: indeed, article 5(4) is said to have been inspired by the English law of habeas corpus (Sanchez Reisse v Switzerland (1986) 9 EHRR 71, 88). As these examples indicate, the protection of human rights is not a distinct area of the law, based on the case law of the European Court of Human Rights, but permeates our legal system. The values underlying both the Convention and our own constitution require that Convention rights should be protected primarily by a detailed body of domestic law. The Convention taken by itself is too inspecific to provide the guidance which is necessary in a state governed by the rule of law. As the European court has said, a norm cannot be regarded as a law unless it is formulated with sufficient precision to enable the citizen to regulate his conduct (Sunday Times v United Kingdom (1979) 2 EHRR 245, 271). The Convention cannot therefore be treated as if it were Moses and the prophets. On the contrary, the European court has often referred to the fundamentally subsidiary role of the Convention (see eg Hatton v United Kingdom (2003) 37 EHRR 611, para 97). In relation to article 5(4) in particular, the court has made it clear that in order for there to be compliance with that guarantee, there must in the first place be compliance with the relevant substantive and procedural rules of domestic law (Koendjbiharie v The Netherlands (1990) 13 EHRR 820, para 27). Domestic law may however fail to reflect fully the requirements of the Convention. In that situation, it has always been open to Parliament to legislate in order to fulfil the United Kingdoms international obligations; as it has done, for example, in response to judgments of the European court concerning the application of article 5(4). The courts have also been able to take account of those obligations in the development of the common law and in the interpretation of legislation. The Human Rights Act has however given domestic effect, for the purposes of the Act, to the guarantees described as Convention rights. It requires public authorities generally to act compatibly with those guarantees, and provides remedies to persons affected by their failure to do so. The Act also provides a number of additional tools enabling the courts and government to develop the law when necessary to fulfil those guarantees, and requires the courts to take account of the judgments of the European court. The importance of the Act is unquestionable. It does not however supersede the protection of human rights under the common law or statute, or create a discrete body of law based upon the judgments of the European court. Human rights continue to be protected by our domestic law, interpreted and developed in accordance with the Act when appropriate. That approach is now well established. A few examples may be given. In R (Daly) v Secretary of State for the Home Department [2001] UKHL 26; [2001] 2 AC 532 a policy that prisoners should be absent from their cells while they were being searched for contraband, as applied to a prisoner who had correspondence with his solicitor in his cell, was held to be unlawful on the ground that it infringed the prisoners common law right that the confidentiality of privileged legal correspondence be maintained. Lord Bingham of Cornhill noted in the final paragraph of his speech that that result was compatible with article 8 of the Convention. In that regard he adopted the observations of Lord Cooke of Thorndon, who said (para 30): It is of great importance, in my opinion, that the common law by itself is being recognised as a sufficient source of the fundamental right to confidential communication with a legal adviser for the purpose of obtaining legal advice. Thus the decision may prove to be in point in common law jurisdictions not affected by the Convention. Rights similar to those in the Convention are of course to be found in constitutional documents and other formal affirmations of rights elsewhere. The truth is, I think, that some rights are inherent and fundamental to democratic civilised society. Conventions, constitutions, bills of rights and the like respond by recognising rather than creating them. When the House of Lords considered in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350 the circumstances in which determinate sentence prisoners recalled to prison were entitled to an oral hearing before the board, it took the common law as its starting point, and considered judgments of the European court, together with judgments from a number of common law jurisdictions, in deciding what the common law required. It went on to hold that the boards review of the prisoners case would satisfy the requirements of article 5(4) provided it was conducted in a manner that met the common law requirements of procedural fairness. That decision is of obvious relevance to the present appeals. Similarly, when the House of Lords rejected the admission of evidence obtained by torture, it did so on the basis of the common law: A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221. Lord Bingham observed at para 51 that English common law had regarded torture and its fruits with abhorrence for over 500 years, and concluded at para 52 that the principles of the common law, standing alone, compelled the exclusion of third party torture evidence. He noted that that was consistent with the Convention. More recently, the importance of the continuing development of the common law, in areas falling within the scope of the Convention guarantees, was emphasised by the Court of Appeal in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (Article 19 intervening) [2012] EWCA Civ 420; [2013] QB 618. The case concerned access by the Press to documents referred to in court, and was decided on the basis of the common law, including authorities from other jurisdictions, rather than on the basis of article 10 of the Convention. Toulson LJ, with whose reasoning the other members of the court agreed, stated at para 88: The development of the common law did not come to an end on the passing of the Human Rights Act 1998 . It is in vigorous health and flourishing in many parts of the world which share a common legal tradition. This case provides a good example of the benefit which can be gained from knowledge of the development of the common law elsewhere. Finally, in this connection, in R (Faulkner) v Secretary of State for Justice [2013] UKSC 23; [2013] 2 WLR 1157, para 29, the ordinary approach to the relationship between domestic law and the Convention was described as being that the courts endeavour to apply and if need be develop the common law, and interpret and apply statutory provisions, so as to arrive at a result which is in compliance with the UKs international obligations, the starting point being our own legal principles rather than the judgments of the international court. Against the background of those authorities, the error in the approach adopted on behalf of the appellants in the present case is to suppose that because an issue falls within the ambit of a Convention guarantee, it follows that the legal analysis of the problem should begin and end with the Strasbourg case law. Properly understood, Convention rights do not form a discrete body of domestic law derived from the judgments of the European court. As Lord Justice General Rodger once observed, it would be wrong to see the rights under the European Convention as somehow forming a wholly separate stream in our law; in truth they soak through and permeate the areas of our law in which they apply (HM Advocate v Montgomery 2000 JC 111, 117). Procedural fairness at common law three preliminary matters Following the approach I have described, it is necessary to begin by considering the practice followed by the board in the light of domestic principles of procedural fairness. In doing so, it may be helpful to clarify three matters at the outset. The first matter concerns the role of the court when considering whether a fair procedure was followed by a decision making body such as the board. In the case of the appellant Osborn, Langstaff J refused the application for judicial review on the ground that the reasons given for refusal [to hold an oral hearing] are not irrational, unlawful nor wholly unreasonable (para 38). In the case of the appellant Reilly, the Court of Appeal in Northern Ireland stated at para 42: Ultimately the question whether procedural fairness requires their deliberations to include an oral hearing must be a matter of judgment for the Parole Board. These dicta might be read as suggesting that the question whether procedural fairness requires an oral hearing is a matter of judgment for the board, reviewable by the court only on Wednesbury grounds. That is not correct. The court must determine for itself whether a fair procedure was followed (Gillies v Secretary of State for Work and Pensions [2006] UKHL 2; 2006 SC (HL) 71; [2006] 1 WLR 781, para 6 per Lord Hope of Craighead). Its function is not merely to review the reasonableness of the decision makers judgment of what fairness required. The second matter to be clarified concerns the purpose of procedural fairness. In the case of the appellant Osborn, Langstaff J stated at para 6 that in determining whether an oral hearing was necessary, what fell to be considered was the extent to which an oral hearing would guarantee better decision making in terms of the uncovering of facts, the resolution of issues and the concerns of the decision maker, due consideration being given to the interests at stake. In the Court of Appeal, Carnwath LJ interpreted Lord Binghams speech in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350 as implying that the underlying rationale of procedural fairness at common law was one in which the emphasis is on the utility of the oral procedure in assisting in the resolution of the issues before the decision maker (para 38). There is no doubt that one of the virtues of procedurally fair decision making is that it is liable to result in better decisions, by ensuring that the decision maker receives all relevant information and that it is properly tested. As Lord Hoffmann observed however in Secretary of State for the Home Department v (AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, para 72, the purpose of a fair hearing is not merely to improve the chances of the tribunal reaching the right decision. At least two other important values are also engaged. The first was described by Lord Hoffmann (ibid) as the avoidance of the sense of injustice which the person who is the subject of the decision will otherwise feel. I would prefer to consider first the reason for that sense of injustice, namely that justice is intuitively understood to require a procedure which pays due respect to persons whose rights are significantly affected by decisions taken in the exercise of administrative or judicial functions. Respect entails that such persons ought to be able to participate in the procedure by which the decision is made, provided they have something to say which is relevant to the decision to be taken. As Jeremy Waldron has written (How Law Protects Dignity [2012] CLJ 200, 210): Applying a norm to a human individual is not like deciding what to do about a rabid animal or a dilapidated house. It involves paying attention to a point of view and respecting the personality of the entity one is dealing with. As such it embodies a crucial dignitarian idea respecting the dignity of those to whom the norms are applied as beings capable of explaining themselves. This point can be illustrated by Byles Js citation in Cooper v Wandsworth Board of Works (1863) 14 CB (NS) 180, 195 of a dictum of Fortescue J in Dr Bentleys Case (R v Chancellor of Cambridge, Ex p Bentley (1748) 2 Ld Raym 1334): The laws of God and man both give the party an opportunity to make his defence, if he has any. I remember to have heard it observed by a very learned man, upon such an occasion, that even God himself did not pass sentence upon Adam before he was called upon to make his defence. The point of the dictum, as Lord Hoffmann explained in AF (No 3) at para 72, is that Adam was allowed a hearing notwithstanding that God, being omniscient, did not require to hear him in order to improve the quality of His decision making. As Byles J observed (ibid), the language used by Fortescue J is somewhat quaint, but has been the law from that time to the present. This aspect of fairness in decision making has practical consequences of the kind to which Lord Hoffmann referred. Courts have recognised what Lord Phillips of Worth Matravers described as the feelings of resentment that will be aroused if a party to legal proceedings is placed in a position where it is impossible for him to influence the result Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, para 63). In the present context, research has established the importance attached by prisoners to a process of risk assessment which provides for their contribution to the process (see Attrill and Liell, Offenders Views on Risk Assessment, in Who to Release? Parole, Fairness and Criminal Justice (2007), ed Padfield). Other research reveals the frustration, anger and despair felt by prisoners who perceive the boards procedures as unfair, and the impact of those feelings upon their motivation and respect for authority (see Padfield, Understanding Recall 2011, University of Cambridge Faculty of Law Research Paper No 2/2013 (2013)). The potential implications for the prospects of rehabilitation, and ultimately for public safety, are evident. The second value is the rule of law. Procedural requirements that decision makers should listen to persons who have something relevant to say promote congruence between the actions of decision makers and the law which should govern their actions (see eg Fuller, The Morality of Law, revised ed (1969), p 81, and Bingham, The Rule of Law (2010), chapter 6). The third matter to be clarified concerns the cost of oral hearings: a consideration which appears to have underlain some of the changes to the rules and practice of the board which have given rise to the present appeals, and which is reflected in the boards annual reports, where figures are given for the savings achieved by the refusal of oral hearings in recall cases. The easy assumption that it is cheaper to decide matters without having to spend time listening to what the persons affected may have to say begs a number of questions. In the context of parole, where the costs of an inaccurate risk assessment may be high (whether the consequence is the continued imprisonment of a prisoner who could safely have been released, or re offending in the community by a prisoner who could not), procedures which involve an immediate cost but contribute to better decision making are in reality less costly than they may appear. In the present cases, counsel for the board accepted that cost was not a conclusive argument against the holding of oral hearings. R (West) v Parole Board The circumstances in which the board should afford an oral hearing to determinate sentence prisoners who have been released on licence and then returned to prison were considered by the House of Lords in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350. The case was decided at a time when such prisoners were entitled to challenge the revocation of their licence before the board (whereas now, as explained earlier, the board cannot adjudicate directly upon the appropriateness of the revocation of the licence, but must determine whether the prisoner should be re released, having regard to his conduct during the licence period, amongst other matters). The case was also decided at a time when indeterminate sentence prisoners in England and Wales were entitled to an oral hearing. The House considered the requirements of procedural fairness in the light of a wide ranging review of authorities from a number of common law jurisdictions, and also a number of judgments of the European court, including Waite v United Kingdom (2002) 36 EHRR 1001, to which it will be necessary to return. Lord Bingham, with whose speech the majority of the committee expressed agreement, stated (para 31): While an oral hearing is most obviously necessary to achieve a just decision in a case where facts are in issue which may affect the outcome, there are other cases in which an oral hearing may well contribute to achieving a just decision. The duty to afford an oral hearing therefore exists where there are facts in dispute which may affect the outcome, but it is not confined to such circumstances. Lord Bingham did not attempt to define exhaustively the other circumstances in which an oral hearing was required, but gave some examples, and some general guidance (para 35): Even if important facts are not in dispute, they may be open to explanation or mitigation, or may lose some of their significance in the light of other new facts. While the board's task certainly is to assess risk, it may well be greatly assisted in discharging it (one way or the other) by exposure to the prisoner or the questioning of those who have dealt with him. It may often be very difficult to address effective representations without knowing the points which are troubling the decision maker. The prisoner should have the benefit of a procedure which fairly reflects, on the facts of his particular case, the importance of what is at stake for him, as for society. Lord Hope added two observations about the approach then followed by the board in relation to cases of the type in question, according to which it professed its willingness to hold oral hearings where the decision turned on disputed issues of fact, but in practice rarely held such hearings. First, there appeared to be a long standing institutional reluctance on the part of the board to deal with cases orally: It would not be surprising if a consequence of that reluctance was an approach, albeit unconscious and unintended, which undervalued the importance of any issues of fact that the prisoner wished to dispute (para 66). As Lord Hope pointed out, this approach was liable to lead to reliance upon assumptions based on general knowledge and experience, and to a lack of focus on the prisoner as an individual. The institutional reluctance of the board to hold oral hearings in determinate recall cases appears to have continued during the period with which these appeals are concerned. The boards annual report for 2009 2010 records, in relation to determinate recall cases considered under the Criminal Justice and Immigration Act 2008, that of a total of 12,388 cases considered that year, only 145 were sent to an oral hearing: in other words, 1%. The proportion the following year was the same. That reluctance can also be detected in the tone of the internal guidance discussed earlier. The statistics also indicate a low rate of success in applications for oral hearings by indeterminate sentence prisoners: of 1054 negative paper decisions considered by ICM assessors in 2009 2010, 174 were sent to an oral hearing on appeal: in other words, 83% of appeals were refused. Lord Hopes second observation concerned the allowance of oral hearings where there were disputed issues of fact: The question is not whether the case ultimately turns on a disputed issue of fact when the decision is taken. It is whether, when the papers are first looked at, it is likely to do so (para 67). In other words, one cannot decide whether a disputed issue of fact will prove to be determinative at the stage of considering whether an oral hearing is appropriate. The most one can do at that stage is to identify the issues which appear to be important, and then decide in the light of that assessment (and other relevant factors) whether an oral hearing should be held. Finally, in relation to West, it is useful to note how the House dealt with the cases before it. The appellant West had breached his licence conditions in a number of ways. He had an explanation for some but not all of the breaches. He was refused an oral hearing. The House concluded that his explanations could not properly be rejected without hearing him. In so far as he had no explanation, the question whether the breach had an unacceptable impact on the risk posed to the public could not fairly be resolved without an oral hearing. The appellant Smith had repeatedly used class A drugs after his release on licence, while living in designated hostels. He maintained that he had succeeded in freeing himself from drugs while in prison, but had relapsed in the hostels because of the prevailing drug culture. He did not request an oral hearing, but it was nevertheless held that such a hearing should have been offered: the board might have been assisted by evidence from his psychiatrist, and should have allowed the appellant an opportunity to persuade it that the community would be better protected by allowing him to remain on licence under supervision than by returning him to prison with the prospect of eventual unsupervised release. The circumstances in which fairness requires an oral hearing What fairness requires of the board depends on the circumstances. As these can vary greatly from one case to another, it is impossible to lay down rules of universal application. The court can however give some general guidance. Generally, the board should hold an oral hearing whenever fairness to the prisoner requires such a hearing in the light of the facts of the case and, as was said in West, the importance of what is at stake. The board should consider whether its independent assessment of risk, and of the means by which it should be managed and addressed, may benefit from the closer examination which an oral hearing can provide. It is presumably because of the possibility of such assistance that the board must hold an oral hearing under rule 11(2)(a) in any case where an indeterminate sentence prisoner appears to the single member panel to be potentially suitable for release or for a transfer to open conditions. The assumption must be that an oral hearing has the potential to make a difference. But that potential may also exist in other cases. The boards annual report for 2005 2006 contains a statement by a psychiatrist member of the board which demonstrates how valuable oral hearings can be: I find the oral hearings particularly rewarding in that the evidence on the day can sometimes illuminate a situation sufficiently to turn around my preliminary view of the case. There is no substitute for being able to hear from, and ask questions of the prisoner. The board should also bear in mind that the purpose of holding an oral hearing is not only to assist it in its decision making, but also to reflect the prisoners legitimate interest in being able to participate in a decision with important implications for him, where he has something useful to contribute. An oral hearing should therefore be allowed where it is maintained on tenable grounds that a face to face encounter with the board, or the questioning of those who have dealt with the prisoner, is necessary to enable him or his representatives to put their case effectively or to test the views of those who have dealt with him. When dealing with cases concerning recalled prisoners, the board should bear in mind that the prisoner has been deprived of his freedom, albeit conditional: a factor upon which Lord Bingham placed emphasis in West. In relation to cases concerning post tariff indeterminate sentence prisoners, it has been said more than once that the board should scrutinise ever more anxiously whether the level of risk is unacceptable, the longer the time the prisoner has spent in prison following the expiry of his tariff (R v Parole Board, Ex p Bradley [1991] 1 WLR 134, 146; R v Parole Board, Ex p Wilson [1992] QB 740, 747). It also has to be borne in mind that the issues which are considered by the board are not in practice confined to the question whether the prisoner should or should not be released or transferred. As I have explained, the statutory directions given to the board require it to consider numerous matters. The boards findings in relation to these matters may in practice affect the prisoners future progress in prison, for example in relation to the courses which he is required to undertake and his future reviews. The board may also be asked specifically to advise the Secretary of State on matters affecting the prisoner. For example, when post tariff indeterminate sentence prisoners are referred to the board, it is generally asked to advise on the continuing areas of risk that need to be addressed. In such cases, the fair disposal of issues of that kind may require an oral hearing even if the question whether the prisoner should be released or transferred does not. In accordance with the guidance provided in West, an oral hearing is required when facts which appear to be important are in dispute, or where a significant explanation or mitigation is advanced which needs to be heard orally if it is to be accepted. An oral hearing is also necessary when for other reasons the board cannot otherwise properly or fairly make an independent assessment of risk, or of the means by which it should be managed and addressed. That is likely to be the position in cases where such an assessment may depend upon the view formed by the board (including its members with expertise in psychology or psychiatry) of characteristics of the prisoner which can best be judged by seeing or questioning him in person, or where a psychological assessment produced by the Ministry of Justice is disputed on tenable grounds, or where the board may be materially assisted by hearing evidence, for example from a psychologist or psychiatrist. As is illustrated by the judgments of the European Court of Human Rights in Hussain v United Kingdom (1996) 22 EHRR 1, Singh v United Kingdom 21 February 1996, Reports of Decisions and Judgments, 1996 I, p 280 and Waite v United Kingdom (2002) 36 EHRR 1001, cases concerning prisoners who have spent lengthy periods in custody are likely to fall into the first of these categories, since an independent assessment of their continuing dangerousness will require a judgment to be made of the extent to which they have developed over the period since their conviction: a matter which cannot normally be independently and fairly assessed without seeing the person concerned. Whether a prisoners right to a fair hearing requires the holding of an oral hearing does not depend on his establishing that his application for release or transfer stands any particular chance of success: that approach would not allow for the possibility that an oral hearing may be necessary in order for the prisoner to have a fair opportunity of establishing his prospects of success, and thus involves circular reasoning. The point can be illustrated by the example of a prisoner who is unable to participate effectively in a written procedure due to learning difficulties. To decide whether he should be allowed an oral hearing on the basis of his prospects of success as they appeared on the basis of the official dossier and his written representations, if any, would plainly be unfair. The problem with reliance on the prospects of success, as they appear from the written material, as the touchstone of what fairness requires is not however confined to prisoners who are manifestly disadvantaged by a written procedure. In so far as the boards practice is to require that a realistic prospect of success be demonstrated, as a precondition of the grant of an oral hearing, that practice should therefore cease. It is in addition fundamental to procedural fairness that the board must be, and appear to be, independent and impartial. The dossier provided to the board by the Ministry of Justice is plainly important to the boards discharge of its functions: it records the prisoners progress in the prison system and the rehabilitation courses which he has undertaken, and it includes expert views on the likelihood of his re offending. Nevertheless, as was said in R (Brooke) v Parole Board [2008] EWCA Civ 29; [2008] 1 WLR 1950 at para 96, the board has to evaluate the material placed before it by the Ministry and reach its own objective judicial decision. The board should therefore have no predisposition to favour the official version of events, or the official risk assessment, over the case advanced by the prisoner. In that regard, the court was referred to a study of the recall of determinate sentence prisoners which concluded that the single member panels were little more than a rubber stamp (Padfield, Understanding Recall 2011, University of Cambridge Faculty of Law Research Paper No 2/2013 (2013) p 40). That conclusion is supported, in relation to the period when the appellant Osborns case was considered, by the statistics which I have mentioned. It is equally important that the board should not give way to the temptation, identified in West by Lord Hope, to discount the significance of matters which are disputed by the prisoner in order to avoid the trouble and expense of an oral hearing. It is also important that the administrative procedure adopted by the board should be well adapted to ensuring that an oral hearing is held when such a hearing is necessary. In that regard, it has to be said that the procedural rules in force at the material time, and the analogous rules currently in force, are liable to give rise to a number of problems, as the present appeals demonstrate (problems which might be avoided if the board took a decision about the appropriate form of hearing, and nothing else, only after any representations on behalf of the prisoner had been received). First, the rule requiring a single member panel either to decide that the case should receive further consideration by an oral panel, or to make a provisional decision that the prisoner is unsuitable for release or for a transfer to open conditions, should not be understood as meaning that an oral hearing is appropriate only if the single member panel forms the provisional view that the prisoner is suitable for release or transfer. Secondly, it is important to understand the provisional nature of a decision made by the single member panel that the prisoner is unsuitable for release. The right conferred on the prisoner, following that decision, to request an oral hearing is not a right of appeal. The prisoner does not have to demonstrate that the decision was (or may have been) wrong: what he has to persuade the board is simply that an oral hearing is appropriate. The unfairness which results from the boards treatment of the request for an oral hearing as an appeal is illustrated by the case of the appellant Booth, in which the ICM assessor identified the critical question as being whether the grounds of the appeal are justified and if an oral hearing would make any material difference to the paper decision. The request for an oral hearing was thus decided on the basis that the earlier decision was presumptively correct. This is to put the cart before the horse. If fairness requires an oral hearing, then a decision arrived at without such a hearing is unfair and cannot stand. The question whether an oral hearing is required cannot therefore be decided on the basis of a presumption that a decision taken without such a hearing is correct. Thirdly, since the effect of the refusal of an oral hearing is that the provisional decision becomes final, it follows that an oral hearing should be granted in any case where it would be unfair to the prisoner for that to happen. For example, if the representations made in support of the prisoners request for an oral hearing raise issues which place in question anything in the provisional decision which may in practice have a significant impact on the prisoners future management in prison or on his future reviews, such as reports of poor behaviour or recommendations that particular courses should be undertaken to reduce risk, it will usually follow that an oral hearing should be allowed for that reason alone, even if there is no doubt that the prisoner should remain in custody or in closed conditions (see eg Roose v Parole Board [2010] EWHC 1780 (Admin)). The present appeals The requirements of procedural fairness at common law were not met in the cases of the appellants. In the case of the appellant Osborn, there were several facts which the paper recall panel treated as important and which were in dispute, or for which a significant explanation or mitigation was advanced: the appellants attitude to the licence conditions; the basis of the official assessment of the risk which he presented; the events on the date of his release, including his alleged statement about firearms; his claim that the hostel manager had agreed to put back the time when he was due to arrive; and his explanation for the detour to the village. An oral hearing should therefore have been held. In the case of the appellant Booth, the approach adopted by the board to the application of rule 12(1) was mistaken, as explained in paras 94 and 95. The points put forward in support of his so called appeal raised significant issues on which the input of his psychiatrist might have been helpful and which merited the depth of consideration which only an oral hearing could provide. In that regard, it is relevant that the appellant had spent so long in custody post tariff and that the board had been asked to advise on continuing areas of risk that needed to be addressed. In the case of the appellant Reilly, the history of adjudications and failed drugs tests was treated as important by the paper panel, and must have influenced the risk assessments which were before it; but that history was disputed in some significant respects, and in other respects was open to explanation or mitigation, according to the representations made on the appellants behalf. An oral hearing should therefore have been held. The unfairness resulting from the failure to hold such a hearing was compounded, in the manner explained in para 96, when his appeal was refused and the paper panel decision became final. The Secretary of State then expressed agreement with the decision and required the appellant to undertake work aimed at addressing misbehaviour and drug use in prison: matters which the ICM assessor had left out of account because they were not considered critical to the question whether to recommend release or transfer, but which remained part of a decision which had become final. Furthermore, the approach adopted by the board to the application of rule 12(1) was also mistaken, as explained in para 94. Convention rights It is unnecessary to consider Convention rights in order to determine the validity of the decisions in question. It is however appropriate to do so in order to consider whether compliance with common law requirements will satisfy the requirements of article 5(4) of the Convention, or whether that article imposes more far reaching obligations in respect of the holding of oral hearings. It is also necessary to consider article 5(4) for the purpose of determining the claim advanced on behalf of the appellant Reilly for an award of damages under section 8 of the Human Rights Act. Article 5(4) and the present appeals Article 5(4) of the Convention provides: Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. As was explained in A v United Kingdom (2009) 49 EHRR 625, paras 202 203, prisoners are entitled under article 5(4) to a review of the lawfulness of their detention in the light of the requirements of domestic law and of the Convention. The review must be carried out in accordance with a procedure which has a judicial character and provides guarantees appropriate to the type of deprivation of liberty in question. As explained earlier, prisoners who have been recalled to prison following release on licence are entitled to a review by the board of whether they should be re released, the test under the relevant directions being whether the risk posed by the prisoner can be safely managed in the community. Indeterminate sentence prisoners whose tariff period has expired are entitled to a review by the board of whether their continued detention is necessary for the protection of the public. It is not in issue in these appeals that the board possesses the essential features of a court within the meaning of article 5(4). On that basis, the boards discharge of its functions should satisfy the requirements of article 5(4), provided its reviews are conducted speedily and in accordance with a procedure which meets Convention standards of fairness. In R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350, Lord Bingham cited a number of judgments of the European Court of Human Rights, including the case of Waite v United Kingdom, in his discussion of the common law, in accordance with the long established understanding that the Convention is relevant to the development of the common law. Having provided the guidance as to the requirements of common law fairness which I have discussed, Lord Bingham concluded, in agreement with the other members of the appellate committee, that review by the board would satisfy the requirements of article 5(4) provided it was conducted in a manner that met the requirements of the common law (para 37). Lord Hope also referred to the case of Hussain v United Kingdom (1996) 22 EHRR 1. The case of Hussain concerned an applicant who had been convicted of murder at the age of 16 and sentenced to detention during Her Majestys pleasure, with a tariff of 15 years. Following the expiry of the tariff, he was reviewed by the board on several occasions, but had no opportunity to take part in the proceedings in any way, and did not see the reports before the board. Its recommendations were not binding upon the Secretary of State, and were not followed. By the time his case was considered by the European court, he had been detained for over 17 years. In its judgment, the court observed that an indeterminate term of detention for a young person, which might be as long as that person's life, could only be justified by considerations based on the need to protect the public. Those considerations, centred on an assessment of the young offender's character and mental state and of his or her resulting dangerousness to society, must of necessity take into account any developments in the young offender's personality and attitude as he or she grew older (para 53). Following the expiry of the tariff, the applicant was entitled under article 5(4) to take proceedings to have the justification for his continuing detention decided by a court at reasonable intervals (para 54). The board could not be regarded as a court for the purposes of article 5(4), given that it could not order the release of a prisoner, and the proceedings before it were not of an adversarial nature (para 58). The court continued: 59. The court recalls in this context that, in matters of such crucial importance as the deprivation of liberty and where questions arise which involve, for example, an assessment of the applicant's character or mental state, it has held that it may be essential to the fairness of the proceedings that the applicant be present at an oral hearing. 60. The court is of the view that, in a situation such as that of the applicant, where a substantial term of imprisonment may be at stake and where characteristics pertaining to his personality and level of maturity are of importance in deciding on his dangerousness, article 5(4) requires an oral hearing in the context of an adversarial procedure involving legal representation and the possibility of calling and questioning witnesses. As I understand this passage, para 59 contains general observations reflecting the previous case law, whereas para 60 expresses a principle applicable specifically to cases such as that of the applicant, where (1) a substantial term of imprisonment may be at stake and (2) characteristics pertaining to his personality and level of maturity are of importance in deciding on his dangerousness. The court repeated paras 59 60 of its Hussain judgment in the case of Singh v United Kingdom 21 February 1996, Reports of Decisions and Judgments, 1996 I, p 280, issued on the same day as Hussain. That case also concerned a young offender sentenced to detention during Her Majestys pleasure, who had been released on licence and then had his licence revoked in the light of concerns as to his conduct. The case of Waite v United Kingdom also concerned a young offender who had been sentenced to detention during Her Majestys pleasure, released on licence, and then had his licence revoked in the light of concerns as to his conduct, which included misuse of drugs, a sexual relationship with a minor, attempted suicide and failure to maintain contact with his supervising officer. The board upheld the decision to revoke his licence without holding an oral hearing. The court held that there had been a breach of article 5(4), and rejected the contention that, since the applicant had admitted the facts leading to his recall, the board was bound to conclude that public protection required that he should be confined: Art 5(4) is first and foremost a guarantee of a fair procedure for reviewing the lawfulness of detention an applicant is not required, as a precondition to enjoying that protection, to show that on the facts of his case he stands any particular chance of success in obtaining his release (para 59). That passage is consistent with, and supports, the approach which I have concluded applies at common law. The court continued (ibid): In matters of such crucial importance as the deprivation of liberty and where questions arise involving, for example, an assessment of the applicant's character or mental state, the court's case law indicates that it may be essential to the fairness of the proceedings that the applicant be present at an oral hearing. In such a case as the present, where characteristics pertaining to the applicant's personality and level of maturity and reliability are of importance in deciding on his dangerousness, art 5(4) requires an oral hearing in the context of an adversarial procedure involving legal representation and the possibility of calling and questioning witnesses. The first sentence in that passage repeats the summary of the earlier case law in para 59 of the Hussain judgment. The second sentence repeats the principle stated in para 60 of that judgment. Although Waite, like Hussain and Singh, concerned a person who had committed the index offence as a young offender, the language of the second sentence is not confined to young offenders. The conditions mentioned by the European court are likely to apply to most indeterminate sentence prisoners who have served their minimum terms. That is not to say that they will necessarily apply on every occasion when such a prisoners case is considered by the board: a prisoners case may be considered in different circumstances and at different intervals of time. Bearing in mind however that the continued detention of a post tariff prisoner must be justified by his continuing dangerousness as independently assessed by the board, and taking account of the importance of what is at stake, it will in most cases be necessary as a matter of fairness that he should have an opportunity to appear in person before the board. That is consistent with the common law, as explained earlier. Since the board failed in its duty of procedural fairness to the appellants at common law, it follows that it also failed to act compatibly with article 5(4). Damages The appellant Reilly sought to have his case remitted to the High Court for consideration of an award of damages as just satisfaction under section 8 of the Human Rights Act. The circumstances in which such an award is appropriate in respect of a breach of article 5(4) were considered in R (Faulkner) v Secretary of State for Justice [2013] UKSC 23; [2013] 2 WLR 1157. Although that case was principally concerned with breaches of the requirement that a review of the lawfulness of detention must be held speedily, the court also considered violations of the requirement that reviews must follow a fair procedure. At paras 55 61, the court considered in particular the judgment of the Grand Chamber in Nikolova v Bulgaria (1999) 31 EHRR 64 and the later judgment in HL v United Kingdom (2004) 40 EHRR 761. In the latter case, Nikolova was described as having endorsed the principle that, where a violation of article 5(3) or (4) was of a procedural nature, just satisfaction could be awarded only in respect of damage resulting from a deprivation of liberty which would not otherwise have occurred. Although, as was noted in Faulkner at para 61, there have been cases since Nikolova, not concerned with delay, in which modest awards of damages have been made as compensation for frustration and anxiety, none of those cases is comparable with that of the appellant. In particular, the cases mentioned there which concerned post tariff indeterminate sentence prisoners, such as Curley v United Kingdom (2000) 31 EHRR 401 and Von Blow v United Kingdom (2003) 39 EHRR 366, date from the period when there was no review of the continued lawfulness of detention by a body with the power to order release or with a procedure containing judicial safeguards. It is not argued that the appellant Reilly has suffered any deprivation of liberty as a result of the breach of article 5(4): damages are sought in respect of feelings of frustration and distress which the court is invited to assume he experienced. In the circumstances, taking into account the principles applied by the European court as required by section 8(4) of the Human Rights Act, the finding of a violation constitutes sufficient just satisfaction. Conclusion oral hearing, and was accordingly in breach of article 5(4) of the Convention. I would in each case allow the appeal, and make a declaration that the board breached its duty of procedural fairness to the appellant by failing to offer him an |
On 7 February 2007, the principal of a school in County Antrim suspended the appellant from school for 5 days. The appellant was a year 12 pupil. The suspension was renewed for 3 further 5 day periods until 13 March. Between 13 March and 20 April, the North Eastern Education and Library Board (the Board) provided him with home tuition. He returned to the school in June to sit his GCSE examinations. He issued these proceedings in April 2007 seeking judicial review of the principals decision to suspend him. The case raises issues as to whether the principal had the power to suspend the appellant and, if he did, whether he exercised that power lawfully. The facts Much of the account that follows is derived from the affidavit sworn by the principal. At the end of January 2007, the appellant was absent from the school on work experience. On 31 January, the principal was approached by two female pupils at the school. He was told that one of them was terrified of the appellant. Like the Court of Appeal (Kerr LCJ, Higgins and Girvan LJJ), I shall refer to her as A. She made it clear that she did not want to make any formal complaint and did not wish the principal to tell the appellant that she had spoken to him about the appellants behaviour towards her. Her complaint related to conduct both inside and outside the school. She said that it was causing her deep distress. The principal assured the two girls that he would help in whatever way he could. Later that day, the other girl came on her own to see the principal for a second time. She told him that A was suffering from deep distress, had extremely low self esteem and was thinking of ending it all. She gave the principal further details of the nature of the appellants offending behaviour in the school. She said that it was of a subtle and covert nature. The principal regarded the report as being sincere and genuine and as extremely serious. The principal spoke to As mother. She told him that she too was concerned about her daughters state of mind and the possibility of suicide and that the appellant was the cause of the problem. She said that A was very vulnerable and needed to be monitored closely. The principal also spoke to Mrs OHare, the Child Protection Officer for the Board. Mrs OHare said that efforts should be made to comfort A and boost her self esteem. He therefore arranged to make a classroom available to A and her friends during breaks and lunchtime periods. During the following days, the principal had daily meetings with A and some of her friends and monitored her progress. He said that this served to confirm to him that the girls concerns were real and sincere. He also received confirmation from some of As friends about the appellants behaviour which they had witnessed. On 1 February, the vice principal attended a multi disciplinary case conference that had been arranged by Social Services to consider the appellant. This conference was convened in view of the fact that allegations had been made against the appellant of criminal offences of a sexual and violent nature outside the school. It was not in any way related to the complaint that had been made by A. Indeed, it seems that those who attended the conference, who included the appellants mother and grandmother and a representative of the police (PSNI), were not even aware of the complaint. The outcome of the conference was that the family were advised that, if they did not adhere to the Care Plan, consideration would be given to placing the appellant on the Child Protection Register. On 2 February, the vice principal informed the principal of what occurred at the conference and of the serious allegations that had been made against the appellant. Mrs OHare advised the principal that a risk assessment meeting should take place in the school. This meeting took place on 6 February. Reference was made to the 4 alleged offences which had been the subject of discussion at the conference on 1 February. The minutes record the following: Issues Discussed Given the principle of innocent until proven guilty how to assess any risk posed by [the appellant] to females in the school. [The appellants] Human Rights. The balance of probability. The concept of proportionality in any measures that may be undertaken. The lack of any documented assessment of the alleged harm to [A]. The principle that Child Protection overrides rights of individuals. The statutory duty on the Principal and Board of Governors to safeguard all the children in their school. Action Plan 1. Social Services to carry out an assessment of the alleged incident with [A] and of any impact on her emotions. 2. [The appellant] to be suspended from school for 5 days, with the possibility of extension, whilst the above assessment takes place. The suspension to be viewed as a precautionary measure, not a presumption of guilt. 3. PSNI to keep the other agencies informed of any developments in the justice system. 4. Following the Social Services assessment, NEELB to convene a formal multi agency/multi disciplinary meeting to a) assess risk within the school and in transport to and from school b) plan the management of any perceived risk. The principal says that it was agreed that, in order to protect As identity and prevent any further deterioration in her mental health, the appellant should not be informed about her complaint. Two options were considered: (i) constant supervision of the appellant by a teacher or other member of staff and (ii) suspension of the appellant together with arrangements for his education off site. He says that he was not satisfied that sufficient teaching and staff resources were available to ensure constant monitoring and supervision of the appellant while he was on the school premises. Nor could he be satisfied that such an arrangement would ensure physical separation of the appellant from A. He was particularly influenced by the nature of the alleged conduct, namely subtle and silent covert intimidation. Accordingly, it was decided that the appellant would be suspended as a precautionary measure (para 9 of the principals affidavit). Following the meeting of 6 February, the principal met Mr Freeman, the chairman of the Board. He explained to Mr Freeman that the suspension was precautionary in nature and that it was based on the need to protect the girl who had made the report. On 7 February, the principal asked for the appellant to attend at his office. The principal explained that certain allegations had been made against him in relation to his behaviour, but that he could not go into them. He said that it had been decided that it was in the interests of everybody that he should be suspended. Following the meeting, the principal telephoned the appellants mother and told her that the appellant would be suspended until a meeting could be arranged by Mrs OHare. On the same day, the principal wrote to the appellants grandparents a letter in these terms: Following the Case Conference on Thursday 1 February 2007, at which you were present, a Risk Assessment meeting with representatives from the school, Social Services, NEELB Child Protection Officer, and the PSNI took place in school on Tuesday 6 February 2007. Based on the information presented at this meeting it was agreed that, in the circumstances, [the appellant] should not remain in school. It must be emphasised that this is not an assumption of [the appellants] guilt in these matters but instead a precautionary strategy which has been taken, I believe, in everyones best interests, including [the appellants]. A further meeting will be arranged by the NEELB as soon as possible in order to consider the matter further. In the meantime, [the appellant] is suspended from school for five days, i.e. Thursday 8 February Wednesday 14 February with a possible extension to follow. Work will be made available for collection from the school office by an adult after 10.00 am on Thursday 8 February 2007 for [the appellant] to complete during this period of suspension. Please contact me should you wish to discuss this matter or require any further information. The principal had earlier drafted a letter of suspension whose opening paragraphs were: It has come to my attention that the PSNI is investigating a number of allegations outside of school of a serious nature which include sexual attacks on girls. I have also had recent reports from girls who claim that he is deliberately intimidating them in school. Following a meeting with representatives from Social Services, NEELB Child Protection Officer and the PSNI, I have decided that [the appellant] should not at this time remain in school. The wording of the draft letter was changed following advice that the principal received from Mrs OHare. During the succeeding weeks, the principal received no information from the Board or Social Services about the progress of the assessment of A. On 14 February, he wrote another letter to the appellants grandparents saying that, in order to allow for further investigation of the matter referred to in my last letter, the suspension was to be extended for a further 5 days from 21 to 27 February. The letter stated that this is not an assumption of [the appellants] guilt in the matters which we have discussed but instead a precautionary strategy. On 23 February, he wrote a further letter to the grandparents in the same terms extending the suspension for a further 5 days from 28 February to 6 March. Finally, on 5 March he wrote another letter to the grandparents in the same terms extending the suspension for a yet further 5 days from 7 to 13 March. Following the initial decision to suspend the appellant, the principal had contacted the Boards Home Tuition Service and requested that a teacher be assigned to the appellant for tuition off site. On 12 March, the principal wrote to the appellants parents informing them that home tuition had been arranged with effect from 14 March and that, consequently, the appellant would be marked on the school roll as educated off site. In the period between 7 February and 14 March, the principal made arrangements for schoolwork to be prepared by the appellants teachers and left for collection at the school office. Work was made available in the subjects of Mathematics, English, Science, Religion, Business and Communication Systems, Music and History. Work was collected by or on behalf of the appellant in the first week only and it was not returned to the school for marking or guidance. On 20 April, the principal wrote to the parents of all pupils within year 12 (including the appellants parents) saying that pupils could attend school to study for their examinations or stay at home if that was preferred. He says that he decided to include the appellant because, since the school timetable had been completed, additional staff resources were now available to monitor the appellant within the school. The appellant availed himself of facilities within the school on a number of occasions after 20 April, but he is shown on the School Registration Certificate as having been on study leave until late June. On 4 May, a meeting was arranged at the school in order to discuss the situation with the appellants mother and grandparents. It was noted that Social Services had not yet completed their assessment of A. It was agreed that a multi agency risk assessment of the appellant may no longer be necessary and that, if the appellant availed himself of the school facilities, he would be escorted by a teacher to and from his allotted room; there would be close supervision of the year 12s at break times; and the appellant would sit all of his examinations in a room on his own. There is no evidence as to whether the Social Services assessment of A was ever completed. It would seem that the multi risk assessment of the appellant was never carried out. Meanwhile, as I have said, the appellant had commenced these judicial review proceedings. The claim was dismissed by Weatherup J and his appeal dismissed by the Court of Appeal. The statutory framework Suspension and expulsion of pupils The school is a controlled school to which the Education and Libraries (NI) Order 1986 SI 1986/594 (NI 3) as amended by SI 1993/2810 (NI 12) (the 1986 Order) applies. Article 49 provides: (1) Each board shall prepare a scheme specifying the procedure to be followed in relation to the suspension or expulsion of pupils from schools under its management. (4) A scheme prepared under paragraph (1)shall provide that a pupil may be expelled from a school only by the expelling authority and shall include provision for such other matters as may be prescribed. Article 134 provides that the Department of Education Northern Ireland (the Department) may make regulations for the purpose of giving effect to the order. Pursuant to article 134 of the 1986 Order, the Department made the Schools (Suspension and Expulsion of Pupils) Regulations (Northern Ireland) 1995 (1995 NI 99) (the Regulations) as amended by 1998 NI 255. Regulation 3 provides: 3. Without prejudice to the generality of Article 49(4) of the 1986 Order a scheme prepared under Article 49(1), (2) or (3) of that Order shall include provision for the following other matters, that is to say (a) a pupil may be suspended from school only by the principal; (b) an initial period of such suspension shall not exceed five school days in any one school term; (c) a pupil may be suspended from school for not more than forty five school days in any one school year; (d) where a pupil has been suspended from school, the principal shall immediately i. give written notification of the reasons for the suspension and the period of the suspension to the parent of the pupil, to the board and to the Chairman of the Board of Governors.; and ii. invite the parent of the pupil to visit the school to discuss the suspension; the principal shall not extend a period of suspension except (e) with the prior approval of the Chairman of the Board of Governors and shall in every such case give written notification of the reasons for the extension and the period of extension to the parent of the pupil, to the board The Board has prepared a scheme entitled Procedures for the Suspension and Expulsion of Pupils in Controlled Schools (the Scheme). It provides: Principles 3.1 A pupil may be suspended only by the principal. 3.2 An initial period of suspension shall not exceed five school days in any one school term. 3.3 A pupil may be suspended from school for not more than forty five school days in any one school year. 3.4 The principal shall not extend a period of suspension except with the prior approval of the Chairman of the Board of Governors and shall in every such case give written notification of the reasons for the extension and the period of extension to the parent of the pupil and to the Board. Steps to be followed prior to suspension 4.1 A schools disciplinary policy describes the standards of behaviour expected from pupils and outlines the procedures and sanction to be adopted when these guidelines are not adhered to. 4.2 The disciplinary policy will provide for the suspension of a pupil in certain circumstances. The option of suspending a pupil for a prescribed period should only be considered: 4.2.1 after a period of indiscipline The school is required to maintain a written record of events and of the interventions of teachers, contacts with parents and any requests for external support from the Boards Educational Welfare and Educational Psychology services; and/or 4.2.2 after a serious incident of indiscipline The school is required to have investigated and documented the incident. The investigation should include an opportunity for the pupil to be interviewed and his or her version of events given before the decision to suspend. Instigating suspension 5.1 On taking the decision to suspend a pupil the principal must immediately notify the parents, in writing, of the suspension, its duration and the reasons for the suspension (for sample letter see Appendix 2). The letter notifying the parents of the suspension must be sent out on the day of the suspension. If the letter is sent home with the pupil this must be followed by a copy sent by 1st class post. 5.2 The letter must also invite the parents to visit the school to discuss the suspension. Should the parents accept this invitation the principal may consider it appropriate to invite other parties such as Educational Welfare, Educational Psychology or Social Services. The meeting should be chaired by the principal. 5.3 The school should keep full notes of the meeting. The Schools Management powers Article 9B(1) of the 1986 Order, inserted by 1989 NI 20, provides that it shall be the duty of a board to prepare a scheme or schemes of management for controlled schools under the management of the board. The Board prepared a scheme for management of the schools under its control (the Management Scheme). Article 26(1) of the Management Scheme provides that in addition to his statutory functions and subject to the provisions of the Education Orders and regulations, orders and directions made thereunder .and such directions as may, from time to time, be given to him by the Board of Governors, the Principal shall control the internal organisation, management and discipline of the school. The background to the legislation The background to the legislation is to be found in the Report of the Working Party on the Management of Schools in Northern Ireland (1979) otherwise known as the Astin Report. The Astin Report was itself largely based on the report of the Committee of Enquiry appointed jointly by the Secretary of State for Education and Science and the Secretary of State for Wales entitled A New Partnership for Our Schools (1977) otherwise known as the Taylor Report. The Taylor Report noted that there was a lack of authoritative definition of the terms exclusion, expulsion and suspension and that this had given rise to confusion in the minds of governors, teachers and parents (para 9.9). The report stated that suspension should not be used as a punishment (para 9.12). It said: Suspension should be seen as providing a breathing space to allow rational consideration, discussion and accommodation between the parties concerned, or depending on the seriousness of the problem, a search for more fundamental solutions, including, in an extreme case, the possibility of education elsewhere. The report also stated that it was unsatisfactory that there were wide differences from area to area in the procedures for suspension. There were stringent and carefully defined suspension procedures for students at further education institutions and the corresponding procedures for school pupils should be prescribed more carefully (para 9.15). At para 9.18, it made the following recommendations: 1. the terms exclusion, suspension and expulsion, wherever they are used in statutory regulations or in local education authorities regulations or instructions, should be authoritatively defined and differentiated in the way we have suggested; 2. every local education authority should be required to make and publish arrangements for the procedures to be followed in its area with regard to the suspension of pupils from attendance at school which satisfy the following general requirements: i. when a pupils behaviour over a period gives rise to a real possibility that he will have to be suspended from attendance if it continues, opportunity for consultation and discussion should be accorded to his parents; it should be clearly known by all concerned who has the power to decide that a pupil should be suspended from attendance or should remain suspended after a specified period; a time limit of not more than three days should be fixed for the duration of any suspension by the head teacher; iii. ii. iv. provision should be made to avoid danger to the pupil concerned, or to others, as a result of his suspension; vs when a decision is made to suspend a particular pupil the parents should be informed by a quick and reliable means, should be told how long the suspension is to last and should be given full particulars of the reason for it. A record should be made in a register kept specifically for the purpose within the school and available to the governing body. the governing body should be empowered to extend the suspension for a strictly limited period, specified by the local education vi. vii. viii. authority for all cases, during which the interested parties should be brought together to seek an acceptable solution; if no satisfactory solution is found within this period the case should be referred to the local education authority; there should be provision for appeal by the parents to the local education authority, to be heard within a specified period, against the continuation of a suspension beyond a specified period or against any other action proposed as an alternative to the childs resumption of attendance at the school. Parents should be told how, and to whom they should appeal, when the appeal will be heard and what procedure will be followed; 3. legislative steps be taken to ensure that: i. ii. no registered pupil is debarred from attendance at his school, except on medical grounds, otherwise the in compliance with than suspension procedures arranged by the local education authority; no registered pupil is expelled from a school except by the decision of the local education authority responsible for maintaining the school, who should inform the governing body. The Astin report in its turn stated that there was an urgent need for clarification and greater precision in legislation concerning suspensions and expulsions of pupils from grant aided schools (para 7.70). Suspension and expulsion, though regrettably necessary on occasions, should be steps of last resort (para 7.71). The recommendations of the Taylor Report were excellent and should be adopted for Northern Ireland: the key features included that a clear procedure should be laid down and made public (para 7.73). At para 7.74, the report recommended inter alia that the stated period for which a principal was empowered to suspend a pupil should be 5 days (not 3 days as recommended by the Taylor Report). The issues Four issues arise on this appeal. First, on what ground did the principal suspend the appellant? Secondly, did he have the power to suspend the appellant on that ground? Thirdly, if he did have the power to suspend the appellant, did he exercise that power lawfully? Fourthly, was there a breach of article 2 of the First Protocol of the European Convention on Human Rights (the Convention)? On what ground did the principal suspend the appellant: disciplinary or precautionary? Both Weatherup J and the Court of Appeal held that the suspension in the present case was precautionary rather than disciplinary. Weatherup J said, at para 43, that the school was not investigating a disciplinary offence, but was awaiting the assessment from Social Services. The Court of Appeal said, at para 22: If an action such as exclusion is taken on disciplinary grounds, it surely takes place on the basis that disciplinary grounds exist i.e. that there is a reason associated with discipline for taking the action. If a pupil is excluded or suspended in order to investigate whether an offence has been committed, this cannot, in our opinion, be said to have occurred on disciplinary groundsit is done in order to investigate whether disciplinary grounds exist. In his affidavit, the principal makes it clear that he suspended the appellant as a precautionary measure based upon child protection issues (para 25). That view is reflected in all the suspension letters: this is not an assumption of [the appellants] guilt in these matters, but instead a precautionary strategy.in everyones best interests. The labels disciplinary grounds and precautionary grounds appear to derive from the House of Lords decision in A v Head Teacher and Governors of Lord Grey School [2006] UKHL 14, [2006] 2 AC 363. In that case, the claimant pupil was excluded from school by the defendants following a fire at the school in respect of which he was investigated by the police and subsequently charged with arson. There was a power to exclude (permanently or temporarily) on disciplinary grounds under section 64 of the School Standards and Framework Act 1998, but the limit for temporary exclusion was 45 days in any one school year. The claimant had been suspended temporarily for more than 45 days in the school year pending the outcome of the criminal process. It was, therefore, common ground that the exclusion was unlawful according to domestic law. Lord Hoffmann said, at para 36, that the statutory code was well adapted to the use of exclusion as a punishment for a serious disciplinary offence, imposed in the interests of the education and welfare of the pupil and others in the school. It was far less suitable for dealing with a case like the case under appeal in which the pupil was excluded on precautionary rather than penal grounds. The dichotomy between disciplinary and precautionary grounds also appears in the speech of Baroness Hale. At para 74, she said: Section 64 is concerned only with exclusion on disciplinary grounds. The requirements all assume that it is imposed as a determinate sanction for a serious breach of discipline, rather than as an indeterminate precaution pending the resolution of what may or may not turn out to have been a serious breach of discipline. In the context of the 1998 Act, therefore, the question was whether the suspension was on disciplinary grounds within the meaning of section 64. If it was not, it was convenient to describe it as being on precautionary grounds. The relevant question in the present case is whether the grounds on which the appellant was suspended were within the scope of the Scheme. If they were not, then it is convenient to describe the suspension as having been made on precautionary grounds. If paras 3 and 4 of the Scheme are read together, it is clear that a pupil may only be suspended under the Scheme on disciplinary grounds. Para 4 specifies the steps that are to be followed prior to suspension. It provides that the option of suspending a pupil should only be considered if the conditions stated in paras 4.2.1 or 4.2.2 (as the case may be) are satisfied. These two paragraphs are concerned with indiscipline. The present case has (rightly) proceeded on the basis that bullying or intimidation by one pupil of another in school is indiscipline within the meaning of the Scheme. Thus, the assertion by the principal that he suspended the appellant on precautionary grounds necessarily implies the assertion that he did not suspend him on disciplinary grounds and that the Scheme did not apply to the case. I cannot accept either the express or the implied assertion. In my opinion, it is clear from the evidence that the principal suspended the appellant both because he considered that there was a prima facie case that the appellant was guilty of the misconduct which had been reported by A and her friends and because he wished to protect A (and others in the School) from the appellant. These reasons were not mutually exclusive. It is plain from the principals affidavit that he was of the view that there was a prima facie case against the appellant. He said that he regarded the girls reports as both sincere and genuine (para 3) and his daily meetings with A and some of her friends served to confirm to me that the girls concerns were real and sincere (para 5). Para 12 of the affidavit is also important: I also made an assessment as to the likelihood of the veracity of her complaints. In this regard, the new information which I received about allegations of assault on females in the community provided an important context to my overall assessment but was not the motivating factor behind the decision. I had previously refused to take action based upon unproven allegations of sexual assault by the [appellant] outside of school. I was also conscious of advice from the Department of Education that in circumstances where there was a conflict between the interests of children, the needs of the victim should be paramount. This is a revealing paragraph. It is clear that the principal regarded the allegations of assaults on females outside the school as relevant to his decision. They could only be relevant if he considered that they provided further support for his belief that there was a prima facie case that As complaint was true. Otherwise it is difficult to see how these allegations provided an important context to his overall assessment. It is also significant that he described A as the victim. That could only have been on the footing that he believed the girls account. It is clear that, as he says, the principal made an assessment as to the likelihood of the veracity of As complaints and concluded, for the reasons that he gave, that they were likely to be true. The Court of Appeal, at para 26, rejected the submission made on behalf of the appellant that, although the suspension was avowedly for the purpose of obtaining a Social Services assessment of A, it proceeded on the assumption that the appellant was guilty. In my opinion, it is clear that the decision to suspend was closely linked to the principals view that there was at least a prima facie case that the appellant was guilty of the conduct that had been alleged by the girls. On the evidence of the principal, it is inconceivable that he would have suspended the appellant if he had disbelieved the account of his behaviour given by the girls, but had nevertheless believed that A was distressed for some other reason by the presence of the appellant in the School. If he had not believed that there was at least a prima facie case that the appellant was guilty of the alleged indiscipline, he would not have suspended him. In my opinion, the answer to the first question is that the appellant was suspended on disciplinary grounds within the scope of the Scheme. Whether the suspension complied with the Scheme is a separate question which I deal with below. The reasons for my opinion are: (i) despite his statements to the contrary (both at the time and in his affidavit), it is clear that the principal suspended the appellant because he considered that there was a prima facie case that the appellant had committed one or more acts of indiscipline; (ii) he did not suspend him as a holding or precautionary measure pending investigation of whether disciplinary grounds for suspension existed: he suspended him pending the Social Services assessment of A and there was no further investigation of whether disciplinary grounds existed; (iii) the principal had investigated the alleged incident or incidents of indiscipline before suspending the appellant (as required by para 4.2.2 of the Scheme), but the investigation was limited to speaking to A and the other girls and did not include an opportunity for the appellant to be interviewed; (iv) the suspensions of 5 days at a time were in accordance with para 3.2 of the Scheme; and (v) at para 11 of his affidavit, the principal states that he believes that his actions were in accordance with the [Scheme]. Was there power to suspend the appellant? It is not in dispute that there was power to suspend the appellant under the Scheme on disciplinary grounds. That is the short answer to the second issue. I should add that it has (rightly) not been argued that there was power to suspend a pupil on disciplinary grounds outside the Scheme. A question that was considered in the courts below was whether there is power to suspend a pupil on precautionary grounds or whether the Scheme is exhaustive of the power of a principal to suspend. The Court of Appeal were of the view that the general management powers available to school authorities must include a power to suspend as a precautionary measure in appropriate circumstances. In the case of Re Ms application [2004] NICA 32 the Court of Appeal (Kerr LCJ, Nicholson and Campbell LJJ) spoke of the practical need for a power to suspend as a precautionary measure. At para 20, they said: we consider that it is entirely proper for a principal to suspend a pupil who may face the prospect of expulsion if the allegations made against him are substantiated for the purpose of having the case against the pupil explored. One need only instance a simple example to demonstrate the inevitability of that conclusion. If a pupil was alleged to have assaulted a teacher, it would be inconceivable that the principal should not be able to suspend the pupil pending a full investigation of the incident or a final decision as to what the ultimate punishment should be. There is strong support for that view, which was replicated by the Court of Appeal in the present case, in the dicta of Lord Scott in the Lord Grey School case who said, at para 69: It seems to me clear that the management powers of a head teacher enable him or her to keep a pupil temporarily away from the school for reasons that have nothing to do with discipline. An obvious example is that of a pupil who arrives at school one day suffering from some infectious disease. It may be necessary, in order to safeguard the health of the other pupils and the school staff, for the pupil to be sent home until he or she is no longer infectious. It is to be hoped that the pupils parents or guardians would agree with this course. But if they did not, the head teacherwould, in my opinion, have power to impose it. It would, in my opinion, be lamentable if, by an application of sections 64 68 to situations to which they could never have been intended to apply, managers of schools found themselves placed in a statutory straightjacket and prevented from taking sensible decisions to deal with unusual situations. Thus it was that the Court of Appeal in the present case held that the principal was entitled to suspend the appellant under his general management powers. These had to be exercised reasonably and in accordance with the common law rules of procedural fairness. In my opinion, it is important to bear in mind the background to the 1986 Order and the schemes that were made under it. As the Taylor and Astin Reports demonstrated, before the 1986 Order was made, the right to suspend and expel pupils was not subject to specific regulation. Control was effected by invoking the common law. This was unsatisfactory, because it gave rise to uncertainty. The recommendations of the reports included that there should be clearly defined suspension procedures. Parliament accepted these recommendations. It considered that it was unacceptable to leave the question of suspension and exclusion of pupils to be regulated by general management powers and the common law. The 1986 Order envisaged that each board would prepare a scheme specifying the procedure to be followed in relation to the suspension or expulsion of pupils from schools under their management. Article 49(4) states that a scheme shall include provision for such other matters as may be prescribed. It would have been open to the Board to prepare a scheme which allowed the suspension or expulsion of pupils on grounds other than disciplinary grounds. Such a scheme would have been required to specify the procedure to be followed in relation to suspension or expulsion on those other grounds. But the Board did not take that course. Its response to article 49 of the 1986 Order was to produce a scheme which provided for suspension and expulsion of pupils on disciplinary grounds only. I can see that it might well be convenient for a principal to have a power to suspend on precautionary grounds, for example, for the reasons given by the Court of Appeal in Ms case and by Lord Scott in the Lord Grey School case. There is no evidence as to why the Board produced a scheme which limited the power to suspend and expel pupils in the way that it did. It may be that it did not contemplate that there would be circumstances in which it would be expedient to suspend or expel a pupil on precautionary grounds. On the other hand, it may be that, taking the view that a pupil should be suspended or expelled only as a last resort, the Board made a deliberate decision not to permit a principal to suspend or expel on precautionary grounds. Support for the view that suspension and expulsion should be seen as a step of last resort is to be found at para 7.71 of the Astin Report. Lord Bingham put the point crisply, at para 21, in the Lord Grey School case: The immense damage done to vulnerable children by indefinite, unnecessary or improperly motivated exclusions from state schools is well known, and none could doubt the need for tight control of the exercise of this important power. In the light of the background to article 49 of the 1986 Order and the problems that had been exposed by the Taylor and Astin reports which it was intended to address, I consider that schemes prepared under article 49(1) should be interpreted as defining exhaustively the circumstances in which a power to suspend or expel a pupil may be exercised. I would, therefore, hold that the Scheme defines exhaustively the circumstances in which a pupil may be suspended or expelled in a school under the control of the Board. If the Board wishes to give school principals the power to suspend or expel on precautionary grounds, then it should amend the Scheme to provide for this expressly and to regulate the exercise of the power. Was the suspension lawful? The principal has not disclosed the details of the alleged misbehaviour of the appellant that resulted in the decision to suspend. It is, therefore, not clear whether there was a single incident or a series of incidents of indiscipline which led to the decision. But either way, it is clear that he was of the view that this was a case of one or more serious incidents of indiscipline within the meaning of para 4.2.2 of the Scheme. The contrary has not been argued. Para 4.2.2 requires that after a serious incident of indiscipline, the school is required to have investigated and documented the incident. Crucially, it also provides that the investigation should include an opportunity for the pupil to be interviewed and his or her version of events given before the decision to suspend (emphasis added). The principal communicated his decision to suspend the appellant at the meeting in his office on 7 February. He told the appellant that certain allegations had been made against him, but he could not give any details. Without more ado, he then told the appellant that he was being suspended. There can be no doubt that the appellant was not given an opportunity to give his version of events before he was suspended. There was, therefore, a clear breach of para 4.2.2 of the Scheme. That breach fundamentally undermined the decision to suspend. The right accorded by para 4.2.2 to a pupil to put his or her version of events before a decision to suspend is made is fundamental. It reflects the fact that a persons right to have afforded to him a reasonable opportunity of learning what is alleged against him and of putting forward his own case in answer to it is one of the fundamental rights accorded by the common law rules of natural justice: see per Lord Diplock in OReilly v Mackman [1983] 2 AC 237, 279 F G. There was also a breach of para 5.1 of the Scheme in that the letter of 7 February did not give the reasons for the suspension. The letter stated that the decision was based on information presented at the meeting on the previous day and that there was no assumption of the appellants guilt. It is true that the last sentence of the letter informed the grandparents that they should contact the principal if they wished to discuss the matter or required further information. But para 5.1 requires the principal to notify the parents of the reasons for the suspension immediately on taking the decision to suspend. Further, it is clear that, if the parents or grandparents had asked for more information, the principal would not have given them details of the allegations against A, because, on the advice of the Board, he had decided to respect As confidence and not to do so. As I have already said, the principal had drafted a letter which included the sentence: I have also had recent reports from girls who claim that he is deliberately intimidating them in school. That might not have been sufficient to satisfy the requirements of para 5.1 even if it had been sent before the decision had been made to suspend, but it would at least have given the appellant some idea of the nature of the allegations that were being made. Unfortunately, on the advice of Mrs OHare this sentence was omitted from the letter that was sent. The principal was undoubtedly faced with a very difficult situation on 1 February. Understandably, he was extremely concerned for the well being of A. He decided that he should respect her confidence. This decision was bound to put him in conflict with para 4.2.2 of the Scheme and probably para 5.1 as well. He decided to suspend the appellant without giving him an opportunity to give his version of events and without giving his parents/grandparents the reasons for his decision, and to suspend him until Social Services had completed their assessment of A. It is not clear what assessment Social Services was being required to undertake, still less how the outcome of the assessment would impact on the decision to suspend the appellant. Further, it is not clear what the principal would have done if (as proved to be the case) the assessment was not completed within the period available for suspensions (not more than 45 days in a school year). One of the odd features of this case is that at para 11 of his affidavit the principal states that he believes that his actions were in accordance with the Boards Scheme for the suspension and expulsion of pupils. Para 4.2.2 of the Scheme is uncompromising in its terms, reflecting the seriousness of a decision to suspend or expel a pupil on disciplinary grounds. Neither the principal nor the Board seems to have appreciated that the course that they followed would necessarily involve a breach of the Scheme. There were alternative avenues that the principal should have explored. For example, he did not explore the possibility of investigating the allegations on the basis of evidence from As friends alone. They claimed to have witnessed the alleged incident or incidents. If this proved impossible, he could have asked A and her mother whether they would object to his investigating the alleged incidents using the evidence of the girls as well as her evidence. He could have explained to them that he owed a duty to everybody at the school to decide whether the complaints that had been made by A and the other girls were true and that he was required by law to ask the appellant for his version of events before deciding what steps, if any, to take. He says that at the meeting of 6 February, he considered whether it would be possible for a teacher or other member of staff to supervise the appellant and monitor his behaviour, but concluded that he was not satisfied that sufficient resources were available to ensure the physical separation of the appellant from A. The appellant and A were not in the same school years and the need to ensure their physical separation would only have arisen during breaks and lunch periods. There is nothing to indicate that the principal made an analysis of precisely what additional calls would be made on the schools resources if the appellant was to be monitored and supervised during the break and lunch periods. No evidence has been produced to show what additional calls would have been made on the schools resources and why the schools existing resources could not have met them. Furthermore, if the school had been unable to meet the additional calls from its existing resources, there is no evidence that consideration was given to the possibility of obtaining the necessary additional resources from the Board. For the reasons that I have given, therefore, the suspension of the appellant was unlawful, since it was in breach of both paras 4.2.2 and 5.1 of the Scheme. Was there a breach of article 2 of the First Protocol of the Convention? It is submitted on behalf of the appellant that the conduct of the respondents amounted to a denial of his right to education in breach of article 2 of the First Protocol of the Convention. So far as material, article 2 provides: No person shall be denied the right to education. The extent of the right conferred by article 2 was considered by the House of Lords in the Lord Grey School case. At para 24, Lord Bingham said: The Strasbourg jurisprudence, summarised above in paras 11 13, makes clear how article 2 should be interpreted. The underlying premise of the article was that all existing member states of the Council of Europe had, and all future member states would have, an established system of state education. It was intended to guarantee fair and non discriminatory access to that system by those within the jurisdiction of the respective states. The fundamental importance of education in a modern democratic state was recognised to require no less. But the guarantee is, in comparison with most other Convention guarantees, a weak one, and deliberately so. There is no right to education of a particular kind or quality, other than that prevailing in the state. There is no Convention guarantee of compliance with domestic law. There is no Convention guarantee of education at or by a particular institution. There is no Convention objection to the expulsion of a pupil from an educational institution on disciplinary grounds, unless (in the ordinary way) there is no alternative source of state education open to the pupil (as in Eren v Turkey (Application No 60856/00) (unreported), 7 February 2006). The test, as always under the Convention, is a highly pragmatic one, to be applied to the specific facts of the case: have the authorities of the state acted so as to deny to a pupil effective access to such educational facilities as the state provides for such pupils? In this case, attention must be focused on the school, as the only public authority the respondent sued, and (for reasons already given) on the period from 7 June 2001 to 20 January 2002. The question, therefore, is whether between 7 February and 20 April the school denied the appellant effective access to such educational facilities as were provided by the state. Ms Quinlivan submits that the appellant suffered an unlawful restriction to his education and that in consequence there was a breach of article 2. She relies on the decision of the ECtHR in ahin v Turkey (2005) 44 EHRR 99, para 154: In order to ensure that the restrictions that are imposed do not curtail the right in question to such an extent as to impair its very essence and deprive it of its effectiveness, the Court must satisfy itself that they are foreseeable for those concerned and pursue a legitimate aim. However, unlike the position with respect to articles 8 to 11 of the Convention, it is not bound by an exhaustive list of legitimate aims under article 2 of Protocol No 1 Furthermore, a limitation will only be compatible with article 2 of Protocol No 1 if there is a reasonable relationship of proportionality between the means employed and the aim sought to be achieved. She submits that the suspension of the appellant from the school was a restriction on his right to education and that the principals response to the allegations against him was disproportionate. He could and should have explored alternatives to suspension such as those mentioned at paras 55 and 56 above and there was no review of the proportionality of the suspension as the weeks went by. She also makes the point that the suspension came at a crucial time in the appellants education, coming as it did in his GCSE year. In my view, there was no restriction on the appellants right to education under article 2 in this case. It follows that the statement at para 154 in Sahins case has no application and no questions of proportionality arise. It is true that (as I have held) the appellant was suspended from the school in breach of domestic law. But it does not follow from this that there was any restriction on his right not to be denied effective access to such educational facilities as the state provides for pupils such as the appellant. In the Lord Grey School case, the pupil had been excluded from the school in breach of domestic law, but the House of Lords nevertheless held that the exclusion did not, in the circumstances of that case, amount to a breach of his article 2 right. As Lord Bingham said in the Lord Grey Case at para 24, there is no Convention right to education of a particular kind or quality, other than that prevailing in the state. Thus, there is a breach of article 2 only if the person is denied effective access to such educational facilities as the state provides for such pupils. Article 86 of the Education (Northern Ireland) Order 1998 (SI 1998/1759 (NI 13))provides: (1) Each board shall make arrangements for the provision of suitable education at school or otherwise than at school for those children of compulsory school age who by reason of illness, expulsion or suspension from school or otherwise, may not for any period receive suitable education unless such arrangements are made for them. The state, therefore, provides educational facilities for pupils who are suspended from school and the appellant was not denied access to those facilities in this case. The fact that the standard or quality of the education provided may have been low is not material. What matters is that the appellant was given access to the alternative facilities provided for pupils who have been suspended. Work was made available by the school for the appellant immediately following his suspension in all the principal subjects: see para 15 above. From 14 March until 20 April, he received home tuition for 8 hours per week mainly in Mathematics and English. Understandably, the appellants mother complains that this was inadequate. But there is no evidence that the arrangements made available and provided by the school were different from those that the state made available and provided to any pupil such as the appellant who, for whatever reason, was not able to attend school. I have little doubt that the facilities made available between 7 February and 13 March (which in the event were not accepted) were not as effective from an educational point of view as attendance in a classroom would have been. It may be that the same can be said in relation to the merits of home tuition of 8 hours per week. But for the reasons that I have given, there was no breach of article 2 of the First Protocol in this case. Overall conclusion I would, therefore, allow the appeal and declare that the appellant was unlawfully suspended from the school from 7 February until 20 April 2007. But I would also declare that there was no breach of article 2 of the First Protocol of the Convention. LORD PHILLIPS Introduction I have had the benefit of reading the judgment of Sir John Dyson. I agree with his conclusions (i) that the appellant was unlawfully suspended from his school from 7 February until 20 April 2007, but (ii) that there was no breach of article 2 of the First Protocol of the Convention. As to the second conclusion, I share Sir Johns reasoning and have nothing that I wish to add. As to the first conclusion, I have reached it by a somewhat different route, both from that of Sir John and from that of Lord Rodger and Lord Brown. I can summarise that route as follows: i) The Boards scheme entitled Procedures for the Suspension and Expulsion of Pupils in Controlled Schools (the Disciplinary Scheme) does not govern all circumstances in which the principal of a controlled school can lawfully deny a pupil access to the school. ii) The circumstances in which the principal suspended the appellant fell within the scope of the Disciplinary Scheme. iii) The principals actions did not comply with the requirements of the Disciplinary Scheme and were, in consequence, unlawful. The scope of the Disciplinary Scheme. Article 49 of the Education and Libraries (Northern Ireland) Order 1986 provides: (1) Each board shall prepare a scheme specifying the procedure to be followed in relation to the suspension or expulsion of pupils from the schools under its management The object and the scope of this provision can readily be deduced from the relevant recommendations of the Reports which, as is common ground, the provision was designed to implement, namely the Taylor Report and the Astin Report. Sir John has summarised the relevant provisions of these Reports in paragraphs 24 to 27 of his judgment. They deal with exclusion from a school, whether temporary or permanent, in a disciplinary context that is by way of reaction to aberrant behaviour on the part of the pupil. The cause of such behaviour may or may not involve culpability on the part of the pupil. The Court has recently heard an appeal in which evidence was given of the large number of pupils who have been excluded from school because of behaviour caused by autism spectrum disorders. Sir John has quoted the statement at para 9.12 of the Taylor Report that suspension should not be used as a punishment but as providing a breathing space for rational consideration of the way ahead. It follows that the scheme that Boards are required to prepare must deal with the procedure to be followed in relation to suspension or expulsion for disciplinary purposes. If there is to be a power for a principal temporarily to exclude a pupil from the school while investigating alleged misbehaviour, provision for this should properly be included in the Disciplinary Scheme. The respondents have drawn a distinction between disciplinary suspension and precautionary suspension. Disciplinary suspension they define as suspension by way of sanction for established misconduct. Precautionary suspension they define as suspension while investigations take place as to whether or not there has been misconduct. It is their submission that the Disciplinary Scheme regulates only the former type of suspension, not the latter. I do not agree. The scheme required by article 49 of the 1986 Order should cover the investigatory stage of the disciplinary process. If it makes no provision for temporary exclusion from school during this stage, then temporary exclusion is not permitted by the scheme. The respondents found, for their distinction between disciplinary and precautionary suspension, on one decision of the Court of Appeal in Northern Ireland and one of the House of Lords. The former is the case of Re Ms Application [2004] NICA 32, cited by Sir John at para 41 of his judgment. In an earlier passage in the same paragraph the Court said: [20] We are satisfied that school principals must have the power, in appropriate cases, to suspend pupils before investigating the full circumstances of an alleged infringement of school rules or other misbehaviour. In those circumstances suspension is not a form of punishment but merely a means of allowing the proper investigation of the allegations. There are two schools of thought as to whether a principal should have power to exclude a pupil from the school while carrying out investigations of alleged misconduct by the pupil, but if he is to have such a power it must be part of the relevant Disciplinary Scheme. I agree with all members of the Court that the 1986 Order requires a scheme that deals comprehensively and exclusively with all exclusions from school that fall properly within its scope. The House of Lords decision relied upon by the respondents is the Lord Grey School case [2006] 2 AC 363. In that case their Lordships made obiter comments on the scope of section 64 of the School Standards and Framework Act 1998. That section provided that the power to exclude could only be taken on disciplinary grounds and the House questioned whether this could preclude exclusion of a pupil pending the result of a criminal trial. I do not find the observations of the House support the suggestion that the scheme required by article 49 is not concerned with the investigatory stage of disciplinary proceedings. The passage that Sir John has quoted at para 42 from the speech of Lord Scott is, however, illuminating. I do not consider that article 49 has any bearing on the power of a principal to keep a pupil temporarily away from school for a reason that has nothing to do with discipline. Such exclusion does not fall within the meaning of suspension or expulsion in article 49, which is dealing with the disciplinary context. Miss Gibson QC for the respondents has helpfully drawn attention to circumstances which have nothing to do with discipline that may justify, indeed require, a principal to exclude a child from school. One is where the lack of cleanliness of the pupil or the pupils clothes so requires section 34 of the Health and Personal Social Services (Northern Ireland) Order 1972 (SI 1972/1265 (NI 14)). Another is where the pupil is infectious or contagious, or is in quarantine section 5 of the Public Health Act (Northern Ireland) 1967. The Scheme of Management drawn up pursuant to article 3 of the Education (Northern Ireland ) Order 1998 provides: 26. (1) In addition to his statutory functions and subject to the provisions of the Education Orders and regulations, orders and directions made thereunder and to the provisions of this scheme and a financial scheme under the Education Orders and such directions as may, from time to time, be given to him by the Board of Governors, the Principal shall control the internal organisation, management and discipline of the school. This gives the principal the power, and indeed the obligation, to exclude a pupil in circumstances that do not fall within the Disciplinary Scheme where the proper management of the school so requires. Such circumstances are not likely to arise very often in practice. The circumstances in which the principal suspended the appellant It follows from the conclusions that I have set out above that it does not matter whether the appellants suspension or exclusion was disciplinary or precautionary. The critical question is whether it was part of a disciplinary process or whether it was for a reason that had nothing to do with discipline. If it formed part of the disciplinary process, it was only lawful if permitted by the Disciplinary Scheme. If it was not part of the disciplinary process, then different questions arise in order to determine whether the appellants exclusion was pursuant to the proper exercise of the principals general managerial powers. There is a problem as to how one approaches the purpose of the appellants suspension or exclusion. Is it to be judged on what the principal told the appellant, his mother and his grandparents, or is it to be judged from the principals own viewpoint? This was not explored in argument and, at the end of the day I have concluded that it does not make any difference. The information provided to the appellant, his mother and his grandparents is summarised at paragraphs 11 to 13 of Sir Johns judgment. This makes it plain that the appellants suspension was part of a disciplinary process. The appellant himself was told that he was being suspended because of allegations about his behaviour. The letter sent to the grandparents on 7 February referred to the Case Conference on 1 February when allegations of serious criminal offending had been made against the appellant. The reference to the fact that the suspension did not involve an assumption of guilt and that the matter would be considered further suggests that the suspension was in order to enable further consideration to be given to the allegations made. That impression would have been reinforced by the subsequent letters stating that the suspension was being extended for further periods of five days in order to allow for further investigation of the matter referred to in the letter of 7 February. The fact that the original suspension was for five days and that subsequent extensions were for the same period was also suggestive of suspension under the Disciplinary Scheme. In these circumstances it is no cause for surprise that the grounds upon which the appellant sought relief in his judicial review proceedings included failure to comply with the Schools (Suspension and Expulsion of Pupils) Regulations (Northern Ireland) 1995 and taking into account irrelevant considerations, in particular unproven allegations made about the Applicant in relation to his conduct outside school. The principals own understanding of the grounds on which he was suspending the appellant are less easy to analyse. These seem to have been a combination of concern for the welfare of the anonymous pupil who had complained of the appellants treatment and a belief, at the least, that there was a prima facie case that the appellant had been guilty of serious misconduct. Significantly the principal himself believed that he was acting under the Disciplinary Scheme. For these reasons I have reached the firm conclusion that the circumstances under which the principal suspended the appellant fell within the scope of the Disciplinary Scheme. I do not think that the principal was purporting to impose a disciplinary sanction. Rather his action was precautionary in that it was provisional suspension in order to give further consideration to the allegations of misconduct made against the appellant and the consequential risk posed by his behaviour. Failure to comply with the Disciplinary Scheme The Disciplinary Scheme made no provision for precautionary suspension. Whether this was as a matter of policy or oversight does not matter. The consequence was that it was not open to the principal to suspend the appellant as a precautionary measure, rather than as a disciplinary sanction after following the procedure required by the Disciplinary Scheme. The appellants suspension was unlawful. I would end by expressing my agreement with those who have sympathised with the predicament in which the principal found himself. Without the power of precautionary suspension his options were limited and he was not well advised as to how to proceed. But for the reasons that I have given I agree that the appellants appeal must be allowed. LORD RODGER I agree with Sir John Dyson that the appeal should be allowed, but, like Lord Brown, I reach that conclusion on the basis that the Principal purported to suspend the appellant as a precautionary measure and that, under the Management Scheme which applied to the school, he had no power to do so. On 31 January 2007 two girls spoke to the Principal and made an allegation of misconduct by the appellant. While the Court has not been furnished with any details, it is accepted that the allegation was of some form of bullying, which was said to be of a subtle and covert nature. It is clear that, having heard the initial account given by the female pupil and her friend, and having heard a further account from her friend later the same day, the Principal was inclined to believe what they said. No doubt, even though it related to entirely separate matters, what he heard the next day after the multi disciplinary case conference would have tended to reinforce his view. Indeed, as Sir John Dyson says, at para 38, on the Principals evidence, it is inconceivable that he would have suspended the appellant if he had disbelieved the girls account of his behaviour. If he had not believed that there was at least a prima facie case that the appellant had done what they said, he would not have suspended him. But it does not follow, in my view, that, because the Principal proceeded on the basis that there was a prima facie case against the appellant, he suspended him on disciplinary, rather than precautionary, grounds. The fact that he accepted that there was a prima facie case against the appellant is entirely consistent with his proceeding on a precautionary basis. In short, the Principal would never have taken any precautionary steps to protect the girls by suspending the appellant if, on the available information, he had not been inclined to accept their account. That the suspension was, in fact, taken as a precautionary measure is confirmed not only by what the Principal says in his affidavit but by the minute of the risk assessment meeting which took place on 6 February. The meeting decided that Social Services were to carry out an assessment of the alleged incident with the girl and of any impact on her emotions. Also the appellant was to be suspended for 5 days, with the possibility of extension, while the assessment took place. The minute included the words (in bold): The suspension to be viewed as a precautionary measure, not a presumption of guilt. This approach was reflected in the (otherwise misleading) letter from the Principal to the appellants grandparents on 7 February. I therefore see no basis for second guessing Weatherup J or the Court of Appeal, both of whom decided that the suspension was precautionary. The girl who alleged that she was being bullied said that she did not want to make a formal complaint and did not wish the Principal to tell the appellant that she had spoken to him about his conduct towards her. Everything that the Principal then did seems to have proceeded on the basis that he could not reveal the identity of the girl, and hence the detail of her allegations, to the appellant. Even in his affidavit of 7 June 2007, he said I do not now wish to say or do anything which may betray the confidence of this pupil or which may assist in identifying her. Pupils who are bullied will often worry in case the bully finds out that they have reported his conduct. So they may well ask that what they have said should be kept confidential. The Northern Ireland Department of Education policy recognises this, but adds that pupils should be told that if teachers are concerned about your safety, or someone elses, they may need to share this with others, but they will always tell you first: Pastoral Care in Schools: Promoting Positive Behaviour (2001), para 110. Here, the Principal took a serious view of what the girls had told him. He clearly thought that the matter could not be passed over without further investigation and without appropriate steps being taken if the allegation proved to be true. But the Principal could never have properly concluded that the allegation was indeed true and taken action to deal with the situation without informing the appellant of the allegation against him and giving him an opportunity to give his version of events. So this was a situation where, as envisaged in the policy paper, the girls complaint could not be kept confidential. As it was, the school was already taking steps, in conjunction with the girls parents, to support and protect her. If more steps were required because the complaint had been revealed to the appellant, doubtless the Principal would have taken them. In fact, the Principal took no steps to investigate the allegation himself. Instead, on 6 February, the risk assessment meeting decided that Social Services were to carry out an assessment of the alleged incident with the girl and of any impact on her. It does not appear that any approach to the appellant was envisaged. So this assessment was unlikely to be conclusive and certainly could never have resulted in any action against the appellant. But, in the meantime, the appellant was to be suspended, initially for 5 days, while the assessment took place. The following day, the Principal proceeded to suspend the appellant for 5 days without giving him any real account of the basis for the suspension even though, it appears, the appellant had an idea about who might have complained. In fact, as we know, suspension succeeded suspension until 20 April and the appellant was not actually allowed to return to school until the beginning of May by which time Social Services had still not completed their assessment of the girl. Indeed, the evidence does not show whether that assessment was ever completed. The upshot is that, on the basis of an allegation of bullying, not involving physical violence, the appellant was suspended for many weeks. This was, in all probability, a more severe consequence than would have been imposed on him even supposing that the incident had been investigated promptly, misconduct on his part had been established and he had been punished for it under the schools current discipline policy. No doubt, all these steps were taken in a difficult situation and with the best of intentions. But, at least with the benefit of hindsight, it is clear that the course adopted was misguided. The Principals insistence on concealing the allegation from the appellant made it impossible for the school to carry out a proper investigation of the alleged misconduct. Perhaps for that reason, instead of the school investigating and dealing with the incident within its disciplinary system, it outsourced the investigation of the girls account to Social Services, which never produced a report. Given the insistence on confidentiality, it is in any event unclear what practical steps were envisaged as following from that investigation. In the meantime, the same insistence on confidentiality appears to explain why the appellants grandparents were given a false and misleading reason for his suspension in the Principals letter of 7 February. As Sir John Dyson has demonstrated, the Management Scheme which applied to the school actually makes no provision for precautionary suspension. In other words, the only use of suspension which it contemplates is as a severe sanction (para 4.1), only short of expulsion, after a period of indiscipline (para 4.2.1) or after a serious incident of indiscipline (para 4.2.2). In the latter case suspension can only be considered after the school has investigated and documented the incident, the investigation being one which should include an opportunity for the pupil to be interviewed and his or her version of events given before the decision to suspend. Here, plainly, that stage was never reached. The Court was not told why the Management Scheme does not include any provision for the use of suspension as a precautionary measure. The simple fact is, however, that it does not. Moreover, since the concern behind framing specific rules on suspension was to remove doubts about how it should be used, in respectful disagreement with the courts below, I see no room for implying into the general management powers of the Principal a power to suspend a pupil on a precautionary basis. Whether the Scheme should be amended to include such a power in appropriate circumstances is a matter of policy for the Northern Ireland Executive and not for this Court. appellant, as he did. For these reasons, and in agreement with Lord Brown, I too would allow the appeal and declare that the appellant was unlawfully suspended from the school from 7 February until 20 April 2007. For the reasons which Sir John Dyson gives, I would also declare that there was no breach of article 2 of the First Protocol to the Convention. In that situation in February 2007 the Principal had no power to suspend the LADY HALE It is remarkable how quickly children pick up a basic sense of justice and fairness. How often do we hear them complain rightly and wrongly that its not fair! Some of the injustices in their lives are not within the control of the adults around them but many of them are. Where adults are in control of childrens lives they have a moral duty to be fair and sometimes this is also a legal duty. If children are faced with a world which is arbitrary and unfair they may see little point in obeying the rules or being just and fair in their own dealings with others when they grow up. Because we can all empathise with the Principal in his dilemma, we must also empathise with the appellant in the situation he faced. Aged 15, he is coming up to his GCSE examinations. He is away from school on work experience for a few days and due to return on Tuesday 6 February 2007. On Wednesday 7 February he is summoned to the Principals office, told that allegations have been made against him and that he is being suspended as a result. At first this does not sink in properly. He is also handed a letter to take home to his grandparents, with whom he lives. He opens this, which spells out that he is suspended for five school days (a whole week) with a possible extension to follow. He is angry and upset (its not fair). He returns to the Principals office and asks why he is being suspended. He is told that there is nothing more the Principal can tell him. The letter to his grandparents is misleading. It implies that the reason for his suspension is the information about allegations outside school, which was shared at the case conference on 1 February. It says nothing about the real reason, which was the allegations made by A and her friends. The suspension is extended for four further weeks. Once home tuition is arranged, from 14 March, there are no further formal extensions. But the reality is that he is not free to come back to school and was not in fact allowed back in until the beginning of May. This is unjust in two ways. He has been away from school for nearly three months at a critical time. His tutors reports indicate that he attended and co operated very well with the eight hours tuition he was offered each week but he was clearly a pupil who needed help to improve basic skills. This looks like a more severe punishment than would have been warranted had the allegations against him been proved. More seriously, he was not given any opportunity of explaining his side of the story in a way which would have made any difference. The Principal left others to take the matter forward and made no further attempt to establish the truth or to negotiate a solution which would enable both the pupils concerned to continue their education in the school. There can be no doubt that what the school did was not in accordance with the Boards scheme, prepared under article 49 of the Education and Libraries (Northern Ireland) Order 1986, and thus unlawful. I agree with Lord Phillips that it is not helpful or necessary to decide whether the Principals action was disciplinary or precautionary. Precautionary is not a term of article It is quite clear that what was done was done in a disciplinary context that is, because the appellant had been accused of indiscipline and not for any other reason. The scheme is undoubtedly intended to be exhaustive of the grounds upon which a pupil can be suspended in a disciplinary context and the procedures which must be followed before he is. It requires the indiscipline to be established and it requires the pupil to be given an opportunity of defending himself. It also requires that his parents are told the right reason. None of that happened: hence the unlawfulness. Whether such schemes should provide for suspension while allegations of indiscipline are being investigated either by the school or (as in A v Head Teacher and Governors of Lord Grey School [2006] UKHL 14, [2006] 2 AC 363) by the police or some other body is, as Lord Rodger points out, a policy question and, I would venture to suggest, not an easy one. Suspension is bound to have an adverse effect upon a pupils education, as well as on his self esteem and on his reputation with others. It may well expose him to risks while he is not at school. It is rightly regarded as a last resort. If a scheme were to provide for suspension during investigations, as Lord Brown points out, it would still have to require that the pupil be told the reasons for it and given an opportunity to argue against it. The Principals dilemma would remain. Whether there is power to send a pupil home, or to require him not to come in, for reasons that have nothing to do with discipline is not a question that arises on the facts of this case. There are arguments either way. On the face of it, article 49 covers all involuntary exclusions from school for whatever reason. Yet common sense might suggest that there should be some flexibility, for example if a pupil insists on attending school when clearly too ill to do so. Improper dress, on the other hand, looks like a disciplinary matter. And the answer to a dirty child might be quietly and tactfully to insist that he has a wash. Usually, these situations can be dealt with by agreement rather than by coercion. The scheme could address itself to such matters if it were thought appropriate to do so. So I would prefer not to express a concluded view on the point. As to article 2 of the First Protocol to the European Convention on Human Rights, the test is that laid down by Lord Bingham of Cornhill in the Lord Grey School case at para 24: have the authorities of the state acted so as to deny to a pupil effective access to such educational facilities as the state provides for such pupils? This is a question of fact and degree. Left to myself, I might have thought that three months out of school in the run up to important public examinations was indeed to deny him effective access to the educational facilities which the state provides for year 12 pupils. He should not have been relegated to eight hours tuition a week for six weeks. But I appreciate that others think and have thought that it may be enough to be effective. The appellant has achieved his major objective of establishing that he should not have been suspended in the way that he was. Had this been recognised at an early stage, he might also have achieved his objective of being allowed back into school. The only purpose of finding a violation of his Convention rights would be to pursue a claim for damages, which could only succeed if the court were satisfied that an award were necessary to afford him just satisfaction: see Human Rights Act 1998, s 8(3). Miss Quinlivan rightly did not place this at the forefront of her submissions. I see no point, therefore, in pressing my doubts to a dissent but, as a declaration is a discretionary matter, I would prefer to make no declaration at all on this issue, the appellant having achieved just satisfaction from his declaration on the first. Finally, we should not forget the complainant either. The Principal believed her friend and her mother about how upset she was and rightly took steps to help her. But we shall never know precisely why she was so upset and whether she had good reason to be. What lessons has she learned? It is good that the school was prepared to take her seriously and give her support. It is not good that an anonymous report of complaints which could not be disclosed was seen to lead to sanctions against the alleged perpetrator. In legal proceedings, children have to be reassured that they will be listened to and their complaints taken seriously. They may also be given help and support to improve their lot. But if adverse consequences are to be visited upon parents or others as a result of their complaints, they cannot be given a guarantee of confidentiality. Those elementary principles of fairness are as applicable in the school disciplinary context as they are in legal proceedings. In the words of Eleanor Roosevelt on the screen at the end of our courtroom, Justice cannot be for one side alone, but must be for both. For these reasons, and in agreement with the other members of the court, I would allow the appeal and declare that the appellant was unlawfully suspended from school from 7 February until 20 April 2007. I would refrain from making the second declaration. LORD BROWN I have had the advantage of reading in draft the judgment of Sir John Dyson and, like him, would allow the appeal and declare (1) that the appellant was unlawfully suspended from 7 February until 20 April 2007 but (2) that there was no breach here of article 2 of the First Protocol of the Convention. I add a few short paragraphs only because I confess to very considerable sympathy for the Principal in this case and because I prefer to found my own judgment on the proposition that there is simply no power under the Boards Scheme to suspend a pupil as a precautionary measure rather than on the basis that the appellant was in fact suspended here on disciplinary grounds and unlawfully so because his suspension was in breach of paragraphs 4.2.2 and 5.1 of the Scheme. I am sympathetic to the Principal both on the facts and because, quite understandably, he thought he was entitled as a matter of law to suspend the appellant on precautionary rather than disciplinary grounds. So far as the facts are concerned it appears that the Principal was so concerned at As distress and state of mind (he thought she posed a real risk of suicide) that he felt unable to betray her confidence in making the complaint. As to whether there exists a power of precautionary suspension, the Northern Ireland Court of Appeal had already decided in Re Ms application [2004] NICA 32 that such a power existed and strong support for such a view was to be found in the judgments of the House of Lords in A v Head Teacher and Governors of Lord Grey School [2006] 2AC 363. True, the House of Lords was there concerned with sections 64 68 of the School Standards and Framework Act 1998 and not with any Scheme made under Northern Irelands (1986) Order and (1995) Regulations but it is difficult to see why these essentially similar provisions should be construed and applied differently. At first blush the case for having a power of precautionary suspension appears strong to the point of irresistibility. On reflection, however, even if such a power be regarded as desirable, I am not convinced that it is necessary, still less that such a power must inevitably exist (as the Court concluded in Re Ms application). As Sir Johns judgment makes clear, there are strong policy reasons for treating all school exclusion (suspension as well as expulsion) as a remedy of last resort and for subjecting this power to the most rigorous controls. Even in the case of an alleged assault on a teacher (the example given in Re Ms application) segregation within the school or other measures short of suspension are available to deal with the situation pending full investigation. Sir John also explains (para 45) that if after all it is thought necessary or desirable to have a power of precautionary suspension, then the Board can amend their Scheme to provide for it. The power would obviously need to be carefully regulated. This very case, indeed, illustrates the problems of a power of precautionary suspension not subject to clear controls: essentially it assumes the right to suspend a pupil for an unlimited period (subject only to the nebulous constraint of reasonableness) provided only that the suspension is not characterised as disciplinary and steps are taken (as here they were, following the Court of Appeals judgment) to ensure that the pupils school records do not indicate a disciplinary breach. The power would inevitably need to be subject to time limits (presumably of such length as to allow for a sufficient investigation of the disciplinary breach alleged) and that investigation would inevitably require the pupil to be notified of the nature of his alleged breach of discipline and given a proper opportunity to respond. It is surely inconceivable that a Principal would be permitted to pretend (as here he did by his letter to the appellants grandparents of 7 February 2007) to be suspending the appellant because of various alleged offences outside school under investigation by the PSNI when in fact he was suspending him because of As complaint (about which he felt unable to notify the appellant and whose account of the matter, therefore, he would necessarily never learn). All this, I readily accept, was undertaken by the Principal in the best of good faith. In hindsight, however, it can be seen that even had a power of precautionary suspension existed, it could never properly have been exercised in this way. The importance of this case, however, I repeat, is not that it illustrates a power being improperly exercised but rather that it establishes that no such power exists. As to the article 2 question, there is really nothing I want to add to Sir Johns analysis. The appellants suspension from school, unlawful though it was under domestic law, does not translate into a denial of the right to education. As Lord Hoffmann made clear in the Lord Grey School case (para 61), the breach of such a public law duty, not giving rise to a private right of action, cannot be promoted to a breach of duty under section 6 of the Human Rights Act 1998 remediable by a claim for damages. |
The issue to which this appeal gives rise is whether the landlord of a block of flats is entitled, without breach of covenant, to grant a licence to a lessee to carry out work which, but for the licence, would breach a covenant in the lease of his or her flat, where the leases of the other flats require the landlord to enforce such covenants at the request and cost of any one of the other lessees. As the Court of Appeal observed, such covenants are common and so the issue is an important one. This particular dispute concerns the leases of the flats in 11 13 Randolph Crescent in Maida Vale. The leases are, in all relevant respects, in substantially the same form and each of them contains an absolute covenant, clause 2.7, which prevents the lessee from cutting into any roofs, walls, ceilings or service media. They also contain a landlords covenant, clause 3.19, requiring it to enforce, at the request and cost of any lessee, certain covenants in the leases held by the other lessees, including any covenant of a similar nature to clause 2.7. It is accepted that such clauses are commonly found in the leases of flats located in apartment blocks. The question is whether the grant by the landlord to a lessee of a licence to carry out an activity falling within clause 2.7 amounts to a breach of clause 3.19 of its agreements with all of the other lessees. The leases 11 13 Randolph Crescent comprises what were originally two mid terrace houses, but it is now a single block separated into nine flats. It formed part of the Church Commissioners Maida Vale estate. In the 1980s the Church Commissioners granted long leases to purchasers of the flats. The term of each of the leases was 125 years from 24 June 1981. Two of the leases (those of flats 11G and 11H) are now held by the respondent, Dr Julia Duval. A third lease (that of flat 13RC) is held by Mrs Martha Winfield. By a transfer dated 17 June 1986 the freehold of the building was transferred to the appellant landlord. The landlord is also the management company. All of the shares in the landlord are owned by the leaseholders of the flats, as the leases themselves require. The lease of each flat demises the internal parts of the flat including all internal non load bearing, non dividing walls; one half (severed vertically) of internal, non load bearing, dividing walls; the internal surfaces of external walls and of load bearing walls; the floor and horizontal structures underneath the floor; the ceiling of the flat, but not the horizontal structures immediately above it; and conduits exclusively serving the flat. But the lease expressly excludes, among other things, the outer and load bearing walls of the building; load bearing or structural columns and beams; the external surfaces of window frames; and any conduits not exclusively serving the flat. The lessees obligations are set out in clause 2. They include covenants to pay the reserved rents and service charges (clause 2.1 and the third schedule); covenants to repair, clean and decorate the demised premises (clauses 2.4 and 2.5); covenants to permit the landlords agents to enter the premises and, among other things, construct any building or erection on any land adjoining or neighbouring the building or the demised premises (clause 2.8); and covenants aimed at securing that the lessees of the flats, and they alone, hold shares in the management company, that is to say the landlord (clause 2.10.4). Clause 2.6 is concerned with alterations, improvements and additions and reads: Not without the previous written consent of the Landlord to erect any structure pipe partition wire or post upon the Demised Premises nor make or suffer to be made any alteration or improvement in or addition to the Demised Premises. This is therefore a covenant which is qualified by reference to the landlords consent. However, by operation of section 19(2) of the Landlord and Tenant Act 1927, such consent is not to be unreasonably withheld. Clause 2.7 is entitled waste and reads: Not to commit or permit or suffer any waste spoil or destruction in or upon the Demised Premises nor cut maim or injure or suffer to be cut maimed or injured any roof wall or ceiling within or enclosing the Demised Premises or any sewers drains pipes radiators ventilators wires and cables therein and not to obstruct but leave accessible at all times all casings or coverings of Conduits serving the Demised Premises and other parts of the Building. In contrast to clause 2.6, this is an absolute covenant. There are two further aspects of it that I must mention at this stage. First, there may be thought to be a degree of overlap between the activities to which it refers and those the subject of clause 2.6. For example, improvements and alterations, which are the subject of clause 2.6, may involve removing and replacing radiators, wiring, cabling and the like, and these are activities which are specifically mentioned in clause 2.7. The common approach of the parties was that clause 2.7 therefore sets boundaries to the activities that fall within clause 2.6. In other words, any activity which falls within the scope of clause 2.7 is necessarily outside the scope of clause 2.6. That is of course one possible interpretation of the relationship between them. But it is not the only one and for reasons to which I will come, it is not one which I favour. Secondly, although not qualified by reference to the landlords consent, it is common ground that, as between the landlord and the lessee, the landlord has the power to license what would otherwise be a breach of this covenant. But, as the Court of Appeal emphasised, it does not follow that by doing so the landlord will not be in breach of a collateral contract as between the landlord and another lessee. Here, and as will become clear, Dr Duval contends that there is such a collateral contract and that by granting such a licence the landlord will be acting in breach of its terms, and in particular clause 3.19. Clause 2.14.2 requires the lessee to pay to the landlord all costs, charges and expenses it incurs on any application by the lessee for any licence or consent in connection with the lease. The fifth schedule to each lease contains various rules and regulations about the use of the property with which the lessee must comply. These include prohibitions on allowing rubbish to accumulate in the flat, playing musical instruments at certain times of day, hanging clothes outside the flat, placing window boxes on external windowsills, and parking cars in any yard, garden or driveway of the building. The landlords covenants are set out in clause 3. They include a covenant that the lessee shall have quiet enjoyment of the demised premises (clause 3.1); a covenant to maintain and keep in good and substantial repair the main structure of the building and all of the conduits and ducts in the building (save for those which exclusively serve any of the demised premises) (clause 3.3); covenants to maintain, cleanse and keep in good and substantial repair the common parts of the building (clause 3.4); and covenants periodically to decorate the building and the common parts (clauses 3.5 and 3.6). Clause 3.19 is of particular importance and reads: every lease of a residential unit in the Building hereafter granted by the Landlord at a premium shall contain regulations to be observed by the tenant thereof in similar terms to those contained in the Fifth Schedule hereto and also covenants of a similar nature to those contained in clauses 2 and 3 of this Lease AND at the request of the Tenant and subject to payment by the Tenant of (and provision beforehand of security for) the costs of the Landlord on a complete indemnity basis to enforce any covenants entered into with the Landlord by a tenant of any residential unit in the Building of a similar nature to those contained in clause 2 of this Lease. The dispute and the judgments below In the spring of 2015, Mrs Winfield approached the landlords managing agents for a licence to carry out proposed works to flat 13RC. These works would involve, among other things, removing a substantial part of a load bearing wall at basement level. It was common ground that they would amount to a breach of clause 2.7 of Mrs Winfields lease if not specifically authorised by the landlord. Progress was made towards the agreement of a licence but, the proposed works having come to the attention of Dr Duval and her husband and they having objected, the licence was refused. However, following presentations by the engineers and architects acting for Mrs Winfield, the landlord reconsidered the matter and, having done so, decided it was minded to grant a licence, subject to Mrs Winfield securing adequate insurance. In December 2015 and then again in February 2016, Dr Duval asked the landlord to secure an undertaking from Mrs Winfield not to act in contravention of clause 2.7 of her lease by cutting or maiming any of the load bearing or structural walls within flat 13RC. On both occasions, Dr Duval said that the landlord would be indemnified if legal action became necessary. On 12 May 2016 Dr Duval began these proceedings by issuing a claim form against the landlord seeking, among other things, a declaration that the landlord did not possess the power to permit Mrs Winfield to act in breach of clause 2.7 of her lease. The proceedings came on for trial before Deputy District Judge Chambers who held that, on the proper interpretation of clause 3.19 of the lease, the landlord had no power to waive any of the covenants in clause 2 without the prior consent of all of the lessees of the flats in the building, and made declarations and orders to that effect. An appeal by the landlord was allowed by Judge Parfitt, sitting in the Central London County Court, by order dated 27 July 2017. In broad terms he held that the landlord had the power to license works that would otherwise amount to a breach of clause 2.7 of the lease; that if such works were licensed they would not amount to a breach of covenant; and that, once licensed, such works could not be the subject of enforcement action pursuant to clause 3.19. A further appeal by Dr Duval to the Court of Appeal was allowed for the reasons set out by that court in its judgment handed down on 18 October 2018 ([2018] EWCA Civ 2298; [2019] Ch 357). Lewison LJ, with whom Newey LJ and Sir Stephen Richards agreed, explained that the landlord had made two promises in clause 3.19. The first was a promise that every lease of a residential unit in the building granted at a premium would contain covenants similar to those in clauses 2 and 3, so including covenants similar to those in clauses 2.7 and 3.19. The second was a promise to enforce the covenants at the request and expense of a lessee. This was a contingent obligation, the relevant contingency being the lessees request and the provision of security. If the contingency arose then the landlords obligation was triggered. Lewison LJ proceeded on the assumption that the contingency had not arisen on the facts in the present case and we must do the same. Lewison LJ then answered the question of principle set out at para 1 above in the negative. He held that if the landlord were to grant to a lessee such as Mrs Winfield a licence to do something that would otherwise be a breach of any of the absolute covenants in clause 2.7 of her lease, it would be committing a breach of its agreement with the lessee of each other flat in the building who enjoyed the benefit of clause 3.19. This was, he thought, implicit in clause 3.19, and it would be the case not only where, at the date of the licence, the other lessee had already made the request and provided the necessary security called for by clause 3.19, but also where the obligation under that clause remained contingent. The Court of Appeal therefore made a declaration to the effect that the waiver by the landlord of a breach of the covenant in clause 2.7 by a lessee or the grant of a licence to commit what would otherwise be a breach of that covenant would amount to a breach of clause 3.19 of the leases held by all of the other lessees in the building. This appeal On this further appeal the landlord contends that, although the Court of Appeal identified the right question, it failed to answer it correctly. In particular, the Court of Appeal failed properly to construe the terms of the leases in their context; failed properly to analyse whether the term it implied satisfied the relevant test for the implication of terms; and ended up with a commercially unworkable scheme, which was not that which was contemplated by the parties to the leases when they were granted, and which is a recipe for chaos and conflict in multi tenanted buildings. Dr Duval responds that the Court of Appeal arrived at the right conclusion. Her primary case is that clause 3.19, on its proper construction, precludes the landlord from granting a licence to any lessee to do anything that would otherwise amount to a breach of an absolute covenant in that lessees lease, including clause 2.7. Her secondary case is that it is implicit in each lease that the landlord will not put it out of its power to comply with a request under clause 3.19. She submits that upon its proper interpretation or by way of implication clause 3.19 obliges the landlord to enforce all of the covenants to which it refers and provides a mechanism whereby a lessee can compel the landlord to take legal action if necessary. By contrast, she continues, the interpretation contended for by Mrs Winfield would remove any meaningful distinction between clauses 2.6 and 2.7 and would allow the landlord to put it out of its power to perform its obligations to other lessees under clause 3.19 of each of their leases. The parties therefore disagree fundamentally about the proper interpretation of the terms in the leases which Dr Duval and Mrs Winfield hold. Accordingly, the starting point must be to construe those terms in context, that is to say to ascertain the meaning which they would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties to each lease in the situation in which they were when the terms of those leases were agreed. Once the process of construing the express words is complete, the issue of an implied term falls to be considered. The rationale for this two stage approach was explained by Lord Neuberger of Abbotsbury in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742, paras 27 and 28: until one has worked out what the parties have expressly agreed, it is difficult to see how one can decide whether a term should be implied into a contract and, if so, what it is. The background There are in my view certain aspects of the background which are highly relevant to the exercise of interpretation which must be carried out. The first is that each lease is a long term contract, having a term of 125 years from 24 June 1981, and was acquired for a substantial premium. The parties to each lease would therefore have been well aware that, from the time of its grant, it was a readily marketable and extremely valuable asset. They would also have understood that it would be in the interests of each lessee to maintain his or her flat so as to retain and perhaps enhance that value. Secondly and importantly, the parties would have appreciated that over the lifetime of the lease it would inevitably be necessary for works to be carried out to each of the flats. Those works would include the routine repair and replacement of the plumbing, drainage, wiring and heating systems of each flat as necessary or thought desirable from time to time. They would also have been well aware that the lessees might at any time wish to modernise their flats or refurbish them to reflect changing tastes and fashions; or to incorporate technological developments and improvements relating to, for example, the supply of services such as water, gas and electricity, the provision of heating, or the transmission and reception of data for telecommunications, the internet or television. Thirdly, the parties would have understood that routine improvements and modifications of this kind would be unlikely to impinge on the other lessees or affect adversely the wider structure or fabric of the building and that it would be entirely sensible for the landlord to be in a position, where appropriate, to give permission to the lessees from time to time to allow such works to take place. Fourthly, the parties must have appreciated the desirability of the landlord retaining, in the interests of all of the lessees, not just the reversionary interest in the flats but also the rights in possession of the common parts of the building such as the stairwells, lobbies, corridors and the outer and load bearing walls; and similarly, the important and active role the landlord would play in managing the building and fulfilling its obligations under the covenants to which I have referred in para 14 above. Clauses 2.6 and 2.7 interpretation Against this background I come to clauses 2.6 and 2.7. As I have mentioned, it was the common approach of the parties (and the Court of Appeal apparently accepted) that clause 2.7 sets the boundaries of clause 2.6. To take an example, a routine rewiring of one room in a flat would necessarily involve cutting a wire and a wall. On the parties interpretation, an activity such as this would fall within the scope of clause 2.7 and so would necessarily be outside the scope of clause 2.6. Indeed, it is difficult to think of any alteration or improvement within the apparent scope of clause 2.6 which would not involve some cutting of a wall, pipe or wire. It seems to me to be most unlikely that the parties intended that routine works of this kind should fall within the scope of clause 2.7 and so outside the scope of clause 2.6 with the consequence that the landlord could, however unreasonably, withhold its consent. It is much more likely, in my opinion, that the parties intended the two provisions to be read together in the context of the lease and the leasehold scheme for the building as a whole. On that approach it becomes clear that the two clauses are directed at different kinds of activity. Clause 2.6 is concerned with routine improvements and alterations by a lessee to his or her flat, these being activities that all lessees would expect to be able to carry out, subject to the approval of the landlord. By contrast, clause 2.7 is directed at activities in the nature of waste, spoil or destruction which go beyond routine alterations and improvements and are intrinsically such that they may be damaging to or destructive of the building. It seems to me that this concept of waste, spoil or destruction should also be treated as qualifying the covenants not to cut, maim or injure referred to in the rest of the clause. In my opinion and in the context of this clause these words do not extend to cutting which is not itself destructive and is no more than incidental to works of normal alteration or improvement, such as are contemplated under clause 2.6. Support for this view may be found in F W Woolworth and Co Ltd v Lambert [1937] Ch 37. There the Court of Appeal considered the proper interpretation of two covenants in the lease of a shop, one being a covenant by the lessee not to make any alterations to the demised premises without the consent of the landlord and the other being an absolute covenant by the lessee not to commit any waste, spoil or destruction on the demised premises or any part of it. The court construed the absolute covenant in such a way as not to conflict with the qualified covenant. As Romer LJ explained at p 60, it was necessary to exclude from the operation of the absolute covenant anything which fell within the qualified covenant, not the other way around. It must also be remembered that the landlord is subject to other restrictions on its ability to license a lessee to make alterations to his or her flat and in my opinion this provides further support for the interpretation of clauses 2.6 and 2.7 which I would hold to be correct. First, each lessee enjoys the benefit of a covenant for quiet enjoyment, that is to say a covenant that the lessees possession of his or her own flat will not be substantially interfered with by the landlord or anyone claiming under the landlord. This protects the right of all of the lessees to use their flats in ordinary and lawful ways. So, for example, regular excessive noise generated by one lessee may constitute a substantial interference with the ordinary enjoyment of the premises of another lessee: Southwark London Borough Council v Mills [2001] 1 AC 1, per Lord Hoffmann at pp 10A 11C; per Lord Millett at p 23B D. Secondly, the landlord must not derogate from its grant. As Lord Millett explained in Southwark v Mills at p 23F, the principle underpinning this obligation and the covenant of quiet enjoyment is much the same: a man may not give with one hand and take away with the other. In order to determine whether a specific act or omission on the part of the landlord constitutes a derogation from grant, it is obviously necessary to establish the extent of the grant. Here the first schedule of Dr Duvals leases contain, for example, rights of way and passage to and from the demised premises (para 2); the free passage and running of water, soil, gas, electricity and other services in and through the conduits that pass through the building (para 4); and the right to adjacent and lateral support and to shelter and protection from adjoining premises (para 5). Were the landlord to permit a neighbouring lessee to cut into a load bearing wall in such a way as to remove or substantially interfere with the support it offered to either of Dr Duvals flats, it would, in my opinion, constitute a clear derogation from her grant. Thirdly, each of the lessees is entitled to be protected against nuisance, that is to say, in this context, the doing of something to or in a neighbouring or nearby flat which constitutes an unreasonable interference with the utility of his or her own flat. The primary defendant in such a case is the lessee who causes the nuisance by doing the act in question, but the landlord will be liable if it has authorised the lessee to commit that nuisance: Southwark v Mills at p 15D F per Lord Hoffmann, pp 21H 22B per Lord Millett. Finally, the landlord has covenanted with the lessee in the terms of clause 3 of the lease. I have referred to this clause earlier in this judgment. Of particular importance here are the covenants to maintain and keep in good and substantial repair the structure of the building including the foundations, main walls, roofs, doors and window frames and conduits (clause 3.3); to maintain, cleanse and keep in good and substantial repair the common parts of the building (clause 3.4); to decorate the outside of the building and inner common parts (clauses 3.5 and 3.6); and to keep the common parts clean and properly lit (clause 3.7). Clause 3.19 interpretation As the Court of Appeal observed, clause 3.19 has two parts. The first is a promise by the landlord that every lease of a flat in the building granted by the landlord at a premium from that point in time will contain covenants of a similar nature to those contained in clauses 2 and 3 of the lease. The Court of Appeal emphasised and I agree that a covenant is a legally binding obligation and so the landlord promised that each lease granted thereafter would contain similar legally binding obligations on the lessee. The landlord also promised that each lease would contain a covenant similar to clause 3.19; that is to say a promise by the landlord that it would enforce covenants of a similar nature to those contained in clause 2, provided the relevant conditions were satisfied. The second part of clause 3.19 is a promise by the landlord that it will, at the request of a lessee and subject to the provision of the required security and the promise to pay the landlords costs on an indemnity basis, enforce any covenant entered into by another lessee which is of a similar nature to any of the covenants contained in clause 2 of the lease of the complainant lessee. The landlord points out that clause 3.19 does not say that the covenants in each lease must be the same; it says they must be of a similar nature. This, says the landlord, accommodates the possibility that it has, on occasion and at the request of one of the lessees, agreed to a limited departure from the terms of clause 2.7. Turning to the second part of clause 3.19, the landlord emphasises that this is conditional. The objecting lessee must make a request and agree to pay the costs of the landlord on an indemnity basis and provide appropriate security. What the landlord has to do, once those conditions have been satisfied, is to enforce similar covenants in the lease of the lessee who proposes to carry out or is carrying out the work the subject of the objection. However, the landlord continues, clause 3.19 only allows a valid request for enforcement to be made so long as it remains legally possible for the landlord to take legal action. The parties cannot have contemplated the landlord could be obliged to take action against a lessee who would have a complete defence to that action, for example because the landlord had authorised the activity complained of in advance. The landlord also contends that, if a lessee applies for a licence to do what would, without the licence, be a breach of covenant, the lessee does not, simply by making that request, commit or threaten to commit a breach in respect of which the landlord can take enforcement action, and so there is no basis for another lessee to make a clause 3.19 request. If, on the other hand, there is a breach or threatened breach in relation to which a landlord can take legal action, and another lessee satisfies the various conditions to which I have referred, the landlord cannot then unilaterally waive the breach or authorise the threatened breach. At that stage the landlord is made subject to the control of the objecting lessee, who has accepted the risk of proceedings. Dr Duval responds and the Court of Appeal accepted that clause 3.19 provides a mechanism whereby every lessee knows that, if one lessee carries out or threatens to carry out an act in breach of a covenant by which it has agreed to be bound then any of the other lessees can require the landlord to take action to enforce that covenant. This, says Dr Duval, is important because, in contrast to a letting scheme where a buildings lessees are given rights inter se so that each may enforce the covenants in each of the leases against each other, enforcement of the covenants of the leases of the units in this block can only take place by the landlord. Further, Dr Duval continues, the inclusion of clause 3.19 in each lease provides a practical way of ensuring that all lessees know the principles and rules upon which the building will be operated and occupied. Dr Duval accepts that, absent clause 3.19, the landlord and lessee would be free to agree a waiver of an absolute covenant or a licence to carry out a piece of work that would otherwise amount to a breach of its terms, but contends that in this case and as a result of the inclusion of clause 3.19 in each of the leases, any such waiver is precluded unless all of the other lessees agree to waive their rights. Put another way, by undertaking to enforce the covenants of the lease, the landlord has undertaken not to do the opposite, namely to license breaches of covenant. She argues that, were it otherwise, clause 3.19 would be ineffective. In my opinion Dr Duval is right to say that, in the first part of clause 3.19, the landlord made a promise that every lease of a residential unit in the building granted by the landlord at a premium would contain covenants similar to those in clauses 2 and 3. In other words, each lessee knew that every other lessee would be bound by similar covenants to those contained in clauses 2.6 and 2.7, and further, that each lease would contain a covenant similar to clause 3.19, that is to say a covenant by the landlord to enforce the covenants in the lease of every other lessee upon request and the provision of security for the landlords costs. As Lewison LJ put it at para 16 of his judgment: From the perspective of a lessee who is paying a premium for the grant of a long lease, the combination of these two promises would be taken to mean that the lessee could be sure that upon request (and the provision of security) the landlord would enforce the covenants by which each lessee had agreed to be bound. Those covenants would be in the form in which they appear in the leases as granted; and would have the practical effect that their appearance in that form was designed to have. That brings me to the critical question, namely whether the landlord can license, at the request of a lessee, structural work which falls within the scope of clause 2.7 and which, absent a licence from the landlord, would amount to a breach of that clause. I agree that clause 3.19 does not say expressly that the landlord cannot give a lessee permission to carry out structural work falling within the scope of clause 2.7, so it must now be considered whether this is nevertheless implicit in clause 3.19. Implied term It is well established that a party who undertakes a contingent or conditional obligation may, depending upon the circumstances, be under a further obligation not to prevent the contingency from occurring; or from putting it out of his power to discharge the obligation if and when the contingency arises. The principle was explained in these terms by Lord Alverstone CJ in Ogdens v Nelson [1903] 2 KB 287, 296: It is, I think, clearly established as a general proposition that where two persons have entered into a contract, the performance of which on one or both sides is to extend over a period of time, each contracting party is bound to abstain from doing anything which will prevent him from fulfilling the obligations which he has undertaken to discharge; further, that, where a person has undertaken to carry on a business, out of the profits of which he has undertaken to pay certain moneys as a consideration for the contract to the other party to the contract, he must not by his own act or default disable and incapacitate himself from further carrying on such business. The principle is well illustrated by cases involving breaches of contracts to marry. In Short v Stone (1846) 8 QB 358 the defendant agreed to marry the claimant within a reasonable time after request. He broke that agreement by marrying somebody else before the request had been made, and in that way put it out of his power to comply with the request, if it were made. In Caines v Smith (1847) 15 M & W 189 the defendant acted in breach of his promise to marry the claimant by marrying another woman, and it was no answer that the claimant had not asked the defendant to fulfil his promise before issuing proceedings. characterised the principle as: In Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701, 717 Lord Atkin a positive rule of the law of contract that conduct of either promiser or promisee which can be said to amount to himself of his own motion bringing about the impossibility of performance is in itself a breach. If A promises to marry B and before performance of that contract marries C, A is not sued for breach of an implied contract not to marry anyone else, but for breach of his contract to marry B. Founding herself on these authorities, Dr Duval sought to characterise as a rule of law the proposition that, where two persons have entered into a contract, the performance of which on both sides is to extend over a period of time, each contracting party is bound to abstain from doing anything which will prevent him from fulfilling the obligations he has undertaken to discharge; and similarly, the proposition that, where one party has undertaken a contingent obligation, he will do nothing to prevent the contingency occurring, or from putting it out of his power to comply with the obligation when the contingency arises. In my view, however, propositions such as these are, at least in general, more properly regarded as implied terms because, where appropriate, they involve the interpolation of terms to deal with matters for which the parties themselves have made no express provision. Thus, for example, in Stirling v Maitland (1864) 5 B & S 840, 852, 122 ER 1043, 1047, Cockburn CJ said: I look on the law to be that, if a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative. As we have seen, in Southern Foundries v Shirlaw, Lord Atkin characterised this principle as a rule of law. But Viscount Maugham (at pp 712 713) adopted an implied term approach. He explained that it was not a rigid rule but one capable of qualification in any particular case; and, in the particular circumstances of that case, the implication should be taken to extend only to direct acts of a party and not to the indirect and unforeseen consequences which might follow from acts which, on the face of them, did not necessarily or even probably alter the state of circumstances under which alone the arrangement could be operative. So too Lord Romer (at pp 730 731), Lord Wright (at p 723) and Lord Porter (at pp 741 742) preferred an implied term analysis. Similarly, in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 the parties agreed that if a party introduced by the respondent should buy two cinemas for a sum in excess of a certain figure, the appellants would pay him a commission on the completion of the sale. The respondent alleged that he was entitled to his commission because he had introduced persons who were ready and willing to purchase the cinemas on the terms on which the appellants were willing to sell, even though no such sale took place. In the particular circumstances of that case the House of Lords held there was no room in the contract for an implied term that the appellants would not dispose of the cinemas themselves in a way which would prevent the respondent from earning his commission. The correct approach to the implication of terms was recently stated by Lord Neuberger, with whom Lord Sumption, Lord Hodge and Lord Clarke agreed, in Marks and Spencer plc v BNP Paribas, paras 14 32. It is sufficient for present purposes to note first, that the express terms of the contract must be construed before one can consider any question of implication; secondly, that the term to be implied must be necessary to give business efficacy to the contract or so obvious that it goes without saying; and thirdly, that the term to be implied must be capable of clear expression. A way of assessing whether a term is necessary to give business efficacy to a contract is to consider whether, without the term, the contract would lack commercial or practical coherence. In this case Lewison LJ identified, at para 27 of his judgment, the term that Dr Duval argues is implicit in her lease as a promise by the landlord not to put it out of its power to enforce clause 2.7 in the leases of other lessees by licensing what would otherwise be a breach of it. I agree with Lewison LJ that this is, in substance, the term that Dr Duval seeks to imply and, in my view and for the reasons I will now explain, he was also right to find that such a term must be implied in her lease. The purpose of the covenants in clauses 2 and 3.19 is primarily to provide protection to all of the lessees of the flats in the building. Each of those lessees would have known that every other lessee was and would continue to be subject to the same or similar obligations and, in particular, to the qualified covenant in clause 2.6 and the absolute covenant in clause 2.7. Each lessee would also have known that, under clause 3.19, the landlord would, upon satisfaction of the necessary conditions, enforce those obligations. Clause 3.19 would therefore have been understood by every lessee to perform an important protective function. What is more and as the landlord accepts, the first obligation in clause 3.19 is a continuing one with the consequence that the landlord is required to keep in place in every lease covenants of a similar nature to those in clause 2, including clauses 2.6 and 2.7. If a lessee threatens to carry out or has carried out an activity in breach of clauses 2.6 or 2.7 then, at the request of another lessee and on the provision of security, the landlord is obliged by the second part of clause 3.19 to take enforcement action. In my view it necessarily follows that the landlord will not put it out of its power to enforce clause 2.7 in the lease of the offending lessee by licensing the activity that would otherwise be a breach of that clause. The clause is an absolute covenant and, under clause 3.19, the complainant lessee is entitled, on provision of security, to require the landlord to enforce it as an absolute covenant. As Lewison LJ said at para 27 of his judgment, it would not give practical content to the obligation if the landlord had the right to vary or modify the absolute covenant or to authorise what would otherwise be a breach of it. As I have mentioned, the landlord has abandoned on this further appeal a submission it made to the Court of Appeal that it could authorise a breach by a lessee of clause 2.7 at any time. It now only argues that it can authorise such a breach up to the moment that an objecting lessee has asked it to take enforcement action and provided the necessary security. It also contends that clause 3.19 allows a valid request for enforcement to be made for so long as it remains legally possible for it to take legal action and not thereafter. The parties cannot have contemplated that the landlord would be obliged to take action against another lessee who would have a complete defence. I cannot accept these submissions. I recognise that if a landlord waives its right to complain of an activity by a lessee in breach of clause 2.7 it cannot subsequently bring a claim against that lessee for breach of the covenant. But that does not mean to say that the landlord has not acted in breach of its obligation under clause 3.19 to another lessee. In my view it would be uncommercial and incoherent to say, as the landlord does, that clause 3.19 can be deprived of practical effect if it manages to give a lessee consent to carry out work in breach of clause 2.7 before another lessee makes an enforcement request and provides the necessary security. The parties cannot have intended that a valuable right in the objecting lessees lease could be defeated depending upon who manages to act first, the landlord or that lessee. The landlord also argues that, over the lifetime of the leases, it was inevitable that each lessee would wish from time to time to carry out repairs, renovations or improvements falling within the scope of clause 2.7. Those works might not impinge in any way on neighbouring flats; or on the landlords retained interest in possession of the load bearing walls, the structural columns and beams, the external surfaces of the building and the common parts such as the stairwells, lobbies and corridors. The parties to the original leases must also have appreciated the obvious desirability of allowing the landlord, after proper consideration of the proposals, to grant a consent for works of that kind to be carried out. Yet, the landlord continues, on the interpretation contended for by Dr Duval, it would be precluded from licensing any such works unless each and every other lessee has expressly consented to them. It would also deprive the landlord of the opportunity to control the activities of a lessee which might impinge upon its own interests in possession in the building, and would place that power in the hands of all of the other lessees. Further and importantly, says the landlord, it would confer on each of those other lessees the power to veto repairs, renovations or improvements, however capricious or unreasonable his or her intentions in doing so might be. Moreover, in a large block of flats the landlord might struggle to obtain a response from all of the other lessees, so frustrating its ability to consent to the works without leaving itself open to a claim for breach of the terms of the other leases. The flaw in this submission, as it seems to me, is that it is founded upon a misapprehension of the scope of clauses 2.6 and 2.7. I do not accept that clause 2.7 extends to the kind of routine repairs, renovations and alterations which the landlord describes. Those alterations fall within the scope of clause 2.6 and so the landlord can give its permission for them to be carried out. By contrast, clause 2.7 is directed to more fundamental works which go beyond routine alterations and improvements and are intrinsically such that they may be damaging to or destructive of the building. These are the kinds of work which it is entirely reasonable to suppose should not be carried out without the consent of all of the other lessees. The present case provides a good example. The work that Mrs Winfield wished to carry out would have involved, among other things, cutting into and removing a substantial portion of a load bearing wall at basement level and excluded from the demise of her flat. In my view the parties were right to agree that this work would fall within the scope of clause 2.7 and it seems to me to be entirely appropriate that works of this kind should require the consent of the other lessees, including Dr Duval. Conclusion For all of these reasons, I would dismiss this appeal. |
The issue in this case is what is meant by the word violence in section 177(1) of the Housing Act 1996. Is it limited to physical contact or does it include other forms of violent conduct? The Court of Appeal, as it was bound to do by the earlier case of Danesh v Kensington and Chelsea Royal London Borough Council [2006] EWCA Civ 1404, [2007] 1 WLR 69, held that it was limited to physical contact: [2009] EWCA Civ 1543. The appellant contends that it is not. As the appellant is a woman, and the majority of victims of all forms of domestic violence are women, I shall refer to the victim as she throughout. But of course I realise that men can be victims too. The evolution of the statutory scheme The modern scheme of local housing authorities powers and duties towards homeless people dates back to the Housing (Homeless Persons) Act 1977. That Act provided that a person was homeless if there was no accommodation which she (together with other members of her family) was entitled to occupy. Even if there was such accommodation, a person was also homeless if it is probable that occupation of it will lead to violence from some other person residing in it or to threats of violence from some other person residing in it and likely to carry out the threats: 1977 Act, section 1(2)(b). That provision was repeated when the 1977 Act was consolidated with other housing legislation in the Housing Act 1985: see section 58(3)(b). Then came the case of R v Hillingdon London Borough Council, Ex p Puhlhofer [1986] AC 484, where the House of Lords held that a person was not homeless even if it was not reasonable for her to have to continue to occupy the accommodation to which she was entitled. In response to this, the Housing and Planning Act 1986 inserted two new subsections into section 58 of the 1985 Act. Subsection (2A) provided that A person shall not be treated as having accommodation unless it is accommodation which it would be reasonable for him to continue to occupy; but subsection (2B) permitted the local housing authority, when deciding whether it would be reasonable to continue to occupy, to have regard to the general circumstances prevailing in relation to housing in the district. No change was made to the basic definition in section 58(3), under which a person was automatically homeless if there was a risk of violence from another person living in the accommodation which she was entitled to occupy. Neither in 1977 nor in 1985 did the subsection specify who had to be the victim of such violence: it may have been assumed that it had to be the person claiming to be homeless or it may have been assumed that it would also cover the people living with her, in particular her children. The scheme was recast in Part VII of the Housing Act 1996, although retaining its basic shape. The definition of homelessness, now contained in section 175 of the 1996 Act, remained the same as it had been in the 1985 Act as amended in 1986, but section 58(3)(b) dealing with violence and section 58(2B) dealing with local housing conditions were removed into section 177 (see para 5). The former reasonable to continue to occupy requirement in section 58(2A) is now contained in section 175(3): A person shall not be treated as having accommodation unless it is accommodation which it would be reasonable for him to continue to occupy. The former section 58(3)(b) and (2B) have been translated into the new section 177, which is headed Whether it is reasonable to continue to occupy accommodation. The former section 58(2B), dealing with local housing conditions, is now contained in section 177(2), which reads as follows: In determining whether it would be, or would have been, reasonable for a person to continue to occupy accommodation, regard may be had to the general circumstances prevailing in relation to housing in the district of the local housing authority to whom he has applied for accommodation or for assistance in obtaining accommodation. Although there was some debate about it before us, the phrase used is the general circumstances in relation to housing and not the general condition of the housing stock in the area. This strongly suggests that regard may be had, not only to the quality of housing available locally, but also to the quantity. The former section 58(3)(b), dealing with the risk of violence, was recast as section 177(1) of the 1996 Act. In its original form, it read as follows: It is not reasonable for a person to continue to occupy accommodation if it is probable that this will lead to domestic violence against him, or against (a) a person who normally resides with him as a member of his family, or (b) any other person who might reasonably be expected to reside with him. For this purpose domestic violence , in relation to a person, means violence from a person with whom he is associated, or threats of violence from such a person which are likely to be carried out. This made two changes of substance from the old law. First, it expressly encompassed violence against other members of the homeless persons household: a mother for example, could not reasonably be expected to occupy accommodation where her children were at risk of domestic violence. Second, it was no longer limited to violence from someone living in the same accommodation but covered violence from an associated person, whether or not living in the same household. Section 178 spells out the Meaning of associated person in detail, but of course it includes spouses and former spouses, cohabitants and former cohabitants, and (since 2005) civil partners and former civil partners. But these changes did not change the underlying purpose of section 177(1). It has variously been called a deeming or a pass-porting provision. The effect is, as it has been since 1977, that a person who is at risk of the violence to which it applies is automatically homeless, even though she has every right to remain in the accommodation concerned and however reasonable it might in other respects be for her to do so. Questions of local housing conditions or shortages do not come into it. There was, however, another important consequence of the particular drafting technique employed in section 177. This was new to the 1996 Act and was not referred to in the argument before us. As it is automatically not reasonable for a person to continue to occupy accommodation where she is at risk of violence, she cannot be treated as intentionally homeless if she leaves. Section 191 defines when a person becomes homeless intentionally as follows: (1) A person becomes homeless intentionally if he deliberately does or fails to do anything in consequence of which he ceases to occupy accommodation which is available for his occupation and which it would have been reasonable for him to continue to occupy. This result follows a recommendation of the Home Affairs Committee in their 1993 Report on Domestic Violence, to which I shall return in paragraph 21. Section 177(1) was amended, and a new section 177(1A) introduced, by the Homelessness Act 2002. These now read as follows: (1) It is not reasonable for a person to continue to occupy accommodation if it is probable that this will lead to domestic violence or other violence against him, or against (a) a person who normally resides with him as a member of his family, or (b) any other person who might reasonably be expected to reside with him. (1A) For this purpose violence means (a) violence from another person; or (b) threats of violence from another person which are likely to be carried out; and violence is domestic violence if it is from a person who is associated with the victim. Once the prospect of other violence was introduced into this pass-porting provision, it is not easy to see why the specific reference to domestic violence (together with the complex definition of associated persons in section 178) was retained, unless perhaps it was thought that domestic violence had a special meaning. But this is quite hard to reconcile with the phrase violence is domestic violence. I return to this question in paragraph 31. One reason may be that the phrase domestic violence has been in the scheme throughout, even though it was not originally used in the definition of homelessness in section 1 of the 1977 Act (see para 2 above). Section 5 of the 1977 Act dealt with responsibility for housing homeless people as between different local housing authorities. The authority first approached could in effect transfer responsibility to another housing authority if the applicant, or other members of her household, had no local connection with their area, but did have a local connection with another area, and neither the person who so applied nor any person who might reasonably be expected to reside with him will run the risk of domestic violence in that housing authoritys area: see section 5(1)(iii). The risk of domestic violence or threats of domestic violence was defined in terms of a risk from any person with whom, but for the risk of violence, he might reasonably be expected to reside or from any person with whom he formerly resided: see section 5(11). These provisions were consolidated in the 1985 Act as section 67(2)(c) and (3). The same principles were carried through into section 198(2)(c) and (3) of the Housing Act 1996 in virtually identical form, save that the risk had now to come from a person with whom he is associated. With the introduction of other violence into section 177(1) by the 2002 Act, changes were also made to section 198. Section 198(2) remains in its original form, but a new section 198(2A) has been introduced and section 198(3) replaced. These now read as follows: (2A) But the conditions for referral mentioned in subsection (2) are not met if (a) the applicant or any person who might reasonably be expected to reside with him has suffered violence (other than domestic violence) in the district of the other authority; and (b) it is probable that the return to that district of the victim will lead to further violence of a similar kind against him. (3) For the purposes of subsections (2) and (2A) violence means - (a) violence from another person; or (b) threats of violence from another person which are likely to be carried out; and violence is domestic violence if it is from a person who is associated with the victim. As with section 177, it is not easy to see why the distinction between domestic and other violence was retained, as the consequence is the same, unless there was thought to be some difference between them. There is one further provision in the homelessness scheme to which I must refer. The 1996 Act introduced a new provision in section 177(3): (3) The Secretary of State may by order specify (a) other circumstances in which it is to be regarded as reasonable or not reasonable for a person to continue to occupy accommodation. There is no equivalent power in section 198. Thus, in theory, the Secretary of State could expand the categories of people who are automatically homeless by reference to some other risk, but they could then be sent back to a district where they would face exactly that same risk. Danesh v Kensington and Chelsea Royal London Borough Council [2006] EWCA Civ 1404, [2007] 1 WLR 69, concerned the meaning of non-domestic violence in section 198. The applicant and his family were asylum seekers who had been living for just over a year in Swansea when they were granted indefinite leave to remain and thus became eligible under Part VII of the 1996 Act. They applied to Kensington which referred them to Swansea. They complained of trouble from local youths in Swansea, shouting abuse and making insulting gestures, racist abuse on a bus, and two specific incidents of assault outside a community centre and in the city centre. The local authority took the view that the two assaults were random incidents of crime which might happen anywhere to anyone and were not part of a course of harassment against the applicant or his family. The verbal abuse did not amount to a threat of violence and accordingly there was no reason to believe that it was more likely than not that violence would result if they returned to Swansea. The Court of Appeal held that in this context, violence involved some sort of physical contact: Neuberger LJ accepted the councils contention that In section 198 violence means physical violence, and the word violence on its own does not include threats of violence or acts or gestures, which lead someone to fear physical violence: see para 14. He went on to give five reasons for this, to which I shall return. Finally, it is worth noting another innovation made by the 1996 Act. Sections 145 and 149 amended the 1985 Act and the Housing Act 1988 by introducing for secure and assured tenancies a new ground for obtaining possession of a dwelling let to a married or cohabiting couple by, respectively, a local authority on a secure tenancy and a registered social landlord or charitable housing trust on an assured tenancy, where one partner has left because of violence or threats of violence towards that partner or a member of the family living with her and is unlikely to return. This was in response to a recommendation of a Department of the Environment Homelessness Policy Division Working Party Report on Relationship Breakdown and Secure Local Authority Tenants (December 1993). The facts of this case The appellant is a married woman with two young children, a girl who is now aged eight and a boy who is now aged two. They were aged respectively six and eight months in August 2008 when she left the matrimonial home in which she lived with her husband, taking the children with her, and (having nowhere else to go) sought the help of the local housing authority. The matrimonial home was rented in her husbands sole name. In her two interviews with the housing officers, she complained that her husband hates her and [she] suspects that he is seeing another woman. [She] is scared that if she confronts him he may hit her. [However her] husband has never actually threatened to hit her. She went on to complain of his shouting in front of the children, so that she retreated to her bedroom with them, not treating her like a human, not giving her any money for housekeeping, being scared that he would take the children away from her and say that she was not able to cope with them, and that he would hit her if she returned home. The officers decided that she was not homeless as her husband had never actually hit her or threatened to do so. She consulted solicitors who applied for a review which was unsuccessful. The panel noted that your root cause of homelessness is not that you fled after a domestic incident, but it was your decision to leave the matrimonial home because you felt that your husband did not love you any more and was not close to you, in addition to suspecting that he was seeing another woman. They believed that the probability of domestic violence is low and found her fear that her husband would take the children away from her to be contradictory, as she had also said that he took no interest in the children. Hence they concluded that it was reasonable for her to continue to occupy the matrimonial home while taking action to secure a transfer under the Family Law Act 1996 or alternatively seeking accommodation in the private sector. Mr Richard Drabble QC, who appears for the local authority, accepts that the housing officers and review panel applied the Danesh meaning when they decided that the appellant was not homeless within the meaning of the Housing Act 1996. If this Court decides that there is a wider meaning, the case will have to be considered afresh. There is no need, therefore, to make any further comment on the facts or upon the reasoning in the decision and review letters. The meaning of violence In Danesh the first, and principal, reason given was that physical violence is the natural meaning of the word violence: para 15. I can readily accept that this is a natural meaning of the word. It is, for example, the first of the meanings given in the Shorter Oxford English Dictionary. But I do not accept that it is the only natural meaning of the word. It is common place to speak of the violence of a persons language or of a persons feelings. Thus the revised 3rd Edition, published in 1973, also included vehemence of personal feeling or action; great, excessive, or extreme ardour or fervour; . . . passion, fury; and the 4th (1993), 5th (2002) and 6th (2006) Editions all include strength or intensity of emotion; fervour, passion. When used as an adjective it can refer to a range of behaviours falling short of physical contact with the person: see, for example, section 8 of the Public Order Act 1986. The question is what it means in the 1996 Act. The 1996 Act was originally concerned only with domestic violence, that is violence between people who are or were connected with one another in an intimate or familial way. By that date, it is clear that both international and national governmental understanding of the term had developed beyond physical contact. The Court is grateful to the diligence of both interveners, the Secretary of State for Communities and Local Government and the Womens Aid Federation of England, for gathering so many of the references together. Internationally, in 1992 the United Nations Committee, which monitors the Convention on the Elimination of all Forms of Discrimination against Women (CEDAW), adopted General Recommendation 19, which included in its definition of discrimination in relation to gender based violence acts that inflict physical, mental or sexual harm or suffering, threats of such acts, coercion and other deprivations of liberty. In 1993, the General Assembly adopted the Declaration on the Elimination of Violence against Women, defined for this purpose as any act of gender-based violence that results in, or is likely to result in, physical, sexual or psychological harm or suffering to women . . . Nationally, in 1993 the House of Commons Home Affairs Committee in its Report on Domestic Violence adopted the definition any form of physical, sexual or emotional abuse which takes place within the context of a close relationship (Session 1992-93, Third Report, HC 245-I, para 5). The Home Affairs Committee report used two reports as the basis for its inquiry: the Report on Domestic Violence of a national inter-agency working party convened by Victim Support (1992) and the Report of the Law Commission on Domestic Violence and Occupation of the Family Home (1992, Law Com No 207). The Law Commission gave this explanation of domestic violence, at para 2.3: The term violence itself is often used in two senses. In its narrower meaning it describes the use or threat of physical force against a victim in the form of an assault or battery. But in the context of the family, there is also a wider meaning which extends to abuse beyond the more typical instances of physical assaults to include any form of physical, sexual or psychological molestation or harassment which has a serious detrimental effect upon the health and well-being of the victim. The recommendations made in the Law Commissions Report were embodied in the Domestic Violence and Occupation of the Family Home Bill which passed through most of its Parliamentary stages in the session 1994 1995 before falling at the last hurdle. The same clauses were reintroduced, with immaterial amendments, in the Family Law Bill 1995 1996 and became Part IV of the Family Law Act 1996. It cannot be a coincidence that the definition of an associated person in section 178 of the Housing Act 1996 bears a very close resemblance to the definition of an associated person for the purpose of occupation and non- molestation orders under the Family Law Act 1996, in section 62(3) to (6) of that Act. It will be recalled that the Housing Act 1996 had shifted the focus, away from the presence of the perpetrator in the same accommodation as the victim, to the nature of the relationship between them. These are strong indications of joined up thinking on the part of the legislators. The Home Affairs Committee had also made the link between the criminal and family law remedies, with which it was concerned, and the housing law remedies, which were then the concern of the Department of the Environment; thus, it recommended that local authorities put an end to the nonsense where a victim fleeing domestic violence is deemed to have made herself intentionally homeless and that appropriate priority be given to rehousing victims of domestic violence (para 131). In fact, the Department of the Environment had already gone some way towards meeting the first point, as the 1991 version of the Code of Guidance for Local Authorities on Homelessness had stated (para 7.11) that authorities should not automatically treat an applicant as intentionally homeless because she had failed to use legal remedies to protect herself from domestic violence. The Department of the Environments Relationship Breakdown Working Party (see para 15 above) was well aware of the Law Commissions Report: not only was the Law Commission represented upon it but the Working Party recommended implementation of the Commissions two most relevant recommendations. All of this indicates a consciousness in 1996 of the need to align housing, homelessness and family law remedies for victims of domestic violence, so that they could have a genuine choice between whether to stay and whether to go and the local authority or social landlord would not be obliged to continue to provide family sized accommodation to the perpetrator. There was also an explicit acknowledgement in the report which led to the Family Law Act 1996 and by the Home Affairs Committee that violence could have a wider meaning than physical contact. In my view, therefore, whatever may have been the original meaning in 1977 (and, for that matter, in the Domestic Proceedings and Magistrates Courts Act 1978), by the time of the 1996 Act the understanding of domestic violence had moved on from a narrow focus upon battered wives and physical contact. But if I am wrong about that, there is no doubt that it has moved on now. In March 2005, the Home Office published Domestic Violence: A National Report, in which it was stated at para 10: To support delivery across government and its agencies through a common understanding of domestic violence, we now have a common definition. This follows the definition already used by the Association of Chief Police Officers, and is: Any incident of threatening behaviour, violence or abuse (psychological, physical, sexual, financial or emotional) between adults who are or have been intimate partners or family members, regardless of gender or sexuality. That definition, or something very close to it, has been adopted by many official and governmental bodies, including the Association of Chief Police Officers: Guidance on Investigating Domestic Abuse (2008); the Crown Prosecution Service Policy for Prosecuting Cases of Domestic Violence (2010); the Ministry of Justice, in Domestic Violence: A Guide to Civil Remedies and Criminal Sanctions (February 2003, updated March 2007); and the UK Border Agency, in Victims of Domestic Violence: Requirements for Settlement Applications. Indeed, it is cited in Hounslows own leaflet, Domestic Violence: What it is and how you can get help (2009), which goes on to explain: It is rarely a one off incident and it is not only about being physically or sexually abused, you may be subject to more subtle attacks, such as constant breaking of trust, isolation, psychological games and harassment. Emotional abuse is just as serious and damaging; many survivors will carry the emotional scars long after the physical injuries have healed. The 2006 version of the Homelessness Code of Guidance for Local Authorities is explicit at para 8.21: The Secretary of State considers that the term violence should not be given a restrictive meaning, and that domestic violence should be understood to include threatening behaviour, violence or abuse (psychological, physical, sexual, financial or emotional) between persons who are, or have been, intimate partners, family members or members of the same household, regardless of gender or sexuality. This was new to the 2006 Code. The fourth reason given by the Court of Appeal in Danesh, at para 18, was that various passages in the previous, 2002, Code had given a different impression, for example by comparing severe harassment with actual violence (para 8.32). However, it is not for government and official bodies to interpret the meaning of the words which Parliament has used. That role lies with the courts. And the courts recognise that, where Parliament uses a word such as violence, the factual circumstances to which it applies can develop and change over the years. There are, as Lord Steyn pointed out in R v Ireland [1998] AC 147, at p 158, statutes where the correct approach is to construe them as if one were interpreting it the day after it was passed. The House went on in that case to construe bodily harm in the Offences Against the Person Act 1861 in the light of our current understanding of psychological as well as physical harm. The third reason given by the Court of Appeal in Danesh was that it was impermissible to construe the meaning of one phrase by reference to the meaning of another. This I accept. However, as Lord Clyde observed in Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27, at p 49, which was concerned with whether same sex partners could be members of one anothers family for the purpose of succession to Rent Act tenancies, it is a relatively rare category of cases where Parliament intended the language to be fixed at the time when the original Act was passed. In other cases, as Lord Slynn of Hadley explained at p 35: It is not an answer to the problem to assume . . . that if in 1920 people had been asked whether one person was a member of another same-sex persons family the answer would have been No. That is not the right question. The first question is what were the characteristics of a family in the 1920 Act and the second whether two same-sex partners can satisfy those characteristics so as today to fall within the word family. An alternative question is whether the word family in the 1920 Act has to be updated so as to be capable of including persons who today would be regarded as being of each others family, whatever might have been said in 1920: see R v Ireland [1998] AC 147, 158, per Lord Steyn; Bennion, Statutory Interpretation, 3rd ed (1997), p 686 and Halsburys Laws of England, 4th ed reissue, vol 44(1) (1995), p 904, para 1473. Violence is a word very similar to the word family. It is not a term of article It is capable of bearing several meanings and applying to many different types of behaviour. These can change and develop over time. There is no comprehensive definition of the kind of conduct which it involves in the Housing Act 1996: the definition is directed towards the people involved. The essential question, as it was in Fitzpatrick, is whether an updated meaning is consistent with the statutory purpose in that case providing a secure home for those who share their lives together. In this case the purpose is to ensure that a person is not obliged to remain living in a home where she, her children or other members of her household are at risk of harm. A further purpose is that the victim of domestic violence has a real choice between remaining in her home and seeking protection from the criminal or civil law and leaving to begin a new life elsewhere. That being the case, it seems clear to me that, whatever may have been the position in 1977, the general understanding of the harm which intimate partners or other family members may do to one another has moved on. The purpose of the legislation would be achieved if the term domestic violence were interpreted in the same sense in which it is used by the President of the Family Division, in his Practice Direction (Residence and Contact Orders: Domestic Violence) (No 2) [2009] 1 WLR 251, para 2, suitably adapted to the forward-looking context of sections 177(1) and 198(2) of the Housing Act 1996: Domestic violence includes physical violence, threatening or intimidating behaviour and any other form of abuse which, directly or indirectly, may give rise to the risk of harm. That conclusion is consistent with the decision of the Court of Appeal in AN (Pakistan) v Secretary of State for the Home Department [2010] EWCA Civ 757. This was concerned with the meaning of domestic violence in para 289A of the Immigration Rules, which stipulates the requirements to be met by a person admitted as the spouse or civil partner of a person present or settled here who is the victim of domestic violence which has caused the relationship permanently to break down and who is seeking indefinite leave to remain in the United Kingdom. Richards LJ quoted the definitions in the 1993 Home Affairs Committee Report, the 2005 National Report (repeated in a more recent Report of the Home Affairs Committee, Domestic Violence, Forced Marriage and Honour-Based Violence, 2007-08, 6th Report, para 4), the guidance given by the UK Border Agency, and the Presidents Practice Direction. He pointed out that The general thrust of all those definitions is much the same (para 23) and accepted that the term was not limited to physical violence, although it must reach some minimum level of seriousness, which will depend upon context and particular circumstances (para 24). It remains to be discussed whether giving the words the meaning given them by the President of the Family Division would be inconsistent with anything in the statutory language or purpose. The statutory language The second reason given in Danesh for preferring a narrow construction was that, in both section 177(1) and section 198(3), violence is defined as violence or threats of violence which are likely to be carried out: para 16. If the concept of violence already included conduct which puts a person in fear of physical violence there would be no need to refer to threats at all. I am not convinced of this. For one thing, there are some forms of conduct which undoubtedly put a person in fear of violence but which would not necessarily be described as threats. Silent phone calls, heavy breathing, the sorts of stalking behaviours which were the subject matter of Bond v Leicester City Council [2001] EWCA Civ 1544, [2002] HLR 158 and R v Ireland [1998] AC 147, can all put the victim in very real (and justified) fear of violence in the narrow sense. They should be covered by the concept of violence. More importantly, if the concept of violence includes other sorts of harmful or abusive behaviour, then the reference to threats is not redundant. Locking a person (including a child) within the home, or depriving a person of food or of the money to buy food, are not uncommon examples of the sort of abusive behaviour which is now recognised as domestic violence. There is nothing redundant in a provision which refers to threats of such behaviour which are likely to be carried out. In this Court, Mr Drabble urged an alternative solution upon us: that if there were forms of ill-treatment falling short of physical violence which ought to be included within the pass-porting provision in section 177(1), the Secretary of State could use the power in section 177(3)(a) to include them. Mr Maurici, on behalf of the Secretary of State, explained that the Secretary of State has not done so because in his view the concept of violence already bears the wider meaning for which the appellant contends. There is the further objection to this solution, that there is no equivalent power in section 198, so that a person might be accepted as homeless under section 177(1) but could then be referred to a district where she would face exactly the same risks. There may also be a concern that an expanded definition is setting the threshold too low. The advantage of the definition adopted by the President of the Family Division is that it deals separately with actual physical violence, putting a person in fear of such violence, and other types of harmful behaviour. It has been recognised for a long time now that it is dangerous to ignore what may appear to some to be relatively trivial forms of physical violence. In the domestic context it is common for assaults to escalate from what seems trivial at first. Once over the hurdle of striking the first blow, apologising and making up, some people find it much easier to strike the second, and the third, and go on and on. But of course, that is not every case. Isolated or minor acts of physical violence in the past will not necessarily give rise to a probability of their happening again in the future. This is the limiting factor. Sections 177 and 198 are concerned with future risk, not with the past. The introduction in 2002 of other violence into a statute which was previously concerned only with domestic violence also raises questions. They are readily answered, if I am right that the concept of domestic violence in 1996 was already wider than physical contact. As Miss Nathalie Lieven QC for the appellant points out, the introduction of other violence in 2002 cannot possibly have been intended to cut down the meaning which the statute already had. However, if the understanding of the conduct to which the word applies has moved on, the question of whether this also applies to other violence does not arise on the facts of this case, and so it is unnecessary for us to express a concluded view. Reading the statute as it now stands, there are arguments on either side. On the one hand, if violence has the same meaning in both domestic violence and other violence, there was no need to retain the separate concept of domestic violence, together with the complicated definition of associated persons in section 178. A person who was at risk of any violence if she stayed in or returned to the property or the locality would be protected. Retaining them as separate concepts suggests that domestic violence is limited by the relationship between the victim and the perpetrator, rather than by the nature of the conduct involved. Other violence, having no such limitation and lacking the connotations of an intimate or familial relationship, might relate to a narrower set of behaviours. On the other hand, providing in sections 177(1A) and 198(3) that violence is domestic violence suggests that violence has a constant meaning. Hence, I would incline towards the view that it does. Nor would that be surprising. People who are at risk of intimidating or harmful behaviour from their near neighbours are equally worthy of protection as are those who run the same risk from their relations. But it may be less likely that they will suffer harm as a result of the abusive behaviour of their neighbours than it is in the domestic context. In practice, the threshold of seriousness may be higher. Conclusion As the housing officers and review panel adopted a narrow view of domestic violence in this case, it is agreed that it must be remitted to the authority to be decided again. I accept that these are not easy decisions and will involve officers in some difficult judgments. But these are no more intrinsically difficult than many of the other judgments that they have to make: for example, as to the circumstances in which it is reasonable to continue to occupy the accommodation; as to whether a person has rendered herself intentionally homeless; and as to the suitability of accommodation provided by the local authority. Was this, in reality, simply a case of marriage breakdown in which the appellant was not genuinely in fear of her husband; or was it a classic case of domestic abuse, in which one spouse puts the other in fear through the constant denial of freedom and of money for essentials, through the denigration of her personality, such that she genuinely fears that he may take her children away from her however unrealistic this may appear to an objective outsider? This is not to apply a subjective test (pace the fifth reason given in Danesh). The test is always the view of the objective outsider but applied to the particular facts, circumstances and personalities of the people involved. I would therefore allow this appeal and remit the case to be decided by the local housing authority. I agree that the appeal should be allowed for the reasons given by Lady Hale. I add a few comments of my own, since the point is not free from difficulty and we are differing from two decisions of the Court of Appeal. The term domestic violence rose to prominence in the 1970s in connexion with battered wives women who, whether married or not, suffered violence at the hands of their husband or partner. One reaction was to set up refuges. Another was public pressure for the law to be reformed to give such women greater protection. Of course, it was known that physical violence was not the only form of abuse which women suffered. For example, in 1974 Dr Elizabeth Wilson referred to a case where the husbands constant abuse in the form of offensive and cruel denigratory remarks had already damaged his wifes psyche possibly in a more irreparable way than if he had broken her nose: Battered wives: why they are the born victims of domestic violence, The Times 4 September 1974, p 13. But, understandably, the predicament of women who were the victims of physical violence was at the forefront of demands for the law to be reformed. It is therefore not surprising that the term domestic violence first entered English law in the short title of the Domestic Violence and Matrimonial Proceedings Act 1976 (the 1976 Act) which derived from the Private Members Bill promoted by Miss Josephine Richardson MP. There can be no doubt that the main aim of Parliament in passing the legislation was to give some additional protection, by way of injunctions in the county court and the possibility of including a power of arrest in certain cases - to women, whether married or cohabiting, who were likely to suffer physical violence at the hands of their husband or partner. Section 2 did indeed refer to the other party to the relationship using violence. But the Act was not confined to such cases. As Lord Scarman noted in Davis v Johnson [1979] AC 264, 348C-E, the mischief at which section 1 of the Act was aimed (molesting) went beyond physical violence and included conduct which makes it impossible or intolerable for the other partner, or the children, to remain at home. When, the following year, Parliament enacted the Housing (Homeless Persons) Act 1977 (the 1977 Act), it included provisions that were designed to provide additional help to victims of violence in the home. On this occasion it did not refer to cases where the woman was molested. Parliament therefore seems to have been concentrating on the paradigm case of battered wives, women who feared physical violence understandably enough, since the new Act was imposing novel obligations on local authorities. More than 30 years have passed. The legislation has become a familiar part of the legal landscape and has been re-enacted in the Housing Act 1996 (the 1996 Act). The question before the Court is whether the word violence in section 177(1) and (1A) of the 1996 Act is confined to physical violence. At first sight it is curious that Parliament has maintained the special term domestic violence. Section 177(1) now applies to cases where it is probable that continuing to occupy accommodation will lead to domestic or other violence - other violence being violence from people, such as neighbours, who are not associated with the victim. Subsection (1A) then says that violence is domestic violence if it is from a person who is associated with the victim. In my view, there is no doubt that violence means the same, whether it comes from a person associated with the victim or from a third party. The form of the provision may simply reflect the way that the provision has evolved. More likely, however, the retention of the term domestic violence is intended to serve a purpose. The aim, it seems to me, may well be to ensure that the same standard is applied to violence within the home as to other violence and so to counter any suggestion that violence within the home is to be treated as being somehow of less significance than violence outside the home. Subsection (1A) makes it clear that any conduct that would count as violence outside the home counts as violence if it occurs within the home: the law does not give a discount to the perpetrator because of the domestic setting. In 1974 Dr Wilson saw that the husbands constant denigration of his wife had damaged her psyche possibly irreparably. The Court has not been referred to any case where a court had to consider whether such conduct would have counted as violence for the purposes of section 1(2)(b) of the 1977 Act. I have already made the point that cases of that kind were not the focus of Parliaments attention in enacting that provision. But it is common place for courts to have to consider whether circumstances, beyond those at the forefront of Parliaments consideration, may properly be held to be within the scope of a provision, having regard to its purpose. Similarly, cases of physical violence surely remain the main focus of section 177(1) of the 1996 Act. And, similarly, the question remains: does deliberate non-physical abuse which harms the other party fall within the scope of violence in that subsection, having regard to its purpose? Parliament has provided that it is not reasonable for someone to continue to occupy accommodation if it is probable that this will lead to her being subjected to violence in the form of deliberate conduct, or threats of deliberate conduct, that may cause her physical harm. So the person at risk is automatically homeless for the purposes of the 1996 Act. I can see no reason why Parliament would have intended the position to be any different where someone will be subjected to deliberate conduct, or threats of such conduct, that may cause her psychological harm. I would therefore interpret violence as including such conduct and the subsection as applying in such cases. To conclude otherwise would be to play down the serious nature of psychological harm. A necessary precondition of a right to be rehoused under the homelessness legislation is that the applicant is without accommodation. Section 175(3) of the Housing Act 1996 as amended (the 1996 Act) provides: A person shall not be treated as having accommodation unless it is accommodation which it would be reasonable for him to continue to occupy. Section 177(1) of the Act provides: It is not reasonable for a person to continue to occupy accommodation if it is probable that this will lead to domestic violence or other violence against him . . . The issue identified by the parties for the Courts determination on this appeal is: Is the concept of domestic violence in section 177(1) of the Act limited to actual physical violence or is it capable of extending to abusive psychological behaviour which could reasonably be described as violence? It has long been known that psychological abuse within a domestic context can cause at least as much long-term harm to the victim (most commonly the woman) as physical abuse. Certainly no one who has read the extensive material put before us by the Womens Aid Federation of England could fail to appreciate that fact. But I have nonetheless found this a much more difficult case than other members of the Court appear to have done and I cannot hide my profound doubt as to whether at any stage of their legislative history the domestic violence provisions with which we are here concerned now enacted as sections 177 and 198 of the 1996 Act - were intended to extend beyond the limits of physical violence. A number of indicators to my mind point to this being Parliaments limited intention. One of these is the primary meaning ordinarily given to the word violence as connoting physical violence (in contrast, in the present context, to other forms of domestic abuse). A second pointer is the very definition of violence and domestic violence contained in both section 177 (1A) and section 198 (3) of the 1996 Act: (1A) For this purpose violence means (a) violence from another person; or (b) threats of violence from another person which are likely to be carried out; and violence is domestic violence if it is from a person who is associated with the victim. Psychological abuse would plainly encompass threats whether or not they are likely to be carried out: it is the threats themselves which are intrinsically abusive and harmful. It is not generally apt to speak of a threat to carry out psychological abuse. Even if one postulates a threat, say, to lock someone up in their room or deprive them of all funds, the statutory definition stipulates that it is only if the threat is likely to be carried out that it constitutes violence: the threat itself, however hurtful and humiliating, unless likely to be carried out, is excluded from the definition. Another pointer to Parliaments intention is the fact that violence falls to be construed in the same way irrespective of whether the perpetrator is a person associated with the victim (sections 177(1A) and 178) or some other person. If, of course, the perpetrator is associated with the applicant, the question arising under section 177(1) is whether the applicants continued occupation of the accommodation would probably lead to domestic violence; the question arising under section 198(2)(c) being whether, if referred to another local housing authority for re-housing in their district, the applicant would then run the risk of domestic violence in that district. If, however, the perpetrator is not associated with the applicant, the question under 177(1) is whether continued occupation of the accommodation would probably lead to violence by that person; the question under 198(2A) being whether the applicant (whom the housing authority contemplates referring to another authority) has in the past suffered (non-domestic) violence in that other authoritys district and would probably suffer violence of a similar kind if returned there. I do not say that psychological abuse (as opposed to actual or threatened physical violence) at the hands of a non-associated perpetrator is literally incapable of being described as violence and of justifying respectively (a) deemed homelessness leading to a section 193 duty to re-house or (b) non- referral back to the district whence the applicant came. I do say, however, that Parliament is unlikely to have contemplated or intended these consequences. Fourthly, it must be recognised that when the homelessness legislation was first introduced (by the Housing (Homeless Persons) Act 1977 - homelessness by section 1(2)(b) of the Act being deemed to exist in the case of those whose occupation of accommodation would probably lead to violence from some other person residing in it or to threats of violence from some other person residing in it and likely to carry out the threats, described as the risk of domestic violence in sections 5(1)(iii) and 5(11) of the Act, the equivalent provisions to those now in section 198 of the 1996 Act) the publics concern as to domestic violence was essentially about battered women (for whom, one recollects, Ms Erin Pizzey was starting to provide refuges). This view, moreover, that in the homelessness context domestic violence meant physical violence, was reflected in successive statutory Codes of Guidance issued by the Secretary of State (under provisions similar to what is now section 182(1) of the 1996 Act), certainly up until the 2006 Code. The 1978 Code, for example, referred to fear of violence and to battered women . . . at risk of violent pursuit or, if they return home, at risk of further violence (paras 2.10(b) and 2.12(c)(iii)). The 2002 Code (issued following the 2002 amendments to the 1996 Act) refers (at para 6.18) to the required assessment of the likelihood of a threat of violence being carried out not being based solely on whether there has been actual violence in the past (emphasis added) and (at para 8.26) to the safety of the applicant . . . [being] of paramount concern (emphasis added). A little later, not in the context of deemed homelessness but rather of priority need for accommodation because of vulnerability for some other special reason (section 189(1)(c) of the 1996 Act), the 2002 Code (at para 8.32) says: People fleeing harassment. In some cases severe harassment may fall short of actual violence or threats of violence likely to be carried out. Housing authorities should consider carefully whether applicants who have fled their home because of non-violent forms of harassment, for example verbal or psychological abuse or damage to property, are vulnerable as a result. There, it can readily be seen, verbal or psychological abuse is mentioned as an example of non-violent forms of harassment and contrasted with actual violence. True it is that from 1991 onwards the successive codes from time to time refer to violence or threats of violence including, for example, racial harassment or attacks, sexual abuse or harassment, and harassment on the grounds of religious creed. Invariably, however, until 2006, this was in the context not of deemed homelessness under section 177(1), but rather of whether it was reasonable for the applicant to continue to occupy his (or more generally her) accommodation, the question now arising under section 175(3) of the 1996 Act. This is the basic question which has arisen ever since 1986 (when the Housing Act 1985 was amended to overturn the effect of R v Hillingdon London Borough Council, Ex p Puhlhofer [1986] AC 484) in every case save when section 177(1) deems continued occupation not reasonable. Only in the 2006 Code (at para 8.21) did the Secretary of State first indicate his support for a wider interpretation of section 177(1): The Secretary of State considers that the term violence should not be given a restrictive meaning, and that domestic violence should be understood to include threatening behaviour, violence or abuse (psychological, physical, sexual, financial or emotional) between persons who are, or have been, intimate partners, family members or members of the same household, regardless of gender or sexuality. It is not, of course, suggested that this notable change in the Secretary of States Code of Guidance could directly affect the true construction of the statute: such guidance can be at most persuasive of the meaning to be given to legislative provisions. It is, after all, for the courts not the executive to interpret legislation. But it is suggested that, consistently with the living instrument, always speaking approach to statutory construction, and following the decision of the House of Lords in Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27, the developing perception and understanding of domestic violence now enables, indeed requires, the interpretation of the relevant sections in line with the Secretary of States present views, reflecting as these do modern thinking on the question. By the same token that the majority of the Court in Fitzpatrick had regard to changes in social habits and opinions to interpret the phrase tenants family as being capable of encompassing a same-sex partner, so too, the appellant argues, nowadays it would be wrong to continue construing domestic violence (or, indeed, this being a necessary part of the appellants case, violence outside the domestic context) as meaning physical violence only. Tempting though it is to accept this argument one does not, after all, like to appear old-fashioned I confess to doubts and hesitation here too. If one considers just why it is that domestic violence (indeed, violence generally), in contradistinction to all other circumstances, has been thought to justify a deeming provision a provision, that is, which deems it unreasonable that a probable victim of future such violence should continue to occupy his or her present accommodation, the explanation would seem to me to lie partly in the obvious need for the speedy re-housing of those identified as being at risk of violence in order to safeguard their physical safety, and partly in the comparative ease with which this particular class of prospective victims can be identified. With the best will in the world I find it difficult to accept that there is quite the same obvious urgency in re-housing those subject to psychological abuse, let alone that it will be possible to identify this substantially wider class of prospective victims, however precisely they may be defined, with anything like the same ease. Confining the deeming provision to the victims and potential victims of physical abuse does not, of course, remove all other victims from protection. Rather it leaves their cases to be assessed under section 175(3). If, then, an applicant does come to be assessed as a victim of sufficiently severe psychological abuse to satisfy the section 175(3) test for homelessness (a process which I accept would be likely to take rather longer than a section 177(1) judgment in respect of physical abuse), then obviously he or she would have to be re-housed just as if they had been deemed homeless under section 177(1). It is, of course, true that, in section 175(3) cases generally but not in deemed cases, the housing officer is empowered by section 177(2) to have regard to the general circumstances prevailing in relation to housing in the district, so that theoretically, on the present understanding and application of the statute, a victim of psychological abuse, in contradistinction to a victim of physical abuse, could be subject to an adverse decision on homelessness by reference to the limited stock of housing available to an authority for re-housing purposes. Realistically, however, I see this as only a theoretical possibility since it seems to me that section 177(2) exists essentially to deal with complaints about the quality of an applicants existing housing: the housing officer may on occasion have to decide that an applicants present accommodation, however un-ideal, must suffice given the quality and quantity of the authoritys stock generally. I had at one time thought that the solution to the problem raised by this case if problem there is lay in the Secretary of States order-making power under section 177(3)(a) of the 1996 Act. I recognise, however, that there are difficulties in the use of this power: first, that, given the Secretary of States view that the victims of psychological abuse are already covered by section 177(1), he cannot properly specify their needs as arising in other circumstances; secondly, that the use of this power could not in any event affect the proper approach to section 198 so that the problem would not be entirely solved. There would remain the possibility of someone being returned for re-housing to an area where, although not cohabiting with an abuser, he or she might be at risk of future psychological abuse from a non-cohabiting family member (essentially the position in Bond v Leicester City Council [2002] HLR 158, although that case was in fact concerned with intentional homelessness and appears to have been argued and decided on the assumption that section 177(1) dealt with physical violence only) or, indeed, a neighbour. Certainly, I no longer see section 177(3) as the solution to this case. Rather the Court has no alternative but to decide whether it is indeed now right, pursuant to the Fitzpatrick principle, to give to the terms domestic violence and violence the wider meaning contended for by the appellant and both interveners. In taking this course we would, of course, be overturning two clear and unanimous decisions of the Court of Appeal: respectively of Mummery, Jacob and Neuberger LJJ in Danesh v Kensington and Chelsea Royal London Borough Council [2007] 1 WLR 69 and of Waller, Laws and Etherton LJJ in the present case. I have already indicated my very real doubts about doing so. At the end of the day, however, I do not feel sufficiently strongly as to the proper outcome of the appeal to carry these doubts to the point of dissent. I am content that the views of the majority should prevail and that the appeal should be allowed. |
The United Kingdom has had a uniquely difficult relationship with Iran for at least a century and a half. British control of the countrys natural resources in the late nineteenth century and the first half of the twentieth, a succession of British orchestrated coups, and two extended British military occupations have combined to leave an enduring imprint on political sentiment. The passage of time heals many things, but in an ancient and distinctive national culture like Irans, injured pride can subsist for generations. In recent years, the participation of the United Kingdom in international sanctions against Iran and a number of violent incidents have revived old suspicions at a time when negotiations with Iran about middle eastern issues, nuclear non proliferation and human rights have assumed considerable importance for British interests and global security. This is the background against which the Home Secretary, on the advice of the Foreign Office, decided that it was not conducive to the public good to allow Mrs Maryam Rajavi to enter the United Kingdom. Mrs Rajavi is described in the agreed Statement of Facts as a dissident Iranian politician, resident in Paris. Between 1985 and 1993, she was the co chair and then the Secretary General of Majahedin e Khalq (MeK), otherwise known as the Peoples Mojahedin Organisation of Iran. MeK is a political organisation founded in 1963 by opponents of Shah Mohammed Reza Pahlavi, which participated in the Iranian revolution of 1979 but subsequently fell out with the regime led by Ayatollah Khomeini. From the 1970s until 2001, MeK supported terrorist violence inside Iran, including bomb attacks and assassinations. It supported Iraq in its eight year war with Iran between 1981 and 1989, when its fighters fought alongside Iraqi forces against those of Iran. For at least part of this period, Mrs Rajavi was also deputy commander of the armed forces of the opposition National Liberation Army. The evidence is that while no longer holding any formal office in MeK, she remains its de facto leader. Since 1993, she has also been the President elect of the National Council of Resistance of Iran, a political organisation opposed to the current government of the country. Mrs Rajavi has visited the United Kingdom on four occasions, in 1985, 1990, 1991 and 1996. But in 1997, the then Secretary of State excluded her from the United Kingdom on the ground that her presence there would not be conducive to the public good for reasons of foreign policy and in the light of the need to take a firm stance against terrorism. That exclusion has been reviewed at regular intervals, but has remained in force ever since. Section 3 of the Terrorism Act 2000 provides for the proscription of organisations concerned in terrorism. Between 2001 and 2008, MeK was a proscribed organisation in the United Kingdom for the purposes of the Act, and in a number of other jurisdictions under corresponding legislation. Its proscription was revoked in the United Kingdom on 30 November 2007 by the Proscribed Organisations Appeals Commission (POAC). The Commission found that while MeK had been actively engaged in terrorism until June 2001, this had no longer been true since that date. The organisation was subsequently de proscribed in the European Union (January 2009), the United States (September 2012) and Canada (December 2012). It is common ground that it is now a wholly non violent organisation and Mrs Rajavis own democratic credentials are not in dispute. She lives in France and is not excluded from any European country other than the United Kingdom. She engages regularly with parliamentarians in the European Parliament and a number of European national legislatures. On 5 December 2010, Lord Carlile of Berriew QC, on behalf of himself and two other members of the House of Lords, asked for a meeting with the current Home Secretary to discuss the possibility of Mrs Rajavis exclusion being lifted to enable her to address meetings in the Palace of Westminster on democracy, human rights and other policy issues relating to Iran. The request was accompanied by written representations. The Home Secretary sought the advice of the Foreign Office, where Lord Carliles request was personally considered by the Foreign Secretary and the Parliamentary Under Secretary of State with the support of officials. On 1 February 2011, the Home Secretary responded to Lord Carliles request for a meeting. She wrote that she had reconsidered Mrs Rajavis case, taking into account the views of the Foreign Office and other government departments, as well as his representations, but had concluded that her admission to the United Kingdom was not conducive to the public good. She wrote: The exclusion of Mrs Rajavi in 1997 pre dates, and was not linked to, the proscription of the Peoples Mojahedin Organisation of Iran (PMOI). The de proscription of this organisation therefore has no direct bearing on whether or not Mrs Rajavi's exclusion should be maintained, which involves wider considerations. The power to exclude is a serious one and I do not take such decisions lightly. In taking such decisions I must ensure that I am acting reasonably, proportionately and consistently and that there is a rational connection between the exclusion and the legitimate aim being pursued. No other reasons were given at this stage. On 12 April 2011, Mishcon de Reya, acting for a cross party group of MPs and peers, wrote a letter before action, making further representations, and criticising the decision on the ground that it contravened their clients rights under articles 9 and 10 of the European Convention on Human Rights. They asked for the decision to be reconsidered. In the absence of a satisfactory response, they said that their clients would apply for judicial review. The Treasury Solicitor responded on the Secretary of States behalf on 13 May 2011. The main points made were that articles 9 and 10 of the Convention were not engaged, because there were other means by which parliamentarians could communicate with Mrs Rajavi. In particular they could set up a video link or meet her personally in France. If, however, articles 9 and 10 were engaged, there was still no contravention because while the Secretary of State was not prepared to go into her reasons in detail, she had concluded that any right arising under those articles was outweighed by other factors rendering it appropriate to maintain her exclusion decision. By the time that the Treasury Solicitors letter was written, sixteen cross party members of the House of Commons and the House of Lords had applied on 3 May 2011 for judicial review to challenge the Secretary of States decision. Mrs Rajavi herself was added as a claimant in September 2011. In October 2011, after considering their application and the evidence in support of it, the Secretary of State made a second, fully reasoned decision, which was communicated to the claimants solicitors by a letter from the UK Border Agency dated 10 October. Her reason, in summary, was the significant damaging impact on UK interests in relation to Iran it is assessed that lifting the extant exclusion would bring about, and the consequences that may have for the lives and interests of others. Although the Secretary of State maintained her view that there was no interference with the claimants article 9 rights, she did not on this occasion dispute that article 10 was engaged. What was said was that the availability of alternative methods of communication with Mrs Rajavi meant that any interference with the claimants article 10 rights was limited, and that the decision was proportionate to it. The Secretary of States reasons have been subjected by the claimants to detailed criticism. I therefore propose to set them out substantially in full: Whilst it is accepted that the MeK was de proscribed by the UK in 2008 on the basis that it could not reasonably be believed to have continued to be concerned in terrorism since June 2001, the organisations historical activities and Mrs Rajavis past role in them as de facto leader cannot be ignored. It is widely recognised that the MeK was actively concerned in terrorist activities between the 1970s and 2001. Acts committed by the MeK during this period include attacks on western interests. It is against this background that Mrs Rajavi was excluded from the UK in 1997, following her move to Iraq from where she had urged the MeK to liberate Iran, at a time when the MeK had continued to mount terrorist attacks there. The MeKs history of terrorist violence until June 2001 and involvement in the Iran/Iraq war, where it was fighting with Iraqi forces against Iran, continues to resonate today. It has resulted in there being little support for the group among the general population in Iran, including anti regime organisations, demonstrators and oppositionists, The FCO does not agree with Lord Carliles own assessment that Mrs Rajavi leads the movement for democratic change in Iran (para 22 of his witness statement). It assesses that the MeK is not a credible opposition group in Iran. The well known Iranian opposition, the Green Movement, for example, has publically distanced itself from any involvement in it. The UK has diplomatic relations with Iran. There is a British Embassy in Tehran and an Iranian Embassy in London. The UK has a strong interest in working with Iran on major policy issues including nuclear counter proliferation, wider issues in the Middle East and human rights. Cooperation between both countries on issues of mutual importance also include reciprocal visa services (both diplomatic and public), consular services and cultural/educational exchanges. However, UK interests are affected by difficulties in UK Iran bilateral relations. The Iranian regime perceives that negative intent lies behind the UK Governments actions and statements. Any attempt at positive engagement by the UK is also viewed with scepticism. Anti UK rhetoric by the Iranian authorities is frequent and both the President and the Iranian Parliament are particularly vocal in expressing their condemnation of the UK on a range of matters. This includes the perception that the UK is supportive of anti Iranian extremist activities, including the sort historically carried out by the MeK. The 2008 de proscription of the MeK led to serious political protests from the Iranian authorities and demonstrations outside the British Embassy in Tehran, particularly as the MeK remains proscribed in Iran. The Iranian authorities believe that the de proscription of the MeK in the UK was politically motivated, notwithstanding attempts to explain otherwise. Similarly, the lifting of Mrs Rajavi's exclusion would also be seen by the Iranians as a deliberate political move against Iran, and, it is assessed, would have a wide ranging negative impact on UK interests and day to day relations, as well as on the major policy areas such as nuclear counter proliferation, human rights and wider issues in the Middle East. It may also result in accusations, however unjustified, of double standards in respect of the condemnation of terrorism. Any deterioration in relations would also be likely to impact on FCO efforts to replace their Ambassador to Tehran and an Iranian Ambassador in London. In short, it is assessed that lifting the exclusion would cause significant damage to the UKs interests in relation to Iran and the UK's ability to engage with Iran on wider and crucial objectives. Whilst Mrs Rajavi is able to travel to other European Countries (in particular by virtue of the fact that she is resident in France), the particular nature of the UK Iran bilateral relationship is such that a particularly strong reaction is expected if her exclusion is lifted. The presence of a British Embassy in Tehran means that staff there are particularly vulnerable to anti Western sentiment in general and anti UK sentiment in particular. There is substantial concern that if bilateral relations were to deteriorate as a consequence of the lifting of the exclusion order, there could be reprisals that put British nationals at risk and make further consular cooperation even more problematic. Historically, the Iranian Regime has actively targeted the British Embassy and staff members in Tehran. Even when tensions periodically ease, UK based staff members access to Iranian officials and information from the authorities has been difficult. Demonstrations outside the Embassy have included damage to property, invasion of compounds and restriction of staff movement due to the fears for personal safety. There have also been cases where British nationals have been held in detention for long periods, often on spurious charges and sometimes without consular access being granted. As Iran moves into a period of electoral activity once again, the Iranian regime is likely to direct accusations at the UK should there be any instability and a ramping up of rhetoric may also provoke an uncontrolled public reaction. When weighed against the serious potential effects of lifting the exclusion on the UK's interests in relation to Iran, the Secretary of State has concluded that the damage to the public interest significantly outweighs any interference with Mrs Rajavis ability to express her views as President elect of the NCRI and with the Parliamentarians ability to meet her in person in London, particularly in view of the fact that Mrs Rajavi has many alternative means at her disposal for achieving these aims (e.g. meeting in France or a third country, or contact by video link or other media). While it is argued by the claimants that there is an urgent need to discuss the future of Camp Ashraf with her, the Secretary of State does not consider that the desire of the original claimants to meet with Mrs Rajavi in London (as opposed to elsewhere, or by other media) is of itself of such importance that the future of Camp Ashraf will be materially affected if the exclusion is not lifted. That issue is considered ultimately to be for the sovereign government of Iraq and the leadership of Camp Ashraf to resolve; while debate about its future is acknowledged to be of value, there are acceptable means by which that debate can be continued even absent Mrs Rajavis physical presence in the United Kingdom. In light of all the available evidence, the Secretary of State has decided that Mrs Rajavis exclusion from the UK must be maintained, is justified on foreign policy grounds and is proportionate to any limited interference with either her right of freedom of expression, or that of the Parliamentarians. On 21 November 2011, Britain, together with the United States and Canada, strengthened financial sanctions against Iran on account of the nuclear proliferation issue. On 29 November, a previously planned demonstration was held outside the Embassy to mark the first anniversary of the assassination of a nuclear scientist (for which Britain, the United States and Israel were blamed). In the course of the demonstration para militaries invaded the Embassy compound and a residential compound of the Embassy. For six hours the compounds were sacked with the acquiescence of the police. All British diplomatic staff were thereafter withdrawn for their own safety and the Iranian Embassy in London was closed on the orders of the Foreign Secretary. Diplomatic relations were maintained, but at the lowest possible level. In the light of these events, the Secretary of State made a third decision in January 2012, in which she maintained the exclusion of Mrs Rajavi, adding further reasons to those that she had previously given. The essential paragraphs of the letter conveying this decision are as follows: The lifting of Mrs Rajavis exclusion would be interpreted in Iran by both the regime and the people as a demonstration of UK support for what continues to be perceived as a terrorist organisation hostile to Iran (the MeK remains an illegal organisation in Iran). Iran continues to regard Mrs Rajavi as the leader of a terrorist organisation and often cites the POAC judgment, which removed the MeK from the UK's list of proscribed organisations, as evidence of UK support for terrorism. The complicity of the Iranian regime in the invasion of both UK diplomatic compounds in Tehran on 29 November 2011 clearly demonstrated that the UK is the prime target in Iran for anti western sentiment in the absence of US and Israeli embassies (a view which would be supported by almost any impartial academic or commentator). Following the events of 29 November 2011, the lifting of Mrs Rajavis exclusion from the UK could also be perceived by Iran as a purposeful political response to the 29 November attack on our Embassy, increasing the likelihood of an adverse Iranian response. The case for exclusion is not based purely on foreign policy grounds but also on grounds of UK security, especially the safety of HMG staff in Iran (there remain over one hundred local employees in Iran), the protection of UK assets that remain in Iran, and the security of UK personnel in the region. The assessment of risk has increased since the 29 November attack as Iran has demonstrated that it is prepared to sanction actions that breach international law. The Iranian regime would seek to respond to the lifting of the exclusion either by targeting our interests in Tehran, putting our local staff at risk, and/or the potential shift of risk to British interests and properties outside Iran which could now bear the brunt of any retaliatory action against the UK, both within and outside the region. Having carefully considered all the available evidence, the Secretary of State has decided that the decision of 25 August 2011 to maintain Mrs Rajavis exclusion from the UK must be maintained and defended as it is justified on grounds including concerns about the welfare of British personnel and interests overseas and is proportionate to any limited interference with either her own or the relevant Parliamentarians human rights or right to freedom of expression. The letters conveying the Secretary of States second and third decisions were supported by witness statements of Mr Ken OFlaherty, an official in the Middle East and North African Directorate of the Foreign Office responsible for diplomatic relations with Iran. Mr OFlahertys evidence sets out the facts recited in the Secretary of States decision letters in somewhat greater detail, and evidently reflects the advice of the Foreign Office on which her decisions were based. The following are among the points which he makes: (1) The United Kingdoms relations with Iran are described by Mr OFlaherty as fragile yet imperative. Historically, the United Kingdom has had a more difficult relationship with Iran than other countries have, which still affect the way that it is perceived there. Statements hostile to the United Kingdom are frequently made by prominent public figures in Iran in the Iranian Parliament and elsewhere. The United States and Israel are also the subject of particularly hostile rhetoric, but of these three states the United Kingdom is the only one which maintains an Embassy in Tehran. Consequently, the British Embassy has for some years been the principal target for anti western feeling in Tehran. Conditions there are difficult. Access by British diplomats to Iranian officials has been limited even at the best of times. The ramping up of rhetoric is liable to aggravate the situation at any time, provoking uncontrolled local reactions. Locally engaged staff have been harassed and detained. Some have been bullied into leaving their employment. Acid bombs have been thrown into the Embassy compound. (2) Although the United Kingdom recognises that MeK is no longer a terrorist organisation, this is not accepted in Iran, where it remains an illegal organisation. Moreover, quite apart from its current activities (or perceived activities), MeKs past support for terrorism in Iran and its armed assistance to Irans principal regional enemy in a major war remain a significant factor in political sentiment there. The de proscription order of 2008 was regarded in Iran as unjustified and politically motivated and provoked serious political protests from the Iranian authorities and demonstrations outside the Tehran Embassy. More recently, in November 2011, the Iranian Parliament voted to expel the newly arrived British ambassador to Iran (Dominick Chilcott) citing Britains historic hostility to Iran and its support for terrorism, a reference to the de proscription of MeK. There are outstanding requests by the government of Iran for assistance against alleged MeK terrorist plots. MeK is an authoritarian and hierarchical organisation and the personality of Mrs Rajavi and her husband have a symbolic significance in Iran greater than that of any other member of its leadership. The lifting of the exclusion order would be perceived in Iran as a hostile political act. (3) The United Kingdom has a strong interest in working with Iran on major policy issues, in spite of the difficulties. These issues include nuclear counter proliferation, wider issues in the Middle East and human rights. In particular, the United Kingdom is a prominent member of the group of western countries negotiating with Iran about nuclear proliferation. In addition to these issues, there are significant consular issues in a country where British nationals are viewed with suspicion and have been arrested and detained, often for long periods on spurious charges. There is a concern that if bilateral relations were to deteriorate, British nationals would be at risk of reprisals. (4) Even after the downgrading of diplomatic relations since the riots of November 2011, there are about 100 locally engaged members of staff still employed there. They, together with British property in Iran, are at risk of violence in the event of retaliatory action against the United Kingdom following a further deterioration of relations. There is also concern about the safety of British nationals outside Iran following threats to promote terrorism in the west in response to perceived western hostility. These developments have led to an increase in the assessed levels of risk at a delicate stage of the bilateral relationship between the United Kingdom and Iran. (5) The Foreign Office assesses that allowing Mrs Rajavi entry to the United Kingdom would have a significant damaging impact on the relations between the United Kingdom and Iran which would therefore harm our wider and crucial objectives concerning Iran (such as on the nuclear issue). In particular, it would damage existing United Kingdom interests in relation to Iran and endanger the security, wellbeing and properties of British officials overseas. The United Kingdom might be prepared to accept a greater measure of risk as the price of supporting a viable opposition group in Iran, but its assessment is that MeK has little support within Iran and that its significance has been overstated by the claimants. 11. The issue The claimants challenge to the Secretary of States decision in these proceedings is based entirely on article 10 of the Convention, which protects freedom of expression. It is now common ground that article 10 is engaged. The Secretary of State submits that the interference with the claimants article 10 rights is justified as a proportionate response to the threat to national security, public safety and the rights of others which would be posed by a hostile reaction from the Iranian government and other forces in Iran. In the courts below, the claimants case was that the Secretary of States decision was disproportionate. It failed to give due weight to the significance of the right of free speech protected by article 10 and the stringency of the test for justifying any interference with it, and it overstated the likelihood and gravity of any hostile reaction on the part of the government of Iran. These contentions have been rejected both by the Divisional Court (Burnton LJ and Underhill J) and by the Court of Appeal (Arden, Patten and McCombe LJJ.). They have been substantially repeated in this court, but Lord Pannick QC, who appears for the claimants, has also advanced for the first time a threshold objection of a more radical kind. He submits that the Secretary of States reasons were legally irrelevant. This, he suggests, is because she was not entitled to have regard at all to the potential reaction of a foreign state which did not share the values embodied in the Convention, and had no respect for the right of free speech or other democratic values. Article 10 of the Convention 12. Article 10 provides: Article 10 Freedom of expression 13. 1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises. 2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. It is well established in the jurisprudence of the European Court of Human Rights that the more important the right, the more difficult it will be to justify any interference with it. For this purpose, freedom of expression has always been treated as one of the core rights protected by the Convention. It constitutes one of the essential foundations of a democratic society and one of the basic conditions for its progress and for each individuals self fulfilment: Srek v Turkey (1999) 7 BHRC 339, at para 57. The exceptions in article 10(2) must therefore be construed strictly and the need of any restrictions must be established convincingly: ibid. In this respect, the jurisprudence of the Strasbourg court is substantially at one with the common law as it had developed for many years before the Convention received the force of law in the United Kingdom: see Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at pp 283 284 (Lord Goff); Derbyshire County Council v Times Newspapers Ltd [1993] AC 534, 550 551 (Lord Keith); R v Secretary of State, Ex p Simms [2000] 2 AC 115, 125 (Lord Steyn); R v Shayler [2003] 1 AC 247, at para 21 (Lord Bingham) The claimants threshold argument: legal irrelevance 14. A person has no right to enter the United Kingdom unless he or she is an EU citizen. Under paragraph 320(6) of the Immigration Rules, if the Secretary of State has personally directed that a particular persons exclusion from the United Kingdom is conducive to the public good, that person will be refused entry clearance or leave to enter. In Secretary of State for the Home Department v Rehman [2003] 1 AC 153 at para 8, Lord Slynn of Hadley observed that the expression conducive to the public good was not expressly defined or limited, and that the matter was plainly in the first instance and primarily one for the discretion of the Secretary of State. The question is one of judgment, informed by fact. 15. When the question arises whether a persons presence or activities in the United Kingdom is conducive to the public good, it is self evident that its potential consequences are a relevant consideration. Indeed, they will usually be the only relevant consideration. A threat to British persons or interests is one potential consequence which in an age of widespread international lawlessness, some of it state sponsored, is unfortunately more common than it used to be. The existence and gravity of the threat is a question of fact. It cannot rationally be regarded as any less relevant to the public good because it emanates from a foreign state as opposed to some other actor, or because that state does not share our values, or because the threat is to do things which would be unlawful by our laws or improper by our standards, or indeed by theirs. The difficulty about the claimants first submission is that it involves treating as legally irrelevant something which is plainly factually relevant to a question which is ultimately one of fact. Moreover, if the proposition be accepted, it must logically apply however serious the consequences and however likely they are to occur, unless perhaps it was so serious as to permit a derogation under article 15 (war or other public emergency threatening the life of the nation). In R (Corner House Research) v Director of the Serious Fraud Office (JUSTICE intervening) [2009] AC 756 the House of Lords rejected a very similar argument, which had been adopted by the Divisional Court, to the effect that it was contrary to the rule of law for a prosecutor to discontinue a criminal investigation in response to threats from a foreign state to suspend intelligence co operation, even in circumstances where that was judged to be liable to expose persons in the United Kingdom to terrorist attack. A prosecutors decision whether to investigate or prosecute an alleged crime is a species of executive decision with which the courts have always been particularly reluctant to interfere, as Lord Bingham of Cornhill pointed out at paras 30 31. But the question at issue was broader than that. The reason for the decision was that the House did not accept that even so fundamental a value as the rule of law could give rise to an absolute rule, as opposed to a weighing of the relevant considerations either way. The point is encapsulated in the statement of Lord Bingham at para 38: The objection to the principle formulated by the Divisional Court is that it distracts attention from what, applying well settled principles of public law, was the right question: whether, in deciding that the public interest in pursuing an 16. important investigation into alleged bribery was outweighed by the public interest in protecting the lives of British citizens, the Director made a decision outside the lawful bounds of the discretion entrusted to him by Parliament. 17. Lord Pannick QC acknowledged most of this. He accepted, for example, that in principle the Secretary of State could lawfully exclude a person in a case like R (Farrakhan) v Secretary of State for the Home Department [2002] QB 1391, where the leader of a religious, social and political group was excluded because his presence would present a significant threat to community relations; or R (Naik) v Secretary of State for the Home Department [2011] EWCA Civ 1546, where a Muslim public speaker was excluded on the ground that he was associated with an organisation which supported terrorism. There has been a number of other cases in which persons holding controversial views have been excluded because it was undesirable in the interests of public order to allow them a platform in the United Kingdom. Lord Pannick suggested that these cases were different, because the Secretary of State herself regarded the visitors views as unacceptable and inconsistent with our collective values of tolerance and inclusiveness. By comparison, in the present case the Secretary of State has no objection to Mrs Rajavis values or opinions. I regard this distinction as contrary to principle. It suggests that the Secretary of States views about the visitors opinions or their consistency with our collective values might make all the difference to the question whether a restriction on freedom of expression is justifiable. But article 10 does not only protect the transmission of information and ideas which accord with the views of the Secretary of State or with her perception of the existing values of our society. It is a truism that freedom of speech is not worth much unless it extends to opinions with which others disagree. The question whether the visitors presence or activities in the United Kingdom is conducive to the public good must depend on its effects, and not on whether his or her opinions command general or ministerial assent. Dr Naik was excluded because the Secretary of State considered that he was liable unlawfully to promote terrorism, and to express views which were divisive and potentially damaging to community relations (see para 11). As Carnwath LJ put it at para 66, the rationale of the ban lies solely in the effect of his words. I therefore reject the claimants threshold argument. 18. Proportionality: the test 19. In Bank Mellat v Her Majestys Treasury (no. 2) [2014] AC 700, this court considered the test of proportionality in a context with some analogies to the present one. The court was divided on the application of the test to the facts, the principal judgments being my own for the majority and the dissenting judgment of Lord Reed. However, Lord Reed and I were agreed about what the test was. At para 20, I summarised the effect of the authorities as follows: the question depends on an exacting analysis of the factual case advanced in defence of the measure, in order to determine (i) whether its objective is sufficiently important to justify the limitation of a fundamental right; (ii) whether it is rationally connected to the objective; (iii) whether a less intrusive measure could have been used; and (iv) whether, having regard to these matters and to the severity of the consequences, a fair balance has been struck between the rights of the individual and the interests of the community. These four requirements are logically separate, but in practice they inevitably overlap because the same facts are likely to be relevant to more than one of them. 20. As Lord Reed observed at paras 69 and 70, the intensity [of review] that is to say, the degree of weight or respect given to the assessment of the primary decision maker depends on the context. This means both the legal context (the nature of the right asserted), and the factual context (the subject matter of the decision impugned). Not all rights protected by the Convention are of equal weight. Not all subjects call for the same degree of respect for the judgment of the executive. But, as both the majority and the minority recognised, no review, however intense, can entitle the court to substitute its own decision for that of the constitutional decision maker: see my own judgment at para 21 and Lord Reeds at para 71. 21. Bank Mellat, like the present case, arose out of a government decision in the conduct of foreign policy. The majority and the minority were agreed that the judgment of the executive was in principle entitled to considerable weight. In the majority judgment, the point is put in this way at para 21: None of this means that the court is to take over the function of the decision maker, least of all in a case like this one. As Maurice Kay LJ observed in the Court of Appeal, this case lies in the area of foreign policy and national security which would once have been regarded as unsuitable for judicial scrutiny. The measures have been opened up to judicial scrutiny by the express terms of the Act because they may engage the rights of designated persons or others under the European Convention on Human Rights. Even so, any assessment of the rationality and proportionality of a Schedule 7 direction must recognise that the nature of the issue requires the Treasury to be allowed a large margin of judgment. It is difficult to think of a public interest as important as nuclear non proliferation. The potential consequences of nuclear proliferation are quite serious enough to justify a precautionary approach. In addition, the question whether some measure is apt to limit the risk posed for the national interest by nuclear proliferation in a foreign country, depends on an experienced judgment of the international implications of a wide range of information, some of which may be secret. This is pre eminently a matter for the executive. For my part, I wholly endorse the view of Lord Reed JSC that the making of government and legislative policy cannot be turned into a judicial process. 22. As a tool for assessing the practice by which the courts accord greater weight to the executives judgment in some cases than in others, the whole concept of deference has been subjected to powerful academic criticism: see, notably, TSR Allan, Human Rights and Judicial Review: a Critique of Due Deference [2006] CLJ 671; J. Jowell, Judicial Deference: Servility, Civility or Institutional Capacity? [2003] PL 592. At least part of the difficulty arises from the word, with its overtones of cringing abstention in the face of superior status. In some circumstances, deference is no more than a recognition that a court of review does not usurp the function of the decision maker, even when Convention rights are engaged. Beyond that elementary principle, the assignment of weight to the decision makers judgment has nothing to do with deference in the ordinary sense of the term. It has two distinct sources. The first is the constitutional principle of the separation of powers. The second is no more than a pragmatic view about the evidential value of certain judgments of the executive, whose force will vary according to the subject matter. Both sources were considered in detail in Secretary of State for the Home Department v Rehman [2003] 1 AC 153. Rehman was a statutory appeal from a decision of the Secretary of State ordering Mr Rehman to be deported from the United Kingdom on the ground that his presence there was not conducive to the public good because of his association with an organisation which supported terrorism in the Indian subcontinent. The decision is authority for the proposition (which had been rejected by the Special Immigration Appeals Commission) that the activities of a person may adversely affect the national security of the United Kingdom if they are directed against the overthrow or destabilisation of a foreign government if that foreign government is likely to take reprisals against the United Kingdom which affect the security of the United Kingdom or of its nationals: see para 2 (Lord Slynn). The importance of the decision for present purposes lies in its analysis of the relationship between the courts and the executive on such an issue. This is to be found mainly in the speech of Lord Hoffmann (with which Lord Clyde and Lord Hutton agreed). 23. Lord Hoffmann dealt with the separation of powers at paras 50 54 of his speech. He started by pointing out (para 50) that while the question what is meant by national security is a question of law, the question whether something would be damaging to national security was a question not of law but of judgment and policy. 50. Under the constitution of the United Kingdom and most other countries, decisions as to whether something is or is not in the interests of national security are not a matter for judicial decision. They are entrusted to the executive. 53. Accordingly it seems to me that the Commission is not entitled to differ from the opinion of the Secretary of State on the question of whether, for example, the promotion of terrorism in a foreign country by a United Kingdom resident would be contrary to the interests of national security. Mr Kadri rightly said that one man's terrorist was another man's freedom fighter. The decision as to whether support for a particular movement in a foreign country would be prejudicial to our national security may involve delicate questions of foreign policy. And, as I shall later explain, I agree with the Court of Appeal that it is artificial to try to segregate national security from foreign policy. They are all within the competence of responsible ministers and not the courts. The Commission was intended to act judicially and not, as the European Court recognised in Chahal v United Kingdom 23 EHRR 413, 468, para 127, to substitute its own opinion for that of the decision maker on questions of pure expediency. 54. This does not mean that the whole decision on whether deportation would be in the interests of national security is surrendered to the Home Secretary, so as to defeat the purpose for which the Commission was set up: see the Commissions decision. It is important neither to blur nor to exaggerate the area of responsibility entrusted to the executive The Commission serves at least three important functions which were shown to be necessary by the decision in Chahal. First, the factual basis for the executives opinion that deportation would be in the interests of national security must be established by evidence. It is therefore open to the Commission to say that there was no factual basis for the Home Secretary's opinion that Mr Rehman was actively supporting terrorism in Kashmir. In this respect the Commissions ability to differ from the Home Secretary's evaluation may be limited, as I shall explain, by considerations inherent in an appellate process but not by the principle of the separation of powers. The effect of the latter principle is only, subject to the next point, to prevent the Commission from saying that although the Home Secretary's opinion that Mr Rehman was actively supporting terrorism in Kashmir had a proper factual basis, it does not accept that this was contrary to the interests of national security. Secondly, the Commission may reject the Home Secretary's opinion on the ground that it was one which no reasonable minister advising the Crown could in the circumstances reasonably have held. Thirdly, an appeal to the Commission may turn upon issues which at no point lie within the exclusive province of the executive. A good example is the question, which arose in Chahal itself, as to whether deporting someone would infringe his rights under article 3 of the Convention because there was a substantial risk that he would suffer torture or inhuman or degrading treatment. The European jurisprudence makes it clear that whether deportation is in the interests of national security is irrelevant to rights under article 3. If there is a danger of torture, the Government must find some other way of dealing with a threat to national security. Whether a sufficient risk exists is a question of evaluation and prediction based on evidence. In answering such a question, the executive enjoys no constitutional prerogative. 24. Lord Hoffmann dealt with the evidential issue at paras 57 58 under the heading Limitations of the appellate process: First, the Commission is not the primary decision maker. Not only is the decision entrusted to the Home Secretary but he also has the advantage of a wide range of advice from people with day to day involvement in security matters which the Commission, despite its specialist membership, cannot match. Secondly, as I have just been saying, the question at issue in this case does not involve a yes or no answer as to whether it is more likely than not that someone has done something but an evaluation of risk. In such questions an appellate body traditionally allows a considerable margin to the primary decision maker. Even if the appellate body prefers a different view, it should not ordinarily interfere with a case in which it considers that the view of the Home Secretary is one which could reasonably be entertained. Such restraint may not be necessary in relation to every issue which the Commission has to decide. As I have mentioned, the approach to whether the rights of an appellant under article 3 are likely to be infringed may be very different. But I think it is required in relation to the question of whether a deportation is in the interests of national security I emphasise that the need for restraint is not based upon any limit to the Commissions appellate jurisdiction. The amplitude of that jurisdiction is emphasised by the express power to reverse the exercise of a discretion. The need for restraint flows from a common sense recognition of the nature of the issue and the differences in the decision making processes and responsibilities of the Home Secretary and the Commission. 25. Returning to both themes in a postscript written a month after the attack on the Twin Towers in New York, Lord Hoffmann observed at para 62 that these events are a reminder that in matters of national security, the cost of failure can be high. This seems to me to underline the need for the judicial arm of government to respect the decisions of ministers of the Crown on the question of whether support for terrorist activities in a foreign country constitutes a threat to national security. It is not only that the executive has access to special information and expertise in these matters. It is also that such decisions, with serious potential results for the community, require a legitimacy which can be conferred only by entrusting them to persons responsible to the community through the democratic process. If the people are to accept the consequences of such decisions, they must be made by persons whom the people have elected and whom they can remove. I have cited Lord Hoffmanns speech at length because it is the fullest and most authoritative analysis of the question, and because it distinguishes the two distinct sources of the courts traditional reticence in this area which are often elided. The principles themselves were certainly not new in 2001 when Lord Hoffmann articulated them: see Chandler v Director of Public Prosecutions [1964] AC 763, 798 (Lord Radcliffe); Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, 398 (Lord Fraser), 26. 411 (Lord Diplock); R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Pirbhai (1985) 107 ILR 462; R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Ferhut Butt (1999) 116 ILR 607. Nor are they outdated now: R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs and Secretary of State for the Home Department [2003] UKHRR 76 at para 106(iii) (Lord Phillips); R (Campaign for Nuclear Disarmament) v Prime Minister [2003] 3 LRC 335; A v Secretary of State for the Home Department [2005] 2 AC 68 at para 29 (Lord Bingham); R v Jones [2007] 1 AC 136 at para 30 (Lord Bingham); R (Gentle) v Prime Minister [2008] AC 1356 at para 8(2) (Lord Bingham). 27. The more difficult question, which is critical to the outcome of this appeal, is how far these principles fall to be modified in cases which (unlike Rehman) are founded on the complainants Convention rights or other fundamental rights recognised at common law. The answer to this question must depend on the reason why the court is being invited to respect the autonomy of an executive decision. 28. The first possibility is that it is being invited to respect the separation of powers and the special constitutional function of the executive. The Human Rights Act 1998 did not abrogate the constitutional distribution of powers between the organs of the state which the courts had recognised for many years before it was passed. The case law of the Strasbourg court is not insensitive to questions of democratic accountability, even though their significance will vary from case to case. Even in the context of Convention rights, there remain areas which although not immune from scrutiny require a qualified respect for the constitutional functions of decision makers who are democratically accountable. Examples are decisions involving policy choices (R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295 at paras 75 76); broad questions of economic and social policy (Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816 at para 70); or issues involving the allocation of finite resources (Wandsworth London Borough Council v Michalak [2003] 1 WLR 617 at para 41 (Brooke LJ)). 29. However, traditional notions of the constitutional distribution of powers have unquestionably been modified by the Human Rights Act 1998. In the first place, any arguable allegation that a persons Convention rights have been infringed is necessarily justiciable. Section 6 of the Act requires public authorities, including the courts, to give effect to those rights. Secondly, the jurisprudence of the European Court of Human Rights calls for a standard of review of the proportionality of the decisions of public authorities which is not only formal and procedural but to some extent substantive. As Lord Bingham put it in R (SB) v Governors of Denbigh High School [2007] 1 AC 100, at para 29: the focus at Strasbourg is not and has never been on whether a challenged decision or action is the product of a defective decision making process, but on whether, in the case under consideration, the applicant's Convention rights have been violated The unlawfulness proscribed by section 6(1) is acting in a way which is incompatible with a Convention right, not relying on a defective process of reasoning, and action may be brought under section 7(1) only by a person who is a victim of an unlawful act. It follows, as he went on to point out, that the court's approach to an issue of proportionality under the Convention must go beyond that traditionally adopted to judicial review in a domestic setting. The inadequacy of that approach was exposed in Smith and Grady v United Kingdom (1999) 29 EHRR 493 , para 138, and the new approach required under the 1998 Act was described by Lord Steyn in R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 , paras 2528, in terms which have never to my knowledge been questioned. There is no shift to a merits review, but the intensity of review is greater than was previously appropriate, and greater even than the heightened scrutiny test adopted by the Court of Appeal in R v Ministry of Defence, Ex p Smith [1996] QB 517, 554. The domestic court must now make a value judgment, an evaluation, by reference to the circumstances prevailing at the relevant time: Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816, paras 6267. Proportionality must be judged objectively, by the court: R (Williamson) v Secretary of State for Education and Employment [2005] 2 AC 246 , para 51. 30. So far, therefore, as the traditional treatment of foreign policy or national security decisions depends on the non justiciability of the Crowns prerogative to conduct the United Kingdoms foreign relations or of measures taken in the interests of national security, it cannot apply in cases where a scrutiny of such decisions is necessary in order to adjudicate on a complaint that Convention rights have been infringed. In these fields of law, nothing which is relevant can be a forbidden area (Lord Phillips phrase in Abbasi), although complaints about the substance as opposed to the application of British foreign policy may well be met by the response that it is not relevant: R (Gentle) v Prime Minister [2008] AC 1356 at paras 24 25 (Lord Hope). In describing what the courts do not or should not do, judges of great distinction have sometimes referred to merits review. I should prefer to avoid the expression, because it has never been sufficiently clear what kind of inquiries a merits review embraces. But whatever it embraces, I would accept that when it comes to reviewing the compatibility of executive decisions with the Convention, there can be no absolute constitutional bar to any inquiry which is both relevant and necessary to enable the court to adjudicate. 31. None of this means that in human rights cases a court of review is entitled to substitute its own decision for that of the constitutional decision maker. However intense or exacting the standard of review in cases where Convention rights are engaged, it stops short of transferring the effective decision making power to the courts. As Lord Bingham observed in Corner House, at para 41: The issue in these proceedings is not whether his decision was right or wrong, nor whether the Divisional Court or the House agrees with it, but whether it was a decision which the Director was lawfully entitled to make. Nor, as a general rule, does the jurisprudence of the Strasbourg court require that administrative decisions should be subject to an appeal on the merits, as opposed to judicial review of the lawfulness of the decision making process, especially when the decision under review is substantially based on what have been loosely called grounds of expediency or is made by a body with specialised experience or expertise: see Zumtobel v Austria (1993) 17 EHRR 116, para 32 (article 6); Bryan v United Kingdom (1995) 21 EHRR 342, para 44, 47; Chahal v United Kingdom (1996) 23 EHRR 413, para 127. However, the obligation of the courts to adjudicate on alleged infringements of Convention rights does mean that the traditional reticence of the courts about examining the basis for executive decisions in certain areas of policy can no longer be justified on constitutional grounds. 32. Rather different considerations apply where the question is not what is the constitutional role of the court but what evidential weight is to be placed on the executives judgment, a question on which the human rights dimension is relevant but less significant. It does not follow from the courts constitutional competence to adjudicate on an alleged infringement of human rights that it must be regarded as factually competent to disagree with the decision maker in every case or that it should decline to recognise its own institutional limitations. In the first place, although the Human Rights Act requires the courts to treat as relevant many questions which would previously have been immune from scrutiny, including on occasions the international implications of an executive decision, they remain questions of fact. The executives assessment of the implications of the facts is not conclusive, but may be entitled to great weight, depending on the nature of the decision and the expertise and sources of information of the decision maker or those who advise her. Secondly, rationality is a minimum condition of proportionality, but is not the whole test. Nonetheless, there are cases where the rationality of a decision is the only criterion which is capable of judicial assessment. This is particularly likely to be true of predictive and other judgmental assessments, especially those of a political nature. Such cases often involve a judgment or prediction of a kind whose rationality can be assessed but whose correctness cannot in the nature of things be tested empirically. Thirdly, where the justification for a decision depends upon a judgment about the future impact of alternative courses of action, there is not necessarily a single right answer. There may be a range of judgments which could be made with equal propriety, in which case the law is satisfied if the judgment under review lies within that range. A case like the present one is perhaps the archetypal example. Fourthly, although a recognition of the relative institutional competence of the executive and the courts in this field is a pragmatic judgment and not a constitutional limitation, it is consistent with the democratic values which are at the heart of the Convention, because it reflects an expectation that in a democracy a person charged with making assessments of this kind should be politically responsible for them. Ministers are politically responsible for the consequences of their decision. Judges are not. These considerations are particularly important in the context of decisions about national security on which, as Lord Hoffmann pointed out in Rehman, the cost of failure can be high. It is pre eminently an area in which the responsibility for a judgment that proves to be wrong should go hand in hand with political removability. 33. All of these points were made by Lord Bingham of Cornhill, two years after Rehman, in A v Secretary of State for the Home Department [2005] 2 AC 68, para 29, in the context of the right of derogation conferred by article 15(1) of the Convention in cases of public emergency threatening the life of the nation: Thirdly, I would accept that great weight should be given to the judgment of the Home Secretary, his colleagues and Parliament on this question, because they were called on to exercise a pre eminently political judgment. It involved making a factual prediction of what various people around the world might or might not do, and when (if at all) they might do it, and what the consequences might be if they did. Any prediction about the future behaviour of human beings (as opposed to the phases of the moon or high water at London Bridge) is necessarily problematical. Reasonable and informed minds may differ, and a judgment is not shown to be wrong or unreasonable because that which is thought likely to happen does not happen. It would have been irresponsible not to err, if at all, on the side of safety. As will become apparent, I do not accept the full breadth of the Attorney General's argument on what is generally called the deference owed by the courts to the political authorities. It is perhaps preferable to approach this question as one of demarcation of functions or what Liberty in its written case called relative institutional competence. The more purely political (in a broad or narrow sense) a question is, the more appropriate it will be for political resolution and the less likely it is to be an appropriate matter for judicial decision. The smaller, therefore, will be the potential role of the court. It is the function of political and not judicial bodies to resolve political questions. Conversely, the greater the legal content of any issue, the greater the potential role of the court, because under our constitution and subject to the sovereign power of Parliament it is the function of the courts and not of political bodies to resolve legal questions. The present question seems to me to be very much at the political end of the spectrum: see Secretary of State for the Home Department v Rehman [2003] I AC 153, para 62, per Lord Hoffmann. I think that there was much wisdom in the observations of Laws LJ, delivering the judgment of the Court of Appeal in R (Al Rawi) v Secretary of State for Foreign and Commonwealth Affairs and Secretary of State for the Home Department [2008] QB 289, paras 146 148: Reasonableness and proportionality are not formal legal standards. They are substantive virtues, upon which, it may be thought, lawyers do not have the only voice: nor necessarily the wisest. Accordingly, the ascertainment of the weight to be given to the primary decision maker's view (very often that of central government) can be elusive and problematic The courts have a special responsibility in the field of human rights. It arises in part from the impetus of the Human Rights Act 1998, in part from the common laws jealousy in seeing that intrusive state power is always strictly justified. The elected government has a special responsibility in what may be called strategic fields of policy, such as the conduct of foreign relations and matters of national security. It arises in part from considerations of competence, in part from the constitutional imperative of electoral accountability The court's role is to see that the Government strictly complies with all formal requirements, and rationally considers the matters it has to confront. Here, because of the subject matter, the law accords to the executive an especially broad margin of discretion. Or, as he has more recently observed in upholding the proportionality of an interference with article 10 rights on the ground on national security in R (Miranda) v Secretary of State for the Home Department (Liberty intervening) [2014] 1 WLR 3140, para 40, where a court of review considers whether the relevant decision strikes a fair balance between the competing interests engaged, there is real difficulty in distinguishing this from a political question to be decided by the elected arm of government. If it is properly within the judicial sphere, it must be on the footing that there is a plain case. A very similar principle has been applied for many years to the review of Commission decisions by the Court of Justice of the European Union. It is essentially the same point as Lord Reed made in Bank Mellat, at para 93, when he observed that even in the context of the enforcement of Convention rights, the relevant decision may be based on an evaluation of complex facts, or considerations (for example, of economic or social policy, or national security) which are contestable and may be controversial. In such situations, the court has to allow room for the exercise of judgment by the executive and legislative branches of government, which bear democratic responsibility for these decisions. The making of government and legislative policy cannot be turned into a judicial process. 34. Various expressions have been used in the case law to describe the quality of the judicial scrutiny called for when considering the proportionality of an interference with a Convention right: heightened, anxious, exacting, and so on. These expressions are necessarily imprecise because their practical effect will depend on the context. In particular, it will depend on the significance of the right, the degree to which it is interfered with, and the range of factors capable of justifying that interference, which may vary from none at all (article 3) to very wide ranging considerations indeed (article 8). But the legal principle is clear enough. The court must test the adequacy of the factual basis claimed for the decision: is it sufficiently robust having regard to the interference with Convention rights which is involved? It must consider whether the professed objective can be said to be necessary, in the sense that it reflects a pressing social need. It must review the rationality of the supposed connection between the objective and the means employed: is it capable of contributing systematically to the desired objective, or its impact on the objective arbitrary? The court must consider whether some less onerous alternative would have been available without unreasonably impairing the objective. The court is the ultimate arbiter of the appropriate balance between two incommensurate values: the Convention rights engaged and the interests of the community relied upon to justify interfering with it. But the court is not usually concerned with remaking the decision makers assessment of the evidence if it was an assessment reasonably open to her. Nor, on a matter dependent on a judgment capable of yielding more than one answer, is the court concerned with remaking the judgment of the decision maker about the relative advantages and disadvantages of the course selected, or of pure policy choices (eg do we wish to engage with Iran at all?). The court does not make the substantive decision in place of the executive. On all of these matters, in determining what weight to give to the evidence, the court is entitled to attach special weight to the judgments and assessments of a primary decision maker with special institutional competence. Application to the present case 35. It is right to start by recording those points which are agreed or unchallenged. First, it is common ground that article 10 is engaged. This is because a refusal of permission to enter a country which is substantially based on a desire to prevent a person expressing or others from receiving her views is an interference with their article 10 rights and hers: Cox v Turkey (2010) 55 EHRR 347, paras 27 28, 43. Secondly, the good faith of the Secretary of State and the Foreign Office are accepted. We may proceed, therefore, on the footing that the decision was genuinely made for the reasons given, and not for some undisclosed or collateral reason. Third, there is no dispute about the primary facts, as Lord Pannick QC confirmed at the outset of the hearing. In relation to the second and third points, it should be noted that no application was made to cross examine Mr OFlaherty and that the Secretary of States evidence has now been accepted by both the Divisional Court and the Court of Appeal. 37. 36. Next comes a point which, although not formally conceded, was hardly challenged and on which in my view the position is clear. The Secretary of States case is that Mrs Rajavis admission to the United Kingdom for the purpose of discussions with Parliamentarians would pose an appreciable risk of (i) reprisals, either instigated by the Iranian government or resulting from an uncontrolled public reaction, against persons for whose safety Britain is responsible such as locally engaged staff of the British Embassy in Tehran and British nationals inside and outside Iran; (ii) damage to British property still in Iran, and (iii) a significant impairment of the United Kingdoms ability to engage diplomatically with Iran on important issues, including nuclear non proliferation, the Middle East and human rights. If Mrs Rajavis admission to the United Kingdom would really pose an appreciable risk of provoking these consequences, then I think it clear that the interference with the claimants article 10 rights is capable of being justified in the interests of national security, public safety and the protection of the rights of others. Nor was this really disputed by Lord Pannick QC. It has been said that there is little scope under article 10.2 of the Convention for restrictions on political speech or on debate on questions of public interest: Wingrove v United Kingdom (1996) 24 EHRR 1, para 58; Srek v Turkey (1999) 7 BHRC 339, para 60. At the same time, the Strasbourg Court has recognised, in recent years with growing emphasis, that article 10 rights are qualified rights. An important milestone was the decision of the Grand Chamber in Stoll v Switzerland (2007) 47 EHRR 1270, acknowledging a legitimate interest on the part of the state in punishing an unauthorised disclosure by the press of tendentiously selected parts of a confidential diplomatic memorandum which admittedly dealt with matters of substantial public interest. The Grand Chamber observed that article 10.2 does not guarantee a wholly unrestricted freedom of expression even with respect to press coverage of matters of serious public concern: para 102. In particular, the Court has always recognised the potential for considerations of national security or public order to justify proportionate restrictions on political speech or public debate, as it did in its observations in Srek itself at paras 60 61. If a persons presence or conduct in the United Kingdom threatened to provoke violence within the United Kingdom, or to export it from the United Kingdom to other countries, there could hardly be any argument about this. This is an unusual case in that the damage to national security or public order which is apprehended would originate from the response of persons outside the United Kingdom, but it is difficult to see why that consideration should itself make any difference to the principle. 38. To say that something is capable of justifying a restriction of freedom of expression does not of course mean that it necessarily justifies this particular restriction, but it unquestionably narrows the field of inquiry. Given that no one has challenged the facts or the bona fides of the Secretary of States decision, and that no one has argued that the consequences feared by the Secretary of State are not grave enough to justify her decision if her fears are realistic, there are only three bases on which the court might in theory quash the decision made in this case. It might conclude (i) that the Secretary of States had attached insufficient importance to the value of freedom of expression generally, or understated its importance in this case; or (ii) that the Foreign Offices assessment on which the decision was based overstated the risks of damage to national security, public order or the rights of others; or (iii) that the Secretary of State objective could reasonably have been achieved by some lesser measure. The claimants take all three points. Point (i): Underrating the value of freedom of expression 39. The Home Secretary has said in her decision letters that she recognised and took into account the value of informed political debate in the United Kingdom. There is no basis for concluding that she underrated the importance of freedom of expression in general. The real point made against her by the claimants is that she underrated the significance of the restrictions on freedom of expression associated with her own decision in this case. 40. The argument gains some traction from the fact that in her decision letter of May 2011 she denied that article 10 was engaged at all, because of the existence of other methods by which the Parliamentary claimants could communicate with Mrs Rajavi which did not involve her entering the United Kingdom. This was a bad point, but it was effectively abandoned in her subsequent decision letters. They acknowledged that the claimants article 10 rights were or might be engaged notwithstanding the availability of other modes of communication. But they relied upon the same matters as limiting the extent of her interference with those rights and asserted that any right arising from that article was outweighed by other considerations. Lord Pannick QC criticised this approach as tending to understate the extent of the interference with freedom of expression. But I think that his criticisms are unsound. There are degrees of interference with even so important a right as freedom of expression. The degree of interference involved necessarily has a significant impact on ones assessment of its proportionality. Relevant factors include the degree of control asserted by the state over the dissemination of the relevant information or opinion, the methods by which it exercises that control and whether the freedom of the press is curtailed. At one extreme there is a case like Srek which involved the total suppression of a particular point of view, enforced with criminal sanctions including imprisonment. At the other are cases where the measure impugned restricted only the method by which the opinion or information was conveyed. Absent unusually compelling considerations of public order, 41. 42. it is difficult to think of any circumstances in which the first extreme would be consistent with article 10. But short of that, the position is more nuanced and less susceptible to absolute positions. In Appleby v United Kingdom (2003) 37 EHRR 783, a local campaigning group was prevented from distributing leaflets against a planning proposal at the entrance to a shopping mall in Washington New Town known as the Galleries. The Strasbourg court rejected the argument that this prohibition contravened the Convention, because the partial character of the interference meant that there had been no failure by the state to observe its positive obligation to protect the dissemination of information and ideas. The court observed, at para 48: 48. In the present case, the restriction on the applicants ability to communicate their views was limited to the entrance areas and passageways of the Galleries. It did not prevent them from obtaining individual permission from businesses within the Galleries (the manager of a hypermarket granted permission for a stand within his store on one occasion) or from distributing their leaflets on the public access paths into the area. It also remained open to them to campaign in the old town centre and to employ alternative means, such as calling door to door or seeking exposure in the local press, radio and television. The applicants did not deny that these other methods were available to them. Their argument, essentially, was that the easiest and most effective method of reaching people was to use the Galleries, as shown by the local authoritys own information campaign (see para 21 above). The Court does not consider however that the applicants can claim that they were as a result of the refusal of the private company, Postel, effectively prevented from communicating their views to their fellow citizens 49. Balancing therefore the rights in issue and having regard to the nature and scope of the restriction in this case, the Court does not find that the Government failed in any positive obligation to protect the applicants freedom of expression. In Mouvement Ralien Suisse v Switzerland (2012) 56 EHRR 482, the complainant, an organisation dedicated to promoting communication with extra terrestrial beings, was prevented by a local authority from advertising on billboards. The local authority disapproved of their message on the ground that it was liable to encourage child abuse and other evils. The 43. organisation, however, had other ways of getting its message across which were not under the local authoritys control. The restriction was held to be proportionate. At para 75, the Grand Chamber said: Like the Government, it finds that a distinction must be drawn between the aim of the association and the means that it uses to achieve that aim. Accordingly, in the present case it might perhaps have been disproportionate to ban the association itself or its website on the basis of the above mentioned factors To limit the scope of the impugned restriction to the display of posters in public places was thus a way of ensuring the minimum impairment of the applicant associations rights. The Court reiterates in this connection that the authorities are required, when they decide to restrict fundamental rights, to choose the means that cause the least possible prejudice to the rights in question In view of the fact that the applicant association is able to continue to disseminate its ideas through its website, and through other means at its disposal such as the distribution of leaflets in the street or in letter boxes, the impugned measure cannot be said to be disproportionate. In case these examples may seem too Lilliputian in one case or too eccentric in the other to give rise to large conclusions of principle, Animal Defenders International v United Kingdom (2013) 57 EHRR 607, another Grand Chamber decision, raised issues filling a larger canvass. The complaint was that Animal Defenders International was prevented by law from taking paid advertising time on television to disseminate its views on animal rights, an issue which the court acknowledged to be of general public interest. The court held that the restriction was compatible with article 10, and treated as relevant the fact that, although television advertisement was the most effective mode of communication, it was not the only one. At para 124, the court said: The Court notes, in this respect, the other media which remain open to the present applicant and it recalls that access to alternative media is key to the proportionality of a restriction on access to other potentially useful media In particular, it remains open to the applicant NGO to participate in radio or TV discussion programmes of a political nature (ie broadcasts other than paid advertisements). It can also advertise on radio and television on a non political matter if it sets up a charitable arm to do so and it has not been demonstrated that the costs of this are prohibitive. Importantly, the applicant has full access for its advertisement to non broadcasting media including the 44. print media, the internet (including social media), as well as to demonstrations, posters and flyers. Even if it has not been shown that the internet, with its social media, is more influential than the broadcast media in the respondent State (para 119 above), those new media remain powerful communication tools which can be of significant assistance to the applicant NGO in achieving its own objectives. In the Court of Appeal in the present case, Arden LJ remarked (para 57) that the interference with article 10 rights in this case was in effect a denial of the right. This seems to me to be too extreme a view. I do not doubt that a face to face meeting between the Parliamentarians and Mrs Rajavi is the most effective way of conducting their discussions. I would accept that the proposed venue (the Palace of Westminster) and the proposed attenders (members of the two Houses of Parliament) both add symbolic value to an occasion intended to promote democratic values, although it may equally be said to enhance any perception on the part of the Iranians that she is being officially endorsed by the organs of the British state. But Mrs Rajavi has not been denied the right to express her views. Nor have English Parliamentarians or anyone else been denied the right to receive them. Putting the matter at its highest, the Secretary of States decision deprives them of the use of one method and one location for their exchanges. It may be that the decision rules out the best method and the best venue for the purpose. For that reason it would be wrong to suggest that such a restriction is trivial. It is not. Nor did the Secretary of State say that it was. The restriction is fairly described in her reasons as limited. But the force of the point does not lie in the choice of adjectives. It lies in the Secretary of States view that the particular restrictions of freedom of expression involved in her decision, in whatever language described, were outweighed by the risk to the safety of British persons and property and Embassy staff. That was a question to which she plainly did address herself. Point (ii): Overstating the risks 45. The claimants take issue at a number of points with the assessment of the risks by the Foreign Office on which the Secretary of State has relied. None of their criticisms seem to me to meet the gravamen of the Secretary of States case. Moreover, many of them were undermined six months after these proceedings were launched when the sack of the British Embassy in Tehran tended to bear out some of the worst fears of the Foreign Office. The points can be dealt with quite shortly, since it is neither necessary nor in my view possible for a court to reach a definitive conclusion of its own: (2) (1) The claimants say that the Iranian government has not reacted adversely to other European countries which have allowed Mrs Rajavi to engage without restriction with Parliamentarians and communicate her message on their soil. All of these countries have embassies in Tehran, including Switzerland which represents the interests there of the United States, regarded as Irans principal international antagonist. The difficulty about this argument is that it fails to address the main point made in the Secretary of States reasons and the evidence of Mr OFlaherty, namely the long standing and highly unusual character of Britains relationship with Iran over a very long period. The Secretary of States view derives considerable support from the fact that although the EU also had extensive sanctions in place against Iran in 2011 only the British Embassy was attacked. No other European country was targeted. It is said that there was no adverse reaction in Iran to Mrs Rajavis earlier visits to the United Kingdom, before her exclusion in 1997; nor (apart from minor demonstrations) to the de proscription of MeK by the United Kingdom in 2008 and by other countries thereafter. Mr OFlahertys answer is that the factors involved have varied over the years in the course of what has generally been an unstable and deteriorating bilateral relationship, with the result that the position before 1997 is not a guide to the gravity of the threat now. Mrs Rajavis last visit to the United Kingdom occurred seventeen years ago. The de proscription of MeK is more recent, but the claimants argument on this appears to be contrary to the evidence. There were demonstrations outside the Embassy after the decision to de proscribe MeK. The fact that they were not violent is of limited relevance given the propensity of mob action to get out of control. De proscription was certainly regarded as a political act and provoked a high level of official and public rhetoric directed against the United Kingdom, much of which was specifically based on the accusation that the United Kingdom was supporting terrorism. It is said that the Iranians are unlikely to try to acquire nuclear weapons because of the admission of Mrs Rajavi to the United Kingdom. This is not disputed, but it is hardly the right question. It is notorious that negotiations with Iran about nuclear non proliferation have been prolonged and difficult. It is self evident that their success is a matter of great importance to global security. It seems equally obvious that a perception of foreign hostility and an antagonistic relationship between Iran and one of the principal countries involved in the negotiations can only hinder their progress. (3) (4) The claimants have argued that since the United Kingdom was prepared to impose economic sanctions on Iran regardless of the consequences for the safety of its nationals and Embassy personnel, no plausible case can be founded on the comparatively minor offence that would be given to the Iranian regime by admitting Mrs Rajavi. I do not find this convincing. In the first place, the United Kingdoms sanctions were imposed under the auspices of the United Nations and the European Union in the context of a general international move against Iran provoked by its perceived desire to acquire nuclear weapons. Secondly, the value of sanctions as a diplomatic tool was considered to be great enough to warrant the risks. The Foreign Offices assessment is that by comparison concessions to Mrs Rajavi would have very little value having regard to her limited influence in Iran. (5) There have been no overt threats to British persons or interests or to Embassy staff if Mrs Rajavi is admitted. This is correct, but there is a difference of view between the parties about whether an overt advance threat would be expected. 46. The claimants contention that the Secretary of State has overstated the risks associated with the admission of Mrs Rajavi to the United Kingdom is outwardly unimpressive, especially in the aftermath of the events of November 2011. But in my opinion it fails for a more fundamental reason. The future is a foreign country, as L P Hartley almost said. They do things differently there. Predicting the likely consequences of a step which the evidence suggests will be viewed in Iran as a hostile act, cannot be a purely analytical exercise. Nor can it turn simply on extrapolation from what did or did not happen in the past. There is a large element of educated impression involved. The decision calls for an experienced judgment of the climate of opinion in Iran, both inside and outside that countrys public institutions. The exercise is made more difficult by the intense political emotions engaged in Iran, combined with a large element of irrationality and the involvement of potentially violent mobs. The consequences of a failure to engage with this complex and unstable society are sufficiently serious to warrant a precautionary approach. It is the proper function of a professional diplomatic service to assess these matters as best they can. It follows that the only reasonable course which the Home Secretary could have taken once Mrs Rajavis position was raised with her by Lord Carlile, was to draw on the expertise of the Foreign Office, as she did. Having received what was on the face of it a reasoned professional assessment of the consequences of admitting Mrs Rajavi, it is difficult to see how she could rationally have rejected it. This court is no better and arguably worse off in that respect than she was. We have no experience and no material which could justify us in rejecting the Foreign Office assessment in favour of a more optimistic assessment of our own. To do so would not only usurp the proper function of the Secretary of State. It would be contrary to long established principle which this court has repeatedly and recently reaffirmed. It would step beyond the proper function of a court of review. And it would involve rejecting by far the strongest and best qualified evidence before us. In my opinion it would be a wholly inappropriate course for us to take. Point (iii): less intrusive alternatives 47. Since the problem arises from the prospective presence of Mrs Rajavi in the United Kingdom it is difficult to see what lesser measure than her exclusion would meet the case. The only alternative suggested by the claimants is for the Secretary of State to explain to the Iranian government that she is bound by the Human Rights Act and by the decisions of an independent judiciary. A similar argument was advanced without success about Saudi Arabia in R (Corner House Research and another) v Director of the Serious Fraud Office (JUSTICE intervening) [2009] AC 756, see para 40. In my opinion, it is equally unrealistic in this case. In the first place, the evidence is that there have been attempts in the past to persuade the Iranian government of these things, which have got nowhere. Secondly, states commonly deal with each other as unitary entities. The impact on them of the United Kingdoms decisions is unlikely to be influenced by the question which organ of the United Kingdom state was its originator. Thirdly, there is no reason to suppose that Iran in particular would be susceptible to such explanations. They treated the judicial decision to de proscribe MeK as a political decision in defiance of the facts. Lord Kerrs Judgment 48. I have naturally reflected further on these issues in the light of the judgment of Lord Kerr, which strongly expresses the opposite view. Lord Kerr considers that while respect is required for the executives assessment of the consequences of admitting Mrs Rajavi for national security, public safety and the rights of others, it is for the court to assess the weight to be attached to the Convention right to freedom of expression. In principle that is right, but it does not take matters any further in a case like this one, where the decision maker has to weigh the one against the other. It cannot therefore be enough to assess the weight to be attached to freedom of expression on its own, unless perhaps the court is to say that the weight to be attached to freedom of expression is so great that as a matter of law nothing can prevail against it. I do not understand that to be Lord Kerrs position. Nor would it be consistent with either the language of article 10 or the jurisprudence of the Strasbourg court, both of which emphasise that freedom of expression is not an absolute right but may be outweighed by other legitimate public interests. 49. This gives rise to what is surely the central issue on this appeal. How is the court to determine where the balance lies if (i) it has no means of independently assessing the seriousness of the risks or the gravity of the consequences were they to materialise, and (ii) the Secretary of State is not shown to have committed any error of principle in her own assessment of them. For that is indeed the position in which the court finds itself. We are not in point of law bound to accept the factual assessment of the Foreign Office about the impact on our relations with Iran of admitting Mrs Rajavi to the United Kingdom. But if we reject it we must have a proper basis for doing so. In this case, there is none. There is no challenge to the primary facts. We have absolutely no evidential basis and no expertise with which to substitute our assessment of the risks to national security, public safety and the rights of others for that of the Foreign Office. We have only the material and the expertise to assess whether the Home Secretary has set about her task rationally, by reference to relevant matters and on the correct legal principle. Beyond that, in a case like this one, we would be substituting our own decision for that of the constitutional decision maker without any proper ground for rejecting what she had done. All the recent jurisprudence of this court has rejected that as an inappropriate exercise for a court of review, even where Convention rights are engaged. Yet that appears to be where Lord Kerrs analysis leads. We do not ask whether the Secretary of States view is tenable, he says (para 158), but whether it is right. Notwithstanding the respect which in earlier parts of his judgment Lord Kerr has acknowledged is due to the executives assessment of questions of national security, this is in fact nothing less than a transfer to the courts of the constitutional function of the Home Secretary, in circumstances where the court is wholly incapable of performing it. In the end, however, Lord Kerr puts forward no reason for rejecting the Home Secretarys assessment of the risks to national security, public safety or the rights of others on the evidence. He makes two rather different points. 51. The first is that the predictive character of the judgment of the Home Secretary and the Foreign Office, combined with the volatility of the Iranian government and people, makes the executives assessment inherently unreliable and therefore substantially diminishes its weight. I would accept that these factors inject into the situation a larger than usual element of uncertainty. This necessarily calls for a high degree of care, and if the evidence had been challenged in the High Court that would no doubt have 50. been one element of the challenge. But I would not accept that any of this diminishes the weight to be attached to the executives assessment. It is inherent in the precautionary approach which is generally required in dealing with potential threats to national security and public safety that decisions must be based on inherently uncertain assessments of the future. In view of the importance of the objective, I am not prepared to say the very nature of the judgments required to achieve it should diminish their significance in the eyes of a court. 52. Lord Kerrs second point is a more fundamental one, namely that the risk of an adverse reaction by the Iranians to the admission of Mrs Rajavi should be entitled to limited weight, not because such a reaction is insufficiently probable or harmful, but because it would be unreasoning and unreasonable, anti democratic and contrary to the standards and values of this country for the Iranians to behave in that way. That may be so. However, the question is not whether an adverse reaction by the Iranians would be legitimate in our terms, but whether it would be sufficiently likely and dangerous to the interests referred to in article 10.2. This is an essentially factual judgment, on which the only pertinent material before us is the expert assessment of the Foreign Office. In the nature of things, many of the public interests listed in article 10.2 of the Convention as being capable of justifying restrictions on freedom of expression will arise from threats which can fairly be described as unreasoning, unreasonable, anti democratic and contrary to the values underlying the Convention. Terrorism and other acts of political violence are unreasoning, unreasonable, anti democratic and contrary to the values of this country. It is an unfortunate truth, but one that we must face, that in the modern world the great majority of threats to our national security, public safety and the rights of others do come from people who are unreasoning, unreasonable and anti democratic and reject the values of this country. But it has never previously been suggested that the threat of violence by third parties should only be entitled to substantial weight in executive decisions so far as they emanate from people who share our values. On the contrary, the courts have consistently treated them as relevant and weighty, as they plainly are. The Secretary of State is concerned with the actual consequences of Mrs Rajavis admission, not with the democratic credentials of those responsible for bringing them about. This was the precise issue decided in Corner House, where the error of the Divisional Court which led to its being overruled in the House of Lords was that it required the decision maker to ignore or downplay real risks to national security where they originated from people acting for motives which were contrary to the values of this country. Lord Kerr suggests (para 161) that no fundamental right was at stake in Corner House. With respect, that is not right. The rights that were at stake were identified by Lord Bingham (at para 23) by reference to the judgment of the Divisional Court. They were on the one hand the rule of law and on the other hand the duty of the state under article 2 of the Convention to protect human life against (among other things) terrorist threats. These are among the most fundamental values of our society. Conclusion 53. In my opinion, on the undisputed facts before the Secretary of State, it has not been shown that she was guilty of any error of principle. On the points which were critical to their decision, it has not been shown that the Divisional Court or the Court of Appeal were guilty of any error of principle. I can see no factual or legal justification for this court to take a different view. I would therefore dismiss this appeal. LORD NEUBERGER: 54. In my view, this appeal should be dismissed. Although I agree with a great deal of what he says, my reasons are perhaps more limited than those given by Lord Sumption, and I will therefore express them in my own words. The nature of the issue 55. The issue on this appeal arises out of a decision of the Home Secretary to refuse to admit Mrs Rajavi into this country because the Foreign Secretary believes that it would risk harming the diplomatic and economic interests of the United Kingdom, and the safety of some people for whom it has a degree of responsibility. The issue is the extent to which the court can override the decision on the ground that it curtails Mrs Rajavis ability to engage in political discussions with members of the United Kingdom legislature. 56. The issue requires one to focus on the boundary and overlap between the respective roles of the executive and of the judiciary. That aspect of our constitutional settlement has gained increasing significance with the growth of judicial review over the past fifty years, and that significance has accelerated since 2000 with the coming into force of the Human Rights Act 1998. Judicial review protects citizens against inappropriate use of the executives powers, and, as those powers have increased in most areas since the 1960s, so has the number of judicial review applications. The 1998 Act for the first time formally introduced fundamental rights into the domestic law of the United Kingdom, and the exercise of executive powers often affects those rights, which include the right engaged in this case, freedom of expression. 57. The courts accordingly are now frequently called on to review, and, where appropriate, to overturn, decisions of the executive, whether government ministers, local authorities, or other administrative bodies as can be seen from perusing the law reports. Judges should always be vigilant and fearless in carrying out their duty to ensure that individuals legal rights are not infringed by the executive. But judges must also bear in mind that any decision of the executive has to be accorded respect in general because the executive is the primary decision maker, and in particular where the decision is based on an assessment which the executive is peculiarly well equipped to make and the judiciary is not. However, I agree with what Lord Kerr says in paras 137 and 147, namely that, whatever the issue, once a Convention right is affected by a decision of the executive, the court has a duty to decide for itself whether the decision strikes a fair balance between the rights of an individual or individuals and the interests of the community as a whole. 58. The specific issue raised on this appeal arises from concerns about how the Iranian government is likely to react to a particular decision of the United Kingdom government, and whether the reaction could endanger the safety of individuals for whom our government has some responsibility, or could harm this countrys economic or international political interests. These are plainly matters which are entrusted under our constitutional settlement to the executive, and in particular to the Foreign Secretary, who, with the experience and sources of information available to his department internally and externally, is, almost literally, infinitely more qualified to form an authoritative opinion on such issues than a domestic judge, however distinguished and experienced he or she may be. 59. The Home Secretary, whose decision is being challenged, has consulted the Foreign Secretary, and she states that, as a result, she has decided not to admit Mrs Rajavi into this country, because it would have a significant damaging impact on United Kingdom interests in relation to Iran and on the lives and interests of others. The possible adverse Iranian response is said to include targeting our interests in Iran and risk to British interests and properties outside Iran, and the decision is described as resting not purely on foreign policy grounds but also on grounds of United Kingdom security, especially the safety of over one hundred local employees in Iran, and the security of United Kingdom personnel in the region. 60. These concerns are more fully described by Lord Sumption in paras 7 9 and by Lord Kerr in paras 122 128 of their respective judgments. They are recorded in letters sent on behalf of the Home Secretary, conveying the decision not to admit Mrs Rajavi, and they are further explained in two statements prepared for the purpose of these proceedings by Mr OFlaherty, a senior official in the Foreign Office responsible for diplomatic relations with Iran. 61. The ground upon which it is said that the decision is unlawful is that the concern on which it is based represents an insufficient justification for interfering with the article 10 rights of Mrs Rajavi and of those many Members of Parliament and Peers who wish to meet her in London in order to discuss the important issue of Iranian democracy. There is no doubt that, if it stands, the decision will impede such discussions; nor is there any doubt that such discussions are at the top of the hierarchy of free speech, as they constitute political communications. 62. There are, I think, three separate submissions contained in the argument of Lord Pannick QC, who seeks to impugn the Home Secretarys decision. The first is that the grounds of objection to Mrs Rajavis admission to the United Kingdom raised by the Home Secretary could not, as a matter of law, defeat an article 10 right. The second submission is that, even if they could, the basis of the decision is flawed because the Home Secretary wrongly considered that article 10 was not engaged. The third submission is that, even if the basis of the decision is not so flawed, the grounds for it are insufficiently strong to justify refusing to give effect to the article 10 rights involved ie that the reasons for refusing Mrs Rajavi admission into the United Kingdom are disproportionate bearing in mind that article 10 is engaged. Discussion of the appellants case 63. I would reject the first submission, which was raised for the first time in this Court. Where a person needs her permission to enter the United Kingdom, the Home Secretary is entitled, indeed in some circumstances she might be said to be obliged, to refuse entry if such a refusal would be conducive to the public good under rule 320 of the Immigration Rules. It is accepted that, if the Home Secretary was rationally concerned that a persons presence in the United Kingdom would damage the national interest within the jurisdiction, entry could be refused because of such concerns. I find it impossible to accept that the same decision could not be made if the Home Secretary was concerned that a persons presence in the United Kingdom would damage the national interest abroad. Neither logic nor the language 64. 65. of the rule justify such a distinction. It is regrettable that the concerns in this case are based on the risk of what may appear to the great majority of people in this country to be an inappropriate and unjustifiable reaction on the part of a foreign government (and possibly others). However, government ministers and judges cannot disregard facts, particularly when it comes to making or reviewing decisions based on the public good. I would also reject the second submission. Although the Home Secretary appears initially to have considered that article 10 was not engaged (understandably, if wrongly, because the discussions with Mrs Rajavi could take place, albeit not with all the parties face to face in this country), it is pretty clear that she accepted that it was engaged by the time she made her final decision. If the second submission had been a good one, then, rather than deciding the question ourselves, I would have concluded that the question of Mrs Rajavis admission into the United Kingdom should be remitted to the Home Secretary. For the reasons I have given for rejecting the third submission, it would, in my view, be inappropriate for us to determine for ourselves whether Mrs Rajavi should be admitted into the United Kingdom. I turn then to Lord Pannicks third submission. He rightly did not contend that the Home Secretarys decision was disproportionate on the grounds that the concerns she invoked were not genuinely held by her or the Foreign Secretary. There are no proper grounds upon which we could conclude that the concerns expressed by the Foreign Secretary and his officials are not genuine: they are concerns which a domestic court is not in a position to challenge or doubt. If Mr OFlaherty had been cross examined, and the High Court had been satisfied that the factual basis for those concerns did not exist or was flawed in some other way, it might be different. So, too, if it had been argued that the concerns were irrational. But, rightly, that argument was not advanced either. 66. However, the appellants evidence carries an undertone of a suggestion that the concerns were unjustified. For instance, it is said that Mrs Rajavi has visited the United Kingdom on four occasions between 1985 and 1996, that she moves round the rest of Europe freely, and that she lives in France. However, as Lord Sumption explains, Mr OFlahertys evidence is that the relationship between Iran and the United Kingdom has long been particularly sensitive, international relations with Iran generally are particularly fraught at the moment, and there have been unfortunate incidents in the past. Accordingly, there are reasons for rejecting the scepticism which some people might feel as to whether the concerns expressed by the Secretaries of State were justified. 67. Having said that, it remains the case that, where human rights are adversely affected by an executive decision, the court must form its own view on the proportionality of the decision, or what is sometimes referred to as the balancing exercise involved in the decision. That was made clear by all members of the appellate committee in Belfast City Council v Miss Behavin Ltd [2007] 1 WLR 1420, paras 13, 24, 31, 44 and 97, applying R (SB) v Governors of Denbigh High School [2007] 1 AC 100. More recently, the point was illuminatingly discussed by Lord Reed in Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700, paras 68 76. As Lord Reed made clear at para 71, while proportionality is ultimately a matter for the court, it does not entitle [domestic] courts simply to substitute their own assessment for that of the decision maker, and he went on to say that the degree of restraint practised by [domestic] courts in applying the principle of proportionality, and the extent to which they will respect the judgment of the primary decision maker, will depend upon the context, and will in part reflect national traditions and institutional culture. The same point was made by Lord Sumption in a passage he quotes on this appeal in para 21. It is also right to bear in mind Lord Binghams remarks in para 29 of A v Secretary of State for the Home Department [2005] 2 AC 68, and Lord Reeds remarks in para 93 of Bank Mellat (No 2), quoted by Lord Sumption in para 33. 68. Accordingly, even where, as here, the relevant decision maker has carried out the balancing exercise, and has not made any errors of primary fact or principle and has not reached an irrational conclusion, so that the only issue is the proportionality of the decision, the court cannot simply frank the decision, but it must give the decision appropriate weight, and that weight may be decisive. The weight to be given to the decision must depend on the type of decision involved, and the reasons for it. There is a spectrum of types of decision, ranging from those based on factors on which judges have the evidence, the experience, the knowledge, and the institutional legitimacy to be able to form their own view with confidence, to those based on factors in respect of which judges cannot claim any such competence, and where only exceptional circumstances would justify judicial interference, in the absence of errors of fact, misunderstandings, failure to take into account relevant material, taking into account irrelevant material or irrationality. 69. Applying those principles to this case, it appears to me clear that the Home Secretarys decision to refuse to admit Mrs Rajavi into the UK is one with which the courts should not interfere, despite the engagement of article 10. Although that conclusion means that I would uphold the decisions of the courts below, it is right to add that I agree with Lord Kerr when he says at paras 136 137 that the Court of Appeal were wrong to confine themselves to the question whether the decision maker had approached the matter 70. 71. rationally, lawfully and in a procedurally correct manner (per Arden LJ at [2013] EWCA Civ 199, para 93). Such an approach has been traditionally adopted in domestic judicial review cases, whereas in cases involving Convention rights, the appropriate approach is that summarised in paras 67 68 above. However, it is fair to say that, in practice in a case such as this, for the reasons given in paras 70 73 below, the difference in the two approaches may rarely produce different results. It is, I would have thought, self evident that a decision based on the possibility of an adverse reaction of a foreign government, and consequential risk of damage to the United Kingdoms diplomatic and economic interests, and to the well being of United Kingdom citizens and employees abroad, is very much at that end of the spectrum where a court should be extremely diffident about differing from a ministerial decision, at least where the only challenge is based on proportionality. Just as it is normally impossible for a judge to challenge the existence of such risks, once they are believed by the Foreign Secretary to exist, so it would normally be impossible for a judge to form a view as to how likely such risks are to eventuate and how serious the consequences would be. That view is also consistent with what Lord Reed called our national traditions and institutional culture, as is evidenced by the cases cited by Lord Sumption in paras 22 26 above, especially those decided after the Human Rights Act came into force. I appreciate that, as Lord Clarke suggests, some people might wonder whether, or even suspect that, the Foreign Secretarys concerns about the repercussions of permitting Mrs Rajavi to enter the United Kingdom are exaggerated, or that the risk of his concerns being realised was slight. That is an opinion which any citizen is entitled to hold and express, but, like Lord Clarke, I do not consider that it is an opinion on which a court would be entitled to act in this case. As I have mentioned, a Judge has neither the experience nor the knowledge to make such a finding, save in exceptional circumstances, and I do not consider that it would be open to us to hold that this was such an exceptional case without the justification having been established through cross examination of Mr OFlaherty. And, even if the likelihood is small, the risk of grave harm exists, and it is primarily for the executive to assess the extent of such a risk and to decide what to do about it. 72. Accordingly, treating this as a balancing exercise, there is, on the one side, a real risk of possible, conceivably substantial, harm to (i) the United Kingdoms diplomatic interests, (ii) the UKs economic interests, and (iii) individuals for whom the United Kingdom has a degree of responsibility. In terms of institutional competence, it is very much the function of the executive, and not the judiciary, to assess the existence and the extent of such risks, and there is insufficient evidence to justify a court forming a different view of the risks. For that reason alone, I consider that it would require an exceptionally heavy weight on the other side of the balance before a court could satisfactorily carry out its own balancing exercise in this case and come to a different conclusion from that of the Home Secretary. 73. When one turns to the other side of the balance, it is perfectly true that the importance of freedom of expression is fundamental in a modern democratic society, and that political free speech is particularly precious. This is clear from the judicial observations cited by Lord Kerr in his judgment at paras 162 165. However, as article 10 provides, it is not an unqualified freedom, in that it may be subject to various formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society for various purposes, including the interests of national security, territorial integrity or public safety. While the Home Secretarys decision in this case results in curbing freedom of speech, the decision itself is a perfectly orthodox exercise of her power to refuse a person entry into the United Kingdom on the grounds of the national interest, and to that extent this is an unusual case. 74. Furthermore, although the effect of the decision would be to impede political discussions with Mrs Rajavi, those discussions would not by any means be prevented: they could be conducted by videolink or (less convincingly bearing in mind the numbers involved) by the Parliamentarians visiting Mrs Rajavi in France. In addition, the decision not to admit Mrs Rajavi into this country was taken at the highest possible level, both at the Home Office and at the Foreign Office, namely by the relevant Secretary of State. It is also worth mentioning (although it is not a decisive point) that, as those objecting to the decision are members of the House of Commons and the House of Lords, it would, at least on the face of it, be relatively easy for the decision to be challenged in Parliament. The contrary view 75. As I understand it, Lord Kerrs contrary conclusion is based on the proposition that, because it is ultimately for the court to decide what weight to attach to the Convention right and where the proportionality balance comes down, we can and should allow this appeal, essentially for two reasons. The first is that there is a large element of uncertainty as to whether or not any of the consequences of admitting Mrs Rajavi, as feared by the Foreign Secretary and summarised in paras 59 60 above, would actually occur. I agree that the feared outcome is uncertain, but I do not consider that that factor takes matters any further, essentially for the reasons given in paras 70 74 above. The very fact that the feared outcome is uncertain appears to me, if anything, to emphasise why a court is not in a position to challenge the conclusion reached by the Home Secretary. The Foreign Office is the best equipped organ of the State to assess the likely reactions of a volatile foreign government and people, and while it would be an overstatement to say that a domestic court is the worst, it is something of an understatement to say that it is less well equipped to make such an assessment than the Foreign Office. 77. 76. Lord Kerrs second point is rather different, and does not appear to involve rejecting or discounting the opinion of the Home Secretary or the Foreign Secretary as to the risk of the harm summarised in paras 6 7 occurring. Rather it rests on the notion that the weight to be given to the anticipated reaction of the Iranian authorities should be significantly discounted, because, as he puts it, that reaction would be rooted in profoundly anti democratic beliefs, antithetical to the standards and values of this country and its parliamentary system in order to significantly restrict one of the fundamental freedoms that has been a cornerstone of our democracy, namely freedom of speech see his para 170. I have no doubt that many people in this country would enthusiastically agree with the sentiment implicit in those observations, but, essentially for the reasons mentioned in para 63 above, I do not accept that they represent an appropriate basis for allowing this appeal. While it may be unwise to be categoric, I find it very hard to envisage any circumstances where a judges decision to quash an executive decision to restrict a Convention right because its exercise might endanger the national interest, could turn on an assessment of the motives of the person responsible for the danger to the national interest. For instance, I cannot accept that, when considering whether anti terrorist legislation was incompatible with the Convention in so far as it restrained citizens human rights, a judge could take into account the fact that the legislation was motivated by the need to avoid risks to national security from actions by people motivated by unreasonable, violent and anti democratic motives. The issue in this case concerns the nature, likelihood and impact of the reaction of the Iranian authorities and people to the admission of Mrs Rajavi into this country, not the legitimacy or defensibility of the reasons for that reaction. 78. This case involves a decision of the executive arm of Government, and, while the executive arm has to obey the law, it has to act in accordance with the harsh practical realities to protect the public interest. It cannot be seriously disputed that members of the executive are therefore entitled, indeed often obliged, to take into account factors which a court, other than when considering the lawfulness of an executive or other third party decision, could normally not properly take into account. A good example can be found in A v Secretary for the Home Department [2005] UKHL 71, [2006] 2 AC 221, in which it was held that a court could never receive evidence obtained by torture; at paras 132 133, Lord Rodger of Earlsferry said that, unlike a judge, a Government minister could properly receive and act on information irrespective of how it had been obtained. It is right to add that, although I disagree with Lord Kerrs conclusion and his reasons for it, I largely agree with what he says in his paras 147 152, as I do with what Lord Sumption and Lady Hale say in their respective judgments. I express myself as largely agreeing with those passages, not so much because there is any specific statement with which I take issue, but because, as Lady Hale says, there are differences between us in terms of nuance. I should, however, perhaps deal with two points on which they are not agreed in those passages. 79. 80. First, there is the question discussed in Lord Kerrs para 158 and Lord Sumptions para 49. Lord Kerr suggests that the court has to decide whether the Secretary of States decision in this case was right rather than tenable, a proposition with which Lord Sumption disagrees. I find neither adjective entirely apt. I agree with Lord Kerr to the extent that the decision is for the court, but Lord Sumption is surely right to the extent that, unless it can be shown to be based on wrong facts or law, not genuinely held, or irrational, the nature of the decision in this case is such that the court would require strong reasons before it could properly substitute its own decision for that of the Secretary of State. 81. The second issue concerns the applicability of the reasoning of the House of Lords in R (Corner House Research) v Director of the Serious Fraud Office (JUSTICE intervening) [2009] AC 756 to this case (cf Lord Kerrs para 161 and Lord Sumptions para 52). While I accept that the decision has features which could enable it to be distinguished in this case as explained by Lady Hale at para 85, I consider that allowing this appeal would be difficult to reconcile with the reasoning in Corner House. In particular, one of the two grounds advanced by Lord Kerr for allowing this appeal would seem to me to imply that Corner House must have been wrongly decided. Lord Kerrs approach appears to involve the notion that the courts should not allow the executive to take into account risks or threats when they are activated by undemocratic or unreasonable motives; if that were right, then the Director of the SFO should surely not have been permitted to take into account the threats which, the House of Lords decided, he was entitled to take into account in that case. Conclusion 82. For the reasons which I have given, I consider that it is not open to a court on the facts of this case to conclude that the decision of the Home Secretary to refuse entry to Mrs Rajavi was unlawful. Accordingly, I would dismiss this appeal. LADY HALE: 83. This has been a very troublesome case. It has become clear that its principal importance lies, not in the result at which we arrive (although that is not unimportant), but in the way in which we describe the role of the court in arriving at it. Fortunately, we have reached a large measure of agreement, although careful readers will undoubtedly detect nuanced differences between us. It is for that reason that I wish to make my own position as plain as I can. 84. The first and most important point is that this is not a judicial review of the lawfulness of the decision of the Secretary of State that the admission of Mrs Rajavi to this country would not be conducive to the public good. Yet the Court of Appeal confined their consideration to the usual grounds for judicial review of administrative action that is, illegality, unfair process and unreasonableness or irrationality. Nor is this a statutory appeal against a decision to deport her from this country for the same reason, as was the case in Secretary of State for the Home Department v Rehman [2003] 1 AC 153. Such cases also raise difficult questions about the respective roles of the executive and the courts where questions of national security are engaged. But they are not the same issues as those raised by this case. 85. Nor, with the greatest respect, is the decision in R (Corner House Research) v Director of the Serious Fraud Office (JUSTICE intervening) [2009] AC 756 directly in point. That was not a human rights case. It was a traditional judicial review of the decision of the Director not to proceed with an investigation into allegations that BAE Systems had been guilty of the offence of bribing a foreign official. The courts have always been very reluctant to hold that a decision of the prosecuting authorities, whether to prosecute or to decline to prosecute, can be set aside on traditional judicial review grounds. The case was concerned with the rule of law, which is one of the two fundamental principles of our constitution; and the justification advanced for discontinuing the investigation included the risk to life if co operation between our security services and those of another country were to be withdrawn. But there was no allegation on either side that a United Kingdom public authority had acted, or proposed to act, in a way which was inconsistent with the Convention rights of any person within the jurisdiction of the United Kingdom. 86. This case is just such a claim. Section 6(1) of the Human Rights Act 1998 provides that it is unlawful for a public authority, such as the Secretary of State, to act in a way which is incompatible with a convention right. This means that even if the act is lawful in other terms it may be rendered unlawful if the effect is incompatible with a convention right. Section 7(1) provides that a victim of such an unlawful act may bring proceedings in the appropriate court or tribunal. Section 8(1) provides that in respect of an act which the court finds unlawful, the court may grant such relief or remedy, or make such other orders, within its powers as it considers just and appropriate. By section 6(3)(a), the court itself is a public authority and may therefore not act in a way which is incompatible with a convention right. 87. This all means that, although the decision in question is, by definition, one which the Secretary of State (or other statutory decision maker) was legally entitled to make, so that in that sense she is the primary decision maker, the court has to decide whether that decision is incompatible with a convention right. She is in the same position as a police officer, using his statutory or common law powers of arrest. He is the primary decision maker. But the court has to form a judgment as to whether or not a convention right has been violated. I agree with Lord Sumption that it is not helpful to ask whether or not this process involves merits review. We have moved on from that question now. 88. This is not to say that the wise observations of distinguished judges in cases such as Rehman and Corner House, as to the respective competence of courts and the executive to make some of the judgments involved, are irrelevant. Far from it. They help us in our approach to some at least of the questions which we have to answer. We have to accept that there are some judgments which the primary decision makers are better qualified to make than are the courts. We do not simply frank those judgments, but we accord them great respect. As Lord Bingham explained in A v Secretary of State for the Home Department [2005] 2 AC 68, para 29, when considering whether, shortly after the atrocities of 11 September 2001, there was a public emergency threating the life of the nation: I would accept that great weight should be given to the judgment of the Home Secretary, his colleagues and Parliament on this question, because they were called on to exercise a pre eminently political judgment. It involved making a factual prediction of what various people around the world might or might not do, and when (if at all) they might do it, and what the consequences might be if they did. Any prediction about the future behaviour of human beings (as opposed to the phases of the moon or high water at London Bridge) is necessarily problematical. Reasonable and informed minds may differ, and a judgment is not shown to be wrong or unreasonable because that which is thought likely to happen does not happen. 89. To form its judgment, the court has to go through an orderly process of decision making, answering a series of questions with which we are now all thoroughly familiar. Some questions are much easier for a court to answer than others, but the answer to each is relevant to the overall judgment that has to be made. (1) Is there a Convention right involved here? 90. No one doubts that article 10.1 of the Convention is involved: Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent states from requiring the licensing of broadcasting, television or cinema enterprises. This covers the right of Mrs Rajavi and of the Parliamentarians both to receive and to impart information and ideas without state interference. And they have this right regardless of frontiers. 91. These are hugely important rights. Freedom of speech, and particularly political speech, is the foundation of any democracy. Without it, how can the electorate know whom to elect and how can the Parliamentarians know how to make up their minds on the difficult issues they have to confront? How can they decide whether or not to support the Government in the actions it wishes to take? This is all the more important, the larger the issues at stake. There are few, if any, issues larger and more rapidly changing than the political and military situation in the Middle East at present. Parliament is considering whether to support air strikes in Iraq as I write. Parliamentarians who have to make these momentous decisions should be as well informed as they can be. They should be sensitive to all sides of a delicate and complex argument. The position of Iran is a vital, and rapidly changing, component in the Middle East situation. 92. Furthermore, this is an unusual case, in that the Government takes no objection to what Mrs Rajavi is likely to say or the views which she is likely to express. The right is there to protect unpopular or offensive views just as much as it is to protect popular or inoffensive views, but this is not such as case, and the justification for interference may be different as a result. 93. This case is also unusual in that the claimants are senior and distinguished Parliamentarians, many of whom have experience which is directly relevant to the questions at issue here. Indeed, they are much better qualified to assess the weight of the Governments objections to Mrs Rajavi coming to address them than are we. But the very distinction of the people who wish to meet her, and of the place where they wish to meet, gives to the meeting a public and a symbolic importance which it would not otherwise have. (2) Has the right been limited or interfered with? 94. The Secretary of State originally argued that there was no interference with the article 10 right by refusing Mrs Rajavi permission to come here to meet the Parliamentarians. They could always go to Paris to meet her. Or they could exchange views by audio or video conferencing methods (which these days are so effective that they are regularly used in court proceedings). But it was soon accepted that to prevent them from meeting face to face in the Houses of Parliament is indeed an interference with their rights. It would be much harder for the numbers of Parliamentarians who wish to meet Mrs Rajavi to do so in any other way. There is also the important symbolic value of a meeting in the Houses of Parliament. On the other hand, it must also be accepted that, as there are other ways in which the Parliamentarians could communicate with Mrs Rajavi, the interference is not as serious as it would be if they were banned from all forms of communication with her. (3) Was the limitation or interference prescribed by law? 95. Mrs Rajavi has no right to enter this country. The Secretary of State undoubtedly has the power to prevent her coming here, if her presence would not be conducive to the public good. This does make a difference, because the power of the state to prevent people meeting, exchanging views and saying what they like in this country is much, much more limited. If Mrs Rajavi were already here, it is unlikely that there would be any power to prevent her meeting the Parliamentarians and exchanging views with them, no matter how damaging the very fact of the meeting, let alone what was said there, might be to our fragile relations with Iran. Immigration control must be exercised consistently with the convention rights, but at least it means that the means used to limit those rights are prescribed by law. (4) Was it in pursuit of one of the legitimate aims permitted by the Convention in relation to the right in question? 96. Article 10.2 describes the permitted limitations: The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. The claimants do not suggest that the aims of the interference do not fall within those permitted by article 10.2. They could fall within national security, public safety or the protection of the rights of others. But this is not national security as many would understand it. It is not suggested that Iran would attack the United Kingdom, or incite terrorist actions against the United Kingdom, or withhold co operation with our security services, thus putting British lives at risk (as was the case in Corner House). This is not an existential threat to the life of the nation. Rather, it is a threat to the foreign policy our Government wishes to pursue. Two things are said (and, as the Administrative Court concluded, plausibly said): first, that it would be perceived by the Iranians as a hostile act, thus damaging our fragile but imperative relations with them; and secondly, that there would be a risk to the safety of locally engaged embassy staff and our remaining property and assets there, a risk which had become all the more plausible following the attack on our Embassy in November 2011, after we had cut off all financial ties with Iran. Knowing that the Strasbourg court generally takes a generous view of the concept, I am prepared to accept that the first risk comes within the ambit of national security and that (in the case of our local staff) the second comes within the protection of the rights of others. 97. That raises two further questions. The first is one of fact. How real are these risks? What is the evidence upon which they are based? What would the damage amount to? Lord Clarke is extremely sceptical about them and I can well understand why. It would, no doubt, have been open to the claimants to have challenged the factual basis for the Governments views before the Administrative Court. They could have asked that Mr OFlaherty be cross examined and subjected those views to searching examination. But they did not. Perhaps they were advised that little good would come of it. There are some factual questions upon which we may have to take the Governments word for it. They cannot always reveal the sources of their information. Qualitative assessments such as this are not readily challenged. So we must accept that those risks do indeed exist, although we have precious little information upon which to assess either their likelihood or their gravity. The second issue is one of evaluation. How important are those risks when weighed against the interference? That comes in at the next stage of the analysis. (5) Was it necessary in a democratic society? 98. This is what we now call proportionality. In this country, we have broken this down into four sub questions, recently articulated by Lord Wilson in R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, at para 45, and repeated in substantively identical terms by Lord Sumption and Lord Reed in Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700, at paras 20 and 74. In reality, however, there is a considerable overlap between the four questions. Provided that (i), (ii) and (iii) are answered in the affirmative, the real question is (iv), which can be encapsulated as do the ends justify the means? I have no doubt that it is for the court to make the proportionality assessment; but I have equally no doubt that on some parts of that assessment the court should be very slow indeed to disagree with the assessment made by the Government. (i) Is the objective sufficiently important to justify limiting a fundamental right? 99. This entails a qualitative judgment which the Government is much better qualified to make than is the court. This is not to say that the court will always take the Governments word for it on this or any of the proportionality questions. We did not do so, for example, in Aguilar Quila. But foreign policy and national security are the Governments business some would say the first business of any Government. They have access to sources of information which cannot be put before any court. They have advisers whose job it is to assess what is likely to happen in the future and how serious that will be. They are accountable to Parliament if they get it wrong. These, in brief, are the reasons given in all the cases why courts should be slow to differ from the Governments assessment of the importance of the objectives pursued in a national security context. 100. This case has two unusual features bearing on this question in different directions. First, many of the claimants are themselves peculiarly well qualified to assess the importance of the Governments objectives. They have been in relevant positions in Government or, in the case of Lord Carlile, has served as the Governments independent reviewer of the operation of our anti terrorism legislation. Second, they are all (apart from Mrs Rajavi herself), senior Parliamentarians. This means that they are among those who can hold the Government to account in Parliament for the judgments it makes. 101. At this threshold stage, however, whatever doubts I might have about the real strength of the Governments fears, I cannot say that preserving our relations with Iran is not even capable of justifying some limitation on freedom of speech. (ii) Are the measures which have been designed to meet it rationally connected to it? 102. Clearly, they are. The risks are said to stem from letting Mrs Rajavi come here to address a group of Parliamentarians in the Houses of Parliament. Preventing her from doing so is the rational way of avoiding the risks. (iii) Are they no more than are necessary to accomplish it? 103. Once again, clearly they are. In this case, this is a circular question. The risks stemming from allowing her to come here to address the Parliamentarians can only be prevented by refusing her permission to do so. (iv) Do they strike a fair balance between the rights of the individual and the interests of the community? 104. This, as always, is the nub of the proportionality question. It involves weighing or balancing values which many may think cannot be weighed against one another. Some will think that our foreign policy interests in the Middle East are so important, not only to the safety and security of this country but to the safety and security of the whole wide world, that nothing should be allowed to put them at risk. Some may think that freedom of political expression, especially where such serious and controversial issues are involved, is such a vital feature of any democracy that only the most weighty of reasons should suffice to justify any interference with it. 105. I agree that, difficult though this is, it is ultimately a task for the court, but a court which is properly humble about its own capacities. If the court is satisfied that the Government has struck the balance in the wrong place, then the court must say so. But I also agree that courts must be very slow to interfere with that balance in a case such as this. The court has a particular expertise in assessing the importance of fundamental rights and protecting individuals against the over mighty power of the state or the majority. The Government has much greater expertise in assessing risks to national security or the safety of people for whom we are responsible. But the Government in a democracy such as ours should be at least as mindful of the need to strike the necessary balance between individual rights and the common good as are the courts; and if it does not protect those rights, it is accountable to Parliament in a way which we are not. I may be (like Nellie) a cockeyed optimist, but I believe that our Government does, on the whole, try to act within the law (there was a time when every senior civil servant carried a copy of guidance entitled The Judge Over Your Shoulder); that law now requires the Government to respect human rights, and so it must try to do so. There are occasions when they get it wrong, and we must say so if they do, but we should certainly not assume that they have. 106. This case is particularly difficult, and perhaps unusual. Not only is neither side of the balance particularly weighty, but many of the features cut both ways. I agree entirely with Lord Kerr that it is for us to assess the importance of the right, and we all agree about the particular importance of freedom of political speech, especially on issues such as this. But there are many other ways in which the Parliamentarians could learn from Mrs Rajavi and exchange views with her. She is not being prevented from making her views known, however unpopular those views are with the Iranian authorities. The Parliamentarians are not being prevented from discussing the issues with her. They do not need her to come to Parliament in the way that, for example, all sides of the political debate on the recent referendum had to be put before the voting public. They want her to come, not only for practical, but also for symbolic reasons. 107. On the other hand, the claimed risks to our national interests are also not of the most weighty. The Government has been prepared to take much greater risks in our relations with Iran than it would be taking if it were to allow Mrs Rajavi to come here. They have judged the foreign policy objectives pursued to be more important than the risks. What is at stake here is, it must be admitted, comparatively small beer compared to what is at stake in sanctions aimed at combatting nuclear proliferation. But like everything else, that cuts both ways. The Governments view is that Mrs Rajavi is not an important figure in the Iranian opposition. There is little to be gained from exchanging views with her and something to be lost. 108. I was for a while troubled by the thought that the risks feared by the Government could not begin to justify interfering with the Parliamentarians rights to exchange views with Mrs Rajavi were she already here. There are many important foreign opposition figures whom we have proudly welcomed to these shores and given a platform for their views. Only if they commit criminal offences here can they be prevented. This must often be extremely irritating, to put it mildly, to foreign governments with whom we wish to remain on friendly terms. Why should it make a difference that Mrs Rajavi is not here and has no right to be? In the end, I have concluded that it does make a difference, not only because the law allows the Government to prevent her coming here, but also because of the symbolic importance which both she and the Parliamentarians, on the one hand, and the Iranian authorities, on the other hand, would attach to the lifting of the ban. Conclusion 109. In the end, I have reluctantly concluded that the risks anticipated by the Government, which we must accept are real, are, in the unusual circumstances of this case, sufficient to justify the interference with Mrs Rajavis and, more importantly, the Parliamentarians rights. No one can doubt the huge importance of what is going on in the Middle East to the national security of this country and of the whole world. Recent events have served to emphasise that our relations with Iran are not only fragile but also imperative. I cannot conclude that the Parliamentarians right to meet Mrs Rajavi face to face in the Houses of Parliament is sufficiently important to put that relationship at risk. They have the unique advantage that the Government can and must answer to Parliament for what the claimants see as an affront to their rights as Parliamentarians. 110. The three decisions under attack in these proceedings were made on 1 February 2011, 10 October 2011, and 24 January 2012. The witness statements of Mr OFlaherty were made on the same days as the second two decisions. The Administrative Court made its decision on 16 March 2012. It is now November 2014. A great deal has happened in the Middle East since then. We do not know how, if at all, the Foreign Office and Security Service assessments of the balance of risk and advantage would be different today. But I am conscious that we are looking in 2014 at the compatibility with the convention rights of a decision taken in 2011. We have, I hope, gone some way towards clarifying the principles. It can be taken again in the light of the up to date situation. LORD CLARKE: 111. I would very much have liked to be able to agree with Lord Kerr and have allowed the appeal. This is because I am extremely sceptical about the reasons given on behalf of the Secretary of State for refusing to permit Mrs Maryam Rajavi to visit the United Kingdom in order to meet a number of members of Parliament and to discuss democracy and human rights in Iran. However, I have reached the conclusion that there is no basis upon which the court could properly allow the appeal and that the appeal should be dismissed, essentially for the reasons given by Lord Neuberger. 112. My reason for being unable to agree with Lord Kerr are essentially these. Like him (at para 133), I agree with the assessment of the Secretary of State that Mrs Rajavis admission to this country would be (or would have been) regarded by the Iranian government as a hostile act and, again like him, I find it impossible to disagree with Stanley Burnton LJs assessment that it was entirely feasible that, given the record of the Iranian government, retaliation in the form of action against Iranian employees or against United Kingdom citizens might ensue. In para 135 Lord Kerr poses this question. Put simply, if the executives assessment of the risk must be accepted, what is the courts role in judging whether such a risk, and the consequences of its materialising, are sufficient to justify the interference with the particular Convention right? It appears to me that, on the facts of this case, once those conclusions are accepted, it is very difficult for the court to reject the Secretary of States view on proportionality. It was indeed at this first stage that I had some doubts. In particular I was unsure whether it was right to accept the evidence of Mr OFlaherty upon which the findings were based. It seemed to me that there was scope for investigation of the question whether the Home Office were still influenced by their previous view that PMOI was a terrorist organisation, given that the Secretary of State had refused to reverse the proscription of PMOI, had resisted an appeal to POAC against that refusal and, when the appeal succeeded, had subsequently appealed to the Court of Appeal, which unanimously dismissed the appeal: see the description by Lord Kerr at para 119. 113. 114. However, as Lord Neuberger and Lord Sumption observe, no attempt was made to cross examine Mr OFlaherty and, as Lord Neuberger says at para 65, not only were the concerns expressed by the Secretary of State and the Foreign Secretary (and their officials) genuine, but they were concerns which a domestic court is not, as a matter of fact, in a position to doubt, at any rate in the absence of evidence to the contrary. 115. The basis upon which Lord Kerr has reached the conclusion that the appeal should be allowed depends upon his analysis of proportionality. He accepts in para 150 that on the question of the assessment of the risks of admission to the United Kingdom and their consequences, very considerable respect for the executive decision is called for, albeit short of genuflection. The position, he says at para 154, is different on the question whether the importance to be attached to the rights of the appellants (and indeed of Mrs Rajavi) to freedom of expression under article 10 of the European Convention on Human Rights was one on which the court should defer to the decision of the respondent. I agree with his conclusion in para 154 that it is for the court to reach its own conclusion on the importance to be attached to such a right on the facts of a particular case. As Lord Neuberger says at para 57, once a Convention right is affected by a decision of the executive, the court has a duty to decide for itself whether the decision strikes a fair balance between the rights of an individual or individuals and the interest of the community as a whole. In these circumstances I agree with Lord Kerrs conclusion at para 158 that the question is whether the decision of the Secretary of State was right. 116. I recognise the importance of Mrs Rajavis rights under article 10. However, in his discussion on striking the balance Lord Kerr asks in para 169 whether unreasoning and unreasoned views should count significantly in support of a claimed justification for interference with that right and whether the Iranian reaction (even if correctly anticipated) should be allowed to exert significant influence over a decision to restrict the guaranteed rights of parliamentarians. He relies too in para 172 on the profoundly anti democratic beliefs of Iran. However, I agree with Lord Neuberger (at his para 81) that the idea that the courts should not allow the executive to take account of risks which are activated by undemocratic or unreasonable motives is unsound. It is surely the duty of the executive to take account of the fact of such risks to personnel or property regardless of the motives of the perpetrators. I am unable to agree with Lord Kerr that it is relevant to take account of the perversity, irrationality or lack of justification of the likely conduct on the part of Iranians in Iran. The executive is rightly concerned with the actual risks. 117. As I see it, the question is how the balance should be struck between the importance of the exercise of the rights of Mrs Rajavi and the parliamentarians to freedom of speech and the risks to British interests in Iran as identified by Lord Sumption in paras 7 9 and Lord Kerr in paras 122 124. Given that no attempt was made to cross examine the witnesses or to challenge their veracity or reliability, while I recognise that questions of proportionality are ultimately questions for the court, the evidence here does not establish the case that the decision of the Secretary of State was disproportionate. In these circumstances, albeit with some reluctance, I would dismiss the appeal. LORD KERR: Introduction 118. Maryam Rajavi is a dissident Iranian politician. She lives in Paris. She has been invited by a number of members of the United Kingdom Parliament to come to meet them in the Palace of Westminster and to speak to them on the subject of democracy and human rights in Iran. In a letter from the appellants solicitors of 12 April 2011 the following claims (which have not been disputed by the respondent) were made about Mrs Rajavis abilities and status and about the organisations with which she is associated: Mrs Rajavi is the leader of the National Council of Resistance of Iran (NCRI). The NCRI acts as a parliament in exile for Iran and aims to establish a democratic secular and coalition government in Iran committed to the rule of law and respect for human rights. Until her exclusion from the United Kingdom in 1997 Mrs Rajavi was a visitor to the United Kingdom where she participated in the political and religious discourse in connection with Iran. She continues to contribute to this discourse elsewhere in the European Union. It is clear that the current regime in Iran object to her views Mrs Rajavi is an eminent and highly respected dissident Iranian politician. She is an expert on the status of women in Iran, the threats posed by the Iranian regime's brand of Islamic fundamentalism, the regime's export of fundamentalism and sponsorship of terrorism, its interference in the affairs of Middle Eastern nations (including the malign role played by the regime in Iraq, Afghanistan, Lebanon, Palestine, as well as North Africa) and pursuit of nuclear weapons. Since 1993, she has been the elected leader of the NCRI. As a woman and as a Muslim, she provides an important counterpoint to the religious and political beliefs expressed on behalf of the present regime in Iran. Despite the threat to her from that regime, she has continued to represent those who seek democracy, freedom of religion and respect for human rights in Iran. Although the People's Mojahedin Organization of Iran (PMOI), a constituent member of the NCRI, believes in Islam (albeit that it advocates a secular state with separation of church and state), the NCRI contains many other members of different faiths and none. 120. Mrs Rajavi has visited the United Kingdom on four occasions, in 1985, 1990, 1991, and 1996. She was excluded from the United Kingdom in 1997. The reason given by the then Home Secretary was that her presence in this country would not be conducive to the public good for reasons of foreign policy and in light of the need to take a firm stance against terrorism. 121. On 5 December 2010 Lord Carlile of Berriew QC wrote to the Secretary of State for the Home Department asking that she agree to meet him and others to discuss the possibility of Mrs Rajavi visiting the United Kingdom. On 1 February 2011 the Home Secretary replied. In her letter she said that she had decided to maintain the exclusion of Mrs Rajavi from the United Kingdom. Beyond saying that she did not consider that Mrs Rajavis presence would be conducive to the public good, the Home Secretary did not give reasons for her decision. She pointed out, however, that the exclusion in 1997 had preceded and was unconnected to the proscription of PMOI. Mrs Rajavis exclusion involved wider considerations. 122. After proceedings for judicial review were issued, the United Kingdom Border Agency (UKBA), on behalf of the Secretary of State, wrote on 10 October 2011 to the appellants solicitors. The letter stated that the Secretary of State had concluded that maintaining Mrs Rajavi's exclusion was justified as her presence in the United Kingdom would not be conducive to the public good due to the significant damaging impact on United Kingdom interests in relation to Iran it is assessed that lifting the extant exclusion would bring about, and the consequences that may have for the lives and interests of others. That claim was elaborated on in a series of statements that can be broadly summarised as follows: (i) Notwithstanding MeKs having been deproscribed in 2008, the organisations historical activities and Mrs Rajavis role in them as its de facto leader could not be ignored; its terrorist violence until June 2001 continued to resonate. Moreover, there was little support for MeK in Iran; it was not a credible opposition group. (ii) The United Kingdom has a strong interest in working with Iran on major policy issues such as nuclear counter proliferation and United Kingdom interests are affected by difficulties in United Kingdom Iran bilateral relations. The United Kingdom is frequently condemned by public figures in Iran, for, among other things, its perceived support of extremist anti Iranian activities, such as were historically carried on by MeK. When that organisation was deproscribed there were serious political protests from the Iranian authorities and demonstrations outside the British Embassy in Tehran. (iii) The lifting of Mrs Rajavis exclusion would be seen as a deliberate political move against Iran, just as the deproscribing of MeK was, despite attempts by British officials to explain that it was not. Although Mrs Rajavi is able to travel to other European countries, the particular nature of the United Kingdom Iran bilateral relationship is such that a particularly strong reaction is expected if her exclusion was lifted. Reprisals might occur which would put British nationals at risk and consular co operation, already difficult, could become more problematic. (iv) Damage to the public interest significantly outweighs any interference with Mrs Rajavis ability to express her views, not least because she has many alternative means of achieving this. The parliamentarians could visit France or a meeting could be held by video link. 123. The reasons for maintaining Mrs Rajavis exclusion from the United Kingdom were also dealt with in two witness statements by Ken OFlaherty, a senior civil servant in the Foreign and Commonwealth Office (FCO). In the first of these he repeated many of the reasons outlined in the UKBAs letter of 10 October 2011. He said that, despite the difficulties in United Kingdom Iran relations, there were some areas in which the United Kingdom continued to work with Iran on a day to day basis. It was the FCOs opinion that a decision by the Home Secretary to lift Mrs Rajavis exclusion would have a significantly damaging effect on relations between the two countries and that this would harm the United Kingdoms wider and crucial objectives. 124. On the basis of the Iranian reaction to the de proscription of MeK in 2008 (which Iranian authorities continued to believe was politically motivated) Mr OFlaherty considered that the lifting of the exclusion on Mrs Rajavi would be regarded as a deliberate political move against Iran. What he described as the fragile yet imperative nature of relations between Iran and the United Kingdom meant that any move by this country that could be perceived as appeasement of MeK was likely to have a wide ranging negative impact on day to day relations, as well as an impact on the major policy areas and United Kingdom interests that require negotiations with Iran. In short, Mr OFlaherty considered that a decision to lift Mrs Rajavis exclusion would provoke a negative reaction from the Iranian regime, affecting United Kingdom interests in an already strained atmosphere and that it might trigger threats to United Kingdom personnel, property and activities in Iran. 125. A further decision letter was issued by the UKBA on 24 January 2012. In this letter it was stated that the Home Secretary had had regard to further evidence provided by the appellants, particularly the support for Mrs Rajavi expressed in some 180 statements, mainly from members of both Houses of Parliament. She had decided, however, that the exclusion of Mrs Rajavi had to be maintained for a number of reasons. These included that the lifting of the exclusion would be regarded as a demonstration of support for MeK which continued to be perceived by Iran as a terrorist organisation; that Iran continued to treat the removal of MeK from the list of proscribed organisations as evidence of United Kingdom support for terrorism; that the Iranian authorities had been complicit in the invasion of United Kingdom diplomatic compounds in Tehran in November 2011 and this demonstrated that the United Kingdom was the prime target for anti Western sentiment, particularly because neither the USA nor Israel had embassies there; and that lifting Mrs Rajavis exclusion could be seen as a political response to the attack on the British Embassy and this would increase the risk of an adverse Iranian response which might involve a threat to United Kingdom government staff in Iran and United Kingdom assets in that country. 126. In his second witness statement Mr OFlaherty said that the Foreign Secretary and the Parliamentary Under Secretary of State, Alistair Burt, whose responsibilities included the Middle East, had both personally considered the question of the continued exclusion of Mrs Rajavi. Both had recommended to the Home Secretary that the exclusion should be maintained. The decision to maintain the exclusion order was also taken by the Home Secretary personally. 127. Mr OFlaherty went on to describe the then current situation in Iran in the following passages of his statement: 4. As the Court no doubt will be aware, United Kingdom diplomatic relations with Iran have deteriorated significantly since my last witness statement. On 27 November, the Majles (Iranian Parliament) voted to expel our newly arrived Ambassador, Dominick Chilcott, citing both the United Kingdom's history of hostile policies towards Iran including its support for terrorism (ie the United Kingdom's deproscription of the MeK) and the announcement on 21 November 2011 that together with a strengthening of sanctions against Iran by Canada and the US, the United Kingdom would sever all financial ties with Iran. 5. The following week, on the afternoon of 29 November 2011, a planned demonstration outside the British Embassy Tehran to mark the first anniversary of the assassination of an Iranian nuclear scientist (for which the United Kingdom is blamed by Iran together with the US and Israel), resulted in approximately two hundred regime backed Basijj paramilitaries invading both our diplomatic compounds, including our residential compound to the north of Tehran. They set light to the Embassy building and ransacked and looted all our properties in an attack that went on for nearly six hours, with Police acquiescence. All British diplomatic staff left Iran shortly after this incident for their own safety and given the Iranian authorities' failure to protect the safety of our staff and diplomatic property, the Foreign Secretary ordered that the Iranian Embassy in London be closed and all Iranian diplomats were told to leave the United Kingdom within 48 hours. Diplomatic relations were reduced at this point to the lowest possible level, short of severing them completely. 128. The risks attendant on Mrs Rajavi being permitted to come to this country were described by Mr OFlaherty in para 6 of his second witness statement. He considered that, although the British Embassy in Tehran had closed down, the security of locally engaged staff would be imperilled. Remaining British Embassy property and assets would be in jeopardy. There was also a potential risk to British interests outside Iran. British property in the Middle East could become targets of retaliatory action against the United Kingdom. The proceedings 129. The appellants are Mrs Rajavi and a cross party group of parliamentarians, led by Lord Carlile of Berriew QC, a Liberal Democrat member of the House of Lords. The parliamentarians wish to meet Mrs Rajavi in the Palace of Westminster in order to discuss the future of Iran, particularly in relation to the establishment of democracy and human rights in that country. They claim that there has been an unjustified interference with their rights under article 10 of the European Convention on Human Rights and Fundamental Freedoms (ECHR). 130. The appellants contend that a face to face meeting between them is vital to the success of their proposed discussions. In support of that claim, they have provided a statement from Mr Alejo Vidal Quadras, a vice president of the European Parliament. On the status and standing of Mrs Rajavi he said that she represents the rights of the oppressed in Iran, from women and students to ethnic and religious minorities. He considered that her modern and progressive interpretation of Islam was an important and necessary example to others. He found her to be a true believer in gender equality and freedom of thought and religion, and he considered that she was committed to the rule of law. She was, in Mr Vidal Quadras estimation, a very responsible leader. He emphasised the importance of meeting Mrs Rajavi in the flesh, citing the experience of members of the European Parliament who had had direct meetings with her. This had allowed them and their advisers to question Mrs Rajavi and spend time with her, addressing a range of sensitive issues. This, he suggested, would not have been possible through long distance communication means. 131. Before the Divisional Court (R (Lord Carlile of Berriew QC) v Secretary of State for the Home Department [2012] EWHC 617 (Admin) Stanley Burnton LJ and Underhill J) the Secretary of State accepted that there had been interference with the appellants rights under article 10 of ECHR but she suggested that this was minor in nature since it was feasible for Members of Parliament to visit France or other countries to speak to Mrs Rajavi or a video link conference could be held. Either of these, it was claimed, would be a suitable alternative to a face to face meeting. That argument was rejected by the Divisional Court, Stanley Burnton LJ observing at para 27 of his judgment that there was no suitable room in the Palace of Westminster to accommodate all who wished to be present at the proposed meeting. That consideration, taken together with the greater impact that a face to face meeting would have and the symbolic importance of such a meeting, persuaded the Divisional Court not to accept the respondents claim on this issue. 132. The Divisional Court accepted that where the right of free expression interfered with was that of parliamentarians, particularly strong justification for the interference was required both under ECHR and at common law para 28 of the Divisional Courts judgment. But the court considered that, because the executive had assessed that there was the possibility of unwelcome action by a foreign government, the decision of the Secretary of State could not be gainsaid by the court paras 34 and 35. 133. Stanley Burnton LJ questioned some aspects of the Secretary of States apprehensions. For instance, he found it difficult to accept that the Iranian governments decision whether or not to develop atomic weapons would be influenced by lifting the exclusion on Mrs Rajavi. He had no such difficulty, however, in agreeing with the assessment that her admission to this country would be regarded by the Iranian government as a hostile act. (Nor, may I say, do I doubt that such a reaction might occur). Stanley Burnton LJ went further. He said that it was entirely feasible that, given the record of the Iranian government, retaliation in the form of action against Iranian employees or against United Kingdom citizens might ensue. (Again, I find it impossible to disagree with this assessment). Two observations about this must be made, however. As I shall discuss below, the recent history of relations between the United Kingdom and Iran is characterised, above all, by the unpredictability of the reaction of Iranian authorities and those whom they encourage to engage in attacks on employees or property of the United Kingdom. The second observation is that such risks, even if they materialise, do not of themselves provide irrefutable justification for the interference with the appellants article 10 rights. 134. The Divisional Court considered that this case closely resembled that of R (Corner House Research) v Direction of Serious Fraud Office (JUSTICE intervening) [2008] UKHL 60 [2009] 1 AC 756. It was acknowledged that in the Corner House case there was an express threat of action by a foreign government whereas here there is only fear of such action. But Stanley Burnton LJ felt that no material distinction could be drawn between the two situations. In both cases, he said, the assessment by the executive, which could not be gainsaid by the court, of the possibility of unwelcome action was the critical factor. He relied particularly on the passage from the speech of Lord Bingham in Corner House where he cited with approval the statement in Matalulu v Director of Public Prosecutions [2003] 4 LRC 712 to the effect that the polycentric character of official decision making in matters involving policy and public interest considerations were not susceptible of judicial review because it was not within the constitutional function [or] the practical competence of the courts to assess their merits. 135. The Divisional Courts reliance on Corner House and Matalulu prompts consideration of two important matters which will be dealt with later in this judgment. The first is whether, when coming to assess the proportionality of interference with an article 10 right, it is relevant that the apprehended inimical action by a foreign state is threatened or merely assumed. The second, and more important, issue is how the executives assessment of the level and importance of the risk should affect the courts consideration of whether this justifies the particular form of interference. Put simply, if the executives assessment of the risk must be accepted, what is the courts role in judging whether such a risk, and the consequences of its materialising, are sufficient to justify the interference with the particular Convention right? 136. The Divisional Courts decision was appealed to the Court of Appeal (R (Lord Carlile of Berriew QC) v Secretary of State for the Home Department [2013] EWCA Civ 199 Arden, Patten and McCombe LJJ). The principal judgment was delivered by Arden LJ. She held that, in the context of national security and foreign policy, the question whether the interference with the appellants rights was no more than necessary to achieve the Secretary of States objectives was to be answered by a review of her decisions on the basis of their rationality, legality and procedural [propriety], not by the substitution by the court of its own judgment on the merits para 7 (iii). At para 72 of her judgment Arden LJ said: once the court is satisfied that the decision was within the range of decisions that could properly be made, proportionality does not require it to go on and be satisfied that the decision is correct. And at para 93 Arden LJ said that the court does not second guess the merits of the substantive decision maker in the field of foreign policy and security but looks to see whether the decision maker had approached the matter rationally, lawfully and in a procedurally correct manner. 137. For reasons that I will give in more detail later, I consider that this was a wrong approach. Shortly stated, the courts role in deciding whether there has been an unjustified interference with a Convention right is to answer the four questions which are said to usually arise see R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621 at para 45 per Lord Wilson: (a) is the objective sufficiently important to justify limiting a fundamental right?; (b) are the measures which have been designed to meet it rationally connected to it?; (c) are they no more than are necessary to accomplish it?; and (d) do they strike a fair balance between the rights of the individual and the interests of the community? In dealing particularly with the latter two of these questions, the court must indeed exercise its own judgment. Of course, it may defer to the Secretary of States assessment of the risks involved and of the consequences, should the risks materialise. But that does not relieve the court of the duty to confront frankly the stark questions whether, given those risks and consequences, it (as opposed to the decision maker) has been persuaded that the measures are no more than is required to achieve the stated object and that a fair balance has been struck. The arguments 138. Lord Pannick QC for the appellants presented two main grounds of challenge to the Secretary of States decision. Firstly he claimed that her anticipation of adverse consequences to British interests if Mrs Rajavi was permitted to come to this country could not constitute a legal justification for interference with the appellants article 10 rights. Such an interference must be founded on standards that are in conformity with democratic values. A restriction of the appellants Convention rights which depended on surrender in the face of anticipated illegal activity wholly undermined the right to freedom of expression. To restrict the right to free speech because of the fear of repressive action was to negate the very values that article 10 was designed to uphold. Society must not abandon its values in the face of threats of a violent reaction, unless conditions warranted a derogation under article 15 of ECHR. To allow anticipated illegal activity by a country that had no respect for the right to free speech or other democratic values to interfere with the appellants rights contravened the very purpose of the Human Rights Act 1998 by allowing a foreign country which did not share the values of ECHR to determine the 1998 Acts application in this country. 139. Interference with a Convention right because of threats or fear of reprisal by a foreign power could only be justified, Lord Pannick argued, in circumstances where a derogation under article 15 of ECHR was warranted. This provides in para 1: In time of war or other public emergency threatening the life of the nation any High Contracting Party may take measures derogating from its obligations under this Convention to the extent strictly required by the exigencies of the situation, provided that such measures are not inconsistent with its other obligations under international law. 140. Lord Pannicks second argument was that, even if it was lawful for the Secretary of State to have regard to the feared reaction from another country, a decision to interfere with freedom of expression in relation to political speech could only be regarded as proportionate in the most extreme circumstances. Such circumstances were not present in this instance. 141. For the Secretary of State Mr Eadie QC emphasised that the decision not to lift the exclusion on Mrs Rajavi was taken by the Home Secretary personally and that the advice proffered by the Foreign and Commonwealth Office had been considered personally by the Foreign Secretary and the Under secretary of State. All of the factors that went up to making the decision were dependent on judgment, as was the final decision itself. This was therefore pre eminently a case where the courts should be slow to interfere with the governments decision. The evaluation of risks was something to be carried out by the experts, namely, the politicians and their advisers. 142. On the first of Lord Pannicks arguments, Mr Eadie submitted that, for it to be viable, it had to prevail in all circumstances. Thus, irrespective of how dire the threat represented by the anticipated reaction of the foreign power, the government of the United Kingdom was powerless to respond to it by restricting a Convention right if what was expected to occur was the product of repression or a failure to subscribe to Convention values. Carried to its logical conclusion, the appellants argument meant that paramount importance had to be given to the nature of the action of the foreign state rather than the risk of the consequences of failing to respond to it. This, Mr Eadie submitted, could not be correct. 143. On the appellants second argument, the respondent submitted that there was no single, indisputably correct answer to the question whether a restriction on the appellants rights was required in order to safeguard national interests. But the risks to local staff and British interests were undeniable. The British Embassy in Tehran had been targeted above all other nations represented in Tehran before the departure of British Embassy staff in November 2011. Lifting the exclusion would be viewed as highly provocative and possibly construed as a further response to the attack on the British Embassy. As the Divisional Court had held, the prospect of the lifting of the exclusion on Mrs Rajavi being regarded as a hostile act was incontestable. The judgment that to permit her to come to the United Kingdom would damage existing United Kingdom interests in relation to Iran and endanger the security, wellbeing and properties of British officials overseas could not be gainsaid. The decision of the Secretary of State could not be considered disproportionate, therefore. Discussion (i) The need to protect democratic values 144. Despite its initial appeal, the appellants first ground of challenge, that interference with article 10 rights can never be justified on the basis of apprehension of action which is out of accord with Convention standards, cannot be accepted. In advancing that argument, Lord Pannick had relied particularly on the decision of ECtHR in United Communist Party of Turkey v Turkey (1998) 26 EHRR 121. At para 45 the court said: Articles 8, 9, 10 and 11 of the Convention require that interference with the exercise of the rights they enshrine must be assessed by the yardstick of what is necessary in a democratic society. The only type of necessity capable of justifying an interference with any of those rights is, therefore, one which may claim to spring from democratic society. Democracy thus appears to be the only political model contemplated by the Convention and, accordingly, the only one compatible with it. 145. Lord Pannick suggested that this betokened the courts view that the only interference which could be countenanced was that which was actuated by and rooted in democratic values. This, he said, ties the basis for the interference to the democratic values which the Convention right enshrines. I am satisfied that this is not the correct construction of the courts judgment. What the court was saying was that only such interference as was necessary to defend democratic society was eligible as justification. Thus, intrusion on a Convention right which did not seek to promote democratic values would not qualify. But that does not mean that the occasion for the decision to interfere (in order to protect those values) must also spring from the same values. Put simply, if it is necessary that, in order to protect the democratic values of our society from the repressive actions of a regime which has no regard for those values, there should be interference with a Convention right, that is justified. The emphasis must be on the values to be protected, not on the circumstances that prompt the need for protection. If the values which require protection are those which can be recognised as democratic and worthy of legitimate protection, it is of no consequence that the need to protect them stems from actions which are undemocratic or repressive. 146. My view on this argument is reinforced by consideration of the very limited and exceptional circumstances in which the state could defend the national interest by use of the power of derogation under article 15 of ECHR. This can only arise where there is a public emergency threatening the life of the nation. On the appellants first argument, dire and immediate threat to the very democratic values that the Convention is designed to uphold, but which fell short of the high threshold of article 15, could not be guarded against by way of interference with individual Convention rights if the threat emanated from an undemocratic and repressive regime. That could not be correct. (ii) Proportionality 147. In Bank Mellat v HM Treasury (No 2) [2014] AC 700, paras 68 76 Lord Reed provided an admirable review of the history, development and, in the case law of the Court of Justice of the European Union and ECtHR, the current contours of the principle of proportionality. As he pointed out in para 70, an inherent feature of the Convention is the search for a fair balance between the demands of the general interests of the community and the requirements of the protection of the individuals fundamental rights. The striking of that vital balance is influenced by the importance of the objective pursued and the value of the right that has been interfered with para 71. While in Convention case law proportionality is, as Lord Reed put it, indissolubly linked to the principle of the margin of appreciation, this does not apply at the national level where the degree of restraint practised by courts in applying the principle of proportionality and the extent to which they will respect the judgment of the primary decision maker depends on the context. 148. Not only is the proportionality principle dependent on context, in the national setting it is applied in a structured way. Building on the formulation suggested by Lord Clyde in de Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69 and drawing also on the decision of Dickson CJ in R v Oakes [1986] 1 SCR 103, the House of Lords in Huang v Secretary of State for the Home Department [2007] 2 AC 167 described four stages through which the proportionality exercise should pass. These were endorsed in Aguilar Quila, as earlier mentioned. The four stage process was derived from Dickson CJs judgment in Oakes and was outlined by Lord Reed in Bank Mellat in para 74 as follows: The judgment of Dickson CJ in Oakes provides the clearest and most influential judicial analysis of proportionality within the common law tradition of legal reasoning. Its attraction as a heuristic tool is that, by breaking down an assessment of proportionality into distinct elements, it can clarify different aspects of such an assessment, and make value judgments more explicit. The approach adopted in Oakes can be summarised by saying that it is necessary to determine (1) whether the objective of the measure is sufficiently important to justify the limitation of a protected right, (2) whether the measure is rationally connected to the objective, (3) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective, and (4) whether, balancing the severity of the measure's effects on the rights of the persons to whom it applies against the importance of the objective, to the extent that the measure will contribute to its achievement, the former outweighs the latter. 149. Obviously, some factors may be relevant in more than one of the four stages described but it is important to maintain separate consideration of each of them. In particular it is essential to recognise the clear difference between the existence of a sufficiently important objective to justify the decision to limit the right (the first stage) and the need for the objective to be sufficiently important to outweigh the interests of those whose rights have been interfered with. Lord Reed dealt with this in para 76 of his judgment in Bank Mellat: In relation to the fourth criterion, there is a meaningful distinction to be drawn (as was explained by McLachlin CJ in Alberta v Hutterian Brethren of Wilson Colony [2009] 2 SCR 567, para 76) between the question whether a particular objective is in principle sufficiently important to justify limiting a particular right (step one), and the question whether, having determined that no less drastic means of achieving the objective are available, the impact of the rights infringement is disproportionate to the likely benefits of the impugned measure (step four). 150. In following the structured approach to the question of whether the Home Secretarys decision was proportionate, it is, I believe, essential to keep the two separate aspects of Mrs Rajavis exclusion clearly in mind. On the question of an assessment of the risks of her being admitted to the United Kingdom and the consequences which might flow from them, very considerable respect for the executive decision is called for, although, as Lord Neuberger has said, this cannot be simply franked by the courts. Although we must accord the Secretary of States view on this issue due deference, we are not required to genuflect in its presence. But on the question of the importance of the right which has been infringed, the courts do not defer to the executive in assessing the value of that right. On that issue, the word of the Secretary of State cannot hold sway. Of course, her views are worthy of careful consideration but they are not necessarily indeed they cannot be if the system is functioning properly the final word. The whole purpose of having the court assess the proportionality of the measure is to allow an independent judgment to be applied to the prominence to be given to the Convention right which is engaged. 151. On the matter of the judgment to be made on how foreign relations would be affected by allowing Mrs Rajavi to come to this country, the courts should therefore be prepared to give considerable, if not uncritical, respect to what the Home Secretary has said. As Lord Bingham said in A v Secretary of State for the Home Department [2005] 2 AC 68 at para 29, it is the function of political and not judicial bodies to resolve political questions. Interpretation of historical events and assessment of their impact on relations between countries are not the concern of the courts. 152. Whether executive action transgresses a Convention right, however, and, if it does, the importance to be attached to the right interfered with are emphatically matters on which courts are constitutionally suited to make judgments. The courts competence to make those judgments is secondary, however, to the consideration that the current constitutional order, in the form of the Human Rights Act 1998, requires courts to make those very judgments. And, although it is trite to say it, one must always remember that they make those judgments on the command of Parliament. The importance given by government to the impact that a particular outcome may have on foreign relations should give courts pause and, undoubtedly, they should be appropriately reticent about questioning the validity of a decision taken on grounds which a government minister considers to be in the national interest. But this should not operate as an inhibition on the discharge of the courts proper constitutional function. If there has been an interference with Convention rights (and in this case there certainly has been), courts are there to examine whether that interference is justified. That examination must focus on the proffered reasons of the decision maker but the inquiry necessarily extends beyond that. The courts, charged with the solemn duty by Parliament of deciding whether the political reasons that have actuated the decision to interfere with the particular Convention right justify the interference, have a clear obligation to have proper regard to the importance of the right which has been interfered with. That exercise requires the courts not only to examine the reasons given for the interference but also to decide for themselves whether that interference is justified. 153. It is superficially attractive to say that because the Home Secretary has, albeit not initially, recognised the symbolic importance of a meeting between parliamentarians and Mrs Rajavi taking place in the Palace of Westminster, she has paid sufficient attention to the appellants article 10 rights and that her decision to maintain the exclusion is beyond interference by the courts. On this basis, it is suggested that there is no warrant for concluding that the Secretary of State has underrated the significance of the restrictions on freedom of expression in this case. On that account, (the argument goes) the court has no business in substituting its view for that of the Home Secretary that the restriction was proportionate. This approach proceeds on the premise that the court is not engaged in what Lord Sumption has described as a merits review and, moreover, that the court is entitled (or required) to attach special weight to the judgments and assessments of those with special institutional competence. 154. All of this is unexceptionable so far as the Secretary of States assessment of the possible political consequences of lifting Mrs Rajavis exclusion is concerned. But the appropriate reticence in relation to that issue should not be assumed to give rise to a similar need for restraint in the matter of deciding the weight to be attached to the right of the appellants to hold the meeting that they wish to have with Mrs Rajavi at Westminster. In none of the cases referred to by Lord Sumption on this issue: Appleby v United Kingdom (2003) 37 EHRR 783; Mouvement Ralien Suisse v Switzerland (2012) 56 EHRR 482; and Animal Defenders International v United Kingdom (2013) 57 EHRR 607 did the Strasbourg court suggest that the question of the importance to be attached to the right was one on which it should defer to the decision of the respondent. On the contrary, it is clear that the court in each of those cases reached its own independent view as to the significance of the interference and, consequently, whether the interference was justified. True it may therefore be that the Secretary of State addressed herself to the question whether the restrictions on the appellants freedom of expression were outweighed by the risk to the safety of British persons, property and Embassy staff, but that is not the point. It is for the court to decide whether these considerations have that offsetting effect. 155. Even if one accepts without reservation the Home Secretarys assessment of the risks and the nature of the hostile reaction in Iran to Mrs Rajavi being permitted to visit the United Kingdom, the question remains whether the apprehension that those risks may materialise justifies the interference with the article 10 rights of the appellants. That is a question that the court must confront and it may not answer merely by saying that the Home Secretary has made her assessment. The court, having accorded appropriate respect to the Home Secretarys assessment of the risk, must then weigh that in the balance against the importance to be attached to the right which her decision interferes with. It would be, in my view, a fundamental error to attach special weight to the judgments and assessments of those with special institutional competence when it comes to evaluating the importance of the appellants article 10 right. The Home Secretary has special institutional competence in the matter of an assessment of the risk to British interests if Mrs Rajavi is permitted to come to the United Kingdom. She has no such competence in the matter of assessing the importance of the article 10 right. To conflate the two elements of the exercise is plainly wrong. 156. It is also plainly wrong to suppose that, because the Home Secretary enjoys particular expertise in assessing the risk to British interests, this places an inhibition on the courts performance of the balancing exercise. The first factor is one on which the Home Secretary can claim expertise and knowledge which put her in a better position than the court to make a judgment; it follows that the court must either accept that judgment or accord it considerable weight. But that is not an end of the courts role and function. On the second part of the balancing exercise, the court is entirely competent and duty bound to reach its own independent judgment. 157. Put simply, it is perfectly feasible for courts to accord considerable respect to the political reasons underlying a particular ministerial decision but to conclude that that decision has a disproportionate effect on the Convention rights at stake. Such a conclusion should not be portrayed as government by the courts. It is simply an instance of the courts looking at the basis on which intrusion on a persons Convention right has been sought to be justified, examining and assessing the nature of the right and finding that, given the importance of that right in the particular circumstances of the case, justification for the interference has not been established. 158. Ultimately, therefore, it is not a question of whether the Secretary of State has been shown to be guilty of an error of principle. We do not ask whether the Secretary of States view is tenable; we ask whether it is right. Right, that is, by the standards that have been set for us by the Human Rights Act. Taking account, albeit with a suitably critical appraisal, of the Secretary of States view as to the consequences of lifting the exclusion on Mrs Rajavi, the question is whether the interference with the appellants right, notwithstanding those consequences, is justified. 159. What it comes to is this. By enacting the Human Rights Act, the government has chosen to subject decisions which any public authority, including the executive or an individual minister, takes, involving interference with citizens Convention rights, to the courts independent review. In submitting to that review, the government is entitled to say to the courts, respect our reasons for deciding why such interference is required. It is not entitled to say, however, you must accept our view as to the importance of the right that has been interfered with. 160. The decisions in Matalulu and Corner House must be seen in this light. In the Corner House case, the decision of the Director of the Serious Fraud Office to discontinue a criminal investigation was challenged on the basis that it had been terminated because of, among other things, a threat by Saudi authorities to withdraw from existing bilateral counter terrorism co operation arrangements with the United Kingdom. In para 30 et seq of his speech, Lord Bingham of Cornhill explained why it was only in highly exceptional cases that the court will review the decisions of independent prosecutors and investigators: 31 The reasons why the courts are very slow to interfere are well understood. They are, first, that the powers in question are entrusted to the officers identified, and to no one else. No other authority may exercise these powers or make the judgments on which such exercise must depend. Secondly, the courts have recognised (as it was described in the cited passage from Matalulu v Director of Public Prosecutions) the polycentric character of official decision making in such matters including policy and public interest considerations which are not susceptible of judicial review because it is within neither the constitutional function nor the practical competence of the courts to assess their merits. Thirdly, the powers are conferred in very broad and unprescriptive terms. 161. The decision under challenge in Corner House was quite different in a number of significant respects from that of the Home Secretary in the present case. In the first place, although the power to exclude rests solely with the Secretary of State, where its exercise conflicts with a Convention right, review of her decision is clearly contemplated. Secondly, for the reasons already given, the courts are competent to assess the value of the right that has been interfered with and are expressly charged with the duty to make a decision as to the proportionality of the interference. Thirdly, unlike the present case, no fundamental right was at stake in the Directors decision in the Corner House case. Finally, while the polycentric dimension of the Home Secretarys decision may have been present in her evaluation of the risks that would be incurred by the admission of Mrs Rajavi to the United Kingdom, the same cannot be said about consideration of the value of the article 10 right. The value to be placed on that right does not require the inexpressible or undefinable experience and expertise of ministers or their advisers. 162. I cannot therefore agree with the view of Stanley Burnton LJ that the citation from Matalulu is as applicable to the present case as it was in Corner House. He considered that the present case concerned fears or apprehensions, based on assessments or judgments made with the wide experience and expertise and information available, in particular to the Foreign and Commonwealth Office, which the Court is not in a position to gainsay para 35. The present case does indeed involve those matters but it goes well beyond them. It also critically involves striking a balance between those concerns and the interference with the important right of freedom of expression. The importance of the right 163. Article 10 of ECHR provides: (1) Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent states from requiring the licensing of broadcasting, television or cinema enterprises. (2) The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. 164. Freedom of expression is a fundamental Convention right. Its importance was recognised in R v Secretary of State for the Home Department Ex p Simms and another [2000] 2 AC 115, particularly in the speech of Lord Steyn, who at 126E/F said: Freedom of expression is, of course, intrinsically important: it is valued for its own sake. But it is well recognised that it is also instrumentally important. It serves a number of broad objectives. First, it promotes the self fulfilment of individuals in society. Secondly, in the famous words of Holmes J (echoing John Stuart Mill), the best test of truth is the power of the thought to get itself accepted in the competition of the market: Abrams v United States (1919) 250 US 616, 630, per Holmes J (dissenting). Thirdly, freedom of speech is the lifeblood of democracy. The free flow of information and ideas informs political debate. It is a safety valve: people are more ready to accept decisions that go against them if they can in principle seek to influence them. It acts as a brake on the abuse of power by public officials. It facilitates the exposure of errors in the governance and administration of justice of the country: see Stone, Seidman, Sunstein and Tushnet, Constitutional Law, 3rd ed (1996), pp 1078 1086. 165. This sentiment has received frequent and enthusiastic endorsement in Strasbourg. In Srek v Turkey (1999) 7 BHRC 339, a decision of the Grand Chamber, the court said at para 57: (i) Freedom of expression constitutes one of the essential foundations of a democratic society and one of the basic conditions for its progress and for each individual's self fulfilment. Subject to article 10.2, it is applicable not only to information or ideas that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb. Such are the demands of that pluralism, tolerance and broadmindedness without which there is no 'democratic society'. As set forth in article 10, this freedom is subject to exceptions, which must, however, be construed strictly, and the need for any restrictions must be established convincingly. (ii) The adjective 'necessary', within the meaning of article 10.2, implies the existence of a 'pressing social need'. 166. Freedom of political speech is given a particular premium. At para 60 of its judgment in Srek the Grand Chamber said: In assessing the necessity of the interference in the light of the principles set out above (see paras 57 58), the court recalls that there is little scope under article 10.2 of the convention for restrictions on political speech or on debate on questions of public interest (see Wingrove v United Kingdom (1996) 1 BHRC 509 at 526 (para 58)) 167. The Strasbourg court has recognised the special importance of the right of politicians to freedom of expression. In Castells v Spain (1992) 14 EHRR 445, 476, at para 42 the court said: The Court recalls that the freedom of expression, enshrined in article 10.1, constitutes one of the essential foundations of a democratic society and one of the basic conditions for its progress. Subject to article 10.2, it is applicable not only to 'information' or 'ideas' that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb. Such are the demands of that pluralism, tolerance and broadmindedness without which there is no democratic society. While freedom of expression is important for everybody, it is especially so for an elected representative of the people. He represents his electorate, draws attention to their preoccupations and defends their interests. Accordingly, interferences with the freedom of expression of an opposition Member of Parliament, like the applicant, call for the closest scrutiny on the part of the Court. 168. Apart from Mrs Rajavi, the appellants in this case comprise a cross party group of eminent politicians, many of them former holders of senior government posts. It is clear by their commitment to this case that they regard the lifting of the exclusion on Mrs Rajavi as a matter of supreme importance to free speech and freedom of expression in this country. That factor, in my view, makes this case one where only the most compelling and pressing circumstances would justify a restriction on the article 10 right. The position is enhanced by the consideration that Mrs Rajavi stands for values which this country has cherished and championed, some of them for centuries. To deny her the opportunity to express views and advance causes in this country that all right thinking members of our society fervently support is a very significant step indeed. Striking the balance 169. The strongly held views of a number of eminent politicians that it is vital that Mrs Rajavi be permitted to visit the United Kingdom is a significant factor which must weigh heavily against a finding that the interference with the article 10 right is justified. On the other hand, the circumstance that her visit here might be regarded by Iran as a hostile act is obviously a matter of significant concern as is the anticipated retaliation against Iranian employees and United Kingdom citizens and property. These are rightly to be regarded as solid countervailing factors. But in as much as the chances of those risks materialising cannot be discounted, so also the chances of their not coming to pass must not be overlooked. It seems to me, therefore, that the fact that this is a prediction of likely action rather than, as in the case of Corner House, an explicit threat, must be taken into account. 170. Lord Sumption has suggested that any attempt by the Secretary of State to explain to the Iranian government that she is bound by the Human Rights Act and by the decisions of an independent judiciary would not avail. He has said that the impact on the Iranian authorities of the United Kingdoms decisions is unlikely to be influenced by the question of which organ of the state was its originator. He has pointed out that they treated the judicial decision to de proscribe MeK as a political decision in defiance of the facts and that it is not to be supposed that they would alter their stance on account of the Secretary of States resolute resistance of the appellants claim in this case. 171. All of this may be true. But, if it is true, one must not lose sight of the fact that these are unreasoning and unreasonable views. While they may, indeed must, be taken into account by the Secretary of State, the weight to be accorded to them cannot be completely divorced from recognition of their perversity. The history of the Iranian governments reaction in the past may carry a portent of how it would react in the future. But when one comes to the question of how much this should influence the judgment of the Secretary of State, the circumstance that such views are irrational and unjustified should not be left out of account, particularly when this involves a restriction of the guaranteed rights of parliamentarians in this country. 172. Moreover, the fact that the anticipated reaction of the Iranian authorities, if indeed it materialises, would be rooted in profoundly anti democratic beliefs; would be antithetical to the standards and values of this country and its parliamentary system; and would significantly restrict one of the fundamental freedoms that has been a cornerstone of our democracy must weigh heavily against sanctioning such a drastic interference with the appellants article 10 rights. While, therefore, the Secretary of State should have regard to the possibility of an adverse reaction by Iran, she must give due recognition to the fact that, if that anticipated response leads to the continued exclusion of Mrs Rajavi, this would be at the expense of one of the most fundamental rights of our Parliamentary democracy. 173. In paras 75 and 76 of his judgment Lord Neuberger refers to what he describes as two points that I have made as to why the appeal should be allowed. In the first place, I should make it clear that these points are not to be taken as alternatives. It is their combined effect which has led me to the view that I have reached. True it is that the Executive is in a better position than the court to make a judgment on the likely reactions of a volatile foreign government and people. But the fact that those reactions are, as recent history unquestionably shows, highly unpredictable should not be left out of account by a court tasked with the duty of deciding whether this particular instance of governments interference with this Convention right is proportionate. The government is entitled to say, we are better placed than the court to make an assessment of what is likely to happen politically; but the court is entitled, indeed required, to observe, that is so, but what is likely to happen is inherently difficult to predict and, on that account, the weight which we attach to your judgment must be adjusted accordingly. 174. Lord Neuberger has suggested that my second point is that the weight to be given to the anticipated reaction of the Iranian authorities should be significantly discounted because this is the product of undemocratic beliefs etc. It is possible to characterise my discussion of this issue as discounting the Secretary of States view about the anticipated Iranian reaction. I prefer to consider the matter more comprehensively. It is one thing to countenance a significant interference with a Convention right when the basis for that interference is the anticipated reaction of a democratic regime. It is quite another when what is apprehended is a wholly anti democratic reaction. It is not simply a question of discounting the Secretary of States view about the reaction of Iran, therefore. This is a factor which should also be taken into account in relation to the significance of the article 10 rights of the appellants. Conclusion 175. The courts of this country have been given momentous obligations by the Human Rights Act, none more so than the duty to decide whether interferences with Convention rights are justified. Parliament has decided that decisions of all public authorities, including government itself, should be subject to that form of independent review. 176. In conducting the review of government decisions, courts must, of course, be keenly alive to the expertise and experience that ministers and public servants have by reason of their involvement in affairs of state, an involvement that courts cannot possibly replicate. But if the power and the duty to conduct fearless, independent review of the justification for interference with Convention rights is to mean anything, close, dispassionate and independent examination of the reasons for interfering with those rights must take place. Convincing reasons for the interference must be provided convincing, that is, to the court that is required to examine and assess them. 177. Taking Mr OFlahertys statements at face value, it is unclear what specific consequences would flow from a decision to allow Mrs Rajavi to come to the United Kingdom. It is revealing that most of what is feared is already happening or has occurred in the past. Generalities such as that contained in Mr OFlahertys first statement, that ramping up of rhetoric may provoke an uncontrolled public reaction really do not provide any tangible evidence that the admission of Mrs Rajavi to the United Kingdom carries a particular risk. 178. Moreover, the inherent unpredictability of such events as have occurred in the past makes any forecast of what might or might not happen in the future extremely difficult. The circumstances of the sacking of the British Embassy in 2011, for instance, demonstrate the problem associated with making this type of prediction. Such events could well occur whether or not Mrs Rajavi is allowed to come to the United Kingdom. Mr OFlahertys first statement vividly illustrates this. In 2009 some of the United Kingdoms locally engaged staff were arrested and accused of involvement in the unrest which followed disputed Presidential elections in Iran. This was something which was, presumably, entirely unforeseen. The throwing of acid bombs into one of the British compounds, shortly before Mr OFlahertys first statement was made on 10 October 2011, appears to have been an entirely random attack, unprovoked by any action on the part of British authorities. According to Mr OFlaherty, even when tensions in the bilateral relationship ease, United Kingdom based staff members have problems with access to Iranian authorities. 179. All of this paints a picture of unpredictability and arbitrariness. Any assessment of the risk of adverse consequences must therefore be of a general, non specific nature. While this court must have due regard to the assessment that Mr OFlaherty has made of the risk (and to the judgment that the Home Secretary has made based on that assessment), it must not lose sight of the fact that the risks cannot be explicitly identified nor can they be precisely defined. They are a loosely expressed agglomeration of possible outcomes. 180. By contrast, the interference with the appellants article 10 right is direct and immediate. Article 10 rights are, in any context, of especial significance but the critical importance of free speech in this case should not be underestimated. Our Parliament is the sovereign part of our constitution. Its laws prevail over everything else. The courts accord greater deference to the decisions of Parliament than to those of any other body. When a distinguished group of Parliamentarians wishes, in the interests of democracy, to conduct a face to face exchange with someone whose views they consider to be of critical importance, only evidence of the most compelling kind will be sufficient to deny them their right to do so. This court has a bounden duty to uphold that right unless convinced of the inescapable need to interfere with it. I have not been brought to that point of conviction. I would therefore allow the appeal and quash the decision to maintain the exclusion of Mrs Rajavi from the United Kingdom. 119. On 29 March 2001 PMOI became one of the proscribed organisations listed in Schedule 2 to the Terrorism Act 2000. On 30 November 2007, the Proscribed Organisations Appeals Commission (POAC) allowed an appeal brought by Lord Alton of Liverpool and a number of other peers and Members of Parliament against the Secretary of States refusal to reverse the proscription of PMOI. POAC ordered the Home Secretary to lay before Parliament an Order removing PMOI from the list of proscribed organisations in Schedule 2. It found that, although PMOI had been actively involved in terrorism until June 2001, from that date onwards there had been a significant change in the organisations activities and it could no longer be said to be involved in terrorism as defined in section 3 of the 2000 Act. POACs decision was unanimously upheld by the Court of Appeal. PMOI has subsequently been de proscribed in the European Union (January 2009), in the United States of America (September 2012) and Canada (December 2012). |
The liability of employers for deaths caused by mesothelioma has pre occupied courts and legislators over recent years. The present appeals concern claims to pass the burden of this liability on to insurers, made either by employers or in the case of insolvent employers by the personal representatives of former employees using the mechanism of the Third Party (Rights against Insurers) Act 1930. The appeals concern employers liability insurance. This is in contrast with Bolton MBC v Municipal Mutual Insurance Ltd [2006] EWCA Civ 50, [2006] 1 WLR 1492 where public liability insurance was in issue. Employers liability focuses necessarily upon the relevant employment relationships and activities. Public liability relates to any of the insureds relationships and to activities affecting the world at large. Another feature of employers liability is that, under the Employers Liability (Compulsory Insurance) Act 1969 (the ELCIA), it has since 1 January 1972 been compulsory for every employer other than local authorities carrying on any business in Great Britain to insure, and maintain insurance, under one or more approved policies with an authorised insurer or insurers against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business, but except in so far as regulations otherwise provide not including injury or disease suffered or contracted outside Great Britain The appeals arise because the relevant insurers maintain that the employers liability insurances which they issued respond (or, better, could only have responded) to mesothelioma which developed (or, possibly, manifested itself) as a disease during the relevant insurance periods all long past. In contrast, the relevant employers and personal representatives maintain that the insurances respond to mesothelioma which develops and manifests itself later; all that is required, they say, is exposure of the victim during the insurance period to asbestos in circumstances where the law attributes responsibility for the mesothelioma to such exposure. These alternative bases of response (or triggers of liability) have been loosely described as an occurrence (or manifestation) basis and an exposure (or causation) basis. It is in issue whether the ELCIA, after it came into force, mandated any particular basis of response. A secondary issue, arising if the insurances only respond on an occurrence basis, is whether the aetiology of mesothelioma justifies a conclusion that there was during the relevant insurance period an occurrence sufficient to trigger liability under the insurances. Burton J, [2008] EWHC 2692 (QB), concluded that the relevant insurances all responded on an exposure basis. The Court of Appeal, [2010] EWCA Civ 1096, by a majority (Rix and Stanley Burnton LJJ), upheld the judge in relation to some of the insurances (particularly those covering disease contracted during the relevant insurance period); but they concluded that others (particularly those covering disease sustained during the insurance period) responded only on an occurrence or manifestation basis. Smith LJ would have upheld the judges judgment in its entirety. The full judgments in both courts repay study. They have been of great assistance to this court and make it possible to go directly to the heart of the issues. Mesothelioma is a hideous disease that is inevitably fatal. In most cases, indeed possibly in all cases, it is caused by the inhalation of asbestos fibres: Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, [2011] 2 AC 229, para 1, per Lord Phillips. It is a cancer of the pleura, which are thin linings around the lungs and on the inside of the rib cage. It is usually undetectable until shortly before death. Its unusual features include what Burton J in this case at para 30 described as the unknowability and indescribability of its precise pathogenesis. In particular, it is impossible to know whether any particular inhalation of asbestos (at least any occurring more than ten or so years prior to diagnosability) played any or no part in such development. Because of this unusual feature, the law has developed a special rule. The special rule was the product of judicial innovation in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32 and in Barker v Corus UK Ltd [2006] UKHL 20; [2006] 2 AC 572. It was modified by statutory intervention in the form of the Compensation Act 2006, section 3. Leaving aside exposures occurring within the ten or so years prior to diagnosability, the rule can now be stated as being that when a victim contracts mesothelioma each person who has, in breach of duty, been responsible for exposing the victim to a significant quantity of asbestos dust and thus creating a "material increase in risk" of the victim contracting the disease will be held to be jointly and severally liable in respect of the disease. Burton Js findings in the present case justify certain further propositions, mostly also corresponding with the summary in Lord Phillips judgment in Sienkiewicz (para 19): (i) A significant proportion of those who contract mesothelioma have no record of occupational exposure to asbestos. The likelihood is that (vi) in their case the disease results from inhalation of asbestos dust that is in the environment. There is, however, a possibility that some cases of mesothelioma are "idiopathic", i.e. attributable to an unknown cause other than asbestos. (ii) The more fibres that are inhaled, the greater the risk of contracting mesothelioma. (iii) There is usually a very long period between the exposure to asbestos and the development of the first malignant cell. Typically this can be at least 30 years. (iv) For a lengthy period (perhaps another five years) after the development of the first malignant cell, there remains a possibility of dormancy and reversal, but at a point (Burton J thought a further five years or so before the disease manifested itself, and was thus diagnosable) a process of angiogenesis will occur. This involves the development by malignant cells of their own independent blood supply, so assuring their continuing growth. (v) The mechanism by which asbestos fibres cause mesothelioma is still not fully understood. It is believed that a cell has to go through 6 or 7 genetic mutations before it becomes malignant, and asbestos fibres may have causative effect on each of these. It is also possible that asbestos fibres have a causative effect by inhibiting the activity of natural killer cells that would otherwise destroy a mutating cell before it reaches the stage of becoming malignant. Mesothelioma currently claims about 3000 lives a year in the United Kingdom. This speaks to the common use of asbestos materials up to the 1960s and 1970s. In Annex I to his judgment Rix LJ set out the insuring clauses of the various forms of policy wording in use from time to time. Subject to re ordering to reflect the development of the language, Annex A to this judgment includes the same and some further wording. It can be seen that the Excess policies and the first two MMI policies promise to indemnify the insured employer against liability if at any time during the period of insurance (or of any renewal) any employee shall sustain under the earlier policies personal injury by accident or disease or under the later policies [any] bodily injury or disease in the case of the first Excess policy while engaged in the service of the Employer or in other cases arising out of and in the course of [his] employment by the insured employer. In the case of the Independent policy, the insurer, under the recital, promised to indemnify the employer during the period of insurance or of any renewal. The insuring clause itself contains no express limitation to any period. It promises indemnity against all sums for which the employer shall be liable for damages for such injury or disease if any employee shall sustain bodily injury or disease arising out of and in the course of his employment by the Insured in connection with the Contract specified or type of work described in the Schedule. The third MMI policy and the BAI policies were in more developed form. The former promises indemnity in respect of legal liability for sums payable as compensation for bodily injury or disease (including death resulting from such bodily injury or disease) suffered by any employee when such injury or disease arises out of and in the course of employment by the Insured and is sustained or contracted during the currency of this Policy. The latter promised indemnity against all sums which the Insured may become liable to pay to any Employee . in respect of any claim for injury sustained or disease contracted by such Employee during the period of insurance or any renewal. The insurers party to the present appeals have at all times represented only a small part of the employers liability insurance market. By far the larger part of the market consists of companies who until the late 1960s (when competition rules intervened) operated a tariff system which bound them to adopt a specified policy form and specified rates. Until 1948 tariff insurance was focused on Workmens Compensation Act claims, but in 1948 legislative changes (in particular the abolition by the Law Reform (Personal Injuries) Act 1948 of the doctrine of common employment) made a common law claim for future accruing causes of action much more attractive. It may well have been in anticipation of these changes that the tariff companies introduced a new form of policy in May 1948, still in widespread use today, providing indemnity if any employee shall sustain any personal injury by accident or disease caused during the period of insurance. Under this tariff wording, sustain looks to the occurrence of an accident or development of a disease at any time, while caused makes clear that the trigger to cover is that the accident or disease has been caused during the insurance period. The present insurers were non tariff companies, and have always been free to set their own wordings. From dates after the insurances the subject of this appeal, three of the insurers in fact ceased to use the wordings set out in Annex A, and themselves moved expressly to causation based wordings Excess in about 1976, Independent in the mid 1980s, and BAI in 1983. As a matter of insurance practice, however, until the decision in Bolton in 2006, all these wordings, whether tariff or non tariff and whether using the language caused, sustain or sustained or contracted, paid out on long tail claims (including the mesothelioma claims which became increasingly frequent in the 1980s) by reference to the date(s) of exposure. Where successive employers with different insurers had exposed a particular employee victim to asbestos, liability was in practice apportioned between the employers, and so insurers, broadly according to the extent of exposure for which each employer was responsible. The rival cases Insurers submit that all the wordings in Annex A require the injury or disease to occur during the period of insurance or of any renewal. In the alternative, if the use of the word contracted in the third MMI policy and the BAI policies or the different formulation of the Independent policy leads to any different conclusion in any of such cases, they submit that this leaves unaffected the clear meaning of the Excess and first two MMI policy wordings. The employers and interested employees contend that all these policies are to be understood as operating on an exposure or causation basis. The implications of these alternative interpretations are clear. On insurers primary contention, the policies set out in Annex A would not respond to current mesothelioma claims. It is unlikely that most of them would have responded to many, if any, mesothelioma claims, since it was only in the 1980s that such claims began to emerge to any great extent. Policies written on a causation basis since the dates indicated in paragraph 10 above would also not respond to current mesothelioma claims. Insurers response is that any insurance must be read according to its terms. Until 1 January 1972, when the ELCIA came into force, it was not obligatory for employers to have any form of employers liability insurance. Further, viewed on an occurrence or manifestation basis, the policies would pick up long tail claims arising from exposure occurring at any time in the past. In this connection, it is to be noted that various long tail diseases were well recognised perils from the era of Workmens Compensation legislation before 1948. Instances were scrotal cancer, pneumoconiosis and more specifically (from the time of Merewether and Prices 1930 Report on Effects of Asbestos Dust on the Lungs and Dust Suppression in the Asbestos Industry) asbestosis. All these would only develop over and could manifest themselves after considerable periods of years. Following upon the 1930 report, The Asbestos Industry Regulations 1931 (SI 1931/1140) were introduced to regulate factories handling and processing raw fibre, and in 1969 The Asbestos Regulations 1969 (SI 1969/690) extended this regulation more widely it appears in the light of an appreciation that mesothelioma could result from exposure to small quantities of asbestos dust (see In re T & N Ltd (No 3) [2006] EWHC 1447 (Ch), [2007] 1 All ER 851, para 118). The Court of Appeals conclusions The force of insurers case rests in the use of the word sustain, whether in connection with the phrase personal injury by accident or disease or bodily injury or disease or in the conjunction injury or disease . sustained or contracted or injury sustained or disease contracted. Rix and Stanley Burnton LJJ concluded that the word sustain looked prima facie at the experience of the suffering employee rather than its cause (paras 232 and 343). Insurances responding to injury or disease sustained during the insurance period would not, on this basis, cover mesothelioma sustained long afterwards. Rix LJ had some compunction about the result because of what he (though not Stanley Burnton LJ) felt was a tension with the commercial purpose of employers liability insurance in the extraordinary context of mesothelioma (para 235). Rix LJ would have liked to hold that mesothelioma sufferers sustained sufficient injury on exposure to asbestos to trigger the insurances in force at the date of such exposure, but felt bound by Bolton to conclude the contrary (paras 277 289). However, Rix LJ, though not Stanley Burnton LJ, considered that the particular wording of the Independent insurances did not explicitly require the injury or disease to be sustained during the insurance period, and could be read as covering the sustaining of injury at any time arising out of and in the course of employment during the insurance period (paras 300 and 350). Rix and Stanley Burnton LJJ differed as to the significance of the ELCIA extension provisions included in the Independent wording, the third MMI wording and the second BAI wording, as quoted in Annex A. Rix LJ thought that the ELCIA required employers to insure on a causation basis (paras 184 and 186) although, since he also expressed the view that an insurance arranged and maintained on a sustained basis could comply with the ELCIA, he may perhaps only have meant required in practice. At all events, he held that the ELCIA extension provisions covered liability incurred to the personal representatives of employees on a causation basis, while enabling insurers to recoup themselves so far as possible from the relevant employers in respect of liability they would not otherwise have had to meet (paras 292, 300 and 302). Stanley Burnton LJ did not agree that the ELCIA required causation wording (para 342), but considered that it required insurance to be taken out and maintained in respect of ex employees, or at least those who were or had been employed at any time after the coming into force of ELCIA (para 342; and see Rix LJs comments at paras 305 307). Rix, Smith and Stanley Burnton LJJ were all agreed that, where provision was made for disease contracted, this could and should be construed as introducing cover on a causation basis, even if or though wording such as injury (or disease) sustained could only respond on an occurrence basis. Analysis Annex A sets out the insuring clauses. Insurers case is, as I have said, rooted most strongly in the word sustain, particularly when it is used by itself, rather than in conjunction with a more ambivalent alternative in the phrase sustained or contracted. The natural meaning of the word sustain, taken in isolation and as defined in the Shorter Oxford English Dictionary from an appropriate date (1965, 3rd ed), is, with respect to injury, undergo, experience, have to submit to, or, possibly, to have inflicted upon one, suffer the infliction of. But the insurance cover granted (and no doubt required) extended expressly beyond injury by accident to embrace disease. This was achieved by less natural conjunctions, such as sustain [any] personal injury by accident or disease or sustain [any] bodily injury or disease. Conscious perhaps that the verb sustain does not fit naturally with the concept of disease, some companies (MMI in its third wording and BAI in its first and second wordings) introduced the different verb contracted in the formulations sustained or contracted or injury sustained or disease contracted. This use of contracted with respect to disease is considerably more natural, but is clearly open to an interpretation that it looks back to the initiating or causative factor of the disease, and (whatever the answer on that point) highlights a question whether any substantial difference exists in this connection between such wordings and other wordings referring more awkwardly to the sustaining of personal injury by disease or the sustaining simply of disease. To resolve these questions it is necessary to avoid over concentration on the meaning of single words or phrases viewed in isolation, and to look at the insurance contracts more broadly. As Lord Mustill observed in Charter Reinsurance Co Ltd v Fagan [1977] AC 313, 384, all such words must be set in the landscape of the instrument as a whole and, at p 381, any instinctive response to their meaning must be verified by studying the other terms of the contract, placed in the context of the factual and commercial background of the transaction. The present case has given rise to considerable argument about what constitutes and is admissible as part of the commercial background to the insurances, which may shape their meaning. But in my opinion, considerable insight into the scope, purpose and proper interpretation of each of these insurances is to be gained from a study of its language, read in its entirety. So, for the moment, I concentrate on the assistance to be gained in that connection. A first point, made very clearly below by Rix LJ (para 263), is that the wordings on their face require the course of employment to be contemporaneous with the sustaining of injury. This leaves open what is meant either by sustaining or by injury. Rix LJ thought that the Independent wording could be understood differently in effect, as if it had expressly read: If any person who is under a contract of service or apprenticeship with the Insured shall at any time sustain bodily injury or disease arising out of and in the course of his employment by the Insured during the policy period in connection with the Contract specified or type of work described in the Schedule . That interpretation assumes that sustain in this context equates with the occurrence, rather than causation, of the injury or disease, and only arises for consideration if that assumption is correct. A second point is that the insurance wordings demonstrate a close link between the actual employment undertaken during each insurance period and the premium agreed to be payable for the risks undertaken by insurers in respect of that period. Premium is linked expressly to actual wages, salaries and earnings during the insurance period under the Excess policies, the first MMI wording and the BAI policies. The second and third MMI wordings contemplate that premium may be linked to wages, salaries and earnings, and, to the extent that any inference regarding the general nature and scope of cover under these standard wordings can be drawn from such a link, it must be capable of being drawn whether or not premium was actually so linked in any particular case. As to the Contractors Combined Policy issued by the Independent, it is a probable inference that the estimates which were provided and were to be updated will have included, in respect of the employers liability cover in section 1, wages, salaries and other earnings paid. Finally, the Independent cover is linked to the actual contract or work which the employer is undertaking during the insurance period. These links are in my view significant. True, premium may sometimes be calculated on a rough and ready basis. Minor discrepancies between the premium calculation and the risk may be understandable: see e.g. Ellerbeck Collieries, Ld v Cornhill Insurance Co [1932] 1 KB 401, 418, per Greer LJ (who pointed out that any such discrepancy there was more apparent than real, since workmen not earning wages because off work would not actually be at risk of any fresh accident, even though they would remain susceptible to certification for disablement). Here the position is quite different. Great care is taken in all the policies to tie premium to the actual employment undertaken during the insurance period, and in the case of the Excess, Independent and MMI policies to tie cover to a business, contract or activities described in the schedule. The natural expectation is that premium is measured by reference to actual employment or work during the insurance period because it is the risks attaching to such employment or work which are being undertaken by insurers. At the very least, the drawing of this link makes improbable the contention advanced by some of the insurers that the present insurances were apt to pick up liabilities emerging during the insurance period which could be attributable to employment and activities undertaken and negligent conduct committed at times long past. The number of employees, their employment activities and the risks involved at those times could be very different. The significance which attaches to the employment current during the insurance period is underlined by legal and practitioner texts. As long ago as 1912, MacGillivray on Insurance (1st ed), pp 966 wrote: The nature and scope of the employers business must be clearly defined in the insurance policy, and workmen employed outside the scope of the assureds business as described in the policy will not be covered In the section on Employers Liability Insurance in Stone & Coxs Accident, Fire and Marine Year Book (1957), pp 688 689, the authors stressed the importance of identifying any special hazards, such as signs of careless management or lack of control or careless workmen, and observed: The surveying of Employers Liability risks has probably become more general than formerly. Apart from the question of the possibilities of accident, there is now the serious question of disability due to disease and in particular the disease known as pneumoconiosis. In 1974 MMI produced a Guide to Insurance Officers in Local Government, which it said that it would like to see on the desk of every insurance officer for ready reference at any time; this, after noting that employers liability was almost invariably dealt with by a separate policy and that its importance had been increased by the ELCIA, went on: "7. Premiums are usually based on wages and salaries this is not only a convenient yardstick but is logical since loss of earnings usually represents a substantial part of claims. Rates of premiums vary according to the nature of the work of the labour force, and the claims experience. 8. A feature of employers liability claims is the length of time which often elapses between the date of the accident and the final settlement, and the cost of servicing claims tends to be high. Injury caused at work during the period of insurance even though it may not be diagnosed till years afterwards can be a liability under the policy." I note in parenthesis that 1974 was the year in which MMI changed from a pure sustain form of wording to a form covering bodily injury or disease suffered, when sustained or contracted during the currency of the policy. Yet there is no suggestion in the Guide of any change in substance. It is in this light improbable that the present insurances can or should be read as offering cover in respect of ancient, as opposed to current, employment and activities. But there is a third point. If insurances in the present form only address risks arising from employment during the insurance period, then, on insurers case, there is a potential gap in cover as regards employers breaches of duty towards employees in one period which only lead to injury or disease in another later period. If the employment relationship spans both insurance periods and the employer remains insured with the same insurers in both periods, there may be no problem. The employee is employed at all relevant times and the insurance may be viewed as a single continuing contract. The policy wordings set out in Annex A, with their references to insurance during the period of insurance or during any subsequent renewal period, would support the latter view. But, even in the days of more stable long term employment and insurance relationships, employees could and would move employment or retire, or employers would cease business, or change insurers. On the basis that the insurances only cover risks arising from employment during the insurance period, there would be no cover unless the liability arose from and in the course of and involved injury or disease during the currency of the same employment and the same insurance (including any renewal). Fourthly, on insurers case, employers would as a result be vulnerable to any decision by insurers not to renew; and such a decision might arise from the simple performance by employers of their common law duty to disclose past negligence to insurers upon any renewal. Employers who discovered or came to appreciate that they had been negligent in the course of past activities in respects that had not yet led to any manifest disease (e.g. by exposing their employees to asbestos) would have such a duty. Insurers could then, on their own case, simply refuse any renewal or further cover. Employers could then have to disclose that refusal also to any further insurers to whom they made a proposal for cover. One response made by insurers to such problems is that they would not arise in the large bulk of cases. That is no doubt true. Most employers liability cases involve short tail claims: typically, an accident involving injury. It is not surprising if the language of the insurances fits more easily with situations in which cause and effect coincide in time. But, by the same token, this does not mean that the underlying risk being assumed was in either partys mind limited to circumstances in which a cause gave rise to an effect during one and the same insurance period. Rix LJ, in accepting that cover depended upon injury being sustained in the sense of experienced during the insurance period, was influenced by the thought that this was not an absurd or meaningless interpretation. The insurance could operate entirely successfully in some 99% of cases (para 235). In the light of this Courts recent decision in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900, para 30, this, in my view, gives too little weight to the implications of the rival interpretations and to the principle that where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense. The 1% of cases in which there might be no cover could not be regarded as insignificant. Well before 1948, there was general awareness of the existence of long tail diseases which would only develop and manifest themselves after considerable periods of years (see para 12 above; and see also Cartledge v E Jopling & Sons Ltd [1963] AC 758). The connection between asbestos exposure and mesothelioma became generally known in the mid 1960s, following the publication in 1965 of Newhouse and Thompsons report on Mesothelioma of pleura and peritoneum following exposure to asbestos in the London area and a Sunday Times article. Yet on insurers case, the present insurances would not cover any situation where, after the termination of employment or the expiry of an insurance, injury or disease developed from an employers breach of duty to a relevant employee during an insurance period. A fifth point concerns the way in which the policies deal with the issue of extra territorial scope. The first Excess wording stands apart from the others in its treatment of that issue. Cover only exists in respect of any employee in the employers service who shall sustain any personal injury by accident or disease while engaged in the service of the employer in Great Britain, Northern Ireland, the Isle of Man or Channel Islands, in work forming part of the process in the employers business. As soon as one postulates a delay in time between the causation and experiencing of a disease, it becomes apparent that this wording could operate to very curious effect if sustain looks to the latter rather than the former. A disease (e.g. a cancer) experienced during employment could be covered although caused by pre employment exposure, while a disease caused by employment would not be covered if only experienced while working abroad. The natural inference to draw from the references to being engaged in the employers service and in work forming part of the employers business process is that it was envisaged that the accident or disease would and should arise out of such service and work, rather than merely occur during it. That points to an underlying focus on causation, even if the assumption was that in the majority of cases causation and experiencing of any injury by accident or disease would coincide. As to the other policies, at the very least, the way they deal with territorial issues throws doubt on any proposition that their wordings are so carefully or well chosen that a court should be careful to stick literally to whatever might be perceived as their natural meaning. They address territorial scope by specific exclusions, but the cover and the exclusions use different language. Thus, although the second and third Excess wordings cover liability to employees who sustain personal injury by accident or disease, the territorial exclusion is in respect only of accidents occurring outside Great Britain, etc, leaving it unclear how disease, whether caused or developing outside Great Britain, should be dealt with. The Independent wording also covers liability to employees who sustain bodily injury or disease, while the territorial exclusion is for injury, illness, loss or damage caused elsewhere than in Great Britain, etc. While the contrast in language is capable of lending some support to a view that sustain looks to experiencing, rather than to causation, an alternative possibility is that the two words were understood as having the same effect and that the cover was understood as focused on causation. The language of this exclusion thus cuts both ways, as Rix LJ recognised (para 297). A similar position applies to the contrast between injury or disease sustained and injury or disease caused outside Great Britain, etc. under the first two MMI wordings. Under the third wording, the language of the cover and the exclusion have been deliberately matched. Under the BAI wordings, however, there is an incongruity between cover for injury sustained or disease contracted and the exclusion in respect of liability for accidents . arising outside the United Kingdom. Again, this leaves the position in respect of disease unclear, and the difference between injury sustained and accidents arising can be read either as deliberate or as suggesting that no significance was attached to the difference or that the real concern was with causation. The history and Workmens Compensation Acts Much attention was, both below and before the Supreme Court, paid to the development of employees rights to compensation in respect of personal injury and disease, at common law and under the scheme of the Workmens Compensation Acts (WCAs). The WCAs were in force from 1897 until replaced in 1948 under the National Insurance (Industrial Injuries) Act 1946. The history and a number of the decisions under the WCAs were examined by Rix LJ in paras 126 to 165 of his judgment. He concluded that such an examination yields in the present context not a lot. To a considerable extent, I agree and I shall not repeat the whole exercise, but identify some potentially relevant aspects. Etymologically, some of the language presently in issue can be traced back to statutory language found in the Employers Liability Act 1880 and the WCA 1897. The 1880 Act modified the common law doctrine of common employment, by entitling employees to recover common law compensation for injury caused by specified matters for which employers were responsible, provided that they gave notice, within six weeks of sustaining the injury of its cause and the date at which it was sustained. The 1897 Act, applying to personal injury by accident arising out of and in the course of employment, also required notice to be given of the accident as soon as it occurred, stating the cause of the injury and the date at which it was sustained. These Acts therefore distinguished the causation and the sustaining of an injury, but not in any presently relevant context. Further, any reference to sustaining disappeared from the Workmens Compensation scheme in the 1906 Act, which amended the scheme to require a notice stating the cause of the injury and the date at which the accident happened. The 1906 WCA also expressly extended the scheme to cover certain diseases specified in section 8. In that context, it provided that, where a workman was certified as disabled or suspended from employment or died due to a disease and the disease is due to the nature of any employment in which the workman was employed at any time within the twelve months previous the date of the disablement or suspension, whether under one or more employers, then he or his dependants shall be entitled to compensation under this Act as if the disease or such suspension . were a personal injury by accident arising out of and in the course of that employment . Section 8(a) provided: The disablement or suspension shall be treated as the happening of the accident. Under section 8(c), the compensation was recoverable from the employer last employing the employee within the previous twelve months, providing the employee furnished that employer with particulars of all his other employers in the employment to the nature of which the disease was due. It was not necessary to prove that the disease actually arose from the last employment, merely to prove that the relevant employment gave rise to a risk of such a disease: Blatchford v Staddon and Founds [1927] AC 461. The 1906 Act may be regarded in this respect as involving an early statutory instance of the kind of liability recognised in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22, [2003] 1 AC 32 and Barker v Corus UK Ltd [2006] UKHL 20, [2006] 2 AC 572. However, failing such particulars, the last employer could excuse himself upon proving that the disease was not contracted whilst the workman was in his employment (section 8(c)(i)). The last employer might also join any other employer (within the last twelve months) and it was provided that upon proof that the disease was in fact contracted whilst the workman was in the employment of that other employer, that other employer shall be the employer from whom the compensation is to be recoverable (section 8(c)(ii)). Finally, section 8(c)(iii) provided that: if the disease is of such a nature as to be contracted by a gradual process, any other employer within the last twelve months was liable to make such contributions as might be agreed or determined by arbitration under the Act. Under this scheme, therefore, compensation for disease was initially based upon the nature of the employment and its potential for causing, rather than upon proof that it caused, such a disease. The paternal benevolence of the Legislature (as Visc Sumner put it in Blatchford: p 469) is well known, and if the price of that benevolence is paid by the last employer, who thus has to bear others burdens, that is nothing new in this kind of legislation. However, the last relevant employer could seek, in specified circumstances, to avoid or to pass on to another employer responsibility by proof that the disease was not actually contracted in his employment. Alternatively, in the case of a disease of such a nature as to be contracted by a gradual process, all relevant employers within the last twelve months would be liable to contribute. The scheme was, as I see it, concerned with either the risk of or actual causation, and in its use of the word contracted it appears to me to have been directing attention to the causation, rather than the mere experiencing or manifestation, of disease. The WCA scheme was the subject of further amendment by the 1925 Act. Section 43 superseded section 8 of the 1906 Act as regards scheduled diseases, while section 47 made specific provision for the introduction of a parallel scheme covering silicosis. Effect was given to this by inter alia the Metal Grinding Industries (Silicosis) Scheme which came into force in July 1927, making provision for obtaining compensation from the last employer within the previous three years, and giving such employer rights to look to other such employers within the last five years. An insurance covering employers liability in this connection was considered in Smith & Son v Eagle Star (1933) 47 Ll. L.R. 88, (1934) 48 Ll. L.R. 67. Mr Hill had been employed in processes giving rise to silicosis for some 20 years. For the last two of these years, from 31 March 1928 to 16 June 1930, he worked for Smith & Son. From 30 June 1927 to 17 June 1930, Smith & Son had an insurance against WCA liability in respect of any personal injury or disease which at any time during the continuance of this policy shall be sustained or contracted by any workmen . The policy was expressly extended to cover any liability in connection with any claim made by employees in respect of silicosis, and the decision of the Court of Appeal rested on this ground. But Scrutton LJ also examined the main policy language, and in particular what was meant by contracted. He noted that there has been a good deal of discussion in the Courts about a disease which is gradually contracted commencing at some stage and through the process going on increasing the disease until at last it results in total disablement (p 70), and concluded that the word was not to be read as first contracted, but in the sense of influenced or increased until it ultimately comes to total disablement. This, although not directly focusing on the first development of a disease from some earlier cause, suggests a flexible view of the word contracted, directed once again to the employments responsible for causing the disease. Confirmation that this was Scrutton LJs view can be found in the earlier case of Ellerbeck Collieries Ltd v Cornhill Insurance Co [1932] 1 KB 401. Two workmen who had been in the colliery companys service for many years were on respectively 11 and 12 March 1929 (dates they were actually off work) certified as suffering from miners nystagmus. The Cornhill had on 8 March 1929 issued the colliery company with a three month provisional cover note insuring in terms matching the wording of the insuring clause in the first Excess wording (i.e. against liability in respect of any employee who shall sustain any personal injury by accident or disease while engaged in the service of the employer). Failing a satisfactory survey, the cover note actually expired on 18 March 1929. The first point decided was whether the employees had sustained personal injury by accident or disease during the period of validity of the cover note (8 to 18 March 1929). It was held that they did. The judgments in the Court of Appeal are of interest for a number of reasons. First, both Scrutton LJ (p 408) and Greer LJ (p 417) approached the question of construction on the basis that the policy was intended to protect the employers against their liability to their workmen under the WCAs. Scrutton LJ added that it seems to me that the policy was intended to cover the liability of the employers for the results of industrial diseases caused by the employment (p 409). His description of the policy, covering in terms any employee sustaining personal injury by accident or disease in service, as intended to cover liability . for the results of diseases caused by the employment fits precisely with the analysis which I consider correct (paragraphs 18 28 above). Second, Scrutton LJ went on to refer to the difficulties in saying when an industrial disease, such as miners nystagmus or lead poisoning, begins, and in these circumstances the difficulty for an employee to pick the proper employer to sue. He described the way in which Parliament, by what became section 43 of the WCA 1925, had addressed such difficulties by providing a conventional and artificial means for enabling the workman to get compensation, leaving the various employers to fight out their proportion of the liability between themselves (p 409). He said that the last employer, liable under the WCA scheme, then claims on the insurance company on the ground that he is liable to make compensation for an injury by disease, and the date of the injury or disablement is by statute and certificate fixed as happening between the dates for which he is provisionally covered (p 411). On this basis, and in the light of the House of Lords decision in Blatchford, Scrutton LJ concluded that he was bound to hold that an accident has happened within the period of the provisional cover against the consequences of which the insurance company is bound to indemnify the employer (p 413). In short, the conventional and artificial provisions of the WCA defined what constituted an accident and when personal injury by accident or disease was sustained for the purposes of the insurance. Greer LJ, more shortly, adopted the same approach (p 418). Only Slesser LJ (p 421) expressed a reservation about the possibility that the artificial deeming provisions of section 43(a) of the WCA 1925 might only apply as between employee and employer, and that it might have been necessary to consider separately the date of the sustaining of injury as between the employer and the insurer, had there been any admissible evidence that the two employees had actually contracted the scheduled disease before the granting of the statutory medical certificate. Commercial purpose and practice Much general evidence was directed or elicited before Burton J in relation to the commercial purpose of the present insurances, and to practice relating to their operation in the years before the present issue arose. It was argued that there was, prior to the decision in Bolton, a universal usage of the insurance industry to pay out mesothelioma or similar claims under [employers liability] policies by reference to the date of inhalation/exposure whatever the wording, or an estoppel by convention to like effect. Burton J rejected the argument (paras 180 to 201, esp. para 201), for the reasons that, first, there was no evidence relating to years earlier than the 1980s which could be put down to any kind of arguable usage, second, any usage was not certain, not least because of the multiplicity of approaches to or bases for it and, third, it was not binding. It was not incorporated into the insurance contracts. No issue of estoppel by convention was pursued to the Court of Appeal (Rix LJ, para 24, and Stanley Burnton LJ, paras 332 and 335) and the issue of a universal custom was only pursued by Zurich Insurance Company (Rix LJ, para 24). By a multiplicity of approaches to or bases for insurers practice, Burton J was referring to evidence that insurers followed the practice they did in some cases because they believed that their contracts were to be interpreted on a causation/exposure basis, in others because they believed that the aetiology of diseases such as mesothelioma was such that injury was in fact sustained (in the sense of experienced) at the date of inhalation, while yet others may have failed to realise that their historically relevant wordings had been on a different basis to the causation wordings to which they had since switched or may have failed to address their minds to any relevant issue at all in relation to an insured who was usually a longstanding repeat client. Rix LJ (para 228) contented himself with agreeing with Burton Js reasoning on this aspect, while Stanley Burnton LJ noted and agreed in particular with Burton Js second reason, relating to the believed aetiology of mesothelioma (para 335). Smith LJ, on the other hand, treated the commonly held understanding that diseases such as mesothelioma involved injury at the date of inhalation as part of the factual matrix of all the insurance contracts (paras 322 323), and considered against that background that no difference in meaning should be held to exist between policies using sustained and causation wording, until the time when the two sides of the insurance industry should be considered to have appreciated that some diseases, including mesothelioma, do not occur until many years after exposure to the causative agent (para 327). She put that as around the time of the decision in Bolton, after which parties using a sustained wording must be taken to have meant only to cover injuries actually occurring during the policy period (para 327). The argument of a binding usage was not pursued before the Supreme Court, rightly so for the reasons given by the judge and the majority in the Court of Appeal. Equally, there has been no suggestion of estoppel by convention, along the lines recognised as possible in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 47. However, on the issues of policy interpretation, Mr Stuart Smith QC for Zurich Insurance, maintained before the Supreme Court an argument that there was a consensus based on market practice, whereby, for one reason or another, such policies would respond to long tail diseases by reference to the date of exposure, and that this could constitute relevant background to their construction. Assuming that, short of a binding usage or estoppel by convention, a practice, if known to or shared by the relevant parties, could in some circumstances be relevant background (see e.g. Reardon Smith Line Ltd v Yngvar Hansen Tangen [1976] 1 WLR 989), still, in my opinion the argument fails in the present case. It fails in particular in the light of the judges findings, even in relation to policies made in and after the 1980s. A practice based on a mistaken understanding, by only some insurers, that the policies operated on a causation basis cannot be relevant background to the interpretation of every policy; on the judges findings other insurers do not appear to have understood that the policies operated on that basis. A practice based on a mistaken understanding by others in the market as to when long tail diseases could be said to have been experienced or to involve injury is likewise an unpromising start for construing all policies; if the understanding were good, it would mean that such diseases fell within the policies, even though the policy cover was restricted to injury or disease experienced during the policy period. The understanding would not therefore carry any imperative to read a sustained wording as meaning caused. Before the Supreme Court, both employers and employees continued to rely upon the evidence given at trial regarding the general purpose of employers liability insurance as part of the background to the interpretation of the present insurances. Rix LJ (paras 223 to 235) gave it some weight as such, but Stanley Burnton LJ thought that there was little if any assistance to be gained by reference to the commercial purpose of EL insurance, as this was simply to provide the cover defined in the policy (para 333). The Supreme Court was provided with a useful summary of the considerable volume of evidence relied upon in this connection. It consisted in general of answers given by insurers, two at least of them with experience going back to the 1940s. They were asked (frequently in response to leading though not inadmissible on that score questions in cross examination) about their or others views, understandings or perceptions as to the purpose of the policies, and the way in which these would or should respond, in relation to injuries arising from exposure in the course of activities during the policy period. In my judgment, Stanley Burnton LJ was right to reject such evidence as inadmissible. The parties cannot be asked what they meant by their contract, and, failing any binding usage, it is equally inadmissible to ask other persons operating in the market to give general evidence as to what they would have understood the parties to have meant by the words used in the context in which they were used. The evidence does not seem to have amounted to more than that. However, I do not agree with Stanley Burnton LJs suggestion that no useful conclusions can be drawn about the commercial purpose of the policies, save that it was to provide the defined cover. In my opinion, relevant conclusions about the general nature and purpose of the individual policies can be drawn in this case, just as they could in the case of the different (and wordier) instrument in issue in In re Sigma Finance Corporation [2009] UKSC 2, [2012] 1 All ER 571 (see especially paras 10, 12 and 37). They can be drawn from an overall consideration of the individual insurance wordings, and particularly from the features which tie cover to the employees and activities during the relevant policy period and the five points considered in paragraphs 18 to 28 above. Further, if the policies are on any view apt to cover employers liability for long tail diseases which initiate during, but only manifest themselves years after, the original policy period, one may look with scepticism at an interpretation which distinguishes this situation from other situations where a long tail disease is caused but does not strictly begin during the policy period, and only manifests itself years later. This is particularly so if a conclusion that the latter diseases fell outside the policy cover meant that they would or might well not fall within any subsequent employers liability policy. ELCIA 1969 Section 1 of the ELCIA provides: 1. (1) Except as otherwise provided by this Act, every employer carrying on any business in Great Britain shall insure, and maintain insurance, under one or more approved policies with an authorised insurer or insurers against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business, but except in so far as regulations otherwise provide not including injury or disease suffered or contracted outside Great Britain (3) For the purposes of this Act (a) approved policy means a policy of insurance not subject to any conditions or exceptions prohibited for those purposes by regulations. 4. (1) Provision may be made by regulations for securing that certificates of insurance in such form and containing such particulars as may be prescribed by the regulations, are issued by insurers to employers entering into contracts of insurance in accordance with the requirements of this Act . (2) . the employer shall during the currency of the insurance and such further period (if any) as may be provided by regulations (a) comply with any regulations requiring him to display copies of the certificate of insurance for the information of his employees; . The only conditions or exceptions ever prohibited were certain exemptions from liability. Under section 3, the ELCIA did not however apply to local authority employers, such as most of MMIs insureds. Under section 4, provision might be made for certificates of insurance to be issued to employers, and in that event the employer was, obliged during the currency of the insurance and such further period (if any) as may be provided by regulations to comply with any regulations requiring him to display copies of the certificate of insurance for the information of his employees. In reaching his conclusions on the ELCIA (para 16 above), Rix LJ engaged in an impressive analysis, to which I would refer (paras 166 to 186). The only doubt this leaves is how, if the ELCIA requires a causation wording, an employer could properly insure on a wording which only covered injury sustained in the sense of experienced (see para 186 and paragraph 16 above). The scope of the ELCIA is, as Rix LJ indicated, open to three alternative analyses: that it requires cover in respect of (i) all future liability incurred during the insurance period, whenever the negligence or injury, or (ii) liability for all future injury or disease sustained (in the sense of experienced) by employees during the insurance period, whenever the negligence, or (iii) liability for all negligence or breach of statutory duty during the insurance period giving rise to liability as in (ii). The retrospectivity of cover involved in (i) and (ii) is unlikely to have been intended. The only one of the three possibilities not involving a degree of retrospectivity is (iii). A duty on every employer to insure, and maintain, insurance is consistent with a requirement to have the insurance in place during, though to maintain it after, the relevant insurance period. The provision, contemplated by section 4, for copies of insurance certificates to be issued by insurers and to be displayed by any employer for the information of his employees during the currency of the insurance and such further period as may be provided by regulations indicates, first, a desire to assure employees of their insurance protection during the relevant insurance period, and, secondly, an awareness that this assurance might need to remain in place after such insurance period; it is therefore suggestive of (iii), rather than (i) or (ii). As Rix LJ observed, it is only cover in accordance with (iii) that can give an employee the assurance that any injury or disease suffered as an employee and arising out of and in the course of [his] employment will be covered by insurance, the benefit of which would, if necessary, be available to him at the time under the Third Party (Rights against Insurers) Act 1930. An obligation to have a policy in force only at or by the time when injury is actually experienced would leave employees or ex employees at the mercy of compliance with the statute by their employers or ex employers at uncertain future dates. It would also leave such employees or ex employees at the mercy of employers who, for whatever reason, ceased to carry on business either in Great Britain or (for example due to insolvency) at all. Further, if injury or disease suffered or contracted bears the same meaning as insurers suggest that injury or disease sustained or contracted bears, then an employee, who had the misfortune to succumb to a disease abroad caused by his employment or previous employment in Great Britain, would not be covered (unless regulations intervened to ensure that he was). Stanley Burnton LJ thought that any issue as to the nature of the insurance required under ELCIA was resolved by its use of the word sustained, rather than caused. He went on to conclude that the ELCIA covered any injury sustained (in the sense of experienced) during a period of insurance, by anyone who was then or had at any previous time been an employee. However, that latter conclusion introduces a retrospectivity into the scope of the ELCIA, which, as already indicated, I think unlikely to have been intended. The statute could have used the tariff wording of causation instead of sustained. But in the statutory language the word sustained is not coupled with a phrase such as during the period of the insurance. Even if sustained means experienced in the context of the statute, the statute may require insurance on what is effectively a causation basis; the words sustained by his employees may well mean sustained at any future time by his current employees. The key to the meaning of the statutory language seems to me the combination of the phrases arising out of and in the course of their employment in Great Britain and not including injury or disease suffered or contracted outside Great Britain. Together, and for reasons given in the last two paragraphs, they indicate a statutory requirement to insure in respect of activities during the course of employment in Great Britain which may in the future give rise in or out of Great Britain to liability to the employees involved in such activities. In my judgment, therefore, the conclusion which gives proper effect to the protective purpose of the legislation is that the ELCIA requires insurance on a causation basis. The ELCIA extension provision to the Independent and second BAI wordings (see Annex A), as well as a similar extension provision to the MMI policy intended for insureds who were not local authorities, achieved this result expressly in relation to policies written subsequent to the coming into force of the ELCIA, at least for the purpose of ensuring that employees claims were covered by insurance. Any other subsequent insurances not containing that extension provision should, if possible, be read as providing the relevant employers cover required by statute. This is a powerful tool in the interpretation of such insurances. Bolton M.B.C. v Municipal Mutual Insurance Ltd The Court of Appeal in the present case was bound by its previous decision in Bolton MBC v Municipal Mutual Insurance Ltd [2006] EWCA Civ 50, [2006] 1 WLR 1492 on public liability policies. The majority regarded that case as, in effect, determining the meaning which must be put on the word sustained in the present employers liability policies: see paras 284, per Rix LJ, and 339, per Stanley Burnton LJ, who however also found the logic of Longmore LJs judgment convincing in relation to the latter type of policies. Smith LJ on the other hand considered that public liability and employers liability insurances gave rise to different considerations (para 328). In my opinion, that is right. Employers liability policies are subject to particular terms and considerations, analysed above (particularly in paragraphs 18 28 and, in the case of policies effected after the coming into effect of the ELCIA, paragraphs 41 46). These considerations are not or certainly not necessarily applicable to public liability insurances. The present case was concerned with employers liability not public liability insurances, and it may well be that not all the relevant facts relating to the latter are before us. We certainly have not heard full argument on the proper conclusions which may be drawn regarding the basis of liability or trigger generally applicable under the latter. In these circumstances, I would proceed on the basis that we are not bound by Bolton, that this does not involve any view about the correctness or otherwise of Bolton, but only that it is unnecessary to consider what the position generally may be under public liability policies. Assuming that, in relation to public liability insurance, the position generally is as stated in Bolton, that does not alter the conclusions which I reach. It merely means, in their light, that public liability insurance generally and the present employers liability policies operate on different bases, because of their different backgrounds, terms and purposes. Contracted There is no difficulty about treating the word contracted as looking to the causation or initiation of a disease, rather than to its development or manifestation. In relation to the two BAI wordings and the third MMI wording, this interpretation obtains strong support from the general nature and purpose of the relevant policies, derived from their immediate context and terms and analysed in paragraphs 18 to 28 and 41 above. To the limited extent that the WCA background may assist to inform the meaning of later policies, it can be seen overall as a legislative scheme which was concerned with either the risk of or actual causation (para 32 above). Even if, in the phrase sustained or contracted or injury sustained or disease contracted, the word sustained is to be understood as meaning experienced, that would reflect no more than the fact that the cause and effect of an injury commonly coincide; I would still unhesitatingly conclude, as did the Court of Appeal, that the word contracted used in conjunction with disease looks to the initiating or causative factor of the disease. Sustained The majority of the Court of Appeal considered that it was impossible to view policies with pure sustained wordings as operating by reference to the initiating or causative factor of a disease. They did so primarily by reference to the wording of the insuring clauses. In my view, as indicated in paragraphs 18 19 above, a broader approach is necessary. The general nature and purpose of these policies can be derived from their immediate context and terms, analysed in paragraphs 18 to 28 and 41 above. It is true, as Rix LJ said, that phrases such as injury sustained by an employee or an employee who shall sustain injury, in either case by accident or disease, appear to address the impact of the accident or disease on the employee. But the underlying focus of the insurance cover is on the employees and activities current during the insurance period. The cover would be potentially incomplete, and employers would be potentially exposed to uninsured risks, were sustained to be understood as meaning developed or manifested. This is so, even before the ELCIA came into force. Any policies written subsequent to the coming into force of the ELCIA either afford cover consistent with the Acts requirements by virtue of an ELCIA extension provision, or, to the extent that this is not the case, should be construed, if at all possible, as meeting employers obligations under that Act. In my view, such obligations included taking out insurance in respect of negligence during the insurance period affecting an employee in a manner giving rise to bodily injury or disease then or at any subsequent time. On this basis, I consider that, although the word sustained may initially appear to refer to the development or manifestation of such an injury or disease as it impacts employees, the only approach, consistent with the nature and underlying purpose of these insurances both before and after the ELCIA, is one which looks to the initiation or causation of the accident or disease which injured the employee. The disease may properly be said to have been sustained by an employee in the period when it was caused or initiated, even though it only developed or manifested itself subsequently. Disease sustained, read as meaning experienced or incurred Rix LJ was attracted by the submission that, even if sustaining disease meant experiencing or incurring it during the period of the insurance, long tail diseases could be said to have been sustained during the period of insurance in this sense. He asked rhetorically whether an employee who had inhaled asbestos had not sustained an injury in the form of an assault of the fibres, as a result of which he was worse off through having dangerous fibres in his lungs (para 280). He noted that, although there was at most trivial injury or damage, and nothing that could create actionable damage, nevertheless, when mesothelioma develops, it is the risk of mesothelioma created by the exposure which is the damage (see . Barker ) and it is the exposure, and the risk of mesothelioma, that is the damage (para 281). He only felt bound to reject this analysis (para 284) because of the Court of Appeals previous decision in Bolton. It may be that in the case of some long tail diseases, the victim can be said to have incurred or caught them at the same time as the initial ingestion or scratch giving rise to them. But it is clear that this is not the position with inhalation of asbestos in relation to either asbestosis or mesothelioma. No cause of action arises from exposure or inhalation alone: Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] 1 AC 281. Further, for reasons which I develop in paragraphs 64 65 below, the exposure and risk are not by themselves damage in any sense known to the law. Damage is only incurred when mesothelioma develops. Only when it develops does the victim incur damage which is legally relevant, and even then this is not because any physical link necessarily exists or can be proved between the mesothelioma and the original exposure. The rule in Fairchild and Barker imposes liability for the mesothelioma upon persons who have exposed the victim to asbestos, and so created a risk of mesothelioma. But it is not a rule which, even as between employers and employees, deems the latter to have suffered injury or disease at the time of any exposure. And, even if it were viewed simply as a rule imposing retrospective liability on employers for exposing their employees to the risk of mesothelioma, the insurance policies do not insure risks of physical injury or disease, but only actual injury or disease. The application of the insurances in respect of mesothelioma At the outset of these appeals, the application of the insurances in respect of mesothelioma suffered by employees exposed to asbestos during their employment by an insured employer did not appear controversial. This changed after a question from Lord Phillips on day 4 of the hearing, followed by a later written note. All the same, the transcript pages containing any argument on the point numbered only 40 out of a total of some 1140. So far as Mr Edelman made any submissions on this point, in his written case or orally, they were to this effect: if the correct analysis of the Houses decision in Fairchild be that an employer who exposes an employee to asbestos is deemed to have caused that employees mesothelioma, then employers liability insurances held by the employer on a causation basis should respond; but, if the policies do not respond on a causation basis, there is no justification for treating the employee as having suffered injury or a disease during their currency, because employers cannot prove that any particular inhalation caused any injury. This led to some discussion, particularly with counsel for employers and employees, of the points which I have already addressed in paragraphs 50 52 above. The point now expressed forcefully by Lord Phillips in his judgment is that exposure to the risk of mesothelioma is the correct analysis of the Fairchild principle, at least as subsequently interpreted, and that such exposure can satisfy neither the concept of injury nor the concept of causation for the purposes of the policies. If that is right, then the present insurance claims must all fail. Indeed, the great bulk of insurance claims settled by other insurers (e.g. former tariff insurers) or by the present insurers under the causation policies they have issued in more recent years (paragraph 10 above) should presumably also have failed. The only exception may be the case of an employee exposed to asbestos in only one employment by an employer holding insurance throughout with only one insurer. In such a case it might (perhaps) be said that, whichever particular inhalation(s) may have been responsible for the employees mesothelioma, it (or they) must have been insured. Even then, the logic of the Supreme Courts reasoning in Fairchild and Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, [2011] 2 AC 229 might lead to the conclusion that causation was still unprovable in the light of the possibilities of environmental or idiopathic causation of mesothelioma. Rules regarding causation are created by the courts for the purpose of determining when liability arises in particular contexts. Normally, they reflect a common sense understanding of what is ordinarily understood when we speak of a cause in a particular context. In their leading work on Causation in the law (Clarendon Press, 2nd ed 1985) Professor H. L. A. Hart and Tony Honor examined both this understanding and its relationship to legal decision making. Generally, but not always, a cause must involve an act or omission that was at least a sine qua non of the injury in respect of which responsibility attaches (the but for test). But sometimes two separate acts or omissions may each independently have been sufficient to give rise to that injury (as when A and B simultaneously, but independently shoot C dead), and then we may as a matter of legal policy accept a weaker causal relationship for the imposition of responsibility: see p lxv in the preface to and p 123 of the 2nd edition. Other cases where causal requirements have been relaxed include Bonnington Castings Ltd v Wardlaw [1956] AC 613; there, materially contributing to part of an accumulation of dust which cumulatively led to pneumoconiosis gave rise to liability for the whole disease (although it has been suggested that some apportionment might now be possible in fact and law). Another relevant authority is McGhee v National Coal Board [1973] 1 WLR 1; there, liability for dermatitis was held to exist because the defendant had materially contributed to part of the claimants exposure to dirt, any part of which might, independently of any other, have given rise to the abrasion leading to the claimants dermatitis. It was recognised that this involved liability based on materially contributing to the risk of the injury. Lord Reid at p.4G H described the result as reached taking a broader view of causation, and Lord Wilberforce at p 5G viewed it as involving a conclusion as to the causal connection that had to exist between the default and the disease complained of. The contrary view (viz, that proof of risk was insufficient without proof that the risk caused or materially contributed to the disease) had a logic which Lord Wilberforce acknowledged, but rejected for policy and evidential reasons set out at p.6C F. In Fairchild, McGhee was seen as a precursor of the decision there reached. Putting aside the possibility of an idiopathic or environmental cause, a Fairchild type situation exists when (a) there are two separate potential causes exposing the claimant to the same risk, one involving an act or omission by the defendant, (b) either one of which causes would have been sufficient to give rise to the injury, and (c) one of which did so, but (d) neither of which can as a matter of probability be shown to have done so. Taking into account the later decisions in Barker v Corus and Sienkiewicz, the Fairchild principle extends to any case where there has been an act or omission exposing a person to asbestos, which exposure may have caused the mesothelioma, but which cannot be shown as a matter of probability to have done so. On that basis, the House held in Barker v Corus that each or any persons liability should only be proportionate to the extent that he had exposed another to the risk of mesothelioma. Parliament by the Compensation Act 2006 reversed that conclusion and made each such person liable in respect of the whole of the damage caused by the mesothelioma. Lord Phillips in his judgment addresses the basis of Fairchild in the light of Barker v Corus, the 2006 Act and Sienkiewicz. He accepts that, if Fairchild is now correctly to be understood as a special rule deeming employers who have exposed an employee to asbestos to have caused any subsequently suffered mesothelioma, then the insurance policies should apply (para 109). But he concludes that Fairchild must be understood as creating liability not for the disease, but for the creation of the risk of causing the disease. It follows in his view that employers and employees gain no assistance from the special rule in asserting that mesothelioma suffered by any person was caused or initiated in any particular policy period. On this basis, even though the insurances respond to injuries caused or initiated during their periods, the employers and employees fail for want of proof. It is not fruitful to repeat the exercise undertaken in Barker v Corus of examining in detail the significance of the speeches in Fairchild. The House was not agreed about this in Barker, but the majority speeches of Lords Hoffmann, Scott and Walker were at pains to reject any analysis of Fairchild as proceeding upon a fiction that each exposure had caused or materially contributed to the disease: see paras 31, 61 and 104; they each also referred to the liability created by Fairchild as being not for causing the disease, but for materially increasing the risk of the mesothelioma which was in fact suffered: paras 31, 36 and 40, 53, 61 and 113. Lord Rodger (dissenting) perceived the majority to be misinterpreting Fairchild by failing to acknowledge that it was based on an equation of materially increasing risk with materially contributing to causation, an equation which he thought had been accepted as sufficient causation in Bonnington Castings Ltd v Wardlaw [1956] AC 613 and McGhee v National Coal Board [1973] 1 WLR 1. It is on the apparently bright line distinction said to have been drawn by the majority in Barker between materially contributing to increasing the risk of, and causing, a disease that Lord Phillips now founds his judgment in these appeals. The Compensation Act 2006 applies where a person who has exposed someone to asbestos is liable in tort in connection with damage caused to the latter by mesothelioma whether by reason of having materially increased a risk or for any other reason (section 3(1)(d)). It makes the former person liable in respect of the whole of the damage (section 3(2)(a)). On its face, the Act assumes rather than creates the liability, and only alters the measure of recovery. That was the view expressed in Sienkiewicz by Lords Phillips, Rodger and Brown (paras 70, 131 and 183). However, on further analysis, the distinction identified in paragraphs 58 59 above proves more elusive. Even in Barker itself, Lord Walker described exposing the employee to the risk of mesothelioma as being equated with causing his injury and the result as an explicit variation of the ordinary requirement as to causation (para 104), and spoke of the rule as one by which exposure to the risk of injury is equated with legal responsibility for that injury (para 109). However, it is conceivable that he meant that the ordinary requirement of causation of the disease was entirely replaced by another liability creating rule. It is in the later authority of Sienkiewicz that the difficulty of drawing any clear cut distinction between creating a risk and causation of the disease becomes most apparent. Lord Phillips there stated that the rule in its current form was that the person responsible for the exposure and thus creating a material increase in risk of the victim contracting the disease will be held to be jointly and severally liable for causing the disease (para 1). Later, he said that the law was presently contained in Fairchild and Barker which had developed the common law by equating materially increasing the risk with contributing to the cause in specified and limited circumstances (para 70). That was the analysis of Fairchild advanced by Lord Rodger in Barker v Corus (paras 73 and 83) but rejected there by the majority. Lord Brown in Sienkiewicz spoke of a more relaxed approach to causation (para 178) and flexibility in the approach to causation (para 187). I referred to Fairchild and Barker as involving a special rule of causation (para 188), and Lord Kerr referred to them as involving a modification of the previously applicable legal rules in relation to the causation element in employers liability claims (para 196) and to adjustments in the burden of proof (paras 198 and 200). Lord Rodger was, on the other hand, loyal to the majority view in Barker by referring to liability as based on materially increas[ing] the risk (para 113), and Lord Dyson was cautious in speaking of materially increasing the risk of contracting the disease as sufficient to satisfy the causal requirements for liability (para 207). Lord Phillips has in para 123 set out a passage from an extra judicial commentary written by Lord Hoffmann in Perspectives on Causation (2011), p 8. In it, Lord Hoffmann describes the two ways in which the changes introduced by Fairchild and Barker could be characterised, one as changing the causal requirements for an action for damages for mesothelioma ; all that is necessary is to prove that the risk has been increased and that the specific exposure may have provided the actual agent; the other as creat[ing], exceptionally, a cause of action for the increased risk of mesothelioma, rather than for the disease itself. Lord Hoffmann notes that the House in Barker (Lord Rodger dissenting) adopted the second explanation of what had happened in Fairchild. But in the next sentence, not quoted by Lord Phillips, Lord Hoffmann went on: Parliament almost immediately reversed this decision by a statute giving effect to the first explanation, which had been advocated by Lord Rodger in his dissenting speech. Lord Hoffmanns extra judicial (or judicial) words cannot by themselves alter the true effect of a statute, but his comments do again show that the suggested distinction is more fluid than might at first appear. It is relevant to look more closely at what Barker decides. In Barker, Lord Hoffmann spoke of Fairchild as applying an exceptional and less demanding test for the necessary causal link between the defendants conduct and the damage (para 1) and of the requirement of a sufficient causal link between the defendants conduct and the claimants injury (para 17). In his note in Perspectives on Causation, he picked up this language with references to the causal requirements of the relevant rule and to the issues in cases of mesothelioma and analogous situations as involving the causal requirements for an action for damages for mesothelioma. Lady Hale in Barker also viewed the common law rules governing the measure of recovery as closely linked to the common laws approach to causation, and said that there was no reason in principle why the former rules should not be modified as the latter approach is courageously developed to meet new situations (para 122). In paras 123 and 124, she made clear that in her view the issue in Barker could be seen as arising from the expanded perceptions or developed concept of causation which the law had accepted. These citations all suggest that it is both possible and appropriate to characterise the position achieved by the common law after Barker v Corus as one concerned with the issue of the causal requirements or causal link, as between the defendants conduct and the disease, which the common law requires in order for there to be an action for mesothelioma. But analysis of the rule arrived at after Fairchild and Barker justifies further propositions. Despite the apparent clarity of the suggested distinction between liability for a risk and for a disease, no cause of action at all exists unless and until mesothelioma actually develops. Neither the exposure to asbestos nor the risk that this may one day lead to mesothelioma or some other disease is by itself an injury giving rise to any cause of action: see Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] 1 AC 281; the House there decided that not even the emergence of pleural plaques marking the past exposure to asbestos constituted injury for the purpose of giving a cause of action. In order to fall within the principle in Fairchild and Barker, the development of mesothelioma is a pre condition: see Barker, per Lord Hoffmann (para 48) and Lord Scott (para 53). Lady Hale went further, stressing that she in fact agreed with Lord Rodgers view that the damage which is the gist of these actions is the mesothelioma and its physical and financial consequences. It is not the risk of contracting mesothelioma (para 120). In reality, it is impossible, or at least inaccurate, to speak of the cause of action recognised in Fairchild and Barker as being simply for the risk created by exposing someone to asbestos. If it were simply for that risk, then the risk would be the injury; damages would be recoverable for every exposure, without proof by the claimant of any (other) injury at all. That is emphatically not the law: see Rothwell and the statements in Barker itself, cited above. The cause of action exists because the defendant has previously exposed the victim to asbestos, because that exposure may have led to the mesothelioma, not because it did, and because mesothelioma has been suffered by the victim. As to the exposure, all that can be said (leaving aside the remote possibility that mesothelioma may develop idiopathically) is that some exposure to asbestos by someone, something or some event led to the mesothelioma. In the present state of scientific knowledge and understanding, there is nothing that enables one to know or suggest that the risk to which the defendant exposed the victim actually materialised. What materialised was at most a risk of the same kind to which someone, who may or may not have been the defendant, or something or some event had exposed the victim. The actual development of mesothelioma is an essential element of the cause of action. In ordinary language, the cause of action is for or in respect of the mesothelioma, and in ordinary language a defendant who exposes a victim of mesothelioma to asbestos is, under the rule in Fairchild and Barker, held responsible for and in respect of both that exposure and the mesothelioma. This legal responsibility may be described in various ways. For reasons already indicated, it is over simple to describe it as being for the risk. Another way is to view a defendant responsible under the rule as an insurer, but that too is hardly a natural description of a liability which is firmly based on traditional conceptions of tort liability as rooted in fault. A third way is to view it as responsibility for the mesothelioma, based on a weak or broad view of the causal requirements or causal link appropriate in the particular context to ground liability for the mesothelioma. This third way is entirely natural. It was adopted by Lords Reid and Wilberforce in McGhee, by Lord Hoffmann, Lady Hale and (possibly) Lord Walker in Barker and by Lord Hoffmann in his extra judicial commentary. It seems to have received the perhaps instinctive endorsement of a number of members of this Court, including myself, in Sienkiewicz. Ultimately, there is no magic about concepts such as causation or causal requirements, wherever they appear. They have the meanings assigned to them and understood in ordinary usage in their context. A logician might disagree with a reference to causation or a causal link in a particular context, but that is not the test of meaning: see Lord Wilberforces words in McGhee, p 6C F (cited in para 56 above). The present appeals concern the meanings we assign to the concept of causation, first in the context of considering employers liability to their employees and then in considering the scope of employers insurance cover with respect to such liability. It is instructive in this connection to look more closely at the Compensation Act 2006. Section 3(3) states that section 3(2) does not prevent (a) one responsible person from claiming a contribution from another, or (b) a finding of contributory negligence. Section 3(4) goes on to provide that [I]n determining the extent of contributions of different responsible persons in accordance with subsection (3)(a), a court shall have regard to the relative lengths of the periods of exposure for which each was responsible . Section 3(3) necessarily relates to the legal bases for claiming contribution or asserting contributory negligence, which are to be found in, respectively, the Civil Liability (Contribution) Act 1978 and the Law Reform (Contributory Negligence) Act 1945. The 1978 Act addresses the situation where two or more persons are liable in respect of the same damage (section 1(1)), while section 2(1) provides for contribution in such situations to be such as may be found by the court to be just and equitable having regard to the extent of that persons responsibility for the damage in question. Although under section 3(4) of the 2006 Act, the court must have regard to the relative lengths of the exposure for which each was responsible, the same damage which is a pre condition to the application of the 1978 Act must be the mesothelioma. It cannot be the risk created by the person by or from whom contribution is sought, because each person and exposure creates a separate risk, and no one person or exposure creates the total risk resulting from all exposures. The 2006 Act, by its reference to the 1978 Act, thus assumes that every person, who has exposed to asbestos a victim who later experiences mesothelioma, incurs responsibility for the mesothelioma. That language again fits an analysis whereby the rule in Fairchild and Barker identifies the appropriate weak or broad causal link between the exposure and the mesothelioma. A similar position applies under the 1945 Act. Under section 1(1), that Act applies [w]here any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons. In that event, the damages recoverable are to be reduced to such extent as the court thinks just and equitable having regard to the claimants share in the responsibility for the damage. The application of this section, as contemplated by the 2006 Act, is only possible on the basis that a mesothelioma sufferer may be said to have suffered the mesothelioma partly as the result . of the fault of anyone who has exposed him to asbestos. In other words, the rule in Fairchild and Barker must have been viewed by the drafters in my opinion entirely understandably as establishing a causal link, between the exposure and the mesothelioma, sufficient for it to be said that the mesothelioma was the result of each (and every) exposure. A similar view is also implicit in the provisions of the Act drafted on the basis that insurers who would commonly of course be employers liability insurers would be among the persons by or for whose benefit or against whom contribution would be sought in cases of multiple responsible persons: see section 3(7)(b) and (10)(a) of the 2006 Act. Those provisions necessarily assume that employers liability insurances, written generally on a causation basis, would respond to Fairchild/Barker type liability incurred by employers. Ultimately, the present appeals raise the questions how the present employers liability insurance policies respond as a matter of construction in circumstances within the rule in Fairchild and Barker. Where two contracts are linked, the law will try to read them consistently with each other. This is so with language in a bill of lading, incorporated from a charterparty: The Njegos [1936] P 90. A similar approach applies to language in a reinsurance incorporated from the insurance: Forsikringsaktieselskapet Vesta v Butcher [1989] AC 852 and Groupama Navigation et Transports v Catatumbo CA Seguros [2000] 2 Lloyds Reports 350, even though there is no guarantee that a reinsurance will in every possible circumstance that may develop pick up every liability that may be held to exist under an insurance: see Wasa International Insurance Co Ltd v Lexington Insurance Co [2009] UKHC 40, [2010] 1 AC 180. The intention under the present insurances must be taken to have been that they would respond to whatever liability the insured employers might be held to incur within the scope of the risks insured and within the period in respect of which they were insured. Thus, as Scrutton and Greer LJJ accepted in the Ellerbeck Collieries case (paragraph 34 above), an employers liability insurance could have been expected to respond to the conventional and artificial definition in the WCAs as to what constituted an accident and when personal injury by accident or disease was sustained for the purposes of employers liability to employees. Furthermore, if the common law during or even after the currency of an insurance develops in a manner which increases employers liability, compared with previous perceptions as to what the common law was, that is a risk which the insurers must accept, within the limits of the relevant insurance and insurance period. Eady J correctly identified this in Phillips v Syndicate 992 Gunner [2003] EWHC 1084 (QB), [2004] Lloyds Insurance and Reinsurance Reports 426, 429 (left). The declaratory theory does not presume the existence of an ideal system of the common law, which the judges from time to time reveal in their decisions. But it does mean that, when judges state what the law is, their decisions do . have a retrospective effect in the sense that the law as stated will, generally speaking, be applicable not only to the case coming before [them] but, as part of the common law, to other comparable cases which come before the courts, whenever the events which are the subject of those cases: Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349, 378G H, per Lord Goff. The declaratory theory is a pragmatic tool, essential when cases can only come before the court some time, perhaps some years after the relevant events occurred, and when the law [must] be applied equally to all, and yet be capable of organic change (p 379A). A similar principle must, generally speaking, apply in relation to a statute such as the Compensation Act 2006, which changes or corrects the common law to what Parliament perceives to be a more appropriate result for the purposes of all future cases coming before the courts, whenever the events giving rise to them. In the case of that Act, the result was one which the courts might as a matter of common law well have themselves accepted (and which indeed Lord Rodger in his powerful dissent in Barker v Corus believed that the common law had accepted) in Fairchild. Concluding, as I have done, that the present insurances covered employers liability for injuries or diseases caused during the relevant insurance periods, the question is whether they cover employers liability for mesothelioma arising under the rule in Fairchild and Barker from having exposed employees to asbestos during such periods. It is not in dispute that, if the rule is characterised as a rule of deemed causation, then the policies must respond. A parallel example, so familiar that it is easy to overlook, is the vicarious liability to an employee, A, which rests on any employer, B, who has not himself been negligent but must answer vicariously for the negligence of another employee, C. We have no hesitation in saying that the employer B has in such a case caused the injury or disease suffered by A. But this is so in reality only because a rule of law requires us to equate the acts or omissions of C with those of B. The argument, accepted by Lord Phillips, is that the rule in Fairchild and Barker is not one of deemed causation of or, therefore, liability for the disease, but one of liability for the risk created by the exposure. For reasons which I have set out, I regard this distinction as too simple. The liability arises only because of the incurring of the disease and is for the disease. A condition of such liability is that the employer (negligently) exposed the victim to asbestos. The insurance policies, read as operating on a causation basis, are aimed at covering liability generated by employers activities during their insurance periods: see paragraphs 18 28 and 41 above; unless liability for mesothelioma flowing from negligent exposure during an insurance period is covered by the policies, this aspect of employers activities will not in practice be covered at all. In my view, these considerations justify a conclusion that, for the purposes of the insurances, liability for mesothelioma following upon exposure to asbestos created during an insurance period involves a sufficient weak or broad causal link for the disease to be regarded as caused within the insurance period. It would, I think, have been anomalous and unjust if the law by deeming there to have been causation of the disease could have created policy liability (which is common ground), but the law by insisting that the liability in respect of mesothelioma was for the risk of causation achieved a quite different result. As I have sought to show, it is not in any event accurate to treat the liability as being either solely or strictly for the risk. The risk is no more than an element or condition necessary to establish liability for the mesothelioma. The reality, reinforced by provisions in the 2006 Act, is that the employer is being held responsible for the mesothelioma. For this purpose, the law accepts a weak or broad causal link. The link is to exposure which may but cannot be shown on the ordinary balance of probabilities to have played a role in the actual occurrence of the disease. But for the purposes of the policies the negligent exposure of an employee to asbestos can properly be described as having a sufficient causal link or being sufficiently causally connected with subsequently arising mesothelioma for the policies to respond. The concept of a disease being caused during the policy period must be interpreted sufficiently flexibly to embrace the role assigned to exposure by the rule in Fairchild and Barker. Viewing the point slightly more broadly, if (as I have concluded) the fundamental focus of the policies is on the employment relationship and activities during the insurance period and on liability arising out of and in course of them, then the liability for mesothelioma imposed by the rule in my opinion fulfils precisely the conditions under which these policies should and do respond. Conclusion I would therefore dismiss the appeals by insurers so far as they concern the policies with contracted wordings. I would allow the appeals against insurers, and dismiss the appeal by the Independent, so far as they concern policies with sustained wordings. ANNEX A The policy wordings (dates are approximate) (1) Excess First Wording (late 1940s): Whereas . (hereinafter called The Employer) carrying on the business of . has made a proposal . this Policy witnesseth that in consideration of the payment of . as premium to the Company on the estimated total amount, as set forth in the Schedule hereto, of the wages, salaries, and other earnings of Employees, a description of whom is set forth in the said Schedule (which premium is subject to adjustment as hereinafter provided) the Company agrees to indemnify the Employer in the manner following, namely That if at any time during the period commencing on theday of19 , and ending on theday of19 (both days inclusive) and for such further period or periods as may be mutually agreed upon, any employee in the Employer's immediate service shall sustain any personal injury by accident or disease while engaged in the service of the Employer in Great Britain, Northern Ireland, the Isle of Man or the Channel Islands, in work forming part of or process in the business above mentioned, and in case the Employer shall be liable to damages for such injury, either under or by virtue of the Common Law, the Fatal Accidents Acts 1846 to 1908, or the Law Reform (Miscellaneous Provisions) Act 1934, the Company will indemnify the Employer The Schedule required a description of the insured companys employees and their estimated total wages, salary and other earnings. Condition 1 of the policy further provided that: the Employer shall truly record in a wages book the name of every employee and the amount of wages, salary and other earnings paid to him. Second Wording (late 1950s to 1960s): Whereas the Employer . carrying on the business described in the . Schedule has made . a written proposal and declaration, containing particulars and statements which it is hereby agreed are the basis of this Contract . and has paid the premium mentioned in the Schedule, which premium is subject to adjustment as hereinafter provided, this Policy witnesseth that if at any time during the period of the indemnity as stated in the Schedule or during any subsequent period for which the Company may accept premium for the renewal of this Policy any person of a description mentioned in the Schedule who is under a contract of service or apprenticeship with the Employer shall sustain personal injury by accident or disease arising out of and in the course of employment by the Employer in work forming part of the process in the business mentioned in the Schedule, the Company will indemnify the Employer against liability at law for damages in respect of such injury or disease The policy provided that the Company should not be liable under it in respect of accidents occurring elsewhere than in Great Britain, Northern Ireland, the Isle of Man or the Channel Islands. The policy provided that premiums were to be regulated by the amount of wages, salaries, or other earnings paid to employees by the employer during each period of insurance, with a wages book being kept open to inspection for that purpose and the employer supplying the correct amounts within one month of the expiry of each insurance period. Condition 1 and the Schedule were in similar form to those in the first wording. Third Wording (1970 to 1976) After a recital in the same form as the second wording, this wording provided: that if at any time during the period of the indemnity as stated in the Schedule or during any subsequent period for which the Company may accept premium for the renewal of this Policy any person of a description mentioned in the Schedule who is under a contract of service or apprenticeship with the Employer shall sustain personal injury by accident or disease arising out of and in the course of employment by the Employer in the business mentioned in the Schedule, the Company will indemnify the Employer against liability at law for damages in respect of such injury or disease Under the third wording, there was the same territorial limitation as under the second wording in relation to accidents occurring elsewhere than in Great Britain, etc. Premiums were also regulated by reference to wages, salaries, etc. and condition 1 and the Schedule were in the same terms as in the second wording. (2) Independent Sole wording in Issue (1972 to 1987): This was a Contractors Combined Policy, covering Employers Liability (section 1), Public Liability (section 2) and Loss of or Damage to Contract Works (section 3). It provided: NOW THIS POLICY WITNESSETH that during the Period of Insurance or during any subsequent period for which the Company may accept payment for the continuance of this Policy and subject to the terms, exceptions and conditions contained herein and or endorsed hereon, the Company will indemnify the Insured as hereinafter specified. SECTION 1 EMPLOYERS' LIABILITY If any person who is under a contract of service or apprenticeship with the Insured shall sustain bodily injury or disease arising out of and in the course of his employment by the Insured in connection with the Contract specified or type of work described in the Schedule the Company will indemnify the Insured against all sums for which the Insured shall be liable at law for damages for such injury or disease The Policy provided that the Company was not to be liable for injury, illness, loss or damage caused elsewhere than in Great Britain, the Isle of Man or the Channel Islands. As a result of the ELCIA 1969 making insurance in respect of employers liability compulsory, the Independent wording also contained the further provision (the ELCIA extension provision): "AVOIDANCE OF CERTAIN TERMS AND RIGHT OF RECOVERY The indemnity granted by section 1 of this Policy is deemed to be in accordance with the provisions of any law relating to compulsory insurance of liability to employees in Great Britain. It is agreed the Insured shall repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the provisions of such law. " The policy Schedule contains spaces for entry of first, annual and minimum premium, as well as of the name of the Principal for whom the insured is undertaking work, the details of the contract or type of work covered by the policy and its situation. Condition 7 provides that the premium is based on estimates provided by the Insured, for record keeping, for the supply of updated information as required by the Company within one month of the expiry of each insurance period and for adjustment of the premium on that basis. (3) MMI First Wording (1949 to 1958) the Company hereby agrees that if at any time during the period of insurance specified in the schedule or thereafter during any subsequent period for which the Insured shall agree to pay and the Company shall agree to accept a renewal premium of the amount specified in the said schedule, or of such other amount as the Company shall from time to time require, any person under a contract of service with the Insured shall sustain any personal injury by accident or disease arising out of and in the course of his employment by the Insured in their activities described in the schedule and if the Insured shall be liable to pay damages for such injury or disease then, subject to the terms and conditions contained herein or endorsed hereon, the Company shall indemnify the Insured against all sums for which the Insured shall be so liable The policy was expressed not to apply to or include liability in respect of injury or disease caused elsewhere than in Great Britain, Northern Ireland, the Isle of Man or the Channel Islands. Condition 5 regulated premiums by reference to wages, salaries, etc, and made provision for a wages book and adjustment to like effect to the Excess second wording. The policy Schedule provided for the classification of staff and employees according to departments and job description, with corresponding figures for estimated total remuneration. Second Wording (1958 to 1974) the Company hereby agrees that if at any time during the First Period of Insurance specified in the said Schedule or during any subsequent period for which the Insured shall agree to pay and the Company shall agree to accept a renewal premium of the amount specified as the Renewal Premium in the said Schedule or of such other amount as the Company shall from time to time require, any person under a contract of service with the Insured shall sustain any bodily injury or disease arising out of and in the course of his employment by the Insured in the Insured's activities described in the said Schedule and if the Insured shall be liable to pay damages for such injury or disease or for death resulting from such injury or disease then, subject to the terms, exceptions and conditions contained herein or endorsed hereon or set out in the Schedule to this Policythe Company will indemnity the Insured against all sums for which the Insured shall be so liable. Like the first wording, this wording contained a territorial exclusion of liability in respect of injury or disease caused elsewhere than in Great Britain, etc. The policy Schedule provided for the entry of the Estimates (if any) on which the premium is calculated, including in particular any such estimate of wages, salaries, etc. paid to staff, and cross referred to condition 7, which provided that, if the premium had been based on any estimates, an accurate record should be kept (of actual amounts), the insured should provide insurers with such particulars and information as might be required within one month of the expiry of the policy period and the premium adjusted accordingly. Third Wording (1974 to 1992) The Company agrees to indemnify the Insured in respect of all sums without limit as to amount which the Insured shall be legally liable to pay as compensation for bodily injury or disease (including death resulting from such bodily injury or disease) suffered by any person under a contract of service or apprenticeship with the Insured when such injury or disease arises out of and in the course of employment by the Insured and is sustained or contracted during the currency of this Policy. The policy Schedule contemplated a premium adjustable in accordance with condition 5, which in turn provided (in like manner to condition 7 of the second wording) for the adjustment of any premium so calculated by reference to actual amounts at the end of the policy period. (4) BAI First Wording (1953 to 1974) . the Company willindemnify the Insured against all sums of money which the Insured may become liable to pay to any Employee engaged in the direct service of the insured or any dependent of such Employee in respect of any claim for injury sustained or disease contracted by such Employee betweenandboth inclusive The policy carried the note: This policy does not cover the insureds liability for accidents to workmen arising outside the United Kingdom. Conditions 1 and 2 made elaborate provision for the regulation of premiums by the amount of wages, salaries, or other earnings paid to employees by the employer during each period of insurance, with pay sheets and books of account being kept open to inspection for that purpose and the employer making a return, and the premium being adjusted, subject to a minimum, at the end of each insurance period. Second Wording (1974 to 1983) the Company willindemnify the Insured against all sums of money which the Insured may become legally liable to pay in respect of any claim for injury sustained or disease contracted by any person engaged in and upon the service of the Insured and being in the Insured's direct employment under a Contract of Service or Apprenticeship between theday ofand theday ofboth inclusive This wording also excluded insurers from liability in respect of accidents to employees arising outside the United Kingdom. Like the Independent and third MMI wordings, the BAI second wording also included the ELCIA extension provision. Conditions 1 and 2 provided for the regulation and adjustment of premiums by reference to actual wages, salaries, etc. during each insurance period, in like terms to conditions 1 and 2 in the first wording. (5) Zurich The Municipal First Select wording (1993 to 1998) The INSURER will indemnify the INSURED in respect of all sums which the INSURED may become legally liable to pay as damages and claimants' costs and expenses in respect of Injury sustained during the Period of Insurance by any EMPLOYEE arising out of and in the course of employment by the INSURED in the BUSINESS within the Geographical Limits. The Municipal Second Select wording (1998 ) The INSURER will indemnify the INSURED in respect of all sums which the INSURED may become legally liable to pay as damages and claimants' costs and expenses in respect of Injury caused during the Period of Insurance to any EMPLOYEE arising out of and in the course of employment by the INSURED in the BUSINESS within the Geographical Limits. The tariff wording (1948 ) if any person under a contract of service or apprenticeship with the Insured shall sustain any personal injury by accident or disease caused during the period of insurance and arising out of and in the course of his employment by the Insured in the business above mentioned and if the Insured shall be liable to pay damages for such injury or disease the Association shall indemnify the Insured against all sums for which the Insured shall be so liable. LORD CLARKE Like other members of the Court, I agree with Lord Mance on the construction issue. Thus I agree that, for the purposes of the EL policies, mesothelioma is sustained or contracted when the process that leads to the disease is initiated as a result of the wrongful exposure of the employee to the asbestos fibre or fibres which cause the disease. I do not wish to add to Lord Mances reasoning on the construction issue. I do however wish to add some words of my own on the causation issue which sharply divides Lord Phillips and Lord Mance. I wish to say shortly why I prefer the conclusion of Lord Mance to that of Lord Phillips. As I see it, the effect of Fairchild, Barker and Sienkiewicz may be summarised in this way. An employer who, in breach of duty, has exposed an employee to asbestos is liable in damages if the employee subsequently suffers the disease. The employees cause of action is not that he was exposed to the risk of mesothelioma. He has no claim unless he in fact suffers the disease. It is the disease which represents the damage which completes the cause of action and it is only then that his cause of action accrues and the relevant time limit begins to run. It is axiomatic that, in order to succeed in tort, the employee must show a sufficient causal link between the breach of duty, namely the exposure to asbestos, and the disease which represents the damage, namely mesothelioma. The effect of the majority opinion in Barker is that, where there are two or more employers who have exposed the claimant to the risk of mesothelioma, they are not jointly and severally liable to the claimant for the whole of the consequences of the disease but only severally liable for an aliquot part. That decision was reversed by the Compensation Act 2006, so that such employers are jointly and severally liable for the whole of the consequences. The question in this appeal is whether the employers liability insurers are liable to indemnify the employers in respect of that liability. It would in my opinion be a remarkable result if they were not. Lord Phillips notes at para 109 that Mr Edelman QC accepted that, if the correct analysis of the special rule, which (using Lord Phillips definitions) was the result of the combined effect of the special approach in Fairchild and Barker and the Compensation Act 2006, was that the employers were deemed to have caused mesothelioma by exposing the employees to asbestos dust, the insurers would be liable. Lord Phillips accepts that that concession was correctly made. I agree, for the reasons he gives at paras 109 to 114. The question is therefore whether the correct analysis of the special rule is indeed that the employers were deemed to have caused the mesothelioma. I accept that in such a case the employee cannot show on the balance of probabilities that the employers negligence caused the disease. The effect of Fairchild and Sienkiewicz was however that the employer is liable where the exposure contributed to the risk that the employee would suffer the disease and where the employee in fact suffers the disease. That is not in dispute. Lord Phillips says at para 124 that the majority in Barker drew the vital distinction between being liable for contributing to the cause of the disease and being liable for the creation of the risk of causing the disease. He quotes para 2 of Lord Hoffmanns speech as follows: Is any defendant who is liable under the exception deemed to have caused the disease? On orthodox principles, all defendants who have actually caused the damage are jointly and severally liable. Or is the damage caused by a defendant in a Fairchild case the creation of a risk that the claimant will contract the disease? In that case, each defendant will be liable only for his aliquot contribution to the total risk of the claimant contracting the disease a risk which is known to have materialised. Lord Phillips further notes that at para 125 Lord Hoffmann advanced the thesis that the basis of liability was the wrongful creation of the risk or chance of causing the disease and that the damage that the defendant should be regarded as having caused was the creation of such risk or chance. See also the passages to like effect referred to by Lord Mance at para 61. I accept that Lord Hoffmann and others did indeed advance that view of Fairchild but it is I think important to note that it was in the context of the question whether, in a case of two or more employers, each was severally liable for a proportion of the consequences of the mesothelioma or whether each was jointly and severally liable for the whole. Lord Hoffmann cannot have intended to hold, without more, that the basis of liability was the wrongful creation of the risk or chance of causing the disease because there would be no liability at all but for the subsequent existence of the mesothelioma. It seems to me that, whether the majority in Barker were correct or not, there is no escape from the conclusion that, in all these cases, where it is not possible to show that the particular employer caused the claimant to suffer mesothelioma, the underlying question is who should be held responsible for causing the mesothelioma which in fact struck down the employee. None of the cases is authority for the proposition that causation is irrelevant. On the contrary, the quest is for the employer who can fairly be held liable for the consequences of the disease and therefore for the employer who can fairly be said to have caused the disease. The courts have embarked on similar quests over the years. Lord Mance has given a number of examples. As Lord Mance shows at para 56, they include Bonnington and McGhee, where Lord Reid was prepared to take a broad view of causation and Lord Wilberforce rejected a traditional approach for policy or evidential reasons. In my opinion the reasoning in Sienkiewicz is of some significance in this context. Lord Mance has given the relevant references in para 61. Thus, as Lord Mance observes, at para 61 Lord Phillips said that Fairchild and Barker had developed the common law by equating materially increasing the risk with contributing to the cause in specified and limited circumstances. Lord Mance further refers to Lord Brown speaking of a more relaxed approach to causation and flexibility in the approach to causation at paras 178 and 187. Lord Mance had himself referred to Fairchild and Barker as involving a special rule of causation at para 188, and Lord Kerr referred to them as involving a modification of the previously applicable legal rules in relation to the causation element in employers liability claims at para 196 and to adjustments in the burden of proof at paras 198 and 200. Again, as Lord Mance observes at para 61 above, Lord Dyson referred (at para 207) to materially increasing the risk of contracting the disease as sufficient to satisfy the causal requirements for liability (para 207). Both Mr Beloff QC and Mr Stuart Smith QC addressed these issues in their oral submissions. They both in effect submitted that the effect of Fairchild, Barker and Sienkiewicz was that the employers were deemed to have caused mesothelioma by exposing the employees to asbestos dust. They both recognised that the ordinary rule of causation could not apply and that some element of policy or doctrine was required in order to explain Fairchild. Mr Stuart Smith submitted that the effect of Fairchild was that each material exposure to asbestos dust is doctrinally held responsible for the mesothelioma. Mr Beloffs submission was to much the same effect. He relied upon a dictum of Lord Walker in Barker at para 109: A rule of law by which exposure to risk of injury is equated with legal responsibility for that injury entails the possibility that an employer may be held liable for an injury which was not in fact caused by that exposure (though in the present state of medical science, that fact can be neither proved nor disproved). The injury is of course the mesothelioma, which is necessary to complete the cause of action. On that basis it seems to me that Lord Walkers statement that the risk of injury is equated with legal responsibility for the injury is in effect to say that, by creating the risk of mesothelioma in the future, the employer is deemed to have caused the mesothelioma, if it should develop in the future. It appears to me that these conclusions are supported by Lord Mances analysis of section 3 of the Compensation 2006 at paras 67 and 68, with which I agree and to which I do not wish to add anything. Given Mr Edelmans concession that, if that is correct, the employers are liable under the policies (and this Courts acceptance of it) I would hold that the causation point does not assist the insurers. I would only add this. It appears to me that, once it is held that, on these facts, the employers are liable to the employees, it would be remarkable if the insurers were not liable under the policies. Rather as in AXA, the whole purpose of the policies was to insure the employers against liability to their employees. That purpose would be frustrated if the insurers submissions on this point were accepted. I agree with Lord Mance, for the reasons he gives at paras 69 73 that these policies respond to these claims. For these reasons, I too would dismiss the appeals by insurers so far as they concern the policies with contracted wordings. I would allow the appeals against insurers, and dismiss the appeal by the Independent, so far as they concern policies with sustained wordings. LORD DYSON I too agree with Lord Mance on the construction issue. As to the causation issue, I agree with the reasoning of Lord Mance and Lord Clarke. Accordingly, I would dismiss the appeals by insurers in so far as they concern the policies with contracted wordings. I would allow the appeals against insurers, and dismiss the appeal by the Independent, so far as they concern policies with sustained wordings. LORD PHILLIPS Introduction So called long tail industrial diseases have raised peculiar difficulties in the field of tort. These diseases result from the effect on the body of exposure to noxious substances. The effect can be long, drawn out and mysterious, in as much as medical science has not yet identified the precise mechanism, or chain of causation, by which the noxious substance causes the disease. Mesothelioma is a long tail disease in which the problems raised have been particularly acute. The problems arise in the application of principles of law that do not ordinarily give rise to difficulty. An employer will be liable in damages if by an act or omission that is negligent or in breach of statutory duty he causes physical harm to an employee. In the vast majority of cases there will be no difficulty in identifying the moment at which the negligence or breach of duty causes the physical harm, for the harm will take the form of an obvious injury. This is not the position in respect of mesothelioma. Asbestos dust, inhaled into the lungs, is the agency that causes mesothelioma, but as long as forty or fifty years may elapse before the effects on the body of dust inhaled culminate in symptoms of mesothelioma. Once the symptoms are felt, the disease will develop swiftly to bring about an inevitable and extremely unpleasant death. Where a victim of mesothelioma was exposed to asbestos dust over a period of years it is impossible, even with hindsight, to determine on balance of probabilities whether dust inhaled in a particular year caused or contributed to the development of the mesothelioma. It follows that, where the victim worked for a series of employers, each of whom exposed him to asbestos dust, it is impossible to prove on balance of probability that any particular employer caused or contributed to the victims mesothelioma. This means that the normal principles of the law of tort provide no remedy to the employee or his dependants. The manifest injustice of this position led the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32 and Barker v Corus UK Ltd [2006] UKHL 20; [2006] 2 AC 572 to create what I shall describe as a special approach to causation in respect of mesothelioma, whose effect was immediately varied by Parliament by section 3 of the Compensation Act 2006. I shall describe the composite result achieved by the House of Lords and Parliament as the special rule. I shall examine the nature of this special rule in due course. Its effect was, however, to place each employer in the same position as that employer would have been under at common law if it were proved, on balance of probability, that its negligence or breach of duty in exposing the employee to asbestos dust had contributed to causing the employees mesothelioma. These developments of the law of tort have formed the backdrop to the issue that has occupied almost all of the eight days that this Court has devoted to this appeal. I shall call this issue the construction issue. The construction issue relates to the true construction of a number of policies of insurance against employers liabilities (EL policies) with similar, but not identical, provisions as to the cover provided. The EL policies provided cover by reference to specific periods usually of a year. The central issue relates to the event or events that, on true construction of each policy, had to occur within the period of the policy in order to render the insurer liable to indemnify the employer in respect of liability for causing an employees mesothelioma. The policies provided cover in respect of diseases sustained or contracted during the period of the policy. The meaning of each of those words, in its context, lies at the heart of the construction issue. It does not seem that the construction issue initially received a great deal of consideration. Insurers treated the policies as if they covered an employer whose breach of duty within the period of the policy had contributed to causing the disease and regarded this requirement as satisfied if the employer was held liable because he had exposed the employee to asbestos dust during that period. Where more than one insurer was liable on this basis, they apportioned liability according to the period of exposure covered by each. The attitude of four of the five insurers party to this appeal changed as a result of the decision of the Court of Appeal in Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd [2006] EWCA Civ 50; [2006] 1 WLR 1492. Those insurers are MMI, Excess, BAI and Independent, each of which is in run off. I shall describe them collectively as the insurers. Their opponents I shall describe collectively as the employers, although they embrace solvent employers, individuals claiming under the Third Party (Rights against Insurers) Act 1930, and Zurich, which has a community of interest with these. Bolton concerned the scope of cover of a public liability policy (PL policy) in relation to liability for causing mesothelioma. The policy provided cover in respect of an injury that occurs during the currency of the policy. The argument proceeded on the premise that the chain of causation of mesothelioma, once it was diagnosed, could be traced back to the initial inhalation of asbestos dust. The issue was whether the mesothelioma could properly be said to have occurred at the time of the initial inhalation. The Court of Appeal held that it could not. The injury only occurred, at earliest, at the stage of development of the disease at which malignancy occurred. This was, on the evidence, ten years, give or take a year, from the date on which it became possible to diagnose the existence of the tumour but very many years after the initial inhalation of asbestos dust. This decision led the insurers to take the point that a similar approach should be taken to the interpretation of the cover afforded by the EL policies. Mesothelioma was not, on true construction of the policies, sustained or contracted at the time of the initial inhalation of asbestos dust. It was only sustained or contracted at the much later stage when, as a consequence of the process initiated by asbestos dust, an actionable injury in the form of malignancy, developed. Before Burton J, the Court of Appeal and this Court the construction issue has been argued at great length and in great detail. I agree, as do the other members of the Court, with the conclusions reached by Lord Mance on the construction issue. These conclusions have application not merely to mesothelioma but to employers liabilities in relation to other long tail industrial diseases such as asbestosis and pneumoconiosis. For the purpose of EL policies, these diseases are sustained or contracted when the process that leads to the disease is initiated as a result of the wrongful exposure of the employee to the noxious substance that causes, or contributes to the cause or the extent of, the disease. Throughout the hearing of this appeal there has lurked a second issue. It has not been the subject of argument below, nor does it feature in the agreed Statement of Facts and Issues. This is, perhaps, because it relates to a point that does not arise out of Bolton. It has always been there for the taking, but insurers have not hitherto chosen to raise it, perhaps because its consequences are unattractive. It arises out of a problem that is similar to that which led the House of Lords to formulate the special approach in Fairchild and Barker. It is not possible for an employer to prove that an employees mesothelioma was, in fact, caused in whole or in part by any particular period of exposure to asbestos dust. Thus the employer cannot prove, on balance of probability, that the mesothelioma for which he has been held liable under the special rule was, in fact, initiated in any particular policy year. How, then, can he prove that his liability falls within the scope of the cover, even if the policy bears the construction contended for by the employers and upheld by this Court? How can he prove that his liability arises out of disease sustained or contracted within the policy period, giving these words the same meaning as initiated? I shall call this issue the causation issue. The causation issue and the judgments below Although the causation issue was not raised in argument below, it was dealt with, at least implicitly, in the judgments of both courts. Burton J at first instance, and Rix and Stanley Burnton LJJ in the Court of Appeal proceeded on the basis that, in the case of a mesothelioma victim, exposing the victim to asbestos dust could be treated as equivalent to causing his disease. This approach was based on the special rule. Thus Burton J at paras 42 to 58 summarised, without significant comment, what he described as the special mesothelioma jurisprudence as it was at the time of his judgment. This included Fairchild, Barker and the 2006 Compensation Act. He thereafter proceeded on the basis that exposing a mesothelioma victim to asbestos dust could be treated as having been equivalent to causing the victim to contract the disease. Thus, when summarising his conclusions at para 243 he said: I conclude, in relation to the policies in issue before me, that they respond, just as would policies with caused wording, to claims against insurers where employers are liable on the basis of inhalation by employees during the policy period. They respond, consistently with other EL policies, in respect of mesothelioma claims, on an exposure basis. For the purposes of these policies, injury is sustained when it is caused and disease is contracted when it is caused, and the policies fall to be so construed. Rix LJ drew a distinction between the meaning of contracted and sustained. Contracted referred to the time of the diseases causal origins para 245. He felt constrained by Bolton, however, to hold that no injury was sustained until the disease reached the malignant stage. Implicit in his judgment was the premise that exposure to asbestos dust during the period of the policy could be treated as the causal origin of the disease see for example his comments at para 244. A difficult passage in his judgment at paras 280 283, when considering the meaning of injury, suggests that this premise was founded on the special rule. Thus he was able to conclude that the disease was contracted at the time that the victim was exposed to asbestos dust albeit that injury was not sustained at that point. In a short judgment Stanley Burnton LJ adopted similar reasoning. He stated, at para 338: We are agreed that in any year in which there was substantial exposure to asbestos, mesothelioma was caused by that exposure during that year. The fact that the disease did not develop for some years does not break the chain of causation. Submissions on the causation issue The causation issue was not raised by the insurers as a discrete issue. It none the less surfaced in a passage of the written case for Excess that was addressing the employers case that personal injury by disease was sustained at the moment of inhalation of asbestos dust that triggered the process of sustaining personal injury by disease. One of the arguments advanced by Excess in answer to this submission read as follows: Medically and empirically, one cannot be said to have suffered an injury on a particular day because it cannot be known in (say) a 10 year occupational exposure period on which of the 3652 days the fatal dose was inhaled (and it may be on more than one). It is likely that any ingestion on a particular day was irrelevant to the development of the final condition. There has been a tendency on the part of the claimants to treat inhalation as a single event from which an unbroken line can be drawn to malignancy. It is not. Inhalation (and hence on this theory) injury may occur over several thousands of days. Each day does not bring injury. Any particular day cannot therefore be selected as injury day. To overcome problems of medical causation in a personal injury action against an employer, the House of Lords extended the McGhee principle to mesothelioma in Fairchild. However this was a rule of causation and not definition. There is no such rule in insurance policies which defines what amounts to an injury. The Supreme Court in Sienkiewicz stressed the limits of the Fairchild exception in no uncertain terms, and it is submitted that it would be quite wrong for it now to invade the law of contract. A liability policy responds only to indemnify against a liability (i.e. actionable injury). There is no such liability on inhalation. Injury occurs when the claimant has a personal injury by disease. Thus Excess took the point that the special rule could not properly be invoked to establish that, on true construction of the contracts of insurance, injury was sustained upon inhalation of asbestos dust. This passage appeared after a submission at para 209 that it was only possible to equate the inhalation of a culpable quantity of asbestos dust with sustaining personal injury by disease by, inter alia, creating a special rule governing the response of EL policies in respect of mesothelioma, and possibly other long tail diseases. This proved to be what counsel for the employers sought to do when invited by the Court to address the causation issue. They did so in short oral submissions that cannot, when taken together, have occupied more than half an hour of the eight day hearing. The relevant submissions made by Mr Beloff QC for Akzo and AMEC and the Local Authorities are reported at pp 120 122 of the transcript for 15 December 2011. He started by observing that we had to cut the Gordian knot. He suggested that we should do so by equating creation of a risk with causing bodily injury. This he submitted was permissible because the object of the policy was to provide cover to an employer who, in breach of duty to employees, caused them compensatable damage. Were this approach not adopted, it would be impossible to show that any of a number of insurers providing cover over a period of years was liable. The law should rebel against such a result. In support of this submission Mr Beloff cited a statement by Lord Walker of Gestingthorpe in Barker at para 109 suggesting that the special approach to mesothelioma equated the exposure to the risk of injury with legal liability for the injury. Mr Stuart Smith QC for Zurich dealt with the causation issue at rather greater length in a passage reported at pp 126 to 131 of the same transcript. He started by accepting that it was impossible to know when the metabolic changes that led to the development of mesothelioma in fact occurred. Fairchild dealt with this problem by creating a doctrinal rule under which each significant exposure to asbestos dust was held to be responsible for the mesothelioma. Thus doctrinally the process of developing mesothelioma started upon inhalation. This doctrinal framework for the application of the law of tort was that within which policies of insurance against tortious liability had to operate. Mr Stuart Smith agreed with this summary of his argument advanced by Lord Mance: If the law of tort treats someone, an employee, as having sustained a personal injury and treats the employer as liable to pay damages for such personal injury, then the policy answers. These submissions on behalf of the employers raise the following questions: i) Will the policies respond to fictional or doctrinal events that are deemed to have occurred under the special rule? If so: ii) Does the special rule deem that events have occurred to which the policies should respond? If not: iii) Can this Court properly reformulate the special rule in such a way as to require the policies to respond? Will the policies respond to fictional or doctrinal events? On the premise that he failed on the construction issue, Mr Edelman accepted that, if the correct analysis of the special rule was that the employers were deemed to have caused the mesothelioma by exposing the victims to asbestos dust, then the policies should properly respond. Because of the view that I take of the next two questions I do not need to decide whether the concession was properly made. I have, however, concluded that it was. The policies exist to provide protection against employers liability in tort. If the law of tort, whether laid down by the courts or by Parliament, resorts to legal or doctrinal fictions, it seems logical that the policies should respond as if the fictions were facts. A purposive approach to construction of the policies would lead to this result. Two examples illustrate this approach. Ellerbeck Collieries Ltd v Cornhill Insurance Co Ltd [1932] 1 KB 401 involved a policy of insurance against liability under the Workmens Compensation Act 1925. The terms of the policy entitled the employer to indemnity if at any time during the currency of the insurance any employee sustained any personal injury by accident or disease. The 1925 Act imposed a fictitious test for identifying when an industrial disease was sustained, namely the date on which a certifying surgeon issued a certificate that the employee was suffering from the disease. On the strength of a certificate issued within the currency of a policy of insurance an employer was held liable to two workmen who had, in fact, sustained the relevant disease before the period of the insurance began. The Court of Appeal held that this liability fell within the cover of the policy. The argument for applying the fictional date was a strong one because, as Greer LJ observed at p 417, the policy was intended to cover the employers liability under the Act. The parallel between Ellerbeck and the present case would have been stronger had the relevant policies been taken out after the special rule had been created. In Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281 the House of Lords held that pleural plaques caused by exposure to asbestos dust did not constitute actionable injury because they produced no adverse physical effects. The Scottish Parliament responded to this decision by introducing the Damages (Asbestos related Conditions) (Scotland) Act 2009 (the Scottish Act). That Act provides by section 1 that asbestos related pleural plaques constitute a personal injury which is not negligible and that accordingly they constitute actionable harm for the purpose of an action for damages for personal injury. In AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2011] 3 WLR 871 the Supreme Court rejected a challenge by insurers to the lawfulness of this Act. The Scottish Act effected a limited alteration to the common law in decreeing that asymptomatic pleural plaques constituted non negligible personal injury and thus actionable damage. Lord Mance at para 88 suggested that the main target of the legislation was employers insurers. He went on at para 89 to consider whether the Act would, in fact, alter the meaning to be given to bodily injury under a policy of insurance: A Scottish Act will not on the face of it change the legal effect of an English insurance contract, even in Scotland. However, depending upon the particular policy language, the scope of the concept of bodily injury under a worldwide policy may respond to different conceptions of bodily injury in different parts of the world. Here, the question would be whether it would respond to a development or change, such as that introduced retrospectively by the 2009 Act, in the conception of bodily injury. I say no more about the answer, which may be elicited in another context or suit. While Lord Mance left open the effect of the Scottish Act on the construction of policies of liability insurance, Lord Brown was in no doubt that the effect of the Scottish Act was to subject insurers to liabilities to which they would not have been subject prior to that Act. He referred at para 80 to the undoubted, and deliberate, impact of the legislation upon pending claims. Earlier, at para 77, he drew an analogy with the effect of the decision in Fairchild on EL insurers liability: Had the House of Lords in Rothwell decided that asymptomatic pleural plaques of themselves constitute a non negligible personal injury and thus actionable damage decided in other words that in this particular context the common law should develop in this admittedly novel way the appellants would doubtless have deplored the decision but they could certainly not have questioned its legitimacy. No doubt they would have resented the fact that, as a consequence of the decision, they would unexpectedly have had to pay out on claims resulting from the employees exposure to asbestos upwards of 20 years (quite likely up to 40 years) previously. But they could no more have advanced an [article 1, Protocol 1] challenge to this development of the law than they could have challenged the House of Lords decision some four years earlier in Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 to adopt a less stringent than the usual but for test for establishing the necessary causal connection between an employers negligence and a claimants condition in, most notably, mesothelioma cases. Employers (and their liability insurers) necessarily take the risk of the common law developing in ways which may adversely affect them with regard to personal injury claims. In this passage Lord Brown assumed that the effect of Fairchild was to bring employers liabilities in respect of mesothelioma within the scope of the cover afforded by EL policies. I am about to consider whether he was correct in this. I agree, however, with the general principle expressed in the last sentence of the extract from his judgment that I have just cited. It is for this reason that I would give an affirmative answer to the first of the three questions posed at para 108 above. I turn to the second. What is the special rule? The employers submissions on the causation issue proceed on the premise that the special rule deems exposure to asbestos dust of an employee who is subsequently diagnosed with mesothelioma to have been a cause of the mesothelioma. I have reached the conclusion that that premise is unsound. In Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 AC 229 I summarised the special rule as follows at para 1: When a victim contracts mesothelioma each person who has, in breach of duty, been responsible for exposing the victim to a significant quantity of asbestos dust and thus creating a material increase in risk of the victim contracting the disease will be held to be jointly and severally liable for causing the disease. This is certainly the effect of the special rule, but in order to discover the juridical basis of the rule it is necessary first to identify the basis of the special approach adopted by the House of Lords in Fairchild and Barker and then to consider the effect of section 3 of the Compensation Act, which adapted the special approach into the special rule. The special approach In Sienkiewicz, at para 70, I stated that Fairchild and Barker developed the common law by equating materially increasing the risk with contributing to the cause in specified and limited circumstances, which include ignorance of how causation in fact occurs. As I shall show, this was not an accurate summary of the special approach adopted in those cases. In Fairchild the House of Lords confronted the position where a mesothelioma victim had worked consecutively for a number of employers, each of which had exposed him to asbestos dust. One or more of these had caused his mesothelioma, but because of the limits of medical knowledge it was not possible, on balance of probability, to identify which. In these circumstances their Lordships adopted a special approach that enabled them to find that each of the employers was jointly and severally liable for the mesothelioma. In doing so they purported to be following a similar approach adopted by the House of Lords in McGhee v National Coal Board [1973] 1 WLR 1. They were not, however, all agreed as to the basis of that approach. Lord Hutton, at para 109, held that it was based on the drawing of a factual or legal inference leading to the conclusion that the breach of duty [in exposing the employee to asbestos dust] was a cause of the disease. The majority of the House did not agree. Lord Bingham said, at para 35: I prefer to recognise that the ordinary approach to proof of causation is varied than to resort to the drawing of legal inferences inconsistent with the proven facts. Lord Nicholls of Birkenhead said, at para 42: So long as it was not insignificant, each employer's wrongful exposure of its employee to asbestos dust, and, hence, to the risk of contracting mesothelioma, should be regarded by the law as a sufficient degree of causal connection. This is sufficient to justify requiring the employer to assume responsibility for causing or materially contributing to the onset of the mesothelioma when, in the present state of medical knowledge, no more exact causal connection is ever capable of being established." Lord Hoffmann at para 65 rejected the suggestion that the House in McGhee held that materially increasing the risk of the disease should be treated as equivalent to material contributing to the injury. He concluded: I would respectfully prefer not to resort to legal fictions and to say that the House treated a material increase in risk as sufficient in the circumstances to satisfy the causal requirements for liability. Lord Rodger of Earlsferry did not agree. His reasoning was close to that of Lord Hutton. He held, at para 168: Following the approach in McGhee I accordingly hold that, by proving that the defendants individually materially increased the risk that the men would develop mesothelioma due to inhaling asbestos fibres, the claimants are taken in law to have proved that the defendants materially contributed to their illness. What then happened has been summarised by Lord Hoffmann in Perspectives on Causation (2011) at p 8: There are two ways in which one could characterise this change in the substantive law of negligence. One is to say that the causal requirements for an action for damages for mesothelioma have been changed; all that is necessary is to prove that the risk has been increased and that the specific exposure may have provided the actual agent. The other is to say that the House created, exceptionally, a cause of action for the increased risk of mesothelioma rather than for the disease itself. In the former case, satisfying the new causal requirement would entitle the claimant to sue for the whole injury caused by contracting the disease. In the latter case, he would be able to sue only for the loss caused by the risk of his contracting the disease having been increased. That would be a proportion of the injury caused by the disease, depending on the extent to which the risk had also been created by other causes. In Barker v Corus the House of Lords (Lord Rodger of Earlsferry dissenting) adopted the second explanation of what had happened in Fairchild. I believe that this summary of the position is essentially correct. The majority in Barker were persuaded that justice would best be served if the special approach adopted in Fairchild were applied in such a way as to render each defendant who had wrongfully exposed the claimant to asbestos dust severally liable for that proportion of the mesothelioma that represented the proportion of the wrongful exposure attributable to that defendant. This was achieved by holding that the liability of each defendant resulted from adding to the risk that the employee would contract mesothelioma. It did not result from an implication that each defendant had actually contributed to the cause of the disease. At the start of his speech at para 2 Lord Hoffmann drew the vital distinction between being liable for contributing to the cause of the disease and being liable for the creation of the risk of causing the disease: Is any defendant who is liable under the exception deemed to have caused the disease? On orthodox principles, all defendants who have actually caused the damage are jointly and severally liable. Or is the damage caused by a defendant in a Fairchild case the creation of a risk that the claimant will contract the disease? In that case, each defendant will be liable only for his aliquot contribution to the total risk of the claimant contracting the disease a risk which is known to have materialised. Lord Hoffmann went on to adopt the latter analysis as the basis of liability in Fairchild. At para 31 he held that the majority in Fairchild had not proceeded upon the fiction that a defendant who had created a material risk of mesothelioma was deemed to have caused or materially contributed to the contraction of the disease. The creation of a material risk of mesothelioma was sufficient for liability. At para 35 he advanced the thesis that the basis of liability was the wrongful creation of the risk or chance of causing the disease and that the damage that the defendant should be regarded as having caused was the creation of such risk or chance. Liability for the mesothelioma that developed should be apportioned according to the contribution that each defendant made to the risk that mesothelioma would be contracted. Lord Scott of Foscote and Lord Walker of Gestingthorpe expressly agreed with both Lord Hoffmanns conclusion that liability for the mesothelioma fell to be apportioned and with his reasons for so concluding. Lord Scott held at para 53 that it was essential to keep firmly in mind that liability in Fairchild was not imposed on any of the defendant employers on the ground that the employers breach of contract had caused the mesothelioma. That causative link had not been proved against any of them. It was imposed because each, by its breach of duty, had materially contributed to the risk that the employee would contract mesothelioma. At para 61 he emphasised that the Fairchild principle was not based on the fiction that each defendant had actually caused the eventual outcome. It was based on subjecting the victim to a material risk. Lord Walker, having stated that he was in full agreement with Lord Hoffmanns reasons went on at para 104 to make a statement that was inconsistent with them, this being to the same effect as the statement relied on by Mr Beloff see para 106 above. Lord Walker stated that the decision in Fairchild equated exposing the victim to the risk of injury with causing his injury. This was the same mistake as I made in Sienkiewicz see para 117 above. Had this been the case, each defendant would have been jointly and severally liable for the injury. Lord Walker went on to say, however, that the result in Fairchild was achieved, not by some fiction, but as an explicit variation of the ordinary requirement as to causation. At para 113 he stated that Fairchild was decided by the majority, not on the fictional basis that the defendants should be treated as having caused the victims damage, but on the factual basis that they had wrongfully exposed him to the risk of damage. Lady Hale did not adopt Lord Hoffmanns thesis that the creation of risk constituted the damage for which each defendant was liable. In general, however, she agreed with the majority. She held that in Fairchild, for the first time in our legal history defendants were made liable for damage even though they might not have caused it at all. It was not said that the defendants had caused or materially contributed to the harm. All that could be said was that each had contributed to the risk of harm. In these circumstances it was sensible and fair to apportion liability for the harm in proportion to the contribution that each had made to the risk of harm. Lord Rodger of Earlsferry vigorously dissented from the reasoning of the majority and from the result in so far as it apportioned liability. He observed at para 71 that the majority were not so much reinterpreting as rewriting the key decisions in McGhee and Fairchild. At para 85 he stated that the new analysis that the House was adopting would tend to maximise the inconsistencies in the law. I have some sympathy with the observations of Lord Rodger. It would, I think, have been possible for the House in Barker to have defined the special approach in Fairchild as one that treated contribution to risk as contribution to the causation of damage. The important fact is, however, that the majority did not do so. They were at pains to emphasise that the special approach was not based on the fiction that the defendants had contributed to causing the mesothelioma. Liability for a proportion of the mesothelioma resulted from contribution to the risk that mesothelioma would be caused and reflected the possibility that a defendant might have caused or contributed to the cause of the disease. This was no obiter expression of opinion. It formed the basis of the substantive decision that liability was severable and not joint. The special rule The special approach rendered each employer who had wrongfully exposed a mesothelioma victim to asbestos dust liable for a proportion of the mesothelioma without creating any inference or legal fiction that the employer in question had actually contributed to causing the disease. Section 3 of the Compensation Act altered the position by imposing joint and several liability on those who were only severally liable under the special approach. Did the special rule that resulted involve a different basis of liability to that which formed the basis of the special approach? This question is considered by Jonathan Morgan in his interesting Chapter 4 of Perspectives on Causation headed Causation, Politics and Law: The English and Scottish Asbestos Saga. At p 79 he poses the following question: Has Parliament, by implication, therefore also reversed Lord Hoffmanns principled reinterpretation of Fairchild? Is the nature of Fairchild liability now after all for causing mesothelioma and not increasing risk? Mr Morgan gives a negative answer to this question, expressing the view that Barker has altered the jurisprudential basis of the Fairchild liability irrevocably. I agree that section 3 of the Compensation Act did not alter the jurisprudential basis of the special approach laid down by the House of Lords in Fairchild and Barker. All that it did was to alter the effect of the special approach by making each defendant jointly and severally liable for the whole of the injury sustained. Section 3(1) provides that the section applies where (c) because of the nature of mesothelioma and the state of medical science, it is not possible to determine with certainty whether it was the exposure [for which the defendant was responsible]or another exposure which caused the victim to become ill, and (d) the responsible person is liable in tort(whether by reason of having materially increased a risk or for any other reason). It is not possible to read section 3 as imposing a different basis of liability to that identified by the majority in Barker. The consequence of the special rule Having regard to its jurisprudential basis I cannot see how the employers can found upon the special rule as identifying the policy year or years in which a victims mesothelioma is initiated. The position is that it is impossible to prove on balance of probability when mesothelioma is initiated, or contracted, or sustained, giving each of those words the same meaning. The special rule does not fill the gap for it raises no implication or fictional assumption as to when mesothelioma is initiated. The consequence is that if claimants have to show that mesothelioma was initiated in a particular policy year in order to establish that insurers are liable they are unable to do so. Should this Court redefine the special rule in order to engage the EL policies? The special approach of the majority in Barker had the object of ensuring that employers who had wrongfully subjected their employees to asbestos dust should bear what the majority considered to be a fair share of responsibility for their wrongdoing. It does not seem likely that the majority gave consideration to the implications for the responsibility of EL insurers of the manner in which this object was achieved. Should this Court now redefine the special rule with the object of enabling claims to be brought under the EL policies? This would, I think, involve holding that the majority in Barker erred in their analysis and that the true basis of the special approach in Fairchild was that contribution to risk should be deemed to be contribution to causation. I would give a firm No to this question. The adoption of the special approach in Fairchild has provoked considerable criticism, both judicial and academic. An example of the former is to be found in the judgment of Lord Brown in Sienkiewicz. An example of the latter is Mr Morgans closely reasoned Chapter 4 of Perspectives on Causation. But the object of the special approach in Fairchild and Barker was at least to ensure that those who had breached the duties that they owed to their employees did not escape liability because of scientific uncertainty. It would be judicial law making of a different dimension to create a legal fiction as to the policy years in which cases of mesothelioma were initiated in order to render liable insurers who could not otherwise be shown to be liable. The Secretary of State has intervened in this appeal and has submitted that, should the claims of employees or their dependants not be met by insurers, they are likely to be a burden on the public purse. It is open to question whether this is a proper consideration, even when considering whether the special rule should be redefined for what are essentially reasons of policy. In any event it seems to me that the position is somewhat more complex than the Secretary of State suggests. The burden of claims in respect of mesothelioma on a scale that was never anticipated is reducing both employers and insurers to insolvency. If this Court were to redefine the special rule so as to impose liability for mesothelioma claims on EL insurers where it could not otherwise be made out, this would in many cases be at the expense of others with claims on the same insurers founded on facts and not legal fictions. The liabilities in respect of mesothelioma will increase the overall shortfall on the part of insurers and this is also likely to have implications for the public purse. So far as I am concerned, however, these considerations have little relevance. Even if there were a compelling case for contending that a means should be found to render EL insurers liable, my reaction would be that this was a matter for Parliament not the courts. It would be wrong in principle for this Court to depart from the reasoning of the majority in Barker for the sole purpose of imposing liability on EL insurers. |
The principal issue in this appeal concerns the role, if any, of the courts of England and Wales (including the Supreme Court of the United Kingdom) in the legislative process of one of the Channel Islands. It raises fundamental questions about the constitutional relationship between the United Kingdom and the Bailiwicks of Guernsey and Jersey. It also raises questions about the constitutional relationship between the courts and a representative or democratically elected legislature. The case concerns an Order in Council of 12 October 2011 by which Royal Assent was given to the Reform (Sark) (Amendment) (No 2) Law 2010 (the 2010 Reform Law) which had been passed by the Chief Pleas, the legislature of Sark. The claimants originally applied to the Administrative Court for the Order to be quashed, and without the Order the Law could not become law. At the outset of the hearing, they modified that claim, to seek only a declaration that the decision of the Committee of the Privy Council which recommended approval of the Law was an unlawful decision, on the ground that, in certain respects, the Law was incompatible with the European Convention on Human Rights. The Administrative Court granted such a declaration: [2013] EWHC 1183 (Admin). The appellants claim that the Court had no jurisdiction to do so, or, if it had, that that jurisdiction should not have been exercised. If it was open to the court to make such a declaration, two further issues arise. First, is the correctness of Government legal advice given as to the meaning and effect of an international treaty ever justiciable in the courts of England and Wales as the House of Lords in R v Secretary of State for the Home Department, ex p Launder [1997] 1 WLR 839 held that it could be? Second, if it is, was the Administrative Court correct to hold that, in one limited respect, the 2010 Reform Law was incompatible with the European Convention? The Supreme Court elected to hear argument from all parties on the jurisdiction issues first. Having done so, we announced that we did not require to hear argument on the two further issues. It follows, as all parties will have understood, that the appeal will be allowed on the principal issue and the declaration made by the Administrative Court set aside. The claimants in this action, Sir David and Sir Frederick Barclay, have withdrawn from the proceedings. They have agreed not to enforce the costs order made in their favour in the Administrative Court. The defendants in the action and appellants in this court, the Secretary of State for Justice and Lord Chancellor, the Privy Council Committee for the Affairs of Jersey and Guernsey, and the Privy Council itself, have agreed not to apply for costs orders against the claimants in any circumstances. Despite the Barclay brothers withdrawal, it seemed to this court that the constitutional issues raised by the appeal were of such importance that we should have the assistance of advocates to the court, who could put forward such counter arguments to those of the appellants as appeared to them proper. We are most grateful to the Hon Michael Beloff QC and Mr Ivan Hare for their able assistance. We are also grateful that the Attorney General of Jersey and the States of Guernsey have intervened in this appeal, given that the appeal raises such serious issues about the relationship between the United Kingdom and the Channel Islands. This is a leap frog appeal, the Administrative Court having granted a certificate pursuant to section 12 of the Administration of Justice Act 1969. That court did not think it right to decline jurisdiction, in the light of two decisions which are binding both on that court and on the Court of Appeal. In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61, [2009] 1 AC 453 (Bancoult (No 2)), the House of Lords held that the courts of England and Wales did have jurisdiction to rule upon the lawfulness of Orders in Council, made under the Royal prerogative, legislating in respect of a British Overseas Territory. In R (Barclay) v Lord Chancellor and Secretary of State for Justice [2009] UKSC 9, [2010] 1 AC 464 (Barclay (No 1)), the Barclay brothers and a resident of Sark mounted a similar challenge to this against the Reform (Sark) Law 2008 (the 2008 Reform Law). It was conceded at all levels in Barclay (No 1) that, in the light of the decisions of the Court of Appeal and House of Lords in Bancoult (No 2), the Order in Council granting Royal Assent to the Law was amenable to judicial review in the courts of England and Wales. The Administrative Court did not think it right to embark upon a process of distinguishing Bancoult (No 2) which had not been considered in Barclay (No 1) (para 46). The relationship between the Channel Islands, the Crown and the United Kingdom The Channel Islands, like the Isle of Man (although it has a rather different history), are not part of the United Kingdom. Nor have they ever been British colonies, or British Overseas Territories as the few remaining colonies are now termed. They are Crown Dependencies, enjoying a unique relationship with the United Kingdom and the rest of the British Commonwealth through the Crown, in the person of the Sovereign. The constitutional relationship between the Channel Islands, the Crown and the United Kingdom is discussed at length in Chapter 31 of the Report of the Royal Commission on the Constitution, 1969 1973 (the Kilbrandon Commission), 1973, Cmnd 5460. This is now supplemented by the House of Commons Justice Committees Eighth Report of Session 2009 2010, Crown Dependencies, 2010, HC 56 1; the Government response to that Report, 2010, Cm 7965; the Justice Committees Tenth Report of Session 2013 2014, Crown Dependencies: developments since 2010, 2014, HC 726; and the Governments response to that Report, 2014, Cm 8837. In none of these is the jurisdiction of the courts of England and Wales over the institutions of the Channel Islands, or over the acts of the United Kingdom government in relation to the Channel Islands, discussed. Many aspects of the relationship are uncertain and practice is still developing. Nevertheless, some things are clear. The Channel Islands consist of the Bailiwicks of Jersey and Guernsey. The Bailiwick of Guernsey includes the islands of Alderney and Sark, which have their own legislative and executive institutions. Not being part of the United Kingdom, unlike Wales, Scotland and Northern Ireland, the Bailiwicks are not represented in the Parliament of the United Kingdom. They are economically self sufficient. They pay no taxes to the United Kingdom and they receive no contribution from the revenues of the United Kingdom. They were not settled by, or conquered by or ceded to, the United Kingdom as colonies. Their link with the United Kingdom and the rest of the Commonwealth is through the Crown, not in the sense of the ultimate executive authority in the United Kingdom, but in the sense of the person of the Sovereign. The Sovereigns personal representative in each Bailiwick is the Lieutenant Governor. This link stems from the Norman conquest of England in 1066, when the Duke of Normandy became King of England. The Islands were part of the Duchy of Normandy. King Philippe Auguste of France succeeded in retaking possession of continental Normandy from King John of England in 1204, but was not able permanently to retake the Islands, which remained in the possession of and retained their allegiance to the King of England. The Treaty of Calais of 1360 contained a clause confirming that the King of England shall have and hold all the islands which he now holds: see Minquiers and Ecrehos Case (France v United Kingdom) [1953] ICJ Rep 47, 54. The States of Guernsey told the Kilbrandon Commission that, after the ducal title was surrendered, the King of England continued to rule the Islands as though he were Duke of Normandy, observing their laws and customs and liberties; and these were later confirmed by the charters of successive sovereigns which secured for them their own judiciaries and freedom from process of English courts and other important privileges of which the Islands were justly proud and which have always been respected (Cmnd 5460, para 1349). The Charter granted by Queen Elizabeth I to the people of Guernsey, Alderney and Sark in 1560, for example, granted to the bailiff and jurats and all other magistrates and officers of justice . full and absolute authority, power and faculty to have the cognisance, jurisdiction, and judgment concerning and touching all and all sorts of pleas, processes, lawsuits, actions, quarrels and causes arising within the islands and maritime places aforesaid (clause 5). Further, it provided that the islands authorities and people should none of them be cited, or summoned, or drawn into any lawsuit, or forced in any manner by any writs or process, issued from any of our courts of the kingdom of England, to appear and answer before any judges, courts or other officers of justice, out of any of the islands and maritime places aforesaid, touching or concerning anything, dispute, causes or matters in controversy whatsoever, arising in the aforesaid islands . (clause 6). Nevertheless, the Bailiwicks are not independent states in international law. The United Kingdom Government is responsible for their international relations and for their defence. But it is the practice to consult the Island authorities before entering into any international agreement which would apply to them. The UK has also undertaken not to act internationally on behalf of a Crown Dependency without prior consultation; recognises that their interests may differ from those of the UK (especially in relation to the European Union, of which the Islands are not members) and so it may have to represent them both; and supports the principle of the Dependencies further developing their own international identities (Cm 8837, p 10). The United Kingdom Parliament has power to legislate for the Islands, but Acts of Parliament do not extend to the Islands automatically, but only by express mention or necessary implication. The more common practice is for an Act of Parliament to give power to extend its application to the Islands by Order in Council. It is the practice to consult the Islands before any UK legislation is extended to them. The Kilbrandon Commission observed that it can be said that a constitutional convention has been established whereby Parliament does not legislate for the islands without their consent on domestic matters (Cmnd 5460, para 1469). Nevertheless, in the light of the view taken by the Judicial Committee of the Privy Council in Madzimbamuto v Lardner Burke [1969] 1 AC 645, at 722 3, the Commission concluded that in the eyes of the courts the UK Parliament did have a paramount power to legislate for the Islands on any matter, domestic or international, without their consent, although it should be no more ready than in the past to interfere in their domestic affairs (para 1473). The Crown also retains the right to legislate for the Islands by Order in Council. The evidence of the States of Guernsey to the Kilbrandon Commission was that the last instance of this was the Court of Appeal (Channel Islands) Order 1949 (Jersey Order in Council 12/1949), which was based on a scheme which had the prior approval of the States. For the most part, therefore, the Islands legislate for themselves. Jersey, Guernsey, Alderney and Sark each have their own legislature. The States of Guernsey have power to legislate for the whole Bailiwick, including Alderney and Sark. On criminal matters they may do this without the consent of the Alderney and Sark legislatures, but on other matters their consent is required. The Human Rights (Bailiwick of Guernsey) Law, 2000 applies throughout the Bailiwick, including Sark. On some matters, the Islands can legislate for themselves. For instance, the States of Guernsey may legislate by Ordinance, the limits of which power were considered by the Judicial Committee of the Privy Council in Jersey Fishermens Association Ltd v States of Guernsey [2007] UKPC 30; [2007] Eu LR 670. However, generally they legislate by Laws which require the Royal Assent after being passed as a Projet de Loi by the local legislature. Royal Assent is given by Order in Council. Since 1668, there has been a Standing Committee of the Privy Council which deals (originally among many other things) with the affairs of Jersey and Guernsey. This was instituted before the development of cabinet government as we now know it. In the 18th century there developed the constitutional convention that, in relation to Great Britain and later the United Kingdom, the Sovereign would only act on the advice of those Privy Councillors who were members of the cabinet and thus accountable to Parliament. But that did not apply to the Channel Islands, and at least until the end of the 19th century, the Committee for the Affairs of Jersey and Guernsey was composed of Privy Councillors the majority of whom were not members of the United Kingdom government (see WJ Heyting, The Privy Council Committee for the Affairs of Jersey and Guernsey, in The Constitutional Relationship between Jersey and the United Kingdom, 1977, The Jersey Constitutional Association). The present Committee was constituted at the beginning of the reign of Her Majesty the Queen by Order in Council dated 22 February 1952. This appoints the whole Privy Council, or any three or more of them, as the Committee and provides that all Acts passed, or to be passed, by the States of the Islands of Jersey and Guernsey and its Dependencies, and submitted to Her Majesty in Council, for Her Majestys approval, and all petitions received from those Islands be, and the same are hereby, referred to the said Committee for their consideration and report. In practice, the Committee consists of the Lord President of the Council, the member of the cabinet responsible for relations with the Channel Islands, and one or two other government ministers. Responsibility for relations with the Islands used to lie with the Home Secretary but has now been passed to the Lord Chancellor. The committee in this case consisted of the Lord Chancellor, a Minister of State in the Ministry of Justice and the Lord President. Thus, in contrast to earlier centuries, Her Majesty in Council is now advised solely by members of the United Kingdom government. The practice is that a Projet de Loi is sent by the Island authorities to the Ministry of Justice, together with an explanatory report. Petitions can be lodged either for or against it. A small team of civil servants in the Ministry scrutinises it to see whether approval should be recommended. It is common ground between the appellants and the interveners in this case that there is a strong presumption in favour of granting Royal Assent to a measure which has been passed by an Island legislature. The 2010 Justice Committee report stated that the grounds for withholding Assent are not entirely clear (2010, HC 56, para 51). The question does not arise in this appeal, as approval of the 2010 Reform Law was indeed recommended. However, it should be recorded that the appellants and the interveners are not agreed on the permissible scope for recommending the refusal of Royal Assent to a measure which has been passed by an Island legislature. The Justice Committee took the view, shared by the appellants, that it would certainly be legitimate to withhold Assent if the legislation would put the relevant Island in breach of an international obligation which applies to the Island and for which the UK is responsible (2010, HC 56, para 51; see also Cm 7965, p 16, note 36). The interveners position is that Assent may be withheld if the Projet de Loi would breach an international obligation which has been extended, by agreement, to the Islands, but that this does not apply where the relevant agreement has already been incorporated by legislation into the domestic law of the Islands. The democratic decision of the Island legislature should not be supplanted by the executives view of an executive agreed treaty obligation. Further, the appellants take the view that Assent may be withheld if it would clearly not be in the public interest for it to become law (Treasury Solicitors letter to the claimants, 16 November 2007). This too is not accepted by the interveners. The Kilbrandon Report did state that the Crown has ultimate responsibility for the good government of the Islands (Cmnd 5460, para 1361). Intervention by the United Kingdom Government would certainly be justifiable to preserve law and order in the event of grave internal disruption; but the UK Government and Parliament ought to be very slow to seek to impose their will on the Islands merely on the grounds that they know better than the Islands what is good for them (para 1502). The Justice Committee reported a high degree of consensus that good government would only be called into question in the most serious of circumstances, such as a fundamental breakdown in public order or endemic corruption in an Island government, legislature or judiciary (2010, HC 56, para 37). The Government agreed (Cm 7965, p 9). Given this very narrow scope for direct intervention, the interveners argue that the public interest is not a ground upon which Royal Assent can be refused. These questions do not arise on this appeal, nor do they necessarily cover the full ground: it is possible, for example, that Royal Assent might lawfully be withheld to Island legislation, not because it put the Island in breach of an applicable international obligation but in the light of the United Kingdoms international relations generally (as is the implication of the discussion, obiter, in the Jersey Fishermens Association case, at paras 29 to 38). It is not necessary for this court to express a view upon these contentious issues. We flag them up because they would arise in the (no doubt highly unlikely) event of a recommendation that Royal Assent be withheld. We note only that, as the interveners were not party to Barclay (No 1), in which the issue also did not arise, or to this case in the Administrative Court, any statement in the judgments in those cases as to the scope for withholding Royal Assent cannot be treated as authoritative. Sark has a population of around 600. Queen Elizabeth I of England granted the island as a Royal Fief to the first Seigneur, Helier de Carteret, by letters patent in 1565. The fief descends by inheritance but can be sold with royal consent. The family of the present Seigneur acquired the fief in 1852 and he inherited it from his grandmother in 1974. The letters patent required the Seigneur to keep the island continually inhabited by 40 men, the quarantine. He therefore leased 40 parcels of land, known as tenements, at low rents, on condition that a house was built and maintained on the tenement and a man and musket provided for the defence of the island. These 40 tenements still exist, although some tenants own more than one. The Barclay litigation is concerned with both the judiciary and the legislature of the Island. The chief judge of the island is the Seneschal, whose office of Seneschal was created by the Crown in 1675. He was originally appointed by the Seigneur with the approval of the Lieutenant Governor of Guernsey, the Sovereigns representative in the Bailiwick. The court of the Seneschal has unlimited jurisdiction in civil matters, but a more limited jurisdiction in criminal matters. There is an appeal from his court to the Royal Court of Guernsey, which also has concurrent first instance jurisdiction in civil matters and sole jurisdiction over more serious criminal matters. Appeals from the Royal Court lie to the Court of Appeal for Guernsey, and from that Court to the Judicial Committee of the Privy Council. The legislature of Sark is the Chief Pleas, which is also the islands executive, operating through committees in the style which used to be adopted by most local authorities in England and Wales. However, as already noted, the legislature of Guernsey may also legislate for the island in criminal matters without the consent of the Chief Pleas and in other matters with its consent. Under the constitution of Sark as set out in the Reform (Sark) Law 1951, the Chief Pleas consisted of the Seigneur and the Seneschal, the 40 tenants, and 12 elected deputies of the people. The Seneschal was ex officio President. Major changes were made by the 2008 Reform Law, which was passed by the Chief Pleas in 2006 and given Royal Assent in 2008. The principal change was that the Chief Pleas became a wholly elected body of 28 conseilleurs, apart from the Seigneur and the Seneschal, who remained members but could not vote. The Seneschal remained ex officio President. In Barclay (No 1) the 2008 Reform Law was challenged on three grounds: that the continued membership of the Chief Pleas of the Seigneur and Seneschal was incompatible with article 3 of the First Protocol to the European Convention; that while alien residents of Sark could vote in the elections for conseilleurs, they could not stand for election, which was also said to be incompatible with article 3 of the First Protocol; and that the dual role of the Seneschal as President of the Chief Pleas and chief judge was incompatible with article 6 of the Convention. All three challenges failed before Wyn Williams J: [2008] EWHC 1354 (Admin); the first two failed both on appeal to the Court of Appeal and to the Supreme Court: [2008] EWCA Civ 1319; [2009] UKSC 9; the third challenge succeeded in the Court of Appeal and there was no cross appeal against that to the Supreme Court. The Court of Appeal declined to quash the Law, but made a declaration that the Seneschals dual role breached article 6 of the Convention. As a result, the Chief Pleas enacted the 2010 Reform Law which is in issue in these proceedings. Under this, the Seneschal is no longer to serve as President or member of the Chief Pleas and a new office of President is created; and new provisions are made for the appointment, removal, renewal and remuneration of the Seneschal. The claimants challenged the latter provisions as being incompatible with the impartiality and independence of the judiciary which is required by article 6 of the Convention. The Administrative Court rejected the challenges to the provisions for the appointment, removal and renewal of the Seneschal. But it held that the provision for the remuneration of the Seneschal, out of public funds to be determined by the Chief Pleas on the recommendation of its General Purposes and Advisory Committee in consultation with its Finance and Commerce Committee, was incompatible with article 6. This was because the court held that there was nothing to prevent the Chief Pleas making an arbitrary reduction in the remuneration of the Seneschal. In such a small community, an objective outsider would see the Seneschal as vulnerable to pressure from the members of the Chief Pleas not to make decisions which would be unpopular with them. The court therefore granted the claimants a declaration that the decision of the Committee for Jersey and Guernsey to recommend approval of the provisions of the 2010 Reform Law amending the 2008 Reform Law was an unlawful decision, as in respect of the remuneration of the office of the Seneschal, the law was incompatible with article 6 of the Convention. The court made it clear that the incompatibility could be cured by amending the law to restore the role of the Lieutenant Governor, whose approval of the remuneration of the Seneschal had been required under the 2008 Reform Law. Jurisdiction The appellants and the interveners both argue (i) that the courts of England and Wales do not have jurisdiction to entertain this claim, and (ii) that if they do have such jurisdiction, they should not have exercised it in this case. As will become apparent, it is not possible to state a general rule as to whether or not an Order made by Her Majesty in Council is amenable to judicial review in the courts of England and Wales, given the wide variety of circumstances in which such Orders are made. However, the principal argument of both the appellants and the interveners in support of each of the above propositions is that any attack upon Island legislation on the ground that it is incompatible with the European Convention on Human Rights ought to be brought in the Island courts under the local Human Rights legislation, in this case the Human Rights (Bailiwick of Guernsey) Law 2000, and not in the courts of England and Wales. This argument was placed at the forefront of the written and oral submissions of the interveners and of the oral submissions of the appellant. It is therefore convenient to consider the lesser jurisdiction question (ii) above, should it be exercised, before the greater jurisdiction question (i), does it exist? (i) Exercise The Human Rights (Bailiwick of Guernsey) Law 2000 is closely modelled on the United Kingdoms Human Rights Act 1998 (the 1998 Act). Thus, so far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights (s 3(1)). This does not affect the validity, continuing operation or enforcement of any incompatible primary legislation (s 3(2)). If a court is satisfied that a provision of primary legislation is incompatible with a Convention right, it may make a declaration of that incompatibility (s 4(2)). Such a declaration does not affect the validity, continuing operation or enforcement of the provision in question and is not binding on the parties (s 4(6)). A court for this purpose means (a) the Judicial Committee of the Privy Council, (b) the Guernsey Court of Appeal, (c) the Royal Court of Guernsey, sitting otherwise than as an Ordinary Court dealing with a criminal matter, (d) the Court of Alderney, sitting otherwise than as a criminal trial court, and (e) the Court of the Seneschal of Sark, sitting otherwise than as a criminal trial court (s 4(5)). When any court is considering whether to make a declaration of incompatibility, Her Majestys Procureur is entitled to be given notice of this and to be joined as a party to the proceedings (s 5(1) and (2)). Primary legislation means any (a) Act of the UK Parliament which applies or extends directly to Guernsey, (b) Church of England measure applicable to Guernsey, (c) Order in Council extending to Guernsey an Act of Parliament, (d) Law, (e) Ordinance other than one made under a power contained in another enactment, and (f) Order in Council (i) made in exercise of Her Majestys Royal Prerogative, or (ii) amending an Act of Parliament, which applies to Guernsey (s 17). Laws and Ordinances (unless made under a power contained in another enactment) passed by an Island legislature are clearly primary legislation for this purpose. So too are the three methods by which other bodies may legislate for the Islands: an Act of the UK Parliament which extends to the Islands (now unusual), an Order in Council extending an Act of the UK Parliament to the Islands (now the usual way of applying UK legislation to the Islands), or an Order in Council made in the exercise of Her Majestys prerogative to legislate directly for the Islands (now rare, see para 12 above). Thus the claimants could have applied, either to have the 2010 Reform Law read down in accordance with section 3(1) of the Human Rights (Bailiwick of Guernsey) Law 2000 or for a declaration of incompatibility in accordance with section 4(2). Such an application could have been brought either in the Royal Court of Guernsey or in the Court of the Seneschal (but given that the challenge was concerned with the appointment and terms of service of the Seneschal the former would have been more appropriate). In each case the ultimate route of appeal would be to the Judicial Committee of the Privy Council. The remedies available would have been different from, in one sense wider and in another sense narrower than, the remedies available on a judicial review of the decision to recommend Royal Assent to an Island Law. On the one hand, in an appropriate case, it is possible to read and give effect to legislation which would otherwise be incompatible with a Convention right in a way which is compatible with that right. This is a flexible power which is capable of directly remedying the complaint of a person who argues that legislation is incompatible with his rights. In the United Kingdom it is regarded as the power of first resort: Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557. A declaration of incompatibility, on the other hand, leaves the incompatible law intact, although it sends a clear message to the legislature that the state will be in breach of its international obligations unless and until it is put right. While it is unlawful for other public authorities to act in a way which is incompatible with the Convention rights (s 6(1)), unless effectively obliged to do so by primary legislation (s 6(2)), a public authority for this purpose does not include an Island legislature or a person exercising functions in connection with proceedings in an Island legislature (s 6(3)). In this way, as with the United Kingdoms 1998 Act, a delicate balance is drawn which respects the supremacy of the Island legislatures. It was not suggested in Barclay (No 1) that those remedies are available in respect of an Island Law in the courts of England and Wales. An Island Law is not included in the list of primary legislation in the 1998 Act (s 21(1)). The list does include an Order in Council made in exercise of Her Majestys Royal Prerogative, but there is nothing in the 1998 Act to indicate that this extends to Orders in Council made in the exercise of the prerogative power to give Royal Assent to Island legislation or to legislate for territories outside the United Kingdom. It was suggested in Barclay (No 1) that the Secretary of State for Justice and Lord Chancellor, the Committee for the Affairs of Jersey and Guernsey and the Privy Council were acting as public authorities for the purpose of sections 6 and 7 of the 1998 Act when they recommended and approved the 2008 Reform Law. That suggestion was rejected both at first instance and in the Court of Appeal. The arguments were canvassed in the Supreme Court (paras 102 to 111) but the Court declined to express a view, because it had been conceded that the recommendation, and indeed the resulting decision of the Privy Council to approve the Law, were amenable to judicial review on ordinary principles (paras 100, 111). The applicability of the 1998 Act to territories outside the United Kingdom but for whose international relations the United Kingdom is responsible was considered by the House of Lords in R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2005] UKHL 57, [2006] 1 AC 529 (Quark Fishing). The company alleged that their rights under article 1 of the First Protocol to the European Convention had been breached by the denial of a licence to fish for Patagonian toothfish in the territorial waters of the South Georgia and South Sandwich Islands (SGSSI). Having succeeded in getting the decision quashed on ordinary judicial review principles, the company applied for damages under the 1998 Act. The company could succeed only if (a) those responsible for refusing them the licence the Director of Fisheries for the SGSSI acting under the instructions of the Commissioner for the SGSSI acting under the instructions of the Secretary of State for Foreign and Commonwealth Affairs were a public authority for the purpose of the 1998 Act, and (b) the rights contained in article 1 of the First Protocol were Convention rights within the meaning of the 1998 Act. The SGSSI is a British Overseas Territory governed as provided for in the South Georgia and South Sandwich Islands Order 1985. The United Kingdom is responsible for the international relations of the SGSSI for the purpose of article 56 of the European Convention, under which any member state may (or may not) declare that the Convention shall extend to all or any of such territories. The United Kingdom had made such a declaration in respect of the Convention itself, but (for some unknown reason) had neglected to do so in respect of the First Protocol. The House of Lords was unanimous in concluding that the rights contained in article 1 of the First Protocol were not Convention rights for the purpose of the 1998 Act. Section 1 of the 1998 Act defines the Convention Rights as the rights set out in the listed articles of the Convention and two of its Protocols. By section 21, the Convention means the European Convention as it has effect for the time being in relation to the United Kingdom. I decided the case on the narrowest possible ground, that the rights in question could not have effect in relation to the United Kingdom when the United Kingdom had not extended them to the territory in question (para 97). Lord Nicholls decided the case on the same basis, but also stated that the rights brought home by the Act do not include Convention rights arising from these extended obligations assumed by the United Kingdom in respect of its overseas territories. The United Kingdom thereby became responsible in international law for securing the protection of those rights but it did not extend the reach of sections 7 and 8 of the 1998 Act (para 36). Lord Hoffmann also stated that declarations under article 56 operated only in international law (para 56). However, the majority, Lord Bingham, Lord Hoffmann and Lord Hope, decided the case on the basis that the instructions had been given on behalf of Her Majesty in right of the SGSSI and not in right of the United Kingdom. Thus the Secretary of State and the SGSSI officials could not be acting as United Kingdom public authorities for the purpose of sections 6 and 7 of the 1998 Act. Both Lord Nicholls and I considered that the capacity in which the Crown acted was irrelevant. What mattered was the intended scope of the 1998 Act. On any view, it would have been strange to hold that the 1998 Act applied to Quarks claim, when the United Kingdom had a choice about whether to extend the rights in question to the SGSSI and had not done so. Thus it was tolerably clear that Quark would not be able to succeed before the European Court of Human Rights (as indeed turned out to be the case: see Quark Fishing Ltd v United Kingdom, Application no 15305/06, Decision of 19 September 2006). Does it make a difference to the scope of the 1998 Act that the United Kingdom has extended the rights in question to the Channel Islands? On the one hand, under our dualist approach to the incorporation of international treaties, there is an important distinction between assuming responsibility in international law and extending rights and responsibilities in domestic law. On the other hand, the House of Lords has decided since Quark Fishing that the 1998 Act applies to the acts of United Kingdom public authorities in relation to persons within its jurisdiction for the purposes of article 1 of the Convention wherever they may be in the world: R (Al Skeini) v Secretary of State for Defence (The Redress Trust intervening) [2008] AC 153. Liability under sections 6 and 7 of the 1998 Act is therefore likely to depend upon whether the alleged victim was within the jurisdiction of the United Kingdom and whether the perpetrator was a United Kingdom public authority. It certainly cannot be ruled out that violations of Convention rights committed in one of the Channel Islands by a United Kingdom public authority are actionable in the United Kingdom courts under the 1998 Act. But in my view it can be ruled out that sections 3 and 4 of the 1998 Act were intended by Parliament to apply to Channel Islands legislation as it applies in the Channel Islands. It is not for the courts of England and Wales to interpret the law of the Channel Islands or decide what is law there. Insofar as that task rests with the courts, it rests with the Island courts, culminating ultimately in the Judicial Committee of the Privy Council. It is not for the courts of England and Wales to read down Island legislation so as to make it conform to the Convention rights. It is not for the courts of England and Wales to declare that Island legislation is incompatible with the Convention rights. I would not, therefore, read an Order in Council made in exercise of [the royal prerogative] in the definition of primary legislation in section 21(1) of the 1998 Act as including an Order in Council giving Royal Assent to Island legislation or legislating directly for an Island. For the courts of England and Wales to entertain challenges to the compatibility of Island legislation with the Convention rights would clearly be to subvert the scheme of the Islands own human rights legislation. It would also be to subvert the method by which the United Kingdom extended the European Convention to the Channel Islands. This was not by extending the 1998 Act to them: amendments to that effect were resisted in the UK Parliament. It was by extending the scope of the Convention in international law by a declaration under article 56, and leaving it to the Islands to legislate to incorporate the rights contained in the Convention into Island law. happened to adopt the same model as the 1998 Act but they did not have to do so. It would be inconsistent with that scheme for the definition of primary legislation in the 1998 Act to cover any form of primary Island legislation as defined in the Human Rights (Bailiwick of Guernsey) Law 2000. It is no answer to say that the challenge in this case was not to the legislation itself, but to the advice given to the Privy Council by the Ministry of Justice and the Committee for the Affairs of Jersey and Guernsey. If that advice was unlawful, then the decision to approve the legislation was unlawful, and it would in principle have been open to the court to quash the Order in Council approving it. It will be recalled that this was the relief originally sought by the claimants, not only in their Statement of Facts and Grounds but also in their skeleton argument for the substantive hearing in the Administrative Court. It was only abandoned at the outset of the hearing. As the Administrative Court itself pointed out, it would be a surprising outcome if the courts of England and Wales could quash the final stage in the Islands legislative process when the courts of the Bailiwick must respect the primacy of the legislative process (para 37). The interveners make the further point that issues of compatibility with Convention rights often involve consideration of whether the legislation in question has struck a fair balance between the protection of individual rights and the general interests of the community. In cases such as Lautsi v Italy (2011) 54 EHRR 60 (Grand Chamber) and SAS v France, Application no 43835/11, Grand Chamber judgment of 1 July 2014, Strasbourg has shown increasing respect for the particular national context and cultural traditions where interferences with qualified rights are concerned. In cases such as Al Khawaja and Tahery v United Kingdom, (2011) 54 EHRR 23 (Grand Chamber), Strasbourg has been sensitive to national concepts of due process when considering the requirements of article 6. The courts of the Bailiwick are infinitely better placed to assess whether an Island measure is necessary in a democratic society or whether an Island court would lack the required independence and impartiality. If it be thought that there is a risk of complacency in the judicial, legislative or administrative authorities, of a small community, where most if not all of the prominent actors will be known to one another, the ultimate safeguard lies with the Judicial Committee of the Privy Council. Unlike the courts of England and Wales, the Judicial Committee has the inestimable benefit of the considered judgments of the courts of first instance and appeal in the Island jurisdictions. Furthermore, the Island authorities will have every opportunity to take part in the case. This Court has benefitted greatly from the intervention of the Attorney General of Jersey and the States of Guernsey, an advantage which the Administrative Court did not enjoy. For all those reasons, it is clear to me that the courts of the Bailiwick are the appropriate forum in which challenges to Island legislation on grounds of incompatibility with the European Convention should be heard. The courts of England and Wales should not have entertained the challenge in Barclay (No 1) and we should not entertain the challenge in Barclay (No 2). That is sufficient to dispose of the case. (ii) Existence Nevertheless, both the appellants and the interveners go further and argue that the courts of England and Wales have no jurisdiction judicially to review the process whereby the Privy Council gives Royal Assent to Island legislation. Channel Islands legislation, it is argued, is quite different from the Orders in Council which were in issue in Bancoult (No 2). Furthermore, even if those differences are not such as to deny the existence of the jurisdiction, they are a further reason why it should not have been exercised in this case. It is necessary, therefore, to go into the details of the Bancoult case. As is now well known, in 1966, the British Government made a formal agreement with the Government of the United States of America for the establishment of a military base on Diego Garcia, the principal island in the Chagos archipelago in the Indian Ocean. At that time the islands were a dependency of Mauritius, a colony which had been ceded to the United Kingdom by France in 1814. The USA was unwilling that sovereignty over Diego Garcia should pass into the hands of Mauritius, which was soon to gain its independence. So the United Kingdom made the British Indian Ocean Territories Order 1965 (the BIOT Order). This detached the Chagos islands from Mauritius and constituted them (with some other islands) a new colony known as the BIOT. The Chagos islands had a small settled population mainly employed in the coconut and copra industries. The islanders presence was seen as an obstacle to the construction of the base. So the Commissioner of the BIOT, using the legislative powers given him under the BIOT Order, made the Immigration Ordinance 1971. Section 4 forbad anyone to enter or remain in the territory without a permit. Between 1968 and 1973 the whole population of the islands was removed, mainly to Mauritius. This was done with a callous disregard of their interests (Lord Hoffmann, Bancoult (No 2), para 10). This was mainly because the UK Government refused to acknowledge that there was any indigenous population of the islands, for fear that the United Kingdom might be held responsible for them in international law. Some of the islanders have been fighting to return to the islands, other than Diego Garcia, ever since. In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs [2001] QB 1067 (Bancoult (No 1)), the Divisional Court of the Queens Bench Division quashed section 4 of the Immigration Ordinance 1971, on the ground that the power to legislate for the peace, order and good government of the BIOT did not include a power to expel all the inhabitants. The Government did not appeal. Indeed, the Foreign Secretary of the day announced, not only that they would put in place a new Immigration Ordinance which would allow the islanders to return to the outer island, but also that they were working on the feasibility of resettling them there. However, in 2004, having concluded that re settlement was not feasible and being concerned about the possibility of landings on the islands, the Government decided to restore full immigration control. A new British Indian Ocean Territory (Constitution) Order 2004 was made, section 9 of which stated that no person had the right of abode in the territory and that no one was entitled to enter or be present in the territory without authorisation. The British Indian Ocean Territory (Immigration) Order 2004 dealt with the details. Bancoult (No 2) was a challenge to the validity of those Orders. It succeeded in the Divisional Court ([2006] EWHC 1038 (Admin)) and in the Court of Appeal ([2008] QB 365) but failed by a majority of three to two in the House of Lords: [2008] UKHL 61, [2009] 1 AC 453. Nevertheless, the House was unanimous that the Orders in Council were amenable to judicial review in the courts of England and Wales. It was common ground that the Crown had the prerogative power to legislate for a ceded colony by Order in Council (and indeed in other ways): Campbell v Hall (1774) 1 Cowp 204, 211. It was argued for the Government that the courts had no power to review the validity of such legislation, either because it was primary legislation having the same validity as an Act of Parliament, or because of the terms of the Colonial Laws Validity Act 1865 (28 & 29 Vict c 63). (The 1865 Act does not apply to Channel Islands legislation and so we need not concern ourselves with the second argument). Rejecting the first argument, Lord Hoffmann could see no reason why prerogative legislation should not be subject to review on ordinary principles of legality, rationality and procedural impropriety in the same way as any other executive action. The principle of the sovereignty of Parliament was founded upon the unique authority Parliament derives from its representative character. The exercise of prerogative power by the executive lacked this quality (para 35). Lord Bingham simply observed that it is for the courts to inquire into whether a particular prerogative power exists or not and, if it does exist, into its extent (para 69). Lord Rodger expressly agreed with Lord Hoffmann on this point (para 105), as did Lord Carswell (para 122), and Lord Mance, who could see no good reason why the making of legislative Orders in Council should not be reviewable in the same way as other steps, administrative or legislative, by the executive, and every reason why they should be, on the familiar grounds of legality, rationality and procedural propriety (para 141). The appellants put forward two main reasons why this case is different from Bancoult (No 2). First and foremost, Bancoult concerned a colony which had no legislature other than the Commissioner whose powers were conferred by the very Orders under attack. There was no semblance of a representative or democratic legislature. The Orders were the act of the UK executive alone. By contrast, the Order in question here was the last stage in the process of passing legislation by an established and representative legislature. Unlike the BIOT, Sark has a functioning legislature, as well as its own functioning system of laws and its own courts. The courts of England and Wales have no more power to interfere in that process than they have to interfere with the process of giving Royal Assent to the Acts of the UK Parliament. This is indeed a very powerful reason why the courts of England and Wales should not interfere in something which is no business of theirs but is very much the business of the people of Sark and the Bailiwick of Guernsey. But it does not follow that there is no jurisdiction to entertain a challenge in a more appropriate case. It is common ground that the United Kingdom government is responsible for the international relations of the Channel Islands. The interveners do not accept that the United Kingdom government may scrutinise a Projet de Loi, even for conformity with its international obligations as they apply to the Channel Islands, if those obligations have already been translated into law in the Channel Islands. In the case of the Human Rights (Bailiwick of Guernsey) Law 2000, which provides its own careful balance between the legislature, the executive and the judiciary, that is a compelling reason for not exercising whatever jurisdiction there is. However, it is the clear responsibility of the United Kingdom government in international law to ensure that the Islands comply with such international obligations as apply to them. Just as the United Kingdom Parliament has the constitutional right to legislate for the Islands, even without their consent, on such matters, so must the United Kingdom executive have the constitutional power to ensure that proposed Island legislation is also compliant. As was pointed out in evidence to the Kilbrandon Commission, to hold otherwise would be to assign responsibility to the United Kingdom without the power to put that responsibility into effect (Cmnd 5460, para 1433). Nor is the analogy with Royal Assent to Acts of the United Kingdom Parliament exact: the Queen in Parliament is sovereign and its procedures cannot be questioned in the courts of the United Kingdom. It is to be hoped (and expected) that any disputes would be decided by negotiation between the UK Government and the Island authorities, but what if they cannot be resolved otherwise than by litigation? The question is perhaps more likely to arise in relation to the refusal of Royal Assent to a Project de Loi. The Administrative Court refers (para 26) to a dispute which arose in 1998. The Jersey legislature had passed fiscal legislation to which the United Kingdom Treasury objected as being potentially contrary to a commitment made to the Organisation for Economic Co operation and Development. Consideration was given in Jersey to bringing proceedings against the Secretary of State in respect of the failure to recommend approval, but never brought because the legislation was eventually approved. It is interesting that the interveners reserve their position in relation to jurisdiction judicially to review the refusal of Royal assent, while arguing that there is no jurisdiction to review a decision that Royal Assent should be granted. Would either the courts of the Island in question, culminating in the Judicial Committee of the Privy Council, or of the United Kingdom, culminating in this court, have jurisdiction in such a case? This leads to consideration of the second reason advanced for distinguishing Bancoult (No 2) from this case. In Bancoult (No 2), it was common ground in the House of Lords that the Orders in Council had been made by the Crown in right of the United Kingdom rather than in right of the BIOT (para 76). As that term of art had been explained in Quark Fishing, they had been made as part of the machinery of government of the United Kingdom, and in the interests of the United Kingdom, rather than as part of the machinery of government of the BIOT. In Quark Fishing on the other hand, the majority held that the instruction to refuse a licence had been made as part of the machinery of government of the SGSSI and not of the United Kingdom. As Lord Bingham put it, the Foreign Secretary was merely the mouthpiece and medium of the Queen as Queen of the SGSSI: [2006] 1 AC 529, para 12. The majority view in Quark Fishing (which also informed the decision of the Court of Appeal in Bancoult (No 2)) was severely criticised by Professor John Finnis, in Common Law Constraints: Whose Common Good Counts? (University of Oxford Faculty of Law Legal Studies Research Paper Series, Working Paper No 10/2008). He pointed out that to regard a Minister of the Crown as the mouthpiece and medium of the Sovereign was to stand the constitutional theory of responsible government on its head. The Queen never acts except on the advice of a government minister who is responsible to the legislature (save in the rare case where she may have to choose a Prime Minister). The question, therefore, is upon whose advice is she acting? According to Halsburys Laws of England, 2009, 5th edition, para 717, in a passage approved in Bancoult (No 2) and in earlier authorities, the position is as follows: The United Kingdom and its dependent territories within Her Majestys dominions form one realm having one undivided Crown. This general principle is not inconsistent with the further principle that on the grant of a representative legislature, and perhaps even as from the setting up of courts, a legislative council and other such structures of government, Her Majestys government in a colony is to be regarded as distinct from Her Majestys government in the United Kingdom. To the extent that a dependency has responsible government, the Crowns representative in the dependency acts on the advice of local ministers responsible to the local legislature, but in respect of any British overseas territory or other dependency of the United Kingdom, acts of Her Majesty herself are performed only on the advice of the United Kingdom government. It is easy to see that, in legislating for the very existence of and constitution of the BIOT, the Crown was acting on the advice of the United Kingdom government. It could hardly be otherwise, as no institutions of responsible government existed in the BIOT at the time. In Quark Fishing, the Crown gave instructions to the Commissioner and through him to the Director of Fisheries through a Secretary of State. That could only be a Secretary of State in the United Kingdom government, responsible to the United Kingdom Parliament. It is perhaps unsurprising that, having read Professor Finnis paper, Lord Hoffmann in Bancoult (No 2) was inclined to think that in Quark Fishing Lord Nicholls had been right (para 48). Although in advising Her Majesty, the United Kingdom government would no doubt take the interests of the colony into account, it was also entitled to take into account the interests of the United Kingdom and indeed the whole of Her Majestys dominions (para 49). In Barclay (No 1), Lord Collins observed, at para 107, that as matters now stand, the approach laid down by the then majority of the House of Lords [in Quark Fishing] leads to the conclusion that the decisions of the Committee for the Affairs of Jersey and Guernsey and the Privy Council were taken as part of the constitutional machinery of the Bailiwick of Guernsey and of Sark for the approval and enactment of laws in Sark, and that the fact that the decisions were taken by Ministers of the Crown who took into account the international obligations of the United Kingdom is irrelevant. It would be quite wrong for the approach in the Quark case to be revisited on an appeal (particularly with a panel of five) in which it does not arise, and in which it is not argued that the Quark case was wrongly decided and ought to be reconsidered. Relying on that observation, the Administrative Court in this case stated (para 43) that the Committee were advising Her Majesty in right of Guernsey, rather than in right of the United Kingdom. The Supreme Court in Barclay (No 1) was not invited to conclude that, if Her Majesty was acting in right of Guernsey and not of the United Kingdom, then the United Kingdom courts had no jurisdiction judicially to review the advice which was given to her. It might be thought logically to follow that, if the appellants were advising Her Majesty as part of the machinery of government of Guernsey and Sark, any judicial review of their advice should be brought in the courts of Guernsey and Sark, rather than in the courts of the United Kingdom. (It is, of course, a different question whether there would be any justiciable basis for such a review.) We are therefore invited by the appellants to distinguish Bancoult (No 2) for this reason also. However, it is not surprising that the Supreme Court in Barclay (No 1) was not invited to reach that conclusion, as it will be recalled (see para 33 above) that the instruction of the Secretary of State in Quark Fishing had been successfully judicially reviewed in the courts of England and Wales on conventional grounds and there was no appeal to the House of Lords on that aspect of the case. The House of Lords was concerned only with whether there was a claim to damages under the 1998 Act. Thus, it is not enough to ask whether a person is acting in right of the United Kingdom or of a colony or dependency: the consequence will depend upon why that question is being asked. In those circumstances, it seems to me that the decision in Quark Fishing is of little assistance in this case. If anything, it suggests that even if Her Majestys government is acting in right of the colony or dependency in question, the courts of the United Kingdom have jurisdiction judicially to review its decisions. The reality, as the Advocates to the Court argue, is that the appellants were advising Her Majesty both in right of the Bailiwick of Guernsey and of Sark and in right of the United Kingdom. They were advising her upon the final stage of the Islands legislative process. But they were doing so because of the United Kingdoms continuing responsibility for the international relations of the Bailiwick. They were politically accountable to the United Kingdom Parliament for that advice. I see no reason to doubt that they were legally accountable to the courts of the United Kingdom, although only in an appropriate case, which this is not. I would prefer to leave open the question whether they might also be legally accountable to the courts of the Bailiwick, as this has not been argued before us. Conclusion As a general proposition, to which there may well be exceptions, I would hold that the courts of the United Kingdom do have jurisdiction judicially to review an Order in Council which is made on the advice of the Government of the United Kingdom acting in whole or in part in the interests of the United Kingdom. Hence the Administrative Court did have jurisdiction to entertain this claim. Nevertheless, there are circumstances in which that jurisdiction should not be exercised. This is clearly one such case. The appeal should be allowed and the declaration made by the Administrative Court set aside. |
When Parliament requires a local authority to consult interested persons before making a decision which would potentially affect all of its inhabitants, what are the ingredients of the requisite consultation? 3. Until 1 April 2013 there was a scheme in England for the payment of Council Tax Benefit (CTB) for the relief, in whole or in part, of certain persons from their annual obligation to pay council tax. The scheme was made by the Department for Work and Pensions and the duty of local authorities was only to operate it. From 1 April 2013, however, local authorities were required to operate a new scheme, entitled a Council Tax Reduction Scheme (CTRS), which they were required to have made for themselves. Before making a CTRS, local authorities were required to consult interested persons on a draft of it. Between August and November 2012 the London Borough of Haringey (Haringey) purported to consult interested persons on its draft CTRS, following which it made the scheme in substantial accordance with its draft. In these proceedings two single mothers, who were resident in Haringey and who until 1 April 2013 had been in receipt of what I will describe as full CTB (by which I mean at a level which had relieved them entirely of their obligation to pay council tax), applied for judicial review of the lawfulness of the consultation which Haringey had purported to conduct in relation to its draft CTRS. The women asked the court to quash the decision which on 17 January 2013 Haringey had made in the light of the consultation; and my reference in paragraph 8 below to the default scheme will explain why the quashing of the decision would have been very much in their interests. On 7 February 2013 Underhill J dismissed their application: [2013] EWHC 252 (Admin); [2013] ACD 62. The judge had allowed them to be anonymised as M and section The latter appealed to the Court of Appeal, which ruled that she was not entitled to anonymity and should be referred to by name, Ms Stirling. On 12 February 2013, with astonishing alacrity referable no doubt to the deadline of 1 April 2013, the court heard the appeal. On 22 February 2013, by a judgment of Sullivan LJ with which Sir Terence Etherton, the Chancellor of the High Court, agreed, and by a judgment of Pitchford LJ in which he disagreed with one aspect of the reasoning of Sullivan LJ but concurred in the proposed result, the court dismissed her appeal: [2013] EWCA Civ 116; [2013] PTSR 1285. Ms Stirling appealed to this court 5. 6. 7. 8. The Surrounding Facts 4. against the dismissal of her appeal but unfortunately she became ill and unable to give instructions, with the result that, by consent, the court substituted Ms Moseley as the appellant; and since then, sadly, Ms Stirling has died. Like the other two women, Ms Moseley is a single mother, resident in Haringey, who until 1 April 2013 had been in receipt of full CTB. For the period prior to 1 April 2013 a means tested scheme set by central government identified those entitled to CTB. Local authorities were obliged to apply it to residents in their area. Although reference is conveniently made to payment of CTB, it was not, in the usual sense of that word, paid to those entitled to it. Instead it provided them with a credit, in whole or in part, against what they would otherwise owe to their local authority in respect of council tax. Central government reimbursed local authorities, pound for pound, for what they forewent as a result of being obliged to grant the benefit. In the final year in which it was payable, namely the year to 1 April 2013, about 36,000 households in Haringey, namely about one third of all of its households, were entitled to CTB. Of those, 25,560 were entitled to full CTB. In its Spending Review back in 2010 central government announced that, as part of its programme for reduction of the national deficit, it would from April 2013 transfer to each local authority the responsibility for making, as well as for operating, a scheme for providing relief from council tax; and that in 2013 2014 the reimbursement by central government to each local authority in respect of whatever it provided by way of relief from council tax would be fixed at about 90% of the amount which the government would have paid to it in that regard in 2012 2013. Section 33(1)(e) of the Welfare Reform Act 2012 duly abolished CTB with effect from 1 April 2013. Section 13(A)(2) of the Local Government Finance Act 1992 (the 1992 Act), as substituted by section 10(1) of the Local Government Finance Act 2012 (the 2012 Act), duly obliged each local authority to make a CTRS for those whom it considered to be in financial need. Schedule 1A to the 1992 Act [the schedule], which was added by Paragraph 1 of Schedule 4(1) to the 2012 Act and given effect by section 13A(3) of that Act, made provisions about a CTRS. Paragraph 2 of the schedule, together with regulations made under subparagraph 8 of it, specified requirements for a scheme, including that pensioners who would have been entitled to CTB should be granted relief at the same level. Paragraph 3 of the schedule, entitled Preparation of a scheme, provided: (1) Before making a scheme, the authority must (in the following order) (a) consult any major precepting authority which has power to issue a precept to it, (b) publish a draft scheme in such manner as it thinks fit, and (c) consult such other persons as it considers are likely to have an interest in the operation of the scheme. (2) (3) Having made a scheme, the authority must publish it in such manner as the authority thinks fit. (4) The Secretary of State may make regulations about the procedure for preparing a scheme. The title of the paragraph puts beyond doubt that the procedure for preparing a scheme, which can be the subject of regulations under subparagraph (4), includes the procedure for the consultation required by subparagraph (1)(c). In the event, however, no such regulations were made. Paragraph 4 of the schedule required the Secretary of State to prescribe a default scheme so as to provide for relief from council tax in and after 2013 2014 for households in the area of any local authority which had failed to make a scheme by 31 January 2013. The default scheme, set out in the Council Tax Reduction Schemes (Default Scheme) (England) Regulations, SI 2012/2886, provided that, notwithstanding the reduction in reimbursement by central government, a local authority should grant relief against council tax after 1 April 2013 at the same level as had previously been granted by way of CTB. Paragraph 5 of the schedule provides that, for each year subsequent to 2013 2014, a local authority must consider whether to revise its CTRS and that, if it resolves to do so, it should again comply with the provisions for preparation of a scheme in paragraph 3. 9. Mr Ellicott, Head of Revenues, Benefits and Customer Services in Haringey, was the main author of a report for consideration by Haringeys Cabinet on 10 July 2012. In it he identified the need for Haringey to make a CTRS by 31 January 2013. He explained that reimbursement by central government to Haringey in respect of relief from council tax was to be reduced by about 10% in 2013 2014 but that, were Haringeys CTRS to provide relief at a level equivalent to CTB, the shortfall would rise to about 17 18%, mainly because of the trend in Haringey for an annual increase in the number of households eligible for relief. In his introduction to the report Councillor Goldberg, Haringeys Cabinet Member for Finance, wrote: Needless to say it is my belief that this represents one of the most appalling policies of the government and it is not insignificant that the unemployed will now be facing the prospect of having to pay 20% local taxation levels, which they last were subjected to paying under the Poll Tax. There was nothing wrong with Councillor Goldbergs expression of indignation. But it did betray an assumption that the shortfall would have to be reflected by provisions in the CTRS which reduced the level of relief below the level previously provided by way of CTB rather than that Haringey should absorb it in other ways. It is true that in the body of the report Mr Ellicott proceeded to refer to the option of absorbing the cost and then rejected it on the ground that it would require a reduction in services. He also identified, and rejected, options for exempting each of four classes of claimant for relief from any reduction below its existing level. In the end he recommended that Haringeys CTRS should provide that the shortfall be met by a percentage reduction in the amount of CTB payable to all claimants other than, of course, to pensioners; and that, because pensioners would not be meeting their share, the percentage reduction for other claimants would have to rise to between 18% and 22%. Those who were then in receipt of full CTB, other than pensioners, would therefore, for example, be required to pay between 18% and 22% of their council tax liability. 10. On 10 July 2012 Haringeys Cabinet approved the recommendation in Mr Ellicotts report. Haringey thereupon proceeded to prepare its draft scheme. Pursuant to paragraph 3(1)(a) of the schedule, it consulted the Greater London Authority, which has power to issue a precept to local authorities in London for a contribution to the cost of funding the Metropolitan Police and fire and transport services. Then, on 29 August 2012, Haringey published its draft scheme pursuant to paragraph 3(1)(b) and purported to embark on the consultation required of it by paragraph 3(1)(c). In that the terms by which it conducted its consultation are at the centre of this appeal, Haringeys consultation exercise deserves separate consideration in the next section of this judgment. 11. 12. Haringeys consultation exercise was expressed to continue until 19 November 2012. Meanwhile, however, on 16 October 2012 a government minister announced the introduction of a Transitional Grant Scheme (TGS). The scheme, set out in a circular published two days later, was that central government would make a grant, not likely to be extended beyond 2013 2014, to each local authority which introduced a CTRS for that year in accordance with three criteria. Of these the most important was that those currently in receipt of full CTB should pay no more than 8.5% of their council tax liability. An annex to the circular revealed that the grant referable to Haringey would be 706,021. Haringey concluded, however, that the grant would not cover the difference between a recovery from those currently in receipt of full CTB of 8.5% of their liability, on the one hand, and of 18 22% of their liability, on the other; and that the scheme would therefore leave Haringey with an unacceptable net shortfall in its receipts of council tax. So it resolved not to amend its draft CTRS so as to comply with the TGS criteria and not to bring the TGS to the attention of those likely to be interested in the operation of its CTRS by means of any enlarged consultation exercise. 13. Haringeys full Council met on 17 January 2013. Before it was a report substantially drafted by Mr Ellicott. Annexed to the report was an elaborate analysis of the responses to Haringeys consultation exercise, including numerous quotations from them, often in vivid language. It was suggested in the report: (a) (b) (c) that the effect of the default CTRS would be to leave Haringey with a shortfall of 3.846m; that adoption of a CTRS which complied with the TGS criteria would leave Haringey with a net shortfall of 1.489m; that in the light, among other things, of responses to the consultation exercise, it would be appropriate for the disabled to join pensioners as the two groups exempt from reduction in support below current CTB levels; and that, in the light of (c) above and of clarification by central government of the precise amount to be paid by it in respect of council tax reduction in 2013 2014, Haringeys CTRS should provide for a reduction of relief below current CTB levels of 19.8% across the board other than for those two groups; and that, subject to difficulties of collection, such a reduction would render Haringey not out of pocket as a result of the move from CTB to a CTRS. (d) 14. The full Council adopted the suggestion in the report. Thus it was that, prior to 31 January 2013, Haringey made a CTRS which provided for a reduction of relief in 2013 14, below the 2012 2013 CTB level, of 19.8% other than for pensioners and the disabled. Its CTRS came into operation on 1 April 2013 (and has not been revised for 2014 2015). 15. Of the 326 local authorities in England, about 25% allowed the default CTRS to take effect in 2013 2014; they thus entirely absorbed the shortfall in central governments funding by means other than the reduction of relief from council tax below the current level of CTB. About 33% of them adopted a CTRS which complied with the TGS criteria; they thus partially absorbed the shortfall by means other than such a reduction. The remaining 42%, like Haringey, adopted a CTRS which entirely translated the shortfall into an increase in liability for council tax above the amount, if any, which in 2012 2013 recipients of CTB were liable to pay; and they thus had no need to absorb the shortfall by other means. The Consultation 16. Haringeys statutory obligation, set out in paragraph 3(1)(c) of the schedule, was to consult such persons as it considers are likely to have an interest in the operation of the scheme. One could argue that even those residents who were not entitled to CTB had a financial interest in the operation of the scheme, namely that it should indeed come into operation rather than that a scheme which addressed the shortfall in other ways, likely to be prejudicial to them, should do so. But those who most obviously had an interest in the operation of the scheme were those who would be adversely affected by it, namely those who were entitled to CTB, other than any group proposed to be excluded from the scheme, being (at the time of the consultation exercise) only the pensioners. It is agreed that, in this regard, Haringey directed its consultation in accordance with paragraph 3(1)(c). For, while it posted a consultation document online and invited all residents to respond to it, Haringey delivered hard copies by hand to each of its 36,000 households entitled to CTB, together with a covering letter signed by Mr Ellicott. In the covering letter Mr Ellicott explained that he was writing it because the recipient was receiving CTB and that the government was abolishing CTB and requiring local authorities to replace it with a CTRS. He continued: At present the Government gives us the money we need to fund Council Tax Benefit in Haringey. We will receive much less money for the new scheme and once we factor in the increasing number of people claiming benefit and the cost of protecting our pensioners, we estimate the shortfall could be as much as 5.7m. This means that the introduction of a local Council Tax Reduction Scheme in Haringey will directly affect the 17. assistance provided to anyone below pensionable age that currently involves council tax benefit. The attached booklet provides all the information you need to understand the changes the Government are making. It sets out the proposed Council Tax Reduction Scheme and explains how this is likely to affect you. Please read this information carefully. We want to know what you think of these proposals before reaching a final decision about the scheme we adopt. Once you have looked at the information please complete the attached questionnaire and return it in the FREEPOST envelope by 19th November 2012. Be heard have your say. For present purposes the importance of Mr Ellicotts letter surrounds the paragraph of it which he chose to print in bold. Note its opening words, namely This means that. Mr Ellicott was there stating that the shortfall in government funding meant that Haringeys CTRS would provide less relief against council tax than recipients of the letter, other than pensioners, were receiving by way of CTB. But the shortfall did not necessarily have that consequence. Why was Mr Ellicott not there recognising that at least there were other options, albeit not favoured by Haringey, for meeting the shortfall? Note also Mr Ellicotts use of the indefinite article, in his reference to the introduction of a local [CTRS] in Haringey. It suggests that any CTRS introduced in Haringey, not just the scheme proposed, would need to meet the shortfall by a reduction from existing levels of CTB. 18. The booklet attached to Mr Ellicotts letter was the consultation document, comprising in part the provision of information and in part the questionnaire. So I turn to see whether the information reasonably dispelled the impression given in the letter that the shortfall had inevitably to be met by a reduction of relief against council tax below CTB levels. 19. The document was entitled The Government is abolishing Council Tax Benefit. It referred to the reduction in government funding and proceeded as follows: Early estimates suggest that the cut will leave Haringey with an actual shortfall in funding of around 20%. This means Haringey claimants will lose on average approximately 1 in every 5 of support they currently receive in [CTB]. [Italics supplied] There is no doubt that Haringeys proposed scheme meant that its claimants would suffer a loss of that order. But the reduction in government funding did not inevitably have that effect. Then, under the subheading Whats changing?, Haringey, adopting almost the same terms as those in Mr Ellicotts letter, said: At present the Government gives us the money we need to fund [CTB] in Haringey. From next April we must implement a new [CTRS]. Well receive much less money for the new scheme and once we factor in the increasing number of people claiming benefit and the cost of protecting our pensioners, we estimate the shortfall could be as much as 5.7m next year and this could rise in later years. Although pensioners will move on to the new [CTRS], they will receive the same amount of support they would have received under the current [CTB] regulations. That means that the introduction of a local [CTRS] in Haringey will directly affect the assistance provided to everyone below pensionable age that currently receives [CTB]. [Italics supplied] 20. In the consultation document there was no reference to options for meeting the shortfall other than by a reduction in relief from council tax, namely to the options of raising council tax or of reducing the funding of Haringeys services or of applying its deployable reserves of capital (which amounted to 76.8m in March 2012); and it follows that there was no explanation of why Haringey was not proposing to adopt any of those three options. In the document Haringey thereupon set out its proposals. It stated its belief that the fairest way in which to apply the government cut was to reduce all relief to working age claimants by about 20% from CTB levels. It added: We also have to decide if certain groups should be protected from any changes we make and continue to get the same level of support as they do now. Doing this would mean that other claimants would get even less support. 21. Then followed Haringeys questionnaire. There were five main questions. The first was: To what extent do you agree we should apply the Governments reduction in funding equally to all recipients of working age? This means that every household of working age will have to pay something towards their council tax bill. I consider, contrary to Haringeys contention, that the reader of the first question was in effect presented with an assumption that the shortfall in government funding would be met by a reduction in the relief from council tax afforded to recipients of working age, rather than that it should be met in other ways so that the level of their relief might be preserved. The gist of the first question was in my view whether, upon that assumption, all such recipients should suffer the reduction in equal proportions. The fifth question, again cast upon that assumption, presented the alternative possibility as follows: Should some groups of people continue to get the same support as now even if doing this would mean that other claimants would get less support? A reader who answered Yes to the fifth question was then offered a box in which to identify the groups whom he or she considered should be protected. The second, third and fourth questions related to other, less significant, departures from CTB rules proposed in Haringeys draft CTRS. Following the five main questions there was a second box, above which Haringey wrote: Please use the space below to make any other comments about our draft Council Tax Reduction Scheme. In response to its consultation exercise Haringey received 1251 completed questionnaires and 36 letters and emails. Of those who completed the questionnaire, 43% agreed or strongly agreed with the first question and 44% disagreed or strongly disagreed with it. Suggestions were made in at least ten of the responses that Haringey should meet the shortfall by cutting services 22. and in at least 11 of them that it should meet it by increasing council tax. One of the 36 letters and emails was an email sent to Haringey by The Reverend Paul Nicolson, a prominent anti poverty campaigner, on 29 October 2012. He wrote: I write to oppose your proposals on the grounds that the 25,560 households who now pay no council tax will not be able to pay 20%, or around 300 pa, from April 2013[B]enefits are paid to our poorest fellow citizens to provide the necessities of life; they are already inadequate On 6 November 2012 Haringey responded: We have asked for comments around protecting groups in addition to Pensioners, however protecting additional groups will have an impact on the remaining recipients who will have to pay a higher amount to cover the shortfall. Your email below is unclear as to which group you are suggesting we protect and how we then make up the shortfall. In his response dated 7 November 2012 The Rev. Nicolson observed: I am aware that central government has cut its council tax benefit grant to Haringey and all other councils by 10%. Other councils are absorbing the cut and continuing [to] implement the current CT benefit scheme. Why cannot Haringey do the same? There is no consultation taking place about that central issue. On 10 December 2012, following the end of the consultation, The Rev. Nicolson wrote a letter of protest to the Leader of Haringey Council, which ended as follows: I am shocked that no alternative to hitting the fragile incomes of the poorest residents of Haringey was included in the recent consultation. The Law 23. A public authoritys duty to consult those interested before taking a decision can arise in a variety of ways. Most commonly, as here, the duty is generated by statute. Not infrequently, however, it is generated by the duty cast by the common law upon a public authority to act fairly. The search for the demands of fairness in this context is often illumined by the doctrine of legitimate expectation; such was the source, for example, of its duty to consult the residents of a care home for the elderly before deciding whether to close it in R v Devon County Council, ex parte Baker [1995] 1 All ER 73. But irrespective of how the duty to consult has been generated, that same common law duty of procedural fairness will inform the manner in which the consultation should be conducted. 24. Fairness is a protean concept, not susceptible of much generalised enlargement. But its requirements in this context must be linked to the purposes of consultation. In R (Osborn) v Parole Board [2013] UKSC 61, [2013] 3 WLR 1020, this court addressed the common law duty of procedural fairness in the determination of a persons legal rights. Nevertheless the first two of the purposes of procedural fairness in that somewhat different context, identified by Lord Reed in paras 67 and 68 of his judgment, equally underlie the requirement that a consultation should be fair. First, the requirement is liable to result in better decisions, by ensuring that the decision maker receives all relevant information and that it is properly tested (para 67). Second, it avoids the sense of injustice which the person who is the subject of the decision will otherwise feel (para 68). Such are two valuable practical consequences of fair consultation. But underlying it is also a third purpose, reflective of the democratic principle at the heart of our society. This third purpose is particularly relevant in a case like the present, in which the question was not Yes or no, should we close this particular care home, this particular school etc? It was Required, as we are, to make a taxation related scheme for application to all the inhabitants of our Borough, should we make one in the terms which we here propose? In R v Brent London Borough Council, ex p Gunning, (1985) 84 LGR 168 Hodgson J quashed Brents decision to close two schools on the ground that the manner of its prior consultation, particularly with the parents, had been unlawful. He said at p 189: 25. Mr Sedley submits that these basic requirements are essential if the consultation process is to have a sensible content. First, that consultation must be at a time when proposals are still at a formative stage. Second, that the proposer must give sufficient reasons for any proposal to permit of intelligent consideration and response. Third, that adequate time must be given for consideration and response and, finally, fourth, that the product of consultation must be conscientiously taken into account in finalising any statutory proposals. Clearly Hodgson J accepted Mr Sedleys submission. It is hard to see how any of his four suggested requirements could be rejected or indeed improved. The Court of Appeal expressly endorsed them, first in the Baker case, cited above (see pp 91 and 87), and then in R v North and East Devon Health Authority, ex parte Coughlan [2001] QB 213 at para 108. In the Coughlan case, which concerned the closure of a home for the disabled, the Court of Appeal, in a judgment delivered by Lord Woolf MR, elaborated at para 112: It has to be remembered that consultation is not litigation: the consulting authority is not required to publicise every submission it receives or (absent some statutory obligation) to disclose all its advice. Its obligation is to let those who have a potential interest in the subject matter know in clear terms what the proposal is and exactly why it is under positive consideration, telling them enough (which may be a good deal) to enable them to make an intelligent response. The obligation, although it may be quite onerous, goes no further than this. The time has come for this court also to endorse the Sedley criteria. They are, as the Court of Appeal said in R (Royal Brompton and Harefield NHS Foundation Trust) v Joint Committee of Primary Care Trusts [2012] EWCA Civ 472, 126 BMLR 134, at para 9, a prescription for fairness. 26. Two further general points emerge from the authorities. First, the degree of specificity with which, in fairness, the public authority should conduct its consultation exercise may be influenced by the identity of those whom it is consulting. Thus, for example, local authorities who were consulted about the governments proposed designation of Stevenage as a new town (Fletcher v Minister of Town and Country Planning [1947] 2 All ER 496 at p 501) would be likely to be able to respond satisfactorily to a presentation of less specificity than would members of the public, particularly perhaps the economically disadvantaged. Second, in the words of Simon Brown LJ in the Baker case, at p 91, the demands of fairness are likely to be somewhat higher when an authority contemplates depriving someone of an existing benefit or advantage than when the claimant is a bare applicant for a future benefit. 27. Sometimes, particularly when statute does not limit the subject of the requisite consultation to the preferred option, fairness will require that interested persons be consulted not only upon the preferred option but also upon arguable yet discarded alternative options. For example, in R (Medway Council and others) v Secretary of State for Transport [2002] EWHC 2516 (Admin), [2003] JPL 583, the court held that, in consulting about an increase in airport capacity in South East England, the government had acted unlawfully in consulting upon possible development only at Heathrow, Stansted and the Thames estuary and not also at Gatwick; and see also R (Montpeliers and Trevors Association) v Westminster City Council [2005] EWHC 16 (Admin), [2006] LGR 304, at para 29. 28. But, even when the subject of the requisite consultation is limited to the preferred option, fairness may nevertheless require passing reference to be made to arguable yet discarded alternative options. In Nichol v Gateshead Metropolitan Borough Council (1988) 87 LGR 435 Gateshead, confronted by a falling birth rate and therefore an inability to sustain a viable sixth form in all its secondary schools, decided to set up sixth form colleges instead. Local parents failed to establish that Gatesheads prior consultation had been unlawful. The Court of Appeal held that Gateshead had made clear what the other options were: see pp 455, 456 and 462. In the Royal Brompton case, cited above, the defendant, an advisory body, was minded to advise that only two London hospitals should provide paediatric cardiac surgical services, namely Guys and Great Ormond Street. In the Court of Appeal the Royal Brompton Hospital failed to establish that the defendants exercise in consultation upon its prospective advice was unlawful. In its judgment delivered by Arden LJ, the court, at para 10, cited the Gateshead case as authority for the proposition that a decision maker may properly decide to present his preferred options in the consultation document, provided it is clear what the other options are. It held, at para 95, that the defendant had made clear to those consulted that they were at liberty to press the case for the Royal Brompton. Application of the law to the facts 29. Paragraph 3(1)(c) of the schedule imposed on Haringey the requirement to consult. The requirement was to consult such other persons as it considers are likely to have an interest in the operation of the scheme. So the subject of the consultation was Haringeys preferred scheme and not any other discarded scheme. It is, however, at this point in the analysis that the division 30. of opinion arose in the Court of Appeal. Sullivan LJ, with whom Sir Terence Etherton agreed, concluded, at para 18, that: In this statutory context fairness does not require the Council in the consultation process to mention other options which it has decided not to incorporate into its published draft scheme; much less does fairness require that the consultation document contain an explanation as to why those options were not incorporated in the draft scheme. Pitchford LJ, by contrast, agreed with Underhill J who, at para 27, had concluded that: consulting about a proposal does inevitably involve inviting and considering views about possible alternatives. It is clear to me that the latter conclusion is correct. It is substantially in accordance with the decisions in the Gateshead and the Royal Brompton cases referred to in para 28 above. Those whom Haringey was primarily consulting were the most economically disadvantaged of its residents. Their income was already at a basic level and the effect of Haringeys proposed scheme would be to reduce it even below that level and thus in all likelihood to cause real hardship, while sparing its more prosperous residents from making any contribution to the shortfall in government funding. Fairness demanded that in the consultation document brief reference should be made to other ways of absorbing the shortfall and to the reasons why (unlike 58% of local authorities in England: see para 15 above) Haringey had concluded that they were unacceptable. The protest of The Rev. Nicolson in his letter dated 10 December 2012 was well directed. It would not have been onerous for Haringey to make brief reference to other ways of absorbing the shortfall. The CTRS proposed by Birmingham City Council was, like that proposed by Haringey, for the shortfall to be met by a reduction in council tax support, although Birmingham favoured sparing households with children aged under six and therefore reducing support more severely for the remainder. In its consultation document dated September 2012 Birmingham nevertheless wrote: We could decide to provide support at the same level as Council Tax Benefit, but this would mean raising Council Tax in the region of 4.4%; reducing Council services and using the compensatory savings to fund Council Tax Support; or a combination of [the two]. [But] we already have to plan the Councils finances on the basis that there may be a rise in Council Tax of around 1.9% and that all service areas will have to make savings this year. Part of Birminghams first question was: if you think the Council should make an additional contribution from its own finances to the [CTRS], how do you think this should be funded? In particular, should the Council increase Council Tax, or cut other Council services, or both? Birminghams presentation was fair. 31. Underhill J and Pitchford LJ nevertheless proceeded to conclude, as did Sullivan LJ and Sir Terence Etherton on the assumption that they were wrong to discern an absence of need to refer to other options, that Haringeys consultation exercise had been lawful because the other options would have been reasonably obvious to those consulted. It is clear that no conclusion to that effect can be drawn from the fact that, from the 36,000 households to which a hard copy of the consultation document was delivered, there were at least ten responses that services should be cut and at least 11 responses that council tax should be increased. On the contrary the apparently infinitesimal number of such responses arguably runs the other way. Assuming, however, that Underhill J and the Court of Appeal were entitled to conclude that the other options would have been reasonably obvious to those consulted, two matters arise. The first is to question whether it would also have been reasonably obvious to them why Haringey was minded to reject the other options. I speak as one who, even after a survey of the evidence filed by Haringey in these proceedings, remains unclear why it was minded to reject the other options. Perhaps the driver of its approach was political. At all events I cannot imagine that an affirmative answer can be given to that question. The second matter is the need to link the assumed knowledge of those consulted with the terms of Haringeys presentation to them in the consultation document and the covering letter. With respect to them, Underhill J and the Court of Appeal gave insufficient attention to the terms both of the document and of the letter, which, as I have demonstrated in paras 17 to 21 above, represented, as being an accomplished fact, that the shortfall in government funding would be met by a reduction in council tax support and that the only question was how, within that parameter, the burden should be distributed. This limited approach to the relevant question was entirely consistent with Mr Ellicotts report in July 2012 (see para 9 above) and, Haringeys response dated 6 November 2012 to The Rev. Nicolson (see para 22 above). Haringeys message to those consulted was therefore that other options were irrelevant and in such circumstances I cannot agree that their assumed knowledge of them saves Haringeys consultation exercise from a verdict that it was unfair and therefore unlawful. 32. A separate ground of Ms Moseleys appeal relates to the TGS. The contention, rejected by Underhill J and the Court of Appeal, is that, following the announcement of the TGS on 16 October 2012, Haringey, even though not minded to propose a scheme in accordance with it, acted unlawfully in failing to enlarge its consultation exercise so as to refer to it. But adoption of a scheme in accordance with the TGS would have left Haringey with a net shortfall in its receipts of council tax and have therefore required its absorption in other ways. Granted that reference should in any event have been made to other ways in Haringeys consultation exercise, the TGS did not add any substantially different dimension to the relevant possibilities. In the light also of the practical consideration that the announcement of the TGS was made on a date when Haringeys consultation exercise was less than five weeks short of completion, I also consider that it was not unlawful for Haringey to fail to refer to the TGS. In its argument on this ground, however, Haringey makes an illuminating concession, namely that, had it known of the TGS when it commenced its consultation exercise, it would have referred to it. The need for brief reference to other discarded options which would have required absorption of the shortfall in ways other than by reduction of council tax support is indeed the basis of my earlier conclusion. In addition to the declaration to which in my view she is entitled, Ms Moseley aspires, albeit with little apparent enthusiasm, to persuade the court to order Haringey to undertake a fresh consultation exercise, in accordance with the terms of its judgments, in relation to its CTRS for the forthcoming year 2015 2016. Paragraph 5(5) of the schedule requires it to comply with paragraph 3, including therefore to undertake the consultation exercise mandated by paragraph 3(1)(c), only if it is minded to revise its CTRS. It is unclear whether it is so minded but, if so, no doubt it will undertake its exercise in accordance with the terms of this courts judgments. The proposed mandatory order would therefore have practical effect only in the event that Haringey was not minded to revise its CTRS. My conclusion is that it would not be 33. proportionate to order Haringey to undertake a fresh consultation exercise in relation to a CTRS which will have been in operation for two years and which it is not minded to revise. LORD REED 34. I am generally in agreement with Lord Wilson, but would prefer to express my analysis of the relevant law in a way which lays less emphasis upon the common law duty to act fairly, and more upon the statutory context and purpose of the particular duty of consultation with which we are concerned. 35. The common law imposes a general duty of procedural fairness upon public authorities exercising a wide range of functions which affect the interests of individuals, but the content of that duty varies almost infinitely depending upon the circumstances. There is however no general common law duty to consult persons who may be affected by a measure before it is adopted. The reasons for the absence of such a duty were explained by Sedley LJ in R (BAPIO Action Ltd) v Secretary of State for the Home Department [2007] EWCA Civ 1139; [2008] ACD 20, paras 43 47. A duty of consultation will however exist in circumstances where there is a legitimate expectation of such consultation, usually arising from an interest which is held to be sufficient to found such an expectation, or from some promise or practice of consultation. The general approach of the common law is illustrated by the cases of R v Devon County Council, Ex p Baker [1995] 1 All ER 73 and R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213, cited by Lord Wilson, with which the BAPIO case might be contrasted. 36. This case is not concerned with a situation of that kind. It is concerned with a statutory duty of consultation. Such duties vary greatly depending on the particular provision in question, the particular context, and the purpose for which the consultation is to be carried out. The duty may, for example, arise before or after a proposal has been decided upon; it may be obligatory or may be at the discretion of the public authority; it may be restricted to particular consultees or may involve the general public; the identity of the consultees may be prescribed or may be left to the discretion of the public authority; the consultation may take the form of seeking views in writing, or holding public meetings; and so on and so forth. The content of a duty to consult can therefore vary greatly from one statutory context to another: the nature and the object of consultation must be related to the circumstances which call for it (Port Louis Corporation v Attorney General of Mauritius [1965] AC 1111, 1124). A mechanistic approach to the requirements of consultation should therefore be avoided. 37. Depending on the circumstances, issues of fairness may be relevant to the explication of a duty to consult. But the present case is not in my opinion concerned with circumstances in which a duty of fairness is owed, and the problem with the consultation is not that it was unfair as that term is normally used in administrative law. In the present context, the local authority is discharging an important function in relation to local government finance, which affects its residents generally. The statutory obligation is, before making a scheme, to consult any major precepting authority, to publish a draft scheme, and, critically, to consult such other persons as it considers are likely to have an interest in the operation of the scheme. All residents of the local authoritys area could reasonably be regarded as likely to have an interest in the operation of the scheme, and it is on that basis that Haringey proceeded. 39. 40. That is not to say that a duty to consult invariably requires the provision of information about options which have been rejected. The matter may be made clear, one way or the other, by the terms of the relevant statutory provisions, as it was in R (Royal Brompton and Harefield NHS Foundation Trust) v Joint Committee of Primary Care Trusts [2012] EWCA Civ 472; [2012] 126 BMLR 134. To the extent that the issue is left open by the relevant statutory provisions, the question will generally be whether, in the particular context, the provision of such information is necessary in order for the consultees to express meaningful views on the proposal. The case of Vale of Glamorgan Council v Lord Chancellor and Secretary of State for Justice [2011] EWHC 1532 (Admin) is an example of a case where such information was not considered necessary, having regard to the nature and purpose of that particular consultation exercise, which concerned the proposed closure of a specific court. In the present case, on the other hand, it is difficult to see how ordinary members of the public could express an intelligent view on the proposed scheme, so as to participate in a meaningful way in the decision making process, unless they had an idea of how the loss of income by the local authority might otherwise be replaced or absorbed. 41. Nor does a requirement to provide information about other options mean that there must be a detailed discussion of the alternatives or of the reasons for their rejection. The consultation required in the present context is in respect of the draft scheme, not the rejected alternatives; and it is important, not least in the context of a public consultation exercise, that the consultation documents should be clear and understandable, and therefore should not be unduly complex or lengthy. Nevertheless, enough must be said about realistic alternatives, and the reasons for the local authoritys preferred choice, to enable the consultees to make an intelligent response in respect of the scheme on which their views are sought. 42. As Lord Wilson has explained, those requirements were not met in this case. The consultation document presented the proposed reduction in council tax support as if it were the inevitable consequence of the Governments funding cuts, and thereby disguised the choice made by Haringey itself. It misleadingly implied that there were no possible alternatives to that choice. In reality, therefore, there was no consultation on the fundamental basis of the scheme. I therefore concur in the order proposed by Lord Wilson. 43. LADY HALE AND LORD CLARKE 44. We agree that the appeal should be disposed of as indicated by Lord Wilson and Lord Reed. There appears to us to be very little between them as to the correct approach. We agree with Lord Reed that the court must have regard to the statutory context and that, as he puts it, in the particular statutory context, the duty of the local authority was to ensure public participation in the decision making process. It seems to us that in order to do so it must act fairly by taking the specific steps set out by Lord Reed in his para 39. In these circumstances we can we think safely agree with both judgments. 38. Such wide ranging consultation, in respect of the exercise of a local authoritys exercise of a general power in relation to finance, is far removed in context and scope from the situations in which the common law has recognised a duty of procedural fairness. The purpose of public consultation in that context is in my opinion not to ensure procedural fairness in the treatment of persons whose legally protected interests may be adversely affected, as the common law seeks to do. The purpose of this particular statutory duty to consult must, in my opinion, be to ensure public participation in the local authoritys decision making process. In order for the consultation to achieve that objective, it must fulfil certain minimum requirements. Meaningful public participation in this particular decision making process, in a context with which the general public cannot be expected to be familiar, requires that the consultees should be provided not only with information about the draft scheme, but also with an outline of the realistic alternatives, and an indication of the main reasons for the authoritys adoption of the draft scheme. That follows, in this context, from the general obligation to let consultees know what the proposal is and exactly why it is under positive consideration, telling them enough (which may be a good deal) to enable them to make an intelligent response: R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213, para 112, per Lord Woolf MR. |
The appellant, O, is a woman of Nigerian nationality, aged 38. In November 2003, with her son, then aged three, she illegally entered the UK. In July 2008 she pleaded guilty to offences of cruelty towards her son, who had returned to live in Nigeria, and the court sentenced her to 12 months imprisonment and recommended that she be deported. On 8 August 2008 her sentence came to an end, whereupon the respondent, the Home Secretary, detained her at first pending the making of a deportation order and then, following the making of such an order, pending her deportation pursuant to it. Os detention, which was at the Immigration Removal Centre (IRC) at Yarls Wood in Bedfordshire, continued until 6 July 2011 when, pursuant to a grant of bail on 1 July 2011, she was released. It follows that O was detained at Yarls Wood for almost three years. The court knows nothing about her circumstances after 6 July 2011 but infers that she has not, or not yet, been deported. In her first claim for judicial review, O, acting (as now) by the Official Solicitor, her litigation friend, challenged the lawfulness of the earlier period of her detention, namely from 8 August 2008 to 22 July 2010. In the Administrative Court her claim failed entirely but on appeal it succeeded to a limited extent. By its decision, entitled R (OM) v Secretary of State for the Home Department [2011] EWCA Civ 909 and dated 28 July 2011, the Court of Appeal held that for most of that earlier period, namely until 28 April 2010, O had been the subject of unlawful detention but was entitled only to nominal damages in respect of it and that for the remainder of that earlier period she had not been the subject of unlawful detention at all. In the present proceedings, which chronologically encompass her fourth claim for judicial review, O challenges the lawfulness of the later period of her detention, namely from 22 July 2010, and in particular from say 4 March 2011, until 6 July 2011. The object of the present proceedings has never been to secure her release, which had already occurred at the time of their issue. The object has been to secure a declaration that the detention was unlawful and, perhaps in particular, an award of substantial damages for false imprisonment. But on 3 April 2012 Lang J refused to grant permission for this claim to proceed and on 17 July 2014 the Court of Appeal (by a panel which comprised Arden LJ, who gave the substantive judgment, and Underhill and Floyd LJJ, who agreed with it) dismissed her appeal: [2014] EWCA Civ 990, [2015] 1 WLR 641. O now asks this court to grant permission for the claim to proceed and therefore to remit it to the Administrative Court, so that, following the filing by the Home Secretary of detailed grounds for contesting it and of any written evidence on which she wished to rely, it might proceed to substantive determination. O has the misfortune to have suffered for many years from serious mental ill health. So the appeal requires this court to consider the Home Secretarys policy relating to the detention of the mentally ill pending deportation; and perhaps also to identify the criterion by which the court should determine a complaint that she has failed to implement some aspect of her policy relating to it. Furthermore the Home Secretary is obliged to conduct monthly reviews of whether a persons detention pending deportation should continue. There were, as the Court of Appeal held, defects in the Home Secretarys conduct of the monthly reviews of Os detention between March and July 2011. The appeal requires this court to identify the effect of the deficiencies on the lawfulness of her detention during those four months, particularly in the light of the Court of Appeals decision in R (Francis) v Secretary of State for the Home Department (Bail for Immigration Detainees intervening) [2014] EWCA Civ 718, [2015] 1 WLR 567. Supported by Bail for Immigration Detainees which, jointly with Medical Justice, also intervenes in the present appeal, O contends that the Francis case was wrongly decided. BACKGROUND It was within days of their arrival in the UK in November 2003 that O (a) committed the offence of cruelty to her son, contrary to section 1 of the Children and Young Persons Act 1933. (b) In 2004, upon being charged with that offence, O was granted bail but she absconded and did not attend court on the date in February 2005 for which the trial had been fixed. (c) Meanwhile, earlier in 2004, Os claim for asylum or for discretionary leave to remain in the UK under the European Convention on Human Rights (the ECHR) was refused and her appeal against the refusal dismissed. In July 2005, while she remained unlawfully at large, O gave birth to (d) a daughter, whom, to Os great distress, a court later authorised to be placed for adoption. (e) In September 2007 O was arrested and charged with making a false instrument, namely a false identity document which she had used in an attempt to open a bank account, for which she was later convicted and sentenced to imprisonment for nine months. (f) In due course it was realised that O was the subject of the outstanding charge of child cruelty, to which in due course she pleaded guilty and for which, in July 2008, she became subject to the sentence of 12 months imprisonment and to the recommendation for deportation. In that the length of the sentence was such as, subject to exceptions, to oblige the Home Secretary to order O to be deported under section 32(5) of the UK Borders Act 2007 (the 2007 Act), no such recommendation would nowadays be given: R v Kluxen [2010] EWCA Crim 1081, [2011] 1 WLR 218. (g) On 5 August 2008, three days prior to Os release from prison and the beginning of her detention at Yarls Wood, the Home Secretary served notice of her intention to make a deportation order in respect of O. (h) On 25 November 2010, following conclusion of the family proceedings relating to Os daughter, the Home Secretary made the deportation order in respect of O. (i) On 7 December 2010 O applied to the Home Secretary to revoke the deportation order on human rights grounds but on 13 January 2011, confirmed on 8 April 2011, the Home Secretary rejected the claim and certified it as clearly unfounded. (j) On 18 January 2011 the Home Secretary made directions for Os removal to Nigeria on a flight booked for 7 February 2011. (k) On 24 January 2011 O issued her second claim for judicial review, which was by way of challenge to the Home Secretarys certificate. (l) On 4 February 2011 the court enjoined the Home Secretary from effecting Os removal to Nigeria on 7 February. (m) On 7 March 2011 a tribunal judge refused to grant bail to O, whereupon she issued her third claim for judicial review by way of challenge to the refusal. (n) On 20 May 2011 a court refused to permit O to proceed with her third claim but permitted her to proceed with her second claim, which ultimately, in November 2012, was upheld, with the result that the Home Secretarys certificate was quashed. (o) Meanwhile, on 17 June 2011, a tribunal judge again refused to grant O bail but on 1 July 2011 she granted it, whereupon, on 6 July 2011, she was released from detention. (p) On 5 October 2011 O issued her fourth claim for judicial review, in which she brings the present appeal. Os MENTAL ILL HEALTH During the period of her imprisonment and of her detention at Yarls Wood O displayed signs of serious mental ill health, including by a number of attempts at suicide and other acts of self harm; by suffering hallucinations; and by unpredictable mood swings and impulsive outbursts. There she was mainly treated with high doses of anti psychotic and anti depressant medication. In May 2008, for the purposes of the court in sentencing her for the offence of child cruelty, Dr Olajubu, a specialist registrar in forensic psychiatry, diagnosed O as suffering a recurrent depressive disorder and an emotionally unstable personality disorder. He considered that in prison she would have access to all appropriate psychological interventions. On 30 April 2009 Professor Katona, a consultant psychiatrist, made the first of a series of reports on O at her request. At that time he agreed with the diagnosis of Dr Olajubu but on 21 September 2009 he reported a considerable deterioration in Os condition and recommended that the Home Secretary should direct her transfer from Yarls Wood to hospital under section 48 of the Mental Health Act 1983. On 12 March 2010, following an attempt to suffocate herself, O was admitted to the psychiatric wing of Bedford Hospital for assessment. On 15 March 2010 Dr Ratnayake, a consultant psychiatrist there, led the assessment and, by letter of discharge to Yarls Wood of that date, he expressed agreement with Dr Olajubus diagnosis of O as having an emotionally unstable personality disorder, which Dr Ratnayake said was of a borderline type. He added that his team found no true psychosis in her and that her needs, in particular for constant observation and continued medication, would be adequately met at Yarls Wood, to where accordingly she was returned. On 16 July 2010 Professor Katona reported that, although Os acts of self harm had become somewhat less frequent and her depression less profound, he maintained his recommendation for her transfer to hospital. On 10 February 2011 Dr Agnew Davies, a clinical psychologist with special expertise on the impact of trauma on the mental health of women, reported on O. Her report forms the foundation of this appeal. It runs to 69 pages. Instructions to her to make the report came from Os solicitors, who asked her to comment in particular upon whether Os detention was detrimental to her mental health and upon the effect on it of her forcible return to Nigeria. Dr Agnew Davies reported: (a) that O gave a plausible history of having suffered frequent physical and sexual abuse at the hands of an uncle when she was aged between 11 and 14 and in his care in Nigeria; (b) that staff at Yarls Wood had told her that since the summer 2010 Os behaviour had been more stable and that she had undertaken a short course of cognitive behavioural therapy; (c) that her study of Os records, her lengthy interview with O and the results of application to her of mainstream psychological tests led her to diagnose in O not only a major depressive disorder but, in particular, a severe, complex and chronic form of post traumatic stress disorder (PTSD) arising out of her uncles protracted abuse of her; (d) necessary mental health services at Yarls Wood; (e) (f) services; (g) (h) that she was not fit to live independently without professional support; that recovery of her mental health could occur only over the long term; that release from detention would greatly benefit her mental health; that she needed a long term structured package of mental health that, unlike Dr Ratnayake, she considered that O could not access the that neither medication nor general counselling services would alone (i) be enough to secure her recovery; (j) that she needed to be referred to a specialist trauma focussed psychiatric clinic, such as those in London provided by St Bartholomews Hospital, by the Maudsley Hospital and by three others, for treatment which would take place in phases over years; (k) that such a referral was in accordance with guidance issued by the National Institute for Health and Care Excellence (NICE) to the effect that neither general counselling services nor treatment with medication could alone provide sufficient interventions in a severe, complex case of this sort; and (l) that her deportation to Nigeria would have grave effects upon her mental health and be likely to precipitate unsuccessful attempts at suicide followed perhaps by a successful one. On 30 June 2011, for the purposes of the application for bail which proved successful on the following day, Dr Agnew Davies wrote an addendum report. She noted the apparent absence of any acts of self harm on Os part during the previous six months and, from her psychological perspective, she urged Os immediate release. She recommended that O should receive medical support in the community from a home treatment team and later from a community mental health team and, as before, that in the long term O should engage in treatment at a specialist clinic. Also on 30 June 2011 Professor Katona wrote a further report in which, without having again interviewed O, he reviewed the reports of Dr Agnew Davies and the up to date medical records from Yarls Wood. In the light of the marked improvement in Os self harming behaviour, he withdrew his recommendation for her transfer to hospital. He now agreed with Dr Agnew Davies that O was suffering PTSD in addition to her depressive disorder. He also agreed with her recommendation for O to access medical care in the community and in the long term for her to undertake treatment at a specialist clinic, which, he added, would probably continue for two or three years. AUTHORITY TO DETAIN Paragraph 2 of Schedule 3 to the Immigration Act 1971 (the 1971 Act), entitled Detention or control pending deportation, provides: (1) Where a recommendation for deportation made by a court is in force in respect of any person, and that person is not detained in pursuance of the sentence or order of any court, he shall be detained pending the making of a deportation order in pursuance of the recommendation, unless the Secretary of State directs him to be released pending further consideration of his case or he is released on bail. (1A) (2) Where notice has been given to a person in accordance with regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 of a decision to make a deportation order against him he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise). I have set four words above in italics in order that the reader may more easily understand my discussion in paras 42 to 49 below of the Francis case cited at para 4 above. In that she had been the subject of a recommendation for deportation, it follows that from 8 August 2008 to 25 November 2010 O was detained under para 2(1) of Schedule 3 to the 1971 Act and that, from 25 November 2010, when the deportation order was made in respect of her, until 6 July 2011 she was detained under the words in parenthesis in para 2(3) of the schedule. In that the Home Secretary made the deportation order in accordance with section 32(5) of the 2007 Act, it is worthwhile to note section 36(2) of that Act, which provides: Where a deportation order is made in accordance with section 32(5) the Secretary of State shall exercise the power of detention under paragraph 2(3) of Schedule 3 to the [1971 Act] unless in the circumstances the Secretary of State thinks it inappropriate. I have set the word power in italics for the same reason. POLICY [I]mmigration detention powers need to be transparently identified through formulated policy statements, observed Lord Dyson in R (Lumba) v Secretary of State for the Home Department (JUSTICE and another intervening) [2011] UKSC 12, [2012] 1 AC 245 at para 34. The Home Secretarys published policy in this regard is set out in Chapter 55, entitled Detention and Temporary Release, of a manual addressed to caseworkers and entitled Enforcement Instructions and Guidance (the manual). It states: (a) at para 55.1.1 that the power to detain had to be retained in the interests of maintaining effective immigration control but that there was a presumption in favour of release; (b) at para 55.1.2 that the presumption applied even to foreign national offenders (such as O) but that, in relation to detention pending their intended deportation, the risks of their re offending and absconding might well outweigh it; and (c) at para 55.8 that, following the start of any detention, reviews of it were necessary in order to ensure that it remained lawful and in line with policy; that in a criminal case (such as that of O) they should take place at least every 28 days; and that the law required detainees to be provided every 28 days with written reasons for their continued detention, based on the outcome of the reviews. Paragraph 55.10 of the manual is entitled Persons considered unsuitable for detention. It states: Certain persons are normally considered suitable for detention in only very exceptional circumstances In criminal cases, the risk of further offending or harm to the public must be carefully weighed against the reason why the individual may be unsuitable for detention. There may be cases where the risk of harm to the public is such that it outweighs factors that would otherwise normally indicate that a person was unsuitable for detention. The following are normally considered suitable for detention in only very exceptional circumstances : Those suffering from serious mental illness which cannot be satisfactorily managed within detention The words at the bullet point quoted above were introduced into the paragraph on 25 August 2010. Prior to that date the category was described as those suffering from serious medical conditions or the mentally ill. It is clear that, in considering whether there are very exceptional circumstances which make a person suitable for detention even though her (or his) serious mental illness cannot satisfactorily be managed there, the caseworker has to weigh the severity of any risks of offending or further offending and of absconding. On 14 January 2016 Mr Stephen Shaw CBE made a report to the Home Secretary entitled Review into the Welfare in Detention of Vulnerable Persons, Cm 9186. His eleventh recommendation was that the phrase satisfactorily managed should be removed from para 55.10 of the manual. Mr Shaw noted suggestions that the meaning of the phrase was inexact and obscure and he stated that, irrespective of whether it was satisfactorily managed, serious mental illness among detainees was clearly not being treated in accordance with good psychiatric practice. REVIEWS OF Os DETENTION A central inquiry mandated by this appeal is into the treatment of the report of Dr Agnew Davies in the Home Secretarys reviews of Os detention. The report was submitted to the Home Secretary under cover of a letter from Os solicitors dated 16 February 2011. It is of some relevance that it was expressly submitted in support of Os application, then recently issued, for judicial review of the Home Secretarys certificate that the application to revoke the deportation order had been clearly unfounded. In the letter Os solicitors quoted at some length from the report and stressed passages relevant to the claim for judicial review, including doubts about Os ability to conduct an out of country appeal and the risk of her suicide in the event of deportation. Although in the letter they did refer to the diagnosis of PTSD, the solicitors did not refer to the recommendation of treatment at a specialist clinic in London; did not allege that Os illness could not be satisfactorily managed at Yarls Wood; and, generally, did not question the legality of Os continued detention in the short term. By letter dated 8 April 2011 the Home Secretary, by her caseworker, replied to the letter dated 16 February 2011. Again the context of the letter was Os claim for judicial review rather than the legality of her continued detention in the short term; and the gist of it was that the Home Secretary found nothing in the report of Dr Agnew Davies to lead her to abandon her defence of the claim. Presumably in an attempt to show that she had carefully read it, the writer quoted at length from the report, including that the doctor had diagnosed PTSD. Oddly, however, she then twice asserted that the report contained no new diagnosis. She said that, in response to Dr Agnew Davies report, the medical officers at Yarls Wood had explained that Os condition had become more stable; that her last attempt at self harm had occurred more than a year previously; and that she was compliant with her medication. In the six reviews of Os detention which were written between 4 March 2011 and 4 July 2011, each prepared by the caseworker who wrote the letter dated 8 April 2011 and each duly countersigned by senior officers, only the briefest reference was made to the report of Dr Agnew Davies. Inserted into the lengthy recital in each review of Os protracted immigration history was reference to yet another psychiatric report, which had been treated as a further request to revoke the deportation order. Again oddly, the reviews identified Os most recent diagnosis as being that of Dr Ratnayake on 15 March 2010. In each case the senior officers in effect indorsed the caseworkers conclusion that the risk of Os reoffending and absconding outweighed the presumption in favour of release. One has some sympathy for the caseworker because the report of Dr Agnew Davies had been submitted to the Home Secretary as relevant to an issue different from that of the legality of Os continued detention in the short term. Nevertheless on any view the report bore some relevance to the Home Secretarys policy relating to the detention of the mentally ill and should have been properly addressed in the reviews. The reviews (a) failed to refer to Dr Agnew Davies diagnosis of O as suffering PTSD; (b) indeed wrongly stated that the most recent diagnosis of Os mental condition was that of Dr Ratnayake; (c) failed to refer to Dr Agnew Davies assessment of Os need for treatment at a specialist trauma focussed psychiatric clinic; and (d) failed therefore to consider whether O could be satisfactorily managed at Yarls Wood and, even if not, whether there were very exceptional circumstances which nevertheless justified her continued detention. In the above circumstances the Court of Appeal concluded that the Home Secretary had unlawfully failed to apply the policy set out in para 55.10 of the manual when deciding to continue to detain O between March and July 2011. This conclusion the Home Secretary now accepts. She does not suggest that the evidence which she would be entitled to file in the event that the claim was permitted to proceed would be likely to throw a different light on it. The defects in the reviews already filed speak for themselves. Appendix 4 to Mr Shaws recent report, referred to in para 20 above, is an assessment by Mr Jeremy Johnson QC of six High Court cases in which since 2010 the Home Secretarys treatment of immigration detainees has been held to be inhuman or degrading and therefore in violation of their rights under article 3 of the ECHR. He also assessed at least six other cases in which, without identifying a violation of article 3, the High Court or the Court of Appeal held the detention to have been unlawful. For the purposes of these assessments Mr Johnson made a detailed study of the Home Secretarys detention reviews and concluded: There are two themes that run through the cases. The first is that the person reviewing detention does not always appear to have been aware of all of the relevant evidence (particularly medical evidence) that is relevant to the assessment of whether it is appropriate to detain (so sequential reviews are written in almost identical terms without any reference being made to important developments in the medical picture). The second is that decisions to detain are made without properly engaging with the test that has to be satisfied before a decision is made. The reviews of Os detention between March and July 2011 are perfect illustrations of both of Mr Johnsons themes. The next question is: were she to have applied her policy correctly, how would the Home Secretary have reacted to the report of Dr Agnew Davies? The first part of the answer is to consider the meaning of the phrase satisfactory management. There is lively dispute between the parties as to the nature of the courts review of the legality of the Home Secretarys application of policy (which presupposes that she has purported to apply it: see para 37 below). But in this appeal there is no dispute that the courts approach to the meaning of the policy is to determine it for itself and not to ask whether the meaning which the Home Secretary has attributed to it is reasonable: R (Raissi) v Secretary of State for the Home Department [2008] EWCA Civ 72, [2008] QB 836, paras 107 to 123. SATISFACTORY MANAGEMENT NHS England is responsible for commissioning the provision of all health services in IRCs as well as in prisons in England pursuant to regulations made under section 3B(1)(c) of the National Health Service Act 2006. What level of health services should NHS England arrange to be provided there? The answer is to be found in the following two principles identified in the Partnership Agreement, first published in 2013 and republished in April 2015, between Home Office Immigration Enforcement, NHS England and Public Health England, at p 12: Detainees should receive health care equivalent to that available to the general population in the community with access to services based on clinical need and in line with the Detention Centre Rules; and Health and wellbeing services in IRCs should seek to improve health and wellbeing (including parity of esteem between services which address mental and physical health) In relation to the detention of those suffering from mental health problems, the Home Secretarys Policy Equality Statement dated 26 November 2014 recorded her agreement with NHS England that the provision of healthcare at a standard equal to that provided in the community was a core principle. She noted, however, that respondents to her consultation had suggested that in IRCs there was an insufficiency of specialist mental health interventions, with the result that adherence to the principle was not achieved. Although both the Partnership Agreement and the Equality Statement post date 2011, the Home Secretary does not suggest that they are irrelevant to the interpretation of the policy then applicable to O. In formulating policy that, save very exceptionally, management of serious mental illness in an IRC, if not satisfactory, should precipitate release, the Home Secretary has adopted a word of extreme and appropriate elasticity. It catches a host of different factors to which the circumstances of the individual case may require her to have regard. In R (Das) v Secretary of State for the Home Department (Mind and another intervening) [2014] EWCA Civ 45, [2014] 1 WLR 3538, in a judgment with which Moses and Underhill LJJ agreed, Beatson LJ, at paras 45 to 47 and 65 to 70, offered a valuable discussion of the phrase satisfactory management. I respectfully disagree with him only in relation to an aside in para 71 of his judgment. Beatson LJ there expressed an inclination to accept the Home Secretarys contention that, if the management of the illness in an IRC was likely to prevent its deterioration, it would be satisfactory even if treatment was available in the community which was likely to secure its improvement. I would not exclude the relevance of treatment, available to the detainee only if released, which would be likely to effect a positive improvement in her (or his) condition. If it was likely that such treatment would actually be made available to the detainee (rather than be no more than on offer in principle to all members of the community in NHS publications), its availability should go into the melting pot; and the burden would be upon the Home Secretary to inquire into its availability. If, contrary to the Partnership Agreement quoted in para 29 above, the standard of care (expressly aimed at improving health as well, of course, as preventing it from deteriorating) provided to a detainee in an IRC were for some reason not equal to that which would be made available to her if released, it would in my view be questionable, subject to the strength of other relevant factors, whether the management of her illness in the IRC was satisfactory. While satisfactory management does not mean optimal management, a narrow construction of the word management as meaning no more than control of the illness would lack principled foundation, particularly when in very exceptional circumstances the detainee may continue to be detained in the IRC pursuant to the policy notwithstanding the unsatisfactory management of her illness there. Above all the policy in para 55.10 of the manual mandates a practical inquiry. As Beatson LJ stressed in the Das case, the phrase satisfactory management should be interpreted with regard to its context and purpose (para 45); should not be subjected to the fine analysis appropriate to a statute (para 47); nor invested with a spurious degree of precision (para 65). An important part of its context is that the management of the illness takes place in detention pending likely deportation. Treatment of a patient who finds herself in the doubly stressful circumstances both of detention and of likely deportation has its own considerable, extra challenges; treatment in those circumstances might be satisfactory even if it would not otherwise be satisfactory. The reliance by Dr Agnew Davies on highly generalised words of guidance issued by NICE, set out in para 11(k) above, leads O to refer the court to the paragraph in The NHS Constitution for England, updated to 14 October 2015, which tells the patient: You have the right to drugs and treatments that have been recommended by NICE for use in the NHS, if your doctor says they are clinically appropriate for you. But Os argument is underdeveloped and carries her appeal no further. Precisely what treatment has been recommended for use in the NHS and for use in what circumstances? As I explore more fully below, would the doctor responsible for O have agreed that treatment at the trauma clinic was clinically appropriate for her and, if so, would it have been among the treatments which the doctors local clinical commissioning group had decided to commission? And to what extent is the right referred to in the NHS Constitution circumscribed by the limited availability of recommended treatments? Had she sought to ask herself whether, in the light of the report of Dr Agnew Davies, Os illness would satisfactorily be managed at Yarls Wood, the Home Secretary would have sought to obtain answers to questions along the following broad lines: (a) Was Dr Agnew Davies likely to be correct in diagnosing PTSD in O? No one had previously diagnosed it. In particular it had been diagnosed neither by Dr Ratnayake nor (until 30 June 2011) by Professor Katona. (b) In particular did the clinicians treating O at Yarls Wood agree with the diagnosis and, if not, what diagnosis did they favour? Their intimate and protracted exposure to O might, subject to the quality of their response, invest their views with considerable authority. (c) What was the nature of the treatment currently provided to O at Yarls Wood? (d) How satisfactory did the clinicians regard the current treatment and would they confirm the improved stability of Os behaviour reported by Dr Agnew Davies? (e) Was it necessary to instruct an independent psychologist to comment on the diagnosis of Dr Agnew Davies? (f) What was the likely length of time before the Home Secretary could achieve Os deportation? In February 2011 she had come close to achieving it but Os second claim for judicial review in relation to revocation of the deportation order was pending. (g) Insofar as Dr Agnew Davies was recommending that O needed at once to embark on lengthy treatment at a specialist trauma focussed clinic, would the doctor responsible for O approve it and was the recommendation in any way practical? Was there evidence that any such clinic could and would accept O, as a foreign citizen awaiting deportation, even for immediate assessment let alone for early treatment? (h) If O were released into the community, what accommodation should be provided for her and would its location be compatible with her need to undergo the treatments appropriate for her? (i) What medical services (in particular, what mental health services) and what local authority community care services would be available to O in her locality immediately following any release? Realistically O accepts that the proper application of the Home Secretarys policy to her case in the light of the report of Dr Agnew Davies would not have led to her immediate release in March 2011. She correctly contends that the report should have led the Home Secretary to make inquiries. We cannot predict the result of the inquiries, most of which, judged by the contents of the reviews, seem never to have been made. Indeed, even if, which is doubtful and which indeed the Court of Appeal expressly rejected, the appropriate conclusion would or might have been that Os illness could not be satisfactorily managed in detention, the Home Secretary, in considering whether there were very exceptional circumstances which nevertheless justified her continued detention, would have had to consider the risks of her absconsion and (possibly also) re offending. On 1 July 2011 the tribunal judge rated them as acceptably low. But, in his judgment given later that month on Os appeal in her first claim for judicial review, and therefore by reference to the circumstances which existed only up to 22 July 2010, Richards LJ at para 36 assessed the risk of her absconsion as very high. At least, however, the limited period between March and her release on bail on 6 July 2011 makes one thing clear: even on the dubious assumption that proper application of her policy should in due course have led the Home Secretary to direct Os release, it is unrealistic to consider that the conditions necessary for her release would have been in place prior to 6 July 2011. For the above reasons, in agreement with the Court of Appeal, I regard it as already clear that, although the Home Secretary unlawfully failed to apply her policy under para 55.10 of the manual to Os continued detention between March and July 2011, a lawful application of her policy would not have secured Os release from detention any earlier than the date of her actual release on bail. I have referred at para 28 above to the dispute as to the nature of the courts review of the legality of the Home Secretarys application of policy. It is now settled at the level of the Court of Appeal at first sight unsurprisingly that the nature of the review is the traditional public law inquiry into whether the application of it was rational: R (ZS) (Afghanistan) v Secretary of State for the Home Department [2015] EWCA Civ 1137. In para 30 above I have explained the open texture of the concept of satisfactory management, which reflects the wide range of factors relevant to it and explains the broad nature of the Home Secretarys decision making process. If indeed the inquiry is into the decisions rationality, a process of that breadth may very well yield more than one rational, and thus more than one lawful, decision. But, supported by the interveners, O vigorously commends a more muscular approach. She insists that the subject is liberty; that indeed it is liberty denied by executive diktat; and that nothing less than an intense judicial inquiry into whether the application of policy was correct can be warranted in circumstances so controversial and of such fundamental importance. I do not descend more fully into the rival contentions noted above because I consider that this appeal does not afford to the court the opportunity to choose between them. For the Home Secretary failed to address the satisfactory management or otherwise of Os illness at Yarls Wood in the light of Dr Agnew Davies report and so there is no decision for a court to be able on either basis to appraise. Instead the overall refusal to release O betrays a different type of public law error: it was procedurally flawed. What however is clear is that, even in the absence of any flaw, no decision to release O would in any event have been made prior to 6 July 2011. THE LUMBA PRINCIPLE In the Lumba case, cited at para 17 above, two foreign nationals, Mr Lumba and Mr Mighty, were sentenced to terms of imprisonment, apparently without being recommended for deportation by the sentencing judge. Once their sentences came to an end, and following notice of her decision to make deportation orders against them, the Home Secretary detained them; and, following the making of those orders, her detention of them continued. So initially, unlike O, they were detained pursuant to para 2(2) of Schedule 3 to the 1971 Act, set out in para 14 above; and subsequently, like O, they were detained pursuant to the words in parenthesis in para 2(3) of the schedule, also there set out. In proceedings for judicial review they challenged the lawfulness of their detention and claimed damages for false imprisonment. At the time of the detention of the two men the Home Secretarys published policy was that, even in relation to foreign national prisoners such as them, there was a presumption that they should be at liberty pending their intended deportation. In fact, however, the Home Secretary detained them pursuant to an unpublished policy which, inconsistently with her published policy, amounted almost to a blanket resolution on her part to detain foreign national prisoners pending intended deportation. It had been patently unlawful for the Home Secretary to apply to them an unpublished policy which was inconsistent with the published one. It was also clear, however, that, had the Home Secretary applied her published policy to them, her decision would, similarly, have been to detain them. This had led the Court of Appeal to hold that her unlawful application of policy had not made their detention unlawful. By a majority, this court disagreed. Giving the leading judgment, Lord Dyson said: 71. I can see that at first sight it might seem counter intuitive to hold that the tort of false imprisonment is committed by the unlawful exercise of the power to detain in circumstances where it is certain that the claimant could and would have been detained if the power had been exercised lawfully. But the ingredients of the tort are clear. There must be a detention and the absence of lawful authority to justify it. Where the detainer is a public authority, it must have the power to detain and the power must be lawfully exercised. Where the power has not been lawfully exercised, it is nothing to the point that it could have been lawfully exercised. If the power could and would have been lawfully exercised, that is a powerful reason for concluding that the detainee has suffered no loss and is entitled to no more than nominal damages. But that is not a reason for holding that the tort has not been committed. I provisionally conclude that, were Os claim for judicial review permitted to Although an unrelated aspect of one claim was remitted for further consideration, the claims relating to the Home Secretarys policy thus resulted in awards to each of the two men of damages in the sum of 1. proceed, it should therefore lead to the same result. The Home Secretary, however, contends that the Lumba case is distinguishable from the present case; and that, where the detainee is initially detained, as here, under para 2(1) of Schedule 3 to the 1971 Act, rather than under para 2(2) of the schedule, an unlawful application of policy does not make the detention itself unlawful; and that therefore it does not generate a right even to nominal damages for false imprisonment. In this respect the Home Secretary relies on the Francis case, cited at para 4 above. THE FRANCIS CASE Although the initial detention of the two men in the Lumba case had been effected pursuant to paragraph 2(2) of Schedule 3 to the 1971 Act, the Court of Appeal in that case, [2010] EWCA Civ 111, [2010] 1 WLR 2168, in the course of explaining its decision (later reversed), had in passing addressed the effect of para 2(1) of the schedule. It had clearly had in mind the difference between the words shall in para 2(1) and may in para 2(2), both of which I have set in italics in my quotation of the sub paragraphs in para 14 above; and at paras 88 to 89 it had proceeded to observe that, unlike detention under para 2(2), a persons detention under para 2(1) was authorised by that sub paragraph itself and that, even were the Home Secretary to have made an unlawful decision not to direct that persons release, the lawfulness of the detention would therefore remain unaffected. In para 55 of his judgment in this court in the Lumba case Lord Dyson had specifically put those observations to one side. In the Francis case the Court of Appeal, by a majority (Moore Bick and Christopher Clarke LJJ), reached its decision by reference to the observations which that court had made in passing in the Lumba case. Mr Francis, who for the purposes of the proceedings was assumed to have Jamaican rather than British nationality, had been sentenced to a term of imprisonment and recommended for deportation. On 4 December 2007 his sentence came to an end and he was detained pending the making of a deportation order. Following the making of that order on 21 May 2008, he continued to be detained until 29 September 2011. So, like that of O, his initial detention was effected pursuant to para 2(1) of Schedule 3 (being a shall provision) and his subsequent detention was effected pursuant to the words in parenthesis in para 2(3) (also being a shall provision). The Court of Appeal divided the detention of Mr Francis into three periods: (a) The first period was from 4 December 2007 to 9 September 2008. In respect of this period the court adopted the conclusion of the trial judge that the Home Secretary had, as in the Lumba case, unlawfully applied to Mr Francis an unpublished policy in favour of detention which was inconsistent with her published policy. (b) The second period was from 9 September 2008 to 1 June 2010. In respect of this period the court adopted the conclusion of the trial judge that the Home Secretary had unlawfully failed to apply her policy by failing to cause the reviews of the continued detention of Mr Francis to be conducted by persons with authority to direct his release. (c) The third period was from 1 June 2010 to 29 September 2011. The court adopted the finding of the trial judge that during this period there was no longer any prospect that the deportation of Mr Francis would take place within a reasonable time. Although the focus required by the present case is upon the courts treatment in the Francis case of the first and second periods, its treatment of the third period remains important. This requires reference to principles which are no longer in play in the present case, namely the Hardial Singh principles, named after the decision of Woolf J in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704. In due course Lord Dyson distilled the decision of Woolf J into four principles of public law and he repeated them in para 22 of his judgment in the Lumba case. The second Hardial Singh principle is that the Home Secretary should detain a person pending intended deportation only for a reasonable period and the third is that if, before the expiry of the reasonable period, it becomes apparent that the Home Secretary will not be able to effect deportation within a reasonable period, she should direct release. In the Francis case the Court of Appeal concluded, in the light of the judges finding, that in respect of the third period the Home Secretary had been in breach of the third Hardial Singh principle. What, however, is of importance is that it then proceeded to hold that the detention of Mr Francis during the third period had been rendered unlawful by the Home Secretarys breach of the third principle and that accordingly he was entitled to damages for false imprisonment during that period. By contrast, however, the Court of Appeal proceeded to hold that neither of the different deficiencies in the Home Secretarys application of policy during the first and second periods rendered the detention of Mr Francis during those periods unlawful. The court felt obliged to give a different value to the word shall in para 2(1) of Schedule 3 from that to be given to the word may in para 2(2) of it. Moore Bick LJ said: 21. In the present case there was no discretionary decision to detain the claimant which was capable of being vitiated by the application of an unlawful policy . 22. The fact remains that the decision to detain has been made by Parliament and the statute provides the authority for detention, unless and until the [Home Secretary] exercises the power to release him. It is that which distinguishes detention under sub paragraph (1) from detention under sub paragraph (2). And see the judgment of Christopher Clarke LJ at paras 53 and 54. Notwithstanding the proper predisposition of any court to discern a difference of effect in any difference of language between statutory provisions, I have, with great respect to Moore Bick and Christopher Clarke LJJ, come to the conclusion that their decision in relation to the first and second periods was wrong. It was wrong for the following reasons, taken cumulatively: (a) Any claim by the Home Secretary to be entitled to detain a person pending deportation must be clearly justified by the statutory language: Khawaja v Secretary of State for the Home Department [1984] AC 74, 122 (Lord Bridge of Harwich). (b) The Home Secretarys duty to review the continuation of detention applies as much to those detained under para 2(1) as to those detained under para 2(2). Why would Parliament intend that the same unlawful deficiencies in her conduct of those reviews should have such different legal consequences? (c) Why should the effect of a recommendation for deportation, with the result that detention falls into para 2(1) rather than para 2(2), be that it remains lawful notwithstanding the Home Secretarys unlawful application of policy? A Crown Court judges recommendation, perhaps made several years previously, has no other legal consequence, let alone one of such significance, and it is not even a recommendation for detention pending deportation. (d) Both men in the Lumba case were detained initially under para 2(2) (being a may provision) and subsequently under the words in parenthesis in para 2(3) (being a shall provision). This court decided that they had been unlawfully detained throughout both periods as a result of the Home Secretarys unlawful application of policy; and it clearly considered that their later detention under the shall provision was no impediment to its decision. It was no doubt respect for this courts decision which led Moore Bick LJ in the Francis case to suggest at para 17 that [t]he natural meaning of the words in paragraph 2(3) (and the meaning which best gives effect to the purpose of paragraph 2 as a whole) is that if the person in question has been detained, whether under sub paragraph (1) or (2), his detention is to continue on the same basis. His suggestion therefore was that, where detention began under the authority of para 2(2), with the result that it would be rendered unlawful by any misapplication of policy, the same result would continue even after a deportation order was made and after authority for the detention instead became conferred by the words in parenthesis in para 2(3). But, if in that situation no different effect is to be attributed to the word shall when found in the parenthesis in para 2(3), it is hard to attribute a different effect to it when found in para 2(1). (e) Section 36(2) of the 2007 Act, set out in para 16 above, refers to the Home Secretarys exercise of the power of detention under para 2(3). But, according to the decision in the Francis case, Parliaments reference to a power under para 2(3) was incorrect in circumstances in which detention under para 2(3) has been preceded by detention under para 2(1). (f) The courts treatment in the Francis case of the Home Secretarys breach of the third Hardial Singh principle seems to me to have been at odds with its treatment of her unlawful application of policy. The former was held to have rendered detention during the third period unlawful. The latter was held not to have rendered detention during the first and second periods unlawful. But why the difference? Moore Bick LJ suggested at para 47 that the Hardial Singh principles can be understood as implied limitations on the scope of an otherwise unqualified direction. But why should the requirement in public law for the Home Secretary properly to apply her policy have any lesser effect than the requirement in public law for her to comply with the Hardial Singh principles? (g) In my view, therefore, the preferable analysis is along the lines sketched by Sir Stephen Sedley in his concurring judgment in the Francis case at paras 56 and 57, namely that the mandate to detain conferred by para 2(1) and by the words in parenthesis in para 2(3) is subject to two conditions. At the risk of oversimplifying the Hardial Singh principles, I would summarise the first condition as being that there is a prospect of deportation within a reasonable time. I would summarise the second as being that the Home Secretary will consider in accordance with her policy whether to exercise the power expressly given to her to direct release. Were either condition not to be satisfied, the mandate would cease and the detention would become unlawful. (h) The second condition was not satisfied in respect of the first and second periods of Mr Francis detention, with the result that, as in respect of the third period, the mandate to detain him ceased and therefore his detention during those periods should also have been held to have been unlawful. Accordingly there is no difference in effect between, on the one hand, the conditional mandate to detain conferred on the Home Secretary by para 2(1) and by the words in parenthesis in para 2(3) and, on the other, the power to detain conferred on her by para 2(2) and by the words not in parenthesis in para 2(3). DISPOSAL The conclusion postulated in para 40 above need no longer be provisional: were Os claim for judicial review permitted to proceed, the result in all likelihood would be a declaration that her detention from 4 March 2011 to 6 July 2011 was unlawful and an award to her of damages in the sum of 1. The Court of Appeal decided that, since such was at most, so it added the likely result of the claim, it was appropriate to uphold the refusal of Lang J to grant permission for it to proceed. I agree. By the time of its issue O had been released and it could bring her no practical benefit. To the extent that her contentions in these proceedings have deserved to be vindicated, she has secured their vindication in this judgment. I would dismiss the appeal. |
This appeal is about an alleged corporate raid. According to the judgment of Mann J, at para 224, this expression is a loose, convenient and pejorative shorthand which can be applied to a variety of situations, but in this case means an attempt to exploit a minority shareholding in a company to obtain effective management or voting control without paying what other shareholders would regard as a proper price. I shall use the expression in that sense in spite of its pejorative overtones, but only because it is convenient. One of the tools available to a public company seeking to resist the covert acquisition of control by raiders is a statutory disclosure notice calling for information about persons interested in its shares. There are statutory provisions empowering the court to restrict the exercise of rights attaching to shares if those interested in them fail to comply with a disclosure notice. But it is common for the articles of a public company to empower the board to impose such restrictions. The questions at issue on this appeal affect companies which have adopted powers of this kind in their articles. They are, in bald summary, what are the proper purposes for which the board may restrict the exercise of rights attaching to shares, and in what circumstances can the restrictions be challenged on the ground that they were imposed for a collateral purpose? JKX Oil & Gas Plc is an English company listed on the London Stock Exchange. It is the parent company of a group whose business consists in the development and exploitation of oil and gas reserves, primarily in Russia and the Ukraine. For reasons which are disputed, and for present purposes irrelevant, the company has not prospered of late. Its difficulties have been reflected in its share price which has fallen to historically low levels. In 2013, the directors of JKX perceived that it had become the target of a raid by two companies, Eclairs and Glengary, both incorporated in the British Virgin Islands. Eclairs is a company controlled by trusts associated with Mr Igor Kolomoisky and Mr Gennadiy Bogolyubov. Mr Kolomoisky is a prominent Ukrainian businessman and politician and Mr Bogolyubov is his business associate. Eclairs beneficially owns some 47m shares amounting to 27.55% of the issued share capital of JKX. Glengary is a company controlled by Mr Alexander Zhukov in which his right hand man Mr Ratskevych also has a small holding. The company beneficially owns 19m shares amounting to 11.45% of the issued share capital of JKX. The judge found that Mr Kolomoisky and Mr Bogolyubov had a reputation as corporate raiders. Rather less is known about Mr Zhukov, but the directors of JKX believed him to have had business dealings with Mr Kolomisky in the past. Between 2010 and 2012, JKX was trying to raise capital. It encountered some difficulty in raising it from banks and other financial institutions, partly because of the risks associated with investment in the Ukraine, and partly because Mr Kolomoiskys substantial stake in the company proved to be a deterrent. A number of proposals were made for raising capital by the issue and allotment of new shares, but these failed because Mr Kolomoisky opposed them. They would have required shareholders special resolutions, and Eclairs holding constituted a blocking minority. On 7 March 2013, Eclairs wrote to JKX calling upon it to convene an extraordinary general meeting to consider ordinary resolutions for the removal of the Chief Executive Dr Davies and the Commercial Director Mr Dixon from the board, and the appointment of three new directors. Enquiries suggested that this move had been concerted between Mr Kolomoisky and Mr Zhukov, and that the proposed new directors were associates of theirs. Newspapers in the Ukraine reported that Mr Kolomoisky was trying to take control of JKXs principal Ukrainian subsidiary. The company received Eclairs request on 15 March 2013. Its response was to issue five disclosure notices between 20 and 26 March. On the Eclairs side, they were addressed to Eclairs and Mr Bogolyubov, and on the Glengary side to Glengarry, Mr Zhukov and Mr Ratskevych. On 13 May 2013, further disclosure notices were issued to the same addressees as the March notices plus, on the Eclairs side, Mr Kolomoisky. The notices requested information about the number of shares held, their beneficial ownership and any agreements or arrangements between the various persons interested in them. The responses, which were received promptly, admitted the existence of interests in JKX shares, but denied that the addressees were party to any agreement or arrangement among themselves. On 23 April 2013, the company convened an AGM for 5 June 2013. The business included the re election of Dr Davies, the approval of the directors remuneration report and three resolutions empowering the board to allot shares for cash, to disapply statutory pre emption rights upon the allotment of shares, and to make market purchases of the companys shares. On 23 May 2013, Eclairs published an advertisement in the Financial Times and an open letter to shareholders. In these documents, shareholders were invited to oppose the above five proposed resolutions. Since the resolutions to authorise market purchases and to disapply pre emption rights required a special resolution, this meant that as matters stood they were certain to fail. The other resolutions required only an ordinary resolution but would be difficult to get through in the face of opposition from two blocks together controlling 39% of the company. The responses to the second batch of disclosure notices were received on 27 and 28 May 2013. On 30 May, a board meeting was held. One director (Mr Miller) was absent, but had given instructions to the chairman as to how he wished to vote, and two others (Dr Davies and Mr Dixon) recused themselves and took no part in the proceedings. The remaining directors considered that the responses to the notices were inadequate because they believed that there were agreements or arrangements between the addressees which they had not disclosed. They resolved to issue restriction notices under powers conferred on the board by the companys articles on the 47m shares in which Eclairs was interested and the 19m shares in which Glengary was interested. The effect of the restriction notices was to suspend the right to vote at general meetings attaching to these shares and to restrict the right of transfer. On 4 June 2013, the day before the AGM, Eclairs and Glengary began separate proceedings in the Chancery Division challenging the restriction notices. A number of grounds were advanced, most of which were rejected by Mann J and have now fallen away. The one ground which subsists and is now before this court is that the board acted for a collateral, and therefore improper, purpose. It was contended that the only proper purpose for which the power could be exercised was to extract the information, and that the real purpose of the board had been to ensure that the resolutions at the forthcoming AGM would be passed. In the event, the company gave undertakings to David Richards J on the day that the proceedings were commenced, the effect of which was to allow the votes attaching to the 47m and 19m shares to be cast on the resolutions without prejudice to their validity. Disclosure notices The power to issue a statutory disclosure notice originates in section 27 of the Companies Act 1976. That provision was subsequently replaced by section 74 of the Companies Act 1981, and then by section 212 of the Act of 1985. It is now contained in section 793 of the Companies Act 2006. Section 793 empowers a public company to issue a disclosure notice to any person whom it knows or reasonably believes to be interested in its shares. The notice may require that person to disclose (among other things) whether or not it is interested in shares, the nature of that interest if there is one, and whether any persons interested are party to any agreement for the acquisition of interests in shares or the exercise of any rights conferred by the holding of shares. Sections 820 825 of the 2006 Act contain very broadly framed provisions for determining when a person is to be regarded as interested in shares for these purposes. It extends to any legal or equitable interest, or any right to exercise or control the exercise of any right attaching to shares, or any such right or interest vested in a company under a persons control or in specified categories of close relative, or any control or influence arising from an agreement for the acquisition of shares. Under the statute, the failure of a person interested in shares to comply with a disclosure notice may result in the restriction of the rights conferred by those shares. Section 794(1) provides: 794 Notice requiring information: order imposing restrictions on shares Where a notice under section 793 (notice requiring (a) information about interests in companys shares) is served by a company on a person who is or was interested in shares in the company, and (b) that person fails to give the company the information required by the notice within the time specified in it, the company may apply to the court for an order directing that the shares in question be subject to restrictions. For the effect of such an order see section 797. Section 797 identifies the restrictions as being that any transfer of the shares is void, no voting rights are exercisable, no further shares may be issued in right of the shares or pursuant to an offer made to their holder, and except in a liquidation no payment of capital or income may be made on the shares. In the case of JKX, corresponding powers were conferred on the board by article 42, which empowered the board to issue a restriction notice whenever a statutory disclosure notice had been issued under section 793 and had not been complied with. It provided (so far as relevant): (2) Notwithstanding anything in these articles to the contrary, if (a) a disclosure notice has been served on a member or any other person appearing to be interested in the specified shares, and (b) the Company has not received (in accordance with the terms of such disclosure notice) the information required therein in respect of any of the specified shares within 14 days after the service of such disclosure notice, then the board may (subject to para 7 below) determine that the member holding the specified shares shall, upon the issue of a restriction notice referring to those specified shares in respect of which information has not been received, be subject to the restrictions referred to in such restriction notice, and upon the issue of such restriction notice such member shall be so subject. As soon as practicable after the issue of a restriction notice the Company shall serve a copy of the notice on the member holding the specified shares. (3) The restrictions which the board may determine shall apply to restricted shares pursuant to this article shall be one or more, as determined by the board, of the following: that no transfer of the restricted shares shall be (a) that the member holding the restricted shares shall not be entitled, in respect of the restricted shares, to attend or be counted in the quorum or vote either personally or by proxy at any general meeting or at any separate meeting of the holders of any class of shares or upon any poll or to exercise any other right or privilege in relation to any general meeting or any meeting of the holders of any class of shares, (b) effective or shall be registered by the Company, (c) that no dividend (or other moneys payable) shall be paid in respect of the restricted shares and that, in circumstances where an offer of the right to elect to receive shares instead of cash in respect of any dividend is or has been made, any election made thereunder in respect of such specified shares shall not be effective. (4) The board may determine that one or more of the restrictions imposed on restricted shares shall cease to apply at any time. If the Company receives in accordance with the terms of the relevant disclosure notice the information required therein in respect of the restricted shares all restrictions imposed on the restricted shares shall cease to apply seven days after receipt of the information. Article 42 differs in a number of respects from sections 794 800 of the Companies Act 2006, notably in vesting the power to impose restrictions on the board instead of the court. It also contains a definition section which specifies the circumstances in which the board is entitled to treat a response to the notice as non compliant. Article 42(1)(j) provides: (j) for the purposes of paragraphs (2)(b) and (4) of this article the Company shall not be treated as having received the information required by the disclosure notice in accordance with the terms of such disclosure notice in circumstances where the board knows or has reasonable cause to believe that the information provided is false or materially incorrect. These were the powers which the board of JKX purported to exercise at their meeting on 30 May 2013 and which are now challenged. The proper purpose rule Part 10, Chapter 2 of the Companies Act 2006 codified for the first time the general duties of directors. The proper purpose rule is stated in section 171(b) of the 2006 Act, which provides that a director of a company must only exercise powers for the purposes for which they are conferred. The rule thus stated substantially corresponds to the equitable rule which had for many years been applied to the exercise of discretionary powers by trustees. It is a principle in this court, Sir James Wigram V C had observed in Balls v Strutt (1841) 1 Hare 146, that a trustee shall not be permitted to use the powers which the trust may confer upon him at law, except for the legitimate purposes of the trust. Like other general duties laid down in the Companies Act 2006, this one was declared to be based on certain common law rules and equitable principles as they apply in relation to directors and have effect in place of those rules and principles as regards the duties owed to a company by a director: section 170(3). Section 170(4) accordingly provides that the general duties are to be interpreted and applied in the same way as common law rules or equitable principles, and regard shall be had to the corresponding rules and equitable principles in interpreting and applying the general duties. The proper purpose rule has its origin in the equitable doctrine which is known, rather inappropriately, as the doctrine of fraud on a power. For a number of purposes, the early Court of Chancery attached the consequences of fraud to acts which were honest and unexceptionable at common law but unconscionable according to equitable principles. In particular, it set aside dispositions under powers conferred by trust deeds if, although within the language conferring the power, they were outside the purpose for which it was conferred. So far as the reported cases show the doctrine dates back to Lane v Page (1754) Amb 233 and Aleyn v Belchier (1758) 1 Eden 132, 138, but it was clearly already familiar to equity lawyers by the time that those cases were decided. In Aleyns Case, Lord Northington could say in the emphatic way of 18th century judges that no point was better established. In Duke of Portland v Topham (1864) 11 HLC 32, 54 Lord Westbury LC stated the rule in these terms: that the donee, the appointor under the power, shall, at the time of the exercise of that power, and for any purpose for which it is used, act with good faith and sincerity, and with an entire and single view to the real purpose and object of the power, and not for the purpose of accomplishing or carrying into effect any bye or sinister object (I mean sinister in the sense of its being beyond the purpose and intent of the power) which he may desire to effect in the exercise of the power. The principle has nothing to do with fraud. As Lord Parker of Waddington observed in delivering the advice of the Privy Council in Vatcher v Paull [1915] AC 372, 378, it does not necessarily denote any conduct on the part of the appointor amounting to fraud in the common law meaning of the term or any conduct which could be properly termed dishonest or immoral. It merely means that the power has been exercised for a purpose, or with an intention, beyond the scope of or not justified by the instrument creating the power. The important point for present purposes is that the proper purpose rule is not concerned with excess of power by doing an act which is beyond the scope of the instrument creating it as a matter of construction or implication. It is concerned with abuse of power, by doing acts which are within its scope but done for an improper reason. It follows that the test is necessarily subjective. Where the question is one of abuse of powers, said Viscount Finlay in Hindle v John Cotton Ltd (1919) 56 Sc LR 625, 630, the state of mind of those who acted, and the motive on which they acted, are all important. A company director differs from an express trustee in having no title to the companys assets. But he is unquestionably a fiduciary and has always been treated as a trustee for the company of his powers. Their exercise is limited to the purpose for which they were conferred. One of the commonest applications of the principle in company law is to prevent the use of the directors powers for the purpose of influencing the outcome of a general meeting. This is not only an abuse of a power for a collateral purpose. It also offends the constitutional distribution of powers between the different organs of the company, because it involves the use of the boards powers to control or influence a decision which the companys constitution assigns to the general body of shareholders. Thus in Fraser v Whalley (1864) 2 H & M 10, the directors of a statutory railway company were restrained from exercising a power to issue shares for the purpose of defeating a shareholders resolution for their removal. In Cannon v Trask (1875) LR 20 Eq 669, which concerned the directors powers to fix a time for the general meeting, Sir James Bacon VC held that it was improper to fix a general meeting at a time when hostile shareholders were known to be unable to attend. In Anglo Universal Bank v Baragnon (1881) 45 LT 362, Sir George Jessel MR held that if it had been proved that the power to make calls was being exercised for the purpose of disqualifying hostile shareholders at a general meeting, that would be an improper exercise of the directors powers. In Hogg v Cramphorn Ltd [1967] 1 Ch 254, Buckley J held that the directors powers to issue shares could not properly be exercised for the purpose of defeating an unwelcome takeover bid, even if the board was genuinely convinced, as the current management of a company commonly is, that the continuance of its own stewardship was in the companys interest. The companys interest was an additional and not an alternative test for the propriety of a board resolution. In all of these cases, either there was no dispute about the directors purpose or else the only purpose which could plausibly be ascribed to them was an improper one. But what if there are multiple purposes, all influential in different degrees but some proper and others not? An analogy with public law might suggest that a decision which has been materially influenced by a legally irrelevant consideration should generally be set aside, even if legally relevant considerations were more significant: R(FDA) v Secretary of State for Work and Pensions [2013] 1 WLR 444, at paras 67 69 (per Lord Neuberger of Abbotsbury MR). In some contexts, such as rescission for deceit or breach of the rules relating to self dealing, equity is at least as exacting. But the proper purpose rule, at any rate as applied in company law, has developed in a different direction. Save perhaps in cases where the decision was influenced by dishonest considerations or by the personal interest of the decision maker, the directors decision will be set aside only if the primary or dominant purpose for which it was made was improper. To some extent this is a pragmatic response to the range of a directors functions and the conflicts which are sometimes inseparable from his position. The main reason, however, is a principled concern of courts of equity not just to uphold the integrity of the decision making process, but to limit its intervention in the conduct of a companys affairs to cases in which an injustice has resulted from the directors having taken irrelevant considerations into account. In his seminal judgment in the High Court of Australia in Mills v Mills (1938) 60 CLR 150, 185 186, Dixon J pointed out the difficulties associated with too rigorous an application of the public law test to the decisions of directors: it may be thought that a question arises whether there must be an entire exclusion of all reasons, motives or aims on the part of the directors, and all of them, which are not relevant to the purpose of a particular power. When the law makes the object, view or purpose of a man, or of a body of men, the test of the validity of their acts, it necessarily opens up the possibility of an almost infinite analysis of the fears and desires, proximate and remote, which, in truth, form the compound motives usually animating human conduct. But logically possible as such an analysis may seem, it would be impracticable to adopt it as a means of determining the validity of the resolutions arrived at by a body of directors, resolutions which otherwise are ostensibly within their powers. The application of the general equitable principle to the acts of directors managing the affairs of a company cannot be as nice as it is in the case of a trustee exercising a special power of appointment. It must, as it seems to me, take the substantial object the accomplishment of which formed the real ground of the boards action. If this is within the scope of the power, then the power has been validly exercised. Once one accepts the need to compare the relative significance of different considerations which influenced the directors, the question inevitably arises what is the primary or dominant purpose, and how is it to be identified. One possibility is that it is the weightiest purpose, ie the one about which the directors felt most strongly. The other is that it is the purpose which caused the decision to be made as it was. Of course, the two things are connected. The ordinary inference is that the weightiest purpose (in this sense) will also have been causative, and that minor purposes will not have been. In most cases the two tests will in practice lead to the same result. But that will not always be so and, as will be seen, it is not necessarily the case here. The first test seems to me to be difficult to justify, for reasons of both practicality and principle. The practical difficulty was pointed out by Dixon J in the passage which I have quoted. It would involve a forensic enquiry into the relative intensity of the directors feelings about the various considerations that influenced them. A director may have been influenced by a number of factors, but if they all point in the same direction he will have had no reason at the time to arrange them in order of importance. The attempt to do so later in the course of the dispute is likely to be both artificial and defensive. Moreover, a realistic appreciation of the directors position will show that it is liable to lead to the wrong answer. Directors of companies cannot be expected to maintain an unworldly ignorance of the consequences of their acts or a lofty indifference to their implications. A director may be perfectly conscious of the collateral advantages of the course of action that he proposes, while appreciating that they are not legitimate reasons for adopting it. He may even enthusiastically welcome them. It does not follow without more that the pursuit of those advantages was his purpose in supporting the decision. All of these problems are aggravated where there are several directors, each with his own point of view. The fundamental point, however, is one of principle. The statutory duty of the directors is to exercise their powers only for the purposes for which they are conferred. That duty is broken if they allow themselves to be influence by any improper purpose. If equity nevertheless allows the decision to stand in some cases, it is not because it condones a minor improper purpose where it would condemn a major one. It is because the law distinguishes between some consequences of a breach of duty and others. The only rational basis for such a distinction is that some improprieties may not have resulted in an injustice to the interests which equity seeks to protect. Here, we are necessarily in the realm of causation. The question is which considerations led the directors to act as they did. In Hindle v John Cotton Ltd (1919) 56 Sc LR 625, 631, Lord Shaw referred to the moving cause of the decision, a phrase taken up by Latham CJ in Mills v Mills, supra, at p 165. But this cryptic formula does not help much in a case where the board was concurrently moved by multiple causes, some proper and some improper. One has to focus on the improper purpose and ask whether the decision would have been made if the directors had not been moved by it. If the answer is that without the improper purpose(s) the decision impugned would never have been made, then it would be irrational to allow it to stand simply because the directors had other, proper considerations in mind as well, to which perhaps they attached greater importance. This was the point made by Dixon J in the passage immediately following the one which I have cited from his judgment in Mills v Mills But if, except for some ulterior and illegitimate object, the power would not have been exercised, that which has been attempted as an ostensible exercise of the power will be void, notwithstanding that the directors may incidentally bring about a result which is within the purpose of the power and which they consider desirable. Correspondingly, if there were proper reasons for exercising the power and it would still have been exercised for those reasons even in the absence of improper ones, it is difficult to see why justice should require the decision to be set aside. Dixon Js formulation has proved influential in the courts of Australia. As the majority (Mason, Deane and Dawson JJ) pointed out in the High Court of Australia in Whitehouse v Carlton House Pty (1987) 162 CLR 285, 294: As a matter of logic and principle, the preferable view would seem to be that, regardless of whether the impermissible purpose was the dominant one or but one of a number of significantly contributing causes, the allotment will be invalidated if the impermissible purpose was causative in the sense that, but for its presence, the power would not have been exercised. I thing that this is right. It is consistent with the rationale of the proper purpose rule. It also corresponds to the view which courts of equity have always taken about the exercise of powers of appointment by trustees: see Birley v Birley (1858) 25 Beav 299, 307 (Sir John Romilly MR), Pryor v Pryor (1864) 2 De G J & S 205, 210 (Knight Bruce LJ), Re Turners Settled Estates (1884) 28 Ch D 205, 217, 219, Roadchef (Employee Benefits Trustees) Ltd v Hill [2014] EWHC 109 (Ch), para 130, and generally Thomas on Powers, 2nd ed (2012), paras 9.85 9.89. The leading modern case is Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821, a decision of the Privy Council on appeal from New South Wales, which proceeded on the basis that the law was the same in England and in New South Wales. It was another case of a board decision to issue and allot new shares against the background of a takeover bid, although rather unusually it was the directors who wanted the bid to succeed over the opposition of two existing shareholders who together held a majority of the shares. Delivering the advice of the Privy Council, Lord Wilberforce observed at p 834: The directors, in deciding to issue shares, forming part of Millers unissued capital, to Howard Smith acted under clause 8 of the companys articles of association. This provides, subject to certain qualifications which have not been invoked, that the shares shall be under the control of the directors, who may allot or otherwise dispose of the same to such persons on such terms and conditions and either at a premium or otherwise and at such time as the directors may think fit. Thus, and this is not disputed, the issue was clearly intra vires the directors. But, intra vires though the issue may have been, the directors power under this article is a fiduciary power: and it remains the case that an exercise of such a power though formally valid, may be attacked on the ground that it was not exercised for the purpose for which it was granted. The main interest of the decision for present purposes lies in the fact that it was a case of multiple concurrent purposes. The company was genuinely in need of fresh capital, and the directors had received legal advice that this was the only ground on which they could properly authorise an issue of shares. The number of shares to be issued and the amount of the subscription had been carefully calculated to match the companys capital requirements. After a trial lasting 28 days in which the four directors supporting the share issue gave evidence, Street J had found that the companys need for capital, although urgent, was not yet critical and that its normal practice had been to meet its capital requirements by borrowing rather than issuing shares. For this reason he rejected the evidence of the four directors that their sole purpose was to meet the companys shortage of capital and found that their primary purpose was in fact to dilute the shareholdings of those who opposed the bid. Lord Wilberforce adopted the primary purpose test which had been applied by the judge (p 832B C) and affirmed his decision (p 832F H): when a dispute arises whether directors of a company made a particular decision for one purpose or for another, or whether, there being more than one purpose, one or another purpose was the substantial or primary purpose, the court, in their Lordships opinion, is entitled to look at the situation objectively in order to estimate how critical or pressing, or substantial or, per contra, insubstantial an alleged requirement may have been. If it finds that a particular requirement, though real, was not urgent, or critical, at the relevant time, it may have reason to doubt, or discount, the assertions of individuals that they acted solely in order to deal with it, particularly when the action they took was unusual or even extreme. Lord Wilberforce did not express the point in terms of causation, but it is I think clear that by the substantial or primary purpose, he meant the purpose which accounted for the boards decision. He approved the judges adoption of Dixon Js test (pp 831 832), and went on to adopt an analysis of the facts based on that test. Although the directors were influenced by the companys need for capital, the decisive factor in Howard Smith Ltd v Ampol Petroleum Ltd was that but for their desire to convert the majority shareholders into a minority, the directors would not have sought to raise capital by means of a share issue, nor at that point of time. The judgment of Mann J In Mann Js view, the only purpose for which the power to impose restrictions was conferred by article 42 was to provide a sanction or an incentive to remedy the default (para 206). In a meticulous judgment he went on to make the following findings of fact, at paras 168 79 and 183 200: (1) He expressed no view of his own on the merits of the dispute between the company and Messrs Kolomoisky and Bogolyubov and their associates. But he found that the board had reasonable cause to believe (whether or not it was right) that they were parties to an agreement or arrangement relating to shares in JKX with a view to carrying out a raid on the company. The board believed that the objective of the raiders was to depress the value of the shares so as to enable them to buy other shares more cheaply and eventually to take control of the companys Ukrainian subsidiary. They regarded the removal of Dr Davies and Mr Dixon and their replacement by inexperienced associates of the raiders as part of that plan. They therefore had reasonable cause to believe that the answers to the disclosure notices had been false. (2) Of the seven directors who took part in the decision, six gave evidence and were cross examined. The seventh was not cross examined in relation to purpose for want of time, and no point was taken on that. Of the six, one was found to have had the primary purpose of extracting the information from the addressees of the disclosure notices. Another took a balanced view which attached substantially the same importance to extracting the information and preventing the raiders from voting against the resolutions at the AGM. The judge summarised the motives of the other four as follows (para. 189): While they may (and in all probability actually did) appreciate that the restrictions would have to be lifted if the information was provided, they did not regard the ability to impose restrictions as being one designed to protect the company pending the provision of information; they regarded it as one which they could use, and did actually use, to get an advantage (the opportunity to pass the resolutions) for its own sake, not linked to the extraction of information. Putting the matter another way, they did not regard the opportunity to get special resolutions passed which would otherwise not be passed (and the increased chance of getting the ordinary ones passed too) as an incidental benefit of imposing restrictions as an incentive to provide information; they elevated it in their minds, and in their purposes, to something with its own independent merit as a way of doing down the raiders for the benefit of the shareholders. (3) The judge concluded (para. 200): The differences between relevant states of mind can be quite subtle in this situation, but I find that the evidence demonstrates that the following purposes, beliefs and states of mind existed among the voting directors: (a) They all knew that the purpose of the notices was to get information. (b) They all appreciated that the effect of restrictions would be (unless the information was provided before the AGM) that Eclairs/Glengary would be prevented from voting, with the effect that all the resolutions would be likely to be passed, or that there was a very enhanced prospect of that happening. (c) They all saw that as operating for the benefit of the company as a whole, and as hindering the cause of the raiders. (d) The majority of the voting directors (Mrs Dubin, Mr Moore, Mr Miller and Lord Oxford) saw that as a sort of standalone proper and useful objective, and achieving it was a substantial purpose of voting for the restrictions, separate from the need to have information. Those directors did not have in mind the protection of the company pending the provision of the information; they had in mind protecting the company full stop. The restrictions were thus a useful weapon the raiders. The disenfranchisement of the raiders at the AGM was not just an incidental effect of the imposition of restrictions; it was the positively desired effect, seen as beneficial to the company in the long term. (e) The bona fides of those directors, and the genuineness of their desire to benefit the company as a whole, was not challenged, and in my view cannot be challenged. to be used against (4) It followed that the primary purpose of the board in issuing the restriction notices was to influence or determine the fate of the resolutions before the AGM. The directors took the opportunity of using the power to alter the potential votes at the forthcoming AGM in order to maximise the chances of the resolutions being passed in a manner which they thought was in the best interests of the Company (para 227). Since this was beyond the purpose for which the power to impose restrictions was conferred, he set aside the restriction notices and the board resolutions authorising them with effect from the time that they were made. In the course of final speeches, the judge raised with the parties the question whether the board would have reached the same decision even if they had not taken account of the impact of the restriction notices on the resolutions at the AGM. On the basis of what I heard, and the shape of the case before me he said, he thought it likely, and to be frank virtually inevitable that the board would have reached the same conclusion and imposed the same restrictions even if they had confined themselves to the proper purpose of inducing the addressees of the disclosure notices to comply with them and imposing sanctions for their failure to do so to date. He provisionally concluded that on this alternative factual hypothesis the court would have had a discretion whether to set aside the board resolution and restriction notices, which it might have exercised in favour of the company. The alternative factual hypothesis had not, however, been pleaded or addressed by the relevant witnesses and had formed no part of the companys case. For this reason the judge, having raised the point, refused to allow the company to take it at that late stage. He put the position as follows (para 232): on the evidence that I have heard, I find it very hard indeed to believe that the directors would have come to any different conclusion. I deal with this in a short section below in which I consider the facts. However, in circumstances in which the directors have not made such a case in their own evidence in chief (or in the pleadings of the company), it would, in the end, be a step too far to allow them to say my purpose was X, but if I had been told that that was an improper purpose and I had to consider a legitimate purpose Y, I would have arrived at the same decision. If that were to be their case then it should have been positively advanced at some stage during the hearing. Although on the evidence I heard I find it difficult to see that the directors would have come to a different decision, none the less I can see that the claimants might have wished to have advanced their case differently, perhaps devoting more attention to the earlier events leading up to the service of the notices and what happened, and what the thinking was, between then and the board meeting. The short section below was paras 235 237. In these paragraphs, the judge summarised what he would have found if he had allowed the company to advance the alternative factual hypothesis and had been obliged to deal with it on the basis of the existing evidence. He appears to have done this in case there was an appeal against his refusal to allow the point to be taken. In the event, however, there was no appeal on that point. The judgments of the Court of appeal The appeals were heard by Longmore and Briggs LJJ and Sir Robin Jacob. There was no challenge to the judges findings of fact. The appeal revolved entirely around their legal significance. By a majority, the court allowed the appeal. The majority (Longmore LJ and Sir Robin Jacob) considered that the proper purpose doctrine had no significant place in the operation of article 42 or Part 22 of the 2006 Act (para 138). They appear to have reached this conclusion for three overlapping reasons. The first was that restrictions arising from a shareholders failure to comply with a disclosure notice did not reflect a unilateral exercise of power by the board. By this they meant that the shareholder could avoid the restrictions by complying with the disclosure notice. Why should the law protect him when all he had to do was tell the truth? (para 136). Their second reason was that the restrictions on the voting and other rights attaching to the shares was the very thing that article 42 was designed to permit if the directors reasonably considered that the disclosure notices had not been complied with. So once the board had reached that conclusion, there was no further limitation on their power to issue a restriction notice. The majoritys third reason was that no limitation on the proper purpose of a restriction notice was expressed, either in Part 22 of the 2006 Act or in article 42 of JKXs articles. In their view there was no room for the implication of such a purpose, because in the nature of things the statutory disclosure procedure was most likely to be operated at a time of controversy in the companys affairs. They thought, at para 141, that the draftsman was unlikely to have intended a detailed enquiry into the minds of directors in what may often be a rapidly changing scene; and, at para 142, that in a battle for control against predators who were up to something subversive but secret the directors would naturally want to see them disenfranchised. In their view, the result of applying the proper purpose rule would be to emasculate the statutory scheme and the corresponding provisions of article 42. Underlying much of this reasoning was the view expressed in their peroration, that any other view would only be an encouragement to deceitful conduct and not something which English company law should countenance (para 143). In a formidable dissent, Briggs LJ set out the rationale for the proper purpose test and the authorities for its application to the exercise of discretionary powers by companies. He accepted the view of Mann J that the purpose of article 42 was to encourage or coerce the provision of information which had been requested under section 793, with the rider that it was also to prevent the accrual of any unfair advantage to any person as a result of the failure to comply with such a request. Even with that limited expansion, on the judges findings of fact the directors decision to impose restrictions under article 42 was improper, and there were no satisfactory reasons why the rule should not be applied to the draconian powers conferred by article 42 of JKXs articles. He added (para 122): Furthermore, I consider it important that the court should uphold the proper purpose principle in relation to the exercise of fiduciary powers by directors, all the more so where the power is capable of affecting, or interfering with, the constitutional balance between shareholders and directors, and between particular groups of shareholders. The temptation on directors, anxious to protect their company from what they regard as the adverse consequences of a course of action proposed by shareholders, to interfere in that way, whether by the issue of shares to their supporters, or by disenfranchisement of their opponents shares, may be very hard to resist, unless the consequences of improprieties of that kind are clearly laid down and adhered to by the court. The proper purpose of article 42 The submission of Mr Swainston QC, who appeared for the company, was that where the purpose of a power was not expressed by the instrument creating it, there was no limitation on its exercise save such as could be implied on the principles which would justify the implication of a term. In particular, the implication would have to be necessary to its efficacy. In my view, this submission misunderstands the way in which purpose comes into questions of this kind. It is true that a companys articles are part of the contract of association, to which successive shareholders accede on becoming members of the company. I do not doubt that a term limiting the exercise of powers conferred on the directors to their proper purpose may sometimes be implied on the ordinary principles of the law of contract governing the implication of terms. But that is not the basis of the proper purpose rule. The rule is not a term of the contract and does not necessarily depend on any limitation on the scope of the power as a matter of construction. The proper purpose rule is a principle by which equity controls the exercise of a fiduciarys powers in respects which are not, or not necessarily, determined by the instrument. Ascertaining the purpose of a power where the instrument is silent depends on an inference from the mischief of the provision conferring it, which is itself deduced from its express terms, from an analysis of their effect, and from the courts understanding of the business context. The purpose of a power conferred by a companys articles is rarely expressed in the instrument itself. It was not expressed in the instrument in any of the leading cases about the application of the proper purpose rule to the powers of directors which I have summarised. But it is usually obvious from its context and effect why a power has been conferred, and so it is with article 42. Article 42(2) authorises the issue of a restriction notice only in the event that a disclosure notice has been issued under section 793 of the 2006 Act and the company has received either no response or a response which it knows or has reasonable cause to believe is false or materially incorrect. Under article 42(4) in the event that the information is supplied after the restrictions have been imposed (ie that a response has been received which the directors have no reasonable cause to regard as wrong), they are automatically lifted seven days thereafter. Any dividends or other payments in respect of the shares which were withheld while the restrictions were in force will then become payable under article 42(6). As Millett J observed in In re Ricardo Group Plc [1989] BCLC 566, 572 about the corresponding power of the court to impose restrictions under what was then section 216 and Part XV of the Companies Act 1985, these restrictions are granted as a sanction to compel the provision of information to which the company is entitled. It follows, in my judgment, that once the information is supplied, any further justification for the continuance of the sanction disappears. The inescapable inference is that the power to restrict the rights attaching to shares is wholly ancillary to the statutory power to call for information under section 793. It follows that I accept the view of Mann J that the purpose of article 42 is to provide a sanction or incentive to remedy a failure to comply with the disclosure notice. But I would not limit it to inducing the defaulter to comply, any more than I believe Mann J to have done in this case or Millett J in In re Ricardo Group. Otherwise the board would be disabled from imposing restrictions in a case where the defiant obduracy of the defaulter made it obvious that the restrictions would not produce compliance. I would therefore identify the purpose in slightly different terms. In my view article 42 has three closely related purposes. The first is to induce the shareholder to comply with a disclosure notice. This is the purpose which Millett J and Mann J regarded the restrictions as serving, and it is the least that they can have been intended to achieve. Secondly, the article is intended to protect the company and its shareholders against having to make decisions about their respective interests in ignorance of relevant information. As Hoffmann J observed in In re TR Technology Investment Trust Plc [1988] BCLC 256, 276, the company, through its existing board, is given the unqualified right to insist that contests for the hearts and minds of shareholders are conducted with cards on the table. Thirdly, the restrictions have a punitive purpose. They are imposed as sanctions on account of the failure or refusal of the addressee of a disclosure notice to provide the information for as long as it persists, on the footing that a person interested in shares who has not complied with obligations attaching to that status should not be entitled to the benefits attaching to the shares. That is the natural inference from the range and character of restrictions envisaged in article 42(3), which affect not only the right to participate in the companys affairs by voting at general meetings, but the right to receive dividends. These three purposes are all directly related to the non provision of information requisitioned by a disclosure notice. None of them extends to influencing the outcome of resolutions at a general meeting. That may well be a consequence of a restriction notice. But it is no part of its proper purpose. It is not itself a legitimate weapon of defence against a corporate raider, which the board is at liberty to take up independently of its interest in getting the information. Basing himself on the observation of Hoffmann J in In re TR Technology Investment Trust Plc, Mr Swainston argued that the purpose of a restriction notice was related to the non provision of the information in a broader sense. The argument was that for as long as the addressee of a disclosure notice failed to put his cards on the table, the directors were justified in treating the restrictions as a free standing technique for frustrating the raiders plans. In my view this extends the purpose of a restriction notice beyond its proper limits. It treats failure to comply with a disclosure notice as no more than a gateway or condition precedent to the directors right to impose and maintain the restrictions for any purpose which they bona fide conceived to be in the interests of the company, including securing their preferred outcome at the AGM. But as the judge put it, at para 206, the non provision of information is not to be taken as a justification for opening up a new front against the predator with the benefit of a new weapon. Otherwise, directors would be entitled to impose restrictions in a case where they attached no importance to the information requisitioned in the disclosure notice. However difficult it may be to draw in practice, there is in principle a clear line between protecting the company and its shareholders against the consequences of non provision of the information, and seeking to manipulate the fate of particular shareholders resolutions or to alter the balance of forces at the companys general meetings. The latter are no part of the purpose of article 42. They are matters for the shareholders, not for the board. We were pressed with a number of arguments about the purpose of article 42 based on an analogy with Part 22 of the Companies Act 2006. I did not find these arguments helpful. The two schemes are both directed at an assumed failure to comply with a statutory disclosure notice, and have a number of other points in common. But they differ in a number of respects, some of them significant. Arguments based on language which is to be found in the statute but not in the articles are unlikely to throw any light on the purpose of the latter. Does the proper purpose rule apply? At this stage, two preliminary observations are called for. The first is that the imposition of restrictions under article 42 is a serious interference with financial and constitutional rights which exist for the benefit of the shareholder and not the company. In the case of listed companies such as JKX a restriction notice is also an interference with the proper operation of the market in its shares, in which there is not only a private but a significant public interest. One would expect such a draconian power to be circumscribed by something more than the directors duty to act in the companys interest as they may in good faith perceive it. The second preliminary observation concerns the role of the proper purpose rule in the governance of companies. The rule that the fiduciary powers of directors may be exercised only for the purposes for which they were conferred is one of the main means by which equity enforces the proper conduct of directors. It is also fundamental to the constitutional distinction between the respective domains of the board and the shareholders. These considerations are particularly important when the company is in play between competing groups seeking to control or influence its affairs. The majority of the Court of Appeal were right to identify this as the background against which disclosure notices are commonly issued. But they drew the opposite conclusion from the one which I would draw. They seem to have thought it unrealistic, indeed undesirable, against that background to expect directors to distinguish between the proper purpose of enforcing the disclosure notice and the improper purpose of defeating the ambitions of one group of shareholders. I find this surprising. The decision to impose restrictions under article 42 requires the directors to recognise the difference between the purpose of a decision and its incidental consequence. That certainly calls for care on their part and possibly for legal advice. But there is nothing particularly special in this context about a decision to issue a restriction notice under a provision such as article 42. The directors task is no more difficult than it was in the many cases like Howard Smith Ltd v Ampol Petroleum Ltd in which other fiduciary powers, such as the power to issue shares, have been held improperly exercised because in the face of pressures arising from a battle for control the directors succumbed to the temptation to use their powers to favour their allies. I would agree with the majority of the Court of Appeal that in that situation the board would naturally wish to have the predators disenfranchised. That is precisely why it is important to confine them to the more limited purpose for which their powers exist. Of all the situations in which directors may be called upon to exercise fiduciary powers with incidental implications for the balance of forces among shareholders, a battle for control of the company is probably the one in which the proper purpose rule has the most valuable part to play. I therefore approach with some scepticism the suggestion that in this of all contexts the proper purpose rule has no application. Of the three reasons given by the majority of the Court of Appeal, I have already dealt with their second reason, which was essentially a slightly repackaged version of Mr Swainstons gateway argument, and with their third, which is that no limiting purpose can be implied in a case where the directors are likely to exercise their powers for the purpose of disenfranchising a predator. I reject both of them as contrary to principle. I would add that I am unimpressed by the suggestion that it is impractical to examine the state of mind of the directors in a rapidly changing situation such as a takeover bid or an attempted raid. The present proceedings were begun on the day before the AGM. The interests of both parties were sufficiently protected pending the decision by the orders made on the same day by David Richards J, and the dispute was heard by Mann J within seven weeks and decided within three months. In some cases, for example where a tight timetable is imposed under the City Code on Takeovers and Mergers, it may be necessary to accelerate the procedure even more drastically, but the judges of the Chancery Division are perfectly capable of responding to these exigencies as they arise. That brings me to the majoritys first and, I think, main reason, which was that the power to impose restrictions under article 42 was not a unilateral power. The addressees of the disclosure notices had only to answer the questions fully and truthfully to bring the restrictions to an end. I reject this also. The short and principled objection to it was given by Briggs LJ. The limitation of the power to its proper purpose derives from its fiduciary character. If its exercise would otherwise be an abuse, it cannot be an answer to say that the person against whom it is directed had only himself to blame. Moreover, the majoritys proposition assumes that that person is the only one whose interests are adversely affected. But that is not right. Other shareholders who agreed with them would be deprived of their support. In Anglo Universal Bank v Baragnon, supra, Sir George Jessel MR considered that the proper purpose rule would apply to a board decision to make calls on shareholders if the object was to prevent particular shareholders from voting at general meetings, although any shareholder could remove the disability by paying. There is no trace in this or any other authority of a distinction between unilateral and non unilateral powers. Moreover, I reject the majoritys premise. The problem cannot always be resolved by unilaterally complying with the disclosure notice. Under a provision in the form of article 42 there may be a deemed non compliance with a disclosure notice even in a case where the answers are prompt, complete and accurate. This is because the directors may reasonably though erroneously conclude that the answers are defective. This is not a fanciful hypothesis. The interest in shares about which information may be sought under section 793 of the 2006 Act is very broadly defined. It will often be a highly debatable question whether it exists. An alleged omission to disclose a relevant agreement or arrangement between persons with a relevant interest may be just as debatable. An agreement sufficient to give rise to a concert party may be informal. An arrangement may be no more than a nod and a wink or a tacit understanding. Reasonableness in these circumstances is very much in the eye of the decision maker. It will depend on what other facts or inferences are available to him. With the best will in the world, things may look very different on the other side of the partition. The weapon which the majoritys analysis puts into the hands of the board is a blunderbuss whose shot is liable to injure the just and the unjust alike. That is part of the reason why I am unable to accept the majoritys parting assertion, at para 143, that the application of the proper purpose rule would be an encouragement to deceitful conduct by predators with subversive but secret projects. There is, however, a more fundamental objection to it, which is that it is incoherent once the operation of the rule is properly understood. If the deceit consists simply in the secrecy, ie in the withholding or deemed withholding of the information, a decision to impose restrictions which is based simply on that fact will be entirely consistent with the proper purpose of the power. But secrecy is one thing, subversion another. If the real objection is to the subversion, it is nothing to do with the issue or enforcement of disclosure notices. Directors owe a duty of loyalty to the company, but shareholders owe no loyalty either to the company or its board. Within broad limits, derived for the most part from Part 30 of the Companies Act 2006 (Protection of Members against Unfair Prejudice) and the City Code on Takeovers and Mergers, they are entitled to exercise their rights in their own interest as they see it and to challenge the existing management for good reasons or bad. The present case What the judges findings amount to is that although at the critical board meeting the majority genuinely wanted to receive the information which they had requisitioned, once they were satisfied that it had not been provided and turned to consider the issue of restriction notices, they were interested only in the effect that this would have on the outcome of the forthcoming general meeting. They did not have in mind the protection of the company pending the provision of the information; they had in mind protecting the company full stop (para 200(d)). In any case where concurrent purposes are being considered, they must have been actual purposes in the minds of the directors, not merely possible or hypothetical ones. If the only consideration which actually influenced the decision was an improper one, it is difficult to envisage any basis on which their decision could have been sustained. I have drawn attention earlier in this judgment to the relevance of causation in this field. The judge posed the question (para 228) whether the notices could be saved on the footing that although the directors purpose was improper, they would have acted in the same way if the improper considerations had been ignored and they had applied their minds to proper ones. Suppose that the directors had decided to issue the restriction notices as a sanction for the non provision of the information and to protect the company from the consequences of its non disclosure pending its provision. Suppose that they also made the decision in order to secure the passing of the resolutions, but would have done the same thing even if that had never entered their minds. On that hypothesis, it would be difficult to regard the impact on the resolutions as a primary consideration. The want of the information would have been a sufficient justification of the restrictions and the resolutions would have been irrelevant, in fact no more than a welcome incidental consequence. That, however, was not the companys case. As summarised by the judge (paras 181, 207 208), their case was that once the raiders had failed to provide the information, the power to make a restriction order could properly be exercised for the purpose of defeating their attempt to influence or control the companys affairs, provided that this was conceived in good faith to be in the companys interests. Indeed it could properly be exercised for the purpose of ensuring the passage of the resolutions at the general meeting in the face of their objections. There was no attempt to justify the decision on some narrower basis if these purposes were found to be improper. Forensic judgments of this kind are often required and they are not easy. This one was no doubt a realistic approach in the face of the facts. But for whatever reason, none of the parties focused on the possibility that the same decision might have been reached without reference to the desire to defeat the raiders, until the judge drew their attention to its possible relevance. By that time it was too late to explore the point with the witnesses. In his judgment (paras 235 237), the judge summarised the findings of fact which he would have made if he had allowed the company to rely on the alternative hypothesis that the directors had disregarded their desire to defeat the raiders. He thought that they would have applied their minds to the right point and made the same decision. But the judge did not allow the company to take the point and there has been no appeal against that refusal. Since his reason for refusing was that the claimants had not had a proper opportunity to challenge the alternative hypothesis in the course of the evidence, it seems to me that the judges hypothetical alternative findings are not properly before this court. I would allow the appeal and restore the decision of Mann J. In the light of the observations of other members of the court, I should record that while we received no oral argument on the role of causation in identifying the relevant purpose(s) of a board decision, full and helpful written submissions on the point were delivered after the hearing, at the invitation of the court. LORD CLARKE: (with whom Lord Neuberger agrees) I initially intended simply to agree with Lord Sumptions judgment. Like Lord Mance (and Lord Neuberger), I agree with Lord Sumption that the appeal should be allowed for the reasons given in his paras 27 to 43. I am inclined to agree with the other views expressed by Lord Sumption but there does seem to me to be force in Lord Mances reservation that not all the points were the subject of full argument and consideration below. In these circumstances I would prefer to defer reaching a final conclusion on the other points identified by Lord Mance until they arise for decision and have been the subject of such argument. LORD MANCE: (with whom Lord Neuberger agrees) I gratefully adopt Lord Sumptions summary of the relevant facts in paras 1 to 13 and of the judgments of Mann J and the Court of Appeal in paras 25 to 29. I also agree with his reasons for allowing this appeal in paras 30 to 44. I have read with interest the discussion of the proper purpose rule in paras 14 to 24. It accepts an analysis which was suggested in general terms by the judge at first instance, but which became immaterial in the light of his refusal to allow any point on causation to be raised. It was not in those circumstances advanced by any party during the oral hearing before the Supreme Court. The analysis was first revived by the Supreme Court in a draft judgment handed down, but then withdrawn before delivery in the light of the parties representations. Thereafter, both appellants confirmed that they had argued the case before the Supreme Court on the basis that, if the proper purpose rule applied, the restriction notices fell to be set aside, since the judge had found the notices to have been issued for the principal purpose of improving the prospects of passing at the forthcoming AGM two special resolutions to authorise market purchases and to disapply pre emption rights as well as of passing three ordinary resolutions. Eclairs submitted that any issue as to whether a but for test should be applied should in these circumstances await a case where it arose squarely. Eclairs and Glengary each supplied a copy of its submissions to the judge at the trial in 2013, which had suggested a two pronged alternative analysis, according to which the notices would be set aside if a court concluded either that (a) the principal purpose was to ensure the passing of the resolutions or (b) even if that was not the principal purpose, the notices would not have been issued but for the wish to ensure the passing of the resolutions. JKX on the other hand sought to use the Supreme Courts new development in the law as a springboard to argue that the appeals should not be allowed and/or that there should be a further hearing on the issue of causation. I readily accept my part in agreeing to the original draft judgment. But I am now satisfied, having considered the authorities without the benefit of oral or written submissions other than those dating from 2013 submitted by Eclairs and Glengary, that we should not express any firm or concluded views on points which do not arise for decision on this appeal. I will summarise my reasons. First, it would be helpful to clarify the meaning of section 171(b) of the Companies Act 2006, providing that directors may use their powers only for the purposes for which they were conferred. On the face of it this is clear. All purposes in mind must be legitimate. But Buckley on the Companies Act (looseleaf ed) suggests that it itself involves a primary purpose test, commenting at 3[869]: What if a power were used for mixed purposes, some good and some bad? According to the old law the exercise would be good if its primary purpose were proper. By virtue of CA 2006, section 170(4), this law should inform the construction of CA 2006, section 171(b). Thus, a director who has exercised powers for mixed purposes has still only exercised them primarily, if not exclusively, for the purposes for which they are conferred and this should be within CA 2006, section 171(b). CA 2006, section 171(b) can be construed (as it should be), in accordance with CA 2006, section 170(4) to mean that a director must exercise his powers primarily (or substantially) only for the purposes for which they are conferred. Buckley cites for the old law Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821. Lord Sumption at paras 14 and 21 treats section 171(b) as requiring a directors power to be used with an entire and single view to the real purpose and object of the power, assimilating a directors power in this respect with the exercise of discretionary powers by trustees. But Dixon J in the judgment in Mills v Mills (1938) 60 CLR 150, 185 186, which Lord Sumption commends at para 18, expressly noted that The application of the general equitable principle to the acts of directors managing the affairs of a company cannot be as nice as it is in the case of a trustee exercising a special power of appointment. It must, as it seems to me, take the substantial object the accomplishment of which formed the real ground of the boards action. If this is within the scope of the power, then the power has been validly exercised. I would therefore wish to have submissions on the scope of the duty under section 171(b). Second, whatever the scope of the duty, I understand Lord Sumptions point that the granting of relief in the event of a breach of section 171(b) is a different matter. But here too I think it would both assist and be wise to hear submissions. I do not for my part think that the interpretation which Lord Sumption puts in para 24 on Lord Wilberforces speech in Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 is necessarily or clearly what Lord Wilberforce meant. Equally, the passage already quoted from Dixon Js judgment in Mills v Mills appears to me far from conclusive, while its later explanation in the High Court in Whitehouse v Carlton House Pty (1987) 162 CLR 285, 294 (quoted by Lord Sumption at para 22) is, at least arguably, consistent with but for causation being viewed either as the only test or as affording an extended basis for the grant of relief, even where the principal purpose was legitimate, as Eclairs and Glengary submitted to the judge. In these circumstances, although I have sympathy with Lord Sumptions view that but for causation offers a single, simple test, which it might be possible or even preferable to substitute for references to the principal or primary purpose, I am not persuaded that we can or should safely undertake what all parties consider would be a new development of company law, without having heard argument. Third, Lord Sumption expresses the view in para 20 that identification of the principal or primary purpose for which directors exercised a power would involve a forensic enquiry into the relative intensity of the directors feelings about the various considerations that influenced them, in relation to which directors evidence would be likely to be both artificial and defensive. To the extent that that is a difficulty, I cannot see that it exists any the less in relation to a test based on but for causation. Human nature being what it is, that is just as likely to give rise to artificial and defensive attempts to justify what was done. If anything, I would have thought that the principal or primary purpose in mind would be likely to be easier to identify, since it is likely to be reflected in directors exchanges before and/or at the time of the decisions under examination, than the answer to a question whether they would have acted as they did without taking into account their main expressed purpose. They will have been less likely to have directed express attention to this: that is, unless well advised by their lawyers, in which case further caution might be necessary about accepting their assertions at face value. Fourth, if a but for test were to be adopted, attention should I think be given to the standard to which the directors, on whom the onus would presumably lie, would have to show that they would have reached the same decision, even if they had not had the illegitimate purpose in mind. Would probability be enough? Or would the test be whether their decision would inevitably have been the same? See eg by analogy the public law test, as stated by May LJ in Smith v North East Derbyshire Primary Care Trust [2006] 1 WLR 3315, and quoted by Lord Neuberger in R (FDA) v Secretary of State for Work and Pensions [2012] EWCA Civ 332; [2013] 1 WLR 444, para 68. |
Although the British Broadcasting Corporation (the BBC) is listed as a public authority in the Freedom of Information Act 2000, the Act, as I will call it, applies to the BBC only to a limited extent. The words of limitation are found in Part VI of Schedule 1 to the Act: they provide that the Act applies only in respect of information held for purposes other than those of journalism, art or literature. I will describe these words of limitation as the designation. This appeal requires the court to consider the meaning of the designation. The focus of the debate is on the word journalism rather than on the words art or literature. How widely or narrowly should the phrase purposes other than those of journalism be construed? The answer of course lies in the narrowness or width of the concept of the purposes ... of journalism in the context of the Act. But the appeal also presents a more particular conundrum. It proceeds, albeit not on foundations as solid as one might wish, upon the premise that the information in issue was held by the BBC partly for purposes of journalism and partly for purposes other than those of journalism (or, for that matter, of art or literature). In a situation in which information is held for such dual and opposite purposes, does the information fall within the designation and thus within the scope of the Act? The primary contention made on behalf of the BBC is that, where it is held by the BBC even only partly for purposes of journalism, information is beyond the scope of the Act; and thus that, provided that the purposes of journalism are significant (i.e. more than minimal), they leave the information beyond the scope of the Act even though it is also held perhaps even predominantly held for purposes other than those of journalism. I will describe this as the BBCs polarised construction; and it was approved by the Court of Appeal (Lord Neuberger MR, Moses and Munby LJJ) on 23 June 2010, [2010] EWCA Civ 715, [2010] 1 WLR 2278, when making the order against which this appeal is brought. The Court of Appeal, however, approved the construction only on the basis that the phrase purposes ... of journalism should be construed in a relatively narrow...way: see para 55, per Lord Neuberger. Sadly the appellant, Mr Steven Sugar, is deceased. His death occurred in January 2011, after he had filed Notice of Appeal to this court; and, by consent, the court appointed Ms Fiona Paveley to represent his estate in the appeal. The contention made on behalf of Mr Sugar is precisely the opposite of the primary contention made on behalf of the BBC. It is that, where it is held by the BBC even only partly for purposes other than those of journalism, information is within the scope of the Act; and thus that, provided that the purposes other than those of journalism are significant (i.e. more than minimal), they draw the information within the scope of the Act even though it is also held perhaps even predominantly held for purposes of journalism. I will describe this as Mr Sugars polarised construction. But the very expression of these polarities foreshadows a middle way, which represents the secondary contention made on behalf of the BBC. It is that, in circumstances in which it holds information partly for purposes of journalism and partly for purposes other than those of journalism, the designation should be so construed as to draw the information within the scope of the Act only if the purposes other than those of journalism are the dominant purposes for which it is held. I will describe this as the dominant purpose construction. B: THE FACTS By October 2003 the BBCs coverage of the Israeli-Palestinian conflict had come under close scrutiny from pressure groups both pro-Israeli and pro-Arab. There were complaints, particularly from pro-Israeli groups, that its coverage was not impartial. Mr Richard Sambrook, then the BBCs Director of News, decided to commission a senior journalist to analyse the BBCs domestic Middle Eastern coverage, to survey the views and analyse the complaints of the pressure groups and to suggest whether and if so how it might be improved. Following discussion with Mr Mark Byford, then the Director of the BBCs World Service, Mr Sambrook caused Mr Malcolm Balen to be appointed to conduct the exercise. Mr Balen had at one time been editor of the BBCs Nine OClock News but, by 2003, he had ceased to be employed by the BBC and was working as Head of News for a commercial television channel. So Mr Sambrook caused Mr Balen to rejoin the BBC under a one-year contract, which took effect on 1 November 2003. It was unusual to bring someone into the BBC from outside to make a report for internal use. The contract described Mr Balen as a Middle Eastern Consultant in News but he and Mr Sambrook regarded his position more as that of a senior editorial adviser. The contract did not specify his duties; but what was clear was that he was to have no line-management responsibilities. For the first three months Mr Balen discussed the BBCs Middle Eastern coverage with journalists and editors, considered some of the complaints about it and gave regular oral reports to Mr Sambrook. Then in about February 2004, in response to a request by Mr Sambrook, he began to compose a full, written, report. It was to be a broad survey both of the quality (including the impartiality) of the BBCs coverage of Middle Eastern affairs in recent years and of the validity or otherwise of the complaints about it, taken as a whole; and it was to include practical suggestions, perhaps only tentative, for improvement of the quality of its coverage including of its impartiality. In July 2004 Mr Balen sent the final version of the report to Mr Sambrook and Mr Byford. The Balen report, as I will describe it, was an internal briefing document for the use of the BBCs top management and reflected only Mr Balens personal views. Meanwhile, in the wake of the publication in January 2004 of Lord Huttons Report of the Inquiry into the Circumstances Surrounding the Death of Dr David Kelly CMG HC 247, there had been several changes in the top management of the BBC. Mr Byford had become Deputy Director-General. In August 2004 Mr Sambrook became Director of the Global News division and Ms Helen Boaden took his place as Director of News. Mr Mark Thompson, the new Director-General, set up three new boards, including a Journalism Board (the Board), of which Mr Byford was the chair and Mr Sambrook, Ms Boaden and other senior managers were members. The Board was to be responsible for setting the strategy which would direct, and for defining the values which would inform, journalism across all areas of the BBCs output. At its meeting on 9 November 2004 the Board considered the Balen report. It considered it as part of its review of strategy in relation to its coverage of conflict in the Middle East. In response to the report the Board commissioned a paper, to be entitled Taking Forward BBC Coverage of the Middle East, which was intended to ensure that the BBC both met the highest standards of impartiality and honesty in its journalism and implemented recommendations in relation to training, editorial control and the handling of complaints, and which could be placed before even more senior bodies at the BBC. The Taking Forward paper, which in effect took forward the Balen report, was first presented to the Board in February 2005. Perhaps in part as a result of the consideration afforded to it in the Taking Forward paper, the Balen report had a number of practical consequences. The most obvious to the ordinary viewer of BBC television was the establishment in 2005 of the post of Middle East Editor, to which Mr Jeremy Bowen was soon appointed. There were also internal changes in the BBC in relation to its analysis of capability, its compilation of a Key Facts Guide, its audit of the use on air of Middle Eastern experts and its development of training. In 2005 the Board of Governors of the BBC appointed Sir Quentin Thomas to chair a panel which was charged with undertaking an external, independent, review of the impartiality of the BBCs reporting of the Israeli- Palestinian conflict. In his report, published in May 2006, Sir Quentin recorded that his panel had been supplied with the Balen report albeit on a confidential basis in that it had been only an unpublished report prepared internally for BBC management; that the report had been helpful; and that a number of its recommendations had already been implemented. C: THE FORENSIC HISTORY Mr Sugar was a respected solicitor and a supporter of the State of Israel; he considered that the BBCs coverage of Israels conflict with the Palestinians had been seriously biased against it. By letter dated 8 January 2005 he made a request to the BBC for disclosure to him of a copy of the Balen report pursuant to the Act. The BBC refused the request on the basis that it held the report or, more strictly, the information in the report for purposes of journalism and thus that it lay beyond the scope of the Act. In March 2005 Mr Sugar applied to the Information Commissioner (the Commissioner) pursuant to section 50 (1) of the Act for a decision whether the BBC had determined his request in accordance with the requirements of the Act. By letters to Mr Sugar dated 24 October and 2 December 2005 the Commissioner, who had privately read the Balen report, communicated his decision, which was to the effect that the BBC had lawfully rejected his request. The Commissioner observed that: (a) the purpose of the designation was to protect journalistic, artistic and literary integrity by carving out a creative and journalistic space for programme-makers to produce programmes free from the interference and scrutiny of the public; information held by the BBC fell beyond the scope of the Act only if there was a direct and creative journalistic relationship between it and programme content; there was such a relationship between the Balen report and programme content; in this regard it was relevant that those mainly likely to be affected by the report were journalists and editors rather than managers and business advisers; (c) (d) (b) (e) if, which he did not accept, the report was held for any non-journalistic purpose, it continued to lie beyond the scope of the Act because the journalistic purpose was manifestly dominant; and (f) had it been impossible to discern which of two such opposite purposes was dominant, he would have applied a rebuttable presumption that the information lay within the scope of the Act. Had the Commissioners observations stopped at that point, the issue about the disclosure of the Balen report to Mr Sugar would have been resolved long ago. But, by a postscript, the Commissioner proceeded to set a hare running and, although he soon repented of what he had done and sought to recapture it, the hare remained at large and was chased all the way up to the Appellate Committee of the House of Lords. It was to prove a most unfortunate distraction. With respect to certain eminent judges with whom it was later to find favour, the postscript which the Commissioner appended to his decision was entirely misconceived. It was that, because the Balen report was outside the designation and thus beyond the scope of the Act, the BBC was not a public authority for the purposes of the Act in relation to Mr Sugars request. The consequence was, according to the Commissioner, that Mr Sugar had no right of appeal against his decision to the Information Tribunal (the Tribunal) under section 57 of the Act. This consequence was said to flow from the conjunction of section 57 itself, which provided that an appeal to the Tribunal lay from the Commissioners decision notice, and of section 50, which provided that a decision notice related to a decision whether a request for information had been lawfully determined by a public authority. At first, therefore, the Commissioner took the view that his letters to Mr Sugar could not represent a decision notice; and he advised Mr Sugar that, if he wished to challenge his decision, he should seek a judicial review of it rather than appeal to the Tribunal. On 30 December 2005, undeterred, Mr Sugar appealed to the Tribunal under section 57 of the Act. The Commissioner and the BBC entered a preliminary objection that the Tribunal lacked jurisdiction for the reasons set out above. By the time when, in June 2006, the Tribunal heard argument about the preliminary objection, the Commissioner had changed his mind and was supporting Mr Sugars rebuttal of it. But the BBC energetically pursued the objection. The Tribunal overruled it (the jurisdiction decision) and proceeded to consider the merits of Mr Sugars appeal. Its decision dated 29 August 2006, by which it upheld Mr Sugars contention that the Balen report was within the scope of the Act (the journalism decision), will require study. But it is convenient first to chart the development of the argument on jurisdiction to its quietus. The BBC appealed on points of law to the High Court under section 59 of the Act against the Tribunals jurisdiction decision as well as against its journalism decision. Mr Sugar and the Commissioner opposed the appeal. The BBC also issued an application for judicial review of the Tribunals jurisdiction decision, to which, in that no order was to be made on it, there is no need again to refer. In order to protect himself against the risk that the High Court would set aside the Tribunals jurisdiction decision, Mr Sugar issued an application for judicial review of the Commissioners decision. These proceedings came before Davis J. By a judgment delivered on 27 April 2007, [2007] EWHC 905 (Admin), [2007] 1 WLR 2583, he: (a) allowed the BBCs appeal against the Tribunals jurisdiction decision; (b) accordingly set aside its journalism decision; and (c) dismissed Mr Sugars protective application for judicial review on the ground that the Commissioners decision had been rational and therefore lawful. Supported by the Commissioner, Mr Sugar appealed to the Court of Appeal against the decision of Davis J to allow the BBCs appeal against the Tribunals jurisdiction decision. At this stage he ceased to appear in person and began to enjoy the benefit of representation by Mr Tim Eicke QC pro bono. By order dated 25 January 2008, [2008] EWCA Civ 191, [2008] 1 WLR 2289, the Court of Appeal (Buxton and Lloyd LJJ and Sir Paul Kennedy) dismissed the appeal. Mr Sugar appealed to the House of Lords against the dismissal of his appeal by the Court of Appeal. By order dated 11 February 2009, [2009] UKHL 9, [2009] 1 WLR 430, the House (Lord Phillips, Lord Hope and Lord Neuberger, Lord Hoffmann and Baroness Hale dissenting) allowed the appeal. Thus, at last, the effect of the BBCs inclusion in the Act became clear. Even in relation to a request to the BBC for information which lay outside the designation and thus beyond the scope of the Act, the BBC remained a public authority for the purposes of the Act: see, in particular, paras 26 to 36 per Lord Phillips and para 54 per Lord Hope. A decision by the Commissioner that a request was of such a character should therefore be, and in this case had been, set in a decision notice under section 50 of the Act and the proper avenue of challenge to it was by appeal to the Tribunal under section 57: see paras 37 and 38, per Lord Phillips. The House therefore remitted to the High Court the BBCs appeal against the Tribunals journalism decision, which Davis J had found it unnecessary to consider. For, from his further conclusion that the Commissioners decision had been lawful, it in no way followed that the BBCs appeal against the Tribunals journalism decision was entitled to succeed: see para 38, per Lord Phillips. In reaching its journalism decision the Tribunal, which had privately read the Balen report, had addressed the application of the designation to a situation in which the requested information was held for dual and opposite purposes. It had noted the polarised constructions advanced by Mr Sugar and by the BBC to which I have referred but had preferred the BBCs secondary contention, which accorded with the Commissioners approach, that in such a situation the Act required reference to the dominant purpose for which the information was held. The Tribunal found that the BBC had originally held the Balen report predominantly for purposes of journalism; that, however, once the report had been placed before the Journalism Board on 9 November 2004, the BBC had begun to hold it predominantly for purposes other than those of journalism, namely for purposes of strategic policy and resource allocation; and thus that, at the date of its receipt of Mr Sugars request in January 2005, the information was within the scope of the Act. The Tribunal did not find and Mr Sugar does not appear to have asked it to find that, at the date of its receipt of his request, the BBC held the report solely for purposes other than those of journalism. The BBCs remitted appeal against the Tribunals journalism decision came to be determined by Irwin J. By order dated 2 October 2009, [2009] EWHC 2349 (Admin), [2010] 1 WLR 2278, he allowed the appeal. Although Mr Sugar reserved the right to advance his polarised construction in the event of a further appeal, all three parties i.e. including the Commissioner, who in the further appeals has ceased to play an active part in the proceedings accepted before Irwin J that the Tribunal had been correct to adopt the dominant purpose construction; the issue between them related to its application of that test to the facts. But at this point the litigation took another unexpected turn. Concerned that he was being invited to determine the appeal on a false legal basis, the judge invited the parties to address him on the polarised constructions which the Tribunal had rejected. In the event he adopted the BBCs polarised construction. My conclusion is said the judge, at para 65, that the words in the Schedule mean the BBC has no obligation to disclose information which they hold to any significant extent for the purposes of journalism, art or literature, whether or not the information is also held for other purposes. Not even Mr Sugar was disputing that, at the date of its receipt of his request, the BBC was continuing to hold the report to some (other than minimal) extent for purposes of journalism; so it followed that the appeal should be allowed. The judge added that, had it been appropriate to determine the appeal by reference to the dominant purpose for which, at the date of its receipt of Mr Sugars request (or, rather, which the judge considered would be less arbitrary, in the period during which the request was made), the BBC held the report, he would, again, have allowed the appeal: for he considered that the Tribunal had erred in law, presumably in finding that, once it had been placed before the Journalism Board, the purposes for which the BBC held the report had become predominantly other than those of journalism. It is against the dismissal by the Court of Appeal of Mr Sugars appeal against the order of Irwin J that the present appeal is brought. In that court, and in the light of Irwin Js judgment, the BBC reverted to casting its polarised construction as its primary contention; and the dominant purpose construction once more became only its secondary contention. In delivering the leading judgment, with which both Moses LJ (who delivered a concurring judgment) and Munby LJ agreed, Lord Neuberger rejected the dominant purpose construction and, although he described each of the polarised constructions as arguable, he agreed with Irwin J that that put forward by the BBC was preferable. Since on any view the purposes for which the BBC held the report at the date of its receipt of Mr Sugars request to some extent included those of journalism, his appeal therefore failed. But a question arises whether the Court of Appeal approached the case on the basis that the purposes for which the BBC held the report at the relevant date were solely those of journalism. Observations which tend in that direction are to be found in the judgments both of Lord Neuberger at para 65 and of Moses LJ at para 83. Nevertheless, had such been its conclusion, it would have been unnecessary for the Court of Appeal to address at length the application of the designation to a situation in which information is held for purposes partly of journalism and partly otherwise. In considering it necessary to address the same point Irwin J must have held that, as the expert fact-finder, the Tribunal had been entitled at any rate to find that the purposes for which the BBC held the report had been to some extent for purposes other than those of journalism; and the Court of Appeal did not dissent from Irwin Js analysis in any way. At all events the BBC positively invites this court to proceed on the premise that it held the report for purposes partly of journalism and partly otherwise: it seeks a definitive ruling on the application of the designation to such a situation. D: THE SCHEME OF THE ACT The purpose of the Act is stated at its outset to be to make provision for the disclosure of information held by public authorities or by persons providing services for them... Section 1, described in the side-note as providing a General right of access to information held by public authorities, provides by subsection (1) that, subject to other specified provisions, any person making a request for information to a public authority is entitled (a) to be informed by the authority whether it holds information of the description specified in the request (described as the duty to confirm or deny) and (b), if so, to have the information communicated to him. Subsection (4) provides that, for the purposes of the section, the information is that held at the time when the request is received. Section 2 (2) is important for present purposes. It provides: In respect of any information which is exempt information by virtue of any provision of Part II, section 1 (1) (b) does not apply if or to the extent that (a) the information is exempt information by virtue of a provision conferring absolute exemption, or (b) in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information. As the subsection foreshadows, Part II of the Act provides for the exemption of certain categories of information from disclosure. Section 2(3) confers absolute exemption upon various of the categories. The other categories enjoy only qualified exemption: information in such categories is not required to be disclosed only if the test in subsection (2)(b) is satisfied; and the bias of the Act in favour of disclosure is visible in the requirement that the public interest in maintaining the exemption should outweigh the public interest in disclosing the information. Among the categories upon which the Act confers absolute exemption is information which relates in specified respects to national security (section 23), to court proceedings (section 32) or to personal data of which the applicant is the subject (section 40(1)), or the disclosure of which would constitute an actionable breach of confidence (section 41) or be unlawful in other specified respects (section 44). Among the categories upon which the Act confers qualified exemption is information the disclosure of which would be likely to prejudice the defence of the British Islands and colonies (section 26) or the UKs international relations (section 27) or its economy (section 29) or law enforcement (section 31) or which relates to the formulation of government policy (section 35). But, in the context of the present appeal, it is worth noting, in particular, two further categories of information upon which the Act confers qualified exemption. The first is information the disclosure of which would be likely to prejudice the commercial interests of the public authority (section 43(2)). The second is information the disclosure of which, in the reasonable opinion of a qualified person (which in the case of the BBC is the corporation itself, acting by its governors) would, or would be likely to, inhibit (i) the free and frank provision of advice, or (ii) the free and frank exchange of views for the purposes of deliberation (section 36(2)(b)). One might have expected that, in the event that the Balen report were to be held to fall within the scope of the Act, the BBC would wish to seek exemption from its disclosure under section 36(2)(b). By letter to Mr Sugar dated 10 June 2009, however, the BBC confirmed that, in that event, it would not claim any exemption under the Act. Perhaps its stance was tactical, designed to sharpen the edge of the current issue. Section 3 of the Act defines a public authority as any body, person or office-holder listed in Schedule 1 (or designated by future order of the Secretary of State) and any publicly-owned company, as defined. Schedule 1 contains a long list of bodies, persons and office-holders, some defined generically and others specifically. The schedule is divided into seven parts, namely I General, II Local Government, III The National Health Service, IV Maintained Schools and Other Educational Institutions, V Police, VI Other Public Bodies and Offices: General and VII Other Public Bodies and Offices: Northern Ireland The BBC (together with the designation) is placed into Part VI. In para 56 of his judgment on the jurisdiction issue Lord Hope explained that the length of the list in Schedule 1 was testament to Parliaments wish to obviate dispute about the identity of the public authorities who were subject to the Act. Section 7(1) of the Act provides: Where a public authority is listed in Schedule 1 only in relation to information of a specified description, nothing in Parts 1 to V of this Act applies to any other information held by the authority. Four public authorities are listed in Schedule 1 in terms of the designation, i.e. in respect of information held for purposes other than those of journalism, art or literature; they are the BBC, the Channel Four Television Corporation, the Gaelic Media Service and Sianel Pedwar Cymru (being the Welsh television channel known as S4C). Other authorities are listed only in relation to information of other specified descriptions. For example the House of Commons, the House of Lords and the National Assembly for Wales are listed in respect of information other than of a specified sort which might serve to identify the residential addresses of their members (Part I, paras 2, 3 and 5, as amended by article 2 of the Freedom of Information (Parliament and National Assembly for Wales) Order 2008 (SI 2008/1967)). The Sub-Treasurer of the Inner Temple and the Under- Treasurer of the Middle Temple are listed in respect of information held in their capacities as a local authority (Part II, para 10). Those providing medical, dental and ophthalmic services are listed in respect of information relating to their provision of services under the NHS (Part III, paras 43A, 44 and 51). Six bodies for example the Pharmaceutical Society of Northern Ireland are listed in respect of information held by them otherwise than as a tribunal (Parts VI and VII, as amended by articles 3 and 5 of, and Schedules 2 and 4 to, the Freedom of Information (Additional Public Authorities) Order 2005 (SI 2005/3593)). And the Bank of England is listed in respect of information held for purposes other than those of its functions with respect to (a) monetary policy, (b) financial operations intended to support financial institutions for the purposes of maintaining stability, and (c) the provision of private banking services and related services. PURPOSES ... OF JOURNALISM, ART OR LITERATURE E: Although they also to some extent reflect the terms of section 12(4) of the Human Rights Act 1998 (to which I will refer in para 58), the words of the designation are essentially derived from the Data Protection Act 1998 (the DPA). The DPA was passed pursuant to Directive 95/46/EC of the European Parliament and of the Council, dated 24 October 1995, on the protection of individuals with regard to the processing of personal data and on the free movement of such data. Article 1(1) of the Directive declared its object to be the protection of a natural persons fundamental right to privacy with respect to the processing of personal data. By recital 37, however, the European Parliament and the Council recognised that the processing of personal data for purposes of journalism or for purposes of literary or artistic expression also engaged the right to receive and impart information, as guaranteed in particular in article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (the ECHR) and should therefore be exempt from the Directives requirements to the extent necessary for the reconciliation of such conflicting rights. Article 9 of the Directive therefore mandated exemption for the processing of personal data carried out solely for journalistic purposes or the purpose of artistic or literary expression only if they are necessary to reconcile the right to privacy with the rules governing freedom of expression. The UKs response to article 9 lies in sections 3 and 32 of the DPA. The former defines the purposes of journalism and artistic and literary purposes as the special purposes. The latter provides that personal data processed only for the special purposes are exempt from most of the provisions of the Act, in particular the individuals central right of access under section 7 to data of which he is the subject, if the processing is undertaken with a view to the publication of any journalistic, literary or artistic material and if the data controller reasonably believes both that, having regard in particular to the special importance of the public interest in freedom of expression, publication would be in the public interest and that compliance with the relevant provision would be incompatible with the special purposes. The government had initially entertained doubts about the inclusion of the BBC in the Freedom of Information Bill. In a published paper setting out background material relevant to the publication on 11 December 1997 of its White Paper entitled Your Right to Know (Cm 3818) about the proposed Bill, the government wrote, at para 23: the BBC, Channel 4 and S4C are public corporations that operate to a defined remit specified in the Royal Charter (BBC) and legislation (Channel 4 and S4C). All three operate independently of Government editorially and to the greatest extent possible in economic and regulatory terms. It might be regarded as anomalous for them to be within the scope of the FOI legislation when the private media (Channels 3 and 5, cable and satellite channels, the Internet, the press and freelances of all sorts) would not. In the event the public service broadcasters were included in the Bill. But, in the course of the passage of the Bill through Parliament and following representations to the Home Office both by the BBC and by Channel 4, their inclusion was made subject to the designation. The designation had two, linked, purposes. Its general purpose, reflective of the genesis of its three specified concepts in the EU Directive dated 24 October 1995 in relation to access to personal data, was to protect the right of the public service broadcasters to freedom of expression, in particular under article 10 of the ECHR. Its particular purpose, foreshadowed in the background material quoted above, was (as confirmed in a letter dated 13 January 2000 from an officer in the Home Office, which had responsibility for the Bill, to an officer in another department) that the public service broadcasters should not be placed at a disadvantage in relation to their commercial rivals. Before I turn to purposes, let me reflect on the meaning, in the context of the Act, of the words journalism, art and literature. I suggest that the key to it lies in the omnibus word output. Article 5 of the BBCs Royal Charter (Cm 6925), presented to Parliament in October 2006, provides, at para (1), that the BBCs main activities should be the promotion of its six Public Purposes, specified in article 4, through the provision of output which consists of information, education and entertainment supplied by means of television, radio, online and similar services; and the Charter provides, at article 5(2), that the BBC may carry out other activities, subordinate to its main activities, provided that they promote the Public Purposes. In his letter to Mr Sugar dated 24 October 2005 the Commissioner, echoing the word in the Charter, wrote that he interpreted the three words in the designation broadly so as to include all types of the BBCs output. In this respect I discern no dissent from his view in any of the three subsequent decisions in these proceedings; and in my opinion he was right. I would be surprised if any later set of facts was to yield a conclusion that something which the BBC put out, or considered putting out, to the public or to a section of the public did not fall within the rubric either of journalism or of art or of literature. So, although one might have an interesting debate whether nowadays the word journalism encompasses more than news and current affairs, the debate is likely in this context to be sterile. For any output which did not obviously qualify as journalism would be likely to qualify either as literature or in particular, in that its meaning has a striking elasticity as article On any view the subject of this appeal leads us to forsake art and literature and even output itself and to revert to journalism. In what circumstances will the BBC hold information for the purposes of journalism? The Tribunal attempted to answer that abstract question; and the substantial criticism of its decision has been directed not at its analysis but at its application of its analysis to the circumstances in which the BBC held the Balen report. Within the word journalism in the designation (which it described as functional journalism a puzzling qualification in that, without elaboration, it implied the existence of other areas of journalism) the Tribunal identified three types of activity: first, the collecting, writing and verifying of material for publication; second, the editing of the material, including its selection and arrangement, the provision of context for it and the determination of when and how it should be broadcast; and third, the maintenance and enhancement of the standards of the output by reviews of its quality, in terms in particular of accuracy, balance and completeness, and the supervision and training of journalists. In relation to this third type, the Tribunal added, at para 116: Self-critical review and analysis of output is a necessary part of safeguarding and enhancing quality. The necessary frankness of such internal analysis would be damaged if it were to be written in an anodyne fashion, as would be likely to be the case if it were potentially disclosable to a rival broadcaster. The Tribunal contrasted the three suggested types of journalistic activity with the direction of policy, strategy and resources which provides the framework within which a public service broadcaster conducts its operations. In the Court of Appeal Lord Neuberger said, at para 53, that, at any rate in the present context, he could not improve upon the Tribunals general analysis. Apart from pointing out that its tripartite classification does not readily encompass the actual exercise of broadcasting or publishing the material, the BBC does not quarrel with the Tribunals analysis of what falls within and without the concept of journalism for the purposes of the Act. In my view, and subject to that point, this court should endorse the Tribunals analysis but should decline the BBCs invitation to clothe it with greater specificity. It is important to note, however, that not all financial information will be held by the BBC for purposes other than those of journalism. If financial information is directly related to the making of a particular programme, or group of programmes, it is likely to be held for purposes of journalism. On the same day, namely 2 October 2009, as that on which he handed down his judgment in the present proceedings, Irwin J handed down his judgment in BBC v The Information Commissioner [2009] EWHC 2348 (Admin), [2010] EMLR 121. He held that information about (among other things) costs referable to its broadcast of EastEnders, about its annual budget for Newsnight and about the price paid for its right to cover the winter Olympics in Turin in 2005/06, was held at an operational level in order to assist in the making of editorial and creative choices and so was held partly (and, if relevant, predominantly) for purposes of journalism. The application of Irelands Freedom of Information Act 1997 to its public service broadcasters is worthy of note. By regulations made in 2000, SI No 115 of 2000, Radio Telefis ireann and other broadcasters were made subject to the Irish Act in relation only to their functions of management, administration, finance, commerce, communications and entry into contracts of service; but the regulations provide that such functions are to be deemed not to include the gathering and recording of material for journalistic purposes, the consideration of programme content, the editing and storing of such material, the making of editorial decisions about programmes and the process of post-transmission internal review. There is a close parallel between the effect of the express provisions made in Ireland and the meaning to be attributed to the bare words of the designation in our Act. There was also an interesting application of the Irish Act in the decision of the Irish High Court in Radio Telefis ireann v The Information Commissioner [2004] IEHC 113. RTE is under a statutory obligation to ensure that its broadcasts of current affairs are impartial. To that end it collected data as to the amount of broadcast time which it had afforded to each political party during the general election campaign in 2002. Caoimh J held that the data related to editorial decisions and to post-transmission internal review and so did not fall to be disclosed under the Irish Act. The BBC has an obligation to seek to ensure that its broadcasting of news is impartial as well as accurate: see clause 6(1) of the Framework Agreement between the Secretary of State for Culture, Media and Sport and the BBC made on 30 June 2006 (Cm 6872) for the purposes of the BBCs Charter. Inevitably the Tribunal found that, when it first came into existence, the Balen report into the impartiality or otherwise of the BBCs coverage of the Israeli/Palestinian conflict was held (or, as it preferred to say, was predominantly held) for purposes of journalism. Its error, as correctly identified by Irwin J and the Court of Appeal, was to conclude that, once the report had been placed before the Journalism Board, it came predominantly to be held for purposes other than those of journalism, namely for those of strategic policy and resource allocation. Irrespective of the level at which, within the BBC, it was appraised, the purpose for which the report was held remained the same: it was to enable the BBC to monitor its coverage of the conflict with a view to its making any and all such changes as might further secure its impartiality. At all material times the BBC held the report at least predominantly for purposes of journalism. But, since the appeal proceeds upon the premise that, at the date of its receipt of Mr Sugars request, the BBC also held the report for purposes other than journalism, I turn finally to address the application of the designation to a situation in which the information is held for such dual and opposite purposes. Had I considered that the court was required to choose between the two polarised constructions of the designation in its application to a situation of dual and opposite purposes, I would on balance have chosen that advanced on behalf of Mr Sugar. First, his contention should probably prevail at a purely literal level: if the purposes for which the BBC holds information comprise even only to a minor extent purposes other than those of journalism, then, so I would conclude, the BBC holds it for purposes other than those of journalism...; and in my view there is probably no scope for altering the conclusion by reference to the fact that it also holds the information for purposes of journalism. But, were one to rearrange the terminology of the designation only marginally, so that it became in respect of information otherwise than held for purposes of journalism..., then the literal construction would probably yield the opposite conclusion. These semantic reflections with which others might reasonably disagree in any event represent far too slender a thread upon which to hang any overall conclusion. Second, however, and more importantly, the designation falls to be construed in the context of the Act as a whole, and thus, in particular of Part II. The beauty (says Mr Eicke) of construing the situation of dual purposes as falling within the scope of the Act is that the focussed exemptions in Part II then become available so as to winnow the information which should not be disclosed from that which should be disclosed; by contrast, were such a situation to be drawn, as if on a blanket, beyond the scope of the Act, the focussed exercise would have no place. Third, there is the bias of the Act in favour of disclosure and, in the resolution of any issue of construction, it would be permissible, as a last resort, to have regard to it. The BBC strongly argues that the designation defines the extent to which its information is included within the scope of the Act, as opposed to the extent to which it is excluded from it. But the distinction, though theoretically valid, is practically elusive: in reality the designation defines an exception, albeit very important, from the subjection of the BBC to the Act and should be construed accordingly. In the Court of Appeal Lord Neuberger suggested, at para 55, that the question whether information is held for purposes... of journalism should be considered in a relatively narrow way. With respect, his suggested departure from the natural construction of the word purposes raises in my mind a question-mark against his overall conclusion about the Acts application to a situation of dual and opposite purposes. No doubt his suggestion flowed from his concern, expressed at para 48, that the effect of his overall conclusion would be that relatively little information held by the BBC fell within the scope of the Act; for a relatively narrow construction of the word purposes would mitigate such an effect. There is in my respectful view a loose analogy here with the driver who, in proceeding down a straight road, nevertheless steers to the left and then has to rectify his position by steering to the right: he would have done better to keep straight. So is it necessary to choose between the two polarised constructions? G: THE DOMINANT PURPOSE Sometimes Parliament specifically refers to the .... principal purpose (section 678 (2)(a) Companies Act 2006) or to the reason (or, if more than one, the principal reason) (section 103A Employment Rights Act 1996, as inserted by section 5 of the Public Interest Disclosure Act 1998). Does Parliaments failure to make such a reference in the designation betoken its rejection of an approach that the purposes to which it there refers should be the dominant (or principal) purposes? We may confidently answer that question in the negative. Everything points to a conclusion that Parliament failed to consider the application of the designation to a situation in which the BBC holds the information for purposes partly of journalism and partly otherwise. Had it considered such a situation, it would have spelt out in one way or another how the designation should then operate. Bennion on Statutory Interpretation, 5th ed (2008) states at p 1268: Similarly, an enactment may lay down a qualifying condition in terms of the purpose of some person in doing an act as if it were the only purpose possible, whereas it may in the instant case, be in fact, one of several purposes. Here the court will construe the enactment as requiring the main or dominant purpose to be the one specified. It has to be acknowledged that the two authorities cited in support of the statement represent a slender foundation for the bold and unequivocal terms in which it is couched. The first authority is Chohan v Saggar [1992] BCC 306. There the High Court held that the power under section 423 of the Insolvency Act 1986 to set aside a transaction entered into by a person at an undervalue for the purpose of putting assets beyond the reach of his creditor was exercisable if such was his dominant, even if not his sole, purpose. As it happens, the decision was overruled by the Court of Appeal in Commissioners of Inland Revenue v Hashmi [2002] EWCA Civ 981, [2002] BCC 943, on the basis that, in the context of the 1986 Act, it sufficed that the statutory purpose should have been a substantial, even if not the dominant, purpose. Laws LJ observed, at para 32, that to qualify the word purpose by the word dominant was not required in order to make sense of that Act or to give it pragmatic efficacy. The second authority is Peach v Commissioner of Police of the Metropolis [1986] QB 1064. There the Court of Appeal held that statements made to the police about the death of Mr Blair Peach should be disclosed to his mother in her action against the police because, although they were made partly for the purpose of a complaint against the police and so would to that extent, in principle, attract public interest immunity from disclosure, they were made predominantly for the purpose of the investigation by the police of a violent death, to which no such immunity attached. The court applied the decision in Waugh v British Railways Board [1980] AC 521. There the House of Lords held that a report into a fatal accident made for two purposes namely for the purpose of the operation and safety of the railway (in which respect it would fall to be disclosed) and for the purpose of obtaining legal advice (in which respect it would fall, in principle, not to be disclosed) should be disclosed because the former was the dominant purpose. The decisions in Waugh and Peach thus both relate to the resolution of conflict between two principles of law which require the existence of different purposes and both of which are engaged by the facts of the case. No doubt the decisions demonstrate in general terms the common sense which may lie behind resort to the dominant purpose but neither represents authority upon statutory construction. But while therefore the statement in Bennion, set out above, is in my view expressed too strongly, I consider that, as it suggests, it may well be appropriate for the court to construe a statutory requirement of a specified purpose as mandating, in the case of dual purposes, examination of whether the specified purpose is dominant. All will depend upon the objective meaning of the words in the statute when appraised in its context as a whole, including by reference to the purpose of the particular provision: see R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349, 396 G-H, per Lord Nicholls. In ordinary conversation we frequently no doubt unconsciously refine our reference to purpose to a reference to dominant purpose. You ask me why I went out last night. I tell you that I went out in order to visit a friend in hospital. I do not add that I did so in order also to catch the post, to buy sausages and to fill my petrol tank significant though those subsidiary purposes may have been for me. In the Court of Appeal Lord Neuberger identified three objections to adoption of the dominant purpose test when applying the designation to a situation in which information is held for dual and opposite purposes. First, he said, at para 40, that the test defied the natural meaning of the words of the designation and that Parliament had not spoken, yet could have spoken, of information predominantly held for purposes other than those of journalism.... Yet the Court of Appeals preferred solution also fails that test for its reading is of information solely held for purposes other than those of journalism.... Second, Lord Neuberger said, at para 41, that identification of the dominant purpose would be a subjective and often speculative exercise. I respectfully disagree. In the case of Waugh, in the course of explaining why they favoured a test of dominant purpose in the different context to which I have referred, both Lord Simon, at p 537G, and Lord Russell, at p 545E, observed that the test would not be difficult to apply. In BBC v The Information Commissioner, cited above, Irwin J appears to have had no difficulty in concluding that the dominant purpose for which the BBC held the financial information was that of journalism. Indeed in my opinion it is easier for the Commissioner and the Tribunal to identify the dominant purpose than to conduct an inquiry into the existence of any purpose of journalism in accordance with the various pieces of guidance given first by Lord Neuberger at para 55 (namely to consider it in a relatively narrow rather than a relatively wide way), then by Lord Phillips at para 67 below (namely to ask whether an immediate object of holding the information is to use it for that purpose) and finally by Lord Walker at para 83 below (namely to have some regard to the directness of the purpose). And, third, Lord Neuberger drew attention, at para 42, to the fact that, if the word purposes in the designation referable to the BBC was, in the case of dual purposes, to be construed as a reference to the dominant purpose, the same word in the designations referable to the Bank of England and to the Competition Commission would need to be construed in the same way. Lord Neuberger suggested that Parliament was unlikely to have intended that, to take the case of the Bank of England, information which it held for dual purposes would be within the scope of the Act unless the purposes of its functions with respect to monetary policy etc were dominant. But Lord Neubergers point fails to take account of the exemptions in Part II of the Act which might in that event be available, particularly exemptions from disclosure likely to prejudice either the economic interests of the UK (section 29) or the effective conduct of public affairs (section 36(2) (b) and/or (c)). So I find myself unable to subscribe to Lord Neubergers concerns about the dominant purpose test. I am convinced that, had Parliament actively considered the situation of information held by the BBC for purposes partly of journalism and partly otherwise, it would expressly have provided that the information was within the scope of the Act if it was held predominantly for the other purposes; that, however, the words which in the event Parliament favoured, namely the words of the designation, are in themselves apt to permit such a construction; and that, since in my view it is more consonant with the Act as a whole than either of the polarities, this court should therefore proceed to endorse it. The further submission on behalf of Mr Sugar is that his request for disclosure of the Balen report engaged his right to receive information under para 1 of article 10 of the ECHR and that such restrictions on the exercise of his right as are permitted by para 2 of the article extend no further than is reflected by the designation (when read in accordance with his polarised construction), together with the exemptions in Part II of the Act. To this submission Lord Brown devotes paras 86 to 102 of his judgment below; with the essence of them I respectfully agree. In short article 10 carries Mr Sugars case no further. Even if (being a possibility which I would countenance somewhat more readily than does Lord Brown) the refusal to disclose the report did interfere with the freedom of Mr Sugar to receive information under the article, the words of the designation, when given the balanced interpretation which I favour, represent a restriction upon it which is legitimate under para 2 of the article in that it is necessary in a democratic society for the protection of the freedom to impart information enjoyed by the BBC under the same article. This conclusion becomes all the stronger when the court obeys the injunction cast upon it by section 12(4) of the Human Rights Act 1998 to have particular regard to the importance of freedom of expression and, in particular, to the extent to which it would be in the public interest for journalistic, literary or artistic material...to be published. In urging this court not to take an extravagant view of any rights of Mr Sugar under article 10 Miss Monica Carss-Frisk QC on behalf of the BBC cites the decision of the House of Lords in R (Al-Skeini) v Secretary of State for Defence [2007] UKHL 26, [2008] AC 153 and, by reference, its earlier decision in R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323. It was in Ullah that, in para 20, Lord Bingham suggested that it was the duty of the House to keep pace with the evolving jurisprudence of the European Court of Human Rights (the ECtHR) no more, but certainly no less. It was in Al Skeini that, in para 106, Lord Brown suggested that its duty was to keep pace with it no less, but certainly no more. I would welcome an appeal, unlike the present, in which it was appropriate for this court to consider whether, of course without acting extravagantly, it might now usefully do more than to shadow the ECtHR in the manner hitherto suggested no doubt sometimes in aid of the further development of human rights and sometimes in aid of their containment within proper bounds. It is, therefore, my view a solitary view that, after six years, the case returns, in a full circle, to where it began; and that it was the Commissioner who both adopted the correct test and properly applied it. The Balen report was held for purposes of journalism. On the premise that it was also held for purposes other than those of journalism, it was not predominantly so held. That is why I consider that the report lay beyond the scope of the Act; and why I agree that the appeal should be dismissed. The effect of the relevant provision of Part VI of Schedule 1, when read with section 7, to the Freedom of Information Act 2000 (the Act), is that Parts I to V of the Act apply in the case of the BBC only to information held for purposes other than those of journalism, art or literature (the definition). I agree with the other members of the Court on the following matters that are sufficient to resolve this appeal in favour of the BBC: i) At all material times the Balen report was held by the BBC predominantly for the purposes of journalism; ii) On the true construction of Part VI of Schedule 1 to the Act information held predominantly for the purposes of journalism does not fall within the definition, even if the information is held for other purposes as well. It follows that the BBC is under no duty to disclose the Balen report and that this appeal must be dismissed. The judgments of Lord Wilson and Lord Walker have, however, disclosed an issue that is academic but is none the less of importance. Does the definition mean information held solely for purposes other than journalism, art or literature or information held predominantly for purposes other than journalism, art or literature? A similar issue arises in relation to the Bank of England, where the relevant definition is information held for purposes other than those of its functions with respect to- (a) monetary policy, (b) financial operations intended to support financial institutions for the purposes of maintaining stability, and (c) the provision of private banking services and related services. I am not able to find an answer to the issue in the language of the definition itself. It is capable of bearing either meaning. The answer to the issue must lie in adopting a purposive approach to the definition. We are concerned with a provision that provides protection against the disclosure obligations that are the object of the Act. What is the purpose of that protection? It is not, as is the protection against disclosure of documents protected by legal professional privilege, designed to remove inhibition on the free exchange of information. Were that the case the protection would focus on the purpose for which the information was obtained. The protection is designed to prevent interference with the performance of the functions of the BBC in broadcasting journalism, art and literature. That is why it focuses on the purpose for which the information is held. The same is true of the information provided to the Bank of England. The object of the protection is to prevent interference with the performance of the specified functions of the Bank. A purposive construction of the definition will prevent disclosure of information when this would risk interference with the broadcasting function of the BBC. This will not depend upon the predominant purpose of holding the information. It will depend upon the likelihood that if the information is disclosed the broadcasting function will be affected. The same is true in the case of the Bank of England. For this reason I do not agree with the approach of Lord Wilson to this issue. Lord Neuberger of Abbotsbury MR at para 53 remarked that todays journalism is tomorrows archive and at para 58 In the case of journalism, above all news journalism, information held for purposes of journalism may soon stop being held for that purpose and be held, instead, for historical or archival purposes. I imagine that the Bank of England also archives information initially used for the purposes of carrying out its functions. No doubt the BBC has recourse to its archives for journalistic purposes from time to time and, if held for purposes of journalism is given a broad meaning it could be said in relation to the BBC that one of the purposes of holding archived material is journalism, albeit a relatively remote purpose. However, Lord Neuberger accepted that archived material would not, as such, fall within the protection afforded by the definition. I consider that he was right to do so. Disclosure of material that is held only in the archives will not be likely to interfere with or inhibit the BBCs broadcasting functions. It ought to be susceptible to disclosure under the Act. If possible information held for purposes other than those of journalism, art or literature should be given an interpretation that brings archived material within that phrase. Can this be achieved? I believe that Lord Walker has the answer. He has concluded, as have I, that the protection is aimed at work in progress and BBCs broadcasting output. He suggests that the Tribunal should have regard to the directness of the purpose of holding the information and the BBCs journalistic activities. I agree. Information should only be found to be held for purposes of journalism, art or literature if an immediate object of holding the information is to use it for one of those purposes. If that test is satisfied the information will fall outside the definition, even if there is also some other purpose for holding the information and even if that is the predominant purpose. If it is not, the information will fall within the definition and be subject to disclosure in accordance with the provisions of Parts I to V of the Act. This appeal requires the Supreme Court to focus closely on the language and legislative purpose of the provisions of the Freedom of Information Act 2000 (FOIA) dealing with public authorities to which that statute has limited application. Without that focus, a long trawl through the Strasbourg jurisprudence on article 10 of the European Convention on Human Rights is of little assistance. The relevant provisions are in section 7 of and Schedule 1 to FOIA. Section 7(1) provides that where a public authority is listed in Schedule 1 only in relation to information of a specified description, nothing in Parts I to V of the Act is to apply to any other information held by the authority. Schedule 1, Part VI lists the British Broadcasting Corporation (BBC) in respect of information held for purposes other than those of journalism, art or literature. A similar form of words appears (in adjectival form) in section 3 of the Data Protection Act 1998, which defines the special purposes as meaning any one or more of the following (a) the purposes of journalism, (b) artistic purposes, and (c) literary purposes. Section 32 of the Data Protection Act gives a limited exemption where personal data is processed with a view to the publication by any person of any journalistic, literary or artistic material, and the data controller reasonably believes that, having regard in particular to the special importance of the public interest in freedom of expression, publication would be in the public interest, and that compliance with some specified provisions of the Data Protection Act would be incompatible with the special purposes. Both sets of statutory provisions are evidently aimed at promoting freedom of expression, the value embodied in article 10 of the European Convention on Human Rights. There is no relevant definition of journalism, art or literature in either statute. The three words are abstract nouns which can be used to describe either an activity or the product of that activity. Journalism is a word introduced into the English language from French in the 19th century. The Oxford English Dictionary gives its primary meaning (by reference to journalist) as the occupation of editing or writing for a public journal. In a loose sense it can cover the production of just about anything published in a newspaper (or, today, broadcast on sound radio or television). But in the context of FOIA, its collocation with art and literature suggests that journalism is used to refer primarily to output on news and current affairs (no doubt including sport, an important part of the BBCs output); and the composite expression journalism, art or literature seems to be intended to cover the whole of the BBCs output in its mission (under article 5 of its Royal Charter) to inform, educate and entertain the public. On that comprehensive approach the purposes of journalism, art or literature would be, quite simply, the purposes of the BBCs entire output to the public. Mr Jeremy Clarkson must, it seems, have moved from the pigeonhole of journalism to that of literature when, as Irwin J recorded in British Broadcasting Corporation v Information Commissioner [2009] EWHC 2348 (Admin), [2010] EMLR 121, para 36, it was decided for editorial reasons to change the format of Top Gear so that it became primarily an entertainment programme rather than a consumer programme, [which] increased the production costs to an important degree. British Broadcasting Corporation v Information Commissioner [2009] EWHC 2348 (Admin) (the financial information case) was heard by Irwin J immediately after he heard the case [2009] EWHC 2349 (Admin) in which this appeal is brought, and he handed down his judgment in the two cases on the same day, 2 October 2009. Important parts of the two judgments are, as Irwin J noted in the first paragraph of each judgment, expressed in identical or very similar terms. There is also one other first-instance judgment calling for mention, that is the judgment of Davis J in the first round of Mr Sugars litigation, British Broadcasting Corporation v Sugar [2007] EWHC 905 (Admin), [2007] 1 WLR 2583. The judgment of Davis J contains a valuable discussion of the relevant provisions of FOIA but proceeds on the footing that the Information Tribunal (the Tribunal) had no jurisdiction, in the circumstances, to hear an appeal from the Information Commissioner (the Commissioner). That premise was later shown by the decision of a bare majority of the House of Lords to be erroneous: [2009] UKHL 9, [2009] 1 WLR 430. One of the most important issues of law considered by Irwin J in his twin judgments is whether, as a matter of construction, the word predominantly should in effect be inserted in Schedule 1, Part VI before the phrase for purposes other than those of journalism, art or literature). Irwin J described this (in para 3 of each judgment) as a concession made by the BBC before the Tribunal, but that description depends on the spectators viewpoint. The Court of Appeal (Lord Neuberger MR, para 36) described it as a successful argument. So it is worth looking at how this point developed. Apart from any de minimis principle, which the Court of Appeal (Lord Neuberger MR, para 59) rightly regarded as unhelpful in this context, there are four possible categories of information held by the BBC that need to be considered: (1) information held exclusively for non-journalistic purposes; (2) information held predominantly, but not exclusively, for non-journalistic purposes (the other purposes being those of journalism); (3) information held predominantly, but not exclusively, for journalistic purposes (the other purposes being non-journalistic); and (4) information held exclusively for journalistic purposes. Before the Tribunal Mr Sugar argued that the BBCs immunity under Schedule 1 Part VI (as opposed to its possible exemption under other particular provisions of FOIA) was limited to information in category (4). In other words he was insisting on disclosure (apart from particular exemptions) of categories (1), (2) and (3). The BBC did not oppose categories (1) and (2) (so that category (2) could be termed a concession) but opposed disclosure of category (3), and was successful in that argument. Irwin J felt unable to accept the concession, either in the Sugar appeal or in the appeal in the financial information case. He held that category (1) was the only category of information that the BBC had to disclose (again, subject to particular exemptions). His reasons are at paras 44 to 66 of his judgment in the Sugar case and at paras 53 to 73 of his judgment in the financial information case, which are in almost identical terms. The Court of Appeal agreed with his reasoning and conclusions (Lord Neuberger MR, paras 39 to 52). I respectfully agree. In my judgment the correct view is that (as Lord Neuberger MR put it at para 44): once it is established that the information sought is held by the BBC for the purposes of journalism, it is effectively exempt from production under the Act, even if the information is also held by the BBC for other purposes. So in effect there are only two categories: one is information held for purposes that are in no way those of journalism, and the other is information held for the purposes of journalism, even if it is also held for other (possibly more important) purposes. That conclusion follows both from FOIAs legislative purpose and from its language. First, legislative purpose. It is common ground that FOIA was enacted in order to promote an important public interest in access to information about public bodies. There are (as Schedule 1 to FOIA reveals) thousands of public authorities, large and small, which are paid for out of public funds, and whose actions or omissions may have a profound effect on citizens and residents of the United Kingdom. There is a strong public interest in the press and the general public having the right, subject to appropriate safeguards, to require public authorities to provide information about their activities. It adds to parliamentary scrutiny a further and more direct route to a measure of public accountability. There is therefore force, in relation to FOIA as well as in relation to the Freedom of Information (Scotland) Act 2002, in the proposition that, as the whole purpose of the 2002 Act is the release of information, it should be construed in as liberal a manner as possible. That is how it was put by Lord Marnoch in Common Services Agency v Scottish Information Commissioner [2006] CSIH 58, 2007 SC 231, para 32, approved by Lord Hope in the House of Lords [2008] UKHL 47, [2008] 1 WLR 1550, para 4. But Lord Hope continued: But that proposition must not be applied too widely, without regard to the way the Act was designed to operate in conjunction with the [Data Protection Act 1998]. It is obvious that not all government can be completely open, and special consideration also had to be given to the release of personal information relating to individuals. So while the entitlement to information is expressed initially in the broadest terms that are imaginable, it is qualified in respects that are equally significant and to which appropriate weight must also be given. The scope and nature of the various exemptions plays a key role within the Acts complex analytical framework. (The Commons Services Agency case serves to explain the position on freedom of information in Scotland, which is not immediately apparent from FOIA itself. FOIA extends to Scotland and so applies to operations in Scotland of public authorities which operate throughout the United Kingdom; but Scotland also has its own statute applying to Scottish public authorities.) In this case, there is a powerful public interest pulling in the opposite direction. It is that public service broadcasters, no less than the commercial media, should be free to gather, edit and publish news and comment on current affairs without the inhibition of an obligation to make public disclosure of or about their work in progress. They should also be free of inhibition in monitoring and reviewing their output in order to maintain standards and rectify lapses. A measure of protection might have been available under some of the qualified exemptions in Part II of FOIA, in particular those in sections 36 (Prejudice to effective conduct of public affairs), 41 (Information provided in confidence) and 43 (Commercial interests). But Parliament evidently decided that the BBCs important right to freedom of expression warranted a more general and unqualified protection for information held for the purposes of the BBCs journalistic, artistic and literary output. That being the purpose of the immunity, section 7 and Schedule 1 Part VI, as they apply to the BBC, would have failed to achieve their purpose if the coexistence of other non-journalistic purposes resulted in the loss of immunity. That is confirmed by the language of these statutory provisions. The disclosable material is defined in terms (held for purposes other than those of journalism, art or literature) which are positive in form but negative in substance. The real emphasis is on what is not disclosable that is material held for the purposes of the BBCs broadcasting output. It is the most natural construction, which does not depend on reading in any words. That was the view formed both by Irwin J (see especially paras 55 to 58 and 63 to 65 of his Sugar judgment) and by Lord Neuberger MR (see especially paras 40 to 42, 44 to 46, and 49 of his judgment). Mr Eicke QC was critical of para 49, submitting that it assumed the very answer that the Court of Appeal was seeking to justify. I consider that criticism to be unjustified, though the reasoning was perhaps rather compressed. The unspoken premise is that Parliament must have intended to lay down a workable test, and both an exclusively and a predominantly test would raise almost insoluble problems in their practical application. That is not to say that the test approved by Irwin J and the Court of Appeal is without its difficulties. Parliament has, in trying to provide machinery for determining where the stronger public interest lies, placed a heavy burden on the Tribunal as an expert decision-maker. Davis J cited the well-known speech of Lord Mustill in R v Monopolies and Mergers Commission, Ex p South Yorkshire Transport Ltd [1993] 1 WLR 23, 32-33 (where the relevant statute referred to a substantial part of the United Kingdom): But this clear-cut approach cannot be applied to every case, for the criterion so established may itself be so imprecise that different decision-makers, each acting rationally, might reach differing conclusions when applying it to the facts of a given case. In such a case the court is entitled to substitute its own opinion for that of the person to whom the decision has been entrusted only if the decision is so aberrant that it cannot be classed as rational: Edwards v Bairstow [1956] AC 14. The present is such a case. Even after eliminating inappropriate senses of substantial one is still left with a meaning broad enough to call for the exercise of judgment rather than an exact quantitative measurement. I consider that Davis J was right to regard the present case as falling within that category. He was however mistaken in supposing that the Tribunal had no jurisdiction to hear an appeal, and so he should have treated the Tribunal, and not the Commissioner, as the crucial decision-maker. Irwin J concluded (para 66 of his Sugar judgment) that the Tribunal had erred in law in applying the predominant purpose test. So did Lord Neuberger MR (para 62). So did Moses LJ (para 73), though I have some difficulty with the way his reasoning is expressed on this point, as it seems to come close to conflicting with the reasoning of the majority of the House of Lords in the first round of litigation, [2009] 1 WLR 430. Munby LJ agreed with both judgments. I would therefore dismiss this appeal, but for reasons different from those set out in the judgment of Lord Wilson. I would add that I am conscious that this interpretation of the limitation may be seen as conferring on the BBC an immunity so wide as to make the particular statutory redemptions redundant, and leave the BBC almost free of obligations under FOIA. As the Tribunal observed (paras 96 and 102): On a broad definition, it could be argued that all of the activities of the BBC are for the purposes of journalism, art and literature, as these are broad descriptions of a substantial part of its broadcast output . . . However, if a very broad definition was intended, there would be little point in including the BBC in Schedule 1, Part VI of FOIA. The BBC could have been omitted altogether from the scope of the Act. The same point was made by Davis J [2007] 1 WLR 2583, para 55. In my view the correct approach is for the Tribunal, while eschewing the predominance of purpose as a test, to have some regard to the directness of the purpose. That is not a distinction without a difference. It is not weighing one purpose against another, but considering the proximity between the subject-matter of the request and the BBCs journalistic activities and end-product. As Irwin J observed in the financial information case, para 87, in the context of a critique of what was operational: The cost of cleaning the BBC Boardroom is only remotely linked to the product of the BBC. I respectfully agree with the measured comments of Lord Neuberger MR (para 55): In my view, whatever meaning is given to journalism I would not be sympathetic to the notion that information about, for instance, advertising revenue, property ownership or outgoings, financial debt, and the like would normally be held for purposes . . . of journalism. No doubt there can be said to be a link between such information and journalism: the more that is spent on wages, rent or interest payments, the less there is for programmes. However, on that basis, literally every piece of information held by the BBC could be said to be held for the purposes of journalism. In my view, save on particular facts, such information, although it may well affect journalism-related issues and decisions, would not normally be held for purposes . . . of journalism. The question whether information is held for the purposes of journalism should thus be considered in a relatively narrow rather than a relatively wide way. That is the best way forward in order to strike the difficult balance of competing interests for which Parliament must be taken to have been aiming. But it will still leave some difficult decisions for the Commissioner and, on appeal, the Tribunal. There cannot be (in the words of Davis J, para 57) any unequivocal, bright-line test. All of us agree that on any conventional approach to the construction of the Freedom of Information Act 2000 (the Act) and in particular the expression information held for purposes . . . of journalism within the meaning of Schedule 1 to the Act, it clearly encompasses the Balen Report (the Report) throughout the whole period that the BBC has held it. It is the appellants contention, however, that this approach to the construction of the Act and the consequent non-disclosure of the Report would violate article 10 of the European Convention on Human Rights and that the Court is accordingly bound, consistently with section 3 of the Human Rights Act 1998, to read and give effect to the Act so as to require the Reports disclosure. It is this contention that I am here principally concerned to address. Given, however, that a disagreement exists within the Court as to whether information held for the purposes of journalism but held also for other purposes must be subjected to a test as to which purpose is predominant and disclosed if the predominant purpose is non-journalistic, I shall in conclusion briefly address this issue too, irrelevant though it is to the outcome of this particular appeal. The appellants article 10 contention is not one that appears to have been advanced before Irwin J at first instance (certainly there is no mention of article 10 in his judgment). Article 10 was, however, invoked in the Court of Appeal, indeed by both sides. The BBC submitted that disclosure of the Report (and any other information held for the purposes of journalism) would have a chilling effect upon their right to freedom of expression; the appellant submitted that, subject only to narrow exceptions (none being applicable here), article 10 gives him a right of access to all such information. The Court of Appeal, however, derived no assistance from article 10 either way, Moses LJ (at para 77) finding it impossible to identify within the jurisprudence any pointer for or against the rival contentions. Before this Court Mr Eicke QC has vigorously returned to article 10 and advances what is essentially a two stage argument. First, he contends, in reliance principally upon a trilogy of Strasbourg decisions Matky v Czech Republic (Application No 19101/03) (unreported) 10 July 2006, (Matky), Tarsasag A Szabadsagjogokert v Hungary (2009) 53 EHRR 130 (14 April 2009) (Tarsasag), and Kenedi v Hungary (Application No 31475/05) (unreported) 26 August 2009 (Kenedi) that the ECtHR has recently moved towards the recognition of a right of access to information and that in the particular circumstances of the present case an interpretation of the Act which withholds from disclosure a document such as the Report interferes with the right of access to information protected by article 10(1). Secondly he submits that such interference is not necessary in a democratic society so as to be justified under article 10(2). He not only disputes that the release of the Report would have a chilling effect on freedom of expression but submits that only the need to protect journalistic sources or perhaps, indeed, more narrowly still, the need to protect sources who might otherwise be deterred from assisting journalists would constitute an overriding requirement of the public interest sufficient to justify this interference with the citizens article 10(1) right of access to information. Before turning to the trilogy of decisions upon which the appellant mainly relies it is helpful first to note the well-established body of Strasbourg jurisprudence which is recognised to define, generally speaking, the nature and extent of the right under article 10(1) to receive . . . information and ideas without interference by public authority. It is sufficient for present purposes to cite a short passage from the unanimous Grand Chamber decision in Roche v United Kingdom (2005) 42 EHRR 599 at para 172: The Court reiterates its conclusion in Leander v Sweden (1987) 9 EHRR 433 and in Gaskin v United Kingdom (1989) 12 EHRR 36 and, more recently, confirmed in Guerra v Italy (1998) 26 EHRR 357, that the freedom to receive information prohibits a Government from restricting a person from receiving information that others wish or may be willing to impart to him and that that freedom cannot be construed as imposing on a State, in circumstances such as those of the present case, positive obligations to . . . disseminate information of its own motion. It is right to observe, before moving on, that the circumstances of those particular cases were that the applicants were attempting to obtain information respectively about their being regarded as a security risk (Leander), about their childhood (Gaskin), about a chemical factory (Guerra) and about long-past Porton Down tests in which they had participated (Roche). I come then to the first of the trilogy of cases on which the appellant so strongly relies: Matky. The complainant there was seeking, against the background of a general right to information under the Czech legal system, access to documentation concerning the construction of a new nuclear power station and in particular was challenging a requirement of the domestic legislation (article 133 of the Building Act) that a request for information had to be justified. The Court accepted that the rejection of his request constituted an interference with the complainants right to receive information. But it held that the decision could not be considered arbitrary, recognised that Contracting States enjoy a certain margin of appreciation in this area and unanimously rejected the complaint as manifestly ill-founded. Matky seems accordingly an unpromising foundation upon which to build any significant departure from what may be called the Roche approach to the freedom to receive information protected by article 10. Nevertheless, in Tarsasag (the second in the appellants trilogy of cases) it was to Matky that the Second Section of the Court referred as (the sole) authority for the proposition that, the Leander line of authority notwithstanding, the Court has recently advanced towards a broader interpretation of the notion of freedom to receive information and thereby towards the recognition of a right of access to information. In Tarsasag the court upheld a complaint by the Hungarian Civil Liberties Union that a refusal by the Constitutional Court to grant them access to an MPs pending complaint as to the constitutionality of certain proposed amendments to the Criminal Code breached its article 10 right to receive information. The Government having accepted that there had been an interference with the applicants article 10 rights, Mr Eicke relies in particular upon the following passage in the Courts judgment: [The Court] considers that the present case essentially concerns an interference by virtue of the censorial power of an information monopoly with the exercise of the functions of a social watchdog, like the press, rather than a denial of a general right of access to official documents. . . . Moreover, the states obligations in matters of freedom of the press include the elimination of barriers to the exercise of press functions where, in issues of public interest, such barriers exist solely because of an information monopoly held by the authorities. (para 36) Kenedi, the third in the trilogy of cases, was decided just four months after Tarsasag, also by the Second Section of the Court (including six of the same seven judges who had decided Tarsasag). The applicant there was a historian specialising in the functioning of the secret services of dictatorships. Although a succession of domestic court judgments had held him to be entitled to access to various documents for research purposes, the Ministry had refused to disclose them. Once again, hardly surprisingly in this case, the government conceded that there had been an interference with the applicants article 10 rights. The Court had no difficulty in finding in the result a violation of article 10: the Court cannot but conclude that the obstinate reluctance of the respondent States authorities to comply with the execution orders was in defiance of domestic law and tantamount to arbitrariness. In my judgment these three cases fall far short of establishing that an individuals article 10(1) freedom to receive information is interfered with whenever, as in the present case, a public authority, acting consistently with the domestic legislation governing the nature and extent of its obligations to disclose information, refuses access to documents. Of course, every public authority has in one sense the censorial power of an information monopoly in respect of its own internal documents. But that consideration alone cannot give rise to a prima facie interference with article 10 rights whenever the disclosure of such documents is refused. Such a view would conflict squarely with the Roche approach. The appellants difficulty here is not that Mr Sugar was not exercising the functions of a social watchdog, like the press. (Perhaps he was.) The Jewish Chronicle would be in no different or better position. The appellants difficulty to my mind is rather that article 10 creates no general right to freedom of information and where, as here, the legislation expressly limits such right to information held otherwise than for the purposes of journalism, it is not interfered with when access is refused to documents which are held for journalistic purposes. True it is, as Lord Judge CJ noted when giving the judgment of the Court in Independent News and Media Ltd v A [2010] 1 WLR 2262 (para 42), that the Venice Commission has described Tarsasag as a landmark decision on the relation between freedom of information and the . . . Convention. Whatever else might be said about Mr Eickes trilogy of cases, however, they cannot to my mind be said to support his first proposition having regard to the particular relationship between the parties in this case. I should perhaps add for the sake of completeness that there is absolutely nothing in Independent News and Media Ltd v A, still less in R (Mohamed) v Secretary of State for Foreign Affairs (No 2) [2011] QB 218, to support Mr Eickes reliance on article 10 in the present context. It follows that for my part I would hold that the appellants article 10 case fails at the first stage. There was no interference here with Mr Sugars freedom to receive information. The Act not having conferred upon him any relevant right of access to information, he had no such freedom. Even were that not so, however, I would reject the second stage of Mr Eickes argument too. Even were one to start with the supposition that any refusal by a public authority to disclose information involves a prima facie interference with a persons freedom to receive that information, it seems to me open to the State to legislate, as here, a blanket exclusion of any requirement to disclose information held (whether predominantly or not) for the purposes of journalism. The appellants contrary argument fixes in particular upon a line of Strasbourg cases concerned essentially with journalistic sources: Goodwin v United Kingdom (1996) 22 EHRR 123, Nordisk Film and TV A/S v Denmark (Application No 40485/02) (8 December 2005) and Sanoma Uitgevers BV v The Netherlands (Application No 38224/03) (14 September 2010). What must be recognised, however, is that in each of these cases it was the journalists who were the complainants, that what they were complaining about were domestic court orders requiring disclosure of their sources or research material, and that the starting point for the Strasbourg Courts consideration of these complaints was, as the Grand Chamber noted at paragraph 59 of its judgment in Sanoma: In its earlier case-law the Court has found various acts of the authorities compelling journalists to give up their privilege and provide information on their sources or to obtain access to journalistic information to constitute interferences with journalistic freedom of expression. The applicant in Goodwin succeeded on the basis that he had been ordered to reveal the identity of a person who had provided him with information on an unattributable basis. The applicant in Nordisk failed because on the particular facts of that case (which it is not here necessary to rehearse) the applicant was not being ordered to disclose its journalistic source of information but rather part of its research material and that, even though the latter may have a chilling effect on the exercise of journalistic freedom of expression, there it was justified by an overriding requirement in the public interest: assisting in the prosecution of paedophiles. The applicant company in Sanoma succeeded because there was an order for the compulsory surrender of journalistic material containing information capable of identifying journalistic sources, an interference with its article 10 rights which the Court there held was not prescribed by law: the quality of the law was deficient in that there was no procedure attended by adequate legal safeguards for the applicant company in order to enable an independent assessment as to whether the interest of the criminal investigation overrode the public interest in the protection of journalistic sources. (para 100) Helpful though these cases may be, however, in explaining the limitations placed upon a journalists prima facie right to protect both his sources and his research material from compulsory court orders for their disclosure, they say little if anything about what other interests and concerns may properly be invoked by journalists in resisting the disclosure to others (whether or not themselves journalists) of other information held for journalistic purposes (ie information apart from that necessary to protect confidential sources and research material, including for example the Balen Report). To my mind it stands to reason that the disclosure of a document such as the Report would be likely to affect the candour of any similar future report. As the Information Tribunal itself found in the present case (at para 116): Self-critical review and analysis of output is a necessary part of safeguarding and enhancing quality. The necessary frankness of such internal analysis would be damaged if it were to be written in an anodyne fashion, as would be likely to be the case if it were potentially disclosable to a rival broadcaster. (Or, one may add, to anyone else.) In short I would reject also the second stage of the appellants argument: the contention that section 3 of the Human Rights Act should be invoked here to limit the information stipulated by the Act to be undisclosable through being held for the purposes of journalism merely to that held for the purpose of safeguarding the BBCs confidential sources. I turn then briefly to the question whether, in a case where information is held partly for journalistic and partly for non-journalistic purposes, it is necessary to ask which purpose is predominant and to disclose any information held predominantly for non-journalistic purposes. I conclude, in common with Lord Phillips and Lord Walker (and, indeed, with the Court of Appeal), but in respectful disagreement with Lord Wilson, that the answer is No. My reasons being essentially the same as those given by both Lord Phillips and Lord Walker (although perhaps more particularly those of Lord Walker), I can explain my concurrence very shortly indeed. Really it comes to this. With regard both to the BBC (together with the three other listed broadcasters) and the Bank of England, Parliament, for differing but in each case compelling reasons of national interest, was concerned not to subject these institutions to the operation of the Act including, for example, the need to resort to Part II of the Act to justify any reluctance to withhold some particular information from disclosure save only in strictly limited circumstances. In the case of the BBC and other broadcasters it is only in respect of information held for purposes other than those of journalism, art or literature. In the event that information is held to any significant degree (and we are all agreed that the de minimis principle would otherwise apply) for the purposes of journalism, then to my mind it would seem artificial and impermissible to construe the Act as applying to that information. Quite simply, it remains information held for the purposes of journalism and therefore constitutes (within the meaning of section 7) other information than information held for purposes other than those of journalism. The mere fact that it may be held (even perhaps to a predominant extent) also for purposes other than those of journalism cannot sensibly serve to enlarge the basic category of information in respect of which the BBC is listed and with regard to which, therefore, the Act is not disapplied by section 7. In short, like Lord Walker, I find that the natural construction of the Act, and Parliaments evident concern to ensure that the interests of free expression trump without more those of freedom of information, supports the BBCs case on this issue. As for the point at which information will cease to be held to any significant degree for the purposes of journalism and become held instead, say, solely for archival purposes, that necessarily will depend on the facts of any particular case and involve a question of judgment. I too agree with Lord Walker that the central question to be asked in such a context will be, not which purpose is predominant, but rather whether there remains any sufficiently direct link between the BBCs continuing holding of the information and the achievement of its journalistic purposes. I too would dismiss this appeal. The question on this appeal is whether the Balen Report commissioned by the BBC in relation to its Middle Eastern coverage and completed in July 2004 constituted information held for purposes other than those of journalism, art or literature (within Part VI of Schedule 1 to the Freedom of Information Act 2000). The appeal falls to be approached on the basis that the Report was at the material time held predominantly for journalistic but partly also for other purposes. The material time was in 2005, when Mr Sugar first requested disclosure of the Report. I agree with the other members of the Court that this appeal should be dismissed. However, there is a difference in the basis upon which different members of the Court would dismiss it. Lord Wilson would only dismiss it on the basis that the critical test is whether the BBC held the Report predominantly for the purposes of journalism. Were this not the test, he would have regarded the existence of other not insignificant purposes as sufficient to mean that the Report was held for purposes other than those of journalism, art or literature, and so disclosable. The other members of the Court take an opposite view: once it is established that the BBC held the Report for purposes of journalism, art or literature, the Report was exempt from disclosure, and would have been even had these not been the predominant purposes for which it was held. The rival arguments on this point are finely balanced, and its resolution in the present appeal on the basis of sparse facts causes me a certain concern. However, after some hesitation, I have come to the conclusion that the test applied by Lords Phillips, Walker and Brown is to be preferred. The Freedom of Information Act 2000 reflects the value to be attached to transparency and openness in the workings of public authorities in modern society, and its provisions should be construed in as liberal a manner as possible: Common Services Agency v Scottish Information Commissioner [2008] UKHL 47, [2008] 1 WLR 1550, para 4 per Lord Hope. But, as Lord Walker notes (para 77), Lord Hope went on to add that that proposition must not be applied too widely, and special considerations may lead to restrictions. In the present case, the special consideration to which the legislator gave effect was the freedom of the BBC as a public service broadcaster in relation to its journalistic, artistic and literary output. Information held for any such purposes of journalism, art or literature was absolutely exempt from disclosure. The legislator was not content with the more qualified protection from disclosure, often depending on a balancing exercise or evaluation, which would anyway have been available under section 2, read with sections 28, 29, 36, 41 and 43. To read into the words information held for purposes other than those of journalism, art or literature a need to evaluate whether such purposes were dominant seems to me unjustified. I share Lord Walkers view (para 79) that the real emphasis of the words is on what is not disclosable, so that the exemption applies, without more, if the information is held for any journalistic, artistic or literary purpose. That conclusion is to my mind also fortified by consideration of the exemption relating to certain functions of the Bank of England. Lord Phillips discusses the position regarding archived material. We were not given any clear picture when or on what basis archiving might occur. I assume that the reference is to material not envisaged as having any current purpose, but stored for historical purposes or against the possibility of some unforeseen need to revisit, or produce evidence of, past events. A library maintained for current reference would in contrast contain material held for the purposes of journalism, art or literature. I agree with Lord Browns analysis of the current state of Strasbourg authority, and also with Lord Wilsons comment in para 59 on the decisions (or dicta) in Ullah and Al-Skeini. Nothing in the Strasbourg jurisprudence calls us to do anything but give effect in this case to what we consider to be the proper construction of the 2000 Act under ordinary domestic principles. It is unnecessary to say more, or to add to recent debate about the nature of the Convention rights in the United Kingdom or the domestic courts role in interpreting and applying them taking into account any relevant Strasbourg case-law. I agree with Lord Browns analysis of the current state of Strasbourg authority, and also with Lord Wilsons comment in para 59 on the decisions (or dicta) in Ullah and Al-Skeini. Nothing in the Strasbourg jurisprudence calls us to do anything but give effect in this case to what we consider to be the proper construction of the 2000 Act under ordinary domestic principles. It is unnecessary to say more, or to add to recent debate about the nature of the Convention rights in the United Kingdom or the domestic courts role in interpreting and applying them taking into account any relevant Strasbourg case-law. |
This appeal raises the issue whether, as the appellants contend, a claimant who is seeking to maintain an action in passing off need only establish a reputation among a significant section of the public within the jurisdiction, or whether, as the courts below held, such a claimant must also establish a business with customers within the jurisdiction. It is an issue on which there is conflicting jurisprudence in the common law world, and it is of particularly acute significance in the age of global electronic communication. The factual background The claim in these proceedings relates to internet protocol television (IPTV), which is a way of delivering TV or video content over the internet. There are two main types of IPTV, closed circuit and over the top. Closed circuit IPTV uses dedicated bandwidth on the providers network. It requires the subscriber to have a set top box to receive the service, the signal for which is encrypted. In many respects, closed circuit IPTV services are akin to traditional cable broadcasts. However, in addition to linear television broadcasts, IPTV services typically include catch up facilities and other forms of video on demand. Over the top (OTT) IPTV involves the signal being delivered via a standard broadband connection. OTT IPTV can be viewed (with appropriate software applications) on any device with a broadband connection. The appellant claimants, Starbucks (HK) Ltd and PCCW Media Ltd, are members of a substantial group based in Hong Kong headed by PCCW Ltd, and I will refer to group members compendiously as PCCM. Since 2003, PCCM has provided a closed circuit IPTV service in Hong Kong. The service was launched under the name NOW BROADBAND TV, but in March 2006 the name was changed to NOW TV, under which it has operated ever since. By 2012, after PCCM had spent substantial sums on marketing, NOW TV had become the largest pay TV operator in Hong Kong, with around 1.2m subscribers, covering over half the households in Hong Kong. Having started with 23 channels it now has around 200, and many of the programmes are PCCMs, quite a few of them under brand names using the word NOW. Although the name of the channel has always been English, all PCCMs programmes are in Mandarin or Cantonese, but the channel also carries some English language programmes (including Sky News and Manchester Uniteds channel, MUTV). Ninety per cent of PCCMs pay TV revenue comes from subscriptions, the balance coming from advertising. People in the United Kingdom cannot receive PCCM's closed circuit service. No set top boxes for it have been supplied in the UK, no subscription has been registered to a subscriber with a UK billing address, and there is no evidence of any subscriptions having been paid for with credit or debit cards with billing addresses in the UK. Consistently with this, PCCM has never held an Ofcom licence for broadcasting in the UK. However, a number of Chinese speakers permanently or temporarily resident in the UK in 2012 were aware of the NOW TV service through exposure to it when residing in or visiting Hong Kong. On the findings made by the trial judge, UK residents could also become acquainted with the NOW TV service in three other ways by 2012. First, since July 2007, the Chinese language content had been accessible free of charge via PCCMs own websites. Secondly, programmes and trailers from the NOW TV service had been available free of charge on PCCMs channel on the YouTube website. Thirdly, a few of PCCMs programmes from its NOW TV service had been available as videos on demand on various international airlines, three of which flew into the UK, but none of whose in flight magazines made reference to NOW TV. PCCM had been giving consideration to expanding its NOW TV subscription service internationally, including into the UK, since some time in 2009, when it began discussions with a potential UK partner, and those discussions had been continuing during 2012. In June 2012, PCCM had launched a NOW player app in the UK, both on its website and via the Apple App Store, in order to warm up the market for the launch of PCCMs NOW TV on the platform of its proposed UK partner. The app and the channels were to be targeted at the Chinese speaking population in the UK. By October 2012, just over 2,200 people in the UK had downloaded the app. Meanwhile, on 21 March 2012, the three respondent defendants, British Sky Broadcasting Group PLC, British Sky Broadcasting Ltd and Sky IP International Ltd, who are all part of the British Sky Broadcasting Group, and have been referred to throughout these proceedings as Sky, announced that they intended to launch a new IPTV service under the name NOW TV, as an OTT service. They subsequently effected that launch in beta form in mid July 2012. The development of Skys NOW TV service had begun with a presentation to their operating executives in late March 2011, and, after consulting an external branding organisation, Sky chose the name Sky Movies NOW in September 2011. However, further consideration suggested that it would be unwise to include the word Sky in the name of the new service, and a consumer research agency was instructed to address the naming issue. The agency recommended simply using the word Now, and Sky decided to follow that advice, while including the phrase Powered by Sky in the branding. The instant proceedings On 19 April 2012, PCCM began these proceedings, seeking to prevent Sky from using the name NOW TV in connection with its OTT IPTV service in the UK, on the grounds that the use of that name amounted to passing off. (There was also a claim that it infringed a trade mark registered in the name of PCCM. That claim was dismissed by the courts below and is not pursued in this appeal.) The claim came before Arnold J, and in the course of his judgment, he found that a substantial number of Chinese speakers permanently or temporarily resident in the UK were acquainted with PCCMs NOW TV service through exposure to it when residing in or visiting Hong Kong. He also found that PCCMs NOW TV service had acquired a reputation amongst members of the Chinese speaking community in the UK, based on their exposure to it via PCCMs NOW TV channel on the YouTube website and PCCMs NOW TV websites (together the websites) as well as the showing of PCCMs programmes on international flights. Arnold J held that this reputation was modest but more than de minimis. However, Arnold J dismissed PCCMs claim. He rejected the argument that it was sufficient for PCCM to identify a body of people in the UK who associated the mark NOW TV with its IPTV service in Hong Kong: they were not customers in the UK, and therefore did not represent goodwill in the jurisdiction. He also considered that the mere accessibility of PCCMs material in the UK via the websites did not give rise to a protectable goodwill, stating that the key question is whether the viewers of PCCMs programmes in the [UK] were customers for its service so as to give rise to a protectable goodwill in the UK [2012] EWHC 3074 Ch, [2013] FSR 29, para 147. Two paragraphs later, he said that the contention that viewers in the UK of PCCMs programmes on the websites represented goodwill would, as he put it, stretch the concept of customer to breaking point. As he explained, if it were otherwise, hundreds of television channels worldwide would have customers, and hence protectable goodwill, in the UK, as a result of the YouTube website. In para 150 of his judgment, he concluded that the reality was that PCCM's primary purpose in making programme content available via YouTube, its own websites and international airlines was to promote its Hong Kong business by encouraging people to subscribe in Hong Kong. Therefore, he held that PCCMs customers were its viewers in Hong Kong, but not viewers in the UK, and so its business had goodwill in Hong Kong but not in the UK, so that the passing off claim failed. Arnold J nonetheless added in para 158 that, if he had found PCCM to have a protectable goodwill in the UK, he would have accepted that there was a likelihood that a substantial number of UK viewers who were previously familiar with PCCMs NOW TV would wrongly believe that Skys NOW TV emanated from the same or a connected source. Arnold J gave PCCM permission to appeal against his decision on the passing off claim. PCCMs appeal to the Court of Appeal was dismissed for reasons given by Sir John Mummery, with whom Patten and Pitchford LJJ agreed [2013] EWCA Civ 1465, [2014] FSR 20. The Court of Appeal essentially agreed with Arnold Js analysis as briefly summarised in para 11 above. In the circumstances, they did not need to deal with the issues raised in Skys respondents notice, in which it was contended that Arnold J had erred in finding that (i) the reputation of PCCM's NOW service in the UK was more than de minimis, and (ii) internet users visiting PCCMs website could access any video content from the UK at any relevant time. With the permission of this Court, PCCM now appeals against the decision of the Court of Appeal, upholding Arnold Js dismissal of its passing off claim. The issue on this appeal As Lord Oliver of Aylmerton explained in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491, [t]he law of passing off can be summarised in one short general proposition no man may pass off his goods as those of another. As he immediately went on to say, a claimant, or a plaintiff as it was then, has to establish three elements in order to succeed in a passing off action: First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying get up (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get up is recognised by the public as distinctive specifically of the plaintiffs goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiffs identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. Thirdly, he must demonstrate that he suffers or that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendants misrepresentation that the source of the defendants goods or services is the same as the source of those offered by the plaintiff. It is common ground that, in order to succeed, a claimant in a passing off action has to establish its claim as at the inception of the use complained of. Although there is no decision of the House of Lords specifically to that effect, it is supported by a number of Court of Appeal decisions, perhaps most clearly from Anheuser Busch Inc v Budejovicky Budvar NP [1984] FSR 413, 462, and it appears to me that it must be right. Accordingly, as the Judge accepted, PCCM had to establish the three elements (or, on one view of PCCMs case on the first element, an updated version of the three elements) identified by Lord Oliver, in relation to the NOW TV mark for IPTV services as at 21 March 2012, the date when Sky went public about its imminent intention to launch its IPTV service in the UK under the name NOW TV. Subject to the issues raised by Sky in their respondents notice, and based on the conclusions reached by the Judge, PCCM established the second and third of the three elements identified by Lord Oliver. The argument on this appeal has therefore focussed on the first element, namely the requirement that PCCM must establish what Lord Oliver referred to as a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the relevant get up, viz. the mark NOW TV with PCCMs IPTV service. The Judge and the Court of Appeal thought that it was not enough for PCCM to establish that it had a reputation among a significant number of people in this country, if it had no goodwill in this country. Thus, they considered that the fact that there were people in this country who associated NOW TV with PCCMs product would not satisfy the first element, if those people were not or had not been customers for PCCMs product in this country. They also considered that the fact that people in this country had been exposed to PCCMs NOW TV products via the websites and the showing of PCCMs programmes on international flights did not make them customers for the purpose of establishing goodwill in this country. On behalf of Sky, Mr Hobbs QC, who appeared with Mr Purvis QC and Mr Hollingworth, supported these conclusions. Mr Silverleaf QC, who appeared with Ms Pickard for PCCM, argued that the courts below were wrong, and in particular that (i) it was sufficient for PCCM to succeed in its passing off claim that it had established a reputation for the NOW TV name in connection with its IPTV service among a significant number of people in this country, even if they were not customers of PCCMs IPTV services in this country, but in Hong Kong, and (ii) in any event, PCCM had customers in this country, because a significant number of people were PCCMs customers in this country by virtue of having been exposed to PCCMs programmes on the websites and on international flights. The House of Lords and Privy Council authorities and Anheuser Busch In the course of their excellent arguments, each counsel referred to a number of judgments to support their respective cases. A degree of caution is appropriate when considering these earlier cases, for two reasons. First, in many (but not all) of the cases, the precise issue which this appeal raises was not being considered, and therefore the judges may not have had that issue in the forefront of their minds or have received full argument in connection with it. Secondly, (despite certifying in its notice of appeal that PCCM would not be inviting this Court to depart from any decision of the House of Lords) Mr Silverleaf argued that we should, if necessary, develop the law so that it accords with their case: thus, it would not automatically be enough to conclude that the reasoning in a previous decision of the House of Lords effectively disposes of this appeal. Nonetheless, it does appear that the courts in the United Kingdom have consistently held that it is necessary for a claimant to have goodwill, in the sense of a customer base, in this jurisdiction, before it can satisfy the first element identified by Lord Oliver. That this has been the consistent theme in the cases can be well established by reference to a series of House of Lords decisions, and a decision of the Judicial Committee of the Privy Council, over the past century. In AG Spalding & Bros v AW Gamage Ltd (1915) 32 RPC 273, 284, Lord Parker of Waddington said that the nature of the right the invasion of which is the subject of [a] passing off action was a right of property in the business or goodwill likely to be injured by the misrepresentation, and, at least unless the concept of goodwill is given a significantly wider meaning than that which it naturally has, it would not extend to a mere reputation. Thus, in Inland Revenue Commissioners v Muller & Cos Margarine Ltd [1901] AC 217, 235, Lord Lindley explained that goodwill is inseparable from the business to which it adds value, and, in my opinion, exists where the business is carried on. As he went on to explain, goodwill can have a distinct locality even within a particular jurisdiction. Observations of Lord Macnaghten, Lord James of Hereford and Lord Brampton at pp 224, 228 and 231 233 respectively were to much the same effect. Although the observations were made in the context of a revenue case, they purported to be general statements about the meaning of goodwill. In T Oertli AG v EJ Bowman (London) Ltd [1959] RPC 1, the House of Lords unanimously upheld a decision of the Court of Appeal, where Jenkins LJ had said that it was of course essential to the success of any claim in respect of passing off based on the use of a given mark or get up that the plaintiff should be able to show that the disputed mark or get up has become by user in this country distinctive of the plaintiffs goods see at [1957] RPC 388, 397. In another passing off case, Star Industrial Co Ltd v Yap Kwee Kor [1976] FSR 256, 269, Lord Diplock, giving the advice of the Privy Council, referred to and relied on the observations of Lord Parker in Spalding. Lord Diplock explained that [g]oodwill, as the subject of proprietary rights, is incapable of subsisting by itself, having no independent existence apart from the business to which it is attached. He went on to explain that it is local in character and divisible, so that if the business is carried on in several countries a separate goodwill attaches to it in each. In Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731, 752, Lord Fraser of Tullybelton quoted Lord Diplocks observations in Star Industrial with approval. At pp 755 756, he went on to identify five facts which it was essential for a plaintiff to establish in a passing off action, of which the first was that his business consists of, or includes, selling in England a class of goods to which a particular trade name applies. In the same case, Lord Diplock at p 742, citing Spalding, identified five characteristics which must be present in order to create a valid cause of action for passing off, which included caus[ing] actual damage to a business or goodwill of the [plaintiff]. Viscount Dilhorne, Lord Salmon and Lord Scarman agreed with both speeches. In the passage in his speech in Reckitt & Colman, quoted in para 15 above, Lord Oliver referred to a goodwill or reputation in the mind of the purchasing public, and at p 510, Lord Jauncey of Tullichettle referred to a requirement that the plaintiffs goods have acquired a reputation in the market and are known by some distinguishing feature. Lord Bridge of Harwich (with undisguised reluctance, albeit not in connection with the point at issue), Lord Brandon of Oakbrook and Lord Goff of Chieveley agreed with both speeches. The ratio of the decision of the Court of Appeal in Anheuser Busch was indisputably that, in order to support a passing off claim, the claimant must establish goodwill in the form of customers for its goods or services within the jurisdiction. In that case the importation from the United States of bottled beer under the plaintiffs BUDWEISER mark for use and sale in US military and diplomatic establishments within the UK and other European countries did not entitle the plaintiff to establish what Lord Oliver later stated was the first element of a passing off claim in relation to the UK, at any rate outside those establishments. Oliver LJ (later of course Lord Oliver) said at p 470 that the sales of 5,000,000 cases of bottles over 12 years in US diplomatic and military establishments in European countries were sales for a very special market having no connection with the market in the countries in which the consumption actually took place; having said that, he accepted that there could well be a localised goodwill within the diplomatic and military establishments. He also emphasised that the fact that the BUDWEISER mark may have had a reputation among a significant number of people in the UK did not assist the plaintiff as it involved confus[ing] goodwill, which cannot exist in a vacuum, with mere reputation, adding that reputation which may, no doubt, and frequently does, exist without any supporting local business, does not by itself constitute a property which the law protects. OConnor and Dillon LJJ expressed similar views at pp 471 472 and 476 respectively. PCCMs case PCCM contends that, particularly in an age of global electronic communication and relatively quick and cheap travel, it is inconsistent with commercial reality and unrealistic in terms of practicality to treat the reputation or goodwill associated with a mark for a particular product or service as limited to jurisdictions in which there is a business with customers for the product or service, and incapable of extending to jurisdictions in which the mark is simply associated with the particular product or service as a matter of reputation. More specifically, PCCM argues that, in any event, on the facts found by Arnold J, it had a sufficient goodwill or reputation in the mind of the purchasing public [in the United Kingdom] by association with the identifying get up of NOW TV attached to its products and services, namely its IPTV service, to satisfy the first element, as identified by Lord Oliver, of its passing off claim. On behalf of PCCM, Mr Silverleaf contended that the notion that goodwill should be limited to jurisdictions where the claimant had business is wrong in principle: the question of where the claimant had goodwill was a matter of fact and evidence, not a matter of law. Further, in the present age of international travel and the presence of the internet, he argued that it would be anachronistic and unjust if there was no right to bring passing off proceedings, particularly in relation to an electronically communicated service, in a jurisdiction where, as a matter of fact, the plaintiffs mark had acquired a reputation. He suggested that the mere fact that the customers are in Hong Kong when they enjoy the service should not undermine PCCMs case that they have such a reputation here which deserves to be protected. He also submitted that the law would be arbitrary if PCCM had no right to bring passing off proceedings despite having a reputation in this country simply because users did not pay when they viewed PCCMs programmes free on the websites. Mr Silverleaf contrasted what he suggested was the slight difference between the present case and cases such as Sheraton Corporation of America v Sheraton Motels Ltd [1964] RPC 202. In that case, Buckley J held that a United States hotel company had a sufficiently arguable case for saying that it had goodwill in the UK to justify an interlocutory injunction against use of its mark; the goodwill was based on the fact that customers living in the United Kingdom booked rooms in the plaintiffs hotels through the plaintiffs London office or through UK based travel agents. So far as authorities are concerned, Mr Silverleaf suggested that there was no decision of the House of Lords which was inconsistent with this analysis, and, if we concluded that there was, we should depart from it. He accepted that some of the reasoning of the Privy Council in Star Industrial and the decision and reasoning of the Court of Appeal in Anheuser Busch were inconsistent with PCCMs argument, but rightly said that we were not bound by them. He also relied on some decisions of the English courts to which I have not so far referred, some decisions of courts in other common law jurisdictions, and the economic and practical realities of the early 21st century. Lord Diplocks suggestion in Star Industrial that, if business is carried on in more than one country there is a separate goodwill in each country, has been questioned in more than one domestic case. Thus, in two first instance decisions, Graham J suggested that the geographical boundaries of any goodwill should be a question of fact in each case, rather than one of law see Baskin Robbins Ice Cream Co v Gutman [1976] FSR 545, 547 548 and Maxims Ltd v Dye [1977] 1 WLR 1155, 1159, 1162. Megarry V C in Metric Resources Corporation v Leasemetrix Ltd [1979] FSR 571, 579 also expressed some doubt about Lord Diplocks view on this point. And Lord Diplocks analysis was described as not being an exactly accurate rendering of what was said in Inland Revenue Commissioners v Muller's Margarine by Lloyd LJ (with whom Jacob and Stanley Burnton LJJ agreed) in Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2010] EWCA Civ 110, [2010] RPC 485, para 99, although Lloyd LJ clearly considered that the actual decision in Star Industrial was correct. As he concluded, however, in para 106, Anheuser Busch was binding authority for the proposition that an undertaking which seeks to establish goodwill in relation to a mark for goods cannot do so, however great may be the reputation of his mark in the UK, unless it has customers among the general public in the UK for those products. So far as Anheuser Busch is concerned, as I have already indicated, the fact that the decision proceeded on the basis that a plaintiff in a passing off action must have goodwill, in the form of customers, in the jurisdiction did not represent any departure from an approach already approved by the House of Lords. As Oliver LJ pointed out at p 464, Lord Diplock in Erven Warnink at p 744 stated that a plaintiff must have used the descriptive term long enough on the market in connection with his own goods and have traded successfully enough to have built up a goodwill for his business, and, as Oliver LJ then observed, this emphasises the point that goodwill (as opposed to mere reputation) does not exist here apart from a business carried on here. As Oliver LJ went on to say, the same feature emerges with even greater clarity from the decision of the Privy Council in Star Industrial. And Dillon LJ in Anheuser Busch at pp 475 476 cited Spalding, Star Industrial and Inland Revenue Commissioners v Muller to make the same point. A number of first instance, mostly interlocutory, cases were cited by Mr Silverleaf to support his argument that there is or should be no requirement that a claimant in a passing off action should be able to establish goodwill, as opposed to mere reputation, in the jurisdiction concerned. I do not think that any of the decisions in question assists PCCM. In La Socit Anonyme des Anciens tablissements Panhard et Levassor v Panhard Levassor Motor Company Ltd [1901] 2 Ch 513, it is true that the French motor car manufacturer plaintiffs, as Farwell J put it at p 516, did not sell directly in England. However, as he went on to explain, their cars were brought and imported into England, so that England was one of their markets. As Dillon LJ put it in Anheuser Busch at pp 477 478, the French plaintiffs there had a market for their cars with the general public in this country through the importers who had obtained licences from the third parties who had relevant patent rights and the reputation, when the cars were imported into this country, enured to the French plaintiffs. Nor does Sheraton help PCCM. As explained in para 29 above, the US hotel company had a booking office and agents in London, so it had customers in England. In Suhner & Co AG v Suhner Ltd [1967] RPC 336, Plowman J made no conclusive finding that the plaintiff had goodwill in the UK, but it is clear that its goods had been sold here see at pp 337 338. In Globelegance BV v Sarkissian [1974] RPC 603, Templeman J reviewed many of the authorities at pp 609 613, and clearly accepted that it was necessary to have custom in this country, concluding that [p]ure advertisement is clearly insufficient [but taking] bookings [is] sufficient [as is] carrying out orders in this country. He then decided that the activities of the plaintiff in that case, selling patterns to a department store, who then used the patterns to make up dresses which were sold under the plaintiffs mark, was enough. In a significant number of other cases at first instance, it is clear that, well before the Court of Appeal decision in Anheuser Busch, Chancery Judges considered that a plaintiff had to establish at least an arguable case that it had business in the UK before it could obtain an interlocutory injunction against passing off. Before turning to them, it is instructive to refer to Maxwell v Hogg (1867) LR 2 Ch 307, which appears to have been the first case in which an English court specifically decided that mere reputation, without customers, was not enough to found a passing off claim. The Court of Appeal held that the plaintiffs advertising campaign in respect of a proposed new newspaper called Belgravia with a view to imminent publication did not give him any right to enjoin the defendant from publishing a newspaper with the same name. Turner LJ, after mentioning the inconvenience of a plaintiff who had not even used the mark being able to restrain someone else from doing so, said at p 312 that the plaintiff had neither given, nor come under any obligation to give, anything to the world; so that there is a total want of consideration for the right which he claims. Cairns LJ at pp 313 314, explained that the plaintiff had no right of property for which he could claim protection, as there has been no sale, or offering for sale, of the articles to which the name is to be attached. More recent cases which support Skys case include the decisions of Pennycuick J in Alain Bernardin et Cie v Pavilion Properties Ltd [1967] RPC 581, Brightman J in Amway Corporation v Eurway International Ltd [1974] RPC 82, and Walton J in Athletes Foot Marketing Associates Inc v Cobra Sports Ltd [1980] RPC 343. In Alain Bernardin, Pennycuick J held that the plaintiffs could not obtain an injunction against the use of the mark CRAZY HORSE in the UK, even though they could establish a reputation here for its cabaret in Paris under that name. The plaintiffs problem was that they could not identify any business done in the UK, either directly or indirectly (to use Farwell Js expression in Panhard), in connection with their Crazy Horse Saloon in Paris, and the mere distribution of advertisements was not enough (hence Templeman Js observation in Globelegance [1974] RPC 603). In other words, there does not seem to have been any evidence of any customers in England of the plaintiffs Paris establishment as opposed to people in England who visited that establishment when they were in Paris (see at p 582). Mr Silverleaf pointed out that the reasoning of Pennycuick J caused Sir Nicolas Browne Wilkinson V C some concern in Pete Waterman Ltd v CBS United Kingdom Ltd [1993] EMLR 27, 53 55. At pp 53 54, Sir Nicolas said that Pennycuick Js reasoning was based on the proposition that even if the foreign trader has customers here he cannot protect his reputation unless he has conducted some business here, whereas the Vice Chancellor thought that the law was or should be that [i]f there is a use by the foreign trader in this country of his name for the purposes of his trade, the piracy of that name is an actionable wrong. But, as Mr Hobbs pointed out, the decision in Alain Bernardin would have been the same if the test identified by the Vice Chancellor had been applied. Turning now to the cases in other jurisdictions, PCCM contends that decisions of the courts of Ireland, Canada, New Zealand, Australia, South Africa, Hong Kong and Singapore are consistent with its argument that a claimant does not have to establish goodwill, in the sense of actual customers, within the jurisdiction, in order to establish a claim for passing off. In C&A Modes v C&A (Waterford) Ltd [1978] FSR 126, the Supreme Court of Ireland held that the plaintiffs C&A department store in Belfast was entitled to mount a claim in passing off in the Irish Republic. At p 139, Henchy J was clearly unhappy about the decision in Alain Bernardin, and said that there were in the Irish Republic sufficient customers of [the] plaintiffs business [in Belfast] to justify his claim. At pp 140 141, Kenny J rejected the argument that a passing off claim should be limited to cases where the plaintiff had acquired some of its goodwill in the Republic by user or trading in this country, and pointed out that the plaintiff in that case had customers in the Republic, where it had carried out extensive advertising on television and radio and in the newspapers. He also said that the decision in Alain Bernardin was wrong. OHiggins CJ agreed with Henchy J. I do not find this decision of much assistance in this case. As Walton J said in Athletes Foot at p 356, these judgments (at least arguably in the same way as the judgment in Pete Waterman) show a misapprehension of the reasoning in Alain Bernardin: if there had been customers of the Crazy Horse business in England, in the sense in which there were customers of the Sheraton Hotels business in England, the decision in [Alain Bernardin] surely must have been the other way. The Canadian case relied on by PCCM, Orkin Exterminating Co Inc v Pestco Co of Canada Ltd (1985) 19 DLR (4th) 90, is of no assistance. Although the plaintiffs business was conducted in the USA, it enjoyed thousands of Canadian clients who used its pest control services for their properties in Canada. At p 101 of his judgment in the Court of Appeal in Ontario, Morden JA specifically relied on the fact that the plaintiff had goodwill including having customers in Canada, although he did express disquiet about Lord Diplocks notion in Star Industrial that goodwill had to be divided up nationally. The New Zealand decision referred to by PCCM, Dominion Rent A Car Ltd v Budget Rent A Car Systems (1970) Ltd [1987] 2 TCLR 91, does not take matters much further. The ultimate decision was that both parties were entitled to use the name BUDGET in connection with their respective car hire businesses in New Zealand, and that turned on the facts. At p 101, Cooke P said that he did not think that Lord Diplock in Star Industrial should be understood as saying that goodwill should be automatically divisible between jurisdictions, describing it as unnecessarily myopic to restrict this process to national boundaries. The furthest Cooke P went in the direction PCCM argues for was at pp 101 102, where he said that he thought that an Australian companys reputation and goodwill can extend to New Zealand (and vice versa), but, importantly, he added and, at least if there is a sufficient business connection with this country, will be entitled to protection here. At pp 106 107, he said that the rental vehicle business in Australasia cannot be divided into two mutually exclusive groups of customers, those who hire vehicles for driving in Australia and those who hire vehicles for driving in New Zealand. Obviously the same persons may do both, thereby rejecting the contention that the defendant only had customers in New Zealand and the plaintiff in Australia. In his judgment, Somers J said at p 116 that a plaintiff in a passing off action must show an invasion of that intangible right of property compendiously described as goodwill which can only exist in New Zealand when attached to a business having some connection with this country. At p 120, Casey J quoted with apparent approval the view of Lord Fraser in Erven Warnink. Richardson J was in general agreement with Cooke P and Somers J, and McMullin J was in general agreement with Cooke P. Support for PCCMs case may however be found in the decision of the Federal Court of Australia in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465, given by Lockhart J, with whom Gummow and French JJ agreed (and gave judgments of their own). After a very full review of the common law authorities (including those I have discussed above) on pp 473 501, Lockhart J said at p 504 that it was no longer valid, if it ever was, to speak of a business having goodwill or reputation only where the business is carried on, relying on [m]odern mass advertising [which] reaches people in many countries of the world, [t]he international mobility of the world population and the fact that [t]his is an age of enormous commercial enterprises. He also said at p 505 that, in his view, the hard line cases in England conflict with the needs of contemporary business and international commerce. He concluded on the next page that it is not necessary that a plaintiff, in order to maintain a passing off action, must have a place of business or a business presence in Australia; nor is it necessary that his goods are sold here, saying that it would be sufficient if his goods have a reputation in this country among persons here, whether residents or otherwise. Two points should be noted about this decision. First, the passing off claim nonetheless failed because the plaintiff was held to have an insufficient reputation in Australia. Secondly, the High Court of Australia has not considered this issue. The approach of the Supreme Court of South Africa in Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd [1998] 3 All SA 175 (A) is to similar effect see at para 16. Indeed, at para 19, ConAgra was cited with approval. However, once again, the claim failed on the ground of insufficiency of reputation. As to Hong Kong, PCCM points out that, in Ten Ichi Co Ltd v Jancar Ltd [1989] 2 HKC 330, Sears J in the High Court on an application for an interlocutory injunction seems to have held that mere reputation was enough to found a passing off claim following an earlier Hong Kong High Court decision. However, more recently, the Court of Final Appeal in In re Ping An Securities Ltd (2009) 12 HKCFAR 808, para 17, cited Lord Oliver in Reckitt & Colman to support the (admittedly undisputed) proposition that a plaintiff must establish a goodwill (in the country or region) in a business in the supply of goods or services under the relevant get up in order to maintain a claim in passing off. Finally, Singapore. In Jet Aviation (Singapore) Pte Ltd v Jet Maintenance Pte Ltd [1998] 3 SLR(R) 713, para 45, PCCM contends that Warren LH Khoo J in the High Court appears to have followed ConAgra. I am not at all sure that he did: see at para 42. However, it is unnecessary to decide that question, because more recently, the Court of Appeal considered the issue in an impressively wide ranging judgment in Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide Inc [2013] SGCA 65, [2014] 1 SLR 911. After briefly considering most of the authorities to which I have referred (including the decision of Arnold J in this case), Sundaresh Menon CJ, giving the judgment of the court, explained at para 135 that the Singapore courts had largely followed Star Industrial, holding that a foreign trader which does not conduct any business activity in Singapore cannot maintain an action in passing off here, and that this draws a clear distinction between goodwill and reputation. However, as he explained in the next paragraph, this hard line approach has been softened in one respect in Singapore (citing CDL Hotels International Ltd v Pontiac Marina Pte Ltd [1998] 1 SLR(R) 975, para 58) namely where the plaintiff has started pre business activities, such as embark[ing] on massive advertising campaigns before the commencement of trading to familiarise the public with the service or product. Sundaresh Menon CJ explained at para 138 that this was consistent with two English decisions, WH Allen & Co v Brown Watson Ltd [1965] RPC 191 and British Broadcasting Corporation v Talbot Motor Co Ltd [1981] FSR 228, a view which derives some support from the judgment of Dillon LJ in Marcus Publishing plc v Hutton Wild Communications Ltd [1990] RPC 576, 584. Discussion Although I acknowledge that PCCMs case is not without force (as is well demonstrated by the reasoning in the judgments in ConAgra), I have reached the conclusion that this appeal should be dismissed on the same ground on which it was decided in the courts below. In other words, I consider that we should reaffirm that the law is that a claimant in a passing off claim must establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question. And, where the claimants business is abroad, people who are in the jurisdiction, but who are not customers of the claimant in the jurisdiction, will not do, even if they are customers of the claimant when they go abroad. It seems to have been the consistent view of the House of Lords and Privy Council from 1915 to 1990 that a plaintiff who seeks passing off relief in an English court must show that he has goodwill, in the form of customers, in the jurisdiction of the court. While it can be said that, in none of the cases discussed in paras 21 25 above was that point the main focus of attention, it nonetheless seems clear that that is what a succession of respected judges, many of whom had substantial experience in this area, considered to be the law. That conclusion is underlined by the reasoning and conclusion in the judgments in Anheuser Busch, and indeed the first instance judgments discussed in paras 32 36 above. It is of course open to this court to develop or even to change the law in relation to a common law principle, when it has become archaic or unsuited to current practices or beliefs. Indeed it is one of the great virtues of the common law that it can adapt itself to practical and commercial realities, which is particularly important in a world which is fast changing in terms of electronic processes, travel and societal values. Nonetheless, we should bear in mind that changing the common law sometimes risks undermining legal certainty, both because a change in itself can sometimes generate uncertainty and because change can sometimes lead to other actual or suggested consequential changes. In addition to domestic cases, it is both important and helpful to consider how the law has developed in other common law jurisdictions important because it is desirable that the common law jurisdictions have a consistent approach, and helpful because every national common law judiciary can benefit from the experiences and thoughts of other common law judges. In the present instance, the Singapore courts follow the approach of the UK courts, whereas the courts of Australia (subject to the High Court holding otherwise) and South Africa seem to favour the approach supported by PCCM. The position is less clear in other Commonwealth jurisdictions. In the United States of America, the approach appears to be consistent with that of the courts below in this case. Thus in Grupo Gigante SA De CV v Dallo & Co Inc (2004) 391 F 3d 1088 the Court of Appeals for the 9th circuit said at p 1093 that priority of trademark rights in the United States depends solely upon priority of use in the United States, not on priority of use anywhere in the world. Earlier use in another country usually just does not count. Accordingly it does not appear to me that there is anything like a clear trend in the common law courts outside the UK away from the hard line approach manifested in the UK cases discussed in paras 21 26 and 32 36 above. Particularly in the light of what has been said in some of the cases discussed above, it appears that there are two connected issues which justify further discussion, namely (i) clarification as to what constitutes sufficient business to give rise to goodwill as a matter of principle, and (ii) resolution of the judicial disagreement as to the jurisdictional division of goodwill described by Lord Diplock in Star Industrial. As to what amounts to a sufficient business to amount to goodwill, it seems clear that mere reputation is not enough, as the cases cited in paras 21 26 and 32 36 above establish. The claimant must show that it has a significant goodwill, in the form of customers, in the jurisdiction, but it is not necessary that the claimant actually has an establishment or office in this country. In order to establish goodwill, the claimant must have customers within the jurisdiction, as opposed to people in the jurisdiction who happen to be customers elsewhere. Thus, where the claimants business is carried on abroad, it is not enough for a claimant to show that there are people in this jurisdiction who happen to be its customers when they are abroad. However, it could be enough if the claimant could show that there were people in this jurisdiction who, by booking with, or purchasing from, an entity in this country, obtained the right to receive the claimants service abroad. And, in such a case, the entity need not be a part or branch of the claimant: it can be someone acting for or on behalf of the claimant. That is why, as explained in Athletes Foot, the decision in Panhard et Levassor and the observations in Pete Waterman are compatible with the decision in Alain Bernardin. As to Lord Diplocks statement in Star Industrial that, for the purpose of determining whether a claimant in a passing off action can establish the first of Lord Olivers three elements, an English court has to consider whether the claimant can establish goodwill in England, I consider that it was correct. In other words, when considering whether to give protection to a claimant seeking relief for passing off, the court must be satisfied that the claimants business has goodwill within its jurisdiction. It would be wrong to suggest that there is a rule of law that, whatever the point at issue, goodwill has to be divided between jurisdictions, not least because (unsurprisingly) we have not had an exhaustive analysis of all the circumstances in which goodwill may have to be considered by the court. However, it seems to me that, when it comes to a domestic, common law issue such as passing off, an English court has to consider the factual position in the UK. That is well illustrated by the fact that, even if PCCMs argument was accepted and it was enough for a claimant merely to establish a reputation, that reputation would still have to be within the jurisdiction. The notion that goodwill in the context of passing off is territorial in nature is also supported by refusal of judges to accept that a court of one jurisdiction has power to make orders in relation to the goodwill in another jurisdiction. I have in mind the decisions of the House of Lords in Lecouturier v Rey [1910] AC 262, 265 per Lord Macnaghten, with whom Lord Atkinson and Lord Collins agreed, and at pp 269 272 per Lord Shaw of Dunfermline, and the Privy Council in Ingenohl v Wing On & Co (Shanghai) Ltd (1927) 44 RPC 343, 359 360, per Viscount Haldane giving the advice of the Board. The territorial approach to goodwill is also apparent in the context of trade marks in RJ Reuter Co Ltd v Mulhens [1954] Ch 50, 89 and 95 96 (per Lord Evershed MR and Romer LJ respectively) and Adrema Werke Maschinenbau GmbH v Custodian of Enemy Property [1957] RPC 49, 54 55 and 59 (per Lord Evershed MR and Jenkins LJ). It is also worth mentioning that article 6 of the Paris Convention for the Protection of Industrial Property 1883 (last revised 1967 and last amended 1979) states, in para (1) that registration of trademarks shall be determined in each country by its domestic legislation, and in para (3) that a duly registered mark is to be regarded as independent of marks registered in other countries of the Union. My view on the two issues discussed in paras 49 53 above is supported by a brief extract from Lord Frasers speech in Erven Warnink at p 755, where he said that the meaning of the name in countries other than England is immaterial because what the court is concerned to do is to protect the plaintiffs' property in the goodwill attaching to the name in England and it has nothing to do with the reputation or meaning of the name elsewhere. Indirect support for this approach is also to be found in decisions of the Court of Justice of the European Union, which has emphasised in a number of decisions the need for genuine use of a mark, namely to guarantee the identity of the origin of the goods or services for which it is registered, in order to create or preserve an outlet for those goods or services, and that this means real commercial exploitation of the mark in the course of trade, particularly the usages regarded as warranted in the economic sector concerned as a means of maintaining or creating market share for the goods or services protected by the mark to quote from Leno Merken BV v Hagelkruis Beheer BV (Case C 149/11) EU:C:2012:816, para 29. Further, it is relevant to note that the CJEU has also held that the mere fact that a website [advertising or selling the product or service concerned] is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in that territory L'Oreal SA v eBay International AG (Case C 324/09) EU:C:2011:474 [2011] ECR I 6011, para 64. It is also of interest that, even in the context of the single market, the CJEU has accepted that because of linguistic, cultural, social and economic differences between the Member States, a sign which is devoid of distinctive character or descriptive of the goods or services concerned in one Member State is not so in another Member State see Junited Autoglas Deutschland GmBH & Co KG v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (Case T 297/13) EU:T:2014:893, para 31, citing Matratzen Concord AG v Hukla Germany SA (Case C 421/04) EU:C:2006:164 [2006] ECR I 2303, para 25. Professor Wadlow has, in my judgment, correctly summarised the position in The Law of Passing off Unfair Competition by Misrepresentation 4th ed, 2011, para 3 131: The reason why goodwill is territorial is that it is a legal proprietary right, existing or not in any jurisdiction according to whether the laws of that jurisdiction protect its putative owner. Goodwill in the legal sense is therefore something more than bare reputation . The distinction between goodwill in the legal sense and reputation in the everyday sense is like that between copyright and the underlying literary work. It may be surprising, and even inconvenient, that at the moment a literary work is reduced to writing tens or hundreds of legally distinct copyrights may simultaneously come into existence all over the world, but the nature of copyright as a legal right of property arising in any given jurisdiction from national legislation, common law or self executing treaty means that it must be wrong to speak as if there were a single international copyright. This analysis can be said with some justification to involve some fine distinctions, and on some occasions to lead to some difficult questions of fact and to result in some decisions which could appear rather harsh. However, any decision as to what a claimant must show in order to establish the first element of Lord Olivers trilogy of elements or requirements will involve fine distinctions, and will sometimes involve difficult or harsh cases. I am unconvinced that if we accept the conclusion of the courts below, supported by Sky, it would be likely to lead to more arguable unfairnesses or difficulties than if we adopted PCCMs case. It is also necessary to bear in mind the balancing exercise underlying the law of passing off, which Somers J described in Dominion Rent A Car at p 116 as a compromise between two conflicting objectives, on the one hand the public interest in free competition, on the other the protection of a trader against unfair competition by others. More broadly, there is always a temptation to conclude that, whenever a defendant has copied the claimants mark or get up, and therefore will have benefitted from the claimants inventiveness, expenditure or hard work, the claimant ought to have a cause of action against the defendant. Apart from the rather narrower point that passing off must involve detriment to the claimant, it is not enough for a claimant to establish copying to succeed. All developments, whether in the commercial, artistic, professional or scientific fields, are made on the back of other peoples ideas: copying may often be an essential step to progress. Hence, there has to be some balance achieved between the public interest in not unduly hindering competition and encouraging development, on the one hand, and on the other, the public interest in encouraging, by rewarding through a monopoly, originality, effort and expenditure the argument which is reflected in Turner LJs observation at p 312 in Maxwell v Hogg to the effect that a plaintiff who has merely advertised, but not marketed, his product, has given no consideration to the public in return for his claimed monopoly. In the instant case, the assessment of the appropriate balance between competition and protection, which arises in relation to any intellectual property right, must be made by the court, given that passing off is a common law concept. If it was enough for a claimant merely to establish reputation within the jurisdiction to maintain a passing off action, it appears to me that it would tip the balance too much in favour of protection. It would mean that, without having any business or any consumers for its product or service in this jurisdiction, a claimant could prevent another person using a mark, such as an ordinary English word, now, for a potentially indefinite period in relation to a similar product or service. In my view, a claimant who has simply obtained a reputation for its mark in this jurisdiction in respect of his products or services outside this jurisdiction has not done enough to justify granting him an effective monopoly in respect of that mark within the jurisdiction. I am unpersuaded that PCCMs case is strengthened by the fact that we are now in the age of easy worldwide travel and global electronic communication. While I accept that there is force in the point that the internet can be said to render the notion of a single international goodwill more attractive, it does not answer the points made in paras 51 59 above. Further, given that it may now be so easy to penetrate into the minds of people almost anywhere in the world so as to be able to lay claim to some reputation within virtually every jurisdiction, it seems to me that the imbalance between protection and competition which PCCMs case already involves (as described in paras 60 62 above) would be exacerbated. The same point can be made in relation to increased travel: it renders it much more likely that consumers of a claimants product or service abroad will happen to be within this jurisdiction and thus to recognise a mark as the claimants. If PCCMs case were correct, it would mean that a claimant could shut off the use of a mark in this jurisdiction even though it had no customers or business here, and had not spent any time or money in developing a market here and did not even intend to do so. A rather different factor which militates against PCCMs case is section 56 of the Trade Marks Act 1994 which gives effect to article 6(bis) of the Paris Convention) and is concerned with well known marks. By virtue of subsection (1), section 56 applies to a mark which is owned by a person who is domiciled or has a business in a Convention country and which is well known in the United Kingdom. Section 56(2) entitles such a person to restrain by injunction the use in the United Kingdom of a trade mark which, or the essential part of which, is identical or similar to his mark, in relation to identical or similar goods or services, where the use is likely to cause confusion. This provision is significant in the present context because it substantially reduces the likelihood of the sort of harsh results referred to at the start of para 60 above. It means that, where a mark which is used abroad and has a reputation in this country, it still can be protected if it satisfies section 56(1), even if the proprietor of the mark cannot establish any customers or sufficient goodwill in this jurisdiction. A more radical argument was advanced by Sky based on section 56 of the 1994 Act, namely that, by that section, the legislature decided on the circumstances in which mere reputation in this country should be enough to justify protection being accorded to a mark used in another country, and that the courts should not extend the common law further than Parliament has thought it right to go. As Mr Hobbs put it, if Parliament has decided that domestic reputation is enough in the case of a well known mark, it is not for the courts to extend the principle to marks which are not well known. Another, perhaps starker, way of putting the point is that, if PCCMs case is correct, it is hard to see what purpose section 56 of the 1994 Act would have. I see considerable force in that argument, but it is unnecessary to rule on it, and I prefer not to do so. Finally, a point which I would leave open is that discussed in the judgment of Sundaresh Menon CJ in Staywell (see para 46 above), namely whether a passing off claim can be brought by a claimant who has not yet attracted goodwill in the UK, but has launched a substantial advertising campaign within the UK making it clear that it will imminently be marketing its goods or services in the UK under the mark in question. It may be that such a conclusion would not so much be an exception, as an extension, to the hard line, in that public advertising with an actual and publicised imminent intention to market, coupled with a reputation thereby established may be sufficient to generate a protectable goodwill. On any view, the conclusion would involve overruling Maxwell v Hogg, and, if it would be an exception rather than an extension to the hard line, it would have to be justified by commercial fairness rather than principle. However, it is unnecessary to rule on the point, which, as explained in para 46, has some limited support in this jurisdiction and clear support in Singapore. Modern developments might seem to argue against such an exception (see para 63 above), but it may be said that it would be cheap and easy, particularly for a large competitor, to spike a pre marketing advertising campaign in the age of the internet. It would, I think, be better to decide the point in a case where it arises. Assuming that such an exception exists, I do not consider that the existence of such a limited, pragmatic exception to the hard line could begin to justify the major and fundamental departure from the clear, well established and realistic principles which PCCMs case would involve. In this case, PCCMs plans for extending its service into the UK under the NOW TV mark were apparently pretty well advanced when Sky launched their NOW TV service, but the plans were still not in the public domain, and therefore, even if the exception to the hard line is accepted, it would not assist PCCM. Conclusion For these reasons, I conclude that PCCMs appeal should be dismissed. Its business is based in Hong Kong, and it has no customers, and therefore no goodwill, in the UK. It is true that, according to the Judge, there are a significant number of people who are, temporarily or in the longer term, members of the Chinese community in the UK, with whom the mark NOW TV is associated with PCCMs IPTV service. In so far as they are customers of PCCM, they are customers in Hong Kong, and not in the UK, because it is only in Hong Kong that they can enjoy the service in question, and the service is not marketed, sold or offered in the UK. The people in the UK who get access to PCCMs NOW TV programmes via the websites, or on various international airlines, are not PCCM customers at any rate in the UK, because there is no payment involved (either directly by the people concerned or indirectly through third party advertising), and the availability of PCCMs product in these outlets simply was intended to, and did, promote PCCMs Hong Kong business. Basically, it simply amounted to advertising in the UK, and, as explained above, a reputation acquired through advertising is not enough to found a claim in passing off. Given that we are dismissing the appeal, it is unnecessary to consider Skys other arguments to support this conclusion which were the same as those which it would have raised before the Court of Appeal in its respondents notice (see para 13 above). If we had allowed PCCMs appeal, because the Court of Appeal understandably did not address those issues we would have remitted the case to the Court of Appeal to consider them. |
This appeal arises out of proceedings for ancillary relief following a divorce. The principal parties before the judge, Moylan J, were Michael and Yasmin Prest. He was born in Nigeria and she in England. Both have dual Nigerian and British nationality. They were married in 1993, and during the marriage the matrimonial home was in England, although the husband was found by the judge to have been resident in Monaco from about 2001 to date. There was also a second home in Nevis. The wife petitioned for divorce in March 2008. A decree nisi was pronounced in December 2008, and a decree absolute in November 2011. The husband is not party to the appeal in point of form, although he is present in spirit. The appeal concerns only the position of a number of companies belonging to the group known as the Petrodel Group which the judge found to be wholly owned and controlled (directly or through intermediate entities) by the husband. There were originally seven companies involved, all of which were joined as additional respondents to the wifes application for ancillary relief. They were Petrodel Resources Ltd (PRL), Petrodel Resources (Nigeria) Ltd (PRL Nigeria), Petrodel Upstream Ltd (Upstream), Vermont Petroleum Ltd (Vermont), Elysium Diem Ltd, Petrodel Resources (Nevis) Ltd (PRL Nevis) and Elysium Diem Ltd (Nevis). Three of these companies, PRL, Upstream and Vermont, all incorporated in the Isle of Man, are the respondents in this court. PRL was the legal owner of the matrimonial home, which was bought in the name of the company in 2001 but was found by the judge to be held for the husband beneficially. There is no longer any issue about that property, which is apparently in the process of being transferred to the wife. In addition, PRL was the legal owner of five residential properties in the United Kingdom and Vermont is the legal owner of two more. The question on this appeal is whether the court has power to order the transfer of these seven properties to the wife given that they legally belong not to him but to his companies. Part II of the Matrimonial Causes Act 1973 confers wide powers on the court to order ancillary relief in matrimonial proceedings. Section 23 provides for periodical and lump sum payments to a spouse or for the benefit of children of the marriage. Under section 24(1)(a), the court may order that a party to the marriage shall transfer to the other party. such property as may be so specified, being property to which the first mentioned party is entitled, either in possession or reversion. Section 25 provides for a number of matters to which the court must in particular have regard in making such orders, including, at section 25(2)(a), the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future. The proper exercise of these powers calls for a considerable measure of candour by the parties in disclosing their financial affairs, and extensive procedural powers are available to the court to compel disclosure if necessary. In this case, the husbands conduct of the proceedings has been characterised by persistent obstruction, obfuscation and deceit, and a contumelious refusal to comply with rules of court and specific orders. The judge, Moylan J, recited in his judgment the long history of successive orders of the court which were either ignored or evaded, the various attempts of the husband to conceal the extent of his assets in the course of his evidence, and the collusive proceedings in Nigeria by which he sought declarations that certain of the companies were held in trust for his siblings. The only evidence on behalf of the respondent companies was an affidavit sworn by Mr Jack Murphy, a director of PRL and the corporate secretary of the three respondent companies, who failed to attend for cross examination on it. The judge rejected his excuse that he was in bad health, and found that he was unwilling rather than unable to attend court. His conclusion was that as a result of the husbands abject failure to comply with his disclosure obligations and to comply with orders made by the court during the course of these proceedings, I do not have the evidence which would enable me to assemble a conventional schedule of assets. However, he found that the husband was the sole beneficial owner and the controller of the companies, and doing the best that he could on the material available assessed his net assets at 37.5 million. By his order dated 16 November 2011, Moylan J ordered that the husband should procure the conveyance of the matrimonial home at 16, Warwick Avenue, London W2 to the wife, free of incumbrances, and that he should make a lump sum payment to her of 17.5 million and periodical payments at the rate of 2% of that sum while it remained outstanding, together with 24,000 per annum and the school fees for each of their four children. In addition he awarded costs in favour of the wife, with a payment of 600,000 on account. The judge ordered the husband to procure the transfer of the seven UK properties legally owned by PRL and Vermont to the wife in partial satisfaction of the lump sum order. He directed those companies to execute such documents as might be necessary to give effect to the transfer of the matrimonial home and the seven properties. Moreover, in awarding costs to the wife, the judge directed that PRL, Upstream and Vermont should be jointly and severally liable with the husband for 10% of those costs. Corresponding orders were made against certain of the other corporate respondents to the original proceedings, but they did not appeal, either to the Court of Appeal or to this court, and are no longer relevant, save insofar as the facts relating to them throw light on the position of the three respondents. No order was made (or sought) for the transfer of any assets of Upstream, but that company is interested in the present appeal by virtue of its liability under the judges order for part of the wifes costs. The distinctive feature of the judges approach was that he concluded that there was no general principle of law which entitled him to reach the companies assets by piercing the corporate veil. This was because the authorities showed that the separate legal personality of the company could not be disregarded unless it was being abused for a purpose that was in some relevant respect improper. He held that there was no relevant impropriety. He nevertheless concluded that in applications for financial relief ancillary to a divorce, a wider jurisdiction to pierce the corporate veil was available under section 24 of the Matrimonial Causes Act. The judge found that the matrimonial home was held by PRL on trust for the husband, but he made no corresponding finding about the seven other properties and refused to make a declaration that the husband was their beneficial owner. It is tolerably clear from his supplementary judgment of 16 November 2011 (on the form of the order), that this was because having decided that he was specifically authorised to dispose of the companies properties under section 24, it was unnecessary for him to do so and undesirable because of the potential tax consequences. It is not clear what potential tax consequences he had in mind, but his observation suggests that without them he might well have made the declaration sought. In the Court of Appeal, the three respondent companies challenged the orders made against them on the ground that there was no jurisdiction to order their property to be conveyed to the wife in satisfaction of the husbands judgment debt. This contention, which has been repeated before us, raises a question of some importance. For some years it has been the practice of the Family Division to treat the assets of companies substantially owned by one party to the marriage as available for distribution under section 24 of the Matrimonial Causes Act, provided that the remaining assets of the company are sufficient to satisfy its creditors. In the Court of Appeal, the practice was supported by Thorpe LJ, but the majority disagreed. Rimer LJ, delivering the leading judgment for the majority, held that the practice developed by the Family Division was beyond the jurisdiction of the court unless (i) the corporate personality of the company was being abused for a purpose which was in some relevant respect improper, or (ii) on the particular facts of the case it could be shown that an asset legally owned by the company was held in trust for the husband. He considered that the judge had rejected both of these possibilities on the facts, and that he ought not therefore to have made the order. In a short concurring judgment, Patten LJ said that the Family Division had developed an approach to company owned assets in ancillary relief applications which amounts almost to a separate system of legal rules unaffected by the relevant principles of English property and company law. The practice, he concluded, must now cease. This has significant practical implications. Unless the UK properties of the Petrodel Group are transferred to Mrs Prest, it is possible (she says likely) that the lump sum order in her favour will remain wholly unsatisfied. To date, the matrimonial home has been transferred to her but only subject to a pre existing charge in favour of BNP Paribas to secure a debt of undisclosed amount. 10% of the money ordered to be paid on account of costs has been paid by the three respondents, but only in order to satisfy a condition imposed on them upon their being granted leave to appeal to the Court of Appeal. Otherwise, apart from paying the childrens school fees, the husband has not complied with any part of Moylan Js order and shows no intention of doing so if he can possibly avoid it. The issues Subject to very limited exceptions, most of which are statutory, a company is a legal entity distinct from its shareholders. It has rights and liabilities of its own which are distinct from those of its shareholders. Its property is its own, and not that of its shareholders. In Salomon v A Salomon and Co Ltd [1897] AC 22, the House of Lords held that these principles applied as much to a company that was wholly owned and controlled by one man as to any other company. In Macaura v Northern Assurance Co Ltd [1925] AC 619, the House of Lords held that the sole owner and controller of a company did not even have an insurable interest in property of the company, although economically he was liable to suffer by its destruction. Lord Buckmaster, at pp 626 627 said: no shareholder has any right to any item of property owned by the company, for he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up. In Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627 the House of Lords held that documents of a subsidiary were not in the power of its parent company for the purposes of disclosure in litigation, simply by virtue of the latters ownership and control of the group. These principles are the starting point for the elaborate restrictions imposed by English law on a wide range of transactions which have the direct or indirect effect of distributing capital to shareholders. The separate personality and property of a company is sometimes described as a fiction, and in a sense it is. But the fiction is the whole foundation of English company and insolvency law. As Robert Goff LJ once observed, in this domain we are concerned not with economics but with law. The distinction between the two is, in law, fundamental: Bank of Tokyo Ltd v Karoon (Note) [1987] AC 45, 64. He could justly have added that it is not just legally but economically fundamental, since limited companies have been the principal unit of commercial life for more than a century. Their separate personality and property are the basis on which third parties are entitled to deal with them and commonly do deal with them. Against this background, there are three possible legal bases on which the assets of the Petrodel companies might be available to satisfy the lump sum order against the husband: (1) It might be said that this is a case in which, exceptionally, a court is at liberty to disregard the corporate veil in order to give effective relief. (2) Section 24 of the Matrimonial Causes Act might be regarded as conferring a distinct power to disregard the corporate veil in matrimonial cases. (3) The companies might be regarded as holding the properties on trust for the husband, not by virtue of his status as their sole shareholder and controller, but in the particular circumstances of this case. The judges findings: the companies Most of the judges findings of fact were directed to two questions which are no longer in dispute, namely whether the husband owned the Petrodel Group and what was the value of his assets. For present purposes, it is enough to summarise those which bear on the position of the three corporate respondents. At the time of the marriage, and throughout the 1990, the husband was employed by a succession of major international oil trading companies as a trader, but in 2001 he left his last employer, Marc Rich, and began to run his own companies. Initially, there were two principal companies involved, Aurora and the Petrodel companies. In 2004 Aurora was wound up and thereafter he operated mainly through the Petrodel companies. The principal operating company of this group was PRL, a company incorporated in the Isle of Man. Its financial statements record that it was incorporated on 4 May 1993, was dormant until 1996, and did not begin operations until 25 April 2002, i.e. after the husband had left Marc Rich and set up on his own. Between 1996 and 2002, it is described in its financial statements as a property investment company. Its sole function in that period appears to have been to hold title to the matrimonial home at 16, Warwick Avenue in London and five residential investment properties in London, and to act as a channel for funding property purchases by other companies of the group. The husbands evidence was that the company had engaged in substantial agricultural and oil related business in the 1990s, in part in association with his then employer, Marc Rich. But this was inconsistent with the companys financial statements, and the judge rejected it. Mr Le Breton, a former business colleague of the husband, gave evidence at the hearing which the judge accepted as reliable. Mr Le Breton said that from about 2001 PRL was engaged in a limited way in oil trading and shipping, and from 2006 moved into oil exploration and production in Nigeria and West Africa. The latest disclosed accounts of PRL are draft accounts for 2008 and 2009. The judge declined to attach any significant weight to the financial data in the 2008 accounts, which he considered to have been manipulated. All the disclosed accounts are now very much out of date. For what they are worth, the accounts for both years show a substantial turnover and large balances. The husbands evidence was that PRL ceased trading in 2010, when it lost its major exploration contract. Given his evident determination to frustrate his wifes claims on him, it cannot be assumed that the assets of the company recorded in the disclosed accounts are still there. Management control of PRL has always been in the hands of the husband, ostensibly as chief executive under a contract of employment conferring on him complete discretion in the management of its business. The judge found that none of the companies had ever had any independent directors. The husband is a director of PRL Nigeria, but otherwise the directors are all nominal or professional directors, generally his relatives, who accept directions from him. The directors of PRL are Mr Murphy (the principal of its corporate secretary) and a lady in Nevis who appears to have been the couples cleaner there. The ownership of the respondent companies proved to be more difficult to establish. The husband did not admit to having any personal interest in the shares of any company of the group, and declined to say who the ultimate shareholders were. Substantially all of the issued shares of PRL are owned by PRL Nigeria. Almost all the shares of that company are owned by PRL Nevis, a company about which very little is known, but whose accounts show substantial balances, apparently derived from trading. The husbands evidence was that the shares of PRL Nevis were owned by its own subsidiary PRL Nigeria. The judge described this as puzzling but made no finding as to whether it was true. More recently, it has been suggested that PRL Nevis is owned by a family trust about which, however, nothing has been disclosed. In the end, it did not matter, because the judge cut through the complexities of the corporate structure by accepting the evidence of the wife and Mr Le Breton that the husband was the true owner of the Petrodel Group, as he had always told them he was, even if the exact means by which he held it remained obscure. That accounted for PRL, PRL Nigeria and PRL Nevis. It also accounted for Vermont, whose shares are held 49% by PRL and 51% by PRL Nigeria, and Upstream, which had a single issued share held by PRL Nevis. Vermont was and possibly still is a trading company. The husbands evidence was that it began to ship crude oil in 2010. The exact nature of Upstreams business (if any) is unclear. It does not appear to trade. The husband declined to answer the question whether he received any benefits from PRL other than his salary, saying that this was an accounting question. The judge, however, made extensive findings about this. He found that his personal expenditure substantially exceeded his salary and bonuses as chief executive, and that the difference was funded entirely by the company. There was no formality involved. The husband simply treated the companies cash balances and property as his own and drew on them as he saw fit. The judge found that the husband had unrestricted access to the companies assets, unconfined by any board control or by any scruples about the legality of his drawings. He used PRLs assets to fund his and his familys personal expenditure, including the substantial legal costs incurred in these proceedings. The group was effectively the husbands money box which he uses at will. Piercing the corporate veil I should first of all draw attention to the limited sense in which this issue arises at all. Piercing the corporate veil is an expression rather indiscriminately used to describe a number of different things. Properly speaking, it means disregarding the separate personality of the company. There is a range of situations in which the law attributes the acts or property of a company to those who control it, without disregarding its separate legal personality. The controller may be personally liable, generally in addition to the company, for something that he has done as its agent or as a joint actor. Property legally vested in a company may belong beneficially to the controller, if the arrangements in relation to the property are such as to make the company its controllers nominee or trustee for that purpose. For specific statutory purposes, a companys legal responsibility may be engaged by the acts or business of an associated company. Examples are the provisions of the Companies Acts governing group accounts or the rules governing infringements of competition law by firms, which may include groups of companies conducting the relevant business as an economic unit. Equitable remedies, such as an injunction or specific performance may be available to compel the controller whose personal legal responsibility is engaged to exercise his control in a particular way. But when we speak of piercing the corporate veil, we are not (or should not be) speaking of any of these situations, but only of those cases which are true exceptions to the rule in Salomon v A Salomon and Co Ltd [1897] AC 22, i.e. where a person who owns and controls a company is said in certain circumstances to be identified with it in law by virtue of that ownership and control. Most advanced legal systems recognise corporate legal personality while acknowledging some limits to its logical implications. In civil law jurisdictions, the juridical basis of the exceptions is generally the concept of abuse of rights, to which the International Court of Justice was referring in In re Barcelona Traction, Light and Power Co Ltd [1970] ICJ 3 when it derived from municipal law a limited principle permitting the piercing of the corporate veil in cases of misuse, fraud, malfeasance or evasion of legal obligations. These examples illustrate the breadth, at least as a matter of legal theory, of the concept of abuse of rights, which extends not just to the illegal and improper invocation of a right but to its use for some purpose collateral to that for which it exists. English law has no general doctrine of this kind. But it has a variety of specific principles which achieve the same result in some cases. One of these principles is that the law defines the incidents of most legal relationships between persons (natural or artificial) on the fundamental assumption that their dealings are honest. The same legal incidents will not necessarily apply if they are not. The principle was stated in its most absolute form by Denning LJ in a famous dictum in Lazarus Estates Ltd v Beasley [1956] 1 QB 702, 712: No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever The principle is mainly familiar in the context of contracts and other consensual arrangements, in which the effect of fraud is to vitiate consent so that the transaction becomes voidable ab initio. But it has been applied altogether more generally, in cases which can be rationalised only on grounds of public policy, for example to justify setting aside a public act such as a judgment, which is in no sense consensual, a jurisdiction which has existed since at least 1775: Duchess of Kingstons Case (1776) 2 Smith's LC, 13th ed, 644, 646, 651. Or to abrogate a right derived from a legal status, such as marriage: R v Secretary of State for the Home Department, Ex p Puttick [1981] QB 767. Or to disapply a statutory time bar which on the face of the statute applies: Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government [2011] 2 AC 304. These decisions (and there are others) illustrate a broader principle governing cases in which the benefit of some apparently absolute legal principle has been obtained by dishonesty. The authorities show that there are limited circumstances in which the law treats the use of a company as a means of evading the law as dishonest for this purpose. The question is heavily burdened by authority, much of it characterised by incautious dicta and inadequate reasoning. I propose, first, to examine those cases which seek to rationalise the case law in terms of general principle, and then to look at a number of cases in which the court has been thought, rightly or wrongly, to have pierced the corporate veil in order to identify the critical features of these cases which enabled them to do so. Almost all the modern analyses of the general principle have taken as their starting point the brief and obiter but influential statement of Lord Keith of Kinkel in Woolfson v Strathclyde Regional Council 1978 SC(HL) 90. This was an appeal from Scotland in which the House of Lords declined to allow the principal shareholder of a company to recover compensation for the compulsory purchase of a property which the company occupied. The case was decided on its facts, but at p 96, Lord Keith, delivering the leading speech, observed that it is appropriate to pierce the corporate veil only where special circumstances exist indicating that it is a mere facade concealing the true facts. The first systematic analysis of the large and disparate body of English case law was undertaken by a strong Court of Appeal in Adams v Cape Industries plc [1990] Ch 433 (Slade, Mustill and Ralph Gibson LJJ). The question at issue in that case was whether the United Kingdom parent of an international mining group which was, at least arguably, managed as a single economic unit was present in the United States for the purpose of making a default judgment of a United States court enforceable against it in England. Among other arguments, it was suggested that it was present in the United States by virtue of the fact that a wholly owned subsidiary was incorporated and carried on business there. Slade LJ, delivering the judgment of the court, rejected this contention: pp 532 544. The court, adopting Lord Keiths dictum in Woolfson v Strathclyde, held that the corporate veil could be disregarded only in cases where it was being used for a deliberately dishonest purpose: pp 539, 540. Apart from that, and from cases turning on the wording of particular statutes, it held at p 536 that the court is not free to disregard the principle of Salomon v A Salomon & Co Ltd [1897] AC 22 merely because it considers that justice so requires. Our law, for better or worse, recognises the creation of subsidiary companies, which though in one sense the creatures of their parent companies, will nevertheless under the general law fall to be treated as separate legal entities with all the rights and liabilities which would normally attach to separate legal entities. In Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177, Sir Andrew Morritt V C reviewed many of the same authorities. Mr Smallbone, the former managing director of Trustor, had improperly procured large amounts of its money to be paid out of its account to a company called Introcom Ltd, incorporated in Gibraltar. Introcom was owned and controlled by a Liechtenstein trust of which Mr Smallbone was a beneficiary. Its directors acted on his instructions. At an earlier stage of the litigation, Trustor had obtained summary judgment on some of its claims against Introcom, on the footing that the payments were unauthorised and a breach of Mr Smallbones duty as managing director, that the company was simply a vehicle Mr Smallbone used for receiving money from Trustor, and that his knowledge could be imputed to the company. The Vice Chancellor was dealing with a subsequent application by Trustor for summary judgment against Mr Smallbone himself. It was accepted that there was an arguable defence to the claims against him for damages or compensation for breach of his duties as a director of Trustor. Accordingly the sole basis of the application was that he was liable to account as a constructive trustee on the footing of knowing receipt. This depended on the proposition that he was to be identified with Introcom and so treated as having received the money himself. It was submitted that the authorities justified piercing the corporate veil in three, possibly overlapping, cases: (i) where the company was a facade or sham; (ii) where the company was involved in some form of impropriety; and (iii) where it was necessary to do so in the interests of justice. In each of these cases, the right of the court to pierce the corporate veil was said to be subject to there being no third party interests engaged, such as unconnected minority shareholders or creditors. The Vice Chancellor concluded that the authorities supported the submission in case (i), and also in case (ii) provided that the impropriety was a relevant one, i.e. linked to the use of the company structure to avoid or conceal liability for that impropriety. He followed Adams v Cape Industries in rejecting the submission as applied to case (iii). In summary, the court was entitled to pierce the corporate veil and recognise the receipt of the company as that of the individual(s) in control of it if the company was used as a device or facade to conceal the true facts, thereby avoiding or concealing any liability of those individual(s): see para 23. For years after it was decided, Cape Industries was regarded as having settled the general law on the subject. But for much of this period, the Family Division pursued an independent line, essentially for reasons of policy arising from its concern to make effective its statutory jurisdiction to distribute the property of the marriage upon a divorce. In Nicholas v Nicholas [1984] FLR 285, the Court of Appeal (Cumming Bruce and Dillon LJJ) overturned the decision of the judge to order the husband to procure the transfer to the wife of a property belonging to a company in which he held a 71% shareholding, the other 29% being held by his business associates. However, both members of the court suggested, obiter, that the result might have been different had it not been for the position of the minority shareholders. Cumming Bruce LJ (at p 287) thought that, in that situation, the court does and will pierce the corporate veil and make an order which has the same effect as an order that would be made if the property was vested in the majority shareholder. Dillon LJ said (at p 292) that if the company was a one man company and the alter ego of the husband, I would have no difficulty in holding that there was power to order a transfer of the property. These dicta were subsequently applied by judges of the Family Division dealing with claims for ancillary financial relief, who regularly made orders awarding to parties to the marriage assets vested in companies of which one of them was the sole shareholder. Connell J made such an order in Green v Green [1993] 1 FLR 326. In Mubarak v Mubarak [2001] 1 FLR 673, 682C, Bodey J held that for the purpose of claims to ancillary financial relief the Family Division would lift the corporate veil not only where the company was a sham but when it is just and necessary, the very proposition that the Court of Appeal had rejected as a statement of the general law in Adams v Cape Industries. And in Kremen v Agrest (No 2) [2011] 2 FLR 490, para 46, Mostyn J held that there was a strong practical reason why the cloak should be penetrable even absent a finding of wrongdoing. There were of course dissenting voices, even in decisions on ancillary relief. Much the most significant of them for present purposes was that of Munby J. In A v A [2007] 2 FLR 467, paras 18 19, he drew attention to the robust approach which had always been adopted by judges of the Family Division in seeing through sham arrangements designed to hide the ownership of assets of the marriage by vesting them in relatives or companies which were in reality holding them as their nominees. But he warned against departing from fundamental legal principle. At para 21, he observed: In this sense, and to this limited extent, the typical case in the Family Division may differ from the typical case in (say) the Chancery Division. But what it is important to appreciate (and too often, I fear, is not appreciated at least in this division) is that the relevant legal principles which have to be applied are precisely the same in this division as in the other two divisions. There is not one law of sham in the Chancery Division and another law of sham in the Family Division. There is only one law of sham, to be applied equally in all three Divisions of the High Court, just as there is but one set of principles, again equally applicable in all three divisions, determining whether or not it is appropriate to pierce the corporate veil. In Ben Hashem v Al Shayif [2009] 1 FLR 115, another decision of Munby J, the difference between the approach taken in the Family Division and in other divisions of the High Court arose in a particularly acute form, because he was hearing the claim for ancillary relief in conjunction with proceedings in the Chancery Division. In the Family Division, the wife was seeking an order transferring to her a property which she was occupying but which was owned by a company controlled by the husband, while in the Chancery proceedings the company was seeking a possession order in respect of the same property. After reminding himself of what he had said in A v A and conducting a careful review of both family and non family cases, Munby J formulated six principles at paras 159 164 which he considered could be derived from them: (i) ownership and control of a company were not enough to justify piercing the corporate veil; (ii) the court cannot pierce the corporate veil, even in the absence of third party interests in the company, merely because it is thought to be necessary in the interests of justice; (iii) the corporate veil can be pierced only if there is some impropriety; (iv) the impropriety in question must, as Sir Andrew Morritt had said in Trustor, be linked to the use of the company structure to avoid or conceal liability; (v) to justify piercing the corporate veil, there must be both control of the company by the wrongdoer(s) and impropriety, that is (mis)use of the company by them as a device or facade to conceal their wrongdoing; and (vi) the company may be a facade even though it was not originally incorporated with any deceptive intent, provided that it is being used for the purpose of deception at the time of the relevant transactions. The court would, however, pierce the corporate veil only so far as it was necessary in order to provide a remedy for the particular wrong which those controlling the company had done. In VTB Capital plc v Nutritek International Corpn [2012] 2 Lloyds Rep 313, VTB Capital sought permission to serve proceedings out of the jurisdiction on the footing that the borrower under a facility agreement was to be identified with the persons who controlled it, so as to make the latter in law parties to the same agreement. The attempt failed in the Court of Appeal because the court was not satisfied that that would be the consequence of piercing the corporate veil even if it were legitimate to do so: see paras 90 91. The decision is not, therefore, direct authority on the question whether the court was entitled to pierce the corporate veil. But the court considered all the principal authorities on that question and arrived at substantially the same conclusions as Sir Andrew Morritt V C and Munby J. Munby Js statement of principle was adopted by the Court of Appeal subject to two qualifications. First, they said that it was not necessary in order to pierce the corporate veil that there should be no other remedy available against the wrongdoer, and so far as Munby J suggested that it was, he had set the bar too high. Secondly, they said that it was not enough to show that there had been wrongdoing. The relevant wrongdoing must be in the nature of an independent wrong that involves the fraudulent or dishonest misuse of the corporate personality of the company for the purpose of concealing the true facts: see paras 79 80. On this point, the case took the same course in the Supreme Court [2013] UKSC 5; [2013] 2 WLR 398, which dismissed VTB Capitals appeal. So far as piercing the corporate veil is concerned, the courts reasons were given by Lord Neuberger. He noted the broad consensus among judges and text book writers that there were circumstances in which separate legal personality of a company might be disregarded and the company identified with those who owned and controlled it. However, he declined to decide whether the consensus was right on an appeal from an interlocutory decision, given that, like the Court of Appeal, he considered that even if the veil were pierced the result would not be to make a companys controllers party to its contracts with third parties. But he adopted, as it seems to me, both the general reasoning of the Court of Appeal and the view of Munby J that any doctrine permitting the court to pierce the corporate veil must be limited to cases where there was a relevant impropriety: see paras 128, 145. In my view, the principle that the court may be justified in piercing the corporate veil if a companys separate legal personality is being abused for the purpose of some relevant wrongdoing is well established in the authorities. It is true that most of the statements of principle in the authorities are obiter, because the corporate veil was not pierced. It is also true that most cases in which the corporate veil was pierced could have been decided on other grounds. But the consensus that there are circumstances in which the court may pierce the corporate veil is impressive. I would not for my part be willing to explain that consensus out of existence. This is because I think that the recognition of a limited power to pierce the corporate veil in carefully defined circumstances is necessary if the law is not to be disarmed in the face of abuse. I also think that provided the limits are recognised and respected, it is consistent with the general approach of English law to the problems raised by the use of legal concepts to defeat mandatory rules of law. The difficulty is to identify what is a relevant wrongdoing. References to a facade or sham beg too many questions to provide a satisfactory answer. It seems to me that two distinct principles lie behind these protean terms, and that much confusion has been caused by failing to distinguish between them. They can conveniently be called the concealment principle and the evasion principle. The concealment principle is legally banal and does not involve piercing the corporate veil at all. It is that the interposition of a company or perhaps several companies so as to conceal the identity of the real actors will not deter the courts from identifying them, assuming that their identity is legally relevant. In these cases the court is not disregarding the facade, but only looking behind it to discover the facts which the corporate structure is concealing. The evasion principle is different. It is that the court may disregard the corporate veil if there is a legal right against the person in control of it which exists independently of the companys involvement, and a company is interposed so that the separate legal personality of the company will defeat the right or frustrate its enforcement. Many cases will fall into both categories, but in some circumstances the difference between them may be critical. This may be illustrated by reference to those cases in which the court has been thought, rightly or wrongly, to have pierced the corporate veil. The first and most famous of them is Gilford Motor Co Ltd v Horne [1933] Ch 935. Mr EB Horne had been the managing director of the Gilford Motor Co. His contract of employment precluded him being engaged in any competing business in a specified geographical area for five years after the end of his employment either solely or jointly with or as agent for any other person, firm or company. He left Gilford and carried on a competing business in the specified area, initially in his own name. He then formed a company, JM Horne & Co Ltd, named after his wife, in which she and a business associate were shareholders. The trial judge, Farwell J, found that the company had been set up in this way to enable the business to be carried on under his own control but without incurring liability for breach of the covenant. However the reality, in his view, was that the company was being used as the channel through which the defendant Horne was carrying on his business. In fact, he dismissed the claim on the ground that the restrictive covenant was void. But the Court of Appeal allowed the appeal on that point and granted an injunction against both Mr Horne and the company. As against Mr Horne, the injunction was granted on the concealment principle. Lord Hanworth MR said, at pp 961 962, that the company was a mere cloak or sham because the business was really being carried on by Mr Horne. Because the restrictive covenant prevented Mr Horne from competing with his former employers whether as principal or as agent for another, it did not matter whether the business belonged to him or to JM Horne & Co Ltd provided that he was carrying it on. The only relevance of the interposition of the company was to maintain the pretence that it was being carried on by others. Lord Hanworth did not explain why the injunction should issue against the company, but I think it is clear from the judgments of Lawrence and Romer LJJ, at pp 965 and 969, that they were applying the evasion principle. Lawrence LJ, who gave the fullest consideration to the point, based his view entirely on Mr Hornes evasive motive for forming the company. This showed that it was a mere channel used by the defendant Horne for the purpose of enabling him, for his own benefit, to obtain the advantage of the customers of the plaintiff company, and that therefore the defendant company ought to be restrained as well as the defendant Horne. In other words, the company was restrained in order to ensure that Horne was deprived of the benefit which he might otherwise have derived from the separate legal personality of the company. I agree with the view expressed by the Court of Appeal in VTB Capital, at para 63, that this is properly to be regarded as a decision to pierce the corporate veil. It is fair to say that the point may have been conceded by counsel, although in rather guarded terms (if the evidence admitted of the conclusion that what was being done was a mere cloak or sham). It is also true that the court in Gilford Motor Co might have justified the injunction against the company on the ground that Mr Hornes knowledge was to be imputed to the company so as to make the latters conduct unconscionable or tortious, thereby justifying the grant of an equitable remedy against it. But the case is authority for what it decided, not for what it might have decided, and in my view the principle which the Court of Appeal applied was correct. It does not follow that JM Horne & Co Ltd was to be identified with Mr Horne for any other purpose. Mr Hornes personal creditors would not, for example, have been entitled simply by virtue of the facts found by Farwell J, to enforce their claims against the assets of the company. Jones v Lipman [1962] 1 WLR 832 was a case of very much the same kind. The facts were that Mr Lipman sold a property to the plaintiffs for 5,250 and then, thinking better of the deal, sold it to a company called Alamed Ltd for 3,000, in order to make it impossible for the plaintiffs to get specific performance. The judge, Russell J, found that company was wholly owned and controlled by Mr Lipman, who had bought it off the shelf and had procured the property to be conveyed to it solely for the purpose of defeating the plaintiffs rights to specific performance. About half of the purchase price payable by Alamed was funded by borrowing from a bank, and the rest was left outstanding. The judge decreed specific performance against both Mr Lipman and Alamed Ltd. As against Mr Lipman this was done on the concealment principle. Because Mr Lipman owned and controlled Alamed Ltd, he was in a position specifically to perform his obligation to the plaintiffs by exercising his powers over the company. This did not involve piercing the corporate veil, but only identifying Mr Lipman as the man in control of the company. The company, said Russell J portentously at p 836, was a device and a sham, a mask which [Mr Lipman] holds before his face in an attempt to avoid recognition by the eye of equity. On the other hand, as against Alamed Ltd itself, the decision was justified on the evasion principle, by reference to the Court of Appeals decision in Gilford Motor Co. The judge must have thought that in the circumstances the company should be treated as having the same obligation to convey the property to the plaintiff as Mr Lipman had, even though it was not party to the contract of sale. It should be noted that he decreed specific performance against the company notwithstanding that as a result of the transaction, the companys main creditor, namely the bank, was prejudiced by its loss of what appears from the report to have been its sole asset apart from a possible personal claim against Mr Lipman which he may or may not have been in a position to meet. This may be thought hard on the bank, but it is no harder than a finding that the company was not the beneficial owner at all. The bank could have protected itself by taking a charge or registering the contract of sale. In Gencor ACP Ltd v Dalby [2000] 2 BCLC 734, the plaintiff made a large number of claims against a former director, Mr Dalby, for misappropriating its funds. For present purposes the claim which matters is a claim for an account of a secret profit which Mr Dalby procured to be paid by a third party, Balfour Beatty, to a BVI company under his control called Burnstead. Rimer J held, at para 26, that Mr Dalby was accountable for the money received by Burnstead, on the ground that the latter was in substance little other than Mr Dalbys offshore bank account held in a nominee name, and simply. the alter ego through which Mr Dalby enjoyed the profit which he earned in breach of his fiduciary duty to ACP. Rimer J ordered an account against both Mr Dalby and Burnstead. He considered that he was piercing the corporate veil. But I do not think that he was. His findings about Mr Dalbys relationship with the company and his analysis of the legal consequences show that both Mr Dalby and Burnstead were independently liable to account to ACP, even on the footing that they were distinct legal persons. If, as the judge held, Burnstead was Mr Dalbys nominee for the purpose of receiving and holding the secret profit, it followed that Burnstead had no right to the money as against Mr Dalby, who had in law received it through Burnstead and could properly be required to account for it to ACP. Burnstead itself was liable to account to ACP because, as the judge went on to point out, Mr Dalbys knowledge of the prior equitable interest of ACP was to be imputed to it. As Rimer J observed, the introduction into the story of such a creature company is. insufficient to prevent equitys eye from identifying it with Mr Dalby. This is in reality the concealment principle. The correct analysis of the situation was that the court refused to be deterred by the legal personality of the company from finding the true facts about its legal relationship with Mr Dalby. It held that the nature of their dealings gave rise to ordinary equitable claims against both. The result would have been exactly the same if Burnstead, instead of being a company, had been a natural person, say Mr Dalbys uncle, about whose separate existence there could be no doubt. The same confusion of concepts is, with respect, apparent in Sir Andrew Morritt V Cs analysis in Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177, which I have already considered. The Vice Chancellors statement of principle at para 23 that the court was entitled to pierce the corporate veil if the company was used as a device or facade to conceal the true facts thereby avoiding or concealing any liability of those individual(s) elides the quite different concepts of concealment and avoidance. As I read his reasons for giving judgment against Mr Smallbone, at paras 24 25, he did so on the concealment principle. It had been found at the earlier stage of the litigation that Introcom was simply a vehicle Mr Smallbone used for receiving money from Trustor, and that the company was a device or facade for concealing that fact. On that footing, the company received the money on Mr Smallbones behalf. This conclusion did not involve piercing the corporate veil, and did not depend on any finding of impropriety. It was simply an application of the principle summarised by the Vice Chancellor at para 19 of his judgment, that receipt by a company will count as receipt by the shareholder if the company received it as his agent or nominee, but not if it received it in its own right. To decide that question, it was necessary to establish the facts which demonstrated the true legal relationship between Mr Smallbone and Introcom. Mr Smallbones ownership and control of Introcom was only one of those facts, not in itself conclusive. Other factors included the circumstances and the source of the receipt, and the nature of the companys other transactions if any. In Trustor, as in Gencor, the analysis would have been the same if Introcom had been a natural person instead of a company. The evasion principle was not engaged, and indeed could not have been engaged on the facts of either case. This is because neither Mr Dalby nor Mr Smallbone had used the companys separate legal personality to evade a liability that they would otherwise have had. They were liable to account only if the true facts were that the company had received the money as their agent or nominee. That was proved in both cases. If it had not been, there would have been no receipt, knowing or otherwise, and therefore no claim to be evaded. The situation was not the same as it had been in Gilford Motor Co v Horne and Jones v Lipman, for in these cases the real actors, Mr Horne and Mr Lipman, had a liability which arose independently of the involvement of the company. These considerations reflect the broader principle that the corporate veil may be pierced only to prevent the abuse of corporate legal personality. It may be an abuse of the separate legal personality of a company to use it to evade the law or to frustrate its enforcement. It is not an abuse to cause a legal liability to be incurred by the company in the first place. It is not an abuse to rely upon the fact (if it is a fact) that a liability is not the controllers because it is the companys. On the contrary, that is what incorporation is all about. Thus in a case like VTB Capital, where the argument was that the corporate veil should be pierced so as to make the controllers of a company jointly and severally liable on the companys contract, the fundamental objection to the argument was that the principle was being invoked so as to create a new liability that would not otherwise exist. The objection to that argument is obvious in the case of a consensual liability under a contract, where the ostensible contracting parties never intended that any one else should be party to it. But the objection would have been just as strong if the liability in question had not been consensual. I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the companys separate legal personality. The principle is properly described as a limited one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil. Like Munby J in Ben Hashem, I consider that if it is not necessary to pierce the corporate veil, it is not appropriate to do so, because on that footing there is no public policy imperative which justifies that course. I therefore disagree with the Court of Appeal in VTB Capital who suggested otherwise at para 79. For all of these reasons, the principle has been recognised far more often than it has been applied. But the recognition of a small residual category of cases where the abuse of the corporate veil to evade or frustrate the law can be addressed only by disregarding the legal personality of the company is, I believe, consistent with authority and with long standing principles of legal policy. In the present case, Moylan J held that he could not pierce the corporate veil under the general law without some relevant impropriety, and declined to find that there was any. In my view he was right about this. The husband has acted improperly in many ways. In the first place, he has misapplied the assets of his companies for his own benefit, but in doing that he was neither concealing nor evading any legal obligation owed to his wife. Nor, more generally, was he concealing or evading the law relating to the distribution of assets of a marriage upon its dissolution. It cannot follow that the court should disregard the legal personality of the companies with the same insouciance as he did. Secondly, the husband has made use of the opacity of the Petrodel Groups corporate structure to deny being its owner. But that, as the judge pointed out at para 219 is simply [the] husband giving false evidence. It may engage what I have called the concealment principle, but that simply means that the court must ascertain the truth that he has concealed, as it has done. The problem in the present case is that the legal interest in the properties is vested in the companies and not in the husband. They were vested in the companies long before the marriage broke up. Whatever the husbands reasons for organising things in that way, there is no evidence that he was seeking to avoid any obligation which is relevant in these proceedings. The judge found that his purpose was wealth protection and the avoidance of tax. It follows that the piercing of the corporate veil cannot be justified in this case by reference to any general principle of law. Section 24(1)(a) of the Matrimonial Causes Act 1973 If there is no justification as a matter of general legal principle for piercing the corporate veil, I find it impossible to say that a special and wider principle applies in matrimonial proceedings by virtue of section 24(1)(a) of the Matrimonial Causes Act 1973. The language of this provision is clear. It empowers the court to order one party to the marriage to transfer to the other property to which the first mentioned party is entitled, either in possession or reversion. An entitlement is a legal right in respect of the property in question. The words in possession or reversion show that the right in question is a proprietary right, legal or equitable. This section is invoking concepts with an established legal meaning and recognised legal incidents under the general law. Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different. If a right of property exists, it exists in every division of the High Court and in every jurisdiction of the county courts. If it does not exist, it does not exist anywhere. It is right to add that even where courts exercising family jurisdiction have claimed a wider jurisdiction to pierce the corporate veil than would be recognised under the general law, they have not usually suggested that this can be founded on section 24 of the Matrimonial Causes Act. On the contrary, in Nicholas v Nicholas [1984] FLR 285, 288, Cumming Bruce LJ said that it could not. This analysis is not affected by section 25(2)(a) of the Matrimonial Causes Act 1973. Section 25(2)(a) requires the court when exercising the powers under section 24, to have regard to the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future. The breadth and inclusiveness of this definition of the relevant resources of the parties to the marriage means that the relevant spouses ownership and control of a company and practical ability to extract money or moneys worth from it are unquestionably relevant to the courts assessment of what his resources really are. That may affect the amount of any lump sum or periodical payment orders, or the decision what transfers to order of other property which unquestionably belongs to the relevant spouse. But it does not follow from the fact that one spouses worth may be boosted by his access to the companys assets that those assets are specifically transferrable to the other under section 24(1)(a). Moylan J considered that it was enough to justify his order to transfer the properties that the husband should have the practical ability to procure their transfer, whether or not he was their beneficial owner. He found that this was established in the present case because of the power which the husband had over the companies by virtue of owning and controlling them. The judge did not make any finding about whether the properties of the corporate respondents were held in trust for the husband, except in the case of the matrimonial home in Warwick Avenue, which he found to be beneficially his. What he held was that the assets of the companies were effectively the husbands property, because he treated them as such. He was able to procure their disposal as he may direct, based again on his being the controller of the companies and the only beneficial owner. The judge accepted that as a matter of company law, the husband as shareholder had no more than a right of participation in accordance with the companys constitution, and that that did not confer any right to any particular property of the company. But, what if the shareholder is, in fact, able to procure the transfer to them of a particular item of company property, such as a matrimonial home, the judge asked, as a result of their control and ownership of the company and the absence of any third party interests. The judges answer to that question was that the purpose and intention of the Matrimonial Causes Act 1973 was that the companies assets should be treated as part of the marital wealth. Effectively, he said, the husband, in respect of the companies and their assets, is in the same position he would be in if he was the beneficiary of a bare trust or the companies were his nominees. I do not accept this, any more than the Court of Appeal did. The judge was entitled to take account of the husbands ownership and control of the companies and his unrestricted access to the companies assets in assessing what his resources were for the purpose of section 25(2)(a). But he was not entitled to order the companies assets to be transferred to the wife in satisfaction of the lump sum order simply by virtue of section 24(1)(a). I do not doubt that the construction of section 24(1)(a) of the Act is informed by its purpose and its social context, as well as by its language. Nor do I doubt that the object is to achieve a proper division of the assets of the marriage. But it does not follow that the courts will stop at nothing in their pursuit of that end, and there are a number of principled reasons for declining to give the section the effect that the judge gave it. In the first place, it is axiomatic that general words in a statute are not to be read in a way which would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness. The words are those of Lord Atkin in Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014, 1031 1032, but the principle is very familiar and has been restated by the courts in many contexts and at every level. There is nothing in the Matrimonial Causes Act and nothing in its purpose or broader social context to indicate that the legislature intended to authorise the transfer by one party to the marriage to the other of property which was not his to transfer. Secondly, a transfer of this kind will ordinarily be unnecessary for the purpose of achieving a fair distribution of the assets of the marriage. Where assets belong to a company owned by one party to the marriage, the proper claims of the other can ordinarily be satisfied by directing the transfer of the shares. It is true that this will not always be possible, particularly in cases like this one where the shareholder and the company are both resident abroad in places which may not give direct effect to the orders of the English court. In an age of internationally mobile spouses and assets this is a more significant problem than it once was, but such cases remain the exception rather than the rule. Section 24 cannot be construed as if it were directed to that problem. Third, so far as a party to matrimonial proceedings deliberately attempts to frustrate the exercise of the courts ancillary powers by disposing of assets, section 37 provides for the setting aside of those dispositions in certain circumstances. Section 37 is a limited provision which is very far from being a complete answer to the problem, but it is as far as the legislature has been prepared to go. The recognition of a jurisdiction such as the judge sought to exercise in this case would cut across the statutory schemes of company and insolvency law. These include elaborate provisions regulating the repayment of capital to shareholders and other forms of reduction of capital, and for the recovery in an insolvency of improper dispositions of the companys assets. These schemes are essential for the protection of those dealing with a company, particularly where it is a trading company like PRL and Vermont. The effect of the judges order in this case was to make the wife a secured creditor. It is no answer to say, as occasionally has been said in cases about ancillary financial relief, that the court will allow for known creditors. The truth is that in the case of a trading company incurring and discharging large liabilities in the ordinary course of business, a court of family jurisdiction is not in a position to conduct the kind of notional liquidation attended by detailed internal investigation and wide publicity which would be necessary to establish what its liabilities are. In the present case, the difficulty is aggravated by the fact that the last financial statements, which are not obviously unreliable, are more than five years old. To some extent that is the fault of the husband and his companies, but that is unlikely to be much comfort to unsatisfied creditors with no knowledge of the state of the shareholders marriage or the proceedings in the Family Division. It is clear from the judges findings of fact that this particular husband made free with the companys assets as if they were his own. That was within his power, in the sense that there was no one to stop him. But, as the judge observed, he never stopped to think whether he had any right to act in this way, and in law, he had none. The sole shareholder or the whole body of shareholders may approve a foolish or negligent decision in the ordinary course of business, at least where the company is solvent: Multinational Gas & Petrochemical Co v Multinational Gas & Petrochemical Services Ltd [1983] Ch 258. But not even they can validly consent to their own appropriation of the companys assets for purposes which are not the companys: Belmont Finance Corpn Ltd v Williams Furniture Ltd [1979] Ch 250, 261 (Buckley LJ), Attorney Generals Reference (No 2 of 1982) [1984] QB 624, Director of Public Prosecutions v Gomez [1993] AC 442, 496 497 (Lord Browne Wilkinson). Mr Prest is of course not the first person to ignore the separate personality of his company and pillage its assets, and he will certainly not be the last. But for the court to deploy its authority to authorise the appropriation of the companys assets to satisfy a personal liability of its shareholder to his wife, in circumstances where the company has not only not consented to that course but vigorously opposed it, would, as it seems to me, be an even more remarkable break with principle. It may be said, as the judge in effect did say, that the way in which the affairs of this company were conducted meant that the corporate veil had no reality. The problem about this is that if, as the judge thought, the property of a company is property to which its sole shareholder is entitled, either in possession or reversion, then that will be so even in a case where the sole shareholder scrupulously respects the separate personality of the company and the requirements of the Companies Acts, and even in a case where none of the exceptional circumstances that may justify piercing the corporate veil applies. This is a proposition which can be justified only by asserting that the corporate veil does not matter where the husband is in sole control of the company. But that is plainly not the law. Beneficial ownership of the properties It follows from the above analysis that the only basis on which the companies can be ordered to convey the seven disputed properties to the wife is that they belong beneficially to the husband, by virtue of the particular circumstances in which the properties came to be vested in them. Only then will they constitute property to which the husband is entitled, either in possession or reversion. This is the issue which the judge felt that he did not need to decide. But on the footing that he was wrong about the ambit of section 24(1)(a), it does need to be decided now. The issue requires an examination of evidence which is incomplete and in critical respects obscure. A good deal therefore depends upon what presumptions may properly be made against the husband given that the defective character of the material is almost entirely due to his persistent obstruction and mendacity. In British Railways Board v Herrington [1972] AC 877, 930 931, Lord Diplock, dealing with the liability of a railway undertaking for injury suffered by trespassers on the line, said: The appellants, who are a public corporation, elected to call no witnesses, thus depriving the court of any positive evidence as to whether the condition of the fence and the adjacent terrain had been noticed by any particular servant of theirs or as to what he or any other of their servants either thought or did about it. This is a legitimate tactical move under our adversarial system of litigation. But a defendant who adopts it cannot complain if the court draws from the facts which have been disclosed all reasonable inferences as to what are the facts which the defendant has chosen to withhold. A court may take judicial notice that railway lines are regularly patrolled by linesmen and Bangers. In the absence of evidence to the contrary, it is entitled to infer that one or more of them in the course of several weeks noticed what was plain for all to see. Anyone of common sense would realise the danger that the state of the fence so close to the live rail created for little children coming to the meadow to play. As the appellants elected to call none of the persons who patrolled the line there is nothing to rebut the inference that they did not lack the common sense to realise the danger. A court is accordingly entitled to infer from the inaction of the appellants that one or more of their employees decided to allow the risk to continue of some child crossing the boundary and being injured or killed by the live rail rather than to incur the trivial trouble and expense of repairing the gap in the fence. The courts have tended to recoil from some of the fiercer parts of this statement, which appear to convert open ended speculation into findings of fact. There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities, before a court can draw useful inferences from a partys failure to rebut it. For my part I would adopt, with a modification which I shall come to, the more balanced view expressed by Lord Lowry with the support of the rest of the committee in R v Inland Revenue Commissioners, Ex p TC Coombs & Co [1991] 2 AC 283, 300: In our legal system generally, the silence of one party in face of the other partys evidence may convert that evidence into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence. Thus, depending on the circumstances, a prima facie case may become a strong or even an overwhelming case. But, if the silent party's failure to give evidence (or to give the necessary evidence) can be credibly explained, even if not entirely justified, the effect of his silence in favour of the other party may be either reduced or nullified. Cf. Wisniewski v Central Manchester Health Authority [1998] PIQR 324, 340. The modification to which I have referred concerns the drawing of adverse inferences in claims for ancillary financial relief in matrimonial proceedings, which have some important distinctive features. There is a public interest in the proper maintenance of the wife by her former husband, especially (but not only) where the interests of the children are engaged. Partly for that reason, the proceedings although in form adversarial have a substantial inquisitorial element. The family finances will commonly have been the responsibility of the husband, so that although technically a claimant, the wife is in reality dependent on the disclosure and evidence of the husband to ascertain the extent of her proper claim. The concept of the burden of proof, which has always been one of the main factors inhibiting the drawing of adverse inferences from the absence of evidence or disclosure, cannot be applied in the same way to proceedings of this kind as it is in ordinary civil litigation. These considerations are not a licence to engage in pure speculation. But judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband is likely to be concealing. I refer to the husband because the husband is usually the economically dominant party, but of course the same applies to the economically dominant spouse whoever it is. The facts, so far as the judge was able to make findings about them, are that the London properties were acquired as follows: December 1995 Flat 4, 27 Abbey Road was transferred to PRL by the husband for 1. It had been bought by him in 1991, before the marriage and before the incorporation of PRL. There are two charges on the property, in favour of Ahli United Bank and BNP Paribas, apparently to secure loans made to PRL. Neither the husband nor PRL has complied with orders to disclose the loan agreement and related documents. March 1996 1998 August 2000 May 2001 Flat 5, 27 Abbey Road was transferred to PRL on the same day, also for 1, by the husbands younger brother Michel. It had been bought in March of that year for 48,650 in Michels name. The wifes evidence was that, at the time, Michel was a student in London with no substantial assets of his own who was being supported by her husband. She said that her husband had led her to believe that he had paid for it. Flat 2, 143 Ashmore Road, is a leasehold property transferred to PRL for 1 by the wife. It had originally been bought by the husband in November 1992 in the name of someone called Jimmy Lawrence. There is no information about Jimmy Lawrence or the reasons for his involvement. According to the husbands evidence, the purchase money came from PRL, but since PRL was not incorporated until six months after that, this cannot be correct. At some stage, it is unclear when or how, the lease was transferred into the name of the wife, and she must have signed the transfer when it was conveyed to PRL, but she had no recollection of being involved or of ever having owned it. The wife transferred her interest in the freehold of 143 Ashmore Street to PRL. The freehold had originally been bought in 1996 in the name of the wife and one Esta Blechman, who was the leasehold owner of another flat in the building. There is no information about the consideration paid either in 1996 or in 1998. The husbands evidence was the funds to buy the wifes interest in 1996 came from PRL. Flat 6, 62 64 Beethoven Street was transferred to PRL by the husband for 85,000. He had originally bought it in 1988 (before the marriage) for 70,500. The property is charged to secure the loans made by Ahli United Bank and BNP Paribas. The matrimonial home, 16 Warwick Avenue, was bought in the name of PRL for 1.4 million July 2001 January 2004 that and subsequently refurbished at a cost of about 1 million. The judge rejected the husbands the purchase price and evidence refurbishment costs were funded by PRL, because at that stage the company had not commenced trading operations. He found that they were funded from bonuses earned by the husband, presumably, at this stage, from his last employer before he set up on his own. The judge found that PRL had always held this property on trust for the husband and that conclusion is not challenged on this appeal. The property is charged to secure the loans made by Ahli United Bank and BNP Paribas. In accordance with the judges order PRL has now conveyed it to the wife, but subject to the charges. Flat 310, Pavilion Apartments was bought in the name of Vermont for 635,000. The judge found that the money was derived from PRL. 11, South Lodge, Circus Road, was bought in the name of Vermont for 700,000. The judge found that the purchase price was also derived from PRL. The property is charged to secure the loans made to Ahli United Bank and BNP Paribas. The judge recorded the wifes evidence that the husband had once advised her that if anything were to happen to him, she should sell all the properties, move to Nevis and use the proceeds of sale to meet her living expenses there. The starting point is that in her points of claim the wife expressly alleged, among other things, that the husband used the corporate defendants to hold legal title to properties that belonged beneficially to him. All seven of the properties in dispute on this appeal were identified in her pleading as having been held for him in this way. In her section 25 statement, she gives evidence of her belief that he was their beneficial owner, supported in some cases by admittedly inconclusive reasons for that belief. Neither the husband nor the companies have complied with orders for the production of the completion statements on the purchase of the properties and evidence of the source of the money used to pay the purchase price. The companies were joined to these proceedings only because they were alleged to be trustees for the husband of the shareholdings and the properties and because orders were being sought for their transfer to the wife. Yet the companies failed to file a defence, or to comply with orders for disclosure. One of the few things that is clear from Mr Murphys affidavit was that the companies refusal to co operate was deliberate, notwithstanding that they were conscious that the London properties (unlike the other assets) were within the jurisdiction of the court, which was in a position directly to enforce any order that it might make in respect of them. The only explanation proffered for their contumacy was that the information was confidential to the companies shareholders or commercial partners. It is difficult to imagine that any commercial partners could enjoy rights of confidence over information concerning residential investment properties in London, and on the judges findings the only shareholder was the husband himself. The only directly relevant evidence given by Mr Murphy in his affidavit is a bald assertion that the companies are the sole beneficial owners of the shareholdings and the properties, but he declined to appear for cross examination on it. The judge rejected his explanation that his health was not up to it. The judges findings about the ownership and control of the companies mean that the companies refusal to co operate with these proceedings is a course ultimately adopted on the direction of the husband. It is a fair inference from all these facts, taken cumulatively, that the main, if not the only, reason for the companies failure to co operate is to protect the London properties. That in turn suggests that proper disclosure of the facts would reveal them to have been held beneficially by the husband, as the wife has alleged. Turning to what is known about the acquisition of the disputed properties, PRL acquired the legal interest in six London properties (including the matrimonial home) between 1995 and 2001. All of these properties were acquired by PRL before it began commercial operations and began to generate funds of its own. This was the main basis on which the judge found that the matrimonial home was held on trust for the husband from its acquisition in 2001. Since, as the judge found, no rent was paid to PRL for the familys occupation of the matrimonial home, this is a particularly clear case of the husband using PRL as a vehicle to hold legal title on trust for himself. Of the other five properties owned by PRL, the first category comprises the three properties (Flats 4 and 5, 27 Abbey Road, and Flat 2, 143 Ashmore Road) acquired by the company in December 1995 and March 1996, in each case for a nominal consideration of 1. Since no explanation has been forthcoming for the gratuitous transfer of these properties to PRL, there is nothing to rebut the ordinary presumption of equity that PRL was not intended to acquire a beneficial interest in them. The only question is who did hold the beneficial interest. Flat 4, 27 Abbey Road was transferred by the husband, who had originally bought it in his own name in 1991, before PRL was incorporated. There is therefore an ordinary resulting trust back to the husband, which is held by him subject to the charges in favour of Ahli United Bank and BNP Paribas. Flat 5, 27 Abbey Road was transferred to PRL by the husbands younger brother Michel. He had acquired title shortly before at a time when he could not have paid for it himself. The wifes evidence was that the husband paid for it. Again, there is no evidence to rebut the ordinary inference that the husband was the beneficial owner of the property at the time of the transfer to PRL, and that the company held it on a resulting trust for him. The leasehold interest in Flat 2, 143 Ashmore Road was transferred to PRL by the wife. The rather curious chain of title before that is summarised above. The circumstances suggest that the husband must have provided the purchase money and was the beneficial owner when the legal estate was held by Jimmy Lawrence and also at the time of its transfer from him to the wife. Either it then became the beneficial property of the wife (which is what equity would initially presume); or else it remained in the beneficial ownership of the husband, which is what I would on balance infer from the wifes evidence that the transfer was procured by the husband without her conscious involvement. In either case, the company as the legal owner can be required to transfer this property to the wife. I conclude that the husband was at all relevant times the beneficial owner of all three properties. The freehold interest in 143 Ashmore Road and Flat 6, 62 64 Beethoven Street come into a different category. Flat 6, 62 64 Beethoven Street is known to have been acquired by PRL from the husband in August 1998 for substantial consideration. Since PRL had not begun operations at that stage, I infer that the purchase money must have come from the husband. Virtually nothing is known about the terms of acquisition of the wifes interest in the freehold of 143 Ashmore Road, except that the husband says that the money came from PRL. I infer for the same reason that PRL was funded by the husband. In itself, that is consistent with PRL being the beneficial owner if, for example, the husband provided the money to the company by way of loan or capital subscription. But there is no evidence to that effect, and I would not be willing to presume it in the absence of any. I conclude that the husband was the beneficial owner of these two properties. That leaves the two London properties (Flat 310, Pavilion Apartments and 11, South Lodge, Circus Road) which were acquired in the name of Vermont for substantial consideration, in July 2001 and January 2004 respectively. Vermont is an oil trading company which according to the husband started lifting oil in 2010. In the companys financial statements for 2008, the two properties are listed as its only assets and there were no liabilities apart from the bank loans charged on Flat 310, Pavilion Apartments. Flat 310, Pavilion Apartments was acquired with funds derived from PRL at a time when the company had not begun trading operations. I infer that the funds were provided to PRL by the husband. The position is the same in the case of 11, South Lodge, except that this was bought with money provided by PRL at a time when it was an active trading company and could therefore have funded the purchase itself. However, it is right to note (i) that the ownership of residential investment property in London appears to have nothing to do with the oil trading business in which PRL was then engaged, and (ii) that at this stage of the history a consistent pattern can be discerned by which the husband causes properties to be acquired with funds provided by himself by companies under his control, nominally funded by PRL but in fact by himself. If 11, South Lodge was the exception, then it was a break with past practice. In the absence of any explanation of these transactions by the husband or his companies, I conclude that both of the properties acquired in the name of Vermont were beneficially owned by the husband. Whether assets legally vested in a company are beneficially owned by its controller is a highly fact specific issue. It is not possible to give general guidance going beyond the ordinary principles and presumptions of equity, especially those relating to gifts and resulting trusts. But I venture to suggest, however tentatively, that in the case of the matrimonial home, the facts are quite likely to justify the inference that the property was held on trust for a spouse who owned and controlled the company. In many, perhaps most cases, the occupation of the companys property as the matrimonial home of its controller will not be easily justified in the companys interest, especially if it is gratuitous. The intention will normally be that the spouse in control of the company intends to retain a degree of control over the matrimonial home which is not consistent with the companys beneficial ownership. Of course, structures can be devised which give a different impression, and some of them will be entirely genuine. But where, say, the terms of acquisition and occupation of the matrimonial home are arranged between the husband in his personal capacity and the husband in his capacity as the sole effective agent of the company (or someone else acting at his direction), judges exercising family jurisdiction are entitled to be sceptical about whether the terms of occupation are really what they are said to be, or are simply a sham to conceal the reality of the husbands beneficial ownership. Nuptial settlement The wife sought special leave to argue that the companies constituted a nuptial settlement within the meaning of section 24(1)(c) of the Act. The court ruled in the course of the hearing that leave would be refused. The point was not argued below and does not appear to be seriously arguable here. Terms for permission to appeal Before parting with this case, I will only record my surprise that the companies were given permission to appeal on such undemanding terms. They were required to make a payment on account of costs, but they were not required to purge their contempt in failing to disclose documents or information, nor were they put on terms as to dealings with the properties. There may have been good reasons for not imposing such terms, but on the face of it the possibility was not even considered. Conclusion I would accordingly declare that the seven disputed properties vested in PRL and Vermont are held on trust for the husband, and I would restore paragraph 6 of the order of Moylan J so far as it required those companies to transfer them to the wife. Subject to any contrary submissions as to costs, I would also restore paragraph 14 of the judges order so far as it dealt with the costs payable by PRL and Vermont, and would order them to pay the costs of the appeal to the Court of Appeal and to this court. As at present advised, I would not require Upstream, against whom no relief has ever been sought, to pay any costs, but in the rather unusual circumstances of this case, I would not make any costs order in their favour either. LORD NEUBERGER I agree that Mrs Prests appeal succeeds. More particularly, I agree that her appeal should be (i) allowed on the basis that the properties were acquired and held by the respondents on trust for the husband, but (ii) dismissed in so far as it relies on piercing the veil of incorporation, or on section 24(1)(a) or (c) of the Matrimonial Causes Act 1973. I agree with all that Lord Sumption says on (i) the construction of section 24(1)(a) of the 1973 Act, in paras 37 42, (ii) the trust issue, in his masterly analysis of the facts and inferences to be drawn from them, in paras 43 52, (iii) the point sought to be raised under section 24(1)(c), in para 53, and (iv) his conclusions in paras 55 and 56, and there is nothing I wish to add on those issues. I wish, however, to add a little to what Lord Sumption says on the question of whether, and if so, in what circumstances, the court has power to pierce the corporate veil in the absence of specific statutory authority to do so. I agree that there are two types of case where judges have described their decisions as being based on piercing the veil, namely those concerned with concealment and those concerned with evasion. It seems to me that Staughton LJ had a similar classification in mind in Atlas Maritime Co SA v Avalon Maritime Ltd (No 1) [1991] 4 All ER 769, 779G (quoted in VTB Capital plc v Nutritek International Corpn [2013] UKSC 5; [2013] 2 WLR 378, para 118), where he sought to distinguish between lifting and piercing the corporate veil. I also agree that cases concerned with concealment do not involve piercing the corporate veil at all. They simply involve the application of conventional legal principles to an arrangement which happens to include a company being interposed to disguise the true nature of that arrangement. Accordingly, if piercing the corporate veil has any role to play, it is in connection with evasion. Furthermore, I agree that, if the court has power to pierce the corporate veil, Munby J was correct in Ben Hashem v Al Shayif [2009] 1 FLR 115 to suggest that it could only do so in favour of a party when all other, more conventional, remedies have proved to be of no assistance (and therefore I disagree with the Court of Appeal in VTB [2012] 2 Lloyds Rep 313, para 79, who suggested otherwise). However, as in the recent decision of this court in VTB, it is not necessary to decide whether there is a principle that it is open to a court, without statutory authority (or, possibly, in the absence of the intention of contracting parties), to pierce the veil of incorporation (the doctrine), and, if it is, the scope, or boundaries, of the doctrine. However, I can see considerable force in the view that it is appropriate for us to address those matters now. This is the second case in the space of a few months when the doctrine has been invoked before this court on what are, on any view, inappropriate grounds. It is also clear from the cases and academic articles that the law relating to the doctrine is unsatisfactory and confused. Those cases and articles appear to me to suggest that (i) there is not a single instance in this jurisdiction where the doctrine has been invoked properly and successfully, (ii) there is doubt as to whether the doctrine should exist, and (iii) it is impossible to discern any coherent approach, applicable principles, or defined limitations to the doctrine. In these circumstances, there is obvious value in seeking to decide whether the doctrine exists, and if so, to identify some coherent, practical and principled basis for it, if we can do so in this case. Any discussion about the doctrine must begin with the decision in Salomon v A Salomon and Co Ltd [1897] AC 22, in which a unanimous House of Lords reached a clear and principled decision, which has stood unimpeached for over a century. The effect of the decision is encapsulated at pp 30 31, where Lord Halsbury LC said that a legally incorporated company must be treated like any other independent person with its rights and liabilities appropriate to itself , whatever may have been the ideas or schemes of those who brought it into existence. Whether that is characterised as a common law rule or a consequence of the companies legislation (or an amalgam of both), it is a very well established principle of long standing and high authority. Writing extra judicially, Lord Templeman referred to the principle in Salomon as the unyielding rock on which company law is constructed, and on which complicated arguments might ultimately become shipwrecked Forty Years On (1990) 11 Co Law 10. The decision in Salomon plainly represents a substantial obstacle in the way of an argument that the veil of incorporation can be pierced. Further, the importance of maintaining clarity and simplicity in this area of law means that, if the doctrine is to exist, the circumstances in which it can apply must be limited and as clear as possible. Since the decision in Salomon, there have been a number of cases where the courts have considered piercing or lifting the corporate veil. The most important of those cases are discussed by Lord Sumption in paras 20 35 above. That discussion demonstrates, as I see it, the following: i. The decision of the International Court of Justice in In re Barcelona Traction, Light and Power Co, Ltd [1970] ICJ 3 recognises the doctrine; however, that is in the context of a civil law system which includes the principle of abuse of rights, and begs the question whether, in a common law system, the doctrine should be applicable by the courts in the absence of specific legislative sanction; ii. There are judgments in family cases based on obiter dicta in Nicholas v Nicholas [1984] FLR 285 (eg the judgments of Thorpe LJ in this case and of Mostyn J in Kremen v Agrest (No 2) [2011] 2 FLR 490), where the doctrine has been treated as valid and applicable; but the application of the doctrine, even if it exists, in these cases is unsound, as Munby J effectively (in both senses of the word) indicated in A v A [2007] 2 FLR 467 and Ben Hashem [2009] 1 FLR 115; iii. There are two cases outside the family law context which laid the ground for the establishment of the doctrine, namely the decisions of the Court of Appeal in Gilford Motor Co Ltd v Horne [1933] Ch 935, and of Russell J in Jones v Lipman [1962] 1 WLR 832; iv. There are two subsequent decisions, one of the House of Lords, Woolfson v Strathclyde Regional Council 1978 SC(HL) 90, the other of the Court of Appeal, Adams v Cape Industries plc [1990] vs Ch 433, in which it was assumed or accepted that the doctrine existed, but they cannot amount to more than obiter observations, as in neither of them did the doctrine apply; In subsequent cases in the Court of Appeal and High Court, it has been (unsurprisingly) assumed that the doctrine does apply, two recent examples being the Court of Appeal decisions in VTB [2012] 2 Lloyds Rep 313 and Alliance Bank JSC v Aquanta Corpn [2013] 1 Lloyds Rep 175; vi. However, in only two of those subsequent cases (the first instance decisions in Gencor ACP Ltd v Dalby [2000] 2 BCLC 734 and Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177) has the doctrine actually been relied on, and they each could have been decided the same way without recourse to the doctrine, and therefore involved illegitimate applications of the doctrine on any view (see para 62 above). On closer analysis of cases mentioned in subpara (iii) above, it does not appear to me that the facts and outcomes in Gilford Motor and Jones provide much direct support for the doctrine. However, the decisions can fairly be said to have rested on the doctrine if one takes the language of the judgments at face value. Further, they indicate that, where a court is of the view (albeit that I think that it was mistaken in those cases) that there is no other method of achieving justice, the doctrine provides a valuable means of doing so. In Gilford Motor, the legal argument at first instance and on appeal seems to have concentrated on the validity of the restrictive covenant (see at [1933] Ch 935, 936 937 and 950 952). It is also clear from the judgment of Lord Hanworth MR at p 961 that counsel for the company conceded that if, contrary to his contention, the company was a mere cloak or sham and that the business was actually being carried on by Horne in breach of the restrictive covenant, then the company should also be restrained. Further, in my view, as that passage indicates, the case was one of concealment, and therefore did not really involve the doctrine at all. In any event, it seems to me that the decision in Gilford Motor that an injunction should be granted against the company was amply justified on the basis that the company was Hornes agent for the purpose of carrying on the business (just as his wife would have been, if he had used her as the cloak); therefore, if an injunction was justified against Horne, it was justified against the company. There is nothing in the judgments in Gilford Motor to suggest that any member of the Court of Appeal thought that he was making new law, let alone cutting into the well established and simple principle laid down in Salomon. It is by no means inconceivable that the three members of the Court of Appeal in Gilford Motor were using the expression cloak or sham to suggest, as a matter of legal analysis, a principal and agent relationship. Lord Hanworth relied on a passage in a judgment of Lindley LJ in Smith v Hancock [1894] 2 Ch 377, 385 (where the expression cloak or sham appears to have originated), and in that passage, it seems to me that the cloak or sham is treated as amounting to the business being carried on for the defendant. This view is supported by something Lord Denning MR said in Wallersteiner v Moir [1974] 1 WLR 991, 1013, namely it was quite clear that the companies in that case: were just the puppets of Dr Wallersteiner. Transformed into legal language, they were his agents to do as he commanded. He was the principal behind them. At any rate, it was up to him to show that any one else had a say in their affairs and he never did so: cf Gilford. As for Jones, I am unconvinced that it was necessary for Russell J to invoke the doctrine in order to justify an effective order for specific performance, as sought by the plaintiffs in that case. An order for specific performance would have required Lipman not merely to convey the property in question to the plaintiffs, but to do everything which was reasonably within his power to ensure that the property was so conveyed see eg Wroth v Tyler [1974] Ch 30, 47 51. Lipman and an employee of his solicitors were the sole shareholders and directors of the company, and its sole liability appears to have been a loan of 1500 to a bank (borrowed to meet half the 3000 which it paid for the property). In those circumstances, it seems clear that Lipman could have compelled the company to convey the property to the plaintiffs (on the basis that he would have to account to the company for the purchase price, which would have ensured that the bank was in no way prejudiced). Indeed, I consider that the company could fairly have been described and treated as being Lipmans creature, without in any way cutting into the principle established in Salomon. The history of the doctrine over 80 years of its putative life (taking Gilford Motor as the starting point) is, therefore, at least as I see it, a series of decisions, each of which can be put into one of three categories, namely: i. Decisions in which it was assumed that the doctrine existed, but it was rightly concluded that it did not apply on the facts; ii. Decisions in which it was assumed that the doctrine existed, and it was wrongly concluded that it applied on the facts; iii. Decisions in which it was assumed that the doctrine existed and it was applied to the facts, but where the result could have been arrived at on some other, conventional, legal basis, and therefore it was wrongly concluded that it applied (see para 62 above). (The doctrine has been invoked in cases not considered by Lord Sumption, but they take matters no further see the decisions mentioned and briefly considered in VTB [2013] 2 WLR 398, paras 125 and 127). The lack of any coherent principle in the application of the doctrine has been commented on judicially in many of the major common law jurisdictions. In this country, Clarke J in The Tjaskemolen [1997] 2 Lloyds Rep 465, 471 said that [t]he cases have not worked out what is meant by piercing the corporate veil. In Australia, in Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549, 567, Rogers AJA in the New South Wales Court of Appeal observed that there is no common, unifying principle, which underlies the occasional decision of courts to pierce the corporate veil, and that there is no principled approach to be derived from the authorities. In Constitution Insurance Co of Canada v Kosmopoulos [1987] 1 SCR 2, 10, Justice Wilson in the Supreme Court of Canada said that [t]he law on when a court may [lift] the corporate veil follows no consistent principle. The New Zealand Court of Appeal in Attorney General v Equiticorp Industries Group Ltd (In Statutory Management) [1996] 1 NZLR 528, 541, said that to lift the corporate veil is not a principle. It describes the process, but provides no guidance as to when it can be used. In the South African Supreme Court decision, Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd 1995 (4) SA 790 (A), 802 803, Smalberger JA observed that [t]he law is far from settled with regard to the circumstances in which it would be permissible to pierce the corporate veil. Judges in the United States have also been critical, even though the doctrine has been invoked and developed to a much greater extent than in this jurisdiction. In Secon Serv Sys Inc v St Joseph Bank & Trust Co, 855 F2d (7th Cir, 1988), 406, 414, Judge Easterbrook in the US Court of Appeals described the doctrine as quite difficult to apply, because it avoids formulating a real rule of decision. This keeps people in the dark about the legal consequences of their acts . And in Allied Capital Corp v GC Sun Holdings LP, 910 A2d (2006) 1020, 1042 1043, the Delaware Court of Chancery said that the doctrine has been rightfully criticized for its ambiguity and randomness, and that its application yield[s] few predictable results. The doctrine has fared no better with academics. Easterbrook and Fischel, Limited Liability and the Corporation (1985) 52 Univ Chicago L Rev 89, pithily observe that [p]iercing seems to happen freakishly. Like lightning, it is rare, severe, and unprincipled. The jurisprudence on the doctrine has been described as incoherent and unprincipled by Farrar, Fraud, Fairness and Piercing the Corporate Veil (1990) 16 Can Bus LJ 474, 478. C Mitchell, in Lifting the Corporate Veil in the English Courts: An Empirical Study (1999) 3 Co Fin and Ins LR 15, 16 observes that courts have often used conclusory terms to express their decisions on the point, which for all their vividness tell us nothing about the reasoning which underpins these decisions. Neyers in Canadian Corporate Law, Veil Piercing, and the Private Law Model Corporation (2000) 50 Univ Toronto LJ 173, 180, asks rhetorically: How can the legal person doctrine that is so central to corporate law in one sentence be disregarded so casually in the next? D Michael in To Know A Veil (2000) 26 J Corp Law 41, 55, refers to the doctrine as a non existent and false doctrine. Ramsay and Noakes, Piercing the Corporate Veil in Australia (2001) 19 C & SLJ 250, 251, note that the doctrine is far from clear in the case law. Oh, Veil Piercing (2010) 89 Texas Law Review 81, 84 says that [t]he inherent imprecision in metaphors has resulted in a doctrinal mess. This last view has some resonance with my remarks in VTB [2013] 2 WLR 398, para 124, about the use of pejorative expressions to mask the absence of rational analysis. It also chimes with Justice Cardozos reference to the mists of metaphor in company law, which, starting as devices to liberate thought, end often by enslaving it, in Berkey v Third Ave Ry 155 NE 58, 61 (1926). In these circumstances, I was initially strongly attracted by the argument that we should decide that a supposed doctrine, which is controversial and uncertain, and which, on analysis, appears never to have been invoked successfully and appropriately in its 80 years of supposed existence, should be given its quietus. Such a decision would render the law much clearer than it is now, and in a number of cases it would reduce complications and costs: whenever the doctrine is really needed, it never seems to apply. However, I have reached the conclusion that it would be wrong to discard a doctrine which, while it has been criticised by judges and academics, has been generally assumed to exist in all common law jurisdictions, and represents a potentially valuable judicial tool to undo wrongdoing in some cases, where no other principle is available. Accordingly, provided that it is possible to discern or identify an approach to piercing the corporate veil, which accords with normal legal principles, reflects previous judicial reasoning (so far as it can be discerned and reconciled), and represents a practical solution (which hopefully will avoid the problems summarised in para 75 above), I believe that it would be right to adopt it as a definition of the doctrine. Having read what Lord Sumption says in his judgment, especially in paras 17, 18, 27, 28, 34 and 35, I am persuaded by his formulation in para 35, namely that the doctrine should only be invoked where a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. It appears to me that such a clear and limited doctrine would not fall foul of at least most of the strictures which have been made of the doctrine. In particular, (i) it should be of value in the few cases where it can be properly invoked, (ii) it is, I believe and hope, sufficiently clear as to render it unlikely to be raised in inappropriate cases, and (iii) it does not cut across the rule in Salomon because it is consistent with conventional legal principles. It is only right to acknowledge that this limited doctrine may not, on analysis, be limited to piercing the corporate veil. However, there are three points to be made about that formulation. In so far as it is based on fraud unravels everything, as discussed by Lord Sumption in para 18, the formulation simply involves the invocation of a well established principle, which exists independently of the doctrine. In any event, the formulation is not, on analysis, a statement about piercing the corporate veil at all. Thus, it would presumably apply equally to a person who transfers assets to a spouse or civil partner, rather than to a company. Further, at least in some cases where it may be relied on, it could probably be analysed as being based on agency or trusteeship especially in the light of the words under his control. However, if either or both those points were correct, it would not undermine Lord Sumptions characterisation of the doctrine: it would, if anything, serve to confirm the existence of the doctrine, albeit as an aspect of a more conventional principle. And if the formulation is intended to go wider than the application of fraud unravels everything, it seems to me questionable whether it would be right for the court to take the course of arrogating to itself the right to step in and undo transactions, save where there is a well established and principled ground for doing so. Such a course is, I would have thought, at least normally, a matter for the legislature. Indeed Parliament has decided to legislate to this effect in specified and limited circumstances with protection for third parties, in provisions such as section 37 of the Matrimonial Causes Act 1973 and section 423 of the Insolvency Act 1986. LADY HALE (with whom Lord Wilson agrees) I agree that this appeal should succeed, on the basis that the properties in question were held by the respondent companies on trust for the husband. As he is beneficially entitled to them, they fall within the scope of the courts power to make transfer of property orders under section 24(1)(a) of the Matrimonial Causes Act 1973. It also means that the court has power to order that the companies, as bare trustees, transfer these properties to the wife. The reasons for holding that these properties were beneficially owned by the husband have been amply explained by Lord Sumption. I would only emphasise the special nature of proceedings for financial relief and property adjustment under the Matrimonial Causes Act, which he explains in para 45. There is a public interest in spouses making proper provision for one another, both during and after their marriage, in particular when there are children to be cared for and educated, but also for all the other reasons explored in cases such as Miller v Miller [2006] UKHL 24, [2006] 2 AC 618. This means that the courts role is an inquisitorial one. It also means that the parties have a duty, not only to one another but also to the court, to make full and frank disclosure of all the material facts which are relevant to the exercise of the courts powers, including of course their resources: see Livesey (formerly Jenkins) v Jenkins [1985] AC 424. If they do not do so, the court is entitled to draw such inferences as can properly be drawn from all the available material, including what has been disclosed, judicial experience of what is likely to be being concealed and the inherent probabilities, in deciding what the facts are. I also agree, for the reasons given by Lord Sumption, that section 24(1)(a) does not give the court power to order a spouse to transfer property to which he is not in law entitled. The words entitled, either in possession or reversion refer to a right recognised by the law of property. This is clear, not only from the statutory language, but also from the statutory history. The words entitled to any property either in possession or reversion first appeared in the Matrimonial Causes Act 1857, which introduced judicial divorce to the law of England and Wales. Section 45 gave the court power, when granting a decree of divorce on the ground of the wifes adultery, to settle such property for the benefit of the husband and/or the children of the marriage. The same words were used in section 3 of the Matrimonial Causes Act 1884, when extending the same power to a husbands application for restitution of conjugal rights. They were carried through, respectively, into section 191(1) and (2) of the Supreme Court of Judicature (Consolidation) Act 1925, then into section 24(1) and (2) of the Matrimonial Causes Act 1950, then into sections 17(2) and 21(3) of the Matrimonial Causes Act 1965. The decree of restitution of conjugal rights was abolished in the comprehensive package of matrimonial law reforms which came into force on 1 January 1971. That package included, in section 4(a) of the Matrimonial Proceedings and Property Act 1970, the power to order either spouse to transfer to the other property to which the first mentioned party is entitled, either in possession or reversion. This was an expansion, for the benefit of either spouse and to outright transfer as well as settlement, of the earlier power to settle the wifes property. Section 4(a) later became section 24(1)(a) of the Matrimonial Causes Act 1973. There is nothing in the language, the history, or indeed the Report of the Law Commission which led to the 1970 Act (Law Com No 25), to suggest that those words should be read to include property over which the first mentioned party has such control that he could cause himself to become entitled, either in possession or reversion. But of course such property can be taken into account when computing that partys resources for the purpose of section 25(2) of the 1973 Act, which lays down a non exhaustive list of factors to be taken into account by the court when deciding how to exercise its various powers to make financial and property adjustment orders. Nor is there anything in the language of section 24(1)(a) to suggest that it was Parliaments intention to grant the divorce courts an express power to pierce the corporate veil in such a way as to treat property belonging to a limited company as property belonging to the spouse who owns and/or controls the company. The question nevertheless arises as to whether, in a case such as this, the courts have power to prevent the statutes under which limited liability companies may be established as separate legal persons, whether in this or some other jurisdiction, being used as an engine of fraud. I agree with Lord Sumption that piercing the corporate veil is an example of that general principle, with which family lawyers are familiar from the case of R v Secretary of State for the Home Department, Ex p Puttick [1981] QB 767. Lord Sumption refers to the process compendiously as disregarding the separate personality of the company at para 16. When considering its scope, however, it may be helpful to consider what the purpose of doing this is. In Salomon v A Salomon and Co Ltd [1897] AC 22 the purpose was to go behind the separate legal personality of the company in order to sue Aron Salomon personally for a liability that was legally that of the company which he had set up (with himself and members of his family as shareholders) to conduct his leather and boot making business. This succeeded at first instance and in the Court of Appeal, Lindley LJ going so far as to say that Mr Aron Salomons scheme is a device to defraud creditors: [1895] 2 Ch 323, 339. They did not think that Parliament had legislated for the setting up of limited liability companies in order that sole traders should be able to conduct their businesses on limited liability terms. But the House of Lords disagreed: the company was a separate person from Mr Salomon and he could not be made liable for the companys debts. They did not think that there was any fraud involved simply in using a limited liability company as a vehicle for conducting a legitimate business. Thus was the legal structure of modern business born. But there are a few cases where the courts have apparently been prepared to disregard the separate personality of a company in order to grant a remedy, not only against the company, but also against the individual who owns and/or controls it. Both Gilford Motor Co Ltd v Horne [1933] Ch 935 and Jones v Lipman [1962] 1 WLR 832 are examples of this. In both those cases, it so happened that the controller had a pre existing legal obligation which he was attempting to evade by setting up a company, in the one case a contractual obligation not to compete with his former employers, in the other case a contractual obligation to sell some land to the claimant. In In re Darby [1911] 1 KB 95, on the other hand, the liquidator of a creditor company was permitted to go behind the separate personality of a debtor company registered in Guernsey in order to obtain a remedy personally against its promoters who had fraudulently creamed off the profit from the sale by the Guernsey company to the creditor company of a worthless licence to run a slate quarry in Wales. I am not sure whether it is possible to classify all of the cases in which the courts have been or should be prepared to disregard the separate legal personality of a company neatly into cases of either concealment or evasion. They may simply be examples of the principle that the individuals who operate limited companies should not be allowed to take unconscionable advantage of the people with whom they do business. But what the cases do have in common is that the separate legal personality is being disregarded in order to obtain a remedy against someone other than the company in respect of a liability which would otherwise be that of the company alone (if it existed at all). In the converse case, where it is sought to convert the personal liability of the owner or controller into a liability of the company, it is usually more appropriate to rely upon the concepts of agency and of the directing mind. What we have in this case is a desire to disregard the separate legal personality of the companies in order to impose upon the companies a liability which can only be that of the husband personally. This is not a liability under the general law, for example for breach of contract. It is a very specific statutory power to order one spouse to transfer property to which he is legally entitled to the other spouse. The argument is that that is a power which can, because the husband owns and controls these companies, be exercised against the companies themselves. I find it difficult to understand how that can be done unless the company is a mere nominee holding the property on trust for the husband, as we have found to be the case with the properties in issue here. I would be surprised if that were not often the case. There is a statutory power to set aside certain dispositions made with the intention of defeating a claim for financial provision or property adjustment in section 37 of the Matrimonial Causes Act 1973. It is not suggested in this case that the expenditure involved in buying these properties, all of which were bought long before the marriage broke down, was made with that intention. If it had been, there might have been an argument that the exception for bona fide purchasers for value contained in section 37(4) did not apply to a company where the controlling mind was acting with that intention. But that is not this case. Stone & Rolls Ltd v Moore Stephens (a firm) [2009] AC 1391 is an example of going behind the separate legal personality of the company in order to get at the person who owned and controlled it, not for the purpose of suing him, but in order to attribute his knowledge to the company so that its auditors could raise a defence of ex turpi causa to the companys allegation that they had negligently failed to detect the fraudulent nature of its business. For all those reasons, in addition to those given by Lord Sumption, I would dismiss this appeal on all but the issue of whether either party had a beneficial interest in the properties in question but allow it on that ground. I fervently hope that the wife will gain some benefit from the outcome of all this litigation, although in the light of the mortgages which apparently encumber the properties I am not optimistic that she will. I agree that the appeal should be allowed for the reasons given by Lord LORD MANCE Sumption, supplemented in their essence by Lord Neuberger. I agree with Lord Sumptions analysis of the domestic case law to date in which the metaphor of piercing the veil has been deployed as part of the reasoning for a decision representing an exception to the basic principle in Salomon v A Salomon & Co Ltd [1897] AC 22. In the upshot, the only cases which Lord Sumption identifies in which a principle of piercing the veil can be said to have been critical to the reasoning can be rationalised as falling within what he describes as the evasion principle. In other cases, the corporate entity was simply being used to conceal the real actor, or some other analysis or relationship existed (such as principal and agent, nominee or trustee beneficiary) to explain the decision. It is however often dangerous to seek to foreclose all possible future situations which may arise and I would not wish to do so. What can be said with confidence is that the strength of the principle in Salomons case and the number of other tools which the law has available mean that, if there are other situations in which piercing the veil may be relevant as a final fall back, they are likely to be novel and very rare. In this connection, I have however in mind that, in giving the recent Privy Council judgment in La Gnrale des Carrires et des Mines v FG Hemisphere Associates LLC [2012] UKPC 27, I said at para 77 (in a context where Gcamines was a state corporation, not susceptible of being wound up): The alternative way in which Hemisphere puts its case is to submit that, if Gcamines is otherwise accepted as a separate juridical entity, the facts found justify the lifting of the corporate veil to enable Hemisphere to pursue Gcamines as well as the State. In the Boards view, this involves a misapplication of any principles upon which the corporate veil may be lifted under domestic and international law. Assuming for the sake of argument that the unceremonious subjecting of Gcamines to the controlling will of the state involved a breach by the State of its duty to respect Gcamines as a separate entity, that might conceivably justify an affected third party, possibly even an aggrieved general creditor of Gcamines, in suggesting that the corporate veil should be lifted to make the State, which had deprived Gcamines of assets, liable for Gcamines debts. The Board need express no further view on that possibility. It represents the inverse of the present situation. There is no basis for treating the States taking or Gcamines use of Gcamines assets for State purposes, at which Hemisphere directs vigorous criticism, as a justification for imposing on Gcamines yet further and far larger burdens in the form of responsibility for the whole of the debts of the Democratic Republic of the Congo. In international law as in domestic law, lifting the corporate veil must be a tailored remedy, fitted to the circumstances giving rise [to] it. It may be that the possibility on which I touched in para 77 would evaporate as a possible further exception to the principle in Salomons case. It is certainly a different situation to those which Lord Sumption discusses. But one would wish to hear further argument on this or any other suggested exception, in a case where it was directly relevant, before deciding this. No one should, however, be encouraged to think that any further exception, in addition to the evasion principle, will be easy to establish, if any exists at all. The evident absence, under the close scrutiny to which Lord Sumption has subjected the case law, of authority for any further exception speaks for itself. LORD CLARKE I agree with the other members of the court that the appeal should be allowed for the reasons given by Lord Sumption. I only wish to add a word on piercing the corporate veil. I agree that there is such a doctrine and that its limits are not clear. I also agree that Munby J was correct in Ben Hashem v Al Shayif [2009] 1 FLR 115 to suggest that the court only has power to pierce the corporate veil when all other more conventional remedies have proved to be of no assistance. It is thus likely to be deployed in a very rare case. Lord Sumption may be right to say that it will only be done in a case of evasion, as opposed to concealment, where it is not necessary. However, this was not a distinction that was discussed in the course of the argument and, to my mind, should not be definitively adopted unless and until the court has heard detailed submissions upon it. I agree with Lord Mance that it is often dangerous to seek to foreclose all possible future situations which may arise and, like him, I would not wish to do so. I expressed a similar view in VTB Capital plc v Nutritek International Corpn [2013] 2 WLR 378 and adhere to it now. However, I also agree with Lord Mance and others that the situations in which piercing the corporate veil may be available as a fall back are likely to be very rare and that no one should be encouraged to think that any further exception, in addition to the evasion principle, will be easy to establish. It will not. LORD WALKER Lord Sumption has comprehensively analysed the rather confused evidence relating to beneficial ownership of the London properties. His conclusion that they are all in the beneficial ownership of Mr Prest is in my view irresistible, based as it is on positive evidence of the sources from which the purchases were funded, as well as on inferences drawn from the failure of Mr Murphy, a director of PRL, to attend court for cross examination. I also agree with all Lord Sumptions observations as to the construction and effect of the Matrimonial Causes Act 1973, to which Lady Hale has added a full account of its legislative history. The appeal should be allowed in the terms proposed by Lord Sumption. In these circumstances it is not strictly necessary for this Court to add further general comments on the vexed question of piercing the corporate veil. But for my part I think it would be a lost opportunity even perhaps a minor dereliction of duty if we were to abstain from any further comment. I do therefore welcome the full discussion in the judgments of Lord Neuberger, Lady Hale, Lord Mance and Lord Sumption. residual category in which the metaphor operates independently no clear example has yet been identified, but Stone & Rolls Ltd v Moore Stephens (a firm), mentioned in Lady Hales judgment, is arguably an example. I am reluctant to add to the discussion but for my part I consider that piercing the corporate veil is not a doctrine at all, in the sense of a coherent principle or rule of law. It is simply a label often, as Lord Sumption observes, used indiscriminately to describe the disparate occasions on which some rule of law produces apparent exceptions to the principle of the separate juristic personality of a body corporate reaffirmed by the House of Lords in Salomon v A Salomon and Co Ltd [1897] AC 22. These may result from a statutory provision, or from joint liability in tort, or from the law of unjust enrichment, or from principles of equity and the law of trusts (but without any false invocation of equity in the phrase used by C Mitchell in the article mentioned by Lord Neuberger). They may result simply from the potency of an injunction or other court order in binding third parties who are aware of its terms. If there is a small |
Permission to appeal was granted in this case in order to enable this Court to consider the following point of law, certified by the Court of Appeal as being of general public importance: If (1) D1 and D2 voluntarily engage in fighting each other, each intending to kill or cause grievous bodily harm to the other and each foreseeing that the other has the reciprocal intention, and if (2) D1 mistakenly kills V in the course of the fight, in what circumstances, if any, is D2 guilty of the offence of murdering V? The facts of this case are unusual, but the importance of the point of law lies in the implications that it may have in respect of the scope of potential liability of those who permit themselves to become involved in public order offences. No previous decision in this jurisdiction provides a clear indication of how the point of law should be resolved. The principles of law that fall to be applied are those of the common law, albeit that it will be necessary to consider a degree of statutory intervention. The particular areas of criminal law that will have to be considered are (i) joint enterprise; (ii) transferred malice; (iii) exemption from liability where a party to what would normally be a crime is a victim of it. No precedent indicates the result of the interaction of these three areas of law on the facts of this case. In resolving the point of law it will be appropriate to have regard to policy. The facts The following account of the facts is taken from the Agreed Statement of Facts and Issues. This reproduces almost verbatim the summary of the facts in the judgment of the Court of Appeal, delivered by Thomas LJ but to which all members of the court had contributed. The other members were Hooper, Hughes and Gross LJJ and Hedley J. Together the court brought to the problem very wide experience in the field of criminal law. Shortly after 6 pm on Tuesday, 2 October 2007, a 26 year old Polish care worker, Magda Pniewska, was walking home from a nursing home through a car park for blocks of residential accommodation in New Cross, South London and up steps towards an open piece of ground. She was on the telephone to her sister when she was killed by a single shot to her head. That shot was fired in an exchange of fire between two gunmen one of whom was the respondent. The respondent, who was born on 26 May 1990, and was 17 years of age at the time, had a dispute with another youth (TC). At about 5 p.m. on 2 October 2007 he went with a friend, Nana Acheampong, by car to the home of his ex girlfriend, Roxanne Landell. Shortly thereafter Nana Acheampong and the respondent drove round to a car park elsewhere on the same estate from where the respondent went on foot to an adjacent car park. He had armed himself with a gun which was silver in colour and he had several rounds of live ammunition. Nana Acheampong had remained in the car. A red Volkswagen Polo was already in the car park. There were four occupants of the car, one of whom was pregnant. The respondent spoke to the occupants of the Polo, as they were about to leave. According to two of them he told them that "he had come to meet someone to handle some business". He asked if they had seen a man in a red bandana, saying that that man owed him some money. Very shortly thereafter the occupants of the red Polo saw someone come down the steps towards the car park. His face was covered with a red bandana. At the trial, he was referred to as "Bandana Man" and I shall so describe him in this judgment. He pulled out a gun, black in colour, and started shooting at the respondent. The respondent crouched down behind the red Polo, pulled out his gun and returned the fire. The respondent fired two or three shots over the roof of the car. He then went to the front of the car and started shooting over the bonnet whilst the other man shot back. The clear evidence of those in the red Polo was that the respondent was shooting at Bandana Man. It was in that crossfire between the respondent and Bandana Man that Magda Pniewska was killed. Scientific examination showed that the single bullet to the deceased's head did not come from the respondent's gun; it had come from the gun held by Bandana Man. Both the respondent and Bandana Man fled from the scene. TC, who was believed to be Bandana Man was arrested, but never charged. The respondent was arrested four days later. The car park, in which the gun fight took place, was surrounded by closely built, modern residential blocks in multiple occupation. All had windows facing the parking area. The areas of common law in play. At this point we propose to summarise quite shortly the areas of common law in play. It will be necessary to revert to these in greater detail when we come to consider their application to the facts of this case. Joint enterprise Section 8 of the Accessories and Abettors Act 1861, as amended by the Criminal Law Act 1977, provides: Whosoever shall aid, abet, counsel, or procure the commission of any indictable offence, whether the same be an offence at common law or by virtue of any Act passed or to be passed, shall be liable to be tried, indicted, and punished as a principal offender. This section does not specify what is encompassed by the words aid, abet, counsel, or procure. That question is determined by the common law. There is no need in this case to attempt a comprehensive definition. In particular we can ignore any complications that may arise in relation to the accessory before or after the fact, who is not present when the criminal act is committed. Having regard to the facts of this case we can start with this simple proposition. Where two persons, D1 and D2 agree to the commission of an indictable offence, where both are present at the place where the criminal act is to be performed and where one of them, D1, commits that act, both will be jointly liable for the crime. The act will have taken place pursuant to their joint criminal purpose and D2 will be equally guilty with D1, having aided, abetted, counselled or procured D1 to commit the crime. The law becomes more complicated where, in the course of committing, or attempting to commit the criminal act which is their common purpose, D1 commits a further criminal act which goes beyond that purpose. The example that is usually given is the following. D1 and D2 break into a house with the common intention of committing a burglary. They are surprised by the householder, whereupon D1 hits him on the head with a jemmy and kills him. D2 had had no intention, or wish, that either of them should inflict injury in the course of the burglary but had foreseen the possibility that D1 might inflict serious injury in the course of it. The situation exemplified by these facts has been repeatedly considered in different factual contexts by the Court of Appeal and the House of Lords. These authorities were recently analysed by Hughes LJ when giving the judgment of the Court of Appeal in R v A [2010] EWCA Crim 1622; [2011] QB 841. His conclusion, which we would endorse, appears in the following passage from para 27 of his judgment: the liability of D2 rests, as all these citations show, on his having continued in the common venture of crime A when he realises (even if he does not desire) that crime B may be committed in the course of it. Where crime B is murder, that means that he can properly be held guilty if he foresees that D1 will cause death by acting with murderous intent (viz either intent to kill or intent to do GBH). He has associated himself with a foreseen murder. Professor Sir John Smith coined the phrase parasitic accessory liability to describe this form of liability arising out of participation in a joint criminal enterprise. While this is not the most elegant phraseology we propose to adopt it in this judgment by way of convenient shorthand. Transferred malice The principles that we are about to describe have long been recognised by commentators on the common law of crime, but there is a dearth of actual cases to illustrate them. Where a defendant intends to kill or cause serious injury to one victim, V1, but accidentally kills another, V2, he will be guilty of the murder of V2. The basis of this liability is customarily described as transferred malice, although a better description might be transferred mens rea see Archbold 2011 ed at 17 24; Blackstones Criminal Practice 2011 at A2.13. The doctrine applies to secondary parties as it does to principal offenders. Thus if D2 attempts to aid, abet, counsel or procure D1 to murder V1 but D1, intending to kill V1, accidentally kills V2 instead, D2 will be guilty of the murder of V2 see Smith & Hogan, Criminal Law,12th ed (2008) at p 205. Exemption from liability where a party to what would normally be a crime is a victim of it In an article on Victims and other exempt parties in crime in (1990) 10 Legal Studies (1990), at p 245 Professor Glanville Williams identified a principle that he described as the victim rule. He defined this as follows: where the courts perceive that the legislation is designed for the protection of a class of persons. Such people should not be convicted as accessories to an offence committed in respect of them when they co operate in it. Nor should they be convicted as conspirators. Professor Glanville Williams stated that the principle was founded on a single English decision, but was widely accepted in common law countries. That decision was R v Tyrrell [1894] 1 QB 710. Section 5 of the Criminal Law Amendment Act 1885 made it an offence for a man to have carnal knowledge of a girl between the age of 13 and 16. The defendant, a girl whose age fell within that bracket, was convicted of (1) aiding, abetting, counselling and procuring the commission of that offence by a man upon herself and (2) of inciting the man to commit the same offence. On appeal these convictions were robustly quashed. Lord Coleridge CJ, giving the leading judgment, said at p 712: The Criminal Law Amendment Act 1885 was passed for the purpose of protecting women and girls against themselves. At the time it was passed there was a discussion as to what point should be fixed as the age of consent. That discussion ended in a compromise, and the age of consent was fixed at sixteen. With the object of protecting women and girls against themselves the Act of Parliament has made illicit connection with a girl under that age unlawful; if a man wishes to have such illicit connection he must wait until the girl is sixteen, otherwise he breaks the law; but it is impossible to say that the Act, which is absolutely silent about aiding or abetting, or soliciting or inciting, can have intended that the girls for whose protection it was passed should be punishable under it for the offences committed upon themselves. I am of the opinion that this conviction ought to be quashed. In R v Whitehouse [1977] QB 868 the Court of Appeal reluctantly held that this principle precluded the conviction of a father for inciting his daughter, who was under 16, to aid and abet him to commit incest with her. Section 1 of the Criminal Law Act 1977 created a statutory offence of conspiracy to commit a crime. Section 2(1) provides: 2. (1) A person shall not by virtue of section 1 above be guilty of conspiracy to commit any offence if he is an intended victim of that offence. (2) A person shall not by virtue of section 1 above be guilty of conspiracy to commit any offence or offences if the only other person or persons with whom he agrees are (both initially and at all times during the currency of the agreement) persons of any one or more of the following descriptions, that is to say (c) an intended victim of that offence or of each of those offences. Blackstone comments at A6.38 that section 2(1) appears designed to apply the principle established by Tyrell. It will be necessary to consider in due course the scope of this provision and whether, by analogy, the common law should prohibit the conviction of a defendant for aiding and abetting an offence against the person where he is the victim of the offence. Relevant to these questions is the more restricted wording of section 51 of the Serious Crime Act 2007: (1) In the case of protective offences a person does not commit an offence under this Part by reference to such an offence if (a) he falls within the protected category; and (b) he is the person in respect of whom the protective offence was committed or would have been if it had been committed. (2) Protective offence means an offence that exists (wholly or in part) for the protection of a particular category of persons (the protected category) The judges ruling on the defence submission of no case to answer and the case subsequently advanced by the Crown At the end of the prosecution case Miss Bennett Jenkins QC for the defence submitted that there was no case to go to the jury. Mr Altman QC for the Crown argued that there were two possible bases upon which the jury could convict. It was common ground that Bandana Man had been guilty of murder of Miss Pniewska, applying the principle of transferred malice in that he had plainly been attempting to kill or cause serious bodily harm to the respondent. The first basis upon which the jury could convict was that the respondent had aided and abetted this murder, in that he had encouraged Bandana Man to fire at him with homicidal intent. When, however, the judge asked whether he was submitting that the respondent aided and abetted his own attempted murder he replied that he could not so submit. He argued that the liability of the respondent flowed on a wider basis from the implicit agreement between himself and Bandana Man that they should meet in a public place, each with an intent to kill or cause serious harm to the other. The judge rejected this argument. He observed that there was difficulty in an analysis of a joint enterprise where the defendant was himself the intended victim of the other gunman: He neither intended nor consented to bodily injury to himself at the hand of the other, nor could he truly be said to be a party to a joint enterprise to kill or cause grievous bodily harm to himself as the intended target of the other. Even if he contemplated that the other might shoot at him with the necessary intent, he not being a party to the enterprise to cause harm to himself, would not be liable for the unintended consequences on that basis alone. About this, in my judgment, there can be no doubt. There is no possible joint enterprise involving the killing of himself to which the defendant was privy as such. If he and Bandana Man had a common enterprise to kill a third party, and Magda was killed by a bullet from Bandana Mans gun, then the doctrine of transferred malice could operate to make Bandana Man guilty as a primary party to the murder of Magda, and in as much as the defendant was privy to a joint enterprise to kill someone in common with Bandana Man, sharing that common intention, he would also be liable as a secondary party. Here, however, there was no common intention to murder any particular person. Each of the protagonists had a separate intent to kill or to seriously injure the other. Their intentions were parallel but running in opposite directions. He later added Here, however, it cannot be said, in my judgment, that the defendant actively encouraged Bandana Man to shoot at him, and even if he did, it would be a real oddity for a victim of an attempted murder to be a secondary party to that attempt. In reality on the evidence, the defendant fired at Bandana Man in the hope of killing him or causing him grievous bodily harm, frightening him, or arguably, in self defence. He cannot be said to have encouraged the other to fire back, whatever the order of shots as the jury might ultimately find them to be. He might have provoked further firing, but he did not encourage it. In the light of this ruling, Mr Altman did not pursue this way of putting his case. The alternative case that Mr Altman advanced was one of parasitic accessory liability. The judge accepted that this alternative was viable. He held that it was open to the jury to find that the respondent and Bandana Man were subject to a joint enterprise to commit an affray and that, if the jury then found that the respondent foresaw and envisaged that Bandana Man might shoot and kill an innocent passer by this would found a verdict of murder on the part of the respondent. The judges direction to the jury The judge crafted his direction to the jury with great care. He founded it on the principle of parasitic accessory liability. For reasons that we shall explain we do not consider that this principle could properly be applied on the facts of this case. None the less it is necessary to set out a large part of his direction in order to decide whether the jury must have been satisfied that the relevant elements of the crime of murder, as we shall identify them, were proved: Now what the prosecution say about the defendants role in this murder is that the defendant was involved in a joint enterprise, that is a term which I will explain to you in a moment and which again will appear in the piece of paper that I am going to give you. It was a joint enterprise because it had a gunfight and both the defendant and Bandana Man, say the prosecution, each took part in that gunfight, realising that the other was likely to shoot, and might, in shooting, with the intention of killing or causing really serious injury, kill someone other than himself who was the immediate target of the shots. And the prosecution say, in those circumstances, the defendant is jointly responsible for the murder with Bandana Man on the basis of this joint enterprise. Joint enterprise: that is a word I need to explain to you. Let me explain that concept. It arises in the ordinary way where people jointly commit an offence. Where a criminal offence is committed by two or more people, each of them may play a different part in that offence, but if they are in it together as part of a joint plan or joint agreement to commit it, each is guilty of the planned offence. The words plan or agreement that I have just used do not mean that there has to be any formality about it. An agreement to commit an offence may arise on the spur of the moment. Nothing needs to be said at all. It can be made with a nod or a wink or just a knowing look or by taking the first step in committing an offence in which the other person then joins, so that it can be inferred from their behaviour. The essence of joint responsibility for a criminal offence is that each person shared the intention to commit the offence and took some part in it so as to achieve that aim, so in the ordinary way, you would consider each person said to be involved, and if you are sure that he took part in committing the offence with any intention necessary for that offence, he would be guilty. But there is a further element in the concept of joint enterprise, and it is this: if two people agree or plan in the sense I have mentioned to commit one offence, one type of offence, but during the course of it, one of them commits another offence, both may still be responsible for that other offence. Of course, the person who actually does the offence, the act which constitutes that further offence will be guilty of it, but the other person will also be guilty of it if he realised that the act done was something which the first person might do with the necessary intent as part of their planned offence. Now here it is said by the prosecution that Bandana Man and the defendant planned to use unlawful violence towards another by having a shoot out, whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively. If you are sure that Bandana Man and the defendant joined together to commit such unlawful violence by having a gunfight, whether pre planned or whether on the spur of the moment on the top of the steps and the side of the car, and that this joint enterprise came into being before Magda was killed by a shot from Bandana Man, then the defendant would be guilty of murder also, along with Bandana Man, provided the other requirements are satisfied. So if you are sure that Bandana Man and the defendant were in a joint enterprise to cause an affray, to use unlawful violence against each other by having a gunfight and by firing at each other, whether this joint enterprise was the result of a pre planned meeting or arose on the spur of the moment when they saw each other, and that in the course of that joint enterprise fight, Magda was murdered by Bandana Man on the basis of transferred malice, as I have explained it to you, and that the defendant realised and the prosecution say that he must have realised that in the course of their joint enterprise gunfight, Bandana Man might kill with the requisite intention for murder, then the defendant would also be guilty of murder. The decision of the Court of Appeal Before the Court of Appeal Mr Altman made no attempt to revive the first way that he had sought to put the Crowns case. He sought to uphold the judges direction on the basis of parasitic accessory liability. Miss Bennett Jenkins submitted that this case was not viable. The starting point for parasitic accessory liability was a joint enterprise. There had been no joint enterprise. The respondent and Bandana Man had each been engaged on a separate, individual and diametrically opposed enterprise, for each was out to harm the other. So far as foresight of Bandana Mans conduct was concerned, all that the respondent could have foreseen was that Bandana Man would try to kill him. Parasitic accessory liability was founded on encouragement to commit the further offence, implicit in pursuing the original joint venture. The judge had rightly found that the respondent had not encouraged Bandana Man to shoot at him. Thus the further essential element of encouragement was missing. The Court of Appeal accepted this argument. Its reasoning was complex and spanned paras 48 to 70 of its judgment, but we believe that we can summarise it quite shortly. Parasitic accessory liability has to arise out of a joint enterprise that involves the two parties acting together, or in concert, or for a common purpose. Where an affray is alleged to have arisen from a fight between two people it does not ordinarily involve a joint enterprise or common purpose. Ordinarily the purpose of each protagonist to such an affray is the individual purpose of striking the other and avoiding being struck himself. Such purposes are not shared by the two protagonists, they are reciprocal, or equal and opposite purposes. It was none the less possible to envisage a scenario in which two persons shared a common purpose to strike and be struck a prize fight or a duel were examples of this. On the facts of the present case there might have been a common purpose to shoot and be shot at, as in a duel, but the judge had never asked the jury to consider that possibility. The reasoning of the court was summarised in para 59 of its judgment: What is at issue here is secondary liability. The essence of secondary liability is that the parties are acting together or, as it is often put, in concert. For what we have described as the third type of joint enterprise liability they must be acting together or in concert in crime A, here affray. Two people who voluntarily engage in fighting each other might, exceptionally, be acting together or in concert, but ordinarily they are not. It is not realistic to say that they acted in concert to cause fear; they acted independently and antagonistically in a manner which did so. Absent a shared purpose to shoot and be shot at, the submission made by the appellant was correct that there was no room on the facts for any other common purpose. The jury was never asked to confront the question whether the shared common purpose was not only to shoot, but to be shot at. The Crown had accepted that the respondent could not be convicted on the basis that he had been party to a joint enterprise with Bandana Man to shoot at each other, with the intent to kill or cause really serious bodily injury for the following reason (para 33): The difficulty on the facts of the current case is that the appellant himself was the intended victim of the other man. The appellant neither intended nor consented to bodily injury to himself at the hand of the other man nor could he truly be said to have been party to a joint enterprise to kill or cause harm to himself (being the intended target of the other man). Even if he had contemplated that the other man might shoot at him with the necessary intent, he not being a party to the enterprise to cause harm to himself, could not be liable for any unintended consequences on that basis alone. The Court of Appeal referred to this concession and emphasised at para 37 that it had not considered whether it was correctly made. However the Court of Appeal returned to the concession in a post script to its judgment and set out the following arguments that raised a question mark over the concession. 73. (i) If two persons agree to a duel with the use of guns, they have agreed to shoot at each other with the intention of killing or seriously harming the other. That activity, as a matter of ordinary language, could be described as an agreement to shoot and be shot at. To that extent it is arguable that they have a shared common purpose. (ii) Clearly an agreement to a duel or to shoot at each other is illegal, as no one can consent to run the risk of being killed in such a way. As Lord Templeman pointed out in R v Brown (Anthony) [1994] 1 AC 212, 231, the defence of consent never availed a person who maimed the other participant in a duel: Hawkins' Pleas of the Crown 8th ed (1824), vol 1, ch 15. In Attorney Generals Reference (No 6 of 1980) [1981] 1 QB 715, it was made clear that it is not in the public interest that people should try to cause or should cause each other harm for no good reason. It is immaterial whether the act occurs in private or in public; it is an assault if actual bodily harm is intended or caused. (iii) There can be an agreement to use unlawful violence by two opposing and antagonistic persons, illegal though it is. In R v Coney (1882) 8 QBD 534, all the judges were agreed that both prize fighters were guilty of an assault on each other. Although each would be guilty as a principal of a separate offence, it is arguable that the two prize fighters have a simple agreement to exchange blows and to that extent share a common purpose to hit and be hit. (iv) The question would then arise, if it was accepted that two prize fighters can have an agreement to hit and be hit, as to whether the use of lethal weapons made a difference. If there really is an agreement to shoot and be shot at, it is arguable that it does not. Just as in the case of prize fighters, each hoped that the other would be wounded or killed, but that he would not be. But the fact that each hoped for a different outcome, did not necessarily mean that they did not share a common purpose of shooting and being shot at. (emphasis added) The Court of Appeal went on to consider issues of policy: 74 There is at the heart of this issue a question of policy. Does the justice and effectiveness of the criminal justice system require the imposition of liability in cases of genuinely agreed duels by acceptance that there can be a joint enterprise of the first type between opposing persons if they agree not only to hit but to be hit? 75 But there is also a second question. At para 58, we referred, in the context of the judge's directions to the jury, to the wider implications for criminal liability for death or injury or damage that occurs in the course of a fight between two gangs. Spelling that second question out may assist. i) Say a home group meet an away group, each seeing that the other is armed with sticks and bars. They begin a fight. ii) In the course of the fight members of the home group use bars intentionally to cause really serious injuries to a member of the away group and in the course of doing so injure an innocent bystander; each receives really serious injuries from which he dies. iii) It could readily be inferred that all those engaged in the fight foresaw that there was a real possibility that one of those engaged in the fight or an innocent bystander might be caused serious bodily injury by being intentionally struck by one of those fighting with a bar in the course of the fight. What are the circumstances in which the members of the away group bear criminal responsibility for the death of the member of their group or the innocent bystander caused by the home group? The court commented that both of these issues of policy were questions for the future. Because of a change of tack by the Crown in this court the time has now come to consider them. The Crown case before this Court In the alternative Mr Altman has sought to rely upon the doctrine of Before this Court Mr Altman QC for the Crown has sought to revive the case that he had abandoned at the trial and had not sought to advance before the Court of Appeal. Paras 30 to 48 of his written case are devoted to arguing that the respondent had been an accessory to Bandana Mans attempt to kill him and thus shared Bandana Mans liability, as a result of the doctrine of transferred malice, for the murder of Miss Pniewska. This radical change of case is perhaps inspired by the obiter comments of the Court of Appeal and by commentary on those comments in [2011] Crim L R 151, 156. parasitic accessory liability that had been rejected by the Court of Appeal. Discussion: Parasitic accessory liability in public order offences We propose to start by considering Mr Altmans attempt to rely upon the doctrine of parasitic accessory liability. We shall first of all explore the reasoning of the Court of Appeal in concluding that this was not a viable route to convicting the respondent of murder. We shall then draw attention to a further significant difficulty that Mr Altman faces in seeking to rely upon this doctrine. The nature of the offence of affray Affray was a common law offence with its origin many centuries ago. By the middle of the twentieth century it had been lost from sight, for as Lord Goddard CJ remarked at p 559 of R v Sharp; R v Johnson, [1957] 1 QB 552, the first case in which the offence resurfaced, there seemed to be no reported case which dealt with it. That case involved a fight between the two defendants in a public place in the presence of a large number of spectators. They were jointly indicted on a charge of affray and convicted. On the basis of distinguished and venerable commentaries Lord Goddard identified the offence of affray as one committed where two or more persons fought in a public place to the terror of the Kings subjects. In that case the convictions of the two appellants were quashed on the ground that each claimed to have been acting in self defence, and this defence had not been left to the jury. Lord Goddard held at p 561: If two men are found fighting in a street one must be able to say that the other attacked him and that he was only defending himself. If he was only defending himself and not attacking that is not a fight and consequently not an affray. This comment proved to be an over simplification. Having been rediscovered, affray became a very popular charge, being used on literally thousands of occasions, and in due course received consideration by the House of Lords. In R v Button; R v Swain [1966] AC 591 the issue was whether an affray had to take place in a public place. The House held that it did not. Lord Gardiner LC, giving the only reasoned speech, held at p 625 that the essence of the offence was that two or more fought together to the terror of the Queens subjects. In R v Taylor (Vincent) [1973] AC 964 the House of Lords, disapproving the dictum of Lord Goddard in Sharp and Johnson, held that a single defendant could be guilty of affray if he fought with another, who lawfully defended himself. Lord Morris of Borth y Gest put the matter as follows at p 991: But if two men are seen to be fighting in a street with the result that terror is caused to the Queens subjects and if it has all come about because one is an aggressor while the other was merely defending himself I see no reason why the aggressor should be immune from conviction for affray. Those who see the fighting may have no means of deciding how it came about or whose fault it was. They may not be able to appreciate that one man is merely defending himself and doing his best to disengage. The terror and alarm caused to them by the fighting will not be any the less because the fact may be that one man of the two was only of necessity engaged in the fighting. In 1983 the Law Commission published a report, HC 85; Law Com No 123, on Offences Relating to Public Order. They recommended that the common law offence of affray should be preserved in an Act that would replace the common law offences of riot, unlawful assembly and affray. In the draft Bill appended to the Report they defined the offence of affray as follows: 3(1) Where two or more persons use or threaten unlawful violence against each other, or one or more persons use or threaten unlawful violence against another, and their conduct is such as would cause a person of reasonable firmness present at the scene to fear for his personal safety, each of those persons commits the offence of affray. This was followed by a White Paper, May 1985 Cmnd 9510, entitled Review of Public Order Law. This stated at para 3.15 that the Government was content to accept the Law Commissions proposed statutory definition of affray. Unfortunately the draftsman of what was to become the Public Order Act 1986 appears to have thought that he could improve on the drafting of the Law Commission. Thus the definition of affray in section 3 of that Act is as follows: (1) A person is guilty of affray if he uses or threatens unlawful violence towards another and his conduct is such as would cause a person of reasonable firmness present at the scene to fear for his personal safety. (2) Where 2 or more persons use or threaten the unlawful violence, it is the conduct of them taken together that must be considered for the purposes of subsection (1). We have emphasised the words the unlawful violence because they gave rise to considerable debate on this appeal. They are hard to reconcile with the passage that we have quoted from the speech of Lord Morris in R v Taylor. More significantly, if given their natural meaning, they would appear to suggest that two defendants can only be jointly liable on a single count of affray if they join in using violence towards another; if they fight each other each commits an individual offence of affray, but they are not guilty of a joint offence. This would be nonsensical. We do not consider that the Act has altered the common law offence of affray in this way. The joint offence of affray can be founded on the common product of individual conduct, viz violence capable of causing fear, and does not require any common intention or purpose on the part of the joint participants. Section 6(2) sets out the mens rea of the offence as follows: A person is guilty of violent disorder or affray only if he intends to use or threaten violence or is aware that his conduct may be violent or threaten violence. Thus an affray need not involve any common enterprise or common purpose. The Court of Appeal rightly held that parasitic accessory liability must be founded on a common unlawful enterprise or purpose. It is joining in this common enterprise that renders the conduct of the accomplice an encouragement to the principal to commit the additional offence, thereby justifying the conviction of the accomplice. Because affray does not necessarily involve any common purpose it cannot automatically constitute a foundation for parasitic accessory liability. The Court of Appeal left open, however, the possibility that, on the facts of an individual case, affray may be the product of a common purpose or enterprise capable of providing a foundation for parasitic accessory liability. A duel was given as an example of such a situation. So might the facts of the present case if they evidenced an agreement to shoot and be shot at. The court held, however, that this possibility had not been left to the jury. Many public order offences constitute a spontaneous outburst of reciprocal violence, often fuelled by alcohol. They can, however, involve a common purpose indeed such a common purpose is an element of the offence of riot. It is not uncommon for groups of youths, supporters of rival football clubs for example, to plan to meet in order to do battle. It may be that most involved in such a skirmish have no wish to cause serious injury. There will, however, be an obvious possibility that one or more of those involved may go beyond the common intention of the majority of the combatants and deliberately cause serious injury. If such an event occurs and a victim suffers serious injury, or even dies, are all who were present guilty of causing grievous bodily harm, or murder where the victim dies, by reason of the doctrine of parasitic accessory liability? It is this question that the Court of Appeal raised, but left unanswered. For reasons that we shall explain the facts of this case do not require an answer to the question, despite the reformulation of the Crowns case. We would consider it undesirable, however, if a practice developed of relying on the doctrine of parasitic accessory liability to charge with murder parties to an affray who had not themselves intended that it would result in serious injury. No issue of parasitic accessory liability arises in this case Parasitic accessory liability arises where (i) D1 and D2 have a common intention to commit crime A (ii) D1, as an incident of committing crime A, commits crime B, and (iii) D2 had foreseen the possibility that he might do so. Here there was no crime A and crime B. It cannot be said that the two protagonists had a joint intention to commit violence of a type that fell short of the violence committed. Either Bandana Man and the respondent had no common intention, or there was a common intention to have a shoot out. If they intended to have a shoot out, then each necessarily accepted that the other would shoot at him with the intention to kill or cause serious injury. Neither intended that the other should kill him but each accepted the risk that he might do so. The Crown sought to suggest that there was a joint intention to have an affray, which was crime A, and that the killing by Bandana Man was crime B, for which the respondent was liable as an accessory because it was within his contemplation as a possible, albeit unintended, incident of crime A. The fallacy of this argument is that, if there was a joint intention to have an affray, that intention was to have an affray by shooting at each other with homicidal intent. It is artificial to treat the intention to have an affray as a separate intention from the intention to have a potentially homicidal shooting match. The victim rule Why was the Crown so keen to establish liability under the doctrine of parasitic accessory liability? The answer is, we believe, that the Crown believed that this route would enable it to by pass what was perceived to be a barrier to the direct route to the respondents liability for murder. The direct route was as follows: i) Bandana Man attempted to kill the respondent; ii) By agreeing to the shoot out, the respondent aided and abetted Bandana Man in this attempted murder; iii) Bandana Man accidentally killed Miss Pniewska instead of the respondent. Under the doctrine of transferred malice he was guilty of her murder. iv) The doctrine of transferred malice applied equally to the respondent as aider and abetter of Bandana Mans attempted murder. He also was guilty of Miss Pniewskas murder. The Crown believed that there was a barrier to this direct route to the respondents liability for murder. This was the application of the victim rule. Mr Altman, when discussing the law with the judge, stated that the respondent could not aid and abet his own attempted murder. If this proposition correctly represents the law, we do not see how the Crown can avoid its effect by invoking the doctrine of parasitic accessory liability. Parasitic accessory liability does not differ in principle from the more common basis for finding someone guilty of aiding, abetting, counselling or procuring the commission of a crime. In so far as the law precludes conviction for aiding and abetting a crime in respect of which the defendant is the victim, it must surely do so whatever the route by which the defendant would otherwise be held to have been an accomplice. We turn then to consider the Crowns new case, which is that the conviction of the respondent can be justified on the basis that the respondent aided and abetted the commission of the murder by actively encouraging Bandana Man to shoot at him. In relation to this case it seems to us that the issues for the Court are as follows: i) Does the victim rule preclude the conviction of a defendant for aiding and abetting a crime in respect of which he is the victim, even where the crime is not designed to protect a particular class of which the victim is a member? If yes, ii) Does the victim rule preclude the conviction of a defendant for aiding and abetting a crime in respect of which he was the intended victim, but where the actual victim is a third party? iii) If the victim rule did not preclude the respondents conviction for aiding and abetting the murder of Miss Pniewska, was the judges direction to the jury a sound basis for the jurys guilty verdict? The scope of the victim rule The first question to consider under this head is whether there is any statutory bar to prosecuting the respondent for being party to a crime in respect of which he was the intended victim. So stated this perhaps begs the question, for it presupposes that the respondent was a prospective victim for the purpose of the victim rule. If the first question produces a negative reply, it will then be necessary to consider whether there either is, or should be, a victim rule under the existing common law, or the common law as this court should develop it. The origin of the victim rule appears to lie in the decision in Tyrrell see para 18 above. The decision in that case can best be interpreted as being based on a term to be implied into the Criminal Law Amendment Act, based as the reasoning was on the implied intention of Parliament. The decision does, however, illustrate the application of the general rule defined by Professor Glanville Williams, as set out at para 17 above. Section 2(1) of the Criminal Law Act 1977, set out at para 19 above, applies a wider principle than Glanville Williams formulation of the victim rule, if victim is given the wide meaning of any person who will be harmed by the offence. The scope of the word victim in that context has not, however, received judicial consideration so far as we are aware. If it is given the wide meaning it would seem to produce the surprising result that a conspiracy by two persons that one will commit a terrorist atrocity as a suicide bomber, or to set fire to a house owned by one of them in furtherance of some ulterior motive, would appear not to subject either to criminal liability. There is a case for confining the meaning of victim to persons of a class that the relevant Act is intended to protect, thus bringing section 2(1) into accord with the victim rule, as defined by Glanville Williams. At all events, section 2(1) is confined to the crime of conspiracy and can have no direct application to the facts of this case. The case for giving a narrow construction to victim in section 2(1) of the Criminal Law Act 1977 is perhaps strengthened by the limited exemption from criminal liability conferred by section 51 of the Serious Crime Act 2007, which we have set out at para 19 above. This section gave effect to a recommendation of the Law Commission that the principle in Tyrrell should apply to proposed offences of encouraging or assisting crime see 12(4) of Halsburys Statutes, 4th ed, at paras 401 and 408. This provision also has no application to the facts of this case. It follows that there is no applicable statutory victim rule that precludes conviction of the respondent on the basis that he aided and abetted Bandana Mans attempt to kill him or cause him serious injury. Is there, or should there be a common law rule that does so? The fact that Parliament found it necessary to enact section 2(1) of the 1977 Act and section 51 of the 2007 Act is cogent indication that there is no common law rule that precludes conviction of a defendant of being party to a crime of which he was the actual or intended victim. We are satisfied that there is no such rule. This is evident from the fact that, under common law, attempted suicide was a crime, as was aiding and abetting suicide. The victim of a successful suicide attempt could not, of course, be prosecuted, but if in an attempt to commit suicide, the defendant killed a third person, he committed the crime of murder under the doctrine of transferred malice see R v Hopwood (1913) 8 Cr App R 143 and R v Spence (1957) 41 Cr App R 80. We can see no reason why this Court should consider extending the common law so as to protect from conviction any defendant who is, or is intended to be, harmed by the crime that he commits, or attempts to commit. Such an extension would defeat the intention of Parliament in circumscribing the victim rule in section 51 of the 2007 Act. In R v Brown (Anthony) [1994] 1 AC 212 sado masochists were held to have been rightly convicted of causing injury to others who willingly consented to the injuries that they received. There would have been no bar to conviction of the latter of having aided and abetted the infliction of those injuries upon themselves. It is no doubt appropriate for prosecuting authorities to consider carefully whether there is justification for prosecuting anyone as party to a crime where he is the victim, or intended victim of that crime, but that is not to say that the actual or intended victim of a crime should on that ground alone be absolved from criminal responsibility in relation to it. As Lord Lane CJ observed in Attorney Generals Reference (N0 6 of 1980) [1981] QB 715, 719: it is not in the public interest that people should try to cause, or should cause, each other actual bodily harm for no good reason The victim rule and transferred malice In the light of the conclusion that we have just reached, no question arises as to the application of the victim rule where, although the intended victim of the crime to which the defendant is party is the defendant himself, the actual victim proves to be a third party. Was the judges direction to the jury a sound basis for their guilty verdict? If the respondent aided, abetted, counselled and procured Bandana Man to shoot at him he was, on my analysis, guilty of aiding and abetting the attempted murder of himself. Had he been killed by Bandana Man, he would have been a party to his own murder. Although he had not intended that Bandana Man should succeed in hitting him, complicity in his attempt to do so would have rendered him a party to the successful achievement of that attempt. As it was, Bandana Man accidentally shot Miss Pniewska. Under the doctrine of transferred malice he was liable for her murder. Under the same doctrine, the respondent, if he had aided abetted, counselled and procured the attempt, was party to the murder that resulted. Does it follow that, having regard to the terms of the judges directions, the jury must have been satisfied that the respondent had aided, abetted, counselled and procured Bandana Man to shoot at him with murderous intent? If so, his conviction can stand. If not, the Court of Appeal correctly quashed it. In his ruling that there was a case to go to the jury the judge ruled that that it could not be said that the defendant actively encouraged Bandana Man to shoot at him. He could not be said to have encouraged Bandana Man to fire at him, although he might have provoked this. Perhaps it was with this passage of his ruling in mind that the Court of Appeal observed at para 59 that the jury was never asked to confront the question whether the shared common purpose was not only to shoot but be shot at. In the next paragraph the Court of Appeal observed that, the judge was, in effect, leaving to the jury a limited common purpose limiting it to an exchange of gun fire which did not extend to the gunman being hit. Having carefully considered the passages in the judges summing up that we have set out at para 23 above we do not consider that they support the Court of Appeals conclusion. It may well be that the intention of the judge was to direct the jury to consider whether there was a common intention to have an affray that fell short of an intention to shoot at each other and be shot at. For the reasons that we have given this would have been an incredible scenario. Either there was no joint plan or agreement at all, or there was a common intention to shoot at one another, which can only mean to shoot and be shot at. What matters, however, is not the route that the judge considered would lead to a conviction, but the direction that he gave to the jury. He directed the jury that, in order to convict they had to be satisfied that there was a plan or agreement to have a shoot out whether made beforehandor made on the spur of the moment when they saw each other and fired at each other from the steps and the car park respectively. This direction did not permit the jury to convict if they believed that one of the protagonists might have been the aggressor and the other merely responding in self defence. It was an unequivocal direction that the jury could convict only if they were satisfied that the protagonists had formed a mutual plan or agreement to have a gun fight in which each would attempt to kill or seriously injure the other. If the jury were satisfied of this, the consequence in law was that each of the protagonists was party, not merely to his own attempt to kill or seriously injure the other, but to the others attempt to kill or seriously injure him. Contrary to the finding of the Court of Appeal, the direction of the judge required the jury to consider whether they were satisfied that the respondent and Bandana Man had a common plan or agreement to shoot at each other and be shot at. If they were so satisfied, and their verdict indicates that they were, this was a proper basis for finding that the respondent was guilty of murder. In arguing at the close of the prosecution case that there was a case of simple aiding and abetting to go to the jury Mr Altman sought to draw an analogy with a duel. There is indeed a close analogy between a consensual gunfight and a duel. In the case of a duel all who are present and who lend encouragement to the duel will be guilty of aiding and abetting each of the protagonists in his attempt to kill or injure the other. If one is killed, all who gave encouragement will be guilty of murder, and this includes the seconds on each side see R v Young and Webber (1838) 8 C & P 644. It logically follows that each protagonist will be party to the violence, or attempted violence, inflicted on himself by his opponent. The same is true of a prize fight. In R v Coney (1882) 8 QBD 534 each protagonist was held guilty of assaulting the other and a number of bystanders were held to have encouraged, and thus to have been guilty of aiding and abetting, the assaults of both. Once again each protagonist could properly have been held guilty of aiding and abetting the assault by the other upon himself. A guilty verdict in this case involves a combination of common law principles in relation to aiding and abetting and the common law doctrine of transferred malice, In Attorney Generals Reference (No 3 of 1994) [1998] AC 245, 261 Lord Mustill commented of the latter doctrine: Like many of its kind this is useful enough to yield rough justice, in particular cases, and it can sensibly be retained notwithstanding its lack of any sound intellectual basis. But it is another matter to build a new rule upon it. We have considered whether to hold the respondent guilty of murder would be so far at odds with what the public would be likely to consider the requirements of justice as to call for a reappraisal of the application of the doctrine in this case. We have concluded to the contrary. On the jurys verdict the respondent and Bandana Man had chosen to indulge in a gunfight in a public place, each intending to kill or cause serious injury to the other, in circumstances where there was a foreseeable risk that this result would be suffered by an innocent bystander. It was a matter of fortuity which of the two fired what proved to be the fatal shot. In other circumstances it might have been impossible to deduce which of the two had done so. In these circumstances it seems to us to accord with the demands of justice rather than to conflict with them that the two gunmen should each be liable for Miss Pniewskas murder. We have considered the judgments of Lord Brown and Lord Clarke. They essentially agree with our conclusions. Each, however, considers that the defendant was liable as a principal to the agreed joint activity of shooting with intent to kill or cause serious injury, rather than as an accessory to the act of firing the shot. This is not a difference of substance. It may well be that, in terms of the common law, Bandana Man was a principal in the first degree and the respondent was a principal in the second degree see Archbold, 2011 edition, para 18 1. But as Archbold remarks at para 18.6: the distinction between a joint principal and an abettor is sometimes difficult, and unnecessary, to draw. Whether the respondent is correctly described as a principal or an accessory is irrelevant to his guilt. In R v Giannetto [1997] 1 Cr. App. 1 the appellant was convicted of murdering his wife. The Crown was unable to say whether he had inflicted the fatal injuries himself or, at the very least, had arranged for someone else to do so. On this basis however he was guilty of her murder either as a principal or as an accessory. Following his conviction the appellant argued that the judge had erred in law when he failed to direct the jury that they must be unanimous as to which of the two versions of events advanced by the Crown they accepted. If the jury were not sure which of the two alternatives they found proved, then the appellant was entitled to be acquitted. After an examination of the authorities, the submission was rejected. If the jury does convict it may do so with some jurors satisfied that the defendant was actually the killer, but all will be satisfied that if not himself the killer at least he encouraged and by reason of the statutory provision in the 1861 Act no more is necessary to prove the offence. (per Kennedy LJ at 5) This decision simply reflects the reality that whether an offence is committed as a principal or as an accessory, the offence is the same offence and the defendant is guilty of it. There may be many situations in which it will be important to distinguish between the principal and the accessory, but this is not such a case. On the jurys verdict, both men agreed to the joint enterprise of having a shoot out. Whether, on strict analysis, that made the respondent guilty as a principal to Bandana Mans actus reus of firing the fatal shot, or guilty as one who had aided, abetted counselled or procured his firing of that shot creates no practical difficulty on the facts of this case and does not affect the result. For these reasons we would answer the certified question in the affirmative, allow this appeal and restore the respondents conviction for murder. LORD BROWN The central question for decision on this appeal can be shortly posed. Two armed men (let us call them A and B) confront one another in a south London car park and there engage in an unlawful gunfight, each with the intention of killing or at least seriously injuring the other. Neither is acting in self defence. Rather the gunfight was agreed, either pre arranged or resulting from a spur of the moment decision by both. Neither in fact succeeds in hitting his adversary but in the course of their crossfire a passerby (C), one of several people in the vicinity, is accidentally killed. B it was who fired the fatal bullet and indisputably he is guilty of Cs murder: the principle of transferred malice so dictates. But is A too guilty of Cs murder? That is the critical question before us. A here is the respondent, Mr Gnango (the successful appellant below), B is Bandana Man (as he has been called throughout these proceedings), and C is an unfortunate Polish careworker, killed on her way home from work. Although the facts of this case are more fully described in Lord Phillips judgment, the appeal to my mind must necessarily be decided by reference to the bare scenario already outlined, not the many surrounding details that can all too easily obscure rather than clarify the real issue arising. And to my mind the all important consideration here is that both A and B were intentionally engaged in a potentially lethal unlawful gunfight (a shoot out as it has also been described) in the course of which an innocent passerby was killed. The general public would in my opinion be astonished and appalled if in those circumstances the law attached liability for the death only to the gunman who actually fired the fatal shot (which, indeed, it would not always be possible to determine). Is he alone to be regarded as guilty of the victims murder? Is the other gunman really to be regarded as blameless and exonerated from all criminal liability for that killing? Does the decision of the Court of Appeal here, allowing As appeal against his conviction for murder, really represent the law of the land? To my mind the answer to these questions is a plain no. Realistically this case is indistinguishable from the succession of authorities establishing criminal liability on the part of anyone who willingly involves himself in the use of unlawful violence between protagonists intent on killing or seriously injuring each other, be they duellers, prize fighters or sado masochists see respectively R v Young & Webber (1838) 8 C & P 644, R v Coney (1882) 8 QBD 534 and R v Brown (Anthony) [1994] 1 AC 212. It is the very purpose of those engaging in these various activities that injuries will occur. The suggestion that certain of the perpetrators of such consensual violence, merely because they are also its prospective victims, cannot be liable for it, whether as principals or accessories by virtue of the decision in R v Tyrrell [1894] 1 QB 710 (discussed by Lord Phillips and Lord Judge at para 18 of their judgment), cannot be right. The principle underlying criminal liability for duelling, prize fighting and so forth is not to be understood simply as the protection of those most directly at risk of the injuries intended. Rather it is the protection of society generally from the damaging consequences of such injuries and the discouragement of violent conduct as a whole. Another powerful illustration of the principle (discussed by Lord Phillips and Lord Judge at para 52) is the law with regard to suicide (modified although that now is). Such being the rationale for criminal liability in this line of cases, how could the principle not encompass also the present case? Insofar as there are factual differences between this case and an old fashioned duel most notably the absence here of the civilities and formalities characterising a duel and the spur of the moment nature (if such it was) of the decision here to engage in a gunfight (ie to shoot and, inevitably, be shot at) none of these suggest any lesser criminality for whatever injuries may result than in the case of a duel itself. Quite the contrary, indeed. The public interest in criminalising the violence engaged in is yet more obvious: here there were others about so that the risk of harm was by no means confined merely to the protagonists themselves. For my part I am not disposed to analyse As liability for Cs murder here in accessory terms as the aider or abetter, counsellor or procurer of Bs attempt to kill him (A himself) whose liability for Cs death thus arises, Tyrrell constituting no obstacle, under the doctrine of transferred malice. Rather it seems to me that A is liable for Cs murder as a principal a direct participant engaged by agreement in unlawful violence (like a duel, a prize fight or sado masochism) specifically designed to cause and in fact causing death or serious injury. But whichever analysis is adopted, As liability for Cs murder seems to me clear and I would regard our criminal law as seriously defective were it otherwise. Does it follow that criminal responsibility for death would attach as widely as was envisaged by the Court of Appeal in this case, and which so plainly concerned them as a matter of policy (see paras 74 and 75 of the judgment below, cited in full by Lord Phillips and Lord Judge at para 28 of their judgment)? In my judgment not. In the scenario there described it could not be said, as here clearly it can, that the very purpose of such a fight is that death or serious injury shall result. For these reasons I too would answer the certified question in the affirmative, allow this appeal and restore the respondents conviction for murder. LORD CLARKE Lord Phillips and Lord Judge have set out the facts in some detail. I shall not therefore repeat them. Lord Brown says at para 68 that the all important consideration here is that both the respondent and Bandana Man were intentionally engaged in a potentially lethal unlawful gunfight or shoot out, in which each intended to kill or seriously injure the other. I agree that there was evidence upon which the jury could so conclude. It is not in dispute that if they had agreed to fight a duel with guns and either had inadvertently shot and killed a passer by in the course of the duel they would both be guilty of murder. It follows, as I see it, in agreement with Lord Phillips, Lord Judge and Lord Brown, that if the respondent and Bandana Man agreed to the shoot out, they were both guilty of murder, even though the victim was killed by a shot fired by Bandana Man and not by the respondent and even though Bandana Man intended to kill or seriously injure the respondent who was the other party to the agreement. In so far as the trial judge, Cooke J, reached a different conclusion, I respectfully disagree. As I see it, this analysis does not depend upon a conclusion that the respondent was aiding, abetting, counselling or procuring Bandana Man but simply on the proposition that the victim was shot and killed in the course of the respondent carrying out the agreement between the two men as principals to shoot and be shot at, just as in a duel. In a passage quoted by Lord Phillips and Lord Judge at para 21 the trial judge, Cooke J, rejected the submission that the respondent actively encouraged Bandana Man to shoot at him. He concluded that, by shooting at Bandana Man, the respondent might have provoked further firing but he did not encourage it. I agree that there is a distinction in principle between provoking a person to do something and encouraging or aiding and abetting him to do it. The question is whether the judge directed the jury correctly. That depends upon the language he used. The relevant passage is quoted by Lord Phillips and Lord Judge at para 23. The whole passage is important but the critical parts seem to me to be these: Where a criminal offence is committed by two or more people, each of them may play a different part in that offence, but if they are in it together as part of a joint plan or joint agreement to commit it, each is guilty of the planned offence. The words plan or agreement that I have just used do not mean that there has to be any formality about it. An agreement to commit an offence may arise on the spur of the moment. Nothing needs to be said at all. It can be made with a nod or a wink or just a knowing look or by taking the first step in committing an offence in which the other person then joins, so that it can be inferred from their behaviour. Now here it is said by the prosecution that Bandana Man and the defendant planned to use unlawful violence towards another by having a shoot out, whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively. If you are sure that Bandana Man and the defendant joined together to commit such unlawful violence by having a gunfight, whether pre planned or whether on the spur of the moment on the top of the steps and the side of the car, and that this joint enterprise came into being before Magda was killed by a shot from Bandana Man, then the defendant would be guilty of murder also, along with Bandana Man, provided the other requirements are satisfied. So if you are sure that Bandana Man and the defendant were in a joint enterprise to cause an affray, to use unlawful violence against each other by having a gunfight and by firing at each other, whether this joint enterprise was the result of a pre planned meeting or arose on the spur of the moment when they saw each other, and that in the course of that joint enterprise fight, Magda was murdered by Bandana Man on the basis of transferred malice, as I have explained it to you, and that the defendant realised and the prosecution say that he must have realised that in the course of their joint enterprise gunfight, Bandana Man might kill with the requisite intention for murder, then the defendant would also be guilty of murder. As Lord Phillips and Lord Judge have explained, the judge had ruled that it was open to the jury to find that the respondent and Bandana Man were engaged on a joint enterprise to commit an affray and that, if the jury found that the respondent foresaw that Bandana Man might shoot and kill an innocent passer by this would found a verdict of murder on the part of the respondent. I agree with Lord Phillips and Lord Judge (at para 42) that no issue of what they call parasitic accessory liability could arise here because it cannot be said that the two protagonists had a joint intention to commit violence of a type that fell short of the violence committed. Either they had no common intention, or the common intention was to have a shoot out, which involved each necessarily accepting that the other would shoot at him with the intention to kill or cause serious injury. It was thus open to the jury to find that there was an agreement to that effect which may have been made on the spur of the moment but was in any event made before Bandana Man shot and killed the victim, Miss Pniewska. My only concern has been whether, in the light of the judges ruling, he intended to direct the jury that they could convict if the common intention fell short of an intention to shoot and be shot at. However, I agree with the conclusion of Lord Phillips and Lord Judge at para 57 that it is not realistic to think that the jury could have found such a common intention and with their conclusion at para 58 that the direction the judge in fact gave was an unequivocal direction that the jury could only convict if they were sure that the protagonists had formed a mutual plan or agreement to have a gun fight in which each would attempt to kill or seriously injure the other. It follows that I would not accept the conclusions of the Court of Appeal to the contrary. At paras 55 to 60 Lord Phillips and Lord Judge return to the relevance of aiding and abetting. For the reasons I have given, I do not think that this is a case of aiding and abetting. It is a case of an agreement to shoot and be shot at just like the agreement between the principal protagonists to a duel. It does not seem to me that any assistance is to be gained by a consideration of the position of the seconds at a duel or of those present at a duel or a prize fight. In reaching these conclusions, I entirely agree with Lord Browns conclusions at paras 69 to 71. Like him, I am not disposed to analyse the respondents liability for murder in accessory terms but as a principal to a joint enterprise (that is an agreement) to engage in unlawful violence specifically designed to cause death or serious injury, where death occurs as a result. I would be inclined to describe this as a form of principal and not secondary liability, but if it is a form of secondary liability, so be it. I also agree with Lord Brown that such a conclusion is consistent with public policy and, for the reasons he gives at para 72, does not extend criminal responsibility for death as widely as the Court of Appeal envisaged at paras 74 and 75 of their judgment. For these reasons, I too would allow the appeal and restore the respondents conviction for murder. By way of postscript I would like to mention another possible basis of liability for murder which was touched upon in argument. It arises out of a consideration of the decision of the Court of Appeal in R v Pagett (1983) 76 Cr App Rep 279 to which Lord Judge drew attention in the course of the argument. It appears to me to be at least arguable that it was or would have been open to the jury to conclude that one of the effective causes of the death of the victim was the respondent shooting at Bandana Man. This is on the basis that it provoked (or caused) Bandana Man to shoot back with intent to kill or cause serious harm to the respondent as a result of which the victim was shot and killed. This analysis does not depend upon the respondent and Bandana Man being parties to a joint enterprise. The argument to the contrary would be that the sole cause of the death of the victim was that she was shot by Bandana Man and that the fact that he may have been returning fire directed at him by the respondent is irrelevant. The argument would be that, even if Bandana Man would not have shot and killed the victim if he had not been shot at by the respondent, the deliberate and criminal act of Bandana Man in shooting back and killing the victim was a novus actus interveniens which broke the chain of causation between the shots fired by the respondent and the death of the victim. In Pagett the appellant shot at police officers who were attempting to arrest him for various serious offences. The appellant had with him a 16 year old girl who was pregnant by him. Against her will he used her body to shield him from any retaliation by the officers. The officers returned his fire and as a result the girl was killed. The appellant was charged with her murder. The trial judge left both murder and manslaughter to the jury. The appellant was acquitted of murder but convicted of manslaughter. In the Court of Appeal, which comprised Robert Goff LJ and Cantley and Farquarson JJ, the appellant challenged the judges directions on causation. The judgment of the court was given by Robert Goff LJ. It was held that it was for the judge to direct the jury as to the relevant principles relating to causation and then leave it to the jury to decide whether or not, in the light of those principles, the relevant causal link had been established. In the rare case in which it was necessary to direct the jurys minds to the question of causation, it was usually enough to direct them simply that in law the accuseds act need not be the sole cause, or even the main cause, of the victims death, it being enough that the act contributed significantly to that result. However, Robert Goff LJ said this at p 288: Occasionally a specific issue of causation may arise. One such case is where, although an act of the accused constitutes a causa sine qua non of (or necessary condition for) the death of the victim, nevertheless the intervention of a third person may be regarded as the sole cause of the victim's death, thereby relieving the accused of criminal responsibility. Such intervention, if it has such an effect, has often been described by lawyers as a novus actus interveniens. We are aware that this time honoured Latin term has been the subject of criticism. We are also aware that attempts have been made to translate it into English; though no simple translation has proved satisfactory, really because the Latin term has become a term of art which conveys to lawyers the crucial feature that there has not merely been an intervening act of another person, but that that act was so independent of the act of the accused that it should be regarded in law as the cause of the victim's death, to the exclusion of the act of the accused. At the risk of scholarly criticism, we shall for the purposes of this judgment continue to use the Latin term. The decision in Pagett is however instructive: see pp 291 292. The judge directed the jury that, in order to convict the appellant, it was necessary that they should find both that he fired at the police officers and thereby caused them to fire back and that he used the girl as a shield by force and against her will. The court held that that direction was generous to the appellant because either of those acts would have constituted the actus reus, whether of murder or manslaughter causing the victims death. So, as Robert Goff LJ put it at p 291, if the jury were sure that, if the victim was killed by a shot fired from the gun of a police officer who, acting in reasonable self defence, fired his gun in response to a lethal attack by the appellant, it would be open to them to convict him of murder or manslaughter as the case may be. This case is not on all fours with Pagett because Bandana Man was not acting in reasonable self defence. However, once the respondent became aware that Bandana Man had a gun and was willing to use it, even assuming that there was no joint enterprise, it was undoubtedly foreseeable that, if the respondent continued shooting at Bandana Man, he would shoot back with intent to kill him or cause serious harm. Indeed, the jurys verdict shows that the respondent foresaw precisely that. In these circumstances, it was open to the jury to conclude that the respondents firing at Bandana Man was a cause of the latter shooting back. It was the very thing that might have been expected. There are of course many cases in the books which consider the correct approach to the suggestion that there has been a novus actus interveniens. Many of them are claims in tort but the principles seem to me to be much the same. I refer only to the well known judgment of Lord Wright in the Court of Appeal in The Oropesa [1943] P 32. After noting at p 37 that human action does not itself sever the chain of causation and referring to a number of the cases, Lord Wright said at p 39: To break the chain of causation it must be shown that there is something which I will call ultroneous, something unwarrantable, a new cause which disturbs the sequence of events, something which can be described as either unreasonable or extraneous or extrinsic. I doubt whether the law can be stated more precisely than that. To my mind, the decision by Bandana Man to shoot at the respondent was not extraneous or ultroneous but the very thing that the respondent must have expected. The mere fact that the immediate cause of the death was a criminal and deliberate act on the part of Bandana Man does not as a matter of law break the chain of causation: see eg, in the context of tort, Gray v Thames Trains Ltd [2009] EWHL 33, [2009] 1 AC 1339 per Lord Hoffmann at paras 27 29 and Corr v IBC Vehicles Ltd [2008] UKHL 13, [2008] AC 884. All depends upon the circumstances of the particular case. In these circumstances, as I see it, the case could have been left to the jury on the basis that it was open to them to hold that the respondent was guilty of murder if they were sure that his act in shooting at Bandana Man was a cause of Bandana Man shooting at him with intent to kill him or cause him serious harm and the victim was killed as a result. It seems to me to be very likely that the jury would have concluded, as Robert Goff LJ put it, that the respondents act in shooting at Bandana Man contributed significantly to Bandana Man shooting at him with intent to kill or seriously injure him and thus to his killing the victim. However, since the case was not put to the jury on this basis, I would not allow this appeal on the basis of causation but on the basis discussed in paras 74 to 82 above. LORD DYSON The facts have been fully set out by Lord Phillips and Lord Judge. Several possible bases for upholding the respondents conviction call for consideration. The first is the basis on which the case was left by the judge to the jury and on which they convicted. This is that the respondent and Bandana Man participated in the commission of an affray and that in the course of it Bandana Man committed an offence (murder) which the respondent had foreseen he might commit. Like Lord Phillips and Lord Judge, I shall adopt Sir John Smiths phrase of parasitic accessory liability for this. The second is that the respondent aided and abetted Bandana Man to shoot at him (by encouraging him to do so). This is a basis on which Lord Phillips and Lord Judge would uphold the conviction, although in his ruling the judge said that his view of the facts was that the respondent did not encourage Bandana Man to shoot at him and that accordingly he would not leave the issue of aiding and abetting to the jury. The third basis is that the respondent and Bandana Man were liable as joint principals for the murder. This is the basis on which Lord Brown and Lord Clarke would uphold the conviction. Lord Clarke has suggested a fourth possible route, namely that the respondent caused Bandana Man to shoot at him and therefore to kill Magda Pniewska. Parasitic accessory liability The ingredients for parasitic accessory liability are that two parties participate in the commission of crime A and, in the course of committing it, D1 commits crime B which D2 foresees that he might commit. The Court of Appeal rejected this as a basis for upholding the conviction in the present case on the grounds that it was necessary to show that the respondent and Bandana Man agreed to commit the affray and shared a common purpose in committing it (para 51). They said (para 59) that it was not realistic to say that they acted in concert to cause fear; they acted independently and antagonistically in a manner which did so. Absent a shared purpose to shoot and be shot at, the submission made by the appellant was correct that there was no room on the facts for any other common purpose. The jury was never asked to confront the question whether the shared purpose was not only to shoot, but to be shot at. I agree with the comments by Professor Ormerod in R v Gnango [2011] Crim LR 151 and by Professor Virgo in The doctrine of joint enterprise liability Archbold Review, Issue 10, 14 December 2010 that, in order to establish parasitic accessory liability, there was no need for the prosecution to prove that there was a common purpose that each man intended to shoot and to be shot at. It was sufficient to establish a common purpose to commit an affray. Consequently, a common purpose to fight or threaten a fight in a public place would be a sufficient common purpose to engage the parasitic accessory liability principle. But at paras 42 and 43, Lord Phillips and Lord Judge have identified a different flaw in the parasitic accessory liability argument. They say that there is no room for the application of this principle in the present case, because on the facts of this case it is artificial to treat the intention to have an affray as separate from the intention to have a potentially homicidal shooting match. I agree. There is no reason in general why the parasitic accessory liability principle cannot be applied where crime A is affray and crime B is murder. All that is required is proof of (i) a common purpose to commit an affray which is shared by D1 and D2 in the sense that they have agreed to commit the offence and (ii) a murder committed by D1 in the course of the affray the commission of which is foreseen as a possibility by D2. Suppose, for example, that a group of youths is involved in a fist fight in a public place and they are all aware that one member of the group is armed with a knife. Let us further suppose that they are all guilty of causing an affray and that the youth who has the knife uses it with the intention to kill or cause really serious harm to kill another member of the group. All the members of the group who foresee that he might use the knife to commit a murder would also be liable for the murder. The fact that they were also guilty of an affray would be no bar to their liability for murder. On the facts of this case, however, the Crown chose to put their case on the basis that the affray was the use of unlawful violence in a public place by having a gun fight and by firing at each other (summing up p 15 16). I agree with Lord Phillips and Lord Judge that the way that the Crown chose to put its case left no room for the application of the parasitic accessory liability principle here. Aiding and abetting The Crown sought to persuade the judge to leave the case to the jury on the alternative basis that, by shooting at Bandana Man, the respondent encouraged him to shoot back at him and fire the fatal shot; and that he was guilty of the murder of Ms Pniewska as an accessory and by application of the transferred malice principle. The judges view of the facts was that this was not a route open to the jury to finding the respondent guilty of murder. As he said in his ruling, in reality on the evidence, [the respondent] fired at Bandana Man in the hope of killing him or causing him grievous bodily harm, frightening him, or arguably, in self defence. He cannot be said to have encouraged the other to fire back, whatever the order of shots as the jury might ultimately find them to be. He might have provoked further firing, but he did not encourage it. Despite the judges declared intention (as expressed in his ruling) not to leave aiding and abetting to the jury, Lord Phillips and Lord Judge say that a basis on which the jurys verdict can be upheld is that they must have found that the respondent aided and abetted Bandana Man to shoot at him with intent to kill or cause really serious harm. At para 59 they draw an analogy with a duel and a prize fight. If the jurys view of the facts was that this case was indeed analogous to a duel (ie that the respondent and Bandana Man had a common purpose to shoot and be shot at), then I agree with the reasoning of Lord Phillips and Lord Judge. It is important to distinguish between a combat which is analogous to a duel and a mere fight. An essential element of the former is an agreement by the combatants to fight each other. They encourage each other to fight. The judge was right to distinguish between encouragement and provocation. If A shoots back at B because he has been provoked by Bs shooting to do so, that is very different from saying that A shoots back at B because he has been encouraged to do so pursuant to an agreement to have a shoot out. The question is whether the jury must have decided that the respondent and Bandana Man had a common purpose to shoot and be shot at and that by their words and/or conduct they encouraged each other to that end. The Court of Appeals view of the facts was that the respondent and Bandana man had no such common purpose: in other words, that this was not analogous to a duel. That was also the view of the judge as expressed in his ruling. But what matters, of course, is what the jury decided. That can only be determined by a consideration of their verdict in the light of the summing up, which must be interpreted in a sensible way and without regard to any ruling that preceded it (of which the jury would have been ignorant). What counts is what the judge said in his summing up, and not what he intended to say or what he intended the words that he used to mean. But where it is suggested that a summing up bears a meaning which differs from what the judge intended, it must be scrutinised with particular care. In his summing up, the judge did not direct the jury on aiding and abetting. He did not ask them in terms to consider whether, by shooting back, the respondent encouraged Bandana Man in turn to shoot back at him with intent to do so. In view of his ruling, these omissions on the part of the judge were not by an oversight: they were quite deliberate. But the question is whether, although the issue of aiding and abetting by encouragement was not before the jury in terms, they showed by their verdict on the issue that was before them (parasitic accessory liability) that they were sure that the respondent and Bandana Man had a common purpose to shoot and be shot at and encouraged each other to give effect to that purpose. This question has caused me considerable anxiety, not least because (i) this was a murder charge, (ii) a finding of aiding and abetting by encouragement did not accord with this careful judges assessment of the facts and (iii) he did not direct the jury explicitly on the aiding and abetting issue. But I have been persuaded by the reasoning of Lord Phillips and Lord Judge that the jury must nevertheless have been satisfied that there was an agreement between the respondent and Bandana Man to shoot and be shot at and that they encouraged each other to carry that agreement into effect. The jury were directed that they had to be sure that the respondent and Bandana Man planned to use unlawful violence towards each other by having a shootout whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively. The judge gave the standard direction for joint enterprise (in the context of parasitic accessory liability) that the offence (in this case affray by gunfight) had to be the joint commission of an offence by two or more people who are in it together as part of a joint plan. In my view, a shootout pursuant to a plan must mean an exchange of fire pursuant to an agreement to shoot and be shot at; and persons who agree to shoot at each other must by virtue of their agreement intend to encourage each other to do so. It differs from a simple exchange of fire. Nor is it relevant that each of the participants hopes that his shot will prove fatal and that there will be no return of fire. The fact that the jury convicted the respondent of the murder of Ms Pniewska following the judges directions must mean that, if they had been asked in terms whether the respondent and Bandana Man (i) agreed to shoot and be shot at and (ii) thereby encouraged each other to that end (intending to do so), they would have answered both questions in the affirmative. In other words, the jury showed by their verdict that they considered that this was analogous to a duel. I would, therefore, uphold the conviction on the basis that the jury must have been satisfied that the respondent aided and abetted the murder of Ms Pniewska by encouraging Bandana Man to shoot at him in the course of the planned shootout. Liability as a joint principal This is the route favoured by Lord Brown and Lord Clarke and accepted as an alternative by Lord Phillips and Lord Judge. They say that the respondent is liable by reason of his participation by agreement in unlawful violence specifically designed to cause and causing death or serious injury. For the reasons that I have given, I am persuaded that the jury must have been sure that Bandana Man and the respondent exchanged fire pursuant to an agreement to have a shoot out, ie an agreement to shoot and be shot at. That is why in my view Lord Phillips and Lord Judge are right to say that in this case the difference between holding the respondent liable as a principal to an agreed joint activity rather than as an accessory is not a difference of substance. Either way, the Crown had to prove that the respondent and Bandana Man agreed to shoot and be shot at with the necessary intent. It follows that, for the reasons I have given, the jury must have been sure that the respondent participated with Bandana Man in an agreed shoot out or agreement to shoot and be shot at with the necessary intent. Accordingly, if the jury had been asked whether the respondent was guilty of the murder of Ms Pniewska on the basis that he had acted in concert with Bandana Man in shooting at each other pursuant to an agreement to shoot and be shot at, in my view, in the light of the terms of the summing up, they would have answered that question in the affirmative. I would, therefore, uphold the conviction on this basis too. Causation Lord Clarke has suggested, as an alternative, that the respondent caused Bandana Man to shoot back at him and thereby contributed to the death. This way of putting the case was not left to the jury and causation was a matter for the jury to determine. Furthermore, we heard very little argument on this point. It seems to me that, if Bandana Mans act of shooting at the respondent was a free, deliberate and informed act, it broke the chain of causation between the respondents shooting at him and his shooting and killing Ms Pniewska: see R v Kennedy (No 2) [2007] UKHL 38; [2008] AC 269. As Professor Ormerod points out in his article (loc cit), it might be argued that Bandana Mans act of shooting was not a free, deliberate and informed act because he was acting in self defence. But that seems very difficult on the facts of this case. It might also be argued that, even if Bandana Man was acting in a free, deliberate and informed manner, that is irrelevant if he and the respondent were acting in concert: see R v Latif [1996] 1 WLR 104, 115. None of these issues was explored by the jury. I agree with Lord Clarke that we cannot uphold the conviction on the basis that the respondent caused Bandana Man to fire the fatal shot. Conclusion I would, therefore, allow the appeal and restore the conviction. In doing so, I wish to emphasise that the judge is not to be criticised for directing the jury in the way that he did. This was a very difficult case. I would add that, although I have disagreed with the analysis of the Court of Appeal, it contains a most useful discussion of some of the complex issues that arise in this area of the law. LORD KERR The respondent to this appeal, Armel Gnango, was convicted of the murder on Tuesday, 2 October 2007, of a 26 year old Polish care worker, Magda Pniewska. She had been walking home from her place of employment when she was killed by a single shot to the head. She was an entirely innocent young woman. Her death is an appalling tragedy. The shot which killed Ms Pniewska was fired by a person known throughout the proceedings by the somewhat unfortunate soubriquet of Bandana man. I shall refer to him as B. He and Gnango had exchanged fire and it was in the course of this that Ms Pniewska was shot. In their judgment, Lord Phillips and Lord Judge have outlined all the relevant facts and I need not dilate further on them. The Court of Appeal quashed the murder conviction. It certified a point of law of public general importance. Its terms have been set out by Lord Phillips and Lord Judge in para 1 of their judgment and it is unnecessary to repeat them. Various bases on which Gnango might or should be found guilty of the murder of Ms Pniewska have been canvassed in the course of argument and in the judgments of the other members of the court. I have had the great advantage of reading these judgments in draft form. Joint affray In paras 32 35 of their judgment, Lord Phillips and Lord Judge have traced the evolution of the statutory offence of affray from its common law origins. As he has pointed out, the Law Commission had recommended that the common law offence of affray should be preserved in an enactment and had suggested that it should be defined as the use or threat of unlawful violence by two or more persons against each other or by the use or threat of such violence by one or more persons against another. Although the government expressed satisfaction with this definition, there was a significant omission in the final form of the provision that appeared in the legislation from that proposed by the Law Commission. It contained no reference to the use or threat of violence by two persons against each other. Instead, section 3(1) dealt only with the basis of a single individuals guilt. A person was to be guilty if he used or threatened unlawful violence towards another. Lord Phillips and Lord Judge consider that the use of the words unlawful violence in subsection (2) of section 3, if given their natural meaning, would lead to the conclusion that two defendants could only be jointly liable of affray if they join in using violence against another. But it seems to me that this conclusion is the consequence not so much of the use of the words unlawful violence in subsection (2) as the unavoidable result of the requirement in subsection (1) that, for a person to be guilty of affray, he must have offered violence to another. Therefore, I have difficulty with Lord Phillips and Lord Judges conclusion that the joint offence of affray can be founded on the common product of individual conduct, if this is to be applied to the use of violence by two persons against each other. Using or threatening violence towards another must mean that in the case of a joint offence of affray the violence of those guilty of it is directed towards another person or other persons, not against each other. This may produce an anomalous result, as Lord Phillips and Lord Judge have suggested, but it seems to me to be the inescapable conclusion that section 3(1) impels. For a joint offence of affray to occur, the person represented by the word another in s 3(1) of the 1986 Act must be someone other than the person offering the violence. It may be correct, as Lord Phillips and Lord Judge have stated (in para 38), that there does not need to be a common intention for a joint offence of affray but the activity comprising the actus reus of the offence, to be capable of giving rise to joint liability, must be directed towards the same target. This is the unavoidable consequence of the stipulation that the violence must be used or threatened to another. On this analysis, Gnango and B committed separate offences of affray. A joint affray is not, in my opinion, available as a source of liability for Gnango. In any event for parasitic accessory liability to arise, Gnango and B would have to have a common intention to commit an affray, if affray is the crime on which Gnango and B are to be said to have jointly embarked. Whether or not a common intention is required for a joint offence of affray, it is most certainly required for parasitic accessory liability. Even if it were possible, therefore, for them to be convicted of joint affray without a common intention to commit that offence, for the offence to provide the basis of parasitic accessory liability, it would have to be proved that they had a shared intention. As Lord Phillips and Lord Judge stated in para 38, the Court of Appeal was right to hold that this form of liability depends on the existence of a common unlawful enterprise or purpose. Although I disagree with Lord Phillips and Lord Judge that there can be a joint affray based on violence offered by two protagonists to each other, I do agree with him that participation in a joint affray cannot automatically constitute a foundation for parasitic accessory liability. The essence of parasitic accessory liability is that there is a common purpose and in the course of furthering that common purpose, the principal goes beyond what was agreed but the secondary participant foresaw the possibility of this occurring. The sine qua non of parasitic accessory liability, therefore, is the existence of an common purpose. Aiding and abetting Lord Phillips, Lord Judge and Lord Dyson have concluded that, although it was not left to the jury by the trial judge, the effect of their verdict is that Gnango was guilty because he aided and abetted B to fire at him. This was on the basis that both shared a common intention to shoot at one another. In particular, each intended to shoot at the other and to be shot at by him. The Court of Appeal concluded that the jury was never asked to confront the question whether the shared common purpose was not only to shoot, but to be shot at (para 59 of the Court of Appeals judgment). This is unquestionably correct. The jury was not invited at any time during the judges carefully composed charge to address the question whether the shared intention included what seems to be the supremely important element of the avowed aiding and abetting of this offence the agreement to be shot at. The judge had refused to allow aiding and abetting to go to the jury because he considered that it could not reasonably be concluded that Gnango had encouraged B to fire at him. The mens rea of aiding and abetting is an intention by ones act to assist the principal in the commission of his offence. Thus at para 18 18 of Archbold 2011 edition: To establish aiding and abetting on the basis of encouragement, it must be proved that the defendant intended to encourage and wilfully did encourage the crime committed. Mere continued voluntary presence at the scene of a crime, even though it was not accidental, does not of itself necessarily amount to encouragement; but the fact that a person was voluntarily and purposely present witnessing the commission of a crime and offered no opposition, though he might reasonably be expected to prevent it and had the power to do so, or at least express his dissent, might in some circumstances afford cogent evidence upon which a jury would be justified in finding that he wilfully encouraged and so aided and abetted, but it would be purely a question of fact for the jury whether he did so or not: R v Clarkson, 55 Cr App R 445, Ct MAC. Since mere presence at the scene of a crime can in certain circumstances be enough to justify a finding of guilt, it is perhaps difficult to see why Gnangos remaining at the scene and firing the gun at B could not amount, in law, to encouragement. It seems likely, however, that the judge considered that the notion of someone encouraging another to fire at him was so at odds with common experience as to be unbefitting of the jurys consideration as a possible basis of liability for in his ruling he observed: it cannot be said, in my judgment, that the defendant actively encouraged [B] to shoot at him, and even if he did, it would be a real oddity for a victim of an attempted murder to be a secondary party to that attempt. Be that as it may, the above passage from Archbold makes clear that, to be satisfied that Gnango intended to assist or encourage B to shoot at him, the jury would have to address directly not only the question whether his actions did encourage B to do so, but also whether he intended that B should do so see also Archbold at 17 67, what needs to be proved is an intention to render assistance to another. If the jury was not invited to consider whether Gnango had that intention, the conclusion that their verdict admits of no view other than that Gnango intended to assist B in firing at him is somewhat startling and one which could only be reached after very careful examination of possible alternative explanations for the verdict. The judge told the jury that the prosecution case was that there was a plan on the part of Gnango and B to have what he described as a shoot out: Now here it is said by the prosecution that Bandana Man and the defendant planned to use unlawful violence towards [one] another by having a shoot out, whether that plan was made beforehand and the meeting was pre arranged or was made on the spur of the moment when they saw each other and fired at each other from the steps and the car respectively. A little later in his charge he gave this critical direction: If you are sure that Bandana Man and the defendant joined together to commit such unlawful violence by having a gunfight, whether pre planned or whether on the spur of the moment on the top of the steps and the side of the car, and that this joint enterprise came into being before Magda was killed by a shot from Bandana Man, then the defendant would be guilty of murder also, along with Bandana Man. At para 58 Lord Phillips and Lord Judge have said that this amounted to an unequivocal direction that the jury could only convict if they were satisfied that Gnango and B had planned to have a gun fight in which each would attempt to kill or seriously injure the other. He suggests that if the jury was satisfied of this, it meant in law that both were party not merely to his own attempt to kill or seriously injure the other but to the others attempt to kill or seriously injure him. Lord Dyson expressed essentially the same view at para 101 where he said: In my view, a shootout pursuant to a plan must mean an exchange of fire pursuant to an agreement to shoot and be shot at; and persons who agree to shoot at each other must by virtue of their agreement intend to encourage each other to do so. The terms of any plan are critical to any conclusion that the parties to it must be taken to have encouraged each other to shoot. But an anterior question must be addressed. Can it be said that solely because there was an exchange of fire, this must be on foot of a plan? Agreement to shoot it out with an opponent, if reached in advance, would be such a plan although there is no evidence that this is what happened here. But where there has been what has been described as a spontaneous agreement to engage in a shoot out, the question arises whether this can truly be said to be the product of an agreement in any real sense. Is it not at least as likely to be the result of a sudden, simultaneously reached, coincident intention by the two protagonists to fire at each other? I do not consider that because there was a shoot out (whatever that term may mean) and because the jury were asked to consider that Gnango and B joined together to commit unlawful violence, by returning a verdict of guilty, the jury must be taken to have concluded that there was a plan in the sense of an agreement between them. But even if the jurys verdict can be taken as evidence of their conclusion that there had been a plan or agreement between Gnango and B, does it follow that an element of that plan must be that they agreed to be shot at, as well as to shoot? Agreeing to a shoot out does not necessarily mean agreeing to be shot at. This is particularly so where the plan takes the form of (and here it could only take the form of) an instantaneous meeting of minds between Gnango and B on their first catching sight of each other on the occasion of the gunfight. That type of situation is quite different from a duel where participants meet at a pre arranged place and an appointed time. The essence of a duel conducted with firearms is that there should be an exchange of fire. The parties to the duel anticipate and may be said to impliedly consent to being fired on as well as firing. But there is no basis on which to infer that such was the intention of the two protagonists here, much less to conclude that the jurys verdict can only be consistent with such implicit intention on the part of Gnango and B. It is at least just as likely that neither agreed to be fired on and that both hoped that they would avoid that unpleasant eventuality by hitting the target with their own shot. Put shortly, when the only material that the jury had to go on was that there was a shoot out, it is, in my view, impossible to conclude that the finding of guilt can only be explained on the basis that it had been proved that there was a plan between Gnango and B to shoot and be shot at. Even if it were possible so to conclude, however, it does not follow that this amounted to an intention on the part of Gnango or B to assist or encourage each other to shoot. One might be alive to the very real risk that firing, if the target was not hit, would prompt return fire, but that is a significantly different thing from saying that this was encouragement to fire back. Being prepared to run the risk does not equate with encouraging an opponent to fire at you. Before, therefore, one could be confident that the jurys verdict meant that they had found it established that Gnango had intended to encourage B to fire, it would have been necessary for them to receive directions about that vital component of aiding and abetting. As the judge said, when ruling that he would not allow this to go to the jury as a possible basis of liability, on the evidence, the defendant fired at Bandana Man in the hope of killing him or causing him grievous bodily harm, frightening him, or arguably, in self defence. Being shot at was hardly likely to have been a desired outcome on the part of Gnango. Intending to encourage B to fire at him was even less likely. This point was made by Graham Virgo in an article, The Doctrine of Joint Enterprise Liability, on the Court of Appeals decision in this case which appeared in Archbold Review 2010 Issue 10, p 6: if the appellant had, by his act of shooting at the opponent, encouraged him to shoot back, if the appellant had foreseen that the opponent might shoot with the intention for murder and then the opponent's shot had accidentally hit and killed a third party, the appellant could be guilty of murder as an accessory by virtue of the transferred malice doctrine The only difficulty with this analysis relates to whether the appellant's shooting at the opponent could have been regarded as a positive encouragement to shoot back. Did the appellant want the opponent to shoot back at him or did he only want to kill or seriously injure the opponent? This is why the Court of Appeal's analysis of an intent to shoot and be shot at was relevant, but it was relevant to accessorial liability and not to the identification of a common purpose. On the facts it would have been difficult to establish such encouragement of the opponent to shoot back, but it is conceivable that such encouragement could be identified if the appellant intended some kind of duel. It is, of course, true that, in considering whether there was an intention to encourage, intent must be clearly distinguished from desire or motive. In a trilogy of cases, R v Moloney [1985] AC 905; R v Hancock [1986] AC 455; and R v Woollin [1999] 1 AC 82 the House of Lords held that intention is not restricted to consequences that are wanted or desired, but includes consequences which a defendant might not want to ensue, but which the jury find (a) are the virtually certain result of the defendants actions (barring some unforeseen intervention); and (b) are consequences which the defendant appreciated were virtually certain to occur. Before such an oblique intention could form the basis of a jurys verdict, of course, precise directions to this effect would have to be given. In the absence of a specific direction on Gnangos intention to encourage B to shoot at him, I do not consider that the verdict of the jury can be upheld on the basis that it was founded on their conclusion that he either had the requisite intention or that the virtually certain result of his firing at B was that he would return fire and that Gnango knew that this was virtually certain to occur. This is particularly so because there is an obvious explanation for the jurys verdict other than that they concluded that there had been a plan which included an intention on the part of Gnango and B to encourage the other to shoot at him. The judge had put to the jury that if they were satisfied that Gnango and B had participated by agreement in an affray, in the course of which Gnango foresaw that B might commit intentional grievous bodily harm or kill, he could be found guilty on that account. For the reasons given by Lord Phillips, Lord Judge and Lord Dyson, with which I agree, this form of parasitic accessory liability was not a basis on which the jury could convict. But it seems to be likely in the extreme that this is the basis on which they did convict. That being so, there was no occasion for them to consider whether the requisite intention on the part of Gnango to found a verdict of guilty on the basis of aiding and abetting was present. Nor can their verdict be considered to supply the necessary ingredients of liability on that basis. Liability as a joint principal It is important at the start of this discussion to recognise the clear distinction that must be drawn between the concepts of joint principal liability and joint enterprise. Joint principal offending is a species of primary liability. In Smith & Hogans Criminal Law (2011) 13th ed the following definition of joint principals is given: D1 and D2 are joint principal offenders where each does an act which is a cause of the actus reus. Unlike the position in a joint enterprise, no common purpose is required in order to render those who cause or contribute to a cause of the actus reus guilty as joint principals. What is required is that each must contribute by his own act to the commission of the offence with the necessary mens rea. By contrast, the doctrine of joint enterprise arises in situations where there are two offences, the first being that which has been jointly embarked on and the second the unplanned but foreseen offence committed by one of the participants alone. It is therefore par excellence a species of secondary liability as Hughes LJ explained in A, B, C and D (Joint Enterprise) [2010] EWCA Crim 1622; [2011] QB 841 where he said at para 37: It is necessary to remember that guilt based upon common enterprise is a form of secondary liability. The principle is that D2 is implicated in the guilt of D1 not only for the agreed crime A but for the further crime B which he foresaw D1 might commit in the course of A. This form of liability therefore arises only where D1 has committed the further crime B. The two models are therefore, if not mutually exclusive, at least conceptually distinct. To speak of joint principal offenders being involved in a joint enterprise is, at least potentially, misleading. The essential ingredient for joint principal offending is a contribution to the cause of the actus reus. If this is absent, the fact that there is a common purpose or a joint enterprise cannot transform the offending into joint principal liability. The actus reus in this case was the killing of Ms Pniewska. To be guilty of that offence as a joint principal, it would have to be shown that Gnango caused or contributed to a cause of her death. With great respect to the views of Lord Brown and Lord Clarke, it is not sufficient that he be shown to be engaged by agreement in violence designed to cause death or serious injury. The crucial question is whether he caused or contributed to the death of the victim. This is not an issue which was put to the jury and a conclusion as to whether Gnangos actions caused or contributed to Ms Pniewskas death cannot be inferred from their verdict. In any event, major difficulties of proof lie in the way of a case that Gnangos actions were an effective cause of the killing of the victim. As a thesis it depends on the proposition that B fired the fatal shot because he was caused to do so by Gnango firing on him. That proposition faces the immediate problem that B fired on Gnango first. It is, one might suppose, possible to assert that, notwithstanding this, Bs continued firing at Gnango was caused by the latters return of fire. But that claim encounters the difficulty that was identified by Lord Bingham in R v Kennedy No 2 [2008] 1 AC 269 where he said at para 14: The criminal law generally assumes the existence of free will. The law recognises certain exceptions, in the case of the young, those who for any reason are not fully responsible for their actions, and the vulnerable, and it acknowledges situations of duress and necessity, as also of deception and mistake. But, generally speaking, informed adults of sound mind are treated as autonomous beings able to make their own decisions how they will act Thus D is not to be treated as causing V to act in a certain way if V makes a voluntary and informed decision to act in that way rather than another. There are many classic statements to this effect. In his article Finis for Novus Actus? [1989] CLJ 391, 392, Professor Glanville Williams wrote: I may suggest reasons to you for doing something; I may urge you to do it, tell you it will pay you to do it, tell you it is your duty to do it. My efforts may perhaps make it very much more likely that you will do it. But they do not cause you to do it, in the sense in which one causes a kettle of water to boil by putting it on the stove. Your volitional act is regarded (within the doctrine of responsibility) as setting a new chain of causation going, irrespective of what has happened before. In chapter XII of Causation in the Law, 2nd ed (1985), p 326, Hart & Honor wrote: The free, deliberate, and informed intervention of a second person, who intends to exploit the situation created by the first, but is not acting in concert with him, is normally held to relieve the first actor of criminal responsibility. This statement was cited by the House with approval in R v Latif [1996] 1 WLR 104, 115. The principle is fundamental and not controversial. If B fired at Gnango first, it seems to me highly questionable (at least) that Gnangos returning fire caused B to fire again. The first shot surely betokened an intention on the part of B to fire at and to hit Gnango, irrespective of whether Gnango fired back. It might be said, to borrow the words of Professor Glanville Williams, that Gnangos firing on B made it much more likely that B would fire again, but that is not enough to show that B was caused to fire because of Gnangos shot. I do not consider, therefore, that Gnango can be guilty of the murder of Ms Pniewska as a joint principal. Conclusion I would dismiss the appeal. |
Under section 37 of the Solicitors Act 1974 the Law Society may make rules requiring solicitors to maintain professional indemnity insurance with authorised insurers and specifying the terms on which indemnity is to be available. As the House of Lords explained in Swain v Law Society [1983] AC 598, the power is intended to be for the protection of the public as well as the premium paying solicitor. The rules made by the Law Society require such insurance to satisfy certain Minimum Terms and Conditions (MTC). There is a prescribed minimum figure for which solicitors must be insured for any one claim, but clause 2.5 of the MTC permits the aggregation of claims in the following circumstances: The insurance may provide that, when considering what may be regarded as one Claim (a) one act or omission; all Claims against any one or more Insured arising from: (i) (ii) one series of related acts or omissions; (iii) matters or transactions; (iv) similar acts or omissions in a series of related matters or transactions the same act or omission in a series of related will be regarded as one Claim. Sub clauses (iii) and (iv) were added in 2005 in circumstances to which I will refer. The dispute in this appeal arises from sub clause (iv). More specifically, it is about the meaning of the expression related matters or transactions. The claims against the solicitors In 2013 two actions were begun in the Chancery Division (EWHC 13E01675 and EWHC 13C02077) against two now defunct firms of solicitors. One of the firms, the International Law Partnership LLP, was the successor in practice of the other, John Howell & Co. It is unnecessary for present purposes to distinguish between the two firms, and I will refer to them as the solicitors. The actions were brought by a total of 214 claimants. The claimants in 13E01675 were all investors in a project to develop holiday resorts on a plot near Izmir, Turkey, referred to as Peninsula Village. The claimants in 13C02077 were all investors in a similar project at Marrakech, Morocco. A certain number of investors in the Peninsula Village development subsequently transferred their investment to the Marrakech development because of planning delays. They have been referred to as the crossover investors. I will refer to the investors collectively as the investors or, where appropriate, as the Peninsula Village investors, the Marrakech investors or the crossover investors. The developers were a UK property company called Midas International Property Development Plc, which operated through subsidiary Midas companies for each development. The precise details of the companies interrelationship do not matter and I will refer to them as the developers. In 2004 they instructed the solicitors to devise a legal mechanism for the financing of foreign developments by private investors who would have security over the development land. The investments would take the form either of loans, at an attractive rate of interest, or of purchase of holiday properties. A trust was created for each development with the object of providing security for the investors. The solicitors were the initial trustees. The trust would either own or hold a charge over the development land as security for the amounts invested. The beneficiaries were the investors. The funds advanced by the investors would initially be held by the solicitors in an escrow account. They were not to be released to the developer unless and until the value of the assets held by the trust was sufficient to cover the investment to be protected, applying a cover test set out in the trust deed. As well as devising the scheme, the solicitors acted for the developers in relation to the individual investments. For each investment the solicitors would open a file, which would include a loan or purchase agreement between the investor and the developer and an escrow agreement between the investor, the developer and the solicitors. The developers signed an agreement for the purchase of the Peninsula Village site in April 2007. They did not enter into a similar agreement for the Marrakech site, but instead they entered into an agreement in November 2007 to buy the shares in the local company which owned it. The solicitors released tranches of Peninsula Village investment funds to the developers in April 2007 and October 2008. They released tranches of Marrakech investment funds on five occasions between November 2007 and March 2008. In May 2008 the Financial Services Authority prohibited the developers from receiving any further investment in relation to the developments. The developers were unable to complete either the purchase of the Peninsula Village site or the purchase of the shares in the company which owned the Marrakech site, and in November 2009 the developers were wound up. All the money in the escrow accounts had been paid out. The investors claims against the solicitors were put in various ways, alleging breach of contract, breach of trust, breach of fiduciary duty, misrepresentation and negligence, but the essence was that the solicitors failed properly to apply the cover test before releasing funds to the developers, with the result that the funds were released without adequate security. The claims were due to be tried in the next few months. The insurance action The solicitors had professional indemnity insurance with the appellant (the insurers) on terms corresponding with the MTC. The insurers liability is limited to 3m in respect of each claim. The investors claims in total amount to over 10m. In March 2014 the insurers issued proceedings against the solicitors in the Commercial Court for a declaration that the investors claims in the two Chancery Division actions are to be considered as a single claim under the MTC. The present trustees of the Peninsula Village and Marrakech trusts (the trustees) applied successfully to be joined in the proceedings as representatives of all the beneficiaries under each trust. The insurers case is that the investors claims against the solicitors all arise from similar acts or omissions in a series of related matters or transactions within the meaning of clause 2.5(a)(iv) and therefore there is an overall limit of indemnity of 3m. The trustees primary case is that none of the investors claims fall to be aggregated with those of any other investor. If that argument fails, their secondary case is that the Peninsula Village claims and the Marrakech claims cannot be aggregated with one another and so there are two available pots of indemnity. It was also the insurers alternative case that the claims could be aggregated by reference to the two developments. The case was tried by Teare J, whose judgment is reported at [2016] Lloyds Rep IR 147. He accepted that all the claims arose from similar acts or omissions, and that finding is not challenged in this court, but he rejected the argument that they were in a series of related matters or transactions. He interpreted those words as referring to transactions which were related in the sense that, by reason of their terms, they were conditional or dependent on each other. Since the transactions entered into between the developers and each investor were not mutually dependent, the claims of each investor did not fall to be aggregated with one another. The action was therefore dismissed. Teare J gave permission to appeal. The Court of Appeal ordered an expedited hearing, confined to issues of principle. The parties agreed a list of issues, the first of which was what is the true construction of the words in a series of related matters or transactions? The judgment of the Court of Appeal (Longmore, Kitchin and Vos LJJ) is reported at [2016] Lloyds Rep IR 289; [2017] 1 All ER 143. The court concluded that Teare J went too far in saying that the transactions had to be dependent on each other. It accepted a submission made by Mr David Edwards QC, appearing for the Law Society as an intervener, that there must be an intrinsic relationship between the transactions rather than a relationship with some outside connecting factor, even if that factor was common to the transactions. If the relevant transaction was the payment of money out of an escrow account, which should not have been paid out of that account, what would be intrinsic would depend on the circumstances of that payment. The court summarised its interpretation, at para 33, by saying that the true construction of the words in a series of matters or transactions is that the matters or transactions have to have an intrinsic relationship with each other, not an extrinsic relationship with a third factor. It allowed the appeal and remitted the action to the Commercial Court to determine in accordance with the guidance in its judgment. The insurers criticise the Court of Appeal for introducing an unwarranted qualification into the concept of related matters or transactions. Those words, they say, are unspecific as to the nature of the relationship, because the clause may fall to be applied in a huge variety of factual situations not capable of prediction; that its application requires an exercise of judgment tailored to assessing whether on the particular facts there is a substantial connection; and that it is wrong for the court to try to create a greater degree of certainty than the natural meaning of the words allows. The trustees and the Law Society support the Court of Appeals interpretation. Analysis Aggregation clauses have been a long standing feature of professional indemnity policies, and there have been many variants. Because such clauses have the capacity in some cases to operate in favour of the insurer (by capping the total sum insured), and in other cases to operate in favour of the insured (by capping the amount deductible per claim), they are not to be approached with a predisposition towards either a broad or a narrow interpretation. There is a further reason for adopting a neutral approach in the interpretation of the MTC. The Law Society is not in a position comparable to an insurer proffering an insurance policy. It is a regulator, setting the minimum terms of cover which firms of solicitors must maintain. In doing so it has to balance the need for reasonable protection of the public with considerations of the cost and availability of obtaining professional indemnity insurance. Clause 2.5 of the MTC authorises the aggregation of more than one claim when each claim arises from acts or omissions falling within any one of sub clauses (a)(i) to (iv). Sub clause (i) (one act or omission) requires no further explanation. Sub clause (ii) (one series of related acts or omissions) was interpreted in Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] 4 All ER 43 by Lord Hoffmann as confined to acts or omissions which together resulted in each of the claims (para 27). Lord Hobhouse was prepared to go somewhat further by including the scenario of the misselling of a pension scheme, by means of the same misleading document, to a succession of people who brought a series of claims. The other three judges expressed no view on the point of difference between Lords Hoffmann and Hobhouse. In the light of that decision, and in response to market pressures by professional indemnity insurers, the Law Society amended clause 2.5 by adding sub clauses (iii) and (iv). But the point of difference between Lords Hoffmann and Hobhouse may not have been rendered academic, as I will explain. The additional sub clauses cover multiple claims arising from the same act or omission (sub clause (iii)), or similar acts or omissions (sub clause (iv)), subject to the important limitation that the setting of the act(s) or omission(s) giving rise to the claims was a series of related matters or transactions. Looking at the matter broadly, it is easy to see the reason for such a limitation. If insurers were permitted to aggregate all claims arising from repeated similar negligent acts or omissions arising in different settings, the scope for aggregation would be so wide as to be almost limitless. By requiring that the acts or omissions should have been in a series of related transactions, the scope for aggregation is confined to circumstances in which there is a real connection between the transactions in which they occurred, rather than merely a similarity in the type of act or omission. In the Lloyds TSB case emphasis was put on the importance of the particular language used in any aggregation clause to specify the factors permitting different claims to be treated as one. Individual words or phrases may not carry the same meaning in different clauses of different policies. Longmore LJ rightly said in the present case, at para 27, that the word related in the phrase a series of related matters or transactions (with which we are presently concerned) does not bear the same connotation as in the phrase related series of acts or omissions (with which the House of Lords was concerned in the Lloyds TSB case). Mr Edelman QC for the insurers accepted that for matters or transactions fairly to be described as related, there must be some identifiable substantive link or connection between them beyond mere similarity. But he criticised the Court of Appeals interpretation of the words a series of related matters or transactions as additionally requiring the matters or transactions to have an intrinsic relationship with each other, not an extrinsic relationship with a third factor. With respect to the Court of Appeal, I do not consider its formulation to be necessary or satisfactory. My difficulty is with the word intrinsic itself and what it means in this context. It is possible to describe things or people as having certain intrinsic qualities or characteristics, but it is a more elusive term when used as a descriptor of a relationship between two transactions. Take Lord Hobhouses example of a pension scheme missold to a group of investors in the same venture by use of the same document. On one interpretation of the Court of Appeals formula it could be said that there was no intrinsic relationship between the matters giving rise to the investors claims, because their only connection was an extrinsic relationship with the third party who sold the pension to all of them. If so, the addition of sub clauses (iii) and (iv) will not have helped to resolve the point of difference between Lords Hoffmann and Hobhouse; and if Lord Hoffmanns view is to be preferred, there would be no right to aggregate in such a case. It is hard to suppose that the Law Society so intended when it introduced the new sub clauses. Sub clause (iv) separates the requirement that the acts or omissions giving rise to the claims should be similar and the requirement that they were in a series of matters or transactions which were related. Each limb must be satisfied for the sub clause to apply. Use of the word related implies that there must be some inter connection between the matters or transactions, or in other words that they must in some way fit together, but the Law Society saw fit after market negotiation not to circumscribe the phrase a series of related matters or transactions by any particular criterion or set of criteria. The absence of further prescription is not particularly surprising, considering the very wide range of transactions which may involve solicitors providing professional services. Determining whether transactions are related is therefore an acutely fact sensitive exercise. To borrow the language of Rix LJ in Scott v Copenhagen Reinsurance Co (UK) Ltd [2003] Lloyds Rep IR 696, para 81, it involves an exercise of judgment, not a reformulation of the clause to be construed and applied. In considering the application of the phrase a series of related matters or transactions it is necessary to begin by identifying the (matters or) transactions. The Court of Appeal appears to have taken a narrow view of the transactions when it spoke, at para 19, of the relevant transaction being the payment of money out of an escrow account which should not have been paid out of that account. That was an act giving rise to a claim, but the act occurred in the course of a wider transaction. The transaction involved an investment in a particular development scheme under a contractual arrangement, of which the trust deed and escrow agreement were part and parcel, being the means designed to provide the investor with security for his investment. The transaction was principally bilateral, but it had an important trilateral component by reason of the solicitors role both as escrow agents and as trustees, and the trust deed created a multilateral element by reason of the investors being co beneficiaries. The transactions entered into by the Peninsula Village investors were connected in significant ways, and likewise the transactions entered into by the Marrakech investors. The members of each group were investing in a common development, for which the monies advanced by them were intended, in combination, to provide the developers with the necessary capital. Notwithstanding individual variations, they were all participants in what was in overall terms a standard scheme. They were co beneficiaries under a common trust. There was some debate about whether the question of the application of the aggregation clause was to be viewed from the perspective of the investors or the solicitors. The answer is that the application of the clause is to be judged not by looking at the transactions exclusively from the viewpoint of one party or another party, but objectively taking the transactions in the round. Viewed objectively, the connecting factors identified above drive me to the firm conclusion that the claims of each group of investors arise from acts or omissions in a series of related transactions. The transactions fitted together in that they shared the common underlying objective of the execution of a particular development project, and they also fitted together legally through the trusts under which the investors were co beneficiaries. The case for aggregating the claims of the Peninsula Village investors with those of the Marrakech investors is much weaker. They bear a striking similarity, but that is not enough. Once again, the proper starting point is to identify the relevant matters or transactions: see para 23 above. On the basis of that characterisation of the transactions, it is difficult to see in what way the transactions entered into by the members of the Peninsula Village group of investors were related to the transactions entered into by the members of the Marrakech group of investors, leaving aside for the moment the particular position of the crossover investors. Although the development companies were related, being members of the Midas group, and the legal structure of the development projects was similar, the development projects were separate and unconnected. They related to different sites, and the different groups of investors were protected by different deeds of trust over different assets. Accordingly, on the facts as they currently appear, the insurers have no right to aggregate the claims of the Peninsula Village investors with those of the Marrakech investors. In saying on the facts as they currently appear, I am conscious that although I have taken the facts from the agreed statement of facts and issues and the factual description in Teare Js judgment, which has not been challenged, the parties did not address the court fully on the facts and wished to reserve the opportunity of analysing them in greater detail if the case is remitted to the Commercial Court, as the Court of Appeal ordered. If any party wishes to argue that on fuller analysis of the facts, the characterisation of the transactions in this judgment is somehow defective, they should have that opportunity. Understandably, the parties did not go into detail about the position of the crossover investors, but each crossover investor entered into a new Marrakesh loan agreement and a new escrow agreement. I do not presently see that the fact that some investors agreed to switch their funds from one investment to the other has any bearing on the position of those who did not, but I do see that entering into one investment and then switching to another would obviously be related transactions. On the facts as they currently appear, the logical analysis would seem to be that any claim made by crossover investors in respect of the first transaction will fall to be aggregated with the claims of other members of that group of investors, and that any claim made by them in respect of the second transaction will fall to be aggregated with their first claim, but we heard no argument on the point. Disposal I would allow the appeal and either remit the case to the Commercial Court to determine in accordance with this judgment or order its transfer to the Chancery Division so that any outstanding matters can be dealt with by the judge who tries the investors claims against the solicitors. I see practical advantages in the second course but would invite the parties written submissions within 28 days. The trustees had a cross appeal against the Court of Appeals order on costs, but that is no longer relevant. The parties submissions on costs should also be made within 28 days. |
The specific issue raised by this appeal is whether, following receipt of a statutory notice from an inspector of taxes to produce documents in connection with its tax affairs, a company is entitled to refuse to comply on the ground that the documents are covered by legal advice privilege (LAP), in a case where the legal advice was given by accountants in relation to a tax avoidance scheme. The more general question raised by this issue is whether LAP extends, or should be extended, so as to apply to legal advice given by someone other than a member of the legal profession, and, if so, how far LAP thereby extends, or should be extended. The statutory provisions applicable in this case The statutory provisions in force at the time during which the events giving rise to the present proceedings took place were in the Taxes Management Act 1970 (TMA). All references in this judgment to sections are to sections of that Act, unless the contrary is stated. Section 20(1)(a) provided that an inspector of taxes may by notice in writing require a person to deliver to him such documents as (in the inspectors reasonable opinion) contain, or may contain, information relevant to (i) any tax liability to which that person is or may be subject, or (ii) the amount of any such liability. Section 20(3) extended this power to require any other person to deliver or make available such documents to an inspector. By virtue of section 20(7), an inspector needed the consent of the special or general commissioners before serving a notice under either subsection. It was established by R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] UKHL 21, [2003] 1 AC 563 (Morgan Grenfell) that the provisions of section 20 could not be invoked to force anyone to produce documents to which LAP attached. Lord Hoffmann at paras 7 and 9 said that a statute could only remove such a fundamental human right if it expressly stated that it was doing so, or if the intention appear[ed] by necessary implication, and, as Lord Hobhouse emphasised at para 45, [a] necessary implication is a matter of express language and logic not interpretation. Section 20A, inserted by the Finance Act 1976 (the 1976 Act), empowered an inspector to call for documents to be produced by a person who had stood in relation to others as a tax accountant and who had been convicted of an offence relating to tax or had had a penalty imposed on him under section 99. Section 20D(2), also inserted by the 1976 Act, explained that a person stands in relation to another as tax accountant when he assists the other in the preparation of returns or accounts to be made or delivered by the other for any purpose of tax . Section 20B was also inserted by the 1976 Act (and was amended in 1988, 1989 and 1990). Section 20B(1) required an inspector, before serving a notice under section 20(1) or (3) on any person, to give that person a reasonable opportunity to deliver (or make available) the documents in question . Section 20B also included the following subsections: (8) A notice under section 20(3) or section 20A(1) does not oblige a barrister, advocate or a solicitor to deliver or make available, without his clients consent, any document with respect to which a claim to professional privilege could be maintained. (9) Subject to subsection (11) below, a notice under section 20(3) (a) does not oblige a person who has been appointed as an auditor for the purposes of any enactment to deliver or make available documents which are his property and were created by him or on his behalf for or in connection with the performance of his functions under that enactment, and (b) does not oblige a tax adviser to deliver or make available documents which are his property and consist of relevant communications. (10) In subsection (9) above relevant communications means communications between the tax adviser and (a) a person in relation to whose tax affairs he has been appointed, or (b) any other tax adviser of such a person, the purpose of which is the giving or obtaining of advice about any of those tax affairs; and in subsection (9) above and this subsection tax adviser means a person appointed to give advice about the tax affairs of another person (whether appointed directly by that other person or by another tax adviser of his). (11) subsection (9) above shall not have effect in relation to any document which contains information explaining any information, return, accounts or other document which the person to whom the notice is given has, as tax accountant, assisted any client of his in preparing for, or delivering to, the inspector or the Board. Section 20BA was inserted by the Finance Act 2000 (the 2000 Act), and it extended the power granted by section 20 to make an order for the delivery of documents by any person who appears to have such documents in his possession or power. Paragraph 5(1) of Schedule 1AA, also inserted by the 2000 Act, exempted from the ambit of section 20BA items subject to legal privilege, which were defined in para 5(2) as: (a) communications between a professional legal adviser and his client or any person representing his client made in connection with the giving of legal advice to the client; (b) communications between a professional legal adviser and his client or any person representing his client or between such an adviser or his client or any such representative and any other person made in connection with or in contemplation of legal proceedings and for the purposes of such proceedings; and (c) items enclosed with or referred to in such communications and made (i) in connection with the giving of legal advice . These various provisions of TMA have now been replaced by provisions contained in section 113 of, and Schedule 36 to, the Finance Act 2008 (the 2008 Act). While there are differences between the regime in TMA and that in the 2008 Act, they are of no significance for present purposes. Paragraph 23 of Schedule 36 to the 2008 Act, which effectively replaces section 20B(8), provides that: (1) An information notice does not require a person (a) to provide privileged information, or (b) to produce any part of a document that is privileged. (2) For the purpose of this Schedule, information or a document is privileged if it is information or a document in respect of which a claim to legal professional privilege, or (in Scotland) to confidentiality of communications as between client and professional legal adviser, could be maintained in legal proceedings. the In 2004, international And paragraphs 24 to 26 of Schedule 36 to the 2008 Act contain provisions relating to communications with auditors and with tax advisers, which are similar to those in subsections (9) to (11) of section 20B. The factual and procedural background to this appeal firm of chartered accountants, PricewaterhouseCoopers (PwC), devised a marketed tax avoidance scheme (the scheme). In accordance with the requirements of Part 7 of the Finance Act 2004, PwC disclosed the scheme to the Commissioners for Inland Revenue, or Her Majestys Revenue and Customs (HMRC) as they became a year later and as I will refer to them. At about that time the Prudential group of companies instructed PwC to advise them in connection with certain overseas holdings, and PwC identified that the scheme could be adapted for their benefit. Thereafter the Prudential group implemented the scheme, which involved a series of transactions (the Transactions). The details of the scheme and the Transactions do not matter for present purposes. It is enough to say that the aim of the scheme was to give rise to a substantial tax deduction in Prudential (Gibraltar) Ltd, a subsidiary company of Prudential plc, which could then be set off against the profits of that company, which profits were ordinarily chargeable to corporation tax in this country. Mr Pandolfo, the inspector of taxes responsible for this aspect of the Prudential groups tax liabilities, considered it necessary to look into the details of the Transactions (for reasons which are not challenged). To that end, he served notices under section 20B(1) on Prudential (Gibraltar) Ltd and Prudential plc (together Prudential) giving them the opportunity to make available specified classes of documents in relation to the Transactions prior to his serving notices under section 20(1) and (3). Prudential disclosed many of the documents requested by Mr Pandolfo, but refused to disclose certain documents (the disputed documents) on the ground that Prudential was entitled to claim legal advice privilege in respect of them. Mr Pandolfo considered that questions were raised by the documents which were disclosed, and he sought authorisation from the Special Commissioners under section 20(7) to require Prudential to disclose the disputed documents. Such authorisation was given, and, on 16 November 2007, Mr Pandolfo served notices under section 20(1) and (3) on Prudential (Gibraltar) Ltd and Prudential plc respectively, requiring disclosure of the disputed documents. Prudential then issued the present application for judicial review challenging the validity of those notices on the ground that they sought disclosure of documents which related to the seeking (by Prudential) and the giving (by PwC) of legal advice in connection with the Transactions, which were therefore said to be excluded from the disclosure requirements of section 20 by virtue of LAP, in accordance with the decision of the House of Lords in Morgan Grenfell. That application came before Charles J, who rejected it on the ground that, although the disputed documents would have attracted LAP (and would have been thereby excluded from the disclosure requirements of section 20) if the advice in question had been sought from, and provided by, a member of the legal profession, no such privilege extended to advice, even if identical in nature, provided by a professional person who was not a qualified lawyer. His decision, [2009] EWHC 2494 (Admin), was upheld, substantially for the same reasons, by the Court of Appeal (Mummery, Lloyd and Stanley Burnton LJJ), [2010] EWCA Civ 1094. (Both decisions are now reported at [2011] QB 669.) Prudential now appeal to this court. Legal advice privilege Where legal professional privilege (LPP) attaches to a communication between a legal adviser and a client, the client is entitled to object to any third party seeing the communication for any purpose, unless (i) the client has agreed or waived its right, (ii) a statute provides that the privilege can be overridden, (iii) the document concerned was prepared for, or in connection with, a nefarious purpose, or (iv) one of a few miscellaneous exceptions applies (eg in a probate case where the validity of a will is contested). As Lord Carswell explained in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 (Three Rivers), para 105, LPP is a single integral privilege, whose sub heads are legal advice privilege and litigation privilege. This case is concerned with the first of those subheads, legal advice privilege (LAP). In summary terms, as is common ground on this appeal, LAP applies to all communications passing between a client and its lawyers, acting in their professional capacity, in connection with the provision of legal advice, i.e. advice which relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law Three Rivers (No 6), [2005] 1 AC 610, para 38, per Lord Scott. The development and rationale of LAP are explained in terms which I could not begin to improve on by Lord Sumption in paras 115 to 121 below. In modern times, LPP, and more particularly LAP, have been fully considered and refined in a number of authoritative decisions, which speak for themselves. Particularly as they throw no direct light on the issue thrown up by this appeal, it is only necessary to identify three points which emerge from them before turning to the issue itself. First, LAP exists to ensure that there is what Justice Rehnquist referred to in the Supreme Court of the United States as full and frank communication between attorneys and their clients, which promote[s] broader public interests in the observance of law and administration of justice Upjohn Co v United States (1981) 449 US 383, 389, quoted by Lord Scott in Three Rivers (No 6) at para 31. As Lord Scott went on to explain at para 34, the principle that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers legal skills , should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else is founded upon the rule of law. Secondly, LAP exists solely for the benefit of the client. As Bingham LJ said in Ventouris v Mountain [1991] 1 WLR 607, 611, the expression legal professional privilege is unhappy in so far as it suggests that the privilege is that of the legal profession, when it is the client who enjoys the privilege. Thus, as Lord Hoffmann pointed out in Morgan Grenfell at para 37, [i]f the client chooses to divulge the information, there is nothing the lawyer can do about it. Thirdly, LAP is a common law principle, which was developed by the judges in cases going back at least to the 16th century see Berd v Lovelace (1577) Cary 62, which, together with subsequent cases, is discussed in the opinion of Lord Taylor of Gosforth CJ in R v Derby Magistrates Court, Ex p B [1996] AC 487, 504 505. As Lloyd LJ said in the Court of Appeal at [2011] QB 669, 709, para 30, LAP and its rationale was probably first coherently characterised in a judgment by Lord Brougham LC in Greenough v Gaskell (1833) 1 My & K 98, 102 103. (Litigation privilege seems to have developed rather later see per Lord Carswell in Three Rivers (No 6), para 96.) The issue on this appeal This appeal is concerned with the breadth of LAP, in the sense of the types of advisers with whom communications can attract LAP. The particular issue on this appeal is whether LAP should attach to communications passing between chartered accountants and their client in connection with expert tax advice given by the accountants to their client, in circumstances where there is no doubt that LAP would attach to those communications if the same advice was being given to the same client by a member of the legal profession. The case advanced by Lord Pannick QC for Prudential, supported by Ms Patricia Robertson QC for the Institute of Chartered Accountants for England and Wales, was that this court should hold that LAP does attach to such communications. This case is based on the proposition that LAP is a common law right created by the judges, which should be applied, and if necessary extended, so as to accord with the principles which underlie and justify the right. More particularly, it is said that, given that LAP is justified by the rule of law, and that it exists for the benefit of a client who seeks and receives legal advice, for instance on its tax affairs, there is no principled basis upon which it can be restricted to cases where the adviser happens to be a member of the legal professions, as opposed to a qualified accountant. This point was said to be reinforced by reference to relatively modern developments, in particular the fact that the great majority of legal advice on taxation matters is now given by accountants rather than by lawyers. In addition reliance was placed on (i) section 330 of the Proceeds of Crime Act 2002 (POCA), (ii) the Human Rights Act 1998 (the HRA), and (iii) the Legal Services Act 2007 (the 2007 Act). The contrary case was advanced by Mr James Eadie QC for HMRC, supported by Sir Sydney Kentridge QC for the Law Society, Mr Bankim Thanki QC for the Bar Council, and Mr Michael Edenborough QC for AIPPI UK. Their case was that it has been universally assumed that LAP is restricted to advice given by lawyers, and the court should not extend it to accountants in connection with tax advice for a number of reasons. Those reasons, in summary form, were that (i) the effect of extending LAP would involve a potentially nuanced policy decision, with unpredictable and potentially wide ranging public and forensic consequences, which is therefore best left to Parliament, and (ii) Parliament has legislated on the assumption that LAP is restricted to advice given by lawyers, and has further considered and rejected a proposal to extend LAP to tax advisers. It was also argued that there is a good principled reason in the modern world to restrict LAP to advice given by lawyers. The ambit of LAP as it is generally understood There is room for argument whether, by allowing Prudentials appeal, we would be extending the breadth of LAP or would simply be identifying the breadth of LAP. On the former view we would be changing the common law; on the latter view, we would be declaring what the common law always has been. I do not think it necessary to address this issue, as the important point for present purposes is that it is universally believed that LAP only applies to communications in connection with advice given by members of the legal profession, which, in modern English and Welsh terms, includes members of the Bar, the Law Society, and the Chartered Institute of Legal Executives (CILEX) (and, by extension, foreign lawyers). That is plain from a number of sources, which speak with a consistent voice. First, there are clear judicial statements of high authority to that effect over the past century and more. Sir George Jessel MR referred to LAP as being confined to communications between a client and his legal adviser, that is, between solicitor and client or barrister and client in Slade v Tucker (1880) 14 Ch D 824, 828, a view he repeated in Wheeler v Le Marchant (1881) 17 Ch D 675, 681 682. In Minter v Priest [1930] AC 558, 581, Lord Atkin said that a [professional] communication pass[ing] for the purpose of getting legal advice must be deemed confidential, and added that it should be understood that the profession is the legal profession. More recently, the view that LAP is confined to advice from lawyers was repeated by Lord Denning MR in Attorney General v Mulholland [1963] 2 QB 477, 489 490, in a passage approved by Lord Edmund Davies in D v National Society for the Prevention of Cruelty to Children [1978] AC 171, 243 244. Secondly, in three more recent cases, on the basis that LAP is confined to advice given by lawyers, the courts have refused to extend LAP to legal advice given by a trade mark agent, a patent agent, or a personnel consultant see, respectively, Dormeuil Trade Mark [1983] RPC 131 (Nourse J), Wilden Pump Engineering Co v Fusfeld [1985] FSR 159 (CA, Waller and Dillon LJJ), and New Victoria Hospital v Ryan [1993] ICR 201 (EAT, Tucker J). Thirdly, and unsurprisingly, the current editions of textbooks on privilege and evidence state that LAP is limited to communications in connection with obtaining legal advice from qualified lawyers see the summary given by Charles J at first instance in this case at [2011] QB 669, 683, para 45(5). Fourthly, more than one significant official report has expressed the view, and proceeded on the basis, that LAP is restricted to legal advice given by a professional lawyer. Thus, The 16th Report of the Law Reform Committee (Privilege in Civil Proceedings) (1967) (Cmnd 3472) stated at para 24, in relation to LAP that [t]he category of professional legal advisers is confined to barristers and solicitors; the committee included Lord Pearson, Diplock LJ, Winn LJ, Megarry J and Roger Parker QC (later Parker LJ). To the same effect, Chapter 26 of the 1983 Report of the Committee on Enforcement Powers of the Revenue Departments, Cmnd 8822 (the Keith Report), prepared by a committee presided over by Lord Keith of Kinkel, proceeds on the clear basis that LAP was limited to communications with a clients lawyers and did not extend to communications with their tax accountants, even where these communications involve the seeking and giving of legal advice. Fifthly, in 2003, the Government (by which I mean the executive as opposed to Parliament) rejected a proposal, which had been made in 2001, by the Director General of Fair Trading that legal advice given by accountants should be subject to the same privilege as that conferred upon advice given by professional lawyers. This shows that both the Director General and the Government clearly proceeded in the belief that legal advice was not protected by LAP unless given by a member of the legal profession. Sixthly, and more importantly, Parliament has legislated in a way which plainly implies that it assumes that LAP is limited to advice given by lawyers. Thus, there are the statutory extensions of LAP to patent attorneys, to trade mark agents and to licensed conveyancers see respectively section 280 of the Copyright, Designs and Patents Act 1988, section 87 of the Trade Mark Act 1994 (as amended by the Legal Services Act 2007), and section 33 of the Administration of Justice Act 1985. Then there are the provisions of section 20B of TMA itself: the terms in which subsection (8) is expressed, particularly when one looks at subsections (3) and (9), plainly show that Parliament believed that there was a difference in the tax advice given by a barrister, advocate or a solicitor, as opposed to the more generic tax adviser. Seventhly, the substantial re enactment of the relevant provisions of TMA in paragraphs 23 to 26 of Part 4 of Schedule 36 to the Finance Act 2008 were considered in the usual way by the House of Commons Public Bill Committee. In their deliberations on 10 June 2008, the Committee actually discussed extending LAP to tax advice given by accountants through the medium of an amendment to what is now paragraph 23 of Schedule 36 to the 2008 Act see the Hansard report of this discussion, (HC Debates), cols 606 608. No details were given to us as to what happened following those discussions, but what is clear is that Parliament none the less decided in Schedule 36 to the 2008 Act to maintain the difference between (i) a person with whom communications attracted legal professional privilege (in England and Wales, and a professional legal adviser in Scotland) in paragraph 23, and (ii) a tax adviser in paragraph 25. Although it could be said to beg the question which we have to decide, a combination of the general understanding as to the breadth of LPP and the absence of any suggestion of a Parliamentary intention to depart from TMA in this connection, leads to the clear conclusion, in my view, that paragraph 23 was intended to be limited to professional lawyers. The implications of allowing this appeal If we were to allow this appeal, we would therefore be extending LAP beyond what are currently, and have for a long time been understood to be, its limits. Indeed, we would be extending it considerably, as the issue cannot simply be treated as limited to the question whether tax advice given by expert accountants is covered by LAP. While that is the specific question between the parties, it is just a subset, no doubt an important subset, of a much larger set. To concentrate on tax advice given by accountants would be wrong, because it would ineluctably follow from our accepting Prudentials argument that legal advice given by some other professional people would also be covered. In that connection, Sir Sydney pointed out in argument that there have been some variations in the way in which Prudential has formulated its case as to the precise breadth of LAP. In my view, the most powerful formulation is that favoured by Lord Sumption, namely that LAP is confined to cases where legal advice is given by a professional person whose profession ordinarily includes the giving of legal advice. It is the most powerful formulation because it is the simplest and the most consistent with the basis on which LAP has been justified by the courts. The case for allowing this appeal There is no doubt that the argument for allowing this appeal is a strong one, at least in terms of principle, as anyone reading Lord Sumptions judgment can appreciate. LAP is based on the need to ensure that a person can seek and obtain legal advice with candour and full disclosure, secure in the knowledge that the communications involved can never be used against that person. And LAP is conferred for the benefit of the client, and may only be waived by the client; it does not serve to protect the legal profession. In light of this, it is hard to see why, as a matter of pure logic, that privilege should be restricted to communications with legal advisers who happen to be qualified lawyers, as opposed to communications with other professional people with a qualification or experience which enables them to give expert legal advice in a particular field. This is especially true at the present time when, as Lord Pannick pointed out, almost all qualified lawyers specialise in limited fields, and when the provision of legal advice is no longer a service limited to professional lawyers, as (in terms of practice) is demonstrated by the specific example of tax advice, and as (in terms of law) is illustrated by the fact that the provision of legal advice is not a reserved legal activity under the 2007 Act. As Charles J said at [2011] QB 669, 691, paras 64 65: [there is] a compelling, and indeed unanswerable, case that in modern conditions accountants have the expertise to advise on tax law and it is firms of accountants, rather than firms of solicitors, who do give such advice and represent clients in disputes with the revenue on many aspects of their tax affairs. Further many firms of accountants now employ lawyers to advise on tax and what they, and qualified accountants in the same firm, do in this context is the same. So, in my view, [it has been] shown that accountants do what lawyers are described as doing in the cases that establish [LAP]. This has been the case for some time and in my view an equivalent position can be said to exist in respect of other professions. The principled arguments for restricting LAP to lawyers advice The principled arguments for restricting LAP to communications with professional lawyers which have been put forward appear to me to be weak, but not wholly devoid of force. They are based on (i) the close connection between members of the legal profession and the court, (ii) historical observations and relics (albeit important relics), such as the involvement of the court in disciplinary procedures of solicitors and barristers, (iii) the duties to the court owed by members of their profession, and (iv) the view that solicitors and barristers are in a special position, in that they are held by the courts to higher standards than members of other professions. At any rate, to modern eyes, it is hard to see why the connection between lawyers and the courts, and in particular the reliance which judges place upon lawyers to act properly, is a good reason in principle for limiting LAP to the legal profession. One can see why the argument might have carried real weight 150 years ago, but for the point to convince today would require something more than such a general statement. Judicial and other observations from the 19th century are of little use, as we are now in a world where a great deal of legal advice is tendered by professional people other than members of the legal profession, as is recognised by the fact, mentioned above, that giving legal advice is not a reserved legal activity under the 2007 Act. The appeal functions of the judges in the disciplinary procedures of the legal profession do not seem to me, at least in general, to be much greater than their judicial review functions in relation to the disciplinary procedures of other professions. It is also true that solicitors and barristers owe a formal duty to the court, but (i) that duty only would be relevant in connection with litigation, whereas LAP goes much wider, and (ii) every professional person involved in litigation can fairly be said to have a duty to the court. Such principled justification as there is for the restriction of LAP to lawyers seems to me to be further undermined by the extension of LAP which the court has approved to all foreign lawyers, without (it would seem) regard to their particular national standards, regulations or rules with regard to privilege. That extension appears to originate from Lawrence v Campbell (1859) 4 Drew 485 (Sir Richard Kindersley V C), and was approved and applied in Macfarlan v Rolt (1872) LR 14 Eq 580 (Sir John Wickens V C), In re Duncan, decd [1968] P 306 (Ormrod J), and Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529, 536 (Templeman LJ). (I do not consider, however, that Prudentials argument is assisted by the fact that advice from employed lawyers attracts LAP: that seems entirely consistent with the notion that LAP applies where legal advice is being sought from or given by members of the legal profession). In the light of these points, particularly as it is entirely a creation of the common law for the benefit of individuals or companies seeking and obtaining legal advice, I accept that there is a strong case in terms of logic for allowing this appeal. Conclusion: introductory While I accept that it would accord with its underlying logic to extend LAP as Prudential contend, [t]he life of the [common] law has not been logic, as Oliver Wendell Holmes, Jr observed on the first page of The Common Law (1881). As he went on to say, the life of the common law has been experience. The common law has been created and developed by judges over more than eight centuries, and, as Holmes also observed, [i]n order to know what it is, we must know what it has been . It is therefore inevitable that the common law will include some rules which, while entirely valid today, have limitations or other aspects which are only explicable by reference to historical practices or beliefs. LAP, as it is currently understood, is such a rule. There is no doubt that the justification for LAP is as valid in the modern world as it was when it was first developed by the courts. However, its restriction to advice from members of the legal profession, while it can fairly be said to be illogical in the modern world, is explicable by reference to history. In particular, until the last century, (i) it was very rare for any professional person other than a lawyer to give legal advice, and (ii) the connection between the legal profession and the courts was thought to be of greater significance than it is now. Where a common law rule is valid in the modern world, but it has an aspect or limitation which appears to be outmoded, it is by no means always right for the courts to modify the aspect or remove the limitation. In any such case, the court must consider whether the implications of the proposed modification or removal are such that it would be more appropriate to leave the matter to Parliament. The court must also consider whether the aspect or limitation in question has led to problems, and whether it has been assumed, approved or disapproved impliedly or expressly by Parliament. And if Parliament has unequivocally endorsed the aspect or limitation then the courts should not, of course, alter it. Subject to that last qualification, the question whether to remove or modify the aspect of the rule in question must inevitably be considered on a case by case basis. Where the court decides that it is inappropriate to remove or modify, it is, in my view, wrong to characterise the result as unprincipled: in a common law system, no well understood rule or aspect of a rule can sensibly be so described. Turning to this case, then, despite the powerful arguments advanced to the contrary, and in agreement with the clear and careful judgments below, I consider that we should not extend LAP to communications in connection with advice given by professional people other than lawyers, even where that advice is legal advice which that professional person is qualified to give. I reach this conclusion for three connected reasons, which together persuade me that what we are being asked to do by Prudential is a matter for Parliament rather than for the judiciary. First, the consequences of allowing Prudentials appeal are hard to assess and would be likely to lead to what is currently a clear and well understood principle becoming an unclear principle, involving uncertainty. Secondly, the question whether LAP should be extended to cases where legal advice is given from professional people who are not qualified lawyers raises questions of policy which should be left to Parliament. Thirdly, Parliament has enacted legislation relating to LAP, which, at the very least, suggests that it would be inappropriate for the court to extend the law on LAP as proposed by Prudential. Conclusion: uncertainties and unknown consequences At the moment, although there are inevitably still arguments about whether a party can rely on LAP on particular facts, these arguments are very much at the margins (as Lord Scott recognised in Three Rivers (No 6) at para 43). That is because the presently accepted state of the law on LAP is clear to any professional advisers who need to understand it, and relatively easy to explain to their clients who are meant to benefit from it. The implications for society, for the courts, and for the executive, of LAP only applying where it is members of the legal profession who are giving the advice, have been generally understood, accepted and allowed for by the rules and practice of the courts and in legislation. The suggested reformulation proffered by Lord Sumption is, as I have said, clear and principled in conceptual terms. However, closer examination of the suggestion that LAP should apply in any case where legal advice is given by a person who is a member of a profession [which] ordinarily includes the giving of legal advice suggests to me that this is an inappropriate formulation for us to adopt, as it would carry with it an unacceptable risk of uncertainty and loss of clarity in a sensitive area of law. For example, it is unclear to me whether occupations such as town planners, engineers, or pension advisers would be members of a profession for this purpose. They require training and qualifications, and they have associations, with rules and disciplinary procedures. Further, like, for instance, actuaries, auditors, architects and surveyors (undoubtedly professionals), they often, as a result of education and/or experience, have considerable specialist legal expertise, on which clients draw and expect to be able to draw. And that may well become more in point now that legal advice is not a reserved legal activity under the 2007 Act. As I see it, it could be necessary for a court to delve into the qualifications or standing, and maybe into the rules and disciplinary procedures, of a particular group of people to decide whether the group constitutes a profession for the purpose of LAP. So there would be room for uncertainty, expenditure and inconsistency, if the court had to decide such an issue. Further, I am not clear quite how a court is to decide whether a profession is one which ordinarily includes the giving of legal advice. Many chartered surveyors, architects and accountants, for instance, may not ordinarily give legal advice, but there are many who do. Should the issue be judged by reference to the profession generally, a particular branch of the profession (which could lead to definitional issues), or the practice of the particular member of the profession in the case, and, if this last possibility is correct, would the issue be determined on that members say so? In addition, I suspect that much of the advice given by most members of those professions could not infrequently be characterised as legal in nature by some people but not by others. Consider cases such as (i) a town planner instructed to try and obtain planning permission for a development or to advise whether it was needed or what had to be done to get it, (ii) a pension consultant asked to advise on whether a payment could be made, or a contribution should be demanded, by trustees of a pension scheme, (iii) a valuation surveyor asked to advise on rental value under a rent review clause or for rating purposes, or (iv) an auditor asked as to the appropriate treatment of a receipt or debt. In each such case, the issue on which advice is sought may well involve a point of law on which the professional concerned is well qualified to advise. In each case, it could very well be open to argument whether LAP attached to such advice. So long as LAP is limited to advice from members of the legal profession, the strong, and justified, presumption will be that LAP does apply in connection with any communications in that context, because lawyers normally only give legal advice. However, where members of other professions give legal advice, it will often not represent the totality of the advice, and there may well be difficult questions to resolve, as to whether, and, if so, in respect of which documents, LAP could be claimed. For instance, it is unclear whether LAP would apply where the legal advice is only subsidiary, and, if so, how one determines subsidiarity; and, in a case where LAP could be claimed, there may be difficulties in deciding how to deal with documents (which may frequently be the majority of documents concerned with the giving of advice in the case) which contain legal and non legal advice. The specific issue in Three Rivers (No 6) provides the basis for an example of my concerns. In that case, it was held that advice to a client as to how to present its case at an inquiry was privileged if it was given by the clients lawyers, who were also giving general legal advice, which was undoubtedly subject to LAP. I am unclear whether, on Prudentials case, it would follow that a letter from town planning experts advising their client how to present its case at a planning inquiry would attract LAP; the answer might, for instance, depend on whether the advisers were also giving legal advice, but that would seem inconsistent with the requirement for consistency across the professions inherent in Prudentials case. And if LAP would apply in such a case, there might be obvious difficulties in disentangling letters seeking or giving both legal and technical advice. A policy issue best left to Parliament Apart from these concerns, it seems to me that this appeal gives rise to an issue, possibly a series of issues, of policy, which constitutes an area into which the courts should generally be reluctant to tread. Rather than extending LAP beyond its present accepted boundaries, we should leave it to Parliament to decide what, if anything, it wishes to do about LAP. Much of what is said in the preceding section of this judgment demonstrates that quite wide questions of public policy may be thrown up by Prudentials argument. The general implications of extending the generally understood limits of LAP as suggested by that argument could clearly have significant implications, which, at least in my view, would be very difficult to identify, let alone to assess. To put it at its lowest, they may well have significant consequences which should be considered through the legislative process, with its wide powers of inquiry and consultation and its democratic accountability. There are no doubt many pieces of legislation giving the executive the power to call for documents, in respect of which LAP could be invoked to avoid delivering up such documents. One of the most vital functions of the courts is to protect citizens against abuses by the executive, but that role must be exercised with discrimination. However, it would, I think, require exceptional circumstances before that function was invoked to create a new right, or to extend an existing right substantially beyond what is currently understood by everyone, including Parliament when enacting such legislation, to be its existing limits. In addition, there is the fast changing landscape of the legal terrain following the passing and implementation of the Legal Services Act 2007. That Act is also another indication that Parliament is ready to change common law practices which involve special rules for lawyers when it wishes to do so. Another reason why the present issue should be left to Parliament is that the extension of LAP to professions other than lawyers may only be appropriate on a conditional or limited basis. That is an aspect which can be properly considered and implemented by Parliament, and cannot appropriately be assessed, let alone imposed, by the courts. This point is well illustrated by reference to the very type of case with which this appeal is concerned. In 1983, when the Keith Committee recommended that LAP should be extended to communications in connection with tax advice given by expert accountants, it included two qualifications. The first was that the privilege should be overridden where it would . unreasonably impede the ascertainment of facts necessary to the proper determination of the taxpayers tax liabilities, being facts not otherwise capable of ascertainment (para 26.6.5). The second was that LAP should not extend to advice given by in house professional advisers (para 26.6.13). It would be open to Parliament to impose such types of restriction or condition: it would not realistically be open to the courts. Further, as demonstrated by the facts set out in paras 33 34 above, the sort of extension to the currently understood law of LAP sought by the appellants has been (i) reported on by two committees, (ii) discussed in a parliamentary committee, and (iii) proposed to the executive. Despite thinking it appropriate to extend LAP to certain other professions, as explained in para 35 above, Parliament has apparently chosen not to extend LAP to accountants giving tax advice. Of course, in another case, points such as these could be overcome if the court was satisfied that there was a pressing need, in terms of the rule of law, injustice or even practicality, for the common law to move from its generally understood position in a particular area. However, although there is evidence of some concern about the presently understood limits of LAP, there is no evidence that even gets near establishing a pressing need to change those limits. Parliament has relevantly legislated and declined to legislate Parliament has on a number of occasions legislated relevantly in this field. On three occasions it thought it appropriate to extend LAP, and did so on the basis that LAP was limited to advice given by members of the legal profession. I have in mind section 280 of the Copyright, Designs and Patents Act 1988, section 87 of the Trade Mark Act 1994, and section 33 of the Administration of Justice Act 1985, referred to in para 35 above. All these provisions would have been demonstrably unnecessary if the breadth of LAP was as Prudential submits. Parliament also legislated in the very field with which this appeal is concerned on the assumption that LAP only applies to advice given by lawyers see section 20B of TMA and paragraphs 23 to 26 of Part 4 of Schedule 36 to the 2008 Act, referred to in paras 6 to 9 above. Lord Pannick sought to meet this point by relying on the approach adopted by the House of Lords in Morgan Grenfell, where it was held that although the general words of sections 20 and 20B of the TMA might appear to imply the removal of LAP in some circumstances, they did not do so because, as already mentioned, [a]n intention to override such [a fundamental human right] must be expressly stated or appear by necessary implication (emphasis added) to quote from Lord Hoffmann at [2003] 1 AC 563, para 8. In my opinion, that principle does not apply here, although I accept that one must be careful about placing too much weight on the points I have identified in paras 63 and 64 above. The reason that it does not apply is that, in Morgan Grenfell, the Revenue was arguing that what undoubtedly was universally accepted as being LAP in common law had been impliedly cut down by legislation. Given that there was therefore no doubt that the LAP claimed by the appellant in that case existed at common law, it was to be expected that, if the 1970 Act had been intended to cut down LAP, Parliament [would have] squarely confront[ed] what it [was] doing and accept[ed] the political cost per Lord Hoffmann in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131, cited by Lord Hobhouse in Morgan Grenfell, para 44. But the position in this case is different from the position in that case, even though in both cases HMRC seek to rely on implication (rather than necessary implication) to defeat the taxpayers argument based on LAP. The difference arises from the fact that in this case, as demonstrated from the discussion in paras 30 36 above, the generally accepted view is that the type of LAP invoked by Prudential does not exist. In other words, HMRCs contention is not that a statutory provision impliedly shows that Parliament intended to remove LAP which plainly would otherwise exist (as in Morgan Grenfell): rather it is that a number of recent statutory provisions clearly show that Parliament, along with the courts, the textbook writers, and the writers of relevant reports, considered the type of LAP contended for by Prudential does not exist. Various other points I referred in para 45 above to four cases where it was held that LAP applied where the advice was tendered by foreign lawyers. In none of those cases does it appear that there was any significant analysis as to why and to what extent LAP was to be accorded where it was a foreign lawyer who had given the advice. It is none the less understandable why LAP was so extended: the extension was, I suspect, based on fairness, comity and convenience. While that extension does rather undermine much of the principled justification for LAP being confined to cases where the advice is given by professional lawyers, it is consistent with the argument that the court should restrict LAP to its currently understood bounds for reasons of practicality and certainty. Nor do I consider that HRA or POCA take the case any further. The decision and reasoning of the Strasbourg court in Van der Mussele v Belgium (1983) 6 EHRR 163, AM & S Europe Ltd v Commission of the European Communities (Case 155/79) [1983] QB 878, and Campbell v United Kingdom (1992) 15 EHRR 137 effectively undermine any suggestion that it would somehow be contrary to article 14 of the Convention to hold that LAP applies to communications with professional lawyers and not with other professional people. Nor do I accept the argument that so to hold would infringe article 8 read together with article 14. As for section 330 of POCA, it is in a form which was intended to give effect to the Second Money Laundering Directive (2001/97/EC), and I do not see how it can be said to represent any sort of indication by Parliament as to its understanding of the extent of LAP. I am also unimpressed by Prudentials reliance on the 2007 Act. At best, it merely acknowledges two realities which I have accepted anyway, namely that legal advice is now given by many professional people other than lawyers, and that lawyers can work in firms with other professionals, and vice versa: the only change affected by the 2007 Act is that lawyers can now go into partnership with people in other professions. Disposition For these reasons, I would dismiss this appeal. LORD HOPE For the reasons given by Lord Neuberger, Lord Mance and Lord Reed I too would dismiss this appeal. I should like to add just a few words of my own to explain why I am of that opinion. A search for a principled answer might well lead one to the conclusion that there was no good reason at all for holding that the tax advice of chartered accountants should be treated differently from similar advice given by a barrister or a solicitor, as Lord Sumptions powerfully reasoned judgment so ably demonstrates. He starts from the position that English law has always taken a functional approach to legal advice privilege, and that all one needs to do is to recognise as a matter of fact that much legal advice falling within the principles governing legal advice privilege is given today by people who are not lawyers: see paras 123 and 128, below. If the issue is approached on that basis, I agree that it is quite difficult to see how in principle according barristers and solicitors a special status on this matter can be justified. I would find it very hard to distinguish between the legal and factual basis for any claim of privilege in this respect as between chartered accountants on the one hand and lawyers on the other. The functions that they perform when giving tax advice are essentially the same in each case. And I would certainly not find it possible to draw any relevant distinction between these two professions as to their standards of training or discipline. My starting point, however, is the same as that indicated by Lord Neuberger: see para 29. The reason why the issue is before us at all in this case is quite simple. It is to be found in what people generally understand the position to be. Legal advice privilege, as generally understood, applies only to advice that is given by lawyers. If we were to declare that the matter is to be determined not by the profession to which the adviser belongs but by the function that he is performing, we would be changing the ambit of the privilege. And it would be a significant change because the position as generally understood has clearly defined limits and, in consequence, the inestimable advantages of clarity and certainty. Can we be certain that that will be so if the privilege were to be extended to tax advice by chartered accountants, on the ground that they too are advisers whose profession has as an ordinary part of its function the giving of skilled legal advice? If the privilege were to be extended that far, what about tax advice given by other members of the accountancy profession? As Sir Sydney Kentridge QC put it, the change we are asked to make would need a very good reason evidence that something was not working properly. I agree with Lord Neuberger that no such pressing need has been demonstrated, and that to adopt the functional test would give rise to a significant risk of uncertainty. I also think that the courts are not best placed to assess how profound such a change would be, whether there are good reasons of policy for making it and what protections, if any, are needed to ensure that the ambit of the privilege is kept within limits that are acceptable. Principle is an uncertain guide in such matters, if all one has to go on is the function that is being performed by the adviser. We do not need to go down that road, and it seems to me that the wiser course is not to do so. If there are reasons of public policy for making the change, the matter should be left to Parliament. LORD MANCE I have had the great advantage of reading the judgments prepared by Lord Neuberger, with whom Lord Hope agrees, and Lord Sumption, with whom Lord Clarke agrees. I come down on the same side as Lord Neuberger, basically for all the reasons which he gives. I add only a few words, principally to address the suggested logic of recognising that clients of tax accountants enjoy legal advice privilege (LAP) in respect of tax advice given them professionally by such accountants paralleling the LAP normally enjoyed by the clients of lawyers. LAP has developed and been accepted on a general basis in respect of lawyers because they are lawyers and their business is normally dealing with legal matters. There has been no particular occasion to examine specific areas of legal advice or lawyers activity, in order to consider whether it merits special treatment and, if so, how such areas of their activity would be defined. Such questions do however arise in respect of Prudentials current claim that the courts should recognise the underlying logic of LAP and accept that it applies in respect of legal advice given professionally in any particular area where the professional who gives it is a member of a profession which has as an ordinary part of its function the giving of skilled legal advice in that particular area. The relevant profession here is accountancy and the relevant area the giving of tax advice. But there are, as Lord Neuberger notes in paras 54 to 60, other professions which might be said to give legal advice in particular areas in the course of their ordinary professional activity. In relation to tax or any other particular areas where legal advice is given professionally, specific considerations may exist which could on examination point away from a recognition of LAP, or away at least from its recognition on an unqualified basis. That was certainly the conclusion of the Keith Committee, when it recommended that LAP be recognised in respect of tax advice by accountants, but only on a significantly qualified basis: see Lord Neubergers judgment, para 65. Similarly, when the New Zealand Parliament legislated by the Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005 in June 2005 to create a statutory privilege in relation to any confidential tax advice document, it did so by inserting into the Tax Administration Act 1994 a complex of statutory provisions (sections 20B to 20G) requiring the relevant tax advisor to be a member of an approved advisor group approved by the Commissioner on Inland Revenue and providing that disclosure must nonetheless be made, from any tax advice document, of tax contextual information. This was defined to include, inter alia, (a) a fact or assumption relating to a transaction that has occurred or is postulated by the person creating the tax advice document; (b) a description of a step involved in the performance of a transaction that has occurred or is postulated by the person creating the tax advice document; (c) advice that does not concern the operation and effect on the person of tax laws; (d) advice that concerns the operation and effect on the person of tax laws relating to the collection by the Commissioner of debts payable to the Commissioner; (e) a fact or assumption relating to advice that is referred to in paragraph (c) or (d); and (f) a fact or assumption from, or relating to the preparation of (i) financial statements of the person, or (ii) a document containing information that the person is required to provide to the Commissioner under an Inland Revenue Act. In Australia the Law Reform Commission, in A Review of Legal Professional Privilege and Federal Investigatory Bodies (report ALRC 107 dated December 2007) supported the New Zealand model of creating a separate tax advice privilege, rather than simply extending client legal privilege to accountants giving tax advice; and it did this specifically because it would allow Parliament greater control over the operation and scope of tax advice privilege (para 6.278). As to the nature of the control, it said (para 6.281): The ALRC is also supportive of the provision in the New Zealand legislation which does not apply the privilege to contextual information provided for the purpose of providing tax advice. It should be very clear in the operation of this privilege that only the advice itself will be protected, and not any other information that may form part of the accountants file or briefing. The legislation should state that no privilege should apply to tax contextual information given for the purpose of providing tax advice. Tax contextual information should be defined as information about: a fact or assumption that has occurred or is postulated by the person creating the tax advice document; a description of a step involved in the performance of a transaction that has occurred or is postulated by the person creating the tax advice document; or advice that does not concern the operation and effect of tax laws. The justification of LAP advanced in respect of lawyers includes candour that is, that it enables clients to provide their lawyers with all the facts and matters that they might need to advise on the law: see eg the quotation from Lord Scott in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610, quoted by Lord Sumption at para 118. But it is evident from paras 86 to 88 above that, when the present issue has been considered by law reform committees or legislators in the United Kingdom, New Zealand and Australia, this justification has not been felt to have the same force. Rather, a specific need has been felt to ensure, by appropriate legislative qualification of the scope of LAP, that the Revenue is put in possession of a full understanding of the facts and the nature of the relevant transactions, so as to be able then to advise itself as to the correct legal conclusions to be derived therefrom as a matter of tax law. Another, not unrelated, feature of this case, to which I attach considerable importance, is that the United Kingdom Parliament has on a number of occasions not only treated lawyers as the only persons whose advice gives rise to LAP on the part of their clients (see Lord Neubergers judgment, para 35 et seq), but has also specifically decided to maintain a distinction between lawyers and tax advisers when it was suggested that the latters advice ought to give rise to a general LAP paralleling that existing in respect of lawyers advice (Lord Neuberger, para 36). If LAP extended to professions other than lawyers, it is accepted that it would not be on a general basis, but that a careful distinction, in practice normally irrelevant in the case of lawyers, would have to be drawn between privileged and non privileged activities. Although such a distinction can sometimes be relevant with lawyers (eg where a lawyer acts as a man of business or purely administratively, rather than as a lawyer), it is not normally so. But in the case of other professions, the distinction would become highly relevant and would not necessarily be easy to draw. For all these and the other reasons given by Lord Neuberger, any recognition in respect of tax accountants of a privilege which has traditionally been and is still regarded as relevant only to legal advice given by lawyers in the course of their profession, or of any parallel privilege, should in my opinion take place, if at all, in Parliament, not in the courts. I agree that this appeal should be dismissed, for the reasons given by Lord LORD REED Neuberger, Lord Hope and Lord Mance. The argument that existing legal principle already recognises the privilege claimed by the appellants, although powerfully put by Lord Clarke and Lord Sumption, is not one that I find persuasive. The process of reasoning by which a legal principle is derived from a body of authority was explained by Lord Diplock in Dorset Yacht Co Ltd v Home Office [1970] AC 1004, 1058 1059. Speaking of the law of negligence, his Lordship explained that the process involved two stages, the first of which was inductive, and involved an analysis of the characteristics of the conduct and relationship involved in each of the decided cases: This analysis leads to a proposition which can be stated in the form: In all the decisions that have been analysed a duty of care has been held to exist wherever the conduct and the relationship possessed each of the characteristics A, B, C, D, etc, and has not so far been found to exist when any of these characteristics were absent. For the second stage, which is deductive and analytical, that proposition is converted to: In all cases where the conduct and relationship possess each of the characteristics A, B, C, D, etc, a duty of care arises. The conduct and relationship involved in the case for decision is then analysed to ascertain whether they possess each of these characteristics. If they do the conclusion follows that a duty of care does arise in the case for decision (p 1059). Applying that approach in the context of legal advice privilege, in each of the decided cases in which the privilege was held to exist, the relationship of the persons between whom the communication passed was that of client (or prospective client) and professional lawyer acting as such; and the privilege has not so far been held to exist when any of the characteristics of that relationship were absent. One can therefore deduce from the authorities a principle which applies when that relationship exists. That relationship does not however exist in the present case. As Lord Diplock explained (ibid), again in the context of the law of negligence, where the conduct or relationship which is involved in the case at hand lacks at least one of the characteristics which have been identified, the court has a choice whether or not to extend the kinds of conduct or relationships which give rise to a duty of care: And the choice is exercised by making a policy decision as to whether or not a duty of care ought to exist if the characteristic which is lacking were absent or redefined in terms broad enough to include the case under consideration. The choice to extend is given effect to by redefining the characteristics in more general terms so as to exclude the necessity to conform to limitations imposed by the former definition which are considered to be inessential. Applying that approach in the present context, since the case at hand lacks one of the characteristics which has been present in all previous cases in which legal advice privilege has been held to exist, the court has a choice whether or not to extend legal advice privilege to situations where legal advice was sought from a professional person other than a lawyer. That choice is exercised by making a policy decision of the kind which Lord Diplock explained. It is open to the court to redefine the characteristics of legal advice privilege in more general terms, for example by holding that legal advice, given in the exercise of a professional activity which involves the giving of such advice, is subject to legal advice privilege. It is also open to the court to adhere to the narrower principle which can be derived from the existing body of case law. A judgment has to be made as to the most appropriate course of action. That judgment, in this case, requires a number of considerations to be taken into account, as Lord Neuberger has explained. There are considerations which weigh in favour of an extension of the principle. In particular, it can be argued that the underlying rationale of the privilege favours its application whenever legal advice is sought from a person who is suitably qualified to give such advice, whether that person is a member of the legal profession or of some other profession whose activities include the giving of legal advice. There are on the other hand countervailing considerations. One which seems to me to be particularly significant is that the privilege must be capable of being relied upon if it is to serve its purpose of enabling clients and their legal advisers to communicate with each other with complete candour. It is therefore highly desirable that the privilege should, as far as possible, be based upon a principle which is clear, certain and readily understood. The existing common law principle meets those requirements. The variety of possible formulations of an extended common law principle, and the consequent scope for debate as to whether particular professional persons, in particular situations, would or would not fall within its scope, would detract from the certainty and clarity which presently exist. More fundamentally, it is necessary to give consideration to the respective roles, in relation to the development of this area of the law, of the courts, the executive and the legislature. In doing so, it is necessary to have regard to the measures taken (or not taken) in this area by the executive and the legislature, after consultation and consideration of a wider character than can be carried out by courts determining disputes between particular parties. In my judgment, having regard particularly to the latter consideration, the court should decide the case as Lord Neuberger proposes. No question arises in this appeal as to the scope of the privilege in Scots law. It may nevertheless be helpful to add some observations about the case from a Scottish perspective, given the likely interest in the case in Scotland as well as in England and Wales. My observations are not however intended to pre empt a full discussion of the matter should the issue arise in Scottish proceedings. The law in this area developed separately in Scotland from in England. The two systems have however developed in the same direction. There are a number of differences in the case law in relation to particular aspects of the law, but the general principle, its fundamental importance, and the considerations of public policy which underlie it, are common to both systems. By the late seventeenth century it was established in Scotland that an advocate was not bound to disclose any private advice or secret of his calling or employment: Creditors of Wamphray v Lady Wamphray (1675) Mor 347; Earl of Northesk v Cheyn (1680) Mor 353; Stair, Institutions of the Law of Scotland, IV.xliii.8. The rationale was explained by Sir George Mackenzie as being the public interest in persons being able to obtain legal advice based upon complete knowledge of the relevant circumstances: An Advocate is by the Nature of his Imployment tied to the same Faithfulness that any Depositor is: For his Client has depositate in his Breast his greatest Secrets; and it is the Interest of the Common wealth, to have that Freedom allowed and secured without which Men cannot manage their Affairs and private Business: And who would use that Freedom if they might be ensnared by it? This were to beget a Diffidence betwixt such who should, of all others, have the greatest mutual Confidence with one another; and this will make Men so jealous of their Advocates that they will lose their private Business, or succumb in their just Defence, rather than Hazard the opening of their Secrets to those who can give them no Advice when the case is Half concealed, or may be forced to discover them when revealed. (Observations upon the 18th Act of the 23rd Parliament of King James the Sixth against Dispositions made in Defraud of Creditors etc (1675), in Sir George Mackenzie's Works, vol 2 (1755), p 1). It became clear during the eighteenth century, if not earlier, that this approach also applied to other types of lawyer engaged in legal proceedings (McLeod v McLeod (1744) Mor 16754), and that the concept of a secret extended to anything of which a lawyer had been informed by his client (Leslie v Grant (1760) 5 Browns Supp 874). A crucial step in the further development of the principle was taken in Executors of Lady Bath v Sir John Johnston, 12 November 1811, FC, which has been interpreted (notably in McCowan v Wright (1852) 15 D 229) as having decided that the privilege was not confined to communications made in connection with legal proceedings which were then pending or in contemplation. It was also understood by the early nineteenth century, if not earlier, that the privilege was that of the client, not the lawyer: see eg Bell, Principles of the Law of Scotland, 4th ed (1839), para 2254. The general principle, as it was understood by the mid nineteenth century, was summarised by Lord Wood in McCowan v Wright at p 237: The rule by which the communications between clients and their legal advisers are protected from discovery, is one of great value and importance, and, within its legitimate limits, ought to be strictly observed. According to the law of Scotland, such communications are privileged although they may not relate to any suit depending or contemplated, or apprehended. Comparing the Scottish authorities down to that date with the review of the English case law by Lord Brougham in Greenough v Gaskell (1833) 1 My & K 98, it could be said that the general principles governing the privilege of communications between lawyer and client in the two jurisdictions were in alignment; and that is reflected in the citation of numerous authorities from England as well as Scotland in Bells account of the subject. More recent development of these general principles, notably in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563, where the privilege was characterised as a fundamental human right, has not depended on matters peculiar to either jurisdiction. In Scotland, as in England and Wales, all the cases in which the privilege has been upheld appear to have concerned lawyers acting in a professional capacity, clerks or assistants acting on their behalf, or other intermediaries to whom a communication had been made for transmission to or from such a person. It has been held that the privilege did not attach to communications made to an accountant (Wright v Arthur (1831) 10 S 139); but the case was not one in which it was suggested that the accountant had given legal advice, and it long pre dated the era in which the giving of tax advice, in particular, became one of the principal areas of practice of many accountants. It is not apparent that the courts have hitherto been required to make a judgment as to whether the privilege ought to be confined to legal advice given by lawyers acting as such, as opposed to legal advice given by members of other professions. As far as I have ascertained, therefore, the authorities do not foreclose the possible application of the privilege to advice given by accountants. Nevertheless, as in England and Wales, the general understanding is that the privilege applies only to members of the legal professions. In Narden Services Ltd v Inverness Retail and Business Park Ltd 2008 SC 335, 338 for example, the court described the notion of legal professional privilege (an expression which was adopted in that case, and has been used in subsequent cases, in preference to the older term confidentiality, which could lead to confusion between the privilege and the different sense in which confidentiality is employed in other contexts), as enshrined in the common law of Scotland, as (in broad terms) a right of absolute privilege in respect of communications emanating between a solicitor and a client relating to advice and also in respect of any documents, including those coming from accountants, which were prepared in the contemplation of litigation. The apparent implication is that documents prepared by accountants may come within the scope of litigation privilege (in the older terminology, post litem motam confidentiality) if they were prepared in contemplation of litigation, but that legal advice privilege is confined, in broad terms, to communications between a solicitor and his client. The court was not however addressing the question whether the scope of the privilege might be extended where legal advice was given by accountants. Textbooks proceed on a similar basis, assuming that the privilege applies only where advice is given by lawyers, but not specifically addressing the question whether it might also apply where legal advice was given by members of other professions. The title on Evidence in the Stair Memorial Encyclopaedia of the Laws of Scotland, (Reissue), for example, states that the privilege is restricted to communications made to professionally qualified and instructed lawyers (para 205), and that any attempt to plead privilege by bankers, accountants and other professional business and personal advisers will fail (para 209). Ross and Chalmers, Walker and Walker, The Law of Evidence in Scotland, 3rd ed (2009), similarly proceed on the basis that the privilege is confined to professional lawyers (para 10.2.7). As in England and Wales, bodies concerned with law reform have also proceeded on the basis of such an understanding. The Keith Report, discussed by Lord Neuberger, concerned the United Kingdom as a whole, and was prepared by a committee presided over by a Scottish member of the Appellate Committee of the House of Lords. It discussed the relevant rules of Scots law, which it described as not differing materially from the English rules, although some differences in matters of detail were noted (para 26.1.5). This area of the law was also considered by the Scottish Law Commission in its Memorandum No 46, Law of Evidence (1980), where it expressed the view that solicitor/client privilege is reasonably well defined and works satisfactorily in practice: para S 21. The Commission did not suggest that the privilege applied, or ought to apply, in situations where legal advice was sought from members of other professions; nor was that issue touched upon in the reports which followed upon the consultative memorandum. As in relation to England and Wales, Parliament has legislated in relation to Scotland in ways which assumed that legal advice privilege was confined to advice given by lawyers. Section 20B of the Taxes Management Act 1970 and the replacement provisions in Schedule 36 to the Finance Act 2008, discussed by Lord Neuberger, apply to Scotland. So also do section 280 of the Copyright, Designs and Patents Act 1988 and section 87 of the Trade Marks Act 1994, which extend the privilege under Scots law to patent attorneys and trade mark agents respectively. Section 22 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 made provision for communications made to or by a licensed conveyancer or registered executry practitioner to be protected from disclosure in like manner as if the practitioner had at all material times been a solicitor acting for the client. Finally, just as Parliament legislated in the Legal Services Act 2007 to create a framework for the future of the provision of legal services, and for the regulation of such provision, in England and Wales, a comparable framework was created by the Scottish Parliament in the Legal Services (Scotland) Act 2010. The provision of legal advice is a legal service falling within the scope of the legislation: section 3. The professions whose members can own or control a licensed provider of legal services under the Act include chartered accountants and chartered certified accountants: Licensed Legal Services (Specification of Regulated Professions) (Scotland) Regulations, SSI 2012/213. The Act makes express provision in section 75, headed professional privilege, that communications made to or by a licensed provider (or a designated person within the licensed provider) in the course of its acting as such in its provision of legal services, are in any legal proceedings, privileged from disclosure as if the licensed provider or (as the case may be) the person had at all material times been a solicitor acting for the client. Since that provision applies only to licensed providers and designated persons within such providers, it therefore applies only where a licence has been granted; and such grants are dependent upon the existence of appropriate regulatory schemes and licensing rules. Against that background, if the question were to arise in Scotland whether the common law privilege should be extended to legal advice given by accountants, the courts would have to make a policy decision, as I have explained. That decision would have to be made in the context which I have discussed, including the enactment of legislation, following consultation and consideration in the Scottish Parliament, providing the privilege where other professions are involved in the provision of legal services, on a conditional and limited basis. LORD SUMPTION (dissenting) In my opinion the law is that legal professional privilege attaches to any communication between a client and his legal adviser which is made (i) for the purpose of enabling the adviser to give or the client to receive legal advice, (ii) in the course of a professional relationship, and (iii) in the exercise by the adviser of a profession which has as an ordinary part of its function the giving of skilled legal advice on the subject in question. The privilege is a substantive right of the client, whose availability depends on the character of the advice which he is seeking and the circumstances in which it is given. It does not depend on the advisers status, provided that the advice is given in a professional context. It follows, on the uncontested evidence before us, that advice on tax law from a chartered accountant will attract the privilege in circumstances where it would have done so had it been given by a barrister or a solicitor. They are performing the same function, to which the same legal incidents attach. The starting point for any analysis of these matters is the rationale of the privilege attaching to the process of obtaining legal advice. It has been described by the Supreme Court of the United States as the oldest of the privileges for confidential communications known to the common law: Upjohn Company v United States 449 US 383, 389 (1981). In some respects its development has been peculiar to the English common law and those legal systems which have adopted it. In most civil law countries, the protection of professional confidences is founded on the status of the adviser. In French law, which can stand as the paradigm case, information given to an adviser in the course of a confidential professional relationship is subject to the rules governing the secret professionnel. The source of the confidence is the professional obligations of the adviser, and the provisions of the Penal Code which reinforce them with criminal sanctions. Consistently with this approach, French law like most European civil law systems accords the same protection to other confidential professional relationships, for example with doctors or priests, and indeed has in recent times extended it to some non professional ones: see Code Pnal, article 226 13. English law originally protected professional confidences on a similar basis. The origins of the privilege have been traced in the speech of Lord Taylor of Gosforth CJ in R v Derby Magistrates Court, Ex p B [1996] AC 487, 504 507 and in Holdsworth, History of English Law, 3rd ed, ix (1944), 201 202. It originated in the practice of the Court of Chancery in the years after the statute of 1562 which first made witnesses compellable: see Berd v Lovelace (1577) Cary 62; Dennis v Codrington (1579) ib, 100. By the early eighteenth century most writers were agreed that it was based on the protection of the honour of the adviser, who would be discredited by being required to disclose his clients confidences. It followed that the adviser was permitted but not compellable to give evidence of them. This theory was disposed of by Lord Mansfield in the Duchess of Kingstons Case (1776) 20 St Tr 355, 574. The famous surgeon Sir Caesar Hawkins declined to give evidence against the Duchess on her trial for bigamy, saying: I do not know how far any thing that has come before me in a confidential trust in my profession should be disclosed consistent with my professional honour. Lord Mansfield ruled that he must testify, because if the sole ground of refusal was the protection of his honour, it was a sufficient answer to those who might subsequently impugn it that he was compellable. In the half century following this decision, the juridical basis of the privilege was redefined by the courts. It became a right of the client, which was justified as serving a specific public interest in his freedom of action in dealings with his legal advisers. In Wilson v Rastall (1792) 4 TR 753, it was established (i) that the privilege was a right of the client, not of the lawyer, (ii) that the lawyer was therefore precluded from giving evidence of privileged matters even if he was willing to, and (iii) that the privilege was not confined to the litigation in which disclosure was sought nor to litigation in which the client was a party, but extended to any litigation in which it was sought to compel the production of documents or the appearance of a witness. In Greenough v Gaskell (1833) 1 My & K 98, Lord Brougham LC reviewed the case law going back to the late eighteenth century. In a judgment which is generally regarded as the foundation of the modern law, he held that the privilege was unaffected by the question whether proceedings were pending or contemplated, for a person oftentimes requires the aid of professional advice upon the subject of his rights and his liabilities, with no reference to any particular litigation, and without any other reference to litigation generally than all human affairs have, in so far as every transaction may, by possibility, become the subject of judicial inquiry (p 102). In a celebrated passage, Lord Brougham said (p 103): The foundation of this rule is not difficult to discover. It is not (as has sometimes been said) on account of any particular importance which the law attributes to the business of legal professors, or any particular disposition to afford them protection, though certainly it may not be very easy to discover why a like privilege has been refused to others, and especially to medical advisers. But it is out of regard to the interests of justice, which cannot be upholden, and to the administration of justice, which cannot go on, without the aid of men skilled in jurisprudence, in the practice of the Courts, and in those matters affecting rights and obligations which form the subject of all judicial proceedings. If the privilege did not exist at all, every one would be thrown upon his own legal resources; deprived of all professional assistance, a man would not venture to consult any skilful person, or would only dare to tell his counsellor half his case. If the privilege were confined to communications connected with suits begun, or intended, or expected, or apprehended, no one could safely adopt such precautions as might eventually render any proceedings successful, or all proceedings superfluous. The only exception to the principle thus stated which Lord Brougham was prepared to recognise was the case where the communication for which privilege was claimed was made to a professional legal adviser but not in the course of a professional relationship with him: see pp 104 115. This was not an indirect way of recognising the special status of professional lawyers. It is clear from the context that the point which Lord Brougham was making was that the privilege attaches only to legal advice taken in a professional context, i.e. not in a social one. Not every one has applauded the principle as it was developed in the late eighteenth and early nineteenth centuries. But it is fair to say that many of its critics have been animated by broader misgivings about the whole process of forensic inquiry and the role of the legal profession in it. Jeremy Bentham, who regarded lawyers as obstacles to the administration of justice, famously characterised legal professional privilege as a doctrine which turned the lawyer into the accomplice of his client. His views were the subject of a ferocious refutation in the pages of the Edinburgh Review by Thomas Denman, a barrister, member of Parliament, and lifelong friend of Lord Brougham, later to become Lord Chief Justice, who restated the classic view of the privilege as fundamental to the rights of the citizen. History has gone Denmans way and not Benthams. Lord Broughams judgment in Greenough v Gaskell remains to this day the classic statement of the rationale for legal advice privilege. In AM & S Europe Ltd v Commission of the European Communities (Case 155/79) [1983] QB 878, 913, Sir Gordon Slynn, Advocate General, after reviewing the law relating to the protection of confidences imparted to lawyers across the member states of the European Community observed Whether it is described as the right of the client or the duty of the lawyer, this principle has nothing to do with the protection or privilege of the lawyer. It springs essentially from the basic need of a man in a civilised society to be able to turn to his lawyer for advice and help, and if proceedings begin, for representation; it springs no less from the advantages to a society which evolves complex law reaching into all the business affairs of persons, real and legal, that they should be able to know what they can do under the law, what is forbidden, where they must tread circumspectly, where they run risks. More recently, in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610, Baroness Hale took up the same theme at para 61: It may thus impede the proper administration of justice in the individual case. This makes the communications covered different from most other types of confidential communication, where the need to encourage candour may be just as great. But the privilege is too well established in the common law for its existence to be doubted now. And there is a clear policy justification for singling out communications between lawyers and their clients from other professional communications. The privilege belongs to the client, but it attaches both to what the client tells his lawyer and to what the lawyer advises his client to do. It is in the interests of the whole community that lawyers give their clients sound advice, accurate as to the law and sensible as to their conduct. I do not propose to multiply citations, but it is right to point out that precisely the same underlying rationale has been given for the privilege in modern times by the Supreme Court of the United States: Upjohn Company v United States 449 US 383, 389 (1981); Swidler & Berlin v United States 524 US 399, 403 (1998). By the High Court of Australia: Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49, at para 35; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at para 44 (McHugh J). And by the Supreme Court of Canada: R v McClure [2001] SCC 14, [2001] 1 SCR 445, at paras 36 39. Doubts have sometimes been expressed about how important the assurance of absolute confidentiality really is to clients who consult legal advisers, particularly when they do so in civil or non contentious matters. How often these doubts are justified is impossible to say. We can assume that they sometimes, perhaps often are. As Lord Scott pointed out in Three Rivers (No 6) at para 34, it is obviously true that in very many cases clients would have no inhibitions in providing their lawyers with all the facts and information the lawyers might need whether or not there were the absolute assurance of non disclosure that the present law of privilege provides. It does not matter for two reasons. The first is that the law is that the confidence must be protected if proper legal advice is to be obtained. It has been established in this sense for many years and no one is asking us to depart from it. The second, which is perhaps more satisfying, is that it would be wrong to depart from it in any event. The underlying principle is that those clients who do wish to consult a lawyer on the basis of absolute confidence should be entitled to do so, notwithstanding that absolute confidence may be less important to others. Consistently with the underlying principle, the modern case law has developed the law of privilege in three principal respects which are relevant to the issues on this appeal. First, the courts have held that the privilege is absolute, subject only to a narrowly defined exception for cases where the client is seeking legal advice in order to enable himself the better to commit a fraud or crime. In R v Derby Magistrates Court, Ex p B [1996] AC 487 the House of Lords, after reviewing the case law on the juridical basis of the privilege from its origins in the sixteenth century, held that it did not depend on balancing the public interest in sustaining the confidence against any competing public interest. In the circumstances of that case, it could not be overridden even if the information withheld was likely to be material evidence to exonerate a man charged with murder. Second, although litigation (civil or criminal) will generally be the occasion for seeking disclosure of information said to be privileged, the modern case law has reaffirmed the principle first stated by Lord Brougham that the privilege does not just exist in aid of forensic litigation. It attaches to confidences given in circumstances where no proceedings were contemplated or where the proceedings contemplated were not litigation but, for example, a domestic or public inquiry: Three Rivers District Council v Bank of England (No 6) [2005] 1 AC 610. Third, in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563, Lord Hoffmann, with whom the rest of the House of Lords agreed, recognised at para 7 what was implicit in these propositions, namely that the privilege was not a mere procedural incident of the forensic process, but a fundamental human right long established in the common law, which was a necessary corollary of the right of any person to obtain skilled advice about the law. Legal advice privilege is sometimes described as essential to the effective administration of justice, and Lord Brougham himself put it that way. By this, they did not mean the effective conduct of legal proceedings. On the contrary, as Baroness Hale pointed out in her speech in Three Rivers (quoted above), privilege may obstruct the forensic process by making relevant evidence unavailable. Lord Scott pointed out in the same case, para 34, that the relevant public interest was in reality the rule of law, which depends upon the citizen being able without inhibition to find out what his legal position is. The complexity of the modern law and its progressive invasion of the interstices of daily life, have made this a public interest of greater importance than ever before. It is perhaps particularly significant in the area of tax law, where the citizen is brought up against the power of the state and the law is often technically complex. From the origins of the privilege in the late eighteenth century to the present day, the case law refers to it as attaching to the advice of lawyers, i.e. barristers, solicitors and attorneys and, in the very early days of the doctrine, the scriveners who drew up wills, charters and other legal instruments. In most of the early cases lawyers were identified in contradistinction not to other sources of professional legal advice, but to professionals whose advice was not legal at all, such as priests or doctors. Once this distinction became too well understood to require repetition, the references in the cases to the advice of lawyers persisted but simply reflected the assumption that lawyers were the only source of skilled professional legal advice. Until modern times, this assumption was correct. The routine resort to accountants for legal advice on tax does not seem to have become common until the 1960s. The only English case before this one to address directly the difference between legal advice received from barristers and solicitors on the one hand and other legal advisers on the other was Wilden Pump Engineering Co v Fusfeld [1985] FSR 159, in which it was held that patent agents were not lawyers and that privilege did not attach to their advice. I shall say something more about this case below. Once it is appreciated (i) that legal advice privilege is the clients privilege, (ii) that it depends on the public interest in promoting his access to legal advice on the basis of absolute confidence, and (iii) that it is not dependent on the status of the adviser, it must follow that there can be no principled reason for distinguishing between the advice of solicitors and barristers on the one hand and accountants on the other. The test is functional. The privilege is conferred in support of the clients right to consult a skilled professional legal adviser, and not in support of his right to consult the members of any particular professional body. The findings of Charles J, which are borne out by the evidence, show that today there are at least three professions whose practitioners have as part of their ordinary professional functions the giving of skilled legal advice on tax. Accountants are among them. Any distinction for this purpose between some skilled professional advisers and others is not only irrational, but inconsistent with the legal basis of the privilege. It would make it dependent not just on the nature of the advice or the circumstances in which it was given, which have always been relevant considerations, but to a substantial degree on the status of the adviser, which has not been a relevant consideration for 250 years. It is consistent with the view that I have expressed that the courts have in recent times expanded the categories of lawyer whose advice may attract privilege, in particular to cover salaried legal advisers and foreign lawyers. This development has been the natural consequence of the functional character of the test combined with the laws pragmatic willingness to recognise the changing patterns of professional life. The privilege attaching to the advice of salaried legal advisers was first recognised judicially by the Court of Appeal in Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1972] 2 QB 102. Lord Denning MR, at p 129, justified the result primarily on the ground that, although the communications of a corporation with an in house legal adviser were internal to the corporation, nevertheless the adviser was performing the same function as the lawyer in independent practice. Relevant communications with foreign lawyers have for many years attracted the same privilege for the same reason. In Lawrence v Campbell (1859) 4 Drew 485 privilege was claimed in English litigation for communications between a Scottish client and a Scottish solicitor practising in London. Sir Richard Kindersley V C held (at p 491) that the same principle that would justify an Englishman consulting his English solicitor would justify a Scotchman consulting a Scotch solicitor. Subsequently, communications with foreign lawyers were treated as being entitled as a matter of course to the same privilege as communications with English lawyers in like circumstances: see Macfarlan v Rolt (1872) LR 14 Eq 580; In re Duncan, decd [1968] P 306; Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529, 535 536. Sir Sydney Kentridge QC, appearing for the Law Society, described these cases as anomalous. But he did not suggest that they were wrong. I think that they were clearly right, and I do not regard them as anomalous. They reflect the functional approach which English law has always taken to legal advice privilege. The only sustained arguments addressed to us for treating barristers and solicitors as having a special status justifying their unique treatment by the law of privilege were (i) that other professionals did not have the same stringent legal obligations of non disclosure as lawyers; and (ii) that barristers and solicitors have a unique relationship with the courts. The first of these points can be shortly dealt with. If privilege attaches to the tax advice of accountants in the same circumstances as it would attach to similar advice from a barrister or solicitor, then its legal incidents are exactly the same in either case. It does not matter that the professional rules of at least some accountants permit them to disclose confidential client information in some circumstances in which it could not lawfully be disclosed by a solicitor. These rules do not prevent accountants from assuming more stringent and less qualified obligations, and they would be treated as doing so by giving advice in privileged circumstances. This is because the juridical source of the accountants duty in relation to privileged material is the right of the client under the law of privilege, not the accountants professional rules. The second reason for attributing a unique status to the advice of barristers and solicitors was that the existence of the privilege has always depended on the close relationship of the courts with the legal professions. The authority of the judges, it is said, has always been the ultimate source of standards of admission and of the disciplinary powers exercisable over legal practitioners. But they have never been concerned with the professional standards or organisation of the accountancy profession. Sir Sydney Kentridge, who was mainly responsible for developing this argument, did not of course suggest that accountants were unworthy of being treated on a par with solicitors and barristers, nor was any such suggestion advanced by any one else on this appeal. His point was that judicial recognition and supervision of the legal profession was historically part of the basis on which privilege attached to their advice. This, he submitted, was not something that could be ignored simply because others have come to perform the same functions. This approach was to some extent invited by the concession of the appellants that the privilege would attach only to communications with members of recognised professions. But in my view the argument, like the concession which provoked it, is mistaken. In the first place, the main judicial safeguard against abuse lies, as Lord Denning pointed out in the Alfred Crompton case (p 129), in the right of the court to examine the legal and factual basis for any claim of privilege at the time when it is made. The court is in as good a position to do this when accountants are involved as it is when the advice was sought from lawyers. Secondly, none of the statements of principle in the case law have identified the relationship of lawyers with the court or the arrangements for the admission or discipline of lawyers as a relevant factor. If it had been, then the English courts would not have recognised a privilege for legal advice which was wholly independent of any forensic proceedings, actual or prospective. Nor would they have recognised the privilege attaching to the advice of foreign lawyers. There is no suggestion in any of the cases about foreign legal advice of any interest on the part of the English court in the standards of their training or discipline, and they are certainly not amenable to the supervision of English judges. Nor could Sir John Romilly have recognised the privilege attaching to the advice of a person whom the client believed to be a solicitor and professionally consulted on that basis, but who in fact was not: see Calley v Richards (1854) 19 Beav 401. Third, the legal basis of the privilege was worked out by the courts at a time when most claims for legal advice privilege concerned communications with solicitors and attorneys, whose professional standards were then notoriously low. Many of them were not enrolled and the courts supervision of their professional practices was nominal or non existent. This was particularly true of attorneys, who practised in the common law courts and whom Sir Vicary Gibbs, Chief Justice of Common Pleas from 1813, once memorably described as the growling jackals and predatory pilot fish of the law: see The Oxford History of the Laws of England, xi (2010), 1110 (the whole of this chapter repays reading). The high modern standing of solicitors (as all of them were called after 1873) was due very largely to the work of the Law Society, which was founded after 1825 to address this perception, and which together with its provincial affiliates gradually transformed the profession in the course of the nineteenth century. Neither Charles J nor the Court of Appeal took issue with these points in principle. On the contrary, Charles J considered, at paras 64 65, that the appellants had put forward a compelling, indeed unanswerable, case that in modern conditions accountants have the expertise to advise on tax law and it is firms of accountants, rather than firms of solicitors, who do give such advice and represent clients in disputes with the revenue on many aspects of their tax affairs. So in my view, Prudential have shown that accountants do what lawyers are described as doing in the cases that establish LPP. The courts below decided the question mainly on the ground that the wider implications of recognising a privilege attaching to the advice of accountants made it a matter for Parliament. Most of the argument addressed to us on behalf of the respondents and those interveners who supported them, was directed to this proposition. In reality, it comprises three distinct points. The first is a classic floodgates argument, namely that it would involve an extension of scope of the privilege which would considerably increase the number of persons whose advice qualified. The second argument is that recognising the privilege attaching to accountants advice would directly conflict with statute. The third is that fixing the boundaries of the privilege for legal advice from non lawyers and determining the conditions on which it was exercisable were inherently legislative processes. The main difficulty about the first point is its premise. This is that by recognising the privilege attaching to the legal advice of accountants we would be extending the scope of the privilege at common law. In my view this premise is wrong. Acceptance of the appellants basic submission would not involve any change to the principles governing the availability of legal advice privilege. It would only involve recognising that as a matter of fact much legal advice falling within those principles is nowadays given by legal advisers who are not barristers and solicitors but accountants. It is the function of the courts, and in particular of this court, to ensure that changes in legal, commercial or social practice are properly reflected in the way that the law is applied. I do not doubt that as a result the number of claims to privilege will be increased. But that is because the growing complexity of tax law and the increasing number of people and organisations affected by it, have led to an exponential increase in the number of people seeking legal advice. A mere increase in the number of people who can take advantage of an existing rule of law cannot be a good reason for failing to apply general principles coherently. Nor can it justify an arbitrary distinction between different professions performing exactly the same function. The second point (that the supposed extension of the privilege would be directly inconsistent with statute) was based on the provisions of sections 20 and 20B of the Taxes Management Act 1970, which were the legal basis of the Revenues demand in this case. Section 20(1) confers on an Inspector of Taxes the power to call for documents in the possession or power of the taxpayer, and section 20(3) confers on him a corresponding power to call for documents from third parties such as advisers. By section 20(9), these provisions are subject to the restrictions in section 20B. Under section 20B(3), only the Commissioners of Inland Revenue (not an Inspector) may exercise the power under section 20(1) or (3) against a barrister, advocate or solicitor. And by section 20B(8), a barrister, advocate or solicitor is not obliged to produce any document for which legal professional privilege could be maintained. Section 20B(9) and (11) make additional provision for dispensing auditors and tax advisers from having to produce relevant communications which are their property (i.e., in effect, their working papers) or which are merely explanatory. For this last purpose, a tax adviser means any person appointed to give advice about the tax affairs of another person. The argument is that these sections make special provision for the assertion of privilege in respect of communications with barristers and solicitors, thus implicitly excluding the assertion of privilege for communications with any one else. The point is said to be reinforced by the fact that Parliament has made distinct provision in section 20B(9) for documents in the possession of a broader category of tax advisers. In my view this argument cannot be accepted in the light of the decision of the House of Lords in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563, which concerned the same provisions of the Taxes Management Act. The relevant advice in that case had been given by solicitors and counsel, but the argument was similar. Section 20B(8) expressly preserved legal professional privilege in respect of documents requisitioned from third parties under section 20(3) but not in respect of documents requisitioned from the taxpayer himself under section 20(1). The point made for the Inland Revenue, as summarised by Lord Hoffmann at para 10, was that Parliament has provided a number of specific safeguards and restrictions for the protection of the taxpayer, including an express preservation of LPP for documents in the possession of a barrister, advocate or legal adviser. It therefore necessarily follows that no wider qualification of the general words of section 20(1) was intended: see also para 21. The argument failed essentially because the provisions relating to privilege in this part of the Act could not be regarded as a complete code governing its availability. Section 20B(8) was held to be directed at a limited problem arising from dicta in Parry Jones v Law Society [1969] 1 Ch 1, which appeared to suggest that documents in the hands of a lawyer were protected only by the law of confidence, not by privilege. As for section 20B(9), that was held to be irrelevant because it was not concerned with privilege at all: see paras 14 and 19. More generally, Lord Hoffmann, with whom the rest of the Appellate Committee agreed, held at para 8 that the fundamental character of the clients right to invoke privilege meant that it could be overridden by statute only if an intention to do so was expressly stated or appear[s] by necessary implication. As Lord Hobhouse pointed out in his concurring judgment, at para 45, A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context. It distinguishes between what it would have been sensible or reasonable for Parliament to have included or what Parliament would, if it had thought about it, probably have included and what it is clear that the express language of the statute shows that the statute must have been included. A necessary implication is a matter of express language and logic not interpretation. The decision in Morgan Grenfell illustrates the difficulty of arguing that statutory provisions expressly reserving legal professional privilege in some circumstances impliedly override it in all others. The most that can be said about section 20B(8) in the present context is that, like some other statutes conferring power to requisition documents or information, it assumes that privilege is available only in cases where a barrister, advocate or solicitor is involved. That is understandable at a time when no court had pronounced on the application of privilege to tax advice given by any one else. But it is axiomatic that the assumptions of Parliament are not the same as its enactments. In my view it is impossible to spell out of these provisions a necessary implication that Parliament intended to confine the privilege to communications with lawyers even if the common law extended it to others. On the footing that privilege attaches to communications about tax advice from accountants on exactly the same basis as corresponding communications with lawyers, I can discern no rational reason why Parliament should have intended to distinguish between them. The truth is that Parliament was not intending to deal with the advice of non lawyers at all. I come therefore to the third of the arguments for leaving the present issue to Parliament, which is to my mind the strongest of them. It can fairly be summarised as follows: (1) Legal professional privilege has been extended by statute to patent and trade mark attorneys, licensed conveyancers, and persons who without being barristers or solicitors are authorised to provide certain legal services under the Courts and Legal Services Act 1990 or the Legal Services Act 2007. There has been no equivalent extension to accountants. (2) A substantial number of statutes confer on the police or regulatory and disciplinary bodies the powers to obtain documents or information, subject to reservations for legal professional privilege which refer to professional legal advisers. Other provisions, such as section 2 of the Criminal Justice Act 1987 (which confers a corresponding power on the Serious Fraud Office), preserve legal professional privilege subject to exceptions which refer in terms to lawyers. The possibility of extending the privilege to accountants was (3) considered on a number of occasions between 1967 and 2008, but on none of them was Parliament prompted to extend the privilege to the advice of accountants. (4) More generally, the question which professionals qualify would be left uncertain if the appellants argument succeeded. They are seeking the recognition only of the privileged status of tax advice given by members of the Institute of Chartered Accountants and the Chartered Institute of Taxation, but the principle which is said to justify such recognition would be capable of affecting a wider and wholly uncertain category of legal adviser. In my view, none of these considerations require this court to refrain from giving a principled answer to the question posed on this appeal. The first point to be made is that we are not here concerned with social or economic issues or other issues of macro policy which are classically the domain of Parliament. Nor are we concerned with legal principles derived from statute. Legal professional privilege is a creation of the common law, whose ordinary incidents are wholly defined by the common law. In principle, therefore, it is for the courts of common law to define the extent of the privilege. The characterisation of privilege as a fundamental human right at common law makes it particularly important that the courts should be able to perform this function. Fundamental rights should not be left to depend on capricious distinctions unrelated to the legal policy which makes them fundamental. Statute has intervened frequently in the past half century, but it is important to appreciate on what basis it has done so. In the great majority of cases, statute has intervened for the limited purpose of reserving privilege when creating new powers to obtain documents or information by compulsion. Sometimes, the privilege is reserved subject to some qualification, although the commonest qualification relates to the right to require a lawyer to disclose his clients name and address, something that would not necessarily be privileged anyway. Section 20 of the Taxes Management Act 1970 is one of the earliest interventions of this kind. They have become commoner as statutory regulation has become more pervasive and powers of compulsion have multiplied. Some of the enactments in question, like the Taxes Management Act itself, assume that the privilege applies only to communications involving barristers and solicitors. Some of them, particularly in more recent times, have assumed that it applies to communications involving legal advisers or professional legal advisers, a term which would naturally include any person who gives legal advice in the course of his profession. Provisions of these kinds are not concerned to define the extent or incidents of the privilege at common law. They operate by reference to the common law as it is declared by the courts. They may proceed on assumptions about the categories of legal adviser to which the relevant common law applies, which may be expressed with greater or lesser precision. Either way, assumptions of this kind are entirely consistent with the courts continuing to perform their historic role of clarifying and developing the common law. Indeed, the regularity of statutory intervention makes it the more important for the courts to declare the common law so that Parliament can proceed on a correct assumption about what it is. The problem at the moment is that Parliament is legislating against the background of assumptions about the common law which are contrary to principle, discriminatory and out of date. Only the courts can be expected to rectify that state of affairs. Certainly, the frequency of references to privilege in statutes providing for the compulsory provision of documents or information has not prevented the courts from recognising the privileged status of relevant dealings with foreign lawyers. A French notary or a German Rechtsanwalt, for example, could not properly be described as a barrister or solicitor for the purposes of section 20B(8) of the Taxes Management Act, but it would be surprising to hear it said that a client who consulted one of these professionals could not claim privilege for their communications in response to a requisition under section 20. The other purpose for which statute has intervened in recent years is to recognise certain professional activities other than those of barristers and solicitors as attracting the privilege. I find it difficult to attach much significance to this. None of the enactments in question attempt a comprehensive scheme of recognition which could make the omission of accountants tax advice significant. There has been piecemeal legislation applying the privilege to certain professional activities of patent and trade mark attorneys and licensed conveyancers. In the case of patent and trade mark attorneys, this was necessary in order to reverse the effect of Wilden Pump Engineering Co v Fusfeld [1985] FSR 159, which had held that their activities did not attract privilege. A more systematic attempt to address the issue was made by section 63 of the Courts and Legal Services Act 1990, which has now been superseded by section 190 of the Legal Services Act 2007. Section 190(2) of the 2007 Act provides that where advocacy, litigation, conveyancing or probate services are provided by individuals who are not barristers or solicitors, legal professional privilege is to attach in like manner as if [the individual] had at all material times been acting as [his] clients solicitor. By section 190(4), it is also to attach where a body licensed by the Legal Services Board provides services through a person who is a relevant lawyer or acts under the supervision or direction of a relevant lawyer. Relevant lawyers include solicitors, barristers, Scottish advocates, registered foreign lawyers, European lawyers and also an indeterminate category of persons authorised by the Board to carry on a reserved legal activity. These provisions can contribute very little to the present debate for two reasons. First, legal advice is not as such covered by the statutory scheme. It is regulated only so far as it is incidental to one of the services specified for the purpose of subsection (2) or the reserved legal activities relevant to subsection (4). The latter are defined in section 12. Secondly, section 190(7) provides that the rest of the section is without prejudice to any. rule of law by virtue of which a communication, a document, material or information is privileged from disclosure. So far as any policy can be discerned which is relevant to the present issue, it is to enable legal services to be supplied on a comparable basis as to privilege and other matters, irrespective of traditional demarcation lines between barristers, advocates and solicitors on the one hand and other persons providing the same services on the other. There is a well established difference between a case where Parliament has merely made assumptions about the common law in framing legislation, and cases where the legislation in question is workable only if that assumption is correct. It was pointed out by Lord Reid in Birmingham Corporation v West Midlands Baptist (Trust) Association Inc [1970] AC 874, 898F G, and the courts have implicitly addressed it on many occasions. Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70 is one of them. The House of Lords extended the right to restitution of unlawfully demanded tax, notwithstanding that important policy considerations were engaged and notwithstanding extensive statutory intervention in the relevant area. Lord Slynn observed at p 200 C E: I do not consider that the fact that Parliament has legislated extensively in this area means that no principle of recovery at common law can or should at this stage of the development of the law be found to exist. If the principle does exist that tax paid on a demand from the Crown when the tax was the subject of an ultra vires demand can be recovered as money had and received then, in my view, it is for the courts to declare it. In so doing they do not usurp the legislative function. I regard the proper approach as the converse. If the legislature finds that limitations on the common law principle are needed for reasons of policy or good administration then they can be adopted by legislation. At the other extreme, in Marcic v Thames Water Utilities Ltd [2004] 2 AC 42 and Johnson v Unisys [2003] 1 AC 518 the suggested developments of the common law would have made apparently comprehensive schemes of statutory regulation unworkable in the manner which Parliament intended. In a case like this, where the suggested development conflicts with some of the assumptions of Parliament but not with its intentions, the courts should be extremely wary before acceding to invitations to leave those assumptions uncorrected when their practical application has become anomalous or incoherent in the light of modern developments. Over the years, there have been some proposals to protect communications with accountants relating to tax advice by statute. Their rejection or abandonment is said by the respondents to suggest that Parliament has taken a position on the question. In 1967, the Law Reform Committee advised in its Sixteenth Report (Cmnd 3472) against creating a statutory privilege for confidential professional relationships generally. The privilege would have been an enhanced rule of confidentiality along the same lines as the secret professionnel in most European civil law jurisdictions. It would have applied to doctors, priests, bankers and accountants. It is, however, clear that the Committee was dealing with the possibility that such a privilege might be desirable by virtue of the confidential character of the relationship, rather than any public interest in enabling persons to take legal advice. This has nothing to do with legal professional privilege. The Keith Committee came rather closer to the mark when they reported in 1983 on the enforcement powers of the revenue departments (Cmnd 8822). The Committee considered (para 26.6.13) that there does not appear to be any reason to distinguish between a legally qualified tax agent and any other, at least in the tax field. They recommended by a majority that the privilege should extend to non legally qualified tax agents in private practice who were members of an incorporated society of accountants or the Institute of Taxation. They considered that the privilege should be subject in all cases (including lawyers) to a right in the tribunal to override it where its exercise would unreasonably impede the ascertainment of the facts. For reasons which do not appear to be recorded, nothing came of this proposal. It would have involved an extension of the categories of relevant adviser but some significant restrictions of the scope of the privilege. This may have been why it got no further. In 2003, the Government rejected a recommendation of the Director General of Fair Trading that accountants legal advice should be privileged on the same basis as that of lawyers, on the ground that the discrimination between them was anti competitive. Its stated reason was that it was undesirable to increase the number of people who could decline on the ground of privilege to produce information about money laundering transactions or tax avoidance schemes. Finally, there was a brief discussion in the committee stage of the Finance Bill 2008 of a proposed amendment to Schedule 36, which substantially re enacted the various powers of the revenue departments to requisition documents or information. Schedule 36 as enacted does in fact allow tax advisers (generally accountants) to withhold material requisitioned by the Revenue if they constitute communications for the purpose of giving or obtaining advice about a clients tax affairs. The proposed amendment was directed to the fact that whereas the advice of lawyers was to be privileged in the hands of both the adviser and the client, the corresponding statutory protection for communications with tax advisers applied only to material in the hands of the adviser. The same material could be obtained by compulsion from the client himself. The Financial Secretary to the Treasury said that the Government was reluctant to extend the protection for privileged material too widely but would consider the position, and on that basis the amendment was withdrawn. The matter does not seem to have resurfaced. The differentiation between material in the hands of the adviser and in the hands of the client was criticised as irrational by Lord Hoffmann in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563 at para 22, in the context of section 20B(8) of the Taxes Management Act, which made a similar distinction in a case where the advice was sought from a lawyer. The same criticism was made by Sir Gordon Slynn as Advocate General in AM & S Europe Ltd v Commission of the European Communities (Case 155/79) [1983] QB 878, 913 914. It is a poor advertisement for the coherence of English statute law in this area. In my view these proposals and their reception fall a very long way short of suggesting that Parliament has implicitly taken a position on the application of legal professional privilege to communications with accountants. The material shows that the Government is reluctant to increase the number of claims to privilege in tax investigations, which will surprise no one. I do not think that it shows any more than that. Only the Keith Report and the Government response to the proposals of the Director General of Fair Trading directly address the question whether privilege or some statutory equivalent should attach to communications with accountants. The former appears to have been rather cursorily discussed in Parliament and the latter not at all. The proposal in 2008 to deal with the anomalous distinction between materials in the hands of a tax adviser and his client was discussed in Parliament, but was left inconclusively in Limbo. Looking at these matters in the round, one point stands out. Most of the policy considerations urged upon us on this appeal ultimately rest on concerns that privilege may get out of hand if it may be claimed in respect of legal advice from non lawyers. It is said that only Parliament can address this problem so far as it is one. I do not underestimate these concerns. But I do not think that they impinge on the issue in this appeal. This is because, although there are perfectly rational reasons why one might wish to see the scope of legal professional privilege limited or the occasions for claiming it curtailed, there are no rational reasons for addressing the issue by discriminating between different categories of legal adviser performing precisely the same function. If privilege is abused by professional legal advisers, and there is no evidence that it is, then the answer lies in (i) the scrutiny to which all claims to privilege are ultimately exposed in court, and (ii) in a sufficiently extreme case, professional disciplinary sanctions against those involved. None of this requires an arbitrary distinction to be made between different kinds of legal adviser which has no basis in principle. If on the other hand, the scope of privilege at common law is thought to be too broad, then the remedy is legislation to modify the common law principles as they apply to all professionals performing the relevant functions and not just some of them. As applied to tax advice this should be straightforward if there is enough Parliamentary support for it: there is a Finance Bill once a year. But none of this has anything to do with the present appeal. We are not here concerned with the breadth of the scope of privilege at common law, but only with identifying the categories of adviser to which the existing principles apply. I turn, finally, to the argument that in recognising that privilege attaches to the advice of members of the Institute of Chartered Accountants or the Chartered Institute of Taxation, we would be acknowledging a principle which would let in an uncertain and potentially large category of other professionals. I would accept that so far as other professionals are found to be giving legal advice on substantially the same basis as barristers and solicitors do, the privilege will apply to them in the same way. Coherence and rationality demand nothing less. But fears of a flood of privilege claims arising from the activities of supernumerary legal advisers strike me as extravagant. The privilege is confined, as it always has been, to the taking of legal advice in the course of a professional relationship with a person whose profession ordinarily includes the giving of legal advice. There are other advisory professions whose practitioners although not lawyers require some knowledge of law. A chartered surveyor advising on the structural integrity of a building may require a knowledge of the building regulations. An investment banker advising on a takeover may require a knowledge of the Takeover Code and associated regulatory codes. An auditor will require a basic knowledge of company and insolvency law. The activities of these professionals will no doubt be informed by their understanding of the relevant law. But it does not follow that their profession has as an ordinary part of its functions the giving of legal advice. The legal element involved in their advisory work is likely to be purely incidental to the exercise of a broader advisory function. The distinctive feature of accountants advice on tax law is that advice on tax law is itself the service which clients routinely seek from them. I very much doubt whether many other professions will find themselves in the same position. It may be that patent agents did in 1984 when the Court of Appeal held in Wilden Pump Engineering Co v Fusfeld [1985] FSR 159 that their legal advice did not attract privilege. But so far as this decision is based on the proposition that communications for the purpose of giving or receiving legal advice are never capable of being privileged if given by non lawyers, I think that it was wrong. As far as patent and trade mark attorneys are concerned, the point no longer matters. Their position has since been regulated by statute. I would allow the appeal and remit the case to the High Court to decide whether the material requisitioned by the respondent would have been privileged if a solicitor or barrister had performed the functions that the accountants performed, and a direction to quash the notices if it would have been. LORD CLARKE (dissenting) I have read the judgments of Lord Neuberger, Lord Sumption and Lord Hope with great interest. I agree with Lord Sumption that the appeal should be allowed, essentially for the reasons he gives. I briefly summarise my reasons for reaching that conclusion because the true position at common law does seem to me to be a matter of some importance and I hope that the whole issue will be considered by Parliament as soon as reasonably practicable. The striking feature of the judgments of Lord Neuberger and Lord Sumption, and indeed of Lord Hope, is to my mind that they agree what the common law is or should be if the issue is treated as one of principle. As I see it, that principle can readily be seen by taking a simple example. Suppose that two individuals, A and B, have the same problem, the solution to which depends upon an application of the legal principles of taxation law to the same, or substantially the same, facts. Suppose that A seeks advice from, say, Freshfields, and that B seeks advice from, say, PricewaterhouseCoopers. Each asks the same question and gives an account of what are substantially the same facts to the person from whom the advice is sought. Each is receiving legal advice. The question for decision in this appeal is whether the information given and the advice received are privileged as legal advice. Are both A and B entitled to claim the privilege and refuse to disclose to HMRC the information and the advice? In my opinion, the only principled answer to that question is yes. It is accepted on all sides that the privilege is that of the client, that is A and B, and not that of either the solicitors or the accountants. It is also accepted that, as recently confirmed in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] UKHL 21, [2003] 1 AC 563, the privilege is a fundamental human right long established in the common law, which was a necessary corollary of the right of any person to obtain skilled advice about the law: per Lord Hoffmann, with whom the other members of the House of Lords agreed, at para 7. As Lord Sumption says at para 122, the privilege depends upon the public interest in promoting A and Bs access to legal advice on the basis of absolute confidence. It seems to me to follow that, if the common law treats the information and advice as privileged in the case of A, principle requires that it must do the same in the case of B. The advice is the same legal advice in both cases and the expertise of the adviser in each case is broadly similar, if not the same. Indeed some accountants may be able to give more specialised legal advice than some solicitors. I agree with Lord Sumption, for the reasons he gives (at para 122), that the privilege is conferred in support of the clients right to consult a skilled professional adviser and not in support of a right to consult the members of any particular professional body. On the respondents case, as Lord Sumption describes at para 123, the privilege extends to advice given by salaried legal advisers and to foreign lawyers. According to Lord Neuberger at para 29, it also extends to members of CILEX. The privilege also applied historically to scriveners. It is thus clear that it is not limited to advice given by solicitors and barristers. If it extends to foreign lawyers, it is to my mind impossible to see how it can properly be denied in the case of advice given by an accountant qualified to give advice on the law of tax. It is important to note that the issue in this appeal relates only to legal advice privilege and not litigation privilege. It is thus not directly related to the administration of the courts by judges. Lord Scott put it clearly in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 at para 34: None of these judicial dicta tie the justification for legal advice privilege to the conduct of litigation. They recognise that in the complex world in which we live there are a multitude of reasons why individuals, whether humble or powerful, or corporations, whether large or small, may need to seek the advice or assistance of lawyers in connection with their affairs; they recognise that the seeking and giving of this advice so that the clients may achieve an orderly arrangement of their affairs is strongly in the public interest; they recognise that in order for the advice to bring about that desirable result it is essential that the full and complete facts are placed before the lawyers who are to give it; and they recognise that unless the clients can be assured that what they tell their lawyers will not be disclosed by the lawyers without their (the clients) consent, there will be cases in which the requisite candour will be absent. It is obviously true that in very many cases clients would have no inhibitions in providing their lawyers with all the facts and information the lawyers might need whether or not there were the absolute assurance of non disclosure that the present law of privilege provides. But the dicta to which I have referred all have in common the idea that it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers legal skills in the management of their (the clients) affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else (see also paras 15.8 to 15.10 of Zuckermans Civil Procedure (2003) where the author refers to the rationale underlying legal advice privilege as the rule of law rationale). I, for my part, subscribe to this idea. It justifies, in my opinion, the retention of legal advice privilege in our law, notwithstanding that as a result cases may sometimes have to be decided in ignorance of relevant probative material. That same analysis seems to me to lead to the conclusion that where advice on tax law is sought from and given by an accountant it should be subject to legal advice privilege in the same way and that there is no difference between the positions of A and B in my example. It was no doubt considerations of this kind that led Charles J to say in this case at first instance (at paras 64 65), in my opinion correctly, that there is a compelling, indeed unanswerable, case that in modern conditions accountants have the expertise to advise on tax law and that it is firms of accountants rather than firms of solicitors who give such advice and represent clients in disputes with the HMRC on many aspects of their tax affairs. He concluded that the respondents had shown that accountants do what lawyers are described as doing in the cases that establish legal advice privilege. Lord Neuberger has demonstrated that the ambit of the privilege as widely understood is that it is limited to lawyers and does not extend to accountants. He has not, however, been able to point to any principled analysis of the reason why it is so limited. The decided cases do not provide such an analysis. For example, in a case entitled Dormeuil Trade Mark [1983] RPC 131, in which privilege was claimed in respect of the disclosure of correspondence between the plaintiffs and their trade mark agents, although Nourse J rejected the claim, he did not give any principled basis for doing so. He noted at page 136 that historically cases had been conducted only by solicitors and counsel and added this: [Counsel for the defendants] says that in those days it was never necessary for anybody to consider whether the privilege should apply in a case where other professional men, far less non professional men, were concerned in advising clients, or indeed in conducting litigation on their behalf. He says that in these days the rule should be different. Like the learned Master, I see great force in that submission. It does seem to me to be a little odd and possibly perverse, that if a trade mark agent is entitled to advise a client in relation to certain legal matters and to conduct certain legal proceedings on his behalf, the same privilege should not apply as would certainly apply in a case where the advice was being given and the proceedings were being conducted by a solicitor. Nevertheless I do not think it is open to me in this court to fly in the face of the established rule, as enunciated in Wheeler v Le Marchant, the statement of Chitty J in Moseley v Victoria Rubber Company, and the fact that in 1968 the legislature seemed to think it was necessary expressly to extend the privilege to the case of patent agents. In the circumstances Nourse J made the order with some reluctance. He certainly did not identify the principle behind the rule. Nor did either of the cases he referred to. In Wheeler v Le Marchant (1881) 17 Ch D 675 the Court of Appeal made it clear that the privilege was limited to legal advice obtained from professional persons, by which was meant, as Nourse J put it at p 135, persons who have a full legal qualification here or abroad. In Moseley v Victoria Rubber Company (1886) 55 LT 482 Chitty J had said that it was quite clear that communication between a man and his patent agent were not privileged. He did not identify the rationale for such a rule. Nor to my mind did Wilden Pump Engineering Co v Fusfeld [1985] FSR 159. In any event, I agree with Lord Sumption (at para 137) that, to the extent that that decision was based on the proposition that communications for the purpose of giving or receiving legal advice are never capable of being privileged if given to non lawyers, it was wrong. Legal advice privilege is a creature of the common law. As such it should be capable of redefinition to cater for changed conditions. If principle requires that it should apply to situations to which it was previously thought not to apply, I can see no reason why this court should not so state, unless prevented from doing so, either expressly or necessary implication, by statute. We have been referred to no such statute. Attention has been drawn to a number of areas in which Parliament may have assumed that the common law was different. However, in my opinion the principle identified by Lord Slynn in Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70, at p 200C E (and quoted by Lord Sumption at para 134 above) applies equally to the issue for decision in this appeal. He put the point thus: I do not consider that the fact that Parliament has legislated extensively in this area means that no principle of recovery at common law can or should at this stage of the development of the law be found to exist. If the principle does exist that tax paid on a demand from the Crown when the tax was the subject of an ultra vires demand can be recovered as money had and received then, in my view, it is for the courts to declare it. In so doing they do not usurp the legislative function. I regard the proper approach as the converse. If the legislature finds that limitations on the common law principle are needed for reasons of policy or good administration then they can be adopted by legislation. If principle requires the court to hold that legal advice privilege extends to advice given by accountants on a professional basis, the court should in my opinion so declare. As Lord Slynn put it, if the legislature finds that limitations on that principle are required for reasons of policy they can be adopted by legislation. It is of interest to note that when the Keith committee considered the position, it could not identify a rationale for the distinction advanced on behalf of the respondents and it did not recommend the continuation of the status quo. As Lord Sumption observes at para 135, it recommended that the privilege should extend to at least some tax advisers but that it should be subject to a limitation in all cases. As Lord Sumption says, the matter was only cursorily discussed in Parliament. In all the circumstances, I do not think that any of the pragmatic considerations identified by Lord Neuberger and Lord Hope are sufficient to confer the privilege on A in my example and to deny it to B. I agree with Lord Sumptions striking conclusion at the end of para 131 that fundamental rights should not be left to depend on capricious distinctions unrelated to the legal policy which makes them fundamental. Lord Sumption expresses the view in para 114 that the privilege extends to advice given by members of a profession which has as an ordinary part of its function the giving of skilled legal advice. I would expect that criterion to be satisfied only where, and to the extent, that they are members of a properly regulated professional body. For these reasons, which are essentially the same as those of Lord Sumption, I would allow the appeal and make the order which he proposes. |
This appeal challenges the making of a non party costs order under section 51 of the Senior Courts Act 1981 against the product liability insurer of one of the defendants in litigation being managed under a Group Litigation Order (GLO). Although the particular circumstances which led to the making of the non party costs order may fairly be described as unusual or even rare, they give rise to important questions about the principles upon which the exercise of the courts broad jurisdiction to make such orders should depend, where the non party is a liability insurer, both funding and largely directing the conduct of its insured defendants defence in the relevant litigation. The search for principle is particularly acute where, as here, some but not all the claims in the group litigation fall within the confines of the cover provided by the insurance. In Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, 975 Lord Goff of Chieveley said that it was for the rule making authority making rules of court and for the appellate courts to establish principles upon which the broad discretionary power to make costs orders against non parties should be exercised. As will appear, a series of authorities have sought to lay down some principles regulating the exercise of this discretion against non party insurers. This appeal provides an opportunity to review that developing jurisprudence. The Facts The group litigation which has generated this appeal concerns the supply of defective silicone implants for use in breast surgery, manufactured by the French company Poly Implant Prothse (PIP). One of the defendants, Transform Medical Group (CS) Ltd (Transform) operated medical clinics which supplied and fitted implants manufactured by PIP to customers in England. The appellant Travelers Insurance Co Ltd (Travelers) provided product liability insurance to Transform which covered liability for bodily injury (or property damage) occurring during the period of insurance, which ran from 31 March 2007 to 30 March 2011. Many of those implants ruptured, causing bodily injury (as defined), principally in the form of leakage of their contents. Of the 1,000 or so women claimants joining in the group litigation, some 623 of their claims were brought against Transform, which was one of a number of similar clinics joined as defendants in the litigation. Of the 623 claiming against Transform, some 197 were later identified as having suffered bodily injury from defective PIP implants during the period covered by Travelers insurance. Of the 426 remaining claimants against Transform, all of whose claims fell outside the cover provided by Travelers insurance, some 194 (labelled in the proceedings the worried well) had not yet suffered bodily injury from a rupture of their implants, but were exposed to a risk that they would do in the future. The remainder had suffered bodily injury from a rupture of their implants outside the period covered by Travelers insurance. Collectively, the 426 claimants within those two classes have been labelled the uninsured claimants. They are the respondents to this appeal. Product liability cover was provided by Travelers to Transform under standard form policies which, broadly speaking, required Travelers to indemnify Transform in respect of the costs (and costs liability) incurred or arising in proceedings where the claims made fell within the cover provided and, in relation to such claims, conferred upon Travelers the right to control the conduct thereof on behalf of Transform. Further, Transform was prohibited from making admissions or offers to settle in relation to claims falling within the cover provided by the policies, without Travelers consent. Transform was required to give Travelers all information and assistance which it might require in connection with any such claim. The 1,000 claimants pursued their claims arising out of allegedly defective PIP implants pursuant to a GLO made on 17 April 2012 by Wyn Williams J. The litigation was case managed by Thirlwall J (later LJ) at all material times after October 2012. As is reflected in para 5 of the GLO, it was appreciated from the outset that the claims were likely to give rise to common or related issues of fact and law. Paragraph 12 of the GLO made provision for sharing of common costs (that is all costs other than those which are purely personal to each claimant), on the basis of dividing common costs by the number of claimants pursuing their claims, and for each partys liability for, and entitlement to recover, costs to be several and not joint. By case management orders made in 2013 Thirlwall J identified two common issues for early determination and selected four test claims to be fast tracked for the purposes of their early determination ahead of the remainder, which were all stayed. In order to preserve the anonymity of the claimants I shall refer to them as claims A to D. Transform was the defendant clinic in all four of them. Claims A and B were made by two of the 197 claimants against Transform whose claims fell within the cover provided by the Travelers policies (insured claimants). Claims C and D were by uninsured claimants. Claim C asserted bodily injury falling outside the period of insurance. Claim D was by a worried well claimant. The selection of the test cases was not made by reference to any understanding on the part of the court, or the claimants, about the extent and terms of Transforms product liability insurance from Travelers. It was, therefore, mere happenstance that two of the test claims were insured, and two uninsured. Furthermore, the costs liability and entitlement arising from the litigation of the common issues in the four test claims was itself shared among all 1,000 claimants and, in particular, all 623 claimants against Transform, on a several only basis pursuant to the GLO. Transform had obtained the PIP breast implants supplied to its customers from a company called Cloverleaf Products Ltd (Cloverleaf), against which Transform made a Part 20 claim for an indemnity for any liability of its own to the claimants. Cloverleaf was itself insured by Amlin Corporate Solutions Ltd (Amlin) which provided cover to Cloverleaf in respect of the period 2004 to 2007, for which Transform was itself uninsured. The claimants legal team had from an early stage in the litigation been understandably concerned to discover, if they could, the nature and extent of Transforms insurance cover, all the more so when in about mid 2013 they became aware that Transform might be in financial difficulties. Inconclusive discussions took place between the claimants legal team, the solicitors jointly retained by Transform and Travelers to conduct Transforms defence, and between Transform, Travelers and those solicitors, about what if any disclosure might voluntarily be made. Eventually the claimants made an application against Transform for disclosure of information about its insurance position in July 2013, which was heard by Thirlwall J in late September and dismissed (subject to one exception) in her reserved judgment on 22 November 2013: [2013] EWHC 3643 (QB). The exception was that she directed Transform to inform her, confidentially, as to whether it had the resources to fund its own defence up until trial. In the event however, the relevant limitations upon Transforms cover from Travelers, namely the temporal limits and the exclusion of worried well claims, were voluntarily disclosed to the claimants by June 2014. It was by then apparent that, without insurance, Transform would be unlikely to have the resources to pay compensation or costs to successful uninsured claimants. The judge was later to find that, had the claimants solicitors known from the outset about those limits on Transforms insurance cover, the uninsured claimants would not have commenced or at least continued their claims as registered members of the claimants group under the GLO. But by June 2014 they had on a several only basis participated in the cost of the prosecution of the common issues in the four test cases, upon which considerable outlay had been expended, including on the obtaining of vital expert evidence probative of the deficiencies in the quality of the PIP implants. They had done so on the basis of no win no fee contingency fee agreements, backed by after the event (ATE) insurance so that, although to that extent protected in their own pockets, the substantial recoveries (including success fees and ATE premium) which might be expected to be made after a successful claim against an insured defendant were threatened with being frustrated if the uninsured claimants only recourse lay against the financially distressed Transform (which, incidentally, went into insolvent administration a year later). It might be asked therefore why, after the disclosure of the limitations on Transforms insurance cover was made in June 2014, the uninsured claimants against Transform continued as members of the GLO, or the group as a whole continued to pursue the uninsured test claims C and D. The answer, as was expressly confirmed by Mr Hugh Preston QC on behalf of the respondents in response to an inquiry from the court during the hearing of this appeal, was that an important (although not sole) reason why they did so was in the hope of obtaining a non party costs order against Travelers in due course, if successful in their claims against Transform. Travelers was in the meantime funding the whole of Transforms defence costs, consisting mainly of the costs of defending all four sample claims in relation to the common issues, notwithstanding that claims C and D were uninsured. This is because, in relation to issues common to insured and uninsured claims, it is settled law that insurers may not seek to apportion their contractual liability to pay defence costs: see New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd [1997] 1 WLR 1237 (PC) approved by this court in International Energy Group Ltd v Zurich Assurance plc UK Branch [2016] AC 509, paras 36 38. That much is common ground. In July 2014 Transform sought and obtained Travelers consent to the making of a drop hands offer to the worried well claimants. It does not appear that such an offer was made and, when Transform sought consent to do so again in January 2015, consent was not given. The judge also found (but it is not clear precisely when this occurred) that Transform sought consent from Travelers to make an admission of liability to the uninsured claimants, and that consent for this was not forthcoming either. Meanwhile, an attempt to settle the litigation against Transform by mediation was attempted but without success in August 2014, mainly because Cloverleaf and Amlin declined to participate. In September 2014 the trial of the sample claims listed for October 2014 was adjourned, so as to enable a coverage dispute to be resolved between Transform and Travelers. That was settled in April 2015 and a settlement of all the insured claims against Transform resolved at a mediation in June 2015 in which Cloverleaf and Amlin did participate. Transform was by then in administration and, being fully insured in relation to those claims, the administrators took no active part in the mediation. Final agreement was reached in August 2015, including sample cases A and B, leaving only the uninsured claims outstanding. At that point Travelers obligation to fund defence costs ceased. The remaining uninsured sample claims C and D were eventually determined in May 2016, by an award of summary judgment. By then, all the other uninsured claimants against Transform had obtained default judgment, in March 2016. The section 51 Applications Notice that a section 51 application would be made against Travelers was communicated to Travelers before the uninsured claimants obtained summary judgment against Transform, as described above. It was heard by Thirlwall LJ in October 2016 and determined in an admirably concise reserved judgment handed down on 24 February 2017: [2017] EWHC 287 (QB). The judge reminded herself of the leading general authorities on non party costs orders, to which reference will be made below. She referred only to one first instance case about non party cost orders against insurers, namely Citibank NA v Excess Insurance Co Ltd [1999] 1 Lloyds Rep IR 122, although she noted that it had been followed in later cases. But she distinguished that line of authority on the basis that, uniquely in the case before her, the insurers had participated in the defence of wholly uninsured claims. She therefore directed herself by reference to the general principles relating to non party costs orders namely: (1) whether the case was exceptional and (2) whether the making of an order would accord with fairness and justice. Her decision to make a non party costs order against Travelers was, in summary, motivated by the following analysis. First, she took the view that the uninsured claims were entirely separate and distinct from the insured claims, so that Travelers had no business involving itself in the uninsured claims at all, either directly or through jointly retained solicitors. Secondly, she was powerfully influenced by her conclusion (which is not open to challenge in this court, having been affirmed by the Court of Appeal) that if early disclosure of the limitations on Travelers insurance had been made, the uninsured claimants would not have pursued their claims, so that the costs which they then incurred on a several only basis under the terms of the GLO for which they had no effective recourse, outside section 51, against anyone, would not have been incurred at all. She concluded that the decision not to make early disclosure had been, at least, influenced by a perception on the part of the jointly retained solicitors that non disclosure would serve Travelers rather than Transforms interests, and that the conflict in that regard had been overlooked. Thirdly, the judge was clearly much affected by her perception that there was an asymmetry or lack of reciprocity in costs risk as between the uninsured claimants and Travelers. If the uninsured claims were successfully defended (at Travelers expense) then Travelers would have a full costs recovery against, inter alia, the uninsured claimants for their several shares of that liability. By contrast, if the uninsured claimants were successful against Transform, they would have no recourse at all against Travelers for their costs and, because of Transforms financial plight, no effective recourse against Transform either. Looking at it from Travelers perspective, the presence of the uninsured claimants within the GLO reduced their costs exposure of failure on the common issues by reference to the number of the uninsured claimants against Transform expressed as a fraction of all the claimants against Transform, whereas Travelers would suffer no corresponding reduction in their costs recovery if successful. By contrast, if only insured claimants had proceeded against Transform, Travelers costs risk would have been for the whole of the common costs, and there would have been reciprocity. Finally, the judge regarded Travelers participation in questions about whether to make offers of settlement or admissions to the uninsured claimants as further factors strongly supportive of a conclusion that Travelers had participated in the uninsured claims to an extent sufficient to incur a non party costs liability. The Court of Appeal (Patten and Lewison LJJ) reached the same conclusion as the judge, but for slightly different reasons: [2018] EWCA Civ 1099. They thought that the judge went too far in her conclusion that the uninsured claims had nothing whatsoever to do with the insured claims, because the same common issues arose in both, and Travelers were obliged under the policies (and the general law) to fund the defence of Transforms position in relation to those common issues in all four test cases. They were, if anything, even more powerfully affected by the asymmetry or lack of reciprocity as between the uninsured claimants and Travelers in relation to costs risk. Having described that lack of reciprocity as leading to the fortuitous result that Travelers escaped liability for approximately 68% of the costs of the common issues Lewison LJ continued, at para 12: My instinctive reaction is that this result accords neither with reason nor justice given the probably unique circumstances of this case. He noted that the editors of Colinvaux and Merkin on Insurance Contract Law reached a similar conclusion, namely that reciprocity was appropriate (see para 17). The Court of Appeal broadly upheld the judges factual analysis of the circumstances in which disclosure of Transforms insurance cover was delayed, and its consequences, and (not without hesitation) her conclusion that Travelers should bear responsibility for what she had regarded as the flawed advice given by the jointly retained solicitors, mindless of the underlying conflict of interest between Travelers, which stood to gain from the addition of uninsured claimants, and Transform, which stood to lose from it. But it is clear that the Court of Appeal regarded the reciprocity point as decisive, both because it made the present case exceptional and because it pointed the way to a non party costs order against Travelers as achieving a just result: see para 45, and its reference back to para 32. In conclusion, after an analysis of the cases (referred to below) about non party costs orders against insurers, the Court of Appeal concluded, at para 46, that the judge had been entirely correct to treat the question as depending upon the twin issues of exceptionality and justice, rather than upon any particular principles applicable to non party costs orders against insurers. The Law Section 51 of the Senior Courts Act 1981 (previously known as the Supreme Court Act) provides as follows: (1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in (a) (b) (ba) (c) the civil division of the Court of Appeal; the High Court; the family court; and the county court, shall be in the discretion of the court. (2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings including, in particular, prescribing scales of costs to be paid to legal or other representatives or for securing that the amount awarded to a party in respect of the costs to be paid by him to such representatives is not limited to what would have been payable by him to them if he had not been awarded costs. (3) The court shall have full power to determine by whom and to what extent the costs are to be paid This formulation amends the original language of section 51(1), which was as follows: Subject to the provisions of this or any other Act and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal and in the High Court, including the administration of estates and trusts, shall be in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid. It is not suggested that the change of language affects the issues arising in this appeal in any way. It was not initially appreciated that the jurisdiction to determine by whom costs are to be paid (first conferred in those words by section 5 of the Supreme Court of Judicature Act 1890) enabled the court to make costs orders against non parties at all. That was the issue decided in the affirmative by the Aidan Shipping case in 1986, reversing long standing authority consisting of decisions of the Court of Appeal to the contrary in 1901 and 1958. Lord Goffs recognition in that case that it was for the Rules Committee to regulate the exercise of this broad jurisdiction if it thought fit has not been reflected in any rules or practice directions relevant to this appeal. Rather the task of formulating principles for the discretionary exercise of this jurisdiction has fallen to the courts. It is evident (from p 981B in the Aidan Shipping case), and obviously right, that it is a pre requisite for the making of a costs order against a non party that the person sought to be made liable has some relevant connection with the proceedings in question. But the passage of time, and the endless development of novel ways of funding the ever increasing cost of civil litigation, has shown that non parties may become connected with proceedings in a wide variety of ways, usually providing funding and/or exercising some degree of control or providing assistance. They range from the pure funder who contributes to a litigation fund out of sympathy or charity, with no financial or other interest in the outcome, through the company shareholder who funds the companys litigation to preserve the value of his shareholding, or the director who controls the conduct of the litigation pursuant to a fiduciary duty to the company, to the speculator who buys into a piece of litigation with a view to making a profit from a share in the damages recovered. Liability insurers occupy a particular, well populated, space on that broad spectrum. It is therefore not surprising that the appellate courts have struggled to identify principles applicable across the board to the exercise of the jurisdiction to make a costs order against a non party, save at the very highest level of generality, although some attempt has been made, for example by Lord Brown of Eaton under Heywood giving the opinion of the Judicial Committee of the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807, paras 25 29, approved as an authoritative statement of English law by the Court of Appeal in Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17, para 62. But neither was a case about insurers, and the conduct of the non party relied upon in the Dymocks case for the making against it of a costs order consisted in the main of self interested funding rather than, as here, conduct of the relevant litigation. An earlier attempt to lay down general principles had been made by the Court of Appeal in Symphony Group Plc v Hodgson [1994] QB 179, but that was not an insurance case either. The ratio of that case was that a section 51 non party costs application should not be used as a substitute for the pursuit of a related cause of action against the non party in ordinary proceedings. Beyond that, the particular statements of principle there enunciated have no relevance to this appeal. It is not the purpose of this judgment comprehensively to reassess those generally applicable principles. It may be (and I am reluctantly prepared to assume but without deciding) that they really are limited, as the Court of Appeal thought in the present case, to the twin considerations of exceptionality and justice. The same general conclusion is to be found in the Deutsche Bank case. That said, I share all Lord Reeds concerns as to the lack of content, principle or precision in the concept of exceptionality as a useful test. Rather, this is an occasion to consider, in more granular detail, the principles which ought to apply to that distinct part of the broad spectrum of non parties occupied by liability insurers. While doing so it will be appropriate to make some brief observations about the impact of those general principles in the liability insurance context, and in particular about the role played by the presence or absence of a causative link between the conduct of the non party relied upon and the costs which the applicants incurred which they seek to recover against the non party under section 51. Liability insurance serves an obvious public interest. It protects those incurring liability from financial ruin. More importantly, it serves to minimise the risk that persons injured by the insured will go uncompensated as a result of the insureds lack of means. Unlike ATE insurance it is not primarily aimed at making a profit by assisting in the funding of litigation but, where liability becomes the subject of litigation, the insurance typically contains provision under which the insurer is obliged to fund the insureds defence and, as an inevitable concomitant, entitled to exercise substantial (although not always complete) control over the conduct of its insureds defence. The liability insurer is therefore typically an involuntary rather than voluntary funder of litigation, and the control which the insurer habitually exercises over the conduct of its insureds defence arises from a pre existing contractual entitlement, rather than from a freely made decision to intermeddle. Where a liability for which the insurance policy provides cover becomes the subject of litigation, there are long settled principles of insurance law which, in addition to the contractual terms of the policy itself, serve to regulate the proper participation of the insurer in the funding and, in particular, conduct and control of the insureds case. They long pre date the recognition of the non party costs jurisdiction. They were summarised by Sir Wilfred Greene MR in Groom v Crocker [1939] 1 KB 194, 203, as follows: The right given to the insurers is to have control of proceedings in which they and the assured have a common interest the assured because he is the defendant and the insurers because they are contractually bound to indemnify him. Each is interested in seeing that any judgment to be recovered against the assured shall be for as small a sum as possible. It is the assured upon whom the burden of the judgment will fall if the insurers are insolvent. The effect of the provisions in question is, I think, to give to the insurers the right to decide upon the proper tactics to pursue in the conduct of the action, provided that they do so in what they bona fide consider to be the common interest of themselves and their assured. But the insurers are in my opinion clearly not entitled to allow their judgment as to the best tactics to pursue to be influenced by the desire to obtain for themselves some advantage altogether outside the litigation in question with which the assured has no concern. The combination of the clear public interest in the provision of liability insurance and the fact that, within the above confines of contractual propriety, an insurer commits itself to the funding and control of its insureds litigation long before the dispute in question is even known about, provides a firm basis for concluding that (in the absence of engagement by the Rules Committee) the appellate courts ought to be as clear and detailed as they properly can in setting out the principles applicable to the incurring of non party costs liability by insurers. It would be unsatisfactory if the insurers exposure to that liability, ex hypothesi lying outside the confines of the policy, were to depend purely upon the uncontrolled perception of a particular judge about the general justice of the matter, controlled only by a requirement to show exceptionality, in the general sense that the case in which the question has arisen is unusual, measured against the general run of civil litigation. Cases in which any question of the non party liability of the liability insurer under section 51 arises may be said, almost by definition, to be unusual. This is because, in the vanilla case of a single claim within the scope of the cover provided by the policy, the insurer will be contractually liable to the insured to indemnify it in respect of its costs liability to the successful claimant, who will make a full costs recovery by that indirect route, if necessary (where the insured is insolvent) with the assistance provided by the Third Parties (Rights against Insurers) Act 2010, replacing the earlier Act of the same name in 1930 (the 1930 Act). To treat every case as exceptional where, for any reason, the claimant lacks that indirect means of costs recovery exposes the liability insurer to the unpredictable outcome of the judges perception of justice in every case where a section 51 application is likely to need to be made. The court should therefore be disposed to identify within the requirement for exceptionality something much more focussed than that the facts of the particular case are unusual. Prior to the present case, the reported decisions about non party costs applications against liability insurers do disclose a sustained attempt to provide some measure of guiding principle for the exercise of this wide jurisdiction. In TGA Chapman Ltd v Christopher [1998] 1 WLR 12 the section 51 application was made because the cover was limited under the defendants liability policy and insufficient to pay all the damages, let alone any part of the costs, and the defendant was not worth powder and shot. Nonetheless the claim fell squarely within the cover provided by the policy. It was, in the argot of the present case, an insured claim, and could have been pursued (subject to the limit of cover) directly against the insurer under the 1930 Act if the insurer had not put the defendant in funds (up to the policy limit) with which to settle it. Drawing upon general principles about the section 51 jurisdiction Phillips LJ identified two separate bases upon which a liability insurer might become exposed to non party costs liability. The first basis (by no means limited to insurers) may be labelled intermeddling. Repeating dicta of his own in Murphy v Young & Cos Brewery Plc [1997] 1 WLR 1591, 1601, he said at p 16: In Giles v Thompson [1994] 1 AC 142, 164 Lord Mustill suggested that the current test of maintenance should ask the question whether: there is wanton and officious intermeddling with the disputes of others in which the meddler has no interest whatever, and where the assistance he renders to one or the other party is without justification or excuse. Where such a test is satisfied, I would expect the court to be receptive to an application under section 51 that the meddler pay any costs attributable to his intermeddling. The second, which may be labelled the real defendant test, arose from the combination of the insurers interest in the outcome of the proceedings, its contractual obligation to indemnify the defendant for its costs liability and its exercise of control over the conduct of the defence. In a case where there was no limit of cover which excluded such a contractual obligation in relation to costs he regarded a section 51 order as a convenient time and cost saving short cut to recovery against the insurer of an insolvent defendant under the 1930 Act. He regarded a case where a limit of cover excluded the insurers contractual liability for costs, as it did in that case, as a more complex example of the second type, calling for a more nuanced approach. The claimant company relied upon five features of the case which justified a section 51 order, namely that: (1) the insurers determined that the claim would be fought; (2) the insurers funded the defence of the claim; (3) the insurers had the conduct of the litigation; (4) the insurers fought the claim exclusively to defend their own interests; (5) the defence failed in its entirety. The Court of Appeal agreed. Much the most important consideration, for both purposes, was that the claim had been funded and defended by the insurers purely in their own interests, regardless of the interests of the assured defendant, who had been entirely without means from start to finish, and who would have been content to settle the case at the outset rather than contest it. The insurers were regarded as the real defendants in all but name. In passing Phillips LJ rejected the submission that exceptionality was to be measured by comparison with other insurance cases rather than the generality of cases, and the argument that an insurer who stayed within the bounds of his rights and obligations under the policy should never be exposed to liability beyond the limit of cover by means of a section 51 application. In Citibank NA v Excess Insurance Co Ltd [1999] Lloyds Rep IR 122, the section 51 application was prompted by the reporting of the Chapman case, and decided by Thomas J (as he then was) specifically upon the basis that the continued defence of the quantum of the claim after judgment on liability had been conducted by the insurers solely in their own interests, after the insureds interest in protecting its reputation had been terminated by the adverse judgment on liability. It was another case in which the claim fell within the cover, but the policy limit left the insureds costs liability uninsured. Thomas J said, at p 131: The decision in Chapman has laid down clear principles that a court can apply. If the circumstances are such that the application for a costs order falls within those principles, then it should follow that there should be a costs order under section 51; if they do not, they should not. To my mind, the principles have been formulated in such a way that the cases that fall within them will be exceptional across the spectrum of litigation and thus the primary approach of the court should be to consider whether the principles set out have been satisfied. The principles to which Thomas J was particularly referring are those features of the Chapman case numbered (1), (3) and (4) in the above summary: namely that the insurers decided that the claim should be fought, conducted the defence, and did so motivated entirely by their own interests. They have since come to be known (and were referred to in submissions during this appeal) as the Chapman principles. Cormack v Excess Insurance Co Ltd [2002] Lloyds Rep IR 398 was another case in which a limit of cover triggered the section 51 application. It turned on the proper application of the fourth Chapman principle. The insurers had conducted the litigation for the defendant under a professional indemnity policy, without objection from the defendant, and the outcome was an award of damages and costs which left part of the costs outside the limit of cover. The judge decided that the insurers had not conducted the litigation solely in their own interests, and that the defendant had, throughout, an interest in defending its reputation. Further the insurers conduct of the case had not been the cause of the claimant incurring costs in excess of the limit of cover. He therefore refused the application, for both those reasons. Dismissing the appeal, the Court of Appeal endorsed the judges analysis that the question whether a limit of cover case of this type was exceptional for the purposes of section 51 was likely to depend critically upon the extent of the insurers self motivation in its conduct of the defence, although this was not to be regarded as an invariable rule. Giving the leading judgment, Auld LJ treated the passage in Groom v Crocker (cited above) as setting the bench mark. Insurers who strayed beyond an appropriate balance, as identified by Groom v Crocker, in allowing their interests to predominate over those of the insured might be found to have acted exceptionally, so as to attract the section 51 jurisdiction to make a non party costs order against them. He said that it followed from the Chapman case that this is what could turn an insurer for all practical purposes into the real defendant. In passing the Court of Appeal warned against treating non disclosure of cover as exceptional, because there was no duty to do so, and disclosure might damage the insurers legitimate interests. Finally the Court of Appeal firmly endorsed the need for the applicant to demonstrate that the relevant conduct of the insurer (or some part of it) caused the claimant to incur the costs sought to be recovered from the insurer under section 51. Auld LJ said that the causation question went to the satisfaction (or otherwise) of the exceptionality requirement. Palmer v Palmer [2008] Lloyds Rep IR 535 was essentially an application of the fourth Chapman principle, as interpreted in the Cormack case. The judge had concluded that the insurers conduct of an unsuccessful defence was sufficiently self motivated to make it the real defendant in all but name, and the Court of Appeal dismissed the appeal. It adds nothing beyond repetition to the development of the relevant principles. Nor does Legg v Sterte Garage Ltd [2016] Lloyds Rep IR 390. It was not a limit of cover case, because the policy required the insurers to indemnify the insured defendants costs liability without monetary limit. Further the claimants were entitled to pursue their costs claim in full against the insurers under the 1930 Act. The section 51 issues arose from the fact that the claimants put their nuisance and Rylands v Fletcher pollution claim on two alternative grounds, single escape of fuel and (by a later amendment) long term leakage, when the relevant policy only provided cover against the former. The insurers abandoned the defence when they (mistakenly) thought that the covered basis of claim had been abandoned, but the claimants then secured default judgment on the basis of both. The judge held, and the Court of Appeal agreed, that the insurers had defended the claims solely or predominantly in their own interests, because they were concerned not to defend the insured from all liability, but only from liability for the head of claim covered by the policy, and the insured had no commercial or reputational reason to defend the claim. The Legg case was therefore a conventional application of the fourth Chapman principle, as interpreted in the Cormack case. In the present case the judge appears to have been persuaded that the Chapman principles, which she identified by reference to the Citibank case, were of limited assistance, because the problem facing her was conceptually different from a limit of cover case about an otherwise insured claim. Her approach was rather to examine whether Travelers became involved in the litigation of the uninsured claims which, in her view, had nothing to do with the insured claims or, therefore, with Travelers, who therefore had no business to become involved in them at all. Although she did not say so in terms, she clearly regarded the question whether Travelers should be liable for the uninsured claimants costs as turning upon whether Travelers intermeddled in those claims. She therefore concentrated her analysis of what she called the exceptionality question upon the conduct of the insurers. She was properly alert to the question of causation, and therefore took the trouble to examine whether the non disclosure of the relevant limits of the cover was a cause of the incurring of costs by the uninsured claimants, concluding that it was. For its part the Court of Appeal conducted a review of the Chapman line of cases, concluding that they did not seek to lay down rigid rules, before concluding that exceptionality was established by the unusual nature of the circumstances, in particular the asymmetry or lack of reciprocity between Travelers and the uninsured claimants, rather than by any departure on the part of the insurers from the normal boundaries of conduct summarised in Groom v Crocker, and treated as a useful bench mark in the Cormack case. Analysis The Chapman principles The main thrust of Travelers case is that the decisions of the courts below, for different reasons, wrongly departed from the Chapman principles, thereby exposing insurers to unexpected and unforeseeable liability for costs as a non party in excess of their obligations under the relevant policies, where their own conduct did not depart from the acceptable norm in a way that could properly be described as exceptional, and that the supposed asymmetry or lack of reciprocity as to costs risk between them and the uninsured claimants was neither exceptional in the relevant sense, nor a good reason why an order under section 51 was a just solution. More specifically they say that the reliance of the courts below upon the non disclosure of the policy cover was contrary to principle, and that the other respects in which the judge found that Travelers had overstepped the proper boundaries had no causative consequences in either causing or increasing the uninsured claimants expenditure of costs. Travelers also sought to mount a detailed attack on the judges findings of fact, although they were confirmed by the Court of Appeal. This court would not have considered it appropriate to entertain this part of the appeal (although it was not actively pursued in oral submissions) but, for reasons which will appear, it has been unnecessary to do so in any event. For their part the uninsured claimants say that the judge was right to treat the insured and uninsured claims as completely separate, that the judge was therefore correct to regard any significant involvement by Travelers in the conduct of the defence of the uninsured claims as conduct stepping across the boundary into the exceptional, and that the lack of reciprocity was, on its own, sufficient to justify an order under section 51. In my view the courts in the Chapman line of cases were right to seek to identify clear and reasonably detailed principles, by way of guidelines rather than rigid rules, sufficient to enable liability insurers to know in advance what kind of conduct would, and what would not, be likely to attract non party liability for the costs of successful claimants against their insured defendants, in excess of any relevant policy limits. It may be that Thomas J went a little too far towards elevating the Chapman principles into rigid conditions rather than guidelines, turning what was designed to be a good servant into a poor master. But the underlying perception that a loose requirement for exceptionality was an insufficient protection from exposure to a particular judges after the event perception of the just result was correct, essentially for the public policy reasons identified in para 32 above. I also consider that the two bases under which an insurer might become liable to a non party costs order identified in the Chapman case, namely by intermeddling or becoming the real defendant, do represent a principled approach to the engagement of this jurisdiction against liability insurers, which is much preferable to the quest for factors which may satisfy an elusive concept of exceptionality. Where the claim itself falls within the scope of the insurance, whether or not subject to limits of cover, the real defendant test will usually be the appropriate one to apply. Furthermore the underlying purpose of the Chapman principles, namely to identify in a limit of cover situation the cases where an insurer has become the real defendant in all but name is also correct. As Lord Reed demonstrates, this has been the animating principle behind the jurisdiction of the Scottish courts to make costs orders against non parties for far longer than the parallel jurisdiction has been recognised in England and Wales, at least following the Judicature Acts. The Chapman line of cases make it clear that this is what the principles which they enunciate are designed to reveal. But I am not satisfied that the Chapman principles really assist in relation to a case, such as the present, where the costs sought to be recovered against the insurer arise in the successful conduct against the insured defendant of a claim which lies outside the scope of the cover provided by the insurer: ie an uninsured claim. In such a case it is the intermeddling principle which falls to be applied. This is a principle derived from the English law about maintenance and champerty, as Phillips LJ acknowledged in the Chapman case, and which has no equivalent in Scotland, as Lord Reed explains. Its starting assumption is that non parties usually, although not invariably, have no legitimate interest in becoming involved in the litigation of others. It does not render involvement of any kind objectionable, but only involvement which is (in old fashioned language) wanton and officious, for which the non party cannot demonstrate some justification or excuse. This basis for the costs liability of the non party does not necessarily depend upon showing that it has taken control of the litigation, or done anything approaching becoming the real defendant in it. Nor is there any fixed benchmark which will establish whether involvement has become a form of intermeddling. In every case the nature and extent of the non partys involvement will have to be measured against the alleged justification or excuse for it. In sharp contrast with the real defendant test, the question whether the non party has become involved under a framework of contractual obligation is likely to be of primary relevance. It may even be decisive against liability, especially where the relevant contract is of a type which is recognised and supported by public policy, such as liability insurance. If the non party has not gone beyond the confines of those contractual obligations and attendant rights in framing its involvement, as explained in Groom v Crocker, liability as an intermeddler may be very hard to establish. The key feature of the present case is that every one of the successful claims for which the claimants seek a non party costs order is wholly uninsured. The uninsured claimants can have had no real expectation, if successful, of being paid their costs by the insurers, unless those costs were incurred as a result of some unjustified intervention in their claims by the insurers. This is sufficient on its own to take them out of the proper ambit of the Chapman principles, and to make it necessary to ask whether Travelers involvement in the defence of the uninsured claims amounted to intermeddling. The question is not whether Travelers became the real defendant in each of them, but whether its level of involvement in them was justified and, even if not, whether it caused the incurring by the claimants of the relevant costs. The present case is of course further complicated by the facts that the uninsured claims against Transform were brought in a group action alongside a smaller number of insured claims by different claimants against Transform, together with further claims (whether insured or uninsured) by yet further claimants against other defendants, all raising similar issues to be tried by reference to test cases, with the claimants contributing to, and liable for, costs on a several only basis. It is out of these additional facts (coupled with Transforms insolvency) that the asymmetry or lack of reciprocity in costs risk arose. Asymmetry Lack of Reciprocity This factor, which so deeply affected the courts below, may be summarised by saying that it describes a situation where one side faces having to pay the other sides costs if it loses, but the other side faces no such risk if it loses. Put the other way round, one side gets its costs if it wins, but not the other side if it wins. While it may be said that there is usually symmetry or reciprocity as to costs risk in ordinary civil litigation between solvent opponents, there are numerous situations where this is not so. The opponent may be legally aided. The claimant may have the benefit of Qualified One way Costs Shifting (QOCS). Sometimes the court makes special orders limiting the costs exposure of one side only, for example under the Aarhus Convention. As in the present case, one side may be uninsured and be or become insolvent. In the latter situation there is theoretical reciprocal liability between the parties, but asymmetry in practicable recovery, and therefore risk. The risk of asymmetry when claiming against a defendant of unknown means is aggravated by any uncertainty whether the defendant is adequately insured, and the law does not generally, and did not in this case, enable the claimants against Transform to obtain disclosure of the terms of its insurance cover. Whether that should be the law is not the subject of this appeal. In the present case every one of the claimants against Transform began their claims without knowing whether they were covered by insurance, and continued them in face of increasingly depressing evidence about Transforms impending insolvency. They all took the risk of asymmetric costs exposure and, for a majority of them, namely the respondents, that risk came to pass, as was revealed when Transform voluntarily disclosed the limits of its insurance cover in June 2014, followed by Transform going into insolvent administration in 2015. By contrast the lucky minority made a satisfactory costs recovery, funded by Travelers, when their cases were settled after mediation in August 2015. In my view the reliance placed by the courts below on asymmetry or lack of reciprocity as a factor tending to justify a section 51 order against Travelers was misplaced. My reasons follow. First, leaving aside the incurring of costs by the uninsured claimants, the asymmetry in risk was not itself in any sense the result of any aspect of the intervention in, or conduct of, the defence of the uninsured claims by Travelers. It arose from the combination of the facts that Transform was insolvent, had insurance for only some of the claims, excluding those of the respondents, and that the claimants liability for and therefore entitlement to costs was several only, and extended to the prosecution of the common issues in the test cases. They chose, no doubt for good reason, to undertake that several only costs burden regardless whether their claims were insured, taking the risk that they would not recover their outlay if they were not, even if successful. One consequence of the several only costs liability of each of the claimants is that the costs position of each of the claimants needs to be looked at separately. This is so notwithstanding the fact that, behind the scenes, the claimants may have used common solicitors, CFAs and ATE insurance in a way which greatly modified both their personal costs exposure, and the entitlement of the common solicitors to make a satisfactory costs recovery. Looked at separately, each claimant had either an insured or an uninsured claim against a common insolvent defendant, with all the consequences in terms of reciprocity which that entailed. Non disclosure of Cover The only sense in which anything done or not done by Travelers may be said to have contributed to that asymmetric outcome for the uninsured claimants was that the solicitors jointly instructed by Travelers and Transform played an advisory role in Transforms decision not to disclose the limits of its insurance cover earlier, when the uninsured claimants might have abandoned their claims, and successfully to resist an order for disclosure in 2013. That advice was given in good faith without a perception by the solicitors that there might be (as the judge held that there was in fact) a conflict between the interests of Transform and Travelers in whether to make that disclosure. Still less was the advice motivated in fact by a desire to dilute Travelers costs risk in the defence of the common issues. It was not in any recognisable sense an inappropriate intervention by Travelers in the defence of the uninsured claims, as distinct from the insured claims. The advice was given in relation to the claims against Transform as a whole and was plainly part of the conduct of the defence to the insured claims which Travelers was entitled to control (in the Groom v Crocker sense) just as much as it was part of the conduct of the defence of the uninsured claims. Of course Transform, Travelers and their jointly instructed solicitors knew that the Worried Well claimants claims were not insured, nor were claimants claims falling outside the insurance policy periods, but disclosure could not practicably have been made to the uninsured claimants alone, since all the claimants were represented by common solicitors. Both the judge and (but with less assurance) the Court of Appeal regarded it as right for Travelers to have to take responsibility for that advice. Whether or not that is so, it was advice which fairly reflected Travelers rights as insurer, as was in due course confirmed by the judge, and noted as something not properly contributory to the making of a section 51 order in the Cormack case. It was not conduct which amounted to unjustified intermeddling in the uninsured claims for the purposes of section 51. Causation I have noted above how firmly the Court of Appeal in the Cormack case endorsed the requirement for an applicant under section 51 to demonstrate a causative link between the incurring of the costs sought to be recovered from the non party and some part of the conduct of the non party alleged to attract the section 51 jurisdiction. That requirement is in my view rightly imposed. Auld LJ regarded it as part of the exceptionality requirement. It could equally be seen as going to the justice, or otherwise, of making the order. If the costs would still have been incurred if the non party had not conducted itself in the relevant manner, why should it be just to visit the non party with liability for them? The causation requirement was not the subject of challenge on this appeal. It does not appear to have featured in the other Chapman cases, but their facts suggest that the relevant costs ordered to be paid would not have been incurred, but for the exceptional conduct relied upon. In cases such as the present, where it is the intermeddling test rather than the real defendant test which falls to be applied, the formulation of that test by Phillips LJ in the passage in the Chapman case quoted above clearly incorporates a need to demonstrate causation, since it is the costs attributable to the intermeddling that the meddler is ordered to pay. The judge found that there was a causative link between the non disclosure of the limits of the cover and the incurring of costs by the uninsured claimants. But for the reasons already given the non disclosure was not itself conduct by Travelers in relation to the uninsured claims which falls within the necessary requirement for unjustified intermeddling. It remains to consider whether the other aspects of Travelers conduct in relation to the uninsured claims amounted to unjustified intermeddling and, if so, whether it had any causative consequence in relation to the incurring of costs by the uninsured claimants. The relationship between the insured and uninsured claims The starting point is that the Court of Appeal was right to depart from the judges view that the uninsured claims were totally separate from the insured claims, so that they were no business of Travelers at all. On the contrary, all the claims, insured and uninsured, were being pursued together within a single group action, by common solicitors. All the claims raised common issues which were ordered to be tried together by way of sample test claims. Although there were several defendant clinics, all the test cases were against Transform and, as already noted, it was mere happenstance that two of them (A and B) were insured and two (C and D) uninsured. At the time of the selection of the test claims, the limits of Travelers cover had not been disclosed. Transform were contractually entitled as against Travelers to have the defence of the common issues funded, regardless whether they arose in insured or uninsured claims. Thus Travelers participation in the litigation of the common issues in claims C and D was not unjustified intermeddling in litigation in which Travelers had no legitimate business, but the involuntary engagement which arose from their status as insurers under the policies. Mr Hugh Preston QC for the respondents acknowledged this, up to a point, but submitted that this legitimate role of Travelers in the uninsured claims did not extend to funding the whole of their defence (a point not relied on by the judge) still less to decision making about admissions or offers of settlement (two matters upon which she did rely). While those distinctions may be discernable conceptually, I consider that they are likely to break down in the real world of hostile group litigation, all the more so when, as here, the main issues in the litigation are common to the insured and uninsured claims alike. For example the offer of a drop hands settlement to uninsured claimants might well be taken as a sign of weakness in relation to the merits of the common issues, and therefore a sign of weakness in relation also to the insured claims. Settlement and Admissions Leaving aside non disclosure of the limits of cover, the two aspects of participation by Travelers in the uninsured claims which the judge regarded as crossing the line were involvement in decision making about whether Transform should make a drop hands offer to all the uninsured claimants, or make certain admissions in relation to their claims, in a context where Transform believed, rightly or wrongly, that Travelers consent was required for both, pursuant to the terms of the policies. As noted above, Travelers consented to the making of a drop hands offer to the uninsured claimants in July 2014, but the offer was not then made. Travelers withheld consent in early 2015, and its participation in the decision whether an admission of liability should be made to the uninsured claimants appears also to have occurred some time in 2015, but before the final settlement by agreement of the insured claims, ie at a time when the common liability issues were still live. By 2015 the uninsured claimants knew who they were and had resolved to continue with their claims, notwithstanding the impending insolvency of Transform, in part for the specific purpose of recovering costs already incurred by means of a section 51 application against Travelers. Against that background it is striking that there is no analysis by the judge of the question whether Travelers conduct in relation to settlement or admissions in relation to the uninsured claims had any causative consequence in terms of the expenditure of costs sought to be recovered under section 51. This is in sharp contrast with her careful analysis of causation in relation to the non disclosure of the limits of cover. It cannot be said that (as perhaps in some of the Chapman line of cases), causation was too obvious to need to be mentioned. The Court of Appeal did not appear to place reliance upon this aspect of Travelers conduct, and conducted no causation analysis of its own. It therefore falls to this court to do so, if satisfied that the relevant conduct in relation to the uninsured claims amounts to unjustified intermeddling. That question also needs to be addressed afresh, because of the judges erroneous view that the uninsured claims were entirely separate from the insured claims, such that Travelers had no business being involved in them at all. Had it been necessary to do so I would have concluded that the judge was wrong to regard Travelers involvement in settlement and admissions in relation to the uninsured claims (while the closely related insured claims were still live) as a sufficient crossing of the line to attract a section 51 order, either alone or in combination with any other matters. Contrary to the judges view there were no other relevant matters, because she was (for reasons already given) wrong about non disclosure of the limits of cover. The court should be slow to second guess jointly instructed solicitors where they allow the insurer a role in decision making about claims raising common issues, notwithstanding that some of them, even as here a majority, are uninsured. Although the judge was far better placed as the manager of this litigation than this court to identify the relevant boundaries, her analysis was undermined by her over rigid separation of the insured and uninsured claims into separate camps. I am however content to rest my decision on the absence of any relevant causative link. By 2015 the uninsured claimants were pursuing their claims to a judgment with costs, in part so that they could seek to recover substantial expenditure already incurred by mid 2014 (while ignorant that they were uninsured) by means of a costs order against Travelers under section 51, as Mr Preston acknowledged during the hearing of this appeal. I cannot see how the offer of an admission of liability, still less a drop hands offer (ie with each side paying their own costs) would have dissuaded the uninsured claimants from continuing to incur the cost of obtaining (in the event) default judgment, and summary judgment in relation to test claims C and D, once the insured claims had been settled and Travelers had withdrawn further funding. I would add that there is to my mind at least some element of disingenuity in the respondents stoutly maintaining that, at the relevant time, the uninsured claims had nothing to do with Travelers when they were by then being pursued by the uninsured claimants for the purpose of obtaining a costs order against Travelers in due course. But that reflection was not advanced in the submissions of the appellant, and my decision is in no sense based upon it. Conclusions It may be convenient to draw together the threads of this rather long analysis into some concluding propositions. First, the underlying question, whether the non party has either become the real defendant in relation to an insured claim, or intermeddled in an uninsured claim, is fundamental to the exercise of the section 51 jurisdiction, in insurance cases. It is the conduct of the non party which matters, rather than the mere rarity of the case. Secondly, the Chapman principles are useful guidelines for establishing whether the liability insurer has become the real defendant in all but name, in a case where some part of the claim (including the claim for costs) is or may lie outside the limits of cover, so that the insured has at least a prima facie joint interest with the insurer in the outcome of the litigation. Thirdly , the Chapman principles are not likely to be of assistance where the question is (as here) whether the liability insurers crossed the line in becoming involved in the funding and conduct of the defence of wholly uninsured claims, as opposed to claims where there is limited cover. In such cases the insurer may cross the line by conduct falling well short of total control, and without becoming the real defendant, if the insurer intermeddles in the uninsured claim in a manner which it cannot justify. But, fourthly, where there is a connection between uninsured claims and claims for which the insurer has provided cover, it may well be that the legitimate interests of the insurer will justify some involvement by the insurer in decision making and even funding of the defence of the uninsured claims without exposing the insurer to liability to pay the successful claimants costs. This is just such a case because of the very close connection between insured and uninsured claims, raising common issues to be tried together in test cases in group litigation, and the limited nature of Travelers involvement in the uninsured claims. Fifthly, causation remains an important element in what an applicant under section 51 has to prove, namely a causative link between the particular conduct of the non party relied upon and the incurring by the claimant of the costs sought to be recovered under section 51. If all those costs would have been incurred in any event, it is unlikely that a section 51 order ought to be made. Sixthly, the non disclosure of limits of cover by the defendant at the request of the insurer is unlikely to amount to relevant conduct, for as long as the law continues to make that non disclosure legitimate. Seventhly, asymmetry or lack of reciprocity in costs risk, as between the uninsured claimant and the defendants insurer, is unlikely on its own to be a reason for the making of a non party costs order against the insurer where, as here, the asymmetry arises because a claimant sues an uninsured and insolvent defendant and incurs several only costs liability in group litigation. Applied to this case, those conclusions mean that this appeal should be allowed. This is because, of the three elements of the conduct of Travelers which the judge regarded as crossing the line, the first (non disclosure) was not unjustified intermeddling, although it did cause those costs to be incurred, while the second and third (decision making about offers and admissions), even if amounting to unjustified intermeddling, which I doubt, plainly had no relevant causative consequences. The Court of Appeals alternative route to the judges conclusion, based essentially upon the asymmetry point, was in my view wrong for the reasons already given. LORD REED: I am respectfully in general agreement with the judgment of Lord Briggs, and wish only to make some additional observations directed towards three points. The first is that Lord Briggss conclusion that an award of costs against a non party may be justified where that person is a meddler in the proceedings, or is in substance a party to those proceedings, has historical antecedents in the practice of the English courts. The second is that the real party approach has also been adopted in other comparable jurisdictions. The third is that exceptionality is not in my opinion a necessary pre condition of an award of costs against a non party. Historical antecedents It may be worth explaining at the outset the historical background to the decision of the House of Lords in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, where the scope of the discretion conferred by section 51 of the Senior Courts Act 1981, as it is now known, was held to be sufficiently wide to allow costs to be awarded against persons who were not party to the proceedings before the court. Traditionally, costs were dealt with differently at common law and in equity, although it was possible in both types of proceedings for an award to be made against a person who was not a party to the proceedings, as I shall explain. With the fusion of the administration of law and equity under the Judicature Acts, section 16 of the Supreme Court of Judicature Act 1875 provided for rules of court, contained in the First Schedule to that Act, to regulate proceedings in the High Court and the Court of Appeal. Those rules of court contained, in Order LV, a single general provision regulating the award of costs. The rules scheduled to the 1875 Act were repealed by the Statute Law Revision Act 1883, and new rules, referred to as the Rules of the Supreme Court 1883, were made pursuant to section 19 of the Supreme Court of Judicature Act 1881. Order 65, rule 1 of those rules provided that, subject to the provisions of, among other things, the Judicature Acts and the rules of court, the costs of and incident to all proceedings in the Supreme Court, including the administration of estates and trusts, were within the discretion of the court or judge. In In re Mills Estate; Ex p Comrs of Works and Public Buildings (1886) 34 Ch D 24 it was held by the Court of Appeal that the effect of the Judicature Acts and of Order 65 was not such as to confer any new jurisdiction to award costs, but was merely to regulate the mode in which costs were to be dealt with in cases where the court already had such jurisdiction. Parliament sought to overcome this restrictive interpretation by enacting section 5 of the Supreme Court of Judicature Act 1890, which was the statutory predecessor of section 51(1) of the Senior Courts Act 1981. The language of section 5 of the 1890 Act was, however, itself restrictively interpreted by the Court of Appeal, notably in Forbes Smith v Forbes Smith (1901) P 258 and John Fairfax & Sons Pty Ltd v E C de Witt & Co (Australia) Pty Ltd [1958] 1 QB 323, until the ground breaking decision in Aiden Shipping. Prior to the Judicature Acts, as I have mentioned, costs were dealt with differently at common law and in equity. The general position in common law proceedings was summarised by Blackburn J in Mobbs v Vandenbrande (1864) 33 LJ QB 177,180: In ordinary cases, where there has been no abuse of its process, the court has no jurisdiction to order a person not a party on the record to pay costs. (Emphasis added) In this context, it appears that the concept of an abuse of process was not narrowly confined. That can be seen, for example, in the judgment of Lord Abinger CB in Hayward v Giffard (1838) 4 M and W 194. In that case, the Court of Exchequer refused to make an order for costs against a non party to the action although he was interested in the outcome of the suit. His Lordship said at p 196: If we were at liberty to consult equity and justice, we should probably make this rule absolute. But the authority of the courts at Westminster is derived from the Queens writ, directing them to take cognisance of the suits mentioned in the writs respectively, and thus bringing the parties before them. This being so, they have no power to order any particular individual to come before them at their pleasure. In the present case, if it could have been shewn that Spencer had committed any contempt of Court, or been guilty, in respect of this suit, of anything in the nature of barratry or maintenance, it would have been another matter; but we cannot make any order against an individual who is not party to any suit before us, nor has been guilty of any contempt, but merely because he has an interest in the event of the suit. (Emphasis added) It appears from Lord Abingers reference to anything in the nature of barratry and maintenance that the court could have made an award of costs against a non party who instigated the prosecution of groundless litigation or who intermeddled in proceedings contrary to the laws of maintenance and champerty. There are also a number of examples of awards of costs against non parties which were based on the conclusion that the non party was the real plaintiff or defendant. For example, in Doe dem Masters v Gray (1830) 10 B and C 615, an order for costs was made in an action of ejectment against a parish council which had put a pauper into possession of the premises in question. Lord Tenterden CJ said at p 616: In ejectment we can make the real party to the suit pay the costs. Actions of ejectment could be regarded at that time as being in a special position by reason of the fictitious form of the proceedings, as Lord Abinger explained in Hayward v Giffard at p 197. However, the real party approach continued to be adopted in relation to actions of ejectment even after the fictitious form of action had been abolished by the Common Law Procedure Act 1852. For example, in Hutchinson v Greenwood (1854) 4 El and Bl 324 Lord Campbell CJ stated at p 326 that the court had jurisdiction to order the persons, who really conducted the defence in an action of ejectment, to pay the costs, though they were not parties on the record. Lord Campbell explained this on the basis that the real party had engaged in an abuse of process, stating (ibid): The principle is that the individuals who order an appearance to be entered in ejectment, in the names of those not really defending the suit, abuse our process, and that, as they substantially are the suitors, we have jurisdiction to make them pay the costs. The real party approach was not confined to actions of ejectment. For example, in Hearsey v Pechell (1839) 5 Bing (NC) 466, an action of trespass, the question arose whether the action should be stayed until a non party provided security for costs. Tindal CJ said at pp 468 469: The real question is, whether this is the action of the plaintiff, or substantially the action of Mr Wood [the non party]. If it were an action which the plaintiff would not have brought but for the instigation and countenance of Wood, the case would fall within the principle of Tenant v Brown (1826) 5 B and C 208, and another case in the Court of Kings Bench, where a master was compelled to pay costs for his servant, whom he had put forward as a defendant instead of himself. An example of an award of costs against the real party, in a different type of case from ejectment, is In re Jones (1870) LR 6 Ch 497, which decided, in the words of the headnote, that where a solicitor engages to indemnify the plaintiff in a suit against the costs of the suit, and has the control of the suit, he will be ordered to pay to the defendants their costs of the suit when dismissed. Lord Hatherley LC stated at p 499 that the general principles of the court were perfectly well established upon the point: The view of the court is, that when a solicitor takes upon himself the conduct of a suit by saying that he will indemnify his client against all costs where the plaintiff is a mere puppet, and the real party suing is the solicitor the court will hold the solicitor liable for all the expenses to which he has put the other parties by his conduct. It was said by Sir Montague Smith in the Indian case of Coondoo v Mookerjee (1876) App Cas 186, 212 that the award of costs in In re Jones was based on the courts disciplinary jurisdiction over solicitors, but the next case to be cited suggests that that may be too narrow a view. It is in any event noteworthy that the Lord Chancellors dictum expressly mentions the need for a causal connection between the conduct of the non party and the incurring of the costs for which he was held liable. Another illustration is R v Greene (1843) 4 QB 646, which concerned relator proceedings brought by an indigent plaintiff who had been procured to bring them by an attorney. The reasoning does not however appear to turn upon the fact that the case concerned an attorney. Lord Denman CJ stated at pp 649 650: Nothing, however, is more certain than that this court has in several instances granted costs against persons who have made affidavits without being strictly parties, especially against attorneys, who are considered as being before the court, and, as its officers, bring cases to its notice We take the true rule to be that the court may adjudge from all circumstances who is the party, and give costs against any party, or against an attorney, if the affidavit of the person sought to be charged, or any affidavit produced by an attorney, shews good ground for imposing them upon them respectively. A similar approach can also be seen in cases concerning next friends, such as Palmer v Walesby (1868) LR 3 Ch App 732. In proceedings in equity, the award of costs was discretionary, and was said to be based on conscience and arbitrium boni viri: Andrews v Barnes (1888) 39 Ch D 133, 138. There are numerous cases concerned with the enforcement of awards made against non parties, such as Attorney General v Skinners Co, Ex p Watkins (1837) Coop Pr Cas 1 and Sangar v Gardiner (1838) Coop Pr Cas 262. It is unnecessary for present purposes to reach any definite conclusions as to the circumstances in which, prior to the Judicature Acts, the courts might have made an order for costs against a non party. It can however be seen from the examples cited that such awards were by no means unknown, even if the circumstances in which they were made were special in one respect or another. The position was in my respectful opinion aptly summarised by Mason CJ and Deane J, giving the majority judgment of the High Court of Australia in Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, 190: Having regard to the variety and the nature of the circumstances in which an order for costs was made against a person who was not a party according to the record, we cannot accept that there was before the Judicature Acts a general rule that there was no jurisdiction to order costs against a non party in the strict sense. It is plain enough that the courts from time to time awarded costs against a person who, not being a party on the record, was considered to be the real party. It may be that these cases are capable of being explained on various grounds, including the ground that the non party ordered to pay costs was guilty of abuse of process, taking a very broad view of what constitutes an abuse of process, but to say that does not deny that there was jurisdiction to make an order for costs against a non party even if the jurisdiction was exercised in limited circumstances only. Other jurisdictions (1) Scotland By 1986, when Aiden Shipping was decided and the earlier decisions of the Court of Appeal were overruled, the general understanding that costs could not be awarded against non parties was long established in England and Wales. In Scotland, on the other hand, where the courts have always possessed an inherent jurisdiction to award expenses (in English terminology, costs), the power to make awards against non parties, without the necessity of establishing conduct which would merit condemnation as an abuse of process, has been recognised and exercised continuously since at least the 18th century (see, for example, Leigh v Rose (1792) Mor 4645), and the principles governing its proper exercise have been considered in a substantial number of cases of different kinds. The power to award expenses can be exercised under Scots law against a person who, although not a party to an action, has the true interest in its subject matter and the control and direction of the case. Such a person is known in civilian terminology as the verus dominus litis (the real master of the litigation), or more briefly as the dominus litis. Put briefly and in broad terms, the court is prepared to look beyond the person who is formally a party to the action, and to exercise its power to award expenses on the basis that another person is the real party in all but form: the person, that is to say, who is in reality conducting the suit and interested in its outcome. by Lord Rutherford in Mathieson v Thomson (1853) 16 D 19, 23: In more precise language, the classic description of a dominus litis was given There may be some difficulty in defining exactly what is a dominus litis; but I confess that I very much agree with what has been laid down by your Lordship [Lord President McNeill, later Lord Colonsay], and with the definition quoted from the civil law by Lord Ivory, that he is a party who has an interest in the subject matter of the suit, and, through that interest, a proper control over the proceedings in the action. Now it will not make a person liable in the expenses of an action that he instigated the suit, or told a man that he had a good cause of action, and that he would be a fool if he did not prosecute it, or though he promoted it by more substantial assistance. It will not make him liable in the expenses of the suit that, while he does both of these things, he shall have some ultimate consequent benefit in the issue of that suit. But when you go a step further, and find a party with a direct interest in the subject matter of the litigation, and, through that interest, master of the litigation itself, having the control and direction of the suit, with power to retard it, or push it on, or put an end to it altogether, then you have a proper character of dominus litis; and, though another name may be substituted, the party behind is answerable for the expenses. As appears from that passage, the alleged dominus litis must, in the first place, have the control and direction of the suit, with power to retard it, or push it on, or put an end to it altogether. Lord President Dunedin observed in McCuaig v McCuaig 1909 SC 355, 357 that The true test of whether a party is or is not dominus litis is probably whether he has or has not the power to compromise the action. Control and direction of the proceedings are not in themselves sufficient. The alleged dominus litis must also have an interest in the subject matter of the action. As Lord Rutherford explained in the passage cited from his opinion in Mathieson, it is not sufficient that the non party have some ultimate consequent benefit; rather, he must have a direct interest in the subject matter of the litigation. The interest must, as Lord President Dunedin stated in McCuaig v McCuaig at p 357, be: the true interest in the cause, and by true interest I mean the entire interest, using that term not in the absolute sense, but as denoting the whole interest for all practical purposes. The alleged dominus litis must also, of course, have caused the expense for which he is sought to be made liable. As Lord President Robertson stated in Kerr v Employers Liability Assurance Co Ltd (1902) 2 F 17, 22: The next point is this, what is the ground upon which a dominus litis is made liable in expenses? As I take it, it is simply the ground upon which everybody is made liable in expenses, and it is stated thus by Lord Jeffrey in Irvine v Kilpatrick (1847) 10 D 367 If any party is put to expense in vindicating his rights he is entitled to recover it from the person by whom it was created, that is to say, by whom the expense was created. To the same effect is the opinion of Lord Hunter in Main v Rankin & Sons 1929 SC 40, 43: The principle upon which liability attaches to a dominus litis is the simple one that he is responsible for the expenses which have been caused to the other party in the litigation. It was established long ago that the requirements of a dominus litis might be satisfied by a liability insurer conducting the defence of proceedings in accordance with a policy of insurance. The leading authority on the point is Kerr v Employers Liability Assurance Co Ltd, in which an injured workman who had obtained an award of damages and expenses against his employer sought, after the employer became insolvent, to obtain an award of expenses against the insurer. It was accepted that, under the policy, the insurers had complete control of the conduct of the defence, that they had exercised such control, and that they also had the entire interest in the subject matter of the action. The court found the insurer liable for the expenses of the action on the basis that it was the dominus litis. Lord President Robertson stated at pp 21 22: Now, if anybody other than the person whose name is printed as party in the record can be the dominus litis, I think this assurance company was. To begin with, to the person whose name was used it was immaterial whether the result of the action was success or failure; he was completely covered by his policy of assurance, and accordingly the assurance company very naturally stipulated in their contract that they, and not he, should have the control of the action, and should, of course, incur all liabilities resulting from that position. There are valuable illustrations, in the cases, of the relations which might constitute a man a dominus litis, but I do not cite any of them, for this reason, that I think that not one of them is clearer than, or, indeed, so clear as, the present case, of an assurance company who begin by stipulating that the insured shall give his name to them in order that they may conduct the action, and where, from that point onwards, he has nothing whatever to do with the conduct of the case. Therefore, that the assurance company was the dominus litis in this matter seems to me to be beyond all doubt. Lord Adam reached the same conclusion at p 22 by reference to the opinion of Lord Rutherfurd in Mathieson v Thomson: That the assurance company had an interest in the subject matter of this suit is beyond doubt. They were ultimately liable to the employers for the damages, and a greater interest in this suit they could not have. And, having that direct interest in the suit, they had entire control of it. It is not disputed that the defenders claimed and obtained, as the insuring company, the absolute conduct and control of the suit. Therefore it appears to me that if ever there was a case where a party fell within the definition of Lord Rutherfurd it is this assurance company. Several other cases of a similar kind can be found in the law reports. Claims of that nature have however seldom, if ever, been necessary since the enactment of the Third Parties (Rights against Insurers) Act 1930, now replaced by the Third Parties (Rights against Insurers) Act 2010. I have not found in the reports any example of a Scottish case where the insurer was sought to be made liable beyond its contractual limit of cover or, as in the present case, was sought to be made liable for the expenses of an uninsured claim. In such a case, it would remain necessary to establish that the insurer had control of the conduct of the defence and had the real interest in its success or failure: requirements which might not readily be satisfied. Finally, in relation to Scotland, it is relevant to note that there is no equivalent of the English law of maintenance and champerty. The discussion of intermeddling in the English cases, as the basis of an award of costs, has no equivalent in the Scottish case law. (2) Other common law jurisdictions It is also relevant to note the approach adopted in some other common law jurisdictions in the aftermath of the decision in Aiden Shipping. The position in Australia, in relation to jurisdictions conferring a discretionary power to award costs, analogous to that existing in England and Wales, was considered by the High Court of Australia in Knight v FP Special Assets Ltd. The court held that costs should be awarded against a non party in a general category of case described by Mason CJ and Deane J at pp 192 193: That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non party has played an active part in the conduct of the litigation and where the non party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non party if the interests of justice require that it be made. Later Australian decisions have identified a number of other situations in which an award of costs against a non party may be appropriate, as for example in Kebaro Pty Ltd v Saunders [2003] FCAFC 5. The position in New Zealand was considered by the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Associated Industrial Finance Pty Ltd, Third Party) [2004] UKPC 39; [2004] 1 WLR 2807, and was held to be similar to that in England and Australia. Exceptionality In Symphony Group Plc v Hodgson [1994] QB 179, the Court of Appeal sought to respond to Lord Goffs observation in Aiden Shipping, at p 975, that section 51 of the 1981 Act left it to the appellate courts to establish principles upon which the discretionary power conferred by that provision might be exercised. Balcombe LJ, with whom Staughton and Waite LJJ agreed, listed at pp 192 193 a number of considerations to be taken into account. The first, and the only one which need be considered for present purposes, was the following: An order for the payment of costs by a non party will always be exceptional: see per Lord Goff in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, 980F. This dictum has been treated in some later cases as imposing a requirement of exceptionality before an award of costs can be made against a non party. Such a requirement or pre condition would not, however, reflect the true import of the dictum on which Balcombe LJs observation was based. What Lord Goff said was this: In the vast majority of cases, it would no doubt be unjust to make an award of costs against a person who is not a party to the relevant proceedings. But, as the facts of the present case show, that is not always so. Lord Goff was not suggesting that exceptionality was a pre condition. He was merely observing that cases in which it is just to make a non party costs order form only a small proportion of the total. It is obvious that, as a general rule, orders for costs are made only against a party to the proceedings. That is because, in general, persons who are not parties do not have a sufficient connection with the proceedings to provide a proper basis for them to be held liable for the costs of the litigation. There are, however, circumstances in which considerations of justice may, in accordance with general principles, justify such an award against a non party. Such cases might be described as exceptional in the sense that their outcome involves a departure from the general rule that orders for costs are made against a party to the proceedings, but not in the sense that their determination depends on the identification of some unique or extraordinary feature. Indeed, exceptionality can scarcely be in itself an intelligible criterion for the making of a non party costs order. A case may be exceptional in respects which have no bearing on the appropriateness of a non party costs order. The case of Donoghue v Stevenson [1932] AC 562, for example, was exceptional in that it concerned a snail. It was also exceptional in that it raised a point of law of the greatest importance. Neither of those factors would have rendered it a suitable case for an award of costs against a non party, if such a question had arisen. In order for such an award to be appropriate, there would have to be some factor present which justified the making of the award. What is necessary, therefore, is to identify the relevant factor or factors. In TGA Chapman Ltd v Christopher [1998] 1 WLR 12, Phillips LJ, in a judgment with which Waller and Mummery LJJ agreed, sought to reformulate the relevant principles, refining his earlier analysis in Murphy v Young & Cos Brewery [1997] 1 WLR 1591. As Lord Briggs has explained, he identified two separate bases on which a non party costs order might be made against a liability insurer: first, that he had intermeddled in the proceedings, or secondly, that he had the control and direction of the proceedings, and the true interest in them, so as to render him the real defendant. He listed at p 20 five factors which were held to make an award of costs against the liability insurer appropriate: (1) the insurers determined that the claim would be fought; (2) the insurers funded the defence of the claim; (3) the insurers had the conduct of the litigation; (4) the insurers fought the claim exclusively to defend their own interests; (5) the defence failed in its entirety. Those factors, which were also present in the Scottish case of Kerr discussed at paras 100 101 above, established control of the proceedings, the real interest in the subject matter of the proceedings, and causation of the plaintiffs costs. Phillips LJs observation at p 21 that in reality, it is the insurers rather than Mr Christopher who are the defendants also expresses in English the idea conveyed in Latin by the expression verus dominus litis. Phillips LJ also clarified the issue of exceptionality. Having listed the features of the case which made it appropriate to make a non party costs order, he added at p 20: In the context of the insurance industry, the features to which I have just referred may not be extraordinary. But that is not the test. The test is whether they are extraordinary in the context of the entire range of litigation that comes to the courts. The later English decisions concerned with liability insurers are mostly consistent with the approach adopted in Chapman, as Lord Briggs has explained. In addition to the cases cited by Lord Briggs, I would mention in addition the case of Globe Equities Ltd v Globe Legal Services Ltd [1999] BLR 232, where Morritt LJ, in a judgment with which Butler Sloss and Sedley LJJ agreed, observed that the supposed requirement of exceptionality was based on what had been said by Lord Goff in Aiden Shipping, and should not be elevated into a precondition to the exercise of the power conferred by section 51. Echoing Phillips LJ in Chapman, he commented, at para 21, that the exceptional case is one to be recognised by comparison with the ordinary run of cases where the party is pursuing or defending the claim for his own benefit through solicitors acting as such. That was also the approach of Lord Brown of Eaton under Heywood, giving the advice of the Judicial Committee of the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Associated Industrial Finance Pty Ltd, Third Party). In a dictum subsequently repeated by the Court of Appeal in Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23; [2016] 4 WLR 17, para 62, he stated at para 25: Although costs orders against non parties are to be regarded as exceptional, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. So understood, exceptionality is in reality of little if any significance, since no judge would contemplate making a non party costs order in the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. LORD SUMPTION: The common law has an instinctive reluctance to make orders in private law litigation which affect non parties, but also a long standing aversion to the unjustified interference by non parties in other peoples litigation. The first of these instincts is founded on elementary principles of justice. Non parties may well have a more or less direct commercial interest in the outcome but do not thereby assume the risks associated with contested litigation. Nor are they bound by rules of practice in the way that parties are. At the same time, there are cases where a person who is not on the record may nevertheless be the real party. He may, for example, be an equitable assignee or, arguably, a subrogated insurer, or have some other interest entitling him to litigate in the name of another. The second instinct depends for its practical application on what constitutes interference and what is unjustified, large questions which vary with changing attitudes to litigation. Historically, it arose from the concern of the law with the implications of contested litigation for public order, but is now founded mainly on a purely procedural concern for the fair and efficient conduct of court proceedings. In the context of costs orders against non parties, the first instinct is reflected in Lords Briggss real defendant test, and the second in what he has called the intermeddling test. I agree with this taxonomy, and more broadly with Lord Briggss analysis of the principles and their application to this case. We are concerned on this appeal with the position of a liability insurer exercising a contractual right to direct the conduct of the defence on behalf of his assured. The relationship between a liability insurer and his assured has a number of specific features which are not necessarily common to other cases in which costs orders are sought against non parties. In the first place, although the insurer is potentially liable to meet a third partys claim against his assured, that liability is owed only to his insured and not directly to the third party, subject to special statutory regimes such as that applicable to insolvent assureds under the Third Parties (Rights against Insurers) Act 2010. In this respect English law differs from many civil law systems which allow direct actions against insurers as a matter of course. Secondly, the insurer is not even liable to his assured during the litigation, since his liability arises only once the assureds liability has been ascertained by judgment, award, admission or agreement. Thirdly, the insurers contractual right to direct the conduct of the litigation, which is an almost invariable incident of liability policies, is a form of compulsory agency. It is a right to direct it in his assureds interest, and not his own, even though their interests will usually coincide. The solicitor whom he appoints is the assureds solicitor, who owes all the usual professional duties to the assured and is entitled to look to the assured for his fees, notwithstanding that his instructions come from the insurer. These features, and particularly the last, mean that the insurer cannot be regarded as the real defendant. He is simply in a position where (i) by virtue of his contractual obligations to the assured, he is liable to suffer a detriment if the assured loses; and (ii) by virtue of his contractual right against his assured, he is entitled to direct the conduct of litigation in his assureds interest. Both are common to other relationships which non parties may have with a defendant without necessarily being at risk in costs, for example his solicitor or other litigation agent in case (i), or a liquidator bringing a claim in the companys name in case (ii). Neither factor is any concern of the claimant, whose concern is only with the defendant. The claimant may hope or even expect the defendant to be insured. But he has no legally recognised right to proceed on that basis and must accept the risk, commonplace in litigation, that he is not. That leaves unjustifiable intermeddling as the only basis on which a liability insurer might be at risk of having a costs order made against him. Cases in which a costs order may be made against a liability insurer on this basis are likely to be rare. What may make a non partys involvement in litigation an unjustified intermeddling is the absence of any interest in the litigation recognised by the law. That need not necessarily be a legal interest. But a liability insurer has an obvious legal interest in the performance of his contractual duties under the policy and the exercise of his contractual rights. Of course, that interest is limited to the defence of insured claims and different considerations may arise if he steps outside that role. But, as the present case illustrates, where insured and uninsured claims are at issue in the same litigation, the proper defence of insured claims may involve steps which directly or indirectly affect uninsured claims. This is an area in which a person conducting or directing the conduct of litigation is entitled to a large margin of judgment and hindsight is not usually an adequate tool for assessing how he exercises it. If he acts in good faith in the interest of the assured qua the defendant to insured claims, he should not incur liability in costs. As at present advised, I would expect this to be equally true of the case where the potential liability of the assured is subject to a limit of cover which is exceeded, but that is not an issue which needs to be examined on this appeal because it does not arise on the facts. I too would allow this appeal. |
The appellant, Raphael Geys, is a Belgian national. He is in dispute with his former employer, Socit Gnrale, London Branch (the Bank), about the amount due to him following his summary dismissal from his employment. His case is that he was dismissed on 6 January 2008, and that he is entitled to a sum contractually due to him in the form of a termination payment amounting to more than 12.5m and to damages for breach of contract. The Banks case is that the appellant is entitled to a termination payment of no more than 7m, as he was dismissed on 29 November 2007 or at the latest 18 December 2007. It also maintains that, having regard among other things to the terms of his employment contract, it is not open to the appellant to claim damages. The case went to trial before Mr George Leggatt QC sitting as a Deputy High Court Judge. On 25 March 2010 he found that the appellant was dismissed on 6 January 2008. He gave judgment for the appellant in a sum to be assessed, with a payment on account by 1 April 2010 of 11m, less tax and national insurance contributions, together with interest on all sums due at 1% above base rate from 3 February 2008: [2010] EWHC 648 (Ch), [2010] IRLR 950. The Bank appealed against that decision on various grounds. The first two related to the date of the appellants dismissal. For reasons that will be explained later, the choice of date has significant consequences for the amount that is contractually due to the appellant as a termination payment. The first ground raised the question as to whether, in the context of employment law, a repudiatory dismissal of an employee will by itself terminate the contract even if its repudiation is not accepted. The second raised the question as to when, having regard to the relevant provision in the contract, the right to terminate was validly exercised. The effect of its submissions on these issues, if sound, is that the appellants employment was terminated at the latest on 18 December 2007. The third ground related to the construction of a paragraph in the appellants employment contract which obliged the Bank to ensure that any bonus award made to the appellant was made in as tax efficient a manner as was possible. The fourth and fifth grounds related to the construction of provisions in the employment contract for the entering into by the appellant of a termination agreement in the event of his employment with the Bank being terminated. The Banks case is that the contract provided for a clean break when the employment was terminated and excluded the possibility of claiming damages. The Court of Appeal (Arden, Rimer and Pitchford LJJ) dismissed the Banks appeal on the first and fifth grounds, but allowed its appeal on the second, third and fourth grounds and found that the appellant was dismissed on 18 December 2007. It dismissed a cross appeal by the appellant as to the date of his dismissal: [2011] EWCA Civ 307, [2011] IRLR 482. The appellant now appeals to this court on the issues raised by the second and third grounds. The Bank cross appeals against the dismissal of its appeal on the first ground. The facts On 9 February 2005 the appellant commenced employment with the Bank as the managing director of its European Fixed Income Sales, Financial Institutions Division. He was provided with a written contract of employment. It was offered to him by a letter dated 28 January 2005 with which there were enclosed, among other things, two copies of a contract of employment (the Contract) and a copy of the Staff Handbook of the SGUK Group (the Handbook). He indicated his acceptance of the offer in the way that the letter required of him and, having done so, commenced his employment. The Contract, in which the Bank was referred to as the Company, contained the provisions that a contract of this kind would be expected to set out as to commencement, job title, remuneration, working hours and duties, overtime, holiday, notice, restrictions upon and after termination of employment, disciplinary rules, choice of law and confidentiality. There was also, in paragraph 5, an elaborate section which extended to more than eleven pages dealing with the employees entitlement to participate in bonuses under the Banks Fixed Income Sales Scheme (FISS) referred to in paragraph 5.2. It included provision for the making of a termination payment in the event of the termination of the employment, in consideration for which the employee was to enter into a termination agreement in the terms set out in a schedule. Various events that might give rise to a termination were provided for in paragraph 5. Paragraph 13, under the heading of Notice, was in these terms: Your employment can be terminated on the expiry of 3 months written notice of termination given by you to the Company or by the Company to you. In paragraph 5.14 it was provided that, if the Company were to terminate his employment in circumstances other than those contained in sub paragraph 5.6(b)(i) (iv) (which did not apply in this case): the Company will, within 28 days after such termination of your employment, make a payment to you (the Termination Payment) as specified in paragraph 5.15. By paragraph 5.15 it was provided that the Termination Payment was to be equal to the aggregate of (a) the value of the proportion of any award by way of bonus that had been made to the employee but retained by the Company and not yet released, and (b) a Compensation Payment calculated by reference to the date of the termination of his employment. The relevant sub paragraphs are as follows: (iii) if your employment terminates after 31 December 2006 but before 1 January 2008, the Compensation Payment shall be 0.65 x (S divided by 2) where S is the aggregate of any award or awards made to you under the FISS and the Scheme (whether or not subject to the Deferral under paragraph 5.7) in respect of the calendar years ending 31 December 2005 and 31 December 2006; (iv) if your employment terminates after 31 December 2007 but before 1 January 2009, the Compensation Payment shall be 0.65 x (T divided by 2) where T is the aggregate of any award or awards made to you under the FISS and the Scheme (whether or not subject to the Deferral under paragraph 5.7) in respect of the calendar years ending 31 December 2006 [and] 31 December 2007. The difference between the payments that would be due to the appellant under sub paragraphs (iii) and (iv) respectively, depending on the date of his dismissal, has not been precisely identified in these proceedings. But it is common ground that it is substantial. So the answer to the question as to the date when the appellants employment was terminated will have a significant bearing on the amount to which he is entitled by way of a termination payment under the contract. Section 1 of the Handbook, in which the Bank was referred to as SG, contained a number of additional terms and conditions of employment. Among them was the following paragraph: Notice Periods 8.1 Your Right to Notice Your entitlement to written notice of termination from SG is the longer of: The period set out in your Contract; or 1 week for each complete year of service up to a maximum of 12 weeks notice after 12 years continuous service. No notice or payment in lieu of notice will be given where SG is entitled to dismiss you immediately without notice or payment in lieu of notice Notice given by SG in writing shall be deemed to have been given by SG upon either being handed to you or sent to your home address (as last notified by you to HR). If such notice is sent by post, it shall be deemed to have been received by you on the second day after posting. 8.2 Giving Notice You are required to give SG the period of written notice set out in your Contract. Without prejudice to any other contractual rights and duties relating to your employment, if you fail to give the correct period of notice, SG may require you to give the correct period of notice as required by your Contract. If SG does, at its absolute discretion, accept less than full notice from you: You shall not be entitled to payment in respect of salary or to receive contractual benefits for the period of notice not worked; You may only be entitled to accrued but untaken holiday pay in respect of that holiday year at SGs discretion; and You will remain subject all contractual and legal restrictions and obligations. 8.3 Termination by SG and Payment in Lieu of Notice SG reserves the right to terminate your employment at any time with immediate effect by making a payment to you in lieu of notice (or, if notice has already been given, the balance of your notice period) based upon the value of your: Basic annual salary; and Flexible benefits allowance; for your notice period (or, if notice has already been given, the balance of your notice period). Paragraph 17 of the Contract, under the heading General Information, 8. was in these terms: This contract is in conjunction with the offer letter, the Staff Handbook of the SGUK Group (as amended from time to time) and the SGUK Compliance Manual which, together with this letter, form the written particulars of employment as required by law. However, in the event of any conflict of any terms set out in this Contract and those contained in the Handbook the terms of this contract will prevail. On 29 November 2007 the appellant was called to a meeting at which he was handed a letter which had been written on the Banks behalf and was in these terms: Termination of Employment I am writing to notify you that Socit Gnrale, London (SG) has decided to terminate your employment with immediate effect. In accordance with the terms of your employment contract with SG dated 28 January 2005, SG will arrange for the appropriate termination documentation to be provided to you and your legal adviser. The appellant was escorted from the building and did not return to it. But he did not let the matter rest there. He consulted his solicitors after his summary dismissal. They wrote to the Bank on 7 December 2007 asking for further information about the sums that it was offering to pay following the termination of his employment, but also saying that the appellant reserved all his rights. On 10 December 2007 the Banks legal department sent the appellant a severance agreement which was said to have been prepared in line with the relevant provisions of his employment contract, together with another letter of the same date which contained a list of the payments that it was proposed should be made to him in consideration of his entering into that agreement. He was asked to agree the terms that were set out in that letter by returning a signed copy, but he declined to do so. On 18 December 2007 the Bank paid 31,899.29 into the appellants bank account. This was the equivalent of his basic salary and flexible benefits allowance for three months. It is agreed that this was a payment that satisfied the monetary requirements of paragraph 8.3 of the Handbook as it was the amount which the appellant would have received had he been given three months notice. The appellant became aware of this payment at some point before 2 January 2008 which has not been precisely identified but which the judge found was probably before the end of December 2007. The Bank then sent the appellant a payslip, accompanied by a P45, which set out the various elements of the payment of 18 December 2007 including in lieu pay amounting to 37,500 before deductions. The appellant first saw it on 7 or 8 January 2008 when he returned to London from Belgium where he had spent most of his Christmas and New Year holiday. He said in his evidence that, while he could not be sure what the payment was for, the best guess he could have was that it was intended to be a payment in lieu of notice. Meantime, on 21 December 2007 the appellants solicitors wrote in reply to the Banks letter of 10 December 2007 asking for further information, in particular about how the proposed payments had been calculated. They again stated that the appellants rights in relation to his employment contract remained reserved. On 2 January 2008 they wrote to the Bank saying that the appellant had decided to affirm his contract of employment. Referring to the payment of 18 December 2007, they said that they reserved his position in relation to those monies until they understood what they constituted. On 4 January 2008 the Banks Human Resources Director wrote to the appellant with regard to his employment with the Bank. The first four paragraphs of that letter were as follows: I write further to your meeting with Fred Desclaux and Nigel Holmes on 29 November 2007 to confirm the details of the termination of your employment. Please accept my apologies for the delay in sending these details to you. 1. Notice Entitlement Under your terms and conditions of employment, you are entitled to 3 months notice of termination of your employment. Socit Gnrale gave you notice to terminate your employment with immediate effect on 29 November 2007 (your Termination Date) and will pay you in lieu of your notice period. This payment will be calculated in accordance with section 1/8.3 of the Socit Gnrale CIB Staff Handbook. 2. Final Salary Payment Your notice payment was credited to your bank account on 18 December and your final salary slip and P45 was sent to your home address. This amount was paid to you with deduction of income tax or employee NICs. 3. Pension Benefits Your active membership of the SG International Pension Plan (IPP) will cease on 29 November 2007. He was also told that the outstanding balance in respect of his annual travel insurance policy would be deducted from his final salary payment and that the policy would continue until 31 March 2008. Having regard to paragraph 8.1 of the Handbook the appellant must be deemed to have received the Banks letter of 4 January 2008 on 6 January 2008. The judge held that this was the first occasion when the Bank notified the appellant that it had exercised its right to terminate the contract under paragraph 8.3. The Court of Appeal held that the contract was terminated on 18 December 2007 when the amount of the payment in lieu of notice was paid into the appellants bank account. The Banks primary argument was that the contract of employment was terminated on 29 November 2007 when the appellant was summarily dismissed. This was rejected by the Court of Appeal, which held that it was bound by the decisions of the Court of Appeal in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448 and Boyo v Lambeth London Borough Council [1994] ICR 727, in which the principle that a repudiatory breach must be accepted was applied to contracts of personal service. Rimer LJ said in para 18 that permission to appeal had been given on this issue solely to keep open the possibility of an appeal to the Supreme Court so that this area of the law could be reconsidered. The issues Four issues are before the court in this appeal. The first two, which are of general public importance, bear directly on the question as to the date when the appellants employment was terminated. The third and fourth are directed solely to the proper construction of provisions in the contract. They can be summarised as follows: (1) Does a repudiation of a contract of employment by the employer which takes the form of an express and immediate dismissal automatically terminate the contract or as was held in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448 and Boyo v Lambeth London Borough Council [1994] ICR 727 does the normal contractual rule that the repudiation must be accepted by the other party apply equally to that case? [the repudiation issue] (2) When, in the events that happened and having regard to the terms of paragraph 8.3 of the Handbook, was the contract of employment terminated? [the termination issue] (3) Is there any conflict, within the meaning of paragraph 17 of the Contract, between the provision for termination on three months notice in paragraph 13 of the Contract and the provision in paragraph 8.3 of the Handbook which gives the Bank the right to terminate the employment at any time with immediate effect by making a payment in lieu of notice? [the conflict issue] (4) On a proper construction of paragraph 5.16 of and Schedules 1 and 2 to the Contract, is the employee entitled to maintain a claim for damages for wrongful dismissal and an alleged breach of the tax efficiency provision in paragraph 5.5 or is he to be taken to have waived those claims? [the paragraph 5.16 issue] The repudiation issue For the reasons given by Lord Wilson, I too would hold that the elective theory is to be preferred that a partys repudiation terminates a contract of employment only if and when the other party elects to accept the repudiation. I am persuaded by his careful analysis of the authorities that provide support for his conclusion that the view that repudiation of a contract of employment terminates the contract without the necessity of acceptance by the other party was not as authoritative or as consistent as Lord Sumption indicates in para 128 below. I also think that there are cases, of which this case is a good example, where it really does matter which of the two theories is adopted. The automatic theory can operate to the disadvantage of the injured party in a way that enables the wrongdoer to benefit from his own wrong. The law should seek to avoid such an obvious injustice. Where there is a real choice as to the direction of travel, the common law should favour the direction that is least likely to do harm to the injured party. I agree that we should be very cautious before reaching a conclusion whose result is that a breach is rewarded rather than its adverse consequences for the innocent party negatived: see para 66. Was Sir John Donaldson clearly right when he declared in Sanders v Ernest A Neale Ltd [1974] ICR 565 at p 571 that an unaccepted repudiation brought a contract of employment to an end? Lord Sumption says that this was an accurate summary of the position as it then stood: paras 128 and 139, below. But I find it hard to disagree with Buckley LJs observation in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448, 466 that Sanders v Ernest A Neale Ltd was the first case in which the automatic theory was part of the basis for the decision in an employment case. In Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 Sir Robert Megarry V C in his review of the authorities also took that case as his starting point. He described it as the high water mark of the doctrine of automatic determination, but said that the authorities on the point were in a state that was far from satisfactory. Shaw LJ, in his dissenting judgment in Gunton, referred to the field that Buckley LJ had covered in his review of the authorities as dubious. He said that, as a result of the ebb and flow of the tide of judicial opinion, the court was left in the slack water of first principles. Only a few months later, in London Transport Executive v Clarke [1981] ICR 355, the majority view in the Court of Appeal was in favour of the position that Sir Robert Megarry V C adopted in Marshall. The fact has to be faced that there is still a degree of oscillation between the two theories: David Cabrelli and Rebecca Zahn, The Elective and Automatic Theories of Termination at Common Law: Resolving the Conundrum? (2012) 41 Industrial Law Journal 346, 349. In any case, the question which of the two theories should be adopted is an open question at our level. Which result is, in principle, the most desirable? One must be careful not to assume that, just because in practice the employee may have little choice but to accept the repudiation, he has in law no alternative but to do so. I would endorse Ralph Gibson LJs criticism in Boyo v Lambeth London Borough Council [1994] ICR 727, 743 of Buckley LJs observation in the Gunton case that in a case of wrongful dismissal the court should easily infer that the innocent party has accepted the guilty partys repudiation of the contract. If the law requires acceptance of the repudiation, the requirement is for a real acceptance a conscious intention to bring the contract to an end, or the doing of something that is inconsistent with its continuation. So the question is whether there are sound reasons of principle for holding that the general rule of law that requires acceptance of a repudiation does not apply. The fact that an application of the automatic theory may produce an injustice is, for me, the crucial point. The question that Sir John Donaldson asked himself in Sanders v Ernest A Neale Ltd [1974] ICR 565, 571 is at the heart of the issue: why should the employee not sue for wages if it is the act of the employer which has prevented his performing the condition precedent of rendering his services? There may be grounds for thinking that the court is less reluctant than it once was to give injunctive relief in such cases, but I would not rest my decision on that point. It is the objection that the party who is in the wrong should not be permitted to benefit from his own wrong that is determinative. The timing of the repudiation may be crucial, and if the automatic theory were to prevail an employer may well be tempted to play this to his advantage by getting in first before a rise in pay or pension entitlement takes place or, as in this case, a rise in the entitlement to bonuses. I note too that, as Professor Douglas Brodie has pointed out, it is not always true that work is the counterpart of the entitlement to wages. In some contracts wages are given to employees for holding themselves available for work: The Contract of Employment (2008), para 18 09. The essential difference between the two theories may be said to be that under the automatic theory the decision as to whether the contract is at an end is made beyond the control of the innocent party in all circumstances, whereas under the elective theory it is for the innocent party to judge whether it is in his interests to keep the contract alive. Manifest justice favours preferring the interests of the innocent party to those of the wrongdoer. If there exists a good reason and an opportunity for the innocent party to affirm the contract, he should be allowed to do so: London Transport Executive v Clarke [1981] ICR 355, 367, per Templeman LJ. I need not elaborate on these and the other points that favour the elective theory, as they have been dealt with so thoroughly by Lord Wilson. I respectfully agree with the conclusion that he reaches in para 97. The termination issue For the reasons given by Lady Hale, I too would hold that it was not until 6 January 2008, when the appellant must be deemed to have received the Banks letter of 4 January 2008, that the contractual right to terminate under paragraph 8.3 of the Handbook by the PILON (payment in lieu of notice) method was validly exercised and his employment with the Bank was terminated. The conflict issue This issue directs attention to the provision in paragraph 13 of the Contract which provided that the employment can be terminated on the expiry of three months written notice of termination given by either side, and to paragraph 8.3 of the Handbook (the PILON provision) under which the Bank reserved the right to terminate the employment at any time with immediate effect by making a payment to the employee in lieu of notice. The judge held that there was no conflict between these provisions when the contract was construed as a whole. Paragraph 13 of the Contract could not be read as giving the appellant an unqualified right to three months notice of termination because other provisions in the contract such as paragraph 5.8 contained express rights to terminate it with immediate effect. So paragraph 8.3 of the Handbook qualified paragraph 13 of the Contract but was not in conflict with it. Rimer LJ said in para 29 that in his judgment the judges answer to this question was obviously correct. Mr Cavender QC for the appellant said that his primary case was that there was no conflict between these two provisions. He described his argument that there was a conflict as a fall back position. He said that there did not have to be a complete conflict to bring paragraph 17 into effect. Furthermore the way the Bank dealt with this case suggested that it was not its intention initially to rely on paragraph 8.3 of the Handbook. It only did so retrospectively. The termination of the appellants employment should be seen as having been on the basis that he was being given three months written notice of termination as provided for by paragraph 13. It is not obvious that these two provisions are inconsistent with each other. Paragraph 13 of the Contract set out one way of terminating the contract, but it did not say that it is the only way. It used the word can, which suggests that it is a course of action that the Bank might take if it wants to. But the Bank reserved the right, as paragraph 8.3 of the Handbook put it, to use the PILON method. The provision in the Handbook can be read as qualifying the provision which is set out in the Contract. In any event the courts duty, when confronted with two provisions in a contract that seem to be inconsistent with each other, is plain. It must do its best to reconcile them if that can conscientiously and fairly be done: Pagnan SpA v Tradax Ocean Transportation SA [1986] 2 Lloyds Rep 646, 653 per Steyn J. That approach, which was endorsed by Bingham LJ in the Court of Appeal [1987] 2 Lloyds Rep 342, 350, does not seem to me to give rise in this case to any difficulty. I would therefore hold that this case must be approached on the basis that it was open to the Bank to use the PILON method which it had reserved to itself by paragraph 8.3 of the Handbook, and that this was what it was seeking to do when the appellant was called to the meeting on 29 November 2007 at which he was handed a letter which had been written on the Banks behalf. The paragraph 5.16 issue The question to which this issue is directed is whether it is open to the appellant to maintain a claim or claims of damages against the Bank in view of the provisions of paragraph 5.16 of and Schedules 1 and 2 to the Contract by which, in consideration of the termination payment provided for by paragraph 5.15, the employee was to waive all contractual and statutory claims against the Bank. The relevant provisions in paragraph 5.16 are as follows: In consideration for the Company making the Termination Payment you will enter into a termination agreement with the Company (in the form of the draft termination agreement in Schedule 1 of this letter but amended to take account of any payments due to you under this letter and to take account of relevant legislative developments) under which you will waive all contractual and statutory claims against the Company and any Group Company (save for any pension rights accrued to the date of termination of your employment, any personal injury claims that you may have against the Company or any Group Company and save for any accrued rights you may have under the Deferral scheme and any share incentive scheme which will be dealt with subject to and in accordance with the rules of any such scheme) arising out of your employment with the Company and its termination If the Company and you wish to amend the form of draft termination agreement further than as set out above, such amendments must be agreed within 28 days after the date on which your employment terminates , failing which you and the Company will enter into the termination agreement in the form of the draft termination agreement in Schedule 1 of this letter only amended to take account of any payments due to you under this agreement and to take account of relevant legislative developments. [emphasis added] Schedule 1 is a draft letter addressed to the appellant which sets out the terms of the termination agreement referred to in paragraph 5.16. Paragraph 1 provides that he will receive his normal salary and benefits up to the termination date. Paragraph 2 provides that, subject to the other provisions of the letter, SG will make various payments to him. His entitlement to pay in lieu of notice, if appropriate, is preserved by paragraph 2(i). Paragraph 2(ii) is in these terms: [SG shall] pay you an amount of (less such deductions as SG is required by law to make) as [compensation for the termination of your employment REWORD AS APPROPRIATE TO INCLUDE SUCH OF THE PAYMENTS REFERRED TO IN SCHEDULE 2 OF THE LETTER AGREEMENT BETWEEN YOU AND THE COMPANY DATED [INSERT DATE] JANUARY 2005 TO WHICH YOU ARE ENTITLED IN ACCORDANCE WITH THE TERMS OF YOUR EMPLOYMENT DEPENDING ON THE CIRCUMSTANCES IN WHICH YOUR EMPLOYMENT TERMINATES] (this includes any entitlement you may have to a statutory redundancy payment) Schedule 2 sets out the payments that the Bank would make to him in the event of his employment being terminated by the Company in four alternative circumstances. In paragraph 3, which applies to the circumstances of this case, five sums which the appellant would have earned or to which he would have been entitled under the Contract on its termination are listed, including a compensation payment calculated in accordance with paragraph 5.15(b) of the Contract and a replacement bonus calculated in accordance with paragraph 5.24. The total amount, when computed, is to be inserted in paragraph 2(ii) of Schedule 1. Paragraph 7(a) of Schedule 1 sets out a number of matters that the appellant is to be taken to have represented and warranted, including that he may have statutory claims for unfair dismissal and a redundancy payment, referred to as the Alleged Claims. Paragraphs 7(b) and (c) state: (b) You hereby unconditionally and irrevocably waive the Alleged Claims, and neither you nor anyone else on your behalf will repeat, refer to or pursue the Alleged Claims. (c) You accept the payment to be given to you pursuant to this letter in full and final settlement of: (i) the Alleged Claims; and (ii) all other claims and rights of action howsoever arising, which you (or anyone on your behalf) have or may have against SG, and/or any Group Company arising from or connected with your employment by SG and/or any Group Company or its termination, with the exception that this paragraph 7(c) will not apply to any pension rights or pension benefits which have accrued to you up to the Termination Date or to any personal injury claim you may have. You represent and warrant that you are not aware of any personal injury claim subsisting at the date of this letter not [sic] aware of any basis on which you could bring any personal injury claim. Paragraph 7(e) sets out, as a fundamental term of the letter, that the payments to be given to him will at all times be conditional on his refraining from pursuing claims against SG or a Group Company and that, if he subsequently pursues such claims in breach of the letter, the payments made to him under the letter will be repayable to SG forthwith on demand. This is to be without prejudice to SGs right to seek damages from him for the breach referred to and any other breach of the letter. Mr Jeans QC for the Bank submitted that the purpose of these provisions was to achieve a clean break in the event of termination. It provided for a full and final settlement, the scope of which was defined by the draft agreement set out in Schedule 1. The appellant had the option not to comply with paragraph 5.16, if he thought that he would be better off by not doing so. In that event his claims against the Bank would not have been waived. The words under this letter in paragraph 5.16 (which I emphasised when setting out that paragraph in para 27, above) were to be read as referring to the Schedule 1 letter. That was the sense in which the words pursuant to this letter in paragraph 7(c) of Schedule 1 were to be read, so the words in paragraph 5.16 of the Contract should be read in the same way. The words in capital letters in paragraph 2(ii), read together with paragraph 3 of Schedule 2, set out all the sums to which the appellant was entitled by way of an amendment to the letter. All other claims, save for those specifically referred to in paragraph 5.16, were waived. The judge disagreed with the Banks interpretation of these provisions. He said that he saw nothing self evidently logical about an arrangement whereby the appellant could not be entitled both to accept the termination payments and to sue the Bank for damages for breach of contract: [2010] IRLR 950, para 98. It was not obvious why the appellant should be required to abandon a claim for breach of the tax efficiency obligation in paragraph 5.5 of the Contract in order to be entitled to a termination payment which he would equally have been entitled to receive if the Bank had performed its contractual obligation. To require him to give up the claim seemed to the judge to produce a windfall for the Bank, and the implications of its argument were even more unmeritorious in relation to a claim for damages for wrongful dismissal. The consequence of its argument was that the appellant could not pursue his claim for the losses he has suffered without losing his right to the termination payment to which he would equally have been entitled if the contract had been terminated lawfully. That would allow the Bank to profit from its own wrong a result that seemed to him wholly unreasonable. The Court of Appeal said that the answer to this issue depended on the correct interpretation of the Contract and its Schedules 1 and 2, and in particular on the relationship between paragraph 5.16 and paragraphs 7(c) and (e) of Schedule 1: [2011] IRLR 482, para 74. On its approach, the words any payments due under this letter in paragraph 5.16 referred to the payments referred to in Schedules 1 and 2. On this reading, it was no part of the scheme of paragraph 5.16 that the termination agreement should include damages as part of the severance package. Paragraph 5.16 was to be interpreted as imposing a mutual obligation on the parties to enter into a termination agreement in the form of the Schedule 1 draft as appropriately amended by reference to Schedule 2. Once any disputes as to the amounts due under it are resolved, the parties are under an obligation to sign the termination agreement. When it is executed the paragraph 7(e) guillotine will fall, with the effect that the appellant will have to cease the pursuit of any pending claims for breach of contract against the Bank whether for wrongful dismissal or otherwise, or else forfeit the termination payments and face a claim for their repayment. The appellant will issue and pursue any new claims at his peril: para 89. I agree with the Court of Appeal that paragraph 5.16 is to be interpreted as imposing a mutual obligation on the parties to enter into a termination agreement in the form of the draft set out in Schedule 1. As I read that paragraph, the appellant does not have an option not to comply with it as I understood Mr Jeans to have suggested. Paragraph 5.14 provides that, within 28 days after termination of the appellants employment, the Company will make a payment to you (the Termination Payment) as specified in paragraph 5.15. The opening words of paragraph 5.16 tell the appellant what he must do in return: In consideration for the Company making the termination payment . you will enter into a termination agreement with the Company (in the form of the draft termination agreement in Schedule 1 of this letter but amended to take account of any payments due to you under this letter and to take account of relevant legislative developments). It seems to me to be plain that these are mutual obligations binding on both parties to the agreement. The Bank is under an obligation to make the termination payment referred to in paragraphs 5.14 and 5.15. The appellant, for his part, is under an obligation to enter into the termination agreement. There is no provision on which he can rely which would entitle him to waive that obligation. If he fails to enter into the termination agreement, he will be in breach of contract and liable to the Bank in damages. But I cannot agree with the Court of Appeals construction of paragraph 5.16. The crucial question is whether the words under this letter refer to the draft letter in Schedule 1 or to the entire agreement to which the appellant was invited by the letter of 28 January 2005 to indicate his acceptance. Mr Cavender said that those words should be read in the broader sense, with the result that the draft termination agreement in Schedule 1 was to be amended to take account of all payments due under and in consequence of the agreement, including claims for damages for wrongful dismissal and for a breach of paragraph 5.5. Mr Jeans, on the other hand, supported the meaning attached to those words by the Court of Appeal. He said that the words under this letter were to be read as referring to the draft letter in Schedule 1 without amendment, which made it plain that such claims were to be taken as waived. Two phrases that appear in paragraph 5.16 tend to support Mr Cavenders argument. The first is to be found in the words which immediately precede the words under this letter which we have to construe: the draft termination agreement in Schedule 1 of this letter. In that phrase the words of this letter must mean of the letter of 28 January 2005 and the contract enclosed with it, to which Schedule 1 is attached. It would be odd if the same words which follow so closely afterwards were to mean something different. The use of the words the letter in the second sentence of paragraph 17, which in that context must mean the letter of 28 January 2005, supports this interpretation. Then there is the phrase amended to take account of any payments due to you under this agreement which appears at the end of paragraph 5.16. The phrase in which the words I have emphasised appear contains a restatement of the amendment provision at the start of the paragraph where the word letter is used. The use of the words under this agreement at the end of the paragraph suggests that these words mean the same thing as the words under this letter were meant to convey. This does not, to say the least, fit easily with the submission that where the word letter is used it means the draft letter in Schedule 1. For these reasons I am inclined to read the words this letter in the sense contended for by Mr Cavender. A desire for finality appears to have been the reason for the provisions in paragraph 5.16 on either of the two competing constructions. The termination letter would serve equally well as a definitive record of all the outstanding financial issues on the construction which I favour, although some of the more difficult issues will no doubt take longer to finalise. I am reinforced in taking this view by two other points which, taken together, seem to me to put the matter beyond doubt. The first is the unreasonable nature of the arrangement, if the Bank is right, for the reasons that the judge identified which I need not repeat but would respectfully endorse: see para 31, above. The second, which is closely linked to the first, raises an issue of principle. The effect of paragraph 5.16, on the Banks interpretation, is to exclude any liability it may have to the appellant in damages for wrongful dismissal and for breach of the tax efficiency obligation in paragraph 5.5 as a consequence of his entering into the termination agreement, which he is bound to do. The approach that ought to be taken to the construction of clauses of this kind is well established. In Canada Steamship Lines Ltd v The King [1952] AC 192, 208 Lord Morton of Henryton quoted with approval the principles applicable to clauses which purport to exempt one party to a contract from liability for negligence which were stated by Lord Greene MR in Alderslade v Hendon Laundry Ltd [1945] KB 189, 192. In summary, these principles are (1) that if the clause expressly exempts the party in whose favour it is made (the proferens) from liability for negligence, effect must be given to it; (2) if there is no express reference to negligence, the court must consider whether the words used are wide enough to cover it; and (3) if a doubt arises on this point it must be resolved in favour of the other party and against the proferens. As Lord Dunedin said in W & S Pollock & Co v Macrae 1922 SC (HL) 192, 199, in order to be effective such clauses must be most clearly and unambiguously expressed. In Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd [1983] 1 WLR 964, 969H Lord Fraser of Tullybelton said that it was an ordinary principle that such conditions must be construed strictly against the proferens. The principle is commonly applied in cases where the contract which the other party has entered into with the proferens is in a standard form or in terms set out by the proferens which were not negotiable. The more improbable it is that the other party would agree to excluding the liability of the proferens, the more exacting the application of the principle will be. The position in this case was that the terms of the employment contract were the product of negotiation between the parties. Nevertheless the exclusion clause was conceived in favour of the Bank. The provisions under which the appellant was required to waive all contractual and statutory claims against it, and thus to exempt the Bank from any liability in damages for breach of contract, are at first sight all embracing. But they are not without qualification. The critical words are those that indicate that the draft termination agreement in Schedule 1 may be amended to take account of payments due to you under this letter. In order to be effective to achieve what the Bank says it was meant to achieve the agreement had to be clearly expressed. At the very least for the appellant, for the reasons given above, the wording that was chosen was ambiguous. In this situation the ordinary principle must be applied. Any doubt that the wording gives rise to must be construed in favour of the appellant and against the Bank. I would therefore hold for these reasons that, on a proper construction of paragraph 5.16 and Schedules 1 and 2 of the Contract, the appellant is entitled to maintain against the Bank a claim for damages for wrongful dismissal and a claim for an alleged breach of the tax efficiency provision in paragraph 5.5 and that, if he were to do so, he would not be in breach of the terms on which he is entitled to payment of the termination payment specified in paragraph 5.15. Conclusion was made by the Deputy High Court judge. I would allow the appeal, dismiss the cross appeal and restore the order that LADY HALE Lord Hope has identified the four issues in this appeal at paragraph 14 of his judgment. On the first issue, the repudiation issue, which is much the most important point in the appeal, I agree with everything which Lord Wilson says in support of the elective rather than the automatic theory of the termination of an employment contract for repudiatory breach. I also agree with the additional reasons given by Lord Hope for supporting that view. The automatic theory simply cannot work in cases of repudiatory breach which do not amount to express dismissal or resignation. Distinguishing between the two types of repudiation is both impracticable and unprincipled. On the third and fourth issues, the conflict and paragraph 5.16 issues, I agree with the conclusions reached by Lord Hope. Paragraph 5.16 is not easy to construe, as demonstrated by the different constructions favoured in this court and in the courts below. I therefore share Lord Hopes view that it was for the Bank, as author of the document which the appellant had to accept if he was to accept the job, to make the position crystal clear. I turn, therefore, to the second issue, the termination issue. When was the contract terminated in accordance with its terms? In particular, having unsuccessfully attempted to dismiss the appellant summarily on 29 November 2007, when did the Bank succeed in operating the provision for payment in lieu of notice (the PILON clause)? Amid the welter of case law and academic commentary upon the subjects of both wrongful and unfair dismissal, there appears to be remarkably little discussion of the requirements for a lawful dismissal under the terms of the employment contract. Ever since indefinite terms of employment became the norm, the courts have implied a term that either party may bring it to an end by giving notice (see S Deakin and GS Morris, Labour Law, 6th ed, 2012, paras 5.13, 5.14). In 1963, statute intervened to lay down minimum periods of notice to which the employee is entitled and a lesser period to which the employer is entitled (see now, Employment Rights Act 1996, sections 86 et seq). But the parties are, of course, free to provide expressly in their contracts for longer periods of notice. Statute also permits either party to waive his right to notice on any occasion or to accept a payment in lieu of notice (1996 Act, section 86(3)). Statute is, however, silent as to the manner in which such notice is to be given. Notice is, of course, an ambiguous term. It can refer to the period between the time when an employer or employee is notified that the contract is to be terminated and the expiry of the specified period. Or it can refer to the notification itself. Or both. The statutory provisions focus upon the period of notice required. This is clear from section 86(6), which provides that the section does not affect the right of either party to treat the contract as terminable without notice by reason of the conduct of the other party. Clause 13 of the Contract of employment between the Bank and the appellant, as is usual, dealt with both the manner of notification and the period of notice required: Your employment can be terminated on the expiry of 3 months written notice of termination given by you to the Company or by the Company to you. The Contract itself contained no provision for payment in lieu of notice (a PILON clause). Clause 17 stated that the contract is in conjunction with the offer letter, the Staff Handbook of the SGUK Group (as amended from time to time) and the SGUK Compliance Manual which, together with this letter, form the written particulars of employment as required by law. Clause 18 stated that the Contract, Part 1 of the Staff Handbook of the SGUK Group and the SGUK Compliance Manual contain the entire understanding between you and the Company. The wording of these two clauses leaves open the possibility that the Staff Handbook is not, in fact, a contractual document, but rather part of the employers rules by which the employee has agreed to abide. This is an interesting question of academic debate, but the point has wisely not been taken on either side in this case. We have proceeded on the basis that the Handbook does indeed form part of the contract between them. Paragraph 8 of section 1 of the Handbook is set out in full at paragraph 7 of Lord Hopes judgment. Paragraph 8.1 deals with the employees right to notice. In relation to the period of notice, it adds nothing to what would otherwise be the position: the employee is entitled to whichever is the longer of the period specified in his contract or the statutory minimum (the Handbook does not state this in exactly the same terms as section 86(1) of the 1996 Act, but it comes to the same result). In relation to the manner of notification, however, it does add something. It refers to your entitlement to written notice and provides for when such notice is deemed to have been given. Even if there were no entitlement to notice in writing in the Contract, therefore, there would clearly be an entitlement to notice in writing under the Handbook. Paragraph 8.2 deals with the employees obligation to give notice. Unlike paragraph 8.1, it is drafted on the assumption that the Contract will provide for the period of written notice to be given by the employee. It does not set out the statutory position as a default. But in both cases the notification given has to be in writing. Paragraph 8.3 deals with termination by the Bank and payment in lieu of notice. Such PILON clauses are very common in contracts of employment and no doubt this clause is in a form which is also common. Its object is to dispense with the period of notice. The employer reserves the right to terminate your employment with immediate effect by making a payment to you in lieu of notice. It says nothing about whether and how the employee is to be notified that his employment is at an end. Is it enough that the payment in lieu is actually made? Or is something more than that required? And if so, what? The resolution of these questions is of great importance to the large numbers of employees and employers who are party to PILON clauses in this form. Mr Cavender, for the appellant, argues that paragraph 8.3 is dealing only with the period of notice. It allows the Bank to cut this short. It does not deal with the manner of notification. It cannot operate in isolation from clause 13 of the Contract and must be construed alongside that clause. It does nothing to detract from the requirement in clause 13 (and in every other clause of the Contract and Handbook dealing with notification of termination of employment) for notification in writing. Payment into the bank account was not enough, because it was not accompanied by notification in writing that the Bank was terminating his employment by making a payment in lieu of the notice period. The letter of 29 November (set out at paragraph 9 of Lord Hopes judgment) was not enough to cure that omission, because it did not notify the appellant that that was what the Bank intended to do (indeed, it is not clear that that is what it intended to do on that day). In any event, it could not put the burden upon him of checking whether and when the money had reached his bank account. It had a duty to notify him at that time. The first proper notification which the Bank gave him was the letter of 4 January 2008, set out at paragraph 12 of Lord Hopes judgment. This was the first time that he was told, clearly and unambiguously and in writing, that the Bank had exercised its right to terminate his employment with immediate effect by making him a payment in lieu of notice. He accepts, therefore, that his contract was validly terminated on 6 January when he was deemed to have received that letter. In support of his argument, Mr Cavender relies on the general principle that notices to determine contracts should be unambiguous and unequivocal and leave the recipient in no doubt as to the contractual right being invoked. He relies in particular upon the well known passage in the opinion of Lord Steyn in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, 768: Making due allowances for contextual differences, such notices [under a break clause in a lease] belong to the general class of unilateral notices served under contractual rights reserved, eg notices to quit, notices to determine licences and notices to complete: Delta Vale Properties Ltd v Mills [1990] 1 WLR 445, 454E G. To those examples may be added notices under charter parties, contracts of affreightment, and so forth. Even if such notices under contractual rights reserved contain errors they may be valid if they are sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they are intended to operate: the Delta case at p 454E G, per Slade LJ and adopted by Stocker and Bingham LJJ; see also Carradine Properties Ltd v Aslam [1976] 1 WLR 442, 444. That test postulates that the reasonable recipient is left in no doubt that the right reserved is being exercised. It acknowledges the importance of such notices. The application of that test is principled and cannot cause any injustice to a recipient of the notice. Although that case was concerned with the effect of a mistake in an otherwise clear and unambiguous notice, the principle is clear. The reasonable recipient has to be told that the right is being exercised, how and when it is intended to operate. This was not done in this case. Mr Jeans, on behalf of the Bank, argues that paragraph 8.3 is simplicity itself. The act of making payment brings the employment to an end. There is no requirement of notification. But in any event, Mr Geys knew from the letter of 29 November and later correspondence that the Bank was sacking him, although this did not spell out the basis upon which it was doing so. He knew of the payment into his account before the end of December. The trial judge found that he had probably guessed that the most likely explanation for the credit was that it was a payment in lieu of notice. So even if there is some requirement of notification, this was enough. So his employment ended before the end of 2007, which is the crucial date for the calculation of his termination payment. In my view, it is quite clear that paragraph 8.3 is not dispensing with whatever requirement there is that the employee be notified of the termination of his employment. The words in brackets (or, if notice has already been given, the balance of your notice period) draw a clear distinction between the notice period and notification of the termination of employment and thus strongly suggest that the word notice which precedes them also refers to the notice period. The question therefore becomes, to what notification was the employee entitled under the express or implied terms of his contract of employment? In this connection, it is important to distinguish between two different kinds of implied terms. First, there are those terms which are implied into a particular contract because, on its proper construction, the parties must have intended to include them: see Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988. Such terms are only implied where it is necessary to give business efficacy to the particular contract in question. Second, there are those terms which are implied into a class of contractual relationship, such as that between landlord and tenant or between employer and employee, where the parties may have left a good deal unsaid, but the courts have implied the term as a necessary incident of the relationship concerned, unless the parties have expressly excluded it: see Lister v Romford Ice & Cold Storage Co Ltd [1957] AC 555, Liverpool City Council v Irwin [1977] AC 239. A great deal of the contractual relationship between employer and employee is governed by implied terms of the latter kind. Some are of long standing, such as the employers duty to provide a safe system of work. Some are of more recent discovery, such as the mutual obligations of trust and confidence. This was referred to by Dyson LJ in Crossley v Faithful and Gould Holdings Ltd [2004] IRLR 377 as an evolutionary process. He also described the necessity involved in implying such terms as somewhat protean, pointing out that some well established terms could scarcely be said to be essential to the functioning of the relationship. At para 36, he said this: It seems to me that, rather than focus upon the elusive concept of necessity, it is better to recognise that, to some extent at least, the existence and scope of standardised implied terms raise questions of reasonableness, fairness and the balancing of competing policy considerations. There is much to be said for that approach, given the way in which those terms have developed over the years. Whatever the test to be applied, it seems to me to be an obviously necessary incident of the employment relationship that the other party is notified in clear and unambiguous terms that the right to bring the contract to an end is being exercised, and how and when it is intended to operate. These are the general requirements applicable to notices of all kinds, and there is every reason why they should also be applicable to employment contracts. Both employer and employee need to know where they stand. They both need to know the exact date upon which the employee ceases to be an employee. In a lucrative contract such as this one, a good deal of money may depend upon it. But even without that, there may be rights such as life and permanent health insurance, which depend upon continuing to be in employment. In some contracts there may also be private health insurance. A person such as Mr Geys, going on holiday over Christmas and the New Year, needs to know whether he should be arranging these for himself. At the other end of the scale, an employee who has been sacked needs to know when he will become eligible for state benefits. It is necessary, therefore, that the employee not only receive his payment in lieu of notice, but that he receive notification from the employer, in clear and unambiguous terms, that such a payment has been made and that it is made in the exercise of the contractual right to terminate the employment with immediate effect. He should not be required to check his bank account regularly in order to discover whether he is still employed. If he does learn of a payment, he should not be left to guess what it is for and what it is meant to do. This is not an unreasonable requirement to place upon an employer (or indeed upon an employee giving notice). When an employer sacks an employee it ought to know what it is doing: is it with immediate effect or on notice? If it is with immediate effect, is it because of some misconduct on the part of the employee or in the exercise of a PILON clause? It is not good enough to purport summarily to dismiss the employee without stating a cause and without making a payment, then to realise that there is no right to do that, but that there is the right to terminate under a PILON clause, and so decide to exercise that right without telling the employee that the right is being exercised and the payment has been made. Given that such a notice is a necessary incident of the relationship, a wise employer would take care to give it in writing. But if the contract does not require writing, it would be possible for an employer to hand over the correct money and clearly state at the same time that this brings the employment to an immediate end, in place of the notice period to which the employee would otherwise be entitled. In the days when wages were normally paid in cash, this would have been a common practice. But if, as is now common, payment is made direct to the employees bank account, the employees bank is his agent for the receipt of payment, but it is not without more his agent for the receipt of notification of what the payment is for. That notification has to be given to the employee. On any view, such clear and unambiguous notification was not given in this case. The Bank could easily have done things properly. But for whatever reason they did not do so. Subject, therefore, to the repudiation issue, it was not until 6 January 2008, when Mr Geys must be deemed to have received the Banks letter of 4 January 2008, that the contractual right to terminate under the PILON method provided for by paragraph 8.3 of the Handbook was validly exercised and his employment with the Bank came to an end. LORD WILSON In para 14 above Lord Hope helpfully identifies the four issues before the court. I agree with his proposed resolution of the third issue (the conflict issue) and the fourth issue (the para 5.16 issue). I also agree with the resolution of the second issue (the termination issue) proposed by Lady Hale. I address the first issue (the repudiation issue). In the absence of any direct authority of real weight at this level, the court is required to make a difficult and important choice between a conclusion that a partys repudiation (albeit perhaps only an immediate and express repudiation) of a contract of employment automatically terminates the contract (the automatic theory) and a conclusion that his repudiation terminates the contract of employment only if and when the other party elects to accept the repudiation (the elective theory). It is common ground that, whichever theory be chosen, it should apply equally to wrongful repudiations by employers (i.e. wrongful dismissals) and wrongful repudiations by employees (i.e. wrongful resignations); and it is only for convenience, and because it is reflective of the facts of the present case, that I will, at times, refer to the wrongful repudiator as the employer and to the innocent party as the employee. In light of the fact that a central incident of the automatic theory is that, upon the automatic termination of the contract, the innocent party has a right to damages, the first question must be whether it matters that the contract is terminated forthwith upon repudiation or, instead, survives until some further, terminating, event? The answer is that sometimes it does matter. It depends on the terms of the contract. The date of termination fixes the end of some contractual obligations and, sometimes, the beginning of others. An increase in salary may depend on the survival of the contract until a particular date. The amount of a pension may be calculated by reference to the final salary paid throughout a completed year of service or to an aggregate of salaries including the final completed year. An entitlement to holiday pay may similarly depend on the contracts survival to a particular date. In some cases an award of damages will compensate the employee for any such loss. But often it will fail to do so. Such failure flows from application of the least burdensome principle, namely that damages should reflect only the losses sustained by the employers decision to repudiate the contract unlawfully rather than by his having hypothetically proceeded, in the manner least profitable to the plaintiff, and the least burthensome to the defendant, to terminate the contract lawfully: see Cockburn v Alexander (1848) 6 CB 791, 136 ER 1459, at pp 814 and 1468, (Maule J), and McGregor on Damages, 18th ed (2009) para 8 093. So, where under the terms of the contract it had been open to the wrongfully repudiating employer to have taken a course which would have terminated the contract quickly as well as lawfully, the damages will be small. These propositions are well demonstrated by the facts of the present case. Lord Hope explains in para 6 above why the appellants termination payment would be substantially increased if his contract of employment were to have terminated after 31 December 2007. Had the effect of the Banks wrongful repudiation been to terminate it on or prior to that date, his damages would not cover his loss of the increase in payment. For, as Lady Hale observes in para 61 above, it would have been easy for the Bank lawfully to have operated the PILON clause in para 8.3 of the Handbook. Indeed it could, by proper operation of that clause, lawfully have dismissed the appellant on 29 November 2007 itself. So his damages for the Banks unlawful repudiation of the contract on that date would, by application of the least onerous principle, be no more than nominal. Superficially, however, it may be said to be paradoxical that the principle should demand a hypothesis that the Bank would have operated the PILON clause immediately and validly in circumstances in which in fact it delayed its attempted operation of the clause until 18 December 2007 and thereafter, until 6 January 2008, it operated it invalidly. The central task in this part of the appeal is therefore to identify the date when the appellants contract terminated; and, in my respectful view, it is not, as Lord Sumption suggests in para 120 below, to analyse the enforceability of what he calls the core obligations. He proceeds to suggest in para 140 below that the application of the elective theory, of which the result, of course, would be to exclude a conclusion that the contract terminated on 29 November 2007, would give rise to significant injustice in this case. There, with respect, I part company with Lord Sumption. Before I consider the detail of the authorities, I find it helpful to stand back and to remind myself of the overall effect of the automatic theory. It is to reward the wrongful repudiator of a contract of employment with a date of termination which he has chosen, no doubt as being, in the light of the terms of the contract, most beneficial to him and, correspondingly, most detrimental to the other, innocent, party to it. We must, I suggest, be very cautious before turning basic principles of the law of contract upon their head so that, in this context, breach is thus to be rewarded rather than its adverse consequences for the innocent party negatived. It is, says Professor Freedland in The Personal Employment Contract, 2003, at p390 a matter of concern if the common law of wrongful dismissal functions so as to invite opportunistic breach of contract. My view of the location of the justice of the case is opposite to that of Lord Sumption: it is that, in that the Bank failed to operate its own PILON clause lawfully until after 31 December 2007, it should not be able to revert to its unlawful act on 29 November as the reason why the contract did not survive for the final 32 days of the year. In the jurisprudence of England and Wales prior to the decision in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448, the fullest analysis of the rival advantages of the automatic and the elective theories, in the light of such earlier relevant authority as existed, was conducted by Sir Robert Megarry VC in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227. As Warner J observed in Irani v Southampton and South West Hampshire Health Authority [1985] ICR 590, 598, the Vice Chancellors analysis was powerfully reasoned. There it was the employee who, following various breaches of contract on his part, wrongfully repudiated it by purported resignation half way through its fixed term. The employer sought interlocutory injunctions that he should neither solicit its customers nor use information confidential to it. Towards the end of his analysis, which begins on p 236, the Vice Chancellor said, at p 243: Above all, I think the courts must be astute to prevent a wrongdoer from profiting too greatly from his wrong. [W]hy should the courts inability to make a servant work for his employer mean that as soon as the servant refuses to do so the court is forthwith disabled from restraining him from committing any breach, however flagrant, of his other obligations during the period of his contract? I would wholly reject the doctrine of automatic determination. The Vice Chancellor thereupon proceeded, at p 247, to make both of the requested injunctions on the basis that they were in support of the employees implied duty of fidelity and good faith which, as the Vice Chancellor had expressly noted at p 243, bound the employee only for as long as the contract subsisted. Contracts of employment often include provisions which are expressed to bind the parties following the termination of the contract: Rhys Harper v Relaxion Group plc [2003] UKHL 33, [2003] ICR 867, para 36 (Lord Nicholls). For example, they may oblige the employee not to compete with the employer for a specified period nor to use information which he has obtained in confidence during the period of his employment. Or, as in the present case, they may oblige the employer, within a specified period following termination of the contract, to make to the employee a termination payment, to be calculated in accordance with terms specified in it, and may oblige the employee, in consideration of the payment, to enter into a termination agreement on terms also therein specified. Such provisions of the contract are, by their terms, enforceable following its termination. The enforceability of, for example, a restrictive covenant by the repudiator against the innocent party is now the subject of some debate: Rock Refrigeration Ltd v Jones [1997] ICR 938. There is no problem about the enforceability of such provisions against the repudiator. But authorities to that effect shed no light on the issue between the elective and the automatic theories because the provisions do not depend on the survival of the contract. By contrast, however, authorities in which, following an unaccepted wrongful repudiation, provisions which do not survive the termination of the contract have been enforced against the repudiator must, in my view, be taken to be examples of the operation of the elective theory. Adoption by this court of the automatic theory would leave them unjustifiable. For example, the Thomas Marshall case was far from being the first example of the enforcement of a covenant against competition during the contract and following its wrongful repudiation. Thus, in Lumley v Wagner (1852) 1 De GM & G 604, 42 Eng Rep 687, Miss Wagner agreed to sing operatic roles for Mr Lumley for the months of April, May and June 1852, at Her Majestys Theatre and not to sing elsewhere during that period. She wrongfully repudiated the contract and proposed, instead, to sing for Mr Gye at the Royal Italian Opera, Covent Garden. The Lord Chancellor, Lord St Leonards, acknowledged, at pp 619 and 693, that he could not order Miss Wagner to sing for Mr Lumley. But he held that he could, and should, order her not to sing for Mr Gye; and it is clear from Mr Lumleys pleading, set out at pp 607 and 689, that the injunction was to endure only during the existence of the agreement, i.e. until 30 June 1852. In Whitwood Chemical Co v Hardman [1891] 2 Ch 416, Lindley LJ observed, at p 428, that he regarded the decision in Lumley v Wagner as an anomaly to be followed in cases like it, but an anomaly which it would be very dangerous to extend. He made clear that the danger was that its extension might represent a movement towards the specific performance of a contract of employment. He did not suggest that there was any anomaly in the analysis that Miss Wagners contract had continued notwithstanding her repudiation of the contract. Indeed in William Robinson and Co Ltd v Heuer [1898] 2 Ch 451 the Court of Appeal, in a constitution over which the same judge, then Master of the Rolls, presided, made an injunction, analogous to that made against Miss Wagner, against an employee who had wrongfully resigned after three of his five contractual years of service and who was breaking his covenant not, during this engagement, to work for any rival business. The court expressly, held, at p 458, that the employees engagement continued; and it made an injunction against his working for a rival business for the remaining two years. In Warner Brothers Pictures Inc v Nelson [1937] 1 KB 209 Bette Davis had, in 1934, entered into a contract of employment with Warner Brothers which, at their option, could continue until 1942. In 1936 she repudiated the contract and proposed to break her covenant not, during its currency, to participate in any other film for any other company. Branson J, at p 222, enjoined her from doing so during the continuance of the contract or for three years from now, whichever period is the shorter. Into a different, yet equally significant, category fall cases in which an employer wrongfully repudiates a contract of employment in circumstances in which its terms require him to have implemented a disciplinary procedure. The law is clear that an injunction may issue so as to enforce the requirement; and the absence of a right to claim damages for breach of a duty to follow a disciplinary procedure (see Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2011] UKSC 58, [2012] 2 AC 22) makes the availability of the injunction particularly precious. But it is self evident that, had the wrongful repudiation already automatically terminated the contract, an injunction would not issue so as to require observance of a procedure designed to determine whether the employer was entitled to terminate it. Thus in Jones v Lee [1980] ICR 310 the managers of a Roman Catholic school wrongfully dismissed its headmaster following his divorce and remarriage to a former teacher at the school. The dismissal was wrongful because it was in breach of a term of his contract of employment which gave him the right to a hearing before the local education authority prior to his dismissal. The Court of Appeal enjoined the managers from dismissing him or purporting to dismiss him prior to any such hearing. In the Irani case, cited above, Warner J made an analogous injunction. In Robb v Hammersmith and Fulham London Borough Council [1991] ICR 514 the claimant, who was Hammersmiths director of finance, had been responsible for speculative, indeed unlawful, investments of its funds. Hammersmith invoked a contractual disciplinary procedure with a view to dismissing him for lack of capability but it abandoned the procedure and wrongfully dismissed him with immediate effect. Morland J granted him an injunction so as to restrain Hammersmith from giving effect to its purported dismissal of him and, as the judge explained at p 523, so as to restore his entitlement to the ventilation of his defence through the disciplinary procedure. In my view the proponents of the automatic theory fail to explain how the competition and the disciplinary cases are consistent with it. To describe them as examples of the enforcement only of collateral obligations would, I believe, be to fail to engage sufficiently with their significance. How and when did the automatic theory take hold? To what extent has it taken hold? To what extent should it take hold? Equity took the view that the remedy of specific performance, or analogous injunction, should not be available so as to require an employee who had wrongfully resigned to go back to work or to require an employer who had wrongfully dismissed the employee to take him back. [T]he courts, said Sir George Jessel, Master of the Rolls, in Rigby v Connol (1880) 14 ChD 482, 487, have never dreamt of enforcing agreements strictly personal in their nature, whether they are agreements of hiring and service, being the common relation of master and servant, or . In Chappell v Times Newspapers Ltd [1975] ICR 145 Geoffrey Lane LJ explained, at p 178, that if one party has no faith in the honesty or integrity or the loyalty of the other, to force him to serve or to employ that other is a plain recipe for disaster. This has made a contract of employment into a special case but only in terms of remedies. Indeed where, notwithstanding an employers wrongful repudiation, trust and confidence between the parties have not been forfeit, an injunction, analogous to specific performance, may be granted to restrain implementation of its purported notice: Hill v CA Parsons & Co Ltd [1972] Ch 305. The big question whether nowadays the more impersonal, less hierarchical, relationship of many employers with their employees requires review of the usual unavailability of specific performance has been raised, for example by Stephenson LJ in the Chappell case, at p 176, but is beyond the scope of this appeal. Where did the unavailability of specific performance leave the wrongly dismissed employee? Specifically, could he sue for his wages on the basis that at any rate he had remained ready, able and willing to resume his work for the employer? The Victorian work ethic helped to provide a negative answer. In Goodman v Pocock (1850) 15 QB 576, 117 ER 577, Erle J said at pp 583 584 and 580: I think that the servant cannot wait till the expiration of the period for which he was hired, and then sue for his whole wages on the ground of a constructive service after dismissal. I think the true measure of damages is the loss sustained at the time of the dismissal. The servant, after dismissal, may and ought to make the best of his time; and he may have an opportunity of turning it to advantage. Ever since then the law has been clear that, save when, unusually, a contract of employment specifies otherwise, the mere readiness of an employee to resume work, following a wrongful dismissal which he has declined to accept, does not entitle him to sue for his salary or wages. He cannot, as Salmon LJ said in Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699, 726, sit in the sun. The law takes the view that it is better for the employee (as well, of course, as for the employer) that his claim for loss of wages or salary should be confined to a claim for damages and therefore be subject to his duty to mitigate them by taking all reasonable steps to find other work. This principle is not without its critics. In Boyo v Lambeth London Borough Council [1994] ICR 727, 747 Staughton LJ observed that, unconstrained by authority, he would not have accepted it; and, in his dissenting judgment in Cerberus Software Ltd v Rowley [2001] ICR 376, Sedley LJ suggested, at p 386, that it was one of the great unresolved questions of employment law. But, even if the question can be said to be unresolved, this court is not invited to resolve it. The facts of this appeal leave no room for an attack on the principle. It has added to the making of a contract of employment into a special case but, again, only in terms of remedies. Until 1955 there was no suggestion in the jurisprudence of England and Wales or elsewhere in the world of the common law that a wrongful repudiation of a contract of employment automatically brought it to an end. The need for the innocent party to elect whether to accept the repudiation, in accordance with general principles of the law of contract, was taken as read: see, for example, Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339, 365 (Bowen LJ) and General Billposting Co Ltd v Atkinson [1909] AC 118, 122 (Lord Collins). Then came the important decision of the High Court of Australia in Automatic Fire Sprinklers Proprietary Ltd v Watson (1946) 72 CLR 435. Its clear indorsement of the elective theory still holds sway in Australia: Byrne v Australian Airlines Ltd (1995) 131 ALR 422. In the Automatic Fire Sprinklers case the employers purported dismissal of the employee was wrongful for two reasons. First, it was in breach of contract. Second, it was in breach of a war time regulation which prohibited his dismissal without the consent of the Director General of Man Power. The employee did not accept the wrongful repudiation and sued for his salary for the year which followed it. In relation to the first issue the court was unanimous: it was that, although at common law the contract was not at an end, the employee was nevertheless not entitled to sue for his salary. But the way in which it expressed that conclusion may, in retrospect, have been significant: for it said that, although the contract was not at an end, the relationship was at an end. Thus Latham CJ, who was in the minority only on the second issue, said, at p 451: Thus the wrongful dismissal determines the relationship of master and servant created by the contract, even though the servant may not have accepted his dismissal as entitling him to regard the contract as discharged. Any other view would in effect grant specific performance of a contract of personal service, a remedy which the courts have always refused in such a case. The second issue related to the effect of the breach of the regulation; the majority held that its effect was to preclude the termination even of the relationship of master and servant, with the result that the employee was entitled to recover his salary. The High Courts reference to the termination of the relationship of master and servant, as distinct from the termination of their contract, was no more than its convenient short hand for the common laws long rejection of a claim for wages or salary. Some subscribers to the elective theory have considered the distinction useful. Thus in the Gunton case, [1981] Ch 448, Brightman LJ explained, at pp 474 475, that although a wrongful dismissal, if not accepted, left the contract in being, the status, or relationship, of the parties to it no longer existed and that obligations not necessarily dependent on the existence of the relationship might alone survive. But other subscribers to the elective theory have criticised the distinction. In Dietman v Brent London Borough Council [1987] ICR 737, Hodgson J referred to it, at p 753, as a little difficult to understand. In their article entitled Theories of Termination in Contracts of Employment: the Scylla and Charybdis, (2003) 19 JCL 134, Hough and Spowart Taylor described it, at p 144, as deeply problematic. I myself regard the distinction as unhelpful, indeed confusing. It has offered easy pickings for proponents of the automatic theory, whom it enables to argue, with superficial force, that, if the wrongful repudiation terminates the relationship, it must also then terminate the contract. The automatic theory made its appearance in the jurisprudence of England and Wales in 1955 almost in parenthesis. The case of Vine v National Dock Labour Board [1956] 1 QB 658 (CA) and [1957] AC 488 (HL), concerned a registered dock worker employed by the Board on terms set by a statutory scheme. The Board wrongfully dismissed him and the House of Lords, reversing the majority decision of the Court of Appeal, held, by reference to the terms of the scheme, that the trial judge had been entitled to declare that his dismissal had been invalid. In his dissenting judgment in the Court of Appeal, Jenkins LJ, at p 674, contrasted the effect of the scheme with the ordinary case of master and servant in which so he proposed the repudiation or the wrongful dismissal puts an end to the contract, and the contract having been wrongfully put an end to a claim for damages arises. In the House of Lords Viscount Kilmuir LC, said, at p 500: This is an entirely different situation from the ordinary master and servant case; there, if the master wrongfully dismisses the servant, either summarily or by giving insufficient notice, the employment is effectively terminated, albeit in breach of contract. Here, the removal of the plaintiffs name from the register being, in law, a nullity, he continued to have the right to be treated as a registered dock worker with all the benefits which, by statute, that status conferred on him. It is therefore right that, with the background of this scheme, the court should declare his rights. Although there may be some ambiguity in his use of the word effectively, the Lord Chancellor is generally there taken to have indorsed the proposition of Jenkins LJ in support of the automatic theory. The basis of the proposition which, as will already be clear, played no part in the reasoning of the decision of the House had been, and remained, unexplained. In its recent affirmation of the elective theory in Paper Reclaim Ltd v Aotearoa International Ltd [2007] 3 NZLR 169, the Supreme Court of New Zealand referred, at para 18, to the difficulty of the proposition as a statement of law, as opposed to a statement of practical consequence for the employee. Two months after its decision in the Vine case the appellate committee heard McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594. The respondent had given six months notice of termination of the appellants employment as a clerk. But, in the absence of her gross misconduct, incapacity or ill health, there was no express provision in the contract for the respondent to terminate it, whether on six months notice or reasonable notice or otherwise. The majority of the committee held that such a provision could not be implied; and accordingly it declared that her contract had not been validly terminated. No reference was made to the decision in the Vine case. The elective theory was applied without argument to the contrary. Mr Jeans presents the judgment of the Privy Council in Francis v The Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411 as an example of the application of the automatic theory. There is no doubt that the employee, wrongfully dismissed, was confined to a claim for damages. But part of the Boards analysis was inconsistent with the theory. Lord Morris of Borth y Gest said, at p 1417 1418: In their Lordships view, when there has been a purported termination of a contract of service a declaration to the effect that the contract of service still subsists will rarely be made. This is a consequence of the general principle of law that the courts will not grant specific performance of contracts of service. Special circumstances will be required before such a declaration is made. there are no circumstances in the present case which would make it either just or proper to make such a declaration. In Decro Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361, the defendant had contracted to be the exclusive marketeer in the UK of tiles manufactured by the claimant in France. So it was a contract for the provision of services. One of the questions before the Court of Appeal was whether, as the claimant contended, its own wrongful repudiation of the contract had automatically brought it to an end. The claimant relied on dicta of Lord Reid in White and Carter (Councils) Ltd v McGregor [1962] AC 413, 428 and 429, which (so the claimant said) suggested that, where, following a wrongful repudiation of a contract for the provision of services, the completion of the contract by the innocent party would have required the repudiators cooperation, the repudiation automatically brought the contract to an end. The court explained that Lord Reids remarks could not bear the weight thus sought to be placed on them and that, in the passage quoted by Lord Sumption at para 114 below, Lord Hodson, with whom Lord Tucker had agreed, had expressly reaffirmed the survival of the contract beyond repudiation until acceptance and irrespective of the availability of specific performance: see p 370 (Salmon LJ), p 375 (Sachs LJ) and p 381 (Buckley LJ). It is, said Sachs LJ at p 375, the range of remedies that is limited, not the right to elect. Salmon LJ, at p 370, and Sachs LJ, at p 376, also, in passing, expressed their provisional rejection of the application of the automatic theory to a contract of employment but Buckley LJ, at p 381, left that point open. In paragraphs 114 and 115 below, albeit under the rubric only of The general law, Lord Sumption lays stress on Lord Reids dicta in the White and Carter case. I agree with the Court of Appeals treatment of them in the Decro Wall case. In particular Lord Reid was not addressing the enforceability of terms of a contract of employment which are not dependent on mutual cooperation and thus, in that context, the wider question of the proper treatment of a wrongful repudiation. In Sanders v Ernest A Neale Ltd [1974] ICR 565 the National Industrial Relations Court, of which the President was Sir John Donaldson, dismissed an appeal by employees against the conclusion of an industrial tribunal that their dismissals had not been attributable to redundancy. The first question was when their dismissals had occurred. The court assumed that the employer had wrongfully repudiated their contracts. It held that it had thereby automatically terminated them; and it proceeded to conclude that the tribunal had been right to hold that the terminations had not been attributable to redundancy. At pp 570 571 Sir John addressed the validity of the proposition that a servant cannot sue for wages if he has not rendered services, and the wrongful dismissal prevents him rendering services. He proceeded as follows: It being admitted that a wrongful dismissal does prevent a servant from so suing, there must be some other explanation. The obvious, and indeed the only, explanation is that the repudiation of a contract of employment is an exception to the general rule. It terminates the contract without the necessity for acceptance by the injured party. Six years later, in the Gunton case, Buckley LJ was to observe, at p 466, that, to the best of his knowledge, the Sanders case was the only ordinary employment case in which the automatic theory was part of the basis of the decision. But if, as also appears to me, it was in that sense the high water mark of the automatic theory, it was scarcely the result of a flood tide. Sir John Donaldsons reasoning was to jump from the absence of some remedies to the absence of all rights, heedless in particular of contractual rights other than to payment of wages or salary. As Deakin and Morris state in Labour Law, 2012, 6th ed, para 5.38, application of the automatic theory is a case of the tail wagging the dog. I am a late convert to the clich as an effective means of explaining a point; and another, apt to the context, would involve babies and bath water. In his article entitled Remedies for Breach of the Contract of Employment [1993] CLJ 405, Professor Ewing wrote, at pp 410 411: So the rights of the parties are to be driven and determined by the availability of remedies; the contract is automatically terminated by the unilateral repudiation of either party, simply because it is not capable of specific performance. As such the argument is hopelessly circular. The circularity is that there is no remedy so there is no right so there is no remedy. The professor proceeded, at p 415, to describe the automatic theory as a bastard doctrine, which is difficult to reconcile with the general principles of contract law. In Treitel: The Law of Contract, 13th ed, 2011, at para 18 006, Professor Peel identifies other types of contract, such as a sale of goods or a charter of a ship, in which, following a wrongful repudiation, the innocent party may be unable to require full payment under the contract yet in which no doubt is raised about the continuation of the contract pending his election. In the Gunton case [1981] Ch 448 the employer wrongfully repudiated the employees contract of employment by dismissing him for disciplinary reasons without complying with the contractual disciplinary procedure. The Court of Appeal held that, if (which Shaw LJ doubted) the termination of the contract depended upon his having accepted the wrongful repudiation, the employee had nevertheless done so. Therefore the question of his obtaining an injunction analogous to that in Jones v Lee [1980] ICR 310 did not arise; and the decision related to the appropriate measure of his damages. But there was a discussion about the automatic theory, which Shaw LJ favoured, and the elective theory, which Buckley and Brightman LJJ favoured. Shaw LJ referred to the basic principle of the common law, which afforded to the innocent party a right to elect whether to accept a wrongful repudiation and claim damages or to call for performance in accordance with the contract. He proceeded, at p 459: This practical basis for according an election to the injured party has no reality in relation to a contract of service where the repudiation takes the form of an express and direct termination of the contract in contravention of its terms. There may conceivably be a different legal result where the repudiation is oblique and arises indirectly as, for example, where the employer seeks to change the nature of the work required to be done or the times of employment; but I cannot see how the undertaking to employ on the one hand, and the undertaking to serve on the other can survive an out and out dismissal by the employer or a complete and intended withdrawal of his service by the employee. It has long been recognised that an order for specific performance will not be made in relation to a contract of service. If the only real redress is damages, how can its measure or scope be affected according to whether the contract is regarded as still subsisting or as at an end? To preserve the bare contractual relationship is an empty formality. But Buckley LJ said, at pp 468 469: Why should the doctrine operate differently in the case of contracts of personal service from the way in which it operates in respect of other contracts? I for my part can discover no reason why it should do so in principle. It cannot be because the court will not decree specific performance of a contract of personal service, for there are innumerable kinds of contract which the court would not order to be specifically enforced, to which the doctrine would undoubtedly apply. [But] in a case of wrongful dismissal in the absence of special circumstances the damages recoverable on the footing of an accepted repudiation must, I think, be as great as, and most probably greater than, any damages which could be recovered on the footing of an affirmation of the contract by the innocent party and of the contract consequently remaining in operation. So. a wrongfully dismissed servant really has, in the absence of special circumstances, no option but to accept the masters repudiation of the contract. It consequently seems to me that, in the absence of special circumstances, in a case of wrongful dismissal the court should easily infer that the innocent party has accepted the guilty partys repudiation of the contract. I do not think, however, that it is impossible that in some cases incidental or collateral terms might cause the injured party to want to keep the contract on foot. In the course of the affirmation of the elective theory by the Saskatchewan Court of Appeal in Smart v Board of Governors of South Saskatchewan Hospital Centre (1989) 60 DLR (4th) 8, Bayda CJS commented on the observations of Buckley LJ, at p 17: This position of being better off to accept the repudiation in which the innocent employee so often finds himself in practice and the courts commensurate readiness to find acceptance have, in my respectful view, tended to seduce some legal analysts into concluding that the innocent employee is obliged in law to accept the repudiation, or, alternatively, does not have the option in law to treat the contract as continuing. But, as. Buckley [LJ] explicitly pointed out, that conclusion is erroneous. It is important to remember that there are times when it is in the innocent employees practical interest to continue the contract in law. But Buckley LJs suggestion that acceptance of a wrongful repudiation should easily be inferred and his consequent dilution of the effect of the theory which he himself was commending has attracted powerful criticism, not least by Professor Brodie in The Contract of Employment (2008), para 18.10, and by Ralph Gibson LJ in the Boyo case [1994] ICR 727, 743. There is certainly no point in conferring upon a party an election to which some other principle of law is applied so as to deprive it of real value; and in my view Buckley LJs suggestion should be treated cautiously. Ralph Gibson LJ proceeded to accept that, following a wrongful repudiation, contractual obligations which did not depend on the existence of the relationship of master and servant, such as terms as to disciplinary procedures and competition, continued to exist. But, subject, so he said, to that qualification, he would, in the absence of the binding authority of the Gunton case, have preferred the automatic theory. I do not understand how a theory can be preferred subject to a qualification which is entirely inconsistent with it. Apart from the decision in 1994 in the Boyo case, cited above, in which the employee represented himself and the court felt reluctantly obliged to apply the elective theory in accordance with the decision in the Gunton case, the most recent domestic decision of significance is London Transport Executive v Clarke [1981] ICR 355. Its date demonstrates that, for an entire generation, the issue between the two theories has been substantially quiescent. The employee went to Jamaica for seven weeks contrary to the terms of the contract and to the employers express instructions. So it was a repudiatory breach falling short of purported resignation. On the contrary, the employee wished to resume his employment upon his return. While he was away, however, the employer told him, by letter, that his employment was at an end. The first question posed by his complaint of unfair dismissal to the industrial tribunal related to the identity of the party who had terminated the contract. Lord Denning MR, evidently prepared to apply the automatic theory even to a repudiatory breach falling short of purported resignation, held, at p 366, that, upon his departure, the employee had himself terminated the contract. But Templeman and Dunn LJJ held that the termination had occurred only when, by its letter, the employer had accepted his repudiatory breach. So he had indeed been dismissed, albeit (so they proceeded to hold) not unfairly. Templeman LJ, with whose reasoning Dunn LJ agreed, said at pp 366 367: The general rule is that a repudiated contract is not terminated unless and until the repudiation is accepted by the innocent party. [C]ontracts of employment cannot provide a general exemption to that rule because it would be manifestly unjust to allow a wrongdoer to determine a contract by repudiatory breach if the innocent party wished to affirm the contract for good reason. Thus in Thomas Marshall (Exports) Ltd v Guinle [1978] ICR 905, which contains a full discussion of principles and of the conflicting authorities, a contract of employment was repudiated by the employee. The court could not enforce specific performance of the contract for personal services, but Sir Robert Megarry VC enforced against the wrongdoing employee at the behest of the innocent employer who had not accepted the repudiation a confidentiality and non competition obligation which was only effective during the continuance of the contract. Repudiation cannot determine a contract of service or any other contract while there exists a reason and an opportunity for the innocent party to affirm the contract. Templeman LJ added, at p 368, that the suggested exception was contrary to principle, unsupported by authority binding on this court and undesirable in practice. Such might have been good quotations with which to conclude my judgment. For I entirely agree with them and cannot improve on them; and they seem particularly apt to the present case, in which the appellant had an obvious reason and in my view a good reason for not accepting the Banks wrongful attempt to terminate his contract until after 2007. But another big question remains: how far would any application of the automatic theory extend? Mr Jeans suggests that the theory should be applied only to wrongful dismissals and resignations which are express and immediate or outright. The suggestion is somewhat analogous to that made by Shaw LJ in the Gunton case, in the passage quoted in para 90 above, in which he would have limited the application of the theory to an express and direct or out and out wrongful termination, as opposed conceivably to an oblique and indirect repudiation. Any proponent of the automatic theory needs to be able to draw the contours of its application and to justify them logically. The following questions arise: (a) (b) (c) (d) Should purported dismissals and resignations be treated differently according to whether they are express or to be implied from words and/or conduct? If so, why? Should purported dismissals and resignations which are immediate be treated differently from those which are delayed (for example by the giving of some notice, albeit that it was too short, as in the Hill case [1972] Ch 305). If so, why? Should purported dismissals and resignations be treated differently according to whether they are outright or something less than outright? If so, why? In any event is the distinction workable? Is it enough for Mr Jeans to submit that, like elephants and post boxes, one can recognise an outright dismissal when one sees it? If, as was held by the House of Lords in Rigby v Ferodo Ltd [1988] ICR 29, a fundamental breach other than by way of purported dismissal (namely in that case, the employers unilateral reduction in wages below the contractual level) does not in any event attract application of the automatic theory, what would be the rationale for treating other fundamental breaches (namely purported dismissals and resignations) differently? Why should wrongful actions more clearly designed to strike at the continuation of the contract be crowned with that significant degree of legal success? As Cabrelli and Zahn suggest in their article entitled The Elective and Automatic Theories of Termination at Common Law: Resolving the Conundrum (2012) 41 ILJ 346, 354, any such difference would be counterintuitive. Is the Rigby case not inconsistent with the implied suggestion of Lord Sumption in para 129 below that the automatic theory should extend to constructive dismissals? Inherent in the notion of a constructive dismissal is resignation in response to fundamental breach: Western Excavating (ECC) Ltd v Sharp [1978] QB 761, 769, 770 (Lord Denning MR). So is there not inherent in it the need for acceptance which the Rigby case establishes? (e) (f) Would the automatic theory extend to wrongful repudiations of contracts of services as well as of contracts of employment? The provision of numerous services pursuant to contract take, by way of easy examples, those of an accountant, a dentist and a builder depends upon the cooperation of the other party. If the rationale behind the automatic theory is both the unavailability of specific performance and the inability to claim the contractual remuneration rather than damages, why should it not extend to contracts of services to which the law attaches those same two consequences? Mr Jeans was wise to decline to answer this question. In proposing that the court should indorse the automatic theory, the Bank invites it to cause the law of England and Wales in relation to contracts of employment to set sail, unaccompanied, upon a journey for which I can discern no just purpose and can identify no final destination. I consider, on the contrary, that we should keep the contract of employment firmly within the harbour which the common law has solidly constructed for the entire fleet of contracts in order to protect the innocent party, as far as practicable, from the consequences of the others breach. LORD CARNWATH I agree that the appeal should be allowed and the order of the Deputy Judge restored as proposed by Lord Hope. I add a few words of my own in recognition of the main points of difficulty. I have nothing to add on the conflict issue, on which I agree entirely with Lord Hopes analysis. The most significant issue, which has divided the court, is the repudiation issue. Lord Sumptions historical analysis of the development of the law in this area is powerful and of great interest. However, I am not in the end persuaded that it should provide the answer to this case. That review, like Lord Wilsons equally powerful response, shows how both courts and academics have grappled with, and sought to reconcile, the apparently conflicting rules and remedies which judicial pragmatism has devised to meet the special features of employment contracts. In choosing between them, I attach particular weight to the fact that, in spite of the force of the criticisms directed at the election theory, and at some of the reasoning of the majority in Gunton [1981], the law as there stated has stood for 30 years, apparently without evidence of practical difficulty or injustice. That in turn drew on the characteristically comprehensive review of the subject by Sir Robert Megarry VC in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227. It also followed settled authority in the High Court of Australia dating back to 1946 (Automatic Fire Sprinklers), which has since been reaffirmed at that level (Byrne v Australian Airlines Ltd (1995) 131 ALR 422) and, as we were told, followed consistently elsewhere in the common law world: see, most recently Paper Reclaim v Aotearoa [2007] 3 NZLR 169 (New Zealand Supreme Court). That approach seems apt also to the particular context of paragraph 5.15, under which the termination payment arises. I am not persuaded that a general distinction can be drawn, as Lord Sumption suggests, between the existential (obligations which go to the continued existence of the employment relationship); and the collateral. Nor do I find it helpful (as in some of the submissions before us) to talk of the continuation of a mere shell or husk contract. As in any other case, the nature and extent of the contractual remedies at any time must depend on the context, the terms of the contract, and the circumstances of the breach. In the present case, the contract provided a detailed code for what was to happen during and after the period of service. The elaborate provisions for termination were an important part of the contractual rights provided to the employee. Paragraph 5.15 fixed the amount of the termination payment by reference to when your employment terminates. I see no reason why, for the purposes of that clause, the employer should not be held to the date of termination in accordance with the contract, rather than permitted to advance that date by repudiatory breach. On the termination issue, after some hesitation, I have come to the conclusion, for the reasons given by Lady Hale, that the payment on 18 December 2007 did not effect a lawful termination. It is true that on the facts of this case, that may seem somewhat formalistic, and the consequences disproportionate. The employee can have been in no doubt by that stage that his employment was at an end, and could no doubt readily infer the purpose of the payment once he became aware of it. However, as she says, it is not unreasonable to expect an employer relying on a PILON clause to make the position clear. Although no formal written notice was required, it was necessary for the employer to ensure that the payment was unequivocally identifiable as an exercise of the power under para 8.3. That was not done. Accordingly, I agree that the contract was not lawfully terminated until 6 January 2008. Turning finally to the paragraph 5.16 issue, I have seen more force than my colleagues in the respondents case. I find Rimer LJs reasoning on the construction of the termination agreement (para 77) persuasive. Arguably, the clearest thing about paragraph 5.16 is the contrast between the payments due to you under this letter (or under this agreement) to which (subject to agreed amendments) the employee is entitled, and all contractual and statutory claims arising out of your employment and its termination, which he is required to give up. On ordinary principles of contractual interpretation, the former would not be read as including the latter. I accept that, if one starts from the premise (following the Court of Appeal) that the termination agreement was mandatory, in the sense that the employee was compelled to enter the agreement and take the payment, the result could be said to be unreasonable. On that view, I agree with Lord Hope that there is a strong case for applying the principle that an agreement purporting to exclude liability for breaches of contract should be narrowly construed contra proferentem. However, it can be looked at the other way round. The companys obligation to make the termination payment, and that of the employee to enter the termination agreement, are not expressed as mutual, concurrent obligations. The first obligation is that of the employer to make the payment. The employees obligation to enter the agreement is expressed as one undertaken in consideration for the making of the termination payment. Arguably that could be construed as leaving the employee free to waive the payment, and thus avoid the obligation to enter the agreement. Such a construction would also avoid an unreasonable result, and might be thought to strain the language less than that proposed by Lord Hope. It is also consistent with the last sentence of the Schedule 1 letter, which appears to assume that the offer is one which can be accepted or rejected. However, in view of the unanimity of my colleagues on this issue, and since it does not appear to be a point of any more general significance, I see no purpose in carrying my doubts to the point of dissent. LORD SUMPTION Background Mr Geys is a lucky man. He had a responsible and highly paid job with an entitlement to participate in a profit sharing bonus scheme dependent on the performance of his division, in addition to discretionary bonuses. The other side of the coin was that he had no contractual job security. Under his contract of employment, his employers, Socit Gnrale (SG), were entitled to dismiss him at any time without cause either upon three months notice or with immediate effect by making a payment to you in lieu of notice. This is what happened to Mr Geys. He was called to a meeting on 29 November 2007 and given a letter informing him that SG had decided to terminate his employment with immediate effect and that the appropriate termination documentation would follow. In accordance with the time honoured ritual, he was then taken to clear his desk and escorted from the building by security staff. There could not have been the slightest doubt that his employment relationship with SG was at an end. He cannot have supposed that he had been dismissed for cause, for no cause was stated. The only reasonable inference was that SG was purporting to dismiss him summarily without cause, as they were entitled in principle to do. Fortunately for Mr Geys, SG did not understand their own contract. It is common ground that if they had handed him a cheque for his payment in lieu of notice at the meeting on 29 November, his dismissal would have taken effect according to his contract at once. Because the right to terminate with immediate effect is exercisable by making a payment in lieu of notice, it is common ground that the purported dismissal with immediate effect on 29 November was a repudiatory breach of contract by SG. They were not entitled to dismiss him with immediate effect from 29 November, but only with effect from the payment in lieu. It was, however, a repudiation of the most technical kind. There was no doubt about SGs right to dismiss him with immediate effect if they set about it in the right way. For this reason, as I understand the majority to accept, SGs mistake in itself caused him no loss. It made a practical difference of only three weeks and a legal difference of just over five. It made a practical difference of three weeks because the payment in lieu was in fact received on 18 December by Mr Geys bank on his behalf. If knowledge of the payment by Mr Geys himself was required (which I doubt), he had it by his own admission when he consulted his account on line some time in late December. As he accepted in cross examination, he saw the payment from SG and realised that it had to be thought would probably be, yes, compensation pay of in lieu. That is the best guess one could have. In the circumstances, it could not have been anything else. SGs mistake made a legal difference of just over five weeks because the majority of this Court is of the opinion that the payment, although received by Mr Geys bank on his behalf on 18 December, was by a term to be implied into the contract ineffective to bring it to an end until 6 January, when SG unequivocally told him what he had already appreciated in late December, namely that the payment was in lieu of notice. The result is that although the employment relationship was dead for all practical purposes from 29 November, and Mr Geys contributed nothing to SGs fortunes after that date, he is in a position to argue that technically the contract limped on as a formal shell or husk (to use the terms deployed in argument) into January 2008. The financial consequences of this, if it is right, are considerable. The effect of paragraph 5.15(b)(iii) and (iv) of the contract is that if Mr Geys employment terminates after 31 December 2007, he is entitled to a Compensation Payment assessed by reference to the aggregate of his bonus awards for the calendar years 2006 and 2007, whereas if it terminates on or before that date, it will be assessed by reference to his awards in 2005 and 2006, which were substantially lower. The figures are disputed, but the result is likely to be that SGs breach, although it has caused Mr Geys no substantial loss, will have brought him a windfall amounting to several million euros. Rarely can form have triumphed so completely over substance. Accordingly, the main question on this appeal can be shortly stated. If an employer repudiates a contract of employment, does it end forthwith, leaving the employee to claim damages so far as the repudiation has caused him any? Or does it end only if and when the employee elects to accept the repudiation as bringing the contract to an end? The general law The law of employment is based partly on contract and partly on statute. The interface between the two can sometimes give rise to difficulty. But not in this case. It is common ground that the present issue depends entirely on the common law. It follows that the starting point is to examine the relevant general principles of the law of contract. The general rule is that the repudiation of a contract does not necessarily bring the contract to an end. The innocent party has a right to choose either (i) to accept the repudiation, thus bringing the primary obligations in the contract to an end but leaving him with a right to enforce the secondary obligation to pay damages for the loss of the bargain; or (ii) to treat the contract as subsisting and claim any sums falling due under it as and when they fall due, together with any damages for the repudiating partys failure to perform as and when performance should have occurred. These principles had been applied for many years by the time that they were first articulated in Hochster v De la Tour (1853) 2 E & B 678 in England and Howie v Anderson (1848) 10 D 355 in Scotland, as the citations in the former case show. Their most recent and authoritative restatement is to be found in the speech of Lord Diplock in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827. The concept was memorably expressed by Asquith LJ in Howard v Pickford Tool Co Ltd [1951] 1 KB 417, 421, when he described an unaccepted repudiation as a thing writ in water. This is sometimes called the elective theory of repudiation. The expression is, however, misleading because it suggests that the innocent partys right to treat the contract as subsisting necessarily follows from the unilateral character of the other partys repudiation. In fact, the right to treat the contract as subsisting has never been absolute. It is subject to important exceptions and qualifications. These can be illustrated from older cases, but were first coherently articulated by Lord Reid, delivering the leading judgment for the majority in White & Carter (Councils) Ltd v McGregor [1962] AC 413. The facts of this case are well known. White & Carter contracted with the Respondent to put advertisements for his garage on litterbins. The Respondent purported to cancel the contract without any right to do so, but the company chose to ignore the cancellation, continued to perform as if nothing had happened and sued for the agreed price of their services, which was much greater than the damages that they would have suffered had they accepted the repudiation. The Appellant succeeded because of what Lord Reid called the peculiarity that the contract could be performed without any co operation from the Respondent. Lord Reid said at p 429: Of course, if it had been necessary for the defender to do or accept anything before the contract could be completed by the pursuers, the pursuers could not and the court would not have compelled the defender to act, the contract would not have been completed and the pursuers' only remedy would have been damages. Lord Hodson (with whom Lord Tucker agreed) appears to have agreed with this. At p 445, he observed: The true position is that the contract survives and does so not only where specific implement is available. When the assistance of the court is not required the innocent party can choose whether he will accept repudiation and sue for damages for anticipatory breach or await the date of performance by the guilty party. [Emphasis added]. Lord Reids qualification about co operative agreements has subsequently been accepted and applied. The most significant decisions are Hounslow London Borough Council v Twickenham Garden Developments Ltd [1971] Ch 233, and Attica Sea Carriers Corporation v Ferrostaal Poseidon Bulk Reederei GmbH [1976] 1 Lloyds Rep 250. It has also been treated as good law in other cases where it nevertheless was found not to apply on the facts, because properly analysed the contract could be performed without the co operation of the repudiating party: see Isabella Shipowner SA v Shagang Shipping Co Ltd [2012] EWHC 1077 (Comm), paras 37 41. These decisions are authority for a general rule that the innocent party to a repudiated contract cannot treat it as subsisting if (i) performance on his part requires the co operation of the repudiating party, and (ii) the contract is incapable of specific performance, with the result that that co operation cannot be compelled. The purpose of the right to treat a repudiated contract as subsisting is to enable it to be performed at the option of the innocent party. It is difficult to see why the law should recognise such a right in a case where the contract cannot be either performed or specifically enforced. The rationale for all this is closely connected with the reasons for the laws reluctance to grant specific performance of certain kinds of contract. Specific performance, like any equitable remedy, is discretionary, but in the present context the discretion is largely determined by well established principles. These have always been influenced by a strong pragmatic aversion to the specific enforcement of contractual obligations in circumstances where they sterilise productive resources or lead to their wasteful allocation. In his dissenting judgment in the Court of Appeal in Co operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1996] Ch. 286, 304, Millett LJ put the point in this way: The competing arguments in the present case, and the difference in the views of the members of this court, reflect a controversy which has persisted since the dispute between Sir Edward Coke and Lord Ellesmere LC. Sir Edward Coke resented the existence of an equitable jurisdiction which deprived the defendant of what he regarded as a fundamental freedom to elect whether to carry out his promise or to pay damages for the breach. Modern economic theory supports Sir Edward Coke; an award of damages reflects normal commercial expectations and ensures a more efficient allocation of scarce economic resources. The defendant will break his contract only if it pays him to do so after taking the payment of damages into account; the plaintiff will be fully compensated in damages; and both parties will be free to allocate their resources elsewhere. Against this there is the repugnance felt by those who share the view of Fuller CJ in Union Pacific Railway Co v Chicago, Rock Island and Pacific Railway Co (1896) 163 US 564, 600 that it is an intolerable travesty of justice that a party should be allowed to break his contract at pleasure by electing to pay damages for the breach. English law has adopted a pragmatic approach in resolving this dispute. Equitable relief is discretionary and exceptional. Courts of equity have never enforced the performance of all contracts, whatever their nature. Over the centuries rules of practice have evolved so that the parties can know in advance which contractual obligations will be specifically enforced and which sound in damages only. The leading principle is usually said to be that equitable relief is not available where damages are an adequate remedy. In my view, it would be more accurate to say that equitable relief will be granted where it is appropriate and not otherwise; and that where damages are an adequate remedy it is inappropriate to grant equitable relief. Millett LJs dissent was subsequently upheld in the House of Lords [1998] AC 1, where Lord Hoffmann observed at pp. 15 16: From a wider perspective, it cannot be in the public interest for the courts to require someone to carry on business at a loss if there is any plausible alternative by which the other party can be given compensation. It is not only a waste of resources but yokes the parties together in a continuing hostile relationship. Application to contracts of employment Subject to the intervention of statute, contracts of employment are governed by the same principles as other contracts, except in those cases where their subject matter gives rise to compelling policy considerations calling for a different approach. But the relationship of employer and employee is especially liable to give rise to policy considerations of this kind, because its incidents have significant social and economic implications. They affect a high proportion of the adult population and have a profound impact both on their personal lives and on their relationships with others. When it comes to enforcing an unwanted relationship of employer and employee, there are altogether more sensitive considerations involved than those governing most other more contractual bargains. As Fry LJ put it in De Francesco v Barnum (1890) 45 Ch D 430, 438, the courts are very unwilling to extend decisions the effect of which is to compel persons who are not desirous of maintaining continuous personal relations with one another to continue those personal relations. Historically, there have been three main reasons for this. The first is that the relationship of employer and employee was traditionally regarded as a highly personal one. In an age of large corporate enterprises many of whose employees perform routine jobs, the personal character which was once typical of employment relationships has lost much of its former importance. But employment is nonetheless a relationship based on mutual trust and confidence, a factor which has assumed growing importance in the way that the law has developed over the past thirty years. Second, the difficult and litigious history of industrial relations in the United Kingdom in the late nineteenth and early twentieth centuries reinforced the sensitivity which the common law had always had about any intervention by a court which might force the parties to continue in a relationship which has been described as at once interdependent and oppositional: The Oxford History of the Laws of England, vol xiii (2010), p 623. This is why the common law rule against injunctions requiring an employee to work has for many years been statutory: see, currently, section 236 of the Trade Union and Labour Relations (Consolidation) Act 1992. This makes it more difficult to justify intervening in a way that forces an employer to employ someone if the law is to maintain the ordinary principle that remedies should operate mutually or not at all. Third, legal thinking in this area has always been influenced by a concern for the productive use of resources, including labour. This is evident in the development of the common law relating, for example, to restrictive covenants and, at a more macro economic level, to the economic torts of interference with contractual relations and procuring a breach of contract and aspects of the law of conspiracy. It is reflected in the abiding concern of the common law to ensure the terminability of contracts of employment, without prejudice to the subsequent regulation of the financial consequences by an award of damages. The harsher consequences of this approach for individuals have been mitigated in the last half century by a parallel scheme of statutory protection of employment, operating within defined limits and administered by specialised statutory tribunals with limited jurisdiction over purely contractual disputes. But the statutory protection of employment overlays the common law without necessarily altering it. Indeed, it makes the development of a more stringent standard of employment protection at common law unnecessary and perhaps inappropriate. That much is apparent from the decision of the House of Lords and this court that the employers obligation to maintain mutual trust and confidence does not apply to or survive a wrongful dismissal: Johnson v Unisys Ltd [2003] 1 AC 518, Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2012] 2 AC 22. The traditional insistence of the courts that contracts of employment are not specifically enforceable has not, at least in the last half century, been dogmatically applied to every obligation under such contracts. It is important to distinguish between the core obligations which provided the original rationale of the rule, and what for want of a better word I will call collateral obligations. In my respectful opinion the difficulties which the majority find with the automatic theory of termination as applied to contracts of employment are largely attributable to their failure to make this distinction. The core obligations are those which are fundamental to the continued existence of the employment relationship, essentially the obligation of the employee to work and the concomitant obligation of the employer to continue to employ and pay him. When courts say, as they always have, that a contract of employment is not specifically enforceable, they are almost always talking about obligations of this kind. The present appeal is about the core obligations under Mr Geys contract of employment. We are concerned with the question whether, in any legally meaningful sense, it can be said that Mr Geys had an obligation to work after 29 November 2007 or SG an obligation to pay him in respect of the period after that date. If the answer to these questions is No, it must be difficult to suggest that there was any subsisting contract of employment between them. What follows is directed only to those obligations under a contract of employment which determine whether the relationship created by it is to subsist. I shall return to the question of collateral obligations later. The law on these core obligations dates back to the early nineteenth century. In a previous age, Lord Mansfield had held that a wrongfully dismissed employee was entitled to his wages accruing after termination, on the principle that the employer should not be allowed to take advantage of his own wrong: Temple v Prescott (1773), cited in The Oxford History of the Laws of England, vol xiii (2010), p 645. But this view was decisively rejected in all the subsequent case law. The rule that the innocent party to a repudiated contract of employment was not entitled to treat it as subsisting or recover wages accruing after dismissal was established after a difference on the point had arisen between Lord Ellenborough and Lord Tenterden. In Gandell v Pontigny (1816) 4 Camp 375, 171 ER 119, a merchants clerk was unlawfully dismissed and declined to accept the repudiation, notifying his employer that he held himself available to work for him. Lord Ellenborough awarded him his full salary, for practical purposes a decree of specific performance. But in Archard v Hornor (1828) 3 Carr & P 349, 172 ER 451, Lord Tenterden limited the award in a comparable case to damages representing the dismissed employees wages up to the time of his unlawful dismissal. His view was consistently accepted thereafter in preference to Lord Ellenboroughs: see Snelling v Lord Huntingfield (1834) 1 CM & R 20, 149 ER 976, Fewings v Tisdal (1847) 1 Exch 295, 154 ER 125 (where the history is reviewed in the successful argument of Greenwood). In French v Brookes (1830) 6 Bing 354, 130 ER 1316, the law was said to have been settled in this sense for many years. The facts were sufficiently close to the present case to repay attention. John Oliver French was employed for three years as the manager of a mine in South America on terms that he might be dismissed either on a years notice or on payment of a years salary and the cost of his passage home. Half way through the term the local agents of the company decided to make economies by suppressing Mr Frenchs post and dismissed him without either notice or the years salary in lieu. He declined to accept the validity of his dismissal, declared his intention of carrying on and sued for a sum which although described as damages was in fact the total amount that he would have received had the contract subsisted. The jury awarded him only his actual loss. Dismissing his claim for the balance, Tindall CJ said, at pp 360 361: [Sergeant] Wildes motion stands on the construction of the agreement: he argues, that the contract between the parties not having been determined in the mode pointed out by the agreement, it must be considered as subsisting for the whole time originally contemplated. But this action, like others of the same sort, is brought because the contract has been violated; and the case has been correctly dealt with if the jury have given damages for the breach. The jury, therefore, have not erred if they have put the plaintiff in the same situation as if the directors, upon dismissing him, had paid at the time twelve months' salary, and a reasonable sum towards defraying his expenses from South America to England. If any special damage had been alleged and proved, as resulting from the directors not having paid the year's salary at the time of the dismissal, the jury might have found for that. The modern law starts with a trio of cases in which the Plaintiff was dismissed by a public authority or an organ of a public authority without the power to do so: Vine v National Dock Labour Board [1957] AC 488, Francis v Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411, and Ridge v Baldwin [1964] AC 40. In each of these cases, there was either a contract of employment or a relationship regarded as legally analogous. But all three cases had the distinctive feature that the decision to dismiss was not only repudiatory in the contractual sense but was, as a matter of public law, a nullity. In each of them, however, the position in the ordinary contractual context was considered, whether by way of either contrast or analogy. Since these are decisions of high authority and it is implicit in the majoritys view that they were wrongly decided, or at least wrongly reasoned, it is I think worth examining them. In Vine v National Dock Labour Board [1957] AC 488 the House of Lords held, overruling the Court of Appeal, that a docker was entitled to a declaration that he had been unlawfully dismissed by the Board. He had been dismissed by a committee which had no power to do so under the relevant regulations. The decisive consideration was that his dismissal was a nullity as a matter of public law. Viscount Kilmuir LC (p 500), adopting the reasoning of the dissenting judgment of Jenkins LJ in the Court of Appeal, observed: This is an entirely different situation from the ordinary master and servant case; there, if the master wrongfully dismisses the servant, either summarily or by giving insufficient notice, the employment is effectively terminated, albeit in breach of contract. Lord Keith of Avonholm (p 507) said: This is not a straightforward relationship of master and servant. Normally, and apart from the intervention of statute, there would never be a nullity in terminating an ordinary contract of master and servant. Dismissal might be in breach of contract and so unlawful but could only sound in damages. Lord Morton (p 504) and Lord Cohen (p 507) both adopted the judgment of Jenkins LJ, the former expressing himself content to adopt, without qualification, everything that he said on the point. Lord Somervell (p 513) agreed on this point with Lord Morton. These remarks were obiter. But they were clearly considered statements of principle, which formed an integral part of the reasoning. In Francis v Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411, Mr Francis was dismissed by the Kuala Lumpur Council on 1 October 1957 from his position as a clerk. The Council had no power to do this, because regulations conferred the power on the president of the Council alone. Mr Franciss case was that the decision was a nullity, and that accordingly he remained in the Councils employment, just as Mr Vine remained an employee of the National Dock Labour Board. Lord Morris, delivering the advice of the Privy Council, distinguished Vines case on grounds which are unclear but for present purposes do not matter. The relevant point is that they proceeded by analogy with an ordinary contract of employment and held that the dismissal, although wrongful, had been immediately effective to terminate Mr Franciss employment. Lord Morris expressed the Boards reasons (p 1417) as follows: Their Lordships consider that it is beyond doubt that on October 1, 1957, there was de facto a dismissal of the appellant by his employers the respondents. On that date he was excluded from the council's premises. Since then he has not done any work for the council. In all these circumstances it seems to their Lordships that the appellant must be treated as having been wrongly dismissed on October 1, 1957, and that his remedy lies in a claim for damages. It would be wholly unreal to accede to the contention that since October 1, 1957, he had continued to be, and that he still continues to be, in the employment of the respondents. Ridge v Baldwin [1964] AC 40 concerned the dismissal for misconduct of a chief constable, not technically an employee but a public officer. The dismissal was a nullity as a matter of public law. Lord Reid (at p 65) contrasted the position under a contract of employment, where it would not have been a nullity: The law regarding master and servant is not in doubt. There cannot be specific performance of a contract of service, and the master can terminate the contract with his servant at any time and for any reason or for none. But if he does so in a manner not warranted by the contract he must pay damages for breach of contract. These statements of principle were accepted in a succession of cases which arose in a purely contractual context, without the public law element: see Barber v Manchester Regional Hospital Board [1958] 1 WLR 181, Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293, 1304 1305; Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699; Ivory v Palmer [1975] ICR 340, 354 (Browne LJ). The most significant of them is Denmark Productions. The case arose from the repudiation by a pop group of its contract with its manager. The issue was whether the manager was entitled to claim an account of profits on the footing that his contract had never lawfully been terminated, or was limited to a claim for damages for loss of the bargain. The contract was not a contract of employment but a contract for services. However, the Court of Appeal held by analogy with the law relating to employment contracts that the manager could not claim his remuneration on the footing that the contract subsisted. Salmon LJ said (p 726): It has long been well settled that, if a man employed under a contract of personal service is wrongfully dismissed, he has no claim for remuneration due under the contract after the repudiation. His only money claim is for damages for having been prevented from earning his remuneration: Goodman v Pocock; French v Brookes; Fewings v Tisdal. A managing director, for example, engaged at 10,000 a year, who has ten years of his service agreement to run, is dismissed without cause. He cannot sit in the sun for ten years drawing his salary on the basis that he is ready, able and willing to serve as managing director if only the company would allow him to do so. His sole money claim is for damages and he must do everything he reasonably can to mitigate them. Harman LJ in the same case said, at p 737: I am, therefore, of opinion, and in this I concur with my brother Salmon, that the true cause of action of the plaintiffs was for damages for wrongful dismissal and that the action as framed for an account is misconceived. An employee dismissed in breach of his contract of employment cannot choose to treat the contract as subsisting and sue for an account of profits which he would have earned to the end of the contractual period: he must sue for damages for the wrongful dismissal and must, of course, mitigate those damages so far as he reasonably can. In 1974, Sir John Donaldson P reviewed the case law in the National Industrial Relations Court in Sanders v Ernest A Neale Ltd [1974] ICR 565 and concluded (p 571) that the repudiation of a contract of employment terminates the contract without the necessity for acceptance by the injured party. As a summary of the position as it then stood, this was clearly right. There was a long, authoritative, and broadly consistent consensus in favour of the principle that an unaccepted repudiation of a contract of employment which terminated the relationship also brought the contract to an end, in law as well as in fact. Even the apparent exceptions were consistent with the underlying principle. Leaving collateral obligations aside for the moment, most of them are cases in which, unusually, the repudiation did not bring an end to the relationship of employer and employee. Such cases are quite different from the case of a dismissal or resignation, actual or constructive, which bring the relationship to an end. Thus in Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293, Roskill J acknowledged in terms the general rule which treated the contract as at an end upon an unaccepted repudiation, but said that he would not have applied it in the case before him because both parties ignored the event said to constitute the repudiation. The relationship continued, not just as a legal construct but in fact. The employee went on working and the employer continued to pay him. In Hill v CA Parsons & Co Ltd [1972] Ch 305, the Court of Appeal declined to treat the contract as at an end in the exceptional circumstances of that case. These were that the dismissal notice was invalid and the employee retained the confidence of the employer. It had only dismissed him at the insistence of a trade union, which had imposed a closed shop agreement of a kind which was about to become unlawful. As Lord Denning pointed out at p 314B, In the ordinary course of things, the relationship of master and servant thereupon comes to an end: for it is inconsistent with the confidential nature of the relationship that it should continue contrary to the will of one of the parties thereto. The position was very similar in Rigby v Ferodo Ltd [1988] ICR 29, where the repudiation consisted in the employers unilateral imposition of a reduction in wage rates but the relationship did not end. The employer wished to go on employing the whole workforce, and had indeed imposed the reduction in order to make that possible. The employee for his part continued to work and receive wages, albeit reserving his rights and protesting about their reduced amount. Lord Oliver, delivering the sole reasoned speech in the House of Lords, expressly reserved his opinion on what the position would have been if there had been an outright dismissal or walk out: see pp 33D, 34E F, 35B C. In my view, this is the true rationale of the cases in which the courts have specifically enforced contractual disciplinary procedures, As Ralph Gibson LJ pointed out in Boyo v Lambeth London Borough Council [1994] ICR 727, 743H, such procedures do not depend on the continued existence of the relationship of employer and employee. They are, in the terminology that I have been using, collateral. The courts, developing a principle originally derived from public law, have been willing to enforce them even if the effect is to prolong the period of employment. This does not impinge on the traditional objections of the common law to the specific enforcement of the employment relationship, because of the collateral character of the disciplinary procedures and because the possibility that an internal disciplinary procedure may result in the employees reinstatement makes it premature to regard that relationship as at an end. Sir John Donaldson also observed in Sanders that the principle which he regarded as well established in the field of employment represented an exception to the general rule of the law of contract allowing the innocent party to elect whether to accept the repudiation or affirm the contract. In my view this was a fundamental misunderstanding of the position which, although often repeated, has had an unfortunate effect on more recent developments in this area of law. In fact, the rule which Sir John Donaldson applied, far from being an exception to the ordinary principles of the law of contract, exemplified the ordinary operation of those principles. The general principle is that the innocent party to a repudiated contract cannot treat it as subsisting unless he can either perform it without the co operation of the other party or compel that co operation. In the case of a contract of employment, neither condition is satisfied. All of the cases which I have cited, as well as those to which I shall come, are agreed that the employers refusal to allow the employee to earn his wages by excluding him from work does not give rise to a right to recover the wages, but only to a claim for damages. Moreover, the courts have never applied to contracts of employment the doctrine of deemed performance endorsed by the House of Lords in Mackay v Dick (1881) 6 App Cas 251, according to which a party who is prevented by the non co operation of the counterparty from satisfying a condition precedent to his right to receive remuneration may be deemed to have earned it notwithstanding the condition. Why have the courts been so absolute in their refusal to contemplate a claim by a wrongfully dismissed employee for his wages? The reason is sometimes said to be that he has not earned it because under a contract of employment the obligation of the employee is to do the work, not just to hold himself available to do it. But this is certainly not a general principle of employment law, as the old cases on sick pay (before it became statutory) and the more recent ones on go slows and other forms of partial industrial action tend to show: see Cuckson v Stones (1858) 1 E & E 248, 256 (Lord Campbell CJ), Miles v Wakefield Metropolitan District Council [1987] AC 539, 561B C (Lord Templeman) and the discussion in Freedland, The Personal Employment Contract (2003), 212 223. Another possible explanation is that to allow the employee to recover his wages after a wrongful dismissal would be a form of specific enforcement of the contract, and that the problem is the unavailability of that particular remedy. That, however, hardly seems more satisfying. After all, if the contract subsists, the wages are a debt. It is hard to see why any of the objections to making the remedy of specific performance available to enforce a contract of employment should apply to the recovery of an accrued debt. If there were such an objection, it would apply equally to an action for wages accrued under a contract which had not been repudiated, but it is clear that it does not. The only rational explanation of the rule that a wrongfully dismissed employee cannot sue for his wages is that once the employee has been dismissed, albeit wrongfully, there is no longer a contractual obligation to pay the wages, and therefore no debt on which to sue. This can only be because the contract terminated upon the dismissal. It terminated because the contract is a co operative agreement whose performance requires the engagement and mutual confidence of both sides. It is therefore not possible for the employee to treat it as subsisting once the employer has repudiated it and brought their de facto relationship to an end. The consequence, as the editors of Chitty on Contracts, 30th ed (2008), vol 1, para 24 032, point out with reference to co operative contracts generally, is that the party not in default may be compelled to treat the prevention of performance as a repudiation of the contract and to sue for damages for the breach. Decro Wall, Thomas Marshall and Gunton This consensus was first seriously challenged by way of dictum in Decro Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361 and Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227, and finally as part of the ratio in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448. Decro Wall was not about a contract of employment. It concerned an oral contract between a manufacturer and his exclusive distributor in the United Kingdom. It was held that upon the repudiation of the contract by the manufacturer, the distributor was entitled to treat the contract as subsisting. The contract was essentially a framework agreement which precluded the manufacturer from selling to any one else in the United Kingdom and the distributor from distributing any one elses competing products, but imposed no obligation on the distributor to buy any goods. The distributor therefore had no obligation which required the manufacturers co operation. He had no more than a right (in effect an option) to buy goods from the manufacturer, which would in principle have been specifically enforceable. The Court of Appeal therefore considered that the case was governed by the actual decision in White & Carter and not by Lord Reids qualification to it concerning co operative agreements. None of the members of the court regarded the arrangement as having any analogies with a contract of employment. For these points, see pp. 369H, 370F G (Salmon LJ), 376B (Sachs LJ), 381D F (Buckley LJ). For present purposes, the case is mainly important for a dictum of Salmon LJ at pp 369 370, responding to the citation in argument of his own judgment (see above) in Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699. Salmon LJ said that he doubted whether an unaccepted repudiation could bring an end to a contract of employment in law although no doubt in practice it does. In law, he thought that the position was (i) that the contract continued in being, (ii) that it would not, however, be specifically enforced because the employee had not worked and had not therefore earned his remuneration; (iii) that the employees only remedy was to sue for his lost wages as damages for the employers breach in preventing him from earning them (presumably from time to time as they would have fallen due); and (iv) that the only thing that prevented the employee from sitting idle for the rest of the contractual term and collecting damages equal to his lost wages was the condition that he should have taken reasonable steps to mitigate his loss by finding alternative employment. Sachs LJ (at p 375H) appears to have taken the same view, observing that In such cases it is the range of remedies that is limited, not the right to elect. In Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227, Sir Robert Megarry V C was concerned with an express covenant in the contract of the Plaintiffs managing director against using or disclosing its confidential information during or after his employment. The managing director had resigned before the end of the contractual term. It was submitted that this was a repudiation which brought the contract to an end and with it any obligation to observe the restrictive covenants. The Vice Chancellors main concern about this submission was that if correct it meant that the employee could bring an end to his own primary obligations under the information covenant by unilaterally renouncing the contract. He reviewed the case law and, adopting the dicta in Decro Wall, rejected the submission on the ground that the employer had elected to treat the contract as subsisting. In his view, therefore, it continued to bind the employee. It seems to me that the result was clearly right for an altogether simpler reason. The covenant in question expressly bound the employee both during and after his employment. It was therefore irrelevant when the employment relationship or the contract embodying it ended. The statements in these two cases were adopted and expanded as a matter of decision by the Court of Appeal in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448. Richmond Council had dismissed Mr Gunton from his employment as a college registrar on disciplinary grounds and excluded him from work, but without properly following the disciplinary procedure incorporated into his contract. This failure was found by the Court of Appeal to have caused him no prejudice, because he had exercised a right of appeal and had received a fair hearing on the appeal, albeit that his appeal failed. Mr Gunton sued on the footing that his employment had not been terminated in law. He claimed damages and a declaration that he was entitled to remain in the councils employment until he retired or was lawfully dismissed. His original claim was essentially a claim in public law, for a declaration that the decision to dismiss him was a nullity, which came before the Chancery Division in the last period of the integration of public and private law, before the new Order 53 separated the streams. In the Court of Appeal, however, the issue was analysed in private law terms. By a majority (Buckley and Brightman LJJ), the Court of Appeal made the declaration and awarded him damages equal to his losses from the time of his exclusion from work until the expiry of one months notice notionally served on the day when a proper disciplinary proceeding could have been concluded. The striking thing about Gunton, however, is that both judges in the majority endorsed the common laws long standing recognition that the employment relationship was thereafter at an end. Both of them accepted the traditional refusal of the common law to allow any remedy other than damages. However, both treated the contract as having a continuing vestigial existence. Buckley LJ accepted that the employee could not sue in debt for his remuneration in respect of any period after his exclusion from work, because the right to receive remuneration and the obligation to render services are mutually interdependent p. 468E. Nonetheless, he concluded that the contract must have a continuing existence in order to give effect to the employees right to elect whether to accept the repudiation or affirm the contract. This right was part of the general law of contract and there were no principled reasons for applying a different rule to contracts of employment: pp 467 468. He offers no explanation of how a contract can be said to subsist in spite of the absence of any obligation on either side to perform its core obligations. Like Buckley LJ, Brightman LJ also accepted that there was no right to sue for wages after the employers repudiation, although he expressed the reason for this differently at p 473B: An employee's remedy, if he is unlawfully dismissed by his employer, is damages. He cannot obtain an order for specific performance because it is not available to compel performance of a contract of service against an unwilling employer. Unlike Buckley LJ, he did produce a rationalisation of the continued existence of the contract, by positing a distinction between Mr Guntons status as an employee, which was terminated when he was excluded from work, and the contract of employment, which subsisted until it was lawfully terminated. His analysis, at pp 474 475, is sufficiently important to be worth quoting in full: It is clear beyond argument that a wrongfully dismissed employee cannot sue for his salary or wages as such, but only for damages. It is also, in my view, equally clear that such an employee cannot assert that he still retains his employment under the contract. If a servant is dismissed and excluded from his employment, it is absurd to suppose that he still occupies the status of a servant. Quite plainly he does not. The relationship of master and servant has been broken, albeit wrongfully by one side alone. The same would apply to a contract for services, such as an agency. If a two year agency contract is made between principal and agent, and the principal wrongfully repudiates the contract of agency after only one year, quite plainly the agent cannot hold himself out as still being the agent of the principal. He is not. The relationship of principal and agent has been broken. I do not think it follows, however, from the rupture of the status of master and servant, or principal and agent, that the contract of service, or the contract of agency, has been terminated by the wrongful act of the master or the principal. What has been determined is only the status or relationship. So in the result the servant cannot sue in debt for his wages, which he is wrongfully deprived of the opportunity to earn; or for his fringe benefit, such as the house which the carpenter in Ivory v Palmer [1975] ICR 340 had the right to occupy as part of his emoluments. As the relationship of master and servant is gone, the servant cannot claim the reward for services no longer rendered. But it does not follow that every right and obligation under the contract is extinguished. An obligation which is not of necessity dependent on the existence of the relationship of master and servant may well survive; such as the right of the master in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 that the servant should not during the term of the contract deal on his own account with customers of the plaintiff company. The distinction made by Brightman LJ between the employees status and his contractual rights, the one terminating on the employers repudiation and the other subsisting, was new to the English case law, but it was not entirely new to the common law. It had previously been accepted by the High Court of Australia in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435, 454 (Latham CJ), 469 (Dixon J); cf. Byrne v Australian Airlines Ltd (1995) 131 ALR 422, 432. It is right to point out that if Gunton was rightly decided on this ground, then Mr Geys will not be entitled to recover his profit related bonus based on the calendar years 2006 and 2007, because his right to such a bonus depends on Clauses 5.15(b)(iii) and (iv) of the contract, which depend on when his employment terminates, and not (if it is different) on when the contract terminates. Shaw LJ dissented, essentially on the ground that the continued vestigial existence of an unperformable contract was an artificial fiction devoid of any connection with the true state of affairs. His reasons are sufficiently summed up in the following passage from p 459 of his judgment: . I cannot see how the undertaking to employ on the one hand, and the undertaking to serve on the other can survive an out and out dismissal by the employer or a complete and intended withdrawal of his service by the employee. It has long been recognised that an order for specific performance will not be made in relation to a contract of service. Therefore, as it seems to me, there can be no logical justification for the proposition that a contract of service survives a total repudiation by one side or the other. If the only real redress is damages, how can its measure or scope be affected according to whether the contract is regarded as still subsisting or as at an end? To preserve the bare contractual relationship is an empty formality. The servant who is wrongfully dismissed cannot claim his wage for services he is not given the opportunity of rendering; and the master whose servant refuses to serve him cannot compel that servant to perform his contracted duties. In this context remedies and rights are inextricably bound together. It is meaningless to say that the contract of service differs from other contracts only in relation to the availability of remedies in the event of breach. The difference is fundamental, for there is no legal substitute for voluntary performance. In my opinion, Shaw LJs reasoning is unanswerable. The consensus as it had stood up to the 1970s was correct, and Gunton was wrongly decided. My reasons are as follows: (1) It was contrary to a rule which, on the weight of authority, had been regarded as settled for at least a quarter of a century before it was decided and, so far as can be seen, for more a century before that. The only authority of any substance in support of the majoritys analysis in Gunton is to be found in the obiter dicta of Salmon LJ and Sachs LJ in Decro Wall and the judgment of Megarry V C in Thomas Marshall. (2) Much of the discussion of this question in the cases and text books is bedevilled by the persistent fallacy that under the general law of contract the employee would have had an unfettered election to treat the contract as subsisting and that the same must apply to contracts of employment unless a special exception can be carved out for such contracts. Buckley LJs sole ground of decision in Gunton was that the doctrine [of election] does apply to contracts of personal service as it applies to the generality of contracts: p 468D. If he had applied the general law of contract as it really is, he could not have reached the conclusion that he did. White & Carter was cited to the Court of Appeal in Gunton, but it was ignored by all three members of the court. It had similarly been ignored by Sir Robert Megarry V C in Thomas Marshall, although cited to him as well. It is not clear why. In Decro Wall, Salmon LJ (at p 370E) thought that Lord Reids qualification to the right of election in the case of co operative contracts was only a restatement of Counsels argument. It is possible that Sir Robert Megarry V C and the majority in Gunton tacitly took the same view. But it is difficult to take that view today. Lord Reids qualifications upon the right of election as applied to co operative agreements has subsequently been accepted as a correct statement of the law. It is not possible to accept this part of the reasoning in Decro Wall, Thomas Marshall or Gunton without either treating Lord Reids qualification as wrong, together with the subsequent judicial statements accepting it, or else treating contracts of employment as a special case to which Lord Reids qualifications do not apply. (3) Lord Reids qualifications to the innocent partys right of election are consistent with principle. The innocent party cannot meaningfully be said to have a right to treat the contract as subsisting if he cannot perform it and the law will not allow him to enforce it. In cases where the contract cannot be performed without co operation, and co operation is neither forthcoming nor compellable, the contract is in balk unless it comes to an end. The actual decision in White & Carter was inevitable given that a party cannot be required to mitigate contractual performance (such as a debt). But it involved a waste of resources which could have been avoided if the parties had been left to their remedy in damages. If Lord Reids qualifications to this proposition are ignored, this unattractive consequence will be gratuitously extended, at least in the context of contracts of employment, to cases where there can be no contractual performance, because the relationship is dead and all that survives is the husk or shell of a contract devoid of practical content. (4) Brightman LJs distinction between the status of an employee or the relationship of employer and employee, which terminate upon a unilateral repudiation by the employer, and the contract of employment which continues is one way of explaining why, if the contract subsists, wages are not recoverable under it. But it is in my view difficult to accept. The whole purpose of the contract of employment is to confer the status of employee, and its whole content is the relationship of employer and employee. What does it mean to say that the contract continues if the status and the relationship which are its entire subject matter have come to an end together with all of the core obligations that go with that status? (5) The result in Gunton leaves the position in relation to mitigation of loss in an uncertain and most unsatisfactory state. It seems that the employee, having no more than a right to damages, must mitigate them. But in principle, the only damages which he can be required to mitigate are the damages for the employers breach of each successive obligation as it would have fallen due for performance if the contract was being performed. If the employee is entitled to treat the contract as subsisting, there can be no question of his recovering damages for the loss of the bargain, and therefore no question of mitigating that loss. So what is the employee supposed to do? Salmon LJ in Decro Wall and Buckley LJ in Gunton considered that he should obtain alternative employment. Yet as Buckley LJ recognised (p 468F) this will normally put it out of his power to perform his contract with his former employer. In effect, the recognition in both Decro Wall and Gunton that only damages will ever be recoverable after an exclusion from work, coupled with the recognition in both cases that those damages are subject to mitigation, means that the employee must either accept the repudiation or else be compelled in practice to mitigate the loss of his bargain when in law it has not been lost. The position seems equally unsatisfactory for the employer, who is left with a penumbral contractual liability, the duration of which is uncertain and the extent of which depends on the inherently uncertain question whether he can show that the employee has failed to satisfy the (relatively light) burden of mitigating his loss. Much of Mr Cavender QCs excellent argument on this point was directed not so much to justifying Gunton as to persuading us that whatever doubts we might entertain about its correctness, it had stood for thirty years without apparently creating problems or giving rise to any injustice. The law, he submitted, should be left as it is rather than disturbed for the sake of mere doctrinal purity. There are certainly cases where that is the right way of dealing with settled but legally anomalous decisions. But this is not one of them. In the first place, Gunton has always been a controversial decision. It was the decision of a divided court. It was recorded in Rigby v Ferodo Ltd [1988] ICR 29, 34 that the Court of Appeal had given leave to appeal to the House of Lords with a view to its correctness being determined, although in the event the appeal was resolved on another point. Two years later, in Octavius Atkinson & Sons Ltd v Morris [1989] ICR 431, 436B C, Sir Nicholas Browne Wilkinson V C observed that the correct legal result unhappily remains unresolved. Gunton was followed with strong and express misgivings by the Court of Appeal in Boyo v Lambeth London Borough Council [1994] ICR 727, some of which foreshadowed the argument before us. Ralph Gibson LJ said that if it had been open to him he would have preferred the analysis of Sir John Donaldson in Sanders v Ernest A Neale Ltd [1974] ICR 565, and Staughton LJ declared a preference for the dissenting judgment of Shaw LJ. Even in 2012, its position has been described as far from assured: Cabrelli and Zahn, The elective and automatic theories of termination at common law: Resolving the conundrum?, Industrial Law Journal vol 41 (2012), 346, 354 355. Secondly, there is no basis for Mr Cavenders assertion that the decision in Gunton has given rise to no difficulty or injustice. Its application would give rise to significant injustice in this case, for reasons which I have sought to explain at para 110. It cannot, with respect, be an answer to say, as the majority do, that their approach is required in order to prevent SG from profiting from its own wrong and to negative the impact of that wrong on Mr Geys. These are proper functions of an award of damages. Mr Geys problem is that the particular feature of SGs conduct which was wrongful, i.e. the temporal separation of the dismissal and the payment in lieu of notice, has not caused him any significant loss. It is no part of the purpose of the law to reflect moral indignation about SGs conduct, even assuming that SGs mistake calls for moral indignation, which I doubt. Third, and more generally, it is always dangerous to allow the law to part company with reality in this way. It leads to unexpected and highly technical results, which businessmen and employees are unlikely to anticipate unless they are particularly well advised. In this case, even a mighty corporation like SG misunderstood the position. How are more modest enterprises to do so? We cannot know what other problems the decision in Gunton has thrown up since it was decided, because it is binding at every level below this one and has therefore had to be borne in silence by any one who lacked the stomach to embark on litigation with a view to taking the issue to the House of Lords or the Supreme Court. Fourth, the law as it was stated in Vines case made for certainty in a way which is not true of the law stated in Gunton. If the contract subsists after the employees exclusion from work, it will often be extremely difficult to determine with any confidence when it terminates. This will depend on the often ambiguous facts said to constitute an acceptance of the repudiation, or on highly technical questions about the validity of notices and payments such as those which arise in this case. I have already drawn attention to the additional uncertainty associated with the question of mitigation. By comparison, if the contract ends when the employment relationship ends, the position is clear. There is no reason to believe that we would be inviting unforeseeable difficulties by recognising the termination of the relationship. Why should they be any greater now than they were during the very long period before the 1970s when that was thought to be settled law? Collateral obligations A good deal of attention was devoted in the course of argument to the implications for other contractual obligations of concluding that an employee cannot treat the contract of employment as subsisting after a repudiation which terminates the employment relationship de facto. In my opinion, this question has very little bearing on the present issue, once it is appreciated that we are concerned only with those obligations which go to the continued existence of the employment relationship. In Gunton itself, at p 475, Brightman LJ envisaged that the extinction of the relationship of employer and employee might well be survived by any obligation which is not of necessity dependent on the existence of the relationship. Echoing this view, Lord Oliver pointed out in Rigby v Ferodo Ltd [1988] ICR 29, 34D that even if Gunton was wrongly decided and the contract terminated with the relationship of employer and employee, that would not necessarily bring an end to those contractual obligations which do not of necessity depend on the existence of the relationship of master and servant. I think that this is right, and significant. In many contracts of employment, and perhaps in most modern ones, there is a large number of obligations which do not depend on the existence of the employment relationship. One example is the specific enforcement after a repudiation of express or implied covenants against competition, as in Lumley v Wagner (1852) 1 De G M & G 604, 42 ER 687. In appropriate cases, this may be subject to the proviso that the repudiation was not by the party in whose favour the covenant was included: see General Billposting Co Ltd v Atkinson [1909] AC 118. Another example is a covenant against the disclosure of confidential information, such as the one considered in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227. Whether collateral obligations of this kind continue to bind after the termination of the contract or the underlying relationship will normally depend on the construction of the contract, or the exact nature of the implication if the obligation in question is implied. This is not the place for a general review of the kind of obligations which survive termination of the contract and are sufficiently collateral to warrant specific enforcement. What is clear is that it is not necessary to prolong the life of a repudiated contract of employment in order to justify this body of law. It follows that it will not be affected one way or the other by the outcome of this appeal. Conclusion I would allow SGs cross appeal on the ground that the contract terminated on 29 November 2007, when it was repudiated by SG and Mr Geys was excluded from work. On that footing the question raised by Mr Geys appeal whether, if the contract subsisted after that date, it came to an end upon the crediting of payment in lieu into his bank account or upon his noticing the payment later in December, does not arise. For my part, I would have held that if Mr Geys (contrary to my opinion) was entitled to affirm the contract after the unequivocal notice of dismissal given to him on 29 November, then all that was required to satisfy Clause 8.3 of the Handbook was the making of the payment in lieu. That seems to be more consistent with both the reality of the situation and the approach of the Court of Appeal in Abrahams v Performing Right Society [1995] ICR 1028 and the Employment Appeal Tribunal in Cerberus Software Ltd Rowley [2000] ICR 35. On the so called full and final settlement issue, which turns on the construction of paragraph 5.16 of the letter agreement, I agree with Lord Hope. |
The issue on this appeal is whether the appellant, Airtours Holidays Transport Ltd (formerly MyTravel Group plc), is entitled to recover, by way of input tax, Value Added Tax (VAT) charged by PricewaterhouseCoopers LLP in respect of services provided by PwC and paid for by Airtours. The factual and procedural background In October 2002, Airtours, which had borrowed money from around 80 financial institutions, and had further liabilities, was in serious financial difficulties, and sought refinancing from the Institutions to enable it to restructure. It was suggested to Airtours that it should commission an accountants report to satisfy the Banks that its restructuring proposals were viable. The Institutions were agreeable to this, and two firms were approached, and, pursuant to a decision in which both the Institutions and Airtours were involved, PwC were appointed to produce a report (the Report). The original terms under which PwC were appointed were contained in a letter dated 5 November 2002 (the Letter), which was addressed To the Engaging Institutions, and headed Silver Group plc [a code name for Airtours] and its subsidiaries . The Letter contained a number of provisions, including the following: Para 1, which confirmed that PwC had been retained by the Institutions as defined in para [4] to provide the Services, which were set out in an Appendix to the Letter, and as I shall refer to them. They included items such as Current trading position, historic cash utilisation, Review of accounting policies and issues, and Budget for year to 30 September 2003. Para 4, which stated that the Report was for the sole use of the Institutions who have expressly agreed to this letter by countersigning below, and that the information and advice given by PwC could be passed to the Institutions, to whom PwC were prepared to assume a duty of care if they countersigned the letter. Para 6, which recorded a request you had made that PwC assist in providing information to the institutions providing facilities to [Airtours]. Para 7, which referred to the work being carried out in phases, and referred to Airtours likely requests for facility extensions Para 8, which stated that Information and advice produced from this engagement is to be addressed to the Engaging Institutions with a copy to the directors of [Airtours], with the exception of any part of the report prepared exclusively or confidentially for the Engaging Institutions. Paras 9, under which PwC accepted that they had a duty of care to the Engaging Institutions. Para 10, under which [y]ou accept that the aggregate limit referred to in paragraph 9 of our Terms and Conditions applies to our liability to [Airtours] and the Engaging Institutions. Para 12, which provided that [y]ou have requested us to undertake a review of [Airtours] as set out below. Our work is required by the Institutions in considering the level of facilities granted to [Airtours]. Paras 13 18, which described the scope of these Services, including the phasing, the limitations, and the extent of the work to be done. Para 19, which provided that a draft of our findings will be available for discussion with management by a specified date, and on a subsequent date with the Engaging Institutions. Para 22, which stated that [Airtours] will be responsible for our fees, expenses and disbursements incurred in carrying out our work . Para 25, which provided that [o]ur terms are that a retainer of 200,000 be payable on the commencement of our work and that weekly invoices will be rendered to [Airtours and] are payable on submission. Para 26, which stated that [t]he attached terms and conditions (the Terms and Conditions) set out the duties of each party in respect of the Services. The Terms and Conditions provide that among other matters: i) [Airtours] will indemnify us against claims brought by any third party. For the avoidance of doubt, the reference to you in clause 10 of the Terms and Conditions (and only in that clause) refers to [Airtours] and not the Engaging Institutions ii) our aggregate liability to [Airtours], the Engaging Institutions and any other third party will be limited in accordance with clause 9.4 of the Terms and Conditions iii) the Engaging Institutions and [Airtours] both agree to all the terms contained in the Contract. The Letter included countersigning pages for the Engaging Institutions, which, inter alia, confirmed (i) that the foregoing properly sets out the arrangements agreed between us, and we agree to the terms contained in this Letter and the attached Terms and Conditions and (ii) that [Airtours] has authorised the Engaging Institutions to disclose to you all relevant matters concerning [its] affairs and its bank accounts. The Letter also contained a countersigning page for Airtours which, inter alia, contained a confirmation in the same form as (i), and also confirmed that PwC would have full access to its books, and that PwC could disclose all aspects of [Airtours] affairs to the Engaging Institutions. The Terms and Conditions (the Terms) referred to in the Letter were in a standard form. The Terms started by providing that they applied to the Services, and together with the Letter constituted the Contract, and I shall adopt that definition. The Terms then stated that [f]or the avoidance of doubt we and our refers to [PwC], and you and your refers to the entity or entities on whose behalf the [Letter] was acknowledged and accepted. The Terms then included the following provisions: Clause 2, which required you to ensure that all information provided is accurate, that any reports will be based on information provided by you, and states that we will not be required to direct your affairs. Clause 3, under which you agree to pay our fees promptly . Clause 9.4, which limited PwCs liability for loss or damage suffered by you, and 9.5, where the Letter is signed by more than one party, this limit will be allocated between them. Clause 10, which provided that [y]ou agree to indemnify us to the fullest extent permitted by law against all liabilities, losses, claims, demands and expenses arising out of or in connection with your breach of any of the terms of the Contract . Clause 12, subclause 1 of which provided that either of us may terminate the Contract upon the expiry of 30 days notice; the clause contained other provisions for determination, including in subclause 5 a right for PwC to terminate if we do not receive payment from you of any invoice within 30 days of the due date. PwC carried out work pursuant to the Contract, ie they provided the Services pursuant to the Letter and the Terms, and carried out further, similar, work pursuant to similarly worded contracts, which for present purposes can conveniently be treated as part of the Contract. That work was, according to the First tier Tribunal wide ranging and highly technical and involved liaising with and making representations to various parties, and carrying out a strategic review of [Airtours] business and creating what was termed an entity priority model [2009] UKFTT 256 (TC), para 2. In due course, PwC produced a Report, which satisfied the Institutions. In accordance with para 25 of the Letter, Airtours paid PwC a retainer of 200,000 when the work began, and thereafter PwC invoiced Airtours for their fees, which Airtours then paid. In addition, Airtours paid PwC VAT in the form of output tax on these sums. Airtours then sought to deduct that VAT as input tax in its VAT returns for the relevant periods. The respondents, the Commissioners of HM Revenue and Customs, challenged Airtours right to do so. While they accepted that the Contract was of commercial benefit to Airtours, they contended that PwCs services under the Contract were not supplied to Airtours, and, as a result, Airtours was not entitled to deduct the VAT on PwCs fees as input tax. The First tier Tribunal found for Airtours, in very summary terms on the basis that all that was required to establish its case was that it had obtained anything at all that was used for the purpose of his business and a supply of a service may consist of a right to have the service supplied to a third party [2009] UKFTT 256 (TC), para 26. The Upper Tribunal allowed the Commissioners appeal, holding that the Contract was one in which the Engaging Institutions contracted with PwC to supply services which they needed for the purposes of their own businesses, and Airtours contracted with PwC to pay its fees, rather than one in which Airtours received something of value from PwC to be used for the purpose of its business in return for its payment [2010] UKUT 404 (TCC), para 24. By a majority, the Court of Appeal dismissed Airtours appeal [2015] STC 61. All members of the Court of Appeal agreed that the issue turned on the interpretation of the Contract. In agreement with the Upper Tribunal, Moore Bick and Vos LJJ held that the effect of the Contract was that PwCs services thereunder were provided to the Engaging Institutions, and not to Airtours. Dissenting, Gloster LJ concluded at para 46 that as a matter of construction of the Contract, and on analysis of the economic realities of the surrounding commercial arrangements, the appellant had a contractual right to require that the Services as described in the [Letter] were provided. The statutory provisions The law relating to payment and recovery of VAT in the United Kingdom is contained in the Value Added Tax Act 1994, which was intended to reflect the provisions of certain EC Directives, most notably EC Council Directive 67/227 (on the harmonisation of legislation of member states concerning turnover taxes) (the First Directive) and EC Council Directive 77/388 (on the harmonisation of the laws of the member states relating to turnover taxes Common system of value added tax: uniform basis of assessment) (the Sixth Directive). The current EU provisions relating to VAT and the recovery of input tax are contained in Council Directive 2006/112/EC (the Principal VAT Directive). Article 1(2) of the Principal VAT Directive (originally as article 2 of the First Directive) describes the basic system of VAT: The principle of the common system of VAT entails the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, however many transactions take place in the production and distribution process before the stage at which the tax is charged. On each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components. The common system of VAT shall be applied up to and including the retail trade stage. VAT is charged on supplies of goods and services for consideration see article 2(1) of the Principal VAT Directive (formerly article 2 of the Sixth Directive). And, as article 63 of the Principal VAT Directive states, VAT becomes chargeable when a supply takes place. Articles 14(1) and 24 of the Principal VAT Directive (formerly articles 5 and 6 of the Sixth Directive), reflected in section 5 of, and Schedule 4 to, the 1994 Act, define the concepts of supply of goods and supply of services respectively, in the following terms; Supply of goods shall mean the transfer of the right to dispose of tangible property as owner. Supply of services shall mean any transaction which does not constitute a supply of goods. Article 73 of the Principal VAT Directive (formerly article 11 of the Sixth Directive), reflected in section 19 of the 1994 Act, defines, so far as relevant, the taxable amount as: in respect of the supply of goods or services everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, Article 168 of the Principal VAT Directive (formerly article 17(2) of the Sixth Directive), reflected in sections 24(1), 24(2), 26(1) and 26(2) of the 1994 Act, allows a taxable person the right, [i]n so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, to deduct VAT due or paid in respect of supplies to him of goods or services carried out or to be carried out by another taxable person. So far as the provisions of the 1994 Act are concerned, they must, of course, be interpreted as far as possible so as to comply with the current Directive, and it is accepted that, at least for present purposes, they do so. Whether it is right to decide this appeal by reference to the Principal VAT Directive or the 1994 Act is therefore a wholly academic point. However, the strictly correct approach must be to decide it by reference to the 1994 Act, but only on the basis that that Act cannot be interpreted without reference to the Principal VAT Directive, and must, if at all possible, be interpreted so as to be consistent with that Directive. The centrally relevant provisions of the 1994 Act are in sections 24 to 26. Section 24(1) defines input tax as, inter alia, VAT on the supply to [a taxable person] of any goods or services which are used or to be used for a business carried on by him. Section 25(2) entitles a taxable person to deduct so much of his input tax as is allowable under section 26 from any output tax that is due from him. Section 26(1) and (2) provides that the amount of allowable input tax is that which is attributable to supplies made or to be made by the taxable person in the course or furtherance of his business [including] taxable supplies. The issues on this appeal in summary In order for the VAT charged by PWC and paid by Airtours to be reclaimable as input tax, it must be VAT on the supply to [Airtours] of any goods or services. There is no doubt that there was in this case a supply of services (and no supply of goods), namely the provision by PwC of the Services as defined in the Letter. The issue is whether the supply of such services was to Airtours. The concept of a supply is not only fundamental to the VAT system; it is an autonomous concept of the EU wide VAT system. In the present appeal, the issue whether there has been a supply of services by PwC to Airtours gives rise to two principal questions. The first question is whether, under the terms of the Contract, PwC agreed with Airtours that it would supply services, and in particular to provide the Report. If the answer to that question is yes, then the Commissioners accept that there has been a supply of services to Airtours, and that this appeal must be allowed, subject to a question of apportionment. On the other hand, if the answer to that first question is no, then the Commissioners contend that this appeal must be dismissed, but Airtours contends that its appeal should still succeed, subject, again to a question of apportionment. In effect, on this second point, Airtours argues that, in order to show that it received a supply of services from PwC for the purposes of VAT, it does not have to show that it had a contractual right to require the Services to be provided to the Institutions by PwC. The first question: was there a contractual obligation to supply? The first question, then, is whether, on the true construction of the Contract, PwC contracted to supply services to Airtours. There is no doubt that the Contract imposes an obligation on PwC to supply services to the Institutions. The issue is whether PwC agreed, in addition, with Airtours that they would supply those services. Thus, it is enough for Airtours purposes if it can establish that PwC were under a contractual obligation to Airtours to supply services, such as providing the Report, to the Institutions. Airtours does not have to show that PwC were under a contractual obligation to supply any services directly to Airtours. Not least because the Terms are in a standard form, which has been poorly adapted, and whose provisions are inconsistently drafted, the issue whether PwC had a contractual obligation to Airtours to provide the Services to the Institutions is not entirely easy. Nonetheless, I have reached the clear conclusion that PwCs commitment to provide the services as described in the Contract was a contractual commitment to the Engaging Institutions, and not to Airtours. First, the Letter is addressed To the Engaging Institutions, and not to Airtours. Secondly, para 1 states in terms that it is those Institutions who have retained PwC: there is no suggestion that Airtours had done so, or that there was some residual contractual duty to Airtours. Thirdly, para 4 provides that any reports are for the sole use of [those] institutions which had countersigned, and again there is nothing about Airtours. Fourthly, para 7, with its reference to [Airtours] likely requests for facility extensions is also more consistent with the Commissioners case. The reference also highlights the risk of conflict if PwC were contracting with Airtours as well as the Banks, but this point is weakened by the evidence before the FTT to the effect that the current practice of PwC would be to contract with both borrower and lender. Fifthly, para 8 of the Letter states that the Report is to be provided to the Institutions, and not only is Airtours merely to be provided with a copy, but that copy can be redacted. While none of that is logically inconsistent with PwCs contract being with Airtours, its thrust is more consistent with the opposite. The obligation to provide a copy of any Report to the directors of Airtours is perfectly consistent with PwCs contractual obligations being to the Institutions alone, as they would want to discuss any Report with Airtours, and would therefore not want Airtours to be excluded from seeing the Report pursuant to the terms of para 4. Sixthly, paras 9 and 10 of the Letter recognise a duty of care on the part of PwC to the Institutions, but does not acknowledge one to Airtours, but it is fair to say that the weight to be given to this point is weakened by the terms of para 26(ii). Seventhly, para 11 reinforces this point as it excludes any duty of care or liability to any other party. If that excludes any duty of care to Airtours, it lies uneasily with the notion that PwC has a contractual obligation to Airtours; if it does not exclude any duty of care to Airtours, then it reinforces the point made in respect of paras 9 and 10. Eighthly, para 12 refers to PwCs work being required by the Institutions, and no suggestion that it was required by Airtours; while that is not inconsistent with the notion that there is also a contractual obligation to Airtours, it is rather an odd provision if there was. It is true that in para 19 of the Letter PwC agreed to discuss any draft report with Airtours management, but that is quite consistent with the Contract being with the Institutions alone: a discussion with Airtours before a discussion with the Institutions would obviously be desirable from the Institutions perspective. Para 22 records the fact that Airtours would pay for PwCs work, but, in so far as such a provision is included in the Letter, it was needed to protect the Institutions as much as PwC, and the same applies to para 26(i) which records that Airtours would indemnify PwC against third party claims. Para 26(ii) referred to PwCs liability to Airtours, but there could clearly be tortious liability. Para 26(iii) was plainly not concerned with imposing any liability on PwC beyond what was in the preceding provisions. As for the fact that Airtours countersigned the Letter in the terms that it did, it appears to me that Airtours had to sign in order to be bound by paras 22 (payment of PwCs fees) and 26 (indemnity and limitation of liability), as well as clauses 2, 3, 9 and 10 of the Terms. In any event, I find it hard to accept the suggestion that the fact that Airtours countersigned, and was required by PwC to countersign, the Letter in the terms that it did had the effect of imposing on PwC obligations to Airtours which would not otherwise have arisen from the provisions of the Letter. Turning to the Terms, they were on a standard printed form, and it is therefore unsurprising that they are not always easy to apply to the provisions contained in the Letter. The statement in the opening part of the Terms that you refers to the entity or entities on whose behalf the Letter was acknowledged and accepted is neutral, because, as just explained, by countersigning the Letter, Airtours had agreed to pay PwCs fees and to give PwC an indemnity, and it had also agreed to a cap on any potential liability to it which PwC might have, as set out in the Letter. The provisions of clause 2 of the Terms are such that the reference to you more naturally refers to Airtours probably as well as the Institutions. In the light of the provisions of paras 22, 25 and 26(i) of the Letter, there can be no doubt but that the references to you in clauses 3 and 10 of the Terms (concerned with the payment of PwCs fees and with an indemnity to PwC) are reference to Airtours alone. The you in clause 9 appears to apply to the Institutions and Airtours. Clause 12 of the Terms, which applies to determination and refers to either of us being able to determine, appears to envisage two parties to the Contract, and, if that is right, they must be the Institutions and PwC, although payment from you in clause 12.5 must mean payment from Airtours. Confining myself for the moment to the express words of the Contract, it appears to me that the Commissioners are correct, and there is no obligation on PwC, as a matter of contract, to Airtours to provide the Services whether to the Institutions or to Airtours. The position appears pretty clear if one confines oneself to the Letter: PwCs obligation to provide the Services set out in the Appendix is owed solely to the Institutions, and Airtours is only a party for the purpose of agreeing to pay PwCs fees, to provide PwC with an indemnity, and to acknowledge the cap on any damages for which PwC may be liable. The Terms are, without doubt, less clear, but there is nothing in them which supports the notion that they were intended to widen PwCs duties beyond what was in the Letter. In any event, the notion that the Terms can give the meaning of you in the Letter any different meaning from that which it naturally has on the face of the Letter is fatally undermined by the fact that the Terms are contained in a standard form, and, even more, by the fact that you in the Terms clearly has different meanings in different places. Looking at the matter more broadly, Airtours argues that when one considers the commercial background, it should be accepted that PwC had a contractual duty to Airtours to provide the Institutions with the Services (and in particular the Report). In that connection, Airtours points to the facts that (i) it was plainly in Airtours interest that the Services were provided, (ii) Airtours was to pay for the Services, (iii) Airtours initiated the idea of having the Report and were involved in the selection of PwC, (iv) Airtours was a party to the Letter through countersigning it, and (v) Airtours took on liabilities to PwC in the Letter. This argument has obvious attraction, but I cannot accept it. I do not consider that these five factors can be successfully invoked either in order to interpret the Contract so as to impose a contractual duty on PwC to Airtours to supply the information to the Institutions, or in order to imply such a duty on PwC. Factors (iv), and (v) are plain from the face of the Letter, and I do not see that they can carry things further, once one has analysed the provisions of the Letter and the Terms. Factor (iii) takes matters little further at least on its own, although it could fairly be said to be supportive of Airtours case in a general sort of way. By contrast, factor (ii), the fact that Airtours, rather than the Institutions, was to pay PwC for the services, can fairly be said to raise a prima facie expectation in a reader of the Letter that PwC would owe a duty to Airtours to provide those services. However, it is not, at least of itself, a particularly powerful point. So long as the Institutions wanted the services, PwC would have been obliged to them to provide them. And, if the Institutions no longer wanted the services, there is no reason to think that Airtours would still have wanted them, especially as it would have had to pay for them. And it is not as if Airtours was agreeing to pay for work which would not be done: payment was to be in arrears except for the 200,000 retainer. Lord Carnwath, whose judgment I have seen in draft form, relies in particular on the retainer of 200,000 which Airtours agreed to pay under para 25 of the Letter. While I see how the liability to pay this retainer can be said to be the high point of Airtours case, it does not cause me to change my view. The liability to pay the initial 200,000 does not seem to me to be different in principle for present purposes from any other payment which Airtours agreed to pay under para 25. Apart from that, the parties would have appreciated that it was very unlikely that PwC would not carry out 200,000s worth of work before any possibility of their ceasing work arose. The Report was being prepared under considerable time pressure, as is clear from the background facts and from para 19, under which the interim report had to be available for the engaging institutions six days after signature, and indeed the Letter was signed three days after it had taken effect. In addition, the termination provisions in clause 12 of the Terms limited the circumstances in which PwC could cease their work. As for factor (i), Airtours interest in having a Report produced for the Institutions, I accept that it means that one would not be at all surprised if PwCs contractual obligation to supply the Services to the Institutions extended to Airtours, but it does not in any way compel such a conclusion as a matter of commercial sense, logic or law. Like factor (ii), it does no more than raise a prima facie expectation in the reader of the Contract. In these circumstances, I do not consider that the five factors mentioned in para 32 above assist Airtours. So far as interpretation of the Contract is concerned, there is the initial difficulty that it is hard to see how the wording of the Letter and the Terms can give rise to an express contractual duty on the part of PwC to Airtours in the light of the analysis in paras 24 to 31 above. As to the possibility of implying such a duty, I cannot see how the proposed implied term can fairly be said to satisfy either of the two tests recently affirmed in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] 3 WLR 1843, paras 18 and 21, namely that it is necessary for business efficacy or that it is so obvious that it went without saying. Apart from the factors mentioned in para 32 above, it does not seem to me that there is much else which assists on the interpretation of the Contract for present purposes. It is true that the evidence before the FTT supported the notion that, at any rate at the time of the hearing in the FTT, one would have expected an agreement such as the Contract to involve PwC agreeing to provide the Services to Airtours, as well as to the Institutions. However, I do not think that that can be of any, or at any rate of much, weight. First, we are concerned with a contract made in 2002, and the FTT hearing was several years later. Secondly, the evidence did not support a universal practice, or general understanding, let alone a professional duty, for an accountant to contract with the borrower as well as the lender in a case such as this. So, at best from Airtours point of view, one is left with the possibility that PwC and Airtours may have believed that the Contract was being made with Airtours as well as the Institutions (although it is fair to emphasise that I do not think that the evidence went nearly as far as that). However, it is very well established that the understandings of the parties themselves at the time they entered into a written contract is wholly inadmissible when the issue is one of interpretation, as opposed to rectification, of the document. Further, I do not consider that this is an appeal where it would be right to give particular weight to the findings of a Tribunal. In the end, we are concerned with the interpretation of a document, and it is well established that that is a matter of law, not fact, in the courts of all parts of the United Kingdom. Of course, when there are relevant findings of primary fact (or even, at least in some cases, of secondary fact) relevant to interpretation, a Tribunals finding will deserve particular respect, but that does not arise in this case. Furthermore, in any event, my conclusion as to the meaning of the Contract is consistent with the view of the specialist UT, which formed its own view, because it concluded that the FTT (also a specialist tribunal) had erred in law. Accordingly, in agreement with the UT and the majority of the Court of Appeal, I consider that Airtours is wrong on the first question, and, as the Commissioners contend, PwC had no contractual obligation to Airtours to supply the Services to it or to the Institutions. That means that it is necessary to address the second question. The second question: was there nonetheless a supply? Even if Airtours were not contractually entitled to require PwC to provide the Services to the Institutions, it remains the fact that it was plainly in Airtours commercial interest that those services be provided. That, it may be said, is evident not merely from the background (namely that the provision of the Services was intended to facilitate the restructuring of Airtours borrowing) and from the face of the Letter (given that Airtours undertook to pay PwC for providing those services). Indeed, I do not think that Mr Scorey QC exaggerated Airtours case when he described PwCs work pursuant to the Contract as important to Airtours very survival. In those circumstances, it is argued on behalf of Airtours that, even if it was not contractually entitled to have the Services provided to the Institutions, the facts that (i) it had a substantial commercial interest in those services being provided by PwC to the Institutions, and (ii) it not merely countersigned the Contract pursuant to which they were provided, but thereby agreed to pay PwC for the Services, lead to the conclusion that the Services were supplied to Airtours (as well as to the Institutions). Some support for that proposition may arguably be found in the speech of Lord Millett in Customs and Excise Comrs v Redrow Group Plc [1999] 1 WLR 408, 418G, where he said [o]nce the taxpayer has identified the payment the question to be asked is: did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment?. If one takes that question at face value, then it can be said with some force that Airtours obtained a substantial benefit from paying PwCs invoices, namely the potential (and, as it turned out, the eventual actual) financial support of the Institutions for its restructuring. However, Lord Milletts observation cannot be taken at face value. As Lord Reed explained in Revenue and Customs Comrs v Loyalty Management UK Ltd [2013] STC 784, paras 66 67: 66. [T]he speeches in Redrow should not be interpreted in a manner which would conflict with the principle, stated by the Court of Justice in the present case, that consideration of economic realities is a fundamental criterion for the application of VAT. [T]he judgments in Redrow cannot have been intended to suggest otherwise. On the contrary, the emphasis placed upon the fact that the estate agents were instructed and paid by Redrow, and had no authority to go beyond Redrows instructions, and upon the fact that the object of the scheme was to promote Redrows sales, indicates that the House had the economic reality of the scheme clearly in mind. When, therefore, Lord Millett asked, Did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment?, [that question] should be understood as being concerned with a realistic appreciation of the transactions in question. 67. Reflecting the point just made, it is also necessary to bear in mind that consideration paid in respect of the provision of a supply of goods or services to a third party may sometimes constitute third party consideration for that supply, either in whole or in part. The speeches in Redrow should not be understood as excluding that possibility. Economic reality being what it is, commercial businesses do not usually pay suppliers unless they themselves are the recipient of the supply for which they are paying (even if it may involve the provision of goods or services to a third party), but that possibility cannot be excluded a priori. A business may, for example, meet the cost of a supply of which it cannot realistically be regarded as the recipient in order to discharge an obligation owed to the recipient or to a third party. In such a situation, the correct analysis is likely to be that the payment constitutes third party consideration for the supply. Lord Hope made the same point in para 110 in remarks which are perhaps particularly germane for present purposes: I think that Lord Millett went too far [at p 418G] when he said that the question to be asked is whether the taxpayer obtained anything anything at all used or to be used for the purposes of his business in return for that payment. Payment for the mere discharge of an obligation owed to a third party will not, as he may be taken to have suggested, give rise to the right to claim a deduction. A case where the taxpayer pays for a service which consists of the supply of goods or services to a third party requires a more careful and sensitive analysis, having regard to the economic realities of the transaction when looked at as a whole. This approach appears to me to reflect the approach of the Supreme Court in the subsequent case of WHA Ltd v Revenue and Customs Comrs [2013] UKSC 24; [2013] STC 943 where at para 27, Lord Reed said that [t]he contractual position is not conclusive of the taxable supplies being made as between the various participants in these arrangements, but it is the most useful starting point. He then went on in paras 30 to 38 to analyse the series of transactions, and in para 39, he explained that the tribunal had concluded that the reality is quite different from that which the contractual documentation suggested. Effectively, Lord Reed agreed with this, and assessed the VAT consequences by reference to the reality. In other words, as I said in Secret Hotels2 Ltd v Revenue and Customs Comrs [2014] STC 937, para 35, when assessing the VAT consequences of a particular contractual arrangement, the court should, at least normally, characterise the relationships by reference to the contracts and then consider whether that characterisation is vitiated by [any relevant] facts. The same approach was adopted by the Court of Justice in Revenue and Customs Comrs v Loyalty Management UK Ltd and Baxi Group Ltd (Joined Cases C 53/09 and C 55/09) [2010] STC 265, paras 39 and 40, where they stated, citing previous judgments, that consideration of economic realities is a fundamental criterion for the application of the common system of VAT, and added that that issue involved consideration of the nature of the transactions carried out in the particular case. To much the same effect, in Tolsma v Inspecteur der Omzetbelasting Leeuwarden (Case C 16/93) [1994] STC 509, para 14, the Court of Justice said that a supply of services is effected for consideration only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, which it explained as meaning the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient. In the context of the supply of goods, the Court made the same point in Primback Ltd v Customs and Excise Comrs (Case C 34/99) [2001] 1 WLR 1693, para 25, where it described the determining factor as the existence of an agreement between the parties for reciprocal performance, the payment received by the one, being the real and effective counter value for the goods furnished to the other. In Revenue and Customs Comrs v Newey (Case C 653/11) [2013] STC 2432, para 40, the Court of Justice again emphasised that that a supply of services is effected for consideration, within the meaning of article 2(1) of [the Sixth] directive, and hence is taxable, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient. In para 41, the court went on to explain that the supply of services is therefore objective in nature and applies without regard to the purpose or results of the transactions concerned and without its being necessary for the tax authorities to carry out inquiries to determine the intention of the taxable person. The court then observed in paras 42 43 that consideration of economic and commercial realities is a fundamental criterion for the application of the common system of VAT and that the contractual position normally reflects the economic and commercial reality of the transactions. An exception to the normal rule that the contractual relationship is central was then identified by the court as being where those contractual terms constitute a purely artificial arrangement which does not correspond with the economic and commercial reality of the transactions (para 45). From these domestic and Court of Justice judgments, it appears clear that, where the person who pays the supplier is not entitled under the contractual documentation to receive any services from the supplier, then, unless the documentation does not reflect the economic reality, the payer has no right to reclaim by way of input tax the VAT in respect of the payment to the supplier. On this analysis, it appears to me that, subject to considering a further way in which Airtours case is put, it also fails on the second question. The Contract, consisting of the Letter and the Terms, did reflect the economic reality, and was not in any way an artificial arrangement. It is true that Airtours benefitted from the Contract, but the benefit which it was getting was not so much the Services from PwC, but the enhanced possibility of funding from the Institutions for its restructuring (a possibility which eventuated into reality thanks, to a substantial extent, to the Report). And it was to improve the prospects of such refinancing that Airtours was prepared to pay for the provision of the Report. On behalf of Airtours, it is suggested that this conclusion is inconsistent with the notion of fiscal neutrality, as the consequence of Airtours appeal in this case failing is that VAT paid as output tax is not reclaimable as input tax. However, as Advocate General Sharpston observed in Finanzamt Frankfurt am Main V Hchst v Deutsche Bank AG (Case C 44/11) [2012] STC 1951, para 60 in connection with exemptions, fiscal neutrality is not a fundamental principle or a rule of primary law which can condition the validity of an exemption but a principle of interpretation, to be applied concurrently with and as a limitation on the principle of strict interpretation of exemptions. In any event, as Mr Thomas says on behalf of the Commissioners, I would not accept the argument is well founded. It assumes that all output tax should, in principle, be reclaimable as input tax, no matter who was invoiced and who paid it, whereas article 168 (set out in para 17 above) clearly limits such a right to output tax paid in respect of supplies to him of services : therefore, where the services in respect of which he paid VAT were not supplied to the person who paid the VAT, no right to reclaim that output tax can arise. To put the point another way, fiscal neutrality cannot be invoked to invent a supply where there is none. Consistently with this, although the VAT Directives contemplate that the consideration itself may be paid by either the recipient of or a third party to the supply or a combination of the two (see para 15 above and HMRC v Loyalty Management UK Ltd, para 67, per Lord Reed), they also contemplate that VAT on a supply will be the subject of an invoice directed to the recipient of the supply (see the Principal VAT Directive, articles 220(1) and 226(5)) and will be potentially deductible by him once paid as input tax (article 168) although it appears that, in this case, the Institutions, being largely exempt, would not have been able to deduct any input tax which had been invoiced to and paid by them. In this context, Mr Scorey also raised a somewhat wider point, namely that, if contrary to his submission, PwC had contracted to, and did, provide services only to the Institutions, there could be no supply at all by PwC for VAT purposes because there was no reciprocal performance by the Institutions for those services. He contrasted the circumstance in which A contracts with and undertakes to pay B to supply a service to C, where there is reciprocity of obligation between A and B, with a contractual arrangement in which C, while undertaking no obligation to pay B, receives a service from B and procures that A will pay for it. In short, he contended that because the Institutions were under no obligation to pay PwC for the services, there had been no relevant supply. I do not accept this argument, which amounts to an assertion that the reference to third party consideration in article 73 of the Principal VAT Directive is limited to consideration such as a guarantee which exists alongside the liability of the recipient of the goods or services. The Court of Justice has spoken of reciprocal performance as a critical component of the concept of supply, but it has never confined the consideration to that provided by the recipient of the supply. Thus in Tolsma at para 14, the court stated: a supply of services is effected for consideration and hence is taxable, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient. van Financin This formulation demonstrates the need for a direct link between the service provided and the consideration received which the court had previously articulated in Staatssecretaris v Association Coperatieve Aardappelenbewaarplaats GA (Case C 154/80) [1981] ECR 445, para 12, Apple and Pear Development Council v Customs and Excise Comrs (Case C 02/86) [1988] STC 221, paras 11 and 12, and Staatssecretaris van Financin v Hong Kong Trade Development Council (Case C 89/91) [1982] ECR 1277, para 10. The Court of Justices later statements of the test have followed Tolsma in not requiring the recipient of the services under the arrangement itself to be the provider of the consideration or to have legal responsibility for its provision see Primback Ltd, para 25 and Newey, para 40, and see also Dixons Retail plc v Revenue and Customs Comrs (Case C 492/12) [2014] Ch 326, paras 31 and 32. When the Court of Justice speaks of reciprocal performance it is looking at the matter from perspective of the supplier of the services and it requires that under the legal arrangement the supplier receives remuneration for the service which it has performed. It is not necessary that the recipient of the service is legally responsible to the supplier for payment of the remuneration; it suffices that the arrangement is for a third party to provide the consideration. Were it otherwise, taxpayers could structure their transactions so as to escape liability to pay VAT, so long as they could meet the economic reality test. When this court has discussed third party consideration in what is now article 73 of the Principal VAT Directive it has similarly not restricted it to consideration provided alongside, or in performance of, a legal obligation of the recipient see WHA Ltd, para 56 per Lord Reed, in which the garage provided a service to the insured car driver but the insurer alone was responsible for remunerating the garage, and Loyalty Management UK Ltd, para 67 per Lord Reed. Finally, it is also said that the fact that PwC did not contract with Airtours to provide the Services to the Institutions is a very small point on which the present decision should turn. The answer to that was provided by Lord Reed in WHA Ltd, para 26, where he said that decisions about the application of the VAT system are highly dependent upon the factual situations involved. A small modification of the facts can render the legal solution in one case inapplicable to another. Conclusion For these reasons, I would dismiss Airtours appeal. LORD CLARKE: (dissenting) (with whom Lord Carnwath agrees) I agree with Lord Carnwath that this appeal should be allowed, both for the reasons he gives and, in particular, for the reasons given by Gloster LJ in her dissenting judgment in the Court of Appeal. The principal reason why I have reached a different conclusion from that of Lord Neuberger is that it seems to me that his approach is too narrow in that, while it focuses on the relationship between PwC and the Banks, it gives too little attention to the legal relationship between PwC and Airtours and to the economic realities of that relationship. The same is in my opinion true of the approach of the majority of the Court of Appeal. Gloster LJ set out the relevant principles, in my opinion correctly, in her para 37. It is convenient to set out here the basic principles without repeating the extensive citations of recent authority, including in particular in the Supreme Court. Using Gloster LJs sub paragraphs, those principles are these: i) Consideration of economic realities is a fundamental criterion for the application of the common system of VAT as regards the identification of the person to whom services are supplied. ii) Decisions about the application of the VAT system are highly dependent upon the factual situations involved. Thus a small modification of the facts can render the legal solution in one case inapplicable to another. iii) The case law of the CJEU indicates that, when determining the relevant supply in which a taxable person engages, regard must be had to all the circumstances in which the transaction or combination of transactions takes place. In cases where a scheme operates through a construct of contractual relationships, it is necessary to look at the matter as a whole in order to determine its economic reality. Thus the relevant contracts have to be understood in the wider context of the totality of the arrangements between the various participants. iv) The terms of any contract between the parties, whilst an important factor to be taken into account in deciding whether a supply of services has been made, are not necessarily determinative of whether as a matter of economic reality taxable supplies are being made as between any particular participants in the arrangements. That may be particularly so where certain contractual terms do not wholly reflect the economic and commercial reality of the transactions. However, the contractual position is generally the most useful starting point for the VAT analysis. v) There may, as a matter of analysis, be two or more distinct supplies within the same transaction. Moreover, a single course of conduct by one party may constitute two or more supplies to different persons. Once the taxpayer has identified the payment the question to be asked is: did he obtain anything anything at all used or to be used for the purposes of his business in return for that payment? This will normally consist of the supply of goods or services to the taxpayer. But it may equally well consist of the right to have goods delivered or services rendered to a third party. The grant of such a right is itself a supply of services. In one case (Redrow) the taxpayer did not merely derive a benefit from the services which the agents supplied to the householders and for which it paid. It chose the agents and instructed them. In return for the payment of their fees it obtained a contractual right to have the householders homes valued and marketed, to monitor the agents performance and maintain pressure for a quick sale, and to override any alteration in the agents instructions which the householders might be minded to give. Everything which the agents did was done at the taxpayers request and in accordance with its instructions and, in the events which happened, at its expense. The doing of those acts constituted a supply of services to the taxpayer. The services obtained by the taxpayer were different. They consisted of the right to have the householders home valued and marketed in accordance with the taxpayer's instructions. Unless the householder sold his home and completed the purchase of a Redrow home, however, the taxpayer was not liable for the agent's fees and paid no input tax, so there was nothing in respect of which a claim to deduction could be made. What must await events was not the identity of the party to whom the services were rendered, for different services were rendered to each; but which of the parties was liable to pay for the services rendered to him and so bear the burden of the tax in respect of which a claim to deduction might arise. vi) However, the mere fact that the taxpayer has paid for the service does not necessarily mean that it has been supplied to him. Consideration of economic realities is a fundamental criterion for the application of VAT. Thus substance and reality remain critical. What is required is a realistic appreciation of the transactions in question. Consideration paid in respect of the provision of a supply of goods or services to a third party may sometimes constitute third party consideration for that supply, either in whole or in part. Economic reality being what it is, commercial businesses do not usually pay suppliers unless they themselves are the recipient of the supply for which they are paying (even if it may involve the provision of goods or services to a third party), but that possibility cannot be excluded a priori. A business may, for example, meet the cost of a supply of which it cannot realistically be regarded as the recipient in order to discharge an obligation owed to the recipient or to a third party. In such a situation, the correct analysis is likely to be that the payment constitutes third party consideration for the supply. A case where the taxpayer pays for a service which consists of the supply of goods or services to a third party requires a more careful and sensitive analysis, having regard to the economic realities of the transaction when looked at as a whole. It may lead to the conclusion that it was solely third party consideration, or it may not. Having set out those principles (and the references which support them) Gloster LJ, in my opinion correctly, described the real issue as being whether, on the primary facts found by the FTT, which were in essence not in dispute, the arrangements between the Banks, PwC and Airtours as a matter of law, involved the supply of services to Airtours or merely third party consideration provided by Airtours for services rendered to the Banks alone. In para 41 Gloster LJ expressed the view that this case, like Customs and Excise Comrs v Redrow Group plc [1999] 1 WLR 408 (Redrow), is a case where two distinct supplies of services were being provided by PwC within the same overall transaction. She noted the caveats articulated by Lord Reed and Lord Hope in Revenue and Customs Comrs v Loyalty Management UK Ltd [2013] UKSC 15; [2013] STC 784 (LMUK (SC)) and recognized, both that every case has to be approached on its own particular facts, and that it may be dangerous to draw analogies between the facts of two different cases which may appear superficially similar. However, she concluded that, although there are obvious differences between the facts of Redrow and those of the present case, the principles identified in Redrow, and confirmed in LMUK (SC), support the analysis that in the present case PwC was making two distinct supplies in both directions (see per Lord Hope in LMUK (SC) at para 89), that is both to the Banks and to Airtours. I agree. I also agree with her description of the two distinct supplies in para 42: i) The supply by PwC to [Airtours] of the service of having PwC, after appropriate liaison with the [Airtours] directors and senior management, review, monitor, and validate (if appropriate) its financial statements, budgets, financial performance, EPM, arrangements with the CAA etc and report on such matters to the [Banks]. That supply of the service of liaison, review etc, and reporting to the [Banks] was provided to [Airtours] pursuant to the Contract which conferred a contractual right on [Airtours] to have such work carried out for the purposes of PwC reporting to the [Banks]. As Lord Millett pointed out in Redrow at 418G, the grant of such a right (ie the right to have services rendered to a third party) is itself a supply of services. The supply of that service, pursuant to the Contract, was for a consideration payable by the appellant. ii) The supply by PwC to the [Banks] of the service of reporting on, monitoring and advising in relation to [Airtours] financial statements, budgets, financial performance, EPM, arrangements with the CAA etc in other words the provision to them of the Services as defined in the Engagement Letters in order to enable the [Banks] to decide whether to continue their credit facilities to [Airtours]. This supply was also made pursuant to the Contract but it was made in circumstances in which the [Banks] incurred no liability or contractual obligation to PwC to pay for the supply. Gloster LJ went on to analyse first the Contract and then the economic realities and concluded that both led to the same conclusion, namely that to treat the Banks as the only entities supplied with the services of PwC was much too narrow a view. I agree. Airtours was at least as much a beneficiary of the services provided by PwC as were the Banks. The particular factors (all included in Gloster LJs analysis of the Contract in paras 44 53 and of the wider economic realities in paras 54 55) which have persuaded me that her analysis is correct are these. While I am not sure that I would go so far as saying that the words you and your as used in the Contract always include Airtours (although it is certainly arguable that they do), that is not to my mind critical. I agree with Gloster LJ (in her para 46) that, as a matter of construction of the Contract, and on analysis of the economic realities of the surrounding commercial arrangements, the appellant had a contractual right to require [her emphasis] that the Services, which were described in the various Engagement Letters and which both the [Banks] and [Airtours] had agreed, were indeed provided by PwC to the [Banks]. I further agree with Gloster LJ in her para 47 that it is wrong to say that there was no provision in the Contract to support Airtours assertion that it had a right to require PwC to provide services to the Banks and that Airtours under the tripartite arrangement was simply to make payment to PwC for the provision of services to the Engaging Institutions. As Gloster LJ put it, that approach disregards the reciprocal obligations entered into on the part of each of Airtours and PwC under the Contract and the commercial reality of the arrangements. Again as she put it, the absence of an express term specifically stating that Airtours had a right to insist on PwC providing the Services to the Banks is irrelevant. The clear and necessary implication from the express terms of the Contract is that Airtours had such a right. I agree with these conclusions in Gloster LJs para 48: Although it may have been the case that PwC was originally approached by the [Banks] it is clear from the facts as found by the FTT that [Airtours] not only had positively to consent to the appointment of PwC but also that it had an input into the decision to choose PwC rather than another firm. [Airtours] also had to agree that PwC would have unrestricted access to its books and records and that [Airtours] directors and senior management would positively co operate with PwC in the provision of information; see for example the appellants confirmation of the November 2002 Letter of Engagement and paragraph 2 of the Terms and Conditions. As reflected in both para 6 and para 12 of the November 2002 Letter of Engagement, the commercial reality was that one of the contracting parties requesting PwC to carry out the work was indeed [Airtours] itself. If [Airtours] had not joined in the request and agreed to PwCs appointment, and the scope of its work, the assignment would have taken a very different form since PwC would have had no contractual right to access to [Airtours] books and records or to cooperation from its directors and senior management. It is also relevant in this context that the evidence showed that at each stage the scope of the work to be carried out by PwC was agreed by all three parties, namely [Airtours], the [Banks] and PwC. Thus although a distinction can be drawn with the factual scenario in Redrow where the taxpayer itself selected and gave instructions to the estate agents, which could not be countermanded by the house owners those factors are not sufficient in my judgment to prevent their being two distinctive services in the present case. As Gloster LJ put it in her para 49, while of course the Banks required the provision of the Services (as defined) for the purposes of their business in order to inform their decision as to whether to continue financial facilities to Airtours, Airtours itself also clearly required PwC to provide the Services (as defined) to the Banks for the purposes of Airtours own business in order to persuade the Banks and other financial institutions to continue the loan facilities to Airtours and to ensure that its bonding arrangements with the CAA were maintained. Unless the Services were provided to the Banks, Airtours had little hope of obtaining any extension of its facilities. A good report by PwC was critical to Airtours future relationship with the Banks and thus to its future more generally. It is true that PwCs report might have been damaging to Airtours interests but, as Gloster LJ put it at the end of her para 49, it necessarily had to take that risk. In truth the value of PwCs services was as great to Airtours as it was to the Banks. Hence the part played by Airtours in the selection of PwC and a number of important aspects of the letter of engagement and terms and conditions, which are set out in some detail by Lord Neuberger and Gloster LJ. It is common ground that the Contract was a tripartite agreement. It is true that para 4 of the letter of engagement provided that PwCs report and letters were for the sole use of the Banks and that it expressly provided that PwC would assume a duty of care to the Banks provided that they individually agreed to it. Paragraph 8 provided that information and advice would be information and advice would be addressed to the Banks with a copy to the directors of the Group, with the exception of any part of the report prepared exclusively or confidentially for the Banks. Moreover, it is also true that para 9 expressly provided the PwC had a duty of care to the Banks relating to the contents of the Phase 1 report. I do not however read any of those provisions as negativing a duty of care owed to Airtours. On the contrary, para 4 seems to me to cater only for the Banks and the purpose of making information and advice, other than that prepared exclusively or confidentially for the Banks, available to Airtours can surely only have been to allow Airtours to rely upon it. As I see it, the only purpose of the clause was to exclude specific confidential matter. Paragraph 10 expressly contemplated the possibility of PwCs liability to Airtours because it expressly provided for a limitation of it. There would have been no need for a provision limiting liability if no duty of care was owed to Airtours. Paragraphs 12 to 16 set out the scope of PwCs services, which identified the extensive basis of the contribution to be made by Airtours. Indeed, paras 15 and 16 included express provisions requiring Airtours management to provide information and to be responsible in specific respect. Airtours was also of course responsible for PwCs fees. Further, there were these important provisions in paragraph 26 under the heading Terms and Conditions: 26. The attached terms and conditions (the Terms and Conditions have been agreed between the parties and set out the duties of each party in respect of the Services. The Terms and Conditions provide among other matters: i) ii) the Group will indemnify us against claims brought by any third party. For the avoidance of doubt, the reference to you in clause 10 of the Terms and Conditions (and only in that clause) refers to the Group and not the [Banks]; and our aggregate liability to the Group, the [Banks] and any other third party to whom we later agree to assume a duty of care taken together, whether in contract, negligence or any other tort, will be limited in accordance with clause 9.4 of the Terms and Conditions. For this purpose, our liability in respect of Phase 1 of the Services will in no circumstances exceed 10m. In the event that you request and we agree to provide services beyond Phase 1, the financial limit of our aggregate liability will increase to 25m in respect of the Services and any additional services we provide to you. iii) The Letter of Engagement and the Terms and Conditions are together referred to as the Contract, and evidence the entire agreement between the parties. For the avoidance of doubt, the [Banks] and the Group both agree to all the terms contained in the Contract. Those provisions strongly support the conclusion that it was agreed that PwC owed a duty of care both to the Banks and to Airtours, as one would expect in the light of the substantive obligations of PwC in a Contract which was for the benefit of both Airtours and the Banks. These conclusions are essentially the same as those set out by Gloster LJ in her paras 50 to 53. See in particular the first sentence of para 50 and also the last sentence of para 51, where she said that it seemed to her to be inconceivable that Airtours did not have an implied correlative contractual right to insist upon due and proper performance by PwC of its obligations under the contract. I also agree with her conclusion to similar effect in para 52. If this conclusion is correct, as I believe it to be, it follows from HMRCs concession referred to in para 22 of Lord Neubergers judgment, that there has been a supply of services to by PwC to Airtours as well as to the Banks. Having correctly considered first the contractual position, Gloster LJ turned to the wider economic realities of the situation. For the reasons I have already given, I agree with her that, as she put it in her para 55, as part of the exercise of looking at the economic reality as to whether a supply was made to a taxpayer, it is relevant to see what, if any, value the taxpayer obtained from the alleged supply. I also agree with her that there is no doubt that, on the evidence as accepted by the FTT, PwCs review, monitoring and (in the event) endorsement of the appellants financial statements, projections and financial position, PwCs liaison with the appellants directors and senior management and its assistance in securing the consequential continuing financial support of the Engaging Institutions, was intended to play, and did indeed play, a critical role in the maintenance of the appellants licence with the CAA and therefore the survival of its business. As she says, put another way, Airtours right to have PwC carry out this work provided real additional value to Airtours in its struggle for financial survival. The presentation to the Banks of Airtours own figures, without review or validation by an independent third party such as PwC, would have been highly unlikely in the circumstances to have satisfied the Banks and other financial institutions, which were considering the possible continuation of credit facilities. Finally, I agree with Gloster LJ that the arrangements between the parties, affording as they did the undoubted consequential benefits to Airtours, clearly involved the supply of economically valuable services to the appellant by PwC as well as the provision of distinct services to the Banks. For these reasons I would allow the appeal. LORD CARNWATH: (dissenting) (with whom Lord Clarke agrees) I gratefully adopt Lord Neubergers exposition of the facts and law. I regret that I am unable to agree with his conclusion. Since I understand that I am in a minority, I will state my reasons briefly, particularly as, like Lord Clarke, I am in general agreement with the much fuller reasoning of Gloster LJ in the Court of Appeal. The issue in short is whether the payments made by Airtours were simply third party consideration for services provided by PwC exclusively to the Banks, or whether they were at the same time consideration for services provided to Airtours itself. As the extracts cited by Lord Neuberger (paras 44 46) make clear, the contractual position is a useful starting point, but not necessarily conclusive; in the words of Lord Hope in Revenue and Customs Comrs v Loyalty Management UK Ltd [2013] STC 784, para 110, such a case requires a more careful and sensitive analysis, having regard to the economic realities of the transaction when looked at as a whole. To rest on a narrow legalistic approach to the construction of the contract seems particularly inappropriate in a case where the distinction between services to Airtours and services to the Banks is unlikely to have been seen as of any practical significance to the parties, and probably for that reason was not addressed in detail in that contract. Nor was it ever put to the test. Once PwC had been engaged, there was never any question of its not completing its task, with the co operation of both Airtours and the Banks, and for the benefit of both. A hypothetical analysis of how the contract might have been given effect in circumstances which were never contemplated and never happened, seems a sterile exercise. As Lord Reed points out in the Loyalty Management case at para 67, the normal expectation is that a commercial business paying a supplier is paying for a right to something, even if that something is a supply to another party. In the present case, that expectation is reinforced by a number of considerations: i) In October 2002 Airtours was in serious financial difficulties and needed something done quickly to ensure its own commercial survival. PWCs involvement was essential to the achievement of that objective, and Airtours was willing to pay for it. It was entitled to expect a correlative commitment from PwC, and, had the issue arisen, it is hard to see any reason why it would have been resisted. ii) The letter of engagement seems to me to acknowledge (as was the fact) that Airtours were party to the request to PwC to provide the services. I agree with the First tier Tribunal and Gloster LJ that you in para 6 (request for assistance) and 12 (request to undertake a review) includes Airtours. This is apparent from para 26(i) which limits you to the Group in respect of clause 10 of the terms (indemnity), thereby implying that elsewhere it refers to both the Group and the Engaging institutions. iii) Although the terms of the contract are in some respects equivocal, it is not in dispute that Airtours was a fully contracting party. It is possible, but in my view artificial, to read that as limited to its obligations to pay and indemnify. The terms of its confirmation letter (taken with para 30 of the principal engagement letter), make clear that it was accepting the terms of [PwCs] engagement as set out in that letter. This implies that PwC was engaged to Airtours, no less than to the Banks. The strongest pointer in this direction, in my view, lies in the provisions for the timetable (clause 19). It is clear that timing for the initial work was critical and very tight. The first agreement was signed on 5 November 2002, but the commencement of the work was fixed for 2 November, three days earlier. The first draft of findings was to be available for discussion with Airtours management on 15 November, and with the Banks on the 18 November. Timing for later phases were to be agreed before each phase commences. (That must in my view imply agreement with both Airtours and the Bank, since the co operation of both would be essential to the fulfilment of any agreed timetable; and I see no reason why any such agreed timetable should not be envisaged as open to enforcement by either party.) The first payment by Airtours, a retainer of 200,000, had to be made on commencement. It is legitimate to ask what would have happened if, having paid its 200,000 on 2 November in the expectation of receiving a draft PwC report 13 days later, Airtours had been faced with a failure by PwC to do anything. On Lord Neubergers interpretation of the contract it would have had no enforceable right of any kind. I find that impossible to accept, either as a matter of ordinary contractual construction, or still less of economic reality. The timetable in clause 19 was part of the obligations undertaken by PwC under the contract. There is nothing in the contract to suggest that the obligation was not enforceable by Airtours as a party to the contract. Commercial sense clearly dictates that it should be so. For these reasons, in addition to those given by Lord Clarke, I would have allowed the appeal. |
The substantive question in this case is whether it is unlawful discrimination, either on grounds of sexual orientation, or on grounds of religious belief or political opinion, for a bakery to refuse to supply a cake iced with the message support gay marriage because of the sincere religious belief of its owners that gay marriage is inconsistent with Biblical teaching and therefore unacceptable to God. If the prima facie answer to either question is yes, then questions arise as to the rights of the bakery and its owners to freedom of religion and freedom of expression, under articles 9 and 10 of the European Convention on Human Rights, and what difference, if any, those rights might make to that prima facie answer. At first instance in the county court, the district judge held that there was direct discrimination, both on grounds of sexual orientation and on grounds of religious belief or political opinion, and that it was not necessary to read down the relevant legislation to make it compatible with the bakery owners rights under articles 9 and 10 of the Convention. The bakery and its owners appealed by way of case stated, raising seven questions, to the Northern Ireland Court of Appeal. The Court of Appeal only found it necessary to answer two questions, holding that there was direct discrimination on grounds of sexual orientation and that it was not necessary to read down the legislation to take account of the bakery owners beliefs. The bakery and its owners wish to appeal to this court. The Attorney General for Northern Ireland intervened in the proceedings in the Court of Appeal in order to challenge the validity of the relevant legislation. In Northern Ireland, discrimination in the provision of goods, facilities or services on the ground of religious belief or political opinion is prohibited by the Fair Employment and Treatment (Northern Ireland) Order 1998 (SI 1998/3162 (NI 21)) (FETO), made by Her Majesty in Council under the Northern Ireland Act 1974. Discrimination in the provision of goods, facilities or services on grounds of sexual orientation is prohibited by the Equality Act (Sexual Orientation) Regulations (Northern Ireland) 2006 (SI 2006/439) (SOR), made by the Office of the First Minister and deputy First Minister of Northern Ireland under the Equality Act 2006, an Act of the United Kingdom Parliament. The Attorney General for Northern Ireland questions the validity of both of those prohibitions, insofar as they impose civil liability for the refusal to express a political opinion or express a view on a matter of public policy contrary to the religious belief of the person refusing to express that view. However, this court can only answer the substantive questions if it has jurisdiction to entertain them, either by way of an appeal from the Northern Ireland Court of Appeal or by way of a reference made by the Attorney General for Northern Ireland. Issues arise in relation to both. Appeals from the county court to the Court of Appeal are governed by the County Courts (Northern Ireland) Order 1980 (SI 1980/397 (NI 3)) and appeals from the Court of Appeal to this court in civil cases are governed by section 42 of the Judicature (Northern Ireland) Act 1978. Put shortly, article 61(7) of the Order provides that the decision of the Court of Appeal on an appeal by way of case stated shall be final and section 42(6) of the 1978 Act precludes an appeal to this court in such cases; but section 42(6) contains an exception for cases which involve any question as to the validity of a provision made by or under an Act of the Northern Ireland Parliament or Assembly. FETO is such a provision but the SORs, having been made under an Act of the United Kingdom Parliament, are not. Under paragraph 33 of Schedule 10 to the Northern Ireland Act 1998, the Attorney General has power to require any court or tribunal to refer to this court any devolution issue which has arisen in proceedings before it to which he is a party. The Attorney General gave such a notice after judgment had been handed down by the Court of Appeal but before its order had been drawn up. The Court of Appeal declined to make the reference on the ground that the proceedings were at an end. Under paragraph 34 of Schedule 10, the Attorney General also has power to refer to this court any devolution issue which is not the subject of proceedings. Accordingly, by his first reference, he has referred to us the questions outlined in para 3 above. However, by his second reference, he has also referred to us the question whether the Court of Appeal should have made the reference under paragraph 33 when required by him to do so. No problem arises as to the validity of the references under paragraph 34, but the answers given by this court would have no effect upon the outcome of the proceedings in Northern Ireland. The matter may be different, however, if the Court of Appeal should have made the reference but failed to do so, because this raises questions as to validity of that courts decision in the case. For the reasons given in a judgment prepared by Lord Mance we have concluded that this Court does have jurisdiction to determine an appeal brought by the bakery and its owners, as well as the Attorney Generals two references. Accordingly we give them permission to appeal as the substantive questions raised are undoubtedly of general public importance, not only in Northern Ireland but also in the rest of the United Kingdom. This judgment is arranged as follows. Part I gives an account of the facts and the outcome of the proceedings so far. Part II discusses the claim for discrimination on grounds of sexual orientation under the SORs. Part III discusses the claim for The facts discrimination on grounds of political opinion under FETO. Part IV discusses the impact of the Convention rights on such a claim. Mr and Mrs McArthur have run a bakery business since 1992. Their son Daniel is now the general manager. They have six shops, a staff of about 65 people, and they also offer their products on line throughout the UK and the Republic of Ireland. Since 2004, the business has been run through Ashers Baking Company Ltd. The name was derived from Genesis 49:20: Bread from Asher shall be rich and he shall yield royal dainties. The McArthurs are Christians, who hold the religious beliefs that: the only form of full sexual expression which is consistent with (a) Biblical teaching (and therefore acceptable to God) is that between a man and a woman within marriage; and (b) therefore acceptable to God) is that between a man and a woman. the only form of marriage consistent with Biblical teaching (and They have sought to run Ashers in accordance with their beliefs, but this, and the biblical connection of the name, has not been advertised or otherwise made known to the public. Mr Lee is a gay man who volunteers with QueerSpace, an organisation for the LGBT community in Belfast. QueerSpace is not a campaigning organisation, but it supports the campaign in Northern Ireland to enable same sex couples to get married. A motion supporting this was narrowly rejected by the Northern Ireland Assembly on 29 April 2014. Mr Lee was invited to attend a private event organised by QueerSpace at Bangor Castle on Friday 17 May 2014 to mark the end of Northern Ireland anti homophobia week and the political momentum towards same sex marriage. He decided to take a cake to the party. He had previously bought cakes from Ashers shop in Royal Avenue, Belfast, but he was not personally known to the staff or to Mr and Mrs McArthur. He did not know anything about the McArthurs beliefs about marriage and neither they nor their staff knew of his sexual orientation. Ashers offered a Build a Cake service to customers. Customers could request particular images or inscriptions to be iced onto a cake. There was a leaflet advertising this service, with various examples of what could be done, but no religious or political restrictions were mentioned. On 8 or 9 May 2014, Mr Lee went into the shop and placed an order for a cake to be iced with his design, a coloured picture of cartoon like characters Bert and Ernie, the QueerSpace logo, and the headline Support Gay Marriage. Mrs McArthur took the order but raised no objection at the time because she wished to consider how to explain her objection and to spare Mr Lee any embarrassment. Mr Lee paid for the cake. Over the following weekend, the McArthurs decided that they could not in conscience produce a cake with that slogan and so should not fulfil the order. On Monday 12 May 2014, Mrs McArthur telephoned Mr Lee and explained that his order could not be fulfilled because they were a Christian business and could not print the slogan requested. She apologised to Mr Lee and he was later given a full refund and the image was returned to him. The district judge found that, when they refused to carry out the order, the defendants did perceive that Mr Lee was gay and/or associated with others who were gay; but one of the questions raised in the case stated was whether she was correct as a matter of law to make that finding. The Court of Appeal found it unnecessary to answer that question as the District Judge had made no finding that the order was cancelled because Mr Lee was perceived as being gay. Mr Lee made arrangements with another cake provider for a similar cake which he was able to take with him to the party on 17 May. He complained to the Equality Commission for Northern Ireland (the ECNI) about the cancellation of his order. The ECNI have supported him in bringing this claim for direct and indirect discrimination on grounds of sexual orientation, religious belief or political opinion. The Court of Appeal expressed some concern that the correspondence between the ECNI and the bakery may have created the impression that the ECNI was not interested in assisting members of the faith community when they found themselves in difficulties as a result of their deeply held religious beliefs (para 106). It is obviously necessary for a body such as the ECNI to offer its services to all people who may need them because of a protected characteristic and not to give the impression of favouring one such characteristic over others. On 19 May 2015, the Presiding District Judge held that refusing to complete the order was direct discrimination on all three grounds. She also held that the legislation (both the SORs and FETO) was compatible with the Convention rights. She made a declaration to that effect and awarded Mr Lee damages in the agreed sum of 500: [2015] NICty 2. The defendants appealed by way of case stated to the Court of Appeal. The Court of Appeal served a devolution notice and a notice of incompatibility upon the Attorney General, who then became a party to the proceedings. On 24 October 2016, the Court of Appeal handed down judgment dismissing the appeal: [2016] NICA 39. It held that this was a case of associative direct discrimination on grounds of sexual orientation (paras 57 and 58) and that it was not necessary to read down the SORs to take account of the McArthurs Convention rights (para 72). The court did not therefore decide, although it did discuss, the questions arising under political and religious discrimination (para 72). On 28 October 2016, the Attorney General gave notice to the Court of Appeal requiring it to make a reference to this court. The Court of Appeal, in its separate judgment dealing with an appeal to this court, concluded that he had no power to do so because the proceedings had ended. The principal judgment was sealed and filed on 31 October in the form of an order. Hence there are before this court: (i) an application by the defendants for permission to appeal against the order of the Court of Appeal dismissing their appeal from the county court; (ii) a reference by the Attorney General raising the issues relating to the power to make the SORs and the validity of the FETO referred to in para 3 above; and (iii) a further reference by the Attorney General raising the issue of whether he was entitled to require the Court of Appeal to make a reference to this court on 28 October 2016. II The sexual orientation claim The SORs were made by the Office of the First Minister and deputy First Minister under powers given to them by section 82(1), (3), (4) and (5) of the Equality Act 2006 (an Act of the UK Parliament). Regulation 3(1) defines direct discrimination thus: a person (A) discriminates against another person (B) if (a) on grounds of sexual orientation, A treats B less favourably than he treats or would treat other persons; . By regulation 2(2), sexual orientation means a sexual orientation towards (a) persons of the same sex; (b) persons of the opposite sex; (c) persons of the same sex and of the opposite sex. By regulation 5(1), It is unlawful for any person concerned with the provision (for payment or not) of goods, facilities or services to the public or a section of the public to discriminate against a person who seeks to obtain or use those goods, facilities or services (a) by refusing or deliberately omitting to provide him with any of them; Regulation 3(1)(b) and (c) provide definitions of indirect discrimination against persons of a particular sexual orientation. The District Judge held that, if she had not reached a finding of direct discrimination, but found that there was indirect discrimination, she would have concluded that there was no justification for it (para 46). She did not however find that there was indirect discrimination, and it is not easy to see how she could have done so. It is now common ground that this is a case of direct discrimination or nothing. The District Judge did not find that the bakery refused to fulfil the order because of Mr Lees actual or perceived sexual orientation. She found that they cancelled this order because they oppose same sex marriage for the reason that they regard it as sinful and contrary to their genuinely held religious beliefs (para 43). As the Court of Appeal pointed out, she did not take issue with the submission that the bakery would have supplied Mr Lee with a cake without the message support gay marriage and that they would also have refused to supply a cake with the message requested to a hetero sexual customer (para 11). The objection was to the message, not the messenger. Not surprisingly, therefore, Mr Scoffield QC, who appears for the appellants, argues that it was not open to the judge to find that there was direct discrimination on grounds of sexual orientation. The reason for treating Mr Lee less favourably than other would be customers was not his sexual orientation but the message he wanted to be iced on the cake. Anyone who wanted that message would have been treated in the same way. In Islington Borough Council v Ladele [2009] EWCA Civ 1357; [2010] 1 WLR 955, para 29, Lord Neuberger of Abbotsbury MR adopted the words of Elias J in the EAT: It cannot constitute direct discrimination to treat all employees in precisely the same way. By definition, direct discrimination is treating people differently. Mr Scoffield also criticises the comparator chosen by the District Judge. She compared the treatment of Mr Lee, not with a person of different sexual orientation who wanted the same cake, but with a person of different sexual orientation who wanted a different message: support hetero sexual marriage. This, he argues, is inconsistent with regulation 3(1)(a), which requires a comparison with the treatment of other persons, not messages; and with regulation 3(2), which requires that the relevant circumstances in each case must be the same, or not materially different. The District Judge also considered at length the question of whether the criterion used by the bakery was indissociable from the protected characteristic and held that support for same sex marriage was indissociable from sexual orientation (para 42). This is, however, to misunderstand the role that indissociability plays in direct discrimination. It comes into play when the express or overt criterion used as the reason for less favourable treatment is not the protected characteristic itself but some proxy for it. Thus, in the classic case of James v Eastleigh Borough Council [1990] 2 AC 751, the criterion used for allowing free entry to the councils swimming pool was not sex but statutory retirement age. There was, however, an exact correspondence between the criterion of statutory retirement age and sex, because the retirement age for women was 60 and the retirement age for men was 65. Hence any woman aged 60 to 64 could enter free but no man aged 60 to 64 could do so. Again, in Preddy v Bull [2013] UKSC 73; [2013] 1 WLR 3741, letting double bedded rooms to married couples but not to civil partners was directly discriminatory because marriage was (at that time) indissociable from hetero sexual orientation. There is no need to consider that question in this case, as the criterion was quite clear. But even if there was, there is no such identity between the criterion and sexual orientation of the customer. People of all sexual orientations, gay, straight or bi sexual, can and do support gay marriage. Support for gay marriage is not a proxy for any particular sexual orientation. Against these powerful points, it is argued that this is a case of associative discrimination. In most direct discrimination cases, the argument is that a person has been less favourably treated because of his own protected characteristic. Indeed, the Explanatory Memorandum to the Northern Ireland SORs, at para 7.2, states that The regulations will protect people from direct discrimination, ie where a person treats another person less favourably because of his sexual orientation. However, regulation 3(1)(a) is not limited to less favourable treatment on the grounds of the sexual orientation of that person (see para 20 above). There is no his or her in the definition. This leaves open the possibility that a person may be less favourably treated because of another persons sexual orientation. The question is how far that possibility extends. The Court of Appeal held that this was a case of association with the gay and bisexual community and the protected personal characteristic was the sexual orientation of that community (para 58). This suggests that the reason for refusing to supply the cake was that Mr Lee was likely to associate with the gay community of which the McArthurs disapproved. But there was no evidence that the bakery had discriminated on that or any other prohibited ground in the past. The evidence was that they both employed and served gay people and treated them in a non discriminatory way. Nor was there any finding that the reason for refusing to supply the cake was that Mr Lee was thought to associate with gay people. The reason was their religious objection to gay marriage. The classic example of associative discrimination is the case of Coleman v Attridge Law (Case C 303/06) [2008] ICR 1128, in the European Court of Justice. The claimant had a disabled son and was treated less favourably than others because her son was disabled. In that case, there was a specific identified person whose disability, the protected characteristic, was the reason for the less favourable treatment. In English v Thomas Sanderson Blinds Ltd [2009] ICR 543, the applicant complained of harassment at work, because he was repeatedly taunted as if he were gay when in fact he was not. The Court of Appeal held, by a majority, that this was harassment on grounds of sexual orientation. The fact that he was not in fact gay made no difference. As Sedley LJ put it, at para 38: If, as is common ground, tormenting a man who is believed to be gay but is not amounts to unlawful harassment, the distance from there to tormenting a man who is being treated as if he were gay when he is not is barely perceptible. In both cases the mans sexual orientation, in both cases imaginary, is the basis that is to say, the ground of the harassment. There was, however, a powerful dissenting judgment from Laws LJ, who said this at para 21: In my judgment, harassment is perpetrated on grounds of sexual orientation only where some person or persons actual, perceived, or assumed sexual orientation gives rise to it, that is, is a substantial cause of it. [Counsels] case confuses the reason for the conduct complained of with the nature of that conduct. On the facts the reason for the harassment was nothing to do with anyones actual, perceived, or assumed sexual orientation. It happened to take the form of homophobic banter so called, which was thus the vehicle for teasing or tormenting the claimant. It is of some interest, although not a guide to interpretation, that the Explanatory Notes to the Equality Act (Sexual Orientation) Regulations 2007 (SI 2007/1263), which applied in Great Britain, go further than the Memorandum to the Northern Ireland SORs. Para 7.3 states that direct discrimination is when a person treats another person less favourably on the grounds of his/her sexual orientation, or what is believed to be his/her sexual orientation, or the sexual orientation/perceived sexual orientation of another person with whom they associate. That is very far from saying that, because the reason for the less favourable treatment has something to do with the sexual orientation of some people, the less favourable treatment is on grounds of sexual orientation. There must, in my view, be a closer connection than that. Nor would I agree with the Court of Appeal that the benefit from the message or slogan on the cake could only accrue to gay or bisexual people (para 58). It could also accrue to the benefit of the children, the parents, the families and friends of gay people who wished to show their commitment to one another in marriage, as well as to the wider community who recognise the social benefits which such commitment can bring. This was a case of associative discrimination or it was nothing. It would be unwise in the context of this particular case to attempt to define the closeness of the association which justifies such a finding. Not only did the District Judge not make such a finding in this case, the association would not have been close enough for her to do so. In a nutshell, the objection was to the message and not to any particular person or persons. In reaching the conclusion that there was no discrimination on grounds of sexual orientation in this case, I do not seek to minimise or disparage the very real problem of discrimination against gay people. Nor do I ignore the very full and careful consideration which was given to the development of the law in this area, to which Mr Allen QC drew our attention at considerable length. Everyone, as article 1 of the Universal Declaration of Human Rights put it 70 years ago is born free and equal in dignity and rights. Experience has shown that the providers of employment, education, accommodation, goods, facilities and services do not always treat people with equal dignity and respect, especially if they have certain personal characteristics which are now protected by the law. It is deeply humiliating, and an affront to human dignity, to deny someone a service because of that persons race, gender, disability, sexual orientation or any of the other protected personal characteristics. But that is not what happened in this case and it does the project of equal treatment no favours to seek to extend it beyond its proper scope. It follows that there is no need to consider whether it is necessary to read down the SORs to take account of the appellants Convention rights or indeed to consider whether there was power to make them. The SORs do not, at least in the circumstances of this case, impose civil liability for the refusal to express a political opinion or express a view on a matter of public policy contrary to the religious belief of the person refusing to express that view. III The political beliefs claim Protection against direct discrimination on grounds of religious belief or political opinion has constitutional status in Northern Ireland. The Government of Ireland Act 1920, which established the Parliaments of Northern and Southern Ireland, prohibited both Parliaments from making any law which prohibited the free exercise of religion, gave preference, privilege or advantage, or imposed disability or disadvantage on account of religious belief and provided that any such law would be void (section 5). This was to protect the Protestant minority in the South and the Roman Catholic minority in the North. The Northern Ireland Constitution Act 1973 provided that certain types of legislation applicable in Northern Ireland should be void, to the extent that it discriminated against any person or class of persons on the ground of religious belief or political opinion (section 17(1)). This was principally designed for the legislation of the Northern Ireland Assembly, established under the Northern Ireland Assembly Act 1973, but also applied retrospectively to Acts of the Northern Ireland Parliament and prospectively to the power to legislate for Northern Ireland by Order in Council under the Northern Ireland Act 1974, while direct rule was in force (paragraph 1(1)(b) of Schedule 1 to the 1974 Act). This limitation is recognised and expressly preserved in the Northern Ireland Act 1998 (paragraph 21 of Schedule 14 to that Act). The 1998 Act also prohibits the Northern Ireland Assembly, established under that Act, and a Minister or Northern Ireland department, from making any legislation or doing any act which discriminates on the ground of religious belief or political opinion (sections 6(2)(e) and 24(1)(c)). The discrimination thus prohibited is direct. The Northern Ireland Constitution Act 1973 provides that legislation discriminates against any person or class of persons if it treats that person or that class less favourably in any circumstances than other persons are treated in those circumstances by the law for the time being in force in Northern Ireland (1973 Act, section 23(1)). The 1998 Act adopts the same definition of a discriminatory law (section 98(4)). FETO was made by Her Majesty under powers conferred by paragraph 1 of Schedule 1 to the Northern Ireland Act 1974, having been approved in draft by both Houses of Parliament. Article 3(1), so far as relevant, defines direct discrimination: (a) discrimination on the ground of religious belief or political opinion. By article 28(1), It is unlawful for any person concerned with the provision (for payment or not) of goods, facilities or services to the public or a section of the public to discriminate against a person who seeks to obtain or use those goods, facilities or services (a) by refusing or deliberately omitting to provide him with any of them; . Article 3(2) and 3(2A) (as inserted by regulation 4 of the Fair Employment and Treatment Order (Amendment) Regulations (Northern Ireland) 2003 (SR 2003/520) define indirect discrimination on the ground of religious belief or political opinion, but as with the sexual orientation claim, it is not now argued that this is a case of indirect discrimination. Three questions therefore rise on this aspect of the claim: (i) Did the bakery discriminate against Mr Lee on the grounds of his political opinions by refusing to supply him with a cake iced with this particular message? If it did, is FETO invalid, or should it be read down under section 3(1) (ii) of the Human Rights Act 1998, as incompatible with the rights of freedom of religion and freedom of expression protected by articles 9 and 10 of the European Convention? (iii) If the answer to (i) is yes and the answer to (ii) is no, is FETO invalid under section 17(1) of the Northern Ireland Constitution Act 1974 to the extent that it imposes civil liability for refusing to express a political opinion contrary to the religious belief of the person refusing to express that view? As already mentioned, the Court of Appeal did not find it necessary to answer these questions. The District Judge held that support for gay marriage was a political opinion for this purpose (para 54). There was a political debate going on in Northern Ireland at the time about whether same sex couples should be allowed to marry in Northern Ireland as they are in the rest of the United Kingdom. The Assembly had debated a motion calling for same sex marriage three times over a period of 18 months and had rejected it for a third time only the week before. Political opinion is not defined in the legislation, but in McKay v Northern Ireland Public Service Alliance [1994] NI 103, it was defined as an opinion relating to the policy of government and matters touching the government of the state (Kelly LJ at p 117) and in Ryder v Northern Ireland Policing Board [2007] NICA 43, it was said that the type of political opinion must be one relating to the conduct of the government of the state or matters of public policy (Kerr LCJ, at para 15). There is no need for an association with a particular political party or ideology, although no doubt that would also count. I see no reason to doubt that support for gay marriage is indeed a political opinion for this purpose. However, it is not entirely clear on what basis the District Judge upheld this aspect of the claim. She clearly held, in two places, that the reason why the order had not been fulfilled was the McArthurs religious belief (paras 43 and 57). Among the arguments presented to her on behalf of Mr Lee was that it was immaterial whether the bakery knew of Mr Lees religious belief or political opinion, because under the 1998 Order, discrimination can take place on the grounds of the discriminators religious belief and political opinion (para 47(7)). Not surprisingly, Mr Scoffield, for the bakery, argues that this cannot be right. The purpose of discrimination law is to protect a person (or a person or persons with whom he is associated) who has a protected characteristic from being treated less favourably because of that characteristic. The purpose is not to protect people without such a characteristic from being treated les favourably because of the protected characteristic of the alleged discriminator. This was reflected, for example, in section 45(1) of the Equality Act 2006 which made it clear that the discrimination has to be on the ground of the religion or belief of someone other than the alleged discriminator. It is also a well established principle of equality law that the motive of the alleged discriminator is irrelevant: see, R (E) v Governing Body of JFS [2009] UKSC 15; [2010] 2 AC 728, eg at paras 13 20, citing R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] AC 1155 and James v Eastleigh Borough Council [1990] 2 AC 751. In In re Northern Ireland Electricity Services Application [1987] NI 271, Nicholson J did observe obiter that the words of section 16(2) of the Fair Employment (Northern Ireland) Act 1976, which are essentially the same as those in article 3(2)(a) of FETO, were capable of being read widely enough to encompass acts done based on the religious belief or political opinion of the person doing the act. There are similar dicta in In re ONeills Application [1995] NI 274, at 279 280, and in Ryder v Northern Ireland Policing Board [2007] NICA 43, para 11. However, such a reading would be inconsistent with article 3(2)(a) which requires a comparison between the person receiving the less favourable treatment and other persons: this would not be possible if the treatment were on the grounds of the discriminators beliefs because everyone would be treated alike. It would also be inconsistent with the definition of indirect discrimination, which requires, in article 3(2)(b)(ii), that the discriminator cannot show that the requirement or condition with which the person to whom it is applied cannot comply is justifiable irrespective of the religious belief or political opinion of the person to whom it is applied. Another pointer are the exemptions in article 31(3)(a) and (4)(a) for goods, facilities and services provided by a religious denomination or political party, the essential nature of which requires them to be provided only to persons holding or not holding a particular belief or opinion. For all those reasons, of policy, principle and language, in my view the less favourable treatment prohibited by FETO must be on the grounds of religious belief or political opinion of someone other than the person meting out that treatment. To the extent that the District Judge held that the bakery had discriminated unlawfully because of its owners religious beliefs she was wrong to do so. However, that may not be an entirely fair reading of her judgment. She rejected the submission that the bakery had no reason to know about Mr Lees political opinions (paras 59, 60). They clearly did know that he supported gay marriage, because of the message he wanted on the cake. The [McArthurs] disagreed with the religious belief and political opinion held by [Mr Lee] with regard to a change in the law to permit gay marriage and, accordingly, by their refusal to provide the services sought, treated [him] less favourably contrary to the law (para 66). It was only if she had been persuaded by the submission that the defendants were not aware of Mr Lees religious belief and/or political opinion or the religious belief and political opinions of those with whom he associated, that she would have found that there had been discrimination on the ground of the McArthurs own beliefs (para 67). It is unfortunate that she referred to both religious beliefs and political opinions in making these findings, because there appears to have been no evidence of Mr Lees religious beliefs. Once a claim based on the McArthurs religious beliefs is dismissed, the claim must be made, if at all, on the basis of his political opinion. But those passages do suggest that the District Judge was holding that Mr Lee was treated less favourably because of his political opinion as well as because of the McArthurs religious beliefs. It may well be that the answer to this question is the same as the answer to the claim based on sexual orientation. There was no less favourable treatment on this ground because anyone else would have been treated in the same way. The objection was not to Mr Lee because he, or anyone with whom he associated, held a political opinion supporting gay marriage. The objection was to being required to promote the message on the cake. The less favourable treatment was afforded to the message not to the man. It was not as if he were being refused a job, or accommodation, or baked goods in general, because of his political opinion, as for example, was alleged to have happened in Ryder v Northern Ireland Policing Board. The evidence was that they were quite prepared to serve him in other ways. The situation is not comparable to people being refused jobs, accommodation or business simply because of their religious faith. It is more akin to a Christian printing business being required to print leaflets promoting an atheist message. However, there is here a much closer association between the political opinions of the man and the message that he wishes to promote, such that it could be argued that they are indissociable for the purpose of direct discrimination on the ground of political opinion. This would not always be the case, because the person ordering a particular message may in fact be indifferent to it. But in this case Mr Lee was perceived as holding the opinion in question. It becomes appropriate, therefore, to consider the impact of the McArthurs Convention rights upon the meaning and effect of FETO. IV The Convention Rights The Convention rights to freedom of thought, conscience and religion and freedom of expression are clearly engaged by this case. Article 9(1) provides that Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief and freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance. Article 9(2) permits limitations on the freedom to manifest ones religion or beliefs but not on the freedom to hold them. In its first case dealing with article 9, Kokkinakis v Greece (1993) 17 EHRR 397, para 31, the European Court of Human Rights expressed the importance of the right in a passage which has been much cited since: As enshrined in article 9, freedom of thought, conscience and religion is one of the foundations of a democratic society within the meaning of the Convention. It is, in its religious dimension, one of the most vital elements that go to make up the identity of believers and their conception of life, but it is also a precious asset for atheists, agnostics, sceptics and the unconcerned. The pluralism indissociable from a democratic society, which has been dearly won over the centuries, depends on it. One is free both to believe and not to believe. Furthermore, obliging a person to manifest a belief which he does not hold has been held to be a limitation on his article 9(1) rights. In Buscarini v San Marino (1999) 30 EHRR 208, the Grand Chamber held that it was a violation of article 9 to oblige non believers to swear a Christian oath as a condition of remaining members of Parliament. The court reiterated that freedom of thought, conscience and religion entails, inter alia, freedom to hold or not to hold religious beliefs and to practise or not to practise a religion (para 34). The Judicial Committee of the Privy Council took the same view in Commodore of the Royal Bahamas Defence Force v Laramore [2017] UKPC 13; [2017] 1 WLR 2752. The Board held that a Muslim petty officer had been hindered in the exercise of his constitutional right to freedom of conscience when he was obliged, on pain of disciplinary action, to remain present and doff his cap during Christian prayers at ceremonial parades and at morning and evening colours. This was a sufficiently active participation to hinder the claimant in the enjoyment of his conscientious beliefs. Nor had any justification been shown for it. The freedom not to be obliged to hold or to manifest beliefs that one does not hold is also protected by article 10 of the Convention. Article 10(1) provides that Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. The right to freedom of expression does not in terms include the right not to express an opinion but it has long been held that it does. A recent example in this jurisdiction is RT (Zimbabwe) v Secretary of State for the Home Department [2012] UKSC 38; [2013] 1 AC 152. The issue was whether asylum seekers should be sent back to Zimbabwe where they would face a real risk of persecution if they refused to demonstrate positive support for the then regime in that country. Citing, among other cases, both Kokkinakis and Buscarini, Lord Dyson held that the principle applied as much to political opinions as it did to religious belief: Nobody should be forced to have or express a political opinion in which he does not believe (para 42). The respondent suggests that the jurisprudence in relation to compelled speech has been developed principally in the United States as a result of the First Amendment. There is indeed longstanding Supreme Court authority for the proposition that the right to freedom of thought protected by the First Amendment against state action includes both the right to speak freely and the right to refrain from speaking at all: see Wooley v Maynard 430 US 705, 714, per Burger CJ, citing Board of Education v Barnette (1943) 319 US 624, 633 634. But in the light of Laramore and RT (Zimbabwe), and the Strasbourg case law on which they are based, it cannot seriously be suggested that the same principles do not apply in the context of articles 9 and 10 of the Convention. The District Judge did not accept that the defendants were being required to promote and support a campaign for a change in the law to enable same sex marriage (paras 40 and 62). The Court of Appeal, while not deciding the point, appears to have agreed with this: the fact that a baker provides a cake for a particular team or portrays witches on a Halloween cake does not indicate any support for either (para 67). These are, in fact, two separate matters: being required to promote a campaign and being associated with it. As to the first, the bakery was required, on pain of liability in damages, to supply a product which actively promoted the cause, a cause in which many believe, but a cause in which the owners most definitely and sincerely did not. As to the second, there is no requirement that the person who is compelled to speak can only complain if he is thought by others to support the message. Mrs McArthur may have been worried that others would see the Ashers logo on the cake box and think that they supported the campaign. But that is by the way: what matters is that by being required to produce the cake they were being required to express a message with which they deeply disagreed. Articles 9 and 10 are, of course, qualified rights which may be limited or restricted in accordance with the law and insofar as this is necessary in a democratic society in pursuit of a legitimate aim. It is, of course, the case that businesses offering services to the public are not entitled to discriminate on certain grounds. The bakery could not refuse to provide a cake or any other of their products to Mr Lee because he was a gay man or because he supported gay marriage. But that important fact does not amount to a justification for something completely different obliging them to supply a cake iced with a message with which they profoundly disagreed. In my view they would be entitled to refuse to do that whatever the message conveyed by the icing on the cake support for living in sin, support for a particular political party, support for a particular religious denomination. The fact that this particular message had to do with sexual orientation is irrelevant to the FETO claim. Under section 3(1) of the Human Rights Act 1998, all legislation is, so far as it is possible to do so, to be read and given effect in a way which is compatible with the Convention rights. I have already indicated my doubts about whether this was discrimination against Mr Lee on the grounds of his political opinions, but have acknowledged the possibility that it might be. But in my view, FETO should not be read or given effect in such a way as to compel providers of goods, facilities and services to express a message with which they disagree, unless justification is shown for doing so. As the courts below reached a different conclusion on this issue, they did not have to consider the position of the company separately from that of Mr and Mrs McArthur. It is the case that in X v Switzerland (Application No 7865/77), Decision of 27 February 1979, and in Kustannus Oy Vapaa Ajattelija Ab v Finland (Application No 20471/92), Decision of 15 April 1996, the European Commission of Human Rights held that limited companies could not rely upon article 9(1) to resist paying church taxes. In this case, however, to hold the company liable when the McArthurs are not would effectively negate their convention rights. In holding that the company is not liable, this court is not holding that the company has rights under article 9; rather, it is upholding the rights of the McArthurs under that article. Had the conclusion been otherwise, it would of course have raised the constitutional question referred to us by the Attorney General. In the event, it is not necessary to address that question. Postscript After the hearing in this case, while this judgment was being prepared, the Supreme Court of the United States handed down judgment in Masterpiece Cakeshop Ltd v Colorado Civil Rights Commission (unreported) 4 June 2018. The facts are not the same. A Christian baker refused to create a wedding cake for a gay couple because of his opposition to same sex marriage. There is nothing in the reported facts to suggest that the couple wanted a particular message or decoration on their cake. The Colorado Civil Rights Commission, upheld by the Colorado courts, held that the baker had violated the Colorado law prohibiting businesses which offered sales or services to the public from discrimination based on sexual orientation. The baker complained that this violated his First Amendment rights to freedom of speech and the free exercise of his religion. The majority held that the delicate question of when the free exercise of his religion must yield to an otherwise valid exercise of state power needed to be determined in an adjudication in which religious hostility on the part of the state itself would not be a factor in the balance the state sought to reach. When the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires. The majority recognised that businesses could not generally refuse to supply products and services for gay weddings; but they acknowledged that the baker saw creating a wedding cake as an expressive statement involving his First Amendment rights; and contrasted the treatment that he had received, which they perceived as hostile, from the favourable treatment given to three bakers who had refused to produce cakes with messages demeaning gay persons and gay marriages. Justices Ginsburg and Sotomayor, in dissent, drew a clear distinction between an objection to the message on the cake and an objection to the customer who wanted the cake. The other bakery cases had been clear examples of an objection to the message rather than an objection to the customer. In their view the objection in this case was to the customer and therefore a violation. Justices Kagan and Breyer, who voted with the majority on the lack of neutrality point, also accepted that the Commission could have based its reasoning on that distinction the other bakers would have refused to make cakes with the demeaning messages for anyone, whereas this baker had refused to make this cake because it was a gay couple who wanted it. Justices Thomas and Alito, on the other hand, considered that to make a cake for a gay wedding was expressive in itself and thus compelling it required strict scrutiny. Justice Gorsuch would also not have distinguished between a cake with words and a cake without. The important message from the Masterpiece Bakery case is that there is a clear distinction between refusing to produce a cake conveying a particular message, for any customer who wants such a cake, and refusing to produce a cake for the particular customer who wants it because of that customers characteristics. One can debate which side of the line particular factual scenarios fall. But in our case there can be no doubt. The bakery would have refused to supply this particular cake to anyone, whatever their personal characteristics. So there was no discrimination on grounds of sexual orientation. If and to the extent that there was discrimination on grounds of political opinion, no justification has been shown for the compelled speech which would be entailed for imposing civil liability for refusing to fulfil the order. LORD MANCE: (with whom Lady Hale, Lord Kerr, Lord Hodge and Lady Black agree) On behalf of the respondent, Mr Lee, and the notice party, the Commission, Mr Allen submits that no appeal lies against the decision of the Northern Ireland Court of Appeal. The Court of Appeal decided the issues before it on a case stated by the District Judge pursuant to article 61(1) of the County Courts (Northern Ireland) Order 1980. Article 61(1) provides: Except where any statutory provision provides that the decision of the county court shall be final, any party dissatisfied with the decision of a county court judge upon any point of law may question that decision by applying to the judge to state a case for the opinion of the Court of Appeal on the point of law involved, and, subject to this article, it shall be the duty of the judge to state the case. Article 61(7) of the Order goes on to impose a restriction on an appeal from such a decision. It provides: Except as provided by section 41 of the Judicature (Northern Ireland) Act 1978, the decision of the Court of Appeal on any case stated under this article shall be final. Although not referred to expressly in article 61(1), it is common ground that a further exception to finality exists under section 42(6) of the Judicature (Northern Ireland) Act 1978, which reads: No appeal from an order or judgment of the Court of Appeal shall, unless it involves a decision of any question as to the validity of any provision made by or under an Act of the Parliament of Northern Ireland or a Measure of the Northern Ireland Assembly, lie under this section in a case where by any statutory provision, including a provision of this Act, it is expressly provided (whatever form of words is used) that that order or judgment is to be final. It is also common ground that the Fair Employment and Treatment (Northern Ireland) Order 1998 (FETO) falls to be considered as a Measure of the Northern Ireland Assembly, but that the Equality Act (Sexual Orientation) Regulations (Northern Ireland) 2006 (SORs) do not. FETO was made as an Order in Council under powers conferred by section 1(3), read with Schedule 1 paragraph 1, of the Northern Ireland Act 1974. The Assembly, which it was intended would be set up in accordance with the Northern Ireland Assembly Act 1973, was at the time prorogued pending dissolution. Following the Belfast Agreement, the Northern Ireland Act 1998 completed that process of dissolution. By section 95(5), read with Schedule 12 paragraph 3(4), the 1998 Act provided for references to Orders in Council, such as FETO, made under its provisions to be considered as Measures of the Assembly which was then prorogued pending dissolution. SORs in contrast were made under powers in the Equality Act 2006, and there is no basis for regarding them as made by or under an Act of the Parliament of Northern Ireland or a Measure of the Northern Ireland Assembly within section 42(6). In these circumstances, it is necessary to consider first whether the proposed appeal involves a decision of any question as to the validity of any provision of FETO. Mr Allen, on behalf of Mr Lee and the Commission, relies on FETO as valid. He points out, correctly, that the appellants primary case is also that FETO is valid and that their conduct was not in breach of any of its provisions, properly understood. In this connection, the appellants contend that, pursuant to the interpretive obligation contained in section 83 of the Northern Ireland Act 1998 (the Northern Irish homologue of section 3 of the Human Rights Act 1998) FETO can and should, if necessary, be read compatibly with their rights under the European Convention on Human Rights. However, all else failing, the appellants also contend that, if the effect of FETO is that their conduct in the present case was unlawful, then FETO is to that extent invalidated by section 24(1)(a) and/or (c) of the Northern Ireland Act 1998. Section 24 reads: (1) A Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the Convention rights; (a) (b) (c) discriminates against a person or class of person on the ground of religious belief or political opinion; Mr Allen submits that this fall back submission does not mean that the appeal involves a decision of any question as to the validity of any provision of FETO within section 42(6) of the Judicature (Northern Ireland) Act 1978. Further, the wording of that section must, he submits, be understood in context against the background of 1978; it cannot cover such invalidity as may arguably arise pro tanto to the extent of any incompatibility with provisions introduced in 1998. I do not accept those submissions. Statutes are generally always speaking and there is no reason why section 42(6) of the 1978 Act should not embrace invalidity arising pro tanto under a subsequent provision such as section 24(1) of the 1998 Act. Further, I consider that, even if a question of invalidity only arises on the prospective appellants case if all other aspects of their case fail, that must be sufficient to bring all issues within the scope of an appeal under section 42(6) of the 1978 Act. It is impossible to know whether the other aspects of the appellants case fail, so that the question of validity directly arises, without hearing and determining an appeal on them. In response to Mr Allens observation that section 42(6) is an exception and should therefore be understood narrowly, I observe that, while that is so, it is also the case that section 42(6) is an exception to an exception introduced by article 61(7) of the County Courts (Northern Ireland) Order 1980 to the general rule that an appeal lies from the Court of Appeal to the Supreme Court. I see no reason to give it other than its ordinary meaning. I also note at this point a submission first raised before the Court of Appeal by the Attorney General as a notice party and intervener. By skeleton argument dated 11 April 2016, supported by the appellants in their skeleton in response dated 18 April 2016, the Attorney General submitted that, if article 28 of FETO has the effect for which Mr Allen submits, it is invalidated pro tanto by section 17 of the Northern Ireland Constitution Act 1973. That section reads: (1) Any Measure, any Act of the Parliament of Northern Ireland and any relevant subordinate instrument shall, to the extent that it discriminates against any person or class of persons on the ground of religious belief or political opinion, be void. The Court of Appeal, pursuant to Order 120 rule 3 of the Rules of the Court of Judicature (Northern Ireland) 1980, issued devolution notices which included this issue. Before the Supreme Court, the Attorney General has by his reference remained the primary protagonist of the same submission. But the appellants, by their written case as interveners in the reference, have again endorsed the Attorney Generals submission regarding section 17. There was therefore before the Court of Appeal and there is before the Supreme Court a question of invalidity, the answer to which could directly affect the appellants case. Once again, even though invalidity could only arise upon all other submissions failing, that in my opinion is sufficient to enable an appeal in respect of FETO. Having established a right of appeal in respect of FETO, the appellants submit that their proposed appeal in respect of SORs can also be maintained. The issue under FETO is discrimination on grounds of religious belief or political opinion, while the issue under SORs is one discrimination on grounds of sexual orientation. But there is, as the appellants point out, a considerable overlap in the circumstances relevant in this case to these different kinds of discrimination. The appellants therefore submit that, once an appeal is admissible in respect of one claim, then any other claim determined in the same proceedings may be appealed either generally or at least where there is an overlap of the relevant factual circumstances such as here exists. The Court of Appeal rejected this submission in its separate judgment dated 22 December 2016 on the appellants application for permission to appeal to the Supreme Court [2016] NICA 55. In the further alternative, the appellants now invoke before the Supreme Court section 40(5) of the Constitutional Reform Act 2005, which provides that: The [Supreme] Court has power to determine any question necessary to be determined for the purposes of doing justice in an appeal to it under any enactment. As will appear, it is unnecessary to consider the appellants case on these points further, in the light of my conclusions with regard to the Attorney Generals References, to which I next therefore turn. The Attorney General has power to require or make a reference in circumstances defined by paragraphs 33 and 34 of Schedule 10 to the Northern Ireland Act 1998 (as amended by paragraph 2 of Schedule 7 to the Justice (Northern Ireland) Act 2002 and paragraph 118 of Schedule 9 to the Constitutional Reform Act 2005), as follows: 33. The Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland or the Advocate General for Scotland may require any court or tribunal to refer to the Supreme Court any devolution issue which has arisen in proceedings before it to which he is or they are a party. 34. The Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland or the Advocate General for Scotland may refer to the Supreme Court any devolution issue which is not the subject of proceedings. The Court of Appeal handed down its judgment on the substantive issues on 24 October 2016. Order 42 rule 8 of the Rules of the Court of Judicature (Northern Ireland) 1980 (SR 1980/346) provides that: (1) A judgment of the Court takes effect from the day of its date. (2) Such a judgment shall be dated as of the day on which it is given, unless the Court orders it to be dated as of some other earlier or later day Rule 2 of the same Order provides that, unless the court otherwise orders and subject to certain other presently inapplicable exceptions, every judgment shall: (a) be drawn up and signed by an officer of the appropriate office; and (b) be sealed and filed by an officer of that office and such officer shall at the time of filing enter such judgment in the record kept for the purpose and the date of filing shall be deemed to be the date of such entry. The Court of Appeals substantive judgment was not drawn up or filed in the form of an order until 31 October 2016. Before this occurred, the Attorney General lodged on 28 October 2016 a notice dated 27 October 2016, purporting to require the Court of Appeal under paragraph 33 of Schedule 10 to the 1998 Act to refer to the Supreme Court issues as to whether, in the light of section 24(1)(a), (c) and (d) of the Northern Ireland Act 1998, there was power to make regulation 5 of SORs and whether, in the light of section 17 of the Northern Ireland Constitution Act 1973, article 28 of FETO was void. The Court of Appeal declined to make such a reference. Its reasons were given in a separate judgment, dated as delivered on 22 December 2016, by which the Court, firstly, refused the appellants permission to appeal in respect of the issues under FETO, held that there was no jurisdiction to permit any appeal in respect of the issues under SORs and, secondly, concluded that the Attorney Generals request for a reference under paragraph 33 came too late, because the proceedings ended with the giving of judgment and have not been reopened (para 10) and that, at the date at which he purported to require a reference, there were no longer proceedings before it (para 11). The Attorney Generals response to the Court of Appeals rejection of his request under paragraph 33 has been to make two references, dated respectively 31 January 2017 and 27 March 2017 to the Supreme Court under paragraph 34. There are no jurisdictional objections to these references. The reference dated 31 January 2017 raises in abstract form three substantive issues all directly inspired by the main proceedings. The first such issue is whether there was, in the light of sections 24(1)(c), power to make regulation 5 of SORs, insofar as that regulation imposes civil liability for the refusal to express a political opinion or to express a view on a matter of public policy contrary to the religious belief of the person refusing to express the view. The second is whether, in the light of section 24(1)(a), there was power to make regulation 5 insofar as it imposes civil liability for the refusal to express a particular political opinion that is inconsistent with the religious belief of the person refusing to express that opinion. The third issue (touched on in para 70 above) is whether article 28 of FETO is void, in the light of section 17 of the Northern Ireland Constitution Act 1973, insofar as article 28 imposes civil liability for the refusal to express a political opinion or to express a view on a matter of public policy contrary to the religious belief of the person refusing to express the view. The second reference dated 27 March 2017 raises the procedural question whether, in effect, the Attorney General was, under paragraph 33, entitled to require the Court of Appeal to make a reference to the Supreme Court on 28 October 2016. I start with the second reference. The Court of Appeal in its judgment dated 22 December 2016 noted correctly (para 9) that a court can always recall and vary an order before it is perfected (in this case by drawing up, sealing and filing). But the Court of Appeal found support in Deighton v Cockle [1912] 1 KB 206 for a conclusion that the proceedings were at an end as from 24 October 2016. The issue in that case was whether, having obtained leave on 28 May 1904 to sign summary judgment (under the old Order XIV), the plaintiff was by the actual signing of judgment, which it did not undertake until 3 July 1905, taking a proceeding, so as require a months notice to proceed to be given in advance. The Court of Appeal held that it was not. Vaughan Williams LJ concluded that the rule requiring a months notice to proceed only applied to proceedings towards judgment or interlocutory proceedings, and did not apply to proceedings after judgment obtained or after an end of the litigation had been arrived at (pp 209 and 211). Buckley LJ took a similar view, while Kennedy LJ considered that the rule referred to some proceeding while the matter is still in controversy, or there is still some further step to be taken before judgment is obtained (p 213). The present context is different. Paragraph 33 confers a power to require a reference of any devolution issue which has arisen in proceedings which have not yet been concluded, while paragraph 34 confers a power to refer any devolution issue which is not the subject of proceedings. Appeals are in principle against orders, not judgments. Following the handing down of a judgment, there are frequently contentious issues about the form of order appropriate to give it effect and about other matters such as costs. It is natural to see the proceedings as being on foot, until such matters are resolved, and a final order is issued. The references to the existence or non existence of relevant proceedings in paragraphs 33 and 34 are readily capable of being understood in a sense whereby such proceedings exist until their finalisation by an order which can be made the subject of an appeal. There is no incongruity in a conclusion that a reference can be required in the light of a judgment handed down, but not yet conclusively formalised. Indeed, there are strong reasons why that should be possible. The need for a reference may only have become obvious as a result of the way in which the judgment handed down has been expressed. The reference will then still serve an important purpose in enabling the Court of Appeal to revise and, if necessary, alter its judgment before it is finally drawn up, sealed and filed. A reference of similar nature is not unfamiliar in the context of the procedure for references by national courts to the Court of Justice of the European Union. The alternative, that the Court of Appeal cannot refer but must formalise its judgment, leaves it open to the Attorney General thereafter to make a reference under paragraph 34, such as his first reference here but to do so too late to affect the outcome of the proceedings to which the reference in substance relates. It is true that the court has no discretion to refuse to make a reference under paragraph 33, if it applies in a situation such as the present. It could in some cases be regrettable and waste costs, if the Attorney General were to delay requesting a reference until after the hand down of a judgment. But the legislation should not be construed on the basis that it will be abused or mishandled. The Attorney General can be relied upon to act sensibly, and, if necessary, the court also retains control over costs, which it can exercise whatever the outcome or success of the Attorney Generals reference under paragraph 33. I therefore conclude that the Attorney Generals request to the Court of Appeal to make a reference fell within the terms of paragraph 33, and the Court of Appeal erred in refusing to give effect to it. That means that the Court of Appeal and the parties to the main proceedings were deprived, by misconstruction of paragraph 33 and consequent procedural error, of the benefit of the answers on the substantive issues which the Supreme Court would have given and of the inevitably different judgment which would have followed. So far as concerns article 28 of FETO, the finding of violation in the courts below can, in the light of my conclusions above, be resolved by an appeal. So far as concerns regulation 5 of SORs, the reference sought related to the power to make that regulation. However, as is confirmed by the form of the first reference actually made, the premise to the reference would have been that regulation 5 imposes civil liability for the refusal to express a political opinion or view contrary to or inconsistent with the religious belief of the person refusing to express the view. The Supreme Court could not have answered the reference which the Attorney General was requiring under paragraph 33, without first considering this premise. In short, the Supreme Court would have had to consider and address the question whether and to what, if any extent, regulation 5 does impose civil liability for conduct such as the appellants in refusing to bake the cake. The Supreme Court would thus have arrived then at the conclusions which it has now reached, namely that (contrary to the District Judges ruling) regulation 5 does not impose liability for such conduct. It would have been bound to express that conclusion, and, on that basis, to decline to go further into what would have been established to be the hypothetical constitutional issues otherwise raised by the reference. In that light it would also have been impossible for the Court of Appeal to maintain its judgment in the form initially handed down. The Court of Appeal would have been bound to reach the opposite conclusions on the issues of sexual discrimination under regulation 5 of SORs, as well as discrimination under FETO, to those which it did in fact reach. That leads to the question what, if any, recourse is open to the appellants in circumstances where the Court of Appeals error in refusing to give effect to the Attorney Generals request under paragraph 33 can now be seen to have led the Court of Appeal to finalise a judgment and order reflecting a result which is the opposite of what should have followed. Does article 61(7) of the County Courts (Northern Ireland) Order 1980, providing that the decision of the Court of Appeal on any case stated under this article shall be final, apply, in this context also, to preclude any appeal? The answer in my opinion is that it does not. I start by noting that the present situation does not fall within the scope of the principle applied in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147. In Anisminic the House was concerned with errors made by an inferior tribunal, the Foreign Compensation Commission. Anisminic Ltd was claiming compensation for property sequestered by the Egyptian authorities in 1956. The Commission had ruled against this claim on the ground that an Egyptian company, to which it had sold the sequestered property in 1957, was its successor in title for the purposes of a provision requiring any claimant and any successor in title of such claimant to be British. The Foreign Compensation Act 1950 provided that The determination by the commission of any application made to them under this Act shall not be called in question in any court of law. The House held that this provision did not preclude judicial review of a determination involving a misconstruction by the commission of the scope of its jurisdiction. Acting in bad faith, making a decision which a tribunal had no power to make, failing to give effect to the requirements of natural justice, taking into account something required to be left out of account and refusing to take into account something required to be taken into account were in this context all mentioned as matters outside the scope of such a finality provision: see p 171C E per Lord Reid, pp 195B C and 198F G per Lord Pearce, p 210E F per Lord Wilberforce and p 215A per Lord Pearson (agreeing with Lord Reid, Lord Pearce and Lord Wilberforce). In the later authority of In re Racal Communications Ltd [1981] AC 374, Lord Diplock said (p 383): There is however The break through made by Anisminic was that, as respects administrative tribunals and authorities, the old distinction between errors of law that went to jurisdiction and errors of law that did not, was for practical purposes abolished. Any error of law that could be shown to have been made by them in the course of reaching their decision on matters of fact or of administrative policy would result in their having asked themselves the wrong question with the result that the decision they reached would be a nullity. no similar presumption that where a decision making power is conferred by statute upon a court of law, Parliament did not intend to confer upon it power to decide questions of law as well as questions of fact. Whether it did or not and, in the case of inferior courts, what limits are imposed on the kinds of questions of law they are empowered to decide, depends upon the construction of the statute unencumbered by any such presumption. In the case of inferior courts where the decision of the court is made final and conclusive by the statute, this may involve the survival of those subtle distinctions formerly drawn between errors of law which go to jurisdiction and errors of law which do not that did so much to confuse English administrative law before Anisminic ; but upon any application for judicial review of a decision of an inferior court in a matter which involves, as so many do, interrelated questions of law, fact and degree the superior court conducting the review should not be astute to hold that Parliament did not intend the inferior court to have jurisdiction to decide for itself the meaning of ordinary words used in the statute to define the question which it has to decide. See In re Racal Communications Ltd, per Lord Diplock, at p 383. The Northern Ireland Court of Appeal is a superior court, but the underlying question of construction remains, whether the legislature has by article 61(7) of the 1980 Order, set out in para 62 above, excluded any right of appeal in circumstances such as the present. Article 61(1) and (7), read together, provide for the decision of the Court of Appeal on a case stated relating to the correctness of the decision of a county court judge upon any point of law to be final. They contemplate the finality of the Court of Appeals decision with regard to the correctness of the county court judges decision on the point of law raised by the case stated. The finality provision in article 61(7) is therefore focused on the decision on the point of law, not on the regularity of the proceedings leading to it. It would require much clearer words and they would, clearly, be unusual and surprising words to conclude that a focused provision like article 61(7) was intended to exclude a challenge to the fairness or regularity of the process by which the Court of Appeal had reached its decision on the point of law. Suppose the Court of Appeal had refused to hear one side, or the situation was one where some apparent bias affected one of its members. This sort of situation cannot have been contemplated by or fall within article 61(7). Likewise, I consider that a failure to admit the Attorney Generals request for a reference and to await its disposition, before ruling on a case stated, constitutes a procedural error, in respect of which an appeal must still be possible, if significant injustice would otherwise follow, notwithstanding the finality provision in article 61(7). Does it matter that, in this case, the error identified consisted in failing to admit the Attorney Generals reference and to await its determination, rather than in giving effect to any application made by the appellants? The appellants had no right to require, or to insist that the Attorney General require, a reference. It can be argued therefore that any error by the Court of Appeal, in failing to make a reference and to await its outcome, is collateral to the litigation between the appellants and Mr Lee and the Commission, and cannot afford the appellants any basis for complaint or appeal. In my view, that would be to take an overly technical view of the issues. The appellants had expressly adopted the Attorney Generals case and submissions during the Court of Appeal proceedings. They and the Attorney General were ad idem in arguing that, by one route or another, the complaint made against the appellants was ill founded. The appellants would have appeared and advanced their supportive position on the reference, had one been made under paragraph 33. They had, in relation to their appeal against the decision of the county court judge on the point of law stated, a direct interest in the content and outcome of the reference, and in its proper handling. In summary, what occurred was an error in the proper conduct of the proceedings, which can now be seen to have precluded the Court of Appeal from deciding the case on a correct basis and from reaching the right outcome. Such an error takes the case outside any provision that the decision of the Court of Appeal on any case stated under this article shall be final. An appeal is therefore competent to the Supreme Court against all aspects of the Court of Appeals judgment, including its decision in respect of sexual discrimination under SORs as well as its decision in respect of political opinion or religious belief under FETO. The appellants should be given permission to appeal accordingly in the light of the undoubted importance of the substantive issues; and, in the light of my conclusions on the substantive issues, the Supreme Court can and should allow the appeal in respect of both SORs and FETO. |
Does a commercial building which is in the course of redevelopment have to be valued for the purposes of rating as if it were still a useable office? That is the question raised in this appeal. An analogous question would arise if the building were a former hospital which was in the process of conversion into flats. Should it be valued as if it were still available for occupation as a hospital? The question is of general public importance to the law of rating and valuation. The appellants (SJJM) own the freehold of the first floor (the premises) of a three storey office building built in the 1990s, known as Avalon House, at St Catherines Court, Sunderland Enterprise Park, Sunderland. In the past the premises were occupied by tenants as a single office suite of 795.73 square metres. In 2006 the tenants vacated the premises and in December 2009 SJJM accepted the surrender of the lease of the premises. On 9 March 2010 SJJM entered into a contract with Jomast Developments Ltd for the renovation and improvement of the premises with a view to making them more adaptable for use as either three separate suites of offices or as a single suite, in order to attract replacement tenants. The contracted building works involved the removal of all internal elements, except for the enclosure for the lift and staircase by which people gained access to other floors. This entailed stripping out the cooling system including all internal and external plant, the lighting and power installations, the fire alarm system, the suspended ceiling, all sanitary fittings and drainage connections, the timber joisted and modular raised flooring, and existing masonry walls and metal stud partitions. The contract also provided for the construction of new common parts to the premises and new communal sanitary facilities, which involved new solid partitioning, a raised floor, new sanitary fittings, new drainage and plumbing systems, and new electric lighting, alarm and heating systems. Finally, the contract envisaged the construction of three new letting areas within the premises with three self contained electrical distribution circuits and air conditioning and heating systems. After entering into the building contract and until at least 6 January 2012 SJJM had the premises marketed as available for rental either as three separate office suites or as a whole. On 6 January 2012, which is the relevant date for assessing the facts and applying the statutory assumptions discussed below when determining the rateable value of the premises on an application to alter the rating list (the material day), the premises were vacant. Contractors had removed the majority of the ceiling tiles and the suspended ceiling grid and light fittings and also 50% of the raised floor. They had also removed the cooling system and the sanitary fittings, demolished the block walls of the lavatories and stripped out the electrical wiring. The contractors had erected and plastered plasterboard partitions to form the outline of the proposed communal lavatories and had erected and plastered a partition across the floor at the east side of the premises. They had completed first fix electrical installations to the lavatory area and had altered the drainage to accommodate the new location of the lavatories. SJJM wished to reduce its liability to local authority rates on the premises while they were being reconstructed. Local authority rates are a tax on property and the unit of assessment is the hereditament. A hereditament is defined as property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list: section 64(1) of the Local Government Finance Act 1988 (the 1988 Act) which refers to this definition in section 115(1) of the General Rate Act 1967 (the 1967 Act). Each hereditament is separately identified on the rating list (which formerly was called the valuation list). The premises were so listed on the 2010 rating list as offices and premises with a rateable value of 102,000. On 6 January 2012 SJJMs agents proposed to the respondent, who is the valuation officer for Sunderland (the VO), that the description of the premises on the rating list should be altered with effect from 1 April 2010 to building undergoing reconstruction and that the rateable value should be reduced to 1. The agents justified their proposal on the basis that the premises were undergoing building works which rendered them incapable of beneficial occupation on the material day. They explained that the scheme of building work was remodelling and refurbishing the floor plate to allow subdivision into up to three separate offices served by communal W/Cs. The VO did not accept the proposal and referred it to the Valuation Tribunal for England (the Valuation Tribunal) as an appeal against his refusal to alter the rating list. The relevant legislation The central issue in this appeal is whether the premises should be rated by having regard to the physical condition they were in on 6 January 2012 or whether para 2(1)(b) of Schedule 6 to the 1988 Act as amended by the Rating (Valuation) Act 1999 (the 1999 Act), which I set out below, requires a valuation officer to assume that they were in reasonable repair as offices and premises on that date. Schedule 6 to the 1988 Act, which is headed Non domestic rating: valuation, provides so far as relevant: 1. This Schedule has effect to determine the rateable value of non domestic hereditaments for the purposes of this Part. 2.(1) The rateable value of a non domestic hereditament none of which consists of domestic property and none of which is exempt from local non domestic rating shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on these three assumptions (a) the first assumption is that the tenancy begins on the day by reference to which the determination is to be made; (b) the second assumption is that immediately before the tenancy begins the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic; (c) the third assumption is that the tenant undertakes to pay all usual tenants rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command the rent mentioned above. (6) Where the rateable value is determined with a view to making an alteration to a list which has been compiled (whether or not it is still in force) the matters mentioned in sub paragraph (7) below shall be taken to be as they are assumed to be on the material day. (7) The matters are the quantity of minerals or other substances in or the mode or category of occupation of the (a) matters affecting the physical state or physical enjoyment of the hereditament. (b) hereditament. (c) extracted from the hereditament. (cc) the quantity of refuse or waste material which is brought onto and permanently deposited on the hereditament. (d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there, and (e) in the locality of the hereditament. the use or occupation of other premises situated (8A) For the purposes of this paragraph the state of repair of a hereditament at any time relevant for the purposes of a list shall be assumed to be the state of repair in which, under sub paragraph (1) above, it is assumed to be immediately before the assumed tenancy begins. The prior proceedings On 19 October 2012 the Valuation Tribunal dismissed SJJMs appeal. It identified the material day as 6 January 2012 and concluded that on that day there was nothing to prevent the economic repair of the premises. It held that the premises were an office suite in disrepair and were to be rated as if they were in reasonable repair. SJJM appealed to the Upper Tribunal (Lands Chamber) (UT), which heard evidence, as the appeal proceeded as a re hearing. The UT confirmed the Valuation Tribunals finding that the material day was 6 January 2012, and that decision has not been appealed. Otherwise, the UT allowed SJJMs appeal, holding that the premises had been stripped out to such an extent that to replace its major building elements would go beyond the meaning of repair. The assumption in para 2(1)(b) of Schedule 6 to the 1988 Act that a hereditament was in a state of reasonable repair did not extend to the replacement of systems that had been completely removed. The alterations had rendered the premises incapable of beneficial occupation as an office and accordingly the premises were to be rated as a building undergoing reconstruction. As a result, the rateable value of the premises should be reduced to the nominal amount of 1. The VO appealed to the Court of Appeal, which allowed his appeal and therefore dismissed SJJMs underlying appeal. The Court of Appeal reasoned as follows. It recognised that the principle of reality, which I discuss in para 12 below, could be displaced by contrary statutory instructions. The question was the extent to which para 2(1)(b) applied to create a counterfactual assumption. The Court concluded as a matter of statutory construction that the para did create such an assumption and so displaced the reality principle. The premises were described in the rating list as offices and premises. On the facts found by the UT, the hereditament so described was not in a reasonable state of repair. It was not correct to look to the future to see what the premises might become when works were completed. In applying the statutory assumption in para 2(1)(b), the court had to compare the hereditament in its actual state with its previous state as listed, namely as offices and premises. In order to decide whether the replacement of the stripped out elements could fairly be described as repairs as distinct from improvements or alterations, the court should look to the tests applied in the common law of landlord and tenant: Camden London Borough Council v Langford [1980] R A 369. Applying those tests, the court concluded that the replacement of the stripped out elements would amount to repairs. On the facts found by the UT, those repairs would economically return the premises to their former state. Therefore the statutory assumption applied and the premises should be valued as if they were in a state of reasonable repair. Discussion For many years and long before Parliament enacted Schedule 6 to the 1988 Act, it had been an established principle of rating law that a hereditament is to be valued as it in fact existed at the material day. This principle, which in the past was described by the Latin phrase, rebus sic stantibus (ie as things stand), and is often referred to as the principle of reality or the reality principle, was stated by Lord Buckmaster in Poplar Assessment Committee v Roberts [1922] 2 AC 93, 103, thus: [A]though the tenant is imaginary, the conditions in which his rent is to be determined cannot be imaginary. They are the actual conditions affecting the hereditament at the time when the valuation is made. Similarly, in Townley Mill Co (1919) Ltd v Oldham Assessment Committee [1937] AC 419, 437, Lord Maugham, when explaining the legal context in which the Rating and Valuation Act 1925 was enacted, said: The hypothetical tenant was assumed to be a tenant from year to year with a reasonable prospect of continuing in occupation; but the hypothetical rent which the tenant could give was estimated with reference to the hereditament in its actual physical condition (rebus sic stantibus), and a continuance of the existing state of things was prima facie to be presumed. In Dawkins (VO) v Ash Brothers and Heaton Ltd [1969] 2 AC 366, in which the House of Lords held that the Lands Tribunal had been correct to take account of an existing demolition order in assessing the hypothetical rent, Lord Pearce stated (382): one must assume a hypothetical letting (which in many cases would never in fact occur) in order to do the best one can to form some estimate of what value should be attributed to a hereditament on the universal standard, namely a letting from year to year. But one only excludes the human realities to a limited and necessary extent, since it is only the human realities that give any value at all to hereditaments. They are excluded in so far as they are accidental to the letting of a hereditament. They are acknowledged in so far as they are essential to the hereditament itself. In the same case, Lord Wilberforce described the reality principle thus (385 386): The principle that the property must be valued as it exists at the relevant date is an old one The principle was mainly devised to meet, and it does deal with, an obvious type of case where the character or condition of the property either has undergone a change or is about to do so: thus a house in course of construction cannot be rated: nor can a building be rated by reference to changes which might be made in it either as to its structure or its use. In this passage Lord Wilberforce referred to each of what is generally regarded as the two limbs of the reality principle, namely the physical state of the property and its use. The reality principle continues to be a fundamental principle of rating and is manifested in Schedule 6 to the 1988 Act, in particular in para 2(6) and (7). In Scottish & Newcastle Retail Ltd v Williams (VO) [2001] 1 EGLR 157 the Court of Appeal upheld the decision of the Lands Tribunal that the reality principle meant that it was assumed that a hereditament was in the same physical state as upon the material day, save for minor alterations, and could be occupied only for a purpose within the same mode or category of purpose as that for which it was occupied on the material day. Thus in that case two public houses in a shopping centre had to be valued as public houses and not as retail units. The decision appealed against interprets Schedule 6 to the 1988 Act as entailing a major departure from the reality principle by requiring that the hereditament be assumed to be in a reasonable state of repair for the mode of occupation listed in the rating list, namely as offices and premises. I do not agree with that approach. In my view, the legislative history shows that the repairing assumption which para 2(1) of Schedule 6 introduced did not supplant the reality principle to that degree. Before the enactment of the 1988 Act the statutory hypothetical tenancy of non industrial property required that the landlord bear the cost of repairs. For example, section 2 of the Valuation for Rating Act 1953 provided that the hypothetical tenancy of a dwelling house was one in which the landlord had undertaken to bear the cost of the repairs and insurance, and the other expenses, if any, necessary to maintain the hereditament in a state to command that rent. In Wexler v Playle (VO) [1960] 1 QB 217 the Court of Appeal held that the statutory hypothesis was that the reasonable landlord, when contracting with the tenant for the let of a dwelling house, undertook to put the property in repair and would do so by removing readily remediable defects (Wilmer LJ 239) or reparable and temporary defects (Harman LJ 240). Thus the existence of such defects in the property did not affect its value for rating purposes. This reflected what might reasonably be expected in reality (Morris LJ 235). See also, on the equivalent provisions in section 19(6) of the 1967 Act, the similar view in relation to commercial offices expressed by Eveleigh LJ in Camden London Borough Council v Langford (VO) in which he distinguished between repairs needed to make good decay, which fell within the hypothetical landlords repair obligation, and structural work on reinforced concrete columns and beams to preserve the stability and duration of the building, which went beyond repair and rendered the building unlettable. Further, in Saunders v Maltby (VO) (1976) 19 RRC 33 the Court of Appeal held that the landlords repair obligation in the statutory provision did not extend to uneconomic repairs which were disproportionate to the value of the property; instead the landlord would let the property at a lower rent. Case law distinguished between a mere lack of repair, which did not affect rateable value because of the hypothetical landlords obligation to repair, and redevelopment works which made a building uninhabitable. Thus, for example, in Paynter (VO) v Buxton [1986] RVR 132, the Lands Tribunal upheld a nil valuation of two flats on the first and second floors of a terraced house in London which, along with the third floor flat, were undergoing a programme of refurbishment works, which were progressing from the top down. At the relevant time, there were extensive alterations to the third floor flat, which had been valued at nil and was not the subject of appeal, but lesser activity in the other flats in which there had been some re plastering, some sanitary ware had been removed, some floorboards lifted and skirting boards and a door had been removed. The Lands Tribunal accepted evidence that a programme of alterations on the three floors was being carried out on all three flats and concluded that the works amounted to alteration and modernisation and not repair. Thus the tribunal upheld the nil valuation. See also De Silva and Another v Davis (VO) [1983] 1 EGLR 211 and Hounslow London Borough Council v Rent Audio Visual Ltd & Bryant (VO) [1970] RA 535 for other applications of the distinction. The 1988 Act ended domestic rating, replacing it with the Community Charge. It also removed from the hypothetical tenancy the assumption that the landlord carried the repairing obligation by providing in Schedule 6 that all non domestic hereditaments be rated by reference to a hypothetical tenancy in which the tenant bore the repairing obligation. As originally enacted para 2(1) of Schedule 6 to the 1988 Act provided: The rateable value of a non domestic hereditament shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenants rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command that rent. Following the decision of the Lands Tribunal in Benjamin v Anston Properties Ltd [1998] 2 EGLR 147 that, because, under the 1988 Act, the hypothetical tenant bore the obligation to repair, the rental value of the hereditament would be adversely affected by a state of disrepair, Parliament, by section 1 of the Rating (Valuation) Act 1999, amended the 1998 Act to reinstate the prior law as to the assumption that the building was in a state of repair. It did so (a) by deleting the words in para 2(1) of Schedule 6 (para 18 above) from if the tenant to the end and replacing them with the three assumptions in the current para 2(1) and (b) by introducing para 2(8A). For both the current para 2(1) and para 2(8A) see para 8 above. As a general rule those amendments took effect retrospectively on 1 April 1990 (the date on which Part III of the 1988 Act first required the compilation of rating lists) in relation to rating lists compiled before the 1999 Act was passed. Paragraph 3 of the 1999 Acts explanatory notes stated that the Act was designed to put on a statutory footing the law as it was widely believed to apply before the Benjamin decision. The 1999 Act can thus be seen as applying principles analogous to those in Wexler, Camden London Borough Council and Saunders (para 16 above) to a hypothetical lease in which the tenant bore the obligation to put the hereditament in repair. In my view the Court of Appeal goes too far in interpreting the 1999 Act as completely displacing the reality principle in relation to both the physical state and the mode of occupation of a hereditament which is undergoing redevelopment. The 1999 Act, by introducing the assumption of reasonable repair at the outset of the hypothetical tenancy (the repair assumption), is not addressing the question of whether the premises were capable of beneficial occupation, which, in the context of a building undergoing redevelopment, is a logically prior question. Thus the repair assumption (para 2(1)(b)) applies to matters affecting the physical state of the hereditament (para 2(7)(a)) but not to the mode or category of occupation of the hereditament (para 2(7)(b)). I derive support for this view from the speech of Baroness Farrington, who identified the mischief which the 1999 Act addresses when she promoted it as a Bill in the Grand Committee in the House of Lords (Hansard 5 May 1999, CWH2 3). After referring, with apparent approval, to Wexler v Playle and Saunders v Maltby she stated: the 1988 Act does not contain any express reference to the hereditaments state of repair. I am aware that the noble Earl, Lord Lytton, regards this as a lacuna. I agree with him that this lacuna lies at the heart of the Lands Tribunal decision in Benjamin v Anston Properties which determined that valuers should take account of disrepair in rating valuations. It is this lacuna, and this alone, that the Bill seeks to address. She went on to state (CWH6): The Bill deals with a single issue of principle in the field of valuation for rating by way of correcting a lacuna. The Government are anxious that what is in effect an old principle governing rating valuation should merely be restated and incorporated with the minimum of disturbance to the corpus of law and valuation practice, which has grown up and developed over the passage of time. This statement, in my view, negatives a suggestion that the 1999 Act was addressing any mischief caused by the established distinction between works to correct a lack of repair on the one hand and what she called renewal, refurbishment or improvement on the other. In a helpful intervention, the Rating Surveyors Association and the British Property Federation submitted that, where works were being carried out on an existing building, the correct approach was to proceed in this order: (i) to determine whether a property is capable of rateable occupation at all and thus whether it is a hereditament, (ii) if the property is a hereditament, to determine the mode or category of occupation and then (iii) to consider whether the property is in a state of reasonable repair for use consistent with that mode or category. The first two stages of that process involve the application of the reality principle. At the third stage the valuation officer applies the statutory assumption in para 2(1)(b) if the reality is otherwise. In my view, this is a helpful approach where a building is undergoing redevelopment. But it is subject to the useful practice, which I discuss in para 31 below, of reducing the rateable value of a building, which is incapable of rateable occupation because of such temporary works, to a nominal figure rather than removing it from the rating list altogether. How does a valuation officer ascertain that premises are undergoing reconstruction rather than simply being in a state of disrepair? The subjective intentions of the freehold owner of a property are not relevant to the reality principle. The matter must be assessed objectively. But, in carrying out that objective assessment of the physical state of the property on the material day, the valuation officer can have regard to the programme of works which is in fact being undertaken on the property. It is clear on the UTs findings of fact, which I have summarised in para 4 above, that on 6 January 2012 the premises had been largely stripped out in the course of a redevelopment and an outline of the future development (the communal lavatory facilities) had been created. The premises were incapable of beneficial occupation, because, as an objective fact, they were in the process of redevelopment and no part of them was capable of beneficial use. If the works are objectively assessed as involving such redevelopment, there is no basis for applying the assumption in para 2(1)(b) to override the reality principle and to create a hypothetical tenancy of the previously existing premises in a reasonable state of repair. This is both because a building under redevelopment, like a building under construction, is incapable of beneficial occupation and, in any event, the hypothetical landlord of a building undergoing redevelopment would normally not consider it economic to restore it to its prior use. When in the course of a redevelopment some part of the developed property becomes capable of beneficial occupation, and thus becomes a separate hereditament, the assumption in para 2(1)(b) might apply to that part. Thus, if, in the course of the conversion of a hospital into offices, a part of the development became capable of beneficial occupation as flatted accommodation, para 2(1)(b) might apply to deem a hole in the roof of that part to have been repaired immediately before the beginning of the hypothetical tenancy of that part. But para 2(1)(b) neither deems the development to be complete nor assumes that the building in whole or in part is in a state of repair to be let as a hospital. It is necessary to examine other statutory provisions and the cases to which counsel for the VO referred to see whether they contradict this approach. He referred, first, to the statutory provisions relating to the completion of a building under structural alteration. Section 46A(5) of the 1988 Act provides that, where a completion day has been notified, the hereditament which comprised the existing building is deemed to have ceased to exist on the day of completion of the new building which results from the structural alteration. The VO argued that this meant that a building undergoing structural reconstruction continued to be liable to rates until the new building was completed. There was thus, he submitted, no scope for an entry in the list as a transitory building undergoing reconstruction either when the reconstruction involved structural alteration or, by analogy, when it did not. He submitted that this was supported also by para 2(7)(b) of Schedule 6 to the 1988 Act which required the identification of the mode and category of occupation, which under para 2(6) was to be taken as they are assumed to be on the material day. On SJJMs approach, there was and could be no such mode or category of occupation. In the alternative, the VO argued that, if there were such a thing in the world of rating as a transitory building under reconstruction, a hereditament could achieve that status only once it had become uneconomic to repair the building to its former status. Again, light is shed on the effect of the statutory provisions by referring to historical developments on the rating regime. Before 1966 liability for occupiers rates depended upon a building being occupied. A building undergoing redevelopment was not occupied in the relevant sense by the carrying out of alterations or by the presence of the workmen who were doing so: Arbuckle Smith & Co Ltd v Greenock Corpn [1960] AC 813. The Local Government Act 1966 introduced liability for rates on premises which were not occupied, if a rating authority so resolved, and its provisions were repeated in the consolidating General Rate Act 1967 in section 17 and Schedule 1. Paragraph 1 of Schedule 1 to the 1967 Act created the liability of an owner to be rated in respect of an unoccupied hereditament at one half of the amount payable if the hereditament were occupied. Paragraph 8 of that Schedule empowered a rating authority to serve a completion notice on the owner of a newly erected or altered building. The notice had the effect that the building was to be treated for the purpose of the schedule as completed on the date specified in the notice and the owner thereafter became liable to be rated in respect of the property. Paragraph 10 of the Schedule contained a precursor of section 46A(5) of the 1988 Act, deeming a relevant hereditament to have ceased to exist on the completion of the structural alteration. The paragraph stated in its concluding words that it was not to be construed as affecting any liability for rates under para 1 in respect of the hereditament for any period before that date. Section 46A of the 1988 Act was thus not a novelty. It was introduced retrospectively into the 1988 Act by the Local Government and Housing Act 1989 (section 139 and Schedule 5 paras 25 and 79(3)). While section 46A(5) does not contain the concluding words of para 10 of Schedule 1 to the 1967 Act, I see no reason to give the section a different interpretation from its precursor in this respect. Counsel for the VO sought to support his position by referring to the judgment of the Divisional Court in Easiwork Homes Ltd v Redbridge London Borough Council [1970] 2 QB 406. In that case, the owners chose to modernise a block of flats. During the modernisation works, the flats were uninhabitable, as the plumbing had been removed and all the essential services were being renewed. The Council assessed each flat for rates while unoccupied. The owners did not pay and the Council applied for a distress warrant to enforce the liability. The Justices decided that the owners were liable to pay rates and issued a distress warrant. The Divisional Court dismissed the owners appeal on the question whether section 17 of the 1967 Act could apply to premises which were unoccupiable. The Court held that the statute contemplated that liability to rates might arise when an owner was carrying out alterations and improvements which temporarily rendered a property incapable of occupation because para 10 of Schedule 1 to the 1967 Act provided for the payment of rates when more radical structural alterations were being carried out. But, in my view, the case does not assist the VO because the owners had not applied to have the valuation list altered during the period of the works; they had challenged their liability only at the stage of enforcement. Indeed, the Council had contended before the Justices that the owners could have applied for a reduction of the rateable values for the period when the premises were unoccupiable. It is clear that para 10 of Schedule 1 to the 1967 Act and its successor, section 46A(5) of the 1988 Act, did not and do not bar an application to alter the rating list to reflect the actual state of a hereditament undergoing redevelopment. In Ravenseft Properties Ltd v Newham London Borough Council [1976] QB 464 the Court of Appeal considered an appeal by the owners of offices, which were in the course of erection, against completion notices under para 8 of Schedule 1 to the 1967 Act. The court held that the test for completion of a new building or an existing hereditament undergoing structural alteration was whether it was ready for occupation. Lord Denning MR in the course of his judgment said that Easiwork had been correctly decided because the old valuation list, unless it was altered, continued to apply (p 474) (emphasis added). Bridge LJ, who had sat in the Easiwork appeal, was of the same view. He stated (p 479) It is clear that in a situation where an old existing hereditament has a valuation based on its occupiable value and is undergoing radical structural alterations, it can be the subject of a proposal for an alteration in the valuation list for, at all events, any substantial period when by reason of the alteration it is incapable of occupation. That seems to me to provide the answer to the problem of hardship to an owner which in the Divisional Court we felt could arise in the Easiwork case. Bridge LJ expressed that view in the context of section 68(4)(b) of the 1967 Act which defined the expression material change of circumstances as a change in value of the hereditament caused by the making of structural alterations or the total or partial destruction of the building. Now, the Non domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 list as a ground for making a proposal to alter a rating list that the rateable value shown in the list is inaccurate by reason of a material change of circumstances (regulation 4(1)(b)) and define material change of circumstances as a change in any of the matters mentioned in para 2(7) of Schedule 6 to the [1988] Act (regulation 3). I consider, therefore, that radical alterations, whether or not they are structural, which render the hereditament unoccupiable, may justify a proposal to alter the rating list. I also do not accept the point made by counsel for the VO (para 25 above) about paras 2(6) and 2(7)(b) of Schedule 6 to the 1988 Act. The location of the reality principle in para 2(7) of Schedule 6 does not require a valuation officer to disregard the fact that a building is incapable of occupation because it is undergoing reconstruction. In my view the assumption in para 2(1)(b), which para 2(6) brings into the assessment of the reality in para 2(7), can operate in the manner set out in para 24 above. But it does not negate the reality principle to the extent that counsel for the VO contended. Further, while a building which is undergoing reconstruction may be incapable of occupation for a time, it has been the practice of the Valuation Office to treat the property as a hereditament with only a nominal value rather than to remove the property from the rating list temporarily: see, for example, Hounslow London Borough Council v Rank Audio Visual Ltd and Paynter v Buxton. There is no bar to implementing a proposal to alter the description of the hereditament on the rating list from offices and premises to building undergoing reconstruction and consequently to reduce the listed rateable value to a nominal amount if the facts, objectively assessed, support that alteration. There is also, for the reasons given above, no basis for the alternative argument that a building can be listed as being under reconstruction only once the works have proceeded so far that it is no longer economic to restore the hereditament to its former state by means of repair. Does the interpretation advanced by SJJM create a danger of ratepayers abusing the system, for example, by removing sanitary facilities or windows and then claiming that the hereditament was incapable of beneficial occupation? The Court of Appeal saw their approach as preventing such abuse: Lewison LJ para 30. But the Court of Appeals interpretation was novel. Prior practice, which had been reflected in the non statutory guidance in the Rating Manual produced by the Valuation Office, had been consistent with the approach which SJJM advocates. It was not suggested to this Court that the administration of rates had not been effective in the past. Further, when Parliament in the Rating (Empty Properties) Act 2007 increased the unoccupied business rate to make owners of unoccupied property liable for the same rate as those payable on occupied properties, it also introduced into the 1988 Act, in section 66A, an anti avoidance power which enables the Secretary of State and the Welsh Ministers to make regulations to disregard changes in the state of an unoccupied hereditament. This power can be used to undermine attempts by owners to avoid unoccupied rates through causing or allowing the state of their property to change. To date neither government have used the power: I infer that the practice before the Court of Appeals decision had not caused a serious problem. In any event, the power can be exercised, if it is needed, for example to prevent avoidance by the partial implementation of a scheme of works and its deliberate non completion. On the facts found by the UT, which I summarised in paras 2 4 above, I conclude that the premises were undergoing reconstruction on the material day and that the UT was entitled to alter the rating list as it did to reflect that reality. Conclusion For these reasons, which differ in some respects from those of the Upper Tribunal, I would allow the appeal and restore the determination of the Upper Tribunal set out in paras 88 and 90 of its decision. |
A company employs a business executive pursuant to a written agreement. Following the termination of her employment she wishes to become employed by a firm whose business is in competition with that of the company. The company contends that her proposed employment would breach a covenant in the agreement. She answers that the covenant is void at common law because part of it is in unreasonable restraint of trade. Before this court the company replies with three contentions, each of which she disputes. Each of the companys contentions raises an issue with a different hypothesis, as follows: (A) The hypothesis in Issue (A) is that the employees construction of the part of the covenant alleged to be in unreasonable restraint of trade is correct. Here the company contends that the impugned part falls outside the doctrine against restraint of trade (the doctrine) and that it is therefore irrelevant that, had it fallen within the doctrine, it would have been in unreasonable restraint of it. (B) The hypothesis in Issue (B) is that the employees construction of the impugned part is incorrect. Here the company contends that, upon a correct construction of it, it is not in unreasonable restraint of trade. (C) The hypothesis in Issue (C) is that, as in Issue (A), the employees construction of the impugned part is correct; but that, contrary to the companys contention in Issue (A), it does fall within the doctrine. Here the company contends that, although it is in unreasonable restraint of trade, the impugned part should be severed and removed from the remainder of the covenant, which would therefore survive so as to prohibit the employees entry into the proposed employment. One can argue that Issue (B) is logically anterior to Issue (A). But, since Issue (A) purports to test the very boundaries of the doctrine, a balance of convenience favours consideration of it first. I will explain why in my opinion the most difficult and important issue raised in the appeal is Issue (C): when part of a post employment covenant is in unreasonable restraint of trade, in what circumstances should the court sever and remove it so as to leave the employee bound by the remainder of it? The Facts Egon Zehnder Ltd (the company), the appellant, is the UK subsidiary of a Swiss company and part of a worldwide group which is in the business of specialist executive search and recruitment. The group has nine practice areas into one of which it will place each of its recruiting customers. Ms Tillman, the respondent, had previously been employed by J P Morgan as European Managing Director. The company considered that she would be ideally placed in the financial services practice area of its business. It employed her as a consultant, with effect from 5 January 2004, pursuant to the terms of an employment agreement dated 10 December 2003. It agreed to pay her a salary of 120,000 pa and, at the end of the first year, a bonus of 100,000 provided that she then remained in its employment. Mann J, at first instance, observed that the company regarded Ms Tillman as a bit special and that it expected to promote her. It duly promoted her to be a principal in 2006 and to be a partner in 2009. A condition of her becoming a partner was that she should hold shares in the Swiss holding company; and she began to do so. In 2012 she became joint global head of the companys financial services practice area. The agreement made in 2003 was never replaced in order to reflect her promotions although no doubt a few of its terms, in particular relating to her remuneration, then changed. In any event, however, resolution of the issues raised by the appeal requires the court to address the terms of the original agreement. Clause 13 of the agreement was entitled COVENANTS and it provided for five restraints upon the activities of Ms Tillman following the end of her employment, all limited to the six months which would immediately follow it. By the first, in clause 13.1, she covenanted not to endeavour to entice away from the company any of its employees in specified senior positions. The other four restraints were included in clause 13.2. Its introductory words, arguably relevant to Issue (B), are as follows: You [Ms Tillman] shall not without the prior written consent of the company directly or indirectly, either alone or jointly with or on behalf of any third party and whether as principal, manager, employee, contractor, consultant, agent or otherwise howsoever By the first of the other four restraints, set out in clause 13.2.1, Ms Tillman covenanted not to solicit the custom of, nor to deal with, specified suppliers of services to the company. By the second, set out in clause 13.2.2, she covenanted not to seek to interfere with supplies to the company. By the fourth, set out in clause 13.2.4, she covenanted not to use any name likely to be confused with any name recently used by the company. The third of the restraints in clause 13.2, set out in clause 13.2.3, is central to all the issues in the appeal. There Ms Tillman covenanted that she would not directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which were carried on at the Termination Date or during the period of 12 months prior to that date and with which you were materially concerned during such period. I will refer to this as the non competition covenant. By clause 13.3, Ms Tillman acknowledged that the provisions of clause 13 were fair, reasonable and necessary to protect the goodwill and interests of the company. Clause 13.4 provided: If any of the restrictions or obligations contained in this clause 13 is held not to be valid as going beyond what is reasonable for the protection of the goodwill and interest of the Company but would be valid if part of the wording were deleted, then such restriction or obligation shall apply with such modifications as may be necessary to make it enforceable. As I will explain, the question raised in Issue (B) relates to whether the word interested in clause 13.2.3 purports to prohibit Ms Tillman from holding any shares in a company conducting business in competition with such businesses there specified as were conducted within the companys group. To that question an earlier clause of the agreement, casting a restraint upon her during the period of her employment, is arguably relevant: 4.5. You shall not, during the course of your employment, directly or indirectly, hold or have any interest in, any shares or other securities in any company whose business is carried on in competition with any business of the Company , except that you may hold or have an interest in, for investment only, shares or other securities in a publicly quoted company of up to a maximum of 5% of the total equity in issue of that company. On 30 January 2017 Ms Tillmans employment by the company came to an end. Shortly thereafter she informed it that she intended to start work, on (as she later added) 1 May 2017, as an employee of a firm which was in competition with the company. She made clear that she intended fully to comply with all her covenants in the agreement apart from that in clause 13.2.3. She conceded that, by its terms, this last clause prevented her entry into the proposed employment but alleged that it was in unreasonable restraint of trade and therefore void. On 10 April 2017 the company issued proceedings in which it applied for an interim injunction to restrain Ms Tillmans entry into the proposed employment. On the undertaking of the company to compensate her in damages if the court were later to hold it not to be entitled to the injunction, she undertook not to enter into the proposed employment until the court had determined the application. The lower courts were impressively accommodating to the fact that the issue related to a covenant which on any view had no effect beyond 30 July 2017. On 15 and 16 May 2017 Mann J heard the companys application and on 23 May he delivered a substantial judgment in which he granted the injunction: [2017] EWHC 1278 (Ch), [2017] IRLR 828. On 11 July the Court of Appeal heard Ms Tillmans expedited appeal and on 21 July, by a judgment delivered by Longmore LJ with which Patten and Sales LJJ agreed, it upheld it, set aside the injunction and dismissed the companys claim: [2017] EWCA Civ 1054, [2018] ICR 574. It is against the Court of Appeals order that the company brings the present appeal. The temporal limitation of the dispute and therefore the reality that determination of the companys application would dispose of the whole claim also led the parties to agree, and Mann J to accept, that the grant of the injunction should depend on a closer inquiry into the merits of the companys claim than whether it merely raised a serious question apt to the conventional determination of an application for an interim injunction: NWL Ltd v Woods [1979] 1 WLR 1294. By her Defence, Ms Tillman alleged that the non competition covenant exceeded the companys need to protect its legitimate interests, and was therefore void, for no less than five different reasons. But, by the time of the hearing before Mann J, the substantial focus was on one argument alone. It was that the effect of the part of the non competition covenant not to be interested in any of the competing businesses there specified was unreasonably to prohibit her from holding even a minority shareholding in such a business. She did not allege that she aspired to hold any shares in the business which proposed to employ her or in any other of the competing businesses there specified; but such was agreed to be irrelevant. The companys response to her argument was (a) to dispute that, on its proper construction, the covenant prohibited her from holding even a minority shareholding in any of the competing businesses there specified; and to concede that, if, contrary to (a), the covenant did prohibit her from (b) doing so, the whole of it was in unreasonable restraint of trade but to contend that a word or words (which the judge took to be the words or interested) should be severed and removed from the remainder of the clause, with the result that she would remain prohibited from entering into the proposed employment. Mann J upheld the companys response at (a) above. He so construed the word interested in the non competition covenant as not to prohibit Ms Tillman from holding shares in any of the competing businesses there specified. He therefore had no need to address what he took to be the companys alternative contention that, together of course with the word or, the word should be severed and removed from the remainder of the clause; he added however that, although it had not been developed at any length, he did not find that contention appealing. In upholding Ms Tillmans appeal, the Court of Appeal rejected the construction placed by Mann J upon the word interested in the non competition covenant. It held that its effect would be to prohibit Ms Tillman from holding even a minority shareholding in any of the competing businesses there specified and that, as such, the covenant was in unreasonable restraint of trade; and it refused to sever the word from the remainder of the clause so as to save the remainder of the prohibition. Issue (A): The Doctrine The hypothesis here is that Ms Tillman is correct to construe the word interested in the non competition covenant as purporting to prohibit her from holding any shares, however small a proportion of those issued, in a company conducting business in competition with such of the businesses of the group as are there specified. On that hypothesis the company concedes that, if the doctrine applied to it, the prohibition reflected in that word, in particular by excluding the sort of minor shareholding which was permitted to Ms Tillman during her employment, would exceed any necessary protection of its interests; that it would therefore be in unreasonable restraint of trade; and that the word would accordingly need to be severed and removed from the remainder in order to justify the injunction sought. But the company contends that the doctrine does not apply at all to a prohibition against holding shares. Not every post employment restriction agreed in a contract of employment will, says the company, restrain trade. It seeks to make its point by reference to an extreme example: what if (it asks) Ms Tillman had there agreed not to play mah jong for six months following the end of her employment? The company did not raise Issue (A) in either of the courts below. Wrongly, as I will suggest, it considered that the doctrine of precedent would have obliged both of them to reject its contention which the issue reflects. The company seems to have had in mind in particular the decision of the Court of Appeal in Scully UK Ltd v Lee [1998] IRLR 259. An employee had covenanted that throughout the year following termination he would not engage in or be otherwise interested in, whether as a shareholder employee or in any other capacity any business, which was defined in terms not limited to the employers competitors. The trial judge held that the prohibition against shareholding on the part of the employee was too wide because it would catch even a small holding but that it should be severed and removed and that the remainder should be enforced against him. The Court of Appeal took no issue with the judges objection to the prohibition against shareholding but upheld the employees appeal on the basis that there were other unreasonable features of the covenant incapable of severance. It seems clear therefore that in the Scully UK case both courts were making an assumption, rather than reaching a focussed determination, that the word interested not only represented a prohibition against holding shares but also fell within the doctrine. The same can be said of the decision in Geo Hill and Co v Hill (1886) 55 LT 769. The claimant company acquired the meat export business of the defendant, who covenanted not to be in any way concerned or interested in any similar business within ten miles of the Royal Exchange. He became an employee of a similar business within that radius. The judge held that it was unnecessary to decide whether he was interested in the business, which, the judge added, meant in commercial language entitled to profits, because on any view he was concerned in it; and that the covenant should be enforced against him. When a court makes an assumption about the law, instead of reaching a focussed determination in relation to it, the decision based upon it does not carry binding authority under the doctrine of precedent: National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397, 406 to 408. But, notwithstanding the absence of a decision on Issue (A) which could have been sought in the courts below, this court has granted permission to the company to raise it and it must therefore receive a focussed determination. The doctrine is one of the earliest products of the common law. It epitomises the nation which developed it: a nation which has ascribed central importance to the freedom of all of us to work in the interests both of the self sufficiency of ourselves and our families and of our common prosperity. In Dyers case, 2 Hen 5, f 5, pl 26, 1414, John Dyer, a dyer, was sued in the Court of Common Pleas for breach of a condition in an indenture that he would not work as a dyer for six months. He contended that he had not broken the condition but Justice Hull observed that he should have taken a wider point, namely that the obligation was void. By God, added the judge, if the plaintiff was here, he would go to prison until he paid a fine to the King. Two hundred years later the invalidity of restraints of trade remained unqualified. In Colgate v Bacheler (1601) Cro Eliz 872, the defendant agreed that, if for three years his son worked as a haberdasher in Canterbury or Rochester, he would pay the plaintiff 20. The court held the agreement to be void irrespective of its limitations of time and place because it was against the benefit of the commonwealth and because the defendants son ought not to have been abridged of his trade and living. But in the 17th century the absolute nature of the right of the ex employee or vendor of a business to work or trade elsewhere irrespective of his covenant began to be tempered. For paradoxically the doctrine against restraint of trade was positively inhibiting trade. In Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 564, Lord Macnaghten explained: it was found that a rule so rigid and far reaching must seriously interfere with transactions of every day occurrence. Traders could hardly venture to let their shops out of their own hands; the purchaser of a business was at the mercy of the seller; every apprentice was a possible rival. So the rule was relaxed. The law came to recognise that the employer or the purchaser of a business had legitimate interests which might justify his placing limited restrictions on his employee or vendor. In 1711 Chief Justice Parker, later Lord Macclesfield, gave the seminal judgment of the Court of Queens Bench in Mitchel v Reynolds. The immaculate report of it is at (1711) 1 P Wms 181 and any study of the contribution made by law reporters to the development of our law would do well to include it. The defendant had assigned to a purchaser the lease of a bakery in Holborn for five years and had entered into a bond with him not to trade as a baker elsewhere in Holborn for that period. Lord Macclesfield held at p 192 that all restraints of trade were presumed to be bad but that at p 193 that Judge Hulls vehemence towards them had been (a) the presumption was rebuttable; (b) excusable but not his manner of expressing it; (c) at p 191 that a restraint of trade throughout England would always be bad (for what does it signify to a tradesman in London what another does at Newcastle?); but (d) of the assignment, was reasonable and should be enforced. at p 197 that this bakers bond, limited to Holborn and to the five years Thus was the concept of reasonableness authoritatively grafted on to the doctrine by way of modification of it. Based as it is on public policy, the doctrine has regularly had to adjust to social change. The need for adjustment is well exemplified by the decision of the appellate committee of the House of Lords in the Nordenfelt case cited in para 24 above. The appellant, who had been a manufacturer of guns and ammunition, had covenanted with the respondent, which had taken over his business, not to engage in manufacture of them anywhere in the world for 25 years. The committee held that, notwithstanding its width, the covenant was reasonable and so enforceable against him. Lord Herschell, the Lord Chancellor, explained at p 547 that changed conditions of commerce and of the means of communication meant that Lord Macclesfields reference to the irrelevance to a London trader of similar trade in Newcastle was out of date; and that what would once have been merely a burden on the covenantor may now be essential if there is to be reasonable protection to the covenantee. Lord Watson observed at p 555 that there had been a protracted struggle between the principle of freedom of contract and the doctrine and that the latter had had the worse of the encounter, particularly in courts of equity. Lord Macnaghten held at p 565 that there was a general rule that restraints of trade were void but that there was an exception to the rule where the restriction was reasonable by reference to the interests of both parties and of the public. You cannot, so he observed at p 572 in relation to a vendors covenant, sell the cow and sup the milk. In Herbert Morris Ltd v Saxelby [1916] 1 AC 688 the members of the appellate committee all stressed that different considerations applied to restraints on a vendor of a business from those which applied to restraints on an ex employee; that, as Lord Atkinson said at p 701, the purchaser of a business had paid for its goodwill, including for the vendors covenant which protected and enhanced it; that, as Lord Shaw of Dunfermline said at p 714, an employer was entitled to reasonable protection against dissemination of his trade secrets or solicitation of his customers, in other words against misuse of his property, but not directly against the employees use of his skill and his manual or mental ability, which were the employees own property; and that, as Lord Shaw added at p 716, a delicate balance was always required between freedom of trade and freedom of contract. During the last century questions arose about the width of the doctrine, in particular whether it extended beyond contracts of employment and for sale of a business. Did it apply to a contract in which I agree to buy specified goods only from you? Or to sell specified goods only to you? Or to sell to others specified goods bought only from you? An early example was Servais Bouchard v The Princes Hall Restaurant (Ltd) (1904) 20 TLR 574. A restaurant in Piccadilly had contracted with a supplier of burgundy not to sell burgundy to its customers other than such as it had purchased from the supplier. The restaurant broke the contract and the Court of Appeal held that the supplier was entitled to enforce it. Sir Richard Henn Collins, the Master of the Rolls, held that the contract fell outside the doctrine; the other members of the court apparently held instead that, albeit within the doctrine, the restraint was reasonable. Later decisions demonstrated a similar slide into a verdict in relation to reasonableness in preference to an attempt to discern the boundaries of the doctrine: Dickson v Pharmaceutical Society of Great Britain [1970] AC 403, 431. The outer reaches of the doctrine were, however, more fully explored, albeit with obvious difficulty, by the appellate committee in Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269. The garage company had entered into solus agreements with Esso to sell petrol bought only from Esso at two of its filling stations and to do so at one of them for in effect five years and at the other for 21 years. The committee held that, on balance, both contracts fell within the doctrine and that, while the agreement for the shorter period was reasonable and enforceable against the garage, the other was unreasonable and unenforceable. Lord Reid noted at p 294 that a contract under which a person agreed to work exclusively for another fell outside the doctrine although it detracted from his freedom to work as he pleased; and at p 298 that a restrictive covenant upon land which prohibited its use for trading fell outside the doctrine because the purchaser of the land who became subject to it was not surrendering any freedom to trade there which he had previously enjoyed. Lord Pearce observed at p 325 that, for the same reason, a contract under which a publican took a lease from a brewer of a tied public house fell outside the doctrine; but that the garage company, by contrast, already ran the filling stations when it accepted Essos restrictions. He added at p 328 that it was the sterilising of a mans capacity for work and not its absorption that underlay the objection to restraint of trade; and he cited Warner Brothers Pictures, Inc v Nelson [1937] 1 KB 209, in which the contract by which Miss Bette Davis had agreed not to work otherwise than for the claimant for one year was enforced against her. Lord Wilberforce, at pp 333 to 335, favoured a pragmatic analysis under which restrictive covenants on land and tied public houses, having long been accepted to fall outside the doctrine, must for that reason be taken to have satisfied the demands of public policy on which the doctrine rested. In my view the resolution of Issue (A) does not require any closer study of the boundaries of the doctrine. For the contract in the present case is of the classic type between employer and employee and, as is agreed, it does provide for a restraint of trade which falls within the doctrine and which is therefore void unless reasonable. The only question under Issue (A) is whether an assumed prohibition against holding shares forms part of the restraint. In this regard assistance is to be derived from the decision of the Court of Appeal in Proactive Sports Management Ltd v Rooney [2011] EWCA Civ 1444, [2012] IRLR 241. Wayne Rooney set up a company to which he assigned his image rights, in other words his rights to exploit his image by, for example, his indorsement of sports products and by other forms of promotion and sponsorship. His company contracted with the claimant to act as its agent in negotiating contracts for the exploitation of his image. His company breached the contract and, when sued by the claimant, it contended that the contract fell within the doctrine. The claimant disputed that it did so but accepted the trial judges conclusion that, if it did so, its terms were in unreasonable restraint of trade and unenforceable, albeit that it was entitled to a restitutionary remedy. At para 67 my lady, then Arden LJ, recorded the claimants submission that Wayne Rooneys trade was as a footballer and that exploitation of his image rights formed no part of it. She held however at paras 92 and 93 that, although his business of exploiting his image rights was ancillary to, and indeed dependent on, his primary occupation of playing football, it fell within the doctrine. The other members of the court agreed. Gross LJ added at para 153 that Wayne Rooneys activities on field and, in exploiting his image rights, off field were both part of a single trade; and at para 155 that the court should adopt a broad, practical, rule of reason approach to determining the applicability of the doctrine. It is an approach which this court should also adopt. In Issue (A) the company contends that the word interested in the non competition covenant falls outside the doctrine but concedes that the remainder of the covenant falls within it. It is a curious proposition, namely that the restraints provided in the rest of the covenant are valid only if reasonable but that the restraint provided by that word is valid although unreasonable. The company cites no authority in which a particular word in a covenant which substantially falls within the doctrine has been held to fall outside it. The covenant was cast in terms which, no doubt on advice, the company considered that it could justify as reasonable for the purposes of the doctrine; and among these terms was one which, for the purposes of Issue (A), we are to construe as prohibiting Ms Tillman from holding any shares in the specified businesses. By clause 13.3 Ms Tillman acknowledged that the provisions of this clause 13 are fair and reasonable. The acknowledgement is hard to explain unless the law required them all of them to be fair and reasonable. A similar conclusion is to be derived, even more clearly, from clause 13.4, set out in para 9 above. It provided that, were any restriction in clause 13 to be held invalid as exceeding what was reasonable for the protection of the companys interest, it should be severed and the balance of the restriction should remain enforceable. Subclause (4) represents a clear acknowledgement that all the restraints in subclauses (1) and (2) fall within the doctrine. Nor is it in any way surprising that, in seeking to protect itself against competing activity on the part of Ms Tillman in the immediate aftermath of her employment, the company should have aspired to prohibit her from holding shares in the potentially competitive businesses specified in the non competition covenant. Any controlling shareholding on her part would, by definition, enable her to direct the competitors operations. But even a minority shareholding, say a 25% shareholding in a company started up with three others, would enable her to influence its operations. And, even more obviously, the employment of a top executive such as Ms Tillman is frequently subject to conditions that she should hold shares in her employer or be remunerated partly in its shares or in options to purchase them. Indeed, as explained in para 5 above, it was a condition of her becoming a partner in the company in 2009 that she should hold shares in the holding company. In substance as well as in form the restraint on shareholding is part of the restraint on Ms Tillmans ability to work in the immediate aftermath of her employment. The proper determination of Issue (A) is that, on the assumption that the word interested purports to restrain Ms Tillman from holding shares in the specified businesses, it falls within the doctrine. Issue (B): Construction The companys argument here is that, when properly construed, the word interested in the non competition covenant does not prohibit Ms Tillman from holding shares in the businesses there specified; and that accordingly in this respect Mann J was right and the Court of Appeal was wrong. The company concedes that in some contexts a person holding shares in a company will properly be described as being interested in it. But it contends, uncontroversially, that the meaning of the word is informed by its context in the agreement as a whole: Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173, para 10. It argues that the word interested, when considered in the context of its agreement with Ms Tillman as a whole, does not cover a shareholding; and that in particular it fails to cover a shareholding once the validity principle, as explained below, has been applied so as to identify its meaning. One might expect the company to have aspired, and reasonably to have aspired, to prohibit Ms Tillman from, for example, having a controlling interest as a shareholder in a competing company even if she was not working in it. But, in relation to this issue, the company cannot have it both ways: it cannot sensibly argue that the word interested covers a large shareholding but not a small shareholding. It is all or nothing. The company contends for nothing. Better considered without reference to its original formulation in Latin, which nowadays few people understand, the validity principle proceeds on the premise that the parties to a contract or other instrument will have intended it to be valid. It therefore provides that, in circumstances in which a clause in their contract is (at this stage to use a word intended only in a general sense) capable of having two meanings, one which would result in its being void and the other which would result in its being valid, the latter should be preferred. In the present appeal, however, the parties are at odds about the specific circumstances in which the principle is engaged. Is it engaged only when the two meanings are equally plausible or is it also engaged even when the meaning which would result in validity is to some extent less plausible? In In re Badens Deed Trusts [1969] 2 Ch 388 the Court of Appeal, by a majority, determined the meaning of a deed of settlement by reference to the validity principle. Harman LJ said at p 400: the court is at liberty, if the considerations on both sides seem evenly balanced, to lean towards that which may effectuate rather than frustrate the settlors intentions I by no means hold that the court may take this course by flying in the teeth of the provisions of the deed, so that the weaker view may prevail because it is likely to have an effectual result, but where the terms of the deed produced a balance so even as the present I am of opinion that the doctrine may be called in aid. (italics supplied) To say that rival meanings are evenly balanced is to say that they are equally plausible. Thus, in The Interpretation of Contracts, 6th ed, 2015, Sir Kim Lewison offers the following proposition at the head of chapter 7, section 16: Where two interpretations of an instrument are equally plausible, upon one of which the instrument is valid, and upon the other of which it is invalid, the court should lean towards that interpretation which validates the instrument. (italics supplied) Others, however, have taken a wider view of the circumstances in which the principle is engaged. In the text of section 16 Sir Kim quotes an observation made by my Lady, then Arden LJ, in Anglo Continental Educational Group (GB) Ltd v Capital Homes (Southern) Ltd [2009] EWCA Civ 218, [2009] CP Rep 30, para 13, that if the agreement is susceptible of an interpretation which will make it enforceable and effective, the court will prefer that interpretation to any interpretation which would result in its being void (italics supplied). And in TFS Derivatives Ltd v Morgan [2004] EWHC 3181 (QB), [2005] IRLR 246, Cox J suggested at para 43 that the principle applied if there was an element of ambiguity about the meaning of a covenant. It was her approach which, in the present case, Mann J adopted at paras 32 and 43. In my view the point at which the validity principle is engaged lies between these various descriptions of it. To require a measure of equal plausibility of the rival meanings is to make unnecessary demands on the court and to set access to the principle too narrowly; but, on the other hand, to apply it whenever an element of ambiguity exists is to countenance too great a departure from the otherwise probable meaning. In Inland Revenue Comrs v Williams [1969] 1 WLR 1197, which related to the meaning of a clause in a deed of appointment, Megarry J adverted at p 1201 to the reference by Harman LJ in the Badens Deed Trusts case to the need for an even balance and added: It is possible that the same approach might be adopted where the scales are tilted only slightly to one side or the other; but plainly it cannot apply where, apart from the effect of the rule against perpetuities or some other sources of invalidity, the court reaches the conclusion that one construction is clearly preferable to the other the right view may well be that, before the doctrine can apply, the court must be left in a state of real and persistent uncertainty of mind. In Great Estates Group Ltd v Digby [2011] EWCA Civ 1120, [2012] 2 All ER (Comm) 361, Toulson LJ explained that, if the contract was capable of being read in two ways, the meaning which would result in validity might be upheld even if it is the less natural construction. And in Tindall Cobham 1 Ltd v Adda Hotels [2014] EWCA Civ 1215, [2015] 1 P & CR 5, Patten LJ, with whom the other members of the court agreed, observed at para 32 that the search was for a realistic alternative construction which might engage the principle. In my view Megarry J, Toulson LJ and Patten LJ were identifying the point at which the principle is engaged in much the same place. Let us work with Patten LJs adjective: let us require the alternative construction to be realistic. In its need to set up a realistic construction of the word interested, alternative to a construction which relates it to a shareholding, the company adverts to three features of the context of the word in the agreement as a whole. The first is the content of clause 4.5, set out in para 10 above. For the duration of her employment, it expressly prohibited Ms Tillman from holding shares in specified businesses except for a holding of up to 5% of issued shares in a publicly quoted company. So the company argues that, when in their agreement it and Ms Tillman wanted to address her holding of shares, they did so expressly; and that it would be anomalous that, having acknowledged her freedom to hold a limited number and type of shares in specified businesses during her employment, they should have agreed that she should be prohibited from doing so in the immediate aftermath of her employment by their use of the word interested, which of course stands unqualified in the non competition covenant. This argument found favour with Mann J, who held that it would be right to adopt a construction which did not give rise to this anomaly. The second feature relates to the introductory words of clause 13.2, set out in para 7 above. There the company and Ms Tillman set out the different types of status in which she was to be subject to the restraints which followed, namely as principal, manager, employee, contractor, consultant, agent or otherwise howsoever. Notwithstanding (says the company) the catch all words at the end, the significance of the list is that it could so easily have included the word shareholder if the restraint in the non competition covenant had been intended to prohibit Ms Tillman from holding shares. The third feature relates to the direct link in the non competition covenant between the word interested and the words in any business. Interest in a business, submits the company, connotes active interest in it and is to be contrasted with the passive interest of a shareholder in a company. In relation to the first and third features the company claims to derive valuable support from the decision of Foskett J in Tradition Financial Services Ltd v Gamberoni [2017] EWHC 768 (QB), [2017] IRLR 698. There the post employment restrictions on the employee were in somewhat similar terms to those in the present case and included a covenant on his part not for six months to undertake, carry on or be employed, engaged or interested in any capacity in any business activity of a specified character. Among the employees various contentions that the restrictions were in unreasonable restraint of trade was a contention, identical to that reflected in Issue (B), that the word interested disabled him from holding even a small quantity of shares in companies of the specified character. In response the employer in the Tradition Financial Services case adverted to two features of the contract, identical to the first and third features to which the company adverts in the present case. Thus, as Foskett J explained in para 127 of his judgment, the employer relied on an earlier clause of the contract under which during his employment the employee had been permitted to hold small amounts of shares, even apparently in competing companies. This was the foundation of the employers primary argument, which the judge described as follows and which he accepted: it cannot sensibly have been intended that [the employee] should be subject to a more onerous restriction as to shareholdings after his employment had terminated than whilst still an employee, particularly if it is suggested that the more onerous obligation is created by a clause that makes no express reference to shareholdings at all. In other words, whatever interested in any capacity . in any business activity means, it cannot be a reference to a shareholding. Indeed, as Foskett J explained in para 128, the employer also relied on the fact that the covenant prohibited the employee from being interested in a business activity and it argued that passive investment by way of a minority shareholding was not a business activity. The judge explained that he gave less weight to this argument but that, when added to the employers primary argument, it supported his conclusion that the word interested did not cover a shareholding. The trouble is that, without expressly acknowledging it, Foskett J, whose opinion is on any view entitled to considerable respect, was there departing from the obvious natural meaning of the word interested, such as had been recognised in our law for more than a century without dissent. In Smith v Hancock [1894] 2 Ch 377 the defendant sold his grocery business near Stoke on Trent to the claimant and agreed not for the following ten years to carry on or be in any wise interested in any similar business operating within five miles of it. The defendants wife set up a grocery within those parameters. In the Court of Appeal Lindley LJ held at p 386 that the word interested meant a proprietary or pecuniary interest and that it did not extend to the indirect interest which every man has in the happiness and welfare of his wife. He and A L Smith LJ both reluctantly held that, on the judges findings, the defendant was not interested in his wifes business. In Gophir Diamond Co v Wood [1902] 1 Ch 950 the ex employee of a jewellery shop in Regent Street had become a salaried employee of a rival shop in the same street. Swinfen Eady J noted at p 952 that his covenant had only been not to be interested in a similar business; and the judge added, intriguingly for present purposes, that in that regard the covenant had materially departed from the common form in the then current edition of Palmers Company Precedents that the covenantor should not be engaged or concerned or interested in a similar business. He held that, since his remuneration had in no way depended on the profits of the rival shop, the ex employee was not in breach of his covenant. It does seem that the phrase engaged or concerned or interested, adopted in the non competition covenant in the present case, has been included in standard precedents for the drafting of non competition covenants throughout the last century. It has popped up frequently in the reported cases, including in CEF Holdings Ltd v Mundey [2012] EWHC 1524 (QB), [2012] IRLR 912. Silber J there held that for various reasons the non competition covenant was in unreasonable restraint of trade. One of his reasons, set out in para 65(i), was that [i]ts width is so great that it prevents any employees from having any interest in [a competing] company, such as even owning one share in a publicly quoted company. The companys alternative construction of the word interested needs to be realistic. What is its proposed construction? At the hearing Lady Hale inquired about it. Even Mr Laddie QC on behalf of the company struggled to find an answer. He suggested that the word might be casual surplusage. Is that good enough? What was the construction placed on the word by Foskett J in the Tradition Financial Services case? As set out in para 48 above, he did no more than to adopt the employers submission that, whatever it meant, it did not refer to shareholding. Was that good enough? The proper determination of Issue (B) is that the natural construction of the word interested, consistent with long standing authority, is that it covers a shareholding; that the three features of the present agreement on which the company relies are insufficient to require a different construction to be placed on the word, when found in clause 13.2.3; that the company fails to establish even a realistic alternative construction of it which would engage the validation principle; that the word interested in the non competition covenant in the present case therefore covers a shareholding, whether large or small, and on that basis is, as is conceded, in unreasonable restraint of trade; and that, unless it can be severed and removed from the rest of the clause, the Court of Appeal was right to set aside the injunction granted against Ms Tillman. Issue (C): Severance Where part of a contract is unenforceable, the enforceability of the remainder represents an issue which arises far more widely than in contracts of employment. In Carney v Herbert [1985] AC 301 the problem was that the security for payment of the price, for which a contract for the sale of shares had provided, was not only a guarantee but also mortgages which were statutorily illegal. The Privy Council indorsed a decision of the Supreme Court of New South Wales that the provision for mortgages could be severed and removed from the contract, with the result that the guarantee should be enforced. Lord Brightman, who delivered the judgment of the Board, observed at p 309 that tests for determining severability in certain types of case were not always applied satisfactorily in others. But then, with hesitation, he suggested at p 317 that, as a general rule, where parties enter into a lawful contract and there is an ancillary provision which is illegal but exists for the exclusive benefit of the plaintiff, the court may and probably will, if the justice of the case so requires, and there is no public policy objection, permit the plaintiff to enforce the contract without the illegal provision. It is clear that considerations of public policy drove the evolution of the doctrine under common law that post employment restraints of trade were, unless reasonable, void: see paras 23 to 25 above. It is less clear that, until the early years of the last century, considerations of public policy also drove a more restrictive approach to severance in post employment restraints of trade than was adopted in other areas. Take, for example, Chesman v Nainby (1726) 2 Ld Raym 1456. Miss Nainby traded as a draper from her home in Drury Lane. Prior to her marriage Mrs Chesman became apprenticed to Miss Nainby. Mrs Chesman entered into a bond that, after leaving Miss Nainbys service, she would not trade as a draper, nor assist anyone else to do so, within half a mile of Miss Nainbys home in Drury Lane or of any other house that [Miss Nainby] shall think proper to remove to and that, in the event of breach, she would pay Miss Nainby 100. After leaving Miss Nainbys service Mrs Chesman assisted her husband to trade as a draper elsewhere up Drury Lane. It was held in the Court of Common Pleas, and upheld on appeal first by the Court of Kings Bench and then by the House of Lords itself in accordance with the opinion of its judicial members, that Mrs Chesman owed Miss Nainby 100. Applying the recent decision in Mitchel v Reynolds addressed in para 25 above, the court accepted that it was unreasonable to seek to restrict Mrs Chesman from trading, or continuing to trade, within half a mile of any other house to which Miss Nainby might at any stage move, even in the remotest part of the kingdom. Nevertheless at p 1459 it upheld Miss Nainbys submission that if a bond is given, with condition to do several things, and some are agreeable to law, and some against the common law; the bond shall be good as to the doing the things agreeable to law, and only void as to those that are against the law. Early in the last century, however, a much more restrictive view was suddenly taken of the availability of severance in post employment covenants. The reasons of public policy which drove a conclusion that, unless reasonable, they were void were adopted and expanded to suggest a further conclusion that, where parts of them were unreasonable, not even the reasonable parts should usually be enforced. This further conclusion was most vividly expressed in unlikely circumstances. In Mason v Provident Clothing and Supply Co Ltd [1913] AC 724 the employee had covenanted not to work for any of the employers competitors within 25 miles of London. The appellate committee held that the employer had failed to establish that the extension of the restraint to the area thus specified was reasonably necessary for its protection and concluded that it was therefore void. It is hard to see how on any view the offending words could have been severed; and, although the employer apparently argued in the alternative for severance, it must have done so briefly for there is no mention of it in the report of its counsels argument. At all events, at the end of his speech, with which no other member of the committee expressed agreement, Lord Moulton, at p 745, added the following: It was suggested in the argument that even if the covenant was, as a whole, too wide, the court might enforce restrictions which it might consider reasonable (even though they were not expressed in the covenant), provided they were within its ambit. My Lords, I do not doubt that the court may, and in some cases will, enforce a part of a covenant in restraint of trade, even though taken as a whole the covenant exceeds what is reasonable. But, in my opinion, that ought only to be done in cases where the part so enforceable is clearly severable, and even so only in cases where the excess is of trivial importance, or merely technical, and not a part of the main purport and substance of the clause. It would in my opinion be pessimi exempli if, when an employer had exacted a covenant deliberately framed in unreasonably wide terms, the Courts were to come to his assistance and, by applying their ingenuity and knowledge of the law, carve out of this void covenant the maximum of what he might validly have required. It must be remembered that the real sanction at the back of these covenants is the terror and expense of litigation, in which the servant is usually at a great disadvantage, in view of the longer purse of his master. These passing observations of Lord Moulton were to have an electric effect on the law. Within six months of their publication Sargant J was seeking to explain part of them away. In SV Nevanas & Co v Walker and Foreman [1914] 1 Ch 413 an employer admitted that the second part of a post employment covenant was void but contended that the first part was valid and, following severance, should be enforced. Sargant J held that the first part was also void and so dismissed the claim. He was however at pains to say that, had the first part been valid, the second part could have been severed and removed from it. He said at p 422 that he wished to clear the ground at once from a suggestion that, in view of certain remarks of Lord Moulton in the recent case of [Mason], this part of the covenant is invalidated, because the succeeding part of the covenant is, admittedly, too wide. I do not think that those remarks were intended to be applicable to cases where the two parts of a covenant are expressed in such a way as to amount to a clear severance by the parties themselves, and as to be substantially equivalent to two separate covenants. No question of the kind was involved in the case before the House of Lords, and I think that Lord Moulton was not intending to deal with the numerous cases of high authority in which the good part of such a covenant was held to be enforceable, notwithstanding its collocation with a bad part Several months later, however, Lord Moultons observations attracted outspoken support from Neville J in Goldsoll v Goldman [1914] 2 Ch 608. In the event the judge applied the principle of severance to a non competition agreement made between two jewellers in Bond Street; and, later to be substantially upheld by the Court of Appeal [1915] 1 Ch 292, he enforced the valid part of it by injunction. At the outset of his judgment, however, at pp 611 612, he had railed against the long standing modification of the doctrine against restraint of trade which rescued a restraint to the extent that it was reasonable; indeed he called it a blot on the jurisprudence. Then at p 613 he had added: Again I think that the application of the doctrine of severability of the terms of a contract in restraint of trade has proved mischievous. It seems to me to be in accordance both with principle and justice that if a man seeks to restrain another from exercising his lawful calling to an extent which the law, even as it now stands, deems unreasonable, the contract by which he does so, whether grammatically severable or not, should be held to be void in toto. To hold otherwise seems to me to expose the covenantor to the almost inevitable risk of litigation which in nine cases out of ten he is very ill able to afford Thus was the stage set for the decisions in Attwood v Lamont, first of the Divisional Court of the Kings Bench Division, [1920] 2 KB 146, and then of the Court of Appeal, [1920] 3 KB 571. The claimant, who carried on business in Kidderminster as a draper, tailor and general outfitter, employed the defendant as a cutter in the tailoring department. The defendant covenanted not at any time thereafter to trade as a tailor, dressmaker, general draper, milliner, hatter, haberdasher, gentlemens, ladies or childrens outfitter within ten miles of Kidderminster. The defendant left the claimants employment and set up business as a tailor; and, although he based it more than ten miles away, he returned to Kidderminster to obtain and execute tailoring orders there, including from the claimants former customers. The Divisional Court, on appeal from the county court, agreed that the list of prohibited trades was too wide but held that the covenant should be severed so as to enable the reference to all trades other than that of a tailor to be removed and that the defendant should be enjoined from trading as a tailor within ten miles of the town. Bailhache J at p 156 held that the covenant was clearly severable. He noted that in the Mason case, in which on any view the covenant had not been severable, Lord Moulton had added that, even if clearly severable, a covenant should not be severed unless the excess was trivial or technical. But he, Bailhache J, expressed himself satisfied that Lord Moultons addition was contrary to authority. Sankey J at pp 158 159 made similar remarks. The Court of Appeal, reversing the order of the Divisional Court, held that the covenant was not severable. But, although its conclusion was unanimous, the route taken to it was different. Lord Sterndale MR gave the first judgment; but the binding authority of the decision attached to the judgment of Younger LJ because it was with his judgment that, without adding anything, Atkin LJ agreed. Lord Sterndale observed at p 577 that the tendency of recent decisions had been to limit severability more than previously but that in his view it remained the law that severance was available if the parts proposed to be severed were independent and if it did not affect the meaning of what was proposed to remain. At p 578 he quoted with approval what Sargant J had said in the SV Nevanas case, set out in para 59 above; and he suggested that, if severance of one part were to leave the remainder of the covenant with a meaning different in kind and not only in extent from its previous meaning, the parts of the covenant could not be said to be substantially equivalent to separate covenants. At p 580 he concluded, however, that severance of the list of trades would entirely alter the scope and intention of the agreement and so failed Sargant Js test. Younger LJ (a) stated at p 581 that recent decisions of the House of Lords had wrought a fundamental change in the approach of the law to post employment restrictions, which were peculiarly susceptible to current views of public policy; (b) observed there that the principle of freedom of contract still remained operative in contracts between the vendor and purchaser of a business; (c) suggested at p 593 that severance of a covenant was available only where it was not really a single covenant but [was] in effect a combination of several distinct covenants; (d) held there that the list of prohibited trades was in effect contained in one covenant because (so he reasoned) the claimant himself had only one trade and not several trades; (e) noted there that, even if he was wrong to regard the list of trades as contained in one covenant, the court should nevertheless decline to sever it; (f) quoted with approval at pp 594 595 the observations first of Lord Moulton that severance should be confined to the trivial and the technical and then of Neville J in the Goldsoll case that a partly unreasonable restraint should make it entirely void, even if grammatically severable; and (g) concluded at p 595 that severance should not generally be allowed. Although, as I will suggest in para 82 below, there were, and remain, good reasons of public policy for the law to take a cautious approach to the severance of a post employment restraint, the decision of the majority in the Attwood case, founded, as it was, upon the passing observations of Lord Moulton and on the hostile approach of Neville J to the whole concept, suddenly made the common law fiercely restrictive of it. How easy would it be for courts to apply the first requirement, that the covenant should in effect be a combination of different covenants? And what would they make of the second requirement, that the part proposed to be removed should be no more than trivial or technical? In Putsman v Taylor [1927] 1 KB 637 the claimant employed the defendant as manager of his tailoring business at 49 Snow Hill in Birmingham. The defendant covenanted that, following the end of his employment, he would not be employed by a tailor (a) anywhere else on Snow Hill nor (b) within half a mile of Aston Cross nor (c) within half a mile of the Bristol Road. He became employed by a tailor at 73 Snow Hill. The Divisional Court of the Kings Bench Division severed the covenant, removed (b) and (c) as too wide and enforced (a) against the defendant by way of injunction. Salter J suggested at pp 640 641 that in the Attwood case it had been Lord Sterndale who had articulated a definite test, namely whether severance would render the covenant different in kind and not only in extent; and he held that removal of (b) and (c) affected only the extent of the covenant. Talbot J observed at p 643 that the law relating to the severability of illegal contracts was as fully applicable to those in restraint of trade as to those illegal in any other respect; and at p 645 that Lord Moultons observations in the Mason case referred to the inability of the court to substitute terms which had not been expressed for terms which were unreasonably wide. Neither judge addressed the second requirement identified in the Attwood case. In Scorer v Seymour Jones [1966] 1 WLR 1419 the Court of Appeal took a similar approach to that taken by the Divisional Court in the Putsman case. The claimant, an estate agent in Dartmouth, opened a branch in Kingsbridge and employed the defendant to manage it. The defendants post employment covenant was not to set up as an estate agent within five miles either of Kingsbridge or of Dartmouth. He set up as an estate agent within five miles of Kingsbridge. The court severed the covenant, removed the reference to Dartmouth as too wide and enforced the remainder. Although the Attwood case was cited to them, none of the judges expressly referred to either of its requirements. In T Lucas & Co Ltd v Mitchell [1974] 1 Ch 129 the claimant, which manufactured foodstuffs, employed the defendant as a salesman in Manchester. His post employment covenant was not to deal in goods similar to those manufactured by the claimant nor to solicit orders from, nor to supply, any of its recent customers. Following termination of his employment, he solicited orders from a number of its recent customers. The Court of Appeal held that the claimants legitimate interests justified the covenants against solicitation and supply but that the covenant against dealing was unreasonable. It held, however, that the latter should be removed following severance and the former enforced. By a judgment delivered on its behalf by Russell LJ, it held at p 135 that the latter could be removed without altering the nature of the contract and that its removal would not confer on the former a meaning and effect different in kind and extent. Then, at p 136, the court addressed the further step apparently required by the Attwood case; and, although it did so in slightly ambiguous terms, a careful reading of the report impels the conclusion that it was referring to what I have described as the second requirement in the Attwood case, namely that the part proposed to be removed should be no more than trivial or technical. The court declared that it looked askance at this requirement, which, it added, much strains our loyalty to precedent and with which a decision of equal stature, namely that of the Court of Appeal in the Scorer case, was wholly inconsistent. The post employment covenant in Sadler v Imperial Life Assurance Co of Canada Ltd [1988] IRLR 388 arose in circumstances significantly different from those addressed above. The defendant employed the claimant as an insurance agent on commission, to be calculated by reference to premiums paid to the defendant for the first ten years under any policy which he had procured. A clause of the contract stated that, if in certain circumstances he left the defendants employment, it would, subject to a proviso, continue to pay him commission in respect of premiums thereafter paid to it for the first ten years under any policy which he had procured. The proviso was that this post employment commission would cease if he began to work for another insurance company. The claimant left the defendants employment and began to work for another insurance company. The defendant refused to pay him further commission. In his claim for payment of it he contended that the proviso was in unreasonable restraint of trade and thus void and that it should be severed and removed from the remainder of the clause, which should continue to entitle him to the commission. Mr Peter Crawford QC, sitting as a deputy judge of the Queens Bench Division, upheld his claim. He rejected the defendants contention that if, which it had denied, the doctrine against restraint of trade applied at all, the whole clause, including for the payment of further commission, was void. Following a survey of the authorities, the deputy judge concluded at para 19 that the proviso could be removed from the remainder of the clause since (1) there was no need to add to or modify the wording of the remainder, (2) the remainder continued to be supported by adequate consideration and (3) the removal did not so change the character of the contract that it becomes not the sort of contract that the parties entered into at all. Save for one complicating feature, the circumstances in Marshall v NM Financial Management Ltd [1995] 1 WLR 1461 were similar to those in the Sadler case. The claimants remuneration from the company was again linked to premiums paid over many years under policies issued by the company which he had procured. Again the contract included a clause that in specified circumstances such remuneration should continue to be paid notwithstanding termination of his agency; but in this case payment was subject to two provisos. The first was that in the immediately following year he should not work for a competitor. Within that year the claimant, then aged 40, did work for a competitor. Mr Jonathan Sumption QC, sitting as a deputy judge of the Chancery Division, chose to apply the three criteria for severance which had been identified in the Sadler case; but he suggested a fourth, namely that severance should be consistent with the public policy underlying avoidance of the offending part. He said at p 1466 that application of the third criterion, which called for inquiry into change in the character of the contract, was altogether more satisfactory than the more traditional and question begging statement of the test: whether there is one obligation or more than one. The complicating feature was the second proviso, which identified an alternative route to entitlement to post employment commission, namely that on termination the agent should have attained the age of 65. This second proviso was not even arguably in restraint of trade but, if the first proviso were alone to be removed, the second would survive to preclude payment of the commission to the claimant. In the event the deputy judge regarded both provisos as linked and removed them both. In the Marshall case the Court of Appeal, [1997] 1 WLR 1527, dismissed the companys appeal against the deputy judges decision. Millett LJ observed at p 1531: Although the question is described as one of severance it is important to bear in mind that we are not concerned to decide how much of an offending restriction should be struck down. In such a case the question is to what extent can the party who imposed the restriction enforce those parts of it which are not in unreasonable restraint of trade. We are concerned with a very different question, namely, whether the party who has been freed from an invalid restraint of trade can enforce the remainder of the contract without it. As Millett LJ observed, it was the employee (or agent) who was seeking severance in the Sadler and Marshall cases; and therefore there was no relevance in the public policy reasons for restricting severance when sought by overbearing employers who had required their employees to subscribe to extravagant restraints. In Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613, [2007] ICR 1539, the defendants, who had been employed by the claimant as independent financial advisers, covenanted that, for the year immediately following termination of their employment, they would not deal with any of the claimants clients with whom they had dealt in the preceding year; and that, if they had then dealt with agents of its clients, the agents should be deemed to be its clients for this purpose. The Court of Appeal held that the deeming of agents as clients was unreasonable; that the covenant should be severed and the deeming provision removed; and that the remainder of the restraint should be enforced against the defendants. In a judgment with which Sir Anthony Clarke MR and Carnwath LJ agreed, Maurice Kay LJ (a) observed at para 34 that [a]t one stage there had been an assumption in the authorities, such as the Mason case, that courts should be reluctant to sever a covenant in restraint of trade in favour of an employer; (b) declared at paras 35 37 that the appropriate starting point was what Lord Sterndale and Younger LJ had said in the Attwood case; (c) noted at para 38 that in the T Lucas case, cited in para 69 above, the court had authoritatively rejected the second prerequisite of severance which Younger LJ had identified; addressed at para 40 the three criteria identified in the Sadler case and (d) noted that it had been applied both in the Marshall case and in the TFS Derivatives case cited in para 41 above; (e) rejected at paras 41 and 42 the suggestion that those three criteria applied only to claims by employees to post employment commission and likened the third criterion to the reference in the T Lucas case to the availability of severance if achievable without altering the nature of the contract; (f) approaching these cases and should be adopted; and (g) the deeming provision removable. concluded at para 44 that application of those three criteria rendered suggested at para 43 that the threefold test is a useful way of Following the decision in 2007 in the Beckett case, there have been a number of decisions at first instance in which issues of severability of post employment restraints have been determined by reference to those three criteria, sometimes with the addition of the fourth criterion suggested in the Marshall case. For example, in East England Schools CIC v Palmer [2013] EWHC 4138 (QB), [2014] IRLR 191, the claimants business was that of an agency which sought to find teachers for schools with teaching vacancies. Among the post employment restraints included in the first defendants contract with the claimant was a provision that, whether as shareholder or otherwise, she should not be concerned with the supply of Services to any school or teacher with whom she had had recent dealings. Mr Richard Salter QC, sitting as a deputy judge of the Queens Bench Division held at para 77 that this provision, which specifically extended to her status as a shareholder, was unreasonably wide because it would even prevent her from having a minority shareholding in a competing company which supplied such services. But, by reference to the three criteria and the additional criterion, he proceeded to declare that the provision should be severed and removed from the remainder of the restraints, which were enforceable. He had therefore asked himself at para 86 whether severance would change the underlying character of the contract. He had not asked himself whether the unreasonable provision in effect formed a separate covenant. In UK Power Reserve Ltd v Read [2014] EWHC 66 (Ch) there was focus, yet again, on whether the effect of the words concerned or interested in a post employment restraint was to preclude the ex employee from having no more than a passive minority shareholding in a competitor, because, if so, they were unreasonably wide. Mr Jeremy Cousins QC, sitting as a deputy judge of the Chancery Division, held that, in the light of a proviso, such was not the effect of the words. But in paras 87 to 93 he observed in passing that, had such been their effect, he would have severed the covenant and removed them from the remainder in accordance with the four criteria first identified in the Sadler and Marshall cases. He referred in para 87 to the strong body of recent authority which suggested that the law had developed so as to require them to be applied. In Freshasia Foods Ltd v Lu [2018] EWHC 3644 (Ch) Mr Daniel Alexander QC, sitting as a deputy judge of the Chancery Division, recently granted an interlocutory injunction by way of enforcement of parts of an employees non solicitation post employment covenant. Treating the inquiry as purely interlocutory, he made only provisional determinations. These were that three aspects of the covenant were unreasonably wide but that, following severance, they should be removed from the remainder. Prompted in part, so it would seem, by the Court of Appeals decision against which this present appeal is brought, he conducted a wide ranging survey of the law of severance of post employment restraints in which he made a number of valuable observations. Even more recently, following a full hearing, Arnold J delivered a judgment in the Freshasia Foods case, [2019] EWHC 638 (Ch), in which he ruled at para 144 that the employer had failed to establish legitimate interests which required the protection of the covenant. He therefore declined to continue the injunction; and, apart from adverting to the difficulty of reconciling the decision in the Beckett case with the decision under present appeal, he explained at para 148 that he had no need to address the issues relating to severance. This final disposal of the application does not however detract from the value of the deputy judges observations. In particular he (a) observed that the deeming provision in the Beckett case could not be regarded as a separate covenant but had nevertheless been severed (para 37); (b) inferred from the Beckett case that the historical reluctance to sever, exemplified in the Mason and Attwood cases, was something of a relic (para 41); (c) recognised on the one hand that an employer had legitimate interests worthy of protection in the public interest; that they might easily be prejudiced when an important employee left; and that they should not be frustrated by too narrow an approach to severability (para 48); (d) recognised on the other hand that Lord Moultons concerns in the Mason case remained valid; and that the law should not allow an employer first to extract an unreasonably wide restraining covenant, inhibiting the employee from leaving to work elsewhere and even from threatening to do so in order to obtain fairer terms from him, and then, if challenged in court, too easily to secure its removal and the enforcement of the remainder (paras 49 and 50); (e) questioned whether Lord Moultons concerns were best addressed by a rule which denies severance of a term within a single covenant, even if insignificant (paras 51 and 52); and (f) concluded that it might be preferable to address substance rather than form and thus to permit the removal of relatively minor terms if it would not materially change the nature of the contract (para 53). A survey of the development in England and Wales of the severance principle, when applied to post employment restraints of trade, would be deficient if it failed to note the current standing of the principle in other common law jurisdictions. In Shafron v KRG Insurance Brokers (Western) Inc [2009] 1 RCS 157 the Supreme Court of Canada, by a judgment delivered by Rothstein J, firmly adhered at para 36 to the historical approach directed by the Attwood case from the foot of the observations of Lord Moulton; and it even rejected the move in the T Lucas case to shed the second requirement of triviality or technicality. By contrast, in Lee Gwee Noi v Humming Flowers and Gifts Pte Ltd [2014] SGHC 64, a magisterial survey of the standing of the principle in Singapore, albeit conducted at first instance, concluded that its application there was subject to the three criteria approved in the Beckett case: paras 155 and 172. In New Zealand the legislature has relieved the courts altogether from the shackles of the severance principle by conferring on them a discretion actively to rewrite an unreasonable covenant in restraint of trade: see section 83(1)(b) of the Contract and Commercial Law Act 2017. Now, at last, it becomes appropriate to address the reasoning of the Court of Appeal in refusing to sever the words or interested from the remainder of Ms Tillmans non competition covenant. In paras 29 and 30 Longmore LJ cited the Attwood case for the proposition that parts of a single covenant could not be severed; and he observed that, in that it prevented Ms Tillman from engaging or being concerned or interested in a competing business in any one of several capacities, the non competition covenant had to be read as a whole and could not be severed. In para 33 he rejected the companys submission that the three criteria approved in the Beckett case had replaced the requirement for separate covenants. He explained that: The requirement is reflected in the third of the three tests because it must always be doubtful whether parts of a single covenant can be deleted without the contract becoming not the sort of contract that the parties entered into at all. We in this court have had the benefit of fuller argument and greater opportunity for reflection than had the Court of Appeal. At all events it is clear that, even were the Attwood case still to be regarded as authoritative, that court took a narrow view of its effect in appearing to discern a single covenant by reference to nothing other than the form of its words. More importantly, however, the time has come to determine whether the Attwood case should remain authoritative. High ranking employees can do particular damage to the legitimate interests of their employers following termination of their employment; and it may be that, when they enter into their post employment covenants, they are able to negotiate with their employers on nearly an equal footing. As Denning LJ said in M & S Drapers v Reynolds [1957] 1 WLR 9, 19, A managing director can look after himself; and so, arguably, could Ms Tillman. But then he added: A traveller is not so well placed to do so. The law must protect him. It is clearly common practice for an employer to present a prospective employee with a substantial written contract, many terms of which, including those imposing post employment restraints, are derived from books of precedent. It is as valid in 2019 as it was in 1913 to infer that most prospective employees will not be able, even if minded, to decline to accept such terms, still less, following the end of their employment, to defend a claim that they are in breach of them. The courts must continue to adopt a cautious approach to the severance of post employment restraints. Nevertheless both of the requirements which were shoe horned into the law by the Attwood case were, as we have seen, to prove both instantly controversial and ultimately unsatisfactory. An inquiry whether the covenant proposed to be severed was indeed one covenant or whether in effect it was more than one covenant proved to be of elusive application, largely dependent on the eye of the beholder. Why was the list of prohibited trades in the Attwood case one covenant but the list of prohibited areas in each of the Putsman and Scorer cases in effect more than one covenant? And, being a question noted in para 78(e) above, why should an unreasonable restraint of insignificant proportions fail to qualify for severance just because of its place in a single covenant? The second requirement of triviality or technicality reflected an attempt to sideline application of the entire severance principle to post employment restraints. It is far from clear that, even in 1913 and 1920, public policy demanded it; and in 1972 in the T Lucas case, it was rightly criticised in the strongest possible terms, following which it fell away. criteria indorsed in the Beckett case. The first is that the unenforceable provision is capable of being removed without the necessity of adding to or modifying the wording of what remains. This is the so called blue pencil test. Unfortunately it can work capriciously and, if the aspiration of our judgments today had been to discern in the common law a principle which can always be applied so as to produce a sensible outcome, we would have laboured in vain. In his judgment in the Divisional Court in the Attwood case, cited in para 61 above, Bailhache J said at p 155: It therefore becomes appropriate to analyse the effect of each of the three the courts will sever in a proper case where the severance can be performed by a blue pencil but not otherwise. To give an illustration, a covenant not to carry on business in Birmingham or within 100 miles may be severed so as to reduce the area to Birmingham, but a covenant not to carry on business within 100 miles of Birmingham will not be severed so as to read will not carry on business in Birmingham. The distinction seems artificial, but is I think settled. The distinction is indeed settled. It is inherent in the word severance itself, which means cutting things up and does not extend to adding things in. The blue pencil criterion is a significant brake on application of the principle; and, although it can work arbitrarily, it is in my view an appropriate brake on the ability of employers to secure severance of an unreasonable restraint customarily devised by themselves. Were it ever to be thought appropriate to confer on the court a power to rewrite a restraint so as to make it reasonable, it would surely have to be achieved by legislation along the lines of that in New Zealand which has been noticed in para 79 above. The second criterion is that the remaining terms continue to be supported by adequate consideration. It goes without saying that an employer who sues on a covenant made otherwise than under seal must show that he provided consideration for it. But why is it said to be a prerequisite of his ability to sever? The answer is surely to be found in the unusual circumstances of the Sadler and Marshall cases, which generated the criteria adopted in the Beckett case. In those two cases it was the claimant employee who secured severance of unreasonable obligations cast by the contract upon himself. In that situation the court needed to satisfy itself (and in each case it did so) that, were his unreasonable obligation to be removed, there would nevertheless remain consideration passing from him under the contract such as would support the obligation which he was seeking to enforce. In the usual post employment situation, however, the need to do so does not arise. A claimant employer who asks the court to sever and remove part of a covenant made by the defendant employee is in no way proposing to diminish the consideration passing from himself under the contract such as is necessary to support the obligation which he seeks to enforce. In the usual situation the second requirement can be ignored. The third criterion is that the removal of the unenforceable provision does not so change the character of the contract that it becomes not the sort of contract that the parties entered into at all. This is the crucial criterion and I find it impossible to equate it with the Attwood requirement, as suggested by the Court of Appeal. In my view this third criterion was rightly imported into the general jurisprudence by the Beckett case and has rightly been applied by our courts ever since then, otherwise than in the decision under appeal. But I suggest, with respect, that the criterion would better be expressed as being whether removal of the provision would not generate any major change in the overall effect of all the post employment restraints in the contract. It is for the employer to establish that its removal would not do so. The focus is on the legal effect of the restraints, which will remain constant, not on their perhaps changing significance for the parties and in particular for the employee. Application of the severance principle to Ms Tillmans restraint covenants now becomes straightforward. First, the words or interested are capable of being removed from the non competition covenant without the need to add to or modify the wording of the remainder. And, second, removal of the prohibition against her being interested would not generate any major change in the overall effect of the restraints. So those words should be severed and removed. Another of the Court of Appeals objections to removing the words or interested from Ms Tillmans non competition covenant was that removal would be idle in that the remainder would continue unlawfully to oblige her not to hold any shares in companies of the character there specified. For the covenant would then become that she would not directly or indirectly engage or be concerned in any business; and, so the Court of Appeal considered, any holding of shares in a company would mean that she was indirectly concerned in it. The company expressly accepts, at any rate in this court, that, if necessary, it would be content for the words or be concerned also to be removed from Ms Tillmans covenant; and my view is that, had the Court of Appeals construction of the word concerned been correct, it would, by reference to the criteria identified above, have been appropriate also to remove them. But are you, as no more than a shareholder in a company, concerned in it? In Ashcourt Rowan Financial Planning Ltd v Hall [2013] EWHC 1185 (QB), [2013] IRLR 637, the defendants non competition covenant prohibited him from being engaged or concerned in any business. It did not include the words or interested. Andrew Smith J concluded at para 39, that the word concerned denoted working for the business or having some other active involvement in it and so did not extend to a proprietary interest, such as a shareholding, in it. But a conclusion which there was clearly borderline becomes stronger in the present case. For Ms Tillman covenanted that she would not engage or be concerned or interested ; and there was no specific reference to her doing so as a shareholder, as there was in the East England Schools case. Conventional principles of construction require value to be attributed, if possible, to each word of an agreement. But, were the word concerned to be construed so as to cover passive interest in a business such as that enjoyed by a shareholder, what value would be left to be attributed to the word interested? Nor is such an exercise in construing the word concerned undermined by the fact that the words or interested are to be severed and removed. The meaning which the words of an agreement carry at its inception is not changed by later events. In British Reinforced Concrete Engineering Co Ltd v Schelff [1921] 2 Ch 563, 573, Younger LJ (no less) said: Now the effect of severing by striking out with a blue pencil the obnoxious part of a covenant is not to alter or affect the construction of what is left. That must be construed as if the portion struck out still remained Conclusion I therefore propose that the court should set aside the Court of Appeals order and should overrule the decision in the Attwood case; and that, although the contractual period of the restraints has expired long ago, it should formally restore the injunction granted by Mann J, subject only to the removal of the words or interested. The court should also invite submissions on the proper orders in respect of the costs incurred in each of the three courts. In para 104 of his judgment on the interim inquiry into the Freshasia Foods case the deputy judge described as legal litter the unreasonable parts of post employment restrictions to which employers extract the agreement of prospective employees; and he added that they cast an unfair burden on others to clear them up. It is a neat metaphor. In my view the company should win but there might be a sting in the tail. |
This appeal concerns the lawfulness of a bus companys policy in relation to the use of the space provided for wheelchair users on its buses. The factual and procedural background At around 9.35 in the morning of 24 February 2012, Mr Doug Paulley, who is a wheelchair user, arrived at Wetherby bus station, expecting to catch the 9.40 bus (the Bus) to Leeds. On arrival at Leeds he intended to catch the train to Stalybridge to meet his parents for lunch. The Bus was operated by a subsidiary of FirstGroup PLC (FirstGroup), which is the parent company of a group of companies which operates a total of about 6,300 buses. The Bus was equipped with a lowering platform and a wheelchair ramp. The Bus also had a space (a space) for wheelchairs, which included a sign that read Please give up this space if needed for a wheelchair user. When Mr Paulley started to board the Bus, the driver, Mr Britcliffe, asked him to wait because the space was occupied by a woman with a sleeping child in a pushchair. The space had a sign with the familiar designation of a wheelchair sign, and in addition it had a notice (the Notice) saying Please give up this space for a wheelchair user. Mr Britcliffe asked the woman to fold down her pushchair and move out of the space so that Mr Paulley could occupy it in his wheelchair. She replied that her pushchair did not fold down, and refused to move. Mr Paulley then asked whether he could fold down his wheelchair and use an ordinary passenger seat. Mr Britcliffe refused that request, because there was no safe way of securing the wheelchair and the Bus had to take a rather winding route. As a result, Mr Paulley had to wait for the next bus, which left around 20 minutes later. The consequence of this was that Mr Paulley missed his train at Leeds, and had to take a later train which arrived at Stalybridge an hour later than he had planned. Although Mr Paulley was a frequent bus user, this was the first time that he was unable to get on a bus because someone refused to vacate the space. Mr Paulley issued proceedings in the Leeds County Court against FirstGroup for unlawful discrimination against him on the ground of his disability. His claim was based on the proposition that FirstGroup had failed to make reasonable adjustments to its policies contrary to section 29(2) of the Equality Act 2010. The claim came on before Recorder Isaacs. The evidence showed that FirstGroups published policy about wheelchairs and their users at the time of the incident was this: By the time of the trial, the published policy had changed somewhat, and it was in these terms: As part of our commitment to providing accessible travel for wheelchair users virtually all our buses have a dedicated area for wheelchair users; other passengers are asked to give up the space for wheelchairs. If the bus is full or if there is already a wheelchair user on board unfortunately we will not be able to carry another wheelchair user. Wheelchairs do not have priority over buggies, but to ensure that all our customers are treated fairly and with consideration, other customers are asked to move to another part of the bus to allow you to board. Unfortunately, if a fellow passenger refuses to move you will need to wait for the next bus. As part of our commitment to providing accessible travel for wheelchair users virtually all our buses have a dedicated wheelchair area for wheelchair users; other passengers are asked to give up the space for wheelchairs. Wheelchair users have priority use of the wheelchair space. If this is occupied with a buggy, standing passengers or otherwise full, and there is space elsewhere on the vehicle, the driver will ask that it is made free for a wheelchair user. Please note that the driver has no power to compel passengers to move in this way and is reliant on the goodwill of the passengers concerned. Unfortunately, if a fellow passenger refuses to move you will need to wait for the next bus. The evidence before the Recorder established that Mr Britcliffe had followed FirstGroups policy, by asking the woman with the pushchair to move from the space, but, when she refused, by taking the matter no further. Mr Birtwhistle, FirstGroups UK Bus Projects Manager, told the Recorder that in the main passengers complied with a request to give up the space. Mr Birtwhistle also explained why FirstGroup had adopted the policy set out in paras 7 and 8 above. The company had carried out a review of the way it communicated with its customers, and found that many of them thought that it was putting up too many peremptory notices on buses. FirstGroup had concluded that it would be better policy to use more pleasant and engaging notices which were friendlier to customers. So far as FirstGroups policy about the space was concerned, Mr Birtwhistle said that it was designed to cause the customer to think Somebody else needs this space. I will be reasonable. I will move away from it. The policy was intended to be non confrontational and placatory. The Recorder found for Mr Paulley and awarded him 5,500 damages. FirstGroup appealed to the Court of Appeal who allowed its appeal [2015] 1 WLR 3384. Mr Paulley now appeals to this Court. The legal requirements in relation to public service vehicles Mr Paulleys claim was based on his allegation that FirstGroup had failed to comply with its duties under the Equality Act 2010, and it is therefore appropriate to set out the relevant provisions of that Act. However, before doing so, I should refer to earlier legislation applicable to public service vehicles, as it was relied on by the Court of Appeal, and it was also canvassed in the arguments before this Court. The Bus was a public service vehicle for the purposes of the Public Passenger Vehicles Act 1981 (the 1981 Act), and it was therefore required to comply with Schedule 1 to the Public Service Vehicles Accessibility Regulations 2000 (SI 2000/1970) (the Accessibility Regulations). Paragraph 2 of that Schedule required the Bus to have at least one wheelchair space on the lower deck, which had to comply with para 3 or 4. The Bus complied with para 4, which contains detailed specifications as to the size and other characteristics of the space, and also envisages that a folding or tip up seat may be placed in the space, and requires there to be a notice on or near such a seat stating Please give up this seat for a wheelchair user. The Bus was also required to carry a sign adjacent to the space which showed a representation of a person in a wheelchair. Paragraph 3 of Schedule 2 to the Accessibility Regulations requires there to be at least four seats designated as priority seats for use by disabled passengers, and a sign on or near a priority seat indicating that disabled persons have priority for the use of that seat. Section 25 of the 1981 Act also enables regulations to be made authorising the driver of a bus or, at his request, a police constable to remove a passenger infringing what are known as the Conduct Regulations, namely the Public Service Vehicles (Conduct of Drivers, Inspectors, Conductors and Passengers) Regulations 1990 (the Conduct Regulations) (SI 1990/1020), which were made under these powers. Para 5(2) of the Conduct Regulations provides: A driver, inspector and conductor shall take all reasonable steps to ensure that the provisions of these Regulations relating to the conduct of passengers are complied with. Para 6(1) of the Conduct Regulations states that no passenger shall, inter alia: (b) put at risk or unreasonably impede or cause discomfort to any person travelling on or entering or leaving the vehicle (k) remain on the vehicle, when directed to leave by the driver, inspector or conductor on the following grounds: (i) that his remaining would result in the number of passengers exceeding the maximum seating capacity or maximum standing capacity (ii) (iii) cause offence to a reasonable passenger that he has been causing a nuisance; or that his condition is such as would be likely to Para 6(2) of the Conduct Regulations states that: [A] passenger on a vehicle who has with him [inter alia any bulky or cumbersome article] or any animal if directed by the driver, inspector or conductor (a) to put it in a particular place on the vehicle, shall put it where directed; and (b) driver, inspector or conductor, shall remove it. if requested to move it from the vehicle by the Para 8(2) of the Conduct Regulations provides that any passenger on a vehicle who contravenes any provision of those regulations may be removed from the vehicle by the driver or, on the request of the driver, by a police constable. The Conduct Regulations were amended by the Public Service Vehicles (Conduct of Drivers, Inspectors, Conductors and Passengers) (Amendment) Regulations 2002 (SI 2002/1974), under powers conferred by the Disability Discrimination Act 1995, to deal with wheelchair users. Para 12 of the Conduct Regulations as inserted by the amendments provides that: the wheelchair is of a type or size that can be (2) If there is an unoccupied wheelchair space on the vehicle, a driver and a conductor shall allow a wheelchair user to board if (a) correctly and safely located in that space, and (b) in so doing, neither the maximum seating nor standing capacity of the vehicle would be exceeded. (3) For the purpose of paragraph (2), a wheelchair space is occupied if (a) (b) passengers or their effects are in that space and they or their effects cannot readily and reasonably vacate it by moving to another part of the vehicle. (4)(e) [B]efore the vehicle is driven [the driver must ensure that] any wheelchair user is correctly and safely positioned in a wheelchair space. there is a wheelchair user in that space; or In addition a bus driver has duties to help wheelchair users to board and alight and, where appropriate, to fit wheelchair restraints. When the Conduct Regulations were amended, the Government issued written guidance about their application. The introduction said that the Government was committed to comprehensive and enforceable civil rights for disabled people. Achieving a fully accessible public transport system is a key element of that policy. Dealing with the space the guidance said: A wheelchair user must only be carried if there is a wheelchair space available and the seating and standing capacity of the vehicle will not be exceeded. Because buses often carry more seated and/or standing passengers when the wheelchair space is unoccupied the opportunity for a wheelchair user to travel may depend on other passengers and how full the vehicle is at the time. If there is space available and the seating and standing capacity will not be exceeded when the space is occupied then any passengers in the wheelchair space should be asked to move. This may not be practical if, for example, the vehicle is nearing its capacity or passengers with baggage or a baby buggy are using the space. The Equality Act 2010 The 2010 Act now governs cases of discrimination on the ground of a protected characteristic. Disability is one such characteristic. Section 6(3) provides: In relation to the protected characteristic of disability a reference to a person who has a particular (a) protected characteristic is a reference to a person who has a particular disability; (b) a reference to persons who share a protected characteristic is a reference to persons who have the same disability. It is common ground that Mr Paulleys particular disability for the purposes of section 6(3)(a) is a physical condition which requires him to use a wheelchair. Accordingly, this case is concerned with disadvantages faced by wheelchair users rather than people with other kinds of disability. FirstGroup is a public service provider. Accordingly it falls within section 29 of the 2010 Act, which provides: (1) A person (a service provider) concerned with the provision of a service to the public or a section of the public (for payment or not) must not discriminate against a person requiring the service by not providing the person with the service. (2) A service provider (A) must not, in providing the service, discriminate against a person (B) as to the terms on which A provides the service (a) to B; (b) by terminating the provision of the service to B; (c) by subjecting B to any other detriment. In addition, under section 29(7) of the 2010 Act, as a public service provider, FirstGroup has a duty to make reasonable adjustments, and by virtue of section 20, that duty involves complying with three requirements, the first of which is in section 20(3), which is in these terms: (3) The first requirement is a requirement, where a provision, criterion or practice of As puts a disabled person at a substantial disadvantage in relation to a relevant matter in comparison with persons who are not disabled, to take such steps as it is reasonable to have to take to avoid the disadvantage. According to section 21(1), the word substantial in subsection 20(3) means more than minor or trivial. The applicable Schedule for the purposes of section 20(1) of the 2010 Act is in this case Schedule 2, paragraph 2 of which provides: (1) A must comply with the first, second and third requirements. (2) For the purposes of this paragraph, the reference in section 20(3), (4) or (5) to a disabled person is to disabled persons generally. Again, it is common ground that paragraph 2(2) of Schedule 2 is, on the facts of this case, concerned with wheelchair users generally, rather than any wider class of disabled persons. Section 21 provides: (1) A failure to comply with the first, second or third requirement is a failure to comply with a duty to make reasonable adjustments. (2) A discriminates against a disabled person if A fails to comply with that duty in relation to that person. (3) A provision of an applicable Schedule which imposes a duty to comply with the first, second or third requirement applies only for the purpose of establishing whether A has contravened this Act by virtue of subsection (2); a failure to comply is, accordingly, not actionable by virtue of another provision of this Act or otherwise. When considering whether a proposed adjustment to a provision, criterion or practice (PCP) is reasonable in any particular case, the Code of Practice on Services, Public Functions and Associations issued by the Equality and Human Rights Commission states at para 7.30 that, without intending to be exhaustive, some of the factors which might be taken into account include: whether taking any particular steps would be effective in overcoming the substantial disadvantage that disabled people face in accessing the services in question; provider to take the steps; the extent to which it is practicable for the service the financial and other costs of making the adjustment; the extent of any disruption which taking the steps the extent of the service providers financial and other the amount of any resources already spent on making would cause; resources; adjustments; and the availability of financial or other assistance. The judgments below The Recorder considered that there was no difference of substance between FirstGroups policy at the time of the incident and its policy at the time of the hearing. (I am not sure that I agree, but the contrary was not argued, and it is not an issue which needs to be resolved on this appeal. In so far as it is relevant, this judgment is directed to the current policy, ie as set out in para 8 above). He found that this policy was a PCP, which he described as a policy of first come first served, whereby a non wheelchair user occupying the space on the bus would be requested to move but if the request was refused nothing more would be done. The Recorder also found that this PCP was a policy which placed Mr Paulley and other wheelchair users at a substantial disadvantage by comparison with non disabled bus passengers. Crucially for present purposes, the Recorder went on to hold that there were reasonable adjustments that FirstGroup could have made to the PCP which would have eliminated that disadvantage. Those reasonable steps were, at least as I read his judgment, (i) an alteration to the Notice which would positively require a non disabled passenger occupying a space to move from it if a wheelchair user needed it, coupled with (ii) an enforcement policy that would require non disabled passengers to leave the bus if they failed to comply with that requirement. In this connection, it is common ground that FirstGroups conditions of carriage do not give a driver power to require, let alone to force (as opposed to request) a non wheelchair user to move out of a space needed by a wheelchair user, or to leave the bus if she refuses to do so. More particularly, the Recorder said that the contention that the system of priority given to wheelchair users should be enforced as a matter not of request to any non wheelchair user (to use the inelegant but convenient term), but of requirement was in his view a reasonable one, because: It could be incorporated into [FirstGroups] conditions of carriage so that any non disabled non wheelchair using passenger could be obliged to leave the space if requested to do so because a wheelchair user needed to use it; just as there are conditions of carriage which forbid smoking, making a nuisance or other anti social behaviour on pain of being asked to leave the bus then a refusal to accede to a requirement to vacate the space could have similar consequences. In my view once the system had been advertised and in place there would be unlikely to be caused any disruption or confrontation as all passengers would know where they were. Although such a policy might inconvenience a mother with a buggy that, I am afraid is a consequence of the protection that Parliament has chosen to give to disabled wheelchair users and not to non disabled mothers with buggies. I agree with the claimant that the [Conduct] Regulations do not really assist the court in determining whether the proposed adjustment suggested by the claimant is reasonable or not. (para 21) FirstGroups appeal to the Court of Appeal was due to be heard with another appeal in a case heard in the Middlesborough County Court involving virtually identical facts, Black v Arriva North East Ltd, where His Honour Judge Bowers had found an identical policy did not involve unlawful discrimination under the 2010 Act see [2013] EqLR 558. However, that appeal was withdrawn. Although FirstGroups appeal in this case was unanimously allowed, in one respect the reasons given by Lewison LJ (who gave the leading judgment) differed from those of Arden and Underhill LJJ. While Underhill and Arden LJJ considered that the PCP put Mr Paulley and other wheelchair users at a substantial disadvantage in comparison with persons who were not [so] disabled, Lewison LJ was not convinced that this was so see paras 62 65 (Underhill LJ), 72 73 (Arden LJ), and paras 35 39 (Lewison LJ). The majority view of the Court of Appeal is not challenged by FirstGroup in this Court (rightly, as I am currently inclined to think). All three members of the Court of Appeal considered that the lawfulness of FirstGroups policy should be assessed on the basis that it had a PCP which they formulated in slightly different terms from the Recorder, although they accepted that this difference did not affect the outcome see per Lewison LJ at para 34. They said that the proper approach started by accepting that FirstGroup had a PCP which involved operating its buses on a first come first served basis and then asking whether the modification to that PCP, namely to request but not to require non wheelchair users to vacate the space, and if necessary the bus, when a wheelchair user wants to use the space, is an adjustment that went far enough to comply with the duty to make reasonable adjustments. There is no challenge in this Court to that proposition (again, rightly in my view). The Court of Appeal decided that it was not reasonable to hold, as the Recorder had done, that FirstGroup should adjust its PCP so that its drivers required, rather than requested, non wheelchair users to vacate a space when it was needed by a person in a wheelchair, and then positively to enforce that requirement, with the ultimate sanction being removal from the bus. The Court of Appeal considered that the adjustment which the Recorder upheld would be both unfair and impractical because: i) (a) It would be unreasonable for the adjustment to extend to all non wheelchair users including those whose refusal to vacate the space was reasonable, as such an adjustment could unfairly affect other passengers (para 55), and If the adjustment was limited to non wheelchair users who (b) unreasonably refused to vacate the space, it would be impracticable as it would require the driver to decide whether a passenger was being unreasonable (paras 48 and 52 53), and, in any event, ii) It would not be reasonable to expect a driver to try and enforce the proposed amended policy by seeking physically to remove such a person from the space or the bus, or by halting the bus until that person vacated the space or the police arrived (paras 49 50). In addition, the Court of Appeal doubted that the proposed adjustment to the PCP could be enforced through the police, because a person who disobeyed it would not be guilty of criminal activity unlike a person who was in breach of the Conduct Regulations (paras 49 50 and 67). The Court of Appeal also rejected the notion that the Notice in the space or the drivers request could have been more prescriptive. Lewison LJ based this view on the grounds that the Recorder had accepted Mr Birtwhistles evidence that FirstGroups research had shown that the company achieved better results with more customer friendly signage and that negative prescriptive signage produced a worse outcome; yet he did not consider that evidence in his assessment of the effectiveness of the adjusted PCP that he endorsed (para 51). Underhill LJ addressed this issue more fully at para 68. He said that he would: hope and expect that, other things being equal, a driver whose first request to a non wheelchair user to vacate the wheelchair space was refused would not simply shrug his or her shoulders and go back to the cab, and that there would normally be some attempt at further persuasion or pressure (possibly even including a threat not to proceed with the journey until the space is cleared though this risks seriously inconveniencing other passengers). However, he considered that: The circumstances in which such a refusal is encountered are liable to vary enormously. In most cases further attempts at persuasion or pressure would be appropriate, but in some they might not be: as Lewison LJ has illustrated, there will be cases where it would be obviously unreasonable to expect the person occupying the space to vacate it, and there would be others where the question of whose need was the greater was at least debatable and where it would not be fair to expect the driver to have to make a decision. Also, the temperaments and experience of different drivers are bound to vary: some would handle such a situation well, but others might find it difficult to cope with. It would be unrealistic for a company to have a policy which prescribed calibrated responses covering the whole range of possible situations. He added that he need not express a final view about any such half way house, since this was not the basis on which the judge decided the case. Arden LJ also discussed this issue, saying at para 80: I consider that the bus company must provide training for bus drivers and devise strategies that bus drivers can lawfully adopt to persuade people to clear the wheelchair space when needed by a wheelchair user. Bus drivers have to use their powers of persuasion with passengers who can move voluntarily. The driver may even decline for a short while to drive on until someone moves out of the wheelchair space. There is no risk of liability to such passengers in requesting them (firmly) to move, if they can, because if they cannot safely do so, they will not do so. The bus company should also have an awareness campaign and put up notices designed to make other passengers more aware of the needs of wheelchair users. However, she said in the following paragraph: These steps are not part of Mr Paulleys case: he has limited his case to requiring the bus company to require people to get off the bus when necessary so that a wheelchair user can get on. In reaching their conclusion, the Court of Appeal considered that the Recorder was wrong to ignore the Conduct Regulations. In para 49 of his judgment, in a passage with which Underhill and Arden LJJ agreed, Lewison LJ pointed out that each of the anti social activities identified by the Recorder in the passage quoted in para 12 above is expressly prohibited by the Conduct Regulations, and the police can be called in aid of the driver under regulation 8(2). Accordingly, he continued, [i]n these cases the driver can truthfully say that the passenger is breaking the law. Earlier in his judgment at para 21, Lewison LJ said that he would infer that the Government took the view that the guidance which accompanied the amended para 12 of the Conduct Regulations (and set out in para 19 above) struck the right balance between the interests of wheelchair users on the one hand, and other passengers on the other, and that FirstGroups policy follows this Government guidance. He fairly added that this guidance pre dated the introduction of the duty to make reasonable adjustments which is now contained in the Equality Act 2010, although as he said the guidance has not been withdrawn or amended. What did the recorder decide? As Lewison LJ said in para 30 of his judgment, it follows from the provisions of 2010 Act set out above that if, on the morning of 24 February 2012, FirstGroup failed to comply with its duty to make reasonable adjustments to its PCP of first come first served, in order to avoid the substantial disadvantage which Mr Paulley suffered as a disabled person, it will have unlawfully discriminated against him. As explained above, the Court of Appeal concentrated on the contention that the adjustment which it was said that FirstGroup had wrongly failed to make to its PCP was to have a policy of requir[ing] and if necessary enforc[ing] the requirement (as Mr Allen QC succinctly put it in his argument on behalf of Mr Paulley), as opposed to merely requesting, that non wheelchair users vacate the space if the space was needed by a wheelchair user. This proposal involves two departures from FirstGroups PCP: first it involves the driver requiring, rather than requesting, a non wheelchair user to vacate a space; secondly, in the event of non compliance, it involves the driver, rather than doing nothing, enforcing the requirement by ejecting the non wheelchair user (or getting him or her ejected) from the space, and, if necessary, from the bus. Before discussing the issues of substance, it is necessary to address the question of what the Recorder actually decided. It appears that Lady Hale and Lord Kerr do not read the Recorders judgment as effectively requiring a policy that could lead to a non wheelchair user being ordered off the bus. However, for my part, I accept the submission of Mr Chamberlain QC for FirstGroup that the Recorder did hold that such a policy was mandated. I say that for a number of reasons. First, the Recorder appears to me to have made it clear when he said that a non disabled passenger would either have to vacate the space by, for example, folding a buggy and sitting elsewhere, or by leaving the bus and taking the next bus available in the passage quoted in para 79 of Lord Toulsons judgment. In addition, the Recorder said that the real adjustment alleged on behalf of the claimant was that there should be a clear practice/policy which not only paid lip service to the giving of priority but actually enforced such priority, so that non wheelchair users would realise that if there was competition for [a] space with a wheelchair user they would either have to vacate the space or [leave] the bus. Consistently with this approach, the Recorder then considered the evidence relating to the possibility of enforcing a requirement to vacate the space on an unwilling non wheelchair user who was occupying it, and concluded that the real adjustment which he had identified should have been made by FirstGroup. In addition, there is his reference to any requirement being enforced in the passage quoted at the beginning of para 30 above. Secondly, in answer to a question from Lewison LJ, Mr Allen QC made it clear to the Court of Appeal on behalf of Mr Paulley that it was necessary to have a policy of require and if necessary, enforce, adding [t]hat was our case and that was the case that was put in cross examination. Thirdly, it is quite clear that the hearing before the Court of Appeal, and the judgment of that court proceeded on the basis that the Recorder had accepted Mr Paulleys case, which was that, to be legally valid, any policy should be enforceable, if necessary, by requiring a non wheelchair user to get off the bus. Lewison LJ said at para 41 of his judgment, the arguments on the appeal were limited to the question whether the judge was right to endorse the PCP that he did. There was no Respondents Notice and no argument directed to some alternative and more limited form of PCP that FirstGroup should have adopted. (Mr Allen QC makes a fair criticism that the two references to PCP are mischaracterisations, but it is clear that Lewison LJ meant adjustment rather than PCP). In particular, Lewison LJ said that Mr Paulleys case had involved an amendment to the PCP where no discretion is given to the driver. And Underhill and Arden LJJ expressed views to the same effect see the passages quoted from their respective judgments at the end of paras 36 and 37 above. Further, as Mr Chamberlain QC said, the point is also apparent from exchanges during the argument in the Court of Appeal, including that quoted in para 42 above. Fourthly, Mr Allen QC accepted in his written case in this Court that this is how the case proceeded in the Court of Appeal, at any rate in his opening argument. He said that at first instance there had been no discussion of compel[ling] all other passengers to vacate the wheelchair space irrespective of the reason why they are in it, but, although he contended that FirstGroup did not rely on exceptional circumstances before the Recorder, Mr Allen nowhere disputed the notion that the Recorder concluded that FirstGroups policy should include mandatory enforcement. It is also clear from later passages in his written case that he accepted that the question of mandatory enforcement was floated in argument before the Recorder. Indeed, in his written case, Mr Allen made the point that FirstGroup could enforce any policy by requiring drivers to turn off the bus a non wheelchair user who did not move from a space. Finally, if a bus company must have a policy which actually forces a non wheelchair user to vacate the space, there can be no getting away from the fact that there will be occasions when that policy can only be complied with by forcing someone off the bus: eg when the bus is completely full, when the non wheelchair user cannot stay on the bus unless she remains in the space, or when the non wheelchair user simply refuses to move from the space. A policy of require and if necessary enforce: discussion In my judgment, it is very difficult to disagree with the reasoning of the Court of Appeal in rejecting this contention (the primary contention) advanced on behalf of Mr Paulley. First, in so far as this adjustment involved an absolute rule (ie that any non wheelchair user must vacate the space if it is required by a wheelchair user), it would not be reasonable. Secondly, whether it was an absolute rule or a qualified rule (ie that any non wheelchair user must vacate if it is reasonable), its implementation through the medium of mandatory enforcement would be likely to lead to problems on some occasions. As to an absolute rule, it is true that there is nothing in the primary or secondary legislation which supports the notion that the space allocated for wheelchair users is to be exclusively used by such individuals, although it is clear that that was, in general terms at any rate, the primarily envisaged use. It is also true that there is no absolutist legislative provision comparable to those relating to anti social activities as contained in the Conduct Regulations set out in paras 15 17 above. However, it does not follow from either point that a court could not conclude that, on appropriate facts, an absolute rule such as that suggested by the Recorder would be requisite. As Mr Allen QC argued, the 2010 Act accorded what Lady Hale has called an extra right consistent with the obligations which the United Kingdom has now undertaken under the United Nations Convention on the Rights of Persons with Disabilities Aster Communities Ltd (formerly Housing Homes Ltd) v Akerman Livingstone (Equality and Human Rights Commission intervening) [2015] AC 1399, paras 25 26. Accordingly, I do not consider that, for instance, para 12(3)(b) of the Conduct Regulations (set out in para 18 above) or the guidance set out in para 19 above provides an automatic answer to the notion that, on appropriate facts, there should be an absolute rule. Nonetheless, once one considers the effect of an absolute rule in relation to the use of spaces on buses, it is not difficult to conceive of circumstances in which it could be unreasonable to expect a non wheelchair user to vacate a space and, even more, to get off the bus even though the space is needed by a wheelchair user. As Lewison LJ said (perhaps somewhat optimistically in some cases) in para 48 of his judgment, [a]lmost by definition, a person who refuses to vacate the wheelchair space when asked to do so [to accommodate a wheelchair user] will have a reason which (at least to them) seems to be a reasonable one. Thus, it might be reasonable for a person to refuse to vacate the space, if he or she was disabled and needed the space to store disability aids, or was elderly and infirm, or was accompanying infants, especially, for instance, if that person had an urgent hospital appointment, or would find it physically very difficult to alight from the bus. Or the space might be occupied by a vulnerable person who only felt safe in the space and could not reasonably be required to leave the bus in an unfamiliar or unsafe location. Of course, in some of these types of circumstances, it might be possible for the non wheelchair user to move elsewhere on the bus, but that may be impossible in some cases, or it may only be possible if third parties, not occupying the space, alighted from the bus, which may be unacceptably difficult or even impossible to arrange. Turning to the possibility of a qualified rule, it is right to record that Mr Allen accepted that, even if there was an absolute rule, there could be exceptions to it in cases of real emergency. Such an approach is close to what I have called a qualified rule, viz a rule that non wheelchair users would only be required to vacate a space to accommodate a wheelchair user if it would be unreasonable for them not to do so. I have some doubts whether it would be fair to impose on bus drivers the burden of deciding on the relative needs of a wheelchair user and a non wheelchair user in circumstances when the decision may result in his requiring the non wheelchair user to vacate the bus. However, it is unnecessary to decide that point in the light of what I say in the next three paragraphs. Whether the policy of requiring non wheelchair users to vacate the space, and, if necessary, the bus, is absolute or qualified, it seems to me to be a fair objection that it would often prove difficult (or worse) when it comes to enforcement. As Mr Chamberlain QC put it, it would be likely to cause confrontation with other passengers and delay. This is particularly relevant given the need to take into account practicability and disruption under para 7.30 of the Code of Practice (para 27 above). As I have already mentioned, a non wheelchair user who refused to vacate the space, whether requested or required to do so, would often (indeed, I think, would normally) consider that he or she was entitled to refuse, and would often have arguably good, or at least understandable, reasons for the refusal. Further, if the bus was full, enforcement of the request would require someone to get off the bus. It would be bad enough if that involved the practically fraught requirement that the non wheelchair user who was occupying the space get off the bus; but in some cases, the driver might have to consider whether it would be more appropriate to require one or more third parties to get off, so that, because of her needs, the non wheelchair user could take their place. Accordingly, any enforcement by a driver of the policy proposed by the primary contention would, possibly frequently, be likely to involve confrontation at best and violence at worst. Further, it is by no means clear that there is any statutory obligation on a passenger to comply with a policy relating to use of the space. This is in marked contrast with the situations dealt with in paras 5 and 6 of the Conduct Regulations (see paras 15 and 16 above), which impose a duty on a passenger, as well as on the operator and the driver, in relation to what the Recorder accurately described as anti social behaviour on the part of the passenger. Further, in para 8, those Regulations provide for enforcement by the driver, and where appropriate by the police (see para 17 above). I note what Lady Hale and Lord Kerr say about para 6(1)(b) of the Conduct Regulations. I do not see how it could on any view be relied on if a non wheelchair user was required to get off the bus: reading paras 6(1)(b) and 12(3)(b) together, the most that a driver can require of such a person is that she move elsewhere in the bus. Quite apart from this, I am by no means convinced that a non wheelchair user who unreasonably failed to comply with a request to move from the space would fall foul of para 6(1)(b). Para 12 imposes duties on a driver, not on a passenger, whereas para 6 is concerned with the behaviour of passengers. And para 6(1)(b) has a requirement of reasonableness, and, as mentioned in para 48 above, most non wheelchair users who refuse to vacate a space will believe that they are being reasonable. And, in any event, even if para 6(1)(b) did apply, it would not answer the points made in paras 50 51 above. The less aggressive policy of stopping the bus until the non wheelchair user vacates the space is, in my view, appropriate, provided that it is not required to be mandatory. Again, I find it impossible to accept that a policy would not be held to be reasonable unless it required a driver to stop the bus until a non wheelchair user vacated a space. It would be plainly unfair on the other passengers, particularly in a full bus or in a bus which was connecting with another service (eg a train or another bus), if the driver had to wait for a long time. Indeed, it is not fanciful to think that such a policy could lead to violence. As Buxton LJ said in Roads v Central Trains Ltd (2004) 104 Con LR 62, para 42, [s]teps might be unreasonable for a [service provider] to take if they unreasonably impact on third parties. Again, I draw support from para 7.30 of the Code of Practice. It is true that stopping the bus until a passenger ceased any anti social behaviour was, on the evidence of Mr Britcliffe, a course which a driver occasionally adopted where a passenger persisted in a breach of para 6 of the Conduct Regulations. But it does not follow that it would therefore be reasonable to expect a driver to take the same course in every case where a non wheelchair user refuses to vacate a space needed by a wheelchair user, and may have to leave the bus if he does vacate the space. In a case involving anti social behaviour, there would rarely if ever be a need for a difficult decision about competing needs, and the nature of any confrontation would be likely to be very different from that in a case involving competing claims to occupy the space. Mr Britcliffe made the point in his evidence when he said that theres a lot of difference between a kebab and a new born baby, Im afraid. Further, subject to the possible argument as to the applicability of para 6(1)(b) of the Conduct Regulations, in a case involving anti social behaviour, the police could be called under para 8 of the Conduct Regulations, whereas there is no such provision applicable to a case where a non wheelchair user refuses to vacate a space required by a wheelchair user. A policy of require and pressurise: introductory Rejection of Mr Paulleys primary contention that FirstGroup should have enforced a more prescriptive policy, requiring, rather than requesting, a non wheelchair user to vacate the space when it was required by a wheelchair user and enforcing that requirement, does not mean that it should not have had a more prescriptive policy than it actually had, so far as any notice and instructions from the driver are concerned. Mr Paulleys alternative contention (the alternative contention) is that, even if one rejects his primary contention, FirstGroup should still have adjusted its PCP so that it expressed itself more prescriptively in writing through the Notice and/or orally through the driver. Thus, on behalf of Mr Paulley it is contended that the Notice should have positively required anyone who was a non wheelchair user occupying the space to give it up to a wheelchair user, and that it should have stated that the obligation to vacate would be enforced. It is also contended that Mr Britcliffe, the driver of the Bus, should have told the woman occupying the space that she had to vacate it now that Mr Paulley required it, and that Mr Britcliffe should have refused to drive on, at least for a period, if she did not comply. It is further contended that there was no good reason why FirstGroup could not have adopted such a policy with regard to its notices and its instructions to its drivers. The fact that such written and oral requirements would not be enforced by drivers or the police does not, it is argued, alter the fact that if such stipulations were expressed as requirements, rather than as requests, it is substantially more likely that any non wheelchair user would vacate the space if it was needed by a wheelchair user. A policy of require and pressurise: a procedural problem Although they discussed Mr Paulleys arguments on this point in the passages cited in para 35 37 above, the Court of Appeal took the view that it was not open to Mr Paulley to advance the alternative contention, and in any event that he was not doing so see paras 42 45 above in that connection. They said that the only adjustment with which this case was concerned was that identified in paras 11 and 14 above, namely what I have called the principal contention, viz that, rather than simply requesting, FirstGroup should have required, and enforced the requirement, that persons not in wheelchairs vacate the space when it was needed by a person in a wheelchair. However, the position appears to have been rather different at first instance. Mr Paulleys pleaded case and his counsels skeleton argument advanced a number of potential reasonable adjustments, which FirstGroup should have made to its PCP, and they were advanced both on alternative and on cumulative bases. Those alleged adjustments included the primary contention (ie forcing a recalcitrant non wheelchair user to leave the bus), but they also included a number of alternative contentions including (i) a more peremptory Notice, (ii) the driver insisting that the pushchair was folded and (iii) the driver refusing to move on until the space was vacated (as well as other suggestions). The Recorder referred to the various suggested adjustments in his well constructed and clear judgment, but, as explained in para 42 above described the real adjustment alleged on behalf of the claimant as requiring and enforcing ie Mr Paulleys primary case which he went on to accept. In these circumstances, there are two possible problems with this Court considering Mr Paulleys alternative contention. First, it seems quite clear that the argument and judgments in the Court of Appeal proceeded on the basis that it was not part of Mr Paulleys case, as seems to have been accepted on his behalf. On the other hand, the case was advanced much more broadly before the Recorder, because, as I have explained, a number of possible adjustments were put forward on the basis that they were alternatives or cumulative. Nonetheless, because of the position adopted on behalf of Mr Paulley in the Court of Appeal, it can be said to be rather unsatisfactory for this Court to consider whether FirstGroup should have made an adjustment to its PCP which was less extreme than that found by the Recorder. The second problem arises from the fact that, in order for Mr Paulley to succeed in his claim, he must not only establish that FirstGroup should have made an adjustment to its PCP, but also that, had that adjustment been made, there is at least a real prospect that it would have made a difference. (It is right to say that decisions of the Employment Appeal Tribunal express the real prospect test slightly differently (compare Lancaster v TBWA Manchester UKEAT/0460/10/DA, para 46 and Leeds Teaching Hospital NHS v Foster UKEAT/052/10, para 17). However, the precise formulation of the test is not relevant for present purposes. The essential point is that there is no finding by the Recorder that, if FirstGroup had phrased the Notice more peremptorily and/or required its drivers to be more forceful, this requirement would have been satisfied, given that there would have been no question of actual enforcement. In particular, as Lord Toulson points out in para 85 below, there has been no formal appeal and no written or oral argument against the finding that the woman occupying the space refused to move after saying that her pushchair did not fold down. There is therefore no satisfactory basis upon which this Court can, in fairness to FirstGroup, conclude that there would have been a real prospect that such an adjustment to its PCP would have resulted in Mr Paulley not being placed in the disadvantage that he was. In my judgment, the solution which enables this Court both to be procedurally fair to the parties and to provide as much guidance as possible in this important field, is to decide whether the alternative contention should, on the evidence given to the Recorder and findings made by him, succeed but, in the event of our so deciding not to award Mr Paulley any damages. The evidence and arguments in relation to the alternative contention were advanced before the Recorder, and, by accepting Mr Paulleys more extreme primary contention, it is very likely that he must or would have decided to reject FirstGroups arguments against the alternative. Although the alternative contention was not advanced in the Court of Appeal, we have the benefit of some valuable thoughts on it from Underhill and Arden LJJ. Accordingly, the fact that a case based on the alternative contention was not run in the Court of Appeal should not be fatal to Mr Paulleys ability to run it before this Court. On the other hand, to award Mr Paulley any damages in the event of this Court accepting the alternative contention would be unwarranted as the Recorder made no finding as to whether he would have been disadvantaged had the PCP been adjusted accordingly. (The first instance finding that Mr Paulley was disadvantaged was based on the Recorders view as to what FirstGroups policy should have been, which, for the reasons which I have attempted to give, was too prescriptive.) It is true that this approach would make any finding as to the alternative contention somewhat hypothetical, and indeed arguably obiter, but that should not, in my opinion, stand in the way of our addressing it. A policy of require and pressurise: discussion Turning then to the substance of Mr Paulleys alternative contention, it has two components. The first is that the Notice should have been more strongly expressed and that it should have stated that the obligation to vacate the space, if needed by a wheelchair user, would be enforced. The second component is that FirstGroups bus drivers should have been required to do more than simply ask a non wheelchair user occupying the space to vacate if it was needed by a wheelchair user, in particular they should positively have expressed themselves as requiring the non wheelchair user to vacate the space and/or they should have refused to drive on until she did so. As mentioned above, the space in the Bus contained a wheelchair sign, as specifically required by the Accessibility Regulations, and it also contained the Notice when no such notice was specifically required by those (or any other) Regulations (see paras 3 and 12 above). I do not consider that FirstGroup can be criticised for not expressing the Notice in more peremptory terms. In disagreement with the Recorder, it seems to me that, albeit politely, the Notice did require, rather than merely request, a non wheelchair user to vacate the space if it was needed by a wheelchair user. Without the word Please it was a requirement, and the addition of the word Please at best makes it more polite and at worst softens the requirement. Secondly, there is no reason to doubt the evidence of Mr Birtwhistle, FirstGroups manager, who said that the company had been advised that directive notices were a less effective means of communication with the public than more customer friendly and non confrontational notices. (It is right to mention that there was evidence that some other bus companies used more peremptory notices, but there was no evidence to suggest that they were more effective). Thirdly, while I would not endorse it as a principle applicable in all cases, Underhill LJs statement at para 68 of his judgment that [l]egal liability ought not to depend on whether an employer has chosen to use specially emphatic language in expressing his policy has real force in relation to criticisms of the way the Notice was expressed. If finding a more peremptory, persuasive or firmly worded notice in another companys buses was enough to undermine the reasonableness of the notice in this case, it could, as a matter of logic, lead to an absurd state of affairs the fact that another bus company used more aggressive language, a larger sign, bolder print, or more exclamation marks could presumably all be relied on. And it is worth remembering that we are concerned with the question whether FirstGroups PCP makes reasonable adjustments, and, as is made clear by the Code of Practice, that involves taking practicality into account. The Recorder also thought that the Notice should have made it clear that the priority of wheelchair users over the space would be enforced. While that view has its attractions, I am ultimately not convinced by it. First, having rejected Mr Paulleys primary case (unlike the Recorder), I am unenthusiastic about the notion of a court requiring a party to put up a notice containing a statement which would not be true and it would not be true once one rejects Mr Paulleys primary case. Secondly, as I have already indicated, in the light of Mr Birtwhistles evidence as to what constituted effective notices, and in the absence of any evidence to the contrary, I would not be prepared to hold that FirstGroup was in breach of its duty to make reasonable adjustments by failing to express the Notice more aggressively. Thirdly, there is the point made by Underhill LJ quoted at the end of para 36 above. I turn finally to the contention that FirstGroup drivers should have been instructed to do more than simply request non wheelchair occupiers to move from a space when it was needed by a wheelchair user. On this aspect, it seems to me that there is obvious force in the concerns, expressed by Underhill LJ in the second passage quoted from his judgment in para 36 above, about the difficulties of identifying any policy given the fact that the circumstances of the non wheelchair user and the character of the driver could be very different in different cases. Nonetheless, I have concluded that it was not enough for FirstGroup to instruct its drivers simply to request non wheelchair users to vacate the space, and do nothing further if the request was rejected. I accept that allowance must be made for the fact that there will be a variety of different circumstances in which a non wheelchair user refuses to vacate a space which is needed by a wheelchair user. Thus, the appropriate approach of the driver could depend on (i) the reason for the refusal, including, in particular, the needs of the non wheelchair user; (ii) the surrounding circumstances, including whether the bus is full or has vacant places, whether the bus is on time, and the frequency of the service; and (possibly) (iii) the character of the driver. However, in para 68 of his judgment, Underhill LJ was in my view right in describing as good practice, a policy to encourage drivers to go as far as they thought appropriate in the circumstances in legal language, use their best endeavours to induce the recalcitrant passenger to reconsider his or her initial refusal. A driver may form the view that a non wheelchair user is reasonable in refusing to move from the space. If the driver considers that that is so, or even probably so, then it would not, at least normally, be unreasonable for any request to move not to be taken further. However, where the driver concludes that the non wheelchair users refusal is unreasonable, it seems to me that it would be unjustifiable for a bus operating company to have a policy which does not require some further step of the bus driver in any circumstances. In particular, where there is some other place on the bus to which a non wheelchair user could move, I cannot see why a driver should not be expected to rephrase any polite request as a requirement, and, if that does not work and especially if the bus is ahead of schedule, why the driver should not be expected to consider whether there was any reason why the bus should not stop for a few minutes with a view to pressurising or shaming the recalcitrant non wheelchair user to move. Because circumstances can vary so much, and because judges should plainly not impose a policy which is not practicable, I consider that this is as far as any adjustment required by this Court to be made to FirstGroups PCP could be expected to go (at least in the light of the evidence given at trial, the Recorders findings and the arguments we have heard). It may well be, as Underhill LJ went on to say, that, at least in many cases, there is in reality no very deep gulf between a policy so expressed and one, like FirstGroups, which does not in terms go further than saying that the passenger should be asked to move. However, in my opinion, there will undoubtedly be cases where the sort of good practice which he suggested, and which I have attempted to summarise in para 67 above, could be expected to produce positive results whereas FirstGroups current, more pallid, policy would not do so. When a non wheelchair user is unreasonably refusing to move from the space, there are vacant places on the bus, (and the bus is ahead of schedule) a more forceful repetition of an initial unsuccessful request in the form of a requirement (coupled with a refusal to drive on for several minutes) may well persuade the unreasonable non wheelchair user to vacate the space. The very fact that, under FirstGroups current PCP (set out in para 8 above), drivers were expected to request a non wheelchair user to vacate a space needed by a wheelchair user, at least if there is a place for the non wheelchair user to move to on the bus, demonstrates that drivers can be expected to show a degree of initiative and to see whether or not there are spare places on the bus. I therefore find it hard to see how it could be unreasonable to expect FirstGroup to train its drivers to do a bit more, when appropriate, if and when an initial request is not complied with. I also agree with Lord Toulson that this conclusion is supported by para 12(2) and (3) of the Conduct Regulations (set out in para 18 above), which show that those responsible for those Regulations did not consider it unreasonable to decide whether a non wheelchair user could readily and reasonably vacate a space and mov[e] to another part of the vehicle. Such a conclusion seems to me to be consistent with what Underhill LJ hope[d] and expect[ed] in the first passage quoted in para 36 above, and what Arden LJ considered that FirstGroup should do in the passage quoted in para 37 above. Conclusion Since preparing the first draft of this judgment, I have had the opportunity of reading in draft the judgments of Lady Hale, Lord Kerr, Lord Clarke, Lord Sumption and Lord Toulson. I agree with what Lord Toulson says in his concise judgment, as to the reasons for allowing this appeal, as to the interpretation of the Recorders judgment, and as to the advisability of reconsidering the state of the law in this area. I think that Lord Kerr and I have arrived at the same view as to what the driver should be expected to do under a policy which complies with a bus companys equality duty. In that connection, I would refer to the fourth and fifth sentences of para 129 and para 133 of his judgment and paras 66 and 67 above. However, we disagree about the notice (compare his para 122 with paras 63 64 above). Lady Hale (with whom Lord Clarke also agrees) prefers to limit any decision to saying whether FirstGroups PCP could have done more see the end of paras 101 and 108 of her judgment. As to that, I accept that we could decide this appeal without expressing a view as to how much further FirstGroups PCP should have gone for instance, without deciding whether a requirement to move would have to be physically enforced. However, that would, in my opinion, be regrettable. Merely to decide that FirstGroups PCP fails to satisfy the requirements of the 2010 Act would leave bus companies in a state of real uncertainty as to their equality duties in connection with wheelchair users. It is inevitable that any decision we reach will result in some grey areas, but it is one of the principal functions of this Court to clarify the law, and therefore to keep the grey areas as few and as small as possible. As to Lord Sumptions judgment, I agree with him that, at least as a general rule, the law should not normally seek to sanction or otherwise deal with lawful but inconsiderate behaviour, and, similarly, it should not normally enforce basic standards of decency and courtesy. However, we are here concerned with a statute whose purpose is to ensure, within limits, that behaviour is curbed when it results in discrimination under section 29 of the Equality Act 2010. Accordingly, while it is essential that any judicial decision in this area seeks to take into account the realities of life and the interests of others, judges have to do their best to give effect to that purpose, even if it may involve a degree of departure from the general rule. Accordingly, I would allow this appeal to the limited extent explained in paras 66 68 above, albeit on a point which was expressly not pursued in the Court of Appeal. LORD TOULSON: (with whom Lord Reed agrees) The majority of the Court of Appeal held that the respondent bus company applied a provision, criterion or practice (PCP), within the meaning of section 20(3) of the Equality Act 2010, that wheelchair users could use the wheelchair space on its buses on a first come first served basis, and that this PCP put wheelchair users at a substantial disadvantage compared with able bodied passengers. There is no appeal against those findings. The issue is whether there were reasonable steps which the bus company could have taken to avoid or ameliorate the disadvantage. With effect from 1 October 2002, regulation 12(2) of the Public Service Vehicles (Conduct of Drivers, Inspectors, Conductors and Passengers) Regulations 1990, (SI 1990/1020) as amended by SI 2002/1724, provided that: If there is an unoccupied wheelchair space on the vehicle, a driver and a conductor shall allow a wheelchair user to board if (a) the wheelchair is of a type and size that can be correctly and safely located in that wheelchair space, and (b) in so doing, neither the maximum seating nor standing capacity of the vehicle would be exceeded. Regulation 12(3) defined a wheelchair space as being occupied if there is a wheelchair user in that space; or (a) (b) passengers or their effects are in that space and they or their effects cannot readily and reasonably vacate it by moving to another part of the vehicle. It follows from the fact that the obligation under regulation 12(2) was imposed on drivers (and conductors), and from the wording of the regulation, that drivers could have to decide whether a passenger who was using a wheelchair space could readily and reasonably vacate it by moving to another part of the vehicle, and this was obviously not considered to be an unreasonable thing for drivers to be expected to do. It should also be noted that a non wheelchair user who was using a wheelchair space was not expected to have to vacate the bus, but rather to move to another part of the vehicle if that was readily and reasonably possible. Regulation 12(4) required the driver to ensure before the vehicle was driven that any wheelchair was correctly and safely positioned in a wheelchair space. There is therefore an apparent tension in the regulation, because regulation 12(2) requires the driver to permit a wheelchair user to board if there is an unoccupied wheelchair space, which includes a space physically occupied by a person who could readily and reasonably move elsewhere, but for as long as that person remains in the wheelchair space the vehicle must not be driven. Where the space is taken by someone who could readily and reasonably vacate it by moving to another part of the bus, the driver could properly say to that person that he, the driver, is required by law to allow the wheelchair user to occupy the space and that for this to happen that person must move. But there is a possibility that he may be ignored. I would in such circumstances interpret the obligation under regulation 12(2) as an obligation on the driver to do as much as he practically can to enable a wheelchair user to occupy the wheelchair space, unless it is already occupied within the meaning of regulation 12(3), but if that task proves impossible he is not required to do more. The Recorder accepted the claimants argument that the bus company could reasonably have adopted a policy of requiring other passengers to allow the wheelchair space to be used by a wheelchair user, even if it meant requiring the other passenger(s) to get off the bus. It is right that I should explain why I interpret the Recorders judgment in that way, since there appears to be some difference of opinion among the members of the court on the point. After setting out the various forms of adjustment pleaded in the claimants particulars of claim, the Recorder said at para 15 that: the most comprehensive adjustment alleged by the claimant was that it should be made clear to other passengers that the wheelchair space is for wheelchair users and that they will be required [underlined] to vacate the space if needed. Once such a practice was put into effect with a proper system of notices, warnings and, if necessary, advertising then the culture will have changed and no non disabled passenger who wished to occupy the space could be under any illusion that if there was competition for such a space with a wheelchair user, then they would either have to vacate the space by, for example, folding a buggy and sitting elsewhere, or by leaving the bus and taking the next bus available. At para 21 the Recorder said that the practice suggested by the claimant was a reasonable one. I infer that the Recorder had in mind that the suggested practice was intended to apply even if it meant requiring other passengers to get off, because this was part of the claimants case and the Recorder referred, at para 17, to counsel for the bus company asking rhetorically whether we want a culture in which a parent with a child is removed from the bus to allow access for a wheelchair user. However, more importantly than debating what precisely the Recorder meant in his full and careful judgment, the case has raised points on which those who are affected need a clear ruling from this Court. They include not only the question whether the bus company should reasonably have adopted a general practice of requiring other passengers to allow the wheelchair space to be occupied by a wheelchair user, but also the question whether that should apply even if it would mean requiring the other passenger(s) to get off the bus. On the latter point, I agree with the Court of Appeal that the Recorder went too far. The risk that a bus may be fully occupied when it arrives at a bus stop is one shared by all travellers. The risk may be greater for wheelchair users because there is likely to be only one wheelchair space, but if that space is occupied within the meaning of regulation 12(3) of the Conduct Regulations, I do not see that it would be reasonable to require the occupier to leave the bus midway through their journey. By definition we are talking about someone who is already lawfully on the bus and who cannot readily and reasonably vacate [the wheelchair space] by moving to another part of the bus. Moreover the person may also have protected characteristics, such as having a disability requiring the use of a walking frame or being a child. As Lady Hale has demonstrated, 90% of people with disabilities do not use wheelchairs, and the evidence is that over half of those with disabilities have mobility problems, no doubt of varying severity. Age is another protected characteristic, and there would be obvious objections to a policy which entailed telling a child that he or she was required to get off the bus, even more so if it were at an unfamiliar or unsafe location or after dark or for a lengthy or uncertain period of time. Illustrations of passengers with particularly cogent reasons to object to being told that they were required to leave the bus could readily be multiplied. If the law in this difficult and sensitive area becomes the subject of further Parliamentary consideration (to which I refer at the end of this judgment), there would doubtless be considerable argument about striking a fair balance. The situation is different if the space is occupied by somebody who could readily and reasonably vacate it but refuses to do so. There is a preliminary objection that a bus driver cannot reasonably be expected to judge whether a person could readily and reasonably vacate the space, but I do not regard that as a point of substance. It is easy to make it sound complicated, but realistically it should not be difficult to tell whether there is another part of the bus which the person could readily and reasonably use. The drafter of regulation 12(2) and (3) must have presupposed that this would not be too much for a bus driver or conductor, and the bus companys own policy, set out by Lord Neuberger at para 8, expected the driver to be able to tell if other space on the bus was available for a non wheelchair user who was occupying the wheelchair area (If this is occupied with a buggy, standing passengers or otherwise full, and there is space elsewhere on the vehicle, the driver will ask that it is made free for a wheelchair user). It is a matter of looking. I agree with Lord Neuberger that there are reasonable steps which a bus company could take beyond simply asking the occupant to move. The driver could make it plain that it is a requirement and I do not see that it would be misleading or wrong for him to do so. For one thing, if the place is taken by someone who could readily and reasonably vacate it by moving to another available space, the object of the duty placed on the driver by regulation 12(2) and (3) is to enable the wheelchair user to occupy it and in those circumstances it must be at least open to the bus company to stipulate that the non wheelchair user who could readily and reasonably vacate it should do so. But in any event I am not aware of a legal principle which prevents a service provider from adopting a requirement just because securing compliance with it will or may depend on moral pressure. Unless the bus is running late, the driver could also wait at least for a time for the passenger to comply. The policy might not succeed in every case, and in that event the driver might have no practical alternative to refusing to allow the wheelchair user to remain on the bus, but the fact that the policy might not work in every case does not make it valueless. The concept of reasonable adjustments under section 29(7) of the Equality Act 2010 is intensely practical. Much human behaviour is governed by expectation and convention rather than legal enforcement. Although this was not the primary case advanced by the claimant on this appeal, it is within it. His lengthy printed case included, for example, the contention (at para 163) that the Court of Appeal was wrong to reject the submission that even a policy of request plus some attempt at further persuasion or pressure would have been better than what happened. In the present case there was no finding of fact by the Recorder whether the lady with the child in a buggy could reasonably and readily have vacated the wheelchair space. Lewison LJ said in his account of the facts that the driver asked her to move and to fold down her pushchair so that the claimant could use the space, but that she said that her pushchair did not fold down and refused to move. There was no appeal against that finding. Because it was not an issue in the appeal, the court heard no argument whether Lewison LJs account was correct or incorrect, but I note that it was consistent with the claimants own witness statement. It would not be right in these circumstances for this Court to substitute a contrary finding, and I do not consider that the case merits being remitted to the judge for further consideration. It follows that the award of damages in favour of the claimant cannot be sustained, but, like Lord Neuberger, I would allow the appeal to the extent of holding that the bus company ought to have adopted a policy of training its staff to make clear, in circumstances where a wheelchair user wanted to board the bus but the wheelchair space was occupied by somebody who could reasonably and readily move to another part of the bus, that the person occupying it must do so. For those reasons as well as the reasons given by Lord Neuberger, I agree with his judgment. By way of postscript, the Court of Appeal made critical comments about the present state of the law in this area. The divisions of opinion in this Court may be thought to reinforce the desirability of it receiving fresh legislative consideration. LORD SUMPTION: If a wheelchair user wishes to occupy the designated wheelchair space on a bus, basic decency and courtesy require the non wheelchair user occupying it to move, unless he or she has a very good reason not to do so. But the law cannot enforce basic decency and courtesy, save insofar as they correspond to legal standards of behaviour. The difficulty in this case is that the Conduct Regulations deal with the obligations of passengers at paras 5 and 6, without imposing any obligation on them to vacate the wheelchair space when it is required by a wheelchair user. FirstGroup cannot create such an obligation of passengers by the terms of their published wheelchair policy. I agree with Lord Neuberger that in those circumstances it would be wrong to expect the bus company to rephrase the notice at the designated wheelchair space so as to suggest that a non wheelchair user was required to move. It would simply not be true. The difficulty is that the same objection might be said to apply to Lord Neubergers view that the drivers polite request having been rejected, he should rephrase it as a requirement. That would not be true either. One solution to the problem might be for FirstGroup to change their conditions of carriage so as to require a non wheelchair user to move to another part of the bus if there is space, or to get off the bus if there is not. They would then have a contractual right to enforce a requirement by the driver to move. The difficulties about this solution are (i) that it will not in all cases be reasonable to require the non wheelchair user to vacate the wheelchair space, even if there is space elsewhere on the bus; (ii) it would not in my view be reasonable in any case to require him or her to get off the bus if there is no space elsewhere; and (iii) a change in the conditions of carriage which were subject to a test of reasonableness in each case would simply give rise to argument with the more recalcitrant non wheelchair users, without being enforceable at the only point of time when enforcement would of be any use to wheelchair users. I see the force of the argument that bus companies can reasonably expect their drivers not just to ask the non wheelchair user to move but to do their best to persuade him or her to do so unless he has good reason to stay or it is clear that persuasion will be unavailing. The difficulties, as it seems to me, are (i) that if this is to be turned into a legally required policy, it is necessary to specify what, as a minimum, a driver ought to do; and (ii) that any alternative guidance must be in terms which are capable of practical application and reasonably likely to be effective in a bus full of people at the roadside. This is a sensitive area in which the circumstances may be infinitely varied and techniques of persuasion are not susceptible to detailed legal prescription. The ideal solution, if there is one, would be to change the law so as to create an obligation on the part of non wheelchair users, enforceable in the same way as the rule against anti social behaviour, to move unless the driver reasonably considers that they have a sufficient reason not to do so. In the absence of such a change, we must recognise that there are limits to what law can achieve in amending lawful but inconsiderate behaviour. Fortunately, the evidence suggests that the present problem rarely arises. For these reasons, I confess that I have misgivings about aspects of the reasoning of Lord Neuberger and Lord Toulson, which would impose on drivers a duty to require the non wheelchair user to move and in some cases to stop the bus for a few minutes, thereby inconveniencing every other passenger in order to shame the non wheelchair user into doing something that the law does not require him to do. But this is not a case in which it would be right to dissent. In a situation where there is no ideal solution, but only more or less unsatisfactory ones, I think that the approach of Lord Neuberger and Lord Toulson comes as close to giving effect to the policy of this legislation as a court legitimately can. I therefore agree with their proposed disposition of this difficult appeal. In particular I agree with them that once one rejects, as I fear one must, the more abrasive policy required by the Recorder, there are no findings which could justify an award of damages. LADY HALE: (dissenting in part) The ability to travel and to get about is important to all of us. Without it we cannot get to work, do the shopping, visit family and friends or places of entertainment, in short be part of the community. Difficulties with transport are one of the two most common barriers to work for people with impairments. Of the 12m disabled people in the United Kingdom, one tenth, that is 1.2m people, are wheelchair users and more than a quarter of these are under the age of 60 (Papworth Trust, Disability in the United Kingdom 2014, Facts and figures). It scarcely needs stating that they face particular difficulties in getting about and thus playing as full a part as they can in the life of the community. Without the ability to travel they risk becoming socially isolated and losing confidence in themselves. But their journeys need even greater planning than do those of people who are not wheelchair users: will I be able to get to the bus stop, will I be able to get on the bus, when will the bus go, will I be able to get from the bus to the train station, will I be able to get on the train, when will the train go, will I be able to get to my destination at the other end? Time was when the law did nothing to help. But then along came the Disability Discrimination Act 1995. This not only prohibited direct and indirect discrimination against disabled people; it also imposed duties upon the providers of employment, accommodation, goods and services, in certain circumstances, to make reasonable adjustments to cater for the needs of disabled people. The object, as has been said time and again, is to level the playing field, to lower the barriers which prevent disabled people having access to employment, accommodation, goods and services on the same terms as non disabled people. It is to produce equality of results rather than equality of treatment (see, for example, MM v Secretary of State for Work and Pensions [2013] EWCA Civ 1565; [2014] 1 WLR 1716, para 35, citing Archibald v Fife Council [2004] UKHL 32; [2004] ICR 954, paras 47, 57, and Roads v Central Trains Ltd (2004) 104 Con LR 62, para 30). However, the general duty to make reasonable adjustments, imposed upon the providers of services by section 21 of the 1995 Act, did not apply to any service so far as it consists of the use of any means of transport (section 19(5)(b)). Instead, Part V of the Act dealt with public transport and empowered the Secretary of State to make regulations for the purpose of securing that it is possible for disabled persons (a) to get on to and off regulated public service vehicles in safety and without unreasonable difficulty (and, in the case of disabled persons in wheelchairs, to do so while remaining in their wheelchairs); and (b) to be carried in such vehicles in safety and in reasonable comfort (section 40(1); now replaced by the Equality Act 2010, section 174). It was pursuant to that and related powers that the Secretary of State made the Public Service Vehicles Accessibility Regulations 2000, which are still in force. These impose detailed and technical requirements for the provision of access to, and wheelchair spaces and priority seating in, buses and coaches. This was a big advance, making public transport much more accessible than it had been before. The Public Service Vehicles (Conduct of Drivers, Inspectors, Conductors and Passengers) Regulations 1990 (SI 1990/1020) were made under powers contained in the Public Passenger Vehicles Act 1981. In 2002, they were strengthened to impose specific duties to allow access by disabled people, and in particular by those accompanied by guide dogs and for wheelchair users. Thus, drivers, inspectors and conductors are prohibited from preventing a disabled person accompanied by an assistance, guide or hearing dog being allowed to board and travel in the vehicle with his dog, subject to there being a suitable space available (regulation 5(7)); likewise, drivers and conductors are required to allow a wheelchair user to board if there is an unoccupied wheelchair space on the vehicle and to ensure that wheelchair users can gain access into and get out of a wheelchair space (regulation 12(2), (4)); a wheelchair space is occupied if (a) there is a wheelchair user in that space; or (b) passengers or their effects are in that space and they or their effects cannot readily and reasonably vacate it by moving to another part of the vehicle (regulation 12(3)). The regulations already imposed upon drivers, inspectors and conductors a duty to take all reasonable steps to ensure that the regulations relating to the conduct of passengers are complied with (regulation 5(2)); and prohibited passengers, among many other things, from putting at risk or unreasonably impeding or causing discomfort to any person travelling on or entering or leaving the vehicle (regulation 6(1)(b)). Any passenger who is reasonably suspected of contravening any of the regulations is required to give his name and address to the driver, inspector or conductor on demand (regulation 8(1)); and any passenger who actually contravenes the regulations may be removed from the vehicle by the driver, inspector or conductor, or, at their request, by a police constable (regulation 8(2)). Contravention of the regulations, whether by drivers, inspectors or conductors or by passengers, is a summary offence punishable by a fine, but it is a defence to prove a reasonable excuse for the act or omission in question (1981 Act, sections 24(2), 25(3) and 68(1)). Parliament must have considered that the 2000 and amended 1990 Regulations were not sufficient to enable disabled passengers to enjoy the same access to public transport as is enjoyed by non disabled passengers, because Parliament next passed the Disability Discrimination Act 2005. Section 5 of that Act added a new section 21ZA to the Disability Discrimination Act 1995, providing for the application of sections 19 to 21 of that Act in modified form to providers of transport services. Where such a provider had a policy, practice or procedure which made it impossible or unreasonably difficult for disabled persons to make use of a service which he provided to other members of the public, it was his duty to take such steps as is reasonable in all the circumstances of the case for him to have to take in order to change that practice, policy or procedure so that it no longer has that effect. The duty of service providers to make reasonable adjustments to cater for the needs of disabled people is now contained in the Equality Act 2010. The duty is imposed by paragraph 2(1) of Schedule 2, which requires the provider to comply with the first, second and third requirements in section 20, as modified by paragraph 2. Relevant in this case is the first (in section 20(3)): The first requirement is a requirement, where a provision, criterion or practice of As puts disabled persons generally at a substantial disadvantage in relation to a relevant matter in comparison with persons who are not disabled, to take such steps as it is reasonable to have to take to avoid the disadvantage. Failure to comply with this (or the other two requirements) is a failure to comply with a duty to make reasonable adjustments (section 21(1)); and A discriminates against a disabled person if A fails to comply with that duty in relation to that person (section 21(2)). As has been pointed out, this is a prospective duty, owed to disabled persons generally, to take proactive steps to meet their needs, and if an individual suffers as a result, then it is discrimination against him. Three general points can be made about the legislative framework which is now in place. The first is that mere compliance with the earlier regulations, both as to the provision of the wheelchair space and affording access to it, is not necessarily enough. Parliament must have contemplated, in passing the 2005 Act, that other adjustments to business as usual might be needed in order to reduce the difficulties faced by disabled people in using public transport services. The second is that, as the Recorder pointed out, there is an enormous difference between imposing a criminal sanction upon a driver and the obligation upon a service provider not to discriminate by a failure to take reasonable steps to adjust a present policy which is having the effect of substantially disadvantaging a disabled person (para 18). The third, and most obvious, is that service providers owe positive duties towards disabled people, including wheelchair users, which they do not owe to other members of the travelling public, including parents travelling with small children in baby buggies or other people travelling with bulky luggage. The Court of Appeal, in my view, fell into the trap of assuming that the claims of disabled travellers were no different from the claims of any other person wishing to use the buses. They are not. Disabled people are, for very good reasons, a special case. It is now not in dispute that the respondent had a provision, criterion or practice which put wheelchair users at a substantial disadvantage when compared with non disabled passengers. This was their policy of making the wheelchair space provided on their buses available on a first come, first served basis and doing no more than request occupants to vacate the space if it was required by a wheelchair using passenger. At the time of the incident in question, the policy was that wheelchair users had no priority over buggies and this infected both the content of the notices and the approach to enforcement. The issue agreed between the parties for the purpose of this appeal is a simple one: Was the Recorder correct in concluding that FirstGroup was in breach of the 2010 Act? The Recorder concluded that FirstGroup could reasonably be expected to adjust its policy. It should have been made clear to passengers, and to their drivers, that wheelchair users had priority over anyone else in the occupation of the wheelchair space and that other passengers would be required, not merely requested, to move out of it if a wheelchair user needed it. With a proper system of notices, making the position plain, backed up with firm statements from the driver, everyone would know where they stood. The culture would change. Disruption and confrontation would be unlikely. It is obviously reasonable to expect bus operators to do more than FirstGroup did in this case. One only has to travel on a London bus to find a different policy in operation. The notice carried on London buses has two boxes side by side. The left hand one is headed Buggy users and below this Please make space for wheelchair users. Below this there is another heading: Priority wheelchair area and below this, This space is reserved for a wheelchair when needed. It goes on to explain how the wheelchair must be placed and ends Please give up this space for a wheelchair. Alongside this is another panel, headed Baby buggies. This reads Buggies can use this area if it is not needed by a wheelchair user. Please move out of the wheelchair priority area if necessary. Buggies may need to be folded at busy times. This may not go quite as far as the Recorder contemplated, but it is clear, polite and firm and a great improvement on the Please give up this space for a wheelchair sign adopted by the respondent. Three sorts of objection have been raised to the Recorders conclusion. One is that management had undertaken a review of the way in which the company communicated with its passengers. They had been told that they were being too directive so the approach was changed to one which was more customer friendly. The sign was intended to be non confrontational (para 7 of the Recorders judgment). But that was merely the explanation given by the company for the current sign. The evidence of Mr Birtwhistle, for the company, was that there was no reason why the signs which were in the form of a request could not be worded differently so as to make it clear to all passengers that wheelchair users not only had such priority but that that such priority would be enforced (para 19 of the Recorders judgment). So he clearly did not consider the non confrontational practice to be an objection. In any event, it is usually possible to be polite as well as clear and firm. And if clarity and firmness cannot be achieved without a more peremptory tone, then it is reasonable to expect a more peremptory tone. The point has to be got across that other people are required to vacate the wheelchair space if it is needed by a wheelchair user. The second sort of objection is that there will be some circumstances in which it is not reasonable to expect an existing occupier to vacate the wheelchair space. This is so, although it is important to bear in mind that non disabled people are not entitled to be treated in the same way as disabled people. There is no duty to make reasonable adjustments for them. There may be circumstances in which that duty, coming as it does after the Conduct Regulations, could go beyond what is required by regulation 12(2) and (3). However, the adjustments to be expected for disabled people must be reasonable ones, and there will obviously be circumstances in which it is not reasonable to expect the space to be vacated. There is nothing in the Recorders judgment to suggest that he was expecting an absolute rule of the sort that would brook no exceptions. This may well be because this sort of objection was not raised before him, although it featured heavily in the Court of Appeal. As already mentioned, the Recorder drew a clear distinction between the criminal liability of drivers under the Regulations and the providers duty to make reasonable adjustments. The third sort of objection rests on the fact that the service provider is being expected to make adjustments which will bring about change in other peoples behaviour. Hence a great deal of argument was directed towards how a priority policy might be enforced against recalcitrant passengers. In my view this is something of a red herring. Most people do what they are told to do if they are told sufficiently clearly what it is that they are required to do. The possibility that some people will be disobedient should not deter the bus company from making it clear what the rules are and doing its best to persuade people to obey. There are many steps short of physically removing the person from the bus which can be taken, including delaying the departure of the bus until the rule is obeyed (which I have observed being highly effective against rowdy behaviour on an underground train). I do not read the Recorders references to enforcement as necessarily involving forcible ejection from the space or the bus. In any event, it is highly arguable that to refuse, without a reasonable excuse, to move from a wheelchair space required by a wheelchair user is to unreasonably impede any person travelling on or entering or leaving the vehicle within the meaning of regulation 6(1)(b). It is also difficult to see why the Recorder was wrong to say that the company could make the requirement to leave the space a term of its conditions of carriage, in breach of which a passenger could be required to leave the bus. This is no more unreasonable than requiring passengers to refrain from eating messy or smelly foods or drinking alcohol. Drivers are frequently required to make judgments of this kind and do their best to enforce them. These points do not have to be decided for the purpose of deciding this case, but I agree with what Lord Kerr says about them in paras 123 to 128 of his judgment. This case is about whether there were adjustments which the company could have made which would have enabled Mr Paulley to board this bus. There clearly were. Furthermore, in the Recorders judgment there is little doubt that had the practice suggested by the claimant been in force on 24 February 2012 then Mr Paulley would have been able to travel rather than having to leave the bus and wait until the next bus was due to leave the Wetherby bus station (para 21). In my view, therefore, the answer to the single issue agreed between the parties (para 101 above) is yes: the Recorder was correct to conclude that FirstGroup was in breach of the 2010 Act. That being so, I have difficulty in understanding how it can possibly be just to deprive Mr Paulley of the damages which the Recorder awarded him. A variety of adjustments were canvassed before the Recorder and I agree with Lord Kerr (para 133) that his judgment did not partake of the absolute quality which the Court of Appeal thought that it did. Even if it did, it should have been open to Mr Paulley to argue that lesser adjustments were appropriate. He did not need to put in a respondents notice in order to do so. And the sole issue for this Court is not whether the Recorder was correct in every particular, although I am inclined to think that he was, but whether he was correct to find that FirstGroup was in breach. The view of this Court is that FirstGroup was in breach. In agreement with Lord Kerr, therefore, I would allow the appeal and restore the order which the Recorder made. LORD KERR: (dissenting in part) It is now not in dispute that FirstGroup, in making wheelchair spaces on their buses available on a first come first served basis, applied a provision, criterion or practice (PCP) which placed wheelchair users at a substantial disadvantage. This appeal therefore centres on the question of what reasonable adjustments were required to modify the PCP. The Recorder considered that two types of adjustment to deal with the deficiencies in the PCP were entirely feasible. First, the notice on the respondents buses could be changed to make it clear that a non disabled passenger was obliged to move from a wheelchair space if it was needed by a wheelchair user. Secondly, passengers who failed to vacate the space when asked to do so, could be asked to leave the bus. The Court of Appeal considered that these went further than was reasonable. Lord Neuberger and Lord Toulson agree. Unlike the Court of Appeal, however, they consider that adjustments which can properly be described as reasonable could be made to the respondents PCP. These adjustments are quite different from those deemed by the Recorder to be reasonable. The reasons that the Court of Appeal considered that the adjustments proposed by the Recorder went beyond what was reasonable have been set out by Lord Neuberger in paras 34 to 39. In short summary, these are: (a) that it would be objectionable to require people to vacate the space whose refusal to do so was reasonable; (b) that it was impracticable to expect the driver to decide whether a passenger was being unreasonable in refusing to move; (c) that it was not feasible to expect a driver to remove such a person or wait for police to arrive and, in any event, police could not enforce the adjusted policy because someone who refused a direction to move would not have committed a criminal offence; and (d) that a more prescriptive notice on the bus was not realistic in light of research which suggested that better results would be achieved by a more customer friendly message. Lord Neuberger takes the view that what he describes as an absolute rule of requiring a non wheelchair user to vacate the wheelchair space and, in the event of non compliance, ejecting the passenger from the space must be rejected (paras 40 and 41). He accepts that establishing an absolute rule is not necessarily inconsistent with a wheelchair users rights under the Equality Act 2010 (para 41). But he concludes that the enforcement of an absolute rule would not be reasonable in all conceivable circumstances. So, for instance, a person who was disabled but who did not require the use of a wheelchair might reasonably refuse to move from the wheelchair space. Likewise, a person who felt safe only in that space and who might otherwise be vulnerable could not reasonably be required to leave it. In paras 43 46 Lord Neuberger has examined the possible difficulties in enforcing even a qualified rule. He expresses doubt as to the fairness of requiring a bus driver to assess whether an objection to vacate the wheelchair space is reasonable. Whatever of that, however, Lord Neuberger considers that the clinching argument is that enforcement of a rule that required a passenger to vacate the wheelchair space on the basis of an absolute or a qualified rule would involve unacceptable confrontation and, on that account, could not be regarded as a reasonable adjustment to the PCP. What has been described as an alternative case that might be made on behalf of the appellant (and which was, apparently, advanced before the Recorder) is discussed by Lord Neuberger in paras 49 51. This involved the consideration of a number of potential reasonable adjustments. They included a more peremptory notice on the buses; the driver insisting that a pushchair be folded so as to accommodate the wheelchair; and the driver refusing to continue the journey until the space was vacated. Lord Neuberger has taken the view that consideration of these alternative formulations was beset by two procedural problems. The first was that the Court of Appeal had proceeded on the basis that the appellants case was confined to the absolute argument viz that a non wheelchair user should be required to vacate the wheelchair space and, in the event of non compliance, they should be ejected from the bus. The second procedural difficulty identified by Lord Neuberger was the absence of any finding by the Recorder that, if one of these modified adjustments had been made, there was a real prospect that it would have made a difference. Notwithstanding these procedural problems, Lord Neuberger considers that it is open to this Court to decide whether the alternative case should succeed but, in the event that it does, the appellant should not be awarded damages. He has concluded that it was not enough for the respondent to instruct its drivers to request non wheelchair users to vacate the space and do nothing further if that request was not acted upon (para 59). Various courses of action that a driver might take are adumbrated by Lord Neuberger at para 60. Reasonable adjustments What is a reasonable adjustment must be determined according to the context in which the assessment is made. Here the context is the elimination of discrimination against disabled people. That will require, in appropriate circumstances, able bodied people to accept restrictions that they may find irksome or inconvenient. It will demand of those who police or enforce the adjustments that they be ready to make difficult decisions and that they be prepared to confront and require of those who may not wish to, to suppress selfish inclinations. Moreover, difficulty in enforcement of those restrictions does not automatically determine that they are unreasonable. There is a distinct exhortatory dimension to be recognised in deciding whether an adjustment to assist a disabled person to overcome the disadvantage that she or he has in comparison to an able bodied person is reasonable. A more peremptory notice? On the first issue, viz whether the notice in the bus should have been in more peremptory terms, Lewison LJ in the Court of Appeal said that the Recorder had accepted evidence that the respondents research had shown that the company achieved better results with more customer friendly signage and that negative prescriptive signage produced a worse outcome but that he had failed to reflect this in his assessment of what he considered should be the adjustment to the PCP. What the Recorder said about this evidence is to be found at para 7 of his judgment: The sign on the bus relating to the wheelchair space is couched in terms which are entirely consistent with the first come first served policy. Mr Birtwhistle [the project director of FirstGroup] agreed that it was merely a request to those passengers, other than wheelchair users, who might be using/occupying the wheelchair space to give up the wheelchair space if needed for a wheelchair user. Mr Birtwhistle explained that the reason for the signs being by way of request rather than requirement was that the management had undertaken a review of the way in which the company communicated with its passengers. They had been told that they were being too directive so the approach was changed to one which was more customer friendly. The sign was intended to be non confrontational. Leaving aside the question whether any distinction should be drawn between Lewison LJs description of this work as research rather than review (as the judge described it) a real issue arises as to whether a more customer friendly notice has anything to do with a reasonable adjustment under section 29(7) of the 2010 Act. It may well be the case that customer relations might be improved if a less confrontational sign was erected but this is not a case about fostering good customer relations, at least not unless the better relations would assist in eliminating the discrimination that wheelchair users suffer in using the respondents buses. Lewison LJ said that negative prescriptive signage would produce a worse outcome but it is not clear on what basis this was anticipated. Is it suggested that non disabled customers were less likely to comply with a requirement to vacate the wheelchair space than they would to a request to do so? Such a conclusion is certainly not warranted by the Recorders account of Mr Birtwhistles evidence on the subject. A person is surely more likely to vacate a space if he or she is aware that they will be required to do so rather than if they are merely going to be asked to move. Customers may baulk at direct instructions but they cannot claim that they are entitled to exercise a choice in the matter. A bus company which alerts its passengers that they will have to abide by certain rules if they wish to travel removes the element of choice or the occasion for discussion. This may not be conducive to the best customer relations but it makes it clear that certain rules must be obeyed if the customer is to avail of the companys services. A reasonable adjustment geared to removing discrimination against wheelchair users cannot be discounted simply because a less rigorous policy might promote good customer relations. The question whether a notice which instructs rather than requests passengers to vacate a wheelchair space when it is required by a wheelchair user must be viewed solely in terms of whether this is a reasonable adjustment to make in order to avoid the discrimination that the wheelchair user would otherwise suffer. Viewed in that way, the answer is plain. It is an entirely reasonable adjustment. It removes the element of choice on the part of the passenger occupying the space. They know, and, importantly, know in advance, that they will have to move. Some passengers may not like it but that is not the point. Such a notice, as well as eliminating any scope for debate, constitutes a significant statement which accords precisely with the Governments policy of providing comprehensive and enforceable civil rights for disabled people and achieving a fully accessible public transport system for them see para 19 of Lord Neubergers judgment. Refusing to move unlawful? The Court of Appeal appears to have been influenced to its decision by the consideration that, under the Conduct Regulations (Public Service Vehicles (Conduct of Drivers, Inspectors, Conductors and Passengers) Regulations 1990 (SI 1990/1020)), it would not be unlawful for a passenger to refuse to obey an instruction to vacate a wheelchair space. I consider that, although passengers are not expressly required to obey every instruction from the driver, a refusal to leave a wheelchair space when instructed to do so in order that it be made available for a wheelchair user would be unlawful. Regulation 12(2) requires the driver to allow a wheelchair user to board the bus if the wheelchair space is unoccupied. Regulation 12(3) provides that the space is deemed to be unoccupied if a passenger, who is not a wheelchair user, occupying the space can readily and reasonably vacate it by moving to another part of the vehicle. In order to comply with his duty under regulation 12(2), the driver will have to make a judgment as to whether a non wheelchair using passenger occupying the wheelchair space can readily and reasonably move, if that person refuses to move. The first step for a driver in deciding whether to permit a wheelchair user to board the bus is to ascertain if the wheelchair space is unoccupied. Because of the deeming provision in regulation 12(3) it is not enough for the driver to discover whether there is someone in that space. He must go further. He has to decide if the person occupying the space can readily and reasonably move from it. If he so concludes, his duty under regulation 12(2) is activated. How, then, is he to comply with that duty if he does not at least direct the passenger deemed to be able to move to do so? Quite apart from the effect of regulation 12, a passenger who is readily and reasonably able to move from a wheelchair space commits an offence under regulation 6(1)(b) if his refusal prevents a wheelchair user from being allowed to board the bus. This regulation prohibits any passenger from unreasonably impeding another passenger from entering a bus. The Court of Appeal was concerned that enforcing regulation 6(1)(b) would require the driver to assess whether the person occupying the wheelchair space was acting unreasonably in refusing to vacate it. But I question whether this is a matter for significant apprehension. Under regulations 6 and 8 a bus driver can be called on to assess whether a passenger is causing discomfort to other passengers, or is causing a nuisance or is in a condition that would be likely to cause offence to a reasonable passenger. All of these are grounds for removal of passengers from buses and the judgment as to whether the conditions justifying such removal must be made, in the first instance at least, by the bus driver. Even if it were the case that to refuse to obey an instruction to move did not amount to a criminal offence, this would not provide the inevitable answer to the question whether it is a reasonable adjustment to a PCP that drivers be required to instruct passengers to do so. As the Recorder observed, this could be made expressly clear by an adjustment to the conditions of carriage. And since it would not involve the driver making assessments which are markedly different from those which he is already required to undertake by virtue of regulations 6 and 8, it cannot be suggested that such an adjustment was other than reasonable. Lewison LJ suggested that it would not be practical for a bus company to sue every passenger who refused to vacate a wheelchair space. I, of course, agree. Nor would it be appropriate for a driver to attempt to manhandle a recalcitrant passenger off the bus see para 50 of Lewison LJs judgment. But these considerations do not detract from the reasonableness of an adjustment to the PCP whereby the driver is at least entitled to say to a passenger, you have to move. If the passenger persists in refusal, the driver may decide not to proceed with the journey. This would of course inconvenience other passengers and it might well lead to unpleasantness but these are not reasons to condemn as unreasonable a change to the PCP which gives drivers the responsibility of pointing out to a passenger obstinately refusing to move that it is the policy of the bus company (and, when the adjustment to them had been made, one of the conditions of carriage) that they must vacate the wheelchair space. Lord Neuberger has stated (in para 46) that what he described as the absolute rule required not only that the passenger be instructed to move but, if he refused, that he be ejected. I do not read the Recorders judgment as requiring that the reasonable adjustment must incorporate the need to eject a passenger refusing to move. In para 13 of his judgment he outlined the various adjustments which the appellant had initially put forward as reasonable modifications that could be made to the companys PCP. None of these suggested that passengers who refused to move would have to be ejected. To the contrary, one suggestion was that the driver should try to persuade the passenger to move; another was that the driver should refuse to continue the journey until the passenger moved from the wheelchair space. These are not consistent with a proposal that the driver be required to eject him. At para 15 the Recorder said that it had become apparent during the hearing that the real adjustment which the appellant sought was a clear practice/policy which not only paid lip service to the giving of priority to the wheelchair user but actually enforced such priority. It has been assumed that the Recorder intended that enforcement in this context connoted ejection but I do not consider that this is correct. What he actually said was: the most comprehensive adjustment alleged by the claimant was that it should be made clear to other passengers that the wheelchair space is for wheelchair users and that they will be required to vacate the space if needed. Once such a practice was put into effect with a proper system of notices, warnings and, if necessary, advertising then the culture will have changed and no non disabled passenger who wished to occupy the space could be under any illusion that if there was a competition for such a space with a wheelchair user, then they would either have to vacate the space by, for example, folding a buggy and sitting elsewhere, or by leaving the bus and taking the next bus available. The extent to which the adoption of such a policy would also require an insistence that pushchairs be folded or that passengers should be asked to fold their buggies before boarding the bus or that drivers should be trained to enable them to better persuade passengers to move from the wheelchair area would be a matter of degree. The most effective adjustment, which would remove the disadvantage occasioned by the competition for the wheelchair space, would require a change in the first come, first served/request approach. (original emphasis) I do not construe the Recorders statement that the able bodied passenger should be under no illusion that he or she would have to sit elsewhere or leave the bus as endorsing a policy of forcible ejection in the face of refusal to move. Ensuring that a passenger was under no illusion as to what was expected of him or her is quite a different matter from physically removing them from the bus against their will if they failed to meet that expectation. Nor do I understand him to have suggested that passengers should in every case be required to vacate the wheelchair space, regardless of whether they were able to do so reasonably. The Recorder articulated a reasonable adjustment designed to cover, among other circumstances, the case of a passenger who occupied a space with what she claimed was a buggy that would not fold. It was never suggested that there was nowhere else on the bus for the passenger to sit. The problem was, if her claim was true, where the buggy should be placed. The necessary inference from the Recorders judgment was that, if the passenger was unable to fold the buggy and to store it somewhere away from the wheelchair space, it was reasonable to expect her to be asked to leave the bus in order that Mr Paulley could be allowed to board. This, I suggest, is clear from para 15 of the Recorders judgment where he said that, if there was competition for such a space with a wheelchair user, then they would either have to vacate the space by, for example, folding a buggy and sitting elsewhere, or by leaving the bus and taking the next bus available. That does no more than affirm the principle that the wheelchair space is to be regarded as an area in which priority be given to wheelchair users. It is entirely consonant with the overall intention and legislative purpose of the Equality Act 2010 and the Accessibility Regulations. Difficulty in enforcement If the reasonable adjustments required to the PCP are that (i) the notice in the respondents bus should stipulate that the wheelchair space must be vacated when a wheelchair user wishes to use it; and (ii) that the driver be required to tell a non disabled passenger occupying the space that he must yield it to the wheelchair user (rather than that he be required to eject the passenger), many of the perceived difficulties in implementing the policy fall away. The notice would give emphasis to the policy of the company that it is expected that able bodied passengers must yield the space to a wheelchair user. There is no reason to suppose that drivers making that policy explicitly clear would not help to persuade reluctant passengers that it is pointless to refuse. There is every difference between a passenger who says well, your policy allows me to refuse a request and I am refusing and the passenger who says, well, I know that your policy requires me to move but I am not moving. Even without coercive back up, there is every reason to conclude that the number of passengers prepared to take the latter stance would be significantly smaller than in the former. In any event, as I have said, difficulty in implementation should not be the lone yardstick against which its reasonableness should be measured. The reasonableness of the adjustments is to be judged by the contribution which they make to redressing the imbalance between wheelchair users and able bodied members of the public in the opportunity they have to use public transport. Of course, if it is utterly impossible to enforce an adjustment and if it is likely to be wholly ignored, it may be said that it is not reasonable to introduce it. But there is no warrant for reaching such a conclusion in the present case. The adjustment to the PCP would, at the very least, make an important statement about the companys commitment to ensuring equal treatment for its wheelchair bound customers. And, for the reasons that I have given, I consider that it would also bring about an attitudinal change on the part of those passengers who might be inclined to refuse a request to move. Without supporting evidence, I am not prepared to accept that a stipulation that a passenger was required to move would lead to confrontation or delay. When members of the public congregate to use a generally available facility, there is always the possibility that there may be disagreement about who is entitled to what but is there any greater likelihood of discord and confrontation because a rule is clear, as opposed to one which allows the passenger to decide whether to accede to a request? I would certainly not take that as a given. And, of course, there are situations that arise under the Conduct Regulations that do require drivers to give instructions. It was not suggested that these gave rise to widespread problems of confrontation or delay. Even if an instruction, as opposed to a request, prompted delay, such as where a driver might refuse to continue the journey until the refusing passenger yielded, that would not be a basis on which the adjustment could be condemned as unreasonable. Wheelchair users face formidable difficulties in making use of facilities that the able bodied can take for granted. If inconvenience to the travelling public because of delay is the price which has to be paid to allow those who depend on a wheelchair to make maximum use of the transport system which is made available to all, I do not consider that this is, in any sense, unreasonable. Inflexible application of the adjusted policy It is important to remember that what is sought is a reasonable adjustment to the PCP. It is not demanded that there be a wholly unyielding application of it in every conceivable circumstance. Even before the Court of Appeal, the appellant accepted that there would be circumstances in which it would not be appropriate to apply the adjusted policy in its full rigour. But, just because there should be a measure of discretion as to when the adjusted policy should be applied, it does not follow that there should not be an adjustment. The inevitable fact that there will be occasions when it would not be appropriate to require a passenger to leave a wheelchair space does not require that the correct policy should not be in place. Of course, the decision when to enforce the adjusted policy rigidly and when to relax or modify it calls for judgment to be exercised by the bus driver. But there is no reason to suppose that this will require exceptional powers of discretion. It is in the nature of a bus drivers work that he or she will need to make decisions about how passengers should be handled or responded to in all manner of circumstances. The fact that there will be circumstances in which a reasonable decision may be made not to enforce a policy strictly does not mean that the policy should not exist. Nothing in the Recorders judgment suggests that he considered that the adjusted policy would have to be enforced in an unbending fashion, whatever circumstances were encountered. I am afraid that I am unable to agree, therefore, with Lord Neubergers statement in para 55 that there is no basis on which to conclude that there would have been a real prospect that an adjustment to the respondents PCP would have resulted in Mr Paulley not being placed in the disadvantage that he was. On my analysis, the Recorder had, at least implicitly, accepted that drivers would not be required to eject passengers who refused to move and he had not ruled out the possibility of drivers deciding that, in exceptional circumstances, the policy should not be strictly enforced. The essential finding that he made was that what he described as the first come first served/request policy required adjustment. It is an inescapable inference from that conclusion that, if the adjustment had been made, there was at least a real prospect that Mr Paulley would not have been prevented from travelling on the bus. That seems to me to be an inescapable inference in any event. If the young woman who refused to move had been told that she had to move and that the bus companys policy was that she must do so, how could it be said that there was not a real prospect that she would have moved? Was it open to the appellant to advance a qualified rule in the Court of Appeal? For the reasons that I have given, I do not believe that the Recorders findings partook of the absolute quality which the Court of Appeal considered that they did. He had not suggested that ejection of the refusing passenger from the bus was an indispensable ingredient of the required adjustment to the PCP. Even if he had done, however, I do not consider that the appellant should have been deprived of the opportunity of arguing that a less rigorous adjustment was appropriate. The essential case made by the appellant was that reasonable adjustments to the policy were required in order to overcome the disparity of treatment between him and able bodied passengers. The case that he had to make was that the policy was deficient and that reasonable adjustments could have cured, or at least ameliorated, that position. He was not required to adopt unshakeably one particular form of reasonable adjustment to the exclusion of all others. That is, no doubt, the reason that a whole series of possible adjustments was adumbrated on his behalf before the Recorder, as detailed by him in para 13 of his judgment. Even if it were the case that the Recorder had lighted on one particular form of adjustment, it surely does not follow that the appellant was fixed with that as the only possible avenue through which to advance his argument. I do not consider that a respondents notice was required in order to allow the appellant to pursue a different line from that espoused by a lower court. A respondents notice is needed where a finding made by a lower court is challenged or where a particular line of argument advanced by the respondent below had been rejected. Neither situation obtained here. Conclusion I would allow the appeal and restore the order which the Recorder made. LORD CLARKE: (dissenting in part) I initially thought that the resolution of this appeal depended upon the application of regulation 12 of the Conduct Regulations (the Regulations) referred to by Lady Hale in para 96 of her judgment. It seemed to me that, so far as relevant to this appeal, the critical provisions were contained in regulation 12. In particular, regulation 12(2) provides for the use of an unoccupied wheelchair space. Regulation 12(3) defines a wheelchair space as being occupied if: there is a wheelchair user in that space; or (a) Regulation 12(2) provides: (b) passengers or their effects are in that space and they or their effects cannot readily and reasonably vacate it by moving to another part of the vehicle. If there is an unoccupied wheelchair space on the vehicle, a driver and conductor shall allow a wheelchair user to board if (a) the wheelchair is of a type and size that can be correctly and safely located in that wheelchair space, and (b) in so doing, neither the maximum seating nor standing capacity of the vehicle would be exceeded. The express meaning of those provisions is that a wheelchair user must be permitted to board and use the space, provided that there is no wheelchair user already in the space or, if another passenger or passengers is or are in the space, he or they must be unable readily and reasonably to vacate it by moving to another part of the vehicle. It follows that the Regulations do not themselves contemplate that such a person or persons would be asked or required to get off the bus. The Regulations thus balance the interests of wheelchair users and other passengers in a specific way. Since that balance does not contemplate that a person using the space would be asked or required to get off the bus altogether, I did not think that FirstGroup could have been in breach of any duty to Mr Paulley under regulation 12 to direct that the lady with the buggy leave the bus. In so far as the Recorder concluded that FirstGroup owed Mr Paulley a duty to make adjustments to what is called a provision, criterion or practice (or PCP) under which he would have priority as a wheelchair user and that, in appropriate circumstances, another person using the wheelchair place who was not using a wheelchair would be required to leave the bus, I thought that his case was not established under regulation 12. Assuming that those were the only relevant regulations governing the duty of the defendant (the company) in a case of this kind it seemed to me that the only way in which it could be said that it was in breach of duty to the claimant would be as follows. First, the company should have ensured that its drivers considered whether, in circumstances like these, a person with a child and a buggy could (in the words of regulation 12(3)) readily and reasonably vacate the space by moving to another part of the bus. For my part, I do not think that it was sufficient for the driver (or the lady concerned) to refuse to wake the child up if, as appears to have been the case on the facts, he or she was asleep. Moreover, it was not, in my judgment, sufficient for the driver to do no more than ask the lady to move out of the wheelchair space. In para 5 of his judgment the Recorder set out the companys policy, both at the time of the incident and at the time of the trial. The first was in these terms: Wheelchairs do not have priority over buggies, but to ensure that all our customers are treated fairly and with consideration, other customers are asked to move to another part of the bus to allow you to board. Unfortunately, if a fellow passenger refuses to move you will need to wait for the next bus. That was on the website but was changed because the wheelchair policy on the website did not reflect the policy adopted by the company. It was replaced by this. Wheelchair users have priority use of the wheelchair space. If this is occupied with a buggy, standing passengers or otherwise full, and there is space elsewhere on the vehicle, the driver will ask that it is made free for a wheelchair user. Please note that the driver has no power to compel passengers to move in this way and is reliant on the goodwill of the passengers concerned. Unfortunately, if a fellow passenger refuses to move you will need to wait for the next bus. It is not now in dispute that neither of those terms is a satisfactory PCP. The question is whether the bus company made reasonable adjustments to the PCP. The reason that it is not now contested that those adjustments are not reasonable is that both leave the decision whether to vacate the space and to move to another part of the bus entirely to the person using the wheelchair space. Under them, if that person refuses to move, that is the end of it. For the reasons given by Lady Hale and Lord Kerr and (I think) by Lord Neuberger, Lord Toulson and Lord Reed, I agree that the failure to make further adjustments to the PCP was contrary to the law as it stood when the Regulations were introduced. For these reasons, I would hold that the company was in breach of duty owed to Mr Paulley in failing to take more steps than it did in response to his request to use the wheelchair space in his wheelchair. In short, I agree with Lord Toulson and Lord Neuberger that it should have gone further than it did. See, in particular para 83 of Lord Toulsons judgment, with which I agree. I further agree with him, and indeed with Lord Neuberger, that the appeal should be allowed, at least to the extent that they propose. I also agree in this regard with Lady Hale and Lord Kerr. The question then arises, or would arise, whether there is any basis upon which the order for damages should be sustained. It is accepted by both Lord Neuberger and Lord Toulson that this alternative case was advanced by the claimant at first instance. I agree that the claimant should be permitted to take the point, since (whatever may have been said in the Court of Appeal), all parties were in a position to argue the point before this Court. The next question is whether, if the bus driver had taken further steps to put pressure upon the lady with the buggy, there was a sufficient prospect that she would have moved from her place to another part of the bus sufficient to satisfy the relevant test of causation. Lord Kerr concludes that, if the policy had been more authoritative, and the lady had been told that she had to move and that the companys policy was that she must do so, there was at least a real prospect that she would have moved. I agree. It seems to me to be a reasonable inference from the facts that it was practicable for her to move to another part of the bus. It was not the evidence of the driver that there was nowhere else she could go. His requests were consistent only with the conclusion that it was both reasonable and practicable for her to move elsewhere on the bus. There is no evidence that she was faced with only two alternatives, namely staying where she was in the wheelchair space or leaving the bus. In these circumstances I agree with Lord Kerr that there is at least a real possibility that, if the position had been explained to her in clear terms, she would have moved elsewhere on the bus, even though it would have involved waking the child. I would go further. It seems to me that, if the problems and the policy had been put clearly to her, it is more likely than not that she would have agreed to do so. The question then arises whether, if the driver had told the lady that she must move and if, as I think, it is more likely than not that she would have done so, it is clear that there was somewhere else in the bus she could (and would) have gone to. It is common ground that the driver asked the lady if she would move elsewhere in the bus in order to accommodate the wheelchair. It is I think clear that there was somewhere else for her to go on the bus. The further question then arises whether the buggy would have been able to be folded up. Again, it seems to me to be more likely than not that the buggy was foldable. First, although there may be some exceptions, buggies are ordinarily foldable. Secondly, the drivers evidence (in his statement) was that he asked the lady if she would fold her buggy up so that Mr Paulley could travel on the bus. In his statement he added at paras 45 and 46: 45 The lady pointed out to me that her child was fast asleep within the buggy and that she had no intentions of waking the child or removing the child from the buggy. It was clear to both me and Mr Paulley that the lady was 46. refusing to assist. The driver did not say that the lady told him that it was not possible to fold up the buggy. When he was asked whether there was anywhere else for the buggy and child to go if they moved out of the space, the driver said no. However, he was then asked whether there was any alternative to asking the person with the buggy to get off the bus. He said that the alternative was to fold down the buggy if possible, if the buggy would fold down. It is true that he was then asked And they had refused to do that? and he replied yes. There is however no evidence that he heard the lady say that. As I see it, he inferred that from the reply recorded in his statement. Ironically perhaps, the only evidence which might be said to support the conclusion that the buggy in question could not be folded up is in the evidence of Mr Paulley. In his statement he said at para 24 that he appreciated that the wheelchair space is a good place for people to park their pushchairs, but they can at least fold them up. That suggests that he thought that the buggy could be folded up. However, earlier in his statement he said at para 14 that, while he was boarding the bus, the following exchange took place between the driver and the lady with the buggy: Of his own initiative, the driver turned to the lady and asked if she would fold it [ie the buggy] down so that I could use the wheelchair bay. The lady (who was on her mobile phone) responded by saying that the pushchair did not fold down and so she wouldnt move. It is true that in the Court of Appeal Lewison LJ at para 3 accepted that account, although he did not advert to the drivers evidence set out above. I am bound to say that it seems unlikely to me that it was not possible to fold the buggy and that it is more likely than not that the true reason for her attitude was the inconvenience of moving the child and the buggy when the child was asleep, which was essentially the reason she gave. If those conclusions are correct, Mr Paulley would be entitled to succeed even if the only relevant provisions were contained in regulation 12 of the Conduct Regulations. However, Lady Hale and Lord Kerr place considerable weight upon the position as at the date of the incident. Lady Hale has described the Regulations and their provenance in detail in her para 96, which she puts in their context in her paras 93 95 and 98. Importantly, she also stresses the importance of section 21ZA of the Disability Discrimination Act 2005 in her para 98. As she says, that section provided for the application of sections 19 to 21 of the DDA 1995 in modified form to providers of transport services. I agree with her that in passing that Act, Parliament must have concluded that the earlier regulations were not sufficient to enable disabled passengers to enjoy the same access to public transport as is enjoyed by non disabled passengers. As she says, those sections provide that, where providers of transport services had a policy, practice or procedure which would make it impossible or unreasonably difficult for disabled persons to make use of a service which they provided to other members of the public, it was their duty to take such steps as is reasonable in all the circumstances of the case for him to take in order to change that practice, policy or procedure so that it no longer has that effect. I now appreciate that the critical point in this appeal is not whether there was a breach of regulation 12 of the Conduct Regulations. As Lady Hale says at para 101, the issue agreed between the parties for the purpose of this appeal is a simple one, namely whether the Recorder was correct in concluding that the company was in breach of the Equality Act 2010. In her paras 99 to 109 Lady Hale convincingly explains why the answer to that question is yes. The essential points which have persuaded me are these, which are really no more than those made by Lady Hale. The bus company as the service provider must comply with three requirements set out in paragraph 2(1) of Schedule 2 to the 2010 Act. The first is in section 20(3) as modified by the Schedule. It reads: The first requirement is a requirement, where a [PCP] of As puts disabled persons generally at a substantial disadvantage in relation to a relevant matter in comparison with persons who are not disabled, to take such steps as it is reasonable to have to take to avoid the disadvantage. As Lady Hale explains in para 99, failure to comply with that requirement is a failure to make reasonable adjustments under section 21(1) and A discriminates against a disabled person if A fails to comply with that duty in relation to that person under section 21(2). This is a prospective duty, owed to disabled persons generally, to take proactive steps to meet their needs, and if an individual suffers as a result, then that failure amounts to discrimination against him. I agree with the general points made by Lady Hale in para 100. In particular, the position under the 2010 Act is different from that under the Conduct Regulations. Disabled people are a special case. Their needs are to be treated differently from those of others, including those with buggies. As Lady Hale puts it in paras 101 and 102, at the time of the incident the companys policy was that wheelchair users had no priority over buggies and that infected both the content of the notices and the approach to enforcement. It should have been made clear to passengers that wheelchair users had priority over others, who should have been required to vacate the wheelchair space. I agree with Lady Hale that disruption and confrontation would be unlikely. As indicated above, it is my view that it is more likely than not on the facts here that, if the lady had been required to move, as opposed to merely being asked to do so, she would have done so. I am also of the view that if, contrary to my view of the facts of this case, a buggy cannot be folded down, the PCP should have been adjusted to make it clear that, if necessary to enable a wheelchair user to use the wheelchair space, the buggy user (and not the wheelchair user) must get off the bus. Only in this way will the statutory policy of priority for wheelchair users be carried out. In reaching this conclusion, I do not disagree with the points made by Lady Hale in para 105. As she says, while non disabled people are not entitled to the same treatment as disabled people, especially after the 2010 Act, the adjustments to be expected for disabled people must be reasonable ones, and there will obviously be circumstances in which it is not reasonable to expect the space (or indeed the bus) to be vacated. However, this is not such a case. In conclusion, I agree in particular with the reasoning of Lady Hale and Lord Kerr. I too would allow the appeal. I also would answer the question posed, namely whether the company was in breach of the 2010 Act in the affirmative. I agree with Lady Hale that, whatever concession may have been made in the Court of Appeal, it cannot be just to deprive Mr Paulley of the damages which the Recorder awarded him. As I say in para 148 above, all parties were in a position to argue the point before this Court. I would therefore restore the order made by the Recorder. |
The appellant, a British national now 57, is in prison in Bali, Indonesia, awaiting execution by firing squad, following her conviction for drug offences. That follows her arrest in May 2012 and her subsequent trial on 22 January 2013 in the District Court of Denpasar. She had admitted the offences, but claimed that she had been coerced by threats to her sons life. Following her arrest she had co operated with the police, leading to the arrest of four others. The prosecutor had called for a sentence of 15 years imprisonment, and supported her appeal to the Indonesian High Court. But that was unsuccessful, as was her further appeal to the Supreme Court on 29 August 2013. The only legal options now available to her to avoid execution are an application to the Supreme Court to reopen the case, and an application to the President for clemency. The time limit for both expires on 29 August 2014. She needs legal help to prepare her case. The UK government has provided substantial consular assistance since it was notified of her arrest, has made diplomatic representations to the Indonesian authorities, and submitted amicus briefs to the High Court and Supreme Court in support of her appeals. But it has declined to pay for legal help, relying on what was said to be a rigid policy, as stated in its publication Support for British Nationals Abroad: a Guide (first published in June 2007): Although we cannot give legal advice, start legal proceedings, or investigate a crime, we can offer basic information about the local legal system, including whether a legal aid scheme is available. We can give you a list of local interpreters and local lawyers if you want, although we cannot pay for either. (emphasis added) The central issue in this case is the legality of that approach, either under domestic law, or (if it applies to her case) the European Convention on Human Rights. The course of the proceedings in UK and Indonesia The present proceedings sought an order requiring the Secretary of State to make arrangements for an adequate lawyer to represent her in the Indonesian appeal. They proceeded with remarkable and commendable urgency. They were lodged on 24 January 2013, only two days after her conviction. The urgency was dictated by the need for her notice of appeal to the Denpasar High Court to be lodged within seven days, and grounds 14 days thereafter. A rolled up hearing took place on 31 January, when the Divisional Court (Gloster and Nicola Davies JJ) granted permission but refused the substantive application, for reasons given in a judgment on 4 February [2013] EWHC 168 (Admin). The applicants grounds had complained of inadequate legal assistance before and at the trial. She had been represented by a local lawyer, paid with funds (5,000) raised by her sister, but who (according to her) spoke little English and had no experience of capital defence litigation. Following her conviction, and by the time of the judicial review application, the consulate had put her in touch with Mr Agus, a local lawyer. He was the British Ambassadors honorary legal adviser and was also a human rights specialist, who had acted in previous death penalty cases. He was willing to act for the appellant on a pro bono basis, subject to payment of his expenses, estimated at some 2,600. Accordingly, it was that seemingly modest sum which was initially the subject of the judicial review proceedings. In the event, following the dismissal of her application by the Divisional Court, the necessary sum was raised by donations from the public. Her appeal to the High Court in Indonesia then proceeded with the assistance of Mr Agus. On the issue of sentence it was supported by the prosecutor, and by amicus briefs submitted by Lord Macdonald and by the UK Government. On 10 April, the High Court of Denpasar dismissed the appeal. In this country her appeal against the order of the Divisional Court was heard by the Court of Appeal on 22 April and judgment was given on 22 May 2013 dismissing the appeal: [2013] 1 WLR 2938. By that time her request was for 8,000 to instruct Mr Agus in the appeal to the Supreme Court (again principally for his expenses). The Court of Appeal noted that some of the money had by that time been raised by donations. In the event, the full sum was raised and the appeal proceeded in the Supreme Court with Mr Agus assistance, but unfortunately was again unsuccessful. We have had the advantage of more detail than the lower courts about the course of proceedings in the lower courts. We were told that translations of the District Court and High Court judgments only became available in March 2014. As will be seen, even allowing for problems of translation, they make very disturbing reading. We have also some further evidence on the appellants side, including information as to the legal options now open to the appellant in Indonesia and their consequences, and also of the practice of other countries in providing funding in comparable cases. We have not seen evidence of any more recent consideration of the case by the Secretary of State. Nor is there before us any ground of challenge based on action or inaction since the Court of Appeal hearing. The appeal to this court has proceeded as one of principle, directed to the legality of the policy and its application in relation to the decision to refuse funding in January 2013. While however we are principally concerned with the legality of the decision made at that time, and the policy on which it was based, there is as we understand it no objection to us taking account of the new material in so far as it assists in resolving those questions. The Indonesian proceedings in more detail The District Court judgment recorded that she had been accompanied by a lawyer and a translator, and that she had been able to understand the proceedings and respond to questions put to her. It also summarised her statement to the court. She admitted her knowledge that she was carrying narcotics, but said that they belonged to a Julian Ponder (a member of a syndicate), who had threatened to kill her child if she did not comply, and that she felt very bad and ashamed. The judgment noted that the prosecutor was seeking a sentence of 15 years imprisonment and a substantial fine, and that her lawyers had filed a plea for the lightest sentence by reason that she committed the deeds not on her own accord but solely under the threats of the other party. The court, however, held that it was just and fitting that the maximum sentence be imposed. It rejected the prosecutions submission that there were no aggravating circumstances. Instead it found no mitigating circumstances. Rather it listed five aggravating circumstances, including her making of complicated statements to the court, her lack of remorse, and her resort to continued excuse for her ailing son, making herself subject to Julians threat into committing the deeds. A fully reasoned notice of appeal to the High Court was prepared by Mr Agus. This repeated her claim that she had been forced to commit the crime because of threats to her son by a narcotics syndicate. It also relied, by way of mitigation, on the facts that she had no previous criminal record and suffered from mental illness; that following her arrest she had co operated with the police in a sting operation which had led to the arrest of four members of the syndicate (including Mr Ponder); that they had been convicted and sentenced only to terms of imprisonment of between one and six years; and that her attempts at trial to read a full statement of apology had been interrupted by flash photography at short distance from photographers in court. The district court had failed to consider her mitigating factors, especially her role as a collaborator with the police, and the sentence was unjust and disproportionate. The appeal was supported by a substantial amicus brief (14 pages) on behalf of the UK government. This relied on a decision of the Indonesian Constitutional Court (Decision no. 2 3/PUU V/2007), which had upheld the permissibility of the death penalty for drug offences, but only in special or exceptional cases, and taking account of any mitigating circumstances. The appellants case came nowhere near that category. The mitigating circumstances included her co operation with the police, her previous good character, her remorse, and the circumstances in which she came to be involved. A further substantial amicus brief (20 pages) was submitted by Lord Macdonald QC (formerly Director of Public Prosecutions) in his own name. He gave particular emphasis to the appellants status as a cooperating witness, having regard to the vital role of such witnesses in combating the drug trade, and the need for leniency in sentencing as an incentive to such co operation. The court dismissed the appeal and confirmed the death penalty. With respect to the court, their treatment of the defendants case seems cursory in the extreme. The judgment noted, without further discussion, that the prosecutor had objected to the death penalty, and that a brief had been submitted by Lord Macdonald QC, but there was no mention of submissions of the UK Government. The court described the appellants action as highly systematic and organised as a criminal organisation network with an international scale with the involvement of many individuals who are all foreign nationals Narcotics crimes were categorised as extraordinary crimes, for which the State of Indonesia had established a state of emergency to eradicate narcotic crimes The death penalty to the appellant would give the positive response to the society to not commit narcotic crimes. Of the case of the appellant and her supporters, it said simply: based on the above consideration the defendants appeal brief, the appeal brief of the Public Prosecutor as well as the Amicus Curiae brief of Lord Macdonald are groundless and must be put aside. We have been given limited information about the subsequent appeal to the Supreme Court, and events thereafter. As we have said, the appellant was represented by Mr Agus before the Supreme Court, again with funds raised from public donations. We have been told that an amicus brief was submitted by the UK government to the Supreme Court. We assume it was in terms similar to that submitted to the High Court. In a witness statement dated 19 March 2014, Zoe Bedford, casework lawyer for Reprieve, indicated that the full judgment of the Supreme Court was still awaited. We understand that is still the position. In the absence of the judgment, and since the sentence was confirmed, there seems little reason to hope that the arguments on her side were given any more weight than in the lower courts. According to Ms Bedford, the only two avenues now open to her to avoid execution are a Peninjuan Kembali (PK) application to the Supreme Court and a clemency petition to the President. We were told that they are normally filed at the same time, with the clemency petition being held over to await the decision on the PK. According to Ms Bedford, the PK application enables the court to review a decision on the grounds of new evidence, a fundamental error or misapplication of the law; and unlike at the appeal stages, there will be the opportunity for oral argument She asserts that a lawyer is essential for this stage, and that legal advice is also needed on the implications of the complex new clemency laws and their interpretation, which remain the subject of much debate within the legal community in Indonesia. This documentation apparently needs to be lodged within one year of the Supreme Court decision, that is by 29 August 2014. Unfortunately, Mr Agus suffered a severe stroke in October 2013 and is unable to represent her. Attempts to find other lawyers prepared to work on a pro bono basis have failed, and Reprieve itself has no Indonesian lawyers qualified to undertake the task. A suitable lawyer has been identified but only if his fees (said to be US$ 35,000, excluding expenses) can be provided for. (We assume, although this is not entirely clear, that this fee would cover both the clemency petition and the linked application to the Supreme Court.) A statement from Mr Agus himself gives his view that the failings in this case are not unique, and that if the death penalty were reversed by the Supreme Court it would be a persuasive decision for future cases highlighting the flaws in the system which make the death penalty such a dangerous sentence to impose. The issues Three issues are identified in the agreed statement: The Convention issues i) Whether the appellant is within the jurisdiction of the UK for the purpose of article 1 of the European Convention on Human Rights. ii) If so, whether the respondent was and is obliged by the Convention to provide funds for the appellants legal representation in capital proceedings against her in Indonesia, or alternatively to consider her claim for funding. The common law issue iii) Whether the UK governments blanket policy to refuse to consider providing such funding in any case, including the appellants, is unlawful and/or irrational and/or (if material) disproportionate. The Convention issues We say at once that on issue (i) we are in substantial agreement with the courts below. This will make it unnecessary to consider in issue (ii). We note at the outset the Convention right on which Mr ONeill QC relies on behalf of Mrs Sandiford. The death sentence under which she suffers might have suggested article 2 or 3. But it is actually article 6, enshrining the right to a fair trial, on which alone reliance is placed. The case advanced is that the United Kingdom can and should secure to Mrs Sandiford free legal assistance under article 6(3)(c), in circumstances where she cannot afford to fund herself and no such assistance is available to her in Indonesia. Lord Dyson MR (para 35ff) reviewed the relevant case law of the European Court of Human Rights, culminating in the authoritative restatement of the principles by the Grand Chamber in Al Skeini v United Kingdom (2011) 53 EHRR 589. As was confirmed in that judgment (para 131ff), jurisdiction under article 1 is primarily territorial, but there are certain recognised exceptions one of which is in relation to the acts of diplomatic and consular agents which may amount to an exercise of jurisdiction when these agents exert authority and control over others (para 134). Having discussed in detail the other Strasbourg cases relied on by the appellants, he concluded that the test was not satisfied in the present case. He adopted a passage from of the judgment of Gloster J in the Divisional Court (para 40): In my judgment it is manifestly clear on the facts of this case, that, at all relevant times, from the moment she was arrested, throughout the time she was in custody, throughout the trial process, and after her conviction when held in prison, the claimant was and remains under the authority and control of the Indonesian state and relevant criminal authorities. The mere fact that the consular officials provided her with advice and support, and that the [Foreign and Commonwealth Office] engaged in diplomatic representations, cannot be regarded as any kind of exertion of authority or control by agents of the United Kingdom so as to engage its responsibilities under the Convention. Since the Court of Appeals decision in this case, the issue of jurisdiction under article 1, and in particular of the exceptions to the principle of territoriality, has been considered by the Supreme Court in Smith v The Ministry of Defence (JUSTICE intervening) [2013] UKSC 41, [2014] AC 52. It is unnecessary to look in detail at Lord Hope of Craigheads leading judgment on this issue, since it confirms that it is to the Strasbourg authorities, in particular Al Skeini, that we must look for detailed guidance. It is enough to say that there is nothing inconsistent with the Court of Appeals approach. Mr ONeill challenged this approach as too narrow. It was wrong to limit the scope of authority and control to situations in which a state is exercising physical control over a person. Physical power and control, in his submission, were not relevant to the separate category, recognised in Al Skeini, of acts of diplomatic and consular agents. In that context the correct approach was to focus on the activity of the member state, even if its authority was only partial. So in this case, the fact that the appellant is in custody in Indonesia does not prevent the UK exercising its authority, under the Vienna Convention, to arrange for her legal representation. The focus is on whether the state had jurisdiction over the act or omission complained about, not whether she is under its authority and control in other ways. In our view, however, the Strasbourg authorities on which he relies do not support such an extension. In Al Skeini the court identified the consular exception in these terms (para 134): First, it is clear that the acts of diplomatic and consular agents, who are present on foreign territory in accordance with provisions of international law, may amount to an exercise of jurisdiction when these agents exert authority and control over others. The Court footnoted this head with a number of references. The main reference was to Bankovi v Belgium (2001) 11 BHRC 435, para 73, where the court said that customary international law and treaty provisions had recognised extra territorial exercise of jurisdiction by a state in cases including those involving the activities of its diplomatic or consular agents abroad. The court added: see also X v Federal Republic of Germany, (1965) 8 Yearbook of the European Convention on Human Rights 158, 169; X v United Kingdom (1977) 12 DR 73; M v Denmark (1992) 73 DR 193; 15 EHRR CD 28 (sub nom V v Denmark)). The United Kingdom has no territorial jurisdiction over Mrs Sandiford in prison in Indonesia. But the United Kingdom could, in one way or another, provide her with funds for her legal proceedings in Indonesia. It could on the face of it do so without using any diplomatic or consular agents, by providing funds here which could then be remitted to Indonesia. However, there is no general Convention principle that the United Kingdom should take steps within the jurisdiction to avoid exposing persons, even United Kingdom citizens, to injury to rights which they would have if the Convention applied abroad. The principle recognised in cases like Soering v United Kingdom (1989) 11 EHRR 439 only applies where the United Kingdom is proposing a step such as the surrender or removal from the jurisdiction of a person which may lead to infringement of that persons Convention rights abroad. The exceptional extra territorial jurisdiction described in Al Skeini 53 EHRR 589, para 134 was expressed as depending on acts of diplomatic or consular agents abroad where such agents exert authority and control over others. It is common ground that the United Kingdom could use its diplomatic or consular agents to fund the defence in Indonesia of a United Kingdom citizen. The Vienna Convention on Consular Relations of 24 April 1963 provides that the consular functions exercisable by consular posts or diplomatic missions consist in inter alia [Article 5] (i) . representing or arranging appropriate representation for nationals of the sending state before the tribunals and other authorities of the receiving state . where, because of absence or any other reason, such nationals are unable at the proper time to assume the defence of their rights and interests. (m) performing any other functions entrusted to a consular post by the sending state that are not prohibited by the laws and regulations of the receiving state or to which no objection is taken by the receiving state . The Convention on Consular Relations permits, but it is not suggested that it obliges, the exercise of any such functions. In the present case, the United Kingdom has decided not to use its agents to arrange or fund representation of Mrs Sandiford for this purpose. In these circumstances, it is not possible, in our opinion, to identify any relevant acts of diplomatic or consular agents or therefore any relevant exercise of authority or control by such agents over Mrs Sandiford, which could bring the first extra territorial exception into play. The United Kingdoms diplomatic and consular agents in Indonesia have of course been active in relation to Mrs Sandifords predicament, particularly making representations and filing an amicus brief. But their support for her and their activity in this regard have hitherto excluded any involvement in instructing or funding lawyers on her behalf. A deliberate refusal to instruct or fund lawyers on behalf of Mrs Sandiford cannot constitute an exercise of authority or control over her. It is the opposite a decision not to undertake or exercise any relevant authority or control. The authorities footnoted in Al Skeini para 134 do not lead to any different conclusion. In X v Germany the allegation was that the German Consul had asked the Moroccan authorities to expel him. The case failed on the facts, with the Commission merely remarking that diplomatic and consular representatives . perform certain duties with regard to [nationals of a contracting state abroad] which may, in certain circumstances, make that country liable in respect of the Convention ((1965) 8 Yearbook of the European Convention on Human Rights 158, 168). The potential liability referred to was therefore based on duties undertaken and performed. M [or V] v Denmark involved the positive act of the Danish Ambassador to East Germany in inviting the East German police to enter the Danish Embassy in East Berlin where a group of East Germans had taken refuge and been promised immunity. Not surprisingly, the Commission held that he had thereby exercised authority over the group, although again the claim failed on the facts, because the group had by then left voluntarily. The high point of Mr ONeills argument is perhaps the Commission decision in X v United Kingdom (1977) 12 DR 73. The British court had ordered a Jordanian father to return his daughter to England. According to the summary, the English mother got in touch with the British consulate in Amman asking it to obtain the custody of her daughter from the Jordanian Court and the Consulate reported on the childs well being, and provided the mother with a list of lawyers practising in Jordan and registered her daughter in her passport, but with no result. The mother complained that the Consul had failed to intervene in her domestic dispute and help reunite mother and child, so allegedly violating articles 8 and/or 13, and that the Consul refused to ask its legal adviser to answer questions about Jordanian law in order to help her prepare her case for court in Jordan, so violating article 6. The complaint failed again on the facts, with the Commission reciting what had been done and concluding that the consular authorities had done all that could be reasonably expected of them. But first the Commission made what appears to have been a statement of legal principle in relation to jurisdiction: authorized agents of a state, including diplomatic or consular agents bring other persons or property within the jurisdiction of that state to the extent that they exercise authority over such persons or property. Insofar as they affect such persons or property by their acts or omissions, the responsibility of the state is engaged Therefore, in the present case the Commission is satisfied that even though the alleged failure of the consular authorities to do all in their power to help the applicant occurred outside the territory of the United Kingdom, it was still within the jurisdiction, within the meaning of article 1 of the Convention. (p 74) The statement refers to responsibility for acts or omissions and treats the alleged failure of the consular authorities to do all in their power as bringing the case within article 1. So it lends a superficial support to Mrs Sandifords case that a mere unexercised consular power suffices for the purposes of establishing jurisdiction under article 1. But, read literally, that would appear to imply that any omission to exercise any power which could be exercised by diplomatic or consular means would bring the circumstances within the jurisdiction under article 1. On that basis, jurisdiction under article 1 would depend not on activities undertaken or duties performed, but simply on powers possessed. That would be contrary to the later statements of principle in Bankovi and Al Skeini. (Logically, it would also mean that Bankovi itself must be wrong, since, if a mere unexercised power suffices, then an actual exercise of a power affecting a person abroad must surely also suffice.) In our opinion, Commission dicta made in passing in 1977 cannot and do not determine the scope of article 1 today. To the extent that they are inconsistent with later statements, they must be regarded as too extensively phrased. But it is not uninteresting to note that, even though they were so widely expressed, their application on the facts in no way favours Mrs Sandifords current case. If states have any duty to arrange and fund representation on behalf of their citizens abroad, the result in X v United Kingdom ought on the face of it to have been the opposite at least in respect of the complaint made under article 6. Looking at the matter more broadly, the position is that Mrs Sandiford has been apprehended, convicted and tried for drug smuggling in Indonesia. If one asks, by reference to any common sense formulation, under whose authority or control she is, the answer is: that of the Indonesian authorities. It is they who ought to be ensuring her fair trial. If they were party to the Convention, it would be their duty to do so, and to provide appropriate legal assistance in a case of impecuniosity, under article 6. Since Al Skeini, it is possible in certain respects to divide and tailor the Convention rights relevant to the situation of a particular individual: see para 137 in that case. But to divide and tailor the rights under article 6, so as to isolate the duty to fund from the remaining package of rights involved in fair trial, and to treat it as applying to the United Kingdom and as putting Mrs Sandiford to that extent under the authority or control of the United Kingdom, is in our opinion impossible in circumstances where the United Kingdom has deliberately not assumed or performed any role in relation to funding. Before leaving the Convention position, it is also worth considering the full implications of the appellants case that the Convention applies. Logically, article 6 would be engaged in respect of every criminal charge, however serious or minor, brought against a British citizen in any overseas country in the world. Article 6 would become a compulsory world wide legal aid scheme for impecunious British citizens abroad, presumably even for those who had decided to live permanently abroad. For reasons we have given, however, in our opinion Mrs Sandiford was not and is not within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention, so that no part of article 6 is capable of imposing any obligation on the United Kingdom in respect of the criminal proceedings and capital penalty to which she is now subject in Indonesia. The common law issue The blanket policy history and practice Before considering the legal issues, it is convenient to refer to the evidence as to how the policy has evolved and how it has worked in practice. Although the policy itself is not in dispute, evidence of the sources of that policy and of the reasoning behind it has proved somewhat elusive. The best evidence now available is contained in two statements (approved we are told by Foreign Office ministers), submitted by Louise Proudlove (Head of Consular Assistance, Consular Directorate, of the FCO). The first was available to the Divisional Court and was necessarily prepared in great haste. The second was submitted to the Court of Appeal in April 2013, partly in response to evidence from Reprieve of a case in 2003 where funding had been provided for a British citizen (Mr Maharaj) facing the death penalty in Florida. It was said to be based on a search of all relevant sources (including documentary and electronic files and interviews with former FCO employees), which was as comprehensive as possible in the time available. It is safe to assume that, if there were further material, it would have come to light in the time that has elapsed since then. There is no doubt as to the longstanding policy of the UK government to oppose the death penalty as a matter of principle. Its current strategy (published in revised form in 2011) is set out in HMG Strategy for Abolition of the Death Penalty 2010 2015. This has the appearance of a formal policy statement, approved by Ministers, and appears as such on the FCO website. According to the Executive Summary it sets out the UK's policy on the death penalty, and offers guidance to FCO overseas missions on how they can take forward our objectives. Appendix 1 identifies Indonesia as one of a second tier of priority countries where consular posts should be working towards one or more of our goals. We were told, for example, the FCO has recently funded a project in Indonesia for training lawyers in handling death penalty cases, in particular by improving understanding of human and constitutional rights. Appendix 2 notes that the FCO is funding three multi country projects (not currently including Indonesia), two of which provide free legal representation for prisoners facing the death penalty. The stated objectives include increasing the number of abolitionist countries, seeking further restrictions in countries where it is used, and ensuring that EU minimum standards are applied. Those standards (as recorded in appendix 4 of the strategy) include the requirement that capital punishment must only be carried out pursuant to a final judgment by an independent and impartial court after legal proceedings complying with international standards including the right of anyone suspected of or charged with a crime for which capital punishment may be imposed to adequate legal assistance at all stages of the proceedings, and where appropriate, the right to contact a consular representative. The methods for achieving these goals include bilateral initiatives including raising individual cases of British nationals: HMG policy is to use all appropriate influence to prevent the execution of any British national (emphasis added; as will be seen appropriate influence is a phrase which is regularly repeated in ministerial statements on the subject). Delivery methods include lobbying on individual cases of British Nationals who have been sentenced to the death penalty or are facing death penalty charges, the strategy being specifically tailored to each case. The strategy says nothing in terms about the funding of legal representation for individual cases, but equally there appears to be nothing which rules it out. Appendix 6, which lists further recommendations of possible actions by consular posts, does not exclude legal action as such. The list includes: Legal challenges to the constitutionality of the imposition and application of the death penalty are a good tool to use, eg to the mandatory nature of the death penalty, delay on death row or the mercy process Such legal challenges are also suggested as possible actions under the heading adherence to international standards. By contrast with this strategy, there appears to be no comparable published statement covering the current policy for funding legal representation. Ms Proudlove explains her own understanding of the practice in individual cases, following notification of an arrest by the host country (as required by the Vienna Convention on Consular Relations 1963). In that connection, she refers to an internal guidance note, the precise date and status of which are unclear, which sets out a checklist of actions. The note starts by affirming the governments policy to use all appropriate influence to prevent the execution of any British national. It includes advice on working with the subjects local lawyer, preparing representations which can be made before, during and after the trial right up to execution, and considering the possibility of a legal brief to court, if admissible under local law but in respect of which, it is said, there are strict HMG criteria. There is special advice about involving Reprieve. For the current policy on funding legal representation, as already noted, she relies on the 2007 guide (and subsequent revisions), and its statement that we cannot pay for local lawyers. That does not purport itself to be a policy making document, nor does it explain the reasons for the prohibition. We were given no direct evidence as to how, or under whose authority, it came to be published in that form. Ms Proudloves researches, going back to 1987, have shown that the previous policy, though strict, was not inflexible. Thus she refers to a Consular Department Circular dated July 1987 which recommends that if there is no possibility of obtaining funds for the defence a report should be submitted with an estimate of costs, to Consular Department for decision whether public funds can be used against a UTR (undertaking to repay). According to the writer: this facility is rarely used (I cannot recall a single case in the last four years) but should remain an option. This position did not change in the ensuing decade. (A letter from the head of the consular division dated January 1997 to Phillip Sapsford QC is to similar effect.) Ms Proudlove also explains the circumstances in which in 1997 it was agreed to offer funding of up to 20,000 for expert evidence (against an undertaking to repay) to Mr Maharaj who was facing capital charges in the USA. Apart from that and one other similar case (Mr Elliott), also from the USA and relating to expert evidence, no record has been found of any case in which funds were made available for legal representation pursuant to the previous policy. She has attempted to discover in the FCO records the circumstances of a change of policy in 2006 7 to a blanket policy allowing no exceptions. She refers to the decision to refuse assistance in another case from the USA (Ms Carty) in 2004. The Minister was at that time recorded as confirming the existing policy that loans should not in general be provided for death penalty cases, although it was recognised that there be would be exceptions which would continue to be considered on a case by case basis. She infers that the change of policy occurred at some time between that decision and the first publication of the guide in 2007. But she frankly admits that in spite of her extensive searches she has been unable to find any documentation recording such a change of policy. She also notes that shortly thereafter the decision was made to provide annual funding to Reprieve, in amounts rising from 20,000 in 2005/6 to 60,000 in 2012/3. According to the terms of reference, Reprieve is to provide a range of services including helping to ensure the best available legal representation, and securing pro bono services from experts and lawyers where possible. The next formal record of a review of the policy (and the last of which we have evidence before the present case) was in May 2010 when there was a detailed submission to the Foreign Secretary. This was triggered, it was said, by two cases at a critical stage, in which the department was in consultation with lawyers and Reprieve, and a steer from Ministers would be welcomed. The scope of the submission is apparent from the introductory passage, under the heading Options: We recommend that Ministers agree we should, as a matter of general policy, continue to seek to use all appropriate influence to prevent the execution of any British national, beginning that effort from the time the death penalty becomes a possibility. 4. Alternatives would include: A) to limit our action to cases clearly in breach of international standards; B) to limit out action to cases where we judged there was a strong chance of success; C) to consider providing direct legal assistance. The paper reviewed the merits and disadvantages of the three alternatives and concluded: Overall we judge that the risks of a more selective approach (in particular defending judgements not to raise cases) outweigh the benefits. So we recommend that we retain our strong advocacy on behalf of all British nationals facing the death penalty abroad. A minute dated 8 June 2010 recorded (without further comment on the three alternatives) that the Secretary of State accepted your recommendation that the UK should seek to use all appropriate influence to prevent the execution of any British National. There appears to be no record of what action was taken in relation to the two cases which triggered the submission. On the other hand we have been shown no specific case where assistance has in practice been refused on the basis simply of the blanket policy, without any consideration of the individual circumstances. We note from this evidence that, while the FCO has resisted requests to fund legal representation as such, it has been willing on occasions to spend relatively substantial sums on legal advice in connection with the preparation of amicus briefs. For example, in the Maharaj case two briefs were prepared in 2003 and 2005, at a cost of over US$25,000. A similar amount was spent in 2010 in another American case (Kenneth Gay). In Indonesia in 2012 Mr Agus on the instructions of the FCO had prepared an amicus brief for another British citizen faced with a possible death penalty (Gareth Cashmore) for a fee equivalent to some 17,000. This was the template used for the preparation of the amicus brief in the appellants case. Finally, although the evidence explains the practical difficulties in operating a fair and consistent scheme for funding legal representation, it is not suggested that it would be impossible. There is no challenge in principle to the evidence more recently submitted on behalf of Reprieve, which shows that many comparable governments do provide such funding for their nationals facing capital charges abroad, although (as Mr Chamberlain fairly points out) the court has no material to judge what practical difficulties may have arisen in the countries concerned. The Secretary of States powers and the role of the courts There was no material dispute as to the existence or source of the power of the Secretary of State to provide assistance, including legal funding, for British citizens facing capital charges abroad. It is immaterial for the present purposes to consider whether this is properly described as a common law or a prerogative power (see eg Wade and Forsyth Administrative Law 10th ed (2009), pp 181 183). The significant point is that it is not derived from statute, and accordingly any legal constraints on its exercise must be found elsewhere. Assistance in this respect can be found in the judgment of the Court of Appeal in R (Abbasi) v Secretary of State for Foreign & Commonwealth Affairs [2002] EWCA Civ 1598, [2003] UKHRR 76, which concerned the possible responsibility of the UK government to make representations to the USA government or take other action on behalf of British citizens detained in Guantanamo bay. The court noted that, subject to issues arising under the European Convention on Human Rights, international law had not yet recognised any general duty for a state to intervene by diplomatic means (para 69). Enforceable rights could however arise in domestic law based on established government policy statements or practices, underpinned by the law of legitimate expectation and justiciable in accordance with the principles established in the GCHQ case (Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374): (paras 81ff). The Court of Appeal held that, although the Foreign Offices discretion as to exercise its prerogative powers in such a case was a very wide one and although the court cannot enter the forbidden areas, including decisions affecting foreign policy, there was no reason why its decision or inaction should not be reviewable if it can be shown that the same were irrational or contrary to legitimate expectation (para 106). Neither party in the present case sought to question that analysis. Relevant also in the present context is the courts discussion of Butts case (R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Ferhut Butt (1999) 116 ILR 607), in which the applicant had sought an order that the FCO should make representations to the President of the Yemen relating to a criminal trial in progress in the Yemen. Henry LJ recorded the concession by the respondent Secretary of State that he was under a common law duty to protect its citizens abroad, but that the extent and the limits of that duty (were) set out in a leaflet that is available for those who travel abroad. As the court noted in Abbasi, the leaflets in question expressly excluded intervention in a criminal trial, which was fatal to the application. Rather than a common law duty as such, as suggested by Henry LJ, the Abbasi court preferred to characterise it as a legitimate expectation that such assistance as was proffered in the leaflets would be provided (paras 93 4). The courts role is dependent on the nature and the subject matter of the power or its exercise, particularly on whether the subject matter is justiciable: Council of Civil Service Union v Minister for the Civil Service [1985] AC 374, 417 418 per Lord Roskill, R v Secretary of State for the Home Department, Ex p Bentley [1994] QB 349. In the former case, at p 418B C, Lord Roskill suggested as prerogative powers which would not be justiciable those relating to the making of treaties, the defence of the realm, the prerogative of mercy, the grant of honours, the dissolution of Parliament and the appointment of Ministers. Even so, it has been held that a decision to refuse to issue any pardon based on a failure to identify the possibility in law of a conditional pardon may be reviewable (see Ex p Bentley); and it has also been held that a decision to refuse to issue a passport is reviewable (R v Secretary of State for the Foreign Office, ex p Everett [1989] 1 QB 81) In the present case, there has been no dispute that the Secretary of State, in accordance with his published policies and established practice, has some responsibility for British citizens facing capital charges abroad, nor that his exercise of that responsibility is subject to review by the courts in accordance with the principles outlined in Abbasi. On the other hand it is also common ground that he has a wide discretion in the formulation and application of that policy. The issues turn on the restrictions on which he is entitled to place on that policy and on its application to the appellants case. Fettering discretion the issues In the courts below, as in this court, the argument has turned principally on his right to adopt a blanket policy not permitting of any exceptions, having regard to the well known rule that a public body may not fetter the exercise of a discretionary statutory power (exemplified by British Oxygen Co Ltd v Board of Trade [1971] AC 610). As recorded in the agreed statement of facts, the existence of such a policy, since about 2007, has not been in dispute. The Court of Appeal decided (following its decision in R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213) that that rule had no application to the exercise of a prerogative or common law power as in this case (para 53, per Lord Dyson MR), and that the decision to adopt such a rule was not irrational (para 60). The reasoning of the Court of Appeal is encapsulated in a short passage in the judgment of the Master of the Rolls: 53. It is clearly established that a public body may not unlawfully fetter the exercise of a discretionary statutory power: see, for example, British Oxygen Co Ltd v Board of Trade [1971] AC 610. But where a policy is made in the exercise of prerogative or common law powers (rather than a statutory discretion), there is no rule of law which requires the decision maker to consider the facts of every case with a view to deciding whether, exceptionally, to depart from the policy in a particular case. This is because it is within the power of the decision maker to decide on the extent to which the power is to be exercised in, for example, setting up a scheme. He can decide on broad and clear criteria and either that there are no exceptions to the criteria in the scheme or, if there are exceptions in the scheme, what they should be: R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213, para 191. The Court of Appeal in Elias had in turn adopted the reasoning of Girvan J in In re Ws Application [1998] NI 19, in a passage approved by the Northern Ireland Court of Appeal [1998] NI 219. Mr ONeill argues that this is too narrow an approach. He challenges the distinction between statutory and common law powers as inconsistent with modern principles of judicial review as it has developed since GCHQ: judicial review is as applicable to decisions taken under prerogative powers as to decisions taken under statutory powers save to the extent that the legality of the exercise of certain prerogative powers (eg treaty making) may not be justiciable.: R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513, 553C D, per Lord Browne Wilkinson) Further, at least where human rights are at stake, the rule against fettering discretion is a general principle of the rule of law (see eg Gillan v United Kingdom (2010) 50 EHRR 1105, para 77). Furthermore he submits, in the context of the present case such a rigid policy is inconsistent with the objects and purpose of the governments adopted strategy on the death penalty and as such is irrational. A more flexible policy would allow exceptional cases to be dealt with on their own merits in accordance with the strategy, but need not be open ended. Mr ONeill accepts for example that it would be open to the Secretary of State to adopt a total cap on fees (say 20,000) in an individual case, or even to refuse funding altogether if he had reached the limit of resources allocated for a particular year. What he cannot do is to exclude consideration altogether. Mr Chamberlain adopts the reasoning of the Court of Appeal. As he points out, the leading cases on the no fettering principle are directed in terms to the exercise of statutory discretions (see eg British Oxygen [1971] AC 610, 625D per Lord Reid). The principle has been explained as founded on the Parliamentary intention that a power exercisable by statute from time to time must reflect the circumstances at the time: it cannot be exercised nunc pro tunc (R v Secretary of State for the Home Department ex parte Venables [1998] AC 407, 496 497 per Lord Browne Wilkinson). The same rationale cannot be applied to non statutory governmental powers However his case does not rest on that legal proposition alone. While he asserts the right of ministers exercising a common law power to formulate a bright line policy, not subject to exceptions, he submits: In any event, even in relation to statutory discretions, decision makers are entitled to adopt policies admitting of no exceptions, provided that they are prepared to consider, by reference to the facts of an individual case, whether to change the policy. That is what happened here. (Secretary of States printed case, paragraph 6) A review of the evidence, he says, shows that the department did in fact consider the points put forward as justifying exceptional treatment for Mrs Sandiford, but decided for good reasons not to accept them. Discussion The issue which divides the parties is, in short, whether there exists in relation to prerogative powers any principle paralleling that which, in relation to statutory powers, precludes the holder of the statutory power from deciding that he will only ever exercise the power in one sense. The basis of the statutory principle is that the legislature in conferring the power, rather than imposing an obligation to exercise it in one sense, must have contemplated that it might be appropriate to exercise it in different senses in different circumstances. But prerogative powers do not stem from any legislative source, nor therefore from any such legislative decision, and there is no external originator who could have imposed any obligation to exercise them in one sense, rather than another. They are intrinsic to the Crown and it is for the Crown to determine whether and how to exercise them in its discretion. In our opinion, in agreement with the Court of Appeal, this does have the consequence that prerogative powers have to be approached on a different basis from statutory powers. There is no necessary implication, from their mere existence, that the State as their holder must keep open the possibility of their exercise in more than one sense. There is no necessary implication that a blanket policy is inappropriate, or that there must always be room for exceptions, when a policy is formulated for the exercise of a prerogative power. In so far as reliance is placed on legitimate expectation derived from established published policy or established practice, it is to the policy or practice that one must look for the limits, rigid or flexible, of the commitment so made, and of any enforceable rights derived from it. The point is well illustrated by the case on which the Court of Appeal relied. Elias [2006] 1 WLR 3213 concerned a non statutory compensation scheme set up by the government in November 2000 to repay the debt of honour owed by the UK to British civilians interned by the Japanese during the Second World War. In July 2001, following some uncertainty about the scope of the scheme, and further discussion within the department, more detailed eligibility criteria were announced to Parliament. This order of events was subject to critical comment in the Court of Appeal. As Mummery LJ observed: It does not require much foresight to appreciate the importance of giving proper consideration to establishing lawful eligibility criteria before starting to make ex gratia payments to claimants. Astonishing though it may seem, very many payments were made under the Compensation Scheme (though not to Mrs Elias), even before the eligibility criteria had been settled and announced and without giving proper consideration to whether there was potential discrimination on racial grounds. (para 19) Mrs Elias challenge was based on a number of grounds, including direct and indirect racial discrimination, as well as fettering of discretion. Under the latter head, she argued that the Secretary of State should have been willing to consider any exceptional circumstances, in which payment might be paid to those owed a debt of honour, even though they fell outside the scope of the eligibility criteria. The court rejected this submission in the words cited by the Master of the Rolls in the present case. It is of interest to note also the terms in which the court refused permission to amend the claim to include a ground based on the failure to review the policy. Mummery LJ observed that the duty to keep the scheme under review in the light of developments was not disputed, but said: There was, however, no such duty here. The criteria had been laid down with full knowledge of the facts and a decision was made as to who should be excluded from the Scheme. In the ABCIFER case this court had decided that this was a rational and lawful decision. There was no duty to reconsider the criteria on the grounds suggested by Mrs Elias (para 189: the reference is to R (Association of British Civilian Internees: Far East Region) v Secretary of State for Defence [2003] QB 1397) In other words, in circumstances where the Secretary of State had laid down a detailed scheme, recently reviewed, covering those to be included or excluded, there could be no legitimate expectation that he would consider further categories of exception outside those specifically provided for. As we have already made clear, this does not mean that the formulation or exercise of a prerogative power may not be susceptible to review on other grounds. In particular there is no reason why a prerogative refusal to fund foreign litigation should be immune from all judicial review. It does not raise any real issues of foreign policy. As we understand it, the Governments current blanket policy is motivated largely by domestic policy and funding considerations. In particular, as Abbasi made clear, there is no reason why action or inaction in the exercise of such a power should not be reviewable on the grounds of irrationality or breach of other judicial review principles. Irrationality is a high threshold, but it may be easier than otherwise to surmount in a case involving an imminent risk of death by execution of a British citizen deprived of financial support abroad. The courts role is given added weight in a context where the right to life is at stake (see R (Bugdaycay) v Secretary of State for the Home Department [1987] AC 514). A keen scrutiny of the policy and its application must on any view be required in such circumstances. There may be scope in an appropriate case to test the legitimacy of the blanket policy that the Foreign Office currently advances, by reference to a broader framework of proportionality discussed in a non Convention context in Kennedy v Information Comr (Secretary of State for Justice intervening) [2014] UKSC 20, [2014] 2 WLR 808. Issues of consistency may also arise when the blanket policy is compared with the strong and apparently flexible approach to the exercise of appropriate influence advocated by the FCOs published strategy for abolition of the death penalty. However, for reasons which will become apparent, these questions are not critical to the outcome of this particular appeal. Policy as applied to the appellant In the event, the legality or otherwise of the blanket policy is not determinative, because, regardless of the strict limits of the policy as described in the evidence, Mr Chamberlain is right in our view to submit that the department did not treat its existence as the end of the matter, but was on the evidence prepared to consider whether it should be modified in the face of the particular circumstances disclosed by the appellants case. Ms Proudlove explains the steps taken by her department following letters before action from the appellants solicitors in October 2012. Consideration, she says, was given to the policy issues: Consular Directorate officials came to the view, having considered our policy in general and the circumstances in Mrs Sandiford's case, that if we were to pay for the provision of her legal representation, this would inevitably result in having to change our policy of not paying for legal representation on the basis that there were a number of analogous death penalty cases. Consideration was then given to whether or not the policy ought to be changed. However, having considered the serious points of principle and practicability that I have outlined above, we came to the view that we should not change our policy. Of course, as is the case with policies in general in the Consular Directorate, they are under regular review with a view to providing the best consular service that we can provide to British nationals abroad. She also explains the Departments view of the special factors put forward in the judicial review proceedings as justifying an exception in the case of the appellant. These were, first, that legal representation was available (through Mr Agus) at relatively low cost, and, secondly, that she had no other means of payment. Ms Proudloves response, in short, was, first, that there was no fair way of distinguishing between cases on the basis of cost, nor of limiting the costs of appeals; secondly, there was some evidence that the appellants family were able to raise sums of the order required, but in any event their financial circumstances were in no way exceptional as compared to others facing the death penalty abroad. It may be said (as Gloster J suggested: para 78) that there is a difference between formulating or reformulating policy, and considering exceptions to policy once made. In many contexts, no doubt, that may be a significant difference, where for example the making of policy is itself subject to a formal process, perhaps including consultation, distinct from its application in individual cases. However, in the present context that seems a distinction without a difference. Our review of the development of policy shows that, on the one hand, policy submissions were made to ministers without any formal procedure, and generally in response to issues raised by individual cases. On the other, it was sensibly recognised that if an exception were to be approved it would be taken as setting a precedent, and to that extent would be tantamount to a variation of the policy. In his written case to this court, Mr ONeill maintains his challenge to the rationality of the actions and decisions of the Secretary of State in January 2013. However, we see nothing arguably irrational in the reasons given by Ms Proudlove for not making an exception to the policy in this case, at least as matters stood in January 2013. The challenge is all the more difficult to sustain in the light of what followed. It follows that the challenge to the decision made in January 2013, and the The department seems to have responded with appropriate urgency to the wholly unexpected death sentence. They were able to put the appellant in contact with an experienced local lawyer who was willing to conduct the appeal on an expenses only basis. Although it is argued that the small amount involved was a reason for making an exception to their policy, it could equally point in the other direction. It was hardly irrational to think that it was a sum which the family should be able to raise for themselves, as indeed turned out to be the case. In the event the problem at the appeal was not the lack of competent legal representation, but the apparent unwillingness of the court to take any notice of it. This cannot be laid at the door of the Secretary of State. policy on which it was based, must fail. The present position While this is enough to dispose of the appeal, we cannot leave the matter there. Mrs Sandiford remains in jeopardy and urgently in need of legal help. Since January 2013, as a result of the surprising course of the Indonesian proceedings, circumstances have radically developed in respects which appear to have been quite unforeseeable. However, we have no up to date information as to the departments consideration of those matters. As has been seen, those responsible have been willing to consider whether the policy should be departed from or qualified in her case, but that has been on information which is now out of date. Logic and consistency, if nothing else, call for an urgent review of the policy as it applies to her in the light of the current information. The evidence now available as to the course of the Indonesian proceedings appears to raise the most serious issues as to the functioning of the local judicial system and its ability to deal justly with the appellants case. In particular, on the material we have been shown, the local courts seem to have ignored the substantial mitigating factors in her case, including her age and mental problems, her lack of any previous record, her co operation with the police, and not least the remarkable disparity of her sentence with those of the members of the syndicate whom she helped to bring to justice. On the face of it, there is substantial material to support her application to the Supreme Court or the President. She needs a competent lawyer to present it. It is through no fault of her own that Mr Agus illness has deprived her of his expert support, and with it her only opportunity of pro bono representation. Nor is this simply a matter of justice to her. If Mr Agus view is accepted, an application to the Supreme Court, supported by appropriate oral submissions and new evidence, may offer the prospect of a lasting improvement to the approach of the local courts to comparable cases in the future. It is not, of course, for this Court now to express any view as to what the outcome might be of such a review. But we note that, even under the old pre 2007 policy, it appears that the Foreign Office did not experience real difficulty in controlling and limiting the financial exposure which it incurred in a very few exceptional cases. It is not clear to us that the creation or recognition of an exception for a case as extreme as the present would risk opening a floodgate to future demands for financial support. However that may be, the further review needs to be undertaken and the outcome to be supported by a clear justification of the rationality and/or proportionality of maintaining an absolutely blanket policy covering even the present circumstances. Without prejudice to that review, but for the reasons given above, the present appeal must be dismissed. LORD SUMPTION I agree with the order proposed by Lord Carnwath and Lord Mance, for the reasons given in their joint judgment. I wish only to add some observations of my own on the rule against the fettering of discretions in the context of the exercise of a common law power. The rule is of long standing. It was articulated by Bankes LJ in more or less its modern form in R v Port of London Authority Ex p Kynoch Ltd [1919] 1 KB 176, 184: There are on the one hand cases where a tribunal in the honest exercise of its discretion has adopted a policy, and, without refusing to hear an applicant, intimates to him what its policy is, and that after hearing him it will in accordance with its policy decide against him, unless there is something exceptional in his case. I think counsel for the applicants would admit that, if the policy has been adopted for reasons which the tribunal may legitimately entertain, no objection could be taken to such a course. On the other hand there are cases where a tribunal has passed a rule, or come to a determination, not to hear any application of a particular character by whomsoever made. There is a wide distinction to be drawn between these two classes. Commenting on Bankes LJs statement of principle, Lord Reid observed in British Oxygen Co Ltd v Board of Trade [1971] AC 610, 625, The general rule is that anyone who has to exercise a statutory discretion must not shut his ears to an application (to adapt from Bankes LJ on p 183). I do not think there is any great difference between a policy and a rule. There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all. But a Ministry or large authority may have had to deal already with a multitude of similar applications and then they will almost certainly have evolved a policy so precise that it could well be called a rule. There can be no objection to that, provided the authority is always willing to listen to anyone with something new to say of course I do not mean to say that there need be an oral hearing. In the present case the respondent's officers have carefully considered all that the appellants have had to say and I have no doubt that they will continue to do so. The respondent might at any time change his mind and therefore I think that the appellants are entitled to have a decision whether these cylinders are eligible for grant. The basis of the rule against the fettering of discretions, as Bankes LJ and Lord Reid pointed out, is that a discretion conferred on a decision maker is to be exercised. Within the limits of that discretion, which will normally be derived from terms in which it was conferred, members of the class of potential beneficiaries have a right to be considered, even if they have no right to any particular outcome. The effect of the decision maker adopting a self imposed rule that he will exercise his discretion in only some of the ways permitted by the terms in which it was conferred, is to deny that right to those who are thereby excluded. It also leads to the arbitrary exclusion of information relevant to the discretion conferred, and thereby to inconsistent, capricious and potentially irrational decisions. Since the decision in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, the principles of public law applicable to the exercise of common law and statutory powers have in many respects been assimilated. But there remain inevitable differences arising from the distinct origins of these powers. One of them relates to the rule which precludes a decision maker from fettering his own discretion. In Elias v Secretary of State for Defence [2006] 1 WLR 3213, the Court of Appeal held that the rule had no application to the exercise of common law powers. The decision concerned the rules of a scheme for compensating certain categories of British subject who had been interned by the Japanese during the Second World War. The scheme had no statutory basis. It was created under the common law powers of the Crown. Mummery LJ, at para 191 said: The analogy with statutory discretion is a false one. It is lawful to formulate a policy for the exercise of a discretionary power conferred by statute, but the person who falls within the statute cannot be completely debarred, as he continues to have a statutory right to be considered by the person entrusted with the discretion. No such consideration arises in the case of an ordinary common law power, as it is within the power of the decision maker to decide on the extent to which the power is to be exercised in, for example, setting up a scheme. He can decide on broad and clear criteria and either that there are no exceptions to the criteria in the scheme or, if there are exceptions in the scheme, what they should be. If there are no exceptions the decision maker is under no duty to make payments outside the parameters of the scheme. The Court of Appeal in the present case were guided by this decision, which was plainly correct. A common law power is a mere power. It does not confer a discretion in the same sense that a statutory power confers a discretion. A statutory discretionary power carries with it a duty to exercise the discretion one way or the other and in doing so to take account of all relevant matters having regard to its scope. Ministers have common law powers to do many things, and if they choose to exercise such a power they must do so in accordance with ordinary public law principles, ie fairly, rationally and on a correct appreciation of the law. But there is no duty to exercise the power at all. There is no identifiable class of potential beneficiaries of the common law powers of the Crown in general, other than the public at large. There are no legal criteria analogous to those to be derived from an empowering Act, by which the decision whether to exercise a common law power or not can be assessed. It is up to ministers to decide whether to exercise them, and if so to what extent. It follows that the mere existence of a common law power to do something cannot give rise to any right to be considered, on the part of someone who might hypothetically benefit by it. Such a right must arise, if at all, in other ways, usually by virtue of a legitimate expectation arising from the actual exercise of the power: see R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2003] UKHRR 76. The problem in this case is that neither the practice nor the public statements of the Foreign Office can be said to give rise to a legitimate expectation that the legal fees of British subjects in difficulty abroad will be paid. On the contrary, it has been clear for some years that the policy of the Secretary of State is not to pay them. The result is that there is no basis for any criticism of the self imposed limitations of the Secretary of States policy, other than the fact that he could have made it broader had he wished to. The limitations are certainly not irrational. In common with Lord Mance and Lord Carnwath I consider that the Secretary of State ought now to revisit the question whether the policy should be broadened or an exception made in order to accommodate the particular case of Mrs Sandiford in the light of the fresh information about the course of the proceedings in Indonesia. But that is not because the Secretary of State has a duty to broaden his policy or make an exception. It is because he has already undertaken a review of that policy on the information available to him at the time, and because consistency and rationality require him not to treat that review as closed at a time when relevant further information is still becoming available which might alter his assessment. |
This appeal is concerned with the relevance and application of the principles of autrefois acquit, res judicata and abuse of process in the context of successive proceedings before a regulatory or disciplinary tribunal. The background facts The appellant is a chartered accountant and a member of the respondent institute (the Institute), which is responsible for the regulation of chartered accountants including the appellant. At the relevant time he and his wife were directors and shareholders of a number of trust companies carrying out regulated financial services work in Jersey. On 18 December 2002 the Jersey Financial Services Commission issued a direction (the direction) to the companies and their directors to cease to take on any new trust company business and to commence an orderly winding up of the companies affairs. It also directed that no records or files in respect of the companies or any customers shall be removed from the offices of the companies. On 22 December 2002, the appellant was stopped by the police at the St Helier ferry terminal, having checked his car on to the ferry to St Malo. On examination of the car, the police found suitcases containing files relating to clients, computer equipment, network servers and back up tapes. The documents included original trust deeds, trust and company documents, share certificates, company memoranda and articles, and letters of wishes. The appellant and (later the same day) his wife were arrested and charged with the offence of failing to comply with the direction. On 16 September 2003 they were both convicted of failing to comply with the direction, contrary to article 20(9) of the Financial Services (Jersey) Law 1998. I will refer to the appellants conviction as the Jersey conviction. On 22 October 2003 the appellant was fined 7,500. The appellant and his wife sought leave to appeal to the Jersey Court of Appeal against their convictions but leave was refused in a fully reasoned judgment on 14 January 2004. On 2 November 2004 the Institutes Investigation Committee preferred a complaint against the appellant. In the course of these proceedings this has been called the conviction complaint but that does not seem to me to be an accurate description. I shall call it the first complaint. That complaint was heard by a disciplinary committee (the tribunal) on 19 April 2005 but was dismissed on the same day. On 7 March 2006 the Investigation Committee preferred a second complaint, which has been referred to as the conduct complaint, but which I will refer to as the second complaint. On 7 December 2006 a differently constituted tribunal held a hearing in order to determine a preliminary issue raised by an application made by the appellant, namely that the second complaint should be summarily dismissed on the ground that the same complaint had already been dismissed. The appellants case was that the first and second complaints made the same allegations and that the second complaint should be dismissed on the grounds of autrefois acquit or res judicata or that it should be dismissed or stayed on the ground that, having regard to the dismissal of the first complaint, the second complaint was an abuse of process. The tribunal dismissed the application. On 7 March 2007 the appellant issued an application for judicial review of that decision on the basis that the tribunal had erred in law and that it should have summarily dismissed the second complaint on the grounds advanced before it. On 6 November 2008 Owen J (the judge) dismissed the application for judicial review. On 4 February 2009 Sullivan LJ granted permission to appeal to the Court of Appeal but on 15 July 2009 the Court of Appeal, comprising Sir Anthony May P, Arden LJ and Jacob LJ, dismissed the appeal. The appellant lodged a petition for permission to appeal to the Supreme Court but, before the petition was determined, a disciplinary tribunal heard the complaint on 9 December 2009 at a hearing which the appellant chose not to attend. It found the complaint proved, ordered that the appellant be excluded from membership of the Institute and made an order for costs against him. Permission to appeal to the Supreme Court was subsequently granted and the sanctions imposed by the tribunal have been suspended pending the outcome of this appeal. The issues In this appeal the appellant raised the same issues as he had raised both before the tribunal and before the courts below, namely that the second complaint should have been summarily dismissed on one or other or all of the grounds of autrefois acquit, res judicata or abuse of process. All of these grounds depend to a greater or lesser extent upon a comparison of the two complaints. The appellants primary position throughout has been that the basis of the two complaints was the same and that the second complaint should have been dismissed on the ground of autrefois acquit or res judicata. In short he relied upon the general principle that nemo debet bis vexari pro una et eadem causa, that is that nobody should be vexed twice in respect of one and the same cause. In these circumstances it is convenient to begin by a comparison of the two complaints but, before doing so, it is necessary to set out the relevant provisions of the Institutes bye laws. The resolution of the issues between the parties as to the correct comparison between the two complaints depends, at least in part, upon the true construction of bye laws 4 and 7. The bye laws Bye law 4 is entitled Liability of members and provisional members to disciplinary action. Bye law 4(1) provides, so far as relevant: A member or provisional member shall be liable to disciplinary action under these bye laws in any of the following cases, whether or not he was a member or provisional member at the time of the occurrence giving rise to that liability (a) if in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy; (e) if any of the circumstances set out in paragraph (2) exist with respect to him. Paragraph (2) sets out a number of specific circumstances. They include, for example, failure to satisfy a judgment debt. They do not, however, include conviction of a criminal offence. Bye law 7, which is entitled Proof of certain matters, provides, so far as relevant: (1) The fact that a member, member firm or provisional member has, before a court of competent jurisdiction, pleaded guilty to or been found guilty of an indictable offence (or has, before such a court, outside England and Wales, pleaded guilty to or been found guilty of an offence corresponding to one which is indictable in England and Wales) shall for the purposes of these bye laws be conclusive evidence of the commission by him of such an act or default as is mentioned in bye law 4(1)(a) or 5(1)(a), as the case may be. (3) A finding of fact (b) in any civil or criminal proceedings before a court of competent jurisdiction in the United Kingdom or elsewhere; shall for the purposes of these bye laws be prima facie evidence of the facts found. The Institute submitted both to this court and to the courts below that, on their true construction, bye laws 4 and 7 provided for two different charges. The first was pleading guilty to or being convicted of an indictable offence of the kind identified in bye law 7(1) and the second was being guilty of the underlying conduct. The underlying conduct on the part of the appellant relied upon in this case was that identified in bye law 4(1)(a), namely any act or default likely to bring discredit on himself, the Institute or the profession of accountancy. In the Court of Appeal the President of the Queens Bench Division, with whom Arden LJ and Jacob LJ agreed, held at para 20 that the discreditable conduct alleged in the first complaint was the Jersey conviction, which was both conclusive evidence of the discreditable conduct and the discreditable conduct itself. It was submitted on behalf of the appellant that so to conclude was to misconstrue the bye laws. I agree. Bye law 4(1) identifies the occurrence(s) giving rise to liability to disciplinary action. The only relevant occurrence here was that the appellant had committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy. Only bye law 4 identifies the occurrences giving rise to liability. In my opinion, if the occurrence relied upon cannot be found in bye law 4 then the complaint must fail. It was submitted that the Jersey conviction was such an occurrence. However, there is nothing in bye law 4(1)(a) which supports the conclusion that such a conviction is itself an act or default of the kind specified. Moreover, such a conviction is not one of the circumstances identified in bye law 4(1)(e), which are limited to the circumstances set out in bye law 4(2). The bye laws could have included a conviction as one of those circumstances but they did not. I do not see how bye law 7(1) can fill that lacuna. It is not concerned with the nature of the occurrence but with proof of it. This is clear from the heading and from the bye law itself. Thus bye law 7(1) provides for what is to be conclusive proof of the commission of such an act or default as is mentioned in bye law 4(1)(a) or 5(1)(a) as the case may be. Bye law 7(3)(b) provides for a fact found in any civil or criminal proceedings before a court of competent jurisdiction in the United Kingdom or elsewhere to be prima facie evidence of the fact so found. There is nothing in bye law 7(1) or 7(3) that provides that a conviction is itself the act or default mentioned in bye law 4(1)(a). In short, there is nothing in the bye laws which provides that a qualifying conviction itself amounts to the discreditable conduct. It is simply conclusive proof of discreditable conduct. The Institutes case involves treating a conviction within the meaning of bye law 7(1) as if it were one of the occurrences referred to in bye law 4(1)(e) and (2), which it is common ground that it is not. Complaints 1 and 2 compared The first complaint alleged that the appellant was liable to disciplinary action under bye law 4(1)(a), namely that: in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy IN THAT HE: was convicted upon indictment at the Royal Court of Jersey on 16 September 2003 of failing to comply with a direction issued on 18 December 2002 by the Jersey Financial Services Commission contrary to article 20(9) of the Financial Services (Jersey) Law 1998. The complaint then set out a summary of the complaint, which referred to the Jersey conviction and set out the underlying facts which led to it in some detail. The summary concluded by saying that the appellant had been convicted of failing to comply with the direction and that the conviction was conclusive evidence for the purposes of bye law 7(1) of the commission by him of such an act as is mentioned in bye law 4(1)(a). The second complaint begins in identical terms to the first, alleging that the appellant was liable to disciplinary action under bye law 4(1)(a), namely that: in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy. The complaint continues: IN THAT HE: On Sunday 22 December 2002, attempted to remove from Jersey, accounts books and records as listed in the witness statement of Peter Howard Beamish dated 18 February 2003 in contravention of the direction issued to him on 18 December 2002 by the Jersey Financial Services Commission in accordance with article 20(9) of the Financial Services (Jersey) Law 1998. There follows a summary of the complaint. It is correctly accepted that the substance of the underlying conduct was the same in the case of both complaints. They both set out in the course of their respective summaries the facts that led to the Jersey prosecution and conviction. Although the particulars on the face of the first complaint assert the conviction and the summary refers to it, the summary concludes by stating the submission of the Investigation Committee to be that the conviction was conclusive evidence for the purposes of bye law 7(1) of the commission by him of such an act as is mentioned in bye law 4(1)(a). Thus, taken as a whole, I do not read the first complaint as meaning that the conviction was the act complained of as being contrary to bye law 4(1)(a). The act complained of was the failure to comply with the direction based on the removal of documents and the like by hiding them in the car and trying to take them off the island. If the conclusion expressed above is correct, namely that on the true construction of the bye laws the role of a conviction is only that expressly stated in bye law 7(1), namely as conclusive evidence of a breach of bye law 4(1)(a), the conviction was not capable of itself being the act complained of as being a breach of bye law 4(1)(a). In these circumstances, on a fair view of the first complaint, the act complained of as a breach was not being convicted but failing to comply with the direction. That is precisely the same complaint as is advanced in the second complaint. Although it is spelt out in a little more detail on the face of the complaint, the alleged breach of bye law 4(1)(a) is the same in each complaint. The question is what is the legal effect of the conclusion that the second complaint is the same as the first. It was submitted on behalf of the appellant that the consequence is that the second complaint must be dismissed, either on the basis of autrefois acquit or on the basis of res judicata. Autrefois convict There is some support for the appellants case that the principles of autrefois convict apply to proceedings before non statutory disciplinary or regulatory tribunals of this kind. It is the decision of the Judicial Committee of the Privy Council in Harry Lee Wee v Law Society of Singapore [1985] 1 WLR 362. It is however of limited assistance because it appears to have been accepted by the appellant solicitor and the respondent, who was the Law Society of Singapore, that the principles of autrefois acquit applied to disciplinary proceedings of this kind. Lord Bridge said at p 368G: No one would dispute that the doctrine of autrefois convict and acquit is applicable to disciplinary proceedings under a statutory code by which any profession is governed. The Judicial Committee plainly thought that such principles should be applied in a case of this kind. However, the proceedings before the tribunal were not criminal proceedings. In the famous case of Connelly v Director of Public Prosecutions [1964] AC 1254 Lord Devlin said at p 1356 that the doctrine of res judicata occupies the same place in the civil law as the doctrine of autrefois acquit or convict does in the criminal law. In these circumstances, while not conceding that the principles of autrefois acquit do not apply to disciplinary tribunals, it was submitted on behalf of the appellant that the underlying principle of nemo debet bis vexari pro una et eadem causa applies to both criminal and civil cases and extends to disciplinary proceedings. The oral argument focused in particular upon the principles of res judicata. In an outline summary of the Institutes submissions produced in the course of the oral argument by Mr Michael Beloff QC, the first two propositions were these. First, in terms of the dividing line between criminal and civil proceedings drawn by Lord Devlin in Connelly v DPP for the purposes of the application of the Latin maxim now embodied in common law (nemo debet bis vexari), disciplinary proceedings fall on the civil side of the line. Second, it follows that where the cause of action in the sets of proceedings is the same the relevant legal principle is res judicata not autrefois acquit. I would accept those submissions. In my opinion, if the appellant cannot succeed on the basis of res judicata, he will not succeed on the basis of autrefois acquit. I therefore turn to res judicata. Res judicata It is important to note that this appeal is concerned only with the case where there have been two successive sets of disciplinary proceedings. It is not concerned with a case in which either set of proceedings was either criminal or civil proceedings. In the 4th edition of Spencer Bower and Handley on Res Judicata (2009) it is stated at para 1.05 that res judicata can either give rise to a cause of action estoppel or to an issue estoppel. In this case the appellant relies upon cause of action estoppel, which is concisely defined in para 1.06 in this way: If the earlier action fails on the merits a cause of action estoppel will bar another. The relationship between cause of action estoppel and issue estoppel was described, in terms that have been generally accepted, by Diplock LJ in Thoday v Thoday [1964] P 181, 197 198: The particular type of estoppel relied upon by the husband is estoppel per rem judicatam. This is a generic term which in modern law includes two species. The first species, which I will call cause of action estoppel, is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, ie judgment was given upon it, it is said to be merged in the judgment, or, for those who prefer Latin, transit in rem judicatam. If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam. This is simply an application of the rule of public policy expressed in the Latin maxim Nemo debet bis vexari pro una et eadem causa. In this application of the maxim causa bears its literal Latin meaning. Res judicata, or estoppel per rem judicatam, is thus a generic term of which cause of action estoppel and issue estoppel are two species. The distinction between the two species is of potential importance because the former creates an absolute bar, whereas the latter does not: see para 47 below. Although the point was not conceded on behalf of the Institute, it was not submitted in the course of the argument that the principle did not apply to non statutory disciplinary proceedings of this kind. In any event, the principle does in my opinion apply to such proceedings. There is no doubt that it applies to what may be called ordinary civil proceedings. In Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273, where an issue estoppel was held to arise out of a determination of a planning application, the principle was held to apply to public law proceedings. Lord Bridge (with whom the other members of the appellate committee agreed) stated the general principle and emphasised its fundamental importance in this way at p 289C D: The doctrine of res judicata rests on the twin principles which cannot be better expressed than in terms of the two Latin maxims interest reipublicae ut sit finis litium and nemo debet bis vexari pro una et eadem causa. These principles are of such fundamental importance that they cannot be confined in their application to litigation in the private law field. They certainly have their place in criminal law. In principle they must apply equally to adjudications in the field of public law. In relation to adjudications subject to a comprehensive self contained statutory code, the presumption, in my opinion, must be that where the statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right, the principle of res judicata applies to give finality to that determination unless an intention to exclude that principle can properly be inferred as a matter of construction of the relevant statutory provisions. The House of Lords thus stressed the importance of the res judicata principle in terms which in my opinion apply equally to cause of action estoppel and to issue estoppel. The judge described the objects and powers of the Institute at paras 9 and 10 of his judgment. The Institute was incorporated by Royal Charter in 1880 to promote the profession of accountancy by compelling the observance of strict rules of conduct for its members and by setting a high standard of professional education. By a Supplemental Royal Charter of 1948 the principal objects of the Institute were declared to include the maintenance of high standards of practice and professional conduct by all its members. The Institute is, at least for some purposes, a public body: see eg Andreou v Institute of Chartered Accountants in England and Wales [1998] 1 All ER 14. The Institute has the power from time to time to make bye laws under para 15(a) of the Supplemental Charter. By para 15(b) no new bye law or rescission or variation of a bye law shall have effect until approved by the Privy Council. In these circumstances I see no reason why the principles of cause of action estoppel should not apply to proceedings before a disciplinary tribunal set up under the bye laws. The provisions of the Charter and Supplemental Charter are akin to statutory provisions and it seems to me that similar principles to those identified by Lord Bridge in Thrasyvoulou apply to them. It was not suggested in the course of the argument that there was anything in the Charter or Supplemental Charter to lead to the conclusion that the principles of cause of action estoppel should not apply to successive sets of disciplinary proceedings. Indeed, even if the bye laws created only private rights as between the Institute and its members, I see no reason why the principle of cause of action estoppel should not apply. In Meyers v Casey [1913] HCA 50, (1913) 17 CLR 90, where the High Court of Australia was considering a decision of the committee of the Victoria Racing Club, at p 114 Isaac J said this of objections considered by the committee: They are, by reason of the committees decision, res judicatae, as much as if instead of the committee it had been the Supreme Court unappealed from, that has so held. That rests on the well known rule that a competent court or other tribunal has jurisdiction to give a wrong judgment, and if there is no appeal in the strict sense, then its decision, whether right or wrong, must stand, and cannot be questioned in any subsequent proceedings elsewhere. See also Spencer Bower and Handley at para 2.05 where the editors say: Every domestic tribunal, including any arbitrator, or other person or body of persons invested with authority to hear and determine a dispute by consent of the parties, court order, or statute, is a judicial tribunal for present purposes, and its awards and decisions conclusive unless set aside. In addition to Meyers v Casey and other cases, the editors cite Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 per Diplock LJ at p 643C, where he said that, the parties having chosen an arbitration tribunal to determine the issues, they are bound by an interim arbitration award on specific issues under the principle of issue estoppel. He added at p 643E that the power of an arbitrator to make an interim award was first conferred by the Arbitration Act 1934 and that, before then, the only kind of award he could make was a final award which determined all the issues between the parties. It is implicit in Diplock LJs judgment that in such a case the principles of cause of action estoppel would apply. None of the propositions in the Institutes outline summary challenged the applicability in principle of cause of action estoppel to decisions of the disciplinary tribunal. I referred earlier to the first two submissions. The third proposition relates to the case of Harry Lee Wee, to which it is not necessary further to refer. The Institutes fourth proposition is that, for the purposes of res judicata the causes of action (or in the context of discipline, the charges) must be the same. I would accept that that is so. The fifth proposition is that in this case the charges were in fact different. Attention is drawn to the distinction between the particulars of the discreditable conduct in the two complaints, which is said to reflect a distinction drawn in the bye laws themselves, one based on the fact of the Jersey conviction and the other based on the conduct which led to it. I would not accept that submission. I have already considered the two complaints in some detail. For the reasons I have given, I have concluded that the alleged breach of bye law 4(1)(a) in each case was the same, namely the failure to comply with the direction by seeking to spirit the various documents off the island. The alleged breach was not that the appellant was convicted of doing so. Although the conviction is referred to in the particulars of the first complaint, a fair reading of the document as a whole is that the Institutes Investigation Committee (which was in effect the prosecutor) was seeking to rely upon the conviction as conclusive evidence of the underlying breach, which was of course the correct approach on the true construction of bye law 7(1) as explained above. In para 1.02 Spencer Bower and Handley makes it clear that there are a number of constituent elements in a case based on cause of action estoppel. They are that: (i) the decision, whether domestic or foreign, was judicial in the relevant sense; (ii) it was in fact pronounced; (iii) the tribunal had jurisdiction over the parties and the subject matter; (iv) the decision was (a) final; (b) on the merits; (v) it determined a question raised in the later litigation; and (vi) the parties are the same or their privies, or the earlier decision was in rem. It is not in dispute that all those elements are established except (iv) and (v). Even if any of the others were in dispute, I would hold that they are plainly satisfied. As to (vi), it was not suggested that the first decision was in rem but it is plain that the parties to both sets of proceedings were the same. As to (iv) and (v), the critical question is whether the first decision was final and on the merits. If it was, since I have already concluded that the question raised in both sets of proceedings was the same, it follows that it determined a question raised in the second proceedings. I therefore turn to the argument before and the decision of the tribunal in respect of the first complaint. The hearing took place on 19 April 2005. The appellant did not attend and was not represented but the Institute was represented by Ms L Peto. The tribunal was advised by a legal assessor, Mr C Hopkinson. In the days before the hearing the appellant had sent Ms Peto a considerable number of emails taking a variety of points and attaching a number of documents. He was seeking an adjournment of the hearing. Ms Peto very fairly put the documents before the tribunal, which considered them and, having done so, refused the application for an adjournment. The particulars of the complaint were then read by the assessor and Ms Peto submitted to the tribunal that, if she was able to satisfy it that the conviction fell within bye law 7(1), that would be conclusive proof of an offence under bye law 4(1)(a). She did not submit, in my opinion correctly, that the conviction itself was contrary to bye law 4(1)(a). Ms Peto appreciated that, in order for the conviction to come within bye law 7(1), she had to show that the offence of which the appellant was convicted in Jersey was an offence corresponding to one which is indictable in England and Wales. This point had been taken by the appellant in the course of the email exchanges prior to the hearing. The only statutory provisions in England and Wales which Ms Peto initially suggested satisfied the bye law were sections 173 and 177 of the Financial Services and Markets Act 2000 (the 2000 Act). Ms Peto explained the underlying facts as set out in the judgment of the Jersey Court of Appeal refusing the appellants application for leave to appeal against the Jersey conviction. However, she then invited the tribunal to find the complaint proved on the basis of the conviction alone. She submitted that the various points on the facts taken by the appellant went only to mitigation. The legal assessor then said that he would like to see the corresponding offence in England. There followed some discussion of sections 165, 173 and 177 of the 2000 Act. After Ms Peto had concluded her submissions on this point the tribunal retired to consider the question whether the offence of which the appellant was convicted in Jersey was an offence corresponding to one which is indictable in England and Wales. When they returned they announced their decision in these terms: We are satisfied that the defendant was convicted on indictment in the Royal Court of Jersey of failing to comply with a direction issued under the Financial Services (Jersey) Law 1998, prohibiting the removal of files and documents. We note that it was alleged (and not disputed by the defendant) that, jointly with his wife, he was caught by the police removing from the jurisdiction of the Jersey authorities original documents and records concealed in the back of his car, in breach of this requirement. This is not the sort of conduct that is to be expected of a member of this Institute. However, we have to be satisfied that this offence corresponds to one which is indictable in England and Wales. Our attention has been drawn to sections 165, 173 and 177 of the Financial Services and Markets Act 2000. We are not satisfied that any of the offences set out in these sections corresponds to the offence of which he was convicted in Jersey. We therefore dismiss the complaint. The tribunal subsequently issued their decision in writing. They set out the basis for the application for an adjournment and gave their reasons for refusing the application. They said that they had proceeded with the hearing on the basis that the appellant denied the complaint. They then made a number of findings of fact, which identified the direction and the circumstances of the appellants arrest and the search of his car. They summarised the points on the merits made by the appellant and they stated at para 7 of their findings of fact that under bye law 7(1), the fact that a member has, before a court outside England and Wales, been found guilty of an offence corresponding to one which is indictable in England and Wales, shall for the purposes of the bye laws be conclusive evidence of the commission by him of such an act or default as is mentioned in bye law 4(1)(a). The tribunal then repeated in identical or almost identical language to that quoted in para 38 above what they had said when announcing their decision orally on 19 April. The written document concluded by stating in capital letters that the tribunal accordingly dismissed the complaint. The question is whether the decision was final and on the merits. In my opinion the answer is that it was both final and on the merits. The hearing on 19 April had been fixed as a hearing of the complaint on the merits. The appellant applied for an adjournment which was refused. The hearing on the merits accordingly proceeded. It was for the Institute to put whatever material it wished before the tribunal and to put its case as it thought fit. It is plain from the transcript of the hearing to which I have referred that the Institute based its case on bye law 7(1) which made the Jersey conviction conclusive evidence of a breach of bye law 4(1)(a) provided that the Jersey offence corresponded to one which is indictable in England and Wales. Although it could have done, it did not put its case in any other way. It could have relied upon the findings of fact as prima facie evidence of the facts under bye law 7(3)(b) or it could have relied upon the underlying facts themselves. All the relevant evidence was available to it. It did not, however, do so. Nor did it apply for an adjournment in order to do so. It is plain on the evidence that a conscious decision was taken to rely only upon the Jersey conviction. In her witness statement, Tracey Owen, Head of Legal Services in the Institutes Professional Standards Directorate, said that the investigation case manager proceeded on an assumption that there was a corresponding offence in England and Wales and that bye law 7(1) would apply. She added that, to the extent that the issue was considered at all, the case manager would not have been inclined to proceed with a detailed and lengthy investigation gathering witness statements from officials in Jersey when he had the option of relying just on the fact that Mr Coke Wallis had been convicted. In its written case the Institute relied upon that evidence in support of a submission that the respondents Investigation Committee considered that the case could be dealt with most economically and efficiently by framing the complaint by reference to bye law 7(1) rather than by reference to the appellants underlying conduct, which would have involved a time consuming and resource intensive process of gathering witness statements from officials and police officers in Jersey and potentially arranging the attendance of witnesses at a hearing. The submission added that that short cut proved not to be possible because there was no corresponding indictable offence in England and Wales. Notwithstanding its reference to findings of fact in their written decision, the tribunal understood the position as being that the Institute was relying on the conviction because, having set out their conclusion that the Jersey conviction was not for an offence which corresponded to an indictable offence in England and Wales, it expressly stated that the complaint was dismissed. If it had reached the opposite conclusion and held that the Jersey conviction was based on an offence which corresponded to an indictable offence in England and Wales, it would have found the complaint proved because the conviction would have been conclusive evidence of a breach of bye law 4(1)(a). There could have been no doubt that such a decision would have been final and on the merits. In my judgment, the same is true of the decision to dismiss the complaint. This conclusion is supported by the decision of the House of Lords in Workington Harbour & Dock Board v Trade Indemnity Co Ltd (No 2) [1938] 2 All ER 101, where the plaintiffs sued on a bond which the defendants had given to guarantee the performance of a contractor who had undertaken to build a dock for the plaintiffs. The bond provided that a certificate which complied with certain criteria would prove the amount due. In the action on the bond the plaintiffs relied upon a certificate which they said complied with the criteria and was thus conclusive evidence of the defendants liability under the bond. The action failed because the certificate did not specify a relevant act or default as required by the bond. The plaintiffs brought a second action relying, not upon the certificate, but upon the underlying facts, which they said amounted to breaches of the contract and thus triggered liability under the bond. The action failed on the basis of res judicata. Lord Atkin described the position concisely at pp 105 106: The question will always be open whether the second action is for the same breach or breaches as the first, in which case the ordinary principles governing the plea of res judicata will prevail. In the present case, in my opinion, the plaintiffs are suing on precisely the same breaches as those in the first action, and for the same damages, though on different evidence. I am satisfied that the first action raised the issue of all the contractors breaches, and treated, and meant to treat, the engineers certificate as conclusive proof of both the breaches and the losses arising therefrom. The result is that the plaintiffs, who appear to have had a good cause of action for a considerable sum of money, fail to obtain it, and on what may appear to be technical grounds. Reluctant, however, as a judge may be to fail to give effect to substantial merits, he has to keep in mind principles established for the protection of litigants from oppressive proceedings. There are solid merits behind the maxim nemo bis vexari debet pro eadem causa. That maxim states what Lord Bridge described in Thrasyvoulou as a fundamental principle in the law. For the reasons I have given above, it is a fundamental principle which applies to successive disciplinary proceedings. As I see it, the principle stated by Lord Atkin applies to the facts here. In all the circumstances I have reached the conclusion that all the constituent elements of cause of action estoppel are established on the facts. It was not suggested in argument that, unless there is some special exception which applies to disciplinary proceedings, the determination of the first complaint is not an absolute bar to the second complaint. In this regard at para 7.04 Spencer Bower and Handley say that the bar created by a cause of action estoppel is absolute with no exception for special circumstances. There is potentially such an exception in cases of issue estoppel: Arnold v National Westminster Bank plc [1991] 2 AC 93, 104. On the second day of the appeal, the Institute introduced, for the first time in the course of this litigation, a novel proposition in the form of the seventh of its outline submissions. The proposition is that in any event, given the disciplinary context the Supreme Court should recognise a public interest exception to the strict application of the doctrine of cause of action estoppel which is absent in the case of conventional civil litigation. This was prompted by a suggestion made by Lord Phillips in the course of the argument that an absolute principle of the kind adverted to by Lord Keith in Arnold would or might put the safety of the public at risk. So, for example, if such an absolute rule applied to doctors it might put the lives of patients at risk. For my part, I see the force of the introduction of such a principle. However, whether and in what circumstances to permit such an exception seems to me to be essentially a matter for Parliament and not for the courts. Different considerations no doubt apply to different professions. For example the risk to patients may be thought to be of a different order from the risks to the clients of accountants. I note in this context that Parliament has taken action in the case of decisions made by a number of Fitness to Practise and Professional Committees, including those of the General Pharmaceutical Council, the General Medical Council, the General Dental Council, the General Optical Council, the General Osteopathic Council, the General Chiropractic Council and others. Part II of the National Health Service Reform and Health Care Professions Act 2002 created the Council for Healthcare Regulatory Excellence to supervise the manner in which self regulation operates in the field of health care. Section 29 of that Act gives that Council the right to refer to the High Court decisions made in disciplinary proceedings of a self regulatory body such as those identified above. Thus Parliament has intervened in specific ways in order to ensure that the public interest is protected. As I see it, very different considerations may arise in different contexts and what steps should be taken is a question of policy which may depend upon the profession concerned. Parliament may think it appropriate to ensure that the relevant profession is consulted before introducing specific provisions. It is perhaps noteworthy that it did not occur to the Institute to suggest that there should be an exception to the principles of res judicata identified above until the eleventh hour. In these circumstances, for my part, I would not invent a public interest exception but leave it to Parliament to decide whether and in what circumstances to do so. It follows that I would allow the appellants appeal on the basis that the first and second complaints relied upon the same conduct and that, once the first complaint was dismissed, it was contrary to the principles of res judicata to allow the Institute to proceed with the second complaint. Abuse of process The conclusions which I have reached so far make the question whether the second complaint should be dismissed or stayed on the ground of abuse of process academic. The question of abuse of process raises points of some interest but I have reached the conclusion that it would not be appropriate for the Court to express an opinion on them. This is in part because it would in all probability involve doing so on the hypothesis that the first and second complaints are different. It does not seem to me to be sensible to embark on that exercise in circumstances in which I have concluded that they are the same. I therefore express no opinion under this head. Conclusion For the reasons I have given, I would allow the appeal on the ground that the second complaint made the same complaint as the first complaint and that the dismissal of the first complaint, which was a final determination of the first complaint on the merits, made that complaint res judicata such that the Institute was not entitled to make or proceed with the second complaint. LORD COLLINS Mr Coke Wallis is a chartered accountant. In flagrant breach of a specific direction from the Jersey Financial Services Commission that no records or files in respect of the companies or any customers were to be removed from the offices of the companies, he (and his wife) attempted, unsuccessfully, to take via the car ferry to St Malo suitcases containing files and digital material relating to the companies and their clients. Mr Coke Wallis and his wife were convicted in Jersey on a charge of failing to comply with the direction, and the Jersey Court of Appeal refused leave to appeal against conviction. For the reasons given by Lord Clarke, I agree that the appeal should be allowed, even though that leads to the thoroughly undesirable result that for purely technical and wholly unmeritorious reasons the second tribunals decision that he be excluded from membership of the Institute cannot stand. The Institute accepted that the classic res judicata principles applied to professional disciplinary bodies. If this had been a case for application of an abuse of process approach rather than the more rigid res judicata principles, then I would have had no hesitation in concluding that the second set of proceedings was not an abuse. But the effect of the decision of this court is simply to reverse the Court of Appeals finding that the discreditable conduct alleged in the two complaints was different (a conviction complaint and a misconduct complaint), and to come to the almost inevitable conclusion that they were both misconduct complaints. Consequently the decision of this court is that the Court of Appeal simply misapplied well settled res judicata principles, and does not raise a question of law of general public importance normally fit for consideration by this court. As Lord Bingham said in R v Secretary of State for Trade and Industry, Ex p Eastaway [2000] 1 WLR 2222, 2228, it is not the role of the highest court to correct errors in the application of settled law. It has been held or assumed in a number of decisions in other common law jurisdictions that res judicata principles apply to successive complaints before professional disciplinary bodies. Many professional disciplinary bodies are established or regulated by legislation, but the principles apply equally irrespective of the status of the disciplinary body. The reason is that from the earliest times it has been recognised that the principle of finality or res judicata applies to tribunals established by the parties, such as an arbitral tribunal: Dunn v Murray (1829) 9 B & C 780; Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630, 643, per Diplock LJ. For example, in Canada it was accepted by the Manitoba Court of Appeal that principles of res judicata applied to a complaint by the College of Physicians against a doctor. On the facts it was held that the College could take proceedings against the doctor for sexual misconduct notwithstanding that four years previously the College had rejected the complaint, but that was because the earlier decision was not regarded as a final decision: Holder v College of Physicians and Surgeons of Manitoba [2003] 1 WWR 19. In Solicitor v Law Society of New Brunswick [2004] NBQB 95 the Law Society was held to be barred from bringing a complaint based on alleged fraudulent billing, when the solicitor had already been reprimanded for billing irregularities arising out of the same matters; and in Visser v Association of Professional Engineers & Geoscientists [2005] BCSC 1402 it was held that the Association was not entitled to bring successive disciplinary proceedings for different offences based on the same conduct. In Australia it was held that a doctor who had been censured by a Medical Board could not subsequently be the object of a second inquiry into alleged infamous conduct: Basser v Medical Board of Victoria [1981] VR 953. See also in New Zealand Dental Council of New Zealand v Gibson [2010] NZHC 912 (dentist bound by findings of disciplinary tribunal). In some cases the same result has been achieved by finding that the disciplinary tribunal is functus officio after the first decision: Chandler v Alberta Association of Architects [1989] 2 SCR 848 (Canadian Supreme Court). In the United States, in Florida Bar v St Louis, 967 So 2d 108 (Fla 2007) and Florida Bar v Rodriguez, 967 So 2d 150 (Fla 2007) the Supreme Court of Florida accepted that res judicata principles applied to successive complaints brought by the Bar, but held that on the facts the causes of action were different. But it has also been said that res judicata or double jeopardy principles may not apply to disciplinary bodies because their disciplinary requirements serve purposes essential to the protection of the public, which are deemed remedial, rather than punitive: Spencer v Maryland State Board of Pharmacy, 846 A 2d 341, 352 (Maryland Court of Appeals, 2003); cf Re Fisher, 202 P 3d 1186, 1199 (Sup Ct, Colorado, 2009). Although it may make no practical difference, it is not the principles of autrefois convict which apply to disciplinary proceedings, which are civil in nature. Lord Bridge was in error, when, speaking for the Judicial Committee of the Privy Council in Harry Lee Wee v Law Society of Singapore [1985] 1 WLR 362, 368, he accepted that the principles of autrefois acquit applied to disciplinary proceedings. The statement was obiter, and the point does not seem to have been argued. The effect of the decision of this court is that a person who has shown by his discreditable conduct that he is not fit to practise may continue to do so. The primary purpose of professional disciplinary proceedings is not to punish, but to protect the public, to maintain public confidence in the integrity of the profession, and to uphold proper standards of behaviour: see e.g. Bolton v Law Society [1994] 1 WLR 512, 518, per Sir Thomas Bingham MR; Gupta v General Medical Council [2002] 1 WLR 1691, para 21, per Lord Rodger. It is unfortunate that the Institutes procedural error should have had such far reaching (and absurd) consequences, but there is no principled basis for upholding the decision of the Court of Appeal. LORD DYSON I agree entirely with the conclusions and reasoning of Lord Clarke on all the issues that arise on this appeal. I add a few words because it seems to me that the House of Lords decision in Workington Harbour & Dock Board v Trade Indemnity Co Ltd (No 2) [1938] 2 All ER 101 provides particularly illuminating support for the appellants case. In that case, the defendant contractor had agreed to construct a new dock for the plaintiff board and had given a bond to guarantee the performance of the contract. The defendant defaulted and the plaintiff made a claim on the bond. In the first action, it relied on an engineers certificate showing that the defendant owed it 78,000 which it had failed to pay. The construction contract provided that any certificate of the engineers should be final and binding on the contractor. Thus in the first action the plaintiff relied on the certificate as conclusive evidence of all the defendants breaches of the construction contract as well as the amount of damages that it was liable to pay. This claim was dismissed on the grounds that the certificate was technically defective. The plaintiff then brought a second action in which it sought to prove its claim for damages for breach of the construction contract without recourse to the engineers certificate. This claim was dismissed on the grounds of res judicata. As Lord Atkin said at p 106D, the issues in the first action covered every breach by the contractor and all the damage suffered by the plaintiff in consequence. These issues were therefore precisely the same as those in the second action. In the present case, the first complaint alleged a breach of bye law 4(1)(a), namely that the appellant had committed an act or default likely to bring discredit on himself, the Institute or the profession of accountancy by failing to comply with the direction issued on 18 December 2002. The Institute sought to prove this breach by relying on the conviction of 16 September 2003. The second complaint alleged the same breach of the same bye law, but this time the Institute sought to prove the breach without recourse to the conviction. The first and second complaints were closely analogous to the first and second actions in the Workington case. The plaintiff in that case and the Institute in the present case both sought to prove on the second occasion by different means what they had failed to prove on the first. The Institutes two complaints were the same, just as both proceedings issued by the plaintiff in Workington were in respect of the same cause of action. The principle of res judicata is a bar to the second complaint as it was a bar to the second action in Workington. |
This appeal arises out of an application for judicial review of a decision taken by the Scottish Criminal Cases Review Commission (the Commission) under section 194B(1) of the Criminal Procedure (Scotland) Act 1995, as amended (the 1995 Act). That subsection provides, so far as material: The Commission on the consideration of any conviction of a person . who has been convicted on indictment or complaint may, if they think fit, at any time, and whether or not an appeal against such conviction has previously been heard and determined by the High Court . refer the whole case to the High Court and, subject to section 194DA of this Act, the case shall be heard and determined, subject to any directions the High Court may make, as if it were an appeal under Part VIII or, as the case may be, Part X of this Act. The grounds for a reference under section 194B(1) are set out in section 194C: (1) The grounds upon which the Commission may refer a case to the High Court are that they believe that it is in the interests of justice that a reference that a miscarriage of justice may have occurred; (a) and (b) should be made. (2) In determining whether or not it is in the interests of justice that a reference should be made, the Commission must have regard to the need for finality and certainty in the determination of criminal proceedings. It is also relevant to note section 194DA. So far as material, it provides: (1) Where the Commission has referred a case to the High Court under section 194B of this Act, the High Court may, despite section 194B(1), reject the reference if the Court considers that it is not in the interests of justice that any appeal arising from the reference should proceed. (2) In determining whether or not it is in the interests of justice that any appeal arising from the reference should proceed, the High Court must have regard to the need for finality and certainty in the determination of criminal proceedings. Sections 194C(2) and 194DA were inserted into the 1995 Act by the Criminal Procedure (Legal Assistance, Detention and Appeals) (Scotland) Act 2010 (the 2010 Act), a piece of emergency legislation which was enacted on the day after this court gave judgment in Cadder v HM Advocate [2010] UKSC 43; 2011 SC (UKSC) 13; [2010] 1 WLR 2601. These proceedings arise out of the Commissions consideration of the appellants conviction for rape. The Commission decided not to refer his case to the High Court of Justiciary. They accepted that a miscarriage of justice might have occurred, but they did not believe that it was in the interests of justice that a reference should be made. The condition laid down in section 194C(1)(b) was therefore not met. The appellant challenges that decision on the basis that the Commissions decision was vitiated by errors of law. The appellants application for judicial review was refused by the Lord Ordinary, Lord Pentland. That decision was upheld by an Extra Division (Lord Menzies, Lady Clark of Calton and Lord Wheatley). The present appeal against their decision was brought before the introduction of a requirement that permission to appeal should be obtained. The factual background to the appeal On 12 August 2001 the appellant had sexual intercourse with a woman who then reported to the police that she had been raped. She was medically examined, and vaginal swabs were taken from her for forensic examination. The following day, the appellant was informed by the police that the allegation had been made. As requested, he went to a police station and was interviewed by police officers. At the beginning of the interview he was cautioned. He confirmed that he fully understood the caution and that he had attended the police station voluntarily. He was asked if he wished to have a solicitor advised, but declined. In accordance with practice at the time, and the law as then understood, he was not offered the option to consult a solicitor before the interview, and no solicitor was present during it. When questioned, he freely admitted having had sexual intercourse with the complainer at his flat, and maintained that it had taken place with her consent. As a result of his admission, the semen found on the vaginal swabs was not subjected to DNA analysis. That also was in accordance with the usual practice at the time, when the fact that sexual intercourse had taken place between an accused and a complainer was not in dispute. The appellant was subsequently charged with the rape of the complainer, and also with indecent assaults on two other women. The subsequent trial took place between 30 August and 5 September 2002. At the trial, the appellant was represented by a highly experienced Queens Counsel. He pled guilty to one of the charges of indecent assault, and the other charge of indecent assault was withdrawn. In relation to the charge of rape, the Crown relied on the appellants admission as corroboration of the complainers evidence that sexual intercourse had occurred, that being an element of the offence which must be proved by corroborated evidence. A videotape of the appellants interview was therefore played to the jury as part of the Crown case, without objection. Corroboration of the complainers evidence as to the other essential element of the offence, namely that she had not consented to sexual intercourse, was provided by other Crown witnesses, who gave evidence of her being in a state of shock and distress shortly after her encounter with the appellant, and of injuries which were found when she was medically examined. There was also evidence that a decorative chain on her trousers had been broken, although her clothing was otherwise undamaged. In cross examination, the complainer accepted that she had initially given the police an untrue account of where the incident occurred, when she had stated that she had been raped in a lane near the nightclub where she met the appellant, rather than at his flat, some miles away. She explained that she had been disorientated. In relation to the evidence of her being distressed, the line of cross examination sought to attribute her distress to her consumption of alcohol and medication, and to the appellants having rejected her at the end of their encounter. It was also established that the complainer initially told the police that she had been taken from the nightclub forcibly, but later said that she left it willingly. She had explained her earlier account by saying that she had been embarrassed to admit that she had gone home with a man she had only just met. The appellant elected not to give evidence, but relied on the interview as setting out his defence to the charge, namely that the sexual intercourse had been consensual. As a result, he avoided having his version of events subjected to cross examination. The appellant was convicted. He was sentenced to five years imprisonment on the rape charge and admonished for the indecent assault. The sentence was completed long ago. The appellants case is fairly typical of rape cases of that period. It was usual for persons accused of rape to be interviewed by the police without having the opportunity to consult a solicitor. It was common for them to accept that sexual intercourse had taken place and to maintain that it was consensual. It was common, in those circumstances, for the police not to complete forensic examination of samples which might have provided independent corroboration of the fact of sexual intercourse, since the accuseds admission at interview rendered such examination unnecessary. It was usual for the Crown then to rely on the admission as part of the Crown case at the trial. It was common for the accused to rely on the exculpatory part of the interview in his defence. The first appeal The appellant appealed against his conviction for rape on three grounds. The first was defective representation. He claimed that evidence should have been led from a number of witnesses who could have given evidence about such matters as his kissing the complainer in the night club prior to their going to his flat, and the lack of noise from his flat at the material time. The second ground was that the jury had been directed on the law of rape in accordance with the decision in Lord Advocates Reference (No 1 of 2001) 2002 SCCR 435, which post dated the incident. The third ground concerned the prejudicial effect of pre trial publicity. Each ground was considered at first sift (by a single judge) on 20 June 2003. Leave to appeal was refused, the first sift judge giving detailed reasons for his decision. However, at second sift (by three judges) on 23 December 2003, leave to appeal was granted, but only on the defective representation ground. Notwithstanding that decision, on 30 April 2004 the court allowed the appellant to lodge two additional grounds of appeal. The new grounds related to the adequacy of corroboration, and to the directions given on mens rea. At the hearing of the appeal on 29 September 2004, it was only the new grounds which were relied upon. The appeal was refused: Gordon v HM Advocate 2004 SCCR 641. The second appeal The appellant applied to the Commission to have his case referred back to the High Court on a number of grounds, namely prejudicial pre trial publicity, the effect of the development in the law of rape between the incident and the trial, the sufficiency of the evidence, misdirection on the law of rape, failure by the Crown to disclose that the complainers clothing had been seized by the police, and police misconduct and failures in relation to the investigation of the incident, the gathering of evidence and the disclosure of evidence. In April 2007 the Commission referred the case back to the High Court, primarily on the basis that (1) the police investigation had been defective in a number of respects, (2) there had been a failure by the Crown to disclose a statement taken from the complainer in which she said that she shouted during the incident, contrary to her evidence at the trial (although the defence knew at the trial that such a statement had been made, and the complainer was cross examined on the basis that she had made such a statement), and (3) the Commission had discovered evidence that the complainer had previously been in a relationship with one of the witnesses who had given evidence of her distress. In accordance with section 194B(1) of the 1995 Act, the referral was dealt with as a second appeal. On 20 April 2007 the appellant made a further application to the Commission, on the basis that there had been an imbalance between men and women on the jury. The Commission rejected the application on the ground that the case had already been referred, and the matter could be raised as a ground of appeal. In the event, the matter was not pursued. The appellants grounds of appeal were lodged in June 2007. They concerned the matters identified by the Commission, and also a failure to disclose that the complainer had been charged by the police with child neglect in relation to an occasion several months after the incident involving the appellant, when her estranged husband reported that their 11 year old daughter had been left at home on her own. The charge had not been pursued. The appeal had an extended procedural history, described in the judgment of Lord Carloway in Gordon v HM Advocate [2009] HCJAC 52; 2009 SCCR 570. In the light of that judgment, in July 2009 the appeal was set down for a hearing on 26 28 January 2010. On those dates the appellant appeared on his own behalf, having parted company (not for the first time) with his legal representatives. He sought to have the hearing discharged in order to instruct fresh counsel and solicitors, but that application was refused in view of the protracted procedural history and the age of the conviction, amongst other matters. The appeal was refused on 6 May 2010: Gordon v HM Advocate [2010] HCJAC 44; 2010 SCCR 589. In its opinion, delivered by Lord Carloway, the court considered each of the grounds of appeal with meticulous care. Its conclusion reflected its evaluation of the likely effect on the jurys verdict of the additional or undisclosed evidence, and of the potential evidence which was unavailable because of defects in investigation: The points raised in this appeal are essentially matters of fact which the appellant maintains might, or perhaps would, have made a difference in the jurys deliberations. But the reality is that this was a complainer who was demonstrated to have given different accounts to the police and others after the occurrence of the incident. The defence brought out a number of points in favour of the defence position, including the lack of damage to the clothing. There was ample material available at the trial which could have persuaded the jury that there was a reasonable doubt about the guilt of the appellant. But, the jury had no reasonable doubt and it is easy to see why. Although there were substantial variations in the complainers early accounts, she ultimately spoke clearly to leaving the nightclub, ending up at the appellants flat and being raped by him. [T]he evidence of the bruising to the complainers breast, arms, thighs and buttocks must have seemed to the jury, as it does to this court, to be of some note. The ornamental chain of her trousers was broken. In addition, it was not disputed that the complainer had left the appellants flat abruptly. She did not go home, as might have been anticipated after a consensual event, but went first to a male friends house in the early hours of the morning in a distressed state. When she left his flat, she still did not go home, but called a female friend to pick her up from a shopping centre some time around 3.30 am, when she was witnessed still to be in a state of distress. In addition, there was the appellants own account where, at parts of his interview, he accepts that he escorted the complainer to his flat when he knew she was in a drunken state. He admitted that things got a wee bit out of control at some point, albeit that he had an alternative explanation for this. He admitted that he did not provide the complainer with his name or address, so that she could telephone a taxi. The jury would have been entitled to regard these admissions as highly supportive of the complainers account and not consistent with an episode of consensual intercourse. The evidence therefore fully entitled the jury to reach the verdict they did and nothing in the grounds of appeal or otherwise has persuaded the court that a miscarriage of justice did occur, or even might have occurred, in this case. (paras 105 107) The Cadder decision On 26 October 2010, several months after the appellants second appeal had been refused, this court gave judgment in the case of Cadder v HM Advocate. It held that the right under article 6 of the European Convention on Human Rights not to incriminate oneself implied that a suspect should be permitted access to legal advice prior to and during interrogation by the police, unless there were compelling reasons in the particular circumstances of the case which justified a restriction on the right of access to a solicitor; and that, as a general rule, answers to police questioning conducted without the opportunity of access to legal advice ought not to be admitted in evidence. However, their admission in evidence did not in itself make the trial unfair. A conviction would only be quashed if (per Lord Hope at para 64) it was clear that there was insufficient evidence for a conviction without the evidence of the police interview or that, taking all the circumstances of the trial into account, there was a real possibility that the jury would have arrived at a different verdict had they not had that evidence before them. This decision was not unexpected. There had however been considerable concern about its practical implications, partly because of an apprehension that the resultant change in understanding of the law might form the basis of appeals by the large numbers of persons who had previously been convicted on the basis of evidence obtained at interviews conducted without their having had access to a solicitor. Such persons had been properly convicted under the law as it was understood at the time of their trial and any subsequent appeal, but they might, following Cadder, argue that they were the victims of a miscarriage of justice. There was little if any authority on the approach which the High Court should take to applications for extensions of time to lodge notices or notes of appeal, based upon developments in the law. If the ordinary approach to applications for extensions were adopted, then it appeared that such applications might be granted in large numbers of cases, since the lateness of the application would generally be excusable. There was also uncertainty as to whether the refusal of applications would in any event be compatible with Convention rights. Even if the court adopted a restrictive approach, the refusal of applications might simply result in a flood of references by the Commission. In Cadder, this court considered the retroactive effect of its own decision in an effort to address those concerns. Lord Hope, in a judgment with which the other members of the court agreed, referred to dicta in earlier decisions of this court, to the effect that it has an inherent power to limit the retrospective effect of its decisions. The Convention principle of legal certainty suggested that there would be no objection to this on Convention grounds. He concluded, however, that the exercise of that power was precluded in this context by the statutory regime created by the Scotland Act 1998. Furthermore, the relevant Strasbourg authority (Salduz v Turkey (2008) 49 EHRR 19) had not laid down a new principle: far from making a ruling that was not applicable to acts or situations that pre dated its judgment, it ruled that the applicants Convention rights were violated in 2001, when the relevant events took place. Nevertheless, Lord Hope considered that there were strong grounds for ruling, on the basis of the principle of legal certainty, that the decision in Cadder did not permit the re opening of cases which had been finally determined. After referring to judgments of the European Court of Human Rights concerned with the principle of legal certainty in the application of the Convention, to the decision of the Supreme Court of Ireland in A v Governor, Arbour Hill Prison [2006] IESC 45; [2006] 4 IR 88, and to that of the Court of Appeal in England in R v Budimir [2010] EWCA Crim 1486; [2011] QB 744, Lord Hope stated: In the light of these authorities I would hold that convictions that have become final because they were not appealed timeously, and appeals that have been finally disposed of by the High Court of Justiciary, must be treated as incapable of being brought under review on the ground that there was a miscarriage of justice because the accused did not have access to a solicitor while he was detained prior to the police interview. The Scottish Criminal Cases Review Commission must make up its own mind, if it is asked to do so, as to whether it would be in the public interest for those cases to be referred to the High Court of Justiciary. It will be for the Appeal Court to decide what course it ought to take if a reference were to be made to it on those grounds by the commission. (para 62) The reference to the public interest in that passage, and in a similar passage in the judgment of Lord Rodger (para 103), should be understood as referring to the interests of justice, in accordance with section 194C(1) of the 1995 Act. Lord Rodger, in a judgment with which the other members of the court also agreed, observed (para 101) that guidance could be derived from the judgment of Murray CJ in A v Governor, Arbour Hill Prison at paras 36 38: [T]he retrospective effect of a judicial decision is excluded from cases already finally determined. This is the common law position . No one has ever suggested that every time there is a judicial adjudication clarifying or interpreting the law in a particular manner which could have had some bearing on previous and finally decided cases, civil or criminal, that such cases be reopened or the decisions set aside. It has not been suggested because no legal system comprehends such an absolute or complete retroactive effect of judicial decisions. To do so would render a legal system uncertain, incoherent and dysfunctional. Such consequences would cause widespread injustices. Lord Rodger considered that Murray CJs description of the effect of a decision which alters the law as previously understood could be applied to Scots law, and that such an approach was also compatible with the Convention: For instance, in Smith v Lees 1997 JC 73 the Court of Five Judges overruled Stobo v HM Advocate 1994 JC 28 and thereby laid down a more restrictive test for corroboration in cases of sexual assault. The new test applied to the appellants case and to other cases that were still live. But it could never have been suggested that the decision meant that convictions in completed cases, which had been obtained on the basis of the law as laid down in Stobo, were ipso facto undermined or invalidated. Similarly, in Thompson v Crowe 2000 JC 173, the Full Bench overruled Balloch v HM Advocate 1977 JC 23 and re established the need to use the procedure of a trial within a trial when the admissibility of statements by the accused is in issue. But, again, this had no effect on the countless completed cases where convictions had been obtained on the basis of evidence of such statements by the accused which judges had admitted in evidence without going through that procedure. So, here, the courts decision as to the implications of article 6(1) and (3)(c) of the Convention for the use of evidence of answers to police questioning has no direct effect on convictions in proceedings that have been completed. To hold otherwise would be to create uncertainty and, as Murray CJ rightly observes [in A v Governor, Arbour Hill Prison A v Governor, Arbour Hill Prison, para 38], cause widespread injustices. And the Strasbourg court has pointed out that the principle of legal certainty is necessarily inherent in the law of the European Convention (Marckx v Belgium (1979) 2 EHRR 330, para 58). In A v Governor, Arbour Hill Prison (para 286) Geoghegan J said that he was satisfied . that it would be wholly against good order if convictions and sentences which were deemed to be lawful at the time they were decided had to be reopened. I emphatically agree. And that policy is, of course, embodied in section 124 of the 1995 Act which makes interlocutors and sentences pronounced by the Appeal Court final and conclusive and not subject to review by any court whatsoever, except in proceedings on a reference by the Scottish Criminal Cases Review Commission. (para 102) In the subsequent cases of Lang and Hastie v United Kingdom (2012) 55 EHRR SE 7, in which applications were made to the European Court of Human Rights by persons who had been refused extensions of time to appeal on a Cadder basis, the court referred approvingly to the legal certainty the Supreme Court properly sought to introduce when it limited the effect of its ruling in Cadder (para 32). The 2010 Act A legislative response to Cadder had been prepared in anticipation of this courts decision, and as earlier explained, the 2010 Act was immediately enacted. As well as amending the legislation governing the rights of persons arrested or detained by the police, so as to provide them with a right of access to a solicitor, and making consequential amendments to legal aid legislation, it amended the provisions of the 1995 Act relating to references by the Commission as explained earlier. As a result, in determining whether or not it was in the interests of justice that a reference should be made, the Commission was required to have regard to the need for finality and certainty in the determination of criminal proceedings. The High Court was also given the power to reject references if it considered that it was not in the interests of justice that any appeal arising from the reference should proceed; and in that regard it also was required to have regard to the need for finality and certainty in the determination of criminal proceedings. Although the immediate occasion for the enactment of the provisions of the 2010 Act concerning references by the Commission was the case of Cadder, it is important to appreciate that those provisions have a wider significance. They are not confined either to Cadder type cases or to other cases concerned with changes in the law. It is inherent in the role of the Commission that it qualifies the principle of finality in criminal proceedings, otherwise secured by statutory provisions concerning the time limits for bringing appeals and the finality of the disposal of appeals by the High Court. The justification for that inroad into finality and legal certainty is the need to provide a mechanism for the review of cases where a possible miscarriage of justice comes to light after the exhaustion of rights of appeal. This is necessary not only in the interests of the potential victim of a miscarriage of justice but also in order to maintain public confidence in the administration of justice. Certainty and finality nevertheless remain important considerations for any system of criminal justice: the re opening of cases which have been completed has significant implications for the victims of crime, and the families of deceased victims, as well as for those who have been convicted. Public confidence in the administration of justice is also damaged if the outcome of completed proceedings appears to be merely provisional. There are in addition more pragmatic considerations. In a legal system with limited resources, the public interest requires priority generally to be given to dealing with current cases. In order for these considerations to be taken into account, it is necessary that the Commission should not merely ask itself whether a miscarriage of justice may have occurred, but also whether it is in the interests of justice that the case should be referred to the High Court; and that, in deciding the latter question, it should have regard to the need for finality and certainty in the determination of criminal proceedings. The post Cadder application to the Commission On 7 May 2010, the day after the refusal of his second appeal, the appellant made another application to the Commission, raising matters relating to forensic findings. On 29 October 2010 the appellant also sought to have his case referred on the basis of the Cadder decision, issued three days earlier. The Commission declined to make a reference on the grounds relating to forensic findings, saying in a statement of reasons dated 25 February 2011 that they did not believe that a miscarriage of justice might have occurred. In relation to Cadder, the Commission decided to defer their decision until judgment had been given in a number of appeals to this court. No issue is taken with that decision in this appeal. In response to further submissions on behalf of the appellant, relating to scientific matters and also making allegations of unfairness and oppression at the hearing of the second appeal, the Commission declined to make a reference on those grounds in a supplementary statement of reasons dated 30 September 2011. No issue is taken with that decision in this appeal. Following the giving of judgment by this court in the case of Ambrose v Harris [2011] UKSC 43; 2012 SC (UKSC) 53; [2011] 1 WLR 2435 and related appeals, the Commission addressed the Cadder ground in a statement of reasons dated 27 January 2012. They considered that, since the Crown had relied upon the appellants admission that sexual intercourse had occurred as corroboration of the complainers evidence in that regard, and no other corroborative evidence existed, there might have been a miscarriage of justice. The remaining question was whether it was in the interests of justice that a reference should be made. In that regard, the Commission noted the requirement to have regard to the need for finality and certainty in the determination of criminal proceedings, in accordance with section 194C(2) of the 1995 Act. They noted that the appellant had been convicted in 2002, long before the decision in Cadder or the judgments of the European Court of Human Rights on which it was based. They noted the history of the previous applications and appeals. They stated that they considered the following matters to be relevant: (1) The amount of time that had passed since the conviction. (2) That the appellant had never disputed that he had sexual intercourse with the complainer, and had relied on the interview at his trial in order to present his defence of consent. (3) That, in so far as the Crown had used the interview not only as corroboration of sexual intercourse having taken place, but also to undermine the appellants credibility, no objection had been taken at the trial (whereas objection had been taken, successfully, to the admissibility of a further interview). (4) That no issue had been raised in the two appeals as to the fairness of the manner in which the interview was conducted. In the light of these considerations, the Commission concluded that it was not in the interests of justice to refer the case back to the High Court. In the light of further submissions on behalf of the appellant, the Commission confirmed their decision in a supplementary statement of reasons dated 27 April 2012. The submissions argued that the appellants case should be regarded as exceptional, particularly because he had been unrepresented at the hearing of the second appeal and had lacked the necessary knowledge to raise a Cadder point. The Commission accepted, as they had in their earlier statement of reasons, that the appellant could not be criticised for raising the point only after the decision in Cadder, and considered that the reasons for his not having raised the point earlier were not relevant to the question of whether it was in the interests of justice to refer his case. In relation to that question, the Commission adhered to their earlier reasoning. They emphasised in particular the fact that the appellant had at no stage disputed the veracity of what he said to the police, together with the fact that he relied upon the interview in order to present his defence of consent. The proceedings below On 13 September 2012 the appellant commenced proceedings for judicial review of the Commissions decision not to refer his case back to the High Court on the Cadder ground. It was argued that the Commission had erred in taking account of the amount of time that had passed since the conviction, or had in any event attached undue weight to that consideration. It was also argued that the Commission should have given greater weight to the adverse impression which might have been created in the minds of the jury by the appellants attitude towards women, as revealed by the interview: an attitude described as one of flippancy, coarseness, indelicacy and selfishness. Finally, it was argued that notwithstanding what had been said by this court in Cadder about the need for finality in criminal proceedings, the appellants case should have been treated as exceptional, particularly since he had been unrepresented when his appeal was heard, and the Cadder appeal had then been pending. In those circumstances, it was argued, the High Court should have advised him to seek an adjournment of the hearing of his appeal. On 24 January 2013 the Lord Ordinary refused the application: [2013] CSOH 13. In a careful judgment, Lord Pentland considered fully the various points made on behalf of the appellant, and rejected each of them. His decision was upheld by the Extra Division on 6 November 2013: [2013] CSIH 101. The present appeal The issues raised by the appellant in the present appeal are stated to be whether the Commission erred in law in taking into account the following considerations, when, had Cadder applied, the interview that provided the corroboration of the Crown case would have been inadmissible and the appellant would not have been convicted: that the appellant had not disputed the truth of what he told the (1) police at interview; (2) that the appellant had not challenged the fairness of the police interview or its use at his trial in that, before Cadder, there was no basis upon which to do so; and (3) that the appellant made use of the interview at trial, when this was a course of action decided upon in circumstances forced on the appellant, namely that the interview was already before the jury. In relation to the first of these matters, Lord Pentland said: [I]t was clearly relevant for the respondents to recognise that the petitioner has never disputed the truth of what he told the police in his interview and, in particular, that he has never suggested that he did not have sexual intercourse with the complainer. What he now seeks to do is to take advantage of a subsequent change in the law rendering inadmissible evidence which was not in dispute at the trial, videlicet evidence that he admitted having intercourse with the complainer. It would, in my opinion, be repugnant to the interests of justice if the petitioner were now to be permitted to invoke Cadder for the purpose of ruling out uncontested evidence that was essential to the technical sufficiency of the Crown case at his trial. To do so would allow the petitioner to transform what was a non issue at the trial into an issue of critical importance years later. That would run counter to the principle of finality and certainty that is central to the fair working of the criminal justice system. I respectfully agree. The fact that the evidence in question was and remains undisputed is plainly relevant to an evaluation of whether it is in the interests of justice to make a reference. It would not normally be in the interests of justice to quash a conviction merely because, under the law as now understood, there was a lack of admissible corroboration of a fact which had never been in dispute. Counsel for the appellant submitted that, if the appellant had been offered the opportunity to consult a solicitor, and if (1) he had taken advantage of that opportunity, (2) he had been advised on corroboration, self incrimination and his right to remain silent, and (3) he had exercised his right to remain silent, then he might not have admitted having sexual intercourse, in which event the interview would not have provided the necessary corroboration that sexual intercourse had occurred. That also is a relevant consideration. So too, for that matter, are factors affecting the likelihood of each of those conditions being satisfied: for example, the fact that the appellant actually declined to have intimation of his being interviewed given to any solicitor (para 7 above), the fact that other potentially corroborative evidence was available, in the form of the semen found on vaginal swabs (para 7 above), and the fact that a person accused of rape might have been advised that the only defence, if sexual intercourse could be proved to have taken place, was one of consent, and that the credibility of such a defence would be enhanced if it were put forward at the earliest opportunity. The fact that it was because of the answers given at interview, and the admissibility of those answers under the law at that time, that the semen was not subjected to examination so as potentially to provide other corroborative evidence, is also relevant. The relevance of considerations such as these does not, however, in any way detract from the relevance of the fact that the truth of what was said at interview about sexual intercourse taking place was and remains undisputed. In relation to the second matter, Lord Pentland said: I also consider that it was plainly important for the respondents to acknowledge that in the course of two full appeals against his conviction the petitioner never challenged the fairness of the manner in which the police conducted the interview. Nor did he seek to argue on appeal that the use made of the interview by the Crown at his trial was unfair. I again agree. Counsel for the appellant argued that there was no basis on which the appellant could have challenged the fairness of the interview or its use at his trial, before Cadder. But that misses the point. The decision in Cadder established a new basis on which evidence of answers to police questioning might be inadmissible, but there were already other well established grounds of objection, including unfairness in the conduct of the interview or in the use made of it at the trial. The short point being made by the Commission was that, in the appellants case, unlike some others, the fairness of the conduct of the interview and the use made of it at the trial had not been challenged. That was plainly relevant to an evaluation of where the interests of justice lay. The third matter was not raised in quite the same way before the courts below, but Lord Pentland accepted that the fact that the appellant had chosen to rely on his police interview to present his defence to the jury was a relevant consideration. Again, I agree. Counsel for the appellant argued that this was a course of action decided upon in circumstances forced upon the appellant, namely that the interview was already before the jury. That is not a complete answer. Given that the appellants admission that sexual intercourse had taken place was admissible under the law as it then stood, he was entitled to have the whole of the interview placed before the jury, as a matter of fairness, so that the jury were aware that the admission was made in the context of his also maintaining that intercourse had been consensual. The result was that, although he was entitled to give evidence in his own defence, he did not have to do so in order for his defence to be placed before the jury: they had already heard his account to the police. He did not, therefore, have to expose his account to cross examination. That afforded him an opportunity which would not have existed if the interview had been inadmissible. In the event, he availed himself of that opportunity. That was a matter which could properly be taken into account by the Commission when evaluating the course of action which the interests of justice required. Counsel for the appellant also argued that the approach to the application of the interests of justice test in section 194C of the 2009 Act which had been adopted by the Commission in the present case was inconsistent with the approach to the application of the corresponding test in section 194DA by the High Court in M v HM Advocate; Gallacher v HM Advocate [2012] HCJAC 121; 2012 SCL 1027. It was argued that the case of Chamberlain Davidson v HM Advocate [2013] HCJAC 54; 2013 SCCR 295 was a good illustration of the approach proposed by the appellant. There are a number of difficulties with these arguments. One arises from the fact that the High Court has not itself seen its task in applying the interests of justice test in section 194DA as identical to that of the Commission applying the corresponding test under section 194C. In M v HM Advocate; Gallacher v HM Advocate, Lord Justice General Hamilton, delivering the opinion of the court, considered the role of the Commission and its relationship with the court, and stated: Although this court has been given the power to reject a reference in language that replicates the provision applicable to the Commission (section 194DA(1), (2)), it cannot be right for us simply to duplicate the Commissions function and give effect to our own view. In light of the impressive record of the Commission, it is unlikely that we will have cause to differ from its judgment on this point. I think that we are entitled to assume, unless the contrary is apparent, that the Commission has considered the criteria set out in section 194C and has duly made its independent and informed judgment on them. In my view, we should reject a reference only where the Commission has demonstrably failed in its task; for example, by failing to apply the statutory test at all; by ignoring relevant factors; by considering irrelevant factors; by giving inadequate reasons, or by making a decision that is perverse. (para 33) As the Lord Justice General pointed out in that passage, the Commission makes an independent judgment. It is therefore possible, as was noted in the Report of the Carloway Review (2011), that there may be cases in which the SCCRC and the High Court could reach a different decision on where the interests of justice may lie (para 8.2.11). A further difficulty with the argument is that the expression the interests of justice, which appears in both section 194C and section 194DA, is not susceptible of a precise legal definition which can be applied mechanically. It requires an evaluation of a broad nature, based on an assessment of the particular circumstances of individual cases. Thanks to the thoroughness of the Commissions reports and the High Courts judgments in the present case, this court has access to a wealth of information about the facts which led the Commission to conclude that a reference was not in the interests of justice. Its knowledge of the other cases relied on in argument is derived entirely from the judgments of the High Court in those cases, and is more limited. Certain points of distinction are however readily apparent. The cases of M v HM Advocate and Gallacher v HM Advocate, which were decided together, raised the question whether the court should reject two references under section 194DA. Each reference concerned the admission of a police interview prior to Cadder. In the case of M v HM Advocate (the subsequent stage of which is reported as RMM v HM Advocate [2012] HCJAC 157; 2013 JC 153), where the appellant had been convicted of rape, the statements made during the interview went to the issue of consent: in relation to that issue, the appellant gave several potentially incriminating answers to questions put to him. At his trial, he did not accept the truth of those answers, and gave evidence in his own defence. The interview was then used in cross examination, and in the prosecutors speech to the jury, to attack his credibility. There was also a lack of clarity in the verdict. The appellant was still serving his sentence. In Gallacher v HM Advocate, the appellant made admissions during a police interview which could be held to show special knowledge of a series of sexual offences. He claimed that the police had bullied him and briefed him as to the answers he should give to their questions. That, he maintained, was how he came to show special knowledge. The court allowed the references to proceed. In each of those cases, the circumstances were very different from those of the present case. None of the factors referred to in para 37 above appears to have been present. Most importantly, the statements in question in those cases went to an issue which was in dispute at the trial and remained in dispute. Their veracity was not accepted. The case of Chamberlain Davidson v HM Advocate was concerned with a conviction for attempted rape, where the appellant had told the police at interview that he had met the complainer in the street, had said hello, and had grabbed her wrists when she started to scream. The latter admission was the only corroboration of the complaint of assault. The Commission made a reference on grounds concerned with misdirection. They declined to make a reference on a Cadder ground, for similar reasons to those given in the present case: the appellant had served his sentence; all parties had proceeded in good faith on the understanding that the interview had been conducted fairly and that its contents were admissible; the appellant had never denied the veracity of the incriminating statement he had made; and he had relied on his police interview by way of his defence. The court decided not to reject the reference under section 194DA: [2012] HCJAC 120. Subsequently, in the exercise of its power under section 194D(4B) of the 1995 Act to grant leave for the appellant to found the appeal on additional grounds, the court allowed additional grounds of appeal to be received, including a ground raising a question as to the retroactive effect of the decision in Cadder: [2012] HCJAC 122. In the event, that point was not discussed at the hearing of the appeal. The Crown conceded that, if there was not a sufficiency of evidence without the police interview, the appeal must succeed. It succeeded on that basis. Nothing in that case suggests that the Commission erred in taking account of the matters mentioned in para 37 above. of, as the courts below correctly held. Conclusion It follows that the Commission did not err in any of the respects complained For these reasons, I would dismiss the appeal. |
The issue is whether the United Kingdom is precluded, by Council Regulation (EC) No 1408/71 on the application of social security schemes to employed persons, self employed persons and members of their families moving within the Community (the Regulation), from imposing a requirement of residence in Great Britain as a condition of entitlement to disability living allowance (DLA) and thus depriving a claimant who has gone to live in another Member State of that benefit. DLA is a non contributory and non means tested benefit consisting of a care component and a mobility component. It is not an income replacement benefit, as the recipient may or may not be working. Its purpose is to cater for the extra costs of requiring certain types of care or being unable or virtually unable to walk. The facts The claimant, Mrs Tolley, a British national, was born on 17 April 1952. She had paid national insurance contributions from 1967 to 1984 and been credited with some contributions thereafter, but none since the year 1993/94. Depending on whether she fulfilled the contribution conditions when she reached state retirement age, therefore, she might have been entitled to a state retirement pension. From 26 July 1993, she was awarded the care component of DLA on an indefinite basis, because she was unable to prepare a cooked meal for herself. On 5 November 2002, she and her husband moved permanently to live in Spain. She was not employed or self employed there. In 2007, the Secretary of State for Work and Pensions decided that, as from 6 November 2002, she was not entitled to DLA. She appealed to the First tier Tribunal, which held that she was entitled to continue to receive DLA by virtue of article 10 of the Regulation. She died on 10 May 2011 and her husband was appointed to continue the proceedings in her place. The Secretary of State appealed to the Upper Tribunal, which also held that Mrs Tolley was entitled to the benefit, but for a different reason: [2012] UKUT 282 (AAC). Because she was insured against the risk of old age by virtue of her national insurance contributions, she was an employed person within the meaning of article 1(a) of the Regulation; that expression had the same meaning wherever it occurred in the Regulation; and the situation fell within article 22 of the Regulation. The Secretary of State appealed to the Court of Appeal, which dismissed the appeal, holding that it was bound by that courts previous decision in Commissioners for Her Majestys Revenue and Customs v Ruas [2010] EWCA Civ 291, applying Martinez Sala (Case C 85/96) [1998] ECR I 2708, to hold that Mrs Tolley was an employed person for this purpose: [2013] EWCA Civ 1471. The Secretary of State now appeals to the Supreme Court of the United Kingdom. Relevant domestic law Section 71(6) of the Social Security Contributions and Benefits Act 1992 (the 1992 Act) provides that A person shall not be entitled to a disability living allowance unless he satisfies prescribed conditions as to residence and presence in Great Britain. The conditions prescribed for this purpose by regulation 2(1) of the Social Security (Disability Living Allowance) Regulations 1991 (SI 1991/2890) are that (a) on that day (iii) he has been present in Great Britain for a period of, or for periods amounting in the aggregate to, not less than 104 weeks in the 156 weeks immediately preceding that day. It is, therefore, common ground that, under domestic law, Mrs Tolley was excluded from entitlement to DLA following her permanent move to Spain in November 2002. The question is whether that domestic law is compatible with the Regulation. European Union law Article 2.1 of the Regulation No 1408/71 provides that This Regulation shall apply to employed or self employed persons and to students who are or have been subject to the legislation of one or more member states and who are nationals of one of the member states . It is therefore common ground that Mrs Tolley falls within the personal scope of the Regulation. It is also common ground that DLA is one of the benefits falling within the material scope of the Regulation, as defined in article 4. Had it been categorised as an invalidity benefit within the meaning of article 4.1(b), it would have been covered by article 10. This precludes the withdrawal of such benefits by reason of the fact that the recipient resides in the territory of a member state other than that in which the institution responsible for payment is situated, in other words, it provides for full portability within the Union. However, in Commission v European Parliament (Case C 299/05) [2007] ECR I 08695, at para 68, following Molenaar (Case C 160/96) [1998] ECR I 843, para 25, and Jauch (Case C 215/99) [2001] ECR I 1901, para 25, the care component of DLA was categorised as a cash sickness benefit for the purpose of EU law. Nevertheless, in Da Silva Martins (Case C 388/09) [2011] ECR I 5761, para 48, the Court observed that benefits relating to the risk of reliance on care, unlike sickness benefits, were not intended to be paid on a short term basis and might, in the detail of their application, display characteristics resembling invalidity and old age benefits. This case is an example of the problems of applying provisions designed with short term benefits in mind to benefits which are capable of applying on a long term basis such as DLA. Article 13.1 lays down the general rule that persons to whom the Regulation applies shall be subject to the legislation of a single member state. Legislation is defined by article 1(j) in effect to mean all the legislation and other implementing measures of a member state relating to the branches and schemes of social security covered by article 4(1) and (2) or the special non contributory benefits covered by article 4(2a). Article 13(2) defines the member state to whose legislation a person is subject, generally the lex loci laboris rather than where the person lives. Article 13(2)(a) refers to a person employed rather than an employed person. Article 13.2(f) provides that: a person to whom the legislation of a member state ceases to be applicable, without the legislation of another member state becoming applicable to him in accordance with one of the rules laid down in the aforegoing sub paragraphs or in accordance with one of the exceptions or special provisions laid down in articles 14 to 17 shall be subject to the legislation of the member state in whose territory he resides in accordance with the provisions of that legislation alone. In Kuusijarvi (Case C 275/96) [1998] ECR I 3443, the court held that this did not preclude a member state from making the right to remain subject to its legislation of a person, who had ceased all occupational activity in its territory, dependent upon his continued residence there. The court observed that a person who has ceased all occupational activity in the territory of a member state no longer satisfies the conditions laid down in article 13(2)(a) (para 32). Article 89 provides that special procedures for implementing the legislations of certain member states are set out in annex VI. Points 19 and 20 of the United Kingdoms entry in annex VI relate to article 13(2)(f). Point 19 defines the date when UK legislation shall cease to apply for this purpose, so far as relevant, as the latest of (a) the day on which residence is transferred; (b) the day of cessation of employment or self employment, whether permanent or temporary, during which the person was subject to UK legislation; or (c) the last day of any period of receipt of UK sickness, maternity or unemployment benefit which began before the transfer of residence. Point 20 provides, so far as relevant, that the fact that a person has become subject to the legislation of another member state in accordance with article 13(2)(f) shall not prevent (a) the application to him by the United Kingdom as the competent state of the provisions relating to employed or self employed persons of Title III, Chapter 1 if he remains an employed or self employed person for those purposes and was last so insured under the legislation of the United Kingdom. Chapter 1 of Title III deals with the portability of sickness and maternity benefits. Article 19.1 provides that An employed or self employed person residing in the territory of a member state other than the competent state, who satisfies the conditions of the legislation of the competent state for entitlement to benefits, , shall receive in the state in which he is resident: (a) benefits in kind ; (b) cash benefits provided by the competent institution in accordance with the legislation which it administers. The Upper Tribunal held in this case that articles 19, 20, 21 and 22 contemplate different situations with no overlap between them. Article 19 did not apply to Mrs Tolley, because on closer scrutiny it covers only the situation of a person who works in one member state and lives in a different member state (para 84). Article 22.1 provides that An employed or self employed person who satisfies the conditions of the legislation of the competent state for entitlement to benefits, , and (b) who, having become entitled to benefits chargeable to the competent institution, is authorised by that institution to transfer his residence to the territory of another member state; shall be entitled (i) to benefits in kind (ii) to cash benefits provided by the competent institution in accordance with the provisions of the legislation which it administers. The Upper Tribunal held that article 22 did apply to Mrs Tolley. She was an employed person for the purposes of the Regulation; she had become entitled to cash sickness benefits under the legislation of the United Kingdom; and she had transferred her residence to another member state (para 86). Her ability to rely on article 22 could not be defeated when, had authorisation been sought, the circumstances did not fall within those where, under article 22.2, refusal is permitted (para 89). The definition of employed person is contained in article 1: For the purpose of this Regulation: (a) employed person and self employed person mean respectively: (i) any person who is insured, compulsorily or on an optional continued basis, for one or more of the contingencies covered by the branches of a social security scheme for employed or self employed persons ; (ii) any person who is compulsorily insured for one or more of the contingencies covered by the branches of social security dealt with in this Regulation under a social security scheme for all residents or for the whole working population, if such person: can be identified as an employed or self employed person by virtue of the manner in which such scheme is administered or financed, or failing such criteria, is insured for some other contingency specified in annex I under a scheme for employed or self employed persons either compulsorily or on an optional continued basis, or, where no such scheme exists in the Member State concerned, complies with the definition given in annex I; The applicable definition is that in article 1(a)(ii), because DLA is a scheme for all residents, whether or not they are employed or self employed. The United Kingdoms entry in annex I provides that Any person who is an employed earner or a self employed earner within the meaning of the legislation of Great Britain shall be regarded respectively as an employed person or a self employed person within the meaning of article 1(a)(ii) of the Regulation. Section 2(1) of the 1992 Act defines employed earner as a person who is gainfully employed in Great Britain either under a contract of service, or in an office (including elective office) with general earnings. This would not cover Mrs Tolley, who was not gainfully employed at the time. the Grand Chamber held that In Dodl and Oberhollenzer (Case C 543/03) [2005] ECR I 5065, para 34, a person has the status of an employed person within the meaning of Regulation No 1408/71 where he is covered, even if only in respect of a single risk, on a compulsory or optional basis, by a general or special social security scheme mentioned in article 1(a) of that Regulation, irrespective of the existence of an employment relationship. That case concerned Austrian women working in Austria but living in Germany with their German husbands who worked in Germany. They were on unpaid maternity leave and the issue was whether Germany or Austria was responsible for paying family benefits. The definition adopted by the Grand Chamber in Dodl was that in Martinez Sala (Case C 85/96) [1998] ECR I 2708, para 36, repeated in Kuusijarvi, para 21. Martinez Sala concerned a Spanish national living lawfully in Germany, who had previously been working there but was no longer employed or self employed. The issue was whether she was entitled to a German child raising allowance, a family benefit. Since her situation was not covered by any of the provisions of Title III, Chapter 7, relating to family benefits, the restriction in the German entry in annex I, did not apply. Hence her status as an employed person had to be judged solely on the basis of article 1(a)(ii), as defined above. It was for the referring court to decide whether this was established on the facts (para 45). If it was, then requiring her to produce a formal residence permit, which was not required of German nationals, was unequal treatment contrary to EU law (para 65). The definition adopted in Martinez Sala was itself derived from Pierik II (Case 182/78) [1979] ECR 1977, paras 4 and 7, where it was held that the status of worker for the purpose of article 22 was not restricted to active as opposed to inactive workers. The issue in that case was whether a person receiving an invalidity pension in the Netherlands was entitled to reclaim the cost of medical treatment in Germany. Such pensioners came within the provisions of the Regulation concerning workers, including article 22, by virtue of their insurance under a social security scheme, unless they are subject to special provisions laid down regarding them (para 4). The parties arguments In very brief summary, the Government does not challenge the classification of DLA as a sickness benefit (although we comment that it would not have had the same problems had it been classified as an invalidity benefit and thus freely exportable under article 10). Its concern is with the implications of collapsing the categories of employed and self employed persons, on the one hand, and unemployed persons, on the other hand, for the purpose, not only of sickness benefits generally, but also for maternity and family benefits (to which the same or similar rules apply). The Government argues that Mrs Tolley cannot be an employed person for the purpose of Chapter 1 of Title III just because she is insured against the risk of old age under UK legislation and thus falls within the interpretation of article 1(a)(ii) in Dodl, Martinez Sala and other cases. So to hold makes nonsense of the careful distinctions drawn in that Chapter between people who are employed or self employed and unemployed persons, covered by articles 19 to 22, whose rights to export sickness and maternity benefits are severely limited by article 25, read in combination with articles 69(1) and 71, dealing with the export of unemployment benefits. Chapter 7, dealing with family benefits, also makes special provision for persons who have become unemployed. The specific provisions in Title III are lex specialis overriding the general provisions in the Regulation. Martinez Sala was not concerned with the provisions about exportability of particular benefits but with the general EU principle of equality. The claimants in Dodl and in Borger were on maternity leave and Mrs Pierik was a pensioner. The cases did not, therefore, have to grapple with the issue arising in this case. Alternatively, a person such as Mrs Tolley falls within article 13(2)(f), because the legislation of the UK has ceased to be applicable to her, without the legislation of another member state becoming applicable under articles 13(2)(a) to (e), 14 to 17. In the light of Kuusijarvi, the UK is entitled to make her right to remain subject to its legislation dependent upon her continued residence here. Hence she is subject to the legislation of Spain, the member state in whose territory she now resides. Point 19 of annex VI does not apply because she was not entitled to receive the benefit once she moved to live in Spain. Point 20 does not apply because she is not an employed or self employed person for the purpose of Title III, Chapter 1. On behalf of Mrs Tolley, it is argued that Commission v Parliament, following earlier case law, rejected the argument that the care component of DLA is a non contributory cash benefit within article 4(2a), and thus not exportable at all. This shows that allowing persons such as Mrs Tolley to export their DLA is consistent with the policy of the Regulation. More importantly, Mrs Tolley clearly fell within the definition of an employed person in Martinez Sala and confirmed by the Grand Chamber in Dodl, because she was covered in respect of the risk of old age by the UK social security system. There cannot be different definitions for different purposes in the same Regulation. Article 25 is concerned with job seekers, that is, persons who are currently unemployed but moving abroad to look for work. It is designed to link the sickness benefit scheme with the unemployment benefit scheme. It is not concerned with people like Mrs Tolley, who are wholly economically inactive owing to long term disability. Article 13(2)(f) does not apply, because Mrs Tolley remains subject to the UK legislation by virtue of Points 19 and 20 of annex VI: either UK legislation has not ceased to apply within the meaning of Point 19, because she was still in receipt of a sickness benefit which began before she moved to Spain; or, if UK legislation had ceased to apply and therefore article 13(2)(f) did apply, by virtue of Point 20, the UK was not prevented from applying the provisions relating to employed or self employed persons in Title III, Chapter 1 to her. For that purpose, according to the case law cited above, she clearly was an employed person. Alternatively, reliance is placed on the opinion of Advocate General Jacobs in Kuusijarvi, at para 65: Article 22 of the Regulation, being designed to ensure that people retain their sickness benefit entitlement if they move their residence to another member state, would be entirely devoid of purpose if it could be defeated by a residence requirement in national law. Hence he concluded that the right to continued payment of benefits conferred by article 22 could not be defeated by a residence requirement imposed by national legislation. It follows that the national legislation had not ceased to apply for the purpose of article 13(2)(f). The Court did not deal with the applicability of article 22 in the circumstances of that case, because it held that the benefit in question was a family, and not a sickness, benefit. The Supreme Courts view In this courts view, although the matter was not argued before us, the principled solution to a case such as this would be to treat the care component of DLA as an invalidity benefit for the purpose of the Regulation, and thus freely exportable under article 10, leaving the detailed provisions of Chapter 1 of Title III to deal with sickness benefits stricto sensu. Then none of the current issues would have arisen: see Stewart (Case C 503/09) [2012] 1 CMLR 337. The broad characteristic of the benefits listed in article 10 is that they are long term or one off payments in respect of permanent conditions, such as disability, old age or death, rather than short term benefits in respect of potentially temporary conditions, such as sickness, maternity or unemployment. Income replacement cannot be an essential feature of an invalidity benefit, because they include those intended for the maintenance or improvement of earning capacity (article 4(1)(b)). However, if DLA remains to be treated as a sickness benefit, the court agrees with the Government that none of the cases relied upon by Mrs Tolley and the English courts was concerned with whether, in the light of the specific provisions of Title III relating to unemployed persons, the broad definition in Dodl could apply to the provisions relating to employed persons. It might be thought surprising if people who are wholly economically inactive were treated more favourably than people who are actively seeking work in a Regulation which is designed to facilitate the free movement of workers. Logically, article 13(2)(f) comes before articles 19 to 22. Mrs Tolley ceased to be subject to the legislation of the United Kingdom concerning DLA, because she was no longer resident here. On the other hand, she remained subject to the legislation of the UK for the purposes of any potential entitlement to a state retirement pension. So when article 13(2)(f) speaks of the legislation of a member state ceasing to be applicable, does it mean all that legislation, or (notwithstanding the definition in article 1(j)) only the legislation relating to the particular benefit in question? If the latter, how are Points 19 and 20 of annex VI to be interpreted? In particular, does Point 19(c) refer to actual receipt of or to entitlement to DLA? And does Point 20 merely permit, as opposed to require, the UK to continue paying DLA in accordance with Chapter 1 of Title III? The questions referred 1. Is the care component of the United Kingdoms Disability Living Allowance properly classified as an invalidity rather than a cash sickness benefit for the purpose of Regulation No 1408/71? 2. (i) Does a person who ceases to be entitled to UK Disability Living Allowance as a matter of UK domestic law, because she has moved to live in another member state, and who has ceased all occupational activity before such move, but remains insured against old age under the UK social security system, cease to be subject to the legislation of the UK for the purpose of article 13(2)(f) of Regulation No 1408/71? (ii) Does such a person in any event remain subject to the legislation of the UK in the light of Point 19(c) of the United Kingdoms annex VI to the Regulation? (iii) If she has ceased to be subject to the legislation of the UK within the meaning of article 13(2)(f), is the UK obliged or merely permitted by virtue of Point 20 of annex VI to apply the provisions of Chapter 1 of Title III to the Regulation to her? (i) Does the broad definition of an employed person in Dodl apply for 3. the purposes of articles 19 to 22 of the Regulation, where the person has ceased all occupational activity before moving to another member state, notwithstanding the distinction drawn in Chapter 1 of Title III between, on the one hand, employed and self employed persons and, on the other hand, unemployed persons? (ii) If it does apply, is such a person entitled to export the benefit by virtue of either article 19 or article 22? Does article 22(1)(b) operate to prevent a claimants entitlement to the care component of DLA being defeated by a residence requirement imposed by national legislation on a transfer of residence to another member state? Hence we refer the following questions to the CJEU: |
In 2008 Lord Bingham of Cornhill and I were the dissenting minority when the majority in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61, [2009] AC 453 (Bancoult No 2) allowed the Secretary of States appeal and upheld the validity of section 9 of the British Indian Ocean Territory (Constitution) Order 2004 (the 2004 Constitution Order). Section 9 provides that, since the British Indian Ocean Territory (BIOT) was set aside for defence purposes, no person shall have any right of abode there (section 9(1)) and further that no person shall be entitled to enter or be present there except as authorised by the Order itself or any other law. I have not changed my opinion as to what would have been the appropriate outcome of the appeal to the House of Lords. But that is not the issue before us. The issue before us is whether the majority decision should be set aside, not on the grounds that it was wrong in law, but on grounds that the Secretary of State failed, in breach of his duty of candour in public law proceedings, to disclose relevant documents containing information which it is said would have been likely to have affected the factual basis on which the House proceeded. That was that the Secretary of State, when enacting section 9, could justifiably rely on the stage 2B report prepared by Posford Haskoning Ltd (Posford) for its conclusion that any long term resettlement on the outlying Chagos Islands was infeasible, other than at prohibitive cost. In addressing the issue now before us, we are bound by the legal reasoning which led the majority to its conclusion indeed, strictly bound without possibility of recourse to the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234, since this is an application in the same proceedings. The relevant documents are conveniently described as the Rashid documents, after Ms Rashid, the deponent from the Treasury Solicitors Department who by witness statement dated 1 May 2012 first produced them. She did this without commentary in Administrative Court proceedings in Bancoult (No 3), regarding the declaration of a Maritime Protected Zone (MPA) in the high seas around BIOT. Ms Rashid made clear that she had no personal knowledge of events leading to the earlier failure to disclose. That the failure to disclose the Rashid documents in the Bancoult No 2 proceedings was culpable is not, and could not be, disputed. On the other hand, it is accepted that it was not intentional and did not involve any bad faith. I shall address the circumstances, the contents of the documents and their significance in due course. In addition to relying on the alleged breach of candour, Mr Bancoult also seeks to adduce four heads of new material, put forward as constituting evidence unavailable at the time of the House of Lords decision. All are said to go to the reliability of the stage 2B report, to undermine or invalidate the basis on which the House proceeded and to constitute an independent justification for re opening the decision. I will revert to this ground of application later in this judgment, and focus in the meanwhile on the alleged breach of candour. The jurisdiction to set aside in cases of unfair procedure and fresh evidence Unfair procedure: There is no doubt that the Supreme Court has inherent jurisdiction to correct any injustice caused by an earlier judgment of itself or its predecessor, the House of Lords, though it is also clear that it will not re open any appeal save in circumstances where, through no fault of a party, he or she has been subjected to an unfair procedure and that there can be no question of that decision being varied or rescinded by a later order made in the same case just because it is thought that the first order is wrong: R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 2) [2000] 1 AC 119, per Lord Browne Wilkinson. One partys failure to disclose relevant documentary information is clearly capable of subjecting the other party to an unfair procedure. However, a decision to re open an appeal also has important evaluative as well as discretionary aspects. The present applicant was, in its application to set aside (paras 109 130), content to express the evaluative aspect in terms used in an analogous context in the Court of Appeal in Taylor v Lawrence [2002] EWCA Civ 90; [2003] QB 528 and followed by the Privy Council in Bain v The Queen [2009] UKPC 4. As the Privy Council said in the latter case at para 6, quoting Lord Woolf CJ at p 547 in the former case: What will be of the greatest importance is that it should be clearly established that a significant injustice has probably occurred and that there is no alternative effective remedy. Fresh evidence: That the jurisdiction to set aside also extends to situations where fresh evidence is discovered after a judgment has been rendered which is not susceptible of appeal is also recognised in Court of Appeal authority: In re U [2005] EWCA Civ 52; [2005] 1 WLR 2398 Feakins v Department of Environment, Food and Rural Affairs [2006] EWCA Civ 699. The latter was a case where it was discovered that a DEFRA official had provided materially incorrect information to the court in a witness statement. In each case, however, it was emphasised that it was not sufficient simply to rely on the principles in Ladd v Marshall [1954] 1 WLR 1489, which apply when fresh evidence is sought to be adduced for or on an appeal. Rather, as it was put in In re U, para 22, it must at least be shown, not merely that the fresh evidence demonstrates a real possibility that an erroneous result was arrived at in the earlier proceedings , but that there exists a powerful probability that such a result has in fact been perpetrated. This statement was quoted from and accepted in the application to set aside, para 121. Further, as to the discretionary aspect, the court noted in Feakins: The court [in In re U] held that, although that was a necessary condition, it was not sufficient; the court would have also to consider the extent to which the complaining party was author of his own misfortune and that there was no alternative remedy. In oral submissions, Mr Edward Fitzgerald QC did not directly challenge the above principles as stated in In re U, stating in his reply that there was nothing between the parties on jurisdiction. However, in his written speaking note, directed specifically to jurisdiction in response to the courts invitation to focus on this, the matter was put differently, and as follows (para 2.4(iv)): As to whether there would now be a different outcome, it is submitted that it is only necessary to show at this threshold stage that there may well be a different outcome on a reconsideration. See also, eg the submission (para 8.8) that Dr Shepherd may well have had an axe to grind. For my part, particularly where, as here, a party has failed to disclose the documents which it is now submitted constituted important evidence, I prefer to leave open whether a test of probability or, in the context of fresh evidence, powerful probability is too inflexible to cater for all possibilities. The egregiousness of a procedural breach and/or the difficulty of assessing the consequences of such a breach or of the significance of fresh evidence might, it seems to me, in some situations militate in favour of a slightly lower test, perhaps even as low as (though I do not decide this) whether the breach may well have had a decisive effect of the outcome of the previous decision. I shall consider the present application in that light also, although I do not in the event consider that the outcome of this application depends at any point on the test applied. The course of events leading to the present application The regrettable facts lying behind these and other proceedings such as R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 1) and (No 3) were outlined by Lord Hoffmann in paras 1 30 of his judgment in Bancoult No 2, in terms which both Lord Bingham and I accepted with only a few (presently immaterial) qualifications: see paras 68 and 137 139. BIOT consists of the Chagos Islands, the largest being Diego Garcia. In 1966 the United Kingdom agreed in principle to make BIOT available to the United States for at least 50 years for defence purposes, and with effect from July 1971 the United States took over Diego Garcia as a base. At the same time, by the Immigration Ordinance 1971, the Commissioner of BIOT prohibited any person from entering or being in BIOT without a permit issued by an immigration officer. Mr Bancoult represents Chagossians (or Ilois), indigenous inhabitants of BIOT, whose removal and resettlement the United Kingdom procured between 1968 and 1973 by various non forceful means with a callous disregard of their interests (Lord Hoffmann, para 10). Compensation, initially in the 1970s of 650,000 and then in 1982 of a further 4m in a trust fund set up under a Mauritian statute, was paid and accepted in satisfaction of all claims by most (some 1,340) Chagossians, though a few refused to sign. A challenge to this settlement was later made but struck out as an abuse of process by Ouseley J in Chagos Islanders v Attorney General [2003] EWHC 2222 (QB), leave to appeal being refused by the Court of Appeal [2004] EWCA Civ 997. Ouseley Js judgment made clear that there was no further economic obligation on the United Kingdom to fund resettlement in BIOT. A challenge to the Immigration Ordinance 1971 was on the other hand successful. In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 1) [2001] QB 1067, the Divisional Court decided that the Commissioner for BIOTs power to legislate for the peace, order and good government of BIOT did not include a power to expel its inhabitants. The then Foreign Secretary, Mr Robin Cook, stated publicly that he accepted this decision, and revoked the 1971 Ordinance by the Immigration Ordinance 2000. This confined the restriction on entry or presence to persons not British Dependent Territories citizens by virtue of their connection with BIOT. Mr Cook also announced that a recently completed feasibility study into the prospects of resettling the Ilois would now proceed to a second stage. This was originally intended to involve two phases, the first (Phase 2A) relating to hydrological monitoring, the second (Phase 2B) to a more general examination, prior to a cost benefit analysis (Phase 3). The second stage reports were undertaken by Posford as project managers. In the event, the first two phases were amalgamated, leading to a report entitled stage 2B published in July 2002. Its General Conclusions, para 1.11, stated: To conclude, whilst it may be feasible to resettle the islands in the short term, the costs of maintaining long term inhabitation are likely to be prohibitive. Even in the short term, natural events such as periodic flooding from storms and seismic activity are likely to make life difficult for a resettled population. The Secretary of State in this light decided not to proceed with Phase 3, terminated consideration of re settlement and on 10 June 2004 introduced a new prohibition on residence in BIOT by section 9 of the 2004 Constitution Order, to the effect set out in para 1 above. A new Immigration Order 2004 was at the same time also enacted, but needs no separate treatment here. The present proceedings were begun for judicial review to quash section 9 of the Constitution Order. They succeeded before the Divisional Court and Court of Appeal, but failed by a majority of three to two before the House of Lords. All members of the House accepted that the 2004 Constitution Order was susceptible to judicial review on ordinary principles of legality, rationality and procedural impropriety. But the majority (Lord Hoffmann, Lord Rodger of Earlsferry and Lord Carswell) held: that, although the Chagossians had had important common law rights of abode, they were not so fundamental that they could not be removed by section 9; that the Secretary of States decision to remove such rights, to reimpose immigration control and to prevent resettlement was in the circumstances neither unreasonable nor an abuse of power; and that the previous Foreign Secretarys statements in 2000 (para 11 above) did not amount to a clear and unambiguous promise that the Chagossians would be permitted to return and settle permanently creating any legitimate expectation on which they could now rely. Lord Bingham and I took the opposite view on these points, and would have dismissed the Secretary of States appeal. During the proceedings no challenge was made or suggested to the stage 2B report or its findings. The Secretary of State relied on its findings in para 106 of his skeleton argument before the Administrative Court dated 25 November 2004, stating: in any event, the defendant submits that it cannot conceivably be said to be irrational for steps to be taken to ensure that the BlOT is not resettled in circumstances where no viable long term resettlement can be supported; where the costs of resettlement would be extensive, prohibitively expensive and potentially open ended; and where the UKs defence interests and treaty obligations strongly militate against permitting resettlement of the archipelago. Sir Sydney Kentridge QC expressly disavowed any challenge to the reports conclusions when opening the Chagossians case before the Divisional Court on 6 December 2005; and amended particulars put before that Court on 13 December 2005 on the issue of irrationality likewise made no such challenge. Before the House of Lords the stage 2B report and its findings were equally uncontentious. All members of the House proceeded on that basis. The argument on behalf of the Chagossians was throughout that the findings did not justify the making of the 2004 Constitution Order. Lord Bingham and I accepted that argument, but the majority rejected it and, to differing extents, deployed the relevant findings in their reasoning. Lord Hoffmann at para 53 said this: 53. I think it is very important that in deciding whether a measure affects fundamental rights or has profoundly intrusive effects, one should consider what those rights and effects actually are. If we were in 1968 and concerned with a proposal to remove the Chagossians from their islands with little or no provision for their future, that would indeed be a profoundly intrusive measure affecting their fundamental rights. But that was many years ago, the deed has been done, the wrong confessed, compensation agreed and paid. The way of life the Chagossians led has been irreparably destroyed. The practicalities of today are that they would be unable to exercise any right to live in the outer islands without financial support which the British government is unwilling to provide and which does not appear to be forthcoming from any other source. During the four years that the Immigration Ordinance 2000 was in force, nothing happened. No one went to live on the islands. Thus their right of abode is, as I said earlier, purely symbolic. If it is exercised by setting up some camp on the islands, that will be a symbol, a gesture, aimed at putting pressure on the government. The whole of this litigation is, as I said in R v Jones (Margaret) [2007] 1 AC 136, 177, the continuation of protest by other means. No one denies the importance of the right to protest, but when one considers the rights in issue in this case, which have to be weighed in the balance against the defence and diplomatic interests of the state, it should be seen for what it is, as a right to protest in a particular way and not as a right to the security of ones home or to live in ones homeland. It is of course true that a person does not lose a right because it becomes difficult to exercise or because he will gain no real advantage by doing so. But when a legislative body is considering a change in the law which will deprive him of that right, it cannot be irrational or unfair to consider the practical consequences of doing so. Indeed, it would be irrational not to. (italics added for emphasis) Lord Rodger at paras 110 114 said: 110. Section 9 of the Constitution Order removes any right of abode on the Chagos Archipelago which the claimant or anyone else may have had. It is a stark provision. But the Secretary of States decision to have it enacted and the effect of that decision have to be judged against the circumstances at the time it was taken. No one was then actually living on the outer islands and, even though the islanders had enjoyed a right to return since November 2000, none of them had done so. They were instead seeking support from the UK and US governments to financially assist their return or alternatively to provide compensation: Feasibility Study Phase 2B, Executive Summary, para 1.1. More importantly, there was no prospect that anyone would be able to live on the outer islands, except on a subsistence basis, in the foreseeable future: Feasibility Study Phase 2B, Executive Summary, para 1.11. Sir Sydney did not dispute this, but contended that it was irrelevant. In other words, the position was just the same as if people had actually been living on the islands when the Orders were made. I am unable to accept that submission. The impact of the legislation on the people concerned would be very different in the two situations. In my view, in reviewing the Secretary of States decision to remove the right of abode, it is relevant that there was actually no prospect of the Chagossians being able to live on the outer islands in the foreseeable future. The government accepts, of course, that they can apply for permits to visit the islands and that an unreasonable refusal could be judicially reviewed. Such visits have taken place in the past. 111. Against that background, can it be said that no reasonable Secretary of State could have decided to have section 9 enacted? 112. On 15 June 2004 a junior minister, Mr Rammell, made a written statement to Parliament. His good faith has not been impugned by the respondent. The statement shows that, in deciding to legislate to prevent people resettling on the outer islands, the government took into account the fact that the economic conditions and infrastructure which had once supported the way of life of the Chagossians had ceased to exist. Something new would have to be devised. The advice was that the cost of providing the necessary support for permanent resettlement was likely to be prohibitive and that natural events were likely to make life difficult for any resettled population. Human interference within the atolls was likely to exacerbate stress on the marine and terrestrial environment and would accelerate the effects of global warming. Flooding would be likely to become more frequent and would threaten the infrastructure and the freshwater aquifers and agricultural production. Severe events might even threaten life. The minister recorded that, for these reasons, the government had decided to legislate to prevent resettlement. Although he made no mention of it, the decision to legislate and to introduce immigration controls at that particular time appears to have been prompted by the prospect of protesters attempting to land on the islands. In addition, Mr Rammell said that restoration of full immigration control over the entire territory was necessary to ensure and maintain the availability and effective use of the territory for defence purposes. He referred to recent developments in the international security climate since November 2000 when such controls had been removed. 113. The ministerial statement indicates that a decision to legislate was taken on the basis of the experts (second) report on the difficulties and dangers of resettling the islands, these difficulties and dangers being dangers and difficulties which would affect the Chagossians themselves, if they were to try to live on the outer islands. Given the terms of that report alone, it could not, in my view, be said that no reasonable government would have decided to legislate to prevent resettlement. In particular, the advice that the cost of any permanent resettlement would be prohibitive was an entirely legitimate factor for the government, which is responsible for the way that tax revenues are spent, to take into account. In addition, the government had regard to defence considerations, the views of its close ally, the United States, and the changed security situation after 9/11. These additional factors reinforce the view that the decision to legislate was neither unreasonable nor irrational. 114. Of course, the decision was adverse to the claim of the Chagossians to return to settle on the outer islands. But that does not mean that their interests had been ignored: a realistic assessment of the long term position of any potential Chagossian settlers on the outer islands was central to the expert report on which the government relied. In addition, the government considered the overall interests of the United Kingdom. It was entitled to do so. In the absence of any relevant legal criteria, judges are not well placed to second guess the balance struck by ministers on such a matter. (italics added) Lord Carswell said (para 120) that he agreed with very little qualification with the reasoning of Lord Hoffmann and Lord Rodger, but his specific reasoning focused on the lack of long term feasibility. He said that the Chagossians expressed wish to return to their homeland was: put on an abstract basis by their counsel, for it is quite clear that for them to resettle in the islands is wholly impracticable without very substantial and disproportionate expenditure. They are not in a position to meet such a cost. It could only be shouldered by the British government, which has made it clear that it is willing to permit and fund from time to time short visits to the outlying islands, but not to support a large scale permanent resettlement. One might ask the question why this campaign is being pursued, for the Chagossians already can pay visits and there is no realistic prospect of resettlement unless it is funded for them at huge expense. I do not find it necessary to seek an answer to that question, but the practical difficulties in the way of resettlement are in my view relevant to the rationality of the governments decision to make the 2004 Orders in Council. (italics added) On the present application, Mr Bancoult submits that, had the Rashid documents been available prior to the hearing before the Divisional Court, the Court of Appeal or the House of Lords, they would have led to a challenge being mounted to stage 2B report, the conclusions drawn in that report would have been discredited, and the majority reasoning in the above extracts would have been impossible. This brings me to a consideration of the Rashid documents. The Rashid documents: (a) Circumstances of late disclosure By letter dated 5 December 2005 disclosure had been made on behalf of the Secretary of State to Sheridans, solicitors acting for Mr Bancoult, of a copy letter dated 23 May 2002 sent by Mr Charles Hamilton of BIOT to Ms Alex Holland, the senior environmental scientist who was Posfords project manager. This raised questions and made comments on a draft stage 2B report. Between November 2005 and February 2006, requests were made on behalf of Mr Bancoult for disclosure of this draft report as well as any draft of the earlier feasibility study. The Treasury Solicitor, while replying that these requests did not go to any issue in Bancoult No 2, made searches, but was in the event only able to locate a draft feasibility study which was disclosed in early December 2005. By letter dated 13 January 2006 (E1472) Mr Bancoults solicitors, Sheridans, questioned, in relation to the stage 2B report, whether there had been official input into the work of consultants which undermines its authority. The Treasury Solicitor responded that this was an extremely serious allegation and needed to be particularised. It was not particularised and, as stated, no challenge to the stage 2B report was then made. A further allegation that, in the absence of the draft stage 2B report, the General Conclusions must be assumed not to be the unguided advice of independent consultants was made by note dated 13 March 2009. On 7 October 2010 an email dated 29 May 2002 sent by Mr Charles Hamilton to Ms Holland advising that the final draft omit development scenarios (advice not in fact followed: para 40 below) was disclosed on behalf of the Secretary of State in the context of the issues arising in Bancoult (No 3). By letter dated 21 December 2010 Clifford Chance (now acting for Mr Bancoult as a result of the move to that firm of Mr Gifford the individual partner handling Mr Bancoults affairs) wrote asserting that the total absence of any records of meetings in May June 2000 and June/July 2002 regarding what became respectively the feasibility study and stage 2B report casts grave doubts on the ability of FCO to explain its conduct or to justify what appears to be serious and concerted influence practised to achieve a conclusion which reflected the views of officials and contradicted the unguided advice of consultants. Clifford Chance referred in this connection to the disclosure of the email dated 29 May 2002 and to statements made to them in a letter dated 11 February 2010 by Mr Stephen Akester, one of the Phase 2B consultants, that resettlement was always feasible within reasonable cost parameters, but that he was not in the committee that drafted the stage 2B report. On 10 October 2011 Clifford Chance wrote in the light of the above urging a yet further search for documents pursuant to the Secretary of States duty of candour in the context of both Bancoult (No 2) and Bancoult (No 3). The further search then made led to the Treasury Solicitor discovering previously undisclosed documents, including the draft stage 2B report, in circumstances described in its letter dated 15 March 2012 to Clifford Chance as follows: In the context of the aforementioned matters, TSol recalled archived files held by a third party document storage company that were generated during the conduct of the Bancoult (No 2) litigation. In the course of reviewing these files, it has become apparent that they contain certain documents concerned with the drafting of the Phase 2B report which originate from the FCO but are no longer retained by the FCO on its own files as a result of its document retention. It was subsequently further explained that there was clearly a point, occurring during 2005, when the FCO no longer held the draft Phase 2B Executive Summary on its files, as it was removed according to the FCOs document retention policies, and yet TSol retained a copy on its Bancoult (No 2) files. The documents so discovered, including the draft stage 2B report, were then disclosed by Ms Rashids witness statement dated 1 May 2012. The Secretary of State accepts that, in the light of the requests made and despite the absence of any challenge to the stage 2B report, the Rashid documents should have been capable of location and should have been located and disclosed pursuant to his general duty of candour in public law proceedings. The failures in this regard were and are highly regrettable. But there is, as stated previously, no basis for attributing them to any deliberate misconduct. The question is what significance would or might have attached to, and what consequences would or might have flowed from, their disclosure. (b) Alleged significance of the Rashid documents In Mr Bancoults written case, it is alleged that the Rashid documents would have been significant under four heads: (i) As showing that, instead of being independent as understood, the final report was subject to extensive alterations to reflect FCO views. Head (iv) below concerns one particular difference alleged to be centrally important to the stage 2B reports conclusions. (ii) As revealing that Dr Sheppard, the FCOs scientific adviser, had criticised the draft stage 2B report in an email sent to Charles Hamilton on 14 May 2002 and had, after the issue of the final report, also endorsed criticisms of it made by a resettlement anthropologist, Jonathan Jenness, instructed on behalf of Mr Bancoult. (iii) As revealing evidence of lack of objectivity in Dr Sheppards input into the stage 2B report before it was finalised. More specifically, it is said that the documents show that Dr Sheppard was the only reviewer of the whole draft, that heavy reliance on only one specialist made the report unsafe and that, as a coral reef specialist well known to be strongly dedicated to their conservation, there is concern whether he could reasonably be regarded as an objective assessor on the issue of reintroducing human settlement. (iv) As showing alterations between the draft and final version of the stage 2B report in a manner which conflates and distorts the consultants original finding in relation to storms creating difficulties for resettlement. Taken together, it is submitted that it is certain that, had the Rashid documents been disclosed, they would have caused the applicants representatives to challenge the reliability of the feasibility study, that it is highly likely that the challenge would have succeeded and that, if the House of Lords judgment is set aside, a new hearing will reach a different conclusion. The focus of the first and fourth heads of alleged significance of the Rashid documents is alterations alleged to have been made and to have distorted the final stage 2B report. The focus of the second and third heads is Dr Sheppard. The second relies on his criticisms of the draft. The third suggests that his input lacked objectivity and was unreliable. (c) The first and fourth heads These two heads stand or fall together. They are reproduced in the speaking note which Mr Edward Fitzgerald QC used at the hearing before the Supreme Court. That speaking note refers to extensive alterations to the original draft in the final draft, which it suggests are likely to have reflected FCO views and input and to have been unsupported by evidence in the body of the study. According to Clifford Chances letter dated 10 October 2011, there were 94 revisions over a period when the document was open for editing for a total of seven and a half hours. The speaking note says that some of the key changes are summarised in a summary note dated 17 February 2015 prepared by counsel for Mr Bancoult. This was based in turn on a lengthy Analysis Note prepared by Mr Bancoults solicitor, Mr Gifford, in conjunction with a coral scientist, Mr Dunne. In addition to the change relating to storms and re settlement identified in head (iv), the summary note identifies three further key amendments. That alterations would or might be made in the final report following comments by the FCO and BIOT on the draft report cannot come as any surprise to those representing Mr Bancoult, or be regarded as in any way unnatural. The stage 2B report was prepared by Posford under a contract expressed to be between the Commissioner for BIOT and Posford Duvivier Environment dated 10 December 2001. The Terms of Reference set out in section 4 of the contract provided by clause 6 for monthly reporting and further by clause 6.3 that A draft final report, containing an account of the work done, conclusions and recommendations will be submitted within four months of commencing the assignment. Within two weeks of the receipt of comments on the draft from recipients, consultants will submit a Final Report. In this respect clause 6.3 echoed the provisions of clause 17 of the terms of reference for the earlier contract dated 13 April 2000 made with David Crapper for the feasibility study, which, when made was according to its terms intended also to cover stage 2. Clause 17 provided: 17. A draft report will be produced for the government of the BIOT. On receiving comments on the draft report from the government of the BIOT, the consultant will finalise the report and provide the text in both paper and electronic form to the government of the BlOT. Sheridans received a copy of this earlier contract, and in a letter dated 28 November 2005 noted and set out clause 17 specifically, not by way of objection, but in order to ask for the draft report and for any comments on it made by the FCO and the government of BIOT. Whether any of the actual alterations made can be described as extensive or as reflecting FCO views, or be seen to have unbalanced the report as a result, are matters to which I will come. Before doing so, it is convenient to examine events in more detail to identify any overt trace of undue executive influence over the final report. After entry into force of the contract dated 10 December 2001, Posford set about preparing for field studies in BIOT, in particular on the two outlying islands of Ile de Coin and Ile Boddam, as contemplated by its terms. These took place in February 2002, after which Posford submitted a second progress report dated 1 March 2002. This was tabled and discussed at a meeting with the FCO and BIOT on 6 March 2002. There is no suggestion or likelihood that the draft executive summary was available to anyone at this stage, and Ms Hollands letter dated 12 April and Mr Hamiltons email dated 15 April 2002 (E2404) indicate that, once drafted and reviewed, such a draft was only submitted to the FCO in early April 2002. It is convenient at this point to introduce the fourth piece of new evidence on which the applicant seeks to rely. It is a note of the 6 March 2002 meeting made by Posford dated 7 March 2002. It was only obtained by the applicants advisers, after a chance meeting, from Mr Stephen Akester of MacAlister Elliott & Partners (MEP), sub contractors to Posford who arranged the on site investigations in the Chagos in early 2002. As such it is not a document which was at any relevant time in the possession of or available to the executive. But it records a meeting at which FCO and BIOT representatives were present, and, taking it as an accurate record of what took place at that meeting, what it records was within their knowledge, and may also throw light on their roles in relation to the re drafting and finalisation of the stage 2B report. Mr Huckle of the FCO is reported as reiterating the political importance of the forthcoming feasibility report which he stressed had been heightened in recent weeks because the Ilois are currently pursuing legal action against the British and American governments. He went on to point out that the outcome of the court case will either be compensation, or financial assistance to the Ilois in resettling the islands and that the questions were how much, and what forms of livelihood development will the British government permit, which he said was where the feasibility report comes in. There is nothing here which appears to be anything other than a genuine explanation as to the reports current relevance couched if anything in terms anticipating that it would accept the possibility of resettlement. The FCO appears a little later as saying that it had hoped that Phase II would negate the need for Phase III, ie if it concluded that resettlement wasnt feasible, but realistically, that was never likely to be the outcome. The FCO is hoping that the section on Climate Change will resolve its difficulties, but Brian [Little] and I pointed out that a considerable amount of money could be made in 25 100 years, and lets not assume that the Ilios are considering a return to subsistence or reliance on natural resources . Again this confirms, if anything, that the FCO was resigned to a report accepting the feasibility of some form of resettlement, and that Posford was well capable of standing up for what it believed correct. Indeed, earlier in the note Posford recorded that allegedly, a number of those whom we competed against in the bidding process have been taking pot shots at our approach within earshot of important people. Sounds like sour grapes. That all said, our findings and arguments must be tight and convincing. There is no suggestion that the FCO was inviting changes to bolster any sort of findings or conclusions in either the draft and the final report, and no basis for regarding Posford as susceptible to any such invitation. The express purpose of the 6 March meeting was, as stated, to provide a de briefing on Posfords recent field studies on Ile du Coin and Ile Boddam. In all the circumstances, the 7 March 2002 note provides no real support to a suggestion that the content even of the draft stage 2B report was unduly interfered with or influenced by the FCO or BIOT, still less that any subsequent alterations between the draft submitted in April and the stage 2B report as finalised in June were the result of any such undue interference or influence. The follow up exchanges after Posford had completed and submitted all sections of the draft report in April 2002 (E2403) are evidenced by the Rashid documents as well as the previously disclosed messages dated 23 and 29 May 2002 from Mr Hamilton to Ms Holland. They are also significant. Dr Sheppard had on 14 May 2002 sent Mr Hamilton very detailed comments on the draft report (E2409 on). In relation to the Executive Summary, he wrote: This important section does not always reflect the content of the volumes very well. This is doubtless due to haste and short deadlines. Several key issues missed out are stated in the text and in the conclusions. I suggest that after a period of reflection this is revisited. Several conclusions are apparently at odds either with each other or with other, known facts. During the rewrite, these apparent contradictions in the text can be resolved. They make parts of the report somewhat vulnerable. One example is the widely varying estimates of numbers of people that could be sustainably supported. Dr Sheppard went on in sections dealing with the body of the draft report to note (a) the risk of water contamination, observing that the draft did not clearly state how such contamination could be prevented through the thin roof of the aquifers, (b) a contradiction between statements that Water recharge of aquifers would increase by vegetation clearing (Groundwater resources section) But: water recharge would decrease with clearance of plants and development (from volume IV), and (c) under Other points: The point about Chagos is that it lies in the most nutrient poor part of the Indian Ocean. The Chagos bank fishery potential is estimated to be half that of other banks (p 146). Mr Hamilton then wrote to Ms Holland on 23 May 2002, noting that he had studied the drafts of the report in some detail, that it and any recommendations which followed from it would be carefully examined and that we are particularly anxious therefore that its scientific content is as complete and watertight as possible. He made detailed comments on the draft, drawing heavily on Dr Sheppards comments, particularly when writing this in relation to the Executive Summary: This important section does not always reflect the content of the volumes very well. Several key points and conclusions in the main text are important and stand out, but are not well reflected in the summary. Further, several conclusions are apparently at odds either with each other or with other known facts. During your revision, I would be grateful if you would resolve these apparent contradictions as they make parts of the report unclear. Examples of issues needing reconciliation include widely varying estimates of numbers of people that could be sustainably supported, issues of water contamination and the balances of water use for different activities, whether plants increase or decrease water recharge, and the Chagos bank fishery potential. Synthesis would doubtless resolve many of these. I understand that different consultants wrote different sections, so I think that this summary may be a suitable place for an overall, concise synthesis, which would also include overall environmental management recommendations. Many of these points are noted in the attachments relating to different sections, but are crucial for the writer of this Executive Summary. As is apparent, Mr Hamilton was here picking up points made by Dr Sheppard as indicated above. In attachment 7, relating to volume III of the draft dealing with resettlement issues, Mr Hamilton discussed three scenarios which had been included, noting various issues and that nothing had been said either on scenario 3 (based partly around expensive tourism), although this appeared to be the only attractive development option for interested parties, or on a possible scenario 4 (non residential, but settled seasonally for some fishing). The discussion ended Possibly use of the three scenarios just adds confusing complexity and begs several questions which are not answered. He ended by underlining the importance attaching to the overall synthesis (Executive Summary) which should clearly highlight the main points which are brought out in the text, and indicated that following the drafts revision he would call a meeting of all concerned to finalise the report. Posford then prepared its own detailed comments on Mr Hamiltons letter which were sent to him by Ms Holland under cover of a faxed letter dated 28 May 2002. Her letter stated: To summarise the attached, we consider that some of the comments are valid and we will revise our report in light of these suggestions. However, we feel that others are somewhat inaccurate and do not reflect the understanding we had with the BlOT Administration on our approach. I should like to discuss these comments with you at your earliest convenience. In the body of the comments, Posford replied to the points made on the three scenarios as follows: Three scenarios: There was much debate during the drafting of the report as to whether the three scenarios should be included, but several of those involved considered that these helped to develop conclusions about whether certain resettlement activities would be possible, particularly in the drafting of the environmental appraisal. We stopped at three hypothetical scenarios, but recognise that there could be many more combinations of activities. The suggestion of scenario 4, which is based on non residential and non development, does not actually constitute resettlement and was therefore not considered as a scenario. However, you will note that Option 1 for fisheries development (p 165) does refer to this form of livelihood activity. We would be grateful if you would give direction as to whether you wish us to include or exclude the development scenarios from the final report. To this last request, Mr Hamilton simply replied by email on 29 May 2002: You asked about the inclusion of development scenarios in the final report. Our advice is that it would be better if these are excluded. However, as Mr Giffords and Mr Dunnes Analysis Note acknowledges, this advice was not in fact taken up in the final stage 2B report, where the Development Scenarios can be seen to be crucial to several parts of the study. Nevertheless, the Analysis Note seeks to portray Mr Hamiltons letter and comments dated 23 May 2002 as an exercise of editorial control, and his email of 29 May 2002 as yet further attempts to exercise editorial control over the final report. To my mind, there is nothing untoward about them at all. The impression conveyed is one of independently minded exchanges, passing between people whose genuine concern was to have as thorough, accurate and watertight a final report as possible. Posfords comments dated 28 May 2002 were evidently also sent to Dr Sheppard, since he commented on them by email on 31st May 2002 (E2450 2451). There were further technical exchanges between Brian Little, who had been appointed as FCO Feasibility Study Project Manager under contract dated 29 January 2001, and Posford in late May and early June (E2452 2458 and E2465 2467), and a further set of comments by Tony Falkland of Posford responding on 9th June to Dr Sheppards comments (E2459 2464) as well as to Brian Littles comments (E2465 2468). Dr Sheppard noted Mr Littles comments on 11 June (E2469), and Mr Little sent an email commenting on Posfords response on 12 June (E2470). A meeting was set up to discuss the final report on Friday 12 June, in relation to which Mr Hamilton invited Dr Sheppard to act as a devils advocate. This he evidently did (E2476 2477). Some changes/deletions were made, leading to the final report. Reading all these exchanges, nothing in them suggests anything but a proper, professionally oriented and independent process, with all involved seeking to arrive at objective and sustainable findings and conclusions. I turn to the alterations which can now be seen to have been made between the original draft and the final report. The General Conclusions, to which Sheridans rightly attached importance in their note dated 13 March 2009 (para 21 above), are now available in both their draft and their final form in the executive summary. A fundamental point which risks being overlooked in discussion about differences elsewhere in the executive summary or body of the text is that the General Conclusions can now be seen to have been in identical terms in both their draft and their final versions. Their terms have been set out in para 12 above. They represent the critical conclusions, on which the majority in the House of Lords relied as justifying the Secretary of States decision to make the 2004 Constitution Order, and they were unaltered between the original draft and final versions. following section headed Vulnerability: Immediately preceding these General Conclusions also appeared the There appear to be sufficient groundwater, soils, fisheries, and environmental (eg limited tourism) resources to support a small population on a subsistence basis with some commercial opportunity, but there are some more fundamental issues surrounding the feasibility of resettlement. These relate to the vulnerability of a resettled population to current and predicted climatic conditions, and the fragility of the environment to human induced disturbance. Under the present climate, it is assumed, based on historic meteorological patterns and observations, that the islands are already subject to regular overtopping events, flooding, and erosion of the outer beaches. As global warming develops, these events are likely to increase in severity and regularity. In addition, the area is seismically active, and the possibility of a tsunami is a concern. These events would threaten both the lives and infrastructure of any people living on the islands. Whilst it might be possible to protect the islands to some extent in the short term through coastal defence measures, it is likely to be cost prohibitive and non pragmatic to consider this form of defence in the long term. The environment of the Chagos Archipelago is highly diverse and yet very susceptible to human disturbance. Coral reefs, which are one of the most important ecosystems within the Archipelago, are already exhibiting signs of stress from increased sea surface temperatures and other climatic phenomenon. Predictions from climate change experts indicate that mass mortality of reef building corals in the Indian Ocean is likely to occur as global warming increases, may be as soon as within the next 20 years. This will not only have huge implications for the long term coastal defence of the islands, and hence their very existence, but will also adversely affect livelihoods, particularly fisheries and tourism, which are likely to be the mainstay of any resettled population. Human interference within the atolls, however well managed, is likely to exacerbate stress on the marine and terrestrial environment and will accelerate the effects of global warming. Thus resettlement is likely to become less feasible over time. Again this passage was in identical form in the draft and final stage 2B report, and, as the Analysis Note acknowledges, it constitutes the basis for the overall negative assessment in the General Conclusions. The identity of these core sections of the Executive Summary in the draft and final reports raises obvious problems for the present application. But it is said that these key sections refer back in turn to section 1.8. It is in section 1.8 that the summary note dated 15 February 2015 identifies in total four key amendments. The following passages underlined and marked A, B or C in the following extracts from the draft report are passages on which Mr Bancoult relies in support of his case of inappropriately motivated or influenced alteration: 1.8 CLIMATE CHANGE The reports of the International Panel on Climate Change were evaluated to determine the latest projections on climate change. Global sea levels are expected to rise by about 38cm between 1990 and the 2080s. Indian and Pacific Ocean islands face the largest relative increase in flood risk. Although there will be regional variation, it is projected that sea level will rise by as much as 5mm per year, with a range of 2 9mm per year, over the next 100 years [B]. With a rise of 0.5 metres in sea level, the implications of climate change on the Chagos Archipelago are considerable, given that mean maximum elevation of the islands is only two metres; the diversity of livelihoods available is limited; and the relative isolation and exposure of the islands to oceanic influences and climatic events. These implications are discussed in the light of biodiversity and resettlement. 1.8.1 Implications for Biodiversity The impacts of climate change on highly diverse and productive coastal ecosystems such as coral reefs and atoll islands will depend upon the rate of sea level rise relative to growth rates and sediment supply. In addition, space for and obstacles to horizontal migration, changes in the climate ocean environment such as sea surface temperatures and storminess as well as human pressures will influence the capacity of ecosystems to adapt to the impacts of' climate change. [Two paragraphs dealing with coral bleaching and reefs] Species that occupy terrestrial habitats for all or part of their life cycle, such as birds, turtles and coconut crabs, will also be adversely affected by sea level rise. There is considerable uncertainty about how climate change will affect the natural environment in the Chagos Archipelago, but that the outcome is likely to be an unfavourable shift in biodiversity. 1.8.2 Implications for Resettlement The most significant and immediate consequences of climate change on a resettled population within the Chagos Archipelago are likely to be related to changes in sea levels, rainfall regimes, fresh water resources, soil moisture budgets, prevailing winds (direction and speed) and short term variation in regional and local patterns of wave action. At present, the Chagos Archipelago lies just north of an active cyclone belt, however, a small northward shift of this belt could lead to frequent cyclones in the area [A]. This would lead to more frequent flooding of the islands, with corresponding risk to life and any infrastructure. It would also reduce agricultural potential and the freshwater contained within the island aquifers would experience higher levels of salinity. Irrespective of whether the Chagos Archipelago becomes subjected to regular cyclones, the general increase in storminess that may accompany climate change would result in increased wave energies and an increasing frequency of over topping events [C]. Based on a 0.5m rise in sea level scenario, models of overtopping events demonstrate an increase of between 20 50% of the frequency of severe events. Of further significance is the probability that sea level rise and overtopping events would threaten the characteristics and sustainability of the fresh groundwater lens. The rate of erosion of the ocean coasts are likely to increase with sea level rise andincreased storminess, and would be accompanied by an increase in sediment transport, which would have implications for shoreline infrastructure. On islands where physical space is limited, as in Chagos, coastal defences are likely to be low key and would need to be developed with a view to sustainability. It is advised that future settlers on the outer atolls should be made aware of the risks of climate change in terms of their own safety and that of any physical investment. Should people wish to return, it would be prudent to provide specialist assistance in the preparation of appropriate and sustainable land use and coastal defence policies, which would ensure that the vulnerability of the resettled population was minimised as far as possible. In the final stage 2B report, section 1.8 of the executive summary reads as follows. Again, the passages underlined and marked A, B and C are passages on which Mr Bancoult relies in support of his case of inappropriately motivated or influenced alteration: CLIMATE CHANGE According to the International Panel on Climate Change global sea levels are expected to rise by about 38cm between 1990 and the 2080s. Indian and Pacific Ocean islands face the largest relative increase in flood risk. Although there will be regional variation, it is projected that sea level will rise by an average of 5mm per year over the next 100 years [B]. The implications of these predictions for resettlement of the Chagos Archipelago are considerable, given that mean elevation of the islands is only two metres. The most significant and immediate consequences of climate change for the Chagos Archipelago are likely to be related to changes in sea level, rainfall regimes, soil moisture budgets, prevailing winds, and short term variation in regional and local patterns of wave action. As a consequence, most islands will experience increased levels of flooding, accelerated erosion, and seawater intrusion into freshwater sources. The extent and severity of storm impacts, including storm surge floods and shore erosion are predicted to increase [A]. Although the risks associated with climate change are not easily established the implications of these issues to resettlement of the outer atolls of the Chagos Archipelago are outlined briefly below. Implications for water resources: Rising sea level would not have a significant effect on island freshwater lenses in the Chagos archipelago unless land is lost by inundation. If rising mean sea level causes land to be permanently inundated, then there will be a consequent loss in fresh groundwater. Increased storminess [C]: The Chagos islands have a small storm surge envelope thus even small changes in sea level and storm surge height implies an increase in the area threatened with inundation. It has been predicted that the flooding severity for a 1 in 50 year storm event with 0.5m of sea level rise is almost as high as the present day 1 in 1000 year event. Inundation can cause seawater intrusion into freshwater lenses. This not only reduces the availability of water for human consumption, but if salinity concentrations are high enough it can lead to decreased agricultural production. Biological systems and biodiversity: Climate change is predicted to have a significant impact on the marine and terrestrial environments of the Archipelago. Coral reefs are one of the most important ecosystems likely to be affected, and their ability to cope will depend upon the rate of sea level rise relative to their growth rate. The Chagos coral reefs were severely affected by the 1998 El Nino event, therefore any future sea surface warming would increase pressure on already stressed coral reefs. The added pressure of human interference within the marine environment would further weaken the ability of these systems to cope with climate change. Fisheries and aquaculture: It is predicted that climate change may have a severe impact on the abundance and distribution of reef fish populations. In addition, there is strong evidence of a correlation between the annual incidence of ciguatera (fish poisoning) and local warming of the sea surface, which will have an impact on fisheries potential, for subsistence and commercial purposes. Climate change is expected to have both positive and negative impacts on aquaculture; but the implications for seaweed farming (as investigated during this study) is not positive, with increased temperatures leading to reductions in productivity [D]. Human health, settlement and infrastructure: Populations, infrastructure and livelihoods are likely to be highly vulnerable to the impacts of climate change. Sustainability in food and water availability will be among the most pressing issues, together with the vulnerability of infrastructure to flooding and storm surges. Vulnerability and adaptation: There is a wide range of adaptation strategies that could be employed by a resettled population in response to climate change. Integrated coastal management has been strongly advocated as the key planning framework for adaptation. Adapting to island instability: There are two issues that need to be taken into account in adapting to island instability: shoreline erosion and sediment inundation of the island surface. Adaptation can fall within three broad categories depending on the level of infrastructure and population density on islands: no response; accommodation (infrastructure and dwellings are replaced at a rate commensurate with island migration); or protection (maintenance of infrastructure through coastal protection measures). The latter is likely to be the most costly strategy, and should be avoided through wise land use planning. Adaptation to inundation: Response to inundation will vary depending on the level of development on islands. On islands that will have little infrastructure, as is likely to be the case in Chagos, the costs to protect against inundation are likely to be prohibitive. Adaptation measures will include siting of infrastructure in low risk areas and the application of appropriate infrastructure designs, such as revised floor levels and open structures. More robust measures to prevent inundation, such as seawalls, are not recommended as they necessitate costly maintenance and future vertical extension as sea level rises, and they can lead to adverse impacts on coastal habitats. Adaptation to reef response: Discussion of the possible response of coral reefs to sea level rise indicates that at worst reef food and sediment resources diminish and at best they are maintained at similar levels or may even increase. The importance of reefs as both natural coastal protection structures and providers of food means that any adaptation measures against climate change, and any human livelihood activities, should not compromise the health of the reef system. Minimising adverse effects on reefs will require robust pollution control measures and effective waste management. From an examination of projected climate change scenarios, it is likely that the Chagos Archipelago, and any population settled on the outer atolls, will be vulnerable to its effects. The main issue facing a resettled population on the low lying islands will be flooding events, which are likely to increase in periodicity and intensity, and will not only threaten infrastructure but also the freshwater aquifers and agricultural production. Severe events may even threaten life. Increases in sea surface temperatures are likely to have adverse effects on coral reefs and consequently their ability to act as a coastal defence to the islands, and to support fisheries. This will place more pressure on resettled populations to not only counteract the pressures of climate change but also to ensure that their subsistence and income needs are met. The key amendments relied upon therefore fall under four heads. It is worth emphasising their limited extent in the overall context of the report, and particularly in the light of the unaltered General Conclusions and Vulnerability sections. Whatever the suggestion whether it is that the alterations were the product of undue executive influence or that they in some way demonstrate that the final report was unreliable or that the Secretary of State would have reached a different decision regarding the making of the 2004 Constitution Order if he had only been shown the draft rather than the final report the limited extent of the alterations in the overall context of the report points to my mind sharply against giving it credence or weight. However, I must also examine the amendments more closely. Taking first the change identified at [A] the main criticism is that The effect of this change is to delete from the feasibility study the important fact that the Chagos Islands are not within the cyclone belt at present, but to the North of it. There is no information anywhere in the Phase 2B study to indicate that (1) the cyclone belt has moved, either northward or in any other direction, in the past; or (2) that it is likely to move in the future; or (3) that if it were to move it would move closer to the Chagos Islands as opposed to moving further away from them. This is not however correct. Both the Gifford/Dunne Analysis Note and Mr Jennesss report demonstrate that the passage removed from the draft executive summary remained in the body of the report: see E1330, citing passages from Part III which set out the same information as appeared in the draft about the effect of a small shift north in the cyclone belt. A second criticism addressed to the change at [A] relates to the addition of new sentences stating that As a consequence [of climate change], most islands will experience increased levels of flooding, accelerated erosion, and seawater intrusion into freshwater sources and that The extent and severity of storm impacts, including storm surge floods and shore erosion are predicted to increase. For the latter, it is said, There is no factual basis and it is not supported by a close reading of the body of the report. As to this, two points arise. First, both the draft and the final reports start by stating that the most significant and immediate consequences of climate change for the Chagos Archipelago are likely to be related to changes in sea levels, rainfall regimes, soil moisture budgets, prevailing winds and wave action. The statements in the final version that As a consequence most islands will experience increased levels of flooding, accelerated erosion, and seawater intrusion into freshwater sources and that the extent and severity of storm impacts, including storm surge floods and shore erosion are predicted to increase follow unsurprisingly from this initial sentence. Second, as to the criticism of lack of evidential support, no basis appears for doubting that these statements were fully endorsed, and if anything regarded as understated, by Dr Sheppard. Dr (now Professor) Sheppard was at the time Head of Biological Sciences at Warwick University, and was (unlike Mr Jenness, who was a resettlement anthropologist) an acknowledged expert on climate change and marine science in general and on BIOT in particular. He supported Posfords conclusions in this area and believed that they were, if anything, understated: see eg E2409, where on 14 May 2002 he commented on the draft report: Oceanographic, climate, groundwater and soils sections are scientifically sound (with some queries and revisions suggested). These broadly show that development in the islands is not sensible, long term nor sustainable (and may even become dangerous) for the first two development scenarios. See further E2461, where on 31st May Dr Sheppard noted, in relation to rainfall and recharging of the lenses and in view of changes to future rainfall projected by the Hadley Centres website, that the consequences to sustainable settlement numbers could be considerable; and E2519 to E2523 where in October 2002 he responded to Mr Jennesss criticisms of the final version, stating, in particular, that past lack of flooding, lack of erosion, steady temperature, are no guide at all to conditions from now on and that our climatic entry into the unknown is difficult to accept for those who are unversed in such matters, as seems to be the case with Jenness. (E2519) Dr Sheppard went on (E2520): The climate modelling section, which is the part which most effectively supports the notion that resettlement will be hazardous is the most criticised by Jenness. In fact the model is pretty rigorous and is probably correct. It does miss some detail, but its general tenet is almost certainly, unhappily for the Chagos islands, quite accurate, and fits well with climate modelling and predictions from many other sources. Again, Jenness is unaware just how much change is forecast. (If he is aware, he is writing propaganda, not a scientific critique.) If anything, it is clear that Dr Sheppard thought that Posford should have gone further. Thus at E2463 he is recorded as having advised on 31 May 2002 that following should be further addressed or resolved in the final report, viz Effects of sea level rise on the boundaries or depths of the lenses, especially in islands whose central parts are near sea level (two islands were levelled and this could be usefully incorporated). Posfords response was that The effects of sea level rise on the groundwater systems was not in the TOR for the groundwater section. As a further example, commenting on Mr Jenness views at E2522, Dr Sheppard records: Cyclones and Earthquakes Posford do go on a lot about cyclones and earthquakes, which is validly criticised by Jenness. Whatever weather changes will occur, cyclones (and certainly earthquakes) are not expected to change at all. Jenness is correct to say that Posford went overboard unjustifiably on this. (Posford should as was recommended to them have made more on sea level rise and warming, which is touched on, and would have been unassailable.) Dr Sheppards view about cyclones quite probably led to the removal of the reference to cyclones from the executive summary to the body of the text. The final bracketed sentence also speaks against any idea that Posford were engaged in a whitewash, or that the consultants were not acting independently. Dr Sheppard went on (E2522): Erosion and overtopping Jenness says that there is no need to defer any plans (for resettlement) before rates of island erosion are established. That is plain daft, unless all constructions are moveable. Jenness says that lack of overtopping damage in the past means that estimates of increased overtopping in future are exaggerated. The climate is changing, and the past is now no guide to the future in this respect. Jenness acknowledges elsewhere that climate change is occurring and that things may get worse. But he says that this is no reason to not develop. All that is needed is that development should use careful land use planning and management with strong components for costal management and reef health. What does he mean? This sweeps a huge issue (the issue) under the carpet. The only land which will be above projected flooding is a rim around part of most islands. He says it should not preclude resettlement of the Chagos in a prudently planned fashion. Where? A final quotation from Dr Sheppard reads (E2524): Jenness has much to say about the omissions on health, economics etc. Some are valid. But he really should go and stand on one of the islands, holding a copy of the islands profile above sea level, before he says Land loss may be inevitable and should be planned for. Loss of groundwater can be planned for . and . can be managed with modest investment. This may be true for, say 20 years. But beyond that we are talking here not about a little loss of a beach, but possibility of broaching of the rims and flooding of large inland areas. The upshot is in my opinion that there is no basis for regarding as suspicious or actually or potentially significant in any way either (a) the removal in the final version of paragraph 1.8 of the reference to the possibility of a small northward shift of the cyclone belt or (b) the inclusion of (i) a reference to increased levels of flooding, accelerated erosion and seawater intrusion into freshwater sources or (ii) the predicted increase in severity of storm impacts, including storm surge floods and shore erosion. I can take the other three key amendments, [B], [C] and [D] quite briefly. The first, a change in respect of future sea water level rises from a range of 2 9mm per year to an average of 5mm a year cannot conceivably be sinister or significant, or, if it had been known to or focused on by any decision maker, have led to a change in any ministerial decision. The second is a complaint that the draft executive summary referred to the general increase in storminess that may accompany climate change (E2397) while the final executive summary contained a paragraph starting Increased storminess (E2498). The Summary Note does not record that the latter paragraph continues the Chagos islands have a small storm surge envelope thus even small changes in sea level and storm surge height implies an increase in the area threatened with inundation. To my mind, there is therefore nothing in the difference. But, if there is, it is clear from Dr Sheppards views, already set out, that he would support the reported threat. The third and last point relates to a new paragraph noting that it is predicted that climate change may have a severe impact on the abundance and distribution of reef fish populations (E2499). The complaint is that the body of the report is expressed in more nuanced terms. Again, it is clear that Dr Sheppard took a clear view of the likely effects of climate change, and there is no reason to suspect that the final version represented anything other than a genuine prediction. Any difference in nuance should also have been apparent and, whether or not so, cannot conceivably support an argument that the minister acted irrationally in making the Orders he did on the basis of the final report. Heads (ii) and (iii) These two heads face in opposite directions. Both aim at undermining the stage 2B report. But head (ii) does so by relying on Dr Sheppard and his alleged endorsement of criticisms by Mr Jenness, the resettlement anthropologist instructed on behalf of Mr Bancoult to consider the stage 2B report in autumn 2002, while head (iii) suggests that Dr Sheppards input into the stage 2B report lacked objectivity and was unreliable. As to the latter suggestion, the applicant has through his representatives been prepared for a long time to cast wide ranging aspersions on a large number of people, including Dr Sheppard. But I do not think that they are made good, and that includes the suggestions that Dr Sheppard allowed his interest in preserving coral reefs to influence the advice he gave government. On the contrary, Dr Sheppard comes across in the material as a forthright and very independent character, not hesitating to comment bluntly on those working for government or for the applicant: see eg his email of 14 May at E2406, comments of 14, 30 and 31 May 2002 set out or reported at E2409 2422, E2450 2451 and E2460 2464 and further comments on Mr Jenness (some cited above) at E2518 2525. I also see no basis for regarding the stage 2B report as unreliable or for treating reliance on it as irrational in 2004, simply because Dr Sheppard had been the sole outside reviewer instructed by the executive, in addition to Mr Little, who had been appointed as FCO Feasibility Study Project Manager. As to the former suggestion, although Dr Sheppard agreed with aspects of Mr Jennesss report, it is apparent from his comments on that report which I have already set out that he disagreed fundamentally with any suggestion that Mr Jennesss report undermined the conclusions in the stage 2B report, and that he would himself have gone, if anything, further in discounting the risks of climate change that underlay those conclusions. Conclusion relating to the Rashid documents The essential issues, as summarised in Mr Fitzgerald QCs speaking note, are (i) whether due disclosure of the Rashid documents would have led to a challenge by Mr Bancoults representatives to the stage 2B report in the original judicial review proceedings, and, if so, (ii) whether it is likely that such a challenge would have resulted in a different outcome in the House of Lords on the rationality of the removal by the 2004 Constitution Order of the right of abode. The two questions are of course inter connected, since any decision whether or not to challenge the stage 2B report would have depended on an assessment of the prospects of such a challenge succeeding. As to the first question, some caution is in my view required before accepting outright the submission that it is certain that there would have been such a challenge. Mr Bancoults advisers had in December 2005 had disclosure of Mr Hamiltons extensive letter dated 23 May 2002 evidencing the nature of the FCOs involvement in and input into the process of re drafting and finalisation of the report (see paras 20 and 37 38 above). Mr Bancoults solicitors felt able, from January 2006 onwards, to make serious allegations about lack of independence of the stage 2B report as well as about allegedly significant alterations between the draft and final versions of the preliminary study from January 2006 onwards (see eg E1472 and E1487). Yet, at the same time, the applicant through Sydney Kentridge QC was expressly disclaiming before the Divisional Court any challenge to the study or its outcome: see E1482. Mr Bancoults advisers did not at that stage think they could or should even try to overcome the first hurdle. Further, they maintained this attitude for years, including after disclosure in October 2010 of the email dated 29 May 2002 (paras 21 and 39 40 above), despite continuing to make serious allegations in correspondence of lack of independence and invalidity. For present purposes, I am however prepared to assume without deciding that a challenge would have been made, and to proceed directly to a consideration of the second. In Mr Fitzgeralds formulation, that is whether it is likely that such a challenge would have resulted in a different outcome but in my judgment it makes no difference ultimately whether the test should be formulated at the slightly higher level of a requirement to show a probability that it would have done so or at the perhaps slightly lower level of whether it may well have done so. The second question reduces itself ultimately to a question whether it is probable or likely, or whether it may well be, that the material now available would have led the court (at whichever level the case was being considered) to conclude that it was irrational or unjustified for the Secretary of State to accept and act on the General Conclusions set out in the stage 2B report. Those were the General Conclusions on which the Secretary of State acted when making, and which the majority in the House of Lords regarded as justifying his decision to make, section 9 of the 2004 Constitution Order. In addressing this question, I proceed on the basis that it is necessary and appropriate to treat the Secretary of State, when deciding in June 2004 whether to make section 9 of the 2004 Constitution Order, as having available to him or within his knowledge all the contemporary material which in fact existed in the possession of the executive. That includes the draft report and all the exchanges taking place and advice received in the process of its redrafting and finalisation. Is it either probable or likely, or may it well be, that the court would have concluded that the material now shown to have been within the executives possession or knowledge at the relevant date in June 2004 undermines the rationality or justifiability of the Secretary of States decision to rely on such Conclusions? The answer in my opinion is clear. The General Conclusions, and the section on Vulnerability immediately preceding them remained unaltered from the draft to the final stage 2B report. There is no probability, likelihood or prospect (and, for completeness, in my view also no real possibility) that a court would have seen or would see, in the process of preparation, re drafting and finalisation of the stage 2B report and in the associated material which can now be seen to have existed, anything which could, would or should have caused the Secretary of State to doubt the General Conclusions, or which made it irrational or otherwise unjustifiable to act on them in June 2004. On that basis, the application to set aside the House of Lords judgment by reference to the Rashid and other documents disclosed late must fail. Additional evidence The first head consists of the Analysis Note. This, as its name indicates, consists essentially of an analysis of primary material and/or submissions on it. Its development has taken place over years starting originally it seems as early as 2006 and continuing up to at least 2012. We have it in various forms. It is not conceived or presented as evidence, though I have taken its contents into account in considering the parties respective cases and submissions on the material which is admissible and relevant. The second head consists of information provided by Mr Stephen Akester, who, after their chance meeting, wrote to Mr Gifford a letter dated 11 February 2011 explaining the role of his company, MEP, as a sub contractor to Posford. MEP was principally concerned with water resources and fisheries, and organised the site visit to the Chagos in early 2001. Mr Akester explains that his own experience was in regional development. In his letter, Mr Akester said that after the site visit, MEP reported and it appears provided Posford with the three development scenarios, after which Posford and he had no further involvement. But he explained: Because I and our team considered that resettlement was feasible, I prepared a draft of the different levels of development that would be appropriate to support such resettlement, given the fragility of the islands and bearing in mind that there had, in contravention of the normal practice of consulting potential settlers, been no consultation with the Chagossians themselves (this was excluded from our terms of reference). After submitting our report via PH to BIOT, I was surprised that we heard nothing further concerning the text of it either from PH or from BIOT. I was not invited to any further meetings with BIOT, did not receive any draft prior to its critique by BIOT on 23 May 2002, and heard nothing more about the terms of the report until the final Executive summary had been approved by BIOT and sent to me. By then, it was of course too late to make any further comments. We were therefore unable to modify the terms of the General Conclusion which I find to be wrong in its claim that resettlement involves obstacles which cannot be overcome by reasonable measures. Such issues are inherent in small island development and are regularly resolved within reasonable cost parameters. That Posfords sub contractor may have disagreed with conclusions drawn by Posford is a matter outside any conceivable sphere of information or knowledge that the Secretary of State or executive may be treated as having had at any material time. The material is thus correctly analysed as potential fresh evidence. But fresh evidence going to what issue? The ultimate issue is whether the Secretary of State was justified in acting as he did on the material which was or should have been available to him at the time, not whether his decision could be justified on a revisiting of the whole issue of resettlement in the light of any other material which either party could adduce now. In any event, the views expressed by Mr Akester in the letter dated 11 February 2010 cannot meet the test, however relaxed the terms in which this might be expressed, for setting aside the House of Lords judgment, even if they were material to any issue. I say this quite apart from the fact that, despite complaints regarding suggested lack of independence, no step was taken to set aside that judgment in the years following receipt of such letter, until after the Rashid documents had been disclosed. The third piece of evidence is a further review of the report, prepared for the applicant by Professor Paul Kench of the University of Auckland dated 5 October 2012. According to the applicants case: He concludes that not only were the findings of the ocean and coastal processes section in the feasibility study unsound, because of lack of specialist understanding and methodological flaws, but also that the relevant summary (section 1.6) in the Executive Summary was not supported by those findings. This conclusion casts grave doubt on the pivotal findings of the feasibility study with regard to increased risk of sea water flooding, which influenced the decision of the majority in the House of Lords Like the information in Mr Akesters letter, this material does not go to any issue relevant to the question whether the Secretary of State acted rationally in the light of the material to be treated as available or within his or the executives knowledge in June 2004. It would be relevant if the issue were whether the conclusions in the stage 2B report were sustainable today. But that is not the issue. I add for completeness that I am also unpersuaded that any good reason has been shown for not obtaining such an experts report at any time prior to the disclosure of the Rashid documents, having regard to the serious allegations of inadequacy and lack of independence of the report that were being made at such time, both before and after receipt of Mr Akesters letter dated 11 February 2010. The fourth piece of evidence is Posfords memorandum dated 7 March 2002, the information in which I am, for reasons already explained, prepared to take into account as material within the executives knowledge, but which does not persuade me that there is any basis for setting aside the House of Lords judgment. Other relevant considerations There is one other factor, which would have been both relevant and in my opinion decisive, had I reached a conclusion that the threshold test for setting aside was or might otherwise have been satisfied. The applicant submits that nothing other than a reversal of the House of Lords decision (in so far as it proceeded on the basis that the stage 2B report could be relied on) will overturn the constitutional bar on their return to the Chagos. But there has been a new 2104 2015 feasibility study, published by KPMG in March 2015, which assesses the risks differently from the prior report and finds that, at some cost and taking into account (for the first time) the possibility of resettlement on Diego Garcia itself (E925 926), there would be scope for supported resettlement: see E917 918. In practical terms, the background has shifted, and logically the constitutional ban needs to be revisited. As Mr Steven Kovats QC expressly accepted during oral submissions, it is open to any Chagossian now or in the future to challenge the failure to abrogate the 2004 Orders in the light of all the information now available. That is in my opinion a factor militating strongly against the setting aside of the House of Lords judgment and ordering a rehearing either of the whole appeal or of the limited issue whether it was rational for the Secretary of State to make the 2004 Constitution Order in the light of the material available to him or the executive generally in 2004. Even the latter issue could lead to further lengthy litigation and, quite possibly, a completely fresh hearing at first instance about a factually superseded study report. There has been a yet further development consisting of the declaration by the Secretary of State on 1 April 2010 of the Marine Protected Area (MPA) in the high seas surrounding the Chagos Islands. That declaration is the subject of a challenge by Mr Bancoult by way of judicial review in Bancoult (No 3). The challenge failed before the Divisional Court on 11 June 2013, [2013] EWHC 1502 (Admin), and before the Court of Appeal on 23 May 2014, [2014] EWCA Civ 708. It is now the subject of a combined application to the Supreme Court for permission to appeal and for a protective costs order without which it is said that it will not be possible to pursue any appeal. The Secretary of States notice of objection dated 6 February 2015 in respect of this application supports the Court of Appeals statement that the MPA (the only practical effect of which according to the Divisional Court was to prohibit commercial fishing in BIOT waters) had no meaningful or real effect at all on the economic, cultural or social development of BIOT, basically because there never had been commercial fishing there and there is no resident population in BIOT outside the US naval defence facility. Having said that, the notice goes on to state that: The MPA does not preclude resettlement in the event that Her Majestys government concludes that it is appropriate to permit and/or support resettlement of the islands. Whilst that decision is being considered in the light of an ongoing Feasibility Study commenced in January 2014 (and expected to be the subject of an imminent report by a panel of experts), the possibility of commercial fishing within the BIOT by a resident population is not realistic without resettlement and without a resident population. The Court of Appeal was right to note that it was therefore the prohibition on residential settlement on the BIOT which directly impacted upon the economic, social and cultural development of the BIOT. But that was not the decision that was under challenge in Bancoult (No 3). That decision was unsuccessfully challenged in Bancoult (No 2), culminating in a decision of the House of Lords These passages confirm that resettlement is not precluded by the MPA, if the outcome of the new KPMG feasibility study of the ensuing public consultation on resettlement options, and of the ongoing governmental policy review persuades the government that it is appropriate to permit and support resettlement. If the outcome of that study, consultation and review does not persuade the government, then Mr Bancoult will be able, in principle, to apply to challenge the governments refusal to permit and/or support resettlement as irrational, unreasonable and/or disproportionate, whichever may in context be the right test, by way of judicial review. If the MPA does prove to prejudice or limit the prospects of resettlement or the nature of any resettlement that may be permitted by the government or on judicial review by the Court, that will be a result of the MPA, which can only be avoided or removed by a successful challenge in the Bancoult (No 3) proceedings. Conclusion For all the reasons I have given, this application to set aside the House of Lords judgment and to direct a rehearing of the appeal to the House of Lords in Bancoult (No 2) fails in my opinion and must be dismissed. LORD CLARKE: I am in many ways sympathetic to the case advanced by Mr Bancoult. Indeed, I was a member of the Court of Appeal which decided the appeal in his favour. In these circumstances it is not perhaps surprising that I much prefer the reasoning of the minority to that of the majority in the House of Lords. It is however common ground that the question now before the court is not whether the majority were correct but whether the issue should be re opened. I have read the judgments of Lord Kerr and Lady Hale on one side and of Lord Mance, supported by Lord Neuberger, on the other. I have reluctantly concluded that Lord Mances analysis is to be preferred and that the application should be refused for the reasons he gives. One of the factors which has led me to that conclusion is that, as I see it, that is not the end of the road. I agree with Lord Mances conclusion in para 72 that there is a critical factor which is in any event conclusive. The background to much of the debate between the parties had been the feasibility of the Chagossians returning to the Chagos Islands. The 2014 2015 feasibility study considers, among other things, the possibility of resettlement on Diego Garcia. Given that new factor, the study concludes that there would be scope for supported resettlement. As Lord Mance puts it, the background has now shifted and logically the constitutional ban needs to be revisited. The outcome of the new (and ongoing) feasibility study will no doubt consider the prospects of resettlement. In the light of the results of the study the government will no doubt consider whether it is (as Lord Mance puts it at para 75) appropriate to permit and support resettlement. It was expressly accepted on behalf of the government that it will be open to any Chagossian to challenge the failure to abrogate the 2004 Orders in the light of all the information which is now available or becomes available in the light of the ongoing study. For example, it will, at any rate in principle, be open to Mr Bancoult to institute judicial review proceedings to challenge any future refusal of the government to permit or support resettlement as, in Lord Mances words irrational, unreasonable or disproportionate. In all these circumstances I do not think that it would be right now to set aside the judgment of the House of Lords and to direct a rehearing. It would be disproportionate to do so without having regard to the new circumstances taking into account the possibility of resettlement on Diego Garcia. LORD KERR: (dissenting) (with whom Lady Hale agrees) Introduction The Chagos Islands are in the middle of the Indian Ocean. Since the early 19th century they had been part of the British colony of Mauritius but they were detached from that country before Mauritius gained its independence in 1968. The islands consist of a group of coral atolls. The largest of these, Diego Garcia, has a land area of approximately thirty square kilometres. To the north of this are Peros Banhos (thirteen square kilometres) and the Salomon Islands (five square kilometres). In 1962 a Seychelles company acquired the coconut plantations on these three islands. The gathering of coconuts and the extraction and sale of the copra or kernel from them was the main form of employment for the inhabitants. After the acquisition of the plantations, it appears that the company exercised a paternalistic, even feudal, control of the islands affairs. Company officers acted as justices of the peace and generally administered most aspects of civilian life. Partly as a consequence of that, Chagossians had what might be considered to be a simple existence. They were largely illiterate and their skills were confined to those that the activities on the islands required. But it was an existence which they valued and, especially when contrasted with what transpired after 1971, one which was unquestionably worthwhile. Apart from indigenous inhabitants, some workers on the plantations came from Mauritius and the Seychelles. But the settled population of the three islands was some 1,000 in 1962. Many of the families which comprised that population had lived in the islands for generations. Their living conditions, although not at all affluent, were far from deprived. Every family had a house and some land. They grew vegetables on the land and kept poultry or pigs to supplement the imported provisions which the company supplied. Some fishing also took place. All who wanted to have and were capable of employment had a job. This was principally in the copra industry but employment was also to be had in construction, boat building and domestic service. The Chagossians therefore enjoyed what Lord Hoffmann (in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No2) [2009] AC 453) described as a rich community life. World affairs were soon to interrupt that simple but rich community life. Events are well described in para 6 of Lord Hoffmanns speech: Into this innocent world there intruded, in the 1960s, the brutal realities of global politics. In the aftermath of the Cuban missile crisis and the early stages of the Vietnam War, the United States felt vulnerable without a land based military presence in the Indian Ocean. A survey of available sites suggested that Diego Garcia would be the most suitable. In 1964 it entered into discussions with Her Majestys government which agreed to provide the island for use as a base. At that time the independence of Mauritius and the Seychelles was foreseeable and the United States was unwilling that sovereignty over Diego Garcia should pass into the hands of an independent, non aligned government. The United Kingdom therefore made the British Indian Ocean Territories Order 1965 (the BIOT Order) which, under powers contained in the Colonial Boundaries Act 1895 (58 & 59 Vict c 34), detached the Chagos Archipelago (and some other islands) from the colony of Mauritius and constituted them a separate colony known as In 1966, in an exchange of notes between the British and United States governments, the United Kingdom agreed in principle to make BIOT available to the United States for defence purposes. Later in the same year it was agreed that a military base on Diego Garcia would be established and that the United States would be allowed to occupy the other islands if they wished. In 1967, the UK government bought all the lands held by the Seychelles company. Although the company was granted a lease which allowed it to continue to run the coconut plantations, it was stipulated that this would come to an end whenever the United States needed the islands. In 1970 the US government gave notice that it would need Diego Garcia in July 1971 and, acting under powers granted to him by the British Indian Ocean Territories Order 1965, the Commissioner for BIOT promptly made the Immigration Ordinance 1971. It provided (in section 4(1)) that no person shall enter the territory or, being in the territory, shall be present or remain in the territory, unless he is in possession of a permit [issued by an immigration officer]. Even before the making of this Ordinance, the UK authorities were active in preparing for the occupation of Diego Garcia by the United States. Between 1968 and 1971 they secured the removal of the inhabitants of the island, mainly to Mauritius and the Seychelles. A small population remained for a short time on Peros Banhos and the Salomon Islands, but they too were evacuated by the middle of 1973. The islanders were told that the company was closing down its activities and that unless they accepted transportation elsewhere, they would be left without supplies. In effect, therefore, although they were not forcibly removed, they were given no choice but to leave their homes. The Chagossians were resettled mainly in Mauritius. There they were largely left to their own devices. Since that country suffered high unemployment and considerable poverty, the conditions in which the displaced Chagossians were required to live, principally in the slums of St Louis, were miserable and squalid. It is now beyond question that their interests had not been considered by the British authorities to any extent. Indeed, one might say that the removal of the Chagossians from their homes was cynically engineered by ensuring that the Seychelles company could no longer continue its commercial activities and that the inhabitants means of livelihood was thereby brought to an inevitable end. As Lord Hoffmann put it (in para 10 of his speech), the removal and resettlement of the Chagossians was accomplished with a callous disregard of their interests. Legal proceedings In 1975 proceedings were issued by a former inhabitant of Diego Garcia, Michael Vencatessen, against the Foreign Secretary, the Defence Secretary and the Attorney General. Damages were claimed for intimidation and deprivation of liberty associated with the circumstances in which he had been required to leave Diego Garcia. In negotiations between the UK government and Mr Vencatessens advisers, the latter were treated as acting on behalf of all the Chagossians. An initial purported settlement of the claim failed to win the approval of the Chagossian community and negotiations resumed in which the Mauritius government was also involved. Finally in July 1982 it was agreed that the UK government would pay 4m into a trust fund for the Chagossians, set up under a Mauritian statute. The agreement was signed by the two governments in the presence of Chagossian representatives. It provided that individual beneficiaries should sign forms renouncing all their claims arising out of their removal from the islands. The vast majority of the displaced persons signed. Matters did not end there. On 30 September 1998 Mr Bancoult applied for judicial review of the Immigration Ordinance 1971 and a declaration that it was void because it purported to authorise the banishment of British Dependent Territory citizens from the Chagos Islands. He also sought a declaration that the policy which prevented him from returning to and residing in the territory was unlawful. The UK government reacted to these proceedings by commissioning an independent feasibility study to examine whether it would be possible to resettle some of the Chagossians on Peros Banhos and the Salomon Islands. Return to Diego Garcia was regarded as unfeasible because, under the arrangements made with the UK government, the United States was entitled to occupy that island until 2016 at least. On 3 November 2000 the Divisional Court (Laws LJ and Gibbs J) gave judgment in favour of Mr Bancoult: R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs [2001] QB 1067 (Bancoult (No 1)). An order was made quashing section 4 of the Immigration Ordinance 1971 as ultra vires. The government did not appeal this decision. Instead the Foreign Secretary issued a statement in which he referred to the feasibility study, Phase 2 of which was, he said, well under way. As a result of the courts judgment, the statement said, the feasibility of resettling the Chagossians took on a new importance and a new Ordinance allowing them to visit the outer islands would be made. On the same day that the statement was issued, the commissioner revoked the 1971 Immigration Ordinance and made the Immigration Ordinance 2000. This largely repeated the provisions of the previous Ordinance but contained a new section 4(3) which provided that the restrictions on entry or residence imposed by section 4(1) should (with the exception of Diego Garcia) not apply to anyone who was a British Dependent Territories citizen by virtue of his connection with BIOT. Some Chagossians visited the outer islands to tend family graves or to re familiarise themselves with the lands that they had been forced to leave. No one attempted to resettle there. Before the feasibility study was published, a group action was begun on behalf of the Chagossians. This claimed compensation and restoration of the property rights of the islanders and declarations of their entitlement to return to all the Chagos Islands and to measures facilitating their return. The action was taken against the Attorney General and other ministers. On 9 October 2003 Ouseley J in Chagos Islanders v Attorney General [2003] EWHC 2222 struck out this action on the grounds, inter alia, that the claim to more compensation after the settlement of the Vencatessen case was an abuse of process, and that the claims were in any case statute barred. An application for leave to appeal against that order was refused on 22 July 2004 (Dame Elizabeth Butler Sloss P, Sedley and Neuberger LJJ) [2004] EWCA Civ 997. The feasibility report was published in June 2002. Its findings were summarised by Lord Hoffmann in para 23 of his speech: It concluded that agroforestal production would be unsuitable for commercial ventures. So there could be no return to gathering coconuts and selling copra. Fisheries and mariculture offered opportunities although they would require investment. Tourism could be encouraged, although there was nowhere that aircraft could land. It might only be feasible in the short term to resettle the islands, although the water resources were adequate only for domestic rather than agricultural or commercial use. But looming over the whole debate was the effect of global warming which was raising the sea level and already eroding the corals of the low lying atolls. In the long term, the need for sea defences and the like would make the cost of inhabitation prohibitive. On any view, the idyll of the old life on the islands appeared to be beyond recall. Even in the short term, the activities of the islanders would have to be very different from what they had been. In light of the feasibility report the government decided that it would not support resettlement of the islands. In any event, in their perception, Diego Garcia would have to be excluded from any resettlement plans because of what was considered to be the UKs treaty obligations to the United States. Added to these considerations were reports of planned direct action by various groups who intended to launch landing expeditions to the islands. These factors combined to prompt the government to restore full immigration control. The British Indian Ocean Territory (Constitution) Order 2004 (the Immigration Order) was made. This included section 9 which provided: (1) Whereas the territory was constituted and is set aside to be available for the defence purposes of the government of the United Kingdom and the government of the United States of America, no person has the right of abode in the territory. (2) Accordingly, no person is entitled to enter or be present in the territory except as authorised by or under this Order or any other law for the time being in force in the territory. A challenge to the validity of section 9 by way of judicial review was made. The Divisional Court [2006] EWHC 1038 (Admin), paras 120 122 held that it was invalid because its rationality had to be judged by the interests of BIOT. That meant the people who lived or used to live on BIOT. The Court of Appeal (Sir Anthony Clarke MR, Waller and Sedley LJJ) [2008] QB 365 affirmed that decision but on somewhat different grounds. The Master of the Rolls and Sedley LJ held that there had been an abuse of power in enacting the 2004 Order because the interests of the Chagossians had not been taken into account. All three members of the Court of Appeal agreed that the Foreign Secretarys statement after the judgment in Bancoult (No 1) and the Immigration Ordinance 2000 constituted promises to the Chagossians which gave rise to a legitimate expectation that, in the absence of a relevant change of circumstances, their rights of entry and abode in the islands would not be revoked and there had been no such change. The Court of Appeals decision was appealed to the House of Lords and by a majority (Lord Hoffmann, Lord Rodger and Lord Carswell, Lord Bingham and Lord Mance dissenting) R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453 the appeal was allowed and the decision of the Court of Appeal was reversed. The present application By this application, Mr Bancoult, the respondent in the appeal before the House of Lords, seeks to have its decision set aside on the ground of material non disclosure. He claims that documents held by the defendant which should have been produced in the course of the earlier proceedings are likely to have made a significant difference to the outcome of those proceedings. Before examining that claim, it is necessary to say something about the various stages and phases that were planned for the feasibility study and how those stages and phases changed in the course of its progress. It will also be necessary to consider the opinions of the House of Lords before assessing whether disclosure of the documents is likely to have affected its decision. The various stages of the feasibility study and the process of disclosure The report on stage 1 of the feasibility study had been published in June 2000 just before the hearing of Bancoult (No 1). It was, the applicant claims, largely in favour of resettlement. It identified fishing as a major means of subsistence for a resettled population. Shortly after the Foreign Secretarys statement following the decision in Bancoult (No 1), the stages of the feasibility study were re named. Stage 1 was now referred to as the preliminary study. Phase 2A was to be a technical report on hydrogeological monitoring on the Salomon and Peros Banhos atolls. A more substantial Phase 2B was to be a general examination of some pre requisites to re settlement, prior to the full cost benefit analysis that was originally intended to come at stage 2 but which would now be a stage 3 of the report. Phase 2A, the hydrogeological survey, was started in 2001 but was never published as a separate report, its work being subsumed into Phase 2B. The latter phase was begun in late 2001 and completed in mid 2002. A report on it was published in July 2002. The full cost benefit analysis, contemplated as stage 3 was never carried out. Phase 2B reported that resettlement would be precarious and that its cost would be prohibitive. The government decided not to proceed with the planned stage 3 (the cost benefit analysis). It terminated consideration of resettlement, and introduced the 2004 Order prohibiting residence on the islands. Richard Gifford was a partner in the firm of solicitors which acted for Mr Bancoult in the litigation which culminated in the decision of the House of Lords. In advance of the hearing before the Divisional Court he sought disclosure of the drafts of the three phases of the feasibility study and of any comments made on these by officials. Correspondence was exchanged with the Treasury Solicitor in which the relevance of some of the material sought was disputed but it is unnecessary to review this. Comments on the draft of the preliminary study could not be located at first. They were then discovered and supplied. Mr Gifford claims that they revealed clear evidence of a crude re writing of the important General Conclusion from an entirely positive statement to a qualified one. It might be thought that since the document which is said to have prompted the 2004 Order was the report on the Phase 2B study, the re writing of the preliminary reports conclusion is of no particular importance. The fact that it was rewritten, however, when set against the now known position that there was extensive rewriting of the draft Phase 2B report may indicate a greater need for caution in examining the reasons for this rewriting. On 6 December 2005 the Treasury Solicitor had written to Mr Gifford stating that draft reports for the preliminary feasibility study and the Phase 2B study report had been located and were available for inspection. In a letter of 13 December, however, this statement was corrected and it was stated that only a draft of the preliminary study had been found. No draft for the Phase 2B report had been found. This was confirmed in a letter of 23 December 2005. During the hearing before the Divisional Court a number of inquiries were made by the judges of the defendant as to whether all relevant documents had been disclosed. The court was informed that if any further relevant documents were found these would be disclosed. Subsequently, on 3 February 2006, Mr Bancoults solicitor wrote to the defendant, specifically asking for the disclosure of all documents and materials which demonstrate and support your counsels assertion that resettlement of the Chagos Islands is not feasible. This was met with the response that the material was not relevant but, when the appeal against the Divisional Courts decision was pending, the UK Chagos Support Association asked for a copy of the draft of the Phase 2B report, and was informed by letter from the Foreign and Commonwealth Office on 6 October 2006 that no copy of the draft report had been retained on their files. This was confirmed on 9 November 2006, in response to a Freedom of Information request. The applicant claims that, faced with the absence of relevant documentation relating to the production and acceptance of the feasibility study, it was considered that a challenge to the reliability of the study could not be made. Counsel for the claimant in the Court of Appeal therefore stated that the governments entitlement to terminate the feasibility study after the Phase 2B report and to decline to support a return to the islands was not contested. In view of the appellants knowledge at that time, I do not consider that this was in any sense unreasonable. In any event, the stance taken by counsel did not make the feasibility study irrelevant to the case, however. The report remained relevant as being the alleged good reason relied on for not proceeding with resettlement and for denying Chagossians the right to return. But the challenge to the governments decision would have been, the applicant claims, of a very different stripe, if the existence of highly critical comments on the Phase 2B report had been known. Then the rationality of the decision not only not to fund resettlement but to deny Chagossians the right to return to the islands would have been strongly contested. That challenge would have been founded directly on the lack of reasonableness in relying on a report which was so obviously flawed and open to criticism. The existence of undisclosed documents first became known in the course of the hearing before the High Court of a case called R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 3) [2013] EWHC 1502 (Admin). That case concerned the creation of a no take marine protected reserve around the Chagos Islands on 1 April 2010. In those proceedings Mr Bancoult challenged the legality of the creation of the reserve. Exhibited to a witness statement filed on behalf of the Foreign Secretary (the defendant in the proceedings) was a bundle of documents. The statement to which the documents were exhibited was that of Zaqia Rashid, a solicitor in the Treasury Solicitors department. She observed that she produced the documents without comment as to the reasons that they had not been disclosed earlier. Before Ms Rashids statement in Bancoult (No 3) had been received, Mr Bancoult had made a number of freedom of information requests to the Foreign and Commonwealth Office concerning drafts of the feasibility reports. He was not satisfied with the replies that he received and lodged a complaint with Information Commissioner and a subsequent appeal to the First tier Tribunal General Regulatory Chamber Chagos Refugees Group (in Mauritius) v Information Comr (Case EA/2011/0030). The hearing of the appeal took place after the documents attached to Ms Rashids statement had been received and was therefore principally concerned with two memoranda which had not been included in those documents. It also touched on explanations given for the failure to disclose the documents, however. The Foreign Office explained that this was due to a combination of factors. There had been a clerical oversight in relation to some of these and a recall of archived material which was more rigorously reviewed in the course of the Bancoult (No 3) litigation led to others being disclosed. What have become known as the Rashid documents (ie those exhibited to Ms Rashid statement) contained a draft version of the executive summary of the Phase 2B feasibility study; and a covering letter from Posford (Royal) Haskoning (the consultants appointed to carry out the study) forwarding the remaining draft volumes. They also contained a number of documents generated during the preparation and finalisation of the feasibility study. These included (1) documents relating to the scope of work to be undertaken both for the first part of the original two stage study, later re named the preliminary study under the Phase 2A contract and under the Phase 2B contract; (2) a memorandum of a meeting between BIOT officials and the consultants; (3) correspondence between the FCO and an external scientific adviser in relation to the Chagos Archipelago, Dr Charles Sheppard; (4) correspondence between the Foreign Office and the consultants and (5) details of the amendments to the draft Phase 2B report. The House of Lords decision The appeal to the House of Lords from the Court of Appeals decision ranged over three principal areas, only one of which is relevant to this application. The first concerned the scope of the courts power to review the validity of an Order in Council legislating for a colony. What were described as the extreme positions adopted by the parties were both rejected by Lord Hoffmann. It had been argued on behalf of the government that no review of the making of an Order in Council was legally legitimate since this involved the exercise of a legislative power. On behalf of the Chagossians it was claimed that the right of abode in ones homeland was so sacred that the Crown did not have power to remove it in any circumstances. Lord Hoffmann decided that there was a power of review and that the main point in the appeal was the application of the ordinary principles of judicial review (para 52). The question whether there had been any contravention of those principles was the second principal area involved in the appeal and it is this ground which underpins the current application. I will consider it presently. The other two members of the majority, Lord Rodger and Lord Carswell, agreed with Lord Hoffmann on his rejection of the extreme positions of the parties on whether the government had power to make the Order. They also agreed that the courts had power to review the making of the 2004 Order on the normal judicial review grounds (paras 105 and 122). The third area of dispute was whether a legitimate expectation on the part of the Chagossians had been created by the Foreign Secretarys statement and the 2000 Ordinance. Lord Hoffmann held that this argument failed at the first hurdle that there had to be a promise which was clear, unambiguous and devoid of relevant qualification per Bingham LJ in R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1569. Lord Rodger and Lord Carswell agreed. In powerful dissenting speeches, Lord Bingham and Lord Mance concluded that the government did not have power by Order in Council to exclude the Chagossians from their homeland (Lord Bingham at para 71 and Lord Mance at para 160). They also held that the Foreign Secretarys statement and the making of the 2000 Ordinance created a legitimate expectation on the part of the Chagossians that they would be allowed to return to the outer islands unless or until the United Kingdoms treaty obligations might at some later date forbid it Lord Bingham at para 73. These findings and their conflict with the conclusions of the majority are not relevant to this application. The findings of Lord Bingham and Lord Mance in relation to the rationality of the decision to make the 2004 Order most certainly are, however. But before examining their reasons for determining that that decision was irrational, it is necessary to look at the speeches of the majority in order to see precisely why they considered that the charge of irrationality had to fail. The summary of the findings of the feasibility report contained in para 23 of Lord Hoffmanns speech has been set out above (para 16). This provided the backdrop to his examination of the issue of irrationality. Having accepted Sir Thomas Bingham MRs statement of principle in R v Ministry of Defence, Ex p Smith [1996] QB 517, 554, to the effect that where a measure affects fundamental rights or has profoundly intrusive effects, the courts will anxiously scrutinise the decision to introduce it, Lord Hoffmann said this at para 53: However, I think it is very important that in deciding whether a measure affects fundamental rights or has profoundly intrusive effects, one should consider what those rights and effects actually are. If we were in 1968 and concerned with a proposal to remove the Chagossians from their islands with little or no provision for their future, that would indeed be a profoundly intrusive measure affecting their fundamental rights. But that was many years ago, the deed has been done, the wrong confessed, compensation agreed and paid. The way of life the Chagossians led has been irreparably destroyed. The practicalities of today are that they would be unable to exercise any right to live in the outer islands without financial support which the British government is unwilling to provide and which does not appear to be forthcoming from any other source. During the four years that the Immigration Ordinance 2000 was in force, nothing happened. No one went to live on the islands. Thus their right of abode is, as I said earlier, purely symbolic. If it is exercised by setting up some camp on the islands, that will be a symbol, a gesture, aimed at putting pressure on the government. The whole of this litigation is, as I said in R v Jones (Margaret) [2007] 1 AC 136, 177 the continuation of protest by other means. No one denies the importance of the right to protest, but when one considers the rights in issue in this case, which have to be weighed in the balance against the defence and diplomatic interests of the state, it should be seen for what it is, as a right to protest in a particular way and not as a right to the security of ones home or to live in ones homeland. It is of course true that a person does not lose a right because it becomes difficult to exercise or because he will gain no real advantage by doing so. But when a legislative body is considering a change in the law which will deprive him of that right, it cannot be irrational or unfair to consider the practical consequences of doing so. Indeed, it would be irrational not to. Some observations can be made about this passage. In the first place it clearly implies that a decision to remove the Chagossians from their homeland with little or no provision for their future would indeed be a profoundly intrusive measure and one for which compelling justification would be required. And, of course, this is precisely what happened between 1968 and 1973. The Chagossians were removed. The islanders need to accept that removal must have been seen by them as a matter of survival. Whatever one might think of the argument that the evacuation of the islands was necessary (and, therefore, justified) in order to accommodate the American bases, it is impossible to defend the failure to ensure that the Chagossians were adequately housed and provided for in their new surroundings. In accordance with the standard set by Lord Hoffmann, the decision to remove the Chagossians without making adequate provision for them and their subsequent actual removal when that provision was not in place must therefore have been irrational when those events occurred. The fact that their removal, when it in fact occurred, was unreasonable cannot, in my opinion, be left out of account in assessing whether the subsequent decision to perpetuate the Chagossians exile was rational. I will give my reasons for that conclusion later. Secondly, it appears that Lord Hoffmann considered that the importance of the right to live in the outer islands, because it could not be fulfilled without financial help, was diminished because it was purely symbolic. This was a view strongly challenged in the speech of Lord Mance. In para 138 he said: [The wish of the Chagossians] for recognition of their historic connection, and on their case rights of abode, in relation to the Chagos Islands is deep felt, longstanding and, in my view, understandable. Arguments that any right of abode is symbolic, since it would be impracticable to exercise without expensive government support to which it is accepted that there is no right and which would not be forthcoming, in my view miss the point. If anything, they indicate that the right claimed could be recognised without this being likely to have any practical effect on the present state of the Chagos Islands. These islands (apart from Diego Garcia) appear to exist as an unspoilt nature paradise to which an increasing number of long distance yachtsmen venture to spend periods of months without noticeable disturbance to the operations of the United States base at Diego Garcia many miles away. This passage throws into sharp focus the question whether the practicability of fulfilment of an undeniable right affects its intrinsic worth. It also emphasises the need to look closely at the question whether it was necessary to deny the Chagossians the right to live on the outer islands in order to avoid responsibility for funding such an option. At a theoretical level at least, a clear distinction can be drawn between, on the one hand, a refusal to underwrite the costs of resettlement, and, on the other, depriving the Chagossians of the right to return to their homeland. If all that the British government wanted to avoid was paying for the cost of resettlement, why should it not simply say so? But the riposte to an argument that it was unnecessary to forbid return to the islands and that refusing to fund such a return was enough to achieve the governments aims might be that given by Lord Hoffmann himself. This was that to permit an unfunded return would merely assist in the campaign on which the Chagossians were embarked. In order to frustrate that campaign, it was necessary to remove from the Chagossians their right to return to the place where they and their ancestors were born and had lived. Lord Mance suggested (also in para 138 of his speech) that it had not been shown that that the Chagossians have been, in Bancoult (No 1) or the present proceedings, engaged in a mere campaign to obtain the UK government support for resettlement or to embarrass the United Kingdom and United States governments. Whether or not there was evidence from which to infer that there was such a campaign, it is clear from Lord Hoffmanns speech that the rationality of the decision to enact the 2004 Order depended crucially on its being shown that the conclusion that it was necessary in order to forestall a campaign by the Chagossians was not unreasonable. This is also clear from the speeches of Lord Rodger and Lord Carswell. At para 112, Lord Rodger said that the decision to legislate and to introduce immigration controls appears to have been prompted by the prospect of protesters attempting to land on the islands. And at para 132 Lord Carswell expressed his full agreement with Lord Hoffmann and Lord Rodger. Does the decision of the majority on the issue of irrationality preclude any re examination of the question of whether the right of the Chagossians to go and live where they were born was merely symbolic or, if it was, that its importance was thereby devalued? Is the second question set out above (whether the purpose of the Chagossians challenge was to advance a campaign to obtain financial support from the UK government and to embarrass the UK and US governments) forever settled by the decision of the majority? In my opinion, the answer to these questions is a conditional no. The conclusion that the decision to enact the 2004 Order could withstand the charge of irrationality was multi factorial. If it now transpires that one of the bases for that conclusion was reliance on information that has now proved to be wrong or incomplete, this inevitably reflects on the cogency of the other grounds on which the conclusion was based. The various reasons for a decision such as this are, of their nature, interlinked. They may also be interdependent. Weight given to one factor may be affected by the discovery that the weight given to another can no longer be sustained. If, therefore, it emerges that the decision on the feasibility of resettlement was reached on information that was plainly wrong or open to serious challenge and that it is at least distinctly possible that a different decision on that question would have been formed had the full picture been known, it seems to me that the rationality of the enactment of the 2004 Order should be re examined generally. Leaving that debate aside for the present, however, it is necessary to focus directly on the feasibility of a return to the islands and the various views expressed about that. Lord Hoffmanns summary of his conclusions (para 23 of his speech) on this question have already been discussed. He also relied on the written statement to the House of Commons on 15 June 2004 by the Foreign Office Under Secretary of State, Mr Bill Rammell, that in the light of the feasibility report it would be impossible for the government to promote or even permit resettlement to take place. Lord Rodger also relied on the contents of the feasibility report and Mr Rammells statement. At paras 112 and 113 he said this: 112. On 15 June 2004 a junior minister, Mr Rammell, made a written statement to Parliament. His good faith has not been impugned by the respondent. The statement shows that, in deciding to legislate to prevent people resettling on the outer islands, the government took into account the fact that the economic conditions and infrastructure which had once supported the way of life of the Chagossians had ceased to exist. Something new would have to be devised. The advice was that the cost of providing the necessary support for permanent resettlement was likely to be prohibitive and that natural events were likely to make life difficult for any resettled population. Human interference within the atolls was likely to exacerbate stress on the marine and terrestrial environment and would accelerate the effects of global warming. Flooding would be likely to become more frequent and would threaten the infrastructure and the freshwater aquifers and agricultural production. Severe events might even threaten life. The minister recorded that, for these reasons, the government had decided to legislate to prevent resettlement. Although he made no mention of it, the decision to legislate and to introduce immigration controls at that particular time appears to have been prompted by the prospect of protesters attempting to land on the islands. In addition, Mr Rammell said that restoration of full immigration control over the entire territory was necessary to ensure and maintain the availability and effective use of the territory for defence purposes. He referred to recent developments in the international security climate since November 2000 when such controls had been removed. 113. The ministerial statement indicates that a decision to legislate was taken on the basis of the experts (second) report on the difficulties and dangers of resettling the islands these difficulties and dangers being dangers and difficulties which would affect the Chagossians themselves, if they were to try to live on the outer islands. Given the terms of that report alone, it could not, in my view, be said that no reasonable government would have decided to legislate to prevent resettlement. In particular, the advice that the cost of any permanent resettlement would be prohibitive was an entirely legitimate factor for the government which is responsible for the way that tax revenues are spent to take into account. In addition, the government had regard to defence considerations, the views of its close ally, the United States, and the changed security situation after 9/11. These additional factors reinforce the view that the decision to legislate was neither unreasonable nor irrational. Although Lord Rodger noted that factors other than those outlined in the experts second report were in play, it is clear from these paragraphs that he acknowledged that the report was the principal influence in the governments decision. He identified a number of features from it as being of particular importance: 1. the cost of permanent resettlement was likely to be prohibitive; 2. natural events would make life difficult for the inhabitants; 3. stress on the marine and terrestrial environments would be aggravated; 4. the effects of global warming would be increased; 5. flooding was likely to become more frequent and fresh water supplies and agricultural production would be endangered; and 6. severe events might even threaten life. By any standard, these were anticipated consequences of considerable moment. Lord Carswell also relied heavily on the report. At para 121 he said that it was quite clear that resettlement was wholly impracticable without very substantial and disproportionate expenditure. The practical difficulties in the way of resettlement were in his view relevant to the rationality of the governments decision. The claims made for the rationality of the decision to introduce the 2004 Order were forthrightly rejected in a lucid and strong passage of Lord Binghams speech. At para 72 he said: section 9 was irrational in the sense that there was, quite simply, no good reason for making it. (1) It is clear that in November 2000 the re settlement of the outer islands (let alone sporadic visits by Mr Bancoult and other Chagossians) was not perceived to threaten the security of the base on Diego Garcia or national security more generally. Had it been, time and money would not have been devoted to exploring the feasibility of resettlement. (2) The United States government had not exercised its treaty right to extend its base to the outer islands. (3) Despite highly imaginative letters written by American officials to strengthen the Secretary of States hand in this litigation, there was no credible reason to apprehend that the security situation had changed. It was not said that the criminal conspiracy headed by Osama bin Laden was, or was planning to be, active in the middle of the Indian Ocean. In 1968 and 1969 American officials had expressly said that they had no objection to occupation of the outer islands for the time being. (4) Little mention was made in the courts below of the rumoured protest landings by LALIT. Even now it is not said that the threatened landings motivated the introduction of section 9, only that they prompted it. Had the British authorities been seriously concerned about the intentions of Mr Bancoult and his fellow Chagossians they could have asked him what they were. (5) Remarkably, in drafting the 2004 Constitution Order, little (if any) consideration appears to have been given to the interests of the Chagossians whose constitution it was to be. (6) Section 9 cannot be justified on the basis that it deprived Mr Bancoult and his fellows of a right of little practical value. It cannot be doubted that the right was of intangible value, and the smaller its practical value the less reason to take it away. Now, it is true that none of the reasons outlined in this paragraph touches on the question of feasibility as such but they provide a powerful and, in my view, unanswered case for rejecting the claim that the decision to introduce the 2004 Order was rational unless it could be shown that the feasibility argument was so strong as to outweigh it. This is crucial. If significant doubt could have been cast on the claims made in relation to feasibility, then the case for the government that its decision was rational would have been thrown into considerable disarray. Lord Mance was unimpressed by the use of the feasibility report as a basis for denying the Chagossians their fundamental right of abode in their homeland. At para 168 he pointed to the central incongruity of using a report published in 2002 to justify the enactment of the 2004 Order, two years later and to the circumstance that the government had been found to be under no legal obligation to fund resettlement: The report is in fact dated 28 June 2002, so the BIOT Order 2004 was enacted two years after the report, and nine months after Ouseley Js decision that the government had no duty to fund resettlement, although a month before the Court of Appeal finally refused permission to appeal against that decision. In the absence of any legal obligation to fund resettlement, the prospective cost of doing so appears to me (as it did to Sedley LJ in the Court of Appeal: para 71) an unconvincing reason for withdrawing any right of abode and any right to enter or be present in BIOT. The Secretary of State notes in his written case that, even in the absence of any legal obligation to fund resettlement (and although the United Kingdom has made clear its determination to resist any suggestion that it should provide such funds on a voluntary basis), there could be public and political pressure claiming that the United Kingdom should provide funding for the cost of resettlement. That is not a reason articulated at the time or supported by any reference in the written case. The logic of this reasoning is, in my opinion, irresistible. At its height, the feasibility report spoke to the impracticability of resettlement and the inordinate cost of funding any attempt by the Chagossians to resettle in their homeland. But it had been held that the government was under no legal obligation to fund a resettlement. As a justification for denying the fundamental right of abode in the country of ones birth, therefore, the report could be relied on only to forestall public and political pressure on the United Kingdom that the government should meet what the feasibility report said was the inordinate cost of resettlement. Quite apart from the consideration that, as Lord Mance pointed out, this was not a reason proffered by the government either by way of explanation of the reason for the 2004 Order or in its written case, this was a heavy burden for the report to bear. It was not enough that it be shown that the cost was exorbitant or that resettlement was impracticable; these had to be so great that the risk of the government coming under pressure to meet the cost and permit resettlement was such that the Chagossians had to be refused the right to return to their traditional home. Against that background, any reservations about the veracity of the claims made in the report assume an unmistakable significance. Unless the report was compelling and irrefutable in its conclusions, its capacity to act as the sole justification for the denial of such an important right was, at least, suspect. Many criticisms of the reliability of the Phase 2B feasibility study have been made on behalf of the applicant. These have included examination of 1. the approach of the consultants to their task; 2. the editorial control exercised by the FCO; 3. the avowedly misleading representation that the consultants acted wholly independently; 4. the alterations to the terms of reference of the preliminary study; 5. the criticisms made of the scientific value of the Phase 2B report; and 6. the changes to the text of the report. Many documents prepared to support the applicants case have been submitted. While I have read and closely considered all of these, I do not find it necessary or helpful to set all of them out in any detail. What follows is a summary of the principal matters to emerge from all this material which are pertinent to the central issue to be determined viz whether this appeal should be re opened. The draft preliminary report and some of the changes made to it An examination of the background to the Phase 2B report must begin with the preliminary stage report. As mentioned (para 102 above) Mr Gifford claimed that there had been a crude rewriting of the conclusion of this report from the version in the original draft. In its original conception the feasibility study was intended to comprise two stages, the first of which was to see whether settlement appears possible and environmentally acceptable (with an estimate of the numbers who might wish to return to the outlying islands). Consultants delivered a draft report in May 2000. The principal conclusion was contained in para 5.1.1: The conclusion of this preliminary study is that there is no obvious physical reason why one or both of the two atolls should not be repopulated, by the sort of numbers (up to or around one thousand) of Ilois [Chagossians] who are said to have expressed an interest in re settlement. Carrying capacity is largely a function of the nature of economic activity which accompanies re settlement, and its capability of financing the necessary amount of resources to ensure adequate supplies of water and to minimise the environmental impact. It was recognised that further feasibility studies would have to be undertaken and so the draft report continued at para 5.1.13: If a decision is taken to examine further the feasibility of re settlement, the next stage of the feasibility study should be largely concerned with examining the technical, financial, economic and environmental aspects of specific development proposals put forward by groups of islanders who are serious about re settlement and who have proper financial and technical backing for their proposed enterprises. When the report reached its final form, there was a notable alteration to the principal conclusion. In the published version it read in para 5.1: The conclusion of this preliminary study is that resettlement of one or both of the two atolls is physically possible, but only if a number of conditions are met. These include confirmation that: the nature and scale of settlement will not a sustainable and affordable water resource can be developed; damage the environment; and basic services; and one or more private investors are willing to develop viable enterprises which can generate sufficient incomes to pay for the investment and recurrent costs of re settlement. public money is available to finance infrastructure Taken on its face, this change may not appear especially significant. But, apart from the difference in language and structure, it had incorporated as essential pre conditions matters which the draft report had indicated should be the subject of further study and investigation. Again, however, this may betoken no more than a recognition of a need for caution about future planning. It is perhaps on this account that these changes did not feature to any great extent in the presentation of Mr Bancoults case at any of the stages of the proceedings which ended in the appeal to the House of Lords. In light of changes to and criticisms of the draft Phase 2B report, it may be that greater importance should be attached to them and that they could be regarded as heralding a reluctance on the part of the government to countenance any return of the Chagossians to Peros Banhos and the Salomon Islands. Certainly, it is not difficult to conclude that such an argument would have been made, had the criticisms of the draft Phase 2B report and the changes made to it been known. What would have been made of such an argument is now perhaps difficult to say but the fact that it could have been but was not advanced should weigh in the balance as to whether the decision of the House of Lords should be set aside. The draft Phase 2B report and the criticisms made of it In his statement to the House of Commons Mr Rammell had said that the government had commissioned a feasibility study by independent experts to examine and report on the prospects for re establishing a viable community in the outer islands of the territory. While it is strictly true that the consultants were independent, the terms of reference for the study made it clear that the BIOT government (for convenience, in the next sections this will be referred to as BIOT) retained the right to see and comment on a draft of the final report. In particular, para 6.3 of the terms of reference for Phase 2B of the study provided that a draft final report, containing a report of the work done, conclusions and recommendations, had to be submitted to BIOT within four months of the assignment starting. After BIOT received the draft, it was then able to make comments on it and it was only after these had been received that the final version of the report would be published. All of this might be regarded as, if not standard government practice, at least not untoward. But the applicant suggests that the way that the procedure in fact operated in this case robbed the final report of any claim to true independence. He claims that when the extent of the widespread changes to the draft originally submitted became known (after the Rashid documents became available) what might have appeared as a wholly independent report took on a very different complexion. It is further suggested that this conclusion is reinforced by a consideration of the contents of a memorandum of a meeting between on 6 March 2002 between Alex Holland of the consultants, Alan Huckle (head of the Overseas Territories Department and BIOT Commissioner), Louise Savill (BIOT Administrator) and Brian Little (FCO Feasibility Study Project Manager). This followed 21 days of field work in Peros Banhos and the Salomon Islands. A progress report covering the period from 25 January to 28 February 2002 was considered at the 6 March meeting. This report laid down the future work programme, with draft reports from individual consultants due at Posford Haskoning by 22 March 2002, followed by submission of the entire first draft to BIOT on 31 March 2002. The memorandum of this meeting was prepared by Ms Holland. In it she recorded Mr Huckle as saying: The FCO had hoped that Phase II would negate the need for Phase III, ie if it concluded that resettlement wasnt feasible. The comment is then made, realistically, that was never likely to be the outcome. Lord Mance has stated at para 33 that there is no suggestion that the FCO was inviting changes to bolster any sort of findings or conclusions in either the draft and the final report, and no basis for regarding Posford as susceptible to any such invitation. It is true that there is no record of an explicit invitation to bolster or change findings. But it is telling that the memorandum recorded that FCO is hoping that the section on climate change will resolve its difficulties. In my view, while these statements might be supposed not to entirely undermine the subsequent findings of the consultants, it is clear that the consultants were being given an unmistakable steer as to what FCO wanted the outcome of the report to be and, inevitably, whatever one might think about Posfords susceptibility to suggestions, this at least raises questions about the independence and impartiality of the judgment that the consultants ultimately made. Those questions in turn play into the validity of the scientific analysis made by the consultants. The Executive Summary of the draft report was received by BIOT in the week beginning 8 April 2002. The remaining sections of the draft arrived on 15 April. On 24 April 2002 Charles Hamilton (who had just succeeded Louise Savill as BIOT Administrator) asked Dr Charles Sheppard (a tropical marine ecologist at Warwick University who had extensive previous work experience in the Chagos) to carry out a peer review of the consultants report. This was provided on 14 May 2002. Dr Sheppard wrote an email to accompany his report. In this he excoriated some parts of the consultants work. Some sections of the report were, he said, quite hopeless. These related principally to the resources section. Importantly, however, Dr Sheppard endorsed the consultants conclusions on the practicability of resettlement largely on account of anticipated climatic conditions. The consultants views on this were, Dr Sheppard said, supported by emerging science connected with tropical science generally. It might therefore be said that on the central issue which influenced the majority in the House of Lords, viz whether resettlement was a feasible option, the consultants assessment was essentially supported by Dr Sheppard. The applicant points to a more general criticism voiced by Dr Sheppard, however. This, he says, is bound to have prompted his advisers to mount a wholesale and direct challenge to the methodology and reliability of the feasibility report generally. In this connection, the applicant relies particularly on a sharp criticism of the report by Dr Sheppard in the following strongly worded terms: the present Posford report should not in my view be released in its present form; some of its science would be badly savaged by anyone not happy with your conclusions, and so, by implication, could some of the conclusions themselves. The claim that if this comment had been known by the applicants advisers, it would have led to a more direct challenge to the feasibility report must be approached with caution in light of the fact that the applicant had engaged a resettlement anthropologist, Jonathan Jenness. He was asked to conduct a review of the feasibility report primarily to provide input on the resettlement issues which were excluded from the Phase 2B study, but Mr Jenness also made some strong criticisms of the claimed conclusions of the study, without knowing how those conclusions had been arrived at. Mr Jenness report was submitted to FCO. The applicant and his advisers were unaware that it had been subjected to a critique by Dr Sheppard until FCO wrote to his solicitors on 2 December 2002 enclosing Dr Sheppards report. He challenged and criticised a number of Mr Jenness conclusions but he said that many of his points about the inadequacies and errors in the Posford report were valid. There must be some doubt, however, that Dr Sheppards acknowledgment that parts of Mr Jenness criticisms of the feasibility study were sound would have led to a markedly different strategy on the part of Mr Bancoults advisers, not least because of the astringency of Dr Sheppards other observations on Mr Jenness report. Whether disclosure of Dr Sheppards critique of Mr Jenness would have led to a different conclusion by the majority in the House of Lords calls for rather more subtle consideration, however. As I have said, the essential issue for the House of Lords was whether the cost of resettlement was so exorbitant or that resettlement was so impracticable that the risk of the government coming under pressure to meet the cost and permit resettlement was such that the Chagossians had to be refused the right to return to their traditional home. It seems to me that, in light of Dr Sheppards general criticisms of the consultants report and his endorsement of some of Mr Jenness disparagement of it, it is at least questionable that such heavy reliance would have been placed by the majority on its conclusions. Alterations made to the draft Phase 2B report The draft report contained a supremely important passage at the second part of para 1.8, which was originally included in the section on resettlement. It reads: the most significant and immediate consequences of climate change on a resettled population within the Chagos Archipelago are likely to be related to changes in sea levels, rainfall regimes, fresh water resources, soil moisture budgets, prevailing winds (direction and speed) and short term variation in regional and local patterns of wave action. At present the Chagos archipelago lies just north of an active cyclone belt, however, a small northward shift of this belt could lead to frequent cyclones in the area. This would lead to more frequent flooding of the islands, with corresponding risk to life and any infrastructure. It would also reduce agricultural potential and the freshwater contained within the island aquifers would experience higher levels of salinity. (emphasis added) The final version of the report in the equivalent section was in the following terms: The most significant and immediate consequences of climate change for the Chagos Archipelago are likely to be related to changes in sea levels, rainfall regimes, soil moisture budgets, prevailing winds and short term variation in regional and local patterns of wave action. As a consequence most islands will experience increased levels of flooding, accelerated erosion, and seawater intrusion into freshwater sources. The extent and severity of storm impacts, including storm surge floods and shore erosion are predicted to increase. Although the risks associated with climate change are not easily established the implications of these issues to resettlement in the outer atolls of the Chagos Archipelago are outlined briefly below (emphasis added). The most obvious and significant points to be made about these two passages is in (i) the transformation of a conditional forecast of frequent flooding etc, predicated on a possible northward shift of the active cyclone belt, into a firm prediction that these and other consequences will occur; (ii) the omission of any reference to the cyclone belt in the final version; and (iii) the new wording in the final version predicting an increase in storm surge floods and shore erosion unconnected with cyclones. A new sentence has been added stating that [t]he extent and severity of storm impacts, including storm surge floods and shore erosion are predicted to increase. No evidence was provided to support the assertion contained in this sentence. The significance of translating the prediction of possible consequences of climate changes into a positive statement that these will occur lies, of course, in the impetus that it gives to the notion that there really was no practical means of resettling the islands. As it happens, there is no evidence that these consequences have begun to materialise even now, although that may not be taken into account on the issue of whether the application to re open the appeal should be allowed. But the essential message of the final report that these consequences would occur cannot but have influenced the decision of the majority of the House of Lords that the perceived need to enact the 2004 Order was not irrational. It is one thing to say that it is rational to forbid Chagossians to return to their homeland if the dire consequences that were spoken of were going to occur. It is quite another to say that it was reasonable if it was merely possible that they might happen. The jurisdiction to set aside a decision of the House of Lords and the test to be applied It is possible, at least theoretically, to distinguish between the question whether this court has jurisdiction to set aside a decision of its predecessor and the test to be applied in deciding whether to do so. In practice, however, these concepts overlap because the jurisdiction tends to be defined in terms of the conditions which justify its invocation. In R v Bow Street Metropolitan Stipendiary Magistrates, Ex p Pinochet Ugarte (No 2) [2000] 1 AC 119, 132D, Lord Browne Wilkinson said: In principle it must be that your Lordships, as the ultimate court of appeal, have power to correct any injustice caused by an earlier order of this House. There is no relevant statutory limitation on the jurisdiction of the House in this regard and therefore its inherent jurisdiction remains unfettered. In Broome v Cassell & Co Ltd (No 2) [1972] AC 1136 your Lordships varied an order for costs already made by the House in circumstances where the parties had not had a fair opportunity to address argument on the point. There is likewise no relevant statutory limitation on the jurisdiction of this court. And its inherent jurisdiction must comprehend the right to correct an injustice caused by an earlier order made by it or however such injustice arises. This point was made by Lord Hope, delivering the judgment of the panel in R (Edwards) v Environment Agency (No 2) [2011] 1 WLR 79 where he said at para 35: The Supreme Court is a creature of statute. But it has inherited all the powers that were vested in the House of Lords as the ultimate court of appeal. So it has the same powers as the House had to correct any injustice caused by an earlier order of the House or this court. It would however be more consistent with the principle which Lord Browne Wilkinson described to say that the power is available to correct any injustice, however it may have arisen Of course, in this context, what is meant by injustice is the critical issue. Providing a comprehensive definition of the circumstances in which it would be appropriate to exercise this jurisdiction is impossible but one can begin with the uncontroversial statement that it must be sparingly invoked. Lord Browne Wilkinson was careful to make that point in emphatic terms. At 132E of Pinochet he said: it should be made clear that the House will not re open any appeal save in circumstances where, through no fault of a party, he or she has been subjected to an unfair procedure. Where an order has been made by the House in a particular case there can be no question of that decision being varied or rescinded by a later order made in the same case just because it is thought that the first order is wrong. By wrong in this connection one may safely assume that Lord Browne Wilkinson had in mind a conclusion that the earlier courts decision was, in the minds of the subsequent panel, one which should not have been reached on the particular facts and legal issues before it. So it is not sufficient to show that the earlier decision was wrong in that sense. But is it necessary to show that, not only was a party subjected to an unfair procedure but that a wrong decision was thereby procured? On one view, the statement in the earlier passage quoted above, that the jurisdiction should be invoked to correct any injustice might indicate this, for how could an injustice occur if the outcome of the proceedings would have been the same in any event? But Lord Browne Wilkinsons later reference to Broome v Cassell (No 2) suggests that the jurisdiction is not so confined. This appears to indicate that where parties have not had a fair opportunity to address argument on a relevant point, an injustice, sufficient to animate the jurisdiction, is present. The question remains, however, whether it is a necessary prerequisite that the earlier decision would not have been, or is likely not to have been, reached, if the defect in procedure or other irregularity had not occurred. The applicant has accepted that it must be shown that the non disclosure probably had, or may well have had, a decisive effect on the outcome. This concession was based largely on Court of Appeal jurisprudence. The respondent agreed with the applicants formulation of the appropriate test. In Taylor v Lawrence [2002] EWCA Civ 90; [2003] QB 528, it was held that the Court of Appeal could re open proceedings which it had already heard and determined if it was clearly established that a significant injustice has probably occurred and that there is no alternative effective remedy. It is apparent that significant injustice in that case connoted an actual injustice (in the form of an adverse result which should not have occurred), although, as it happens, no such injustice was held to have happened there. A tangible injustice in the form of the probably wrong outcome was considered to be necessary. This approach was followed in Feakins v Department of the Environment, Food and Rural Affairs [2006] EWCA Civ 699. After Taylor v Lawrence was decided, CPR 52.17 headed Re opening of Final Appeals was promulgated on 6 October 2003. It provided: The Court of Appeal . will not re open a final determination of any appeal unless it is necessary to do so in order to avoid real (a) injustice; (b) appropriate to re open the appeal; and (c) there is no alternative effective remedy. the circumstances are exceptional and make it No such provision exists in the Supreme Court Rules. Obviously, there will customarily be no alternative effective remedy where the decision that is sought to be re opened is one of the Supreme Court. Should the approach of this court be the same as that otherwise indicated in this provision? For reasons earlier given, the power to re open should be invoked sparingly and the need for exceptional circumstances is unobjectionable. The requirement that the circumstances are such as to make it appropriate to re open the appeal is somewhat general and rather begs the question, when is it appropriate that the appeal should be re opened. This is an issue on which, I think, it is quite impossible to be prospectively prescriptive. It seems to me, therefore, that the truly important condition in CPR 52.17 is that the re opening of an appeal should be necessary in order to avoid injustice and that this is the touchstone which this court should adopt as a guide to when this exceptional course should be followed. Does real injustice involve a conclusion that the circumstance which prompts the application to re open the appeal probably had, or may well have had, a decisive effect on the outcome? I am content to say that this should normally be required. But I enter two caveats to that proposition. In the first place, it may not always be possible to forecast that such a decisive effect would probably or might well accrue. In that event, I would not preclude in every circumstance the possibility of a re opening of the appeal. The second possible exception to the general rule might arise where the behaviour of the party whose failure to place before the court relevant material was so egregious that, even if it was not considered likely that the outcome of the appeal would be affected, it would nevertheless be appropriate that the appeal be re opened in order to demonstrate that all pertinent information had been fully considered and that due process had been followed. Neither situation arises here. I am satisfied, therefore, that it is incumbent on the applicant to show that if the material in the Rashid documents had been available to the House of Lords they would have had, or may well have had, a decisive effect on the outcome of the appeal. I am entirely satisfied, however, that it is enough that it be established that there is a real possibility that a different outcome would have occurred had the information been available at the time of the original hearing. How could it be otherwise? If it is shown that it is distinctly possible that a party might have achieved a different result had relevant material been available to it, I cannot understand how it could be said that that party has not suffered an injustice by being denied the material and thereby being denied the opportunity of securing the outcome that they sought. If I might have persuaded the court that it should reach a different view if I had material that could have influenced that view, have I not suffered an injustice by being deprived of that chance? Of course I have. To the extent that Taylor v Lawrence and Feakins v Department of the Environment, Food and Rural Affairs suggest otherwise I emphatically disagree with them. It is, therefore, my firm belief that it is not necessary to show that it was probable that a different outcome would have been brought about; it is enough that there exists a distinct possibility that this would be so. Furthermore, the formulation whether it was irrational or unjustified for the Secretary of State to accept and act on the General Conclusions does not focus on the essential issue here. It was not simply a question of the Secretary of State accepting the conclusions; it was a matter of using those conclusions as a basis for denying a right of abode to the Chagossians solely in order to deter a campaign by the Chagossians to be allowed to return to their homeland. The House of Lords was not addressing in the abstract the question of the rationality or justifiability of the Secretary of States decision to rely on such conclusions (Lord Mance in the final sentence of para 64). What it was about was an examination of the sufficiency of his reliance on those reasons as a basis for denying the Chagos Islanders entitlement to return to live in their homeland, when there was no question of any legal obligation on the part of the government to fund that return. It is therefore, I am afraid, not enough to say that there was nothing in the re drafting and finalisation of the stage 2B report which could, would or should have caused the Secretary of State to doubt the General Conclusions or which made it irrational or otherwise unjustifiable to act on them in June 2004 Lord Mance para 65. The critical issues were the nature of the action taken and the background against which it occurred. It might not be irrational to accept the conclusions of the report but that, with respect, is simply not the point. The question is whether it was rational to deny these islanders their fundamental right to live where they and their ancestors were born for the sole reason of seeking to avoid a potentially embarrassing campaign that the British government should put right the callous disregard that had been shown them when they were effectively forced from the islands between 1968 and 1973. The House of Lords was not merely considering whether it was reasonable for the Secretary of State to accept the reports findings. The rationality challenge was to the action that he took, having accepted those findings. In the knowledge that the British government was not under any legal obligation to fund resettlement and that the most it had to fear was a campaign by the islanders that they be allowed to return home and that the government should facilitate that, the minister decided that they should be denied their right of abode in their homeland. That is the true nature of the rationality challenge. And that is why (as I explain at para 165 below) that it is necessary to recognise how severe the challenge to justify the 2004 Order truly was. When that central truth is confronted, it becomes clear how any doubt on the authority of the report was likely to or certainly should have caused the majority of the panel to question the rationality of the decision. And that is why there is, at the very least, a distinct possibility that there would have been a different outcome. Would the Rashid documents have had, or may they well have had a decisive effect? In my view the principal relevant documents exhibited to Ms Rashids statement were: 1. the memorandum of the meeting of 6 March 2002 in which the governments hopes for the outcome of the feasibility study were made clear; 2. Dr Sheppards critique of the draft Phase 2B report; 3. Dr Sheppards endorsement of some of Mr Jenness criticism of the feasibility study; 4. The draft Phase 2B report which, when contrasted with the final report, illustrated the distinct change in emphasis in the prediction of climate changes, especially since these bore directly on the question of the feasibility of resettlement. In deciding whether the disclosure of these documents before the appeal was heard by the House of Lords would or might well have had a decisive effect on the outcome, one must keep closely in mind the real issue on rationality. This was whether it was rational to deny the Chagossians the right to return to their homeland in order to deflect or prevent a campaign that the UK government should fund resettlement costs. The issue was not whether it would be reasonable for the government to meet those costs. It had been decided that there was no legal obligation on them to do so. It could not, therefore, be sought to justify the decision to introduce the 2004 Order on the basis that it was not reasonable that the UK government should have to fund the resettlement costs. The government did not need to defend a decision that it would not pay for resettlement. It had been told by a court that it was not legally obliged to do so. What motivated the decision to categorically forbid the Chagossians the right to go back to live in their homeland was an anticipated campaign that might have been politically embarrassing for the government. When this apprehended harm is pitted against the importance of the right to be denied, it is not difficult to recognise how severe the challenge to justify the 2004 Order truly was. People were told that they could not go back to live where they and their ancestors had lived. Moreover, that denial took place against a background that they had been evacuated from the islands in circumstances which were plainly unjustified. When the decision came to be made in 2004 whether they should be allowed to return to live in the outlying islands, the fact that their removal from them had been organised with callous disregard of their interests was a plainly relevant circumstance. It could not have been properly left out of account by a conscientious decision maker. There is no evidence that regard was had to that factor. Irrespective of whether it was or not, however, the circumstances in which the Chagossians were originally removed from their homeland rendered any subsequent decision to refuse to allow them to return all the more difficult to justify. If the Rashid documents had been before the House of Lords, the following matters would have had to be squarely confronted: the draft report had to be submitted to BIOT officials who had the (i) despite the claims for their independence, the consultants had been told in unequivocal terms what the government hoped would be the outcome of their report; (ii) opportunity to approve or require amendment of its contents; (iii) much of the science of the report (although not that relating to climatic changes) had been severely criticised by Dr Sheppard; (iv) many of the criticisms of the report by Mr Jenness had been endorsed by Dr Sheppard (even though he was also extremely critical of Mr Jenness); (v) most importantly, the draft reports central findings in relation to climate change, couched in conditional terms, had been altered to provide a firm prediction that such changes would take place. In my view, the collective effect of these revelations is that the appeal might well have been decided differently. The passages from the speeches of the majority which have been quoted earlier, for perfectly understandable reasons, bear no trace of reservation or doubt as to the anticipated consequences of any attempt to resettle the islands. If the members of the House of Lords knew that much of the science of the report was considered to be suspect by the scientist retained by the FCO; that the consultants had been given a clear indication of what the government hoped the report would deliver; that the changes to the conclusions of the preliminary study (which were known) proved to be a mild herald of the more radical changes to the Phase 2B report; that the Chagos Islands were not in an active cyclone belt and that this had a direct bearing on the predictions contained in the report, is it likely that the speeches of the majority concerning the anticipated consequences of an attempt to resettle would have been expressed in such emphatic terms? In my judgment it is not. And if the majority felt compelled, as it surely would, to recognise the lack of certainty in some of the central predictions, is it likely that they would have been prepared to hold as rational a decision to completely deny the Chagossians the right to return to their homeland, simply because a failure to do so would give rise to a campaign that the government should fund resettlement, when it had already been held that they were under no obligation to do so? In my opinion, it is at least distinctly possible that a different view would have been taken by the majority and that the outcome of the appeal would have been different. I would therefore grant the application to re open the appeal. Other matters (i) New evidence The applicant sought to introduce new evidence which, he claimed, would show that the dire consequences which the feasibility study predicted have not in fact materialised and were, in any event, highly suspect from the start. Four species of evidence were involved: (i) a comprehensive analysis of the Phase 2 feasibility study based on a comparison of the original draft disclosed in the Rashid documents with the final published version of the study and on other information contained in the documents. This was prepared by Richard Gifford and by a coral reef scientist, Richard Dunne; (ii) information provided to the applicant by Stephen Akester, who was one of the members of the team which prepared the feasibility study. Mr Akester stated that he did not agree with the conclusion of the feasibility study that resettlement was not feasible, and that he was not consulted about the finalisation of the original draft of the study. It is claimed that he was the only member of the team of consultants the only person with direct experience of re settlement on small coral atolls; (iii) a review of the feasibility study, prepared by Professor Paul Kench, of the University of Auckland, New Zealand, dated 5 October 2012. He concluded that not only were the findings of the ocean and coastal processes section in the feasibility study unsound, because of lack of specialist understanding and methodological flaws, but also that the relevant summary in the executive summary was not supported by those findings. This conclusion, it was claimed, cast grave doubt on the pivotal findings of the feasibility study especially in relation to increased risk of sea water flooding; (iv) the written note of 6 March 2002, referred to in para 138 above. It is not open to an applicant for a re opening of an appeal to adduce evidence solely for the purpose of retrospectively impeaching the decision of the court whose judgment he seeks to have reviewed. This would, in effect, allow an appeal against the decision based on information acquired for the purpose of undermining the judgment. An application to re open an appeal must be based on the contention that if the original appeal had been conducted in the way that it ought to have been, it is probable or at least distinctly possible that there would have been a different outcome. On this account, much of the material which the applicant seeks to introduce is not admissible, irrespective of whether it complies with the conditions which should be met, based on the principles of Ladd v Marshall [1954] 1 WLR 1489, for the introduction of fresh evidence. In truth, an application to re open an appeal will rarely, if ever, be the occasion for an application to introduce fresh evidence in the conventional meaning of that term. The essence of an application to re open an appeal, in so far as it relates to evidence, is that evidence which should have been before the original court was not. For this reason, I consider that none of the so called items of evidence in the first three categories above is admissible. The memorandum of 6 March 2002, by contrast constitutes material which ought to have been disclosed before the Divisional Court hearing. If it had been, I consider that it would unquestionably have featured in that and subsequent proceedings in the case, bearing, as it undoubtedly did, on not only the independence of the consultants but also on the result that the Foreign Office hoped to obtain from the feasibility study. (ii) The paucity of the peer review of the feasibility study and Dr Sheppards impartiality It was argued on behalf of the applicant that, in light of the range of subjects covered by the feasibility study, a professional peer review of the draft study, carried out by up to six specialists was essential. Unique reliance on the expertise of Dr Sheppard, whose specialism is coral reef ecology, was insufficient to give the report the authority that it required. There is nothing in this point. If the rationality of deciding to introduce the 2004 Order depended at all on the robustness of the peer review of the feasibility study, this point could have been made during the earlier proceedings. But, in any event, while it may be good practice to have a comprehensive peer review of a report such as the feasibility study, that is a very far cry from saying that it was irrational to rely on the study in the absence of such a review. It was suggested that Dr Sheppards input into the revision of the draft of the feasibility study was mainly composed of criticisms of those parts of the study which tended to suggest that resettlement was feasible. Thus in his input to the final version he described the natural resources sections, which suggested a variety of ways in which natural resources could be exploited to provide a livelihood for the islands as dismal, while stating that the oceanographic, climate, groundwater and soils sections were scientifically sound. This, it was claimed, reflected the fact that Dr Sheppard was well known to be strongly dedicated to [the] conservation [of coral reefs] and it was therefore questionable whether he could reasonably be regarded as an objective assessor of a study on the issue of reintroducing human settlement to the pristine and now deserted environment which he was so committed to protecting. Even if one was prepared to take these highly contentious and untested claims at their height, they fall very far short of showing that taking Dr Sheppards views into account in deciding to introduce the 2004 Order was irrational. The applicant does not dispute that Dr Sheppard was a well recognised expert in his field. The suggestion that he might have allowed his interest in preserving coral reefs to influence the advice that he gave to the government is, at best, speculative. I consider that this argument is without merit. Is the application moot? The respondent has argued that events occurring since the decision of the House of Lords and a further review of the feasibility of resettlement render this application unnecessary. In July 2013 the respondent announced that a new feasibility study would be carried out. The terms of reference for this study were published on 31 January 2014. The new study was to consider a range of options for the re settlement of BIOT, including not just the outer Chagos Islands but also Diego Garcia where the United States military base is located. These developments do not render the re opening of the appeal of merely academic interest. If the original judgment of the House of Lords is not set aside, the starting point for all future consideration of the resettlement issue will be that section 9 of the Constitution Order is valid, and that the removal of the Chagos Islanders right of abode was lawful. If it proves that there would have been a different outcome in the appeal before the House of Lords if the material from the Rashid documents had been before their Lordships, it would obviously not be right that the position concerning the Chagossians right to return to their homeland, recognised first by the Divisional Court, should not be retrospectively vindicated, with whatever legal consequences that this might entail. Lord Mance in para 72 and Lord Clarke in para 78 of their judgments have characterised as conclusive the consideration that the 2014/5 feasibility study takes into account the possibility of resettlement on the islands, including Diego Garcia. They both suggest that the background has now shifted and that the constitutional ban needs to be revisited. With respect, whatever the outcome of the 2014/5 feasibility study, it cannot be right to suggest that this is relevant to a decision whether the appeal should be re opened, much less that it is conclusive of that issue. The fallacy of the suggestion can be demonstrated in this way: let us suppose that timeous disclosure of the Rashid documents would have led the House of Lords to a different conclusion on the question of the rationality of the decision to make the 2004 Orders. Could it seriously be suggested that the appeal should not be re opened because of the possibility that the Chagos Islanders might be allowed to resettle in entirely different circumstances and for completely different reasons than those which underlay the original decision? What is the juridical basis on which such a conclusion might be made? Is it an instance of the exercise of judicial discretion to deny a remedy to which the applicant is otherwise plainly entitled? For such a result, it would be necessary to demonstrate that the applicant would achieve the same result as would accrue on the successful re opening of the appeal. Alternatively, it might be suggested that there are occasions where it is appropriate for a court to take a pragmatic view and dispose of a case in a particular way because of a new factual context. Quite apart from the unfortunate imprecision of such an approach, it must surely only be permissible when the particular disposal allows the court to achieve justice in the changed circumstances. Given the narrowness of the issue before the Supreme Court on this appeal, taking account of changed circumstances in the Chagos Islands does not achieve justice. We are not in a position to make an order that vindicates the applicants right to resettle on Diego Garcia or elsewhere on the archipelago. The suggestion that we need not re open this appeal because of the possibility that the 2014/5 feasibility study would permit resettlement depends on (a) the government changing its stance as a result of the study; failing which (b) the applicant or others of like mind having the appetite to bring forward yet further litigation, despite the unhappy previous experience of past proceedings; (c) their being able to secure the services of lawyers prepared to work for them pro bono or on some other uncertain basis; and (d) the courts deciding in favour of the Chagossians in that speculative litigation. Even if it could be said that a favourable outcome of the 2014/5 feasibility study is possible, the Chagossians ability to obtain the result that the original appeal, if successful before the House of Lords, would have achieved is remote in the extreme. That this should provide a basis for denying them an outcome to which they were otherwise entitled is in my view inconceivable. The respondent has claimed that there was undue delay in making the application to re open the appeal. I do not consider that there is any merit in that claim. The Rashid documents were disclosed on 1 May 2012, in the course of the Bancoult (No 3) proceedings. The applicant sought to raise the issue of their non disclosure in those proceedings. He was not permitted to do so. It was held that the feasibility study had not played a part in the decision to create a marine protected area paras 81 to 93 of judgment given on 11 June 2013. That decision was appealed to the Court of Appeal, and judgment was given in the Court of Appeal on 23 May 2014 ([2014] EWCA Civ 708; [2014] 1 WLR 2921). The applicant then sought to resolve the matter by inviting the respondent to agree that the judgment in the present action should be set aside by consent. This request was made in a letter dated 5 December 2013. It was refused on 5 January 2014. Counsels opinion was obtained on 26 January 2014 and legal aid was applied for immediately. It was eventually granted on 29 September 2014. There is no suggestion that the applicant was in any way responsible for delay between the submission of the application for legal aid and its grant. The application form was filed on 9 January 2015. There was no culpable delay on the part of the applicant. Duty of candour A respondents duty of candour in judicial review proceedings is summarised at p 125 of Fordhams Judicial Review Handbook (Sixth Edition 2012): A defendant public authority and its lawyers owe a vital duty to make full and fair disclosure of relevant material. That should include (1) due diligence in investigating what material is available; (2) disclosure which is relevant or assists the claimant, including on some as yet unpleaded ground; and (3) disclosure at the permission stage if permission is resisted. A main reason why disclosure is not ordered in judicial review is because courts trust public authorities to discharge this self policing duty, which is why such anxious concern is expressed where it transpires that they have not done so. In R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1409 at para 50 Laws LJ said, There is a very high duty on public authority respondents, not least central government, to assist the court with full and accurate explanations of all the facts relevant to the issue which the court must decide. The duty extends to disclosure of materials which are reasonably required for the court to arrive at an accurate decision Graham v Police Service Commission [2011] UKPC 46 at para 18. The purpose of disclosure is to explain the full facts and reasoning underlying the decision challenged, and to disclose relevant documents, unless, in the particular circumstances of the case, other factors, including those which may fall short of public interest immunity, may exclude their disclosure R (AHK) v Secretary of State for Home Department (No 2) [2012] EWHC 1117 at para 22. The Rashid documents should have been disclosed. That is accepted by the respondent. They contained material that was obviously germane to the issues between the parties. The fact that they were not disclosed, despite numerous pointed requests for their production and the circumstance that, in some instances, their very existence was denied are deeply disturbing. The failure to locate the documents throughout the proceedings before the Divisional Court, the Court of Appeal and the House of Lords is not merely unfortunate, it is plainly reprehensible. But I am not persuaded that the non production of the documents until the hearing in Bancoult (No 3) was deliberate. The applicant has accepted as much, having said in his written case that the non disclosure of the documents may conceivably have been due to an oversight. I believe that the preponderance of evidence suggests that this is the most likely explanation, although it was a grievous oversight and one which, it is to be hoped, will be so regarded by the relevant authorities. An omission by government to disclose such material as was contained in the Rashid documents and its failure thereby to discharge its duty of candour was wholly unacceptable when such a fundamental right was at stake. The applicant has suggested that, in light of the seriousness of the failure to disclose these documents and in view of their high relevance, judicial criticism will not suffice and that the decision of the House of Lords should be set aside on account only of their non disclosure. I do not agree. If there are circumstances in which a failure to disclose documents would alone be cause for setting aside a judgment, they are not present here. For the reasons earlier given, however, I consider that the decision should be set aside and the appeal re opened. LADY HALE: (dissenting) This is another chapter in the epic saga of the Chagossians, their expulsion from their homeland and their persistent attempts to secure, if not their actual return, then at least the recognition of their right to do so. It is a saga which shows how the imperial common good is riven by competing theoretical justifications for empire: one, based in liberal imperialism, emphasises the civilising nature of empire and focuses on the good governance of colonies; the other, based in a utilitarian imperialism, instead focuses on how best to appropriate colonial possessions for the benefit of the imperial power (T Frost and CRG Murray, The Chagos Island cases: the empire strikes back (2015) 66 NILQ 263, 266). Thus far, it is the latter which has not only driven the actions of government but has also triumphed in the courts: Lord Hoffmann acknowledged that a choice between the liberal and utilitarian faces of imperialism did rest with the court, and decisively affirmed the utilitarian importance of the imperial interests at stake (Ibid, 287). Courts have, of course, to do justice according to law. Any doubts about whether it is legally possible for the imperial power to exile a people from their homeland have to be rigorously suppressed. That question of law has been finally resolved in these proceedings by the decision of the majority in Bancoult (No 2). Nevertheless, the decision to exile a people has to be taken in accordance with the law; and the people to whom it is of such momentous importance are entitled to expect the highest standards of decision making and the most scrupulous standards of fairness from the institutions of imperial government. The challenge in the main proceedings is to the rationality of the decision in 2004 to re impose the denial of the Chagossians right of abode in their homeland, the first denial in 1971 having been declared unlawful in Bancoult (No 1), a decision which was accepted by the government of the day. The challenge in this application is to the decision of the majority in Bancoult (No 2) that the governments decision was rational. The question for the appellate committee, as Lord Kerr has explained, was not whether it was rational to accept the conclusions of the feasibility study, but whether, on the basis of that report, it was rational to take the drastic decision to re impose the denial of the right of abode. The question for us is not whether the majority got the answer to that question wrong. We could no more set that decision aside on that basis than we could set aside their decision that the imperial government had the power to do this. The basis upon which this court could set aside the earlier decision is that explained by Lord Browne Wilkinson in R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 2) [2000] 1 AC 119, 132D: In principle it must be that your Lordships, as the ultimate court of appeal, have power to correct any injustice caused by an earlier order of this House. However, it should be made clear that the House will not re open any appeal save in circumstances where, through no fault of a party, he or she has been subjected to an unfair procedure. When an order has been made by the House in a particular case there can be no question of that decision being varied or rescinded by a later order made in the same case just because it is thought that the first order is wrong. The previous decision in that case was set aside because of Lord Hoffmanns connection with an intervener in the case. He should not have decided the case without that connection being disclosed to the other parties. The House did not therefore have to consider whether his participation made any difference to the result (although, given that the earlier decision had been reached by a majority of three to two and that at the re hearing a rather different decision was reached, there was surely a very real possibility that it did). I accept that, even if it has power to do so, this court should not set aside a decision reached after an unfair procedure if the result would inevitably have been the same had the procedure been fair. However, if it is clear that the procedure was unfair, this court should not struggle too hard to discover that the result would have been the same. It is for the court which rehears the case to reach its own conclusions. The parties are entitled to procedural as well as substantive justice. It is a proud feature of the law of judicial review of administrative action in this country that the public authority whose actions or decisions are under challenge has a duty to make full and fair disclosure of all the relevant material. Only if this is done can the court perform its vital role of deciding whether or not those actions or decisions were lawful. There is no doubt in this case that the Rashid documents should have been disclosed. They were obviously relevant to the issues in the case. Not only that, the government was asked for them many times and denied their existence. This is scarcely a good advertisement for the quality of government record keeping. No doubt files are sometimes transferred to the Treasury Solicitor for litigation purposes and their existence forgotten. But this should not happen in any well regulated system of file keeping. It was deeply unfair to the applicant, and to the court, that these documents were not disclosed. This was all the more unfair, given the sorry treatment of the Chagossians in the past and the importance of what was at stake for them. Given that context, this court should not take much convincing that their disclosure might have made a difference to the decision in the case. What light they do cast upon the rationality of the decision under challenge will be a matter for the court which does reconsider the case. To my mind, it is quite obvious that they might have made a difference and we certainly cannot be satisfied that they would not. They showed that the science of the report had been severely criticised both by the governments own expert and by an expert on behalf of the islanders; it matters not in what direction those criticisms had tended; what they did was cast doubt upon the authority of the report. They showed that the government had made it plain to the consultants what it wanted the conclusions to be. They showed that important changes had been made to the conclusion. They showed that the central findings about climate change had been changed. They showed that the islands were not in a cyclone belt. The question whether this might have made a difference has to be answered objectively rather than by reference to the particular judges who were then sitting on the case. Ultimately, this is a case about justice. While I deeply admire the industry and intellectual honesty of Lord Mance, which has led him to the conclusion that the decision with which he disagreed at the time should not be set aside, for the reasons given by Lord Kerr, with which I agree, I would grant this application. Justice to my mind demands that the applicant be given a fair chance to satisfy this court that the decision to re impose the denial of the islanders right of abode was not a rational one. |
Since 1969 Mr Cusack has practised as a solicitor at 66 Station Road, Harrow (the property). Station Road, part of the A409, is a single carriage road in each direction flanked by a pedestrian footway. At some unknown date the former front garden was turned into a forecourt open to the highway, which has since then been used for parking cars of staff and clients. This involves cars crossing the footway to gain access, and backing into the road when leaving. The house had been built in around 1900 as a dwelling. In 1973 a personal permission was granted on appeal to Mr Cusack to use the ground floor as offices, subject to a condition requiring cessation by 31 August 1976. It was noted that the ground floor had been used for that purpose for some time, and permission was only sought for a temporary period to enable Mr Cusack to continue his work in the local court. One of the objections had related to traffic generation, but the inspector did not think that use of these rather limited premises has added materially to traffic hazard over the last two years. Following the expiry of that permission the use as an office has continued and has become established in planning terms. The present dispute began in January 2009, when the London Borough of Harrow (the council), as highway authority, wrote to Mr Cusack asserting that the movement of vehicles over the footway caused danger to pedestrians and other motorists. In March 2009 he was informed that the council were planning to erect barriers from 36 to 76 Station Road to prevent vehicles from driving over raised kerbs and footways. After some initial confusion as to the statutory basis for their proposed action, they settled on section 80 of the Highways Act 1980. Mr Cusack began proceedings in the county court for an injunction to prevent the erection of the barriers outside his house. Judge McDowall and on appeal Maddison J found in favour of the council, but their decisions were reversed by the Court of Appeal. Pursuant to an undertaking given by the council to the county court, no barriers have yet been erected outside number 66, although they have been erected outside some other adjoining properties. Apart from statute, Mr Cusack, as owner of property fronting on to the highway, would have had a common law right of access without restriction from any part of the property (see Marshall v Blackpool Corporation [1935] AC 16, 22 per Lord Atkin). In practice those rights have been much circumscribed by statute. As Lord Radcliffe said in Ching Garage Ltd v Chingford Corporation [1961] 1 WLR 470, 478: It is plain, therefore, that, certainly in any built-up area, there are numerous rights of access to the streets from adjoining premises, and that they are rights derived from common law or statute, general or local, or, perhaps, from a combination of the two sources. In my opinion, it is well-settled law that a highway authority exercising statutory powers to improve or maintain a street or highway, such as to raise or lower its level, to form a footpath, to pave or kerb or to erect omnibus shelters, is empowered to carry out its works even though by so doing it interferes with or obstructs frontagers' rights of access to the highway. As that case also shows, although many of the powers conferred by the Acts are subject to payment of compensation, there is no general rule to that effect. As Lord Radcliffe said in the same case (p 475), the right to compensation is a matter of law not concession: If they can do what they want to without having to pay compensation, they have no business to use public funds in paying over money to an objector who is not entitled to it; and if they have to pay compensation, they must pay according to the proper legal measure One of the issues in the appeal is whether that simple dichotomy holds good since the enactment of the Human Rights Act 1998. It is not now in dispute that the council has statutory power to do what it did. The Court of Appeal declared that it is not entitled to proceed under section 80 of the Highways Act 1980, but was so entitled under section 66(2). The latter declaration is not under appeal. The difference lies in whether compensation is payable. Statutory provisions I turn to the relevant sections. Section 66 (in a group of sections headed Safety provisions) provides: Footways and guard-rails etc for publicly maintainable highways (1) It is the duty of a highway authority to provide in or by the side of a highway maintainable at the public expense by them which consists of or comprises a made-up carriageway, a proper and sufficient footway as part of the highway in any case where they consider the provision of a footway as necessary or desirable for the safety or accommodation of pedestrians; and they may light any footway provided by them under this subsection. (2) A highway authority may provide and maintain in a highway maintainable at the public expense by them which consists of or comprises a carriageway, such raised paving, pillars, walls, rails or fences as they think necessary for the purpose of safeguarding persons using the highway. (3) A highway authority may provide and maintain in a highway maintainable at the public expense by them which consists of a footpath or bridleway, such barriers, posts, rails or fences as they think necessary for the purpose of safeguarding persons using the highway. (5) The power conferred by subsection (3) above, and the power to alter or remove any works provided under that subsection, shall not be exercised so as to obstruct any private access to any premises or interfere with the carrying out of agricultural operations. (8) A highway authority or council shall pay compensation to any person who sustains damage by reason of the execution by them of works under subsection (2) or (3) above. Section 80 (in a group headed Fences and boundaries) provides: Power to fence highways (1) Subject to the provisions of this section, a highway authority may erect and maintain fences or posts for the purpose of preventing access to- (a) a highway maintainable at the public expense by them, (b) land on which in accordance with plans made or approved by the Minister they are for the time being constructing or intending to construct a highway shown in the plans which is to be a highway so maintainable, or (c) land on which in pursuance of a scheme under section 16 above, or of an order under section 14 or 18 above, they are for the time being constructing or intending to construct a highway. (2) A highway authority may alter or remove a fence or post erected by them under this section. (3) The powers conferred by this section shall not be exercised so as to- (a) interfere with a fence or gate required for the purpose of agriculture; or (b) obstruct a public right of way; or (c) obstruct any means of access for the construction, formation or laying out of which planning permission has been granted under Part III of the Town and Country Planning Act 1990 (or under any enactment replaced by the said Part III); or (d) obstruct any means of access which was constructed, formed or laid out before 1 July 1948, unless it was constructed, formed or laid out in contravention of restrictions in force under section 1 or 2 of the Restriction of Ribbon Development Act 1935 Reference was also made in earlier correspondence, and in argument before us, to other powers in the Highways Act. They include the power to stop up private means of access subject to compensation (sections 124, 126), and the power to create crossings for, or impose conditions on the use of, accesses onto the highway (section 184). Apart from providing further illustrations of the wide range of sometimes overlapping powers available to authorities under the Act, they appear to throw no useful light on the issues we have to decide. The Court of Appeal The Court of Appeal accepted the submission of Mr Green, for Mr Cusack, that viewed in the context of the structure of the Act as a whole, the appropriate power for what the council wanted to do was section 66 not section 80. As Lewison LJ recorded his submission: Section 66(2) applies where the highway authority consider that the erection of posts etc is necessary for the purpose of safeguarding persons using the highway. This is a much more specific reason for invoking a statutory power than the more nebulous statement of purpose in section 80. Indeed this is precisely the reason, according to the council, why it wishes to erect barriers across the forecourt of 66 Station Road. Lewison LJ found support for that submission in the principle that in statutory construction the specific overrides the general - generalia specialibus non derogant (see eg Pretty v Solly (1859) 26 Beav 606). In his view, the councils proposed action and the reason for taking it fall squarely within section 66(2), and accordingly section 80 did not apply to the facts of the case (para 21). He considered an alternative argument based on section 3 of the Human Rights Act 1998, but did not think that argument took Mr Cusacks case any further (para 27). In this court Mr Sauvain for the council challenges that conclusion. There is no justification, he says, for application of the general/specific principle where there is no conflict between the two provisions. Although they may overlap, they are provided for different purposes and apply in different situations. Where the council has two alternative statutory methods of achieving the same objective, it is entitled to adopt the one which imposes the least burden on the public purse (Westminster Bank Ltd v Minister of Housing and Local Government [1971] AC 508, 530). Whether compensation is payable depends on the particular statutory provision. Mr Green, as I understood his arguments in this court, relied less on the general/specific principle as such, than on a purposive interpretation of the statutory provisions in their context. Although he put his arguments in a number of ways, the common theme was that the broad, unfettered power asserted by the council, without the protection of compensation, was irreconcilable with the general scheme of the Act and the pattern of other comparable provisions. In particular the councils construction of section 80 would enable it to override the safeguards provided in other sections. In particular, it would deprive section 66(2) of most of its apparent content, and, if applied to footpaths and bridleways, would enable it to bypass the prohibition on the use of section 66 to obstruct a private access (section 66(3)(5)). With respect to the Court of Appeal, I am unable to see how the general/specific principle assists in this case. I see no reason to regard either power as more specific or less general than the other. It is true that section 66(2) is directed to a specific purpose (safeguarding persons using the highway), but the powers are defined in relatively wide terms, not necessarily related to private accesses. The powers in section 80 are expressed in narrower terms, related specifically to the prevention of access to an existing or future highway. Although there is no express mention of safety as a purpose, it is implicit that the section must be used for purposes related to those of the Act, which of course include, but are not necessarily confined to, highway safety. Before considering Mr Greens more general submissions it is necessary to say something about the legislative background of the relevant provisions. Legislative history Section 80 It is of interest, though hardly unexpected, that highway safety was one of the purposes referred to when the predecessor of section 80 was first introduced as part of a statute restricting ribbon development (Restriction of Ribbon Development Act 1935, section 4). Mr Sauvains researches have revealed that the then Minister (Mr Hore-Belisha MP better known perhaps for his beacons) described the objects of the new powers as being - to minimise the present dangers to life and limb which result from the erection of houses and buildings with their own means of access at innumerable and ill-considered points along the road, to remove the obstruction to the free passage of traffic and to prevent the further impairment of the setting in which the roads lie. (Hansard (HC Debates), 29 July 1935, col 2335) The 1935 Act imposed a general restriction on the construction, formation or laying out without the consent of the highway authority of any means of access to or from various categories of road, including classified roads (sections 1, 2). Where such restrictions were in force on any road, section 4 enabled the highway authority to erect fences or posts for the purpose of preventing access except at places permitted by them. The section contained exceptions to prevent interference with agricultural fences or gates, or obstruction of public rights of way, and also to prevent obstruction of any means of access formed either before the date on which the restrictions were brought into force, or with the consent of the highway authority thereafter. The Act (section 9) contained provision for compensation for diminution in value caused, not by the erection of the fences as such, but by the prohibition on the formation of new accesses resulting from the restrictions imposed by sections 1 and 2. The main provisions of the 1935 Act (including sections 1, 2 and 9) were repealed by the Town and Country Planning Act 1947, at the same time as the introduction of universal planning control, which has continued under successive enactments to the present day (now the Town and Country Planning Act 1990). The restrictions on ribbon development were in effect subsumed into the general prohibition of development other than with planning permission. For the purposes of the planning Acts, the formation or laying out of means of access to highways was included in the definition of engineering operations and was thus treated as development requiring planning permission (see the 1990 Act, sections 55(1), 336(1)). With very limited exceptions, not material to this case, no compensation was payable for refusal of permission under the new statutory scheme. Section 4 of the 1935 Act was retained following the repeal of the substantive provisions of that Act (including the compensation provision), but was amended by section 113 of, and Schedule 8 to, the 1947 Act to take account of the new legislative scheme. The amended section retained the first two exceptions (agricultural fences or gates, and public rights of way) but for the remainder there was substituted a prohibition in terms related to the 1947 Act. It prohibited use of the section so as to obstruct - any means of access for the construction, formation or laying out of which planning permission has been granted under Part III of the Town and Country Planning Act 1947, or which was constructed, formed or laid out before the appointed day within the meaning of the said Act, unless it was constructed, formed or laid out in contravention of restrictions in force under the foregoing restrictions of this Act. Subject to minor drafting changes, this is the form in which the provision was carried into the Highways Act 1959 (section 85), and now section 80 of the Highways Act 1980. Section 66 Section 66(2) has a very different history, dating back to the Public Health Act 1875. Section 149 included a power for urban authorities to place and keep in repair fences and posts for the safety of foot passengers. That was expanded to something more like its present form in section 39 of the Public Health Acts Amendment Act 1890 (read as one with the 1875 Act: see section 2). The 1875 Act contained a general provision giving compensation for damage caused by the exercise of powers under the Act (section 308). These provisions were replaced by section 67(2) of the Highways Act 1959. By contrast section 67(1) of the 1959 Act (duty to provide footways) reproduced the effect of a more recent enactment, section 58 of the Road Traffic Act 1930. Section 67(1) and (2) were re-enacted as section 66(1) and (2) of the 1980 Act. This different history probably explains why the right to compensation in section 66(8) extends to the effects of works under section 66(2), but not of those under section 66(1). As this account illustrates, the current Highways Act 1980 is the result of a complex evolutionary history extending over more than 130 years. Against this background, and in spite of the efforts of the consolidating draftsmen, it is not perhaps surprising that it contains a varied miscellany of sometimes overlapping and not always consistent statutory powers. The Ching Garage case shows that the present councils confusion as to the appropriate source of the necessary powers is not without precedent. In that case the councils arguments went through a number of vicissitudes (see p 473), before they settled on the provisions on which they lost at trial. By the time of the appeal these had been overtaken by the coming into force of section 67(2) of the 1959 Act, which was substituted by amendment of their pleadings. Having satisfied themselves that the proposed works fell within that provision, their Lordships were not concerned by the possible overlap with other provisions. Planning immunity It is common ground that the use of the property as an office, although in breach of planning control since 1976, has become immune from enforcement. There is no precise finding as to when the occupants of number 66 began to use the forecourt for parking with direct access to the road, nor what works were carried out at that time. Judge McDowall accepted that by the time Mr Cusack acquired the property (1969) it was in its present state, without a front wall or fence, and further that at some time thereafter the pavement was lowered at that point. He was unwilling to find that it began before 1948. The commencement of use of the access, if incidental to the office use of the property, would not itself have involved a material change of use requiring planning permission. But when works were carried out amounting to formation or laying out of a means of access, they would have amounted to an engineering operation and thus development within the statutory definition. That also would have involved a breach of planning control, but again would long since have become immune from enforcement action. Section 80 provides specific protection for accesses formed since 1947 if authorised by planning permission. The protection does not in terms extend to use of accesses which have become immune from enforcement under the planning Acts. In that respect planning law has moved on since 1947. Immunity and its consequences are now governed by amendments made to the 1990 Act by the Planning and Compensation Act 1991, implementing recommendations made in my own report on planning enforcement (Enforcing Planning Control (HMSO 1989)). Among my recommendations was that a development which had become immune from enforcement should be put on the same footing as a permitted use, and that this should be done by treating it as subject to deemed planning permission. I was concerned that the limbo state described as unlawful but immune was confusing to all but specialists and could create difficulties in other areas of the law, including that of compensation for acquisition of land (under the Land Compensation Act 1961, section 5) (see report pp 69-73). Those recommendations were given effect by a new section 191 of the 1990 Act (Certificates of lawfulness of existing use or development). Section 191(2) provides: For the purposes of this Act uses and operations are lawful at any time if - (a) no enforcement action may then be taken in respect of them (whether because they did not involve development or require planning permission or because the time for enforcement action has expired or for any other reason); and (b) they do not constitute a contravention of any of the requirements of any enforcement notice then in force. The section enables application to be made to the local planning authority for a certificate to that effect. It further provides: (6) The lawfulness of any use, operations or other matter for which a certificate is in force under this section shall be conclusively presumed. (7) A certificate under this section in respect of any use shall also have effect, for the purposes of the following enactments, as if it were a grant of planning permission - (a) section 3(3) of the Caravan Sites and Control of Development Act 1960; (b) section 5(2) of the Control of Pollution Act 1974; and (c) section 36(2)(a) of the Environmental Protection Act 1990. It is to be noted that, apart from those three specific cases, the draftsman did not in terms adopt my proposal that there should be a deemed planning permission whenever development had become immune from enforcement. On the other hand, under subsection (2) lawfulness as such for the purposes of the Act does not depend on the issue of a certificate, which is relevant only as evidence of that status. Nor is lawfulness limited to the three categories for which there is deemed planning permission. As Chadwick LJ explained in Epping Forest District Council v Philcox [2002] Env LR 46, paras 28-30, features common to those three statutes are that they involve regulatory regimes which prevent an occupier of land from using that land for the specified purpose unless he is the holder of a licence; that the regimes are underpinned by criminal sanctions; and that no licence can be granted unless at that time the use is authorised by planning permission. In those cases the fact that the use is lawful would not be enough. There is no indication, however, that the specific provision for those three categories was intended to detract from the generality of the proposition that immune uses must now be regarded as lawful for all planning purposes. Lawful for planning purposes might not necessarily be the same as lawful for the purposes of the Highways Act 1980. However, as has been seen, the effect of the 1947 Act was to substitute the general prohibition on development under the planning Acts for the previous more specific restrictions under highways legislation. Apart from planning control, we have not been referred to any other provisions in highways legislation in force since 1947, which would have precluded Mr Cusack from relying on his common law right of access to the highway. Interpretation of section 80 Consideration of the legislative history does not in my view detract from the natural meaning of section 80 as it appears in the 1980 Act. It may be of some interest in explaining why the specific provision for compensation in the 1935 Act was not retained, following the introduction of general planning control, including control over new accesses. As far as concerned Mr Cusacks property, this had the effect that after the 1947 Act any prospective expectation of creating a direct access to the road was subject to the powers of the highway authority, at any time and without compensation, to prevent its use for highway reasons, unless planning permission was first obtained. In my view, apart from the Human Rights Act 1998, Mr Sauvain is right in his submission that the council is entitled to rely on the clear words of section 80 for the power they seek. There is no express or implied restriction on its use. On the basis of the pre-1998 Act authorities, the fact that section 66(2) may confer an alternative power to achieve the same object, which is subject to compensation, is beside the point. That is clear in particular from the Westminster Bank case (see above). There also the legislation provided two different ways of achieving the councils objective, one under the planning Acts and the other under the Highways Act, only the latter involving compensation. The authority was entitled to rely on the former. Lord Reid (giving the majority speech) said: Here the authority did not act in excess of power in deciding to proceed by way of refusal of planning permission rather than by way of prescribing an improvement line. Did it then act in abuse of power? I do not think so. Parliament has chosen to set up two different ways of preventing development which would interfere with schemes for street widening. It must have been aware that one involved paying compensation but the other did not. Nevertheless it expressed no preference, and imposed no limit on the use of either. No doubt there might be special circumstances which make it unreasonable or an abuse of power to use one of these methods but here there were none. ([1971] AC 508, 530) The passage (in the final sentence) also provides an answer to Mr Greens concern that the power might be abused in particular cases, for example, to override specific prohibitions in section 66. Judicial review is not excluded in such circumstances. Mr Green sought to distinguish that case by reference to the speech of Viscount Dilhorne. He had referred to section 220 of the Town and Country Planning Act 1962, which provided for the avoidance of doubt that the powers under that Act were exercisable notwithstanding provision in any other enactment for regulating development. As Mr Green observed, there is no equivalent to that in section 80. However, Viscount Dilhornes reliance on that section was not reflected in the comments of the majority speech, which were expressed in general terms. For these reasons, the council is in my view entitled to succeed, unless some additional limitation on their powers can be derived from the Human Rights Act 1998. To that question I now turn. Human Rights Act 1998 In this part of the case, Mr Green relies on article 1 of the First Protocol to the European Convention on Human Rights (A1P1), which provides: Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. In the domestic context A1P1 is given effect by two provisions of the Human Rights Act (HRA). First, section 3 deals with the duty of the court when interpreting legislation. It requires that so far as it is possible to do so legislation must be read and given effect to in a way which is compatible with the Convention rights. Secondly, section 6 deals with acts of public authorities. It provides so far as material: (1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. (2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions. Three questions therefore arise: Is the closure of Mr Cusacks access without compensation under i) section 80 compatible with A1P1? ii) If not, (under HRA section 3) is it possible to read section 80 in such a way as to make it compatible? iii) Alternatively, (under HRA section 6(2)(a)) could the authority have avoided the breach by acting differently? Mr Green submits that use of section 80 to deprive Mr Cusack of vehicular access to his own property and the right to park on his own hard-standing, without any compensation, would be a breach of A1P1, which can be avoided by use of section 66(2) to achieve the same end. The effect of the Strasbourg caselaw under that article, dating from the leading case of Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, was summarised by the Grand Chamber in Depalle v France (2010) 54 EHRR 535, 559: The Court reiterates that, according to its case-law, Article 1 of Protocol No 1, which guarantees in substance the right of property, comprises three distinct rules (see, inter alia, James v United Kingdom (1986) 8 EHRR 123, para 37): the first, which is expressed in the first sentence of the first paragraph and is of a general nature, lays down the principle of peaceful enjoyment of property. The second rule, in the second sentence of the same paragraph, covers deprivation of possessions and subjects it to certain conditions. The third, contained in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest. The second and third rules, which are concerned with particular instances of interference with the right to peaceful enjoyment of property, are to be construed in the light of the general principle laid down in the first rule (see Bruncrona v Finland (2004) 41 EHRR 592, paras 65- 69 and Broniowski v Poland (2004) 40 EHRR 495, para 134). Regarding whether or not there has been an interference, the Court reiterates that, in determining whether there has been a deprivation of possessions within the second rule, it is necessary not only to consider whether there has been a formal taking or expropriation of property but to look behind the appearances and investigate the realities of the situation complained of. Since the Convention is intended to guarantee rights that are practical and effective, it has to be ascertained whether the situation amounted to a de facto expropriation (see Brumrescu v Romania (1999) 33 EHRR 862, para 76 and Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, paras 63 and 69-74). As that passage makes clear, there is a material distinction between the second rule, relating to deprivation of possessions, and the third (the second paragraph of the article) relating to control of the use of property. Mr Greens primary submission is that removing Mr Cusacks common law right of access to the highway is deprivation of a possession within the second rule. The significance of that characterization, he says, is that where there is a deprivation of property absence of a right to compensation will only be justified in exceptional circumstances (James v UK (1986) 8 EHRR 123, para 54). Alternatively, if deprivation of a frontager's right of access is characterised as a control of his property rights, albeit lawful and in the general interest, the council has not discharged its onus of showing the proportionality of the interference. I say at once that I see no basis for his reliance on the second rule. Mr Cusack has not been deprived of any property. Mr Green was unable to point us to any support in the Strasbourg cases for treating a restriction on the form of access as a deprivation of a possession under that rule. On the other hand, as Mr Sauvain concedes, it falls clearly within the third rule as a control of his property. Accordingly, it is in that context that its compatibility with the Convention right must be considered. Mr Green referred us to the decision in Chassagnou v France (1999) 29 EHRR 615, in which it was held that a law effecting the compulsory transfer to a municipal association of hunting rights over the applicants land was a disproportionate burden and thus a breach of the second paragraph of article 1. Although it was intended that he would be compensated by the grant of a concomitant right to hunt over other land, this was of no value to him since he disapproved of hunting on ethical grounds (see paras 82-85). In my view, the subject-matter of that case was so far from the present that it is of little assistance, other possibly than as an illustration of the width of the principle. Closer to the present context is the decision in Bugajny v Poland (Application No 22531/05) (unreported) given 6 November 2007, which was considered and applied recently by the Court of Appeal in Thomas v Bridgend County Borough Council [2012] QB 512. In my leading judgment I commented on the guidance to be derived from that and other cases since Sporrong: 31. Later cases (see eg Bugajny v Poland (Application No 22531/05) (unreported) given 6 November 2007, para 56 and following) have given further guidance on the practical application of article 1 to individual cases. First, the three rules are not distinct in the sense of being unconnected; the second and third rules are to be construed in the light of the general principle enunciated in the first rule. Secondly, although not spelt out in the wording of the article, claims under any of the three rules need to be examined under four heads: (i) whether there was an interference with the peaceful enjoyment of possessions; (ii) whether the interference was in the general interest; (iii) whether the interference was provided for by law; and (iv) proportionality of the interference. ... 49. The cases show that the issue of proportionality can be expanded into the following question: whether the interference with the applicants' right to peaceful enjoyment of their possessions struck the requisite fair balance between the demands of the general interest of the public and the requirements of the protection of the individual's fundamental rights, or whether it imposed a disproportionate and excessive burden on them. (Bugajny v Poland 6 November 2007, para 67). In Bugajny itself certain plots in a development area had been designated as internal roads, which were in due course built and opened to the public. The developers sought to transfer ownership to the council in return for compensation, under a statute by which public roads were required to be expropriated subject to compensation. This request was rejected on the grounds that, not having been provided for in the local land development plan, they did not belong to the category of public roads. An application to the Strasbourg court alleging a breach of A1P1 succeeded. The requirement to accept the public use of the roads was an interference with the peaceful enjoyment of their possessions within A1P1. Although it met the requirements of being lawful and in the general interest, it was not proportionate. The court recognised that in the area of land development and town planning contracting states enjoyed a wide margin of appreciation in order to implement their policies; but it was for the court to determine whether the requisite balance was maintained in a manner consonant with the applicant's right of property (para 68). To explain how it approached that task, it is necessary to quote from the judgment at some length: [The roads] currently serve both the general public and the housing estate which the applicants developed and are open both to public and private transport of all kinds Given that the entire area of the housing estate covers nine hectares which were divided into as many as thirty-six plots of land designated for the construction purposes, it is reasonable to accept that a considerable number of people can be said to use these roads. It has not been shown or even argued that the access to the estate or the use of these roads is restricted or limited in any way. The situation examined in the present case must therefore be distinguished from that of fenced housing estates to which the public access is restricted by a decision of its inhabitants. The only way in which the land in question can now be used is as roads. The applicants are also currently obliged to bear the costs of their maintenance. The Court emphasises that the burden which the applicants were made to bear is not limited in time in any way. The Court observes that one of the arguments on which the authorities relied when refusing to expropriate the applicants' property was that the roads to be constructed on the estate had not been included in the local land development plan. However, it reiterates that it was not in dispute that the decision on the division could be issued only when the division plan submitted by the owners was compatible with the land development plan. The Court considers that by adopting such an approach the authorities could effectively evade the obligation to build and maintain roads other than major thoroughfares provided for in the plans and shift this obligation onto individual owners. The Court finally notes that the Poznan Regional Court expressed serious doubts as to whether the applicants' situation was compatible with the requirements of article 1 of Protocol No 1. This court expressly compared the applicants' position to that of the applicant in the Papamichalopoulos v Greece case [(1993) 16 EHRR 440] and considered it to be even worse. In the Court's view, the applicants' situation in the present case was less serious than the situation examined in the Papamichalopoulos judgment, because they were not divested of all possibility of using their property. Nonetheless, such a critical assessment on the part of the domestic court is certainly, in the Court's view, of relevance for the overall assessment of the case. Having regard to the above considerations, the Court is of the view that a fair balance was not struck between the competing general and individual interests and that the applicants had to bear an excessive individual burden. (paras 70-74) In the Thomas case the factual circumstances were very different, but a similar approach was applied. The case concerned the exclusion of the right to compensation for the effects of road works where the opening of the road was delayed beyond a fixed time-limit, even if the delay was attributable to default by the authoritys contractor. I noted that, while A1P1 does not impose any general requirement for compensation, its absence may be relevant to the issue of proportionality (para 53): In deciding whether the proportionality test is satisfied, the court is entitled to treat the compensation rights created by the 1973 Act as part of the fair balance thought necessary by Parliament. Where a class of potential claimants is excluded from those rights, the court is entitled to inquire into the reasons for the exclusion, and ask whether it serves any legitimate purpose, or leads to results so anomalous as to render the legislation unacceptable: J A Pye (Oxford) Ltd v United Kingdom (2007) 46 EHRR 1083, para 83. On the particular case I said: Whatever its purpose, the operation of the provision in circumstances such as the present is truly bizarre. The diligent road- builder who completes his project in time is penalised by liability for compensation; the inefficient road-builder is rewarded by evading liability altogether. For the householders there is a double disadvantage. Not only do they suffer the inconvenience and disturbance of a protracted maintenance period, but they lose their right to any compensation for the effects of the use which they are already experiencing. This result is in my view so absurd that it undermines the fairness of the balance intended by Parliament, and necessary to satisfy article 1. In this respect it is my view a stronger case than Bugajny... The nature of the interference was very different. But at the heart of the court's reasoning on proportionality, as I read the decision, was the arbitrary distinction drawn by the domestic law between public roads as designated in the development plan, and internal roads which were no less public in practice, and no less appropriate for adoption by the authorities. The fairness of the balance between public and private interests was destroyed by the opportunity so given to the authorities to evade the responsibility otherwise imposed on them. At least there the state was able to raise an arguable case for distinguishing between the two categories of road. Here, instead, the section produces a result which is directly contrary to that which common sense would dictate. (paras 56-57) As is perhaps implicit in that passage, I regard Bugajny as a somewhat extreme example of the use of A1P1 to override the decisions of the national authorities. The court effectively substituted its own views for that of the national courts as to what was a public road under national law. However, it is relevant that the present case, like Bugajny, falls in the general field of land development and town planning, in which the state is allowed a wide margin of appreciation. As that case also shows, the issue of proportionality is not hard-edged, but requires a broad judgment as to where the fair balance lies. It is not in my view confined to cases of the truly bizarre (as in Thomas), or what might be termed irrationality or Wednesbury unreasonableness in domestic law. In this respect, in my view, the Convention may require some qualification to the narrow approach established by earlier authorities, such as Westminster Bank. The issue is not simply whether the councils action is an abuse of its powers under section 80, but whether in that action a fair balance was struck between the competing general and individual interests. On the other hand, there is no challenge to the compatibility of section 80 as such. Accordingly, the mere fact that another statutory route was available involving compensation does not in itself lead to the conclusion that reliance on section 80 was disproportionate. One argument on the councils side might have been that the requirement for specific planning permission under section 80 is designed to ensure that there has been an opportunity for highway considerations to be taken into account. That, however, does not explain why the exception can be overridden by use of a different power, the only material difference being liability to compensation. Further the inclusion of an exception for pre-1947 uses, regardless of whether they have been assessed on safety grounds, shows that the exclusion is related at least as much to protection of accrued rights as to safety considerations. It was also suggested in the course of argument that frontagers potentially at risk under section 80 could have protected themselves by seeking retrospective planning permission. However, it is at least doubtful whether that would be a proper use of the councils power, in relation to a use which is already lawful for planning purposes, and where the sole object is not a planning purpose, but to secure a right to compensation under a different legislative scheme. Mr Greens strongest argument in my view rests on the changes made by the 1991 Act. Previously, the access, though immune from enforcement under the planning Acts, was not lawful, and therefore, it could be said, should not be the subject of compensation (cf the Land Compensation Act 1973, section 5(4)). As he submits, that position has now changed. The access is to be regarded as lawful for planning purposes, and therefore, he says, there is no good reason for treating it less favourably than a pre-1948 use. The question must however be answered principally by reference to the balance drawn by section 80 itself, allowing for the wide margin of appreciation allowed to the national authorities. It is in my view significant that the legislature did not adopt my recommendation that all immune uses and operations should be treated generally as though subject to planning permission, apart from the three cases specified in the section. There may be room for argument as to where the line in section 80 should have been drawn, but the compatibility of the section is not the issue. Given the availability of the power as a legitimate means of controlling use of a private access in the public interest, its use in the present circumstances was in my view neither an abuse of the councils powers nor outside the boundaries of the discretion allowed by the Convention. For these reasons, I would allow this appeal and (save for the second part of the declaration, relating to possible use of section 66(2), which is not in dispute) set aside the order of the Court of Appeal. LORD NEUBERGER (with whom Lord Sumpton and Lord Hughes agree) Mr Cusack contends that he is entitled to compensation for the loss of vehicular access to his property at 66 Station Road, Harrow, across the footway of the A409 highway. This contention is based on the proposition that, in order to justify its right to impede that access (the access), the council should be required to rely on section 66 of the Highways Act 1980 which provides for compensation, rather than on section 80 of the same Act, which does not. Mr Cusack puts his case on two alternative bases. The first, which was accepted by the Court of Appeal, is that, as a matter of ordinary statutory interpretation, the council cannot choose to rely on section 80, and can only properly rely on section 66. If this is wrong, his alternative basis, which was rejected by the Court of Appeal, is that, once one takes into account the European Convention on Human Rights, and in particular article 1 of the First Protocol (A1P1), the council must rely on section 66 rather than section 80. I agree with Lord Carnwath that both these arguments fail, and that accordingly the councils appeal to this court should be allowed, for the reasons which he gives. However, I would like to add a little, not least because we are differing from the Court of Appeal. As has been accepted by both parties, at least as a matter of language, section 66(2) and section 80(1) of the 1980 Act each appear to be capable of justifying the councils actions in blocking the access. If indeed they do both apply in this case, then, subject to the effect of A1P1, it appears clear the council would be entitled to choose which of the two statutory provisions to rely on. In Westminster Bank Ltd v Minister of Housing and Local Government [1971] AC 508, 530, having said that where Parliament has chosen to set up two different ways of preventing development and that [i]t must have been aware that one involved paying compensation but the other did not, Lord Reid concluded that in the absence of special circumstances which make it unreasonable or an abuse of power to use one of these methods, a highway authority was entitled to rely on either method. Indeed, it was suggested that, bearing in mind the councils obligation to conserve public funds, the council has a duty to rely on section 80. Thus, in a slightly different context, Lord Radcliffe said in Ching Garage Ltd v Chingford Corporation [1961] 1 WLR 470, 475, that if a highway authority can do what they want to without having to pay compensation, they have no business to use public funds in paying over money to an objector who is not entitled to it. It seems to me that the correct test in a case such as this, where there are two separate statutory provisions which could apply, is that, as Lord Reid stated, it is open to the council to rely on either provision, provided that it is reasonable in all the circumstances for it to do so. However, the Court of Appeal concluded that, despite the language of section 80(1), it could not be relied on here, because, construing the 1980 Act as a whole, section 66(2) was the specific statutory provision which applied to the councils actions in this case, and the council could not effectively disapply it by invoking the more general power contained in section 80(1). In his clear and succinct judgment, Lewison LJ identified the relevant approach to interpretation by quoting from a judgment of Sir John Romilly MR in Pretty v Solly (1859) 26 Beav 606, 610. Sir John said that wherever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply. It was suggested on behalf of the council that this case represented an opportunity for this court to make it clear that canons of construction should have a limited role to play in the interpretation of statutes (and indeed contracts). In my view, canons of construction have a valuable part to play in interpretation, provided that they are treated as guidelines rather than railway lines, as servants rather than masters. If invoked properly, they represent a very good example of the value of precedent. Interpretation of any document ultimately involves identifying the intention of Parliament, the drafter, or the parties. That intention must be determined by reference to the precise words used, their particular documentary and factual context, and, where identifiable, their aim or purpose. To that extent, almost every issue of interpretation is unique in terms of the nature of the various factors involved. However, that does not mean that the court has a completely free hand when it comes to interpreting documents: that would be inconsistent with the rule of law, and with the need for as much certainty and predictability as can be attained, bearing in mind that each case must be resolved by reference to its particular factors. Thus, there are some rules of general application eg that a statute cannot be interpreted by reference to what was said about it in Parliament (unless the requirements laid down in Pepper v Hart [1993] AC 593 are satisfied), or that prior negotiations or subsequent actions cannot be taken into account when construing a contract. In addition, particularly in a system which accords as much importance to precedence as the common law, considerable help can often be gained from considering the approach and techniques devised or adopted by other judges when considering questions of interpretation. Even though such approaches and techniques cannot amount to rules, they not only assist lawyers and judges who are subsequently faced with interpretation issues, but they also ensure a degree of consistency of approach to such issues. Hence the so-called canons of construction, some of which are of relatively general application, such as the so-called golden rule (that words are prima facie to be given their ordinary meaning), and some of which may assist in dealing with a more specific problem, such as that enunciated by Sir John Romilly in Pretty v Solly. With few, if any, exceptions, the canons embody logic or common sense, but that is scarcely a reason for discarding them: on the contrary. Of course there will be many cases, where different canons will point to different answers, but that does not call their value into question. Provided that it is remembered that the canons exist to illuminate and help, but not to constrain or inhibit, they remain of real value. Although the principle expressed by Sir John Romilly, sometimes referred to by the Latin expression generalia specialibus non derogant, is a valuable canon of construction, I do not consider that it applies in relation to section 66 and section 80 of the Highways Act 1980. That is because I do not think that it is possible to treat section 66(2) as a specific provision in contrast with section 80(1) as the more general provision. They are, as Mr Sauvain QC for the council submitted, simply different provisions concerned with overlapping aims and with overlapping applications. Each provision authorises a highway authority to erect posts, in the case of section 66 to [safeguard] persons using the highway, and in the case of section 80 for the purpose of preventing access to a highway. There is a relatively narrow exception, in section 66(5), to the circumstances in which section 66(2) can be relied on but by virtue of section 66(8), if it is relied on, it carries with it compensation; on the other hand, there are fairly widely drawn circumstances, set out in section 80(3), in which section 80(1) cannot be invoked, but, where it is relied on, it carries no compensation. The notion that either of two independent provisions in the same statute can be invoked for a particular purpose may seem surprising, especially when that purpose involves an interference with a frontagers right of access by a public body, and when the provisions have significantly different consequences for the frontager. Accordingly, one can well understand why the Court of Appeal sought to reconcile section 66(2) and section 80(1) so as to avoid, or at least to minimise, any overlap. However, as Lord Carnwaths analysis in paras 13-19 above shows, the 1980 Act, like its predecessor was a consolidating statute, and, while it included amendments, it did not purport to rationalise and re-codify the existing law. Rather, it sought to bring into a single Act of Parliament most, if not all, of the various existing and rather disparate statutory provisions relating to highways, which had developed over the years in a piecemeal way, with a few amendments. That was equally true of the 1959 Act, as evidenced by the statutory provisions considered, and the approach taken to them by the House of Lords, in Westminster Bank. Extensive reference to the genealogy or archaeology of a consolidating statute is almost always unhelpful, and is sometimes positively confusing. However, in this case, once one appreciates the way in which the 1980 Act was put together, and more particularly the different statutory origins of sections 66(2) and 80(1), the force of the argument that the two provisions should be construed in a mutually exclusive way is substantially weakened. In view of the history of the 1980 Act, it is unsurprising that it includes provisions which substantially overlap, and courts should not therefore strain to find an interpretation which avoids or minimises such overlap. So far as the application of A1P1 is concerned, as the Grand Chamber said in Depalle v France (2010) 54 EHRR 535, para 78, it is necessary not only to consider whether there has been a formal taking or expropriation of property but to look behind the appearances and investigate the realities of the situation. On that basis, it seems to me clear that the restriction of Mr Cusacks frontager rights, by depriving him of vehicular access to his property, did not involve the deprivation of a possession, within the second rule of A1P1, as identified in Depalle, para 77. However, I do accept, as did the council, that it falls within the third rule there identified, namely the control [of] the use of property in accordance with the general interest. As Lewison LJ said in the Court of Appeal, [2011] EWCA Civ 1514, [2012] PTSR 970, para 25, [E]ven on Mr Green's hypothesis the council is not proposing to rob Mr Cusack of all access to the highway. It is merely proposing to block vehicular access to the highway; and even then perhaps only access by four wheeled vehicles. So even on that basis he is not deprived of the right of access to the highway: the right is being controlled so that it can only be exercised in a particular way. Given that the disadvantage suffered by Mr Cusack falls within the third rule, I do not see how it can be said that the councils reliance on section 80, with the consequence that Mr Cusack receives no compensation, falls foul of A1P1. Although there is no general right to compensation where the third rule applies, that is not, I accept, the end of the matter: it is appropriate to consider whether the exceptions in section 80(3), and in particular the fact that Mr Cusacks case does not fall within them, can be said to be arbitrary. I do not consider such a suggestion to be supportable. Section 80(3)(c) and (d) are drawn so as to exclude accesses which are immune from enforcement under the planning legislation, as opposed to accesses which, under para (c), are the subject of planning permission or deemed planning permission, or which, in the case of para (d), pre-dated the planning legislation. I accept that the distinction between (i) actual or deemed permission and (ii) immunity from enforcement is somewhat narrow, but it undoubtedly exists and has long existed, and it is far from arbitrary or irrational, as Lord Carnwath explains in paras 20-25. Given that there is nothing in the argument that the councils reliance in this case on section 80, which carries no compensation, offends A1P1, I do not consider that the fact that the council could have relied on section 66, which would have carried compensation, alters that conclusion. The fact that these two provisions happen to have overlapping applications, but different consequences in terms of compensation, is explicable by reference to their different origins. A1P1 does not carry with it a general rule that, where the state seeks to control the use of property, and could do so under two different provisions, which have different consequences in terms of compensation, it is obliged to invoke the provision which carries some (or greater) compensation. Of course, as in domestic law (as explained by Lord Reid in Westminster Bank), in a particular case with special facts, there may be such an obligation, but no such special facts have been prayed in aid here. LORD MANCE I agree that the appeal should succeed for the reasons given by Lord Carnwath in paras 27 to 50 and by Lord Neuberger in paras 61 to 69 of their respective judgments. |
This appeal concerns the operation of section 1 of the Crime (International Co operation) Act 2003. That section gives the Secretary of State for the Home Department (who is the appellant in these proceedings) power to serve on a person in the United Kingdom any process or other document at the request of a foreign government or its authorities. Mr Mamdouh Ismail, the respondent, is an Egyptian national. He was chairman of the board of management of the El Salam Maritime Transportation Company which was based in Egypt. Mr Ismails son, Amr, was an executive director and vice chairman. The company operated a ferry. On 3 February 2006 it sank in the Red Sea and more than 1,000 people lost their lives. Mr Ismail and his son were charged with manslaughter. A trial took place before the first instance Safaga Court of Summary Justice. Neither Mr Ismail nor his son was present but they were legally represented. Both were acquitted on 27 July 2008. The prosecution appealed. The respondent and his son were again not present at the appeal hearing but lawyers appeared on their behalf. The respondents sons acquittal was affirmed but on 11 March 2009 Mr Ismail was found guilty. During the hearing before the Appeal Court a lawyer for the prosecution argued that submissions made on behalf of the respondent and his son should not be taken into account because neither was present. It appears that this argument was based on a rule of Egyptian law which requires a defendant to be present in court during a trial of a misdemeanour punishable by imprisonment. The argument was accepted. The respondent was sentenced to the maximum term of imprisonment: seven years, with hard labour. The respondent and his son had entered the United Kingdom on 26 April 2006. They have remained in this country since then. On 11 October 2010 the Egyptian authorities requested the Secretary of State to serve the judgment of the Appeal Court on Mr Ismail. In July 2011 they confirmed that request. On 3 August 2011 the Secretary of State informed the respondent that she intended to serve the judgment. In a letter before claim dated 18 August 2011, Mr Ismails solicitors submitted to the appellant that she would be acting unlawfully if she acceded to the request to serve the judgment. Various reasons were given. Further representations were made on Mr Ismails behalf between August 2011 and January 2012. These prompted an inquiry by the Secretary of State of the Egyptian authorities as to the effect that service of the judgment would have on the respondent. She was informed that the judgment of the Appeal Court, having been given in the respondents absence, could be appealed by means of an objection and this could be done by a lawyer acting on the respondents behalf; time for the lodging of objection (ten days) would begin to run when the judgment was served; if the respondent failed to appeal, the judgment would become final but, in that event, it could be appealed to the Court of Cassation; and if the respondent lodged an objection, he would have to attend the hearing of the appeal in person. On 23 May 2012 the Secretary of State informed Mr Ismails solicitors that she intended to serve the judgment on him. On 20 June 2012 a claim for permission to apply for judicial review of that decision was made. Permission was refused on the papers by Haddon Cave J on 10 October 2012. A renewed application was made and the matter was listed for a rolled up hearing before Goldring LJ and Wyn Williams J on 12 February 2013. Permission to apply for judicial review was given during the hearing and on 26 March 2013 the High Court delivered its reserved judgment, allowing the respondents claim for judicial review. On the Secretary of States application, the High Court certified two points of law of general public importance: 1. What is the extent of the Secretary of States discretion when serving a foreign judgment under section 1 of the Crime (International Co operation) Act 2003? 2. May a persons article 6 rights be engaged on service by the Secretary of State of a foreign judgment under section 1 of the Crime (International Co operation) Act 2003? The judgment of the High Court The High Court considered three grounds advanced on behalf of Mr Ismail. The first of these was that the Secretary of State had been wrong in her analysis of the extent of the obligations imposed on her by article 6 of the European Convention on Human Rights and Fundamental Freedoms (ECHR). The second ground was that the Secretary of State adopted an irrational and unlawful approach in exercising her discretion as to whether or not to accede to the request to serve the judgment on Mr Ismail. Finally, it was argued that the Secretary of State, in her consideration of articles 2, 3 and 8 of ECHR, had failed to take into account all relevant circumstances. Goldring LJ (who delivered the judgment of the court) dealt first with the second of these arguments. He held (in para 63) that, in exercising her discretion under section 1 of the 2003 Act, the Secretary of State could not ignore evidence of obvious illegality or bad faith in the proceedings which had led to the request to enforce a foreign judgment. Nor could she fail to have regard to evidence in relation to the manner in which the judgment had been obtained. She was also obliged to take into account the consequences for the person on whom the judgment was to be served. The consequences which the court considered would ensue for the respondent by service of the judgment were summarised in paras 67 and 68: 67. Service of the judgment would have serious implications for the claimant both in Egypt and the United Kingdom. It would set time running for finalising the judgment. He would have two options: return to Egypt and begin to serve the prison sentence of seven years with hard labour and appeal or remain in the United Kingdom and suffer the consequences of a final judgment. 68. Remaining in the United Kingdom would have significant consequences for the claimant once the judgment is served. Although there is presently no extradition arrangement between the United Kingdom and Egypt, on any request for extradition, the claimant could not dispute the facts. Egypt would then be seeking the extradition of a man guilty of manslaughter. Of course, the claimant would have the protection rights under Part 2 of the Extradition Act 2003. Further, a final judgment in the United Kingdom might well lead to an Interpol red notice. He could not then leave the United Kingdom for fear of being arrested. On the question of whether the proceedings before the court of appeal in Egypt were tainted by illegality or bad faith, Goldring LJ (in para 72) referred to four factors which, he said, constituted sufficient evidence for the Secretary of State to have considered whether this was a judgment obviously obtained in flagrant disregard of justice; in other words, in bad faith (para 73). Those factors were: (i) the background of public pressure after the respondents acquittal for him to be convicted; (ii) the fact that two of the three judges due to hear the appeal were replaced shortly after their appointment by two men who had worked in the prosecutor's office at the time of the investigation; (iii) in the course of the appeal hearing, the respondents legal representation was effectively withdrawn; and (iv) there were grounds to question whether the judgment could be sustained on a proper analysis of the facts. On the first ground advanced on Mr Ismails behalf (that the Secretary of State had been wrong in her understanding of the duties imposed on her by article 6 of ECHR), Goldring LJ said (in para 100) that it was very difficult as a matter of principle to distinguish between enforcing a judgment and directly assisting in the enforcement of it in circumstances such as arose in Mr Ismails case. He considered, therefore, that there was sufficient evidence for the Secretary of State to consider whether article 6 was engaged. He made the following observation at para 102, however: For article 6 to be engaged the disregard of a persons article 6 rights must be flagrant. The test is a very high one. Some indication of that can be gauged from the fact that over the past 20 years article 6 has not been successfully invoked in an extradition context. Even in a case where defence counsel was appointed by the public prosecutor, the applicants were held incommunicado until trial, the hearing was not public and closed to the defence lawyers and self incriminating statements were obtained in highly doubtful circumstances, extradition was permitted (see Lord Browns speech in RB (Algeria) v Secretary of State for the Home Department [2010] 2 AC 110). That underlines how very exceptional must be the circumstances to result in the application of article 6 in a case such as the present. In light of the courts findings on the first two grounds, Goldring LJ said that it was unnecessary to consider the final ground to any degree. He reflected that, since the service of the judgment would have an impact on the respondents family life, the extent and proportionality of any interference with it would have to be assessed. He made an incidental comment on medical evidence that had been submitted on behalf of Mr Ismail. This consisted of three reports from a Professor Kopelman, the last of which suggested that the respondents poor mental condition would worsen if the judgment was served on him. Goldring LJ said (at para 103) that the Secretary of States concerns about this she had said that the claims made about Mr Ismails health were unrealistic may have been entirely justifiable. The appeal before this court For the Secretary of State, Mr Perry QC described the principal question on the appeal as being whether the service of a foreign judgment was capable of engaging the article 6 rights of the individual who is served with the judgment. He submitted that service of such a judgment could not engage article 6 for two reasons: first, service of a foreign judgment does not have the direct consequence of exposing the individual on whom it is served to a breach of any fair trial guarantee; secondly, the consequences of service are not of a type or nature to warrant the engagement of article 6 rights. Mr Perry claimed that it was beyond dispute that service of the judgment on the respondent would have had no direct effect on his rights in this jurisdiction. The only practical effect of service would have been to start the timetable for further appellate proceedings in Egypt. This would in turn require the respondent to decide whether or not to attend those appeal proceedings. Service of the judgment would make no difference to his ability to remain in the United Kingdom, nor would it have any effect on the conditions in which he lived here. By recognising the possible engagement of article 6, the High Courts judgment had impermissibly extended the reach of ECHR to a category of cases to which it had not previously been applied. On the second issue on which a question had been certified (the extent of the Secretary of States discretion when serving a foreign judgment under section 1 of the 2003 Act), Mr Perry submitted that it was not incumbent on the Secretary of State to investigate the fairness of proceedings in a foreign state where she is asked to serve or facilitate the service of a foreign judgment. To impose such a duty would run counter to the purpose of the 2003 Act in that such an obligation would impede the ability of the Secretary of State to offer speedy and effective procedural assistance to the competent authorities in other sovereign states. The High Court was wrong, Mr Perry argued, to treat mere service of process as giving rise to similar duties to those which might attend recognition and enforcement of such process. The two were conceptually and, as a matter of practicality, fundamentally different. The recognition and enforcement of a foreign judgment could have the consequence of directly exposing an individual to a possible breach of his article 6 rights, as in the case of extradition. Mere service of process, carrying no such risk (at present there is no extradition treaty between the UK and Egypt) was of a completely different order. The possibility that at some time in the future an extradition treaty might be made between the two countries was remote, Mr Perry said, and, in any event, a person whose extradition was sought would then have the protections provided for in Part 2 of the Extradition Act 2003. These include the prohibition of extradition where that would be incompatible with ECHR rights. Mr Perry also argued that the High Court was wrong to suggest that the issue of a red notice was contingent on the service of the judgment. Article 82 of INTERPOLs Rules on the Processing of Data explains the purpose of red notices. It stipulates that such notices are published at the request of a National Central Bureau or an international entity with powers of investigation and prosecution in criminal matters in order to seek the location of a wanted person and his or her detention, arrest or restriction of movement for the purpose of extradition, surrender, or similar lawful action. It did not depend on a final judgment having been passed on the person who was the subject of the notice. In fact, as emerged during the hearing of the appeal before this court, a red notice had been issued in respect of Mr Ismail. For the respondent, Ms Montgomery QC suggested that section 1 of the 2003 Act clearly conferred a discretion on the Secretary of State. The essential question was what the extent of that discretion was and what considerations the Secretary of State had to take into account in deciding whether to accede to a request to serve the foreign judgment. In this case there was a properly arguable case that the Egyptian appeal proceedings were manifestly unfair. They should be characterised in article 6 terms as amounting to a flagrant denial of justice Othman v UK (2012) 55 EHRR 1, para 259. To suggest, as did the appellant, that, acceding to the Egyptian governments request to serve the judgment of the appeal court on the respondent would have involved the discharge of a mere administrative function akin to the service of a claim form in a civil/commercial dispute, was unreal. Where material had been placed before the Secretary of State which plausibly suggested that there was inherent and blatant unfairness in the Egyptian trial process, a careful assessment of the respondents representations was needed. Ms Montgomery accepted that in many cases where service of process was sought, this would have limited or ancillary consequences in foreign proceedings. She suggested, however, that this would not invariably be the case and was not the case here. In this instance, service would have had immediate, profound, and irreversible consequences for the respondent. It was the single step necessary to trigger the start of a short period before Mr Ismails conviction and the sentence imposed on him became final. Service of the judgment dramatically reduced the options available to him. He would either have to become a fugitive from justice (having declined to return to Egypt, and having lost forever the opportunity to challenge the allegations), or to have surrendered to Egyptian custody and begun serving the custodial sentence while pursuing an appeal before the Egyptian courts. Contrary to the appellants contention, Ms Montgomery submitted that the service of foreign process was not a purely administrative act; it was, as a matter of principle, an exercise of sovereignty Dicey, Morris and Collins on The Conflict of Laws (15th ed) at 8 049. It was also wrong, Ms Montgomery argued, to suggest that the effects of service would only have been felt abroad. Service would have had foreseeable effects on Mr Ismail in the UK as well. In this jurisdiction the fact that he had become a fugitive from justice would necessarily have had serious implications for him: it would have potentially affected his immigration status and his ability to travel. Most significantly, Mr Ismail would have lost forever his ability to contest the merits of the criminal case against him and the effects of that would be experienced by him in this jurisdiction. (As it happens, Mr Ismails immigration status has not been affected. He was granted indefinite leave to remain on 21 August 2015, following the Egyptian authorities acceptance that the underlying criminal proceedings against him were time barred, and their withdrawal of their request for service of the judgment.) As to the engagement of article 6 of ECHR, Ms Montgomery contended that this case fell within the existing categories of exception to the ordinary territoriality principle under article 1 of the Convention. Relying on Soering v United Kingdom (1989) 11 EHRR 439; Drozd and Janousek v France and Spain (1992) 14 EHRR 745; Bankovic v United Kingdom (2007) 44 EHRR SE5; and Al Skeini v United Kingdom (2011) 53 EHRR 18, she claimed that enforcement of a foreign judgment arising from a flagrantly unfair trial, which would lead to the imposition of punishment in the form of a fine or detention in the UK was capable of engaging the appellants responsibility under article 6 of ECHR. Although the request for assistance in this instance did not seek the imposition of a fine or detention on the respondent, it involved the appellant directly in the process of enforcing the Egyptian judgment. On a proper analysis, in this case the appellant had been asked to participate in and to facilitate a critical step in criminal proceedings in a foreign state. This was not assistance in relation to a collateral feature of an Egyptian criminal process, or engagement with an ancillary part of it. It was participation in a key act with substantive consequences: it would have converted an arguably flagrantly unfair criminal trial process into a final conviction, accompanied by a lengthy sentence of imprisonment. By way of alternative argument, Ms Montgomery suggested that, if it was considered that the case did not come within the already recognised categories of exception to the territoriality principle, an extension of the existing categories of extraterritorial application of ECHR to cover the respondents position would be both limited and justified. The 2003 Act and guidance as to its application The material parts of section 1 of the 2003 Act are these: 1. Service of overseas process (1) The power conferred by subsection (3) is exercisable where the Secretary of State receives any process or other document to which this section applies from the government of, or other authority in, a country outside the United Kingdom, together with a request for the process or document to be served on a person in the United Kingdom. (2) (3) The Secretary of State may cause the process or document to be served by post or, if the request is for personal service, direct the chief officer of police for the area in which that person appears to be to cause it to be personally served on him. The tenor of the provision, looked at from a purely textual perspective, suggests an administrative procedure. It is contemplated that transmission of the document will be made by post unless personal service has been requested. This is not indicative of a requirement that there should routinely be an examination of the proceedings which prompted the request for service of the judgment in order to investigate whether they were infected by obvious illegality or bad faith. On the contrary, at first blush, the Secretary of States role might be regarded as that of a cipher, on account of her obviously occupying the position in the executive through which such requests should pass. Such a role might be considered to chime well with the preamble to the 2003 Act which states that the purpose of the legislation is, among other things, to make provision for furthering co operation with other countries in respect of criminal proceedings and investigations. It might also be considered to properly reflect the circumstance that there are no express statutory preconditions on the exercise of the Secretary of States power. As against such considerations, however, is the fact that the Secretary of State is invested with a power, as opposed to an obligation, to effect service of the foreign process. And, clearly, it was contemplated that there would be circumstances in which it would be appropriate not to authorise service. Mutual Legal Assistance Guidelines are issued by the Secretary of State to inform those who wish to make a request under the 2003 Act. The relevant edition of these guidelines, so far as concerns the present case, is the ninth. In the seventh edition, however, in passages omitted from the ninth, it was stated that the central authority (which administered such requests on behalf of the Secretary of State) should ensure that requests for legal assistance conformed with the requirements of law in the relevant part of the UK and the UKs international obligations and that the execution of particular requests was not inappropriate on public policy grounds. The ninth edition of the guidelines presented a different emphasis. It stated: The UK reserves the right not to serve process or procedural documents where to do so could place a persons safety at risk. (For example: if the procedural documents reveal the address of a key witness in a murder trial). Requesting Authorities should therefore always consider if it is necessary to include details relating to witnesses or victims in such documents. It should be noted that the passages in the seventh edition of the guidelines which required the central authority to ensure that requests for legal assistance conformed with the law of the UK and this countrys international obligations and that the execution of the request was not inappropriate on public policy grounds applied to both requests for service of process and legal assistance generally. The appellant has suggested that these sections were directed to the more intrusive forms of assistance which might be provided within the United Kingdom such as the execution of search warrants. The respondent has sought to counter this argument by referring to the fact that when the Bill which became the 2003 Act was passing through the House of Lords, the Parliamentary Under Secretary of State at the Home Office, Lord Filkin said: Clause 1(3) [section 1(3) of the enacted legislation] is not an obligatory provision. It contains the word may. It always remains open to the Secretary of State to decline to comply with a request. Clearly, there is a burden of responsibility on him when making an appropriate response to any such request. Evidence of this answer was given to the High Court without objection by counsel for the Secretary of State. It is doubtful that it would satisfy the test for admissibility set out in Pepper v Hart [1993] AC 593. In any event, I do not consider that the statement made by Lord Filkin advances the respondents case. It was an answer given to an inquiry as to what might happen if a request for service of process came from countries such as Iraq, North Korea or Zimbabwe. Lord Filkins statement did no more than point out that clause 1(3) was a permissive provision. That is not in dispute. The answer did not deal with the question at issue here, namely, what steps the Secretary of State must take to ensure that there is a lawful exercise of her power under section 1(3). It appears to me, therefore, that neither Lord Filkins answer nor the quoted passages from the seventh edition of the guidelines betoken an intention that the Secretary of State should be, in every instance where service of a foreign judgment is requested, obliged to examine the underlying proceedings which prompted the request for their consistency with the UKs standards of fairness in a criminal trial. The extraterritorial reach of ECHR It is well settled (and not in dispute in the present case) that a person who is physically present in a country which has acceded to ECHR is entitled to the protections enshrined in the Convention. Moreover, such a person may invoke his or her rights where the actions of the member state would expose them to consequences in a non contracting foreign state which would amount to a violation of Convention rights. Thus in Soering v United Kingdom (1989) 11 EHRR 439 the European Court of Human Rights (ECtHR) held that the extradition of the applicant to the United States of America would violate his article 3 rights because he would there be exposed to the risk of the imposition of the death penalty. The violation arose because, as Goldring LJ put it in para 75 of the High Courts judgment, as a direct consequence of the action of a contracting state an individual will be subject to proscribed ill treatment in a foreign state ECtHR was careful to explain, however, the limited nature of this apparent exception to the territorial reach of the Convention. In para 86 the court described the limits of that reach in these terms: Article 1 of the Convention, which provides that the High Contracting Parties shall secure to everyone within their jurisdiction the rights and freedoms defined in Section I, sets a limit, notably territorial, on the reach of the Convention. In particular, the engagement undertaken by a Contracting State is confined to securing (reconnaitre in the French text) the listed rights and freedoms to persons within its own jurisdiction. Further, the Convention does not govern the actions of states not Parties to it, nor does it purport to be a means of requiring the Contracting States to impose Convention standards on other states. Article 1 cannot be read as justifying a general principle to the effect that, notwithstanding its extradition obligations, a Contracting State may not surrender an individual unless satisfied that the conditions awaiting him in the country of destination are in full accord with each of the safeguards of the Convention. It was because the actions of the UK authorities, in extraditing the applicant to a country where he faced the possibility of suffering the death penalty, facilitated that outcome that a violation of article 3 was held to be present. In effect, the UK would have been directly instrumental in exposing Soering to the risk of being executed. Properly understood, therefore, this was not an instance of extending the territorial reach of ECHR. It was the decision to extradite, taken within this jurisdiction, that constituted the breach of article 3. It is, of course, true that the actual transgression of article 3 would take place outside the espace juridique of the Council of Europe but the decision of UK authorities which, it was held, would expose the applicant to the risk of execution was taken within this jurisdiction. Thus understood, Soering provides an obvious contrast with Mr Ismails case. The decision of the Secretary of State to serve the judgment on him did not expose him to the risk of violation of his Convention rights. It is undoubtedly true that service of the judgment would have placed Mr Ismail in something of a dilemma. But it is no part of the Secretary of States function to take steps to relieve him of the need to confront that dilemma. Avoidance of the consequences of the judgment becoming final lay in Mr Ismails hands. He could as he did simply decide not to return to Egypt. That may not have been a pleasant prospect but it is a very far cry from saying that his having to face it amounted to a possible violation of his article 6 rights. It is important to recognise that ECtHR in Soering found that the liability of the UK for a breach of article 3 arose as a direct consequence of the actions of UK authorities. At para 91, the court said: In so far as any liability under the Convention is or may be incurred, it is liability incurred by the extraditing Contracting State by reason of its having taken action which has as a direct consequence the exposure of an individual to proscribed ill treatment. (emphasis supplied) Again the contrast with the respondents position is clear. Service of the Egyptian courts judgment does not have the direct consequence of his becoming exposed to proscribed ill treatment. Even if one assumes that his return to Egypt would involve his being vulnerable to treatment that would, if it occurred within one of the contracting states, amount to a violation of a Convention right, this can on no account be said to be the direct consequence of the Secretary of State having served the judgment on him. Service of the judgment did not require him to return to Egypt. It may be said to have reduced his options but this is quite different from its carrying as an inevitable outcome his exposure to violation of his rights. As I have observed, avoidance of that consequence clearly lay within Mr Ismails control. He may have been faced with an unpalatable choice by the service of the judgment on him but that is quite a different matter from the Secretary of State having taken action which had as a direct consequence the respondents exposure to a violation of his Convention rights. Breach of an individuals rights within a contracting state can arise from actions taken outside the state by a non contracting country. As the judgment in Drozd and Janousek v France and Spain (1992) 14 EHRR 745 illustrates, where a judgment which has been obtained in a non contracting state is enforced in a member state, notwithstanding the fact that it was obtained in circumstances which would have amounted to breach of a Convention right, it may render its enforcement in a member state a violation of that states ECHR obligations. This can only occur if the circumstances in which the judgment was obtained amounted to a flagrant denial of justice para 110 and the concurring opinion of Judge Matscher in Drozd. That argument can be left aside for the present appeal. The issue is whether the service of a judgment can be regarded as akin to its enforcement. Goldring LJ considered that no practical distinction could be drawn between service of the judgment and its enforcement. At para 70 he said that by serving the judgment the Secretary of State would be directly assisting in the enforcement of this Egyptian conviction. He expanded on that thesis in para 100 where he said that it was very difficult as a matter of principle to distinguish between enforcing a judgment and directly assisting in the enforcement of it in such circumstances as the present. This finding lies at the heart of the appeal. Is the service of the judgment part and parcel of its enforcement? Certainly, it is a preliminary step which, on the available evidence, is at least prerequisite to enforcing the judgment. But does it give legal force to the judgment or ratify it? Plainly not. On the contrary section 2(2) of the 2003 Act expressly provides that no obligation arises under the law of the UK to comply with the process by virtue of its service. And section 2(3)(a) requires that the process must be accompanied by a notice drawing to the attention of the person on whom it is served the provisions of subsection (2). I consider that a clear distinction can be drawn between serving a judgment and taking steps to ensure that it is enforced. Enforcement of a judgment necessarily alters the legal position of the person against whom it has been obtained. The legal options available to the respondent may have been narrowed by service but his essential legal position remained unchanged. Mr Ismail remained free to stay in the United Kingdom. Any assets that he held in the UK were unaffected. Service of the judgment on him did not involve any coercive action against him. Moreover, enforcement of the judgment does not flow inexorably from its having been served. It may have been a stage in the process but it did not signify that that process would inevitably continue to its ultimate destination. Indeed, by serving the judgment, the Secretary of State was in no sense committed to authorising its enforcement. Very different considerations would have been in play if she had been asked to take the necessary steps to enforce it presumably, by agreeing to extradite the respondent. Then, as Mr Perry has pointed out, she would be required to observe the obligations imposed on her by the Extradition Act. These would include the duty to ascertain whether the respondents extradition to Egypt would be incompatible with any of his Convention rights precisely the type of exercise contemplated in Soering and Drozd. In my opinion, there is no reason that this type of consideration should be required to take place at the anterior and quite separate stage of deciding whether to serve the judgment. The Secretary of State was quite plainly aware that service of the judgment alone carried no risk of the respondent being exposed to breach of his Convention rights. Sovereignty Whether a decision to serve the judgment is to be characterised as a purely administrative act or the exercise of sovereignty does not seem to me to greatly matter in the present appeal. As Mr Perry submitted, states and international bodies attach increasing importance to their ability to seek assistance in criminal matters swiftly and through processes which are easily accessible. In both Drozd and Willcox v UK (2013) 57 EHRR SE16 the need for strengthening international co operation has been recognised. The European Convention on Mutual Assistance in Criminal Matters 1959 is the primary European instrument providing a framework for mutual legal assistance between EU member states. This is supplemented by the European Convention on Mutual Assistance in Criminal Matters (Council Act of 29 May 2000). It provides for the sending and service of procedural documents. Article 5(1) contemplates service being effected directly by post. It provides that each member state shall send procedural documents intended for persons who are in the territory of another member state to them directly by post. Article 5(2) provides a series of exceptions whereby service may be made via the competent authority of the requested state: 5(2) Procedural documents may be sent via the competent authorities of the requested member state only if: the address of the person for whom the document (a) is intended is unknown or uncertain; or, (b) the relevant procedural law of the requesting member state requires proof of service of the document on the addressee, other than proof that can be obtained by post; or (c) post; or (d) the requesting member state has justified reasons for considering that dispatch by post will be ineffective or is inappropriate. it has not been possible to serve the document by The fact that within the European Union the essentially formal and administrative nature of the exercise of serving process has been given such prominence is not irrelevant to the approach to the interpretation of section 1(3) of the 2003 Act. It would be inconsistent if service of process emanating from an EU country should be treated differently from that of a country which is outside the EU but which enjoys conventional diplomatic relations with the UK. Quite apart from this, the 2003 Act itself and the guidance issued under it clearly indicate that service of process would normally be achieved directly by post. In my opinion, this highlights the predominantly administrative element of this procedure. If service of a judgment is to be regarded as an essentially formal act (as I believe it should be) the question of whether it involves an act of sovereignty recedes in terms of importance. As the appellant has submitted, the United Kingdom plainly regards the service of foreign process as trespassing only in the most minimal way on its sovereignty. Serving a foreign judgment on a person within the UK does not involve any significant compromise on the sovereignty of this country. Consequences Service of the judgment by the Secretary of State would not, therefore, have involved an exercise of the UKs sovereignty nor, for the reasons given above, would it engage Mr Ismails fundamental rights. Indeed, in the particular circumstances of his case, service would have had no material impact on Mr Ismail at all. The High Court considered it to be a significant consequence that he would be exposed to the risk of service of a so called red notice. This, I am afraid, was plainly wrong. Not only was it the case that a red notice had already been issued in respect of him at the request of the Egyptian authorities, INTERPOL rules do not require service of a judgment on a person before a red notice can be issued. The High Court considered that there were other material consequences for the respondent of the service of the Egyptian court of appeals judgment on him: (i) he would have two options only; either to return to Egypt and begin to serve the prison sentence which had been imposed on him or to remain in the UK and suffer the consequences of a final judgment; and (ii) in the event of an extradition agreement being concluded between UK and Egypt, he would not be able to dispute the facts on which his conviction of manslaughter was based. For the reasons that I have earlier given, I do not consider that the narrowing of the respondents options as described in para 50(i) above is sufficient to engage article 6 of ECHR. Nor does the prospect of a future extradition agreement between Egypt and UK, or some other request by Egypt for the respondents extradition, engage article 6 at this stage. If such a circumstance arises, he will then be entitled to rely on the protections afforded by the Extradition Act, including invoking the entire panoply of his article 6 rights. I am also of the view that the Secretary of State was not, in this case, under any obligation to investigate further the consequences that would accrue to the respondent. These were clear. He was entitled to remain in the UK. Service of the judgment could not affect that situation. His assets in the UK were unaffected by having had the judgment served. There was a distinct difference, in terms of its effect on the respondent, between service of the judgment and seeking to have it enforced. While I have concluded that, in the respondents case, article 6 was not engaged and that the Secretary of State was not under an obligation to investigate further the respondents claim, it does not follow that there would not be circumstances in which the service of a judgment would engage article 6 or call for further investigation of the basis on which the judgment was obtained. It is conceivable that service of a judgment, in circumstances different from those arising in the present appeal, might lead more directly to its enforcement or other material consequences, or that obvious illegality or bad faith (that would affect the person on whom service was made in a way that does not arise for Mr Ismail) would warrant a more probing inquiry. On the issue identified by Mr Perry (para 13, above) I therefore consider that it may well be possible in certain cases for service of a foreign judgment to engage article 6. This is not such a case, however. Conclusion I would allow the appeal and dismiss the application for judicial review of the Secretary of States decision. |
This is an appeal from an interlocutor of the First Division of the Inner House of the Court of Session (the Lord President (Hamilton), Lord Reed and Lord Emslie) in a joint referral to the Special Commissioners by Scottish Widows Plc (the Company) and Her Majestys Revenue and Customs (HMRC) under para 31 of Schedule 18 to the Finance Act 1998: [2010] CSIH 47, 2010 SLT 885, 2010 STC 2133. The question that was referred to the Special Commissioners for their determination was in these terms: Whether in computing the Case 1 profit or loss of Scottish Widows plc for the accounting periods ending in 2000, 2001 and 2002, amounts described by the company as transfers from Capital Reserve and included as part of the entries at line 15 of Form 40 for each period fall to be taken into account [as receipts] in computing the profit or loss as the case may be. It is agreed that the words as receipts, which were not in the question as referred, may be understood as following after the words into account. The Special Commissioners answered that question in the affirmative. The Company appealed against that decision and HMRC cross appealed. The Court of Session by a majority (Lord Emslie dissenting) refused the appeal and unanimously refused the cross appeal. Both sides have appealed against its decisions to this court. The essence of the dispute between the parties is whether, in each of the three consecutive years in question, part of the entry in line 15 of the Companys form 40 must be taken as falling within the scope of either section 83(2) or section 83(3) of the Finance Act 1989, as substituted by paragraph 16 of Schedule 8 to the Finance Act 1995 and paragraph 4 of Schedule 31 to the Finance Act 1996. If it falls within the scope either of these two subsections, the sum concerned will fall to be treated as a chargeable receipt for the purposes of Case 1 of Schedule D in ascertaining whether, and if so to what extent, the Company made a loss during those years. The Company carries on business as a life assurance company. Insurance business is a trade within the meaning of Case 1 of Schedule D: Income and Corporation Taxes Act 1988, section 18. The amounts to be taken into account in computing its profits include its investment income from its long term business fund and any increase in the value of its assets during the accounting period. Those profits may be computed for tax purposes in one or other of two ways. They may be computed on the Schedule D, Case 1 basis, the actuarial surplus being a suitable starting point for dealing with cases of this description: see Scottish Union and National Insurance Co v Inland Revenue (1889) 16 R 461, 475, per Lord President Inglis. Or they may be computed on the basis of the income which the insurer receives on its investments less management expenses, known as the I E basis. HMRC are entitled to elect to charge tax on the investment income, and they almost invariably do so as it nearly always pays the Crown to take the interest on the investments and not to trouble with the profits: Revell v Edinburgh Life Insurance Co (1906) 5 TC 221, 227 per Lord President Dunedin. But a Case 1 computation is nevertheless required in every case. The dispute between the parties arises from the demutualisation in 2000 of the Scottish Widows Fund and Life Assurance Society (the Society) and the transfer, under a scheme sanctioned by the Court, of its business to the Company. The scheme came into effect on 3 March 2000. In para 22.1 it was provided that on or after the effective date the Company was to maintain a memorandum account within its long term fund, designated as the capital reserve, which was to represent the amount of the shareholders capital held within the long term business fund. The capital reserve was to be divided between the Companys with profits fund and its non participating fund. Para 22.4 provided that the Company was to maintain records of the capital reserve and of the parts of it allocated to each of these two funds. While the funds comprised identifiable assets with all the qualities that attach to items of that kind, the capital reserve was a device or, as Lord Walker says in para 55, an abstraction. It was created for accounting purposes only and had no real life of its own. At the time of the transfer to the Company the value of the Societys assets was substantially in excess of its liabilities. But the Company sustained trading losses in each of the relevant accounting periods. The market value of its assets decreased from the inception of its long term business fund, due principally to falls in the value of the stock market. The Company claims that account should be taken of its commercial losses in its non participating fund during the relevant accounting periods. It has included Case 1 losses in its tax returns and computations for those periods equal to 28,689,437, 612,583,866 and 431,261, 757 respectively. HMRC maintain that, on a proper construction of section 83(2) of the 1989 Act, which failing of section 83(3), and having regard to entries in the Companys statutory returns for the relevant periods in which it was required to show that it had a surplus in excess of its liabilities for regulatory purposes, these claims should be disallowed. The Company brought various sums into account, described as transfers from the capital reserve, in the years in which they sustained losses. HMRC submit that each increase in the regulatory value selected by the Company falls to be treated as an increase in the value of its assets within the meaning of section 83(2)(b). In any event the amounts brought into account and recorded as transfers from the capital reserve fall to treated as receipts under section 83(3) because they were amounts which had previously been added to the long term business fund as part of the transfer of business to the Company from the Society. The statutory provisions Section 83, as amended, so far as relevant to this case provides as follows: (1) The following provisions of this section have effect where the profits of an insurance company in respect of its life assurance business are, for the purposes of the Taxes Act 1988, computed in accordance with the provisions of that Act applicable to Case 1 of Schedule D. (2) So far as referable to that business, the following items, as brought into account for a period of account (and not otherwise), shall be taken into account as receipts of the period (a) the companys investment income from the assets of its long term business fund, and (b) any increase in value (whether realised or not) of those assets. If for any period of account there is a reduction in the value referred to in paragraph (b) above (as brought into account for the period), that reduction shall be taken into account as an expense of that period. (3) In ascertaining whether or to what extent a company has incurred a loss in respect of that business in a case where an amount is added to the companys long term business fund as part of or in connection with (a) a transfer of business to the company, or (b) a demutualisation of the company not involving a transfer of business, that amount shall (subject to subsection (4) below) be taken into account for the period for which it is brought into account, as an increase in value of the assets of that fund within subsection (2)(b) above. (4) Subsection (3) above does not apply where, or to the extent that, the amount concerned (a) would fall to be taken into account as a receipt apart from this section, (b) is taken into account under subsection (2) above otherwise than by virtue of subsection (3) above, or (c) is specifically exempted from tax. In section 83(8) of the 1989 Act, as amended it is provided that the word add in that section, in relation to an amount and a companys long term business fund, includes transfer (whether from other assets of the company or otherwise). Section 83A(1), which was inserted by section 51 of and paragraph 16 of Schedule 8 to the Finance Act 1995 and amended by paragraph 6 of Schedule 31 to the Finance Act 1996, provides that brought into account in sections 83 to 83AB (as inserted by paragraph 5 of Schedule 31 to the 1996 Act) means brought into account in an account which is recognised for the purposes of those sections. Section 83A(2) provides: Subject to the following provisions of this section and to any regulations made by the Treasury, the accounts recognised for the purposes of those sections are (a) a revenue account prepared for the purposes of the Insurance Companies Act 1982 in respect of the whole of the companys long term business; (b) any separate revenue account required to be prepared under that Act in respect of a part of that business. Paragraph (b) above does not include accounts required in respect of internal linked funds. The revenue account that section 83A(2)(b) refers to is the regulatory return in form 40: see para 12, below. Section 431 of the 1988 Act contains a list of interpretative provisions relating to insurance companies. They include a definition of the word value: see section 83(2)(b) of the 1989 Act. It is in these terms: value, in relation to assets of an insurance company, means the value of the assets as taken into account for the purposes of the companys periodical return. Insurance companies are under an obligation to submit annual returns to the Financial Services Authority (FSA) for regulatory purposes. The purpose of these returns is to demonstrate that the insurer meets the regulatory standard of solvency. They are required to show the results of a statutory actuarial investigation, which calculates the value of the insurers liabilities and identifies the amount of surplus in excess of those liabilities. They must show that there is a sufficient surplus to cover any declared bonuses. At the time of the demutualisation the relevant regulations were to be found in the Insurance Companies Act 1982, the Insurance Companies Regulations 1994 (SI 1994/1516) and the Insurance Companies (Accounts and Statements) Regulations 1996 (SI 1996/943). Section 17 of the 1982 Act provides that every insurance company carrying on insurance business in the United Kingdom must prepare a revenue account for each financial year of the company, a balance sheet and a profit and loss account, the contents of which are to be such as may be prescribed by regulations. Section 18 provides for an actuarial investigation once in every period of twelve months of every insurance company which carries on long term business. Section 28 provides that it must maintain an account of the assets and liabilities attributable to its ordinary long term insurance business. Regulation 45(6) of the 1994 Regulations provides that an insurance company may, for the purposes of an investigation to which section 18 of the Act applied, elect to assign to any of its assets the value given to the asset in question in the books or other records of the company. This was already a practice of long standing in the insurance industry. For a detailed description of the background to these requirements and to the provisions of the Finance Act 1989 about the taxation of the life assurance business of an insurance company, reference may be made to Lord Reeds opinion in the Court of Session to which, like Lord Walker, I would pay tribute: 2010 SLT 885, paras 91 126. A useful summary of the FSA regime that was in force at the relevant time is to be found in Lord Emslies opinion, para 198 (ix) to (xii); see also Lord Walker, at paras 49 53, below. In short, the regulatory returns which a company carrying on long term life insurance was required to complete and submit included a series of numbered forms. Form 13 set out an analysis of all the companys admissible assets, entered at a value which broadly corresponded to their year end market value. Form 14 set out in line 51 the amount by which the net admissible assets exceeded the companys long term business liabilities. Form 40, which was headed Revenue account, set out revenue flows and expenditure for the Companys long term business fund, its with profits fund and its non participating fund, and the amount of each fund to be carried forward to form 58. Form 58, which was headed Valuation result and distribution of surplus, determined the amount of the actuarial surplus by comparing the value of the insurers liabilities under the policies that it has issued with the fund shown on form 40. The data that were used to prepare these regulatory returns were the same as those used to prepare the Companys statutory accounts. The amounts that were calculated by the Company as the commercial losses of its non participating fund were derived from decreases in the market value of the admissible assets less liabilities in that fund during the relevant accounting periods. For each of these periods, however, there were included in the figure entered as other income in line 15 of form 40 amounts described as transfers from capital reserve which reduced the capital reserve by an equivalent amount. They should perhaps have been included as an increase in the value of assets brought into account in line 13. But it is agreed that the way they fall to be treated does not depend on whether they were entered there or in line 15. The Special Commissioners said there is no difference in principle, as both lines are brought into account in the total shown at line 19: para 51. The amounts in aggregate for the relevant accounting periods were 33,410,000, 472,724,000 and 370,000,000 respectively. The approach to construction It is well understood that statutory provisions which bring profits and gains into charge to tax are to be construed as directed towards profits and gains in their natural and proper sense in a sense which no commercial man would misunderstand and that those words are equally applicable whatever the commercial concern may be: Gresham Life Assurance Society v Styles [1892] AC 309, 315, per Lord Halsbury LC. The objective is to ascertain and charge the true profits and gains of the business in question. The requirement that there should be a true and fair view involves the application of a legal standard. The courts are, in general, guided as to the content of the computation by expert opinions of accountants as to what the best current accounting practice requires: Revenue and Customs Commissioners v William Grant & Sons Distillers Ltd [2007] UKHL 15, 2007 SC (HL) 105, [2007] 1 WLR 1448, para 2, per Lord Hoffmann. The special rules that section 83 of the 1989 Act lays down for the calculation of the profits of life assurance companies in respect of their life insurance business for the purposes of corporation tax are, in this respect, no different from the rules that apply to companies generally. They provide a legal standard according to which these profits are to be ascertained. As has already been noted, that section has been amended more than once. But I do not think that it is helpful to look back into the legislative history. Lord Wilberforce said in Farrell v Alexander [1977] AC 59, 73 that self contained statutes, whether consolidating previous law or so doing with amendments, should be interpreted, if reasonably possible, without recourse to antecedents, and that the recourse should only be had when there is a real and substantial difficulty or ambiguity which classical methods of construction cannot solve. Further amendments to section 83 were introduced by section 170 and paragraph 2 of Schedule 33 to the Finance Act 2003. In Inland Revenue Commissioners v Joiner [1975] 1 WLR 1701, 1715 1716 Lord Diplock said that it was a legitimate purpose of legislation by Parliament to clarify the law by making it clear in which of two alternative meanings the ambiguous language of an earlier statute was to be understood, but that it would only be if the language of a provision in an existing statute was ambiguous that it would be legitimate to infer that a purpose of the subsequent statute was to remove doubts as to what the law had always been. So the proper approach is to concentrate on the wording of sections 83(2) and 83(3) as they were at the relevant accounting periods. With that background, and with the benefit of the much more comprehensive description of the facts that Lord Walker has provided and of the carefully reasoned opinions of all the judges in the Inner House, I now turn to the provisions of the 1989 Act which are under scrutiny in this case. Section 83(2) This subsection directs that there must be taken into account as receipts of the period for the purposes of Case 1 of Schedule D (a) the Companys investment income from the assets of its long term business fund and (b) any increase in value of those assets, in so far as these items have been brought into account by the Company. The question is whether its language permits the Company to claim that it in fact sustained an allowable loss during the relevant period when the values as brought into account for that period indicate the contrary. It is common ground that the reference to investment income in paragraph (a) of the subsection is a reference to actual income from assets actually comprised in the long term business fund. The Company submits that, by parity of reasoning, the reference to any increase in value in paragraph (b) must be taken to be a reference to something that can be recognised on a commercial basis as a real increase in real assets. So the word assets in both paragraphs meant assets of the long term business fund which had the capacity to earn income and to grow in value. The fact was that its assets had decreased, not increased, in each of the relevant accounting periods. The amounts included in line 15 of form 40 were there for regulatory purposes only. They were book entries which had no commercial validity. The fact was that the assets of the long term business fund had decreased, not increased, in each of the relevant accounting periods. The mere fact that an amount, such as interest on unpaid tax, was entered in form 40 did not mean that it was taxable. To arrive at a true and fair view it was necessary to go behind the entries on the forms and look at the facts. In the Court of Session the judges of the First Division were unanimous in accepting this argument and rejecting the argument for HMRC. The Lord President said that he was unable to accept that the contents of the revenue account that had been prepared for regulatory purposes had the definitional character for which HMRC contended. The fact that the investment income was inevitably an actual receipt suggested that the increase in value should be an actual sum, as opposed to an accounting element: para 54. Lord Reed made the same point in para 181, adding that the words whether realised or not were a strong indication that section 83(2) was concerned with real gains rather than a change in notional values. Lord Emslie said that, consistent with the long established distinction between assets and fund, the reference to an increase in value of assets should be taken as reflecting commercial reality in the form of actual increases in the value of assets: para 204. As Mr Andrew Young QC for HMRC pointed out, however, that section 83(2) is a special rule for the computation of the profits of an insurance company in respect of its life assurance business. The general rules for the computation of profits and gains for the purposes of Case 1 of Schedule D must be taken to have been modified to the extent provided for in this subsection. The Company was being taxed on the I minus E basis and it is this subsection, not the rules that are generally applicable, that must be construed. An insurance company is entitled to elect, under regulation 45(6) of the 1994 Regulations, to assign to any of its assets the value given to the asset in the books or other records of the company. Section 83(2) can be taken to have been drafted in the light of the fact that insurance companies almost always, if not invariably, choose to use book values (in the sense indicated by regulation 45(6)) to arrive at the necessary balance in form 40 to demonstrate solvency to the regulatory authority. Once this point is grasped, it seems to me that the meaning to be given to section 83(2)(b) falls fairly easily into place. The wording of the subsection follows that of the forms. While the investment income in paragraph (a) is real income, the increase in value referred to in paragraph (b) may or may not be a real increase. The assets which gave rise to this increase in value may or may not be the same assets as those referred to in paragraph (a). It depends on the content of the amounts shown in lines 13 and 15 of form 40. Amounts taken from its long term business fund were used by the Company to supplement its trading income in each of the three years in question. It chose to use its own book values, not values computed according to the current value of the assets of its long term business fund, to arrive at the final values that were brought into account on form 40. In the absence of further directions in the statute as to how the increase in value is to be computed in cases where that option has been chosen and there are none I would hold that the increase in value referred to in paragraph (b) must be taken to be the amount which has been brought into account on the form. The phrase as brought into account for a period of account in the opening words of the paragraph lies at the heart of this interpretation. It was suggested by the Company that this phrase determined the period for which items were to be treated as taxable receipts but not the items which were taxable. But this interpretation of the phrase does not, I think, give full weight to the word as. Linked to the words the following items which precede it, the phrase indicates that the computation must proceed on the basis of the way the items have actually been entered on the forms. If values shown in the books or other records of the company have been used, instead of market values, it will be the book values that will determine whether or not there has been any increase in value during the relevant period and, if so, how much that increase is. The phrase and not otherwise was said to support the Companys interpretation of paragraph (b) because it indicated that it was being assumed that the items that were being brought into account when any increase in value was being assessed were items that could be realised, not notional ones. But I think that their purpose is to make it clear that the basis of computation referred to in subsection (2) is the only basis that is relevant for the purposes referred to in subsection (1). The words whether realised or not are there to indicate a change from the computation indicated by the original wording of section 83. If the company chooses to bring unrealised increases in value into account, those increases in value must be taken into account as receipts for the period in the same way as increases that have been realised. For these reasons I am unable to agree with the judges of the Court of Session as to the meaning and effect of section 83(2)(b). But in para 205 of his opinion Lord Emslie made some further points which, as they were attractively put, need to be answered too. He said that a factor which favoured the Companys construction of section 83(2) was that it accorded well with the general principles (1) that the ascertainment of receipts or gains for tax purposes should prima facie reflect commercial reality; (2) that income or gains to be taxed should prima facie be the taxpayers and not those of a third party; and (3) that the ordinary recognition of shareholders capital to cover actual trading should not prima facie be a chargeable receipt. He described these principles in more detail in paras 197 and 198, and I agree with him that prima facie they can be taken to be a reliable guide as to how tax legislation ought to be construed. But his use of the phrase prima facie indicates, if I may say so quite correctly, that these are not absolute rules that are incapable of being disapplied by the statute. In this case we are dealing with special rules that have been designed to take account of the unique nature of the business carried on by life assurance companies. That in itself suggests that it is the language of the statute, rather than these general rules, that should be the determinative factor in this case. Taking Lord Emslies three points in turn, I would hold, firstly, that the language of section 83(2) shows conclusively that, if the insurance company chooses to use book values to arrive at the final values shown on form 40, it is on those values that the computation referred to in section 83(1) must be based. This can be said to reflect the commercial reality of the life assurance industry, as the Companys taxable receipts were based on its own figures as submitted to the regulatory authorities to justify the surplus of assets that it wished to recognise. Secondly, there is no question, in this case, of taxing the income or gains of a third party. The values brought into account on form 40 are the product of assets that were vested in the Company when it established its long term business fund. Their link with the Society was entirely broken when the transfer under the scheme took effect. As to Lord Emslies third point, it must be appreciated that the capital reserve was not, as he said in para 202, ordinary shareholders capital. The words themselves might be taken as suggesting otherwise, but I think that the name that was given to what the scheme described as a memorandum account is a distraction. The reality is that the reserve had no life of its own separate from the long term business fund. It was an accounting mechanism which the Company had established for its own internal accounting purposes as part of its long term business fund. It did not consist of particular assets but was a financial structure which was subject to all the statutory restrictions and requirements to which that fund was subject. In para 205 he said that, as the capital reserve was shareholders capital, its ordinary recognition to cover actual trading receipts should not prima facie be deemed a chargeable receipt. But, as the capital reserve had no life of its own, amounts that were described as transfers from the reserve fell to be treated in the same way as any other assets comprised within the long term business fund for regulatory purposes and, in consequence, for the purposes of section 83(2) too. For these reasons, and those given by Lord Walker, I would allow the HMRCs cross appeal. Section 83(3) As I would answer the question in the reference in favour of HMRC on the ground that the amounts in question fall to be taken into account as receipts under section 83(2) with the result that there was a corresponding increase in the assets of the long term business fund for each of the relevant accounting periods within the meaning of paragraph (b) of that subsection, the question whether section 83(3) applies to those amounts does not arise. This is because section 83(4) provides that subsection (3) of that section does not apply where, or to the extent that, the amount concerned is taken into account under subsection (2). But, as the judges of the Court of Session were divided in this issue and out of respect for the care which they took to examine it, I would like to make these few brief comments. The exercise to which section 83(3) is directed proceeds in two stages which are, as Lord Reed said in para 191(1), conceptually distinct from each other. First, there is the question whether an amount has been added to the companys long term business fund as a part of or in connection with a transfer of business to the company. Section 83(8) provides that the word add includes transfer. As for the facts of this case, amounts were added to the Companys long term business fund when the scheme took effect as part of the transfer of the Societys business to the Company. The whole of the amount that was to be treated as the capital reserve for accounting purposes was added or transferred to the Companys long term business fund as an integral part of the scheme. It seems to me to be plain, having regard to the terms of the scheme, that the addition to the Companys long term business fund was as part of or in connection with the transfer of the Societys business to the Company. The fact that it was only later that some amounts were brought into account by way of what were called transfers from the capital reserve does not matter. The second stage is the bringing of the amount into account for the period in question. It seems to me that this occurs as and when, and indeed whenever, the amount is brought into account as an increase in value to reduce or eliminate a loss that would otherwise have occurred during the relevant period. As Lord Reed said in para 191(2), there are understandable reasons why Parliament might consider that the use of amounts acquired on a transfer of business to offset liabilities resulting from normal patterns of trading which were not otherwise chargeable to tax should be disallowed. I agree with him that, when the amounts were subsequently brought into account on form 40, they would but for the fact that they were already caught by section 83(2) have fallen to be treated by section 83(3) as chargeable receipts for the purpose of ascertaining whether or to what extent the Company had incurred a loss in each of the relevant periods. Lord Emslies point, which he made in para 228 of his dissenting opinion, that the transfers were made in a non chargeable context is answered by the two stage nature of the exercise to which section 83(3) is directed. It is not the context in which the transfer was made at the outset that determines the way in which the amounts fall to be treated when, at some later stage, they are brought into account. Had it been necessary to do so to arrive at an answer to the question that was referred to the Special Commissioners, I would have affirmed the decision of the majority in the Inner House on this issue and dismissed the Companys appeal. Conclusion I would recall the interlocutor of the Inner House of the Court of Session, allow the cross appeal by the HMRC and answer the question referred to the Special Commissioners in the affirmative. LORD WALKER Introduction On 3 March 2000 Scottish Widows plc (the Company), a new company within the Lloyds TSB banking group, acquired the principal assets and liabilities of the life assurance business of the Scottish Widows Fund and Life Assurance Society (the Society). The Society had a long and distinguished history. It was established in Edinburgh in 1814 upon the principle of mutual assurance. It was incorporated by statute in 1861 as a company without a share capital and it remained a mutual life office that is an entity owned by its members, the policyholders, with no outside shareholders until the change in 2000, which has been referred to as demutualisation. The process of demutualisation was achieved by a scheme of transfer approved by the Court of Session under section 49 of and Schedule 2C to the Insurance Companies Act 1982 (ICA 1982). Some of the provisions of the scheme are of central importance to this appeal. The transfers which it effected were on a very large scale: the Company acquired, in round terms, assets with a market value of the order of 25bn and became subject to actuarial liabilities of the order of 19bn. The qualifying members of the Society received compensation of approximately 5.846bn, representing the difference (with various adjustments and enhancements) between the assets and the liabilities. This compensation was paid by the Companys holding company, Scottish Widows Financial Services Holdings Limited (Holdings), which owns the whole of the Companys issued share capital. The Societys assets included large holdings of equities as well as fixed interest securities, immovable property and other investments. As it happens the United Kingdom stock market reached what was (and remains) an all time high in the new year of 2000, and in the first years of the Companys business the market value of its holdings of equities was substantially reduced. This unexpected and unwelcome turn of events has led to a dispute between the Company and HM Revenue and Customs (the Revenue) as to the tax consequences. On 11 October 2006 the Company and the Revenue joined in making a referral to the Special Commissioners under Schedule 18, para 31 of the Finance Act 1998. The agreed question to be determined was as follows (with a small agreed explanatory addition): Whether in computing the Case 1 profit or loss of [the Company] for the accounting periods ending in 2000, 2001 and 2002, amounts described by the company as transfers from Capital Reserve and included as part of the entries at line 15 of Form 40 for each period fall to be taken into account [as receipts] in computing the profit or loss as the case may be. It is common ground that the answer to this question depends on two issues, one turning on the meaning and application of a general provision in subsection 83(2) (read with subsection (1)) of the Finance Act 1989 as amended (FA 1989), and the other turning on the meaning and application of a more particular provision in subsection 83(3) (read with subsection (4)) of the same section. The Company must win on both issues in order to succeed. Conversely it is sufficient for the Revenue to succeed if it wins on either issue. The first issue, once understood, is a short point of construction. But for the non specialist a lot of background, some of it quite technical, is required in order to understand the point, and to be able to weigh the linguistic arguments against more general considerations based on the legislative scheme and purpose. The second issue (which arises only if the Company is successful on the first issue) is a rather more intricate point of construction. The complex background, and the large amounts of tax at stake, help to explain why these two points of construction took four and a half days before the Special Commissioners, and no less than seven and a half days before the Court of Session. The Special Commissioners (Mr J Gordon Reid QC and Dr John F Avery Jones CBE) decided the first issue in favour of the Company and the second issue in favour of the Revenue, so that the Revenue was successful. The First Division of the Inner House of the Court of Session (the Lord President (Hamilton), Lord Reed and Lord Emslie) reached the same conclusions on both issues, unanimously on the first and with Lord Emslie dissenting on the second: [2010] CSIH 47; 2010 SLT 885; [2010] STC 2133. The Company now appeals on the second issue and the Revenue cross appeals on the first issue. The historical background. The first issue (the subject of the Revenues cross appeal) comes naturally before the second issue (the subject of the Companys appeal). But before getting to the detailed arguments on either issue it is necessary to say something about the historical background, and to cover regulatory as well as taxation aspects, since these two aspects have become closely interrelated. The background has already been covered with conspicuous thoroughness and clarity in the judgment of Lord Reed (paras 87 104), to which I gratefully acknowledge my indebtedness. This part of my judgment is largely based on the fuller description by Lord Reed, with the addition of a few points of my own. Life assurance, in its many different forms, has played an important part in British social and economic history. Actuarial science was already developing by the beginning of the eighteenth century (one of the founding fathers, Edmund Halley, published a paper on The Degrees of the Mortality of Mankind, commissioned by the Royal Society, in 1693). The Life Assurance Act 1774 addressed the problem of insurable interest and curbed the scandal of tontines, then fashionable in some wealthy circles. Interest in life policies was by no means restricted to the wealthy. The Society was only one (and among the most prominent in Scotland) of many mutual societies by which working men could insure against the risk of their families being left in penury in the event of the early death or disablement of the main breadwinner. In England the most prominent comparable body was probably the Friends Provident Society, founded in 1832 (it was a registered friendly society, regulated by a different statutory system). The growth of these mutual societies was remarkable: they had just over 700,000 members in 1803, over 3 million in 1887, and over 6 million in 1910 (there are fuller statistics in D. Green, Reinventing Civil Society, 1993). The mutual movement went into decline after Lloyd George introduced a system of compulsory national insurance in 1911. The public interest in life assurance as encouraging prudent self reliance was reflected in its tax treatment, though for the most part the incentives were directed to policyholders rather than life offices. In 1870, after several life offices had run into difficulties, Parliament introduced a new system of regulation. It was the foundation of the more elaborate system that we have today. The Life Assurance Companies Act 1870 (LACA 1870) required life offices (whether mutual or proprietary) to keep proper accounts and to prepare annual financial statements consisting of a revenue account and a balance sheet in a prescribed form. Regular actuarial investigations were made mandatory. Lord Reed explains in his judgment (paras 91 94) how section 4 of LACA 1870 introduced for the first time the statutory concept of a life assurance fund held as security for the rights of holders of life policies and annuities. This was the origin of what is now referred to as a life offices long term business fund (LTBF). As regards taxation, during the 19th century and the first two thirds of the 20th century there was no corporation tax and no capital gains tax. Companies were subject, in much the same way as individuals, to income tax assessed and charged under the various schedules and cases defined in the Income Tax Acts. If a taxpayer received income which could be regarded as falling within more than one schedule or case, the Revenue could not claim tax twice, but could choose which schedule to apply. This choice (sometimes referred to as the Crown option) was available to the Revenue in relation to proprietary life offices, which held large reserves of income producing investments in order to meet their actuarial liabilities and provide for unforeseen contingencies. They could be taxed either on the profits of a trade under Schedule D Case I, or on their investment income as such. It was usually more advantageous for the Revenue to make an assessment on the companys investment income, as Lord President Dunedin noted in Revell v Edinburgh Life Insurance Co (1906) 5 TC 221, 227. The Crown option was abolished by the Finance Act 2007 and replaced by mandatory provisions. With a mutual life office the Revenue never had a choice, since mutual trading does not produce profits taxable under Schedule D Case I. The first statutory provisions giving special tax treatment to life offices were in the Finance Act 1915. Life assurance was to be treated as a separate business. Annuity funds were to be taxed separately from life funds. Life offices taxed on their investment income were to be allowed a deduction for management expenses (including commission paid to brokers). This system of taxation is generally referred to as the I minus E (that is, income minus expenses) basis of assessment. It remained open to the Revenue to choose to assess a life office to tax under Schedule D Case I, but the basis of that assessment was altered (and the likelihood of its actually being adopted by the Revenue was reduced) by section 16 of the Finance Act 1923 (FA 1923), which gave effect to a recommendation in the report, published in 1920, of the Royal Commission on Income Tax (Cmd 615). Profits allocated to with profits policies were to be excluded from the life offices taxable profits. This was not unprincipled, since on allocation the profits became liabilities. This provision has been re enacted in successive consolidating statutes, and finally in section 433 of the Income and Corporation Taxes Act 1988 (ICTA 1988), the terms of which are set out in para 103 of Lord Reeds judgment. Section 433 of ICTA 1988 was repealed and replaced by FA 1989. The change made by FA 1923 was an important change. In practical terms it diminished the difference in tax treatment as between proprietary and mutual life offices. Its importance increased with changes in economic conditions in Britain during the second half of the 20th century (in brief, monetary inflation and the prospect of substantial capital gains from investment in equities and property). The Society was required by its constitution and regulations (to be found in their final form in the Scottish Widows Fund and Life Assurance Act 1980), as the Company is required under the scheme, to allocate to the holders of its with profits whole life and endowment policies nine tenths of the with profits part of the gains which it recognised, or brought into account (the expressions mean the same), in the revenue account of its LTBF. After the introduction of capital gains tax and corporation tax on chargeable gains, realised gains made by the Society were taxed at differential rates, the details of which are not material. But unrealised gains could be recognised (or brought into account) in order to enable larger bonuses to be allocated and paid to with profits policyholders without having been taxed in the Societys hands. This was perceived by the Revenue as a serious defect in the system, as appears from an official consultation document published in 1988, The Taxation of Life Assurance, (summarised in paras 123 126 of Lord Reeds judgment). This document gives a summary of how during the 1980s the life assurance industry was rapidly evolving into being part of a larger savings industry, in competition with unit trusts and other savings media, and itself increasingly making use of unit linked policies rather than traditional with profit policies (investment by small savers in authorised unit trusts and approved investment trusts was encouraged in a different way, by deferring tax on capital gains until individual unitholders or shareholders realised their gains). Section 83 of FA 1989, which is at the heart of this appeal, was part of the changes which Parliament made in consequence of this review. It makes an express link between the imposition of liability to tax (or the creation of an allowable loss) under Schedule D Case I and the regulatory regime under ICA 1982. It is therefore necessary, before coming to section 83, to give a short account of the regulatory regime in ICA 1982 and regulations made under it. ICA 1982 and regulations under it The regulatory system introduced by LACA 1870 had been re enacted and modified from time to time. ICA 1982 replaced it with a similar but much more detailed system, elaborated in a number of statutory instruments, of which the most relevant for present purposes are the Insurance Companies Regulations 1994 (SI 1994/1516) (the 1994 regulations) and the Insurance Companies (Accounts and Statements) Regulations 1996 (SI 1996/943) (the 1996 regulations). Section 17 of ICA 1982 required every insurance company to which Part II applied to prepare with respect to each financial year of the company, a revenue account for the year, a balance sheet as at the end of the year and a profit and loss account (or for a mutual an income and expenditure account) for the year. Each of these was to be in a form prescribed by regulations. Under the 1996 regulations (as amended down to the year 2000) different forms were prescribed for different types of insurance companies, and they were still required by the new regulatory system mentioned in para 55 below. The form of balance sheet prescribed (by regulation 6) for companies carrying on long term business were forms 13 (relating to assets) and 14 (relating to liabilities). These together made up the two sides of the balance sheet. The form prescribed (by regulation 8) for companies carrying on long term business was form 40; if the company had more than one LTBF a separate account was required for each LTBF, and a consolidated form for all of them. The Company has three LTBFs, a with profits fund, a non participating fund for business taken over from the Society, and a non participating fund for new business. Section 18 of ICA 1982 required every insurance company to which it applied, and which carried on long term business, to cause its actuary to make an annual investigation of its financial condition, and to cause an abstract of the actuarys report to be made. Assets were to be valued and liabilities determined in accordance with valuation regulations, and the abstract was to be in a form prescribed by regulations. Under regulation 25 of the 1996 regulations (as under the new regulatory system) the most relevant of the prescribed forms to be included in the abstract was form 58. Regulation 45 of the 1994 regulations (as amended down to the material time) dealt with valuation of assets. After some general provisions in paras (1) to (5) it dealt specifically with actuarial investigations under section 18 of ICA 1982: (6) Notwithstanding paragraph (1) above (but subject to the conditions set out in paragraph (7) below), an insurance company may, for the purposes of an investigation to which section 18 of the Act applies or an investigation made in pursuance of a requirement under section 42 of the Act, elect to assign to any of its assets the value given to the asset in question in the books or other records of the company. (7) The conditions referred to in paragraph (6) above are (a) that the election shall not enable the company to bring into account any asset for the valuation of which no provision is made in this Part of these Regulations; (b) that the value assigned to the aggregate of the assets shall not be higher than the aggregate of the value of those assets as determined in accordance with regulations 46 to 57 of these Regulations. Section 28 and 29 of ICA 1982 required separate accounts and funds to be maintained for long term business, and for the assets representing those funds to be applicable only for the purposes of the appropriate business, except so far as the value of the assets was shown, on a statutory actuarial investigation, to exceed the liabilities attributable to the fund. I shall have to come back to the prescribed forms. I add one comment. Lord Reed observed (para 112), and I agree, that the use of the word fund in ICA 1982 is not entirely consistent. Lord Reed had earlier quoted an observation of Lord Greene MR in Allchin v Coulthard [1942] 2 KB 228, 234: The word fund may mean actual cash resources of a particular kind (e.g. money in a drawer or a bank), or it may be a mere accountancy expression used to describe a particular category which a person uses in making up his accounts. This is an important distinction, although Lord Greenes reference to cash resources is a little surprising and may have been influenced by the context of the particular case before him (it concerned the taxation of a local authoritys general rate fund). In the context of life assurance a LTBF is a fund of investments of various types, and it falls within Lord Greenes first category. The investments (the assets of the fund) change from time to time, as and when the investment managers need to raise money or exercise their judgment to switch investments, and the values of the assets fluctuate constantly. But at any time it is possible to identify the assets for the time being constituting the fund, which is a continuing entity. By contrast the Capital Reserve established by the scheme approved by the Court of Session and put into effect in 2000 (and here I am putting down a marker for later parts of this judgment), if it was a fund at all, was a fund in Lord Greenes second sense. It was an accounting abstraction and it never consisted of identifiable assets. Before going on to the scheme it is convenient to record, out of chronological sequence, that ICA 1982 was repealed by a statutory instrument made under the Financial Services and Markets Act 2000 which came into full force on 1 December 2001 (having come into force at earlier dates for limited purposes including rule making powers). In consequence the new regime applied to the second and third of the Companys accounting periods relevant to this appeal that is, the calendar years 2001 and 2002; the Financial Services Authority (FSA) became the regulator, and the system of regulation was prescribed by rules made by the FSA rather than by statutory instrument. But the substance of the system, and the identifying numbers of the forms, were unchanged. In particular, rule 9.10(c) of the FSAs Interim Prudential Sourcebook for Insurers Instrument 2001 reproduced the effect of regulation 45(6) of the 1994 regulations. There were some minor changes of terminology in the forms, which were set out in Appendices 9.1 (forms 13 and 14), 9.3 (form 40) and 9.4 (form 58) of the 2001 instrument. The scheme The scheme for the transfer of the Societys business to the Lloyds TSB group was preceded by an agreement dated 23 June 1999 between the Society and Lloyds TSB Group plc. The agreement provided for the scheme to be approved by a special resolution of the Society in general meeting (which duly occurred) and for an application to be made to the Court of Session for sanction of the scheme under section 49 of and Schedule 2C to ICA 1982. The Court of Session (Lord Nimmo Smith) sanctioned the scheme by an order made on 28 February 2000, and the scheme took effect on 3 March 2000. The scheme also obtained regulatory approval and tax clearances. The scheme is lengthy and in parts very technical. It runs to 41 clauses and 12 schedules. In bare outline, the bulk of the assets and liabilities of the Society were transferred to the Company; pension policies and assets and liabilities associated with them were transferred to another Lloyds TSB group company and are not relevant to this appeal. Payment of the membership compensation to qualifying members of the Society (later quantified at 5,846m) was undertaken by Holdings, which is the owner of all the Companys issued share capital. The provisions of the scheme which call for most attention are in Part D (Fund Structure) and Part E (operation of the Funds). Clause 22 in Part E (Capital Reserve) is of particular importance. Under Part D (Fund Structure) the most basic division was between the LBTF (defined as the Long Term Fund) and the Shareholders Fund. The latter fund was to have allocated to it infrastructure assets and shares in seven subsidiaries and any joint venture companies (clause 15.1 and relevant definitions in Schedule 1). All other assets (other than pension assets as mentioned above) were to be allocated to the LTBF, which was to be divided into two separate subfunds, the With Profits Fund and the Non Participating Fund (respectively the WPF and the NPF), with an appropriate allocation of existing policies (clauses 13 and 14.1). The allocation of assets between the WPF and NPF was to be determined by the actuary in accordance with the detailed provisions of clause 15.2 to 15.6, 15.10 and 15.11. Liabilities were to be similarly matched, subject to some special exceptions (clause 16). In part E (Operation of the Funds) clause 18 deals with allocation of surplus arising in the WPF. One ninth of the amount of bonuses allocated to conventional (that is, not unit linked) with profits policies (in other words one tenth of the gross allocation) is to be allocated to the NPF or the Shareholders Fund, as the board directs. All other surplus is to be applied as bonus for the benefit of holders of with profits policies. This replicates the position under the Societys constitution and regulations (para 47 above). In life offices shorthand the WPF is a 90/10 fund. The NPF, by contrast, is a 0/100 fund. Following each actuarial valuation of the NPF the board may transfer to the WPF statutory surplus arising in the NPF (clause 21). Finally I come to the Capital Reserve, provided for in clause 22. Clause 22.1 is as follows: On and after [3 March 2000], [the Company] shall maintain a memorandum account within the [LTBF] designated as the Capital Reserve (the Capital Reserve). At [3 March 2000] the Capital Reserve shall represent the amount of the shareholders capital held within the [LTBF]. Clause 22.2 provides for the Capital Reserve to be credited with an amount arrived at by a complicated formula. It is common ground that this amount was 4,455m. Clause 22.3 (headed Maintenance of Capital Reserve) provides that no more may be added to the Capital Reserve and that it may be reduced only by being brought into account in the revenue account of the WPF (up to a limit arrived at by a formula) or the revenue account of the NPF (without limit). There does not seem to have been a finding or formal agreement as to the amount of the WPF limit, but the unchallenged evidence of Mr Adrian Eastwood, the Companys actuarial director at the material time, was that the amount was 432m. Clause 22.4 to 22.6 provided for the Capital Reserve to be notionally allocated between the WPF and the NPF. The initial division was 1,895m to the WPF and 2,560m to the NPF. Tables B and C annexed to the agreed statement of facts and issues (SFI) show how the Companys opening capital of 4,769m in its LTBF can be reconciled with the opening Capital Reserve (4,455m) and the membership compensation (5,846m). Clause 22A of the scheme provided for what was described as a contingent loan, free of interest, from the NPF to the WPF, repayable as mentioned in that clause. Its purpose was to compensate the WPF for the fact that its right to future profits could not be included, for regulatory purposes, as an asset with an admissible value. This inter subfund loan (described in SFI, para 29) hardly featured in the parties written and oral submissions, but it is a further complication in understanding the regulatory forms, to which I now turn. The forms The balance sheet consists of forms 13 and 14. Form 13 sets out the values of the assets of the fund (that is, the LTBF or a subfund of it) at their admissible values (a technical term which in practice was not less than 99% of market value). The effective bottom line of form 13 is line 89, Grand total of admissible values. Form 14 sets out liabilities and margins. For present purposes the most important lines are: 11, mathematical reserves (that is, actuarial liabilities which have not yet been finally quantified); 13, balance of surplus (or valuation deficit); 14, LTBF carried forward; 49, total other (ie non actuarial) liabilities; 51, excess of the value of net admissible assets; and 59, total liabilities and margins. The entries at line 89 of form 13 and line 59 of form 14 must be the same. The balancing items on form 14 are the figures entered at line 13 (balance of surplus) and line 51 (excess of the value of net admissible assets, which is also called the investment reserve: SFI para 53(2)). The interrelation between the figures at lines 13 and 51 of form 14 is that the line 13 figure is generally a relatively small amount representing value that has been brought into account but not yet finally appropriated. The line 51 figure is the true balancing figure, and is the last figure to be entered on the form. It represents the (generally very much larger) value that has not yet been brought into account at all the amount by which the admissible value of the LTBF assets exceeds the book value that has been brought into account. It illustrates the proposition stated (perhaps in rather question begging terms) in para 9 of the Revenues written case, that life offices are treated differently from most businesses in that they can shelter profits from taxation to meet unforeseen future liabilities. This point is discussed further in paras 82 to 86 below headed Bringing assets into account at book value. Form 40, the revenue account, shows movements during the accounting period. The most important lines for present purposes are 11, earned premiums; 12, investment income; 13, increase (or decrease) in the value of non linked assets brought into account; 14, increase (or decrease) in the value of linked assets; 15, other income; 19, total income; 29, total expenditure; 39, increase (decrease) in fund in financial year; 49, fund brought forward; and 59, fund carried forward (39 + 49). The entry at line 49 must be the same as line 14 on form 14 for the previous accounting period, and the entry at line 59 must be the same as line 14 on form 14 for the current period. As to lines 13 and 14, Lord Reed explains in his judgment (para 116) that any increase or decrease in the value of linked investments (line 14) is required to be brought into account automatically, but unrealised increases in the value of non linked assets (line 13) need not be brought into account. Form 58 (valuation result and distribution of surplus) shows the actuarial surplus (line 29), its movement during the accounting period (lines 31, 34 and 35), and its distribution as between policyholders (line 46), shareholders (line 47) and balance (line 49, this being the same as line 13 on form 14). The term distribution as used in lines 41 48 does not imply that sums necessarily leave the Companys hands; it refers to an allocation as between policyholders and shareholders. Three separate forms 58 were completed for the WPF, the transferred business in the NPF and the new business in the NPF. How the forms were completed by the Company Volume V of the papers before the Court contains over 500 pages of the Companys regulatory returns for the three relevant accounting periods, including completed forms 13, 14, 50 and 58 for the LTBF and its sub funds (except that form 58 was completed, as already noted, for three sub funds and not for the LTBF as a whole). From these forms the following information as to the whole LTBF can be extracted (in bn, rounded to the nearest 1m, and with some rounding adjustments in the computations). 2000 2001 2002 Form 13 line 89: total assets at admissible value 20.962 Form 14 line 11: mathematical reserves 18.645 line 13: balance of surplus 0.181 line 14: LTBF carried forward 18.827 23.066 19.128 0.033 19.162 22.427 19.807 0.064 19.871 0.386 2.107 22.427 0.468 0.441 1.668 3.462 20.962 23.066 line 49: total non actuarial liabilities line 51: excess of value of net admissible assets line 59: total liabilities and margins Form 40 2.000 2.445 2.540 line 11: earned premiums 0.922 0.633 0.787 line 12: investment income line 13: increase (decrease) in value of non linked assets brought (2.254) 1.273 (1.168) into account line 14: increase (decrease) in value of (0.036) linked assets (0.031) (0.011) 0.408 0.502 16.875 line 15: other income 1.040 line 19: total income 21.216 2.631 1.921 2.084 2.054 line 29: total expenditure (1.045) line 39: increase (decrease) in LTBF 19.162 0.709 19.871 line 49: fund brought forward .000 19.162 19.162 19.871 18.827 line 59: fund carried forward Form 58 (WPF) line 59: distributed surplus line 61: percentage distributed to policyholders It would be imprudent to attempt any sophisticated commentary on these figures. The entry on form 40, line 15 for 2000 is obviously exceptional, representing the effect of a change of ownership of a long established business; no one has suggested that the whole sum is taxable. But we know that it included a sum of 33.410m as a transfer from Capital Reserve (see para 70 below). Taken overall, the figures illustrate the effect of bringing into account value which, for prudential reasons, has not previously been recognised. During the three accounting periods the admissible (for practical purposes, market) value of the assets of the LTBF fell by about 4bn (the figures can be collected from SFI, Table A and the Companys completed forms 13 for the three accounting periods). The mathematical reserves decreased by a little under 0.5bn and the recognised value of the LTBF, tracking as it did the mathematical reserve and the unappropriated surplus, went down by about 0.3bn. But the investment reserve, that is the excess of admissible value over the recognised value of the LTBF (line 51 on form 14) was reduced by almost 1.8bn. The successive entries 0.633 0.915 94.72 96.64 0.576 97.05 on line 13 of form 40 are noteworthy. In the accounting period ending on 31 December 2000 the value of non linked assets brought into account increased by over 1.2bn although their admissible value decreased during that period. This disparity was reversed in the two following accounting periods, during which (taken together) admissible value fell further by about 1.6bn but the form 40, line 13 decrease was a good deal larger, about 3.4bn. During the whole period the Company declared bonuses of significant amounts, and allocated more than the mandatory 90% to with profits policyholders. Part of the form 40, line 15 amounts included sums described in the notes submitted with the statutory forms (volume V, pp1756, 2035 2036 and 2319) as transfers from Capital Reserve. The amounts were as follows (SFI, paras 56 60): 2000 2001 2002 m to WPF 33.410 30.724 17.000 81.134 total 33.410 472.724 370.000 876.134 to NPF 442.000 353.000 795.000 Whether they should nevertheless have been brought into the computation of the Companys profit or loss under Schedule D Case I under section 83(1) and (2) of FA 1989 is the first issue. Line 15 of form 40 is, it will be recalled, specifically mentioned in the referred question (set out at para 36 above). The statutory provisions The provisions which this Court has to construe are in a single section, section 83 of FA 1989. A rapid survey of the landscape in which that section is found shows that in the consolidating statute, ICTA 1988, Part XII dealt with special classes of companies and businesses, and Chapter 1 of Part XII dealt with insurance companies, underwriters and capital redemption businesses. I have already mentioned section 433, which was repealed by FA 1989 and replaced by similar (but more complex) provisions in section 82 of FA 1989. Section 444A, inserted into ICTA 1988 by the Finance Act 1990, applies to a transfer of long term business in accordance with a scheme sanctioned under section 49 of ICA 1982, but neither side placed any reliance on this section. At the time when the consolidating statute was enacted the government was engaged in a far reaching review of the taxation of life offices, as already noted (para 48 above). The outcome was sections 82 to 90 of FA 1989 (together with Schedule 8 to that Act, amending Part XII of ICTA 1988). These sections, and Schedule 8, were frequently amended between 1989 and 2000, especially by the Finance Acts of 1995 and 1996. The details are set out in Lord Reeds judgment (paras 134 to 163). But I agree with Lord Hope (in para 15 of his judgment) that it is unnecessary, and maybe unhelpful, to go into the legislative history. What matters is the statutory provisions as they were in 2000, 2001 and 2002. During that period section 83(1) to (4) was in the following terms: (1) The following provisions of this section have effect where the profits of an insurance company in respect of its life assurance business are, for the purposes of the Taxes Act 1988, computed in accordance with the provisions of that Act applicable to Case 1 of Schedule D. (2) So far as referable to that business, the following items, as brought into account for a period of account (and not otherwise), shall be taken into account as receipts of the period (a) the companys investment income from the assets of its long term business fund, and (b) any increase in value (whether realised or not) of those assets. If for any period of account there is a reduction in the value referred to in paragraph (b) above (as brought into account for the period), that reduction shall be taken into account as an expense of that period. (3) In ascertaining whether or to what extent a company has incurred a loss in respect of that business in a case where an amount is added to the companys long term business fund as part of or in connection with (a) a transfer of business to the company, or (b) a demutualisation of the company not involving a transfer of business, that amount shall (subject to subsection (4) below) be taken into account for the period for which it is brought into account, as an increase in value of the assets of that fund within subsection (2)(b) above. (4) Subsection (3) above does not apply where, or to the extent that, the amount concerned (a) would fall to be taken into account as a receipt apart from this section, (b) is taken into account under subsection (2) above otherwise than by virtue of subsection (3) above, or (c) is specifically exempted from tax. Section 83A(1) to (3) of FA 1989 was in the following terms: (1) In sections 83 to 83AB brought into account means brought into account in an account which is recognised for the purposes of those sections. (2) Subject to the following provisions of this section and to any regulations made by the Treasury, the accounts recognised for the purposes of those sections are (a) a revenue account prepared for the purposes of the Insurance Companies Act 1982 in respect of the whole of the companys long term business; (b) that Act in respect of a part of that business. any separate revenue account required to be prepared under Paragraph (b) above does not include accounts required in respect of internal linked funds. (3) Where there are prepared any such separate accounts as are mentioned in subsection (2)(b) above, reference shall be made to those accounts rather than to the account for the whole of the business. It is common ground that the relevant revenue accounts are forms 40 for the whole LTBF and its constituent parts, the WPF and the NPF. The first point of construction (which I have already described as a short point, but one which takes some getting to) is the meaning of value (whether realised or not) of those assets in section 83(2)(b). The Company contends that it means market value, and that any reduction in their value (the form of words at the end of the subsection) is to be treated as an expense capable of giving rise to an allowable loss. The Revenue contends that section 83(2) is referring to a difference in value (whether it be an increase or a reduction) as brought into account for the relevant period of account, and that section 83(A)(2) leaves no room for doubt as to what that means. It directs attention to the appropriate regulatory account, in this case form 40. The Lord President (para 54) described this approach as definitional. Taxing a loss? The Companys written case before this Court, and Mr Gardiner QCs robust oral submissions, characterised the Revenues position as unnatural, uncommercial and contrary to fundamental principles of tax law. The Court was reminded of some famous judicial observations made more than a century ago, including Lord Halsbury LC in Gresham Life Assurance Society v Styles [1892] AC 309, 315: The word profits I think is to be understood in its natural and proper sense in a sense which no commercial man would misunderstand and Lord Macnaghten in London County Council v Attorney General [1901] AC 26,35: Income tax, if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else. In this case, Mr Gardiner submitted, the Revenue was attempting to tax what was in reality a loss of capital. These submissions call for careful consideration. The massive volume of documents and figures put before the Special Commissioners and the Court of Session, and now before this Court, creates a risk of getting lost in a labyrinth of abstractions. Actuaries, accountants and lawyers are trying to converse in the same language, but it is not easy going. It is a case in which there is a real danger, in the hackneyed phrase, of not seeing the wood for the trees. It may help to avoid confusion to start with three simple points. The first point is that the Revenue is not seeking to exact tax from the Company under Schedule D Case I either on profits or on losses incurred by the Company; it is taxing the Company on the I minus E basis. Simultaneously the Company is seeking to establish large Schedule D Case I losses in order to have them available for surrender to obtain group relief. The second point is that it is, and always has been, standard practice for life offices to bring the assets of their LTBFs into account, not at market values that fluctuate from year to year, but at a book value (though in practice that expression is applied to LTBFs in a way that an outsider may find surprising). The third point is that the Capital Reserve is not, and never has been, a separate fund distinct from the Companys LTBF. It has always been part of the LTBF. Each of these three points calls for some further explanation. The Crown option as it applies to this case The Revenue is not seeking to charge tax under Schedule D Case I on losses incurred by the Company. It is common ground (SFI, para 61) that at all material times since 3 March 2000 the Company has been taxed on the I minus E basis (the detailed computations for 2000 and 2002 can be seen in volume VII at pages 3211 and 3290; the relevant page for 2001 seems to have been inadvertently omitted). Nevertheless (SFI paras 62 and 63) the Company seeks to claim an allowable loss under Schedule D Case I which would be available for surrender to other Lloyds TSB group companies by way of group relief. The Revenue accepts (SFI, paras 62 and 63) that if the Company succeeds in this appeal the losses available for surrender would be approximately 28.7m for 2000, 612.6m for 2001 and 431.3m for 2002 (the relevant computations are at volume VII pages 3216, 3255 and 3295). The fact that a proprietary life office can simultaneously pay tax on the I minus E basis and have an allowable loss under Schedule D Case I shows that whatever the position a century ago, when there were no special statutory provisions, the taxation of long term life assurance business is now a very specialised area. Bringing assets into account at book value Regulation 45(6) of the 1994 Regulations (set out in para 20 above, and later reproduced in Rule 9.10(c) of the FSAs 2001 instrument) allowed a life office, for the purposes of an actuarial investigation, to take the value of any of its assets as its value in the books or other records of the company. This had been expressly permitted by the regulatory system since 1980, when Regulation 3 of the Insurance Companies (Valuation of Assets) Regulations 1976 (SI 1976/87), was amended by the Insurance Companies (Valuation of Assets) (Amendment) Regulations 1980 (SI 1980/5). But the two expert witnesses agreed that it was a very long standing and well established practice, and the Special Commissioners made a finding to that effect (para 16 of their decision). It would be potentially misleading to say that a life office is permitted to bring the assets of its LTBF into account at book value, since that is normally understood to mean historic cost. In a LTBF some assets are normally brought into account at the full admissible value, and others at nil (Special Commissioners decision, para 48; also para 122 of Lord Reeds judgment). It is unnecessary to go into the reasons for this practice, as to which there was no dispute. The reasons for maintaining an investment reserve of unrecognised value are fundamental to the way in which long term life business, and especially with profits business, has been conducted in the United Kingdom. It is the mechanism by which the life office, relying on the professional skills of its chief actuary and his staff, can achieve a balance between competing considerations and interests. First and foremost is the overriding need for a sufficient margin of solvency. Subject to that the life office will wish to produce consistently good results for its with profit policyholders, both in the policyholders interests and to preserve and enhance the companys reputation. It must also achieve fairness between different classes of policyholders in accordance with their rights and expectations (the difficulties of which are illustrated by Equitable Life Assurance Society v Hyman [2002] 1 AC 408). Finally there are tax considerations. No company likes to pay more tax than it has to, or to pay it sooner than it has to. Before 1989 the tax system allowed life offices to defer taxation, especially on unrealised capital gains. It is common ground that section 83 of FA 1989 was intended to change that; the controversy is as to the extent of the change. These points were well made by Mr Brian Drummond, an accountant, in an article entitled Making Sense of the FSA Return in Life Company Tax Computations (Tax and Accountancy Review, June 2006, p6). Some changes had taken place by then (both on the regulatory front and the taxation front) but the article is nevertheless instructive. After mentioning recent changes the author gives a brief overview of the forms: In broad terms, however, the overall structure remains unchanged. Form 13 remains a reasonably straightforward analysis of the total admissible value of the assets of the company by category with narratives that are commendably clear; Form 40 demonstrates how much of the Form 13 value is brought into account for the purposes of calculating surplus; Form 58 deals with the calculation, composition and distribution of the surplus; and, Form 14 then links that exercise back to Form 13 by showing how much of that original Form 13 value is covering liabilities and bonuses and how much of it is being held in reserve. He describes form 14 as an area of linguistic opacity, and comments: This confusion is carried across into form 14 of the FSA return where it increases further. The first line in form 14 is described as mathematical reserves, after distribution of surplus and in this one narrative only two of the six words (after and of) take their conventional or even accounting meaning. The most relevant passage is on the general philosophy of with profits business (at pp 9 10): Form 40 is described as revenue account but in conventional terms it is a very partial one. By reference to normal accounting convention it is surprising to have a revenue account that makes no explicit reference to a movement in liabilities to third parties. The layout of Form 40 and its interaction with Form 58 reflects much more of the history of with profit funds than it reflects normal accounting principles. In with profits funds the starting point in determining the extent to which surplus is recognised is establishing what bonus should be recommended. This will be driven by a combination of the results of the company (in terms of investment return and underwriting profit) together with policyholder reasonable expectations and the need to treat customers fairly. One of the principles of UK with profits business is smooth bonuses from year to year. Having established what bonus it is appropriate to declare for the year it is then possible, depending on the structure of the fund, to calculate the minimum extent to which surplus must be recognised both to meet the bonus requirement and any corresponding entitlement of the shareholders to participate in surplus as a fraction of the amount allocated to policyholders (very often one ninth the 90:10 structure). Historically with profit funds hesitated to recognise any more surplus than was required to meet the bonus, and associated shareholder entitlement, and hence the fund would generally be approximately equal to the liabilities (after current year bonus) plus any residual surplus not allocated. The nature of the Capital Reserve The third point mentioned in para 78 above is that the Capital Reserve is not, and never has been, an appropriated fund separate from the Companys LTBF. It is, as para 22.1 of the scheme makes clear, part of the LTBF. It is an account falling within Lord Greene MRs second category in Allchin v Coulthard [1942] 2 KB 228, 234 235 merely an accounting category. Abstract though it is, the Capital Reserve is on the Companys case of central importance to this appeal. It is not easy to discern its purpose. The Companys own independent actuarial expert, Mr Chamberlain, stated in his report dated 18 September 2007, para 5.1: The Scheme by which [the Society] demutualised established something it refers to as a Capital Reserve. This Reserve is a financial structure whose form and operation is defined by the Scheme, and does not meet any particular regulatory or other requirement, other than that emanating directly from the Scheme. It is a memorandum account and does not consist of particular assets. Mr Allen, the Revenues independent expert, stated in his report dated 5 October 2007, para 6.1: Within the notes to their returns I understand that [the Company] created a memorandum account (the Capital Reserve) with an initial balance of approximately 4.5bn. Notwithstanding that this account was referred to in the Scheme which obtained approval from the Court of Session, in my opinion this memorandum account had no meaning or relevance, other than as an item of information, as regards either the Companys statutory report and accounts or its regulatory returns. The memorandum account did not represent any particular assets, nor did it reflect any actual profit or loss incurred by the Company, it was simply a note of a particular transaction. The experts did not give a further explanation of the expression memorandum account, nor did counsel offer any. The Special Commissioners made a finding that reflects the natural meaning of memorandum (para 45): The purpose of the Capital Reserve was to keep a record of this initial value created by [Holdings] and to distinguish it from subsequent profits. The notion that it was an item of information that ought to be remembered comes out most clearly in the witness statement of Mr Michael Ross. He was an actuary who was employed by the Society for most of his career, becoming chief actuary of the Society in 1986 and the first chief executive of the Company in 2000. In his witness statement (paras 18 to 27, not challenged in cross examination) he described how demutualisation involved a strategic choice between ring fencing the estate and monetising the estate (the estate is a term used to describe a mutuals excess of assets over liabilities, or investment reserve). After careful thought the Lloyds TSB group and the Society opted for monetising the estate. This course was likely to be more attractive to the Societys members but required the Lloyds TSB group to find a very large sum to pay the membership compensation. But the payment of that compensation gave the Lloyds TSB group the advantage that the Company had a comfortable investment reserve at the inception of its business (whereas with ring fencing the group might have had to inject further capital). The group wanted to earmark what Mr Ross (para 27) regarded as shareholder owned capital, held within the [LTBF] in order to be able, in the long term, to benefit from it. That provides a clue, I think, to the purpose of the restriction on reduction of the Capital Reserve in para 22.3 of the Scheme (summarised in para 60 above). Only a limited amount (432m out of 4,455m) of the Capital Reserve could be brought into account in the revenue account of the WPF, because it was a 90/10 fund and nine tenths of the distributed surplus were to go for the benefit of holders of with profit policies; only one tenth (at most) could find its way to the shareholder, Holdings. There was no restriction (beyond the total amount of the Capital Reserve) on bringing it into account in the NPF, which was a 0/100 fund. The decision of the Special Commissioners and the judgments in the Court of Session The Special Commissioners decided the first issue in favour of the Company, and the Court of Session unanimously upheld that decision (Lord Emslies dissent was on the second, narrower issue as to section 83(3)). All three members of the Court delivered full judgments, so this Court has four separately reasoned routes to the same conclusion on the first issue. The reasoning can be imprecisely classified under three heads: the correct approach to the construction of taxing statues, arguments based on the legislative scheme and purpose, and detailed linguistic arguments. The Lord President dealt most fully with statutory construction (paras 45 to 49). He cited the well known speech of Lord Steyn in Inland Revenue Commissioners v McGuckian [1997] 1 WLR 991, 9991000, in which Lord Steyn referred to Lord Wilberforces seminal speech in W T Ramsay Ltd v Inland Revenue Commissioners [1982] AC 300, 323: Lord Wilberforce restated the principle of statutory construction that a subject is only to be taxed upon clear words . To the question What are clear words? he gave the answer that the court is not confined to a literal interpretation. He added There may, indeed should, be considered the context and scheme of the relevant Act as a whole, and its purpose may, indeed should, be regarded. This sentence was critical. It marked the rejection by the House of pure literalism in the interpretation of tax statutes. The Lord President ultimately decided the issue by applying the clear words principle in the light of his view of the statutory purpose (paras 55 and 56). Lord Emslie relied on the same principle, and some other principles which he set out at para 197: Since this appeal concerns the construction of tax legislation, certain fundamental rules, principles and presumptions may be thought to apply. First, as Lord Wilberforce explained in Vestey v Inland Revenue Commissioners [1980] AC 1148, 1172: Taxes are imposed upon subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined. Second, in the absence of specific charging provisions, capital and capital receipts do not fall to be taxed as revenue and vice versa. Third, corporation tax being an annual tax on the profits of a company, it is prima facie reasonable and appropriate to construe statutory charging provisions as directed towards real receipts and gains . in a sense which no commercial man would misunderstand: Gresham Life Assurance Society v Styles [1892] AC 309, 315, per Lord Halsbury LC. And fourth, as reflected in countless provisions of the taxing statutes, a subject is in general assessable to tax on his own profits and gains, and not on those of any third party. The second, third and fourth of these principles (and especially the second) may be what the Special Commissioners had in mind (in para 79 of their decision) in a more general reference to tax principles as predisposing them in the Companys favour, and in characterising the transfer from the Capital Reserve as a capital receipt (para 80). Arguments based on the legislative scheme and purpose move from the very general to the rather more particular. What was the underlying purpose of section 83? In particular was it intended, as the Lord President stated in para 55 of his judgment, to reverse the effect of section 433 of ICTA 1988? Is there a key conceptual distinction (Lord Emslie, para 201) between the Companys LTBF and the assets representing that fund? Was a transfer from the Capital Reserve a capital receipt comparable to an injection of new capital (Special Commissioners, para 80)? How cogent is the argument (Lord Reed, para 183; Lord Emslie, para 197, fourth point, and para 205, second point) that one taxpayer should not be taxed on another taxpayers profits or gains? What practical results do the statutory provisions produce if construed (Lord Emslie, para 200) as a one stage or alternatively a two stage process? I shall consider these points in turn. Legislative scheme and purpose It is permissible, without getting into the territory of Pepper v Hart [1993] AC 593, to look at the official consultation paper published in 1988, The Taxation of Life Assurance, to see the general nature of the problem perceived by the Revenue. The most relevant paragraphs are paras 6.2 to 6.7, 6.12 to 6.21, 6.33 and 7.1 to 7.8 A life office might have a large capital gain on a long term income producing investment (such as a fully let office block or a strategic holding of shares in an oil company) as part of the with profits part of its LTBF. Before 1989 this gain could be recognised (or brought into account) in its revenue account without being realised so as to give rise to a chargeable gain. Value representing at least nine tenths of the gain could then be distributed (in the form 58 sense, that is allocated) to the holders of with profits policies so as to obtain the protection of section 433 of ICTA 1988, as well as escaping income tax or capital gains tax in the policyholders hands on the maturity of their policies (assuming them to be qualifying policies). Section 83 of FA 1989 made the recognition of an unrealised capital gain a receipt to be brought into the Schedule D Case I computation, while section 82 of FA 1989 re enacted the substance of section 433 in a more satisfactory form. All this is very clearly set out, in a good deal more detail, in paras 123 to 133 of Lord Reeds judgment (which refer to section 83 in the form in which it was originally enacted). I respectfully think that in para 55 of his judgment the Lord President was to some extent running together the functions of sections 82 and 83, and misunderstanding the purpose of the two sections in tandem. Lord Emslie referred to section 433 (para 200) but not to section 82. In my opinion Lord Reeds analysis is to be preferred. Section 83 is concerned with the immediate implications, in making the necessary Case I computations, of bringing into account all or part of the difference between book value and market value, and section 82 is concerned with the next stage of the computations, that is adjustments in respect of the distribution of surplus to holders of with profits policies (covered by form 58, lines 41 to 59). The next point is the term fund. It is, as both Lord Reed (para 112) and Lord Emslie (para 199) observed, used inconsistently both in ICA 1982 and in the regulatory forms. But the two principal and relevant meanings, in this context, are clear (and here I am repeating ground I have already covered). The LTBF is an actual, appropriated fund of identifiable investments, the constituent assets of which (with their admissible values) appear in form 13. The Capital Reserve is a notional part of that fund to an initial amount of 4,455m; the independent actuarial experts agreed that it serves no regulatory purpose. The fund for the purposes of lines 39, 49 and 59 of form 40, and for all the purposes of form 58, is the same fund, but valued in a special way (that is at book values in the sense that actuaries use that term) in order to produce the life offices objectives solvency and prudent preservation of the investment reserve, but at the same time smooth progress in the allocation of bonuses to with profits policies. I am not sure that I understand para 201 of Lord Emslies judgment. In that paragraph he is (as I understand it) setting out part of the submissions made on behalf of the Company. But later (para 204) Lord Emslie himself accepted that there is a significant distinction between the assets and the fund itself. Of course there is a difference, the difference between the parts and the whole. But the value of the whole is in this case the sum of the values of the parts, and the significant distinction, affecting both, is the basis of valuation. It is common ground that if in 2001 or 2002 the Lloyds TSB Group had decided to inject fresh capital into the Companys LTBF (as might have been done by the Company issuing new shares to Holdings, paid for in cash that was appropriated to the LTBF) it would not have been treated as a receipt under section 83(2). The new money would have appeared on line 26 of form 40 (transfer from non technical account). The admissible value of the LTBF would have been increased, and so (if it was needed for solvency purposes) would its value as brought into account (lines 39 and 59 of form 40). A transfer from the Capital Reserve, by contrast, costs the group nothing (although it may be an indication that the state of the business is disappointing). The transfer does not increase the market value of the LTBF. Nor has it any regulatory significance, as the experts agreed. What happens is that part of the value held in the investment reserve is brought into account, a familiar event generally recorded (as Mr Allen stated, though Mr Chamberlain disagreed) on line 13 of form 40. I respectfully consider that the Special Commissioners, and to some extent the Court of Session also, attached too much weight to the label Capital Reserve and to the notion that capital gains ought not to be taxed under Schedule D, Case I. It could not be clearer that under section 83(2)(b) any increase in value (whether realised or not) of investments constituting a LTBF, as brought into account, is to come into the Case I computation. The argument that (in the absence of very clear words) one taxpayer ought not to be taxed on another taxpayers profits or gains is, on the face of it, a strong one. It is not satisfactorily answered simply by pointing out (though this should not be forgotten) that this appeal is not about taxing profits. It is about allowing losses capable of being surrendered for the benefit of other group companies. But the Company acquired a long established mutual business and a LTBF with a healthy investment reserve. That reserve may have been built up by the Society largely by means of unrealised gains. But it was the Company and the Lloyds TSB Group that decided, for entirely understandable reasons, to bring part of the investment reserve into account, rather than making an injection of new capital. The language of section 83(3)(b) (as amended in 1996) shows that Parliament had demutualisation well in mind as a situation for which the legislation should make provision. The last general point to be considered, before getting to linguistic arguments, is the implication of Lord Emslies illuminating distinction (para 200, summarising the Companys argument, and para 204, accepting it) between a two stage process (asking whether there are any real gains, and then how far they have been brought into account) and a one stage process (asking simply what increase in value, if any, has been brought into account). Again, it is necessary to be reminded that this appeal is about losses, not gains; and the three accounting periods have to be considered separately, and not as a whole. In any accounting period the operation of the statutory provisions, if analysed as a two stage process, allows six different combinations, although some of them may be fairly improbable in practice, as follows (AV denoting admissible value, and RV value recognised and brought into account): (1) AV up, RV up by less (2) AV up, RV up by more (3) AV up, RV down (4) AV down, RV down by less (5) AV down, RV down by more (6) AV down, RV up. It is easy to see how the competing interpretations work in situations (1), (2), (4) and (5). On the Companys two stage approach the lower figure (whether an increase or a reduction) will be brought into the computations; on the Revenues one stage approach the difference in RV will always be taken. But it is not so easy to see how either sides interpretation would apply to situations (3) and (6); and the Companys regulatory return for 2000 disclosed situation (6). It might be thought that though neither sides interpretation fits easily, the Companys two stage approach is distinctly more difficult to reconcile with the situation in which there is a reduction in admissible value, but an increase in value brought into account, in an accounting period, and the Company is seeking to establish an allowable loss during that period. But so far as I can see that submission was not made either to the Special Commissioners or to the Court of Session, nor do I recollect it being put forward in this Court. The terms of the agreed question do not positively require the point to be resolved. Indeed SFI, para 63 suggests that the point may already have been agreed between the parties. So the best course is, I think, to exclude that point, which was not argued, from any consideration of the statutory scheme and purpose. Nevertheless, unlike the Special Commissioners and (to some extent) the Court of Session, I do not approach the narrower linguistic points with any predisposition in favour of the Companys case. I approach them disposed towards the Revenues case as being more in accordance with the statutory scheme and purpose. Linguistic points on the first issue I can take these more shortly, and it is convenient to do so by reference to the numbered sub paragraphs at the end of para 181 of Lord Reeds judgment. The first point is that an increase in value . of . assets is said to refer most naturally to capital gains. In some contexts it might do so. In the context of a system of computation which is closely and explicitly linked to the regulatory returns in respect of LTBFs I see little force in this point. What is important is how value is to be measured, and to my mind sections 83(2) and 83A leave no doubt about that. The second point is on the words (whether realised or not) in section 83(2)(b). The section was making an important change in the law in that unrealised increases in value, so far as brought into account, were to come into the tax computation. To my mind it would have been surprising if the draftsman had not inserted this parenthesis so as to leave no doubt as to the character of the change in the law. The third point is on another parenthesis in section 83(2), (and not otherwise), though these words have come out in the text of Lord Reeds judgment before us as or otherwise. Again, I have to say that I think the draftsman is being rather unfairly criticised for his efforts to leave no doubt about the intended meaning. The preceding word as means in the manner that and the parenthesis means and in no other manner. To my mind it is a bit hard to dismiss this as otiose. Lord Reeds fourth point is that the expression brought into account is not apt to describe the overall effect of those entries. I confess that I simply do not understand this point. The critical entry is line 13 on form 40 (increase (decrease) in the value of non linked assets brought into account). That is the only line on form 40 in which the words brought into account are found. It was conceded that the line 15 entry could have been on line 13. The bottom lines (39, 49 and 59) show the overall position, and do not use the words brought into account. Lord Reeds remaining points on the first issue (in para 181(5) and (6) and para 183) are more general and I will not revisit them. Conclusion In my judgment the Revenues submissions on the first issue are correct, both as to the statutory scheme and purpose and as to the linguistic points just mentioned. I have gone into the matter at some length because I am conscious that I am differing both from the Special Commissioners and from the unanimous view of the Court of Session. But in the end I consider that it is simply a question of giving section 83(1) and (2) of FA 1989, as amended, their natural meaning. On that basis the second issue does not arise and I prefer to say nothing about it. I would allow the Revenues cross appeal and treat the Companys appeal as moot. LADY HALE As so often happens, what appears at first sight to be a very complicated question turns out on closer analysis to be quite a simple one. When calculating the profits of an insurance company in respect of its life assurance business under Case 1 of Schedule D to the Taxes Act, does an increase in value or conversely a reduction in the value of the assets of its long term business fund refer to an increase or decrease in their actual value? Or does it refer to an increase or decrease in their value as brought into account for a period of account in the companys revenue account prepared for the purpose of the Insurance Companies Act 1982? We know that the words as brought into account for a period of account (and not otherwise) in section 83(2) of the Finance Act 1989 (set out by Lord Walker at para 41 above) describe the words the following items; we know that the following items are (a) the companys investment income from the assets of its long term business fund, and (b) any increase in value (whether realised or not) of those assets; we know from section 83A (set out by Lord Walker at para 74 above) that brought into account means brought into account in the revenue account (or accounts) prepared for the purposes of the Insurance Companies Act 1982 in respect of the companys long term business (or part of it); so the linguistic question boils down to what is meant by as in section 83(2). The Company would have it that as means when. The link to the regulatory returns is a purely temporal one. Value means real value not whatever the company chose to put in the forms. The Revenue would have it that as means as. What is taken into account in computing the companys profits for income tax purposes is what the company brings into account in completing its revenue accounts for regulatory purposes. In my experience, if Parliamentary counsel mean when, they write when, and if they mean as, they write as. We should be slow to re write what they have written. The words and not otherwise, if nothing else, make it clear that there might have been some other way of taking items (a) and (b) into account for income tax purposes, but this is the way it is to be done. They are making a special rule for life insurance business. This is not surprising, for all the reasons that Lord Walker has so clearly and carefully explained. The words whether realised or not point to the real change which was being made by the 1989 Act. Otherwise it was business as usual. It was not until 1995 that these insurance companies were required to file any other sort of accounts than those which they had to file for regulatory purposes. It was natural for the Revenue to use the figures in the regulatory revenue account as their starting point. In full agreement with Lord Walker, and Lord Hope and Lord Neuberger, therefore, I would allow the Revenues cross appeal and regard the Companys appeal as moot. LORD NEUBERGER I too would recall the interlocutor of the Inner House of the Court of Session and allow HMRCs cross appeal. Having had the great benefit of reading in draft the judgments of Lord Hope and Lord Walker, I can express my reasons shortly. The cross appeal raises an issue as to the meaning of section 83(2) of the Finance Act 1989 (as substituted by paragraph 16 of Schedule 8 to the Finance Act 1995). It is unnecessary for me to set out section 83, as it is fully quoted in para 7 of Lord Hopes judgment and para 73 of Lord Walkers judgment. As will be clear to anyone who has read those judgments, the difficulty in this case arises from the fact that the issue of interpretation arises in the context of a very complex background. That complexity is attributable to a number of different factors, namely (i) the technical rules as regards the regulatory returns to be made by life assurance offices, (ii) the many changes in the legislation embodying those rules since they were first introduced in 1870, (iii) the many changes in the statutory provisions governing the taxation of life assurance offices, (iv) the extensive contractual provisions in the documentation governing the scheme (the scheme) for transferring of the business of Scottish Widows Fund and Life Assurance Society to Scottish Widows plc (the Company), and (v) the details of the regulatory returns made by the Company in the three accounting years in issue. When considering the application of section 83(2) to the facts of this case, I am sceptical about the value of analysing the history of the statutory provisions governing either the returns to be made by life assurance offices or the taxation of profits made by life assurance offices i.e. what I have characterised as factors (ii) and (iii). This cross appeal concerns the meaning of the statutory provision in force during the three relevant years, section 83(2), and its impact on the returns actually made in respect of those years, in the then stipulated form by the Company. Particularly as the provisions of the scheme, the prescribed forms for returns, and the contents of the Companys returns for the three years in question, all require careful analysis, it seems to me that to focus in addition on the rather intricate history, as opposed to the present provisions, of the regulations, risks taking ones eye off the ball (or, as Lord Walker puts it, not seeing the wood for the trees). Legislative archaeology has its place in statutory interpretation, but its role is limited. Where a statutory provision, when read in its immediate statutory and practical context, has a meaning which is tolerably clear as a matter of language, and not unreasonable or unfair in terms of its consequences, it seems to me that little is to be gained, and much may be lost (in terms of time, expense and eventual confusion) by going into the genesis and development of the provision in earlier legislation. As Lord Hope points out, such an approach is consistent with what was said both by Lord Wilberforce in Farrell v Alexander [1977] AC 59, 73 and by Lord Diplock in Inland Revenue Commissioners v Joiner [1975] 1 WLR 1701, 1715 6. Once one understands the scheme, the relevant regulations, the forms, and the Companys returns for the three years in question, it appears to me that the answer to the question posed on the cross appeal, namely the meaning and effect of section 83(2), is tolerably clear. I could not hope to equal the clarity of Lord Walkers analysis in paras 49 to 53, 57 to 70, and 82 to 91, and, very gratefully, adopt the benefit of his distillation of the various complex matters which he there explains. Turning to the central issue on the cross appeal, the meaning of section 83(2), it may be a little glib to suggest that HMRCs case is ultimately vindicated by a single word. However, if one was to isolate a single crucial point, it seems to me that it would involve focussing on the word as in that subsection, as Lady Hale suggested during argument. Section 83(2) stipulates that the items which should be taken into account as receipts of [a particular accounting] period are to be those items identified in paras (a) and (b) as brought into account for [that] period of account. The obvious and natural effect of the words which I have emphasised is that those items are to be taken into account for the period in question in the same way and to the same extent as they are brought into account for that period. It was argued on behalf of the Company that the expression as brought into account for a period of account should be treated simply as a reference to the period in which the item was brought into account, and was not concerned with how the item was brought into account. Particularly in the light of the inclusion of the word as, that does not seem to me to accord with the natural reading of the expression. Although both the Company and HMRC relied on other provisions in the 1989 Act to support their respective cases on the meaning of the expression, I am unconvinced that they are of any real assistance. Thus, it was suggested that the words (and not otherwise) in the subsection assisted the Companys interpretation. I do not see how that is so: they are there simply to emphasise that an item is only to be brought into account if it falls within the expression, and therefore they can take the issue of what the expression means no further. Equally, the fact that section 83A(1) (as inserted by paragraph 16 Schedule 8 to, the 1995 Act and amended by paragraph 6 of Schedule 31 to the 1996 Act) defines the term brought into account does not take matters further, as the position of each party is consistent with that definition. The conclusion that HMRCs construction of section 83(2) is correct seems to me to be supported, rather than undermined, by the normal approach to taxation of business profits as explained by Lord Halsbury LC in Gresham Life Assurance Society v Styles [1892] AC 309, 315 and by Lord Hoffmann in Revenue and Customs Commissioners v William Grant & Sons Distillers Ltd [2007] UKHL 15, [2007] SC (HL) 105, [2007] 1 WLR 1448, para 2. In connection with taxing business profits, the concept of a profit should normally be accorded its proper meaning, which will obviously depend on the specific context, but current accountancy practice is generally a good, and often the best, guide as to the precise quantification of any profit. In the case of a life assurance business, HMRCs case is that, in effect, statute requires the profit to be assessed by a rather unusual means, namely by reference to the returns in the regulatory forms. This is entirely consistent with the normal approach to assessing the profits of companies for taxation purposes, as these returns effectively take the place of the statutory audited accounts, which are relied on to define the profits of the overwhelming majority of other businesses owned by limited companies. Furthermore, although there is, at first sight, real force in the Companys argument that HMRCs case results in its business being taxed on some figure which cannot sensibly be said to be a profit, a closer analysis of the situation, as provided by Lord Walker in paras 81 to 90 and 95 to 105, shows that this is incorrect. Accordingly, and in agreement with the fuller reasoning of Lord Hope and Lord Walker, I would allow HMRCs cross appeal. As the cross appeal succeeds, it is unnecessary to consider the Companys appeal. I agree with Lord Walker that it would be better not to go into the question whether the majority of the Inner House was right in finding for HMRC on section 83(3). It is tempting to do so, given that there is a decision of the Inner House on the point. However, at least on the basis of the argument we have heard on this appeal, it does seem to me that the interpretation of subsection (3) is rather difficult, and I think it would be better to wait for a case where the issue matters, not least as it may be that some assistance would be gleaned from the facts of such a case, which may throw light on the practical consequences of the rival interpretations. LORD CLARKE I confess that I was initially attracted by the approach of Lord Emslie to the issues in relation to both the cross appeal and the appeal. However, having considered the masterly judgment of Lord Walker, I have found his reasoning compelling and agree with him (and indeed Lord Hope, Lady Hale and Lord Neuberger) that the Revenues cross appeal on the true construction of section 83(2) of the Finance Act 1989 as amended should be allowed. Like Lord Walker, Lady Hale and Lord Neuberger, I prefer to express no view on the issue of the true construction of section 83(3). I too would therefore allow the Revenues cross appeal and treat the Companys appeal as moot. |
This appeal and cross appeal raise important questions about the compatibility of two statutory regimes, namely the adjudication of construction disputes and the operation of insolvency set off. In bare outline, section 108 of the Housing Grants, Construction and Regeneration Act 1996 (the 1996 Act) confers a right upon a party to a construction contract to refer a dispute arising under that contract to adjudication. Rules made under the Insolvency Act 1986 (now rule 14.25 of the Insolvency (England and Wales) Rules 2016 (SI 2016/1024)) (the IR) make provision for automatic set off of cross claims between a company in liquidation and each of its creditors, giving rise to a single net balance between them, to be ascertained by the taking of an account. Rule 14.24 does the same for a company in distributing administration. The 1996 Act does not deny the right of a company to refer disputes to adjudication merely because it is in liquidation, but it is argued on this appeal that, if there are cross claims between parties to a construction contract and one of them is in liquidation, then there can be no adjudication of any dispute between them about those cross claims even if, but for the liquidation and the existence of cross claims, one or more of those disputes would fall within the right to refer to adjudication conferred by section 108. This objection to the use or availability of adjudication in the context of insolvency set off is put on two grounds, which may be labelled jurisdiction and futility. First it is said that since insolvency set off replaces the former cross claims with a single claim for the net balance, there is no longer a claim, or therefore a dispute, under the construction contract, so that the adjudicators jurisdiction under section 108 (or under a bespoke or standard form contractual provision to similar effect) is not engaged. There is only a dispute about the net balance arising under the regime for insolvency set off. Secondly it is submitted that, even if there is jurisdiction, the conduct of an adjudication in the context of insolvency set off will, generally speaking, not lead to an enforceable award, and will therefore be an exercise in futility which the court can and ordinarily should restrain by injunction, before costs are thrown away upon a process which serves no useful purpose. In short, it is said that the two regimes are simply incompatible. Both these submissions were endorsed by the trial judge in the present proceedings, but only the futility argument prevailed in the Court of Appeal. This court is therefore faced with an appeal against the order made by the Court of Appeal by way of an injunction restraining the pursuit of the adjudication, and a cross appeal seeking to restore the judges ruling that the adjudicator lacked jurisdiction. The two objections to the use of adjudication in the context of insolvency set off are conceptually distinct and, as the parties recognised, the question of jurisdiction logically comes first. It is a question of construction of section 108 and of the express or implied terms of a construction contract made in accordance with its requirements. But the general need to construe and apply both statutes and contracts in context and by reference to their purpose makes it convenient to begin, after a summary of the facts, with an overview of the respective contexts and purposes of both the adjudication and corporate insolvency regimes, set off being only a subordinate part of the latter. Furthermore a conclusion that the two regimes really are incompatible might well incline the court to a construction which recognised that reality, rather than forced the two regimes into unprofitable co existence. By the same token, the opposite conclusion about compatibility might encourage a more generous approach to the construction of the provisions conferring jurisdiction. The Facts Both the appellant Bresco Electrical Services Ltd (Bresco) and the respondent Michael J Lonsdale (Electrical) Ltd (Lonsdale) are electrical works contractors. By a sub sub contract dated 21 August 2014 (the Contract) Bresco agreed to perform electrical installation works for Lonsdale at a site at 6, St Jamess Square, London SW1. The Contract is a construction contract to which section 108 applies, and it included express provision for adjudication of disputes arising under it which complied with the section. In December 2014 Bresco ceased to attend the site, alleging much later that it did so by way of acceptance of repudiatory breach of the Contract by Lonsdale. In March 2015 Bresco went into creditors voluntary liquidation. Thereafter Bresco acted as described below by its liquidator or from time to time by its agent Pythagoras Capital Ltd (Pythagoras) which is funding the claim against Lonsdale in the liquidation. In correspondence in late 2017 both Bresco and Lonsdale made claims against each other for breach of the Contract. Each accused the other of repudiatory breach. Lonsdales claim included 325,000 odd for the cost of having Brescos contracted works done by another contractor. Bresco says that those were additional to the works for which it contracted, and claimed for the value of works which it had carried out under the Contract, for which it had not been paid. Both parties claimed damages against the other. Both Brescos claims and Lonsdales cross claims arose entirely from the Contract. Each denied the others claims in their entirety. On 18 June 2018 Bresco served on Lonsdale notice of intention to refer a dispute to adjudication, seeking payment of 219,000 odd for the value of work done, and damages for loss of profits under the Contract. On 21 June RICS appointed Mr Tony Bingham as adjudicator on Brescos application. Bresco served its notice of referral to adjudication on the same date. Lonsdales response was, on 22 June, to assert that the Adjudicator was without jurisdiction, for the reason described above relating to insolvency set off and, on 26 June, to issue the present proceedings in the Technology and Construction Court (TCC) under CPR Part 8 for a declaration that the Adjudicator lacked jurisdiction and for an injunction restraining the further conduct of the adjudication. Lonsdales claim was tried with commendable speed on 11 July 2018 by Fraser J, who delivered an equally speedy reserved judgment on 31 July, acceding to Lonsdales case on lack of jurisdiction. On its appeal to the Court of Appeal (Sir Andrew McFarlane P, King and Coulson LJJ) Bresco succeeded on jurisdiction, but the injunction restraining the further conduct of the adjudication was continued on the basis that, since there could be no enforcement, it would be an exercise in futility and a waste of time and money. Accordingly Bresco appeals to this court against the continuation of the injunction, while Lonsdale cross appeals on jurisdiction. The Construction Adjudication Regime Introduced as a statutory regime by the 1996 Act, adjudication of construction disputes has been a conspicuously successful addition to the range of dispute resolution mechanisms available for use in what used to be an over adversarial, litigious environment. It builds upon a purely contractual structure for adjudication which was already by 1996 regarded by many in the industry as best practice. Speaking generally, adjudication is one of a spectrum of dispute resolution mechanisms which range from party and party negotiation at one end, through mediation, early neutral evaluation (ENE) and arbitration to litigation at the other end, lying roughly between ENE and arbitration. ENE delivers a private non binding opinion on the merits of the dispute from an independent, respected and often expert source. Arbitration delivers a (usually) private determination from a similar source which is binding subject to very limited scope for appeal. Adjudication shares with ENE the independent, often expert, respected source together with the speed and economy of ENE, with a provisional element of binding decision, unless and until the matter in dispute is later resolved by arbitration, by litigation or by agreement. The statutory regime was introduced in response to the report and recommendations of Sir Michael Latham, commissioned in July 1993 to review the procurement and contractual arrangements in the UK construction industry. His final report, called Constructing the Team, published in July 1994, contained at chapter 9 a section headed Dispute Resolution. Drawing upon experience of the development of alternative dispute resolution (ADR) in the USA, he noted at paragraph 9.2 that debate over adjudication, conciliation/mediation and arbitration had been strong throughout his review, with a growing consensus over the action needed. Of those alternatives his main focus was upon adjudication. He recommended that adjudication should extend to the widest range of potential disputes under the construction contract, that it should be available immediately, that adjudicators decisions should be swiftly implemented and that litigation or arbitration should be resorted to only after practical completion. A very important underlying objective, both of adjudication and of other recommendations which were eventually implemented in the 1996 Act, was the improvement of cash flow to fund ongoing works on construction projects. A particular concern was that a dispute between (say) a sub contractor and a sub sub contractor which could only be resolved by litigation or arbitration could in the meantime disrupt the entire project while a refusal of interim payment led to the cessation of significant works. The motto which has come to summarise the recommended approach is pay now, argue later. Adjudication was one of five reforms introduced by Part II of the 1996 Act designed to facilitate the realisation of the cash flow aspiration behind that motto. The way in which adjudication initially emerged as a consensual industry solution to this cash flow problem, before being mandated by the 1996 Act, is graphically described by May LJ in Pegram Shopfitters Ltd v Tally Weijl (UK) Ltd [2003] EWCA Civ 1750; [2004] 1 WLR 2082, paras 1 3. It is achieved by rigorous time limits for the conduct of the adjudication, the provisionally binding nature of the adjudicators decision and the readiness of the courts (and in particular the TCC) to grant speedy summary judgment by way of enforcement, leaving any continuing disagreement about the merits of the underlying dispute to be resolved at a later date, by arbitration, litigation or settlement agreement. But solving the cash flow problem should not be regarded as the sole objective of adjudication. It was designed to be, and more importantly has proved to be, a mainstream dispute resolution mechanism in its own right, producing de facto final resolution of most of the disputes which are referred to an adjudicator. Furthermore the availability of adjudication as of right has meant that many disputes are speedily settled between the parties without even the need to invoke the adjudication process. This is in part because Parliament chose to confer the right to adjudicate at any time, so that it can be and is used to resolve disputes eg about final accounts between the parties after practical completion, rather than merely at the interim stage: see Connex South Eastern Ltd v MJ Building Services Group plc [2005] EWCA Civ 193; [2005] 1 WLR 3323, paras 34 38 per Dyson LJ, who concluded that in section 108: The phrase at any time means exactly what it says. There is a chorus of observations, from experienced TCC judges and textbook writers to the effect that adjudication does, in most cases, achieve a resolution of the underlying dispute which becomes final because it is not thereafter challenged. Underlying statistics are hard to find, but judicial confirmation that this is so may be found in Carillion Construction Ltd v Devonport Royal Dockyard [2005] EWHC 778 (TCC), para 78 per Jackson J, Aspect Contracts (Asbestos) Ltd v Higgins Construction plc [2013] EWHC 1322 (TCC); [2013] Bus LR 1199, para 29 per Akenhead J, Severfield (UK) Ltd v Duro Felguera UK Ltd [2015] EWHC 3352 (TCC), para 63 per Coulson J, Meadowside Building Developments Ltd v 12 18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC), paras 63 64 per Adam Constable QC and Balfour Beatty Civil Engineering Ltd v Astec Projects Ltd [2020] EWHC 796 (TCC), paras 20 21 per Waksman J. It is worth quoting Mr Constables observations in full. After noting Coulson LJs comment in the present case (in the Court of Appeal) that many adjudication decisions become final either because the parties so agree, or because neither party challenges it, he continued: This plainly reflects the reality across the construction industry. Although it may have been a process which had its origins in a desire to maintain cashflow, the lifeblood of the construction industry (and alluded to in para 37 of Bresco, quoted above), it would in my view be wrong to restrict the utility of adjudication, in light of the breadth of the statutory scheme and its practical use within the industry, as being solely about short term cashflow. The scheme is, for example, used to determine final account disputes, and professional negligence claims, neither of which are usually primarily (or at all) about cashflow. Adjudication is often about achieving a quicker and cheaper resolution to the parties disputes. Where one party regards an adjudicators decision as a real miscarriage of justice, it has the right to take the dispute to litigation or arbitration to have that decision effectively overturned; where, as is so often the case, the parties regard the decision as a decent attempt to arrive at a fair resolution of the competing positions, the parties generally treat the decision as binding or negotiate a settlement around it. This is good for the overall administration of justice and no doubt many cases which would otherwise end up in the TCC are resolved without burdening public resources as a result of the practical utility of adjudication, notwithstanding its temporary nature. Confirmation from leading textbooks may be found in Glover and Elliott, Building Contract Disputes: Practice and Precedents looseleaf ed, paras 5 1 and 5 7, and Keating on Construction Contracts 10th ed (2016), para 18 028. In a 2014 article in Building, there is attributed to David Adamson (former Deputy Chair of the Construction Clients Forum) the suggestion that only around 2% of adjudication decisions have since been challenged in the courts (Joey Gardner, Lathams report: Did it change us?, Building, 27 June 2014). Statistics do not appear available to confirm this figure, but the overall picture of most adjudication decisions achieving de facto final resolution of the underlying dispute appears clear. Turning to the mechanics, section 108 of the 1996 Act was slightly amended (and augmented by section 108A) by the Local Democracy, Economic Development and Construction Act 2009, following a further report by Sir Michael Latham. It is convenient for present purposes to refer to section 108 in its amended form. It provides, so far as is relevant, as follows (with the 2009 amendments in square brackets): (1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section. For this purpose dispute includes any difference. (2) The contract shall [include provision in writing so as to] enable a party to give notice at any time of his (a) intention to refer a dispute to adjudication; (b) provide a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him within seven days of such notice; (c) require the adjudicator to reach a decision within 28 days of referral or such longer period as is agreed by the parties after the dispute has been referred; allow the adjudicator to extend the period of 28 (d) days by up to 14 days, with the consent of the party by whom the dispute was referred; (e) impartially; and impose a duty on the adjudicator to act enable the adjudicator to take the initiative in (f) ascertaining the facts and the law. (3) The contract shall provide [in writing] that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement. The parties may agree to accept the decision of the adjudicator as finally determining the dispute. [(3A) The contract shall include provision in writing permitting the adjudicator to correct his decision so as to remove a clerical or typographical error arising by accident or omission.] (4) The contract shall also provide [in writing] that the adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as adjudicator unless the act or omission is in bad faith, and that any employee or agent of the adjudicator is similarly protected from liability. (5) If the contract does not comply with the requirements of subsections (1) to (4), the adjudication provisions of the Scheme for Construction Contracts apply. The Scheme for Construction Contracts (the Scheme) referred to in section 108(5) is contained in the Schedule to the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649). Part 1 of the Schedule contains what is, in effect, a default adjudication framework if the parties to a construction contract fail to include one expressly with terms that are compliant with section 108, which operates as a set of statutorily implied terms: see section 114(4) of the 1996 Act. The detailed terms of the default framework do not matter for present purposes, save to note that by paragraph 8 the adjudicator may determine more than one dispute, and disputes under more than one relevant contract, if the parties so agree. In the present case the Contract contained express provision for adjudication which complied with the requirements of section 108. Construction adjudication does not generally allow for party and party costs shifting. Paragraph 25 of the default framework only permits adjudicators to determine the amount of their own reasonable fees and expenses and to apportion them between the parties. Section 108A (introduced in 2009) significantly limits the ability of the parties to contract otherwise. In the present case the Contract provided for joint and several liability for the adjudicators fees. Certain aspects of this machinery will need closer review, in particular the one dispute rule and the scope for the respondent to an adjudication reference to rely upon set off (at law or in equity) as a defence. But the following features are uncontentious and worthy of note at the outset. First, construction adjudication is semi compulsory. That is, the parties are not required to adjudicate every dispute. Rather each party is given a statutory and contractual right to require an adjudication of any dispute, including difference, which may arise under a construction contract, and to do so at any time, even after the contract has been fully performed or come to an end, whether by effluxion of time or discharge, including discharge by breach. Secondly, that right is conferred upon every legal person who or which is, or was, a party to a construction contract (as defined). There is no exclusion of particular types of person, such as a company in liquidation, as there is in some comparable jurisdictions such as New South Wales. Thirdly, the jurisdiction of the adjudicator is defined in the simplest of terms. It extends to every dispute which arises under a qualifying contract which a party entitled to adjudicate chooses to include in their reference. Fourthly, adjudication is remarkably speedy, because of the time limits imposed both on the parties and the adjudicator. A bespoke adjudication framework which does not include those time limits will not be in accordance with section 108(2), and will be overridden by the time limits in the default framework. Fifthly, as a direct corollary of speed, the adjudication process is almost bound to be cheaper, usually very much cheaper, than arbitration or litigation. This is mainly because, as lawyers and their clients know, the scope for expenditure on a dispute increases with the time available to argue about it. It is also because adjudicators are not confined to a purely passive role, but may investigate both fact and law as they think fit, within the time constraints imposed. It is unusual for there to be an oral hearing. Sixthly, the adjudicator will be both independent and equipped with the requisite subject matter expertise. Though not usually a lawyer, the adjudicator may obtain independent legal advice if necessary. Finally, when compared with arbitration and litigation, speed and economy come at an inevitable price in terms of reliability. There is no formal avenue of appeal against an adjudicators decision, and the court will in general summarily enforce it, regardless whether it is correct on the merits, provided that the adjudicator acted independently and within their jurisdiction. But a dissatisfied party can insist on having the dispute redetermined de novo in court or by arbitration (if available) even though the adjudicators decision will continue to bind in the meantime. Insolvency Set off The special rules as to set off in the context of insolvency (usually labelled insolvency set off) form a small but important part of the wider statutory insolvency code, which is directed to ensuring that the assets of an insolvent person (individual or company) are first collected in and then distributed mainly pari passu among those with relevant claims of the same priority. Speaking generally, those objectives are served by the imposition of substantial restraints upon what creditors might otherwise be able to do by way of enforcing their rights. These restraints serve both to optimise the collection and realisation of the insolvent persons assets and to prevent a free for all among the creditors in seeking to get their hands on them. By contrast there are, unsurprisingly, few corresponding restraints upon the enforcement of the insolvent persons rights by the relevant office holder. In what follows I will concentrate on corporate insolvency, and therefore refer to the insolvent person as the company. Although substantially the same scheme governs the insolvency process in both liquidation (voluntary or compulsory) and in a distributing administration, I will refer for present purposes to the office holder as the liquidator. The basic scheme whereby an unsecured creditors claims may only be pursued by way of proof and participation in a pari passu distribution of any available surplus after discharge of prior claims, whereas the liquidator may pursue the companys claims in full, and with every available tool for enforcement, risks causing a real injustice where there are cross claims between the company and one of its creditors arising from their mutual dealings. Leaving aside the special position of fiduciaries, there is no fairness in a creditor having to accept only a proportion of the debt due, while the company can recover on its cross claim against the same creditor in full. The legal and equitable rules for asserting set off as a defence to the companys claim by no means encompass every type of cross claim, in relation to current, contingent and future liabilities. But the statutory regime for set off in insolvency, now to be found in IR 14.25 operates upon an altogether more comprehensive and rigorous basis. First, it applies to every type of pre liquidation mutual dealing, and also to secured, contingent and future debts: see IR 14.25(1), (2), (6) and (7). Secondly, whereas legal or equitable set off is essentially optional, taking effect only if the cross claim is pleaded as a defence to the claim, insolvency set off is mandatory, and takes effect upon the commencement of the insolvency (the cut off date). It is said to be self executing, and for some purposes the original cross claims are replaced by a single claim for the balance: see IR 14.25(3) and (4). Thus the separate cross claims may no longer be assigned after the cut off date: see Stein v Blake [1996] AC 243. But the separate claims may survive for other purposes: see Wight v Eckhardt Marine GmbH [2003] UKPC 37; [2004] 1 AC 147, paras 26 27 per Lord Hoffmann. One example is the balance of contingent or prospective claims under IR 14.25(5). Within the liquidation, a net balance owing to the creditor must be pursued by proof of debt in the ordinary way. The liquidator is entitled to be paid the full amount of any net balance owing by the creditor, and may exercise any available remedies for its quantification and recovery, including litigation, arbitration or ADR: see IR 14.25(4) and (5). The identification of the net balance is to be ascertained by the taking of an account: see IR 14.25(2). If there is no dispute as to the existence and amount of the claims and cross claims this is in practice a matter of simple arithmetic, the net balance being the difference between the aggregate of the claims and the aggregate of the cross claims. But if any of the claims and cross claims are in dispute, then those disputes will need first to be resolved, by reference to the individual merits of each, before the arithmetic resumes: see again Stein v Blake (supra) per Lord Hoffmann at 255E G. This schematic portrayal of the way in which insolvency set off works should not mask the reality, namely that set off may, and commonly does, arise both in the ordinary process of proof by a creditor and in the ordinary course of litigation or other dispute resolution processes when the liquidator is seeking to pursue a claim of the company. The account is not an essential first step in the process. Thus a proof by a creditor must acknowledge an undisputed cross claim by the company (see IR 14.4(1)(d)), or the claim may be allowed in part by the liquidator after reducing the creditors claim by reference to a disputed cross claim of the company. In a claim in court by the company the liquidator may acknowledge an undisputed cross claim by the defendant, or be met by the defendant asserting a disputed cross claim against the company by way of set off (and therefore defence) in those proceedings: see Stein v Blake (supra) at p 253 per Lord Hoffmann. The process of proof of debt in the insolvency regime shares a number of the essential features of adjudication. Once initiated it is designed to operate both speedily and relatively cheaply. The liquidator is a professional likely to have some experience or expertise in business of the type being conducted by the company, together with accounting expertise. The liquidator is also semi independent. Although nominally asserting the companys position against the proving creditor, the liquidator is in substance adjudicating between the creditors as a whole in deciding what share of the available assets each should receive. The liquidator holds no brief for any particular creditor. The process of proof is (by comparison with litigation or arbitration) relatively light touch and inquisitorial, and the outcome is only provisionally binding, in the sense that both the proving creditor and any other dissatisfied creditor may challenge the liquidators ruling, by proceedings in court in which the issues are addressed de novo. It becomes final only if not challenged. In practice, as with adjudication, most of the liquidators rulings in the process of proof are not challenged. Where there are real disputes between the company and third parties (who may be creditors or debtors) the insolvency code is inherently flexible as to the best means for their resolution. A disputed pending claim (in court proceedings or in arbitration) against the company (as at the cut off date) may be allowed to continue by the liquidator or by the court supervising the insolvency process, as the best means of resolving the dispute: see Cosco Bulk Carrier Co Ltd v Armada Shipping SA [2011] EWHC 216 (Ch); [2011] 2 All ER (Comm) 481, para 58. New proceedings may be authorised for the same purpose. The liquidator may take the initiative by seeking the directions of the court in relation to particular disputes or to legal issues common to a number of disputed claims, and for that purpose join interested parties or representatives of interested classes. Within those proceedings the court has almost unlimited procedural flexibility, as the numerous matters referred to court by the administrators of the top Lehman company in London (Lehman Brothers International (Europe)) demonstrated. Furthermore there is no rule that, merely because there exists set off between cross claims, and the need to take an account, disputes about all the claims and cross claims need to be adjudicated upon in a single proceeding. Again, the Lehman litigation contains numerous examples of the separate resolution, in successive proceedings, of different issues between the same parties within the Lehman group, concerning their mutual dealings. More generally liquidators are no strangers to ADR, or to the pursuit of the most cost effective and proportionate means of resolution of disputes. Specific provision is made for the expenses incurred by liquidators in the pursuit of other dispute resolution procedures to be treated as liquidation expenses: see IR 7.108(4)(a)(ii). The court has expressly approved the inclusion of third party determination procedures similar to adjudication in insolvency schemes of arrangement: see In re Pan Atlantic Insurance Co Ltd [2003] EWHC 1696 (Ch); [2003] 2 BCLC 678, para 32 per Lloyd J. The Cross Appeal Jurisdiction As already noted the question whether the determination of a matter in dispute falls within the jurisdiction of an adjudicator turns on the true construction of section 108 and the contractual provision for adjudication in the relevant construction contract. There is no single, universal, form of words in current use but a form which does not confer a right to refer any dispute arising under the relevant contract will not be compliant with section 108 of the 1996 Act, in which case the form used in the default scheme is statutorily implied. Paragraph 1(1) of the Scheme, which was expressly incorporated into the Contract in the present case, provides that: Any party to a construction contract (the referring party) may give written notice (the notice of adjudication) of his intention to refer any dispute arising under the contract to adjudication. Thus an adjudicator properly appointed has jurisdiction to determine a dispute if it arises under the construction contract and has been referred to the adjudicator by one of the parties to the contract. It is common ground in the present case that the disputed claim of Bresco referred to Mr Bingham would have been within his jurisdiction as a dispute under the Contract, even though Bresco was by then in liquidation and the Contract had ended, if Lonsdale had not had a cross claim qualifying (if well founded) for insolvency set off. The main submission for Lonsdale is that because of the automatic operation of insolvency set off (on the cut off date in March 2015) all claims and cross claims under the Contract then ceased to exist, and were replaced by a single claim to the balance (by whichever of the parties turned out to have the larger claim). This was not a claim under the Contract but a claim under Brescos insolvency. Accordingly any dispute or disputes about that claim for the balance was also a dispute under the insolvency rather than under the Contract. Lonsdale advanced a number of subordinate arguments to bolster this central submission. First, it was said that the liberal construction afforded to similar provisions in agreements to arbitrate was inappropriate in the present context, mainly because adjudication was imposed upon the parties by the 1996 Act, rather than freely agreed, but also because arbitration was different in kind from adjudication. Secondly, a narrow construction of the gateway to jurisdiction was warranted as a simple means of avoiding the various respects in which adjudication was said to be incompatible with the process of accounting required by insolvency set off. Thirdly it was submitted that, even if disputes under the Contract survived insolvency set off, the requirement to resolve them all together in a single account could not be accommodated within an adjudication because of the single dispute rule, and the limited scope within adjudication for the determination of cross claims. It is convenient to address these subordinate arguments first, even though some of them overlap with the second issue, which is directly about incompatibility. There is some reported authority, but little agreement, on the question whether the liberal construction afforded to jurisdiction provisions in arbitration agreements should inform the construction of section 108 of the 1996 Act and paragraph 1 of the Scheme, in relation to the jurisdiction of an adjudicator. In the leading arbitration case Fiona Trust and Holding Corpn v Privalov [2007] UKHL 40; [2007] Bus LR 1719, the question was whether an arbitration agreement which conferred jurisdiction in relation to a dispute about repudiation of the contract should extend to the question whether the contract should be rescinded for bribery or misrepresentation in its inception. The House of Lords held that it did, and that this did not depend upon fine distinctions about whether the contract required that the dispute arose under or in relation to or in connection with the contract. A similar issue arose in relation to adjudication under a construction contract in Hillcrest Homes Ltd v Beresford and Curbishley Ltd [2014] EWHC 280 (TCC). At para 50 HHJ Raynor QC saw considerable force in the submission that the reasoning in Fiona Trust was inapplicable to construction adjudication because the provision for adjudication was the consequence of statutory intervention. By contrast in J Murphy & Sons Ltd v W Maher & Sons Ltd [2016] EWHC 1148 (TCC); [2017] Bus LR 916 Sir Robert Akenhead reached the opposite conclusion, treating the learning about arbitration in Fiona Trust as a useful analogy at para 23. The editors of Hudsons Building and Engineering Contracts 14th ed (2019) prefer Judge Raynors view, at para 11 022, while the editors of Keating on Construction Contracts, Supplement to 10th ed (2019), para 18 077 appear to veer toward recognising the force of Fiona Trust by analogy. There is in my view little to be gained by an extensive analysis of the question how close is the analogy between arbitration and adjudication for the purpose of applying or not applying the learning in Fiona Trust. There are plainly points to be made on both sides. There are obvious differences between arbitration and adjudication, but they are both types of dispute resolution procedures for which provision is made by a contract between the parties, in which recourse to that procedure is conferred by way of contractual right. I am not persuaded that the statutory compulsion lying behind the conferral of the contractual right to adjudicate points at all towards giving the phrase a dispute arising under the contract a narrow meaning, by comparison with a similar phrase in a contract freely negotiated. The fact that, after due consideration of the Latham Report, Parliament considered that construction adjudication was such a good thing that all parties to such contracts should have the right to go to adjudication points if anything in the opposite direction. Indeed, the fact that the right to adjudicate is statutorily guaranteed is a powerful consideration favourable both to its recognition as a matter of construction, and to the caution which the court ought to employ before preventing its exercise by injunction. Incompatibility with insolvency set off, as a spur to a narrow construction of the adjudication jurisdiction, is a much deeper question and underlies the whole of these proceedings. It is the central question on the issue whether the adjudication should be restrained by injunction. I would prefer to address it in a single section of this judgment, below, rather than either to analyse it twice, or split it into inconvenient and arbitrary parts. Suffice it to say, for present purposes, that for reasons to follow I do not regard construction adjudication as in any way incompatible with the operation of the insolvency code in general, or with insolvency set off in particular. The single dispute rule was deployed as the second prong of a forensic Mortons Fork. Either there was a single dispute about the net balance, in which case it did not arise under the contract, or there were multiple disputes (arising under the various cross claims if they survived) which needed to be resolved on the taking of a single account, but which could not fall within the adjudicators jurisdiction because of the single dispute rule. I consider this argument to be misconceived. The starting point is that nothing in the 1996 Act or in the Scheme expressly creates a single dispute rule, as a matter of jurisdiction. The jurisdiction of the adjudicator is, subject to the overriding requirement that the dispute or disputes referred arise under the contract, mainly defined by the terms of the reference in each particular case. The only guidance from the Scheme is, in paragraph 8, that the adjudicator may determine more than one dispute, or disputes under more than one contract, if the parties so agree. However narrowly the referring party chooses to confine the reference, a claim submitted to adjudication will nonetheless confer jurisdiction to determine everything which may be advanced against it by way of defence, and this will necessarily include every cross claim which amounts to (or is pleaded as) a set off. This much was common ground, but it is supported by authority: see Bailey Construction Law 3rd ed (2020), para 24.57 and PC Harrington Contractors Ltd v Multiplex Constructions (UK) Ltd [2007] EWHC 2833 (TCC); [2008] BLR 16, paras 40 41 per Christopher Clarke J. The set off may be advanced by way of defence to the exclusion of the claim referred to adjudication, but not as an independent claim for a monetary award in favour of the respondent to the reference. To the same effect, in relation to a cross claim in fraud, is Speymill Contracts Ltd v Baskind [2010] EWCA Civ 120; [2010] BLR 257, paras 36 37 per Jackson LJ. What is or is not a single dispute within the rule is by no means straightforward. The most comprehensive judicial analysis of the rule appears in Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2332 (TCC); [2011] BLR 707, para 38 per Akenhead J, in the following principles: (i) A dispute arises generally when and in circumstances in which a claim or assertion is made by one party and expressly or implicitly challenged or not accepted. (ii) A dispute in existence at one time can in time metamorphose into something different to that which it was originally. (iii) A dispute can comprise a single issue or any number of issues within it. However, a dispute between parties does not necessarily comprise everything which is in issue between them at the time that one party initiates adjudication; put another way, everything in issue at that time does not necessarily comprise one dispute, although it may do so. (iv) What a dispute in any given case is will be a question of fact albeit that the facts may require to be interpreted. Courts should not adopt an over legalistic analysis of what the dispute between the parties is, bearing in mind that almost every construction contract is a commercial transaction and parties cannot broadly have contemplated that every issue between the parties would necessarily have to attract a separate reference to adjudication. (v) The Notice of Adjudication and the Referral Notice are not necessarily determinative of what the true dispute is or as to whether there is more than one dispute. One looks at them but also at the background facts. (vi) Where on a proper analysis, there are two separate and distinct disputes, only one can be referred to one adjudicator unless the parties agree otherwise. An adjudicator who has two disputes referred to him or her does not have jurisdiction to deal with the two disputes. (vii) Whether there are one or more disputes again involves a consideration of the facts. It may well be that, if there is a clear link between two or more arguably separate claims or assertions, that may well point to there being one dispute. A useful if not invariable rule of thumb is that, if disputed claim No 1 cannot be decided without deciding all or parts of disputed claim No 2, that establishes such a clear link and points to there being only one dispute. These principles were applied with apparent approval by Coulson J in Deluxe Art & Theme Ltd v Beck Interiors Ltd [2016] EWHC 238 (TCC); [2016] BLR 274, paras 15 16. They were not subjected to any sustained challenge in these proceedings. Applying Akenhead Js useful rule of thumb, it appears that a dispute about a cross claim relied on as a set off by way of defence to the claim referred will be part of the dispute raised by the reference, because the claim cannot be decided without consideration of the cross claim by way of defence. However that may be, the single dispute rule would only assist Lonsdales argument on jurisdiction if the law of insolvency set off compelled the liquidator to bring all disputes about the claims and cross claims qualifying for set off for resolution in a single proceeding. But the law and practice of insolvency set off does no such thing. The liquidator may, if it appears economical and proportionate to do so, untangle a complex web of disputed issues arising from mutual dealings between the company and a third party by picking some as suitable for adjudication, others for arbitration and others for disposal by an application to the court for directions, or by ordinary action. At the same time the liquidator may seek to deploy ADR and negotiation to narrow the issues in the meantime. Returning to the main submission, the existence of a cross claim operating by way of insolvency set off does not mean that the underlying disputes about the companys claim under the construction contract and (if disputed) the cross claim simply melt away so as to render them incapable of adjudication. The submission that they are replaced by a dispute in the insolvency is wrong for the reasons which follow. First, the submission proves too much. It is common ground that a disputed claim by the company in liquidation for (say) 300,000 under a construction contract can be referred by the liquidator to adjudication. But suppose there is an undisputed cross claim for 25. This would trigger insolvency set off and on Lonsdales argument (as Ms Sinclair QC ruefully admitted) deprive the adjudicator of jurisdiction. True it is that the liquidator would have to give credit for 25 against the companys claim, but in reality the only dispute would be as to the merits of that claim under the construction contract. To treat the existence of the undisputed cross claim for 25 as a basis for depriving the company of its right to adjudication of its disputed claim would be a triumph of technicality over substance. Now suppose that there is a disputed cross claim under the same contract for 100,000. Again, this dispute would be entirely a dispute or disputes under the contract, and the cross claim would be available by way of insolvency set off, as a defence to one third of the companys claim. Using Akenhead Js rule of thumb, there would still be a single dispute under the contract. Finally, suppose that the cross claim is alleged to overtop the companys claim (as here). It would still be available as a defence to the companys claim, now to the whole of it, and form part of the same dispute. The only constraint upon the adjudicators jurisdiction would be that he could not award the balance to the creditor, but he could dismiss the claim and even make a declaration as to the value of the cross claim, as part of his reasons why the companys claim wholly failed, leaving the creditor to prove for it in the liquidation under IR 14.25(3). Secondly, the submission assumes, from an over literal reading of the language of Lord Hoffmanns speech in Stein v Blake, that the claims and cross claims which fall within insolvency set off lose their separate identity for all purposes, on the cut off date. It is true that they do for the purpose of assignment, but there are important examples of purposes where they do not. Lord Hoffmann himself acknowledged this in Stein v Blake at p 255E, when he said that: The cross claims must obviously be considered separately for the purpose of ascertaining the balance. For that purpose they are treated as if they continued to exist. As already noted a future or contingent claim may survive set off so as to be enforceable as to the balance after the debt becomes due: see IR 14.25(5), which gave effect (by amendment) to part of the reasoning of the Court of Appeal in In re Kaupthing Singer and Friedlander Ltd [2010] EWCA Civ 518; [2011] BCC 555. More prosaically, when a liquidator causes a company in liquidation to pursue a contractual claim by litigation or arbitration, the pleaded claim remains one based upon the underlying contract, even if an undisputed set off is acknowledged, or a disputed set off is raised by way of defence. Nor does the existence of insolvency set off deprive the owner of the original claim of ancillary rights under the transaction which created it. For example, insolvency set off is now considered to apply to secured claims: see In re Lehman Brothers International (Europe) (No 4) [2017] UKSC 38; [2018] AC 465, paras 167 170 per Lord Neuberger of Abbotsbury and MS Fashions Ltd v Bank of Credit and Commerce International SA [1993] Ch 425, 446 per Dillon LJ, impliedly overruling dicta to the contrary by Rose LJ in In re Bank of Credit and Commerce International SA (No 8) [1996] Ch 245, 256 and In re Norman Holding Co Ltd [1991] 1 WLR 10. This is because mutual dealings in IR 14.25 are not limited to provable debts. Thus where a secured claim for (say) 300,000 is reduced to 200,000 by a set off, the creditor for the balance retains its security rights. By analogy the company retains its rights as to dispute resolution, whether to go to court, or a contractual right to arbitrate or adjudicate. A main plank in the reasoning of the Court of Appeal that the challenge to jurisdiction was unfounded was that if (as is not in dispute) a liquidator was entitled to pursue the companys claims by arbitration (pursuant to a clause referring disputes under the contract to arbitration) then the same must apply to the right to refer disputes to adjudication: see per Coulson LJ at para 31. I agree. I can see no reason why the two forms of dispute resolution should be treated differently. For all those reasons I would dismiss the cross appeal on jurisdiction. The Appeal Futility The reasoning of the Court of Appeal that the adjudication triggered by the reference made on Brescos behalf should be restrained by injunction may be captured from the following extracts from the judgment of Coulson LJ: 37. I consider that there is a basic incompatibility between adjudication and the regime set out in the Rules. The former is a method of obtaining an improved cashflow quickly and cheaply. The latter is an abstract accounting exercise, principally designed to assist the liquidators in recovering assets in order to pay a dividend to creditors. 38. This incompatibility can be seen in the different processes that each regime entails; in a comparison of the results that may be available; and in a consideration of the wider issues that could arise if companies in insolvent liquidation regularly sought to refer claims to adjudication. 45. a decision of an adjudicator in favour of a company in liquidation, like Bresco, would not ordinarily be enforced by the court. in my view, judgment in favour of a company in insolvent liquidation (and no stay), in circumstances where there is a cross claim, will only be granted in an exceptional case. 46. As a result of this . a reference to adjudication of a claim by a contractor in insolvent liquidation, in circumstances where there is a cross claim, would be incapable of enforcement and therefore an exercise in futility. The Court of Appeal was encouraged in its view by the following additional considerations. First, participation in adjudication would involve the waste of limited financial resources by the liquidator. Secondly it would expose the respondent to the reference to wasting costs in a futile process, where there would be no basis of recovering them even if successful. Thirdly the respondent would, if the liquidator obtained summary judgment for an excessive amount, have to spend further costs on court proceedings to rectify the position, with doubtful recovery from the company even if successful. Finally the pursuit by liquidators of adjudication followed by enforcement would put undue pressure on the TCC, to the detriment of solvent court users. In considering that those considerations of futility and incompatibility justified the grant of an injunction, the Court of Appeal relied upon Twintec v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC); [2014] BLR 150. At paras 63 64 Edwards Stuart J said this: By section 37 of the Senior Courts Act 1981, the court may grant an injunction in all cases in which it appears to the court to be just and convenient to do so I am unable to see how it would be either just or convenient to permit an adjudication to continue in circumstances where the decision of the adjudicator will be incapable of enforcement. In the present case if the adjudication went ahead and the adjudicator purported to give a decision in Twintecs favour, that decision would not be binding on VFL. Precisely the same issue would still have to be resolved in the litigation. Accordingly a victory by Twintec in the adjudication would be one that would make no difference to its legal rights. On the contrary, Twintec would have diverted valuable resources in order to deal with the issues in the adjudication and to incur substantial irrecoverable expenditure in doing so. Conversely, a purported decision in VFLs favour would be unenforceable and would, in itself, achieve nothing. It is true that a well reasoned decision by an adjudicator might encourage the parties to settle their dispute, but that, it seems to me, is a fairly nebulous advantage. I cannot see how it outweighs the significant and otherwise unproductive expenditure of money and resources by both parties that the adjudication will involve. In this court Lonsdale broadly supported the reasoning of the Court of Appeal. If a just and convenient test for the grant of an injunction might be thought too broad, Ms Sinclair QC submitted that a useful analogy was to be found in the principles applied by the court when restraining the presentation of a winding up petition for the enforcement of a disputed debt. For Bresco Mr Arden QC suggested that the exceptional jurisdiction to grant an anti suit injunction might be more appropriate by way of analogy. Trenchant expressions of the futility of adjudication, and its incompatibility with insolvency set off, from two judges with great experience in construction disputes deserve real respect, although the observations by Edwards Stuart J may have arisen from the particular facts of the Twintec case. Nonetheless I am unable to accept that they afford any proper basis for the grant of an injunction to restrain the pursuit of adjudication merely because the company making the reference is in an insolvency process and there are cross claims between the company and the respondent to the reference which trigger insolvency set off. The starting point, once it is appreciated that there is jurisdiction under section 108 in such circumstances, is that the insolvent company has both a statutory and a contractual right to pursue adjudication as a means of achieving resolution of any dispute arising under a construction contract to which it is a party, even though that dispute relates to a claim which is affected by insolvency set off. It follows that it would ordinarily be entirely inappropriate for the court to interfere with the exercise of that statutory and contractual right. Injunctive relief may restrain a threatened breach of contract but not, save very exceptionally, an attempt to enforce a contractual right, still less a statutory right. That very steep hurdle is not surmounted, either generally (in the context of insolvency set off) or on the particular facts of this case. For reasons already explained it is simply wrong to suggest that the only purpose of construction adjudication is to enable a party to obtain summary enforcement of a right to interim payment for the protection of its cash flow, although that is one important purpose. In the context of construction disputes adjudication has, as was always intended, become a mainstream method of ADR, leading to the speedy, cost effective and final resolution of most of the many disputes that are referred to adjudication. Dispute resolution is therefore an end in its own right, even where summary enforcement may be inappropriate or for some reason unavailable. Nor is there any basis for a conclusion that this beneficial means of dispute resolution is incompatible with the insolvency process, or with the requirement to deal with cross claims in insolvency by set off, still less an exercise in futility. First, as already described, the process of proof of debt in insolvency shares many of the attractive features of adjudication, in terms of speed, simplicity, proportionality and economy, but adjudication has the added advantage that a construction dispute arising during an insolvency will be more amenable to resolution by a professional construction expert than by many liquidators. In many cases, disputed cross claims needing to be resolved as a prelude to a final arithmetical set off account will both, or all, arise under the same construction contract, as in the present case, because all the mutual dealings between the parties will have arisen under the aegis of that single contract. Even if they arise under more than one construction contract, the adjudicator will be better placed than most liquidators to resolve them. The Scheme contains provision whereby that may be achieved by consent, and the need to take cross claims into account as defences (by way of set off) may well mean that there is in reality one single dispute within Akenhead Js helpful rule of thumb in the Witney Town Council case. It is true that the effect of insolvency set off may mean that cross claims raise issues wholly outwith the purview of one or more construction contracts, such as the apportionment of liability for personal injuries, or liability under mutual dealings between the same parties in some other commercial field. In such a case the adjudicator will need to have regard to them, if they amount to a defence to the disputed construction claim being referred, but may have simply to make a declaration as to the value of the claim, leaving the unrelated cross claim to be resolved by some other means. That is a remedy well within the adjudicators powers. Nonetheless the adjudicators resolution of the construction dispute referred by the liquidator may be of real utility to the conduct of the process of set off within the insolvency process as a whole. Thus it is no answer to the utility (rather than futility) of construction adjudication in the context of insolvency set off to say that the adjudicators decision is unlikely to be summarily enforceable. The reasons why summary enforcement will frequently be unavailable are set out in detail in Bouygues (UK) Ltd v Dahl Jensen (UK) Ltd [2001] 1 All ER (Comm) 1041, paras 29 35 per Chadwick LJ. As he says, the court is well placed to deal with those difficulties at the summary judgment stage, simply by refusing it in an appropriate case as a matter of discretion, or by granting it, but with a stay of execution. There is in those circumstances no need for an injunction, still less a need to prevent the adjudication from running its speedy course, as a potentially useful means of ADR in its own right. Furthermore it will not be in every case that summary enforcement will be inappropriate. There may be no dispute about the cross claim, and the claim may be found to exist in a larger amount, so that there is no reason not to give summary judgment for the company for the balance in its favour. Or the disputed cross claim may be found to be of no substance. Or, if the cross claim can be determined by the adjudicator, because the claim and cross claim form part of the same dispute under the contract, the adjudicator may be able to determine the net balance. If that is in favour of the company, there is again no reason arising merely from the existence of cross claims why it should not be summarily enforced. True it is that the adjudicator may over value the net balance in favour of the company, so that summary enforcement may leave the respondent to the reference having first to establish a true balance in its favour and then to pursue it by proof (or possibly as a liquidation expense) against an under funded liquidation estate. But over valuation is a problem that may arise in any liquidation context, even where there is no cross claim. There is no suggestion that, absent insolvency set off, adjudication is ordinarily futile merely because the company making the reference is in liquidation or distributing administration. The proper answer to all these issues about enforcement is that they can be dealt with, as Chadwick LJ suggested, at the enforcement stage, if there is one. In many cases the liquidator will not seek to enforce the adjudicators decision summarily. In others the liquidator may offer appropriate undertakings, such as to ring fence any enforcement proceeds: see the discussion of undertakings in the Meadowside case. Where there remains a real risk that the summary enforcement of an adjudication decision will deprive the respondent of its right to have recourse to the companys claim as security (pro tanto) for its cross claim, then the court will be astute to refuse summary judgment. There remain the issues about costs and the burden on the TCC. Taking costs first, Parliament chose to make this form of semi compulsory ADR costs neutral, even when invoked after the completion or other termination of the contract, when issues of cash flow have passed into history. Thus the statutory and contractual right with which an injunction would interfere has costs neutrality built into it. The very considerable success of construction adjudication since 1996 suggests that costs neutrality was built in for good reason. Many forms of ADR, including mediation, are costs neutral, and are none the worse (many would say all the better) for that. So are small claims procedures in the County Court, and many other court or tribunal dispute resolution processes. So also, in the insolvency context, is the process of proof of debt. Similarly it is inherent in the adjudication procedure that a party may be put to expense in having an incorrect decision put right in later litigation (or arbitration), at least part of which will usually be irrecoverable even if the litigation succeeds. That cannot of itself be a reason for preventing by injunction the statutory right to adjudication. Lonsdale makes the particular point, in the insolvency context, that a joint and several liability to pay the adjudicators costs and expenses (as in the Contract in this case and in the Scheme) may leave the respondent having to pay the whole of those amounts, with no effective recourse against the insolvent company for its half share. But that liability of the company will be a liquidation (or administration) expense, rather than a matter of proof: see IR 7.108(4)(a)(ii). Although this may not be a complete guarantee of payment by the company, it provides reasonable reassurance, and a joint and several liability of this kind is not generally risk free, for example where insolvency of one party follows the reference to adjudication. And it is a point equally applicable to all adjudication in the insolvency context, even where there are no cross claims, so it proves too much. In my view, consideration of costs and of burdens on the court militate against, rather than in favour, of admitting applications for injunctions to restrain adjudications before they have run their course. The tight time limits and document based investigatory nature of construction adjudication means that, if left to proceed, it would probably be completed before any opposed injunction application could be determined by the court, and at a fraction of the likely cost. The outcome of the adjudication may mean that no risks of the respondent losing the benefit of insolvency set off arise, for example if the respondent is successful. Opposition to such attempts to enforce as there may be can then, if necessary, be dealt with on their merits, when the outcome of the adjudication is known, rather than having to be guessed at. I have therefore reached the opposite conclusion from that of the Court of Appeal on the issue of futility. Construction adjudication, on the application of the liquidator, is not incompatible with the insolvency process. It is not an exercise in futility, either generally or merely because there are cross claims falling within insolvency set off, and there is no reason why the existence of such cross claims can constitute a basis for denying to the company the right to submit disputes to adjudication which Parliament has chosen to confer. For those reasons I consider that the appeal should be allowed. |
The issue in this case is whether a woman who has temporarily left work because of the late stages of pregnancy and early aftermath of childbirth is to be treated as a worker for the purpose of the right of free movement enshrined in article 45 of the Treaty on the Functioning of the European Union (TFEU) and more specifically the right of residence conferred by Article 7 of Directive 2004/38/EC of the European Parliament and of the Council on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States (the Citizenship Directive). Upon this depends her entitlement to income support, a non contributory, means tested benefit. Under UK domestic law, a pregnant woman within 11 weeks of her expected date of confinement is not required to be available for, or actively to seek, work. However, a national of another EU state will be excluded as a person from abroad unless, in this case, she falls within Article 7. The facts The claimant is a Frenchwoman (and qualified teacher) who came to the United Kingdom on 10 July 2006. She worked in various jobs, mostly as a teaching assistant, from 1 September 2006 until 1 August 2007. She then enrolled on a Post Graduate Certificate in Education course in the University of London, the envisaged period of study being from 17 September 2007 until 27 June 2008. She became pregnant with an expected date of confinement of 2 June 2008. She therefore withdrew from her course as of 1 February 2008. She undertook agency work from 22 January 2008, hoping to find work in secondary schools. As none was available, she took agency positions working in nursery schools. By 12 March 2008, when she was nearly six months pregnant, the demands of caring for nursery school children became too strenuous and she stopped this work. She looked for lighter work for a few days but none was available. On 18 March 2008, she made a claim for income support. Her evidence is that, as it was now 11 weeks before her expected date of confinement, she was advised by her general practitioner to do so. On 4 May 2008, the Secretary of State refused her claim. Her baby was born prematurely on 21 May 2008 and she returned to work three months later. On 4 September 2008, the First Tier Tribunal allowed the claimants appeal against the refusal of income support. But on 7 May 2010, the Upper Tribunal allowed the appeal of the Secretary of State. On 13 July 2011, the Court of Appeal dismissed the claimants appeal: see [2011] EWCA Civ 806. She now appeals to the Supreme Court of the United Kingdom. Relevant domestic law The relevant domestic legislation is complex. By virtue of regulation 4ZA of and paragraph 14 of Schedule 1B to the Income Support (General) Regulations 1987 (SI 1987/1967), a woman who . is or has been pregnant but only for the period commencing 11 weeks before her expected week of confinement and ending fifteen weeks after the date on which her pregnancy ends falls within a prescribed category of person for the purpose of section 124(1)(e) of the Social Security Contributions and Benefits Act 1992 and is thus eligible for income support. Unlike the closely related Jobseekers Allowance, there is no requirement for such a person to be available for work or actively seeking employment. A pregnant woman who is available for or actively seeking work may claim Jobseekers Allowance until six weeks before her expected date of confinement, but from then until two weeks after she ceases to be pregnant, she is deemed incapable of work and so cannot do so: see regulation 14 of the Social Security (Incapacity for Work) (General) Regulations 1995. Thus without other sources of income (including stutory maternity pay and other social security benefits for which some but not all pregnant women are eligible) she will be left destitute unless income support is available. However, a person from abroad is effectively excluded from entitlement to income support because the applicable amount prescribed for such a person is nil: see the 1992 Act, section 124(1)(b) and paragraph 17 of Schedule 7 to the 1987 Regulations. Regulation 21AA of those Regulations tells us what a person from abroad means. By regulation 21AA(1), it means a claimant who is not habitually resident in the United Kingdom . By regulation 21AA(2), No claimant shall be treated as habitually resident in the United Kingdom . unless he has a right to reside in . the United Kingdom . This is subject to various exclusions in regulation 21AA(3) which do not concern us. However, by regulation 21AA(4): A claimant is not a person from abroad if he is (a) a worker for the purposes of Council Directive No 2004/38/EC; (b) a self employed person for the purposes of that Directive; (c) a person who retains a status referred to in sub paragraph (a) or (b) pursuant to article 7(3) of that Directive; (d) a person who is a family member of a person referred to in sub paragraph (a), (b) or (c) within the meaning of article 2 of that Directive; (e) a person who has a right to reside permanently in the United Kingdom by virtue of Article 17 of that Directive. Thus EU citizens who are workers in the United Kingdom within the meaning of EU law are put in the same position as habitually resident citizens of the UK for the purpose of entitlement to income support (and indeed other benefits, such as housing benefit and child benefit, to which it is the passport or which have a similar rule of entitlement). European Union law The relevant provisions of European Union law are article 45 of the TFEU and Article 7 of the Citizenship Directive. Article 45 enshrines the principle of freedom of movement for workers and requires the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment. Neither Article 45 TFEU nor Article 7 of the Directive defines worker. The central issue in this case is whether a pregnant woman who temporarily gives up work because of her pregnancy remains a worker for this purpose. Article 7 of the Citizenship Directive, so far as relevant, provides as follows: 1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they: (a) are workers or self employed persons in the host Member state; . 3. For the purposes of paragraph 1(a), a Union citizen who is no longer a worker or self employed person shall retain the status of worker or self employed person in the following circumstances: (a) he/she is temporarily unable to work as the result of an illness or accident; (b) he/she is in duly recorded involuntary unemployment after having been employed for more than one year and has registered as a job seeker with the relevant employment office; (c) he/she is in duly recorded involuntary unemployment after completing a fixed term employment contract of less than a year or after having become involuntarily unemployed during the first twelve months and has registered as a job seeker with the relevant employment office. In this case the status of worker shall be retained for no less than six months; (d) he/she embarks on vocational training. Unless he/she is involuntarily unemployed, the retention of the status of worker shall require the training to be related to the previous employment. It is noted that not all of the persons covered by Article 7(3) will be involuntarily unemployed or unable to work. Reference was also made in the course of argument to Articles 16(3) and 24. Article 16(3) provides that the continuity of residence required to obtain the right of permanent residence in the host Member State is not affected by a temporary absence of up to twelve months for important reasons such as pregnancy and childbirth, serious illness, study or vocational training. Article 24(1) requires that Subject to such specific provisions as are expressly provided for in the Treaty and secondary law, all Union citizens residing on the basis of this Directive in the territory of the host Member State shall enjoy equal treatment with the nationals of that Member State within the scope of the Treaty. The parties arguments It is common ground between the parties that the term worker includes (i) a person who currently has a contract of employment with an employer, but who is on paid or unpaid maternity leave; and (ii) in certain circumstances, a person who does not currently have a contract of employment but is actively seeking work in the host country: see R v Immigration Appeal Tribunal, Ex p Antonissen (Case C 292/89) [1991] ECR I 745. It is also common ground between the parties that the claimant does not fall within any of the categories of person specified in Article 7(3) who are to retain the status of worker for the purpose of Article 7(1)(a). In particular, although she had understandable reasons for not continuing to work or look for work, there is no finding that she was in fact unable to do work of any kind, nor would such inability have been the result of illness or accident. Pregnancy on its own is not an illness: Webb v EMO Air Cargo (UK) Ltd (Case C 32/93) [1994] ECR I 3567. The claimant, with the support of the AIRE (Advice on Individual Rights in Europe) Centre, submits that an EU citizen who travels to another Member State in order to work there, does work there, but temporarily ceases work owing to the demands of pregnancy, remains a worker. They rely upon the long standing and well settled approach of the CJEU giving a broad and purposive interpretation to the term worker having regard to social as well as economic considerations. Examples given are Levin v Secretary of State for Justice (Case 53/81) [1982] ECR 1035, at para 13; Kempf v Staatssecretaris van Justitie (Case 139/85) [1986] ECR 1741, at para 13; Lair v Universitt Hannover (Case 39/86) [1988] ECR 3161; Antonissen, above; and Orfanopoulos v Land Baden Wrttemberg (Joined Cases C 482/01 and C 493/01) [2004] ECR I 5257. In Lair, in particular, at para 31, the Court observed that the rights guaranteed to migrant workers do not necessarily depend on the actual or continuing existence of an employment relationship. In Ninni Orasche v Bundesminister fr Wissenschaft, Verkehr under Kunst (Case C 413/01) [2003] ECR I 13187, it was held that a person might retain her worker status after the ending of a fixed term contract. Furthermore, they argue that the Court has on a number of occasions given significant weight to the prospect of EU citizens being deterred from exercising their free movement rights if these are too narrowly interpreted: examples are R v Immigration Appeal Tribunal and Surinder Singh, Ex p Secretary of State for the Home Department (Case C 370/90) [1992] ECR I 4265 and Metock v Minister for Justice, Equality and Law Reform (Case C 127/08) [2009] QB 318. If a pregnant woman loses the status of worker she may also lose her right to reside in the host state (there is even a risk that she might be threatened with removal). It would be a substantial deterrent to the free movement of female workers if they were faced with the prospect of being left destitute, and threatened with removal to their home country, should they become pregnant and temporarily give up work in the later stages of pregnancy. After all, there comes a point in any pregnancy where a woman has to give up actual work for a short while just in order to give birth, but she will not fall within the literal wording of article 7(3)(a). It is argued that it would be wrong to place decisive weight on the continuation of a contract of employment in such circumstances. In CIS/1042/2008, the Secretary of State conceded to the Social Security Commissioner that a self employed woman who takes a break for reasons of maternity remains a self employed person for the purpose of Article 7. It would be particularly unjust if a woman who is wrongfully dismissed from her employment because of her pregnancy, which is contrary to both EU and domestic law, loses her character as a worker unless she registers as a job seeker. There is, it is said, no logical basis for treating an agency worker without the protection of maternity leave differently from an employee who takes maternity leave or a self employed woman who gives herself a break. None of them has left the labour market in any permanent sense. Further, it would be anomalous if a pregnant woman who gave up work and returned to her home country for up to a year did not lose her continuity of residence for the purpose of Article 16, while a pregnant woman who gave up work for up to six months but remained in the host country would do so. The latter retains a significantly closer connection with the host country but would have to start her qualifying period of residence all over again. The Secretary of State, on the other hand, points to the mention of codification of existing Community instruments in recital (3) to the Directive. He argues that Article 7 was intended to be a codification of the existing law. Thus worker in Article 7(1) should be taken to have the meaning that it had acquired in 2004 and Article 7(3) is an exhaustive list of the people who then fell outside that meaning but were nevertheless to be treated as if they were workers. The fact that a person might have good reasons for giving up work or looking for work for a while does not mean that he or she retains the status of worker. In support of that proposition he relies, in particular, on Secretary of State for Work and Pensions v Dias [2009] EWCA Civ 807, [2010] 1 CMLR 112; (Case C 325/09) [2011] 3 CMLR 1103. According both to the English Court of Appeal and to the Advocate Generals opinion, endorsed by the Court, the status of worker was lost when, at the end of her period of maternity leave, a mother decided not to return to work but to continue to care for her son, albeit that she might return to work in the future. This was consistent with the decision in Johnson v Chief Adjudication Officer (Case C 31/90) [1991] ECR I 3723 that a mother was not a member of the working population when devoting herself to looking after her children. Leaving because of the late stages of pregnancy, it is argued, is no different from leaving to take care of a child. The Secretary of State further submits that the claimants case leaves it uncertain whether and for how long a pregnant women who has no continuing employment contract and is not self employed remains a worker and points out that some women, once pregnant, may never return or intend to return to work. The claimant in response submits that, on the analogy with maternity leave, she should be regarded as a worker for the period during which national law regards it as reasonable that she be absent from work because of the late stages of pregnancy and the immediate aftermath of childbirth, that is for up to 11 weeks before her expected date of confinement and up to 15 weeks after the pregnancy ends (see paragraph 4 above). Both parties rely upon the Courts statement in Martinez Sala v Freistaat Bayern (Case C 85/96) [1998] ECR I 2691, at para 32: Once the employment relationship has ended, the person concerned as a rule loses his status of worker, although that status may produce certain effects after the relationship has ended, and a person who is genuinely seeking work must also be classified as a worker. The Secretary of State argues that that encapsulates the meaning of worker, characterised by the continuation of an employment relationship or by genuinely seeking work. The claimant argues that as a rule indicates that other analogous situations are not excluded and this is such an one. The claimant makes a separate but related argument, that if Article 7 were not to encompass the situation under discussion, this would constitute direct discrimination against women and be therefore contrary to the fundamental principle of equal treatment. It is well established that, where pregnancy is the ground for less favourable treatment, there is no need to identify a male comparator: see Webb v EMO Air Cargo (UK) Ltd [1994ECR I 3567. This goes further than saying that inability to work because of pregnancy should be equated with inability to work for other reasons. As the Advocate General said in that case, at para AG 14, Nor does it seem to me to be possible a fortiori to draw comparisons . between a woman on maternity leave and a man unable to work because, for example, he has to take part in a sporting event, even if it were the Olympic Games. Other considerations apart, a sportsman, even a champion (whether a man or a woman) is confronted with a normal choice reflecting his needs and priorities in life; the same cannot reasonably be said of a pregnant woman, unless the view is taken but it would be absurd that a woman who wishes to keep her job always has the option of not having children. Pregnancy is not just a lifestyle choice. Equal treatment encompasses the reasonable response of a working woman to the physical demands and limitations of late pregnancy and childbirth. UK law gives sensible recognition to these, not only for the sake of the mother but also for the sake of her child, by not requiring that she seek or be available for work from 11 weeks before the expected date of confinement until 15 weeks after her pregnancy has ended (whether with a live or a still birth). Excluding a woman who makes that choice from the right of residence which she would have retained had she not become pregnant is, it is argued, direct discrimination on grounds of sex. The Secretary of State argues that there is no sex discrimination. The claimant was refused income support because she does not have a right to reside in the UK as required by regulation 21AA(2) or Article 7 of the Citizenship Directive. Any discrimination is on grounds of her nationality and, as the Supreme Court held in Patmalniece v Secretary of State for Work and Pensions [2011] UKSC 11, [2011] 1 WLR 783, is indirect and justified. In any event, even if it were sex discrimination, this would not constitute a ground for the Court of Justice to strike down Article 7, which is plainly lawful as far as it goes. If there is a lacuna, it is for the EU legislature to rectify. The Courts view The Supreme Court is not persuaded that the case of either side is acte clair. We believe it likely that the Council and Parliament did think, when enacting the Citizenship Directive, that the Directive was codifying the law as it then stood. But we are not persuaded that in doing so it was precluding further elaboration of the concept of worker to fit situations as yet not envisaged. The Court has developed the concept of EU citizenship in a number of ways: see, for example, Collins v Secretary of State for Work and Pensions [2004] ECR I 2703. We are further conscious that pregnancy and the immediate aftermath of childbirth are a special case. Equal treatment of men and women is one of the foundational principles of EU law. Only women can become pregnant and bear children. Thus in this respect they cannot be compared to men. Pregnancy is not to be equated with illness or disability. But unless special account is taken of pregnancy and childbirth, women will suffer comparative disadvantage in the workplace. There are also good reasons in health and social policy for allowing women to take a reasonable period of maternity leave without losing the advantages attached to their status as workers. This is different from leaving the workforce in order to look after children. Both men and women may do this and there is no sex discrimination involved in denying them both the status of worker for the time being. We do not see the sex discrimination argument as invalidating Article 7, but as indicating that it would be consistent with the fundamental general principles of EU law for the Court to develop the concept of worker to meet this particular situation. The questions referred Is the right of residence conferred upon a worker in Article 7 of the Citizenship Directive to be interpreted as applying only to those (i) in an existing employment relationship, (ii) (at least in some circumstances) seeking work, or (iii) covered by the extensions in article 7(3), or is the Article to be interpreted as not precluding the recognition of further persons who remain workers for this purpose? (i) If the latter, does it extend to a woman who reasonably gives up work, or seeking work, because of the physical constraints of the late stages of pregnancy (and the aftermath of childbirth)? (ii) If so, is she entitled to the benefit of the national laws definition of when it is reasonable for her to do so? 1. 2. Hence we refer the following questions to the CJEU: |
This appeal concerns the procedure for collective proceedings introduced by amendment to the Competition Act 1998 (the Act) for the purpose of enabling small businesses and consumers more easily to bring claims for what may loosely be described as anti competitive conduct in breach of the provisions of the Act. Where the harmful impact of such conduct affects consumers, it may typically cause damage to very large classes of claimants. Proof of breach, causation and loss is likely to involve very difficult and expensive forensic work, both in terms of the assembly of evidence and the analysis of its economic effect. Viewed from the perspective of an individual consumer, the likely disparity between the cost and effort involved in bringing such a claim and the monetary amount of the consumers individual loss, coupled with the much greater litigation resources likely to be available to the alleged wrongdoer, means that it will rarely, if ever, be a wise or proportionate use of limited resources for the consumer to litigate alone. The procedure for collective proceedings introduced by the Act applies to claims by two or more persons for damages, money or an injunction in respect of a breach of specified provisions of statutory competition law: see sections 47A(2) and 47B(1) of the Act. It enables whole classes of consumers to vindicate their rights to compensation and the large cost of the necessary litigation to be funded, before an expert tribunal, the Competition Appeal Tribunal (CAT), which is given exclusive jurisdiction over collective proceedings. The prospect that the rights of consumers can be vindicated in that way also serves to act as a disincentive to unlawful anti competitive behaviour of a type likely to harm consumers generally. But collective proceedings may not proceed beyond the issue and service of a claim form without the permission of the CAT in the form of certification by a Collective Proceedings Order (CPO) under section 47B of the Act. At issue in the appeal are the legal requirements for certification. There are (at least for present purposes) three key features of collective proceedings. The first is that claims by any number of claimants may be pursued on their behalf by a single representative who may, but need not, be a member of the class. The claims need not be identical, and they need not all be against all the defendants, but they must all raise the same, similar or related issues of fact or law. Secondly, the remedy sought may, but need not always, be the award of what are called aggregate damages. This type of damages provides just compensation for the loss suffered by the claimant class as a whole, but the amount need not be computed by reference to an assessment of the amount of damages recoverable by each member of the class individually. Thirdly, the CAT has a discretion as to how aggregate damages (if recovered) are to be distributed among members of the class. Any unclaimed residue of an aggregate award is to be given to a charity specified by the Lord Chancellor, or used to meet the litigation costs and expenses of the representative. The CAT is given an important screening or gatekeeping role over the pursuit of collective proceedings. First, collective proceedings may not be pursued beyond the issue and service of a claim form without the CATs permission, in the form of a CPO, for which the representative must apply. The obtaining of a CPO is called certification. Secondly, collective proceedings may be terminated by the CAT at any stage by the revocation of that CPO. Thirdly, the CAT may accede to an application by one or more defendants to strike out collective proceedings if they disclose no reasonable cause of action (or are otherwise abusive) or to an application for defendants summary judgment, just as in any ordinary civil proceedings. The process of certification requires the CAT to be satisfied as to two main criteria, in relation to any particular collective proceedings. First, it must be just and reasonable for the person seeking to act as representative to be authorised to do so. Secondly, the claims must be eligible for inclusion in collective proceedings. This means that they must all raise the same, similar or related issues of fact or law and be suitable to be brought in collective proceedings. In the present case the CAT decided that the claims were not suitable to be brought in collective proceedings and therefore refused a CPO. The representative, Mr Walter Merricks, appealed successfully to the Court of Appeal. The defendants, companies in the Mastercard group, appeal to this court, seeking to reinstate the decision of the CAT. This is the first collective proceedings case of this kind to reach this court, or the Court of Appeal, and it raises important questions about the legal framework within which the CAT should exercise its undoubted expertise in granting or refusing certification. The Facts The appellant defendants (collectively Mastercard) are three members of the Mastercard group of companies, the first two of which are registered in Delaware, USA, and the third in Belgium. At the relevant time Mastercard operated the well known Mastercard payment card scheme, by the use of which consumers with banking facilities are able to purchase goods and services from retailers otherwise than by the use of cash or cheques. The scheme includes both credit and debit cards and operates as a four party scheme in accordance with the diagram shown below. The consumer is the card holder. The retailer is called the merchant. The consumers bank issues the card used by the consumer to make payment and is therefore called the issuer. The retailers bank is called the acquirer. The scheme rules, laid down by Mastercard, require both the issuer and the acquirer to pay fees to Mastercard for being licensed to use the scheme. But the rules also provide for an interchange fee (IF) to be paid by the acquirer to the issuer for each transaction paid by the use of a Mastercard, which is debited from the payment made by the issuer to the acquirer on the card holders behalf. The acquirer then credits the net amount, less its own fee, to the account of the merchant. The combined deduction of the IF and the acquirers own fee is called the merchant service charge (MSC). Thus it is common ground that the acquirer passes on the whole of the IF to the merchant. This may be illustrated by a notional sale of goods (or services) by the merchant to the card holder for 100, where the IF is 1% and the MSC is 1.2% (ie the IF of 1% and the acquirers own fee of 0.2%). The card holder pays 100, which the issuer deducts from his account. The issuer pays 99 to the Acquirer and the acquirer pays 98.80 to the merchant. The IF may be bilaterally agreed between the issuer and the acquirer, or they may both be the same bank. But otherwise the IF is paid at a default rate set by the scheme rules, known as the multilateral interchange fee (MIF). There are various different rates of MIF, depending on the type of card used (eg debit or credit) and the places where respectively the card is issued and the merchant carries on business. Thus there was a domestic UK MIF where the card was issued in the UK and the merchant carried on business there. There was also an Intra EEA MIF where the two respective places were in different member states of the EEA. Following an investigation, the European Commission decided in December 2007 that the default level set by Mastercard since May 1992 for its Intra EEA MIF amounted to a restriction of competition by effect, contrary to article 81 EC (now article 101 TFEU) and article 53 of the EEA Agreement. It is common ground that this was a form of unlawful anti competitive behaviour sounding in damages for breach of statutory duty under section 47A of the Act. The Intra EEA MIF applied to a large number of purchase transactions by UK card holders, using cards issued in the UK to make purchases from merchants in other EEA states, and to purchases from UK merchants where the card holders were using cards issued in other EEA states. A very much larger series of transactions by UK card holders during the same period attracted the domestic UK MIF. It is alleged in the present proceedings, but it is not common ground, that the level of the UK MIF was affected by the level of the infringing Intra EEA MIF, so that the loss said to result from the UK MIF was therefore caused by the infringement. The Commissions decision (the EC Decision) stated at recital 411 that: A further consequence of this restriction of price competition is that customers making purchases at merchants who accept payment cards are likely to have to bear some part of the cost of Mastercards MIF irrespective of the form of payment the customers use. This is because depending on the competitive situation merchants may increase the price for all goods sold by a small margin rather than internalising the cost imposed on them by a MIF. Mastercard challenged the Commissions decision in the European courts, but without success, and now accepts that it is bound by the finding of breach, for the whole of the period from May 1992 until December 2007 (the Infringement Period). The Proceedings In September 2016 the respondent Mr Walter Merricks CBE issued a collective proceedings claim form against Mastercard, seeking to represent claims by all UK resident adult consumers of goods and services purchased in the UK during the almost 16 year Infringement Period from merchants accepting Mastercard. The size of the represented class was estimated in the claim form to be 46.2m people. It was not a condition of class membership that members either had owned or used a Mastercard for their purchases. It was alleged that any price increases by which merchants passed on the cost of the MIF was applied to all purchasers, not just purchasers using cards. Business customers of merchants using the Mastercard scheme are not included in the claimant class. The essential structure of the claim was as follows: a. The infringing Intra EEA MIF set an unlawfully high minimum level of IF. But for the infringement identified by the EC Decision, IFs both for cross border and domestic transactions would have been charged at a lower level, the difference between that lower level and both the Intra EEA MIF and the domestic UK MIF representing an unlawful element of overcharge. b. That unlawful overcharge was passed on by acquirers to their merchants in full, via the MSC. c. All or a substantial part of the unlawful overcharge was then passed on by merchants operating the Mastercard scheme to their consumer customers, by way of higher prices than would otherwise have been charged for goods and services, thereby causing loss to consumers as a class, equivalent to the amount of the unlawful overcharge passed on. This is a follow on claim which is sought to be brought on an opt out basis. A follow on claim is one which is based upon an existing decision establishing breach, here the EC Decision, which is binding on the domestic tribunal: see section 58A of the Act. Section 47B of the Act makes provision for collective proceedings to be brought on an opt in or opt out basis. Leaving aside non domiciled claimants, an opt out basis means that the proceedings are brought on behalf of every person within the class definition who does not opt out from membership of the class: see section 47B(11). Mr Merricks seeks an award of aggregate damages under section 47C of the Act and proposes that the proceeds of any award should be distributed broadly equally among members of the class on a per capita basis for each separate year of the Infringement Period. He justifies this on the ground that any attempt to differentiate between members on the basis of individual loss would be disproportionate having regard to the modest amounts at stake for each individual, and the forensic difficulties in any reliable basis for discrimination, after the passage of time, within such a huge class. Save that Mastercard admits, as it must, the breach of statutory duty identified by the EC Decision in relation to the Intra EEA MIF and accepts that the whole of any relevant MIF was passed on in full by acquirers to merchants, Mastercard challenges every aspect of the claim. It denies that its excessive Intra EEA MIF caused any unlawful increase in domestic UK MIFs (which dominated the relevant transactions during the Infringement Period), or that IFs would have been any lower than in fact they were, but for the infringement. Thus it denies unlawful overcharge: (the overcharge issue). More importantly for present purposes Mastercard does not accept that merchants passed on all or any part of any overcharge to their customers: (the merchant pass on issue). I use the phrase does not accept rather than deny advisedly. There are now pending some hundreds of claims by merchants against Mastercard, alleging loss by reason of having incurred the cost of the overcharge as part of the MSC passed on by their acquirer banks, without having passed it, or at least all of it, on to their customers. In at least some of those cases Mastercard has sought to defend by alleging that the merchants did pass on all or part of any overcharge to their customers, and therefore, or at least to that extent, suffered no loss. Mr Merricks sought to support his case that the claims were eligible for collective proceedings by describing both the overcharge issue and the merchant pass on issue as common issues affecting all the claims. Mastercard persuaded the CAT that the merchant pass on issue was not a common issue. But the Court of Appeal held that it was, and their conclusion has not been challenged in this court. The potential quantum of the claims, on the basis of full success on the main issues, was provisionally estimated in written evidence by Mr Merricks expert team at more than 14 billion for the class as a whole. But the likely average individual recovery after a distribution on the basis proposed has been very roughly estimated at only 300 each, even on a full success basis. It became reasonably clear during the hearing before the CAT that the aggregate damages figure was very likely to prove to be a considerable over estimate, with the consequence that the likely individual recoveries would also be reduced. On any view however the proceedings involve a disparity in size between collective and individual recovery on a scale which is, in the current experience of the UK courts and tribunals, completely unique. Mastercard objected to certification on both the main criteria, submitting that Mr Merricks could show neither that it was reasonable for him to be authorised to act as representative nor that the claims were eligible for collective proceedings. The CAT rejected the first of those objections, but upheld the second, and Mastercard did not pursue its objection to Mr Merricks as representative in the Court of Appeal. The result is that this appeal concerns solely the legal requirements for eligibility. Before considering the CATs analysis and the Court of Appeals reasons for finding that it was wrong in law, it is convenient to set out the relevant provisions in the Act, the relevant rules and the CATs published guidance. The statutory framework for certification The structure for collective proceedings of this type is an entirely statutory creation. Its relative novelty means that it has yet to attract a body of authoritative UK case law about its operation, although there is significant Canadian jurisprudence about pre existing similar (although not identical) statutory schemes there which has been much relied upon in these proceedings. As will appear it will be necessary to set the bones of the statutory structure in its context as a part (albeit specialised) of the UKs civil and tribunal procedure. Although now forming part of the Competition Act 1998, the statutory part of the structure for collective proceedings was introduced, by amendment, in two stages. The first was in the Enterprise Act 2002, but it only permitted opt in proceedings and was unsuccessful. The second was in the Consumer Rights Act 2015. This followed a public consultation by the Department for Business, Innovation and Skills. In its paper published in April 2012, it was announced that the government wished to bring forward proposals to improve the regime for bringing private actions for redress for anti competitive behaviour. At paragraph 3.6 under the heading Aims the paper stated: The aim of these proposals is therefore two fold: Increase growth, by empowering small businesses to tackle anti competitive behaviour that is stifling their business. Promote fairness, by enabling consumers and businesses who have suffered loss due to anti competitive behaviour to obtain redress. Under the heading Why is reform needed? the paper recognised, at paragraph 3.11, the widespread view that private actions were the least satisfactory aspect of the competition regime, so that there was wide recognition of the need to improve access to redress and dispute resolution. At paragraph 3.12 it stated: Currently it is rare for consumers and SMEs to obtain redress from those who have breached competition law, and it can be difficult and expensive for them to go to court to halt anti competitive behaviour. At paragraph 3.13 it continued: A further difficulty is that competition cases may involve large sums but be divided across many businesses or consumers, each of whom has lost only a small amount. This means that a major case, with aggregate losses in the millions or tens of millions of pounds, can nevertheless lack any one individual for whom pursuing costs makes economic sense. Paragraph 3.14 contained a brief review of the shortcomings of the then current procedural frameworks, including the representative action under the English and Welsh Civil Procedural Rules. Under the heading Proposals the paper proposed both the establishment of the CAT as a major venue for competition actions across the UK and to: Introduce an opt out collective actions regime for competition law to allow consumers and businesses to collectively bring a case to obtain redress for their losses. Section 47A of the Act (introduced by the Enterprise Act 2002 and amended by the Consumer Rights Act 2015) identifies the types of claim which, under section 47B(1), may now be brought as collective proceedings. The present claims are included at section 47A(2) and (6)(c), because they are based upon a decision of the Commission that there has been an infringement of the prohibition in article 101(1). But collective proceedings are not the only type of proceedings which may be brought, even before the CAT, and the CAT does not have exclusive jurisdiction for claims falling within section 47A. As section 47A(2) recognises, such claims may in theory at least be brought by means of any available type of civil proceedings within the UK. Collective proceedings are however within the exclusive jurisdiction of the CAT, and subject to the Competition Appeal Tribunal Rules 2015 (SI 2015/1648) (the Rules). Section 47B provides as follows: (1) Subject to the provisions of this Act and Tribunal rules, proceedings may be brought before the Tribunal combining two or more claims to which section 47A applies (collective proceedings). (2) Collective proceedings must be commenced by a person who proposes to be the representative in those proceedings. (3) The following points apply in relation to claims in collective proceedings (a) it is not a requirement that all of the claims should be against all of the defendants to the proceedings, (b) the proceedings may combine claims which have been made in proceedings under section 47A and claims which have not, and (c) a claim which has been made in proceedings under section 47A may be continued in collective proceedings only with the consent of the person who made that claim. (4) Collective proceedings may be continued only if the Tribunal makes a collective proceedings order. (5) The Tribunal may make a collective proceedings order only (a) if it considers that the person who brought the proceedings is a person who, if the order were made, the Tribunal could authorise to act as the representative in those proceedings in accordance with subsection (8), and (b) inclusion in collective proceedings. in respect of claims which are eligible for (6) Claims are eligible for inclusion in collective proceedings only if the Tribunal considers that they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings. (7) A collective proceedings order must include the following matters (a) authorisation of the person who brought the proceedings to act as the representative in those proceedings, (b) description of a class of persons whose claims are eligible for inclusion in the proceedings, and (c) specification of the proceedings as opt in collective proceedings or opt out collective proceedings (see subsections (10) and (11)). (8) The Tribunal may authorise a person to act as the representative in collective proceedings (a) whether or not that person is a person falling within the class of persons described in the collective proceedings order for those proceedings (a class member), but (b) only if the Tribunal considers that it is just and reasonable for that person to act as a representative in those proceedings. (9) The Tribunal may vary or revoke a collective proceedings order at any time. (10) Opt in collective proceedings are collective proceedings which are brought on behalf of each class member who opts in by notifying the representative, in a manner and by a time specified, that the claim should be included in the collective proceedings. (11) Opt out collective proceedings are collective proceedings which are brought on behalf of each class member except any class member who opts out by notifying the (a) representative, in a manner and by a time specified, that the claim should not be included in the collective proceedings, and (b) any class member who Section 47C deals with damages and costs in collective proceedings. It provides, so far as is relevant: is not domiciled in the United Kingdom at (i) a time specified, and (ii) does not, in a manner and by a time specified, opt in by notifying the representative that the claim should be included in the collective proceedings. (12) Where the Tribunal gives a judgment or makes an order in collective proceedings, the judgment or order is binding on all represented persons, except as otherwise specified. (13) The right to make a claim in collective proceedings does not affect the right to bring any other proceedings in respect of the claim. (14) In this section and in section 47C, specified means specified in a direction made by the Tribunal. (2) The Tribunal may make an award of damages in collective proceedings without undertaking an assessment of the amount of damages recoverable in respect of the claim of each represented person. (3) Where the Tribunal makes an award of damages in opt out collective proceedings, the Tribunal must make an order providing for the damages to be paid on behalf of the represented persons to the representative, or such person other than a represented person as (a) (b) the Tribunal thinks fit. (4) Where the Tribunal makes an award of damages in opt in collective proceedings, the Tribunal may make an order as described in subsection (3). Subsections (5) and following provide for the distribution of unclaimed collective damages to charity or to meet the representatives costs and expenses, as already mentioned. Section 49 makes provision for appeals from the CAT in relation to (inter alia) collective proceedings. It is common ground in this court that an appeal from a certification decision of the CAT lies only on a point of law. Section 47B(1) expressly makes the right to bring collective proceedings subject to the Rules. They provide, at rule 2(2), that the Rules are to be applied and interpreted in accordance with the governing principles in rule 4. Rule 4(1) (2) states that cases are to be decided justly and at proportionate cost. This is a modified version of the well known overriding objective enshrined in the Civil Procedure Rules of England and Wales and with parallels in most modern codes of civil procedure both in the UK and around the common law world, including Canada. Rules 41 and 43 provide for the CAT, on the application of a party or of its own initiative, to have power to strike out all or part of a claim or to give summary judgment in relation to a claim or an issue in a claim against a claimant or defendant. These powers are fully applicable to collective proceedings, both generally and at the time of the hearing of an application for a CPO: see rule 79(4). They enable the CAT to prevent collective proceedings going to a (probably very expensive) trial in cases where they, or parts of them, disclose no reasonable cause of action, are abusive or do not raise triable issues. In short, they enable the CAT to exercise a merits based control over collective proceedings on lines similar to those available in civil proceedings generally. Rules 75 to 81 make detailed provision for the commencement and certification of collective proceedings. For present purposes rule 77, headed Determination of the application for a collective proceedings order and rule 79, headed Certification of the claims as eligible for inclusion in collective proceedings, are of primary importance. They provide as follows: 77(1) The Tribunal may make a collective proceedings order, after hearing the parties, only (a) if it considers that the proposed class representative is a person who, if the order were made, the Tribunal could authorise to act as the class representative in those proceedings in accordance with rule 78; and (b) in respect of claims or specified parts of claims which are eligible for inclusion in collective proceedings in accordance with rule 79. (2) If the Tribunal makes a collective proceedings order it may attach such conditions to the order or give such directions as it thinks fit, including (a) directions for filing and service of the order, pleadings and any other document in relation to the collective proceedings; and (b) directions regarding any class member who is a child or person who lacks capacity. 79(1) The Tribunal may certify claims as eligible for inclusion in collective proceedings where, having regard to all the circumstances, it is satisfied by the proposed class representative that the claims sought to be included in the collective proceedings are brought on behalf of an identifiable class of raise common issues; and are suitable to be brought in collective (a) persons; (b) (c) proceedings. In determining whether the claims are suitable to be (2) brought in collective proceedings for the purposes of paragraph (1)(c), the Tribunal shall take into account all matters it thinks fit, including the costs and the benefits of continuing the (a) whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues; (b) collective proceedings; (c) whether any separate proceedings making claims of the same or a similar nature have already been commenced by members of the class; (d) the size and the nature of the class; (e) whether it is possible to determine in respect of any person whether that person is or is not a member of the class; (f) whether the claims are suitable for an aggregate award of damages; and the availability of alternative dispute resolution (g) and any other means of resolving the dispute, including the availability of redress through voluntary schemes whether approved by the CMA under section 49C of the 1998 Act or otherwise. In determining whether collective proceedings should (3) be opt in or opt out proceedings, the Tribunal may take into account all matters it thinks fit, including the following matters additional to those set out in paragraph (2) the strength of the claims; and (a) (b) whether it is practicable for the proceedings to be brought as opt in collective proceedings, having regard to all the circumstances, including the estimated amount of damages that individual class members may recover. (4) At the hearing of the application for a collective proceedings order, the Tribunal may hear any application by the defendant (a) under rule 41(1), to strike out in whole or part any or all of the claims sought to be included in the collective proceedings; or (b) under rule 43(1), for summary judgment. (5) Any member of the proposed class may apply to make submissions either in writing or orally at the hearing of the application for a collective proceedings order. A CPO is not either the beginning or the end of the measures whereby the CAT may case manage collective proceedings. Under rule 76(9) the CAT must convene a case management conference for the management of the application for a CPO. Rule 85 contains wide powers for the CAT to stay collective proceedings or to vary or revoke a CPO, including power to add, remove or substitute parties and power to order the amendment of the claim form. Rule 88 confers wide powers of case management, exercisable at any time, while rule 89 confers power to order disclosure, in the widest possible form. Finally, rule 115(3) empowers the president of the CAT to issue practice directions. The current Guidance (published by the CAT in 2015) has the force of a practice direction. Paragraph 6.13 provides that: The proposed class representative should send with the collective proceedings claim form any evidence relied on in support of the application for a CPO. That may include, for example, a witness statement by or on behalf of the proposed class representative addressing the considerations raised by rules 78 and 79; and an experts report regarding the way in which the common issues identified in the claim form may suitably be determined on a collective basis. Paragraph 6.39 deals with the requirement in rule 79(3)(a) to consider the strength of the claims when deciding whether collective proceedings should be opt in or opt out. It provides: Strength of the claims (rule 79(3)(a)) Given the greater complexity, cost and risks of opt out proceedings, the Tribunal will usually expect the strength of the claims to be more immediately perceptible in an opt out than an opt in case, since in the latter case, the class members have chosen to be part of the proceedings and may be presumed to have conducted their own assessment of the strength of their claim. However, the reference to the strength of the claims does not require the Tribunal to conduct a full merits assessment, and the Tribunal does not expect the parties to make detailed submissions as if that were the case. Rather, the Tribunal will form a high level view of the strength of the claims based on the collective proceedings claim form. For example, where the claims seek damages for the consequence of an infringement which is covered by a decision of a competition authority (follow on claims), they will generally be of sufficient strength for the purpose of this criterion. Paragraph 6.43 of the Guidance provides that defendants applications to strike out or for summary judgment made before the certification hearing will generally be dealt with at that hearing, together with any application for security for costs. The decision of the CAT to refuse certification In a reserved judgment the CAT refused Mr Merricks a CPO upon two distinct but related grounds, both relating to the eligibility criterion under section 47B(5)(b) and (6) of the Act: [2017] CAT 16; [2018] Comp AR 1. This was not because the claims failed to raise the same, similar or related issues, even though the CAT held that the merchant pass on issue was not a common issue in that sense. The overcharge issue was a common issue, so their conclusion that the merchant pass on issue was not common was not fatal to the application. Rather the refusal of a CPO was because the claims were not suitable to be brought in collective proceedings. The first reason was that the claims were not suitable for an aggregate award of damages, within rule 79(2)(f). This was sufficient on its own to require refusal of a CPO. The second reason was that Mr Merricks proposals for distribution of any aggregate award did not respond in any way to the compensatory principle which the CAT regarded, on common law principles, as an essential requirement of any distributive scheme. This was not a requirement mentioned in the Act, the Rules or the Guidance, but it was regarded by the CAT as a relevant matter under rule 79(2), also sufficient on its own to require a CPO to be refused. The first reason requires some unpacking. Mr Merricks supported his application by an expert report from Dr Veljanovski, an economist, and Mr Dearman, a forensic accountant, which sought to explain (inter alia) the methodology by which it was proposed to support an award of aggregate damages for the losses cumulatively suffered by an enormous class over the Infringement Period. That methodology included dividing the retail goods and services market into some 11 sectors, seeking to establish the degree of merchant pass on in each and then deriving a weighted average across the retail market as a whole. Expressed as a fraction or percentage, that average could be used to estimate the amount of the overcharge (separately identified) passed on to consumers, and therefore the amount of the overcharge which represented the aggregate loss of the consumers, as opposed to the merchants, as a separate class. After a hearing which included questioning of the experts by the members of the CAT and some cross examination by counsel for Mastercard, the CAT concluded that the experts had not demonstrated a sufficient likelihood of there being available at trial sufficient data for all those sectors across the whole of the Infringement Period to enable that methodology to generate a sufficiently reliable result. The CAT did not by this conclusion mean that they regarded it as impossible, or even unlikely, for Mr Merricks to be able to prove at trial that the class had suffered some loss. Rather, their concern was as to the probable unreliability of the quantification of that loss, on a class wide basis as permitted by the procedure for an award of aggregate damages. Their conclusion is encapsulated in this extract from para 78 of the judgment: . we are unpersuaded on the material before us that there is sufficient data available for this methodology to be applied on a sufficiently sound basis. It follows that we are not satisfied, and indeed very much doubt, that the claims are suitable for an aggregate award of damages: see rule 79(2)(f). The CATs second reason is, in a sense, self explanatory. When a class is constituted by all consumers who, during a 16 year period, purchased goods and services from one or more of the half million or so merchants which operated the Mastercard scheme, it is obvious that there will be wide divergences in the impact of any overcharge upon each one of them, viewed individually, even if all of them will probably have suffered some loss, because of the virtual impossibility of a consumer entirely avoiding a merchant operating Mastercards scheme for any of their purchases. These divergences will only be partly mitigated by adoption of the proposed annual basis of per capita distribution. Even within a single year, the effect of an overcharge upon individual consumers will depend upon sectoral variations in merchant pass on, the particular focus of the consumers spending, and the relative wealth of each consumer. The CAT regarded it as axiomatic, in accordance with the basic common law principle that damages had to be compensation for loss, that if an estimation of aggregate damages was adopted which was not itself based in any way upon an assessment of individual loss, then: Such an approach can only be permissible, in our view, if there is then a reasonable and practicable means of getting back to the calculation of individual compensation. (para 79) In the CATs view, a per capita per annum basis of distribution of aggregate damages entirely failed to satisfy that requirement. At para 84 they said: The problem in the present case is that there is no plausible way of reaching even a very rough and ready approximation of the loss suffered by each individual claimant from the aggregate loss calculated according to the applicants proposed method. At para 88 the CAT concluded that a method of distribution which did not serve the compensatory principle could not be a reasonable basis for the distribution of aggregate damages. The Court of Appeal On Mr Merricks appeal the Court of Appeal (Patten, Hamblen and Coulson LJJ) concluded, in a judgment of the court, that the CATs decision to refuse a CPO had been vitiated by five errors of law: [2019] EWCA Civ 674; [2019] Bus LR 3025. First, as already noted, the CAT had wrongly regarded the merchant pass on issue as not being a common issue. Secondly, the CAT had in its approach to the issue as to the likely availability of data for the quantification of merchant pass on set an illegitimately high merits threshold at the certification stage. Thirdly, for that purpose the CAT conducted in effect a mini trial, involving the cross examination of experts, whereas they should have confined themselves to the question whether, on the documents, the claim form disclosed a real prospect of success. Fourthly the CAT had been wrong to conclude that aggregate damages could not be distributed by a method which paid no regard to differing levels of individual loss. Finally, it had been premature for the CAT to reach a final, and adverse, conclusion about the proposed method of distribution at the certification stage, and to use that conclusion as a self standing reason for refusing certification at all. Both the CAT and the Court of Appeal treated as highly persuasive some dicta in the leading Canadian case on certification, Pro Sys Consultants Ltd v Microsoft Corpn [2013] SCC 57. The CAT purported to rely upon them as the basis for their conclusion that the claims were unsuitable for aggregate damages. The Court of Appeal treated the same (and other) Canadian dicta as the foundation for their decision that the merits threshold for certification was lower than the hurdle which the CAT had applied. It is convenient at this stage to summarise the Canadian jurisprudence, and to set it in its own statutory and procedural context. The Canadian Jurisprudence on Certification of Collective Proceedings Many Canadian provinces and territories developed a statutory structure for collective proceedings (there called class proceedings) both earlier, and comprehending a more general range of potential claims, than in the UK. For present purposes it is sufficient to consider the regime enacted in British Columbia. By its Class Proceedings Act 1996 (the CPA) opt out class proceedings for civil claims generally were introduced subject to a certification procedure, with provision for the award of aggregate damages. Ontario had adopted a similar structure in 1992. The Canadian structures were regarded by the UK government as the best model for the collective proceedings regime introduced in 2015 (see para 194 of the Departments Final Impact Assessment published in January 2013, following the consultation referred to above). There are many similarities and some differences between the Canadian and UK statutory structures. Both operate within a civil procedural framework based upon common law principles and which is guided by a similar form of overriding objective: see eg rule 1 3 of British Columbias Supreme Court Civil Rules, BC Regulation 168/2009. Both may be said to serve broadly the same statutory purpose of providing effective access to justice for claimants for whom the pursuit of individual claims would be impracticable or disproportionate. In Hollick v Toronto (City) 2001 SCC 68; [2001] 3 SCR 158, Chief Justice McLachlin described the beneficial purposes of class action procedure in these terms, at para 15, speaking of the Ontario Class Proceedings Act 1992: The Act reflects an increasing recognition of the important advantages that the class action offers as a procedural tool class actions provide three important advantages over a multiplicity of individual suits. First, by aggregating similar individual actions, class actions serve judicial economy by avoiding unnecessary duplication in fact finding and legal analysis. Second, by distributing fixed litigation costs amongst a large number of class members, class actions improve access to justice by making economical the prosecution of claims that any one class member would find too costly to prosecute on his or her own. Third, class actions serve efficiency and justice by ensuring that actual and potential wrongdoers modify their behaviour to take full account of the harm they are causing, or might cause, to the public. In proposing that Ontario adopt class action legislation, the Ontario Law Reform Commission identified each of these advantages In my view, it is essential therefore that courts not take an overly restrictive approach to the legislation, but rather interpret the Act in a way that gives full effect to the benefits foreseen by the drafters. Section 4(1) of the British Columbia CPA requires the court to certify claims as class proceedings where all the following requirements are met: a. The pleadings disclose a cause of action, b. There is an identifiable class, c. The claims raise common issues, d. A class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, and e. There is a suitable representative plaintiff. Section 4(2) requires the court to address the question whether a class proceeding would be preferable by reference to all relevant matters, including a list of five which are loosely similar to those in the CATs rule 79(2). Power to award aggregate damages in class proceedings is conferred by section 29, but the suitability of the case for an award of aggregate damages is not one of the relevant factors listed in section 4(2). The leading case on the certification of class proceedings in Canada is the decision of the Canadian Supreme Court in Pro Sys Consultants Ltd v Microsoft Corpn [2013] SCC 57 in 2013, on appeal from British Columbia. The Supreme Court restored an order for the certification of class proceedings made at first instance, which had been set aside by the BC Court of Appeal. The claims were brought on behalf of the ultimate consumers of computer software after an alleged unlawful overcharge by Microsoft which it was claimed had been passed on by the intermediate merchants. For present purposes there were two relevant conclusions. The first was that the threshold test for establishing that the pleadings disclosed a cause of action was the equivalent of the strike out test in English civil procedure. The second was that the threshold for the establishment of the other conditions for certification was that there should be some basis in fact for a conclusion that the requirement was met. This low threshold, derived from the Supreme Courts earlier decision in the Hollick case, was not a merits test, applied to the claim itself. Rather the question was whether the applicant could show that there was some factual basis for thinking that the procedural requirements for a class action were satisfied, so that the action was not doomed to failure at the merits stage by reason of a failure of one or more of those requirements: see per Rothstein J at paras 99 to 105. The standard of proof at the certification stage came nowhere near a balance of probabilities. One of the many issues in the Microsoft case was whether the requirement for common issues was satisfied. In a passage which has come to assume a central place in the submissions in this case, at all levels, Rothstein J said this, at para 118, about the expert methodology put forward in support of the claim: In my view, the expert methodology must be sufficiently credible or plausible to establish some basis in fact for the commonality requirement. This means that the methodology must offer a realistic prospect of establishing loss on a class wide basis so that, if the overcharge is eventually established at the trial of the common issues, there is a means by which to demonstrate that it is common to the class (ie that passing on has occurred). The methodology cannot be purely theoretical or hypothetical but must be grounded in the facts of the particular case in question. There must be some evidence of the availability of the data to which the methodology is to be applied. Subsequent reported decisions in Canada have fortified this low threshold approach to meeting the conditions for certification. In Ewert v Nippon Yusen Kabushiki Kaisha [2019] BCCA 187, paras 105 to 109 the BC Court of Appeal warned against imposing an excessive burden on the provision of expert evidence about the likely availability of data at the certification stage, in particular because it necessarily preceded the processes of disclosure which would become available after certification. The some basis in fact test required only a minimum evidentiary basis and was not an onerous one. As recently as September 2019 the Supreme Court of Canada affirmed the approach taken to certification in the Microsoft case, in Pioneer Corpn v Godfrey [2019] SCC 42, paras 106 to 108. I regard the Canadian jurisprudence as persuasive in the UK not only because of the greater experience of their courts in the conduct of class actions but also because of the substantial similarity of purpose underlying both their legislation and ours. Nonetheless in the analysis which follows I base myself firmly on the true construction of the UK legislation, set against the background of the common law and civil procedure against which it falls to be construed. The Parties Submissions The main submissions of counsel for Mastercard were that the CATs judgment disclosed no error of law, that its treatment of the issue as to the suitability of the claims for aggregate damages was both expressly and in substance based upon the Microsoft criteria, and that the CAT was entitled to take into account at the certification stage the fact that Mr Merricks distribution method did nothing to implement the compensatory principle in its application to individual consumers. In particular the CAT was entitled to identify each of the two particular factors (suitability for aggregate damages and distribution method) as sufficient on its own to require certification to be refused. Further the CAT was entitled to ask questions of Mr Merricks experts and to permit limited cross examination for the purpose of clarifying their proposed methodology in this very large and complex case. For their part counsel for Mr Merricks broadly supported the criticisms made of the CATs judgment by the Court of Appeal. In addition they sought to rely upon supplementary expert evidence, served after the hearing before the CAT, which the Court of Appeal had found it unnecessary to consider. This court looked at the material de bene esse but I have not found it necessary to consider it either. Analysis An appreciation of the legal requirements of the certification process, and in particular their level of severity, needs to be derived from setting the express statutory provisions of the Act and the Rules in their context as a special part of UK civil procedure, with due regard paid to their purpose. Collective proceedings are a special form of civil procedure for the vindication of private rights, designed to provide access to justice for that purpose where the ordinary forms of individual civil claim have proved inadequate for the purpose. The claims which are enabled to be pursued collectively could all, at least in theory, be individually pursued by ordinary claim, in England and Wales under the CPR, under the protection of the Overriding Objective. It follows that it should not lightly be assumed that the collective process imposes restrictions upon claimants as a class which the law and rules of procedure for individual claims would not impose. The issues which gave rise to the forensic difficulties which led to the CATs refusal of certification in the present case all relate to the quantification of damages, both at the class level (where the claims were held to be unsuitable for aggregate damages) and at the individual level (where the method of distribution was found to pay insufficient respect to the compensatory principle). In this follow on claim Mr Merricks and the class he seeks to represent already have a finding of breach of statutory duty in their favour. All they would need as individual claimants to establish a cause of action would be to prove that the breach caused them some more than purely nominal loss. In order to be entitled to a trial of that claim they would (again individually) need only to be able to pass the strike out and (if necessary) summary judgment test: ie to show that the claim as pleaded raises a triable issue that they have suffered some loss from the breach of duty. Where in ordinary civil proceedings a claimant establishes an entitlement to trial in that sense, the court does not then deprive the claimant of a trial merely because of forensic difficulties in quantifying damages, once there is a sufficient basis to demonstrate a triable issue whether some more than nominal loss has been suffered. Once that hurdle is passed, the claimant is entitled to have the court quantify their loss, almost ex debito justitiae. There are cases where the court has to do the best it can upon the basis of exiguous evidence. There are cases, such as general damages for pain and suffering in personal injury claims, where quantification defies scientific analysis, where the court has to apply general tariffs developed over many years by the common law, and now enshrined in the Judicial College Guidelines for the Assessment of General Damages in Personal Injury. In many cases the court unashamedly resorts to an element of guesswork: see generally McGregor on Damages, 20th ed (2017), paras 10 001 to 10 007. A resort to informed guesswork rather than (or in aid of) scientific calculation is of particular importance when (as here) the court has to proceed by reference to a hypothetical or counterfactual state of affairs. The loss may have to be measured by reference to what the court thinks a claimant would have done if the defendant had not committed the wrong complained of. Sometimes the quantification depends upon what a third party would have done, and the court has to evaluate the claimants loss of a chance. Chaplin v Hicks [1911] 2 KB 786 is a famous example. At p 792 Vaughan Williams LJ said this: In early days when it was necessary to assess damages, no rules were laid down by the courts to guide juries in the assessment of damages for breach of contract; it was left to the jury absolutely. But in course of time judges began to give advice to juries; as the stress of commerce increased, let us say between the reigns of Queen Elizabeth and Queen Victoria, rule after rule was suggested by way of advice to juries by the judges when damages for breach of contract had to be assessed. But from first to last there were, as there are now, many cases in which it was difficult to apply definite rules. In the case of a breach of a contract for the delivery of goods the damages are usually supplied by the fact of there being a market in which similar goods can be immediately bought, and the difference between the contract price and the price given for the substituted goods in the open market is the measure of damages; that rule has been always recognized. Sometimes, however, there is no market for the particular class of goods; but no one has ever suggested that, because there is no market, there are no damages. In such a case the jury must do the best they can, and it may be that the amount of their verdict will really be a matter of guesswork. But the fact that damages cannot be assessed with certainty does not relieve the wrong doer of the necessity of paying damages for his breach of contract Fletcher Moulton LJ emphasised the entitlement of the claimant to an assessment, at p 796: The present case is a typical one. From a body of 6,000, who sent in their photographs, a smaller body of 50 was formed, of which the plaintiff was one, and among that smaller body 12 prizes were allotted for distribution; by reason of the defendants breach of contract she has lost all the advantage of being in the limited competition, and she is entitled to have her loss estimated. I cannot lay down any rule as to the measure of damages in such a case; this must be left to the good sense of the jury. This principle of entitlement to quantification notwithstanding forensic difficulty has stood the test of time and outlasted the involvement of civil juries in the assessment of damages. In Davies v Taylor [1974] AC 207, 212, Lord Reid said: There can be no question of proving as a fact that she would have received a certain amount of benefit. No one can know what might have happened had he not been killed. But the value of the prospect, chance or probability of support can be estimated by taking all significant factors into account. But, perhaps on an application of the de minimis principle, speculative possibilities would be ignored. I think that must apply equally whether the contention is that for some reason or reasons the support might have increased, decreased or ceased altogether. The court or jury must do its best to evaluate all the chances large or small, favourable or unfavourable. For a practical example of the application of this principle in the context of infringement of intellectual property rights see Experience Hendrix LLC v Times Newspapers Ltd [2010] EWHC 1986 (Ch), paras 204 205 per Blackburne J. This unavoidable requirement for quantification in order to do justice is not limited to damages. There are occasions where the court has to quantify or value some right or species of property and does not allow itself to be put off by forensic difficulties, however severe. For example a rateable value may have to be assessed in relation to property, such as a stately home, where there are no real comparables at all, and it has never been let. Or a market rent may have to be assessed as at a date when there are no remotely contemporaneous comparables. Assisted by experts, the court makes use of the best evidence available, often by making quite broad assumptions about market movements over a long period of time. See generally Dennard v PricewaterhouseCoopers [2010] EWHC 812 (Ch), para 182 per Vos J and Capita Alternative Fund Services (Guernsey) Ltd v Drivers Jonas (A Firm) [2012] EWCA Civ 1417, para 43 per Gross LJ. Sometimes the court has to determine the beneficial shares of cohabitees in co owned residential property, where there is no reliable evidence of the parties intentions. In such cases the court now broadly applies the maxim that equality is equity: see Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432. In none of these cases does the court throw up its hands and bring the proceedings to an end before trial because the necessary evidence is exiguous, difficult to interpret or of questionable reliability. In relation to damages, this fundamental requirement of justice that the court must do its best on the evidence available is often labelled the broad axe or broad brush principle: see Watson Laidlaw & Co Ltd v Pott Cassels & Williamson (A Firm) 1914 SC (HL) 18, 29 30 per Lord Shaw. It is fully applicable in competition cases. ASDA Stores Ltd v Mastercard Inc [2017] EWHC 93 (Comm) was a claim by an individual merchant arising out of (inter alia) the same breach as in these proceedings. After citing the Watson Laidlaw case Popplewell J said, at para 306: The broad axe metaphor appears to originate in Scotland in the 19th century. The more creative painting metaphor of a broad brush is sometimes used. In either event the sense is clear. The court will not allow an unreasonable insistence on precision to defeat the justice of compensating a claimant for infringement of his rights. There is European guidance to the same effect. In a Commission Staff Working Document entitled Practical Guide on Quantifying Harm in Actions for Damages based on articles 101 and 102, C (2013) 3440, the Commission said: 16. It is impossible to know with certainty how a market would have exactly evolved in the absence of the infringement of article 101 or 102 TFEU. Prices, sales volumes, and profit margins depend on a range of factors and complex, often strategic interactions between market participants that are not easily estimated. Estimation of the hypothetical non infringement scenario will thus by definition rely on a number of assumptions. In practice, the unavailability or inaccessibility of data will often add to this intrinsic limitation. 17. For these reasons, quantification of harm in competition cases is, by its very nature, subject to considerable limits as to the degree of certainty and precision that can be expected. There cannot be a single true value of the harm suffered that could be determined, but only best estimates relying on assumptions and approximations. Applicable national legal rules and their interpretation should reflect these inherent limits in the quantification of harm in damages actions for breaches of articles 101 and 102 TFEU in accordance with the EU law principle of effectiveness so that the exercise of the right to damages guaranteed by the Treaty is not made practically impossible or excessively difficult. There is an unresolved question, when there remains uncertainty which cannot be fully resolved, whether the benefit of the doubt should be given to the claimant or to the defendant. It is unnecessary to deal with it on this appeal, and the court did not seek, or have, the parties submissions on it. But it is clear from the above citations that justice requires that the damages be quantified for the twin reasons of vindicating the claimants rights and exacting appropriate payment by the defendant to reflect the wrong done. In the present context that second reason is fortified by the perception that anti competitive conduct may never be effectively restrained in the future if wrongdoers cannot be brought to book by the masses of individual consumers who may bear the ultimate loss from misconduct which has already occurred. There is nothing in the statutory scheme for collective proceedings which suggests, expressly or by implication, that this principle of justice, that claimants who have suffered more than nominal loss by reason of the defendants breach should have their damages quantified by the court doing the best it can on the available evidence, is in any way watered down in collective proceedings. Nor that the gatekeeping function of the CAT at the certification stage should be an occasion when a case which has not failed the strike out or summary judgment tests should nonetheless not go to trial because of difficulties in the quantification of damages. On the contrary, as the Court of Appeal observed at para 59, a refusal of certification of a case like the present is likely to make it certain that the rights of consumers arising out of a proven infringement will never be vindicated, because individual claims are likely to be a practical impossibility. The evident purpose of the statutory scheme was to facilitate rather than to impede the vindication of those rights. As Mr Paul Harris QC for Mr Merricks submitted, it is useful to ask whether the forensic difficulties which the CAT considered made the class claim unsuitable for aggregate damages, would have been any easier for an individual claimant to surmount. His answer, with which I would agree, was they would not be. The particular difficulties identified by the CAT lay in establishing the overall proportion of any overcharge passed on by merchants to consumers, by means of a weighted average of merchant pass on in each sector of the retail market for goods or services, due to the probable dearth of relevant data for some sectors of the market. That overall amount is equivalent to the loss suffered by consumers as a class. But an individual consumer would still have to address the same issue, at least for the years in which he or she was making purchases from merchants, in every sector of the retail market in which that consumer was active. If that is right why, one asks, should a forensic difficulty in quantifying loss which would not stop an individual consumers claim going to trial (assuming it disclosed a triable issue) stop a class claim at the certification stage? The answer depends to some extent upon the meaning of suitable as descriptive of claims both generally under section 47B in the phrase suitable to be brought in collective proceedings and under rule 79(2)(f) in the phrase suitable for an aggregate award of damages. It might mean (i) suitable in the abstract, or (ii) suitable in a relative sense: ie suitable to be brought in collective proceedings rather than individual proceedings, and suitable for an award of aggregate rather than individual damages. The British Columbia CPA solves this conundrum by using the word preferable instead of suitable, a word plainly asking the question preferable to what?. The different words used, as between BC and the UK, are at first sight striking. But a reflection upon the central purpose of the collective proceedings structure, which has substantially the same purpose in the UK as in BC, suggests that suitable to be brought in collective proceedings has the second of those two meanings. This is because collective proceedings have been made available as an alternative to individual claims, where their procedure may be supposed to deal adequately with, or replace, aspects of the individual claim procedure which have been shown to make it unsuitable for the obtaining of redress at the individual consumer level for unlawful anti competitive behaviour. The same analysis leads to the same conclusion about the meaning of suitable for an award of aggregate damages under rule 79(2)(f). The pursuit of a multitude of individually assessed claims for damages, which is all that is possible in individual claims under the ordinary civil procedure, is both burdensome for the court and usually disproportionate for the parties. Individually assessed damages may also be pursued in collective proceedings, but the alternative aggregate basis radically dissolves those disadvantages, both for the court and for all the parties. In general, although there may be exceptions, defendants are only interested in the quantification of their overall (ie aggregate) liability. For the claimants the choice between individual or aggregate assessment will usually be a question of proportionality. Another basic feature of the law and procedure for the determination of civil claims for damages is of course the compensatory principle, as the CAT recognised. It is another important element of the background against which the statutory scheme for collective proceedings and aggregate awards of damages has to be understood. But in sharp contrast with the principle that justice requires the court to do what it can with the evidence when quantifying damages, which is unaffected by the new structure, the compensatory principle is expressly, and radically, modified. Where aggregate damages are to be awarded, section 47C of the Act removes the ordinary requirement for the separate assessment of each claimants loss in the plainest terms. Nothing in the provisions of the Act or the Rules in relation to the distribution of a collective award among the class puts it back again. The only requirement, implied because distribution is judicially supervised, is that it should be just, in the sense of being fair and reasonable. Moving away from the general background of the law and procedure for civil claims, the following points need emphasis about the statutory structure itself. First, the Act and Rules make it clear that, subject to two exceptions, the certification process is not about, and does not involve, a merits test. This is because the power of the CAT, on application by a party or of its own motion, to strike out or grant summary judgment is dealt with separately from certification. The Rules make separate provision for strike out and summary judgment in rules 41 and 43 respectively, which applies to collective proceedings as to other proceedings before the CAT. There is no requirement at the certification stage for the CAT to assess whether the collective claim form, or the underlying claims, would pass any other merits test, or survive a strike out or summary judgment application, save that the CAT may, as a matter of discretion, hear such an application at the same time as it hears the application for a CPO: see rule 89(4). This is the first exception, but inapplicable in the present case because no such application was made. The second exception is that rule 79(3)(a) makes express reference to the strength of the claims, but only in the context of the choice between opt in and opt out proceedings. It does so in terms which, by the use of the words the following matters additional to the matters set out in paragraph (2), confirm that the factors relevant to whether the claims are suitable to be brought in collective proceedings do not include a review of the merits. By contrast with the conditions for certification in British Columbia, which do require that the pleadings disclose a cause of action, not even this basic merits threshold is prescribed in the UK by the Act or the Rules. Secondly, the listing of a number of factors potentially relevant to the question whether the claims are suitable to be brought in collective proceedings in rule 79(2), within the general rubric all matters it thinks fit shows that the CAT is expected to conduct a value judgment about suitability in which the listed and other factors are weighed in the balance. The listed factors are not separate suitability hurdles, each of which the applicant for a CPO must surmount. The hurdles (ie preconditions to eligibility under section 47B(5)(b) and (6)) are only that the claims are brought on behalf of an identifiable class, that they raise common issues and that they are suitable to be brought in collective proceedings: see also rule 79(1). In particular it is not a condition that the claims are suitable for an award of aggregate damages. That is only one of many relevant factors in the suitability assessment under rule 79(2). Thirdly, although the existence of common issues is a hurdle under section 47B(6) and rule 79(1)(b), in the sense that if none is raised the CAT may not make a CPO, it is also a factor relevant to suitability under rule 79(2). There the question is not whether there are common issues but whether collective proceedings are an appropriate means for the fair and efficient resolution of such common issues as are identified. At first sight this second inclusion of the common issues question under rule 79(2)(a) seems a little odd. It may contemplate a situation where a common issue may more fairly and economically be resolved by a procedure other than collective proceedings, perhaps by an individual test case. But it may also be a potential plus factor in the balance, where a common issue is ideal for determination in collective proceedings, or where all the big issues in a particular dispute are common issues. However that may be, it must certainly require the CAT first to determine, as it tried to do, what are the main issues in a particular case, and whether or not they are common issues. Unfortunately, the CAT got the common issue question wrong in relation to one of the two main issues in the present dispute, namely the merchant pass on issue, finding that it was not a common issue at all. That was the very issue about which the forensic difficulties identified by the CAT led it to refuse certification. Thus, both the two main issues in the present dispute are common issues, whereas the CAT considered that only one of them was. Error of law With the assistance of that analysis I turn to the question whether the refusal of a CPO in the present case by the CAT was vitiated by an error of law. I do so bearing well in mind that the CAT has unique expertise in making sophisticated economic analysis of a wide variety of data in competition cases, that it is an expert tribunal constituted for that purpose, with economists as well as lawyers on its panels of judges, and that it is the tribunal to which Parliament has entrusted both the exclusive jurisdiction over collective proceedings and, in particular, the conduct of the task of certification, with wide discretionary power for that purpose. In my judgment the CATs decision was vitiated by error of law. My reasons largely but not entirely concur with those of the Court of Appeal, but it is appropriate that I set out my own reasoning in full. I will do so mainly by separate treatment of the CATs two reasons for refusing certification (aggregate damages and distribution method), but I regard the question of certification as involving a single, albeit multi factorial, balancing exercise in which too much compartmentalisation may obscure the true task. In summary: a. The CAT got the common issue question wrong in relation to the merchant pass on issue, and therefore inevitably failed to include, as an important plus factor in the balance, the fact that this issue, and indeed both the main issues in the case, were common issues. That was an issue of law. b. The CAT treated the suitability of the claims for aggregate damages as if it were a hurdle rather than merely a factor to be weighed in the balance. That was wrong in law, because it misconstrued rule 79(2). c. In any event the CAT failed to construe suitability (in both of the respects in which it played a part in the process) in the relative sense, and thereby failed to take into account the need to consider whether individual proceedings were a relevant alternative, which they plainly were not, and whether the same difficulties as affected quantification in a collective claim would in any event afflict an individual claimant. d. The CAT did not take into account the general principle that the court must do what it can with the evidence available when quantifying damages, and therefore allowed undoubted forensic difficulties and shortcomings in the likely availability of data to lead it to a conclusion that claimants with a real prospect of (some) success should be denied a trial by the only procedure available to them in practice. e. The CAT was wrong in law to regard respect for the compensatory principle as an essential element in the distribution of aggregate damages. f. By contrast I would not criticise the CAT, as did the Court of Appeal, for having conducted a trial within a trial at the certification stage. g. Nor do I regard it as inevitably premature for the CAT to have regard to a proposed distribution method at the certification stage. Common Issues Having decided that the merchant pass on issue was not a common issue, the CAT continued, at para 67: However, that in itself does not mean that this case is unsuitable for a CPO. There is no requirement that all the significant issues in the claims should be common issues, or indeed and by contrast with the position under the Federal Rules of Civil Procedure in the United States that the common issues should predominate over the individual issues. What is required, in the words of section 47(6) CA, is that the claims are nonetheless suitable to be brought in collective proceedings. Here, the applicant seeks to address the problem of pass through by submitting that the Tribunal can arrive at an aggregate award of damages, which would then be distributed to the class members. At the beginning of this passage the CAT correctly addresses the common issues requirement as a certification hurdle (under section 47B(6)). It had already correctly concluded that there was nonetheless another common issue (the overcharge issue), sufficient to surmount the common issues hurdle. But it then treated the assertion (which it later rejected) that the case was suitable for aggregate damages as a sort of substitute for Mr Merricks failure to show that the merchant pass on issue was a common issue. Had the CAT concluded (as the Court of Appeal held and which is not appealed) that the merchant pass on issue was a common issue, then this would, or should, have been a powerful factor in favour of certification, under rule 79(2)(a). As already noted it meant that both the main issues in the case were common issues. In my view the remainder of the balancing exercise conducted by the CAT never recovered from a starting point in which, far from being treated as a major plus factor, the presence of common issues was regarded as being at the low level sufficient only to surmount the eligibility hurdle. On any view, it was a sufficiently important error to require the assessment of suitability to be carried out again. Suitability for Aggregate Damages Not a Hurdle The CAT concluded its review of the suitability of the case for aggregate damages at para 78. There follows a section on Distribution on which Mr Merricks also failed (paras 79 to 91) and a section on Authorisation of the Class Representative on which he succeeded (paras 92 to 104). There is then the stark conclusion at para 141(a) that certification should be refused. There is no express balancing of factors for or against certification, and the reader is, as the parties both agreed, left to assume that the CAT regarded both the unsuitability of the case for aggregate damages and the failure of the distribution proposal to accord with the compensatory principle as each being, separately, enough to require certification to be refused. Mr Mark Hoskins QC for Mastercard submitted, correctly, that a tribunal charged with a multi factorial balancing exercise may perfectly properly regard one factor among many as sufficient to compel a particular outcome. But in such a case, and in particular where some factors are statutory hurdles and others are not, I consider it incumbent upon a tribunal which regards a factor which is not a statutory hurdle but is nonetheless decisive to make that clear in express terms. Suitability of a case for aggregate damages is plainly not a hurdle. It is just one of many factors relevant to suitability of the claims for collective proceedings under rule 79(2). It may well be that it was the CATs failure to recognise that the merchant pass on issue was a common issue that led to it treating the aggregate damages question as being of decisive importance. The two factors are closely linked because it was the forensic difficulties attending the resolution of the extent of merchant pass on which led the CAT to the conclusion that the case was unsuitable for aggregate damages. Relative Suitability I have set out at length why I regard the suitability test as being best understood in a relative rather than abstract sense. It is clear that the CAT did not make any comparison between collective and individual proceedings when assessing the forensic difficulties lying in the path of the resolution of the merchant pass on issue. In my view it is clear that they would have been equally formidable to a typical individual claimant, seeking compensation for increased retail prices over the sectors of the market in which he or she was accustomed to make purchases. That was Mr Harriss submission, and Mr Hoskins had no cogent answer to it. If those difficulties would have been insufficient to deny a trial to an individual claimant who could show an arguable case to have suffered some loss, they should not, in principle, have been sufficient to lead to a denial of certification for collective proceedings. Quantifying Damages the Tribunal must do what it can with the available evidence I regard the CATs failure to give effect to this basic principle of civil procedure as the most serious of the errors of law discernible in its judgment. I start by acknowledging the expertise of the CATs factual review of the difficulties. At the risk of over simplification it may be summarised in this way. Mr Merricks expert team proposed to deal with the merchant pass on issue by deriving a weighted average pass on percentage from a review of each relevant market sector during the whole of the Infringement Period. For that purpose they proposed to divide the retail market into some 11 sectors. But the CAT reviewed a report from RBB Economics entitled Cost pass through: theory, measurement, and potential policy implications prepared for the Office of Fair Trading in 2014, which concluded that, although in some sectors there was reliable data, in many others the data was incomplete and difficult to interpret. Further, although it might be that litigation between retailers and Mastercard might yield further data by way of disclosure in these proceedings, that would be unlikely to cover the earlier part of the Infringement Period and would involve a very burdensome and hugely expensive exercise. But the CATs assessment fell well short of suggesting that Mr Merricks would be unable at trial to deploy data sufficient to have a reasonable prospect of showing that the represented class had suffered any significant loss. The fact that data is likely to turn out to be incomplete and difficult to interpret, and that its assembly may involve burdensome and expensive processes of disclosure are not good reasons for a court or tribunal refusing a trial to an individual or to a large class who have a reasonable prospect of showing they have suffered some loss from an already established breach of statutory duty. In the context of suitability for collective proceedings or aggregate damages, it is no answer to say that members of the class can bring individual claims. They would face the same forensic difficulties in establishing merchant pass on, and insuperable funding obstacles on their own, litigating for small sums for which the cost of recovery would be disproportionately large. The incompleteness of data and the difficulties of interpreting what survives are frequent problems with which the civil courts and tribunals wrestle on a daily basis. The likely cost and burden of disclosure may well require skilled case management. But neither justifies the denial of practicable access to justice to a litigant or class of litigants who have a triable cause of action, merely because it will make quantification of their loss very difficult and expensive. The present case may well present difficulties of those kinds on a grand scale, but they are difficulties which the CAT is probably uniquely qualified to surmount. It may be that gaps in the data will in some instances be able to be bridged by techniques of extrapolation or interpolation, and that some gaps will be unbridgeable, so that nothing is recovered in relation to particular market sectors or for parts of the Infringement Period. Nonetheless it is a task which the CAT owes a duty to the represented class to carry out, as best it can with the evidence that eventually proves to be available. Nor can it be ignored that ADR may help, either in relation to narrowing the issues, or towards an overall settlement. The Court of Appeal responded to the same aspect of the CATs reasoning by concluding that it amounted to the imposition of an inappropriately high merits threshold at the certification stage. While I would agree that such a merits threshold should not be applied, beyond the strike out or summary judgment levels, I would prefer to regard this part of the CATs analysis as more directed to the issue about suitability for collective proceedings. But the boundary between issues as to the likely availability of data at trial and issues as to the merits is by no means easy to define, or to identify in practice. That is why I have described my reasons for concluding that the CAT erred in law as closely allied with those of the Court of Appeal. Compensatory principle not essential in distribution of aggregate damages I have already noted that section 47C of the Act radically alters the established common law compensatory principle by removing the requirement to assess individual loss in an aggregate damages case, and that nothing in the Act or the Rules puts it back again, for the purposes of distribution. The CAT took the opposite view. At para 79 it said that in a case where the quantification of aggregate damages takes no account of individual loss, then the process of distribution must, in some way, put it back. Speaking of aggregate damages determined in that way, the CAT said: Such an approach can only be permissible, in our view, if there is then a reasonable and practicable means of getting back to the calculation of individual compensation. At para 88 the CAT continued: . even if it were possible to determine with some broad degree of accuracy the weighted average for pass through and thus to estimate the aggregate loss for the class each year, it is the significance of the individual issues remaining which mean that it is impossible in this case to see how the payments to individuals could be determined on any reasonable basis. this application for over 46m claims to be pursued by collective proceedings would not result in damages being paid to those claimants in accordance with that governing principle at all. For reasons already given, I consider that this approach discloses a clear error in law. A central purpose of the power to award aggregate damages in collective proceedings is to avoid the need for individual assessment of loss. While there may be many cases in which some approximation towards individual loss may be achieved by a proposed distribution method, there will be some where the mechanics will be likely to be so difficult and disproportionate, eg because of the modest amounts likely to be recovered by individuals in a large class, that some other method may be more reasonable, fair and therefore more just. For that purpose the statutory scheme provides scope for members within the class to be heard about the proposed distribution method. In many cases the selection of the fairest method will best be left until the size of the class and the amount of the aggregate damages are known. Trial within a trial The Court of Appeal regarded the questioning and cross examination of Mr Merricks experts at the certification hearing as an inappropriate trial within a trial, indicative of the imposition of an overly high merits threshold. I would not criticise the CAT on that account. The CATs own questioning of the experts achieved both greater clarity and a considerable improvement in the quantification methodology then being proposed on Mr Merricks behalf, in a case of unprecedented size and complexity. It was by no means hostile or adversarial, and the limited cross examination by counsel for Mastercard was closely supervised by the CAT. It may well be that questioning and cross examination of experts both should and will be a rare occurrence at certification hearings. But the present case is in my view one where an exception was justified. Prematurity Finally, the Court of Appeal regarded any consideration of distribution proposals at, and for the purposes of, the certification stage as premature. I agree that this will generally be true, not least because issues about distribution mainly engage the interests of the represented class inter se, rather than those of the proposed defendant. But there may be cases where the issues as to suitability of the claims for collective proceedings will be better addressed when the whole of the representatives proposed scheme, including distribution proposals, are looked at in the round. In the present case there was nothing in the proposals for distribution I would therefore dismiss the appeal. I agree with the Court of Appeal that which militated against certification, and an inappropriate element in the distribution proposals would normally be better dealt with at a later stage. Disposition the application for a CPO should be remitted to the CAT. Lord Kerr presided at the hearing of this appeal, participated fully in the deliberations which followed the hearing and oversaw the preparation and discussion of the judgments. He agreed that the appeal should be dismissed for the reasons set out in this judgment prior to his retirement on 30 September 2020. There was a delay between the completion of the judgments and their being handed down to allow, in accordance with the Courts practice, the law reporters and counsel an opportunity to check the judgments for typographical errors and minor inaccuracies, and to enable a press summary of the judgments to be prepared. The judgments were accordingly circulated in draft to the parties legal advisers, with Lord Kerr and Lord Thomas recorded as agreeing with this judgment, and a consequent majority of three to two in favour of dismissing the appeal. After those administrative steps had been completed, and three days before judgment was due to be handed down, Lord Kerr sadly died. Following his death Lord Reed as President of the Supreme Court directed under section 43(4) of the Constitutional Reform Act 2005 that the panel for this appeal be re constituted as consisting of myself, Lord Sales, Lord Leggatt and Lord Thomas. Lord Sales and Lord Leggatt explain in their joint judgment why they agree that, in these circumstances, this appeal should be dismissed, notwithstanding their disagreement with the reasoning in this judgment. LORD SALES AND LORD LEGGATT: The Competition Appeal Tribunal (CAT) declined to certify these proceedings as a class action (or collective proceedings, in the language of the applicable legislation) for two distinct reasons: first, because in the CATs assessment the class of claims was not suitable for an aggregate award of damages and in those circumstances not suitable to be brought in collective proceedings; and second, because the class representative, Mr Merricks, did not propose to distribute any damages awarded in a way which would reflect the individual losses suffered by the members of the class. We agree with Lord Briggs and the Court of Appeal that the CATs second reason was unsound. However, in our view its first reason was legitimate. We consider that the CATs assessment that the claims were not suitable for an aggregate award of damages, and on that account not suitable to be brought in collective proceedings, was lawful and the Court of Appeal should not have interfered with it. We recognise, however, that ours is the minority view. Lord Kerr, well before his untimely death on 1 December 2020, had expressed his agreement with the final version of the judgment of Lord Briggs and would have been recorded as agreeing with it. Were the result of his death now to be that the court is left evenly divided, the case would have to be re argued before a different constitution. As well as being hugely wasteful of resources, this would not be a just outcome. It would be a consequence simply of the happenstance of Lord Kerrs death occurring during the interval between the completion of the judgments and the date when they were formally handed down: a circumstance which has no bearing on the just decision of this appeal. We therefore agree that the appeal should be dismissed. We nevertheless explain the reasons why, had our view been shared by the other members of the court, we would have allowed Mastercards appeal. Class actions A new class action regime was introduced in the United Kingdom in 2015 as part of a wider set of reforms of private actions for breaches of competition law. The central rationale for any class action regime is that it enables claimants to benefit from the same economies of scale as are already naturally enjoyed by the defendant as a single litigant. It does so by allowing numerous individual claims to be combined into a single claim brought on behalf of a class of persons. Such a procedural device is especially valuable where a defendants wrongful conduct has caused harm to many people but each individual claim is too small to justify the expense of a separate lawsuit. Without such a device what may in aggregate be very substantial harm is likely to go unredressed. As Judge Posner put it in Carnegie v Household International Inc (2004) 376 F 3d 656, 661, a decision of the US Seventh Circuit Court of Appeals: The realistic alternative to a class action is not 17m individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30. This problem has historically impeded the bringing of private actions to seek redress for breaches of competition law in the UK. As the Government observed in explaining its decision to introduce a class action regime in this field: Breaches of competition law, such as price fixing, often involve very large numbers of people each losing a small amount, meaning it is not cost effective for any individual to bring a case to court. Allowing actions to be brought collectively would overcome this problem, allowing consumers and businesses to get back the money that is rightfully theirs as well as acting as a further deterrent to anyone thinking of breaking the law. See Private Actions in Competition Law: A consultation on options for reform government response (January 2013), p 6, para 2. Experience in other jurisdictions, however, has also shown that a class action regime presents risks. In particular, there is a risk that speculative actions may be brought claiming large amounts of damages even where there is no realistic prospect of recovering such damages, but where the size of the claims and the heavy costs of defending the action may be used as a threat to induce defendants to settle. In introducing the new regime in the UK, the Government was alert to this risk. Immediately after the passage quoted above, its response to the consultation on options for reform continued: Recognising the concerns raised that this could lead to frivolous or unmeritorious litigation, the Government is introducing a set of strong safeguards These strong safeguards were said to include strict judicial certification of cases so that only meritorious cases are taken forward. This appeal concerns the proper test for such certification and the nature and degree of the scrutiny which it is permissible for the CAT to undertake in operating this safeguard in the collective proceedings regime. Key features of the collective proceedings regime The regime was established by the Consumer Rights Act 2015, which made amendments to the Competition Act 1998 (the Act), and by new rules applicable to proceedings before the CAT: the Competition Appeal Tribunal Rules 2015 (SI 2015/1648). The amendments to the Act and the new rules (the CAT Rules) came into force at the same time on 1 October 2015. The regime is limited in scope to claims to which section 47A of the Act applies. These are, broadly speaking, claims for redress for loss or damage caused by an infringement or alleged infringement of competition law. Section 47B makes provision for collective proceedings whereby two or more such claims may be combined in one action brought before the CAT. Although claims to which section 47A applies can be brought in the CAT or in the courts, collective proceedings can only be brought in the CAT. It is clear from the terms of the Act and the CAT Rules that Parliament intended that the CAT should have a substantive role to play in deciding whether claims seeking redress for breaches of competition law may be pursued as collective proceedings and in actively managing such claims. The CAT is a specialist tribunal which is particularly well suited for this role. Each panel includes an economist and its legal members have extensive experience in the field. The CAT has considerable experience and expertise in assessing matters such as evidence from expert economists, economic data and the likely impact and practical workability of economic theories in addressing claims alleging anti competitive conduct. Group actions which enable a (potentially large) number of claimants to litigate common issues together, allowing them to share costs and obtain one judgment which is binding in relation to all their claims, have long been possible in England and Wales. Collective proceedings brought under section 47B of the Act, however, have two notable potential advantages for claimants compared to such group actions. They allow the legal rights of a class of people to be determined without the express consent of the members of the class; and they enable liability to be established and damages recovered without the need to prove that individual members of the class have suffered loss it being sufficient to show that loss has been suffered by the class viewed as a whole. Each of these features requires some amplification. Opt out collective proceedings Generally, legal proceedings may only be brought with the authority of the persons whose rights are sought to be enforced. Proceedings brought without such authority may be struck out and the person responsible for commencing them held liable to the defendant in damages. A significant innovation of the collective proceedings regime is the provision in section 47B(11) of the Act for opt out collective proceedings. These are proceedings brought by a representative on behalf of all the members of a class except any member who opts out by notifying the representative, in a manner and by a time specified, that his or her claim should not be included in the collective proceedings. This means that a person may become a claimant in collective proceedings without taking any affirmative step and, potentially, without even knowing of the existence of the proceedings and the fact that he or she is a claimant in them. This arrangement (which applies only to class members domiciled in the UK) is designed to facilitate access to legal redress for those who lack the awareness, capability or resolve required to take the positive step of opting in to legal proceedings. Aggregate damages A second major innovation (in terms of UK law) is effected by section 47C(2) of the Act, which provides: The tribunal may make an award of damages in collective proceedings without undertaking an assessment of the amount of damages recoverable in respect of the claim of each represented person. Such an award of damages is referred to in the CAT Rules as an aggregate award of damages: see rule 73(2). As pointed out by Professor Rachel Mulheron in an illuminating discussion of the present proceedings, there are two functions which a provision allowing damages to be awarded on an aggregate basis may in principle fulfil: see R Mulheron, Revisiting the Class Action Certification Matrix in Merricks v Mastercard Inc (2019) 30 Kings LJ 396, 412 417. The first concerns the quantification of loss. Where the liability of the defendant to the members of a class has been established, such a provision enables damages to be assessed by quantifying the loss suffered by the class as a whole, without the need to determine what loss each individual member of the class has suffered. This involves a departure from the normal compensatory principle, whereby the object of an award of damages for a civil wrong is to put the claimant (as an individual) in the same financial position as if the wrong had not occurred. It is clear that section 47C(2) is intended to serve this purpose. A provision for aggregate damages may, however, go further and serve an additional purpose. It may also permit liability to be established on a class wide basis without the need for individual members of the class to prove that they have suffered loss, even though this would otherwise be an essential element of their claim. As Professor Mulheron notes, the nature of a claim for a breach of competition law is that it constitutes a claim in tort for a breach of statutory duty. Under the general law such a claim is not actionable without proof of loss. In other words, a defendant commits no wrong and incurs no liability towards a claimant unless its anti competitive behaviour causes that claimant to suffer financial harm. An aggregate damages provision may dispense with this requirement by permitting liability towards all the members of a class to be established by proof that the class as a whole has suffered loss without the need to show that any individual member of the class has done so. The Canadian legislation referred to by Lord Briggs has not been interpreted as allowing liability, as well as the quantum of loss, to be established on a class wide basis. The British Columbia Class Proceedings Act 1996, section 29(1), provides that a court may make an aggregate monetary award if (amongst other requirements) no questions of fact or law other than those relating to the assessment of monetary relief remain to be determined . In Pro Sys Consultants Ltd v Microsoft Corpn [2013] SCC 57 (Microsoft), paras 128 134, the Supreme Court of Canada held that this provision could not be used to establish proof of loss where this is an essential element of proving liability. Rothstein J said (at para 133): The [British Columbia legislation] was not intended to allow a group to prove a claim that no individual could. Rather, an important objective of the [legislation] is to allow individuals who have provable individual claims to band together to make it more feasible to pursue their claims. The UK legislation is not limited in this way. Section 47C(2) of the Act contains no wording comparable to that of section 29(1)(b) of the British Columbia Class Proceedings Act, quoted above. Section 47C(2) is phrased in broad terms and is properly read as dispensing with the requirement to undertake an assessment of the amount of damages recoverable in respect of the claim of each represented person for all purposes antecedent to an award of damages, including proof of liability as well as the quantification of loss. Such an interpretation better accords both with the language used and with the statutory objective of facilitating the recovery of loss caused to consumers by anti competitive behaviour. Certification A class action procedure which has these features provides a potent means of achieving access to justice for consumers. But it is also capable of being misused. The ability to bring proceedings on behalf of what may be a very large class of persons without obtaining their active consent and to recover damages without the need to show individual loss presents risks of the kind already mentioned, as well as giving rise to substantial administrative burdens and litigation costs. The risk that the enormous leveraging effect which such a class action device creates may be used oppressively or unfairly is exacerbated by the opportunities that it provides for profit. As the Court of Appeal observed in the present case, the power to bring collective proceedings was obviously intended to facilitate a means of redress which could attract and be facilitated by litigation funding: [2019] EWCA Civ 674; [2019] Bus LR 3025, para 60. Those who fund litigation are, for the most part, commercial investors whose dominant interest is naturally to make money on their investment from the fruits of the litigation. As noted earlier, to ensure that the substantive legal advantages afforded by the collective proceedings regime are conferred only in appropriate cases, the regime contains a control mechanism of requiring collective proceedings to be certified by the CAT. Collective proceedings cannot be brought as of right and the CAT is given a broad discretion in deciding whether, and if so in what form, collective proceedings may be pursued. Thus, section 47B(4) of the Act provides that collective proceedings may be continued only if the CAT makes a collective proceedings order (CPO). Section 47B(5) lays down two necessary conditions for making a CPO: (i) the person who brings the proceedings must be a person who could be authorised by the CAT to act as the representative claimant in those proceedings, and (ii) the CPO is in respect of claims which are eligible for inclusion in collective proceedings. Pursuant to section 47B(6), claims are eligible for inclusion in collective proceedings only if two conditions are fulfilled. These are that the CAT considers that the claims (i) raise the same, similar or related issues of fact or law (the common issues requirement), and (ii) are suitable to be brought in collective proceedings (the suitability requirement). The meaning and scope of the suitability requirement is central to this appeal. The CAT rules Section 47B(1) provides that collective proceedings may be brought [s]ubject to the provisions of this Act and Tribunal rules. Rule 2(2) of the CAT Rules requires that the rules to be applied by the CAT are interpreted in accordance with the governing principles set out in rule 4. Rule 4 is in similar terms to Part 1 of the Civil Procedure Rules 1998, which requires courts to seek to give effect to the overriding objective of dealing with cases justly and at proportionate cost and also requires the active management of cases. Rule 4(2) provides that dealing with a case justly and at proportionate cost includes, so far as is practicable: ensuring that it is dealt with expeditiously and fairly; (d) (e) allotting to it an appropriate share of the Tribunals resources, while taking into account the need to allot resources to other cases; By virtue of section 47B(1) and the co ordinated introduction of the CAT Rules in tandem with the collective proceedings provisions in the Act, it is clear that the provisions in the Act and the rules are to be read together and as subject to the same general principles. In applying and exercising its powers under the collective proceedings provisions in the Act, the CAT must therefore seek to ensure that claims are dealt with justly and at proportionate cost, reading that objective in the light of the particular reforms effected by the primary legislation to which we have referred. Part 5 of the CAT Rules is concerned specifically with collective proceedings and collective settlements. Rule 75 deals with the contents of a collective proceedings claim form and provides that it shall contain, among other things, a summary of the basis on which it is contended that the criteria for certification and approval in rule 79 are satisfied (rule 75(3)(e)) and a statement of the relief sought including where applicable, an estimate of the amount claimed in damages, including whether an aggregate award of damages is sought, supported by an explanation of how that amount has been calculated (rule 75(3)(i)(i)). Rule 76(9) provides that as soon as practicable the CAT will hold a case management conference to give directions in relation to the application for a CPO. This recognises that collective proceedings are an unusual form of litigation which are likely to require careful management by the CAT and indicates that the CAT has a substantive role above and beyond being a mere rubber stamp for the issuing of collective proceedings. This is also recognised by the requirement in rule 77(1) to hear the parties before a CPO may be made. Rule 77(1) tracks section 47B(5) of the Act in specifying the two conditions which must be satisfied before the CAT may make a CPO the first being that the CAT considers that the proposed class representative is a person who could be authorised to act in that capacity in accordance with rule 78, and the second that the order is in respect of claims or parts of claims which are eligible for inclusion in collective proceedings in accordance with rule 79. Authorisation of the class representative Rule 78 deals with authorisation of the class representative. An applicant may be authorised to act as the class representative only if the CAT considers this to be just and reasonable (rule 78(1)). This is to be assessed by reference to a number of factors, including whether that person would fairly and adequately act in the interests of the class members (rule 78(2)(a)); if there is more than one applicant seeking authorisation to act as class representative, which of them would be the most suitable (rule 78(2)(c)); and whether the applicant will be able to pay the defendants recoverable costs if ordered to do so (rule 78(2)(d)). In determining whether the applicant would act fairly and adequately in the interests of the class members, the CAT is required to take into account all the circumstances, including whether the proposed class representative is a member of the class, and if so, its suitability to manage the proceedings (rule 78(3)(a)). It is clear that in these sub rules, the word suitable or suitability means suitable to fulfil the purpose which a class representative is intended to fulfil in the context of the collective proceedings regime. This is consistent with the meaning of the suitability requirement in rule 79, to which we now come. Eligibility of claims Rule 79 deals with the certification of claims as eligible for inclusion in collective proceedings. Lord Briggs has set out the full text. For present purposes, the following parts of it are relevant. Rule 79(1) states that the CAT may certify claims as eligible for inclusion in collective proceedings where, having regard to all the circumstances, it is satisfied that three conditions are fulfilled, namely that the proceedings are (a) brought on behalf of an identifiable class of persons; (b) raise common issues; and (c) are suitable to be brought in collective proceedings. Three points arise from this. First, the rule makes clear that the question of suitability is distinct from the question whether the claims raise common issues. Second, by using the phrase where it is satisfied rather than simply stating the three conditions, the rule emphasises that deciding whether the conditions are fulfilled is a matter for the judgment of the CAT. Third, the rule requires the CAT in making that decision to adopt a very wide frame of reference, in that it is to have regard to all the circumstances. Rule 79(2) reinforces these points. It is central to this appeal. It provides as follows: (2) In determining whether the claims are suitable to be brought in collective proceedings for the purposes of paragraph (1)(c), the Tribunal shall take into account all matters it thinks fit, including (a) whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues; (b) collective proceedings; the costs and the benefits of continuing the (c) whether any separate proceedings making claims of the same or a similar nature have already been commenced by members of the class; the size and the nature of the class; (d) (e) whether it is possible to determine in respect of any person whether that person is or is not a member of the class; (f) whether the claims are suitable for an aggregate award of damages; and (g) the availability of alternative dispute resolution and any other means of resolving the dispute, including the availability of redress through voluntary schemes whether approved by the [Competition and Markets Authority] under section 49C of the 1998 Act or otherwise. This provision focuses on the suitability requirement as a distinct condition for the making of a CPO. It again emphasises the substantive rather than merely checking role for the CAT in making the relevant judgment whether claims are suitable to be brought in collective proceedings and again emphasises the wide frame of reference to be adopted, by saying that the CAT shall take into account all matters it thinks fit, and providing a non exhaustive list of matters which the CAT might think fit to consider and place weight upon. The width of the frame of reference in itself shows that the CATs judgment as to suitability is central, since the very wide range of matters to which the CAT might have regard, the disparity in their nature and their incommensurability means that there may often be wide scope for reasonable differences of view about what relevance or weight should be given to what factors and what overall conclusion should be drawn on the suitability issue. The Act and the CAT Rules identify the CAT as the body whose judgment matters for this purpose. Rule 79(3) identifies additional factors to those set out in rule 79(2) which the CAT may take into account if it thinks fit in deciding whether collective proceedings should be opt in or opt out proceedings, including the strength of the claims. This indicates that the strength of the claims is likely to be a matter of particular significance in determining whether proceedings are suitable to be brought as opt out proceedings, but it does not give rise to an inference that the strength of the claims can never be relevant for the purposes of rule 79(2). The explicit language used in rule 79(2) that the CAT should take into account all matters it thinks fit allows it to do so in an appropriate case. Clearly, if the CAT thinks it relevant when deciding on suitability to have regard in any way to the strength of the claims, it has to bear in mind that it would be wholly inappropriate at the preliminary stage of deciding whether claims may proceed by way of collective proceedings to hold a mini trial. Furthermore, since the object of the collective proceedings regime is to facilitate access to justice for those with small but potentially meritorious claims, it would also be wrong in principle to make any consideration of the merits of the claims at the CPO stage excessively demanding, thereby preventing claimants from having enhanced access to the judicial process under the collective proceedings regime without a sufficiently good reason. This point is further underlined by rule 79(4), which provides that a strike out application under rule 41 or a summary judgment application under rule 43 may be heard at the hearing of an application for a CPO. The CAT has the usual powers to strike out a claim, including if it considers that there are no reasonable grounds for making it (rule 41), and to give summary judgment for a claimant or a defendant if it considers that either of them has no real prospect of success (rule 43). Given these powers, the suitability requirement should not be interpreted as involving a test of the substantive merits of the claims which is comparable to but higher than the test that would be applicable under these rules. The suitability requirement A critical issue on this appeal is: what is the suitability requirement concerned with? What makes claims suitable to be brought in collective proceedings, over and above the fact that they raise common issues? In our view, the word suitable in this context means suitable to be grouped together and determined collectively in accordance with the regime established by the Act and the CAT Rules. Applying this criterion requires the tribunal to focus on the special features of this regime and the objects which collective proceedings under the regime are intended to fulfil. This includes consideration of whether collective proceedings offer a reasonable prospect of achieving a just outcome. It also calls for an assessment of proportionality: is combining these claims and determining them collectively in accordance with the collective proceedings regime likely to achieve the fair determination of the claims at proportionate cost? If other forms of proceeding are in contemplation, either by way of a group action or some different collective proceeding, it may be relevant to assess which form of proceeding is better suited to securing justice at proportionate cost when deciding whether, overall, the proceedings for which certification is sought are suitable. We cannot agree with Lord Briggs, however, that the suitability requirement is relative and solely a question of whether claims are suitable to be brought in collective proceedings rather than individual proceedings. First of all, this is not what the Act says. If the intention had been to make the test inherently comparative, it would have been easy to do so by using language such as that used in the British Columbia Class Proceedings Act, section 4(1)(d), which imposes a test of whether a class proceeding would be the preferable procedure. As Lord Briggs observes, the use of that term implicitly poses the question preferable to what?. By contrast, the UK legislature has not chosen to formulate the criterion as one of comparative merit or suitability. Second, it does not follow that, because collective proceedings are an alternative to conventional proceedings brought by or on behalf of individuals, they are intended to be available in any case where they would be less unsatisfactory than such individual proceedings. As we have noted, collective proceedings confer substantial legal advantages on claimants and burdens on defendants which are capable of being exploited opportunistically. In the absence of wording which says so, we cannot accept that demonstrating that the members of the proposed class would face greater difficulties pursuing their claims individually must be regarded as sufficient to justify allowing their claims to be brought as a collective proceeding, with the advantages that this confers. Such an approach would very significantly diminish the role and utility of the certification safeguard. Third, in so far as comparisons are relevant, the choice is not in any case a binary one. The question is not whether some form of collective proceeding is preferable to individual proceedings; it is whether the claims sought to be included in the collective proceedings which the tribunal is asked to certify are suitable to be combined in such proceedings. Answering that question in the negative does not mean that there is no other class of claims which is suitable to be brought as collective proceedings. There may well be. Suitability for aggregate damages In determining whether the claims sought to be combined in collective proceedings are suitable to be brought in such proceedings, one of the matters specifically identified in rule 79(2) is whether the claims are suitable for an aggregate award of damages. In some cases this is likely to be a critical consideration. As we noted earlier, the potential for an aggregate award of damages is a major innovative feature of the collective proceedings regime which, in cases where it is available, has substantive legal effects. Such an award dispenses not only with the legal requirement to calculate damages on an individual basis but also with the legal requirement for a claimant to prove individual loss in order to establish liability. Contrary to the position spelled out by Rothstein J in the Microsoft case (quoted earlier), it allows a group to prove a claim even though individuals within the group might well not be able to do so. In our view, suitable has a similar meaning in considering whether the claims are suitable for an aggregate award of damages to its meaning in considering the more general question of whether the claims are suitable to be brought in collective proceedings. In determining whether a class of claims is suitable for an aggregate award of damages, the focus is on whether the claims are suitable to be grouped together as a unit for the purpose of proving and assessing loss, justly and at proportionate cost. This calls for an assessment of whether there is, or is likely to be if the proceedings are authorised to continue as collective proceedings, a method available which can be used to assess loss suffered by the class as a whole with a reasonable degree of accuracy. In making this judgment, the CAT will naturally have in mind the broad axe principle emphasised by Lord Briggs. The common law recognises that, even where the loss suffered by a claimant is purely financial and is in principle a precise sum of money, determining this sum accurately may be practically impossible or achievable only at disproportionate cost. The law does not require unreasonable precision from the claimant: see eg Sainsburys Supermarkets Ltd v Visa Europe Services Llc [2020] UKSC 24; [2020] Bus LR 1196, paras 217 223. At the same time, justice to a defendant requires that it should not be ordered to pay damages which are not based on a reasonable estimate of loss (all the more so if what may be a very large sum of damages is being awarded without requiring the proof of individual loss which is normally a condition of liability). The object at the certification stage is not of course to quantify the loss suffered by the proposed class. But in order to be satisfied that the proposed class of claims is suitable for an aggregate award of damages, the CAT is entitled to require the class representative to demonstrate that there is a method which is capable of establishing loss in a reasonable and just way, and at proportionate cost, on a class wide basis. Again, we do not accept that the test of suitability is relative. Showing that claims would be difficult or impossible to prove or quantify if pursued individually does not by itself make them suitable for an award of aggregate damages, let alone establish whether the class of claims for which certification is sought is suitable for such an award. These proceedings The number of claims sought to be included in these proceedings is by any standard vast. Mr Merricks (the applicant) applied to the CAT to make a CPO in respect of the following class: Individuals who between 22 May 1992 and 21 June 2008 purchased goods and/or services from businesses selling in the UK that accepted Mastercard cards, at a time at which those individuals were both (1) resident in the UK for a continuous period of at least three months, and (2) aged 16 years or over. It is to be noted that the class is not limited to individuals who, at any time during the specified 16 year period, possessed or used a Mastercard credit or debit card: it includes anyone (resident in the UK for at least three months and aged 16 or over at any relevant time) who purchased any goods or services from any business selling in the UK that accepted Mastercard cards during this entire period. The number of such businesses rose from about 500,000 at the start of the period to about 800,000 at the end. These businesses (the merchants) spanned the whole of the UK economy and operated in very disparate markets. In consequence, the class in respect of which the CPO was sought was, in substance, the whole of the adult consumer population of the UK during the 16 year claim period, which was about 46.2m people. As described in more detail by Lord Briggs, the proposed claim relies on a decision of the European Commission in December 2007 as a basis for contending that the merchant service charge paid on transactions by the merchants who participated in the Mastercard payment card scheme was, throughout the claim period, higher than it should have been as a result of a breach by Mastercard of competition law. The breach involved fixing a default fee called the multilateral interchange fee (MIF) charged (unless otherwise agreed) by the cardholders bank to the merchants bank on payments made using the card. This fee was included in the merchant service charge deducted from payments by the merchants bank. It typically accounted for the vast majority of the service charge (eg 1% out of a total charge of 1.3% of a credit card payment). The allegation made by the applicant was that the merchants had passed on the element of unlawful overcharge included in the merchant service charge to all their customers (whether those customers used a Mastercard card or not) by charging higher prices for goods or services than they would otherwise have done. The present proceedings were brought on an opt out basis and claimed (as the only relief sought) an aggregate award of damages in a sum estimated in the collective proceedings claim form at around 14 billion. The proposed method of establishing loss At the hearing of the application for a CPO, the applicant adduced expert evidence to explain the basis for the class action and how he proposed to establish that the class as a whole had suffered loss and the amount of such loss if the action was allowed to proceed. The experts methodology involved three steps. The first step was to calculate the total value of payments made by customers using Mastercard cards in the UK in each year of the claim period. This has been referred to as the volume of commerce. It should be possible to calculate the volume of commerce using Mastercards own records. The second step would be to estimate the amount by which the merchant service charge paid by merchants on the volume of commerce was higher than it would otherwise have been because of the overcharge resulting from the MIF. There were in fact a number of different MIFs and these changed over the 16 years of the claim period. It was not in dispute, however, that the amount of the overcharge was capable of assessment, as the MIFs which applied at different times were known and it was common ground that 100% of the MIFs was passed on to the merchants through the merchant service charge. The third step in the experts proposed method was to estimate the extent to which the overcharge was passed on by merchants to their customers in the form of increased retail prices. It was in relation to this step that problems arose. The extent to which merchants might have passed on the overcharge to their customers rather than absorbing it themselves will depend on the markets in which they operated and on their own business strategies: see Sainsburys Supermarkets Ltd v Visa Europe Services Llc; Sainsburys Supermarkets Ltd v Mastercard Inc [2020] UKSC 24; [2020] Bus LR 1196, para 205. Thus, the experts instructed by the applicant recognised that there will not have been one common rate of pass on which was applied by merchants across the board. Their proposed approach was to arrive at a global figure by calculating weighted average rates of pass on over time for different sectors of the economy. They produced a table which broke down the UK economy into 11 broad sectors: food and drink, mixed business, clothing, household, other retailers, motoring, entertainment, hotels, travel, financial and other services. As the experts accepted, however, when questioned by the tribunal, and as the CAT found, within each of these broad sectors there is a wide variety of businesses which may have had quite different rates of pass on. For example, the motoring sector covered fuel, new vehicle sales, car rental, and garage repair. In food and drink, the extent of pass on by major supermarket chains may be significantly different from the rate for local greengrocers, butchers etc. It was also accepted that rates of pass on may have varied geographically across the UK, as well as over time during the 16 year claim period. The antiquity of the claim period beginning over 25 years ago and ending in 2008 exacerbated the difficulties, particularly in relation to the availability of data. The CATs decision At para 57 of its judgment the CAT correctly observed that an application for a CPO is not a mini trial and that the applicant does not have to establish his case in anything like the way he would at trial. However, it noted that the applicant had to do more than show that he had an arguable case on the pleadings, meaning that he had also to satisfy the requirement that the claims of all the enormous class of persons whom the applicant was seeking to represent were suitable to be brought as a collective proceeding. The CAT observed that, although collective proceedings on an opt out basis can bring great benefits for the class members which could not otherwise be achieved, like other substantial competition damages claims such proceedings can be very burdensome and expensive for defendants and under section 47B(6) it is the CATs role to scrutinise an application for a CPO to ensure that only appropriate cases proceed. In considering the expert evidence relied on by the applicant to seek to satisfy the CAT that the claims were suitable for determination in collective proceedings, the CAT decided that the approach it should adopt could appropriately be drawn from the following passage in the judgment of Rothstein J in the Supreme Court of Canada in the Microsoft case (at para 118): the expert methodology must be sufficiently credible or plausible to establish some basis in fact for the commonality requirement. This means that the methodology must offer a realistic prospect of establishing loss on a class wide basis so that, if the overcharge is eventually established at the trial of the common issues, there is a means by which to demonstrate that it is common to the class (ie that passing on has occurred). The methodology cannot be purely theoretical or hypothetical, but must be grounded in the facts of the particular case in question. There must be some evidence of the availability of the data to which the methodology is to be applied. Neither party sought to argue before the CAT that this was not an appropriate approach for the CAT to adopt (see paras 58 59 of the CATs judgment). It was not in dispute that the methodology identified by the applicants experts was a valid theoretical approach to estimating loss on a class wide basis for the class of over 46m people represented by the applicant. The argument before the CAT turned on the availability of the data which would be required to enable the methodology to be applied in practice. As mentioned, the method proposed by the experts relied on being able to estimate a weighted average rate of pass on of the relevant overcharge by merchants to their customers for each sector of the economy during each of the 16 years of the claim period. The experts expressed the view that it should be possible to acquire the data necessary for this analysis from a combination of three sources: (a) information derived from claims which have been brought against Mastercard by retailers in a variety of sectors; (b) disclosure from third parties; and (c) publicly available data. The CAT considered each of these proposed sources and found that they could not realistically be expected to yield sufficient data to enable the claimants methodology to be applied on a sufficiently sound basis to calculate the loss sustained by the class as a whole (paras 69 78). The first potential source of data was information derived from claims brought by retailers against Mastercard. However, these claims relate to periods commencing in 2006, so there is minimal overlap with the claim period in the present proceedings. The CAT found that [i]t would be impossible to extrapolate back from any findings or expert analyses of pass through in around 2006 to derive meaningful figures for much of the claims period in the present action (para 73). The CAT was clearly entitled to make this assessment on the evidence before it. We would add that still less could it be thought that such information could provide a basis for extrapolation to allow any meaningful or reliable assessment to be made regarding the rate of pass on in the many sectors and sub sectors of the UK economy which are not represented in the retailer claims brought against Mastercard. As regards the second potential source, the CAT noted that in theory requests could be made for disclosure of evidence from third party retailers in the various different sectors of the economy to gather data to calculate their various rates of pass on at relevant times. But it observed that in view of the number of markets to be considered, the long period involved, and the wide range of data required to arrive at a meaningful estimate, this would be a very burdensome and hugely expensive exercise; merchants could be expected to resist providing such information; the costs budget filed with the application for the CPO made no provision for the cost of this exercise; and in sum, in the CATs view, such extensive third party disclosure is wholly impractical as a way forward (para 74). Again, the CAT was clearly entitled to make this assessment on the evidence before it. As to published data, a report by RBB Economics relied on by the experts itself made clear that the publicly available data were incomplete and difficult to interpret. Apart from that report, the CAT noted that no real attempt appears to have been made to consider what data are available for each of the broad sectors over the relevant period (para 75). Again, on the material before it, the CAT was clearly entitled to conclude that it was not satisfied that there were sufficient publicly available data to allow the proposed methodology to be implemented. The CAT stated its conclusion on the question whether the claims were suitable for an award of aggregate damages at paras 77 78 of its judgment: 77. We accept that in theory calculation of global loss through a weighted average pass through, as explained in the evidence and as summarised above, is methodologically sound. But making every allowance for the need to estimate, extrapolate and adopt reasonable assumptions, to apply that method across virtually the entire UK retail sector over a period of 16 years is a hugely complex exercise requiring access to a wide range of data. We certainly would not expect that analysis to be carried out for the purpose of a CPO application, but a proper effort would have had to be made to determine whether it is practicable by ascertaining what data is reasonably available. Given the massive size of the claim, a difference of even 10% in the average pass through rate makes a very substantial difference in financial terms. 78. Accordingly, applying the Microsoft test we are unpersuaded on the material before us that there is sufficient data available for this methodology to be applied on a sufficiently sound basis. It follows that we are not satisfied, and indeed very much doubt, that the claims are suitable for an aggregate award of damages: see rule 79(2)(f). The CAT also gave a second and separate reason for concluding that the claims were not suitable to be brought in collective proceedings. This was that, even if the total loss to the whole class was capable of calculation in the manner proposed, there was no reasonable and practicable means of estimating the loss suffered by each individual claimant. The experts accepted that this was so. The method put forward by the applicant for distributing any award of aggregate damages was to divide any damages awarded in respect of each year of the claim period equally between each member of the class for that year. The CAT did not consider this approach acceptable, stating (at para 88): The governing principle of damages for breach of competition law is restoration of the claimants to the position they would have been in but for the breach. The restoration will often be imprecise and may have to be based on broad estimates. But this application for over 46m claims to be pursued by collective proceedings would not result in damages being paid to those claimants in accordance with that governing principle at all. The CAT went on to consider whether the applicant met the requirements for authorisation to act as the class representative and concluded that he did. However, since, in the CATs view, the claims were not suitable to be brought in collective proceedings, the application for a CPO was dismissed. The Court of Appeals decision When the applicant sought to appeal from the CATs decision, a preliminary issue arose as to whether the Court of Appeal had jurisdiction to entertain an appeal. Under section 49(1A)(a) of the Act an appeal lies on a point of law from a decision of the CAT in collective proceedings as to the award of damages. The Court of Appeal held that the decision of the CAT to refuse to make a CPO fell within this provision because it had the effect of barring the claim to an award of aggregate damages under section 47C(2), which was the only type of relief sought in the collective proceedings and is a unique remedy not otherwise obtainable: see [2018] EWCA Civ 2527; [2019] Bus LR 1287, paras 20, 27, 28. On the substantive appeal, the Court of Appeal decided that both reasons given by the CAT for refusing to make a CPO involved errors of law. On the question whether the claims were suitable to be brought in collective proceedings (and, in particular, for an aggregate award of damages), the Court of Appeal considered that the approach taken by the CAT to the expert evidence was based on a misdirection as to the correct test to be applied. In the Court of Appeals view, in assessing the availability of data to establish a claim for aggregate damages, the CAT had demanded too much of the applicant at the certification stage: [2019] EWCA Civ 674; [2019] Bus LR 3025, paras 48 54. On the question of distribution, the Court of Appeal considered both that it was premature for the CAT to take account of the proposed method of distributing any aggregate award of damages at all at the certification stage and that the CAT was wrong to regard it as a requirement that any award must be distributed in a way which corresponds, even if only approximately, to individual loss: see paras 56 62. Mastercard on this further appeal contests the conclusion reached by the Court of Appeal on each of these two issues. The distribution issue It is convenient to deal with the distribution issue first. We can do so briefly, as we agree with Lord Briggs on this issue. The dispute is a narrow one, as Mastercard accepts that there is no legal requirement that an award of aggregate damages must be distributed to class members in a way which attempts to compensate them for their individual losses; and the applicant accepts that the CAT is entitled to treat the way in which it is proposed that an award of aggregate damages should be distributed as a relevant factor when considering whether the suitability requirement is satisfied in order for a CPO to be made. But the applicant objects that the CAT went further than this and treated the existence of a significant degree of correspondence between the proposed distribution and losses suffered by individuals as a mandatory legal requirement which must be met before a CPO can be made. In our view, Mastercard was right to accept the first point. We think it clear that, under the legislative scheme, where an aggregate award of damages is made, that award is the means by which compensation is achieved: that is to say, by providing compensation for loss suffered by the class of represented persons as a whole. As discussed earlier, section 47C of the Act dispenses with the requirement that would ordinarily apply to undertake an assessment of the losses suffered by individual members of the class. How such an award of damages is distributed is a further and separate question. There is no necessity at that stage to try to estimate loss: only to adopt a method of distribution which is fair. Other things being equal, a fair method will no doubt be one which gives a larger share of the award of damages to someone who can be shown to have suffered a greater individual loss. But it may be impractical or disproportionate to adopt such a method of distribution, particularly where the size of the class is large and the amount of damages awarded small, considered on a per capita basis. We can see nothing wrong in principle with a conclusion that the fairest method of distribution is, in the circumstances of a particular case, an equal division among all the members of the class (or, as proposed by the applicant in this case, an equal division among all the relevant class members of the damages referable to each year of the claim period). Like Lord Briggs, we do not think it is necessarily premature to have regard at the certification stage to any proposal made by the applicant provisional though it would necessarily be as to how an aggregate award of damages would be distributed among the class of persons represented. However, the fact that it is not practicable and reasonable, and therefore not proposed, to adopt a method of distribution which reflects individual loss is not a reason which requires the CAT to refuse to make a CPO as a matter of law. Contrary to Mastercards submission, we think it clear that the CAT did consider that it is only permissible to make an award of aggregate damages if there is a reasonable and practicable means of distributing the damages to the members of the class in a way which seeks to compensate them for their individual losses. That was an error of law on the part of the CAT. There was nothing legally objectionable about the approach to the distribution of damages proposed by the applicant. This ground of the CATs decision to decline to make a CPO therefore cannot be sustained. That error does not, however, affect the separate reason given by the CAT for its decision: namely, that it was not satisfied that the claims sought to be included in the proceedings were suitable for an aggregate award of damages. In relation to that conclusion, two questions arise: (i) did the CAT err in law in reaching that conclusion; and (ii) if not, was the CAT entitled on that basis to decide that the claims were not suitable to be brought in collective proceedings? Suitability for aggregate damages As noted, in determining whether the class of claims sought to be brought in these proceedings is suitable for an award of aggregate damages, the CAT adopted a test articulated by the Supreme Court of Canada in the Microsoft case (quoted at para 135 above). In the relevant passage (at para 118 of the judgment) Rothstein J was not addressing the question of the suitability of claims for an aggregate award of damages (which is not a criterion under the applicable Canadian legislation), but whether the issue of loss was capable of being resolved on a common basis and was therefore appropriate for certification as a common issue. For this purpose, it was not necessary for the class representative at the certification stage to quantify the damages in question; it was sufficient to demonstrate that there was a method capable of doing so on a class wide basis. What this requirement meant was elaborated in para 118 of the judgment. Although it was formulated in a different legislative context, the CAT was in our view entitled to treat the Microsoft test as providing an appropriate standard to apply for the purpose of determining the suitability of a class of claims for an aggregate award of damages under section 47C(2) of the Act. Not only did the Court of Appeal endorse that approach (at para 40), but it has been common ground between the parties at all levels in the CAT, in the Court of Appeal and in this court that it was appropriate for the CAT to apply this test. In any event, it seems to us to provide sensible guidance as to how to approach the question whether a class of claims is suitable to be grouped together for the purpose of estimating loss. The approach stated by Rothstein J reflects the broad axe principle, and adoption of it in the present context gives appropriate recognition to that principle in the context of the collective proceedings regime in the Act. The principle cannot be invoked as a way of circumventing the suitability requirement in the Act and the CAT Rules. If the applicant could not show that there was a realistic prospect that his experts proposed methodology would be capable of application in a reasonable and fair manner across the whole width of the proposed class, then (i) there would be a significant risk that a claim of this magnitude could unfairly be held over Mastercards head in terrorem to extract a substantial settlement payment without a proper basis for it; (ii) there would be a significant risk that, if carried forward towards trial, the collective proceeding, as framed by the CPO obtained at the outset, would at some stage run into the sand and be found not to be viable, so that it would have given rise to a great waste of expense and resources for no good effect; (iii) the risk referred to in (ii) would not just relate to potential waste of the resources of the defendant, but also to waste of the resources of the CAT, which could be better allocated elsewhere (see rule 4(2)(e)); and (iv) there would be a significant risk that, if the methodology were applied to the class at trial on the basis of inadequate data and unjustified extrapolations from available data sets, the outcome would be unjust and one in which one could have no confidence, because of the margin for error in calculating pass through rates for all sectors of the economy over a 16 year period and the potentially very substantial effects of such errors being made, by reason of the large sums being claimed (the point made in para 77 of the CATs judgment). We accordingly consider that the Court of Appeal, in agreement with the parties and the CAT, was correct to hold that what the applicant in this case had to do was to satisfy the CAT that the expert methodology was capable of assessing the level of pass on to the represented class and that there was, or was likely to be, data available to operate that methodology (para 44). The Court of Appeals criticisms We disagree, however, with the Court of Appeals view that the CAT did not in fact apply this test. There seem to us in the Court of Appeals judgment to be three particular criticisms made of the CATs approach. One is that the CAT wrongly required the applicant to establish more than a reasonably arguable case (para 52) or to be satisfied that the collective claim has more than a real prospect of success (paras 44 and 54). In our view, this criticism is misplaced in that it treats the assessment of whether the claims in question are suitable for an aggregate award of damages as if it were an assessment of whether the claims are of sufficient merit to survive a strike out application. However, as we have emphasised (and understand to be common ground between the parties on this appeal), the eligibility requirements including the question of suitability for aggregate damages are directed to ascertaining whether it is appropriate to combine individual claims into collective proceedings and not to the question whether the claims are sufficiently arguable as a matter of their substantive merits to be allowed to proceed. In particular, in relation to aggregate damages, the question for the CAT was not whether the claims had a real prospect of success; it was whether the proposed methodology offered a realistic prospect of establishing loss on a class wide basis. This turned, in the context of this case, on whether there was, or was likely to be, data available to operate that methodology (as the Court of Appeal had itself recognised at para 44). That was the question which the CAT addressed. We therefore think it clear that the CAT asked itself, and answered, the correct question and that the CAT was right to say (at para 57 of its judgment) that the applicant had to do more than simply show that he has an arguable case on the pleadings, as if, for example, he was facing an application to strike out. The second criticism made by the Court of Appeal was that the CAT had, in effect, carried out a form of mini trial, which involved cross examination of the applicants experts at a pre disclosure stage in the proceedings about their ability to prove the claim at trial by reference to sources of evidence which they had identified but had not yet been able fully to analyse or assess (para 52). It was said that the certification hearing therefore exposed the claim to a more vigorous process of examination than would have taken place at a strike out application (para 53). We have already explained why we consider the comparison with a strike out application to have been misplaced. We nevertheless agree with the Court of Appeal that an application for a CPO should not involve a mini trial. The CAT expressly recognised this at para 57 of its judgment and we do not accept that it failed to follow the direction that it expressly gave itself. In particular, we can see nothing wrong in principle, where the credibility or capability of expert methodology is of importance as it was here, with asking questions of the experts in order to clarify and better understand their proposed approach. That does not amount to anything approaching a mini trial. That is what occurred at the hearing before the CAT in this case. The consideration of the experts evidence by the CAT was not adversarial. The questioning was led by the tribunal, not Mastercard. To the extent that counsel for Mastercard was permitted to ask questions, it was only by way of clarification rather than by way of challenge to their evidence. Mastercard did not submit any expert evidence. The CAT was not engaged in weighing up competing expert evidence nor in seeking to resolve any disputed points of fact or expert opinion; it merely sought to understand and clarify the methodology proposed by the experts and the availability of the data necessary to apply that methodology. The tribunals questions gave the experts the opportunity to explain and expand on their proposed method. Providing this opportunity was an advantage, not a disadvantage, to the applicant, as is apparent from para 76 of the CATs judgment where the CAT observed that the methodology put forward by the experts in their oral evidence, in response to the tribunals questioning, is considerably more sophisticated and nuanced than that set out, rather briefly, in their experts report. Indeed, for the purposes of his submissions before the CAT, the Court of Appeal and in this court, the applicant positively sought to rely on the contents of the evidence given by his experts as amplified by their oral explanations in answers given at the hearing before the CAT. There was in these circumstances no procedural impropriety or error of law in the CATs approach. The third criticism made by the Court of Appeal was that the CAT demanded too much in terms of the availability of data at what was still an early stage of the proceedings. It is said that the experts had identified expected sources of data and it was not appropriate at the certification stage to require the proposed representative and his experts to specify in detail what data would be available for each of the relevant retail sectors in respect of the infringement period (para 51). In our view, this criticism is also misplaced. The CAT did not require the applicant or his experts to specify in detail what data would be available for each of the relevant retail sectors in respect of the infringement period. It applied an appropriately low threshold of whether there was evidence that data were available which could offer a realistic prospect of the applicant being able to apply his proposed economic methodology across the whole range, or substantially the whole range, of the class claim. On the evidence before it, the CAT was entitled to make the assessment at paras 69 75 of its judgment that the applicant had failed to show that appropriate data were or were likely to be available across that range such as would mean that his proposed methodology could be applied in a meaningful or reasonable way to make an aggregate award of damages assessed on a class wide basis: see paras 138 141 above. The Court of Appeal also suggested that, if it later transpired that the applicant was unable to access sufficient data to enable the experts method of calculating the rate of pass on to be performed, the CPO could be revoked; and that a decision of that kind is much more appropriate to be taken once the pleadings, disclosure and expert evidence are complete and the court is dealing with reality rather than conjecture (para 53). We do not consider this a permissible approach. The fact that there is a power to vary or revoke a CPO at any time under section 47B(9) of the Act does not relieve the CAT of the obligation only to make a CPO if it considers that the statutory conditions are satisfied and not otherwise. The CAT may not make a CPO on a speculative basis, in the hope that the claims might later become suitable to be brought as collective proceedings but that, if they do not, the order can be revoked, no doubt after a great deal of resources have been expended on the litigation. The applicant applied in this court for permission to adduce additional evidence regarding the availability of data to that adduced before the CAT. We would refuse that application. Any such evidence is not capable of disclosing a legal error on the part of the CAT, which was obliged to make its decision on the basis of the evidence before it. In any case, having looked at the additional material as we were invited to do by Mr Harris QC on behalf of the applicant, we are not persuaded that it shows a realistic possibility of filling the large gaps in the available data that were identified by the CAT. In our view, the CATs decision that it was not satisfied that the claims sought to be brought as collective proceedings were suitable for an aggregate award of damages cannot be impugned as unlawful. Suitability for collective proceedings If, as we consider, that decision was not wrong in law, then, in the circumstances of this case, it follows that the CAT was also entitled to conclude that the claims were not suitable to be brought in collective proceedings. As mentioned earlier, an aggregate award of damages under section 47C(2) of the Act was the only type of relief sought in these proceedings. The applicant has not suggested that it would be feasible or practicable to estimate the losses suffered by members of the proposed class individually. Indeed, the proposed method of distributing any damages recovered was founded on the premise that there is no reasonable or practicable means of establishing loss on an individual basis (see eg para 91 of the CATs judgment). In these circumstances, if the claims are not suitable for an aggregate award of damages, it is common ground that they are not suitable for any award of damages (or other relief). There is accordingly no basis on which the proceedings as they have been framed could properly be continued. Lord Briggs has emphasised that whether the claims are suitable for an aggregate award of damages is only one factor in the list of matters identified in rule 79(2) as potentially relevant to the issue of overall suitability. He criticises the CAT for treating this particular factor as if it were a hurdle rather than merely one factor to be weighed in the balance along with others in determining whether the claims are suitable to be brought in collective proceedings. This is not an argument which the applicant has made and we are not able to agree with it. It was not incumbent on the CAT to treat the factors in rule 79(2) (or for that matter the factors in rule 4) as a check list which it had to work through and address one by one. The position is the same as where a court makes a procedural decision under the Civil Procedure Rules and has to comply with the overriding objective in CPR Part 1: see Khrapunov v JSC BTA Bank [2018] EWCA Civ 819, para 46. Furthermore, while the structure of rule 79 makes it clear that satisfying the CAT that the claims are suitable for an aggregate award of damages is not a separate hurdle or pre condition for certifying claims as eligible for inclusion in collective proceedings, that does not prevent this factor from being in practice decisive in the circumstances of a particular case, given the way in which the proceedings have been framed. For the reasons indicated, that was the case here. For the same reasons, the CATs error (as we agree that it was) in failing to recognise that whether or to what extent merchants passed on the MIFs to their customers was a common issue did not affect its analysis of suitability. The reasons given by the CAT for remaining unpersuaded that the claims of the proposed class members were suitable for an aggregate award of damages did not depend in any way on whether the extent of merchant pass on is regarded as a common issue. Since an aggregate award of damages was the only relief sought by the applicant and said by the applicant to be appropriate, it followed from the conclusion that the claims were not suitable for such relief that the claims were not suitable to be brought in collective proceedings. Whether the extent of merchant pass on is a common issue has no bearing on that. Mr Harris for the applicant emphasised that the difficulties in establishing the extent of any merchant pass on would have been equally formidable for a typical individual claimant, seeking compensation for increased retail prices over the sectors of the market in which he or she was accustomed to make purchases. He submitted that, if those difficulties would have been insufficient to deny a trial to an individual claimant, they should not, in principle, have been sufficient to lead to a denial of certification for collective proceedings. This argument seems to us to make the error already discussed of confusing the requirements for certification of claims as eligible for inclusion in collective proceedings with a summary judgment or strike out test. Whether an individual claimant has a claim that is sufficiently strong to go to trial is a different question, involving a different test, from whether a class of claims is eligible to be brought as a collective proceeding. It does not follow that, just because claims are capable of being pursued individually without being struck out, they must also be suitable to be brought in collective proceedings. Nor does it follow that, because a group of claimants would have greater difficulties (practical or legal) in pursuing their claims individually than they would if the claims are brought in collective proceedings, that of itself makes the claims suitable to be brought in collective proceedings. For the reasons stated earlier, the suitability requirement is not relative in this way. Conclusion For the reasons given, the CAT was in our opinion entitled to take the view that the claims which the applicant was seeking to bring as a class action were not suitable to be brought in collective proceedings when the CAT was not satisfied that there was a realistic prospect of the applicant being able to apply its proposed economic methodology across the whole width, or substantially the whole width, of the proposed class. This is not to say that none of the claims which the applicant was seeking to combine had a real prospect of success. The CAT was right to treat the issue of suitability as distinct from the question whether the class action might be struck out on the merits under rule 41 or rule 43. We think it would not have been possible for the CAT to strike out or give summary judgment on the claims covered by the proposed CPO because some of them are very likely to have merit. But it was a separate question whether it was suitable for them to proceed as a collective proceeding, with the substantive legal advantages that this would give to the claimants, where the applicant could not show that data existed or were likely to exist which would make the action viable across the whole width of the class. Finally, it should be emphasised that the CATs approach does not undermine the efficacy of the collective proceedings regime. The test which the CAT applied in looking to see whether the relevant data were or might become available was a low one. It was open to the applicant to seek a CPO in relation to a class of claims which was framed less ambitiously for example, in relation to particular sectors of the economy where the relevant data needed to make the applicants economic methodology workable in a meaningful and fair way could be shown to be available or likely to be available. However, the applicant did not put forward any alternative proposal. The only application made was to certify as suitable to be brought in collective proceedings a massive class of claims brought on behalf of more than 46m people everyone domiciled in the UK who when over the age of 16 had been resident in the UK for more than three months at any time during a 16 year period between 1992 and 2008. The fact that this gargantuan class action was found unsuitable to proceed did not rule out the possibility of pursuing in collective proceedings a more focused class of claims. |
The liability of employers for deaths caused by mesothelioma has pre occupied courts and legislators over recent years. The present appeals concern claims to pass the burden of this liability on to insurers, made either by employers or in the case of insolvent employers by the personal representatives of former employees using the mechanism of the Third Party (Rights against Insurers) Act 1930. The appeals concern employers liability insurance. This is in contrast with Bolton MBC v Municipal Mutual Insurance Ltd [2006] EWCA Civ 50, [2006] 1 WLR 1492 where public liability insurance was in issue. Employers liability focuses necessarily upon the relevant employment relationships and activities. Public liability relates to any of the insureds relationships and to activities affecting the world at large. Another feature of employers liability is that, under the Employers Liability (Compulsory Insurance) Act 1969 (the ELCIA), it has since 1 January 1972 been compulsory for every employer other than local authorities carrying on any business in Great Britain to insure, and maintain insurance, under one or more approved policies with an authorised insurer or insurers against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business, but except in so far as regulations otherwise provide not including injury or disease suffered or contracted outside Great Britain The appeals arise because the relevant insurers maintain that the employers liability insurances which they issued respond (or, better, could only have responded) to mesothelioma which developed (or, possibly, manifested itself) as a disease during the relevant insurance periods all long past. In contrast, the relevant employers and personal representatives maintain that the insurances respond to mesothelioma which develops and manifests itself later; all that is required, they say, is exposure of the victim during the insurance period to asbestos in circumstances where the law attributes responsibility for the mesothelioma to such exposure. These alternative bases of response (or triggers of liability) have been loosely described as an occurrence (or manifestation) basis and an exposure (or causation) basis. It is in issue whether the ELCIA, after it came into force, mandated any particular basis of response. A secondary issue, arising if the insurances only respond on an occurrence basis, is whether the aetiology of mesothelioma justifies a conclusion that there was during the relevant insurance period an occurrence sufficient to trigger liability under the insurances. Burton J, [2008] EWHC 2692 (QB), concluded that the relevant insurances all responded on an exposure basis. The Court of Appeal, [2010] EWCA Civ 1096, by a majority (Rix and Stanley Burnton LJJ), upheld the judge in relation to some of the insurances (particularly those covering disease contracted during the relevant insurance period); but they concluded that others (particularly those covering disease sustained during the insurance period) responded only on an occurrence or manifestation basis. Smith LJ would have upheld the judges judgment in its entirety. The full judgments in both courts repay study. They have been of great assistance to this court and make it possible to go directly to the heart of the issues. Mesothelioma is a hideous disease that is inevitably fatal. In most cases, indeed possibly in all cases, it is caused by the inhalation of asbestos fibres: Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, [2011] 2 AC 229, para 1, per Lord Phillips. It is a cancer of the pleura, which are thin linings around the lungs and on the inside of the rib cage. It is usually undetectable until shortly before death. Its unusual features include what Burton J in this case at para 30 described as the unknowability and indescribability of its precise pathogenesis. In particular, it is impossible to know whether any particular inhalation of asbestos (at least any occurring more than ten or so years prior to diagnosability) played any or no part in such development. Because of this unusual feature, the law has developed a special rule. The special rule was the product of judicial innovation in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32 and in Barker v Corus UK Ltd [2006] UKHL 20; [2006] 2 AC 572. It was modified by statutory intervention in the form of the Compensation Act 2006, section 3. Leaving aside exposures occurring within the ten or so years prior to diagnosability, the rule can now be stated as being that when a victim contracts mesothelioma each person who has, in breach of duty, been responsible for exposing the victim to a significant quantity of asbestos dust and thus creating a "material increase in risk" of the victim contracting the disease will be held to be jointly and severally liable in respect of the disease. Burton Js findings in the present case justify certain further propositions, mostly also corresponding with the summary in Lord Phillips judgment in Sienkiewicz (para 19): (i) A significant proportion of those who contract mesothelioma have no record of occupational exposure to asbestos. The likelihood is that (vi) in their case the disease results from inhalation of asbestos dust that is in the environment. There is, however, a possibility that some cases of mesothelioma are "idiopathic", i.e. attributable to an unknown cause other than asbestos. (ii) The more fibres that are inhaled, the greater the risk of contracting mesothelioma. (iii) There is usually a very long period between the exposure to asbestos and the development of the first malignant cell. Typically this can be at least 30 years. (iv) For a lengthy period (perhaps another five years) after the development of the first malignant cell, there remains a possibility of dormancy and reversal, but at a point (Burton J thought a further five years or so before the disease manifested itself, and was thus diagnosable) a process of angiogenesis will occur. This involves the development by malignant cells of their own independent blood supply, so assuring their continuing growth. (v) The mechanism by which asbestos fibres cause mesothelioma is still not fully understood. It is believed that a cell has to go through 6 or 7 genetic mutations before it becomes malignant, and asbestos fibres may have causative effect on each of these. It is also possible that asbestos fibres have a causative effect by inhibiting the activity of natural killer cells that would otherwise destroy a mutating cell before it reaches the stage of becoming malignant. Mesothelioma currently claims about 3000 lives a year in the United Kingdom. This speaks to the common use of asbestos materials up to the 1960s and 1970s. In Annex I to his judgment Rix LJ set out the insuring clauses of the various forms of policy wording in use from time to time. Subject to re ordering to reflect the development of the language, Annex A to this judgment includes the same and some further wording. It can be seen that the Excess policies and the first two MMI policies promise to indemnify the insured employer against liability if at any time during the period of insurance (or of any renewal) any employee shall sustain under the earlier policies personal injury by accident or disease or under the later policies [any] bodily injury or disease in the case of the first Excess policy while engaged in the service of the Employer or in other cases arising out of and in the course of [his] employment by the insured employer. In the case of the Independent policy, the insurer, under the recital, promised to indemnify the employer during the period of insurance or of any renewal. The insuring clause itself contains no express limitation to any period. It promises indemnity against all sums for which the employer shall be liable for damages for such injury or disease if any employee shall sustain bodily injury or disease arising out of and in the course of his employment by the Insured in connection with the Contract specified or type of work described in the Schedule. The third MMI policy and the BAI policies were in more developed form. The former promises indemnity in respect of legal liability for sums payable as compensation for bodily injury or disease (including death resulting from such bodily injury or disease) suffered by any employee when such injury or disease arises out of and in the course of employment by the Insured and is sustained or contracted during the currency of this Policy. The latter promised indemnity against all sums which the Insured may become liable to pay to any Employee . in respect of any claim for injury sustained or disease contracted by such Employee during the period of insurance or any renewal. The insurers party to the present appeals have at all times represented only a small part of the employers liability insurance market. By far the larger part of the market consists of companies who until the late 1960s (when competition rules intervened) operated a tariff system which bound them to adopt a specified policy form and specified rates. Until 1948 tariff insurance was focused on Workmens Compensation Act claims, but in 1948 legislative changes (in particular the abolition by the Law Reform (Personal Injuries) Act 1948 of the doctrine of common employment) made a common law claim for future accruing causes of action much more attractive. It may well have been in anticipation of these changes that the tariff companies introduced a new form of policy in May 1948, still in widespread use today, providing indemnity if any employee shall sustain any personal injury by accident or disease caused during the period of insurance. Under this tariff wording, sustain looks to the occurrence of an accident or development of a disease at any time, while caused makes clear that the trigger to cover is that the accident or disease has been caused during the insurance period. The present insurers were non tariff companies, and have always been free to set their own wordings. From dates after the insurances the subject of this appeal, three of the insurers in fact ceased to use the wordings set out in Annex A, and themselves moved expressly to causation based wordings Excess in about 1976, Independent in the mid 1980s, and BAI in 1983. As a matter of insurance practice, however, until the decision in Bolton in 2006, all these wordings, whether tariff or non tariff and whether using the language caused, sustain or sustained or contracted, paid out on long tail claims (including the mesothelioma claims which became increasingly frequent in the 1980s) by reference to the date(s) of exposure. Where successive employers with different insurers had exposed a particular employee victim to asbestos, liability was in practice apportioned between the employers, and so insurers, broadly according to the extent of exposure for which each employer was responsible. The rival cases Insurers submit that all the wordings in Annex A require the injury or disease to occur during the period of insurance or of any renewal. In the alternative, if the use of the word contracted in the third MMI policy and the BAI policies or the different formulation of the Independent policy leads to any different conclusion in any of such cases, they submit that this leaves unaffected the clear meaning of the Excess and first two MMI policy wordings. The employers and interested employees contend that all these policies are to be understood as operating on an exposure or causation basis. The implications of these alternative interpretations are clear. On insurers primary contention, the policies set out in Annex A would not respond to current mesothelioma claims. It is unlikely that most of them would have responded to many, if any, mesothelioma claims, since it was only in the 1980s that such claims began to emerge to any great extent. Policies written on a causation basis since the dates indicated in paragraph 10 above would also not respond to current mesothelioma claims. Insurers response is that any insurance must be read according to its terms. Until 1 January 1972, when the ELCIA came into force, it was not obligatory for employers to have any form of employers liability insurance. Further, viewed on an occurrence or manifestation basis, the policies would pick up long tail claims arising from exposure occurring at any time in the past. In this connection, it is to be noted that various long tail diseases were well recognised perils from the era of Workmens Compensation legislation before 1948. Instances were scrotal cancer, pneumoconiosis and more specifically (from the time of Merewether and Prices 1930 Report on Effects of Asbestos Dust on the Lungs and Dust Suppression in the Asbestos Industry) asbestosis. All these would only develop over and could manifest themselves after considerable periods of years. Following upon the 1930 report, The Asbestos Industry Regulations 1931 (SI 1931/1140) were introduced to regulate factories handling and processing raw fibre, and in 1969 The Asbestos Regulations 1969 (SI 1969/690) extended this regulation more widely it appears in the light of an appreciation that mesothelioma could result from exposure to small quantities of asbestos dust (see In re T & N Ltd (No 3) [2006] EWHC 1447 (Ch), [2007] 1 All ER 851, para 118). The Court of Appeals conclusions The force of insurers case rests in the use of the word sustain, whether in connection with the phrase personal injury by accident or disease or bodily injury or disease or in the conjunction injury or disease . sustained or contracted or injury sustained or disease contracted. Rix and Stanley Burnton LJJ concluded that the word sustain looked prima facie at the experience of the suffering employee rather than its cause (paras 232 and 343). Insurances responding to injury or disease sustained during the insurance period would not, on this basis, cover mesothelioma sustained long afterwards. Rix LJ had some compunction about the result because of what he (though not Stanley Burnton LJ) felt was a tension with the commercial purpose of employers liability insurance in the extraordinary context of mesothelioma (para 235). Rix LJ would have liked to hold that mesothelioma sufferers sustained sufficient injury on exposure to asbestos to trigger the insurances in force at the date of such exposure, but felt bound by Bolton to conclude the contrary (paras 277 289). However, Rix LJ, though not Stanley Burnton LJ, considered that the particular wording of the Independent insurances did not explicitly require the injury or disease to be sustained during the insurance period, and could be read as covering the sustaining of injury at any time arising out of and in the course of employment during the insurance period (paras 300 and 350). Rix and Stanley Burnton LJJ differed as to the significance of the ELCIA extension provisions included in the Independent wording, the third MMI wording and the second BAI wording, as quoted in Annex A. Rix LJ thought that the ELCIA required employers to insure on a causation basis (paras 184 and 186) although, since he also expressed the view that an insurance arranged and maintained on a sustained basis could comply with the ELCIA, he may perhaps only have meant required in practice. At all events, he held that the ELCIA extension provisions covered liability incurred to the personal representatives of employees on a causation basis, while enabling insurers to recoup themselves so far as possible from the relevant employers in respect of liability they would not otherwise have had to meet (paras 292, 300 and 302). Stanley Burnton LJ did not agree that the ELCIA required causation wording (para 342), but considered that it required insurance to be taken out and maintained in respect of ex employees, or at least those who were or had been employed at any time after the coming into force of ELCIA (para 342; and see Rix LJs comments at paras 305 307). Rix, Smith and Stanley Burnton LJJ were all agreed that, where provision was made for disease contracted, this could and should be construed as introducing cover on a causation basis, even if or though wording such as injury (or disease) sustained could only respond on an occurrence basis. Analysis Annex A sets out the insuring clauses. Insurers case is, as I have said, rooted most strongly in the word sustain, particularly when it is used by itself, rather than in conjunction with a more ambivalent alternative in the phrase sustained or contracted. The natural meaning of the word sustain, taken in isolation and as defined in the Shorter Oxford English Dictionary from an appropriate date (1965, 3rd ed), is, with respect to injury, undergo, experience, have to submit to, or, possibly, to have inflicted upon one, suffer the infliction of. But the insurance cover granted (and no doubt required) extended expressly beyond injury by accident to embrace disease. This was achieved by less natural conjunctions, such as sustain [any] personal injury by accident or disease or sustain [any] bodily injury or disease. Conscious perhaps that the verb sustain does not fit naturally with the concept of disease, some companies (MMI in its third wording and BAI in its first and second wordings) introduced the different verb contracted in the formulations sustained or contracted or injury sustained or disease contracted. This use of contracted with respect to disease is considerably more natural, but is clearly open to an interpretation that it looks back to the initiating or causative factor of the disease, and (whatever the answer on that point) highlights a question whether any substantial difference exists in this connection between such wordings and other wordings referring more awkwardly to the sustaining of personal injury by disease or the sustaining simply of disease. To resolve these questions it is necessary to avoid over concentration on the meaning of single words or phrases viewed in isolation, and to look at the insurance contracts more broadly. As Lord Mustill observed in Charter Reinsurance Co Ltd v Fagan [1977] AC 313, 384, all such words must be set in the landscape of the instrument as a whole and, at p 381, any instinctive response to their meaning must be verified by studying the other terms of the contract, placed in the context of the factual and commercial background of the transaction. The present case has given rise to considerable argument about what constitutes and is admissible as part of the commercial background to the insurances, which may shape their meaning. But in my opinion, considerable insight into the scope, purpose and proper interpretation of each of these insurances is to be gained from a study of its language, read in its entirety. So, for the moment, I concentrate on the assistance to be gained in that connection. A first point, made very clearly below by Rix LJ (para 263), is that the wordings on their face require the course of employment to be contemporaneous with the sustaining of injury. This leaves open what is meant either by sustaining or by injury. Rix LJ thought that the Independent wording could be understood differently in effect, as if it had expressly read: If any person who is under a contract of service or apprenticeship with the Insured shall at any time sustain bodily injury or disease arising out of and in the course of his employment by the Insured during the policy period in connection with the Contract specified or type of work described in the Schedule . That interpretation assumes that sustain in this context equates with the occurrence, rather than causation, of the injury or disease, and only arises for consideration if that assumption is correct. A second point is that the insurance wordings demonstrate a close link between the actual employment undertaken during each insurance period and the premium agreed to be payable for the risks undertaken by insurers in respect of that period. Premium is linked expressly to actual wages, salaries and earnings during the insurance period under the Excess policies, the first MMI wording and the BAI policies. The second and third MMI wordings contemplate that premium may be linked to wages, salaries and earnings, and, to the extent that any inference regarding the general nature and scope of cover under these standard wordings can be drawn from such a link, it must be capable of being drawn whether or not premium was actually so linked in any particular case. As to the Contractors Combined Policy issued by the Independent, it is a probable inference that the estimates which were provided and were to be updated will have included, in respect of the employers liability cover in section 1, wages, salaries and other earnings paid. Finally, the Independent cover is linked to the actual contract or work which the employer is undertaking during the insurance period. These links are in my view significant. True, premium may sometimes be calculated on a rough and ready basis. Minor discrepancies between the premium calculation and the risk may be understandable: see e.g. Ellerbeck Collieries, Ld v Cornhill Insurance Co [1932] 1 KB 401, 418, per Greer LJ (who pointed out that any such discrepancy there was more apparent than real, since workmen not earning wages because off work would not actually be at risk of any fresh accident, even though they would remain susceptible to certification for disablement). Here the position is quite different. Great care is taken in all the policies to tie premium to the actual employment undertaken during the insurance period, and in the case of the Excess, Independent and MMI policies to tie cover to a business, contract or activities described in the schedule. The natural expectation is that premium is measured by reference to actual employment or work during the insurance period because it is the risks attaching to such employment or work which are being undertaken by insurers. At the very least, the drawing of this link makes improbable the contention advanced by some of the insurers that the present insurances were apt to pick up liabilities emerging during the insurance period which could be attributable to employment and activities undertaken and negligent conduct committed at times long past. The number of employees, their employment activities and the risks involved at those times could be very different. The significance which attaches to the employment current during the insurance period is underlined by legal and practitioner texts. As long ago as 1912, MacGillivray on Insurance (1st ed), pp 966 wrote: The nature and scope of the employers business must be clearly defined in the insurance policy, and workmen employed outside the scope of the assureds business as described in the policy will not be covered In the section on Employers Liability Insurance in Stone & Coxs Accident, Fire and Marine Year Book (1957), pp 688 689, the authors stressed the importance of identifying any special hazards, such as signs of careless management or lack of control or careless workmen, and observed: The surveying of Employers Liability risks has probably become more general than formerly. Apart from the question of the possibilities of accident, there is now the serious question of disability due to disease and in particular the disease known as pneumoconiosis. In 1974 MMI produced a Guide to Insurance Officers in Local Government, which it said that it would like to see on the desk of every insurance officer for ready reference at any time; this, after noting that employers liability was almost invariably dealt with by a separate policy and that its importance had been increased by the ELCIA, went on: "7. Premiums are usually based on wages and salaries this is not only a convenient yardstick but is logical since loss of earnings usually represents a substantial part of claims. Rates of premiums vary according to the nature of the work of the labour force, and the claims experience. 8. A feature of employers liability claims is the length of time which often elapses between the date of the accident and the final settlement, and the cost of servicing claims tends to be high. Injury caused at work during the period of insurance even though it may not be diagnosed till years afterwards can be a liability under the policy." I note in parenthesis that 1974 was the year in which MMI changed from a pure sustain form of wording to a form covering bodily injury or disease suffered, when sustained or contracted during the currency of the policy. Yet there is no suggestion in the Guide of any change in substance. It is in this light improbable that the present insurances can or should be read as offering cover in respect of ancient, as opposed to current, employment and activities. But there is a third point. If insurances in the present form only address risks arising from employment during the insurance period, then, on insurers case, there is a potential gap in cover as regards employers breaches of duty towards employees in one period which only lead to injury or disease in another later period. If the employment relationship spans both insurance periods and the employer remains insured with the same insurers in both periods, there may be no problem. The employee is employed at all relevant times and the insurance may be viewed as a single continuing contract. The policy wordings set out in Annex A, with their references to insurance during the period of insurance or during any subsequent renewal period, would support the latter view. But, even in the days of more stable long term employment and insurance relationships, employees could and would move employment or retire, or employers would cease business, or change insurers. On the basis that the insurances only cover risks arising from employment during the insurance period, there would be no cover unless the liability arose from and in the course of and involved injury or disease during the currency of the same employment and the same insurance (including any renewal). Fourthly, on insurers case, employers would as a result be vulnerable to any decision by insurers not to renew; and such a decision might arise from the simple performance by employers of their common law duty to disclose past negligence to insurers upon any renewal. Employers who discovered or came to appreciate that they had been negligent in the course of past activities in respects that had not yet led to any manifest disease (e.g. by exposing their employees to asbestos) would have such a duty. Insurers could then, on their own case, simply refuse any renewal or further cover. Employers could then have to disclose that refusal also to any further insurers to whom they made a proposal for cover. One response made by insurers to such problems is that they would not arise in the large bulk of cases. That is no doubt true. Most employers liability cases involve short tail claims: typically, an accident involving injury. It is not surprising if the language of the insurances fits more easily with situations in which cause and effect coincide in time. But, by the same token, this does not mean that the underlying risk being assumed was in either partys mind limited to circumstances in which a cause gave rise to an effect during one and the same insurance period. Rix LJ, in accepting that cover depended upon injury being sustained in the sense of experienced during the insurance period, was influenced by the thought that this was not an absurd or meaningless interpretation. The insurance could operate entirely successfully in some 99% of cases (para 235). In the light of this Courts recent decision in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900, para 30, this, in my view, gives too little weight to the implications of the rival interpretations and to the principle that where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense. The 1% of cases in which there might be no cover could not be regarded as insignificant. Well before 1948, there was general awareness of the existence of long tail diseases which would only develop and manifest themselves after considerable periods of years (see para 12 above; and see also Cartledge v E Jopling & Sons Ltd [1963] AC 758). The connection between asbestos exposure and mesothelioma became generally known in the mid 1960s, following the publication in 1965 of Newhouse and Thompsons report on Mesothelioma of pleura and peritoneum following exposure to asbestos in the London area and a Sunday Times article. Yet on insurers case, the present insurances would not cover any situation where, after the termination of employment or the expiry of an insurance, injury or disease developed from an employers breach of duty to a relevant employee during an insurance period. A fifth point concerns the way in which the policies deal with the issue of extra territorial scope. The first Excess wording stands apart from the others in its treatment of that issue. Cover only exists in respect of any employee in the employers service who shall sustain any personal injury by accident or disease while engaged in the service of the employer in Great Britain, Northern Ireland, the Isle of Man or Channel Islands, in work forming part of the process in the employers business. As soon as one postulates a delay in time between the causation and experiencing of a disease, it becomes apparent that this wording could operate to very curious effect if sustain looks to the latter rather than the former. A disease (e.g. a cancer) experienced during employment could be covered although caused by pre employment exposure, while a disease caused by employment would not be covered if only experienced while working abroad. The natural inference to draw from the references to being engaged in the employers service and in work forming part of the employers business process is that it was envisaged that the accident or disease would and should arise out of such service and work, rather than merely occur during it. That points to an underlying focus on causation, even if the assumption was that in the majority of cases causation and experiencing of any injury by accident or disease would coincide. As to the other policies, at the very least, the way they deal with territorial issues throws doubt on any proposition that their wordings are so carefully or well chosen that a court should be careful to stick literally to whatever might be perceived as their natural meaning. They address territorial scope by specific exclusions, but the cover and the exclusions use different language. Thus, although the second and third Excess wordings cover liability to employees who sustain personal injury by accident or disease, the territorial exclusion is in respect only of accidents occurring outside Great Britain, etc, leaving it unclear how disease, whether caused or developing outside Great Britain, should be dealt with. The Independent wording also covers liability to employees who sustain bodily injury or disease, while the territorial exclusion is for injury, illness, loss or damage caused elsewhere than in Great Britain, etc. While the contrast in language is capable of lending some support to a view that sustain looks to experiencing, rather than to causation, an alternative possibility is that the two words were understood as having the same effect and that the cover was understood as focused on causation. The language of this exclusion thus cuts both ways, as Rix LJ recognised (para 297). A similar position applies to the contrast between injury or disease sustained and injury or disease caused outside Great Britain, etc. under the first two MMI wordings. Under the third wording, the language of the cover and the exclusion have been deliberately matched. Under the BAI wordings, however, there is an incongruity between cover for injury sustained or disease contracted and the exclusion in respect of liability for accidents . arising outside the United Kingdom. Again, this leaves the position in respect of disease unclear, and the difference between injury sustained and accidents arising can be read either as deliberate or as suggesting that no significance was attached to the difference or that the real concern was with causation. The history and Workmens Compensation Acts Much attention was, both below and before the Supreme Court, paid to the development of employees rights to compensation in respect of personal injury and disease, at common law and under the scheme of the Workmens Compensation Acts (WCAs). The WCAs were in force from 1897 until replaced in 1948 under the National Insurance (Industrial Injuries) Act 1946. The history and a number of the decisions under the WCAs were examined by Rix LJ in paras 126 to 165 of his judgment. He concluded that such an examination yields in the present context not a lot. To a considerable extent, I agree and I shall not repeat the whole exercise, but identify some potentially relevant aspects. Etymologically, some of the language presently in issue can be traced back to statutory language found in the Employers Liability Act 1880 and the WCA 1897. The 1880 Act modified the common law doctrine of common employment, by entitling employees to recover common law compensation for injury caused by specified matters for which employers were responsible, provided that they gave notice, within six weeks of sustaining the injury of its cause and the date at which it was sustained. The 1897 Act, applying to personal injury by accident arising out of and in the course of employment, also required notice to be given of the accident as soon as it occurred, stating the cause of the injury and the date at which it was sustained. These Acts therefore distinguished the causation and the sustaining of an injury, but not in any presently relevant context. Further, any reference to sustaining disappeared from the Workmens Compensation scheme in the 1906 Act, which amended the scheme to require a notice stating the cause of the injury and the date at which the accident happened. The 1906 WCA also expressly extended the scheme to cover certain diseases specified in section 8. In that context, it provided that, where a workman was certified as disabled or suspended from employment or died due to a disease and the disease is due to the nature of any employment in which the workman was employed at any time within the twelve months previous the date of the disablement or suspension, whether under one or more employers, then he or his dependants shall be entitled to compensation under this Act as if the disease or such suspension . were a personal injury by accident arising out of and in the course of that employment . Section 8(a) provided: The disablement or suspension shall be treated as the happening of the accident. Under section 8(c), the compensation was recoverable from the employer last employing the employee within the previous twelve months, providing the employee furnished that employer with particulars of all his other employers in the employment to the nature of which the disease was due. It was not necessary to prove that the disease actually arose from the last employment, merely to prove that the relevant employment gave rise to a risk of such a disease: Blatchford v Staddon and Founds [1927] AC 461. The 1906 Act may be regarded in this respect as involving an early statutory instance of the kind of liability recognised in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22, [2003] 1 AC 32 and Barker v Corus UK Ltd [2006] UKHL 20, [2006] 2 AC 572. However, failing such particulars, the last employer could excuse himself upon proving that the disease was not contracted whilst the workman was in his employment (section 8(c)(i)). The last employer might also join any other employer (within the last twelve months) and it was provided that upon proof that the disease was in fact contracted whilst the workman was in the employment of that other employer, that other employer shall be the employer from whom the compensation is to be recoverable (section 8(c)(ii)). Finally, section 8(c)(iii) provided that: if the disease is of such a nature as to be contracted by a gradual process, any other employer within the last twelve months was liable to make such contributions as might be agreed or determined by arbitration under the Act. Under this scheme, therefore, compensation for disease was initially based upon the nature of the employment and its potential for causing, rather than upon proof that it caused, such a disease. The paternal benevolence of the Legislature (as Visc Sumner put it in Blatchford: p 469) is well known, and if the price of that benevolence is paid by the last employer, who thus has to bear others burdens, that is nothing new in this kind of legislation. However, the last relevant employer could seek, in specified circumstances, to avoid or to pass on to another employer responsibility by proof that the disease was not actually contracted in his employment. Alternatively, in the case of a disease of such a nature as to be contracted by a gradual process, all relevant employers within the last twelve months would be liable to contribute. The scheme was, as I see it, concerned with either the risk of or actual causation, and in its use of the word contracted it appears to me to have been directing attention to the causation, rather than the mere experiencing or manifestation, of disease. The WCA scheme was the subject of further amendment by the 1925 Act. Section 43 superseded section 8 of the 1906 Act as regards scheduled diseases, while section 47 made specific provision for the introduction of a parallel scheme covering silicosis. Effect was given to this by inter alia the Metal Grinding Industries (Silicosis) Scheme which came into force in July 1927, making provision for obtaining compensation from the last employer within the previous three years, and giving such employer rights to look to other such employers within the last five years. An insurance covering employers liability in this connection was considered in Smith & Son v Eagle Star (1933) 47 Ll. L.R. 88, (1934) 48 Ll. L.R. 67. Mr Hill had been employed in processes giving rise to silicosis for some 20 years. For the last two of these years, from 31 March 1928 to 16 June 1930, he worked for Smith & Son. From 30 June 1927 to 17 June 1930, Smith & Son had an insurance against WCA liability in respect of any personal injury or disease which at any time during the continuance of this policy shall be sustained or contracted by any workmen . The policy was expressly extended to cover any liability in connection with any claim made by employees in respect of silicosis, and the decision of the Court of Appeal rested on this ground. But Scrutton LJ also examined the main policy language, and in particular what was meant by contracted. He noted that there has been a good deal of discussion in the Courts about a disease which is gradually contracted commencing at some stage and through the process going on increasing the disease until at last it results in total disablement (p 70), and concluded that the word was not to be read as first contracted, but in the sense of influenced or increased until it ultimately comes to total disablement. This, although not directly focusing on the first development of a disease from some earlier cause, suggests a flexible view of the word contracted, directed once again to the employments responsible for causing the disease. Confirmation that this was Scrutton LJs view can be found in the earlier case of Ellerbeck Collieries Ltd v Cornhill Insurance Co [1932] 1 KB 401. Two workmen who had been in the colliery companys service for many years were on respectively 11 and 12 March 1929 (dates they were actually off work) certified as suffering from miners nystagmus. The Cornhill had on 8 March 1929 issued the colliery company with a three month provisional cover note insuring in terms matching the wording of the insuring clause in the first Excess wording (i.e. against liability in respect of any employee who shall sustain any personal injury by accident or disease while engaged in the service of the employer). Failing a satisfactory survey, the cover note actually expired on 18 March 1929. The first point decided was whether the employees had sustained personal injury by accident or disease during the period of validity of the cover note (8 to 18 March 1929). It was held that they did. The judgments in the Court of Appeal are of interest for a number of reasons. First, both Scrutton LJ (p 408) and Greer LJ (p 417) approached the question of construction on the basis that the policy was intended to protect the employers against their liability to their workmen under the WCAs. Scrutton LJ added that it seems to me that the policy was intended to cover the liability of the employers for the results of industrial diseases caused by the employment (p 409). His description of the policy, covering in terms any employee sustaining personal injury by accident or disease in service, as intended to cover liability . for the results of diseases caused by the employment fits precisely with the analysis which I consider correct (paragraphs 18 28 above). Second, Scrutton LJ went on to refer to the difficulties in saying when an industrial disease, such as miners nystagmus or lead poisoning, begins, and in these circumstances the difficulty for an employee to pick the proper employer to sue. He described the way in which Parliament, by what became section 43 of the WCA 1925, had addressed such difficulties by providing a conventional and artificial means for enabling the workman to get compensation, leaving the various employers to fight out their proportion of the liability between themselves (p 409). He said that the last employer, liable under the WCA scheme, then claims on the insurance company on the ground that he is liable to make compensation for an injury by disease, and the date of the injury or disablement is by statute and certificate fixed as happening between the dates for which he is provisionally covered (p 411). On this basis, and in the light of the House of Lords decision in Blatchford, Scrutton LJ concluded that he was bound to hold that an accident has happened within the period of the provisional cover against the consequences of which the insurance company is bound to indemnify the employer (p 413). In short, the conventional and artificial provisions of the WCA defined what constituted an accident and when personal injury by accident or disease was sustained for the purposes of the insurance. Greer LJ, more shortly, adopted the same approach (p 418). Only Slesser LJ (p 421) expressed a reservation about the possibility that the artificial deeming provisions of section 43(a) of the WCA 1925 might only apply as between employee and employer, and that it might have been necessary to consider separately the date of the sustaining of injury as between the employer and the insurer, had there been any admissible evidence that the two employees had actually contracted the scheduled disease before the granting of the statutory medical certificate. Commercial purpose and practice Much general evidence was directed or elicited before Burton J in relation to the commercial purpose of the present insurances, and to practice relating to their operation in the years before the present issue arose. It was argued that there was, prior to the decision in Bolton, a universal usage of the insurance industry to pay out mesothelioma or similar claims under [employers liability] policies by reference to the date of inhalation/exposure whatever the wording, or an estoppel by convention to like effect. Burton J rejected the argument (paras 180 to 201, esp. para 201), for the reasons that, first, there was no evidence relating to years earlier than the 1980s which could be put down to any kind of arguable usage, second, any usage was not certain, not least because of the multiplicity of approaches to or bases for it and, third, it was not binding. It was not incorporated into the insurance contracts. No issue of estoppel by convention was pursued to the Court of Appeal (Rix LJ, para 24, and Stanley Burnton LJ, paras 332 and 335) and the issue of a universal custom was only pursued by Zurich Insurance Company (Rix LJ, para 24). By a multiplicity of approaches to or bases for insurers practice, Burton J was referring to evidence that insurers followed the practice they did in some cases because they believed that their contracts were to be interpreted on a causation/exposure basis, in others because they believed that the aetiology of diseases such as mesothelioma was such that injury was in fact sustained (in the sense of experienced) at the date of inhalation, while yet others may have failed to realise that their historically relevant wordings had been on a different basis to the causation wordings to which they had since switched or may have failed to address their minds to any relevant issue at all in relation to an insured who was usually a longstanding repeat client. Rix LJ (para 228) contented himself with agreeing with Burton Js reasoning on this aspect, while Stanley Burnton LJ noted and agreed in particular with Burton Js second reason, relating to the believed aetiology of mesothelioma (para 335). Smith LJ, on the other hand, treated the commonly held understanding that diseases such as mesothelioma involved injury at the date of inhalation as part of the factual matrix of all the insurance contracts (paras 322 323), and considered against that background that no difference in meaning should be held to exist between policies using sustained and causation wording, until the time when the two sides of the insurance industry should be considered to have appreciated that some diseases, including mesothelioma, do not occur until many years after exposure to the causative agent (para 327). She put that as around the time of the decision in Bolton, after which parties using a sustained wording must be taken to have meant only to cover injuries actually occurring during the policy period (para 327). The argument of a binding usage was not pursued before the Supreme Court, rightly so for the reasons given by the judge and the majority in the Court of Appeal. Equally, there has been no suggestion of estoppel by convention, along the lines recognised as possible in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 47. However, on the issues of policy interpretation, Mr Stuart Smith QC for Zurich Insurance, maintained before the Supreme Court an argument that there was a consensus based on market practice, whereby, for one reason or another, such policies would respond to long tail diseases by reference to the date of exposure, and that this could constitute relevant background to their construction. Assuming that, short of a binding usage or estoppel by convention, a practice, if known to or shared by the relevant parties, could in some circumstances be relevant background (see e.g. Reardon Smith Line Ltd v Yngvar Hansen Tangen [1976] 1 WLR 989), still, in my opinion the argument fails in the present case. It fails in particular in the light of the judges findings, even in relation to policies made in and after the 1980s. A practice based on a mistaken understanding, by only some insurers, that the policies operated on a causation basis cannot be relevant background to the interpretation of every policy; on the judges findings other insurers do not appear to have understood that the policies operated on that basis. A practice based on a mistaken understanding by others in the market as to when long tail diseases could be said to have been experienced or to involve injury is likewise an unpromising start for construing all policies; if the understanding were good, it would mean that such diseases fell within the policies, even though the policy cover was restricted to injury or disease experienced during the policy period. The understanding would not therefore carry any imperative to read a sustained wording as meaning caused. Before the Supreme Court, both employers and employees continued to rely upon the evidence given at trial regarding the general purpose of employers liability insurance as part of the background to the interpretation of the present insurances. Rix LJ (paras 223 to 235) gave it some weight as such, but Stanley Burnton LJ thought that there was little if any assistance to be gained by reference to the commercial purpose of EL insurance, as this was simply to provide the cover defined in the policy (para 333). The Supreme Court was provided with a useful summary of the considerable volume of evidence relied upon in this connection. It consisted in general of answers given by insurers, two at least of them with experience going back to the 1940s. They were asked (frequently in response to leading though not inadmissible on that score questions in cross examination) about their or others views, understandings or perceptions as to the purpose of the policies, and the way in which these would or should respond, in relation to injuries arising from exposure in the course of activities during the policy period. In my judgment, Stanley Burnton LJ was right to reject such evidence as inadmissible. The parties cannot be asked what they meant by their contract, and, failing any binding usage, it is equally inadmissible to ask other persons operating in the market to give general evidence as to what they would have understood the parties to have meant by the words used in the context in which they were used. The evidence does not seem to have amounted to more than that. However, I do not agree with Stanley Burnton LJs suggestion that no useful conclusions can be drawn about the commercial purpose of the policies, save that it was to provide the defined cover. In my opinion, relevant conclusions about the general nature and purpose of the individual policies can be drawn in this case, just as they could in the case of the different (and wordier) instrument in issue in In re Sigma Finance Corporation [2009] UKSC 2, [2012] 1 All ER 571 (see especially paras 10, 12 and 37). They can be drawn from an overall consideration of the individual insurance wordings, and particularly from the features which tie cover to the employees and activities during the relevant policy period and the five points considered in paragraphs 18 to 28 above. Further, if the policies are on any view apt to cover employers liability for long tail diseases which initiate during, but only manifest themselves years after, the original policy period, one may look with scepticism at an interpretation which distinguishes this situation from other situations where a long tail disease is caused but does not strictly begin during the policy period, and only manifests itself years later. This is particularly so if a conclusion that the latter diseases fell outside the policy cover meant that they would or might well not fall within any subsequent employers liability policy. ELCIA 1969 Section 1 of the ELCIA provides: 1. (1) Except as otherwise provided by this Act, every employer carrying on any business in Great Britain shall insure, and maintain insurance, under one or more approved policies with an authorised insurer or insurers against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business, but except in so far as regulations otherwise provide not including injury or disease suffered or contracted outside Great Britain (3) For the purposes of this Act (a) approved policy means a policy of insurance not subject to any conditions or exceptions prohibited for those purposes by regulations. 4. (1) Provision may be made by regulations for securing that certificates of insurance in such form and containing such particulars as may be prescribed by the regulations, are issued by insurers to employers entering into contracts of insurance in accordance with the requirements of this Act . (2) . the employer shall during the currency of the insurance and such further period (if any) as may be provided by regulations (a) comply with any regulations requiring him to display copies of the certificate of insurance for the information of his employees; . The only conditions or exceptions ever prohibited were certain exemptions from liability. Under section 3, the ELCIA did not however apply to local authority employers, such as most of MMIs insureds. Under section 4, provision might be made for certificates of insurance to be issued to employers, and in that event the employer was, obliged during the currency of the insurance and such further period (if any) as may be provided by regulations to comply with any regulations requiring him to display copies of the certificate of insurance for the information of his employees. In reaching his conclusions on the ELCIA (para 16 above), Rix LJ engaged in an impressive analysis, to which I would refer (paras 166 to 186). The only doubt this leaves is how, if the ELCIA requires a causation wording, an employer could properly insure on a wording which only covered injury sustained in the sense of experienced (see para 186 and paragraph 16 above). The scope of the ELCIA is, as Rix LJ indicated, open to three alternative analyses: that it requires cover in respect of (i) all future liability incurred during the insurance period, whenever the negligence or injury, or (ii) liability for all future injury or disease sustained (in the sense of experienced) by employees during the insurance period, whenever the negligence, or (iii) liability for all negligence or breach of statutory duty during the insurance period giving rise to liability as in (ii). The retrospectivity of cover involved in (i) and (ii) is unlikely to have been intended. The only one of the three possibilities not involving a degree of retrospectivity is (iii). A duty on every employer to insure, and maintain, insurance is consistent with a requirement to have the insurance in place during, though to maintain it after, the relevant insurance period. The provision, contemplated by section 4, for copies of insurance certificates to be issued by insurers and to be displayed by any employer for the information of his employees during the currency of the insurance and such further period as may be provided by regulations indicates, first, a desire to assure employees of their insurance protection during the relevant insurance period, and, secondly, an awareness that this assurance might need to remain in place after such insurance period; it is therefore suggestive of (iii), rather than (i) or (ii). As Rix LJ observed, it is only cover in accordance with (iii) that can give an employee the assurance that any injury or disease suffered as an employee and arising out of and in the course of [his] employment will be covered by insurance, the benefit of which would, if necessary, be available to him at the time under the Third Party (Rights against Insurers) Act 1930. An obligation to have a policy in force only at or by the time when injury is actually experienced would leave employees or ex employees at the mercy of compliance with the statute by their employers or ex employers at uncertain future dates. It would also leave such employees or ex employees at the mercy of employers who, for whatever reason, ceased to carry on business either in Great Britain or (for example due to insolvency) at all. Further, if injury or disease suffered or contracted bears the same meaning as insurers suggest that injury or disease sustained or contracted bears, then an employee, who had the misfortune to succumb to a disease abroad caused by his employment or previous employment in Great Britain, would not be covered (unless regulations intervened to ensure that he was). Stanley Burnton LJ thought that any issue as to the nature of the insurance required under ELCIA was resolved by its use of the word sustained, rather than caused. He went on to conclude that the ELCIA covered any injury sustained (in the sense of experienced) during a period of insurance, by anyone who was then or had at any previous time been an employee. However, that latter conclusion introduces a retrospectivity into the scope of the ELCIA, which, as already indicated, I think unlikely to have been intended. The statute could have used the tariff wording of causation instead of sustained. But in the statutory language the word sustained is not coupled with a phrase such as during the period of the insurance. Even if sustained means experienced in the context of the statute, the statute may require insurance on what is effectively a causation basis; the words sustained by his employees may well mean sustained at any future time by his current employees. The key to the meaning of the statutory language seems to me the combination of the phrases arising out of and in the course of their employment in Great Britain and not including injury or disease suffered or contracted outside Great Britain. Together, and for reasons given in the last two paragraphs, they indicate a statutory requirement to insure in respect of activities during the course of employment in Great Britain which may in the future give rise in or out of Great Britain to liability to the employees involved in such activities. In my judgment, therefore, the conclusion which gives proper effect to the protective purpose of the legislation is that the ELCIA requires insurance on a causation basis. The ELCIA extension provision to the Independent and second BAI wordings (see Annex A), as well as a similar extension provision to the MMI policy intended for insureds who were not local authorities, achieved this result expressly in relation to policies written subsequent to the coming into force of the ELCIA, at least for the purpose of ensuring that employees claims were covered by insurance. Any other subsequent insurances not containing that extension provision should, if possible, be read as providing the relevant employers cover required by statute. This is a powerful tool in the interpretation of such insurances. Bolton M.B.C. v Municipal Mutual Insurance Ltd The Court of Appeal in the present case was bound by its previous decision in Bolton MBC v Municipal Mutual Insurance Ltd [2006] EWCA Civ 50, [2006] 1 WLR 1492 on public liability policies. The majority regarded that case as, in effect, determining the meaning which must be put on the word sustained in the present employers liability policies: see paras 284, per Rix LJ, and 339, per Stanley Burnton LJ, who however also found the logic of Longmore LJs judgment convincing in relation to the latter type of policies. Smith LJ on the other hand considered that public liability and employers liability insurances gave rise to different considerations (para 328). In my opinion, that is right. Employers liability policies are subject to particular terms and considerations, analysed above (particularly in paragraphs 18 28 and, in the case of policies effected after the coming into effect of the ELCIA, paragraphs 41 46). These considerations are not or certainly not necessarily applicable to public liability insurances. The present case was concerned with employers liability not public liability insurances, and it may well be that not all the relevant facts relating to the latter are before us. We certainly have not heard full argument on the proper conclusions which may be drawn regarding the basis of liability or trigger generally applicable under the latter. In these circumstances, I would proceed on the basis that we are not bound by Bolton, that this does not involve any view about the correctness or otherwise of Bolton, but only that it is unnecessary to consider what the position generally may be under public liability policies. Assuming that, in relation to public liability insurance, the position generally is as stated in Bolton, that does not alter the conclusions which I reach. It merely means, in their light, that public liability insurance generally and the present employers liability policies operate on different bases, because of their different backgrounds, terms and purposes. Contracted There is no difficulty about treating the word contracted as looking to the causation or initiation of a disease, rather than to its development or manifestation. In relation to the two BAI wordings and the third MMI wording, this interpretation obtains strong support from the general nature and purpose of the relevant policies, derived from their immediate context and terms and analysed in paragraphs 18 to 28 and 41 above. To the limited extent that the WCA background may assist to inform the meaning of later policies, it can be seen overall as a legislative scheme which was concerned with either the risk of or actual causation (para 32 above). Even if, in the phrase sustained or contracted or injury sustained or disease contracted, the word sustained is to be understood as meaning experienced, that would reflect no more than the fact that the cause and effect of an injury commonly coincide; I would still unhesitatingly conclude, as did the Court of Appeal, that the word contracted used in conjunction with disease looks to the initiating or causative factor of the disease. Sustained The majority of the Court of Appeal considered that it was impossible to view policies with pure sustained wordings as operating by reference to the initiating or causative factor of a disease. They did so primarily by reference to the wording of the insuring clauses. In my view, as indicated in paragraphs 18 19 above, a broader approach is necessary. The general nature and purpose of these policies can be derived from their immediate context and terms, analysed in paragraphs 18 to 28 and 41 above. It is true, as Rix LJ said, that phrases such as injury sustained by an employee or an employee who shall sustain injury, in either case by accident or disease, appear to address the impact of the accident or disease on the employee. But the underlying focus of the insurance cover is on the employees and activities current during the insurance period. The cover would be potentially incomplete, and employers would be potentially exposed to uninsured risks, were sustained to be understood as meaning developed or manifested. This is so, even before the ELCIA came into force. Any policies written subsequent to the coming into force of the ELCIA either afford cover consistent with the Acts requirements by virtue of an ELCIA extension provision, or, to the extent that this is not the case, should be construed, if at all possible, as meeting employers obligations under that Act. In my view, such obligations included taking out insurance in respect of negligence during the insurance period affecting an employee in a manner giving rise to bodily injury or disease then or at any subsequent time. On this basis, I consider that, although the word sustained may initially appear to refer to the development or manifestation of such an injury or disease as it impacts employees, the only approach, consistent with the nature and underlying purpose of these insurances both before and after the ELCIA, is one which looks to the initiation or causation of the accident or disease which injured the employee. The disease may properly be said to have been sustained by an employee in the period when it was caused or initiated, even though it only developed or manifested itself subsequently. Disease sustained, read as meaning experienced or incurred Rix LJ was attracted by the submission that, even if sustaining disease meant experiencing or incurring it during the period of the insurance, long tail diseases could be said to have been sustained during the period of insurance in this sense. He asked rhetorically whether an employee who had inhaled asbestos had not sustained an injury in the form of an assault of the fibres, as a result of which he was worse off through having dangerous fibres in his lungs (para 280). He noted that, although there was at most trivial injury or damage, and nothing that could create actionable damage, nevertheless, when mesothelioma develops, it is the risk of mesothelioma created by the exposure which is the damage (see . Barker ) and it is the exposure, and the risk of mesothelioma, that is the damage (para 281). He only felt bound to reject this analysis (para 284) because of the Court of Appeals previous decision in Bolton. It may be that in the case of some long tail diseases, the victim can be said to have incurred or caught them at the same time as the initial ingestion or scratch giving rise to them. But it is clear that this is not the position with inhalation of asbestos in relation to either asbestosis or mesothelioma. No cause of action arises from exposure or inhalation alone: Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] 1 AC 281. Further, for reasons which I develop in paragraphs 64 65 below, the exposure and risk are not by themselves damage in any sense known to the law. Damage is only incurred when mesothelioma develops. Only when it develops does the victim incur damage which is legally relevant, and even then this is not because any physical link necessarily exists or can be proved between the mesothelioma and the original exposure. The rule in Fairchild and Barker imposes liability for the mesothelioma upon persons who have exposed the victim to asbestos, and so created a risk of mesothelioma. But it is not a rule which, even as between employers and employees, deems the latter to have suffered injury or disease at the time of any exposure. And, even if it were viewed simply as a rule imposing retrospective liability on employers for exposing their employees to the risk of mesothelioma, the insurance policies do not insure risks of physical injury or disease, but only actual injury or disease. The application of the insurances in respect of mesothelioma At the outset of these appeals, the application of the insurances in respect of mesothelioma suffered by employees exposed to asbestos during their employment by an insured employer did not appear controversial. This changed after a question from Lord Phillips on day 4 of the hearing, followed by a later written note. All the same, the transcript pages containing any argument on the point numbered only 40 out of a total of some 1140. So far as Mr Edelman made any submissions on this point, in his written case or orally, they were to this effect: if the correct analysis of the Houses decision in Fairchild be that an employer who exposes an employee to asbestos is deemed to have caused that employees mesothelioma, then employers liability insurances held by the employer on a causation basis should respond; but, if the policies do not respond on a causation basis, there is no justification for treating the employee as having suffered injury or a disease during their currency, because employers cannot prove that any particular inhalation caused any injury. This led to some discussion, particularly with counsel for employers and employees, of the points which I have already addressed in paragraphs 50 52 above. The point now expressed forcefully by Lord Phillips in his judgment is that exposure to the risk of mesothelioma is the correct analysis of the Fairchild principle, at least as subsequently interpreted, and that such exposure can satisfy neither the concept of injury nor the concept of causation for the purposes of the policies. If that is right, then the present insurance claims must all fail. Indeed, the great bulk of insurance claims settled by other insurers (e.g. former tariff insurers) or by the present insurers under the causation policies they have issued in more recent years (paragraph 10 above) should presumably also have failed. The only exception may be the case of an employee exposed to asbestos in only one employment by an employer holding insurance throughout with only one insurer. In such a case it might (perhaps) be said that, whichever particular inhalation(s) may have been responsible for the employees mesothelioma, it (or they) must have been insured. Even then, the logic of the Supreme Courts reasoning in Fairchild and Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, [2011] 2 AC 229 might lead to the conclusion that causation was still unprovable in the light of the possibilities of environmental or idiopathic causation of mesothelioma. Rules regarding causation are created by the courts for the purpose of determining when liability arises in particular contexts. Normally, they reflect a common sense understanding of what is ordinarily understood when we speak of a cause in a particular context. In their leading work on Causation in the law (Clarendon Press, 2nd ed 1985) Professor H. L. A. Hart and Tony Honor examined both this understanding and its relationship to legal decision making. Generally, but not always, a cause must involve an act or omission that was at least a sine qua non of the injury in respect of which responsibility attaches (the but for test). But sometimes two separate acts or omissions may each independently have been sufficient to give rise to that injury (as when A and B simultaneously, but independently shoot C dead), and then we may as a matter of legal policy accept a weaker causal relationship for the imposition of responsibility: see p lxv in the preface to and p 123 of the 2nd edition. Other cases where causal requirements have been relaxed include Bonnington Castings Ltd v Wardlaw [1956] AC 613; there, materially contributing to part of an accumulation of dust which cumulatively led to pneumoconiosis gave rise to liability for the whole disease (although it has been suggested that some apportionment might now be possible in fact and law). Another relevant authority is McGhee v National Coal Board [1973] 1 WLR 1; there, liability for dermatitis was held to exist because the defendant had materially contributed to part of the claimants exposure to dirt, any part of which might, independently of any other, have given rise to the abrasion leading to the claimants dermatitis. It was recognised that this involved liability based on materially contributing to the risk of the injury. Lord Reid at p.4G H described the result as reached taking a broader view of causation, and Lord Wilberforce at p 5G viewed it as involving a conclusion as to the causal connection that had to exist between the default and the disease complained of. The contrary view (viz, that proof of risk was insufficient without proof that the risk caused or materially contributed to the disease) had a logic which Lord Wilberforce acknowledged, but rejected for policy and evidential reasons set out at p.6C F. In Fairchild, McGhee was seen as a precursor of the decision there reached. Putting aside the possibility of an idiopathic or environmental cause, a Fairchild type situation exists when (a) there are two separate potential causes exposing the claimant to the same risk, one involving an act or omission by the defendant, (b) either one of which causes would have been sufficient to give rise to the injury, and (c) one of which did so, but (d) neither of which can as a matter of probability be shown to have done so. Taking into account the later decisions in Barker v Corus and Sienkiewicz, the Fairchild principle extends to any case where there has been an act or omission exposing a person to asbestos, which exposure may have caused the mesothelioma, but which cannot be shown as a matter of probability to have done so. On that basis, the House held in Barker v Corus that each or any persons liability should only be proportionate to the extent that he had exposed another to the risk of mesothelioma. Parliament by the Compensation Act 2006 reversed that conclusion and made each such person liable in respect of the whole of the damage caused by the mesothelioma. Lord Phillips in his judgment addresses the basis of Fairchild in the light of Barker v Corus, the 2006 Act and Sienkiewicz. He accepts that, if Fairchild is now correctly to be understood as a special rule deeming employers who have exposed an employee to asbestos to have caused any subsequently suffered mesothelioma, then the insurance policies should apply (para 109). But he concludes that Fairchild must be understood as creating liability not for the disease, but for the creation of the risk of causing the disease. It follows in his view that employers and employees gain no assistance from the special rule in asserting that mesothelioma suffered by any person was caused or initiated in any particular policy period. On this basis, even though the insurances respond to injuries caused or initiated during their periods, the employers and employees fail for want of proof. It is not fruitful to repeat the exercise undertaken in Barker v Corus of examining in detail the significance of the speeches in Fairchild. The House was not agreed about this in Barker, but the majority speeches of Lords Hoffmann, Scott and Walker were at pains to reject any analysis of Fairchild as proceeding upon a fiction that each exposure had caused or materially contributed to the disease: see paras 31, 61 and 104; they each also referred to the liability created by Fairchild as being not for causing the disease, but for materially increasing the risk of the mesothelioma which was in fact suffered: paras 31, 36 and 40, 53, 61 and 113. Lord Rodger (dissenting) perceived the majority to be misinterpreting Fairchild by failing to acknowledge that it was based on an equation of materially increasing risk with materially contributing to causation, an equation which he thought had been accepted as sufficient causation in Bonnington Castings Ltd v Wardlaw [1956] AC 613 and McGhee v National Coal Board [1973] 1 WLR 1. It is on the apparently bright line distinction said to have been drawn by the majority in Barker between materially contributing to increasing the risk of, and causing, a disease that Lord Phillips now founds his judgment in these appeals. The Compensation Act 2006 applies where a person who has exposed someone to asbestos is liable in tort in connection with damage caused to the latter by mesothelioma whether by reason of having materially increased a risk or for any other reason (section 3(1)(d)). It makes the former person liable in respect of the whole of the damage (section 3(2)(a)). On its face, the Act assumes rather than creates the liability, and only alters the measure of recovery. That was the view expressed in Sienkiewicz by Lords Phillips, Rodger and Brown (paras 70, 131 and 183). However, on further analysis, the distinction identified in paragraphs 58 59 above proves more elusive. Even in Barker itself, Lord Walker described exposing the employee to the risk of mesothelioma as being equated with causing his injury and the result as an explicit variation of the ordinary requirement as to causation (para 104), and spoke of the rule as one by which exposure to the risk of injury is equated with legal responsibility for that injury (para 109). However, it is conceivable that he meant that the ordinary requirement of causation of the disease was entirely replaced by another liability creating rule. It is in the later authority of Sienkiewicz that the difficulty of drawing any clear cut distinction between creating a risk and causation of the disease becomes most apparent. Lord Phillips there stated that the rule in its current form was that the person responsible for the exposure and thus creating a material increase in risk of the victim contracting the disease will be held to be jointly and severally liable for causing the disease (para 1). Later, he said that the law was presently contained in Fairchild and Barker which had developed the common law by equating materially increasing the risk with contributing to the cause in specified and limited circumstances (para 70). That was the analysis of Fairchild advanced by Lord Rodger in Barker v Corus (paras 73 and 83) but rejected there by the majority. Lord Brown in Sienkiewicz spoke of a more relaxed approach to causation (para 178) and flexibility in the approach to causation (para 187). I referred to Fairchild and Barker as involving a special rule of causation (para 188), and Lord Kerr referred to them as involving a modification of the previously applicable legal rules in relation to the causation element in employers liability claims (para 196) and to adjustments in the burden of proof (paras 198 and 200). Lord Rodger was, on the other hand, loyal to the majority view in Barker by referring to liability as based on materially increas[ing] the risk (para 113), and Lord Dyson was cautious in speaking of materially increasing the risk of contracting the disease as sufficient to satisfy the causal requirements for liability (para 207). Lord Phillips has in para 123 set out a passage from an extra judicial commentary written by Lord Hoffmann in Perspectives on Causation (2011), p 8. In it, Lord Hoffmann describes the two ways in which the changes introduced by Fairchild and Barker could be characterised, one as changing the causal requirements for an action for damages for mesothelioma ; all that is necessary is to prove that the risk has been increased and that the specific exposure may have provided the actual agent; the other as creat[ing], exceptionally, a cause of action for the increased risk of mesothelioma, rather than for the disease itself. Lord Hoffmann notes that the House in Barker (Lord Rodger dissenting) adopted the second explanation of what had happened in Fairchild. But in the next sentence, not quoted by Lord Phillips, Lord Hoffmann went on: Parliament almost immediately reversed this decision by a statute giving effect to the first explanation, which had been advocated by Lord Rodger in his dissenting speech. Lord Hoffmanns extra judicial (or judicial) words cannot by themselves alter the true effect of a statute, but his comments do again show that the suggested distinction is more fluid than might at first appear. It is relevant to look more closely at what Barker decides. In Barker, Lord Hoffmann spoke of Fairchild as applying an exceptional and less demanding test for the necessary causal link between the defendants conduct and the damage (para 1) and of the requirement of a sufficient causal link between the defendants conduct and the claimants injury (para 17). In his note in Perspectives on Causation, he picked up this language with references to the causal requirements of the relevant rule and to the issues in cases of mesothelioma and analogous situations as involving the causal requirements for an action for damages for mesothelioma. Lady Hale in Barker also viewed the common law rules governing the measure of recovery as closely linked to the common laws approach to causation, and said that there was no reason in principle why the former rules should not be modified as the latter approach is courageously developed to meet new situations (para 122). In paras 123 and 124, she made clear that in her view the issue in Barker could be seen as arising from the expanded perceptions or developed concept of causation which the law had accepted. These citations all suggest that it is both possible and appropriate to characterise the position achieved by the common law after Barker v Corus as one concerned with the issue of the causal requirements or causal link, as between the defendants conduct and the disease, which the common law requires in order for there to be an action for mesothelioma. But analysis of the rule arrived at after Fairchild and Barker justifies further propositions. Despite the apparent clarity of the suggested distinction between liability for a risk and for a disease, no cause of action at all exists unless and until mesothelioma actually develops. Neither the exposure to asbestos nor the risk that this may one day lead to mesothelioma or some other disease is by itself an injury giving rise to any cause of action: see Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] 1 AC 281; the House there decided that not even the emergence of pleural plaques marking the past exposure to asbestos constituted injury for the purpose of giving a cause of action. In order to fall within the principle in Fairchild and Barker, the development of mesothelioma is a pre condition: see Barker, per Lord Hoffmann (para 48) and Lord Scott (para 53). Lady Hale went further, stressing that she in fact agreed with Lord Rodgers view that the damage which is the gist of these actions is the mesothelioma and its physical and financial consequences. It is not the risk of contracting mesothelioma (para 120). In reality, it is impossible, or at least inaccurate, to speak of the cause of action recognised in Fairchild and Barker as being simply for the risk created by exposing someone to asbestos. If it were simply for that risk, then the risk would be the injury; damages would be recoverable for every exposure, without proof by the claimant of any (other) injury at all. That is emphatically not the law: see Rothwell and the statements in Barker itself, cited above. The cause of action exists because the defendant has previously exposed the victim to asbestos, because that exposure may have led to the mesothelioma, not because it did, and because mesothelioma has been suffered by the victim. As to the exposure, all that can be said (leaving aside the remote possibility that mesothelioma may develop idiopathically) is that some exposure to asbestos by someone, something or some event led to the mesothelioma. In the present state of scientific knowledge and understanding, there is nothing that enables one to know or suggest that the risk to which the defendant exposed the victim actually materialised. What materialised was at most a risk of the same kind to which someone, who may or may not have been the defendant, or something or some event had exposed the victim. The actual development of mesothelioma is an essential element of the cause of action. In ordinary language, the cause of action is for or in respect of the mesothelioma, and in ordinary language a defendant who exposes a victim of mesothelioma to asbestos is, under the rule in Fairchild and Barker, held responsible for and in respect of both that exposure and the mesothelioma. This legal responsibility may be described in various ways. For reasons already indicated, it is over simple to describe it as being for the risk. Another way is to view a defendant responsible under the rule as an insurer, but that too is hardly a natural description of a liability which is firmly based on traditional conceptions of tort liability as rooted in fault. A third way is to view it as responsibility for the mesothelioma, based on a weak or broad view of the causal requirements or causal link appropriate in the particular context to ground liability for the mesothelioma. This third way is entirely natural. It was adopted by Lords Reid and Wilberforce in McGhee, by Lord Hoffmann, Lady Hale and (possibly) Lord Walker in Barker and by Lord Hoffmann in his extra judicial commentary. It seems to have received the perhaps instinctive endorsement of a number of members of this Court, including myself, in Sienkiewicz. Ultimately, there is no magic about concepts such as causation or causal requirements, wherever they appear. They have the meanings assigned to them and understood in ordinary usage in their context. A logician might disagree with a reference to causation or a causal link in a particular context, but that is not the test of meaning: see Lord Wilberforces words in McGhee, p 6C F (cited in para 56 above). The present appeals concern the meanings we assign to the concept of causation, first in the context of considering employers liability to their employees and then in considering the scope of employers insurance cover with respect to such liability. It is instructive in this connection to look more closely at the Compensation Act 2006. Section 3(3) states that section 3(2) does not prevent (a) one responsible person from claiming a contribution from another, or (b) a finding of contributory negligence. Section 3(4) goes on to provide that [I]n determining the extent of contributions of different responsible persons in accordance with subsection (3)(a), a court shall have regard to the relative lengths of the periods of exposure for which each was responsible . Section 3(3) necessarily relates to the legal bases for claiming contribution or asserting contributory negligence, which are to be found in, respectively, the Civil Liability (Contribution) Act 1978 and the Law Reform (Contributory Negligence) Act 1945. The 1978 Act addresses the situation where two or more persons are liable in respect of the same damage (section 1(1)), while section 2(1) provides for contribution in such situations to be such as may be found by the court to be just and equitable having regard to the extent of that persons responsibility for the damage in question. Although under section 3(4) of the 2006 Act, the court must have regard to the relative lengths of the exposure for which each was responsible, the same damage which is a pre condition to the application of the 1978 Act must be the mesothelioma. It cannot be the risk created by the person by or from whom contribution is sought, because each person and exposure creates a separate risk, and no one person or exposure creates the total risk resulting from all exposures. The 2006 Act, by its reference to the 1978 Act, thus assumes that every person, who has exposed to asbestos a victim who later experiences mesothelioma, incurs responsibility for the mesothelioma. That language again fits an analysis whereby the rule in Fairchild and Barker identifies the appropriate weak or broad causal link between the exposure and the mesothelioma. A similar position applies under the 1945 Act. Under section 1(1), that Act applies [w]here any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons. In that event, the damages recoverable are to be reduced to such extent as the court thinks just and equitable having regard to the claimants share in the responsibility for the damage. The application of this section, as contemplated by the 2006 Act, is only possible on the basis that a mesothelioma sufferer may be said to have suffered the mesothelioma partly as the result . of the fault of anyone who has exposed him to asbestos. In other words, the rule in Fairchild and Barker must have been viewed by the drafters in my opinion entirely understandably as establishing a causal link, between the exposure and the mesothelioma, sufficient for it to be said that the mesothelioma was the result of each (and every) exposure. A similar view is also implicit in the provisions of the Act drafted on the basis that insurers who would commonly of course be employers liability insurers would be among the persons by or for whose benefit or against whom contribution would be sought in cases of multiple responsible persons: see section 3(7)(b) and (10)(a) of the 2006 Act. Those provisions necessarily assume that employers liability insurances, written generally on a causation basis, would respond to Fairchild/Barker type liability incurred by employers. Ultimately, the present appeals raise the questions how the present employers liability insurance policies respond as a matter of construction in circumstances within the rule in Fairchild and Barker. Where two contracts are linked, the law will try to read them consistently with each other. This is so with language in a bill of lading, incorporated from a charterparty: The Njegos [1936] P 90. A similar approach applies to language in a reinsurance incorporated from the insurance: Forsikringsaktieselskapet Vesta v Butcher [1989] AC 852 and Groupama Navigation et Transports v Catatumbo CA Seguros [2000] 2 Lloyds Reports 350, even though there is no guarantee that a reinsurance will in every possible circumstance that may develop pick up every liability that may be held to exist under an insurance: see Wasa International Insurance Co Ltd v Lexington Insurance Co [2009] UKHC 40, [2010] 1 AC 180. The intention under the present insurances must be taken to have been that they would respond to whatever liability the insured employers might be held to incur within the scope of the risks insured and within the period in respect of which they were insured. Thus, as Scrutton and Greer LJJ accepted in the Ellerbeck Collieries case (paragraph 34 above), an employers liability insurance could have been expected to respond to the conventional and artificial definition in the WCAs as to what constituted an accident and when personal injury by accident or disease was sustained for the purposes of employers liability to employees. Furthermore, if the common law during or even after the currency of an insurance develops in a manner which increases employers liability, compared with previous perceptions as to what the common law was, that is a risk which the insurers must accept, within the limits of the relevant insurance and insurance period. Eady J correctly identified this in Phillips v Syndicate 992 Gunner [2003] EWHC 1084 (QB), [2004] Lloyds Insurance and Reinsurance Reports 426, 429 (left). The declaratory theory does not presume the existence of an ideal system of the common law, which the judges from time to time reveal in their decisions. But it does mean that, when judges state what the law is, their decisions do . have a retrospective effect in the sense that the law as stated will, generally speaking, be applicable not only to the case coming before [them] but, as part of the common law, to other comparable cases which come before the courts, whenever the events which are the subject of those cases: Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349, 378G H, per Lord Goff. The declaratory theory is a pragmatic tool, essential when cases can only come before the court some time, perhaps some years after the relevant events occurred, and when the law [must] be applied equally to all, and yet be capable of organic change (p 379A). A similar principle must, generally speaking, apply in relation to a statute such as the Compensation Act 2006, which changes or corrects the common law to what Parliament perceives to be a more appropriate result for the purposes of all future cases coming before the courts, whenever the events giving rise to them. In the case of that Act, the result was one which the courts might as a matter of common law well have themselves accepted (and which indeed Lord Rodger in his powerful dissent in Barker v Corus believed that the common law had accepted) in Fairchild. Concluding, as I have done, that the present insurances covered employers liability for injuries or diseases caused during the relevant insurance periods, the question is whether they cover employers liability for mesothelioma arising under the rule in Fairchild and Barker from having exposed employees to asbestos during such periods. It is not in dispute that, if the rule is characterised as a rule of deemed causation, then the policies must respond. A parallel example, so familiar that it is easy to overlook, is the vicarious liability to an employee, A, which rests on any employer, B, who has not himself been negligent but must answer vicariously for the negligence of another employee, C. We have no hesitation in saying that the employer B has in such a case caused the injury or disease suffered by A. But this is so in reality only because a rule of law requires us to equate the acts or omissions of C with those of B. The argument, accepted by Lord Phillips, is that the rule in Fairchild and Barker is not one of deemed causation of or, therefore, liability for the disease, but one of liability for the risk created by the exposure. For reasons which I have set out, I regard this distinction as too simple. The liability arises only because of the incurring of the disease and is for the disease. A condition of such liability is that the employer (negligently) exposed the victim to asbestos. The insurance policies, read as operating on a causation basis, are aimed at covering liability generated by employers activities during their insurance periods: see paragraphs 18 28 and 41 above; unless liability for mesothelioma flowing from negligent exposure during an insurance period is covered by the policies, this aspect of employers activities will not in practice be covered at all. In my view, these considerations justify a conclusion that, for the purposes of the insurances, liability for mesothelioma following upon exposure to asbestos created during an insurance period involves a sufficient weak or broad causal link for the disease to be regarded as caused within the insurance period. It would, I think, have been anomalous and unjust if the law by deeming there to have been causation of the disease could have created policy liability (which is common ground), but the law by insisting that the liability in respect of mesothelioma was for the risk of causation achieved a quite different result. As I have sought to show, it is not in any event accurate to treat the liability as being either solely or strictly for the risk. The risk is no more than an element or condition necessary to establish liability for the mesothelioma. The reality, reinforced by provisions in the 2006 Act, is that the employer is being held responsible for the mesothelioma. For this purpose, the law accepts a weak or broad causal link. The link is to exposure which may but cannot be shown on the ordinary balance of probabilities to have played a role in the actual occurrence of the disease. But for the purposes of the policies the negligent exposure of an employee to asbestos can properly be described as having a sufficient causal link or being sufficiently causally connected with subsequently arising mesothelioma for the policies to respond. The concept of a disease being caused during the policy period must be interpreted sufficiently flexibly to embrace the role assigned to exposure by the rule in Fairchild and Barker. Viewing the point slightly more broadly, if (as I have concluded) the fundamental focus of the policies is on the employment relationship and activities during the insurance period and on liability arising out of and in course of them, then the liability for mesothelioma imposed by the rule in my opinion fulfils precisely the conditions under which these policies should and do respond. Conclusion I would therefore dismiss the appeals by insurers so far as they concern the policies with contracted wordings. I would allow the appeals against insurers, and dismiss the appeal by the Independent, so far as they concern policies with sustained wordings. ANNEX A The policy wordings (dates are approximate) (1) Excess First Wording (late 1940s): Whereas . (hereinafter called The Employer) carrying on the business of . has made a proposal . this Policy witnesseth that in consideration of the payment of . as premium to the Company on the estimated total amount, as set forth in the Schedule hereto, of the wages, salaries, and other earnings of Employees, a description of whom is set forth in the said Schedule (which premium is subject to adjustment as hereinafter provided) the Company agrees to indemnify the Employer in the manner following, namely That if at any time during the period commencing on theday of19 , and ending on theday of19 (both days inclusive) and for such further period or periods as may be mutually agreed upon, any employee in the Employer's immediate service shall sustain any personal injury by accident or disease while engaged in the service of the Employer in Great Britain, Northern Ireland, the Isle of Man or the Channel Islands, in work forming part of or process in the business above mentioned, and in case the Employer shall be liable to damages for such injury, either under or by virtue of the Common Law, the Fatal Accidents Acts 1846 to 1908, or the Law Reform (Miscellaneous Provisions) Act 1934, the Company will indemnify the Employer The Schedule required a description of the insured companys employees and their estimated total wages, salary and other earnings. Condition 1 of the policy further provided that: the Employer shall truly record in a wages book the name of every employee and the amount of wages, salary and other earnings paid to him. Second Wording (late 1950s to 1960s): Whereas the Employer . carrying on the business described in the . Schedule has made . a written proposal and declaration, containing particulars and statements which it is hereby agreed are the basis of this Contract . and has paid the premium mentioned in the Schedule, which premium is subject to adjustment as hereinafter provided, this Policy witnesseth that if at any time during the period of the indemnity as stated in the Schedule or during any subsequent period for which the Company may accept premium for the renewal of this Policy any person of a description mentioned in the Schedule who is under a contract of service or apprenticeship with the Employer shall sustain personal injury by accident or disease arising out of and in the course of employment by the Employer in work forming part of the process in the business mentioned in the Schedule, the Company will indemnify the Employer against liability at law for damages in respect of such injury or disease The policy provided that the Company should not be liable under it in respect of accidents occurring elsewhere than in Great Britain, Northern Ireland, the Isle of Man or the Channel Islands. The policy provided that premiums were to be regulated by the amount of wages, salaries, or other earnings paid to employees by the employer during each period of insurance, with a wages book being kept open to inspection for that purpose and the employer supplying the correct amounts within one month of the expiry of each insurance period. Condition 1 and the Schedule were in similar form to those in the first wording. Third Wording (1970 to 1976) After a recital in the same form as the second wording, this wording provided: that if at any time during the period of the indemnity as stated in the Schedule or during any subsequent period for which the Company may accept premium for the renewal of this Policy any person of a description mentioned in the Schedule who is under a contract of service or apprenticeship with the Employer shall sustain personal injury by accident or disease arising out of and in the course of employment by the Employer in the business mentioned in the Schedule, the Company will indemnify the Employer against liability at law for damages in respect of such injury or disease Under the third wording, there was the same territorial limitation as under the second wording in relation to accidents occurring elsewhere than in Great Britain, etc. Premiums were also regulated by reference to wages, salaries, etc. and condition 1 and the Schedule were in the same terms as in the second wording. (2) Independent Sole wording in Issue (1972 to 1987): This was a Contractors Combined Policy, covering Employers Liability (section 1), Public Liability (section 2) and Loss of or Damage to Contract Works (section 3). It provided: NOW THIS POLICY WITNESSETH that during the Period of Insurance or during any subsequent period for which the Company may accept payment for the continuance of this Policy and subject to the terms, exceptions and conditions contained herein and or endorsed hereon, the Company will indemnify the Insured as hereinafter specified. SECTION 1 EMPLOYERS' LIABILITY If any person who is under a contract of service or apprenticeship with the Insured shall sustain bodily injury or disease arising out of and in the course of his employment by the Insured in connection with the Contract specified or type of work described in the Schedule the Company will indemnify the Insured against all sums for which the Insured shall be liable at law for damages for such injury or disease The Policy provided that the Company was not to be liable for injury, illness, loss or damage caused elsewhere than in Great Britain, the Isle of Man or the Channel Islands. As a result of the ELCIA 1969 making insurance in respect of employers liability compulsory, the Independent wording also contained the further provision (the ELCIA extension provision): "AVOIDANCE OF CERTAIN TERMS AND RIGHT OF RECOVERY The indemnity granted by section 1 of this Policy is deemed to be in accordance with the provisions of any law relating to compulsory insurance of liability to employees in Great Britain. It is agreed the Insured shall repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the provisions of such law. " The policy Schedule contains spaces for entry of first, annual and minimum premium, as well as of the name of the Principal for whom the insured is undertaking work, the details of the contract or type of work covered by the policy and its situation. Condition 7 provides that the premium is based on estimates provided by the Insured, for record keeping, for the supply of updated information as required by the Company within one month of the expiry of each insurance period and for adjustment of the premium on that basis. (3) MMI First Wording (1949 to 1958) the Company hereby agrees that if at any time during the period of insurance specified in the schedule or thereafter during any subsequent period for which the Insured shall agree to pay and the Company shall agree to accept a renewal premium of the amount specified in the said schedule, or of such other amount as the Company shall from time to time require, any person under a contract of service with the Insured shall sustain any personal injury by accident or disease arising out of and in the course of his employment by the Insured in their activities described in the schedule and if the Insured shall be liable to pay damages for such injury or disease then, subject to the terms and conditions contained herein or endorsed hereon, the Company shall indemnify the Insured against all sums for which the Insured shall be so liable The policy was expressed not to apply to or include liability in respect of injury or disease caused elsewhere than in Great Britain, Northern Ireland, the Isle of Man or the Channel Islands. Condition 5 regulated premiums by reference to wages, salaries, etc, and made provision for a wages book and adjustment to like effect to the Excess second wording. The policy Schedule provided for the classification of staff and employees according to departments and job description, with corresponding figures for estimated total remuneration. Second Wording (1958 to 1974) the Company hereby agrees that if at any time during the First Period of Insurance specified in the said Schedule or during any subsequent period for which the Insured shall agree to pay and the Company shall agree to accept a renewal premium of the amount specified as the Renewal Premium in the said Schedule or of such other amount as the Company shall from time to time require, any person under a contract of service with the Insured shall sustain any bodily injury or disease arising out of and in the course of his employment by the Insured in the Insured's activities described in the said Schedule and if the Insured shall be liable to pay damages for such injury or disease or for death resulting from such injury or disease then, subject to the terms, exceptions and conditions contained herein or endorsed hereon or set out in the Schedule to this Policythe Company will indemnity the Insured against all sums for which the Insured shall be so liable. Like the first wording, this wording contained a territorial exclusion of liability in respect of injury or disease caused elsewhere than in Great Britain, etc. The policy Schedule provided for the entry of the Estimates (if any) on which the premium is calculated, including in particular any such estimate of wages, salaries, etc. paid to staff, and cross referred to condition 7, which provided that, if the premium had been based on any estimates, an accurate record should be kept (of actual amounts), the insured should provide insurers with such particulars and information as might be required within one month of the expiry of the policy period and the premium adjusted accordingly. Third Wording (1974 to 1992) The Company agrees to indemnify the Insured in respect of all sums without limit as to amount which the Insured shall be legally liable to pay as compensation for bodily injury or disease (including death resulting from such bodily injury or disease) suffered by any person under a contract of service or apprenticeship with the Insured when such injury or disease arises out of and in the course of employment by the Insured and is sustained or contracted during the currency of this Policy. The policy Schedule contemplated a premium adjustable in accordance with condition 5, which in turn provided (in like manner to condition 7 of the second wording) for the adjustment of any premium so calculated by reference to actual amounts at the end of the policy period. (4) BAI First Wording (1953 to 1974) . the Company willindemnify the Insured against all sums of money which the Insured may become liable to pay to any Employee engaged in the direct service of the insured or any dependent of such Employee in respect of any claim for injury sustained or disease contracted by such Employee betweenandboth inclusive The policy carried the note: This policy does not cover the insureds liability for accidents to workmen arising outside the United Kingdom. Conditions 1 and 2 made elaborate provision for the regulation of premiums by the amount of wages, salaries, or other earnings paid to employees by the employer during each period of insurance, with pay sheets and books of account being kept open to inspection for that purpose and the employer making a return, and the premium being adjusted, subject to a minimum, at the end of each insurance period. Second Wording (1974 to 1983) the Company willindemnify the Insured against all sums of money which the Insured may become legally liable to pay in respect of any claim for injury sustained or disease contracted by any person engaged in and upon the service of the Insured and being in the Insured's direct employment under a Contract of Service or Apprenticeship between theday ofand theday ofboth inclusive This wording also excluded insurers from liability in respect of accidents to employees arising outside the United Kingdom. Like the Independent and third MMI wordings, the BAI second wording also included the ELCIA extension provision. Conditions 1 and 2 provided for the regulation and adjustment of premiums by reference to actual wages, salaries, etc. during each insurance period, in like terms to conditions 1 and 2 in the first wording. (5) Zurich The Municipal First Select wording (1993 to 1998) The INSURER will indemnify the INSURED in respect of all sums which the INSURED may become legally liable to pay as damages and claimants' costs and expenses in respect of Injury sustained during the Period of Insurance by any EMPLOYEE arising out of and in the course of employment by the INSURED in the BUSINESS within the Geographical Limits. The Municipal Second Select wording (1998 ) The INSURER will indemnify the INSURED in respect of all sums which the INSURED may become legally liable to pay as damages and claimants' costs and expenses in respect of Injury caused during the Period of Insurance to any EMPLOYEE arising out of and in the course of employment by the INSURED in the BUSINESS within the Geographical Limits. The tariff wording (1948 ) if any person under a contract of service or apprenticeship with the Insured shall sustain any personal injury by accident or disease caused during the period of insurance and arising out of and in the course of his employment by the Insured in the business above mentioned and if the Insured shall be liable to pay damages for such injury or disease the Association shall indemnify the Insured against all sums for which the Insured shall be so liable. LORD CLARKE Like other members of the Court, I agree with Lord Mance on the construction issue. Thus I agree that, for the purposes of the EL policies, mesothelioma is sustained or contracted when the process that leads to the disease is initiated as a result of the wrongful exposure of the employee to the asbestos fibre or fibres which cause the disease. I do not wish to add to Lord Mances reasoning on the construction issue. I do however wish to add some words of my own on the causation issue which sharply divides Lord Phillips and Lord Mance. I wish to say shortly why I prefer the conclusion of Lord Mance to that of Lord Phillips. As I see it, the effect of Fairchild, Barker and Sienkiewicz may be summarised in this way. An employer who, in breach of duty, has exposed an employee to asbestos is liable in damages if the employee subsequently suffers the disease. The employees cause of action is not that he was exposed to the risk of mesothelioma. He has no claim unless he in fact suffers the disease. It is the disease which represents the damage which completes the cause of action and it is only then that his cause of action accrues and the relevant time limit begins to run. It is axiomatic that, in order to succeed in tort, the employee must show a sufficient causal link between the breach of duty, namely the exposure to asbestos, and the disease which represents the damage, namely mesothelioma. The effect of the majority opinion in Barker is that, where there are two or more employers who have exposed the claimant to the risk of mesothelioma, they are not jointly and severally liable to the claimant for the whole of the consequences of the disease but only severally liable for an aliquot part. That decision was reversed by the Compensation Act 2006, so that such employers are jointly and severally liable for the whole of the consequences. The question in this appeal is whether the employers liability insurers are liable to indemnify the employers in respect of that liability. It would in my opinion be a remarkable result if they were not. Lord Phillips notes at para 109 that Mr Edelman QC accepted that, if the correct analysis of the special rule, which (using Lord Phillips definitions) was the result of the combined effect of the special approach in Fairchild and Barker and the Compensation Act 2006, was that the employers were deemed to have caused mesothelioma by exposing the employees to asbestos dust, the insurers would be liable. Lord Phillips accepts that that concession was correctly made. I agree, for the reasons he gives at paras 109 to 114. The question is therefore whether the correct analysis of the special rule is indeed that the employers were deemed to have caused the mesothelioma. I accept that in such a case the employee cannot show on the balance of probabilities that the employers negligence caused the disease. The effect of Fairchild and Sienkiewicz was however that the employer is liable where the exposure contributed to the risk that the employee would suffer the disease and where the employee in fact suffers the disease. That is not in dispute. Lord Phillips says at para 124 that the majority in Barker drew the vital distinction between being liable for contributing to the cause of the disease and being liable for the creation of the risk of causing the disease. He quotes para 2 of Lord Hoffmanns speech as follows: Is any defendant who is liable under the exception deemed to have caused the disease? On orthodox principles, all defendants who have actually caused the damage are jointly and severally liable. Or is the damage caused by a defendant in a Fairchild case the creation of a risk that the claimant will contract the disease? In that case, each defendant will be liable only for his aliquot contribution to the total risk of the claimant contracting the disease a risk which is known to have materialised. Lord Phillips further notes that at para 125 Lord Hoffmann advanced the thesis that the basis of liability was the wrongful creation of the risk or chance of causing the disease and that the damage that the defendant should be regarded as having caused was the creation of such risk or chance. See also the passages to like effect referred to by Lord Mance at para 61. I accept that Lord Hoffmann and others did indeed advance that view of Fairchild but it is I think important to note that it was in the context of the question whether, in a case of two or more employers, each was severally liable for a proportion of the consequences of the mesothelioma or whether each was jointly and severally liable for the whole. Lord Hoffmann cannot have intended to hold, without more, that the basis of liability was the wrongful creation of the risk or chance of causing the disease because there would be no liability at all but for the subsequent existence of the mesothelioma. It seems to me that, whether the majority in Barker were correct or not, there is no escape from the conclusion that, in all these cases, where it is not possible to show that the particular employer caused the claimant to suffer mesothelioma, the underlying question is who should be held responsible for causing the mesothelioma which in fact struck down the employee. None of the cases is authority for the proposition that causation is irrelevant. On the contrary, the quest is for the employer who can fairly be held liable for the consequences of the disease and therefore for the employer who can fairly be said to have caused the disease. The courts have embarked on similar quests over the years. Lord Mance has given a number of examples. As Lord Mance shows at para 56, they include Bonnington and McGhee, where Lord Reid was prepared to take a broad view of causation and Lord Wilberforce rejected a traditional approach for policy or evidential reasons. In my opinion the reasoning in Sienkiewicz is of some significance in this context. Lord Mance has given the relevant references in para 61. Thus, as Lord Mance observes, at para 61 Lord Phillips said that Fairchild and Barker had developed the common law by equating materially increasing the risk with contributing to the cause in specified and limited circumstances. Lord Mance further refers to Lord Brown speaking of a more relaxed approach to causation and flexibility in the approach to causation at paras 178 and 187. Lord Mance had himself referred to Fairchild and Barker as involving a special rule of causation at para 188, and Lord Kerr referred to them as involving a modification of the previously applicable legal rules in relation to the causation element in employers liability claims at para 196 and to adjustments in the burden of proof at paras 198 and 200. Again, as Lord Mance observes at para 61 above, Lord Dyson referred (at para 207) to materially increasing the risk of contracting the disease as sufficient to satisfy the causal requirements for liability (para 207). Both Mr Beloff QC and Mr Stuart Smith QC addressed these issues in their oral submissions. They both in effect submitted that the effect of Fairchild, Barker and Sienkiewicz was that the employers were deemed to have caused mesothelioma by exposing the employees to asbestos dust. They both recognised that the ordinary rule of causation could not apply and that some element of policy or doctrine was required in order to explain Fairchild. Mr Stuart Smith submitted that the effect of Fairchild was that each material exposure to asbestos dust is doctrinally held responsible for the mesothelioma. Mr Beloffs submission was to much the same effect. He relied upon a dictum of Lord Walker in Barker at para 109: A rule of law by which exposure to risk of injury is equated with legal responsibility for that injury entails the possibility that an employer may be held liable for an injury which was not in fact caused by that exposure (though in the present state of medical science, that fact can be neither proved nor disproved). The injury is of course the mesothelioma, which is necessary to complete the cause of action. On that basis it seems to me that Lord Walkers statement that the risk of injury is equated with legal responsibility for the injury is in effect to say that, by creating the risk of mesothelioma in the future, the employer is deemed to have caused the mesothelioma, if it should develop in the future. It appears to me that these conclusions are supported by Lord Mances analysis of section 3 of the Compensation 2006 at paras 67 and 68, with which I agree and to which I do not wish to add anything. Given Mr Edelmans concession that, if that is correct, the employers are liable under the policies (and this Courts acceptance of it) I would hold that the causation point does not assist the insurers. I would only add this. It appears to me that, once it is held that, on these facts, the employers are liable to the employees, it would be remarkable if the insurers were not liable under the policies. Rather as in AXA, the whole purpose of the policies was to insure the employers against liability to their employees. That purpose would be frustrated if the insurers submissions on this point were accepted. I agree with Lord Mance, for the reasons he gives at paras 69 73 that these policies respond to these claims. For these reasons, I too would dismiss the appeals by insurers so far as they concern the policies with contracted wordings. I would allow the appeals against insurers, and dismiss the appeal by the Independent, so far as they concern policies with sustained wordings. LORD DYSON I too agree with Lord Mance on the construction issue. As to the causation issue, I agree with the reasoning of Lord Mance and Lord Clarke. Accordingly, I would dismiss the appeals by insurers in so far as they concern the policies with contracted wordings. I would allow the appeals against insurers, and dismiss the appeal by the Independent, so far as they concern policies with sustained wordings. LORD PHILLIPS Introduction So called long tail industrial diseases have raised peculiar difficulties in the field of tort. These diseases result from the effect on the body of exposure to noxious substances. The effect can be long, drawn out and mysterious, in as much as medical science has not yet identified the precise mechanism, or chain of causation, by which the noxious substance causes the disease. Mesothelioma is a long tail disease in which the problems raised have been particularly acute. The problems arise in the application of principles of law that do not ordinarily give rise to difficulty. An employer will be liable in damages if by an act or omission that is negligent or in breach of statutory duty he causes physical harm to an employee. In the vast majority of cases there will be no difficulty in identifying the moment at which the negligence or breach of duty causes the physical harm, for the harm will take the form of an obvious injury. This is not the position in respect of mesothelioma. Asbestos dust, inhaled into the lungs, is the agency that causes mesothelioma, but as long as forty or fifty years may elapse before the effects on the body of dust inhaled culminate in symptoms of mesothelioma. Once the symptoms are felt, the disease will develop swiftly to bring about an inevitable and extremely unpleasant death. Where a victim of mesothelioma was exposed to asbestos dust over a period of years it is impossible, even with hindsight, to determine on balance of probabilities whether dust inhaled in a particular year caused or contributed to the development of the mesothelioma. It follows that, where the victim worked for a series of employers, each of whom exposed him to asbestos dust, it is impossible to prove on balance of probability that any particular employer caused or contributed to the victims mesothelioma. This means that the normal principles of the law of tort provide no remedy to the employee or his dependants. The manifest injustice of this position led the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32 and Barker v Corus UK Ltd [2006] UKHL 20; [2006] 2 AC 572 to create what I shall describe as a special approach to causation in respect of mesothelioma, whose effect was immediately varied by Parliament by section 3 of the Compensation Act 2006. I shall describe the composite result achieved by the House of Lords and Parliament as the special rule. I shall examine the nature of this special rule in due course. Its effect was, however, to place each employer in the same position as that employer would have been under at common law if it were proved, on balance of probability, that its negligence or breach of duty in exposing the employee to asbestos dust had contributed to causing the employees mesothelioma. These developments of the law of tort have formed the backdrop to the issue that has occupied almost all of the eight days that this Court has devoted to this appeal. I shall call this issue the construction issue. The construction issue relates to the true construction of a number of policies of insurance against employers liabilities (EL policies) with similar, but not identical, provisions as to the cover provided. The EL policies provided cover by reference to specific periods usually of a year. The central issue relates to the event or events that, on true construction of each policy, had to occur within the period of the policy in order to render the insurer liable to indemnify the employer in respect of liability for causing an employees mesothelioma. The policies provided cover in respect of diseases sustained or contracted during the period of the policy. The meaning of each of those words, in its context, lies at the heart of the construction issue. It does not seem that the construction issue initially received a great deal of consideration. Insurers treated the policies as if they covered an employer whose breach of duty within the period of the policy had contributed to causing the disease and regarded this requirement as satisfied if the employer was held liable because he had exposed the employee to asbestos dust during that period. Where more than one insurer was liable on this basis, they apportioned liability according to the period of exposure covered by each. The attitude of four of the five insurers party to this appeal changed as a result of the decision of the Court of Appeal in Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd [2006] EWCA Civ 50; [2006] 1 WLR 1492. Those insurers are MMI, Excess, BAI and Independent, each of which is in run off. I shall describe them collectively as the insurers. Their opponents I shall describe collectively as the employers, although they embrace solvent employers, individuals claiming under the Third Party (Rights against Insurers) Act 1930, and Zurich, which has a community of interest with these. Bolton concerned the scope of cover of a public liability policy (PL policy) in relation to liability for causing mesothelioma. The policy provided cover in respect of an injury that occurs during the currency of the policy. The argument proceeded on the premise that the chain of causation of mesothelioma, once it was diagnosed, could be traced back to the initial inhalation of asbestos dust. The issue was whether the mesothelioma could properly be said to have occurred at the time of the initial inhalation. The Court of Appeal held that it could not. The injury only occurred, at earliest, at the stage of development of the disease at which malignancy occurred. This was, on the evidence, ten years, give or take a year, from the date on which it became possible to diagnose the existence of the tumour but very many years after the initial inhalation of asbestos dust. This decision led the insurers to take the point that a similar approach should be taken to the interpretation of the cover afforded by the EL policies. Mesothelioma was not, on true construction of the policies, sustained or contracted at the time of the initial inhalation of asbestos dust. It was only sustained or contracted at the much later stage when, as a consequence of the process initiated by asbestos dust, an actionable injury in the form of malignancy, developed. Before Burton J, the Court of Appeal and this Court the construction issue has been argued at great length and in great detail. I agree, as do the other members of the Court, with the conclusions reached by Lord Mance on the construction issue. These conclusions have application not merely to mesothelioma but to employers liabilities in relation to other long tail industrial diseases such as asbestosis and pneumoconiosis. For the purpose of EL policies, these diseases are sustained or contracted when the process that leads to the disease is initiated as a result of the wrongful exposure of the employee to the noxious substance that causes, or contributes to the cause or the extent of, the disease. Throughout the hearing of this appeal there has lurked a second issue. It has not been the subject of argument below, nor does it feature in the agreed Statement of Facts and Issues. This is, perhaps, because it relates to a point that does not arise out of Bolton. It has always been there for the taking, but insurers have not hitherto chosen to raise it, perhaps because its consequences are unattractive. It arises out of a problem that is similar to that which led the House of Lords to formulate the special approach in Fairchild and Barker. It is not possible for an employer to prove that an employees mesothelioma was, in fact, caused in whole or in part by any particular period of exposure to asbestos dust. Thus the employer cannot prove, on balance of probability, that the mesothelioma for which he has been held liable under the special rule was, in fact, initiated in any particular policy year. How, then, can he prove that his liability falls within the scope of the cover, even if the policy bears the construction contended for by the employers and upheld by this Court? How can he prove that his liability arises out of disease sustained or contracted within the policy period, giving these words the same meaning as initiated? I shall call this issue the causation issue. The causation issue and the judgments below Although the causation issue was not raised in argument below, it was dealt with, at least implicitly, in the judgments of both courts. Burton J at first instance, and Rix and Stanley Burnton LJJ in the Court of Appeal proceeded on the basis that, in the case of a mesothelioma victim, exposing the victim to asbestos dust could be treated as equivalent to causing his disease. This approach was based on the special rule. Thus Burton J at paras 42 to 58 summarised, without significant comment, what he described as the special mesothelioma jurisprudence as it was at the time of his judgment. This included Fairchild, Barker and the 2006 Compensation Act. He thereafter proceeded on the basis that exposing a mesothelioma victim to asbestos dust could be treated as having been equivalent to causing the victim to contract the disease. Thus, when summarising his conclusions at para 243 he said: I conclude, in relation to the policies in issue before me, that they respond, just as would policies with caused wording, to claims against insurers where employers are liable on the basis of inhalation by employees during the policy period. They respond, consistently with other EL policies, in respect of mesothelioma claims, on an exposure basis. For the purposes of these policies, injury is sustained when it is caused and disease is contracted when it is caused, and the policies fall to be so construed. Rix LJ drew a distinction between the meaning of contracted and sustained. Contracted referred to the time of the diseases causal origins para 245. He felt constrained by Bolton, however, to hold that no injury was sustained until the disease reached the malignant stage. Implicit in his judgment was the premise that exposure to asbestos dust during the period of the policy could be treated as the causal origin of the disease see for example his comments at para 244. A difficult passage in his judgment at paras 280 283, when considering the meaning of injury, suggests that this premise was founded on the special rule. Thus he was able to conclude that the disease was contracted at the time that the victim was exposed to asbestos dust albeit that injury was not sustained at that point. In a short judgment Stanley Burnton LJ adopted similar reasoning. He stated, at para 338: We are agreed that in any year in which there was substantial exposure to asbestos, mesothelioma was caused by that exposure during that year. The fact that the disease did not develop for some years does not break the chain of causation. Submissions on the causation issue The causation issue was not raised by the insurers as a discrete issue. It none the less surfaced in a passage of the written case for Excess that was addressing the employers case that personal injury by disease was sustained at the moment of inhalation of asbestos dust that triggered the process of sustaining personal injury by disease. One of the arguments advanced by Excess in answer to this submission read as follows: Medically and empirically, one cannot be said to have suffered an injury on a particular day because it cannot be known in (say) a 10 year occupational exposure period on which of the 3652 days the fatal dose was inhaled (and it may be on more than one). It is likely that any ingestion on a particular day was irrelevant to the development of the final condition. There has been a tendency on the part of the claimants to treat inhalation as a single event from which an unbroken line can be drawn to malignancy. It is not. Inhalation (and hence on this theory) injury may occur over several thousands of days. Each day does not bring injury. Any particular day cannot therefore be selected as injury day. To overcome problems of medical causation in a personal injury action against an employer, the House of Lords extended the McGhee principle to mesothelioma in Fairchild. However this was a rule of causation and not definition. There is no such rule in insurance policies which defines what amounts to an injury. The Supreme Court in Sienkiewicz stressed the limits of the Fairchild exception in no uncertain terms, and it is submitted that it would be quite wrong for it now to invade the law of contract. A liability policy responds only to indemnify against a liability (i.e. actionable injury). There is no such liability on inhalation. Injury occurs when the claimant has a personal injury by disease. Thus Excess took the point that the special rule could not properly be invoked to establish that, on true construction of the contracts of insurance, injury was sustained upon inhalation of asbestos dust. This passage appeared after a submission at para 209 that it was only possible to equate the inhalation of a culpable quantity of asbestos dust with sustaining personal injury by disease by, inter alia, creating a special rule governing the response of EL policies in respect of mesothelioma, and possibly other long tail diseases. This proved to be what counsel for the employers sought to do when invited by the Court to address the causation issue. They did so in short oral submissions that cannot, when taken together, have occupied more than half an hour of the eight day hearing. The relevant submissions made by Mr Beloff QC for Akzo and AMEC and the Local Authorities are reported at pp 120 122 of the transcript for 15 December 2011. He started by observing that we had to cut the Gordian knot. He suggested that we should do so by equating creation of a risk with causing bodily injury. This he submitted was permissible because the object of the policy was to provide cover to an employer who, in breach of duty to employees, caused them compensatable damage. Were this approach not adopted, it would be impossible to show that any of a number of insurers providing cover over a period of years was liable. The law should rebel against such a result. In support of this submission Mr Beloff cited a statement by Lord Walker of Gestingthorpe in Barker at para 109 suggesting that the special approach to mesothelioma equated the exposure to the risk of injury with legal liability for the injury. Mr Stuart Smith QC for Zurich dealt with the causation issue at rather greater length in a passage reported at pp 126 to 131 of the same transcript. He started by accepting that it was impossible to know when the metabolic changes that led to the development of mesothelioma in fact occurred. Fairchild dealt with this problem by creating a doctrinal rule under which each significant exposure to asbestos dust was held to be responsible for the mesothelioma. Thus doctrinally the process of developing mesothelioma started upon inhalation. This doctrinal framework for the application of the law of tort was that within which policies of insurance against tortious liability had to operate. Mr Stuart Smith agreed with this summary of his argument advanced by Lord Mance: If the law of tort treats someone, an employee, as having sustained a personal injury and treats the employer as liable to pay damages for such personal injury, then the policy answers. These submissions on behalf of the employers raise the following questions: i) Will the policies respond to fictional or doctrinal events that are deemed to have occurred under the special rule? If so: ii) Does the special rule deem that events have occurred to which the policies should respond? If not: iii) Can this Court properly reformulate the special rule in such a way as to require the policies to respond? Will the policies respond to fictional or doctrinal events? On the premise that he failed on the construction issue, Mr Edelman accepted that, if the correct analysis of the special rule was that the employers were deemed to have caused the mesothelioma by exposing the victims to asbestos dust, then the policies should properly respond. Because of the view that I take of the next two questions I do not need to decide whether the concession was properly made. I have, however, concluded that it was. The policies exist to provide protection against employers liability in tort. If the law of tort, whether laid down by the courts or by Parliament, resorts to legal or doctrinal fictions, it seems logical that the policies should respond as if the fictions were facts. A purposive approach to construction of the policies would lead to this result. Two examples illustrate this approach. Ellerbeck Collieries Ltd v Cornhill Insurance Co Ltd [1932] 1 KB 401 involved a policy of insurance against liability under the Workmens Compensation Act 1925. The terms of the policy entitled the employer to indemnity if at any time during the currency of the insurance any employee sustained any personal injury by accident or disease. The 1925 Act imposed a fictitious test for identifying when an industrial disease was sustained, namely the date on which a certifying surgeon issued a certificate that the employee was suffering from the disease. On the strength of a certificate issued within the currency of a policy of insurance an employer was held liable to two workmen who had, in fact, sustained the relevant disease before the period of the insurance began. The Court of Appeal held that this liability fell within the cover of the policy. The argument for applying the fictional date was a strong one because, as Greer LJ observed at p 417, the policy was intended to cover the employers liability under the Act. The parallel between Ellerbeck and the present case would have been stronger had the relevant policies been taken out after the special rule had been created. In Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281 the House of Lords held that pleural plaques caused by exposure to asbestos dust did not constitute actionable injury because they produced no adverse physical effects. The Scottish Parliament responded to this decision by introducing the Damages (Asbestos related Conditions) (Scotland) Act 2009 (the Scottish Act). That Act provides by section 1 that asbestos related pleural plaques constitute a personal injury which is not negligible and that accordingly they constitute actionable harm for the purpose of an action for damages for personal injury. In AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2011] 3 WLR 871 the Supreme Court rejected a challenge by insurers to the lawfulness of this Act. The Scottish Act effected a limited alteration to the common law in decreeing that asymptomatic pleural plaques constituted non negligible personal injury and thus actionable damage. Lord Mance at para 88 suggested that the main target of the legislation was employers insurers. He went on at para 89 to consider whether the Act would, in fact, alter the meaning to be given to bodily injury under a policy of insurance: A Scottish Act will not on the face of it change the legal effect of an English insurance contract, even in Scotland. However, depending upon the particular policy language, the scope of the concept of bodily injury under a worldwide policy may respond to different conceptions of bodily injury in different parts of the world. Here, the question would be whether it would respond to a development or change, such as that introduced retrospectively by the 2009 Act, in the conception of bodily injury. I say no more about the answer, which may be elicited in another context or suit. While Lord Mance left open the effect of the Scottish Act on the construction of policies of liability insurance, Lord Brown was in no doubt that the effect of the Scottish Act was to subject insurers to liabilities to which they would not have been subject prior to that Act. He referred at para 80 to the undoubted, and deliberate, impact of the legislation upon pending claims. Earlier, at para 77, he drew an analogy with the effect of the decision in Fairchild on EL insurers liability: Had the House of Lords in Rothwell decided that asymptomatic pleural plaques of themselves constitute a non negligible personal injury and thus actionable damage decided in other words that in this particular context the common law should develop in this admittedly novel way the appellants would doubtless have deplored the decision but they could certainly not have questioned its legitimacy. No doubt they would have resented the fact that, as a consequence of the decision, they would unexpectedly have had to pay out on claims resulting from the employees exposure to asbestos upwards of 20 years (quite likely up to 40 years) previously. But they could no more have advanced an [article 1, Protocol 1] challenge to this development of the law than they could have challenged the House of Lords decision some four years earlier in Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 to adopt a less stringent than the usual but for test for establishing the necessary causal connection between an employers negligence and a claimants condition in, most notably, mesothelioma cases. Employers (and their liability insurers) necessarily take the risk of the common law developing in ways which may adversely affect them with regard to personal injury claims. In this passage Lord Brown assumed that the effect of Fairchild was to bring employers liabilities in respect of mesothelioma within the scope of the cover afforded by EL policies. I am about to consider whether he was correct in this. I agree, however, with the general principle expressed in the last sentence of the extract from his judgment that I have just cited. It is for this reason that I would give an affirmative answer to the first of the three questions posed at para 108 above. I turn to the second. What is the special rule? The employers submissions on the causation issue proceed on the premise that the special rule deems exposure to asbestos dust of an employee who is subsequently diagnosed with mesothelioma to have been a cause of the mesothelioma. I have reached the conclusion that that premise is unsound. In Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 AC 229 I summarised the special rule as follows at para 1: When a victim contracts mesothelioma each person who has, in breach of duty, been responsible for exposing the victim to a significant quantity of asbestos dust and thus creating a material increase in risk of the victim contracting the disease will be held to be jointly and severally liable for causing the disease. This is certainly the effect of the special rule, but in order to discover the juridical basis of the rule it is necessary first to identify the basis of the special approach adopted by the House of Lords in Fairchild and Barker and then to consider the effect of section 3 of the Compensation Act, which adapted the special approach into the special rule. The special approach In Sienkiewicz, at para 70, I stated that Fairchild and Barker developed the common law by equating materially increasing the risk with contributing to the cause in specified and limited circumstances, which include ignorance of how causation in fact occurs. As I shall show, this was not an accurate summary of the special approach adopted in those cases. In Fairchild the House of Lords confronted the position where a mesothelioma victim had worked consecutively for a number of employers, each of which had exposed him to asbestos dust. One or more of these had caused his mesothelioma, but because of the limits of medical knowledge it was not possible, on balance of probability, to identify which. In these circumstances their Lordships adopted a special approach that enabled them to find that each of the employers was jointly and severally liable for the mesothelioma. In doing so they purported to be following a similar approach adopted by the House of Lords in McGhee v National Coal Board [1973] 1 WLR 1. They were not, however, all agreed as to the basis of that approach. Lord Hutton, at para 109, held that it was based on the drawing of a factual or legal inference leading to the conclusion that the breach of duty [in exposing the employee to asbestos dust] was a cause of the disease. The majority of the House did not agree. Lord Bingham said, at para 35: I prefer to recognise that the ordinary approach to proof of causation is varied than to resort to the drawing of legal inferences inconsistent with the proven facts. Lord Nicholls of Birkenhead said, at para 42: So long as it was not insignificant, each employer's wrongful exposure of its employee to asbestos dust, and, hence, to the risk of contracting mesothelioma, should be regarded by the law as a sufficient degree of causal connection. This is sufficient to justify requiring the employer to assume responsibility for causing or materially contributing to the onset of the mesothelioma when, in the present state of medical knowledge, no more exact causal connection is ever capable of being established." Lord Hoffmann at para 65 rejected the suggestion that the House in McGhee held that materially increasing the risk of the disease should be treated as equivalent to material contributing to the injury. He concluded: I would respectfully prefer not to resort to legal fictions and to say that the House treated a material increase in risk as sufficient in the circumstances to satisfy the causal requirements for liability. Lord Rodger of Earlsferry did not agree. His reasoning was close to that of Lord Hutton. He held, at para 168: Following the approach in McGhee I accordingly hold that, by proving that the defendants individually materially increased the risk that the men would develop mesothelioma due to inhaling asbestos fibres, the claimants are taken in law to have proved that the defendants materially contributed to their illness. What then happened has been summarised by Lord Hoffmann in Perspectives on Causation (2011) at p 8: There are two ways in which one could characterise this change in the substantive law of negligence. One is to say that the causal requirements for an action for damages for mesothelioma have been changed; all that is necessary is to prove that the risk has been increased and that the specific exposure may have provided the actual agent. The other is to say that the House created, exceptionally, a cause of action for the increased risk of mesothelioma rather than for the disease itself. In the former case, satisfying the new causal requirement would entitle the claimant to sue for the whole injury caused by contracting the disease. In the latter case, he would be able to sue only for the loss caused by the risk of his contracting the disease having been increased. That would be a proportion of the injury caused by the disease, depending on the extent to which the risk had also been created by other causes. In Barker v Corus the House of Lords (Lord Rodger of Earlsferry dissenting) adopted the second explanation of what had happened in Fairchild. I believe that this summary of the position is essentially correct. The majority in Barker were persuaded that justice would best be served if the special approach adopted in Fairchild were applied in such a way as to render each defendant who had wrongfully exposed the claimant to asbestos dust severally liable for that proportion of the mesothelioma that represented the proportion of the wrongful exposure attributable to that defendant. This was achieved by holding that the liability of each defendant resulted from adding to the risk that the employee would contract mesothelioma. It did not result from an implication that each defendant had actually contributed to the cause of the disease. At the start of his speech at para 2 Lord Hoffmann drew the vital distinction between being liable for contributing to the cause of the disease and being liable for the creation of the risk of causing the disease: Is any defendant who is liable under the exception deemed to have caused the disease? On orthodox principles, all defendants who have actually caused the damage are jointly and severally liable. Or is the damage caused by a defendant in a Fairchild case the creation of a risk that the claimant will contract the disease? In that case, each defendant will be liable only for his aliquot contribution to the total risk of the claimant contracting the disease a risk which is known to have materialised. Lord Hoffmann went on to adopt the latter analysis as the basis of liability in Fairchild. At para 31 he held that the majority in Fairchild had not proceeded upon the fiction that a defendant who had created a material risk of mesothelioma was deemed to have caused or materially contributed to the contraction of the disease. The creation of a material risk of mesothelioma was sufficient for liability. At para 35 he advanced the thesis that the basis of liability was the wrongful creation of the risk or chance of causing the disease and that the damage that the defendant should be regarded as having caused was the creation of such risk or chance. Liability for the mesothelioma that developed should be apportioned according to the contribution that each defendant made to the risk that mesothelioma would be contracted. Lord Scott of Foscote and Lord Walker of Gestingthorpe expressly agreed with both Lord Hoffmanns conclusion that liability for the mesothelioma fell to be apportioned and with his reasons for so concluding. Lord Scott held at para 53 that it was essential to keep firmly in mind that liability in Fairchild was not imposed on any of the defendant employers on the ground that the employers breach of contract had caused the mesothelioma. That causative link had not been proved against any of them. It was imposed because each, by its breach of duty, had materially contributed to the risk that the employee would contract mesothelioma. At para 61 he emphasised that the Fairchild principle was not based on the fiction that each defendant had actually caused the eventual outcome. It was based on subjecting the victim to a material risk. Lord Walker, having stated that he was in full agreement with Lord Hoffmanns reasons went on at para 104 to make a statement that was inconsistent with them, this being to the same effect as the statement relied on by Mr Beloff see para 106 above. Lord Walker stated that the decision in Fairchild equated exposing the victim to the risk of injury with causing his injury. This was the same mistake as I made in Sienkiewicz see para 117 above. Had this been the case, each defendant would have been jointly and severally liable for the injury. Lord Walker went on to say, however, that the result in Fairchild was achieved, not by some fiction, but as an explicit variation of the ordinary requirement as to causation. At para 113 he stated that Fairchild was decided by the majority, not on the fictional basis that the defendants should be treated as having caused the victims damage, but on the factual basis that they had wrongfully exposed him to the risk of damage. Lady Hale did not adopt Lord Hoffmanns thesis that the creation of risk constituted the damage for which each defendant was liable. In general, however, she agreed with the majority. She held that in Fairchild, for the first time in our legal history defendants were made liable for damage even though they might not have caused it at all. It was not said that the defendants had caused or materially contributed to the harm. All that could be said was that each had contributed to the risk of harm. In these circumstances it was sensible and fair to apportion liability for the harm in proportion to the contribution that each had made to the risk of harm. Lord Rodger of Earlsferry vigorously dissented from the reasoning of the majority and from the result in so far as it apportioned liability. He observed at para 71 that the majority were not so much reinterpreting as rewriting the key decisions in McGhee and Fairchild. At para 85 he stated that the new analysis that the House was adopting would tend to maximise the inconsistencies in the law. I have some sympathy with the observations of Lord Rodger. It would, I think, have been possible for the House in Barker to have defined the special approach in Fairchild as one that treated contribution to risk as contribution to the causation of damage. The important fact is, however, that the majority did not do so. They were at pains to emphasise that the special approach was not based on the fiction that the defendants had contributed to causing the mesothelioma. Liability for a proportion of the mesothelioma resulted from contribution to the risk that mesothelioma would be caused and reflected the possibility that a defendant might have caused or contributed to the cause of the disease. This was no obiter expression of opinion. It formed the basis of the substantive decision that liability was severable and not joint. The special rule The special approach rendered each employer who had wrongfully exposed a mesothelioma victim to asbestos dust liable for a proportion of the mesothelioma without creating any inference or legal fiction that the employer in question had actually contributed to causing the disease. Section 3 of the Compensation Act altered the position by imposing joint and several liability on those who were only severally liable under the special approach. Did the special rule that resulted involve a different basis of liability to that which formed the basis of the special approach? This question is considered by Jonathan Morgan in his interesting Chapter 4 of Perspectives on Causation headed Causation, Politics and Law: The English and Scottish Asbestos Saga. At p 79 he poses the following question: Has Parliament, by implication, therefore also reversed Lord Hoffmanns principled reinterpretation of Fairchild? Is the nature of Fairchild liability now after all for causing mesothelioma and not increasing risk? Mr Morgan gives a negative answer to this question, expressing the view that Barker has altered the jurisprudential basis of the Fairchild liability irrevocably. I agree that section 3 of the Compensation Act did not alter the jurisprudential basis of the special approach laid down by the House of Lords in Fairchild and Barker. All that it did was to alter the effect of the special approach by making each defendant jointly and severally liable for the whole of the injury sustained. Section 3(1) provides that the section applies where (c) because of the nature of mesothelioma and the state of medical science, it is not possible to determine with certainty whether it was the exposure [for which the defendant was responsible]or another exposure which caused the victim to become ill, and (d) the responsible person is liable in tort(whether by reason of having materially increased a risk or for any other reason). It is not possible to read section 3 as imposing a different basis of liability to that identified by the majority in Barker. The consequence of the special rule Having regard to its jurisprudential basis I cannot see how the employers can found upon the special rule as identifying the policy year or years in which a victims mesothelioma is initiated. The position is that it is impossible to prove on balance of probability when mesothelioma is initiated, or contracted, or sustained, giving each of those words the same meaning. The special rule does not fill the gap for it raises no implication or fictional assumption as to when mesothelioma is initiated. The consequence is that if claimants have to show that mesothelioma was initiated in a particular policy year in order to establish that insurers are liable they are unable to do so. Should this Court redefine the special rule in order to engage the EL policies? The special approach of the majority in Barker had the object of ensuring that employers who had wrongfully subjected their employees to asbestos dust should bear what the majority considered to be a fair share of responsibility for their wrongdoing. It does not seem likely that the majority gave consideration to the implications for the responsibility of EL insurers of the manner in which this object was achieved. Should this Court now redefine the special rule with the object of enabling claims to be brought under the EL policies? This would, I think, involve holding that the majority in Barker erred in their analysis and that the true basis of the special approach in Fairchild was that contribution to risk should be deemed to be contribution to causation. I would give a firm No to this question. The adoption of the special approach in Fairchild has provoked considerable criticism, both judicial and academic. An example of the former is to be found in the judgment of Lord Brown in Sienkiewicz. An example of the latter is Mr Morgans closely reasoned Chapter 4 of Perspectives on Causation. But the object of the special approach in Fairchild and Barker was at least to ensure that those who had breached the duties that they owed to their employees did not escape liability because of scientific uncertainty. It would be judicial law making of a different dimension to create a legal fiction as to the policy years in which cases of mesothelioma were initiated in order to render liable insurers who could not otherwise be shown to be liable. The Secretary of State has intervened in this appeal and has submitted that, should the claims of employees or their dependants not be met by insurers, they are likely to be a burden on the public purse. It is open to question whether this is a proper consideration, even when considering whether the special rule should be redefined for what are essentially reasons of policy. In any event it seems to me that the position is somewhat more complex than the Secretary of State suggests. The burden of claims in respect of mesothelioma on a scale that was never anticipated is reducing both employers and insurers to insolvency. If this Court were to redefine the special rule so as to impose liability for mesothelioma claims on EL insurers where it could not otherwise be made out, this would in many cases be at the expense of others with claims on the same insurers founded on facts and not legal fictions. The liabilities in respect of mesothelioma will increase the overall shortfall on the part of insurers and this is also likely to have implications for the public purse. So far as I am concerned, however, these considerations have little relevance. Even if there were a compelling case for contending that a means should be found to render EL insurers liable, my reaction would be that this was a matter for Parliament not the courts. It would be wrong in principle for this Court to depart from the reasoning of the majority in Barker for the sole purpose of imposing liability on EL insurers. |
There are three cases before the Court, two on appeal from the Court of Appeal of England and Wales and one from the Inner House of the Court of Session in Scotland. This judgment deals with the two English cases, while a separate judgment will deal with the Scottish case. The issue common to all three is the scope for judicial review by the High Court or Court of Session of unappealable decisions of the Upper Tribunal established under the Tribunals, Courts and Enforcement Act 2007 (the 2007 Act). It is no longer argued on behalf of the Government that such decisions are not amenable to judicial review at all. But it is argued that they are only reviewable in exceptional circumstances. The claimants argue that no such limit exists. The debate, therefore, has focussed upon the effect of the creation of a wholly new and integrated tribunal structure under the 2007 Act. The cases It has been helpful to hear three different cases together, all raising essentially the same question in different contexts. In all of them the claimant failed in an appeal to the First tier Tribunal set up under the 2007 Act and was refused permission to appeal to the Upper Tribunal against that decision both by the First tier Tribunal and by the Upper Tribunal. In all three the claimant seeks a judicial review of the refusal of permission to appeal by the Upper Tribunal. In R (Cart) v The Upper Tribunal, Mr Cart appealed to the Social Security and Child Support Tribunal (whose jurisdiction has since been taken over by the First tier Tribunal) against the refusal of the Child Support Agency (whose functions have since been taken over by the Child Maintenance and Enforcement Commission) to revise a variation in the level of child maintenance to be paid to his ex wife for the support of their children. His appeal was dismissed in October 2007. He applied for permission to appeal to the Child Support Commissioners. In June 2008, Commissioner Jacobs gave him permission to appeal on three grounds but refused him permission to appeal on a fourth. The functions of the Child Support Commissioners were then taken over by the Administrative Appeals Chamber of the Upper Tribunal. Following a hearing in January 2009 the Upper Tribunal, consisting of the Senior President, Carnwath LJ, and Tribunal Judge Jacobs (as the Commissioner had now become) dismissed his appeal on the three grounds for which permission had been given and declined permission to reopen the fourth: [2009] UKUT 62 (AAC). Mr Cart sought judicial review of the Upper Tribunals refusal of permission to appeal on the fourth point. It was agreed that the amenability of the Upper Tribunal to judicial review should be determined as a preliminary issue. In December 2009, the Divisional Court dismissed his claim for judicial review, holding that this was only available in exceptional circumstances: [2009] EWHC 3052 (Admin), [2010] 2 WLR 1012. In July 2010, the Court of Appeal dismissed his appeal, reaching the same result but by a different route: [2010] EWCA Civ 859; [2011] 2 WLR 36. It will be necessary to return to their reasoning in due course. Mr Cart now appeals to this Court. R (MR (Pakistan)) v The Upper Tribunal concerns a native of Pakistan who has been in the United Kingdom since June 2007. At that stage he had a multi visit visa valid until June 2009. In March 2010 he applied for asylum on the basis of his conversion to Christianity. This was refused in April 2010. His appeal to the Immigration and Asylum Chamber of the First tier Tribunal was dismissed less than two weeks later. His application to the First tier Tribunal for permission to appeal to the Upper Tribunal was refused in May and his application to the Upper Tribunal was refused only days later by Ouseley J, sitting as a judge of the Upper Tribunal. MR sought judicial review of Ouseley Js decision. Permission to apply was granted by Judge Nicholas Cooke QC, sitting as a High Court Judge. But at the hearing of the claim in December 2010, Sullivan LJ determined a preliminary issue concerning the amenability of the Upper Tribunal to judicial review in accordance with the decision of the Court of Appeal in Cart and dismissed the claim: [2010] EWHC 3558 (Admin). He granted a certificate under section 12 of the Administration of Justice Act 1969, so that the appeal against his decision could leap frog over the Court of Appeal and be heard by this Court together with the appeals in Cart and Eba. In Eba v Advocate General for Scotland, Ms Eba appealed to the Social Entitlement Chamber of the First tier Tribunal against the refusal of her claim for disability living allowance. Her appeal was also refused, as were her applications both to the First tier Tribunal and to the Upper Tribunal for permission to appeal to the Upper Tribunal against that refusal. Ms Ebas petition for judicial review of each of those decisions was dismissed by the Lord Ordinary, who followed the reasoning of the Divisional Court in Cart: [2010] CSOH 45, 2010 SLT 547. She reclaimed that refusal, on the ground that judicial review was not so limited. The Advocate General cross appealed on the ground that the Upper Tribunal was not amenable to judicial review at all. The First Division refused the cross appeal but allowed Ms Ebas reclaiming motion on the basis that the supervisory jurisdiction of the Court of Session was not so limited and that, notwithstanding the decision of the Court of Appeal in Cart, it did not follow that the result should be the same in Scotland: [2010] CSIH 78; 2010 SLT 1047. The First Division granted the Advocate General permission to appeal to this Court. Conveniently, however, we heard first the arguments of all three claimants, Mr Richard Drabble QC for Mr Cart, Mr Jonathan Mitchell QC for Ms Eba, and Mr Manjit Gill QC for MR, followed by oral arguments for two of the interveners, Mr Michael Fordham QC for the Public Law Project, and Mr James Mure QC for the Lord Advocate, followed by Mr James Eadie QC for the Secretaries of State for Justice and for the Home Department and the Child Maintenance and Enforcement Commission and Mr David Johnston QC for the Advocate General for Scotland. Mr Alex Bailin QC and others also made helpful written submissions on behalf of the intervener JUSTICE. It has been particularly useful to be able to look at the issues in the context of the two jurisdictions, social security (including for this purpose child support) and immigration and asylum, which together make up the great bulk of the business of the new tribunal system, and in the context of the supervisory jurisdiction of the higher courts in both Scotland and England and Wales. The judgment in Eba will deal with the supervisory jurisdiction of the Court of Session in Scotland while this judgment will deal with the supervisory jurisdiction of the High Court in England and Wales. The tribunal systems with which we are concerned, both before and after their restructuring in the 2007 Act, however, are common to both parts of the United Kingdom, and in many contexts also to Northern Ireland. The tribunal system One of the most important and controversial features of the development of the legal system in the 20th century was the creation and proliferation of statutory tribunals separate from the ordinary courts. Mostly they were set up to determine claims between an individual and the state to war pensions, to social security benefits, to immigration and asylum, to provision for special educational needs, to be released from detention in a psychiatric hospital, against the refusal or withdrawal of licences or approvals to conduct certain kinds of business, for the determination of liability to direct and indirect taxation, for compensation for compulsory purchase and so on. In some instances, they were set up to adjudicate upon statutory schemes, generally those which modified what would otherwise be an ordinary contractual relationship between private persons between employer and employee or between landlord and tenant of residential property. These jurisdictions were and remain very diverse. The subject matter can range from liability to VAT or entitlement to performing rights or the price of leasehold enfranchisement, which can be worth millions of pounds, to the amount of weekly means tested benefits or war pensions entitlement, which may be worth only a few pounds at a time but may mean a great deal to the claimants involved and to others like them. The judiciary, also, could and still can be very diverse, ranging from seconded High Court judges or senior Queens Counsel to fee paid part timers from a great variety of legal professional backgrounds. In many cases, tribunals also had and still may have members who were not legally qualified but had other professional qualifications or experience which was particularly suited to the subject matter of the claim. Some had single tier structures, some with and some without a right of appeal to the High Court or Court of Appeal. Some had two tier structures with their own appellate tier, again with or without a right of appeal to the High Court or Court of Appeal. But in general these tribunal systems shared some common characteristics. They were set up by statute to administer complex and rapidly changing areas of the law. Their judges were expected to know this law without having to have lawyers for the parties to explain it to them. Their members were expected to have relevant expertise or experience in the subject matter of the dispute, not only so that they would be able to adjudicate upon factual issues without the help of lawyers for the parties, but also so that the parties could feel confident that the overall balance of the panel (for example between employers and employees) would produce impartial results. Their procedures were also tailored to the subject matter of the dispute and they were not bound by the technical rules of evidence. While legal representation was common in those tribunals where large sums of money were at stake, and latterly in mental health review tribunals where personal liberty was at stake, the original expectation in most tribunals was that people would not need representation, or could be helped by specialist non lawyer representatives. In theory, therefore, the respective roles of the tribunal and the parties were rather different from their roles in the ordinary courts. The tribunal was more than a neutral referee before whom each party was expected to lay out all the material necessary to decide the case for the judge to choose which he preferred (compare Bingham, The Rule of Law, 2010, p 89). In general, this diverse specialism was regarded as a strength rather than a weakness, although the concomitant lack of legal aid in almost all tribunals was regretted by those who saw the benefits which skilled representation could bring. However, another feature of these tribunal systems was more controversial. They were mostly resourced and administered by whichever Department of State was responsible for the statutory scheme in question, rather than by the Department which was responsible for the administration of justice in the ordinary courts. This led to fears that they were not, or at least were not seen to be, sufficiently independent of those sponsoring Departments. The Department may have seen the independence and expertise of the tribunals as an integral part of the proper administration of a statutory scheme which was designed to bring certain benefits to the people. But others may have feared that they were simply accomplices with the Department in denying to claimants the benefits which were properly theirs. In between these two extremes, there might well be a perceived risk that the tribunals would be more inclined to accept the Departmental view of what the law was, rather than an alternative view which was more favourable to the claimant or taxpayer or whomever. The system was greatly improved by the Tribunals and Inquiries Act 1958, following the Report of the Franks Committee on Administrative Tribunals and Inquiries in 1957 (Cmnd 218), with its insistence on openness and accountability to the higher courts. In particular, provision was made in section 9 for appeals to the High Court which could be applied to any specified tribunal; and all (save two) previous exclusions of judicial review were abrogated by section 11. The Franks Committee was firm that the prerogative orders were clearly necessary in cases where questions of jurisdiction are involved and in cases where no provision is made for appeals on points of law. Accordingly no statute should contain words purporting to oust those remedies (para 117). A later improvement was to strengthen the leadership of particular tribunal systems by introducing a presidential structure, headed by a High Court or Circuit Judge. The final solution, following the Report of Sir Andrew Leggatt, Tribunals for Users One System, One Service (TSO, March 2001), was to transfer the administration of tribunals to the Ministry of Justice and to set up a new, integrated tribunal structure to take over the jurisdiction of most, but not all, of the existing systems under the 2007 Act. But before turning to the effect of that Act, it is necessary to see how judicial review was employed under the old system. Judicial review in its modern form, of course, is the product of two developments. One was the integration and simplification of the procedures for obtaining the former prerogative writs of certiorari, prohibition and mandamus or declaratory relief, in the revised Order 53 of the Rules of the Supreme Court, introduced in 1978 following the recommendations of the Law Commissions Report on Remedies in Administrative Law (1976, Law Com No 73). The other was the vigorous development of the substantive law, most notably of course in Anisminic v Foreign Compensation Commission [1969] 2 AC 147. Mr Fordham, for the Public Law Project, rightly reminds us that the remedy of certiorari had long been available to quash the decision of an inferior court or tribunal for error of law on the face of the record: see R v Northumberland Compensation Appeal Tribunal, Ex p Shaw [1952] 1 KB 338. There the tribunal had wrongly interpreted the service to be taken into account in assessing the applicants compensation for loss of office. There was no right of appeal against its decisions. The Attorney General had argued that certiorari would only lie to prevent a tribunal exceeding its jurisdiction. Both the Divisional Court and the Court of Appeal emphatically disagreed. This was not to assume an appellate function which had not been given to it; the court had an inherent jurisdiction to control all inferior tribunals, not in an appellate capacity, but in a supervisory capacity. This control extends not only to seeing that the inferior tribunals keep within their jurisdiction, but also to seeing that they observe the law. The control is exercised by means of a power to quash any determination by the tribunal which, on the face of it, offends against the law. The Kings Bench does not substitute its own views for those of the tribunal, as a Court of Appeal would do. It leaves it to the tribunal to hear the case again . : see Denning LJ, at pp 346 7. Singleton LJ lamented the lack of a right of appeal on a point of law, which he thought would save a great deal of time and trouble in deciding whether certiorari would lie: see pp 345 6. No doubt such views were influential when the Franks Committee came to recommend such a right. Then came Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, where not only was there no right of appeal from the Commissions decisions but there was also an express provision in the Foreign Compensation Act 1950 that those decisions shall not be called in question in any court of law (s 4(4)). This provision was one of the two expressly excepted from the general abrogation of such clauses in section 11 of the 1958 Act. In holding that, nevertheless, it was not effective to oust the jurisdiction of the High Court to set aside a decision which was a nullity, and that a decision made in error of law was a nullity, the House of Lords effectively removed the distinction between error of law and excess of jurisdiction. Where there was a right of appeal, of course, an aggrieved party would be expected to use that rather than judicial review. Judicial review was always a remedy of last resort. However, where there was no such right, there are numerous examples, at the highest level, of resort to judicial review to correct an error of law made by an inferior tribunal. Two will suffice. In Re Woodling, Woodling v Secretary of State for Social Services [1984] 1 WLR 348, the question of law was whether cooking meals was attention in connection with bodily functions for the purpose of attendance allowance. It reached the House of Lords by way of judicial review of the refusal of the Social Security Commissioner to grant leave to appeal from the decision of the Attendance Allowance Board. Significantly for the cases before this Court, the Board and the Commissioner were bound by an earlier decision of the Court of Appeal (R v National Insurance Commissioner, Ex p Secretary of State for Social Services [1981] 1 WLR 1017) excluding cooking; and when it was suggested to the Commissioner that this decision was wrong he indicated that he could add nothing to his earlier refusal of leave. (The challenge failed in the House of Lords, their lordships taking the view that attention in connection with bodily functions referred to things which the fit man normally does for himself, it not occurring to them that this might include cooking his own meals.) That was a social security case. R v Immigration Appeal Tribunal, Ex p Bakhtaur Singh [1986] 1 WLR 910 was an immigration case. The claimants appeal against the decision of the Secretary of State to deport him failed before the adjudicator and the Immigration Appeal Tribunal refused leave to appeal to that Tribunal. The case reached the House of Lords by way of judicial review of that refusal. The issue was whether the public interest in paragraph 154 of the Immigration Rules could include the interests of the Sikh community as well as the public interest in maintaining effective immigration control. Once again, the adjudicator had considered himself bound by dicta in an earlier High Court case (R v Immigration Appeal Tribunal, ex p Darsham Singh Sohal [1981] Imm AR 20). Thus the principle was firmly established that the unappealable decisions of inferior tribunals, including the refusal of leave to appeal, were amenable to judicial review on all the usual grounds. Indeed, in some cases, judicial review was considered a more appropriate remedy, even though statute provided another way of correcting errors of law: in Bone v Mental Health Review Tribunal [1985] 3 All ER 330, for example, Nolan J thought judicial review preferable to the power of a mental health review tribunal to state a case for the opinion of the High Court and the case stated procedure fell into disuse. However, the availability of judicial review was seen as a particular problem in the context of immigration and asylum appeals. In the Nationality, Immigration and Asylum Act 2002, s 101(2), Parliament introduced a form of statutory review of the refusal by the Immigration Appeal Tribunal of permission to appeal to that Tribunal. This was conducted by a single High Court judge without either an oral hearing or any appeal from his decision. It was therefore much swifter than the standard judicial review process, which involves the possibility of both written and oral submissions before both a High Court judge and a Lord Justice of Appeal. In R (G) v Immigration Appeal Tribunal [2005] 1 WLR 1445, the Court of Appeal held that, although the introduction of this new statutory procedure did not remove the judicial review jurisdiction, the new procedure was an adequate and proportionate protection for the claimants rights and it was therefore a proper exercise of the courts discretion to decline to entertain an application for judicial review of issues which were or could have been the subject of statutory review. Lord Phillips MR observed, at para 20: The consideration of proportionality involves more than comparing the remedy with what is at stake in the litigation. When Parliament enacts a remedy with the clear intention that this should be pursued in place of judicial review, it is appropriate to have regard to the considerations giving rise to that intention. The satisfactory operation of the separation of powers requires that Parliament should leave the judges free to perform their role of maintaining the rule of law but also that, in performing that role, the judges should, so far as consistent with the rule of law, have regard to legislative policy. The same approach was adopted when the Asylum and Immigration (Treatment of Claimants et cetera) Act 2004 collapsed the former two tier appellate structure into one. If the Asylum and Immigration Tribunal refused to order the reconsideration of a decision, the aggrieved party could ask the High Court to review the matter on paper and its decision was final (2002 Act, s 103A). The Tribunals, Courts and Enforcement Act 2007 Part 1 of the 2007 Act established the new unified tribunal structure which was recommended in the Leggatt Report. There is a First tier Tribunal, which is organised into chambers according to subject matter, each with its own President. It consists of its judges and other (non lawyer) members. There is an Upper Tribunal, also organised into chambers according to subject matter, each with its own President. With one exception, the Upper Tribunal Presidents are all High Court judges, but this is not a statutory requirement. It too consists of its judges and other (non lawyer) members. While most of the tribunal judiciary are specifically appointed to that role, all the judges in the ordinary courts, from the Lords Justices of Appeal to the District Judges in the Magistrates Courts, are automatically judges of both the First tier and Upper Tribunals. The whole is presided over by the Senior President of Tribunals, who shares the responsibility for organising the chambers with the Lord Chancellor (see s 7). The Senior President is currently a Lord Justice of Appeal, but the Act provides two routes to appointment: the first is that the Lord Chancellor and heads of the judiciary in England and Wales, Scotland and Northern Ireland all agree to recommend an appeal court judge for appointment; and only if that process does not produce a result does the second route, selection by the Judicial Appointments Commission, which is not limited to appeal court judges, apply (see Schedule 1, para 2(5)). Parliament has therefore expected, but not insisted, that the Senior President be an appeal court judge. The new structure may look neat but the diversity of jurisdictions accommodated means that it is not as neat as it looks. Thus, for example, the jurisdiction of the Special Commissioners of Income Tax and the VAT and Duties Tribunal has been assigned to the First tier Tribunal, although the importance of the decisions they make and the expertise of their judiciaries is, and should be, at least the equivalent of that of the Social Security Commissioners, who as appellate judges are assigned to the Upper Tribunal. Section 3(5) provides that The Upper Tribunal is to be a superior court of record. The Upper Tribunal has in fact three different roles. First, it may be the tribunal of first instance. Thus, for example, the Lands Chamber has both the first instance and appellate jurisdictions of the former Lands Tribunal; the Administrative Appeals Chamber has the jurisdiction of the former Transport Tribunal; and the Tax and Chancery Chamber has the jurisdiction of the former Financial Services and Markets Tribunal. Thus some first instance jurisdictions have been transferred to the Upper Tribunal whereas others of equivalent importance and difficulty, particularly in the tax field, have been transferred to the First tier Tribunal. Second, and this is a major innovation in the 2007 Act, it may exercise a statutory jurisdiction which is the equivalent of the judicial review jurisdiction of the High Court in England and Wales or Northern Ireland (ss 15, 16, 17). This only applies if certain conditions are met, the most important of which is that the application falls within a class specified in a direction given by the Lord Chief Justice or his nominee with the consent of the Lord Chancellor under Part 1 of Schedule 2 to the Constitutional Reform Act 2005 (s 18(6)). Once such a direction has been given, any application for judicial review or permission to apply for judicial review which is made to the High Court in that class of case must be transferred to the Upper Tribunal (Senior Courts Act 1981, s 31A(2)). The High Court also has power to transfer judicial review cases of other kinds to the Upper Tribunal if it appears just and convenient to do so (1981 Act, s 31A(3)). Similar provision is made in Scotland, in that judicial review cases in a specified class must, and others may, be transferred from the Court of Session to the Upper Tribunal (2007 Act, s 20(1)). The difference is that the application must first be made to the Court of Session, whereas in England and Wales and Northern Ireland applications in the specified classes should be made direct to the Upper Tribunal. Third, and probably most important, there is a right of appeal to the Upper Tribunal on any point of law arising from a decision made by the First tier Tribunal other than an excluded decision (s 11(1), (2)). This right may only be exercised with the permission of either the First tier or the Upper Tribunal (s 11(3), (4)). Section 11(5) lists the decisions which are excluded from the right of appeal. These include decisions of a description specified in an order made by the Lord Chancellor (s 11(5)(f)). The current list is contained in the Appeals (Excluded Decisions) Order 2009, as amended in 2010 to take account of the inclusion of immigration and asylum appeals within the new structure. There is a right of appeal to the Court of Appeal, in England and Wales or Northern Ireland, or the Court of Session in Scotland, on any point of law arising from a decision made by the Upper Tribunal other than an excluded decision (s 13(1), (2)). Excluded decisions include any decision of the Upper Tribunal on an application under section 11(4)(b) (application for permission or leave to appeal) (s 13(8)(c)). These appeals also require permission either from the Upper Tribunal or, if refused by the Upper Tribunal, from the relevant appellate court (s 13(3), (4), (5)). Where this would be a second tier appeal (that is, an appeal from the decision of the Upper Tribunal on appeal from the First tier Tribunal), the Lord Chancellor has exercised the power granted to him by section 13(6) to order that permission shall not be granted unless (a) the proposed appeal would raise some important point of principle or practice; or (b) there is some other compelling reason for the relevant appellate court to hear the appeal (Appeals from the Upper Tribunal to the Court of Appeal Order 2008, SI 2008 No 2834, art 2). Equivalent provision has been made for appeals from the Upper Tribunal to the Court of Session in Scotland by rule 41.59 of the Act of Sederunt (Rules of Court of Session 1994) 1994 (inserted by SSI 2008 No 349). These criteria are, of course, those applicable to a second tier appeal from a court to the Court of Appeal in England and Wales under section 55(1) of the Access to Justice Act 1999. It is worth noting that both the First tier Tribunal and the Upper Tribunal have power to review their own decisions, but this power does not apply to excluded decisions (see ss 9(1) and 10(1) respectively). This means that the Upper Tribunal has no power to review its own decision to refuse permission to appeal to the Upper Tribunal, even if it is convinced that that decision was wrong (compare the facts of Re Wooding, para 19 earlier). There is no express provision in the 2007 Act which makes any attempt to limit or remove the supervisory jurisdiction of the High Courts of England and Wales or Northern Ireland and the Court of Session in Scotland to review the decisions of the Upper Tribunal. It is nevertheless argued, and both the Divisional Court and the Court of Appeal held, that in the light of the system introduced by the 2007 Act the exercise of that jurisdiction should be limited to certain exceptional cases. Before turning to the possible approaches available to this Court, it is worth noting the various ways in which that argument has been put in the course of these proceedings. The developing argument The Cart case was heard by the Divisional Court along with two cases involving the Special Immigration Appeals Commission (SIAC). As does section 3(5) of the 2007 Act, section 1(3) of the Special Immigration Appeals Commission Act 1997 provides that SIAC shall be a superior court of record. The Governments primary case was that this made both tribunals immune from judicial review. This is not surprising, given that the same view had been expressed, of the Employment Appeal Tribunal, by Morison J in Chessington World of Adventures Ltd v Reed [1998] ICR 97, and by Sedley LJ in R v Regional Office of the Employment Tribunals (London North), Ex p Sojorin (unreported), 21 February 2000, and at para 6.31 of the Leggatt Report, and of the Upper Tribunal itself in de Smiths Judicial Review 6th ed (2007), para I 093. Nevertheless the argument was comprehensively demolished by Laws LJ, with whom Owen J agreed, in a typically subtle and erudite judgment, to which the following brief summary cannot do justice. It was a constitutional solecism to consider that merely to designate a body a superior court of record was sufficient to preclude judicial review. This could only be done by the most clear and explicit language and not by implication, still less by what was effectively a deeming provision. The rule of law requires that statute law be interpreted by an authoritative and independent judicial source: . the need for such an authoritative judicial source cannot be dispensed with by Parliament. This is not a denial of legislative sovereignty, but an affirmation of it . The requirement of an authoritative judicial source for the interpretation of law means that Parliaments statutes are always effective; . (para 38). That source was the High Court. This was not because it was a superior court of record but because it was a court of unlimited jurisdiction. Other courts and tribunals, having a limited jurisdiction, were not that source and were susceptible to judicial review by the High Court. Unreviewable courts of limited jurisdiction were exceptional. In the light of that comprehensive demolition, Mr Eadie has not since tried to rebuild the argument. He does not need to do so, because (in relation to the Upper Tribunal but not to SIAC) he has succeeded on his secondary case, that judicial review is only exercisable in rare and exceptional cases. Laws LJ accepted the argument on the basis that the newly constituted Upper Tribunal was the alter ego of the High Court within the areas covered by the tribunal system: it constituted an authoritative, impartial and independent judicial source for the interpretation and application of the relevant statutory tests. The rule of law did not require that it be subject to review for error of law within its jurisdiction: it had the final power to interpret for itself the law it must apply (para 94). But in the grossly improbable event that [Upper Tribunal] were to embark upon a case which was frankly beyond the four corners of its statutory remit there was no reason why the High Court should not correct it. With more caution, he accepted that it might also intervene where there has been a wholly exceptional collapse of fair procedure: something as gross as actual bias on the part of the tribunal (para 99). Laws LJ recognised that if the Upper Tribunal were in truth the alter ego of the High Court the logical consequence would be that it was wholly immune from the supervision of the High Court. The Government therefore pursued that argument before the Court of Appeal. Sedley LJ, giving the judgment of the court, rejected it: . the [Upper Tribunal] is not an avatar of the High Court at all: far from standing in the High Courts shoes, . , the shoes the [Upper Tribunal] stands in are those of the tribunals it has replaced (para 19). But he agreed that the supervisory jurisdiction of the High Court, well known to Parliament as one of the great historic artefacts of the common law, runs to statutory tribunals both in their old and in their new incarnation unless ousted by the plainest possible statutory language. There is no such language in the 2007 Act (para 20). Nevertheless, it did not follow that judicial review should be available on the full panoply of grounds which had been developed over the last half century. Judicial review had always been a remedy of last resort. As the Court of Appeal had recognised in R (Sivasubramaniam) v Wandsworth County Court [2003] 1 WLR 475, permission would not be granted where satisfactory alternative recourse existed, whether or not it had been exhausted. The scope of judicial review was a matter of principle, not discretion. But it could be changed to keep pace with other changes. The complete reordering of administrative justice was such a change: The tribunal system is designed to be so far as possible a self sufficient structure, dealing internally with errors of law made at first instance and resorting to higher appellate authority only where a legal issue of difficulty or of principle requires it. By this means serious questions of law are channelled into the legal system without the need of post Anisminic judicial review. (para 30) Two principles needed to be reconciled: one was the relative autonomy which Parliament had invested the tribunals as a whole and the Upper Tribunal in particular; the other was the constitutional role of the High Court as guardian of the standard of legality and due process from which the Upper Tribunal was not exempt (para 35). There was a true jurisprudential difference between an error of law made in the course of an adjudication which a tribunal is authorised to conduct and the conducting of an adjudication without lawful authority. For the former, no system of law can guarantee to be infallible. But [o]utright excess of jurisdiction by the [Upper Tribunal] and or denial by it of fundamental justice, should they ever occur, are in a different class: they represent the doing by the [Upper Tribunal] of something that Parliament cannot possibly have authorised it do so (para 36). Thus, by this rather different route, the Court of Appeal in Cart arrived at the same practical conclusion as had both the Divisional Court in Cart and the Court of Appeal in Sivasubramaniam [2003] 1 WLR 475. Sivasubramaniam was, of course, dealing with the new system of civil appeals brought in under the Access to Justice Act 1999 in response to the Bowman Report (1997). For the first time, virtually all appeals from a district judge to a circuit judge in a county court required permission to appeal. Refusal of permission by the circuit judge meant that there was no way, other than by judicial review, of having the case scrutinised by a High Court judge. However, while judicial review was not ousted, the Court of Appeal considered the new scheme provided the litigant with fair, adequate and proportionate protection against the risk that the judge of the lower court may have acted without jurisdiction or fallen into error (para 54). Permission to apply for judicial review should therefore not be granted except in very rare cases where it was sought on the ground of jurisdictional error in the narrow, pre Anisminic sense, or procedural irregularity of such a kind as to constitute a denial of the applicants right to a fair hearing (para 56). In R (Sinclair Gardens Investments (Kensington) Ltd) v Lands Tribunal [2005] EWCA Civ 1305, [2006] 3 All ER 650, essentially the same approach was applied to the refusal, by a non lawyer member of the Lands Tribunal, of permission to appeal from a determination of a Leasehold Valuation Tribunal relating to residential service charges. Thus the mere fact that a decision by the Lands Tribunal was obviously wrong in law was not enough to justify its being judicially reviewed (para 56); although there might be exceptional circumstances other than those identified in Sivasubramaniam which would justify this, for example where there were conflicting decisions in Leasehold Valuation Tribunals which cried out for definitive resolution (para 57). On the other hand, in Sivasubramaniam itself, the Court of Appeal had recognised the special features of the asylum jurisdiction which justified the former practice of unrestricted judicial review of refusals of leave to appeal. In MR (Pakistan), therefore, Mr Manjit Gill argued that those special features justified making an exception to the principles adopted by the Court of Appeal in Cart. Sullivan LJ disagreed. The immigration and asylum jurisdiction was not the only one in which claimants might be unrepresented, or particularly vulnerable, or where fundamental human rights were involved, or where the law was complex. There was no principled justification for maintaining a historical exemption: one of the basic purposes of the 2007 Act was to unify the procedures of the many and disparate tribunals which had been gathered into the new structure. It would be a significant invasion of the coherence of the new system to maintain such a historical exemption (para 53). The field of choice in this Court The way in which the argument has developed through the proceedings which are now collected before us enables us to be clear on three points. First, there is nothing in the 2007 Act which purports to oust or exclude judicial review of the unappealable decisions of the Upper Tribunal. Clear words would be needed to do this and they are not there. The argument that making the Upper Tribunal a superior court of record was sufficient to do this was killed stone dead by Laws LJ and has not been resurrected. Second, it would be completely inconsistent with the new structure introduced by the 2007 Act to distinguish between the scope of judicial review in the various jurisdictions which have now been gathered together in that new structure. The duties of the Senior President, set out in section 1(2), clearly contemplate that the jurisdictions will retain their specialist expertise, so that one size does not necessarily fit all; but the relationships of its component parts with one another and with the ordinary courts are common to all. So too must be the principles adopted by the High Court in deciding the scope of judicial review. Third, the scope of judicial review is an artefact of the common law whose object is to maintain the rule of law that is to ensure that, within the bounds of practical possibility, decisions are taken in accordance with the law, and in particular the law which Parliament has enacted, and not otherwise. Both tribunals and the courts are there to do Parliaments bidding. But we all make mistakes. No one is infallible. The question is, what machinery is necessary and proportionate to keep such mistakes to a minimum? In particular, should there be any jurisdiction in which mistakes of law are, either in theory or in practice, immune from scrutiny in the higher courts? In the course of oral argument before the Court it became clear that there were three possible approaches which the Court could take. First, we could accept the view of the courts below in Cart and MR that the new system is such that the scope of judicial review should be restricted to pre Anisminic excess of jurisdiction and the denial of fundamental justice (and possibly other exceptional circumstances such as those identified in Sinclair Gardens). Second, we could accept the argument, variously described in the courts below as elegant and attractive, that nothing has changed. Judicial review of refusals of leave to appeal from one tribunal tier to another has always been available and with salutary results for the systems of law in question. Third, we could adopt a course which is somewhere between those two options, and was foreshadowed by Dyson LJ (with the enthusiastic support of Longmore LJ) in R (Wiles) v Social Security Commissioner [2010] EWCA Civ 258 but rejected by the Court of Appeal in Cart, namely that judicial review in these cases should be limited to the grounds upon which permission to make a second tier appeal to the Court of Appeal would be granted. (i) The exceptional circumstances approach The approach of the Divisional Court and Court of Appeal would lead us back to the distinction between jurisdictional and other errors which was effectively abandoned after Anisminic. It is a distinction which lawyers can readily grasp. As Denning MR put it in Shaws case [1952] 1 KB 338, 346, A tribunal may often decide a point of law wrongly whilst keeping well within its jurisdiction. There are, however, several objections to reviving it. First, we would not in fact be turning the clock back to the days before Anisminic because, as we have seen, certiorari was available to correct errors of law on the face of the record made by tribunals of limited jurisdiction. We would be re introducing a distinction which had become relevant for the most part only where judicial review was expressly excluded, which it is not here. Secondly, the distinction was given its quietus by the majority in Anisminic not least because the word jurisdiction has many meanings ranging from the very wide to the very narrow. By the narrow original sense both Lord Reid and Lord Pearson meant that the tribunal had asked itself the wrong question. But, as Lord Reid explained, a tribunal does this if it does any of the things which would ordinarily render its decision susceptible to judicial review (at p 171). And, as Lord Pearson observed, there has been evolution over the centuries and there have been many technicalities. There have also been many border line cases (at p 195). And Lord Wilberforce did not find the expressions asking the wrong question or applying the wrong test wholly satisfactory, although he agreed that such decisions were a nullity (at p 210). If the approach of the Court of Appeal in Cart is maintained we may expect a return to some of the technicalities of the past. Thirdly, as Lord Wilberforce pointed out (at p 207), it does of course lie within the power of Parliament to provide that a tribunal of limited jurisdiction should be the ultimate interpreter of the law which it has to administer: the position may be reached, as the result of statutory provisions, that even if they make what the courts might regard as decisions wrong in law, these are to stand. But there is no such provision in the 2007 Act. There is no clear and explicit recognition that the Upper Tribunal is to be permitted to make mistakes of law. Certain decisions are unappealable and for the most part there are obvious practical reasons why this should be so. But this does not mean that the tribunal must always be permitted to make errors of law when making them. The consideration which weighed most heavily with the Court of Appeal in Sivasubramaniam was proportionality. There must be a limit to the resources which the legal system can devote to the task of trying to get the decision right in any individual case. There must be a limit to the number of times a party can ask a judge to look at a question. The Court of Appeal took the view that, in the sorts of cases coming before the district judges in the county courts, it was enough if both the district judge and the circuit judge could detect no arguable case that the district judge had gone wrong. There was no need, save in the two extreme and exceptional cases identified, for a High Court judge to take another look especially as, under the current judicial review procedures, it would then be possible for the case to be looked at another four times. This approach accepts that a certain level of error is acceptable in a legal system which has so many demands upon its limited resources. Some might question whether it does provide sufficient protection against mistakes of law. In the ordinary courts, unlike the new tribunal system, there may be an appeal on a point of fact as well as law. It makes sense to limit such appeals to those with a real prospect of success. But judicial review is not such an appeal. The district judge and the circuit judge may both have gone wrong in law. They may work so closely and regularly together that the latter is unlikely to detect the possibility of error in the former. But at least in the county courts such errors are in due course likely to be detected elsewhere and put right for the future. The county courts are applying the ordinary law of the land which is applicable in courts throughout the country, often in the High Court as well as in the county courts. The risk of their developing local law is reduced although by no means eliminated. But that risk is much higher in the specialist tribunal jurisdictions, however expert and high powered they may be. As a superior court of record, the Upper Tribunal is empowered to set precedent, often in a highly technical and fast moving area of law. The judge in the First tier Tribunal will follow the precedent set by the Upper Tribunal and refuse permission to appeal because he is confident that the Upper Tribunal will do so too. The Upper Tribunal will refuse permission to appeal because it considers the precedent to be correct. It may seem only a remote possibility that the High Court or Court of Appeal might take a different view. Indeed, both tiers may be applying precedent set by the High Court or Court of Appeal which they think it unlikely that a higher court would disturb. The same question of law will not reach the High Court or the Court of Appeal by a different route. There is therefore a real risk of the Upper Tribunal becoming in reality the final arbiter of the law, which is not what Parliament has provided. Serious questions of law might never be channelled into the legal system (as Sedley LJ put it at para 30) because there would be no independent means of spotting them. High Court judges may sit in the Upper Tribunal but they will certainly not be responsible for all the decisions on permission to appeal, nor is it possible for the Upper Tribunal to review its own refusals, even when satisfied that they are wrong in law. Furthermore, it appears to be accepted that full judicial review of the unappealable decisions of the First tier Tribunal, and possibly of excluded decisions of the Upper Tribunal other than the refusal of permission to appeal, remains available. It is difficult to spell out a principled basis for such anomalies. In short, while the introduction of the new system may justify a more restricted approach, the approach of the Court of Appeal in Cart is too narrow, leaving the possibility that serious errors of law affecting large numbers of people will go uncorrected. (ii) The status quo ante but which? Mr Drabble, together with (in the rather different context of Scotland) Mr Mitchell, makes a powerful case for the status quo, by which he means the position obtaining in the social security system before the 2007 Act. The Social Security Commissioners were a highly skilled body of senior lawyers, thoroughly steeped in the intricacies of social security law, yet they could occasionally fail to detect the possibility of error in a social security tribunals decision for example because both were following an authoritative decision of the High Court or Court of Appeal which had stood for some time. Judicial review of the refusal of leave enabled such questions of law, often important to a great many people, to be examined in the higher courts to the benefit of the jurisdiction in question. It is, after all, the object of the benefits system to get things right to pay people the benefits to which Parliament has said that they are entitled, not a penny more but also not a penny less. He also rightly points out that nothing much has changed. The Social Security Commissioners are now judges of the Upper Tribunal but they are (mostly) the same people doing the same job. The new structure has followed the model of the previous social security adjudication system. What is so different that it justifies the removal of a right from which each party in a social security claim could benefit, the Department as well as the individual claimant? Mr Manjit Gill makes essentially the same argument in immigration and asylum cases. They too had a two tier appellate structure with the possibility of judicial review of unappealable decisions until the 2002 Act. The 2002 Act introduced the alternative form of statutory review, but it still gave access to a High Court judge. The 2004 Act collapsed the two tier structure into one, but provided an equivalent form of statutory review giving access to a High Court judge. Now, as Sullivan LJ put it in FA (Iraq) and PD (India) v Secretary of State for the Home Department [2010] EWCA Civ 827, at para 1, The wheel has come full circle. Once again there is a two tier appellate structure with a right of appeal with permission on a point of law from the First tier to the Upper Tribunal and a further right of appeal, with permission, to the Court of Appeal. The only change from the old two tier structure is the introduction of the limited grounds for a second tier appeal to the Court of Appeal. The statutory reviews introduced by the 2002 and 2004 Acts have been abolished. Hence, he argues, in that system too we are now back where we began and there is no reason to restrict the availability of judicial review of unappealable decisions. But it is impossible to leave out of account the reasons why those statutory reviews were introduced. It is not difficult to dress up an argument as a point of law when in truth it is no more than an attack upon the factual conclusions of the first instance judge. In most tribunal cases, a claimant will have little to gain by pressing ahead with a well nigh hopeless case. He may have less money than he otherwise would, but he will not have to leave the country and may make another claim if circumstances change. But in immigration and asylum cases, the claimant may well have to leave the country if he comes to the end of the road. There is every incentive to make the road as long as possible, to take every possible point, and to make every possible application. This is not a criticism. People who perceive their situation to be desperate are scarcely to be blamed for taking full advantage of the legal claims available to them. But the courts resources are not unlimited and it is well known that the High Court and Court of Appeal were overwhelmed with judicial review applications in immigration and asylum cases until the introduction of statutory reviews. Mr Gills answer is that under the new system the burden on the High Court and Court of Appeal is to be reduced by transferring judicial review applications relating to the refusal of the Secretary of State to treat new representations as a fresh claim to the Upper Tribunal (see the announcement made by Lord McNally, Hansard (HL), 3 March 2011, col WS120). But this, of course, does not address the perceived burden resulting from attempts to achieve a judicial review of the decisions of the Tribunal itself. Mr Fordham, in particular, argues that there is no need to introduce further restrictions upon judicial review. The courts have already adopted principles of judicial restraint when considering the decisions of expert tribunals. As long ago as R v Preston Supplementary Benefits Appeal Tribunal, Ex p Moore [1975] 1 WLR 624, before the creation of the unified social security appeal tribunals with a common right of appeal to the Commissioners, Lord Denning MR observed, at pp 631 2, that the courts should leave the tribunals to interpret the Supplementary Benefits Act in a broad reasonable way, according to the spirit and not the letter. But it was important that cases raising the same points should be dealt with in the same way, so the courts should be prepared to consider points of law of general application. Individual cases of particular application should be left to the tribunals. More recently, in Cooke v Secretary of State for Social Security [2001] EWCA Civ 734, [2002] 3 All ER 279, paras 15 17, I (with the agreement of both Clarke LJ and Butterfield J) urged appropriate caution in giving permission to appeal from the Social Security Commissioners, because of their particular expertise in a highly specialised area of the law, where it was quite probable that . the Social Security Commissioner will have got it right. Those observations have been referred to many times since, not least by Dyson LJ in R (Wiles) v Social Security Commissioner [2010] EWCA Civ 258, paras 53 54, where he said this: Thus, in seeing whether it can detect some error of law by the commissioner who has refused leave to appeal, the reviewing court should not be astute to find such error. This is a further reason why there need be no real concern that the established approach to judicial review in these cases would lead to an opening of the floodgates. It is, however, fair to say that this restraint has found more favour in some contexts than in others. Although it was adopted in the asylum context in AH (Sudan) v Secretary of State for the Home Department [2007] UKHL 49, [2008] AC 678, at para 30, the courts are also well aware of the anxious scrutiny required in asylum cases and of the particular difficulties facing the tribunals in this jurisdiction. Had they adopted the same restraint in asylum as in social security cases, it might not have been thought necessary to introduce the statutory review procedures. Ironically, therefore, the more troubling the context, the more necessary it has seemed to limit the availability of judicial review. The real question, as all agree, is what level of independent scrutiny outside the tribunal structure is required by the rule of law. The mere fact that something has been taken for granted without causing practical problems in the social security context until now does not mean that it should be taken for granted forever. Equally the fact that the courts have hitherto found it difficult to deter repeated or unmeritorious applications in immigration and asylum cases does not mean that such applications should become virtually impossible. There must be a principled but proportionate approach. (iii) The second tier appeals criteria An important innovation in the 2007 Act was the power given to the Lord Chancellor in section 13(6), to prescribe the same criteria for the grant of permission to appeal from the Upper Tribunal to the Court of Appeal as apply to second tier appeals in the courts of England and Wales. These have now been prescribed for second tier appeals from the Upper Tribunal in all three jurisdictions. (It was the previous lack of such criteria which led to the remarks about restraint in Cooke.) This gives, at the very least, an indication of the circumstances in which Parliament considered that questions of law should be, as Sedley LJ put it, channelled into the legal system. In Wiles, Dyson LJ considered that there was much to be said for applying the same criteria to judicial review of a Social Security Commissioners refusal of permission to appeal to himself (para 48). This would reflect the fact that (i) the issues that arise . may affect the lives not only of the individual claimant, but also of many others who are in the same position, some of whom are among the most vulnerable members of our society; and (ii) the issues may be of fundamental importance to them, sometimes making the difference between a reasonable life and a life of destitution (para 47). This proposal was warmly endorse[d] by Longmore LJ (para 79). It was, however, expressly rejected by Sedley LJ in Cart, because the new tribunal structure is something greater than the sum of its parts. It represents a newly coherent and comprehensive edifice designed, among other things, to complete the long process of divorcing administrative justice from departmental policy, to ensure the application across the board of proper standards of adjudication, and to provide for the correction of legal error within rather than outside the system (para 42). While all of this is true, it seems to me to do little justice to the independence and expertise of the tribunal judiciaries in the old system and to over estimate what has changed in the new. There must be some risk that the amalgamation of very different jurisdictions in the new chambers will dilute rather than enhance the specialist expertise of their judges and members. Mental health and special educational needs, for example, are similar in some ways but very different in others. It would be difficult to say that bringing them together has reduced the capacity for error although of course we all hope that it has not been increased. The claimants accept that if there is to be any restriction on the availability of judicial review, this approach would be far preferable to that of the Court of Appeal in Cart. Their main objection is that it would deprive the parties of the second substantive hearing to which they would have been entitled if the Upper Tribunal had spotted the error and given permission to appeal. Another objection is that it would leave uncorrected those errors of law which do not raise an important point of principle or practice and where there is no other compelling reason for the court to hear the case. But no system of decision making is perfect or infallible. There is always the possibility that a judge at any level will get it wrong. Clearly there should always be the possibility that another judge can look at the case and check for error. That second judge should always be someone with more experience or expertise than the judge who first heard the case (it is to be hoped that the new structure will not perpetuate the possibility, exemplified in Sinclair Gardens, that a non lawyer member might be entrusted with deciding whether a tribunal chaired by a legally qualified tribunal judge had gone wrong in law, but this is left to the good sense of the Senior President rather than enshrined in the legislation). But it is not obvious that there should be a right to any particular number of further checks after that. The adoption of the second tier appeal criteria would lead to a further check, outside the tribunal system, but not one which could be expected to succeed in the great majority of cases. Conclusion For all those reasons, together with those given by Lord Dyson (in this case) and Lord Hope (in Eba), the adoption of the second tier appeals criteria would be a rational and proportionate restriction upon the availability of judicial review of the refusal by the Upper Tribunal of permission to appeal to itself. It would recognise that the new and in many ways enhanced tribunal structure deserves a more restrained approach to judicial review than has previously been the case, while ensuring that important errors can still be corrected. It is a test which the courts are now very used to applying. It is capable of encompassing both the important point of principle affecting large numbers of similar claims and the compelling reasons presented by the extremity of the consequences for the individual. It follows that the approach in Sinclair Gardens should no longer be followed. If this approach is adopted, the Civil Procedure Rules Committee might also wish to consider the scope for stream lining the procedure for considering applications for permission to apply for judicial review of these decisions. I agree with Lord Phillips that it would be totally disproportionate to allow the four stage system of paper and oral applications to both the High Court and the Court of Appeal in such cases. The previous procedures for statutory reviews in immigration and asylum cases showed that there is nothing inherently objectionable in a paper procedure, particularly if there has been an oral hearing of the first application for permission to appeal. But, in agreement with Lord Clarke, it seems to me that this is a matter for the rules committee rather than for this Court to determine. In the result, however, there is clearly nothing in Mr Carts case to bring it within the second tier appeal criteria. The tribunal considered very carefully whether he had been prejudiced by the failure of the Secretary of State to give him notice of the application to vary and it was clear that he had not, so any difference of approach to whether prejudice was necessary would not affect the result. The same is true of the case of MR (Pakistan). As Ouseley J said in refusing permission to appeal to the Upper Tribunal, crucial to the decision was the finding that the applicant was not a genuine convert to Christianity. The question of how a genuine convert would be treated did not arise. I would therefore dismiss the appeals in the cases of Cart and MR (Pakistan) but on a different basis from that adopted in the Divisional Court and the Court of Appeal. LORD PHILLIPS I have had the benefit of reading the judgment of Lady Hale, which illuminates the background to the English appeals, and the issues that are raised by them. I have also had the benefit of reading the judgment of Lord Hope in the Scottish appeal. His conclusions are in harmony with those of Lady Hale. I am in agreement with both judgments. My own contribution is essentially by way of emphasis, directed largely to the fundamental issue of principle raised by these appeals. That is whether the courts should apply a principle of proportionality when deciding whether to accede to an application to judicially review a decision of the Upper Tribunal. For the reasons that follow I have decided that they should, but that, at least in England and Wales, the needs of proportionality also require changes in the Civil Procedure Rules (CPR). Introduction In March 2001 a Committee chaired by Sir Andrew Leggatt delivered a report (the Leggatt Report) to the Lord Chancellor on the delivery of justice through tribunals. The Committee was confronted with 70 different administrative tribunals employing about 3,500 people and handling nearly one million cases a year. The Leggatt Report made recommendations for bringing these tribunals into a single Tribunals System. In July 2004 a Government White Paper accepted the broad thrust of those recommendations. Parliament then implemented this by enacting the Tribunals, Courts and Enforcement Act 2007 (TCEA). A striking feature of the tribunals system created by the TCEA is the creation of two tiers, a First tier Tribunal and an Upper Tribunal. Appeals lie from the First tier Tribunal to the Upper Tribunal. Carnwath LJ was appointed the first Senior President of the new system. In his article Tribunal Justice a New Start in [2009] Public Law 48 he commented of the Upper Tribunal that it would be operating in parallel with the existing Administrative Court and would become the principal agency for judicial review of the legality of tribunal decisions. He suggested that there was scope for rethinking the traditional allocation, as between courts and tribunals, of responsibilities for definitive interpretation of substantive law, including human rights law, in specialist fields. These three conjoined appeals raise a single issue. This is the extent to which decisions of the Upper Tribunal are properly subject to judicial review by the Administrative Court in England and Wales and the Court of Session in Scotland. That issue calls for a review of the roles of the legislature, the executive and the judiciary in maintaining the rule of law in this country. The rule of law requires that the laws enacted by Parliament, together with the principles of common law that subsist with those laws, are enforced by a judiciary that is independent of the legislature and the executive. Laws LJ, in paras 43 to 51 of his judgment in Cart [2009] EWHC 3052 (Admin), has summarised the history of the role of the courts from 1066 to 1873 in upholding and developing the law. In particular, he has described the growth of the supremacy under the common law of the court of the Kings Bench as a court of unlimited jurisdiction with the power by means of the prerogative writs to supervise the other courts, described as inferior courts of record. The Judicature Act 1873 marked the assumption by Parliament of responsibility for the infrastructure necessary for the administration of justice. A new hierarchy of courts was created, including a High Court and a Court of Appeal. The common law powers of the Kings Bench were vested in the High Court. The creation of a Court of Appeal provided, however, an alternative means of reviewing errors of law on the part of inferior courts and, in particular, the County Court, which replaced the use of the prerogative writs. Since 1873 there has been a series of statutes dealing with the administration of justice, of which the Supreme Court Act 1981 (now the Senior Courts Act 1981) was particularly significant. Section 4 of that Act defined the composition of the High Court. Section 19 provided that the High Court should continue to exercise the jurisdiction that it enjoyed prior to the 1981 Act. Thus the common law powers of judicial review were preserved. Section 31 of the 1981 Act provided for rules of court to be made governing the procedure to be followed on an application for judicial review and required the leave of the High Court to be obtained for such an application. Part 54 of the CPR gives effect to that requirement. At the same time as making provision for the structure of the general court system, Parliament created tribunals to adjudicate on disputes in specialised areas and a number of specialist courts. A common theme can be identified in relation to most of these, as well as in relation to the general court system. The possibility of at least one appeal is desirable in order to address the possibility of error of law on the part of the court or tribunal first seised of the matter. Legislation dealing with the court system in general and with specialist courts and tribunals usually makes provision for appeals. Prior to 1999 there was growing concern that rights of appeal in civil proceedings were over generous with the result that the pursuit of appeals that lacked merit was resulting in unnecessary delay and consumption of limited judicial resources. Lord Woolfs final report on Access to Justice published in July 1996 reached a similar conclusion on this topic to that subsequently reached by the Bowman Report published in September 1997. Both concluded that civil appeals served both a private and a public purpose. The private purpose was to correct an error, unfairness or wrong exercise of discretion leading to an unjust result. The public purpose was to ensure public confidence in the administration of justice and, in appropriate cases, to clarify and develop the law, practice and procedure and to help maintain the standards of first instance courts and tribunals. Many of the existing provisions for appeals failed, however, to have regard to proportionality. Rights of appeal should be proportionate to the grounds of complaint and the subject matter of the dispute. More than one level of appeal would not normally be justified unless an important point of principle or practice was involved. The Bowman Report led to provisions in the Access to Justice Act 1999 which resulted in a new Part 52 of the CPR to replace the provisions of the Rules of the Supreme Court dealing with, inter alia, appeals to the High Court from lower courts and tribunals and appeals to the Court of Appeal. Section 54 of the 1999 Act provided that rules of court could introduce a requirement that any right of appeal be exercised only with permission. It further provided that no appeal could be made against a decision of a court to give or refuse permission, albeit that rules of court might provide for the making of a further application for permission to that court or another court. CPR 52.3 introduced a permission requirement in relation to appeals from lower courts, but not from tribunals, albeit that it stated that other enactments might require permission for particular appeals. CPR 52.3(6) provides that permission to appeal may only be given where the court considers that the appeal would have a real prospect of success or where there is some other compelling reason why the appeal should be heard. CPR 52.13(2) provides that in the case of a second appeal to the Court of Appeal the court will only give permission to appeal if the appeal raises an important point of principle or practice or there is some other compelling reason for the court to hear it. The power of the High Court to conduct judicial review subsists alongside these statutory provisions for appeal. It is not, however, the practice of the Court to use this power where a satisfactory alternative remedy has been provided by Parliament. Where this is not the case the power of judicial review is a valuable safeguard of the rule of law. It is one which the judges guard jealously. The decision of the House of Lords in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 finessed what, on its face, appeared to be an attempt by Parliament to exclude judicial review of the decisions of the Commission. Since that case Parliament has not purported, as it might have done, expressly to preclude the exercise by the High Court of the power of judicial review. At paras 39 to 40 of his judgment in Cart Laws LJ stated that the general principle was clear: The rule of law requires that statute should be mediated by an authoritative and independent judicial source; and Parliaments sovereignty itself requires that it respect this rule. None of this, of course, is to say that Parliament may not modify, sometimes radically, the procedures by which statute law is mediated. It may impose tight time limits within which proceedings must be bought. It may provide a substitute procedure for judicial review, as it has by a regime of statutory appeals in fields such as town and country planning, highways, and compulsory purchase: where, however, the appeal body remains the High Court. It may create new judicial authorities with extensive powers. It may create rights of appeal from specialist tribunals direct to the Court of Appeal. The breadth of its power is subject only to the principle I have stated. The proposition that Parliamentary sovereignty requires Parliament to respect the power of the High Court to subject the decisions of public authorities, including courts of limited jurisdiction, to judicial review is controversial. Hopefully the issue will remain academic. Before the Divisional Court in Cart the Secretary of State contended that, by enacting in section 3(5) of TCEA that the Upper Tribunal should be a superior court of record, Parliament had rendered its decisions immune from judicial review. The Divisional Court rejected that submission, and it has not been pursued. The issue before this Court relates to the principles that should govern the exercise of the power judicially to review the decisions of the Upper Tribunal. The appellants in the English appeals, supported by JUSTICE as intervener, adopt the same approach as the Lord Advocate in the Scottish Appeal and contend that judicial review should be permitted whenever there is an arguable case that the Upper Tribunal has made any error of law. The Secretary of State submits that the statutory provisions for appeal in the TCEA meet the requirements of the rule of law in all ordinary circumstances. Judicial review of the Upper Tribunal is only appropriate in exceptional circumstances, which do not exist in any of the appeals before the Court. The issue of principle raised by these appeals is thus whether, and on what basis, the right to judicial review of a decision of the Upper Tribunal should be restricted. All three appeals have, however, an important common factor. Each arises out of the refusal of the Upper Tribunal to give permission to appeal to it from a decision of the First tier Tribunal or, in the case of Cart, of the Tribunal whose functions have been taken over by the First tier Tribunal. In each of the English cases a claim for judicial review of the Upper Tribunals decision was dismissed on the ground that this could only be justified in exceptional circumstances. In the Scottish case a similar application was granted, and the Advocate General appeals against the decision granting the application for judicial review. It became apparent in the course of argument that the appellants in the English cases were particularly aggrieved that they had been denied the right to have their appeals heard. Because there was no right to appeal to the Court of Appeal from the Upper Tiers refusal to give permission to appeal, they had only had one substantive hearing. Mr Gill QC for MR accepted that it was this fact, rather than the status of the tribunal that had refused permission to appeal, that gave rise to his principal complaint. There have already been a number of decisions of lower courts in which it has been held appropriate to circumscribe the right to judicial review. The appellants in the English appeals submit that they were wrongly decided and I propose first to consider them. Next I shall consider the recommendations made by the Leggatt Report in relation to the availability of judicial review. After that I shall examine the extent to which Parliament gave effect to those recommendations. Finally I shall answer the issue of principle posed above, with specific reference to the individual appeals. Restrictions on the right to judicial review The first of a series of cases in which the court held that there was a right to judicial review which was restricted involved two appeals by the same appellant in relation to two unsuccessful applications for judicial review. In R (Sivasubramaniam) v Wandsworth County Court; R (Sivasubramaniam) v Kingston upon Thames County Court (Lord Chancellors Department intervening) [2002] EWCA Civ 1738, [2003] 1 WLR 475, which I shall hereafter refer to as Siva, the applicant brought bizarre claims before two district judges. Each had been dismissed. Applications for permission to appeal were dismissed in each case by a county court judge. In the latter, but not the former, case he could have appealed to the Court of Appeal. He did not do so. He applied in each case to the High Court for permission to claim judicial review. His applications were dismissed. He appealed against the dismissals to the Court of Appeal. In the second case the Court of Appeal refused the application on the ground that there had been a satisfactory alternative remedy. The Court rejected the submission by the respondents that section 54(4) of the Access to Justice Act ousted judicial review of the decision of the county court judge. It held, however, at para 48: Under the 1999 Act, and the rules pursuant to it, a coherent statutory scheme has been set up governing appeals at all levels short of the House of Lords. One object of the scheme is to ensure that, where there is an arguable ground for challenging a decision of the lower court, an appeal will lie, but to prevent court resources being wasted by the pursuit of appeals which have no prospect of success. The other object of the scheme is to ensure that the level of judge dealing with the application for permission to appeal, and the appeal if permission is given, is appropriate to the dispute. This is a sensible scheme which accords with the object of access to justice and the Woolf reforms. It has the merit of proportionality. To permit an applicant to bypass the scheme by pursuing a claim for judicial review before a judge of the Administrative Court is to defeat the object of the exercise. We believe that this should not be permitted unless there are exceptional circumstances and we find it hard to envisage what these could be. So far as the first case was concerned, the Court adopted a similar approach. It held: 54 This scheme we consider provides the litigant with fair, adequate and proportionate protection against the risk that the judge of the lower court may have acted without jurisdiction or fallen into error. The substantive issue will have been considered by a judge of a court at two levels. On what basis can it be argued that the decision of the judge of the appeal court should be open to further judicial review? The answer, as a matter of jurisprudential theory, is that the judge in question has limited statutory jurisdiction and that it must be open to the High Court to review whether that jurisdiction has been exceeded. But the possibility that a circuit judge may exceed his jurisdiction, in the narrow pre Anisminic sense, where that jurisdiction is the statutory power to determine an application for permission to appeal from the decision of a district judge, is patently unlikely. In such circumstances an application for judicial review is likely to be founded on the assertion by the litigant that the circuit judge was wrong to conclude that the attack on the decision of the district judge was without merit. The attack is likely to be misconceived, as exemplified by the cases before us. We do not consider that judges of the Administrative Court should be required to devote time to considering applications for permission to claim judicial review on grounds such as these. They should dismiss them summarily in the exercise of their discretion. The ground for so doing is that Parliament has put in place an adequate system for reviewing the merits of decisions made by district judges and it is not appropriate that there should be further review of these by the High Court. This, we believe, reflects the intention of Parliament when enacting section 54 (4) of the 1999 Act. While Parliament did not legislate to remove the jurisdiction of the High Court judicially to review decisions of county court judges to grant or refuse permission to appeal, we do not believe that Parliament can have anticipated the spate of applications for judicial review that section 54 (4) appears to have spawned. 55 Everything that we have said should be applied equally to an application for permission to claim judicial review of the decision of a judge of the county court granting permission to appeal. We are not aware that such an application has yet been made. Exceptional circumstances 56 The possibility remains that there may be very rare cases where a litigant challenges the jurisdiction of a circuit judge giving or refusing permission to appeal on the ground of jurisdictional error in the narrow, pre Anisminic sense, or procedural irregularity of such a kind as to constitute a denial of the applicant's right to a fair hearing. If such grounds are made out we consider that a proper case for judicial review will have been established. The Court commented on the fact that permission to claim judicial review was regularly given in relation to refusals by the Immigration Appeal Tribunal of permission to appeal to the tribunal against decisions of special adjudicators. The Court observed at para 52 that on the face of it judicial review of such decisions might seem anomalous, but explained the practice as follows: There are, in our judgment, special factors which fully justify the practice of entertaining applications for permission to claim judicial review of refusals of leave to appeal by the tribunal. In asylum cases, and most cases are asylum cases, fundamental human rights are in play, often including the right to life and the right not to be subjected to torture. The number of applications for asylum is enormous, the pressure on the tribunal immense and the consequences of error considerable. The most anxious scrutiny of individual cases is called for and review by a High Court judge is a reasonable, if not an essential, ingredient in that scrutiny. In Gregory v Turner [2003] EWCA Civ 183; [2003] 1 WLR 1149 the Court of Appeal followed Siva when it refused an application for judicial review of the decision of a circuit judge who refused permission to appeal from the decision of a district judge, despite the fact that there were grounds for concluding that the district judge had fallen into error. At para 46 Brooke LJ explained the reason for what might appear to be an injustice: In his Interim Report on Access to Justice (1995), Section I, Chapter 4, paras 5 and 6 Lord Woolf highlighted the tensions that exist between a desire to achieve perfection and a desire to achieve a system of justice which is not inaccessible to most people on grounds of the time and cost involved. He quoted tellingly from a 1970 broadcast by Lord Devlin: is it right to cling to a system that offers perfection for the few and nothing at all for the many? Perhaps: if we could really be sure that our existing system was perfect. But of course it is not. We delude ourselves if we think that it always produces the right judgment. Every system contains a percentage of error; and if by slightly increasing the percentage of error, we can substantially reduce the percentage of cost, it is only the idealist who will revolt. Both Siva and Gregory v Turner involved attempts to review decisions of the County Court. In R (on the application of Sinclair Gardens Investments (Kensington) Ltd) v Lands Tribunal [2005] EWCA Civ 1305; [2006] 3 All ER 650 the Court of Appeal applied the same reasoning to the scheme laid down by Parliament for leasehold valuation. The statutory scheme in that case provided for an appeal from the Leasehold Valuation Tribunal to the Lands Tribunal provided that one or the other gave permission to appeal. Both having refused permission, a landlord sought permission to review the decision of the Lands Tribunal to refuse permission to appeal. The application was refused and the landlord appealed to the Court of Appeal. The Court dismissed the appeal. Giving the only reasoned judgment, Neuberger LJ said this: 56 I do not accept that the mere fact that a decision of the Lands Tribunal refusing permission to appeal was obviously wrong in law would be sufficient to justify its being judicially reviewed. Such a basis for judicial review would fly in the face of the conclusion and reasoning in Sivasubramaniams case and in Gregory v Turner, which appear to me to be applicable in this case for the reasons given above. Before permission to seek judicial review could be granted, it would not be enough to show that the refusal of permission to appeal was plainly wrong in law. It would also have to be established that the error was sufficiently grave to justify the case being treated as exceptional. 57 I think it is appropriate to say, that there could, in my view, be cases, which would be wholly exceptional, where it would be right to consider an application for judicial review of such a decision on the basis of what could be said to be an error of law. A possible example would be if the Lands Tribunal, despite being aware of the position, refused, without any good reason, permission to appeal on a difficult point of law of general application, which had been before a number of different LVTs which had taken different views on it, and which cried out for a definitive answer in the public interest. In that connection, it seems to me that one could say that it was not so much the point of law itself which justified judicial review, but more the failure of a public tribunal to perform its duty to the public, as well as what one might call its duty to the parties in that particular case. In Siva the Court of Appeal recognised that there were special circumstances that justified judicial review of decisions of the Immigration Appeal Tribunal that refused permission to appeal to it. Parliament then intervened by section 101(2) of the Nationality, Immigration and Asylum Act 2002 to provide for a statutory review, to be carried out by a High Court judge on paper, of such refusals. In R(G) v Immigration Appeal Tribunal [2004] EWCA Civ 1731, [2005] 1 WLR 1445 the Court of Appeal endorsed the view of Collins J at first instance that it was Parliaments intention that this should provide a satisfactory alternative to judicial review, thereby avoiding the delay that was involved in the four stage process of the latter. The Court of Appeal held that the statutory regime provided adequate and proportionate protection of the asylum seekers rights and that it was, accordingly, a proper exercise of the courts discretion to decline to entertain an application for judicial review of issues which had been, or could have been the subject of statutory review. The Court stated at para 20: The consideration of proportionality involves more than comparing the remedy with what is at stake in the litigation. Where Parliament enacts a remedy with the clear intention that this should be pursued in place of judicial review, it is appropriate to have regard to the considerations giving rise to that intention. The satisfactory operation of the separation of powers requires that Parliament should leave the judges free to perform their role of maintaining the rule of law but also that, in performing that role, the judges should, so far as consistent with the rule of law, have regard to legislative policy. This approach was followed by the Court of Appeal in R (F (Mongolia)) v Asylum and Immigration Tribunal [2007] 1 WLR 2523 in relation to the new review procedure introduced under the Asylum and Immigration (Treatment of Claimants, etc Act) 2004 see Lady Hales judgment at para 31. This series of cases was considered by the Court of Appeal in Wiles v Social Security Commissioner [2010] EWCA Civ 258, when considering an appeal against the refusal to grant judicial review of the decision of a social security commissioner refusing permission to appeal from a decision of the Social Security Appeal Tribunal under the regime that pre dated the TCEA. Giving the leading judgment, Dyson LJ held at para 43 that it was impossible to find in the relevant legislation any indication that Parliament intended to oust, or even to limit, the jurisdiction to grant judicial review. That jurisdiction had been exercised in social security cases for nearly thirty years. In the light of this it would not be right to curtail it. But for this, however, Dyson LJ would have favoured applying the same criteria to an application for judicial review as was applied by the court when considering an application for permission to bring a second appeal, as set out at para 70 above. The Leggatt recommendations The Leggatt Report recommended a two tier tribunal system, describing the upper tier as the appellate Division. There would be a comprehensive and systematic right of appeal from first tier tribunals to the appellate Division, and from there to the Court of Appeal. In these circumstances the Report recommended that the right of judicial review should be excluded 6.30. This recommendation had regard to the waste of scarce resources involved where judicial review was available in parallel with statutory rights of appeal to a tribunal and to the huge number of judicial review applications in immigration and asylum cases, most of which were unsuccessful 6.27. The Report commented, erroneously, that this goal could be achieved by making the appellate Division a superior court of record 6.33. It recommended, however, an express statutory exclusion of judicial review 6.34. Parliaments response Parliament made the Upper Tribunal a superior court of record see section 3(5) of the TCEA. Although the Government argued in Cart that this meant that its decisions were not susceptible to judicial review see Lady Hales judgment at para 30 it does not follow that this was Parliaments intention, or indeed the Governments intention in promoting the Act. In the Home Office Consultation Paper on immigration appeals, Fair Decisions; Faster Justice, of 12 August 2008 it was stated at para 23 that the Government had been advised that except in the most exceptional circumstances decisions of the Upper Tribunal would not be subject to judicial review. What must, I believe, be beyond doubt is that it was Parliaments intention that the two tier structure set up by the TCEA would provide a statutory right of appeal in relation to decisions of tribunals that would, in most cases, provide a satisfactory alternative to judicial review. Discussion It is now common ground that the fact that the Upper Tribunal is a superior court of record does not render its decisions immune from judicial review. The issue raised by these appeals falls into two parts: (i) is it right to impose restrictions on the grant of judicial review in relation to decisions of the Upper Tribunal? (ii) If it is, what restrictions should be imposed? It was submitted on behalf of the English appellants, with support from the Public Law Project represented by Mr Fordham QC as intervener, that the courts had taken a wrong turning in the recent series of cases that had imposed restrictions on the grant of judicial review. There was no justification for departing from the long established practice of the court to entertain a claim for judicial review whenever there were reasonable grounds for contending that an inferior court had made an error of law. The Scottish respondent contended that the Court of Session had rightly applied the ordinary principles of judicial review to a decision of the Upper Tribunal. Mr Eadie QC, responding to the English appeals, and Mr Johnston QC, for the Advocate General for Scotland, submitted that Parliament had by the TCEA deliberately set up a self sufficient structure dealing internally with errors of law and that, in accordance with Parliaments intention, applications for judicial review should only be entertained in exceptional circumstances. I am in no doubt that the submissions of the English appellants should be rejected. The administration of justice and upholding of the rule of law involves a partnership between Parliament and the judges. Parliament has to provide the resources needed for the administration of justice. The size and the jurisdiction of the judiciary is determined by statute. Parliament has not sought to oust or fetter the common law powers of judicial review of the judges of the High Court and I hope that Parliament will never do so. It should be for the judges to decide whether the statutory provisions for the administration of justice adequately protect the rule of law and, by judicial review, to supplement these should it be necessary. But, in exercising the power of judicial review, the judges must pay due regard to the fact that, even where the due administration of justice is at stake, resources are limited. Where statute provides a structure under which a superior court or tribunal reviews decisions of an inferior court or tribunal, common law judicial review should be restricted so as to ensure, in the interest of making the best use of judicial resources, that this does not result in a duplication of judicial process that cannot be justified by the demands of the rule of law. Lady Hale observes in para 51 of her judgment, that the real question in this appeal is what level of independent scrutiny outside the tribunal structure is required by the rule of law. To this question I would add the two words if any. I add those two words because if the court is to entertain applications for judicial review of the decisions of the Upper Tribunal this will require a High Court or Deputy High Court judge to consider every such application, however stringent may be the criteria for granting permission. For the reasons given by Lady Hale in para 47 of her judgment, the stringency of the criteria that must be demonstrated will not discourage a host of applications in the field of immigration and asylum which are without any merit. Thus the first question is whether there is justification for imposing this burden on the High Court. My initial inclination was to treat the new two tier tribunal system as wholly self sufficient. It is under the presidency of a judge who is likely to be a member of the Court of Appeal, and High Court judges can and will sit in the Upper Tribunal. There is considerable flexibility in the system in relation to the administration and composition of the Upper Tribunal. Can it not be left to the Senior President, in consultation with the President of the Queens Bench Division and other judicial colleagues to ensure that the tribunal judiciary is so deployed as to ensure the appropriate degree of judicial scrutiny of decisions of the lower tier? Having considered, however, the judgment of Lady Hale, who has great experience in this field, and those of other members of the Court, I have been persuaded that there is, at least until we have experience of how the new tribunal system is working in practice, the need for some overall judicial supervision of the decisions of the Upper Tribunal, particularly in relation to refusals of permission to appeal to it, in order to guard against the risk that errors of law of real significance slip through the system. What would, however, be totally disproportionate, is that this judicial supervision should extend to the four stage system of paper and oral applications first to the Administrative Court and then, by way of appeal, to the Court of Appeal, to which the ordinary judicial review procedure is subject. What are first required are readily identifiable criteria for the grant of permission to seek judicial review. That these exist should be capable of demonstration by paper applications, and my firm view is that applications for judicial review should be restricted to a single paper application, unless the court otherwise orders. This is, however, a matter for the Civil Procedure Rule Committee. As to the criteria, I have been persuaded, for the reasons given by Lady Hale, that the test laid down by the Court of Appeal in Siva is not the most satisfactory, and that the test governing second appeals in the courts of England and Wales should be adopted. For these reasons I endorse the conclusions reached by Lady Hale. I consider, however, that the procedural change, the possibility of which she contemplates in paragraph 58 of her judgment, will prove a necessity. I concur in the order that she proposes at para 60. LORD HOPE AND LORD RODGER For the reasons given by Lady Hale, Lord Phillips and Lord Dyson, we would make the order proposed by Lady Hale. LORD BROWN The critical issue raised by these appeals is the scope of the High Courts supervisory jurisdiction over a particular but important category of unappealable decisions of the Upper Tribunal, namely those by which the Upper Tribunal refuses leave to appeal to it from a First tier Tribunal decision. Having had the advantage of reading in draft the detailed judgments of Lord Phillips, Lord Hope (in Eba), Lady Hale and Lord Dyson, and respectfully agreeing with all of them as I do, there is singularly little that I wish to add. Really the only point I am concerned to emphasise is that our decision on these appeals to adopt the second appeals approach when deciding whether or not to permit a judicial review challenge in these cases cannot properly be regarded as in any way contrary to principle. The point can be simply made. The very fact that Parliament, by section 13(6) of the 2007 Act, has prescribed the same criteria for the grant of permission to appeal from the Upper Tribunal to the Court of Appeal as apply to second tier appeals in the courts of England and Wales destroys any possibility of an absolutist argument to the effect that the rule of law requires, post Anisminic (Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147), unrestricted judicial review over all unappealable decisions of courts or tribunals of limited jurisdiction to ensure that they are not permitted, unsupervised by the higher courts, to commit errors of law. The second tier appeals approach expressly contemplates that some Upper Tribunal decisions, even though erroneous in point of law, will be refused leave to appeal on the basis that they raise no important point of principle or practice and that there is no other compelling reason to hear them. Understandably, it has never been suggested that, following a refusal of leave to appeal on this basis, the underlying decision is nonetheless judicially reviewable for error of law. If, then, the rule of law allows certain errors of law in substantive decisions of the Upper Tribunal on appeal from the First tier Tribunal to go uncorrected, why as a matter of principle should it not similarly allow this in respect of decisions of the Upper Tribunal refusing leave to appeal to itself from the First tier Tribunal? True it is, of course, that the refusal of leave to appeal will have deprived the party refused of a second substantive hearing. Realistically, however, the very fact that he was refused leave to appeal to the Upper Tribunal (by both tribunals) tends to indicate the unlikelihood of there having been a genuinely arguable error of law in the first place. And certainly this situation calls no less for a proportionate answer to the question arising as to the required scope of the Courts supervisory jurisdiction to safeguard the rule of law. The rule of law is weakened, not strengthened, if a disproportionate part of the courts resources is devoted to finding a very occasional grain of wheat on a threshing floor full of chaff. For the reasons given in the other judgments to which I have referred (together with the reasoning above if, indeed, it adds anything to what others have said), I too would make the order proposed and leave it to the Rules Committee to decide how precisely to stream line the procedure for considering applications for permission to apply for judicial review in this class of case. LORD CLARKE I entirely agree with paras 1 to 50 of Lady Hales judgment, which set out the relevant history and issues with great clarity. I also agree with her that the real question in this appeal is what level of independent scrutiny outside the tribunal structure is required by the rule of law. It was common ground between the parties that at least some judicial scrutiny was required. It is, as I see it, a matter for the courts to determine what that scrutiny should be. I am not persuaded that judicial review requires the same degree of scrutiny in every case. All depends upon the circumstances. The circumstances have been described in detail by both Lady Hale and Lord Phillips as regards England and, in the Eba case, by Lord Hope as regards Scotland. The relevant circumstances include the following. The tribunal structure provides for the Upper Tribunal, as a superior court of record, to review the decision of the First tier tribunal. As Lord Phillips observes at para 91, the new system is under the presidency of a judge who is likely to be a member of the Court of Appeal and High Court judges can and will sit in the Upper Tribunal. Further scrutiny of a decision by the Upper Tribunal refusing permission to appeal is only needed in case something has gone seriously wrong. I agree with Lady Hale, Lord Phillips and Lord Dyson (and with Lord Hope in Eba) that adequate scrutiny will be provided if the High Court applies the same test as is applied by the Court of Appeal in the case of a second appeal. As Lord Phillips observes at para 70, in such a case the Court of Appeal will only give permission to appeal under CPR 52.13(2) if the appeal raises an important point of principle or practice or there is some other compelling reason for the court to hear it. My experience as Master of the Rolls was that such a test worked well for second appeals. On the one hand it limited the number of appeals and thus the expenditure of excessive resources while, on the other hand, it enabled the court to hear cases raising an important point and cases where there was some other compelling reason to do so. In that way the court has been able to deal with cases where something has gone seriously wrong. In my opinion the same would be true in the case of a proposed challenge to a refusal of permission to appeal by the Upper Tribunal. I agree with Lady Hale at para 57 that such an approach would be both rational and proportionate. I also agree with Lord Phillips at para 86 that there can be no doubt that Parliament intended that the two tier tribunal structure would provide a statutory right of appeal in relation to decisions of lower tier tribunals which would, in most cases, provide a satisfactory alternative to judicial review. Finally I agree with Lord Phillips at para 94 that the second appeals test should be adopted in preference to the approach laid down in Siva. The question which then arises is whether the application for permission to apply for judicial review should be dealt with wholly on paper or whether, if it was refused on paper, there should be a right to renew the application orally. There would then be a further question whether, if the application was refused at the first instance, it would be open to the applicant to apply to the Court of Appeal for permission to appeal and, if so, what the procedure should be. I agree with Lord Phillips at para 93 that it would be totally disproportionate to provide for the four stage system of paper and oral applications to which the ordinary judicial review procedure is subject. Although there is much to be said for his view that the application should be determined on paper unless the court otherwise orders, I also agree with him that this is a matter for the Civil Procedure Rules Committee. For these reasons I concur with the order proposed by Lady Hale at para 60. LORD DYSON Introduction It is common ground (and rightly so) that the Tribunals, Courts and Enforcement Act 2007 (TCEA) does not oust the courts jurisdiction to grant judicial review of unappealable decisions of the Upper Tribunal (UT). What is in issue is the scope of this jurisdiction. The Divisional Court and the Court of Appeal described it in similar terms. Laws LJ in the Divisional Court said ([2010] 2 WLR 1012, para 99) that it was limited to exceptional cases where there was an excess of jurisdiction in the narrow pre Anisminic sense ([1969] 2 AC 147) or where there has been a wholly exceptional collapse of fair procedure. Sedley LJ, delivering the judgment of the Court of Appeal, adopted at [2011] 2 WLR 36, para 42 what he described as the Sivasubramaniam model ([2003] 1 WLR 475) ie excess of jurisdiction in the pre Anisminic sense or procedural irregularity of such a kind as to constitute a denial of the applicants right to a fair hearing Sivasubramaniam para 56. This is the scope of the jurisdiction for which Mr Eadie QC (in Cart) and Mr Johnston QC (in Eba) contend. Like Lady Hale, I shall refer to it as the exceptional circumstances approach. On the other hand, Mr Drabble QC (supported by Mr Fordham QC and Mr Bailin QC) in Cart and Mr Mitchell in Eba submit that there is no justification for any restriction in the scope of the judicial review jurisdiction: it should in principle be available in all cases of legal error; and Mr Manjit Gill QC in MR (Pakistan) makes the same submission in the particular context of immigration and asylum cases. The exceptional circumstances approach I agree with Lady Hale that, for the reasons that she gives, the exceptional circumstances approach is not justified. As Mr Fordham points out, there are objections to it both in principle and in practice. As regards principle, the concept of jurisdictional error in the pre Anisminic sense (where, for example, a tribunal embarks on a case that is beyond its statutory remit) was used to indicate that a decision was so fundamentally flawed as to be a nullity, so that judicial review could be granted notwithstanding the existence of a statutory ouster. There is no statutory ouster in the present context. Even if there were, the importance of Anisminic is that it showed that a material error of law renders a decision a nullity so that the decision is in principle judicially reviewable. It is difficult to see any principled basis for holding that only jurisdictional errors of law by the UT should be judicially reviewable. In practical terms, it is immaterial to the victim of an error of law whether it is a jurisdictional error or should be differently classified. Non jurisdictional error may be egregious and obvious. Laws LJ accepted (para 99) that on the exceptional circumstances approach a decision which gets it wrong, even extremely wrong will not justify judicial review, whereas if the issue can be classified as jurisdictional, mere error will suffice. Thus a non jurisdictional error of law on a point of general public importance (for example, an important point of statutory interpretation) would not be amenable to judicial review; whereas a one off jurisdictional error of no general significance would be. Such a distinction does not promote the rule of law. In my view, as a matter of principle, there is no justification for drawing the line at jurisdictional error. Lady Hale has referred to the problem of practice. The distinction between jurisdictional error and other error is artificial and technical. I agree with what the editors of De Smiths Judicial Review 6th ed, (2007) state at para 4 046: It is, however, doubtful whether any test of jurisdictional error will prove satisfactory. The distinction between jurisdictional and non jurisdictional error is ultimately based on foundations of sand. Much of the super structure had already crumbled. What remains is likely quickly to fall away as the courts rightly insist that all administrative actions should be simply, lawful, whether or not jurisdictionally lawful. Unrestricted judicial review In my view, the case for retaining unrestricted judicial review is more formidable. There are a number of strands to the argument. First, there is nothing to indicate that Parliament intended to restrict the High Courts previous jurisdiction over unappealable decisions of tribunals. Although the TCEA made substantial changes to the organisation of tribunals, it is contended that these do not justify the court, as a matter of judicial policy, making a major change to the scope of judicial review. The High Courts supervisory jurisdiction to correct any error of law in unappealable decisions of the predecessors of the UT has been beneficial for the rule of law. There is a real risk that the exclusion of judicial review will lead to the fossilisation of bad law such, for example, as that which was corrected in Woodling v Secretary of State for Social Services [1984] 1 WLR 348 (see para 19 of Lady Hales judgment). There are also risks in restricting the judicial review jurisdiction in relation to errors of law in unappealable decisions of tribunals in cases involving fundamental rights and EU law. In such cases, if the UT makes an error of law in refusing permission to appeal, the consequences for the individual concerned may be extremely grave. Indeed, in Sivasubramaniam itself, the Court of Appeal recognised the existence of special factors which fully justify the practice of entertaining applications for permission to claim judicial review of refusals of leave to appeal by the [immigration appeal tribunal] (para 52). In asylum cases, fundamental human rights are in play, often including the right to life and the right not to be subjected to torture. Secondly, as Lady Hale says (para 49), the courts have established a principle of judicial restraint when considering decisions of expert tribunals. If this principle towards decisions of the UT is respected (as it should be), then judicial review of unappealable decisions provides a system of justice which is proportionate and appropriate to protect the rule of law. Further restrictions on the scope of judicial review are unnecessary. Finally, in so far as a floodgates argument is relied on by the respondents to justify restricting the scope of judicial review, this should be resisted. First, there is no evidence of a floodgates problem in relation to any tribunals except in the field of immigration and asylum. Secondly, this is in any event not a legitimate basis for the courts to restrict the scope of judicial review as a matter of judicial policy where Parliament, in enacting the TCEA, decided not to do so for itself. As Lord Bridge said in Leech v Deputy Governor of HMP Parkhurst [1988] AC 533 at 566C: In a matter of jurisdiction it cannot be right to draw lines on a purely defensive basis and determine that the court has no jurisdiction over one matter which it ought properly to entertain for fear that acceptance of jurisdiction may set a precedent which will make it difficult to decline jurisdiction over other matters which it ought not to entertain. Historically, the development of the law in accordance with coherent and consistent principles has all too often been impeded, in diverse areas of the law besides that of judicial review, by the courts fear that unless an arbitrary boundary is drawn it will be inundated by a flood of unmeritorious claims. Despite their apparent strength, I cannot accept these arguments. The TCEA has made a major change to the order of things. It implemented many of the recommendations of the committee chaired by Sir Andrew Leggatt, Tribunals for usersOne System, One Service (2001). The committees terms of reference included a review of the delivery of justice through tribunals to ensure that there are fair, timely, proportionate and effective arrangements for handling those disputes, within an effective framework for decision making which encourages the systematic development of the area of law concerned, and which forms a coherent structure, together with the superior courts, for the delivery of administrative justice. As stated in the overview of its report, the committee considered that its proposals would give to tribunals a collective standing to match that of the Court System and a collective power to fulfil the needs of users in the way that was originally intended (para 8). The report contains many proposals which were designed to meet that overall objective. Para 6.16 is important: These arrangements will create for the first time a complete structure of appellate tribunals, covering all tribunal jurisdictions. As we explain in further detail in paragraphs 6.376.38 below, the President of each Division will be a judge, often a senior one. All members will be experts, specialising in the jurisdiction of the Division or Divisions in which they sit. They will also be trained to conduct hearings in the distinctive enabling approach common to all tribunals. For all these reasons, we think the time has come for a change in the relationship between tribunals and the courts. Hitherto, tribunal decisions have in general not set precedents. In some tribunals, there have been arrangements to identify individual cases as carrying particular weight or authority, which future tribunals are normally expected to observe. We do not think that will suffice to give the greater coherence and consistency that we would recommend in the Tribunals System. We therefore wish to see systematic arrangements for the setting of precedent. We think that this should lead to changing the relationship between tribunals and the supervisory jurisdiction of the High Court. There is also a section of the report (paras 6.27 to 6.36) headed The place of judicial review. It notes (para 6.27) that the proportion of immigration and (mostly) asylum cases in applications for permission for judicial review in 1999 was approaching two thirds of the total. While the great majority of them were unsuccessful, they demonstrated the waste of scarce resources which can arise from problems in the relationship between tribunals and courts. It states (para 6.31) that the EAT and the Transport Tribunal have been designated as superior courts of record and as such have a status formally equivalent to that of the High Court and therefore escape judicial review. Others do not. Para 6.32 states that the aim of the new appellate Division would be to develop by its general expertise and the selective identification of binding precedents, a coherent approach to the law. It would be comparable in authority to the High Court so far as tribunals are concerned. For that reason, it would be inappropriate to subject the Presidents of the appellate Division to review by another judge of equal status. The report considers two ways of excluding judicial review. One is by constituting all the appeal tribunals as a superior court of record, but this is rejected for the reasons stated in para 6.33. The other is to exclude judicial review by express statutory provision (para 6.34). It is this proposal that is recommended, the advantage being said to be that it would preserve a clear distinction between the new System and the courts. It is true that this last proposal was not accepted by Parliament. But it is clear that the Leggatt committee proposed that judicial review of decisions by what was to become the UT should be excluded altogether because they thought that their proposals for restructuring and enhancing the tribunal system and the resultant change in the relationship between the tribunals and the courts meant that judicial review was no longer necessary. Since Parliament adopted the main thrust of the committees proposals, the views of the committee as to the significance of those changes for the relationship between the tribunals and the courts are entitled to respect. The fact that Parliament did not accept the recommendation to exclude judicial review of unappealable decisions of the UT does not mean that it rejected the committees view that there had been a significant change in the structure of the tribunal system such as might justify a reappraisal of the scope of the judicial review jurisdiction. As I shall explain, the Government certainly did not disagree with that view and there is no reason to think that Parliament disagreed with it either. It merely means that Parliament was not willing to adopt the controversial suggestion that judicial review should be excluded altogether. An insight into the thinking of Government and Parliament is to be found in the Government White Paper: Transforming Public Services: Complaints, Redress and Tribunals presented to Parliament in July 2004 (Cm 6243). At para 7.27, the paper stated that it was intended to strengthen the UT by the secondment of circuit judges and, for cases of sufficient weight, High Court judges with relevant expertise. Para 7.28 stated: With this structure the only possible role for judicial review in the High Court would be on a refusal by the first and second tier to grant permission to appeal. It is this possible route to redress which has caused so much difficulty for both the Immigration Appellate Authorities and the Courts. When permission to appeal has been refused by both tiers, and provided that the tribunal appellate judiciary are of appropriate quality, as we intend that they should be, there ought not to be a need for further scrutiny of a case by the courts. However, complete exclusion of the courts from their historic supervisory role is a highly contentious constitutional proposition and so we see merit in providing as a final form of recourse a statutory review on paper by a judge of the Court of Appeal. Thus a consequence of giving effect to the Leggatt report was to bring about a strategic reorganisation of the tribunals system by making it more coherent and improving its expertise and standing. I agree with the views expressed in the Leggatt report and the 2004 White Paper that the changes demanded a reappraisal of the scope of judicial review. Parliament refused to undertake it. The task of deciding the scope of the judicial review jurisdiction falls therefore to be performed by the courts. It follows that the fact that in the pre TCEA era there was unrestricted availability of judicial review of refusals of permission to appeal by appeal tribunals is not of itself a good reason for holding that that situation should survive the enactment of the TCEA. It is for the court to decide in the post TCEA world whether any and, if so, what restrictions should be placed on the availability of judicial review. I accept that any restrictions call for justification. Prima facie, judicial review should be available to challenge the legality of decisions of public bodies. Authority is not needed (although much exists) to show that there is no principle more basic to our system of law than the maintenance of rule of law itself and the constitutional protection afforded by judicial review. But the scope of judicial review should be no more (as well as no less) than is proportionate and necessary for the maintaining of the rule of law. The status and functions of the UT to which I have already referred are important here. In my view, there are three reasons why unrestricted judicial review of unappealable decisions of the UT is neither proportionate nor necessary for maintaining the rule of law. First, there is the status, nature and role of the UT to which I have already referred. Secondly, the TCEA gives those who wish to challenge the decision of a First tier Tribunal (FTT) the opportunity to have the decision scrutinised on several occasions: first when the FTT decides whether or not to review its decision under section 9(1) and (2); second, if the FTT decides not to review its decision, when it decides whether or not to grant permission to appeal to the UT under section 11(4)(a); third, if the FTT refuses permission to appeal, when the UT decides whether or not to grant permission to appeal under section 11(4)(b). The UT initially decides this on the papers. In certain categories of case, there is a right to renew the application at an oral hearing (Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698) rules 22(3) and (4); in any event, the UT has the power, if it considers it appropriate to do so, to hold an oral hearing to decide permission (ibid, rules 5(1) and 5(3)(g)). The third reason involves the issue of resources. There is no doubt that immigration and asylum cases have presented huge problems for the justice system. The relevant history is summarised at paras 46 and 47 of Lady Hales judgment. It is singled out for particular mention in the 2004 White Paper as having caused so much difficulty for both the Immigration Appellate Authorities and the Courts. The adoption of unrestricted judicial review of refusals of permission to appeal by the Upper Tribunal (Immigration and Asylum Chamber) would involve a return to the position under the Immigration Act 1971 and the Asylum and Immigration Appeals Act 1993 when the courts were inundated with unmeritorious applications for judicial review of refusals by the Immigration Appeal Tribunal of decisions of the special adjudicator. Parliament recognised the existence of the problem and sought to overcome it successively by enacting Nationality, Immigration and Asylum Act 2002 and the Asylum and Immigration (Treatment of Claimants etc) Act 2004 (see para 21 of Lady Hales judgment). It cannot have been intended by Parliament when it enacted the TCEA that there should, in effect, be a return to the situation that obtained before the enactment of the 2002 Act. Mr Gill does not suggest that this was Parliaments intention. His point is simply that, in the absence of the plainest express words to restrict the courts historical role of supervising statutory tribunals of limited jurisdiction, it is unconstitutional for the courts to limit that role. Recognising that a return to the pre 2002 Act days would be unlikely to commend itself to this court as necessary and proportionate for the maintenance of the rule of law, Mr Gill suggested in his reply, as an alternative to his principal submission, that judicial review should lie in cases where there was clear and obvious error and where the prospects of success were strong as opposed to real. One can readily sympathise with the argument that problems that are peculiar to the immigration and asylum cases should not determine the scope of judicial review in all other cases. It seems that the courts have not been inundated with unmeritorious applications for judicial review of the refusal of leave to appeal from other tribunals. But Sullivan LJ was right, for the reasons that he gave at paras 51 to 53 of his judgment in MR (Pakistan), to hold that the same approach should be applied to permission decisions made by the Immigration and Asylum Chamber of the Upper Tribunal as they do to decisions made by other chambers. In the light of the unified tribunal structure created by the TCEA, there should be a unified approach as to the grounds, if any, on which a judicial review of decisions of the UT can be sought. It would be contrary to the unifying purpose of the TCEA for a different approach to be adopted depending on the subject matter of the decision being appealed. I accept that floodgates arguments must be examined with care. But they cannot be ignored, particularly in the light of the experience in the immigration and asylum field. As Lord Phillips says, judicial resources are limited. It is clear from the general acceptance of the Leggatt report and from the terms of the 2004 White Paper that Parliament intended that there should not be a return to the pre 2002 Act days in immigration and asylum cases when the courts were overwhelmed with unmeritorious judicial review claims. If the floodgates argument were the only point militating against unrestricted judicial review, I doubt whether it would be enough. But it does not stand alone. The various factors to which I have drawn attention (in particular, the reorganisation of the tribunal system) lead me to conclude that it is not necessary or proportionate for the maintaining of the rule of law to allow unrestricted judicial review of unappealable decisions of the UT. For these reasons, I would hold that unrestricted judicial review is not necessary for the maintenance of the rule of law and is not proportionate. The second tier appeals approach It follows from what I have said so far that the court must find another solution. The problem with the exceptional circumstances approach is that, although it recognises the need to restrict the scope of judicial review, it does so in a way which creates its own problems and does not target arguable errors of law of general importance. The problem with unrestricted judicial review is that it captures all arguable errors of law without discriminating between them notwithstanding the countervailing factors to which I have referred. In R (Wiles) v Social Security Commissioner [2010] EWCA Civ 258, I suggested that there was much to be said for applying (by analogy) the criteria for the grant of permission by the UT to the Court of Appeal. Section 13(6) of the TCEA provides that permission shall not be granted unless (a) the proposed appeal would raise some important point of principle or practice; or (b) there is some other compelling reason for the relevant appellate court to hear the appeal. These criteria are identical to those that apply to any second appeal in the courts: see section 55(1) of the Access to Justice Act 1999. It seems to me that the second appeal criteria approach offers a number of advantages. First, and obviously, it does not suffer from the defects of the two alternatives that I have rejected. Secondly, and positively, it ensures that errors on important points of principle or practice do not become fossilised within the UT system. An individual who has been unsuccessful before the FTT will be able to raise an important point of law in the courts if the UT refuses to grant permission to appeal to itself. As explained by the Court of Appeal in Uphill v BRB (Residuary) Ltd [2005] 1 WLR 2070, it is not enough to point to a litigants private interest in the correction of error in order to obtain permission for a second appeal. Permission will only be given where there is an element of general interest, which justifies the use of the courts scarce resources: see also Zuckerman on Civil Procedure 2nd ed, (2006) para 23.139. It follows that, if the law is clear and well established but arguably has not been properly applied in the particular case, it will be difficult to show that an important point of principle or practice would be raised by an appeal. The position might be different where it is arguable that, although the law is clear, the UT is systematically misapplying it: see, for example, Cramp v Hastings Borough Council [2005] 4 All ER 1014. Thirdly, the second limb of the test (some other compelling reason) would enable the court to examine an arguable error of law in a decision of the FTT which may not raise an important point of principle or practice, but which cries out for consideration by the court if the UT refuses to do so. Care should be exercised in giving examples of what might be some other compelling reason, because it will depend on the particular circumstances of the case. But they might include (i) a case where it is strongly arguable that the individual has suffered what Laws LJ referred to at para 99 as a wholly exceptional collapse of fair procedure or (ii) a case where it is strongly arguable that there has been an error of law which has caused truly drastic consequences. The second appeal criteria have been in force in the courts since October 2000. The exceptional nature of the test is well understood. A perusal of the commentary in Civil Procedure (2011) (The White Book) on CPR 52 r 13(2)(a) and (b) suggests that the application of the second appeals test has not caused difficulty. That also accords with the experience of Lord Clarke. It also accords with mine. I agree with others that rules should be made by the Civil Procedure Rule Committee (CPRC) to govern the exercise of the judicial review jurisdiction of unappealable decisions of the UT. The mistakes of the past should not be repeated. A fair but streamlined system should be introduced with an emphasis on applications being made and dealt with on paper. Ultimately, however, it will be for the CPRC, taking account of the judgments of this court and after due consultation, to decide what is the appropriate procedure to adopt. In practice, there is little if any substantive difference between an appeal on a point of law and judicial review, although each may, of course, be subject to different procedural conditions. Parliament has shown a liking for the second appeal criteria in second appeals and in particular in the tribunal context of appeals from the UT to the Court of Appeal. It can at least be said that to import those criteria into the judicial review jurisdiction in the present context does not go against the grain of the TCEA. More positively, in my view the second tier appeals approach provides a proportionate answer to the question: what scope of judicial review of unappealable decisions of the UT is required to maintain the rule of law? For these reasons, as well as those given by Lady Hale and Lord Phillips (in Cart) and by Lord Hope (in Eba), I would allow these appeals on the jurisdictional issue. But, in agreement with them, I would dismiss the appeals in both cases as well as in MR (Pakistan). |
Trump International Golf Club Scotland Limited (TIGC) has developed a golf club and resort at Menie Estate and Menie Links, Balmedie, Aberdeenshire. In 2011 Aberdeen Offshore Wind Farm Limited (AOWFL) applied for consent under section 36 of the Electricity Act 1989 (the 1989 Act) to construct and operate the European Offshore Wind Deployment Centre in Aberdeen Bay, off the coast of Blackdog, Aberdeenshire. The application concerned the construction of up to 11 wind turbines, which might be of different sizes, with a maximum power generation of 100MW. The proposed windfarm, if constructed, would be located about 3.5 kilometres from the golf resort and would be seen by people using the resort. TIGC, concerned that the proposed windfarm development would materially diminish the amenity of the golf resort, opposed the application. On 26 March 2013 the Scottish Ministers granted consent for the development and operation of the windfarm subject to conditions. TIGC has challenged that decision on various grounds in the courts in Scotland without success. Two grounds of challenge remain in this appeal. The two grounds on which TIGC now seeks to have the consent quashed are: (i) because the Scottish Ministers had no power under the 1989 Act to grant consent to the windfarm application as only a licence holder or an exempt person may apply for and be granted a construction consent under section 36 of that Act; and (ii) because condition 14 of the consent (which requires the submission and approval of a design statement) is void for uncertainty. I shall refer to the first ground as the section 36 challenge and the second ground as the condition 14 challenge. The section 36 challenge The section 36 challenge raises a question of statutory construction. In essence, TIGC relies on the wording of paragraph 3 of Schedule 9 to the 1989 Act in support of its contention that only the holder of a licence to generate, transmit, or supply electricity, which is granted under section 6 of the 1989 Act, or a person exempted under section 5 of that Act from holding such a licence, may apply for a construction consent under section 36. Paragraph 3 of Schedule 9 (so far as relevant) provides: (1) In formulating any relevant proposals, a licence holder or a person authorised by an exemption to generate, distribute, supply or participate in the transmission of electricity (a) shall have regard to the desirability of preserving natural beauty, of conserving flora, fauna and geological or physiographical features of special interest and of protecting sites, buildings and objects of architectural, historic or archaeological interest; and (b) shall do what he reasonably can to mitigate any effect which the proposals would have on the natural beauty of the countryside or on such flora, fauna, features, sites, buildings or objects. (2) In considering any relevant proposals for which his consent is required under section 36 or 37 of this Act, the Secretary of State shall have regard to (a) paragraph (a) of sub paragraph (1) above; and (b) the extent to which the person by whom the proposals were formulated has complied with his duty under paragraph (b) of that sub paragraph. the desirability of the matters mentioned in (3) Without prejudice to sub paragraphs (1) and (2) above, in exercising any relevant functions each of the following, namely, a licence holder, a person authorised by an exemption to generate or supply electricity and the Secretary of State shall avoid, so far as possible, causing injury to fisheries or to the stock of fish in any waters. The references to the Secretary of State in relation to section 36 applications in Scotland should be treated as references to the Scottish Ministers: Scotland Act 1998, section 117. Section 36 of the 1989 Act provides inter alia that a generating station shall not be constructed, extended or operated except in accordance with a consent which in England and Wales is granted by the Secretary of State and in Scotland by the Scottish Ministers. Mr John Campbell QC for TIGC submits that paragraph 3 of Schedule 9 to the 1989 Act gives rise to a necessary implication that only licence holders or exempt persons may be granted a section 36 consent. Were it otherwise, there would be two classes of section 36 applicant, namely those with duties under paragraph 3(1) of Schedule 9 and those without such duties. There is, he submits, no reason for two such classes. Secondly, under paragraph 3(2) of Schedule 9, the Scottish Ministers when considering any relevant proposals which require a section 36 consent, are to have regard to the extent to which the applicant has complied with his duty under paragraph 3(1)(b) of Schedule 9. That presupposes that the applicant is under such a duty. Only licence holders and exempt persons are under those duties. If an applicant were able to obtain a section 36 consent and construct a generating station or other relevant proposal before he obtained a licence to generate, he could complete a significant development before he became subject to the environmental duties of paragraph 3 of Schedule 9. Looking more generally at statutory policy, Mr Campbell submits that the statutory policy is to secure that only operators who are suitably qualified in the electricity generating industry will apply for consent to construct a generating station or other development which is a relevant proposal. There is, he submits, a logical progression by which, first, an applicant establishes his competence to generate electricity by obtaining a section 6 licence or a section 5 exemption, secondly, he formulates his proposals for the development in a section 36 application, thirdly, he prepares and publishes a statement (under Schedule 9, paragraph 4) setting out the manner in which he will perform the Schedule 9 paragraph 3(1) duties, before, finally, he implements the section 36 consent by constructing the relevant proposal. Like Lord Doherty and the First Division of the Inner House of the Court of Session, I am satisfied that this challenge fails. I examine first the structure of and the language used in the 1989 Act and then discuss the wider policy background to the Act. (i) The structure and language of the 1989 Act The relevant starting point is section 4 of the 1989 Act, which makes it a criminal offence to generate electricity or to carry out other specified activities without authorisation by a licence. Section 5 empowers the Secretary of State to grant an exemption from the requirement of a licence. Section 6 empowers the Gas and Electricity Markets Authority to grant, among others, a licence to generate electricity. There is no express prohibition in section 4 from constructing a generating station without a licence, as one might have expected if only licence holders or exempt persons alone were to be given a section 36 consent. Section 36 places no restriction on who may apply for a consent to construct a generating station. Neither does Schedule 8, which section 36(8) relates to consents under section 36 and also consents to the installation of overhead lines under section 37. Schedule 8 sets out the procedures to be followed when seeking or objecting to applications for consent or challenging a decision whether to hold a public inquiry. Again, one might have expected an express restriction on the applicants for a section 36 consent in these provisions if one were intended. Section 38 provides: The provisions of Schedule 9 to this Act (which relate to the preservation of amenity and fisheries) shall have effect. Paragraphs 1 and 2 of Schedule 9 relate to the preservation of amenity in England and Wales and paragraphs 3 and 4 contain similar provisions for the preservation of amenity in Scotland. Two considerations point away from Mr Campbells interpretation. First, neither paragraph 1(1) or 3(1) contains any express restriction on who may apply for a section 36 consent for the construction of a generating station which is large enough to be a relevant proposal. If there were to be such a restriction, I would have expected an express provision. Secondly, not all section 36 applications are affected by Schedule 9, but only relevant proposals, which are defined in Schedule 9, paragraph 1(3) as the construction or extension of a generating station with a capacity of not less than 10MW. Offshore generating stations with a capacity of 1MW or more require a section 36 consent (the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002 ((SSI 2002/407), article 3). But they are not relevant proposals to which Schedule 9 applies if their capacity is below 10MW. As offshore installations with a capacity of under 10MW can have a significant impact on the environment and amenity, this limitation suggests that Schedule 9 was not intended to be a regime for controlling the environmental effects of constructing generating stations but, as I suggest in para 20 below, is a survivor from prior legislation when the electricity generating market was organised differently. In my view, Mr Campbells strongest point is that sub paragraph 3(2)(b) requires the Scottish Ministers, when considering any relevant proposals in a section 36 application, to have regard to the extent to which the licence holder or person authorised to generate by an exemption has complied with his sub paragraph 3(1)(b) duties to mitigate adverse effects. But, in the absence of any indication in sub paragraph 3(1), either express or arising by necessary implication, that only a licence holder or person authorised by exemption could apply under section 36 to construct a generating station which was a relevant proposal, I do not attach significance to this point. In my view sub paragraph 3(2) requires the Scottish Ministers to have regard to the environmental matters in sub paragraph 3(1)(a), whoever is the section 36 applicant. This is supported by the opening words of sub paragraph 3(2): In considering any relevant proposals for which [their] consent is required. Sub paragraph 3(2)(b) makes sense in this context if one construes it as applying only to those applicants who are under a duty under sub paragraph 3(1)(b) by reading in the words (if any) after duty so that the provision reads the Scottish Ministers shall have regard to the extent to which the person by whom the proposals were formulated has complied with his duty (if any) under paragraph (b) of sub paragraph 3(1) (emphasis added). Unless there were anything in the wider policy background to the 1989 Act which suggested an intention to restrict the persons who may apply under section 36, I think that the reading in of those words, which does no violence to the statutory language, makes sense of the provisions of Schedule 9. Finally, in this part of the challenge, Mr Campbell points out that the section 36 permission allows the applicant to operate as well as construct the generating station. Because only a licensed person or a person authorised by exemption can lawfully generate electricity, he suggests that the permission to operate can only be given to a licensed or exempted person. I am not persuaded that that is so. A section 36 permission to operate is a necessary but not a sufficient precondition for generating electricity in a generating station. As the Scottish Ministers submit in their written case, section 4 makes it clear that no generating station may be operated without a licence or exemption, and it is customary in statutory development consents to include conditions governing the operations of the new building. By requiring a section 36 consent for operations, the 1989 Act enables the Scottish Ministers to impose conditions relating to the use of the generating station as well as its construction. I am therefore of the view that the structure and language of the 1989 Act does not support TIGCs case, which depends upon the courts acceptance that Parliament sought to limit who may apply for a section 36 consent by using circumlocution and implication. (ii) The policy background to the 1989 Act I am also satisfied that there is nothing in the background to the 1989 Act which requires the court to take a different view of the relevant statutory provisions. I have five reasons for that conclusion. First, the aim of the 1989 Act was to liberalise the market for the generation, transmission and supply of electricity in Great Britain by privatisation. The White Paper, Privatisation of the Scottish Electricity Industry (1988) (Cm 327) proposed the replacement of the two Scottish public sector electricity boards by two vertically integrated private companies and envisaged that, because Scotland then had surplus generating capacity and England and Wales were projected to need substantial new capacity by 2000, the electricity industry in Scotland could compete in the British market for electricity. It and the White Paper for England and Wales, Privatising Electricity (1988) (Cm 322), proposed a Britain wide regulatory system in order to promote fair competition. In England and Wales the White Paper proposed competition in electricity generation by removing the effective monopoly on generation of the Central Electricity Generating Board and by transferring control and ownership of the National Grid to the distribution companies, with whom the generating companies would enter into contracts. The policy did not address who would construct generating stations. But it was not a necessary part of this model that the persons who sought to build the needed new generating stations were the same persons as those who later generated electricity at those stations. Secondly, the 1989 Act contains two separate regulatory regimes, for the construction of electricity generation stations and overhead electric lines (sections 36 and 37) on the one hand, and for the licensing and other regulation of electricity supply, including generation and transmission (inter alia sections 4, 6 and 7) on the other. Since the devolution of power to Scotland there have been separate regulators for those activities: the former, involving a land use permission, is in Scotland the responsibility of the Scottish Ministers; the latter, involving the regulation of electricity generation, transmission, distribution and supply in the interests of consumers (viz the 1989 Act section 3A(1) and (5)) is a reserved matter (Scotland Act 1998, section 30 and Schedule 5, Part II, section D1) and is the responsibility of the Secretary of State and the Gas and Electricity Markets Authority. Thirdly, I am satisfied that Parliament did not create a regulatory gap by allowing persons, who are not subject to environmental duties under sub paragraph 3(1) of Schedule 9, to apply for construction consents under section 36 of the 1989 Act. There is a theme in TIGCs written case which suggests that if an applicant for a section 36 consent is not under statutory environmental obligations in Schedule 9, paragraph 3(1), it is not subject to environmental constraints when constructing a generating station. But this is not so. The Scottish Ministers have a duty under sub paragraph 3(2)(a) of Schedule 9, when considering any application for consent under section 36 or 37 for a development which is a relevant proposal, to have regard to the desirability of the matters mentioned in sub paragraph 3(1) of that Schedule. In addition, the Scottish Ministers have a wide power under section 36(5) to impose conditions in a section 36 consent and they are informed of the environmental impact of a proposed development by an environmental assessment which has been required since the commencement of the Environmental Assessment (Scotland) Regulations 1988 (SI 1988/1221) and their amendment in 1990 to take into account the 1989 Act. Now the Scottish Ministers are subject to the Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2000 (SSI 2000/320), all as Lord Doherty narrated in paras 42 to 44 of his impressive opinion. As with an applicant for planning permission under the Town and Country Planning legislation, it is not necessary in order to protect the environment for an applicant for a section 36 consent to be subject to environmental duties in relation to the construction of a generating station because the authority granting the consent protects the environment by imposing conditions. Fourthly, there was and is no need to require an applicant under section 36 to possess in advance a generating licence or an exemption in order to secure that only competent persons construct generating stations. Section 36(5) of the 1989 Act, which provides that the Scottish Ministers may include in a consent such conditions as appear to them to be appropriate, expressly refers to conditions as to the ownership or operation of the station. Further, the skills required to construct a generating station, whether onshore or offshore, are not the same as those required for generating and supplying electricity, although the two skill sets may overlap. Fifthly, as Mr James Mure QC explained, it has been the established practice in both of the British jurisdictions for commercial organisations to apply for and obtain section 36 consents before they seek a licence to generate electricity under section 6 of the 1989 Act or an exemption under section 5. No evidence was presented that this practice has resulted in unsuitable persons applying for and obtaining section 36 consents or in any failure to protect the environment. A question remains as to why Parliament, when creating the new regulatory regime in the 1989 Act, should have imposed duties in Schedule 9 on licence holders and exempt persons in relation to the formulation of relevant proposals but not on other applicants for a section 36 consent for relevant proposals. The answer seems to be in the prior legislative history, in which earlier statutes imposed similar duties on publicly owned electricity boards which generated electricity. The 1989 Act preserved those duties by imposing them on persons authorised to generate electricity. Lord Malcolm in the First Division discussed this in paras 52 to 57 of his opinion, which I need not repeat in this judgment. Accordingly, neither the language of the 1989 Act nor its policy background supports the interpretation which TIGC advances. I therefore turn to the challenge to the validity of condition 14 of the section 36 consent. The condition 14 challenge Condition 14 of the section 36 consent, which the Scottish Ministers included after consulting Scottish Natural Heritage (SNH), states: Prior to the Commencement of the Development, a detailed Design Statement must be submitted by the Company to the Scottish Ministers for their written approval, after consultation by the Scottish Ministers with SNH, Marine and Coastguard Agency, Northern Lighthouse Board, National Air Traffic Services and any such other advisors as may be required at the discretion of the Scottish Ministers. The Design Statement must provide guiding principles for the deployment of the wind turbines. This plan must detail: (a) Layout location for each phase and each turbine; and (b) Turbine height, finishes, blade diameter and rotation speed across each phase, rows and individual turbine locations; and (c) Lighting requirements (navigation and aviation) for each turbine/row or, as the case may be, phase including any anemometer mast; and (d) Further detailed assessment of visual impacts to inform the detailed layout and design of each location and phase of the deployment centre from selected viewpoints to be agreed with the Scottish Ministers and any such other advisors as may be required at their discretion. Reason: to set out design principles to mitigate, as far as possible, the visual impact of the turbines. Mr Campbell submits that the section 36 consent is invalid because condition 14 is both unenforceable and also so uncertain that it is irrational. He advances three arguments in support of that contention. First, he submits that the condition is invalid because there is no mechanism by which the Scottish Ministers can force the developer to construct the windfarm in accordance with the design statement. He argues that, in contrast with conditions 18, 24 and 25, there is no express statement that the developer must construct and operate the development in accordance with its terms. Secondly, he submits that the condition is void for uncertainty because there is no indication of what compliance with it entails. Thirdly, even if (which he does not accept) the design statement could be enforced through the construction method statement in condition 13, which I set out in para 29 below, the power of the Scottish Ministers to agree a departure from the construction method statement means that the scope of the development is uncertain. The short answer to this challenge is that if, contrary to my view, condition 14 were unenforceable, the section 36 consent would not be invalidated. Annex 1 of the consent confines the development to 11 turbines each with a maximum blade tip height of 198.5 metres and Figure 1 attached to the consent shows the approved location of the 11 turbines. TIGC does not dispute that (subject to an argument about the final words of the condition, which I discuss below) condition 7 requires that the development be constructed and operated in accordance with, among others, the environmental statement and the supplementary environmental information statement. The latter document contains design principles on the location and height of the turbines, on which the Scottish Ministers can insist by invoking condition 7. Chapter 19 of the environmental statement contained a seascape, landscape and visual impact assessment which had been prepared after consultation with SNH, Aberdeen City Council and Aberdeenshire Council. It assumed that the wind turbines would have a tip height of up to 195 metres and a rotor radius of up to 75 metres. In order to take account of developing windfarm technology, in the supplementary environmental information statement AOWFL re assessed the visual impact of the development on the assumption that the maximum tip height was 198.5 metres and the maximum rotor radius was 86 metres. AOWFL also took account of SNHs consultation response, in which it requested a condition requiring a design statement. AOWFL set out objectives or design principles which it formulated after having regard to, and adapting to the offshore environment, SNHs publication, Siting and Designing Windfarms in the Landscape (2009). AOWFL listed its objectives such as (a) that the closest shoreward row of turbines should be relatively consistent in tip height to maintain design integrity in views from the immediate coastline and should be populated with the smallest tip heights and rotor diameter, and (b) that the largest turbines should be located further out to sea at specified locations to achieve a gradation to the lowest turbines located closest to the coastline. It used those objectives to formulate three zoning scenarios and appraised their visual impact from various locations. The Scottish Ministers accepted the visual impact of those scenarios. Thus, even if condition 14 were invalid, important elements of the benefits which it promoted are contained within the supplementary environmental information statement. The Scottish Ministers can insist on compliance with that document and those principles in the construction of the development. The scope of the development is defined by Annex 1 of the consent and the supplementary environmental information statement sets out the principles governing the size and location of the turbines. Condition 14 therefore cannot be seen as a fundamental condition which determines the scope and nature of a development and which, if invalid, would in turn invalidate the consent. For completeness, I observe that even if condition 14 could not be enforced so as to require AOWFL to construct the windfarm in accordance with the design statement, the condition would not be void for uncertainty. It would have effect to the extent that the developer would have to produce a design statement and obtain its approval by the Scottish Ministers before it could start the development. In Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, a case concerning a condition in a planning permission, Lord Denning stated (p 678): a planning condition is only void for uncertainty if it can be given no meaning or no sensible or ascertainable meaning, and not merely because it is ambiguous or leads to absurd results. It is the daily task of the courts to resolve ambiguities of language and to choose between them; and to construe words so as to avoid absurdities or to put up with them. And this applies to conditions in planning permissions as well as to other documents. It cannot be said that condition 14 has no ascertainable meaning. Indeed, TIGC accepts that it provides that the Scottish Ministers must approve the design statement before the development can commence. Further, I do not accept the submission that the condition is invalid because of any uncertainty as to what amounts to compliance with its terms. What will amount to compliance with the design statement will depend on (a) its terms and (b) the way in which the Scottish Ministers incorporate its requirements into the construction method statement, which is the subject of condition 13, to which I now turn. When one construes the conditions as a whole, it is clear that the consent contains a mechanism that can enable the Scottish Ministers to enforce compliance with the condition 14 design statement in the construction of the development. First, condition 13 provides (so far as relevant): Prior to the Commencement of Development a Construction Method Statement (CMS) must be submitted by the Company to the Scottish Ministers and approved, in writing by the Scottish Ministers, following consultation [with specified advisors including SNH]. Unless otherwise agreed in writing by the Scottish Ministers, construction of the Development must proceed in accordance with the approved CMS. The CMS must include, but not be limited to, information on the following matters: (a) Commencement dates; (b) Working methods ; and (g) Design Statement. The CMS must be cross referenced with the Project Environmental Management Plan, the Vessel Management Plan and the Navigational Safety Plan. Reason: To ensure the appropriate construction management of the Development, taking into account mitigation measures to protect the environment and other users of the marine area. It is thus open to the Scottish Ministers to require AOWFL to include in the CMS a statement as to how it would implement the design statement. The condition refers to information on the design statement. That can include information on how the method of construction will comply with it, which, once the CMS is approved, becomes obligatory. Further, the listed matters are not exclusive as the condition says that the CMS must include, but not be limited to the listed topics. The Scottish Ministers, after consulting SNH amongst others, can require other relevant matters which mitigate environmental impact to be included within the CMS before they approve it. Thus condition 14 can be enforced by the use of the powers which the Scottish Ministers possess in condition 13. Secondly, further support for the view that the conditions envisaged that the developer would be required to comply with the design statement can be found in condition 24, which requires AOWFL to submit for approval a vessel management plan to minimise disturbance to marine mammals and birds. As mentioned above, the condition requires that the development must be constructed and operated in accordance with the vessel management plan. It also provides that the vessel management plan must be cross referenced with, amongst others, the CMS and the design statement. Thus, when one reads condition 14 in the context of conditions 13 and 24 it is clear that the conditions envisaged that the Scottish Ministers could use both the CMS and the design statement to regulate the detailed design of the windfarm in the interests of environmental protection and require those constructing the generating station to comply with those statements. It is not therefore necessary to consider whether one can imply into condition 14 an obligation that the construction of the development must be in accordance with the design statement. But as it is an important point which Mr Campbell raises in his submissions, and as Lord Carnwath has discussed the matter more fully in his judgment, I will deal with it briefly. Mr Campbell submits that the court should follow the approach which Sullivan J adopted to planning conditions in Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 13 and hold that there is no room for implying into condition 14 a further obligation that the developer must construct the development in accordance with the design statement. In agreement with Lord Carnwath, I am not persuaded that there is a complete bar on implying terms into the conditions in planning permissions, and I do not see the case law on planning conditions under planning legislation as directly applicable to conditions under the 1989 Act because of the different wording of the 1989 Act. Whether words are to be implied into a document depends on the interpretation of the words which the author or authors have used. The first question therefore is how to interpret the express words, in this case the section 36 consent. There is a modern tendency in the law to break down divisions in the rules on the interpretation of different kinds of document, both private and public, and to look for more general rules on how to ascertain the meaning of words. In particular, there has been a harmonisation of the interpretation of contracts, unilateral notices, patents and also testamentary documents. This can be seen, for example, in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 per Lord Clarke at paras 14 to 23 (contracts), Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 per Lord Steyn at pp 770C 771D and Lord Hoffmann at pp 779H 780F (unilateral notices), Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667, per Lord Hoffmann at paras 27 to 35 (patents), and Marley v Rawlings [2015] AC 129, per Lord Neuberger at paras 18 23 (testamentary documents). Differences in the nature of documents will influence the extent to which the court may look at the factual background to assist interpretation. Thus third parties may have an interest in a public document, such as a planning permission or a consent under section 36 of the 1989 Act, in contrast with many contracts. As a result, the shared knowledge of the applicant for permission and the drafter of the condition does not have the relevance to the process of interpretation that the shared knowledge of parties to a contract, in which there may be no third party interest, has. There is only limited scope for the use of extrinsic material in the interpretation of a public document, such as a planning permission or a section 36 consent: R v Ashford Borough Council, Ex p Shepway District Council [1999] PLCR 12, per Keene J at pp 19C 20B; Carter Commercial Developments Ltd v Secretary of State for Transport, Local Government and the Regions [2002] EWCA Civ 1994, [2003] JPL 1048, per Buxton LJ at para 13, at para 27 per Arden LJ. It is also relevant to the process of interpretation that a failure to comply with a condition in a public law consent may give rise to criminal liability. In section 36(6) of the 1989 Act the construction of a generating station otherwise than in accordance with the consent is a criminal offence. This calls for clarity and precision in the drafting of conditions. When the court is concerned with the interpretation of words in a condition in a public document such as a section 36 consent, it asks itself what a reasonable reader would understand the words to mean when reading the condition in the context of the other conditions and of the consent as a whole. This is an objective exercise in which the court will have regard to the natural and ordinary meaning of the relevant words, the overall purpose of the consent, any other conditions which cast light on the purpose of the relevant words, and common sense. Whether the court may also look at other documents that are connected with the application for the consent or are referred to in the consent will depend on the circumstances of the case, in particular the wording of the document that it is interpreting. Other documents may be relevant if they are incorporated into the consent by reference (as in condition 7 set out in para 38 below) or there is an ambiguity in the consent, which can be resolved, for example, by considering the application for consent. Interpretation is not the same as the implication of terms. Interpretation of the words of a document is the precursor of implication. It forms the context in which the law may have to imply terms into a document, where the court concludes from its interpretation of the words used in the document that it must have been intended that the document would have a certain effect, although the words to give it that effect are absent. See the decision of the Privy Council in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 per Lord Hoffmann at paras 16 to 24 as explained by this court in Marks & Spencer plc v BNP Paribas Securities Trust Company (Jersey) Ltd [2015] UKSC 71, per Lord Neuberger at paras 22 to 30. While the court will, understandably, exercise great restraint in implying terms into public documents which have criminal sanctions, I see no principled reason for excluding implication altogether. In my view assertions, such as are found in Trustees of the Walton on Thames Charities v Walton and Weybridge Urban District Council (1970) 21 P & CR 411, Salmon LJ at p 418 and Widgery LJ at p 420, and in the Sevenoaks District Council case (above), Sullivan J at para 45, that there can never be an implied condition in a planning permission are too absolute. To say that is not to undervalue the importance of the advice of the Secretary of State and now the Scottish Ministers in Planning Circular 4/98 that planning conditions should be precise and clear. In paragraph 29 of Annex A to the circular it is stated: The framing of conditions requires great care, not least to ensure that a condition is enforceable. A condition, for example, requiring only that a landscaping scheme shall be submitted for the approval of the planning authority is incomplete since, if the applicant were to submit the scheme and even obtain approval for it, but neglect to carry it out, it is unlikely that the planning authority could actually require the scheme to be implemented. In such a case, a requirement should be imposed that landscaping shall be carried out in accordance with a scheme to be approved in writing by the planning authority; and the wording of the condition must clearly require this. Subject to the observation that, in view of the decision in this case, the second sentence of the advice may overstate the difficulty which the planning authority might face in requiring the implementation of an approved scheme, this and the almost identical advice in the earlier Circular 11/95, paragraph 30 in respect of England and Wales remain good advice as a planning authority which follows the advice can avoid unnecessary and possibly difficult disputes about whether terms can be implied into a condition. If condition 13 had not provided that the CMS was to contain information about the design statement but, like condition 24, had required only cross references to it, I, on applying the approach to interpretation set out above, would have readily drawn the inference that the conditions of the consent read as a whole required the developer to conform to the design statement in the construction of the windfarm. The combination of the obligation in condition 14 to have the design statement approved by the Scottish Ministers and what would have been the obligation to cross refer to the design statement in statements or plans under conditions 13 and 24, with which the Scottish Ministers could enforce compliance, would point inexorably towards that conclusion. But, as I have said, it is not necessary to imply words into the consent as condition 13 gives the Scottish Ministers the vehicle to make the requirement explicit. Finally, Mr Campbell argues that the power conferred on the Scottish Ministers to alter the terms of the CMS in condition 13 (ie Unless otherwise agreed in writing by the Scottish Ministers ) invalidated the condition as it rendered the design and layout of the development uncertain. He argues also that condition 7 suffers from a similar defect. Condition 7 provides: The Development must be constructed and operated in accordance with the terms of the Application and the the accompanying Environmental Statement Supplementary Environmental Information Statement, except in so far as amended by the terms of the section 36 consent and any direction made by the Scottish Ministers. (Emphasis added) Reason: To ensure that the Development is carried out in accordance with the application documentation. and In support of that contention he refers to two cases, Midcounties Co operative Ltd v Wyre Forest District Council [2009] EWHC 964 (Admin) and Hubert v Carmarthenshire County Council [2015] EWHC 2327 (Admin). I consider that his contention is unsound. The flexibility conferred on the Scottish Ministers in each of those conditions to modify the way in which the windfarm is constructed and operated does not enable them to alter the nature of the approved development. As I have said, the maximum size and the maximum number of the turbines and their locations are set out in Annex 1 and Figure 1 of the consent, which define the development. The two cases to which Mr Campbell refers can be distinguished on that basis. The parties agreed that the reference in condition 7 to a direction made by the Scottish Ministers was a reference to a lawful direction made under a statutory power, for example under section 96 of the 1989 Act. Such a direction likewise may affect the manner in which the windfarm is constructed or operated, but it cannot alter the definition of the development itself. Conclusion For these reasons, I would dismiss the appeal. LORD MANCE: I agree with the judgment prepared by Lord Hodge and agree therefore that the appeal should be dismissed. But I add some words with regard to the process of implication on which Lord Hodge touches in para 35 of his judgment by reference to the Privy Councils advice in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 per Lord Hoffmann at paras 16 to 24 as explained by this court in Marks & Spencer plc v BNP Paribas Securities Trust Company (Jersey) Ltd [2015] UKSC 72 per Lord Neuberger at paras 22 to 30. As Lord Neuberger indicates in para 23 in Marks & Spencer, whether an implication is necessary to give business efficacy must be judged objectively, in the light of the provisions of the contract as a whole and the surrounding circumstances at the time when the contract is made. But I would not encourage advocates or courts to adopt too rigid or sequential an approach to the processes of consideration of the express terms and of consideration of the possibility of an implication. Without derogating from the requirement to construe any contract as a whole, particular provisions of a contract may I think give rise to a necessary implication, which, once recognised, will itself throw light on the scope and meaning of other express provisions of the contract. This applies whether one is concerned, as in this case, with a public document in the interpretation of which there is, as Lord Hodge notes in para 33, limited scope for the use of extrinsic material or with, for example, a commercial contract, where the overall aim is to give effect to the parties assumed intentions, objectively assessed by reference to the contractual language they used understood against the background of their wider relationship and the circumstances of which both must be taken to have been aware when contracting. In the light of the above at least, it appears to me helpful to recognise that, in a broad sense as Lord Neuberger and Lord Clarke recognise in Marks & Spencer at paras 26 and 76, the processes of consideration of express terms and of the possibility that an implication exists are all part of an overall, and potentially iterative, process of objective construction of the contract as a whole. LORD CARNWATH: I agree that the appeal should be dismissed for the reasons given by Lord Hodge. I add a comment on the planning cases which have been relied on in support of the appellants strict interpretation of condition 14. These cases, in particular the first Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 13), are said by Mr Campbell QC for the appellants to support the submission that it is not possible by implication to add to the condition a requirement that the development be completed in accordance with the approved design statement. For reasons I will explain at the end of this judgment, I do not regard the planning cases as of much assistance in relation to the issue before us, which is in a different statutory context. However, since they have been said to disclose a degree of tension between competing principles of interpretation, some guidance from this court may be of value. The planning cases The three cases are: Sevenoaks District Council v First Secretary of State [2005] 1 P & (i) CR 13; (ii) Hulme v Secretary of State for Communities and Local Government [2011] EWCA Civ 638; (iii) Telford and Wrekin Council v Secretary of State for Communities and Local Government [2013] EWHC 79 (Admin). All three were concerned with what might be termed incomplete conditions, in that they required approval of certain matters in relation to the development in question, without fully stating the consequences. A similar defect is said to affect condition 14 in the present case. It is convenient to start with a brief summary of each case, to explain how the incompleteness arose and how it was resolved, before discussing the principles of law which they are said to establish or illustrate. the construction of a 27 hole golf course. It was subject to a condition 12: In Sevenoaks the claimant had been granted outline planning permission for Prior to the commencement of the development hereby permitted details of all proposed engineering works associated with the laying out of golf courses including the creation of greens, bunkers, tees, ponds or lakes shall be submitted to and approved in writing by the district planning authority. There was nothing in terms to require completion of those engineering works in accordance with the approved details. By contrast condition 8, dealing with details of means of access, expressly required completion in accordance with the approved details. Parts of the engineering works as constructed did not comply with the approved details under condition 12. The authority served an enforcement notice alleging breach of the condition. Sullivan J upheld the planning inspectors decision to allow an appeal against the notice, on the basis that the condition was unambiguously directed to submission of the details only, and not to their implementation. This authority is relied on by the appellants as providing a direct parallel with the present case, which has not been displaced by the later authorities. In Hulme permission had been granted for a windfarm, subject to a complex group of conditions, designed to mitigate noise, including (as it was described) blade swish. Condition 20 required the operator, in the event of a complaint from a local resident, to employ a consultant to assess whether the noise emissions at that dwelling exceeded the expected levels, by reference to levels specified in the condition. The condition was obscurely drafted, and failed to indicate clearly what was to happen next. However, having regard to its obvious purpose and to the scheme of the conditions as a whole, Elias LJ was able to interpret it as imposing an obligation, running for the duration of the permission, to comply with the specified levels, subject to enforcement by the planning authority in the normal way (para 38). He distinguished but did not overrule the decision in Sevenoaks. In Telford permission had been granted for use of a building as a garden centre subject to a condition in these terms: prior to the garden centre hereby approved opening, details of the proposed types of products to be sold should be submitted to and agreed in writing by the local planning authority. It was accepted that use as a garden centre was a retail use within Use Class A1, and that apart from the condition it could have been used without permission for any other use within that class. On an application for a certificate of lawful use to that effect, it was held by the planning inspector that the condition was insufficiently clear to exclude the rights otherwise available under the Use Classes Order. Beatson LJ, sitting in the Administrative Court, refused leave to appeal against that decision. He detected what he described, at para 32, as a degree of tension between the approaches in the two previous cases: The Sevenoaks case involved a condition that was considered clear and without ambiguity. Sullivan J emphasised the need for clarity and certainty on the face of the condition, in particular because a planning permission is a public document which is likely to affect third party rights and the wider public and on which they are entitled to rely, and because breach of a condition may ultimately have criminal consequences. Hulmes case appears to take a less strict approach in the context of words in a condition Elias LJ (at para 31) described as particularly opaque. The Hulme principles In both Hulme and Telford the court attempted to enunciate lists of principles said to be derived from the relevant authorities. In the first, Elias LJ set out four principles, by reference to three decided cases, one at first instance, one in the Court of Appeal and one in the House of Lords. In Telford, Beatson LJ managed with the assistance of the very experienced counsel before him to extract no fewer than nine principles, derived from a dozen or so authorities at different levels of the judicial hierarchy. With respect to them both I see dangers in an approach which may lead to the impression that there is a special set of rules applying to planning conditions, as compared to other legal documents, or that the process is one of great complexity. Beatson LJ was faced with an apparent conflict between the approaches in Sevenoaks and Hulme which needed to be resolved, and I have no difficulty with his conclusion on the facts of the case before him. However, most of the judgments cited in support of his nine principles, many at first instance, turned on their own facts, and cannot be relied on as establishing any more general rules. It may be useful to comment in more detail on Elias LJs summary of the relevant legal principles, and their relationship to the decision in Sevenoaks which is most directly relevant to the present case. They were said by him to be not in dispute (para 13), from which I infer that he may have been reproducing a summary provided by counsel without further discussion or examination of the authorities referred to. The principles were stated by him, at para 13, as follows: a) The conditions must be construed in the context of the decision letter as a whole. b) The conditions should be interpreted benevolently and not narrowly or strictly: see Carter Commercial Development Ltd v Secretary of State for the Environment [2002] EWHC 1200 (Admin), para 49 per Sullivan J, as he was. c) A condition will be void for uncertainty only if it can be given no meaning or no sensible or ascertainable meaning, and not merely because it is ambiguous or leads to absurd results per Lord Denning in Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, 678. This seems to me to be an application of the benevolent construction principle. d) There is no room for an implied condition (although for reasons I discuss more fully below, the scope of this principle needs careful analysis). This principle was enunciated by Widgery LJ, as he then was, in Trustees of Walton on Thames Charities v Walton and Weighbridge District Council (1970) 21 P & CR 411, 420 in the following terms: I have never heard of an implied condition in a planning permission, and I believe that no such creature exists. Planning permission enures for the benefit of the land. It is not simply a matter of contract between the parties. There is no place, in my judgment, within the law relating to planning permission for an implied condition. Conditions should be express; they should be clear; they should be in the document containing the permission. Principle (a) is of course uncontroversial but not peculiar to planning permissions. Principle (b) requires a little more comment, as does the citation. Benevolence is not a very helpful concept, since benevolence to one party may have the opposite effect on his opponent. But it is equally uncontroversial, if it means no more than that, as with any other legal document, incompetent drafting should not prevent the court from giving the condition a sensible meaning if at all possible. On the other hand, I suspect Sullivan J himself might have been surprised to find that principle supported by reference to his own judgment at first instance from 2002. The case went to the Court of Appeal ([2002] EWCA Civ 1994), which upheld his decision but did not refer to this aspect of the judgment (see further below). In fact that same principle is supported by one of the earliest Court of Appeal decisions under the Town and Country Planning Act 1947: Crisp from the Fens Ltd v Rutland County Council (1950) 1 P & CR 48, 59. In that case a permission granted for a change of use of a building to use for making potato crisps was subject to a condition confining its use to that of the manufacture of potato crisps or any use within class III of [the Use Classes Order]. The stated reason was to ensure that the building shall not be used for general industrial purposes which would be detrimental to the amenity of the locality. The relevant Use Classes Order distinguished between use as a light industrial building (class III) and as a general industrial building (class IV); the former being defined by reference to whether the processes could be carried on in any residential area without detriment to its amenity by reason of noise, smell, fumes or smoke. It was held that, notwithstanding the unqualified reference in the condition to use for manufacture of potato crisps, the word other should be read into the second part of the condition (or any other use ), with the effect that class III constraints should be read as applying to both parts of the condition. The court relied in particular on the clear intention, expressed in the reason, to protect the local amenities by excluding general industrial use: see p 54, per Bucknill LJ. As he put it, the court should have regard to the common sense of the transaction, and to the real intention and meaning of the parties rather than criticise minutely the precise words used (p 55). Denning LJ added: It is a case where strict adherence to the letter would involve an error of substance (p 59). The same approach was reflected in the words, again of Lord Denning, from Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, 678, cited in support of Elias LJs third principle, again in itself uncontroversial. However, it is also clear from the context that Lord Denning was not enunciating some principle special to planning conditions, as compared to other forms of legal document rather the contrary. In the previous paragraph he had been considering suggested comparisons with documents such as contracts or wills. Following the passage quoted by Elias LJ, he commented: It is the daily task of the courts to resolve ambiguities of language and to choose between them; and to construe words so as to avoid absurdities or to put up with them. And this applies to conditions in planning permissions as well as to other documents. (p 678 emphasis added) I have more difficulty with Elias LJs fourth principle, not least because it reflects a strictness of approach apparently at odds with his two previous principles. The case cited in support (Walton) arose in a very esoteric and now obsolete legal context: that of so called third schedule development (under Schedule 3 to the Town and Country Planning Act 1962, as applied by section 15(3) of the Land Compensation Act 1961). Elias LJ explained the issue later in his judgment in Hulme (paras 36 37): That case concerned the assessment of compensation for the compulsory purchase of land under the Land Compensation Act 1961. The value of the compensation depended upon the value of the deemed planning permission for the rebuilding of 50 prefabs on the land. The compensating authority contended that the value with the assumed planning permission would be nil since there was to be implied a condition that any prefabs would have to be removed within ten years. This was said to arise by virtue of a power under section 2 of the Housing (Temporary Accommodation) Act 1944 which enabled the Secretary of State to require the removal of prefabs after ten years unless housing conditions required that they should remain. The Court of Appeal unanimously held that there could be no implied condition to that effect, and Widgery LJ made the observations to which I have referred above, and on which the appellant relies. Elias LJ contrasted the proposed implied term in that case, which depended on reading into the planning permission an obligation which was said to arise from extrinsic circumstances, with that in the instant case which arises as a necessary implication from the language of the express conditions when read in the context of the decision letter (para 37). I agree with that analysis, but I would go further. Widgery LJ had been a leading proponent of planning law in the early decades of the new system. However, with great respect to him, I regret the elevation of these obiter comments, made in a very unusual legal and factual context, to statements of general principle. He was not giving the leading judgment, and his comments went further than was necessary to decide the case. His general approach is apparent from the passage immediately preceding the words quoted: The courts have said on many occasions that it is only fair to a landowner that conditions attaching to planning permissions should be clear and explicit. Their effect is to work a forfeiture, and they have to be judged by the courts strict rules, like any other forfeiture. (p 420) That reflects a view, not uncommon at the time, of planning control as an interference with property rights requiring to be kept within narrow limits. It is not consistent with the modern approach, nor indeed with that of earlier cases such as Crisp from the Fens and Fawcett. There is no reason in my view to exclude implication as a technique of interpretation, where justified in accordance with the familiar, albeit restrictive, principles applied to other legal documents. In this respect planning permissions are not in a special category. Sevenoaks There are indications that such an exclusionary rule was the basis of Sullivan Js reasoning in Sevenoaks. To that extent, he was in my respectful view mistaken. The inspector had recorded the appellants case as resting on the proposition that they did what the condition required of them and could not by implication be required to do more: Words cannot be introduced later to give a condition efficacy. That is a contractual not a public law concept (judgment, para 10). The substance of that submission seems to have been accepted by Sullivan J. Having cited the statement by Widgery LJ in Walton he noted the authoritys attempt to distinguish the case, on the basis that it involved the implication of an additional condition, rather than the implication of an additional obligation to a condition already in the permission. That he said, was a distinction without a difference, adding: If conditions are to be included in a public document such as a planning permission, they should be clearly and expressly imposed, so that they are plain for all to read. There is no room for implication. (para 45) For the reasons I have given, I consider that was too widely stated, and he was wrong to find support in Walton. His approach to the issue of implication was in my view also inconsistent with the reasoning of the Court of Appeal in Crisp from the Fens, which he had cited earlier in the judgment (para 19). That decision had been relied on by counsel to support the proposition that it was possible to imply words into a condition if it was necessary to do so in order to enable the condition to achieve its purpose (para 23). Sullivan J distinguished it on the basis that the condition in that case had been found to be ambiguous, unlike his view of the condition before him. He also noted the Court of Appeals references to the intention of the parties, made, he said, at a time when the 1947 Act was a novel Act. He added: We no longer consider it appropriate to examine the intentions of the applicant and the local planning authority. The question is: what was permitted by the local planning authority? The answer to that question is to be found by construing in a common sense way the planning permission together with such other documentary evidence as may be admissible: see per Arden LJ in Carter paras 27 and 28. (para 38). I have no difficulty with the approach stated in the second part of that passage, which is entirely consistent with that of the Court of Appeal in 1950. It is true that at the end of his judgment, Bucknill LJ noted that it was a novel Act (p 55), but, as I read it, rather by way of explanation of the authoritys failure, than as a necessary part of his reasoning. Denning LJ himself emphasised the importance in general of such a condition being expressed in plain language so that any layman can understand it , but here the terms of the condition and, particularly, the reasons for it left no doubt as to its meaning (p 59). The intention of the authority was apparent, not from extrinsic evidence, but from the terms of the document itself. It was that which enabled words to be added by implication to the terms of the condition. Before leaving this subject I should add one comment on the judgment of Arden LJ in Carter Commercial (cited by Sullivan J in the passage quoted above). At the outset of her concurring judgment she said: 27. I start from the position that this planning permission is not to be construed like a commercial document, but is to be given the meaning that a reasonable reader would give to it, having available to him only the permission, the variation, the application form and the Lewin Fryer report referred to in condition 4 in the planning permission itself. 28. The reasonable reader for this purpose is to be contrasted with, for instance, the testator into whose armchair the court is enjoined to place itself in order to construe a will, or the position of parties to a commercial contract from whose standpoint the court will construe a commercial contract having regard to all the background information reasonably available to them. This is a public document, to which very different principles apply. She cited the judgment of Keene J (as he then was) in R v Ashford Borough Council, Ex p Shepway District Council [1999] PLCR 12, as indicating the very strict limitations on the extrinsic material that can be used in construing an application, including a permission I do not question the decision of the court in that case, or the reasoning on which it was based. As will have become apparent, however, and in agreement also with Lord Hodge, I do not think it is right to regard the process of interpreting a planning permission as differing materially from that appropriate to other legal documents. As has been seen, that was not how it was regarded by Lord Denning in Fawcett. Any such document of course must be interpreted in its particular legal and factual context. One aspect of that context is that a planning permission is a public document which may be relied on by parties unrelated to those originally involved. (Similar considerations may apply to other forms of legal document, for example leases which may need to be interpreted many years, or decades, after the original parties have disappeared or ceased to have any interest.) It must also be borne in mind that planning conditions may be used to support criminal proceedings. Those are good reasons for a relatively cautious approach, for example in the well established rules limiting the categories of documents which may be used in interpreting a planning permission (helpfully summarised in the judgment of Keene J in the Shepway case at pp 19 20). But such considerations arise from the legal framework within which planning permissions are granted. They do not require the adoption of a completely different approach to their interpretation. The statutory contexts compared As I have indicated I do not in any event regard the English planning cases as providing much assistance to the resolution of the issue before us. There are important differences between the two statutory schemes in respect of non compliance and its consequences. The scheme of the Town and Country Planning Act 1990 (as of the Town and Country Planning (Scotland) Act 1997, which in this respect follows the English statute), as respects enforcement, is relatively complex. Section 57 provides that planning permission is required for the carrying out of any development of land. It says nothing of the consequences of non compliance, nor is it made an offence. Enforcement is covered by a different group of sections (Part VII). [B]reach of planning control is defined as either (a) carrying out development without the required planning permission; or (b) failing to comply with any condition or limitation subject to which planning permission has been granted (section 171A(1)). Enforcement may be by means of an enforcement notice, which is required to state the paragraph of section 171A(1) within which, in the opinion of the authority, the breach falls: section 173(1)(b) (a requirement relied on by the inspector, and noted by Sullivan J, in the Sevenoaks case: para 18). An alternative, in the case of contravention of a condition, is a breach of condition notice (section 187A). An offence is committed by non compliance with a confirmed enforcement notice (section 179), or a breach of condition notice (section 187A(9)). There is also specific provision for the planning authority to apply to the court for an injunction (or, in the Scottish Act, section 146, interdict) to restrain an apprehended breach of planning control as so defined (section 187B). The scheme of the Electricity Act 1989 is much simpler. Section 36(1) provides that a generating station shall not be constructed, extended or operated except in accordance with a consent granted by the Secretary of State. Such a consent may include such conditions as appear to the Secretary of State to be appropriate (section 36(5)). Contravention of the provisions of the section is an offence, for which proceedings can only be commenced by the Secretary of State (section 36(6)(7)). I do not read this as excluding the possibility of a civil remedy if necessary to restrain an apprehended breach, at least at the suit of the Secretary of State. It seems clear that that construction will not be in accordance with the consent if it does not comply with the conditions under which it was granted. By contrast with the planning scheme, no distinction is drawn for this purpose between the two forms of non compliance. The same approach would extend in my view to any matters requiring subsequent approval under the conditions, in so far as they are properly regarded as part of the consent. Thus, even disregarding condition 13 (on which I agree with Lord Hodge), I see no reason why the requirement to construct in accordance with the consent should not include compliance with the terms of the condition 14 design statement. By condition 14 the design statement must be submitted to the Scottish Ministers for their written approval, and it must provide guiding principles for the deployment of the wind turbines, including such matters as layout location and detailed assessment of visual impacts. Although it does not in terms provide that development must be constructed in accordance with the design statement, such a requirement must as a matter of common sense be implicit, since otherwise the statement would have no practical purpose. For these reasons, in addition to those given by Lord Hodge, I would dismiss the appeal. |
This is a judgment in two appeals that this Court heard together. They raise issues as to the scope of the powers conferred by the Proceeds of Crime Act 2002 (POCA). They arise out of attempts by the respondent (SOCA), acting apparently on its own initiative, to deprive the first appellant (Mr Perry), together with members of his family or entities associated with them, of the fruits of serious criminal fraud for which Mr Perry has been convicted in Israel, wherever in the world those fruits may be found. SOCA intends to achieve this aim by invoking the powers of civil recovery conferred on the High Court by Part 5 of POCA. So far, however, it has not got beyond preliminary steps aimed at ensuring that the substantive relief which it seeks is effective. One of those steps has been obtaining a worldwide property freezing order in respect of property held by the appellants in appeal 0143. I shall call this the PFO appeal. The other step has been to obtain a disclosure order, under which notices have been given to the appellants in appeal 0182. I shall call this the DO appeal. It is logical to consider the PFO appeal first, for the result of this appeal will have some bearing on the DO appeal. THE PFO APPEAL Introduction and factual background Some of this introduction will be relevant to both appeals. The substantive relief that SOCA seeks consists of civil recovery orders in relation to property obtained through Mr Perrys unlawful conduct. In order to prevent the dissipation of that property SOCA has obtained a worldwide property freezing order pursuant to section 245A of POCA (in future all statutory references will be to POCA unless I state otherwise). Section 245A gives SOCA the power to seek a property freezing order where it is empowered to take proceedings for a civil recovery order. It is common ground that a property freezing order can only relate to property that can properly be made the subject of a civil recovery order. The appellants contend that, subject to a limited exception, a civil recovery order can only be made in respect of property that is within the territorial jurisdiction of the court making it. On this ground the appellants attack the validity of the property freezing order in so far as this extends to property outside that jurisdiction. Thus the important issue raised by the PFO appeal is the extent to which a recovery order can be made in respect of property outside the United Kingdom. Lea Perry is Mr Perrys wife and Tamar Greenspoon and Yael Perry are his daughters. Leadenhall Property Ltd is an Isle of Man company alleged to hold assets on behalf of Mr Perry. On 24 October 2007 Mr Perry was convicted in Israel of a number of offences in relation to a pension scheme that he had operated in Israel. On 19 February 2008 he was sentenced to 12 years imprisonment and fined the equivalent of approximately 3m. He has paid that fine. Two subsequent appeals had limited success inasmuch as they resulted in a reduction of his sentence to 10 years imprisonment and a reduction in the finding of the amount that he had stolen. In or about May 2008 Hoares Bank in London disclosed to SOCA that Mr Perry, Tamar and Yael had accounts there. Subsequently SOCA discovered that Mr Perry had accounts in London in the Bank J Safra (Gibraltar) Ltd. The total in these various accounts amounted to approximately 14m. On 8 August 2008 SOCA obtained a disclosure order from HH Judge Kay QC, sitting as a Deputy High Court Judge, on a paper application without notice. Notices under that order addressed to the DO appellants, all of whom were at all material times outside the jurisdiction, were communicated to them by letter addressed to a residence that Mr Perry maintains in Mayfair. On 28 October 2009 SOCA obtained a worldwide property freezing order from Cranston J on an application without notice against eight respondents, including the appellants in the PFO appeal. So far as Mrs Perry was concerned, the order froze certain identified assets, but it froze worldwide all the assets of the other defendants. The order also required all the defendants to disclose all their worldwide assets. The hearings below The PFO appellants sought an order from Mitting J varying the property freezing order so as, inter alia, to exclude from its ambit property that was located outside England and Wales and to limit the disclosure obligations under the order to assets located within England and Wales. In a judgment dated 28 June 2010 [2010] EWHC 1711 (Admin); [2010] 1 WLR 2761 Mitting J varied some of the disclosure obligations but otherwise rejected the application. Mitting Js judgment was admirably clear and concise. He started with a presumption against giving the relevant provisions of POCA extraterritorial effect, but concluded that, with the exception of section 286, which applied only to an order made in Scotland, the language of the relevant provisions so clearly applied to property outside the jurisdiction that it displaced this presumption. The appellants appeal to the Court of Appeal was heard on 8 and 9 December 2010 and judgment was delivered on 18 May 2011 [2011] EWCA Civ 578; [2011] 1 WLR 2817. The lengthy lead judgment of Hooper LJ was a reflection not only of the complexities of POCA but of the very detailed submissions advanced by Mr Philip Jones QC for the appellants, which were summarised at some length by the Lord Justice. Among many other arguments Mr Jones relied on the presumption against extraterritoriality. A civil recovery order vests property in a trustee for civil recovery. Mr Jones submitted that such an order took effect in rem. He submitted that it would be a breach of international law for the English Court to make an order in rem in respect of property in a foreign jurisdiction, the more so if that property was real property. Hooper LJ rejected this argument. He held that a civil recovery order operated in personam against the holder of the property. The effect, if any, of a civil recovery order in relation to property in a foreign jurisdiction would depend upon the law applied in that jurisdiction and, in those circumstances, there was nothing untoward in making such an order. Like Mitting J, Hooper LJ concluded that the clear meaning of the relevant provisions was that a civil recovery order could be made in respect of property wherever in the world the property was located, and there was no reason not to give effect to the natural meaning of the language. Like Mitting J, Hooper LJ concluded that section 286 made an exception in the case of an order made in Scotland. Hooper LJ derived support for his conclusions from analogies with the law of bankruptcy and from the practice of issuing worldwide freezing orders. In a shorter judgment Tomlinson LJ concurred both with the result reached by Hooper LJ and with his reasoning. Maurice Kay LJ agreed with both judgments. It is common ground that, on its face, section 286 makes provision in respect of the scope of a recovery order that distinguishes the position in Scotland from that in the rest of the United Kingdom. There is a dispute as to the nature of that distinction and, whatever its nature, no one has yet been able to suggest an explanation for it. A summary of my conclusions Because of the complexity of the subject matter of this appeal I propose to follow the example of Hooper LJ by summarising my conclusions at the outset. (i) The courts below placed undue weight on the definition of property in POCA. (ii) The appellants have placed undue weight on the presumption that a statute does not have extraterritorial effect. (iii) States have, by agreement, departed from the customary principles of international law in the case of confiscating the proceeds of crime. Of particular relevance is the 1990 Strasbourg Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (the Strasbourg Convention). POCA must be read in the light of that Convention. (iv) The Convention recognises that the courts of state A may make an order purporting to vest in the authorities of state A property that is situated in state B in circumstances where the property is the proceeds of the criminal conduct of a defendant subject to the criminal jurisdiction of state A. (v) The Convention provides that effect should be given to such an order by confiscation proceedings in state B at the request of state A. (vi) The answer to the issue raised by the PFO appeal depends upon an analysis of both the scheme and the language of POCA considered in the light of the Convention. (vii) Parts 2, 3 and 4 of POCA provide for (a) the imposition in personam of obligations in respect of property worldwide; (b) measures in rem to secure and realise property within the United Kingdom; and (c) requests to be made to other states to take such measures in respect of property within their territories. (viii) Part 5 of POCA makes provision for in rem proceedings in respect of property within the United Kingdom but not outside it. (ix) The scheme of POCA, as described above, accords with arrangements made by the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (SI 2005/3181) (the Order) for giving effect to requests from other states in relation to the confiscation of the proceeds of crime. (x) The scheme of POCA as described above also accords with the requirements of a coherent international scheme for confiscation of the proceeds of crime and with principles of public international law. The converse is the case if SOCAs submissions as to the extraterritorial effect of Part 5 are correct. (xi) Section 286 is an anomalous enigma and cannot justify giving the provisions of POCA that relate to the rest of the United Kingdom a meaning different from that which they would bear in the absence of section 286. (xii) For all these reasons the PFO appeal should be allowed. The definition Part 5 of POCA places on the High Court in England and Wales and Northern Ireland and the Court of Session in Scotland the obligation, in prescribed circumstances, to make a civil recovery order in respect of property which is, or represents, property obtained through unlawful conduct. Section 316(4) has a definition of property (the definition) that applies in Part 5: Property is all property wherever situated and includes (i) money, (ii) all forms of property, real or personal, heritable or moveable, (c) incorporeal property. things in action and other intangible or Mitting J and the Court of Appeal were impressed by the natural meaning of the words wherever situated and concluded that these words should be applied, without restriction, to property in respect of which a recovery order could be made. Thus a recovery order could be made in respect of any form of property, whether real, personal or a chose in action, and wherever in the world that property was situated. The words wherever situated do not describe the type of property to which Part 5 applies. Rather they indicate the location of the property to which the provisions of Part 5 can apply. The definition is repeated no less than eight times in POCA sections 84(1), 150(1), 232(1), 316(4), 326(9), 340(9), 414(1) and 447(4). POCA is peppered with references to property. All fall within the definition. But the definition cannot be applied so as to add to the words property, wherever it appears, the words wherever situated. As I shall demonstrate, most of the provisions of POCA apply only to property within England and Wales, Scotland or Northern Ireland. By way simply of example, I can refer to section 45(1) which confers on a constable the power to seize property to prevent its removal from England and Wales. Some provisions refer, however, to property worldwide. Whether or not the location of property to which a provision of POCA refers is subject to a territorial restriction depends upon the context. I so held, when giving the only reasoned speech, in King v Director of the Serious Fraud Office [2008] UKHL 17; [2009] 1 WLR 718, para 37. For these reasons I do not attach to the words in the definition wherever situated the weight that they have carried with the courts below. In order to decide on the scope of the application of Part 5 of POCA it is necessary to consider both the structure and the language of the Act having regard to relevant principles of international law. The presumption against extraterritoriality and the Strasbourg Convention Mr Jones QC for the appellants submitted that it was a breach of international law for a United Kingdom statute even to purport to vest in a United Kingdom authority property situated in the territory of another state. Mitting J began his judgment by reference to the presumption of statutory interpretation that a statute will not have extraterritorial effect and to the statement of Lord Hoffmann in Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260, para 54: it is a general principle of international law that one sovereign state should not trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within its boundaries. Hooper LJ himself cited the statement of Lord Diplock in R v Cuthbertson [1981] AC 470, 485: Under English rules of conflict of laws it is in my view well established that an English court has no jurisdiction either in a criminal or a civil matter to make orders purporting ipso jure to transfer moveable property situate abroad. Confiscation of the proceeds of crime is, however, an activity in respect of which States have departed from these principles. Of particular relevance is the Strasbourg Convention, to which the United Kingdom is a party. The question of whether the exorbitant effect of Part 5 of POCA for which SOCA contends would involve a breach of international law must be considered in the light of the Strasbourg Convention. Hooper LJ set out relevant provisions of the Strasbourg Convention in some detail and I must do the same. The Strasbourg Convention Chapter I contains definitions which include: (b) property includes property of any description, whether corporeal or incorporeal, movable or immovable, and legal documents or instruments evidencing title to, or interest in such property; (c) instrumentalities means any property used or intended to be used, in any manner, wholly or in part, to commit a criminal offence or criminal offences; (d) confiscation means a penalty or a measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences resulting in the final deprivation of property; Chapter II deals with measures to be taken at national level to identify and trace properties subject to confiscation. Chapter III deals with international co operation. Section 1 sets out the relevant principles. Article 7 lays down general principles and measures for international co operation. It provides: 1. The Parties shall co operate with each other to the widest extent possible for the purposes of investigations and proceedings aiming at the confiscation of instrumentalities and proceeds. 2. Each Party shall adopt such legislative or other measures as may be necessary to enable it to comply, under the conditions provided for in this chapter, with requests: a. for confiscation of specific items of property representing proceeds or instrumentalities, as well as for confiscation of proceeds consisting in a requirement to pay a sum of money corresponding to the value of proceeds; b. for investigative assistance and provisional measures with a view to either form of confiscation referred to under a. above. The Explanatory Report submitted to the Committee of Ministers of the Council of Europe by the committee of experts who drew up the Convention, illuminates article 7: 10. Where the law enforcement agencies and judicial authorities have gathered information through investigations, there should also be efficient means available to ensure that the offender does not remove the instruments and proceeds of his criminal activities. Freezing of bank accounts, seizure of property or other measures of conservancy need to be taken to ensure this. Section 3 of Chapter III provides for international co operation in respect of provisional measures. In order to secure the confiscation of the instruments and proceeds from crime, the Convention provides in section 4 of Chapter III principally two forms of international co operation, namely the execution by the requested State of a confiscation order made abroad and, secondly, the institution, under its own law, of national proceedings leading to a confiscation by the requested State at the request of another State. In respect of the first alternative, the Convention follows the pattern of the European Convention on the International Validity of Criminal Judgments. The second method of international co operation could be compared to the one which is provided for in the European Convention on the Transfer of Proceedings in Criminal Matters. Section 2 deals with mutual assistance in identifying and tracing property liable to confiscation and requires a party to comply with a request for assistance from another party to the extent compatible with the law of the former. Section 3 deals with provisional measures. Where a party has instituted criminal proceedings or proceedings for the purpose of confiscation and so requests, another party must take provisional measures such as freezing or seizing to secure property which may become subject to confiscation, in so far as permitted by its domestic legislation. The same applies where a party receives a request for confiscation. Section 4 deals with confiscation. It provides: Article 13 Obligation to confiscate 1. A Party, which has received a request made by another Party for confiscation concerning instrumentalities or proceeds, situated in its territory, shall: a. enforce a confiscation order made by a court of a requesting Party in relation to such instrumentalities or proceeds; or b. submit the request to its competent authorities for the purpose of obtaining an order of confiscation and, if such order is granted, enforce it. 2. For the purposes of applying paragraph 1.b of this article, any Party shall whenever necessary have competence to institute confiscation proceedings under its own law. 3. The provisions of paragraph 1 of this article shall also apply to confiscation consisting in a requirement to pay a sum of money corresponding to the value of proceeds, if property on which the confiscation can be enforced is located in the requested Party. In such cases, when enforcing confiscation pursuant to paragraph 1, the requested Party shall, if payment is not obtained, realise the claim on any property available for that purpose. 4. If a request for confiscation concerns a specific item of property, the Parties may agree that the requested Party may enforce the confiscation in the form of a requirement to pay a sum of money corresponding to the value of the property. Article 14 Execution of confiscation 1. The procedures for obtaining and enforcing the confiscation under article 13 shall be governed by the law of the requested Party. 2. The requested Party shall be bound by the findings as to the facts in so far as they are stated in a conviction or judicial decision of the requesting Party or in so far as such conviction or judicial decision is implicitly based on them. 3. Each Party may, at the time of signature or when depositing its instrument of ratification, acceptance, approval or accession, by a declaration addressed to the Secretary General of the Council of Europe, declare that paragraph 2 of this article applies only subject to its constitutional principles and the basic concepts of its legal system. There was an issue in the Court of Appeal as to whether the Strasbourg Convention applied to Part 5 proceedings. Hooper LJ held at para 72 that it did. I agree with him. The Explanatory Report makes the following comment at para 15: The experts were also able to identify considerable differences in respect of the procedural organisation of the taking of decisions to confiscate (decisions taken by criminal courts, administrative courts, separate judicial authorities, in civil or criminal proceedings totally separate from those in which the guilt of the offender is determined (these proceedings are referred to in the text of the Convention as proceedings for the purpose of confiscation and in the explanatory report sometimes as in rem proceedings), etc). It was also possible to distinguish differences in respect of the procedural framework of such decisions (presumptions of licitly/illicitly acquired property, time limits, etc). The experts agreed that it would be impossible to devise an efficient instrument of international co operation without taking into account these basic differences in national legislation. On the other hand, effective co operation must recognise that the systems may not be alike but that they aim to achieve the same goals. This is why the committee agreed to put the two systems (value and property confiscation) of confiscation on an equal footing and to make the text unambiguous on this point. The Explanatory Report adds at para 43 in relation to article 13: Any type of proceedings, independently of their relationship with criminal proceedings and of applicable procedural rules, might qualify in so far as they may result in a confiscation order, provided that they are carried out by judicial authorities and that they are criminal in nature, that is, that they concern instrumentalities or proceeds. Such types of proceedings (which include, for instance, the so called in rem proceedings) are, as indicated under General considerations above, referred to in the text of the Convention as proceedings for the purpose of confiscation. The Explanatory Report adds this further comment at para 48: [According to para 3 of article 13], parties must, for purposes of international co operation in the confiscation of proceeds, be able to apply both the system of property confiscation and the system of value confiscation. This is made clear by article 7, paragraph 2.a. It may imply that Parties which have only a system of property confiscation in domestic cases have to introduce legislation providing for a system of value confiscation of proceeds, including the taking of provisional measures on any realisable property, in order to be able to comply with requests to that effect from value confiscation countries. On the other hand, Parties which have only a system of value confiscation of proceeds in domestic cases must introduce legislation providing for a system of property confiscation of proceeds in order to be able to comply with requests to that effect from property confiscation countries. Confiscation under the Strasbourg Convention has to be ordered by a court following proceedings in relation to a criminal offence or criminal offences see article 1(d). Thus it would seem that the Convention applies to (i) a confiscation order in rem made by party A after conviction of a defendant within its territory in respect of property owned by the defendant situated within the territory of party B; (ii) a confiscation order in rem made by party A in respect of property situated within its territory after conviction of the owner of that property in the territory of party B. One thing is plain beyond doubt. The Strasbourg Convention envisages the courts in one state making an order confiscating property situated in another state. There would thus appear to be established, in respect of the proceeds of crime, an exception to the principle stated by Lord Diplock in Cuthbertson to which I have referred at para 17 above. I believe, however, that the exorbitant in rem confiscation order that the Strasbourg Convention envisages is one where the jurisdiction to make the order is an in personam jurisdiction founded on the conviction of the owner of the property by the court of the state making the order. The much wider exorbitant jurisdiction that SOCA contends is conferred by Part 5 is, so far as I am aware, without precedent anywhere in the world. I can summarise the position as follows. The Strasbourg Convention envisages two types of confiscation proceedings: (i) value confiscation and (ii) confiscation of specific property. It requires parties to give effect, by proceedings within their own jurisdictions and in accordance with their own laws, to requests for assistance in respect of both types of confiscation proceedings that are taking place or have taken place in the jurisdictions of other parties. The scheme of confiscation under POCA Confiscation Parts 2, 3 and 4 of POCA make provision for value confiscation by the criminal court, by means of what is described as a confiscation order. Confiscation is a misnomer. The scheme of these Parts involves the imposition of the obligation to make a money payment, which is enforced in the same way as a fine, on a person who has been convicted in the relevant jurisdiction. Thus the order is in personam and it is made as part of the criminal process. The amount of the confiscation order is the amount of benefit that the defendant has obtained from his criminal conduct, calculated in accordance with complex provisions of POCA and subject to an upper limit, which is the amount of the defendants available assets. The provisions in Part 2 relate to England and Wales. Similar provision in relation to Scotland are set out in Part 3 and in relation to Northern Ireland in Part 4. I shall describe the effect of the provisions in Part 2. The confiscation order is made by the Crown Court after a defendant has been convicted by the court or committed to the court for sentencing or for the imposition of a confiscation order. Thus the order is in personam on a defendant who is within the jurisdiction of the Crown Court. To calculate the amount of the confiscation order, the court must (i) identify the property that the defendant initially obtained as a result of or in connection with his criminal conduct and value this; (ii) decide whether the defendant still holds that property, or property that represents it and value this; and (iii) identify all the realisable property that the defendant owns and value this. The confiscation order is made in the higher of the values arrived at under process (i) and process (ii) subject to an upper limit in the amount of the value arrived at under process (iii). Where POCA speaks of property in the context of these processes, the property is worldwide. It matters not where in the world the defendant obtained property through his criminal conduct or where in the world he owns property when his realisable assets fall to be assessed. Thus where property is referred to in sections 76 to 83, which deal with these matters, the property referred to is property wherever situated in the world. Many of the provisions in Parts 2, 3 and 4 are concerned with identifying and securing property in each of the three jurisdictions, either in anticipation of the possibility of the making of a confiscation order or by way of enforcing a confiscation order. The relevant powers are conferred on the Crown Court in England and Wales and in Northern Ireland and on the Court of Session or the sheriff in Scotland. The provisions of the three Parts begin to apply as soon as a criminal investigation has been started in circumstances where there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct. Although the terminology and the precise nature of the measures that can be ordered by the court differ in the case of Scotland from those in the other two jurisdictions, their effect is in substance the same. I shall refer to some of the more material provisions that relate to England and Wales. Section 41 permits the Crown Court to make a restraint order prohibiting any specified person from dealing with any realisable property held by him. The property need not be described in the order. Section 45 permits a constable, inter alios, to seize realisable property to which a restraint order relates to prevent it being taken out of England and Wales. Section 48 permits the Crown Court to appoint a receiver, described as a management receiver in respect of realisable property to which the restraint order applies. Section 50 permits the Crown Court to appoint a receiver, described as an enforcement receiver in relation to realisable property for the purpose of the enforcement of a confiscation order that has been made. While the restraint order takes effect in personam and is of worldwide effect, the provisions that relate to securing and realising property apply to such activities within England and Wales, for each of Parts 2, 3 and 4 deals with activities in the jurisdiction to which it relates. This is made plain by section 443 which provides, inter alia, for the making of Orders in Council (i) for an order made under Part 2 to be enforced in Scotland or Northern Ireland, for an order made under Part 3 to be enforced in England and Wales or Northern Ireland and for an order made under Part 4 to be enforced in England and Wales or Scotland; (ii) for a function of a receiver appointed pursuant to Part 2 to be exercisable in Scotland or Northern Ireland, for a function of an administrator appointed pursuant to Part 3 to be exercisable in England and Wales or Northern Ireland and for a function of a receiver appointed pursuant to Part 4 to be exercisable in England and Wales or Scotland. These provisions would seem to indicate, a fortiori, that the powers or functions conferred by Parts 2, 3 or 4 cannot be exercised outside the United Kingdom. Orders in Council pursuant to the above provisions have been made. The effect of these provisions is as I have summarised them at para 12(vii) above. Value confiscation is ordered in personam having regard to property worldwide, but no power is granted to authorities within the United Kingdom to secure or realise property that is situated outside the jurisdiction. This situation is dealt with by section 74. Section 74 relates to confiscation under Part 2 (sections 141 and 222 are analogous provisions in Parts 3 and 4). Section 74 deals with securing property abroad in anticipation of making a confiscation order and realising property in satisfaction of a confiscation order that has been made. It provides: Enforcement abroad (1) This section applies if (a) any of the conditions in section 40 is satisfied, (b) the prosecutor believes that realisable property is situated in a country or territory outside the United Kingdom (the receiving country), and (c) the prosecutor sends a request for assistance to the Secretary of State with a view to it being forwarded under this section. (2) In a case where no confiscation order has been made, a request for assistance is a request to the government of the receiving country to secure that any person is prohibited from dealing with realisable property. (3) In a case where a confiscation order has been made and has not been satisfied, discharged or quashed, a request for assistance is a request to the government of the receiving country to secure that (a) any person is prohibited from dealing with realisable property; (b) realisable property is realised and the proceeds are applied in accordance with the law of the receiving country. (4) No request for assistance may be made for the purposes of this section in a case where a confiscation order has been made and has been satisfied, discharged or quashed. (5) If the Secretary of State believes it is appropriate to do so he may forward the request for assistance to the government of the receiving country. (6) If property is realised in pursuance of a request under subsection (3) the amount ordered to be paid under the confiscation order must be taken to be reduced by an amount equal to the proceeds of realisation. These provisions are in accord with the scheme of the Strasbourg Convention. Civil Recovery As section 240, which introduces Part 5, explains, the purpose of that Part is to enable recovery in civil proceedings before the High Court or Court of Session of property which is, or represents, property obtained through unlawful conduct. Parts 2, 3 and 4 impose personal liability on defendants convicted of criminal conduct in each of the three jurisdictions. Part 5 is of very different effect. The focus is not on a particular defendant but upon property that is the product of criminal conduct, wherever in the world this is committed, as section 241 makes plain. It is not necessary that the person who holds or owns the property should be the person guilty of the criminal conduct. The claim form in the relevant proceedings has to be served on the holder of the property, wherever that person is domiciled, resident or present: see sections 243 and 244. Sections 245A to 255 provide for the measures that a court in England and Wales or Northern Ireland can take to preserve property in respect of which a recovery order may be sought. Sections 255A to 265 make similar provisions in respect of Scotland. Section 245A provides for a property freezing order. As this is the order under attack in this appeal I shall set out the material part of its provisions in full: (1) Where the enforcement authority may take proceedings for a recovery order in the High Court, the authority may apply to the court for a property freezing order (whether before or after starting the proceedings). (2) A property freezing order is an order that (a) specifies or describes the property to which it applies, and (b) subject to any exclusions (see section 245C(1)(b) and (2)), prohibits any person to whose property the order applies from in any way dealing with the property. (3) An application for a property freezing order may be made without notice if the circumstances are such that notice of the application would prejudice any right of the enforcement authority to obtain a recovery order in respect of any property. (4) The court may make a property freezing order on an application if it is satisfied that the condition in subsection (5) is met and, where applicable, that the condition in subsection (6) is met. (5) The first condition is that there is a good arguable case (a) that the property to which the application for the order relates is or includes recoverable property . Sections 245E to 245G make provision for the appointment by the High Court of a receiver in respect of property to which a property freezing order relates. Sections 246 to 247 make similar provision in relation to property that is not subject to such an order. In each case the order may require any person to whose property the order applies to bring the property to a place (in England and Wales or, as the case may be, Northern Ireland) specified by the receiver or to place it in the custody of the receiver (if, in either case, he is able to do so). Section 255A provides (1) Where the enforcement authority may take proceedings for a recovery order in the Court of Session, the authority may apply to the court for a prohibitory property order Section 266 sets out the circumstances in which the court must make a recovery order: (1) If in proceedings under this Chapter the court is satisfied that any property is recoverable, the court must make a recovery order. (2) The recovery order must vest the recoverable property in the trustee for civil recovery. (3) But the court may not make in a recovery order (a) any provision in respect of any recoverable property if each of the conditions in subsection (4) or (as the case may be) (5) is met and it would not be just and equitable to do so, or (b) any provision which is incompatible with any of the Convention rights (within the meaning of the Human Rights Act 1998 (c 42)). (4) In relation to a court in England and Wales or Northern Ireland, the conditions referred to in subsection (3)(a) are that (a) the respondent obtained the recoverable property in good faith, (b) he took steps after obtaining the property which he would not have taken if he had not obtained it or he took steps before obtaining the property which he would not have taken if he had not believed he was going to obtain it, (c) when he took the steps, he had no notice that the property was recoverable, (d) if a recovery order were made in respect of the property, it would, by reason of the steps, be detrimental to him. The provisions in (4) are repeated virtually verbatim in (5) in relation to a court in Scotland. The very fact that separate provision is made for making property recovery orders in England and Wales, Scotland and Northern Ireland indicates that these, and the ancillary steps in relation to securing and realising property, were, at least primarily, designed to apply to property within one of the three jurisdictions of the United Kingdom. Some of the provisions plainly relate exclusively to property within the United Kingdom, such as those in section 248, which deal with registration of property freezing orders and interim receiving orders in relation to land. The question raised by the PFO appeal is whether the totality of Part 5 relates exclusively to property within the United Kingdom. Provisions of Part 5 that relate to the recovery order itself Mr Jones drew attention to a number of provisions in relation to the recovery order itself, which he submitted could only apply in respect of property within the three jurisdictions of the United Kingdom. He relied upon the absence of any similar provisions that would apply in relation to property situated outside the United Kingdom as indicating that Part 5 did not apply to property outside the United Kingdom. Mr Eadie QC on behalf of SOCA did not accept that the provisions in question carried that significance. I shall refer to two exceptions. Section 269(1) provides that a recovery order is to have effect in relation to any property despite any provision (of whatever nature) which would otherwise prevent, penalise or restrict the vesting of the property. Section 269(2) then specifies a number of rights that are to be overridden by a recovery order. These include a right of return or other similar right, a right of return being defined as any right under a provision for the return or reversion of property in specified circumstances. Mr Eadie submitted that these provisions applied implicitly only to property within the jurisdiction. Mr Jones agreed with this submission, and argued that this was a further indication that recovery orders could only be made in respect of property within the jurisdiction. Hooper LJ dealt with section 269 in a different way. He held at para 155 that section 269(1) should be interpreted as applying only to provisions of English law as it could never have been intended to apply to provisions of the law of a foreign country in relation to property situated in that country. Mr Jones accepted the last part of this proposition, but on the basis that Part 5 as a whole did not apply to property situated in a foreign country. He did not, however, accept that section 269(1) only applied to provisions of English law. He pointed out that under the English rules of conflict of laws foreign law is sometimes determinative of title to property situated in this country. On the premise that Part 5 applies only to property within this jurisdiction there is no basis for restricting the ambit of section 269(1) to rules of English law. I found Mr Jones submissions compelling. Section 269 makes sense if Part 5 is concerned only with property within the United Kingdom. It does not make sense if the property is worldwide. Section 269 deals with provisions that are overridden by a recovery order. Sections 281 and 282 deal with exemptions from the effect of a recovery order. The first of these, under section 281, arises where the victim of the offence to which the recovery order relates demonstrates to the court that the property belongs to him. The implications of this I shall consider when I come, at paras 65 and 66, to deal with the coherence of the scheme laid down by POCA. Section 282 sets out a number of other exemptions, including property held by the Financial Services Authority, property held by a person in his capacity as an insolvency practitioner and property subject to any of a number of charges under United Kingdom statutes. Mr Jones submitted that if property subject to a recovery order were worldwide property, there would have to be equivalent provisions, even if only in general terms, to acknowledge exceptions that would be required in order to accommodate the laws of the countries in which the property was situated. Mr Eadies answer to this was that this was unnecessary as those laws would apply to defeat any claim based on the recovery order in any event. This is a fair response to Mr Jones point. None the less, these domestic provisions in relation to the reach of a recovery order add force to the submission that Part 5 is concerned only with property within the United Kingdom. In summary, apart from the definition of property in section 316(4), and the enigmatic section 286, there is nothing in Part 5, from first to last, that suggests that its application extends to property outside England and Wales, Scotland and Northern Ireland. Many of its provisions clearly relate to property within those jurisdictions. What then of the definition? If a recovery order can only be made in respect of property within England and Wales, Scotland and Northern Ireland, can the words in the definition wherever situated, which appear in the definition of property in Part 5, have any application in Part 5 at all? The answer to that question is that there are places in Part 5 where property means property wherever situated, even if a recovery order can only be made in respect of property within the United Kingdom. Section 240 provides in relation to Part 5: (1) This Part has effect for the purposes of (a) enabling the enforcement authority to recover, in civil proceedings before the High Court or Court of Session, property which is, or represents, property obtained through unlawful conduct, Even if property when first used means property within the United Kingdom Courts, the second time that the word is used it unquestionably means property wherever situated. Property within the United Kingdom that represents property obtained by criminal conduct, wherever the property was when obtained, is on any view, covered by Part 5. The same point can be made in relation to property in section 242, which deals with the initial obtaining of property through unlawful conduct, and to the original property in section 305, which deals with tracing property that represents the original property. Thus it is not right to postulate that the words wherever situated in the definition of property in section 316 make no sense if Part 5 does not permit the making of a recovery order in respect of property abroad. For these reasons, giving the words of Part 5 their natural meaning, and ignoring section 286, I would conclude that the provisions that they make in relation to an order for civil recovery apply only within the United Kingdom. Thus far I have been considering the provisions that appear in Part 5. Of perhaps greater significance are the provisions that do not appear in that Part. There are no provisions in relation to enforcement abroad to mirror those that appear at sections 74, 141 and 222 in relation to Parts 2, 3 and 4. Mr Jones submitted to the Court of Appeal that this indicated that Parliament did not intend that civil recovery orders could be made in respect of property situated abroad. Hooper LJ dismissed this submission out of hand at para 113 of his judgment. He held that, having taken the view that the Strasbourg Convention applied to enforcement orders made in civil proceedings, SOCA was entitled to seek to enforce both interim and final Part 5 orders abroad in those countries in which the Convention was in force or in which provisions similar to the Convention had been implemented. I find Hooper LJs conclusions surprising. They are at odds with the scheme of the Strasbourg Convention: see para 30 above. I do not understand how SOCA could seek to enforce abroad interim or final orders under Part 5. Part 5 makes no provisions for SOCA to take steps to secure property or enforce confiscation abroad. The relevant provisions in Part 5 in relation to securing property apply within the United Kingdom: see para 44 above. Realisation of confiscated property is exclusively a matter for the trustee for civil recovery in whom property vests under a recovery order. The suggestion that he would be able to recover property situated abroad is unrealistic: see para 71 below. Had Parliament, or those responsible for drafting POCA, intended Part 5 confiscation to extend to property outside the United Kingdom they would surely have included provisions parallel to section 74. The fact that they did not do so strongly suggests that there was no intention that Part 5 should have extraterritorial effect. Reciprocity I now turn to demonstrate that provisions for giving effect to requests for assistance from other states accord with an interpretation of Part 5 that restricts its application to property within the United Kingdom. One obvious explanation for the provisions of Part 5 is that they were intended to comply with the obligations of the United Kingdom in respect of incoming requests under the Strasbourg Convention, and to afford similar assistance to states not party to that convention. Section 444(1) provides for the making of an Order in Council to make provision for a prohibition on dealing with property which is the subject of an external request and for the realisation of property for the purpose of giving effect to an external order. Section 444(2) provides that such an Order may include provision which (subject to any specified modification) corresponds to any provision of Part 2, 3, 4 or 5, excluding Chapter 3, which deals with cash seizure. Section 447 defines an external request and an external order as follows: (1) An external request is a request by an overseas authority to prohibit dealing with relevant property which is identified in the request. (2) An external order is an order which (a) is made by an overseas court where property is found or believed to have been obtained as a result of or in connection with criminal conduct, and (b) is for the recovery of specified property or a specified sum of money. Thus, where a foreign court makes a finding that property has been, or is believed to have been, obtained as a result of or in connection with criminal conduct and orders the recovery of specified property or a specified sum of money, section 444 provides for an Order in Council that permits realisation of property to give effect to the order of the foreign court. Section 444 addresses both forms of confiscation order referred to in the Explanatory Report to the Strasbourg Convention: see para 28 above. Section 444 does not provide in terms that the property to be realised should be within the United Kingdom. The power conferred by section 444 was exercised by the making of the Order. The Order enables the powers conferred by Parts 2, 3, 4 and 5 of POCA to be exercised for the purpose of giving effect to external requests and external orders, so that the provisions of the Order mirror the provisions of POCA. Part 2 of the Order provides for the Secretary of State to refer an external request in connection with criminal investigation or proceedings, or an external order arising from a criminal conviction, to, among others in England and Wales, the Director of Public Prosecutions. He will then apply to the Crown Court for the exercise of the powers conferred by Part 2. Parts 3 and 4 of the Order make equivalent provisions in respect of Scotland and Northern Ireland. Parts 2, 3 and 4 provide for measures to secure and realise relevant property. Section 447(7) of POCA states that property is relevant property if there are reasonable grounds to believe that it may be needed to satisfy an external order which has been or may be made. Part 2 of the Order is headed Giving Effect in England and Wales to External Requests in Connection with Criminal Investigations or Proceedings and to External Orders Arising from Such Proceedings. Parts 3 and 4 have equivalent headings. Parts 2, 3 and 4 of the Order expressly provide that the external request or order must relate to property in, respectively, England and Wales, Scotland and Northern Ireland. In King v Director of the Serious Fraud Office [2009] UKHL 17; [2009] 1 WLR 718 the House of Lords held that the provisions of Part 2 of the Order only permitted a restraint order to be made in respect of property within England and Wales and that the same territorial restriction applied in respect of seizure and enforcement provisions. Why do Parts 2, 3 and 4 of the Order expressly limit the assistance that can be sought by the foreign state to assistance in respect of property within England and Wales, Scotland and Northern Ireland? The answer must be that which I gave in King v Director of the Serious Fraud Office at para 31: If a country wishes assistance from other countries in preserving or recovering property that is related to criminal activity, it makes sense for its request to each of those other countries to be restricted to the provision of assistance in relation to property located within its own jurisdiction. If each country were requested to take steps to procure the preservation or recovery of property on a worldwide basis, this would lead to a confusing, and possibly conflicting, overlap of international requests for assistance. Not only would such multiplication of activity be confusing, it would involve significant and unnecessary multiplication of effort and expense. This reasoning underlies the scheme for assistance laid down in the Strasbourg Convention. Part 5 of the Order provides for the Secretary of State to forward an external order to the enforcement authority in the United Kingdom for the purpose of enabling the enforcement authority to realise recoverable property in civil proceedings for the purpose of giving effect to the external order. The procedure for a civil recovery order in response to the external order is thus put in train. Part 5 of the Order is headed: Giving Effect in the United Kingdom to External Orders by Means of Civil Recovery (my emphasis). In contrast to Parts 2, 3 and 4, however, the body of Part 5 contains no express territorial limitation in relation to the property to which the Order relates. There would seem to be two possible explanations for this. One is that SOCA is correct in contending that Part 5 of POCA has extraterritorial effect and Part 5 of the Order is similarly intended to apply without territorial limitation. The other is that Part 5 of POCA applies only to property within the United Kingdom, so that there was no need to insert a territorial restriction in Part 5 of the Order. I believe that the latter is the correct explanation. In the first place that accords with the heading of Part 5 of the Order. In the second place, if Part 5 of POCA had extraterritorial effect, there would seem no reason to restrict Parts 2, 3 and 4 of the Order to property within the United Kingdom but to impose no such restriction in relation to Part 5. In summary, the terms of the Order accord with an interpretation of POCA that restricts the making of recovery orders under Part 5 to property that is situated within the United Kingdom. A coherent scheme that accords with international law The provisions of Part 5 of POCA comply with the requirements of reciprocity contained in the Strasbourg Convention. If a foreign court makes an order by way of value confiscation, the property of the defendant in England and Wales, Scotland or Northern Ireland can be seized and realised in satisfaction, or part satisfaction, of the order. If, after conviction, a foreign court makes an order for the confiscation of specific proceeds of crime which are in one of the three United Kingdom jurisdictions, they can be seized and realised. However Part 5 of POCA goes further than is necessary to meet the requirements of the Strasbourg Convention. Section 241 requires the court or sheriff to decide on a balance of probabilities whether the property is or represents property obtained through unlawful conduct, irrespective of whether such conduct occurred in the United Kingdom or abroad. If it is, or does, the Court must, subject to the provisions of Part 5, make a recovery order in respect of the property, whether or not any proceedings have been brought for an offence in connection with the property: see section 240(2). The claim form has to be served on the person holding the property and on any person holding associated property which the authority wishes to be subject to a recovery order, wherever domiciled, resident or present (section 243(2)). Part 5 makes complex provision for the protection of the rights of holders of associated property and of third parties who claim ownership of property that is subject to Part 5 proceedings. Those provisions require those persons to make their claims before the court in England and Wales, Scotland or Northern Ireland seised of the Part 5 proceedings. If the jurisdiction described above is founded on the presence of the property in question within the jurisdiction of the Court making the order, the action permitted by Part 5 is neither unreasonable nor contrary to international law. It is perfectly understandable that Parliament should wish to make provision for the confiscation of proceeds of crime held in the United Kingdom by someone outside the jurisdiction and proper that anyone holding that property, or associated property, should be served with the claim to confiscate it and that anyone claiming ownership of it or an interest in it should be expected to assert that claim before the court conducting the confiscation proceedings. Part 5 proceedings brought in respect of property held within the jurisdiction are also likely to be effective, thanks to the provisions in Part 5 for securing and realising the property in question. Thus the scheme of Part 5 is simple and rational. If property is identified in England and Wales, Scotland or Northern Ireland that is believed to be or to represent the proceeds of a crime committed outside the United Kingdom, recovery proceedings can be begun in the jurisdiction concerned. Steps can be taken to secure the property in question and subsequently to realise it within the jurisdiction in question. The proceeds of realisation of the property will be available to defray the cost of the proceedings. The holder of the property, and any holder of associated property or person claiming to own the property can reasonably be expected to take part in the proceedings to assert his right or otherwise to challenge the making of the recovery order. The picture is very different if SOCAs submissions as to the scope of Part 5 proceedings are correct. Part 5 proceedings in respect of property outside the jurisdiction would involve the assertion of an exorbitant jurisdiction in personam without any basis in international law. They would also be likely to prove ineffective. At para 14 of his judgment Hooper LJ cited the following description by the appellants of the effect of SOCAs submissions: Parliament has conferred authority on the enforcement authorities to bring proceedings to vest in a trustee for civil recovery property situated abroad which derives entirely from unlawful conduct abroad where neither the holder of the property, nor any intermediate holders of the property, or property from which the holder's property is derived, have ever been domiciled, resident or present within the jurisdiction; in other words, where there is no connection with the jurisdiction whatsoever. Hooper LJ accepted that this result was startling. He was right to do so. Asserting in personam jurisdiction over the holder of such property, or of associated property, has, as I have said, no precedent in international law. It would not be reasonable to expect the holder of the property, or any person holding associated property or claiming to own the property, to submit to the jurisdiction of a United Kingdom court when neither they nor the property had any connection with that jurisdiction. Any order made would be likely to be made unopposed. In these circumstances the exorbitant confiscation proceedings that had resulted in an unopposed recovery order would be unlikely to bear fruit. Hooper LJ stated on a number of occasions that the recovery order would operate in personam so as to give the trustee for civil recovery a right against the holder of the property. Such a right would, however, be likely to be nugatory, for there would be no basis upon which the trustee for civil recovery could found jurisdiction in the United Kingdom over the holder of the property or any associated property so long as they remained outside the jurisdiction. The fact that they had been served in the Part 5 proceedings would not confer jurisdiction in relation to a claim by the trustee. It was common ground that if in such circumstances the trustee sought to bring a civil claim in respect of the property in the state where it was located, his title would not be likely to be recognised. Hooper LJ advanced the following practical justification for according Part 5 extraterritorial effect. He held, at para 15, that if the appellants were correct: a court in this jurisdiction would be unable to make a civil recovery order in respect of land or other property in Spain bought with the proceeds of crimes committed here by a person resident here. Unable to obtain a civil recovery order, the enforcement authority could not take any steps here to require the person to hand over the property in Spain. Nor (so it appears) could the United Kingdom take enforcement action in Spain pursuant to [the Strasbourg Convention] (to which I return below) because there would be no order of the court to enforce: see paragraph 81 below. This reasoning is not compelling. The appropriate course in the circumstances envisaged by Hooper LJ would be to obtain a confiscation order under Part 2, 3 or 4 and to make a request for assistance via the Secretary of State in accordance with section 74. I can see no compelling reason why Parliament should have wished to confer on SOCA a right to seek a civil recovery order in respect of the proceeds of a crime that was not committed within the United Kingdom where those proceeds are not within the United Kingdom. There will, of course, be the possibility that SOCA will become aware of the existence of property in another jurisdiction that it has reason to believe is, or may be, the proceeds of crime. The natural course in those circumstances will be to pass on such information as it has about the property to the appropriate authorities in the country where the property is situated. For all these reasons, but for the effect of section 286, I would have reached the firm conclusion that the jurisdiction to make a civil recovery order conferred by Part 5 of POCA applied only in respect of property that is situated in England and Wales, Scotland or Northern Ireland. What is the effect of section 286? The enigma Section 286 provides: (1) Orders under this Chapter may be made by the Court of Session in respect of a person wherever domiciled, resident or present. (2) Such an order may be made by the Court of Session in respect of moveable property wherever situated. (3) But such an order in respect of a persons moveable property may not be made by the Court of Session where (a) the person is not domiciled, resident or present in Scotland, and (b) the property is not situated in Scotland, unless the unlawful conduct took place in Scotland. It is implicit in this provision that, if POCA did not include it, the jurisdiction that it confers would not exist. Thus section 286(2) purports to confer on the Court of Session the jurisdiction to make an order in respect of moveable property outside Scotland provided either that the holder is domiciled, resident or present in Scotland or the unlawful conduct through which the property was obtained took place in Scotland. The only thing that is agreed about this provision is that it purports to create for Scotland a position that differs from that which the Act provides in relation to the rest of the United Kingdom. This is puzzling as, when moving the amendment that introduced it in the House of Lords, Lord Goldsmith stated on 25 June 2002 that the intention was to achieve the same effect in all the jurisdictions of the United Kingdom: see Hansard (HL Debates), 25 June 2002, vol 636, col 1291. Equally puzzling is section 399 in the Explanatory Notes to the Act, the second sentence of which echoes a comment that Lord Goldsmith made on the same occasion: 399. The section provides that the Court of Session may make an order in respect of a person whether or not he is domiciled, present or resident in the United Kingdom. No similar provision is required in respect of England, Wales and Northern Ireland, due to the jurisdiction of the civil courts and the general provisions on property in section 316. In relation to this note Hooper LJ understandably remarked at para 128 that he could not understand the reference to section 316 of the Act as this applied to all three jurisdictions. No one has been able to proffer a satisfactory explanation for section 286(2). Part 3 of POCA would be the normal and appropriate route for confiscation in relation to property outside Scotland that was or represented proceeds of unlawful conduct that had taken place in Scotland. Why, in the case of Scotland, should special provision be made to bring such property within the scope of Part 5? Section 286(2) remains an enigma. It does not lead me to alter the conclusion that I have expressed in para 74 above, at least in so far as it relates to the position in England and Wales and Northern Ireland. Conclusion The High Court of England and Wales has no jurisdiction under Part 5 to make a recovery order in relation to property outside England and Wales. It follows that the court had no jurisdiction to make the worldwide property freezing order that was made in this case. The PFO appeal should be allowed and the property freezing order redrawn so that it applies only to property within the jurisdiction of the Court. It may be necessary for the Court to hear further argument as to how this should be done, for a question remains, that has not yet been addressed, as to whether the form of the order made in this case is appropriate even if its ambit is restricted to property within the jurisdiction. The foundation of the jurisdiction conferred under Part 5 of POCA is the existence of property believed to be the proceeds of crime. The existence of such property enables SOCA, as the enforcement authority, to serve a claim form on the holder of the property and on any other person who SOCA thinks holds associated property, even if that person is outside the jurisdiction, if SOCA wishes the property to be the subject of a civil recovery order see section 243. Section 243(3) requires the property either to be specified or described in the form in general terms. Section 245A, which I have set out at para 40 above, sets out the requirements of a property freezing order. Subsection (2)(a) states that a property freezing order is one that specifies or describes the property to which it applies. The property freezing order obtained in this case set out schedules of property to which the order applied. But the order was not restricted to specific property. It provided that the prohibition on disposal of assets applies, but is not limited to, the following categories of assets: (1) all real property, including, but not limited to the properties listed at Schedule 1 to this Order; (2) the balances standing to the credit of any bank and/or building society accounts, including, but not limited to the accounts listed at Schedule 2 to this Order; (3) any Personal Equity Plan (PEP); (4) any endowment policy; (5) any securities, including any debentures or shares in any company (wheresoever incorporated); and (6) any chattels, motor vehicles, or other personal property valued in excess of 2000, including, but not limited to the property listed at Schedule 3 to this Order. wheresoever located (whether within England and Wales or otherwise). It is questionable whether these general descriptions specify or describe property as required by section 245A. The property freezing order also required all the PFO appellants, together with the other respondents to the property freezing order, to disclose all their worldwide assets. It is not clear to me how the court had jurisdiction to make such an order. Part 8 of POCA expressly deals with disclosure, which is the subject of the DO appeal. If this Court is invited to make a revised property freezing order in which property is described in terms as general and speculative as have been adopted in this case it will require to be satisfied that they fall within the scope of section 245A. If the Court is invited to include in the revised freezing order an order for disclosure of assets it will require to be satisfied that it has jurisdiction to do so. The DO appeal This appeal challenges the validity of information notices addressed to Mr Perry and his daughters by SOCA pursuant to the disclosure order issued by Judge Kay QC on 8 August 2008: see para 6 above. The disclosure order was issued under Part 8 of POCA, which deals with Investigations. Part 8 applies to both confiscation proceedings under Parts 2, 3 and 4 of POCA and civil recovery proceedings under Part 5. In relation to Part 5 a disclosure order can be made only if property specified in the application for the order is subject to a civil recovery investigation and the order is sought for the purposes of the investigation: see section 357(3)(b). A civil recovery investigation is defined by section 341(2): For the purposes of this Part a civil recovery investigation is an investigation into (a) whether property is recoverable property or associated property, (b) who holds the property, or (c) its extent or whereabouts. Section 357 defines a disclosure order as follows: (4) A disclosure order is an order authorising an appropriate officer to give to any person the appropriate officer considers has relevant information notice in writing requiring him to do, with respect to any matter relevant to the investigation for the purposes of which the order is sought, any or all of the following (a) answer questions, either at a time specified in the notice or at once, at a place so specified; (b) provide information specified in the notice, by a time and in a manner so specified; (c) produce documents, or documents of a description, specified in the notice, either at or by a time so specified or at once, and in a manner so specified. (5) Relevant information is information (whether or not contained in a document) which the appropriate officer concerned considers to be relevant to the investigation. Section 358 sets out the requirements for making a "disclosure order": (1) These are the requirements for the making of a disclosure order. (2) There must be reasonable grounds for suspecting that (b) in the case of a civil recovery investigation, the property specified in the application for the order is recoverable property or associated property. (3) There must be reasonable grounds for believing that information which may be provided in compliance with a requirement imposed under the order is likely to be of substantial value (whether or not by itself) to the investigation for the purposes of which the order is sought. (4) There must be reasonable grounds for believing that it is in the public interest for the information to be provided, having regard to the benefit likely to accrue to the investigation if the information is obtained. Section 359(1) provides that a person commits an offence if without reasonable excuse he fails to comply with a requirement imposed on him under a disclosure order. The offence carries a maximum sentence on summary conviction of imprisonment for six months. Section 359(3) provides for the more serious offence of knowingly or recklessly making a false statement in purported compliance with a requirement imposed under a disclosure order. This carries a maximum sentence of two years imprisonment in respect of a conviction after a trial on indictment. SOCAs application for a disclosure order was supported by a witness statement of Vanessa Ewing, a Financial Investigator on SOCAs staff. The application notice named as respondents Mr Perry, Mrs Lea Perry, Mrs Greenspoon, Miss Yael Perry and any other individual or entity specifically associated to the named respondents and property identified as relevant to the civil recovery investigation conducted by the Director General. In para 5.7 Miss Ewing described the property that was subject to the civil recovery investigation as any property held by or on behalf of Perry including, but not limited to, the following: (i) monies which have been credited to or have passed through the following: (a) accounts held by or on behalf of Israel Perry, including accounts held by his wife, Mrs Lea Lili Perry, and/or his two adult daughters, Mrs Tamar Greenspoon and Miss Yael Perry. In explaining why the order was sought in relation to Mr Perrys wife and daughters, Miss Ewing explained: I believe that it is common practice for criminals to use the proceeds of crime to acquire property held in the names of other family members or trusted associates. Persons involved in criminal activity often seek to reduce the amount of money and other property held in their own names in an attempt to minimise their exposure to the risk of confiscation or to avoid paying tax. It is therefore reasonable for the investigation to include property owned by Mrs Lea Lili Perry, Miss Yael Perry and Mrs Tamar Greenspoon in order to ascertain whether such property has a legitimate origin or whether it represents the proceeds of criminal conduct. The Order made by Judge Kay was addressed to all those named in the application notice, included, inappropriately, a penal notice, and conferred authority on SOCA in the general terms of section 357(4). The property referred to by Miss Ewing in her application was described in the most general terms. The purpose of the application, as explained by her, appears to have been to enable SOCA to carry out a roving commission aimed at identifying any property that might be the proceeds of Mr Perrys criminal conduct. A number of notices were issued by Miss Ewing pursuant to the disclosure order. Some sought information of funds in specific accounts. Some sought information in the following terms: (1) Provide the following information under section 357(4)(b) of the Act: (i) A statement of assets held by, or on behalf of, Israel PERRY in the United Kingdom including Crown Dependencies and British Overseas Territories; (ii) A statement of assets held by, or on behalf of, Israel PERRY in any other country other than the United Kingdom. The information sought includes, but is not limited to, the following: (a) Any assets held by a legal entity of which Mr PERRY is the beneficiary including worldwide companies, trusts and corporations; (b) Any precious metals and gems held by, or on behalf of, Israel PERRY; (c) Any valuable art, antiques and the like held by, or on behalf of, Israel PERRY; (d) Any loans made by, or on behalf of, Israel PERRY; (e) Any real estate held by, or on behalf of, Israel PERRY; (f) Any vehicles, pleasure craft etc held by, or on behalf of, Israel PERRY; (g) Any stocks, bonds, shares, bearer bonds, negotiable instruments, investment funds etc held by, or on behalf of, Israel PERRY; (h) Any bank accounts, in any currency, held by, or on behalf of, Israel PERRY; The exercise carried out by Miss Ewing seems to go beyond the purpose of a civil recovery investigation as defined in section 341(2). That investigation, as I understand the relevant provisions, relates to property whose existence has already been identified. Similar questions arise in relation to the scope of the disclosure order and some of the notices served under it as to those that I have raised in paras 79 to 83 above in relation to the scope of the property freezing order. Under section 357(4) the authority conferred by a disclosure order is restricted to enquiries with respect to any matter relevant to the investigation for the purposes of which the order is sought. It is questionable whether this authority extends beyond seeking information about property whose existence has already been identified. Mr Jones has not, however, sought to challenge the scope of the order or of the notices issued under it. He has made a more fundamental attack on SOCAs authority to issue the notices. Those notices were given to persons who were, and were known by SOCA to be, outside the jurisdiction of the United Kingdom. It was Mr Jones submission, advanced before the Court of Appeal, that the authority given by a disclosure order to give disclosure notices only applies to notices given to persons within the jurisdiction. In making this submission Mr Jones relied particularly on the presumption that, unless it clearly provides to the contrary, a statute will not have extraterritorial effect. The majority of the Court of Appeal, Ward and Carnwath LJJ, rejected the appellants attack on the validity of the notices; Richards LJ dissented [2010] EWCA Civ 907; [2011] 1 WLR 542. The gist of the reasoning of Carnwath LJ appears in the following short passage of his judgment: 50. is there any reason why persons who are reasonably considered to have an interest in property validly subject to a disclosure order, and who have a sufficient presence within the jurisdiction for a notice to be effectively given to them, should be treated as outside the legislative grasp of the statutory scheme? 51. As a matter of common sense, it is difficult to see why mere presence in or absence from the country at the time of sending or delivery of the notice is the critical factor. For example, a person normally resident at an address in this country could not sensibly seek to deny that the notice had been given to him at that address, merely because he happened to be out of the country at the time (for example, on a business or holiday trip). Ward LJ proceeded on the premise that a recovery order could be made in respect of property outside the jurisdiction. He commented at para 77 that the extraterritorial effect of Part 5 could not be denied and that he could not see why Part 8 should not act in the same way. For the reasons that I have given I consider that he proceeded on a false premise. The point is a very short one. No authority is required under English law for a person to request information from another person anywhere in the world. But section 357 authorises orders for requests for information with which the recipient is obliged to comply, subject to penal sanction. Subject to limited exceptions, it is contrary to international law for country A to purport to make criminal conduct in country B committed by persons who are not citizens of country A. Section 357, read with section 359, does not simply make proscribed conduct a criminal offence. It confers on a United Kingdom public authority the power to impose on persons positive obligations to provide information subject to criminal sanction in the event of non compliance. To confer such authority in respect of persons outside the jurisdiction would be a particularly startling breach of international law. For this reason alone I consider it implicit that the authority given under section 357 can only be exercised in respect of persons who are within the jurisdiction. Mr Jones referred to a number of other provisions of POCA which, so he submitted, indicated that notices under a disclosure order could only be given to persons within the jurisdiction. He pointed out that Part 8 applies to confiscation as well as to civil recovery. Section 376 as originally drafted included provision for the issue by the judge of a letter of request for the purpose of obtaining information relevant to a confiscation order. He submitted that this provision would have been superfluous if the authority conferred by section 357 extended to persons beyond the United Kingdom. Part 8 gives other investigatory powers, including the power to make a production order in relation to specified material, the power to issue search and seizure warrants and the power to make a customer information order. Mr Jones submitted that the provisions conferring these powers, either as a matter of language or because of the presumption against extraterritoriality, could only be exercised within the United Kingdom. These submissions have some merit and reinforce my view of the limited ambit of section 357. For these reasons I would also allow the DO appeal. I agree with Mr Jones suggestion that the appropriate relief is a declaration that the Disclosure Order made by Judge Kay does not authorise sending information notices to persons who are outside the United Kingdom. LORD REED I agree with Lord Phillips, for all the reasons that he gives, that these appeals must be allowed. In relation to the appeal concerning the property freezing order, however, I wish to consider further section 286 of POCA, in view of the extent to which the submissions of the parties, and the division of opinion in the court, have focused upon that provision. In expressing views about it, I am conscious that the provision is concerned with the jurisdiction of the Court of Session, that these are not Scottish appeals, and that this court has not had the benefit of consideration of the provision by the Scottish courts. In those circumstances, it would be undesirable to express any definite view about the effect of section 286 unless it is necessary to do so in order to determine the present appeal; and, in my view, it is not. Nevertheless, since the provision appears in a United Kingdom statute which must be read and understood as a whole, it is potentially relevant to the construction of the provisions with which the appeal is directly concerned. It was also the subject of much of the argument in the present appeal. Some consideration of its effect is therefore unavoidable. In recognition of that, both parties adduced expert evidence from Scottish counsel before the Court of Appeal. This court, on the other hand, as the final court of appeal in civil matters from all parts of the United Kingdom, has judicial knowledge of Scots, English and Northern Irish law, and may take cognisance of the law of one jurisdiction in an appeal originating in another (Elliot v Joicey [1935] AC 209; 1935 SC (HL) 57; Bank of East Asia Ltd v Scottish Enterprise 1997 SLT 1213). Both the appellants and the respondent were therefore represented by Scottish as well as English counsel. The international background In order to understand the relevant provisions of POCA, including section 286, it is necessary to begin by considering an important aspect of the background to the legislation. As Lord Phillips has explained, POCA is intended to fulfil certain international obligations of the United Kingdom. These include, in particular, the obligations arising under the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna, 20 December 1988), the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime (Strasbourg, 8 November 1990), and the Council Framework Decision of 26 June 2001 on Money Laundering, the Identification, Tracing, Freezing, Seizing and Confiscation of Instrumentalities and the Proceeds of Crime (OJ 5.7.2001, L182/1). The legislation must therefore be considered in the light of those instruments. For present purposes, the most significant of them are the Vienna Convention and the Strasbourg Convention. The Vienna Convention The Vienna Convention is concerned with drugs offences. Article 5 relates to confiscation, defined by article 1 as meaning the permanent deprivation of property by order of a court or other competent authority. Article 5(1) requires each party to adopt such measures as may be necessary to enable confiscation of proceeds derived from relevant offences. Proceeds are defined in article 1 as meaning any property derived from or obtained, directly or indirectly, through the commission of a relevant offence. Article 5(2) requires each party also to adopt such measures as may be necessary to enable its authorities to identify, trace, and freeze or seize proceeds for the purpose of eventual confiscation. Article 5(4) relates to international co operation. Put shortly, article 5(4)(a) envisages that a request may be made by a party having jurisdiction over an offence to another party in whose territory proceeds referred to in article 5(1) that is to say, proceeds derived from offences are situated. On receipt of such a request, the party requested must either submit the request to its competent authorities for the purpose of obtaining an order of confiscation and, if such order is granted, give effect to it, or it must submit to its competent authorities an order of confiscation issued by the requesting party, with a view to giving effect to it in so far as it relates to proceeds situated in its territory. Article 5(4)(b) in addition provides for effect to be given to requests for the taking of provisional measures for the purpose of eventual confiscation. In terms of article 5(5)(a), proceeds confiscated by a party pursuant to article 5(4) are to be disposed of by that party according to its domestic law. The Strasbourg Convention The Strasbourg Convention is wider in its subject matter than the Vienna Convention, in that it applies to criminal offences generally, but narrower in its geographical scope, in so far as it was made under the auspices of the Council of Europe rather than the United Nations, and fewer states are party to it. Chapter III is concerned with international co operation in relation to confiscation of the proceeds of crime. The relevant provisions have been set out by Lord Phillips. Confiscation is defined by article 1(d) as meaning a penalty or a measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences resulting in the final deprivation of property. It is to be noted that, as in the Vienna Convention, the term confiscation has a wider scope than a confiscation order within the meaning of Parts 2, 3 and 4 of POCA, and is apt to include recovery orders of the kind for which Part 5 makes provision. Section 1 of Chapter III of the Convention, comprising article 7, sets out the general principles in relation to international co operation. In particular, article 7(2) imposes an obligation upon each party to the Convention to adopt such legislative and other measures as may be necessary to enable it to comply, under the conditions provided for in that chapter, with requests for confiscation, and with requests for investigative assistance and provisional measures with a view to confiscation. Section 2, comprising articles 8 to 10, is concerned with investigative assistance. In terms of article 8, in particular, parties undertake to afford each other, upon request, the widest possible measure of assistance in the identification and tracing of proceeds and other property liable to confiscation. Such assistance is to include any measure providing and securing evidence as to, amongst other matters, the existence and location of such property. Section 3, comprising articles 11 and 12, is concerned with provisional measures. In terms of article 11(1), in particular, parties are obliged, at the request of another party which has instituted criminal proceedings or proceedings for the purpose of confiscation, to take the necessary provisional measures, such as freezing or seizing, to prevent any dealing in, transfer or disposal of property which, at a later stage, may be the subject of a request for confiscation or which might be such as to satisfy the request. Section 4, comprising articles 13 to 17, is concerned with confiscation. Article 13, in particular, is concerned with the obligation to confiscate. Following the dual scheme created by article 5(4) of the Vienna Convention, article 13(1) of the Strasbourg Convention envisages alternative means by which a party may respond to a request made by another party for the confiscation of proceeds of crime which are situated in its territory. The first alternative, set out in article 13(1)(a), is that the requested party may enforce a confiscation order made by a court of the requesting party. The second alternative, set out in article 13(1)(b), is that the requesting party may submit a request to the competent authorities of the requested party so that the latter may obtain and enforce a confiscation order. Finally, in relation to the Strasbourg Convention, article 15 follows article 5(5)(a) of the Vienna Convention in providing that any property confiscated by the requested party shall be disposed of by that party in accordance with its domestic law, unless otherwise agreed by the parties concerned. As I shall explain, that provision is not reflected in the effect of a recovery order made under Part 5 of POCA. The contrast is relevant to the question whether such orders can be of the kind contemplated by article 13(1)(a) of the Convention, and therefore to the question whether such orders may fall within the scope of that exception to the ordinary principles of international law. The Framework Decision The Framework Decision seeks to ensure the effective implementation of the Strasbourg Convention within the EU. It does not however add anything of significance in relation to the issues with which the appeal is concerned. Parts 2, 3 and 4 of POCA Parts 2, 3 and 4 of POCA are concerned primarily with confiscation orders: orders, that is to say, made against a person convicted in criminal proceedings, for the payment of a sum of money equivalent to the value of any property or pecuniary advantage obtained as a result of or in connection with his criminal conduct (or such lesser amount as may be available). Such orders can be made in criminal proceedings in England and Wales, Scotland or Northern Ireland: see section 6 in relation to England and Wales, section 92 in relation to Scotland, and section 156 in relation to Northern Ireland. The order operates in personam, and the person against whom it is made is necessarily subject to the criminal jurisdiction of the court which makes the order. The courts are also empowered to order provisional measures. In particular, a restraint order can be made if, put shortly, a criminal investigation or criminal proceedings have been started in England and Wales, Scotland or Northern Ireland, and there is reasonable cause to believe that the alleged offender or defendant has benefited from his criminal conduct: see sections 41, 120 and 190. Such orders again operate in personam. The courts can also order enforcement measures, including measures authorising the securing and realisation of property. Such orders operate in rem. Parts 2, 3 and 4 each contain a provision concerned with overseas jurisdictions. If the conditions for the making of a restraint order are met, and the prosecutor believes that realisable property that is to say, property held by the defendant or by the recipient of a tainted gift is situated in a country outside the United Kingdom, then the prosecutor can send a request to the Secretary of State, with a view to its being forwarded to the government of the country where the property is situated: see sections 74, 141 and 222. In a case where no confiscation order has been made, the request is to secure that any person is prohibited from dealing with the property. If a confiscation order has been made and has not been satisfied, the request is also to secure that the property is realised and the proceeds are applied in accordance with the law of the requested country. These provisions fall within the ambit of articles 5(4) and (5) of the Vienna Convention and 11 and 13(3) of the Strasbourg Convention. It appears, therefore, that although property is defined by section 84(1), and by the corresponding provisions for Scotland and Northern Ireland, as all property wherever situated, and the powers to make restraint orders under sections 41, 120 and 190 can therefore be exercised in relation to property situated overseas, it is envisaged that the securing and realisation of such property will be dealt with by means of requests to foreign governments for assistance. That is as one would expect, since it is only the authorities of the jurisdiction where the property is situated which have the power to make effective orders of that nature in respect of such property. The wide definition of property is nevertheless essential in the context of Parts 2, 3 and 4, not only for the purposes of sections 74, 141 and 222 but more generally. In particular, as I have explained, a confiscation order is an order for the payment of a sum of money equal to the value of any property or pecuniary advantage obtained by the defendant from his criminal conduct. Although the court must have jurisdiction over the defendant in the criminal proceedings, there is no reason why the property obtained as a result of or in connection with the offence need also be situated within the United Kingdom, or within the part of the United Kingdom where the court is located. Part 5 of POCA As section 240(1) of POCA states, Part 5 has two purposes. The first, with which the present case is concerned, is to enable the enforcement authority to recover, in civil proceedings before the High Court or the Court of Session, property which is or represents property obtained through unlawful conduct. The Act thus creates an entirely new form of remedy. Section 240(2) makes it clear that such proceedings may be brought whether or not any criminal proceedings have been brought for an offence in connection with the property. Section 241 explains what is meant by unlawful conduct, and in particular that such conduct may occur in the United Kingdom or elsewhere. Accordingly, in distinction to Parts 2, 3 and 4, proceedings can be brought under Part 5 in circumstances where the court has no jurisdiction in respect of the offence in question. Chapter 2 of Part 5 is concerned with civil recovery. In particular, sections 243 and 244 are concerned with proceedings for recovery orders in England and Wales or Northern Ireland, and in Scotland, respectively. Each provision permits proceedings for a recovery order to be taken against any person who the enforcement authority thinks holds recoverable property, and requires the enforcement authority to serve the claim form or application upon the respondent wherever domiciled, resident or present. Accordingly, proceedings for a recovery order can be brought in circumstances where not only the court has no jurisdiction in respect of the offence in question, but the defendant is not domiciled, resident or present within the jurisdiction of the court. Having read only this far into the legislation, if one were to ask what connecting factor is required in order for the Court of Session to have jurisdiction in proceedings under Part 5, if the respondent is not domiciled, resident or present in Scotland, and if the Scottish courts do not have criminal jurisdiction over him, the answer which one would naturally expect is that the necessary connecting factor is the situation within Scotland of the property which is sought to be recovered. It is difficult to see what else it might be. It is however necessary to read further to find out whether that expectation is well founded. This is perhaps an appropriate point at which to note SOCAs submission that there need not be any connecting factor: POCA, it is argued, enables the enforcement authorities to bring proceedings in the High Court or the Court of Session to vest property situated abroad in a trustee for civil recovery, even where there is no connection with the United Kingdom whatsoever. As it is put in SOCAs written case, Parliament has decided that a Chinese thief, living in China, who has stolen property in China from a Chinese citizen may be the subject of civil recovery action. It is however inherently unlikely that such a result could have been intended by Parliament: in such circumstances, there would be no reason for the holder of the property to submit to the jurisdiction of the courts of this country, and no likelihood that any order granted by those courts without appearance would be given effect overseas. Again, however, it is necessary to examine the legislation further in order to determine what Parliament has done. A recovery order must vest the recoverable property in the trustee for civil recovery: section 266(2). The order may sever any property: section 266(7). Furthermore, the order may impose conditions as to the manner in which the trustee for civil recovery may deal with any property vested by the order for the purpose of realising it: section 266(8). The trustee for civil recovery is a person appointed by the court to give effect to a recovery order: section 267(1). His functions include securing the detention, custody or preservation of any property vested in him by the recovery order and realising the value of the property, other than money: section 267(3). By virtue of section 267(6), he has the powers mentioned in Schedule 7. The first of these is power to sell the property: paragraph 1. There is no equivalent of these provisions in Parts 2, 3 or 4. These provisions suggest strongly, if not conclusively, that a recovery order operates in rem to transfer title to the property to the trustee. That is the usual, although not invariable, sense in which the concept of vesting is employed, and that sense is consistent with the power to sever the property, and with the power of the trustee to sell the property and his function of realising its value. This interpretation of section 266 derives further support from section 269, which is concerned with rights, such as rights of pre emption or irritancy, which might otherwise be triggered by the vesting of the property in the trustee. Section 269 provides, so far as material: (1) A recovery order is to have effect in relation to any property despite any provision (of whatever nature) which would otherwise prevent, penalise or restrict the vesting of the property. (2) A right of pre emption, right of irritancy, right of return or other similar right does not operate or become exercisable as a result of the vesting of any property under a recovery order. A right of return means any right under a provision for the return or reversion of property in specified circumstances. (3) Where property is vested under a recovery order, any such right is to have effect as if the person in whom the property is vested were the same person in law as the person who held the property and as if no transfer of the property had taken place. The most significant of these provisions for present purposes is section 269(3), since that provision implies that the vesting of property under a recovery order involves the transfer of the property, so that it is held by the trustee rather than by the person who formerly held it. It was also accepted on behalf of SOCA that section 269(2) is one of a number of provisions in Part 5 which can only apply to property if POCA forms part of the lex situs: in other words, if the property is situated in one of the parts of the United Kingdom. One would ordinarily expect an order having the effect of transferring a real right of ownership to apply only in relation to property situated in the territory of the state where the order is made. As Lord Mance, delivering the judgment of the Board, said in Pattni v Ali [2006] UKPC 51; [2007] 2 AC 85 (para 24): Their Lordships also note the existence of a more general principle. The actual transfer or disposition of property is, in principle, a matter for the legislature and courts of the jurisdiction where the property is situate (state A), and will be recognised accordingly by courts in any other state (state B) It follows from it, conversely, that in the unlikely event that the courts of state A were to purport actually to transfer or dispose of property in state B, the purported transfer or disposal should not be recognised as effective in courts outside state A. That principle would apply with particular force if the order were made for the purpose of seizure or confiscation: Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260, para 54 per Lord Hoffmann; Government of the Republic of Spain v National Bank of Scotland 1939 SC 413. Lord Justice Clerk Aitchison said in the latter case (at pp 433 434): such decrees of a foreign country as purport to have extra territorial effect, and to attach property in a subject situated, and at a time when it is situated, within this country or its territorial waters, will not be recognised by our laws and courts. As I have previously explained, however, article 5(4) of the Vienna Convention and article 13(1)(a) of the Strasbourg Convention allow for the possibility that a party may make an order confiscating property situated in the territory of another party, to which the latter party may choose to give effect, but is not obliged to do so. It therefore cannot be taken for granted that POCA does not allow for that possibility. It is necessary to examine the legislation further in order to decide whether POCA does so or not. Other provisions in Chapter 2 concern provisional measures. The available measures in England and Wales, and in Northern Ireland, are property freezing orders and interim receiving orders. The corresponding measures in Scotland are prohibitory property orders and interim administration orders. A property freezing order and a prohibitory property order are orders that prohibit any person to whose property the order applies from dealing with the property: sections 245A(2)(b) and 255A(2)(b). The court can make such an order only if it is satisfied that there is a good arguable case that the property to which the application for the order relates is or includes recoverable property, and that, if any of it is not recoverable property, it is associated property: sections 245A(4) and (5), and 255A(4) and (5). One consequence of that requirement is that such orders can be made only in respect of property which is, in principle, capable of being made the subject of a recovery order, or is mixed with such property in such a way as to be associated property as defined in section 245. If a recovery order operates in rem, as one might infer for the reasons I have explained at paragraphs 123 to 125, it follows that the scope of property freezing orders and prohibitory property orders is more limited than the nature of the orders themselves might otherwise have led one to expect. Part 5 contains no provision concerned with overseas jurisdictions. There is, in particular, no equivalent of sections 74, 141 and 222. This contrast with Parts 2, 3 and 4 (and also with Part 8, as originally enacted: see section 376) provides further support for the view that recovery orders are concerned solely with property situated within the part of the United Kingdom where the order was made. If such orders had extraterritorial scope, the absence of any provision corresponding to sections 74, 141 and 222 would be difficult to understand. In that connection, it is also relevant to note that Part 5 requires that the realised proceeds of property vested in the trustee must be applied in accordance with section 280. That section requires that the net proceeds, after payment of the remuneration and expenses of the trustee, must be paid to the enforcement authority. No provision is made for the possibility that the proceeds of realization of property situated in another jurisdiction might be applied in accordance with the law of that jurisdiction, as envisaged by article 5(5)(a) of the Vienna Convention and article 15 of the Strasbourg Convention. In that respect, recovery orders again differ from confiscation orders made under Parts 2, 3 and 4: in the case of those orders, sections 74(3), 141(3) and 222(3) provide, in relation to enforcement abroad, that the request is to be that realisable property is realised and the proceeds are applied in accordance with the law of the receiving country. I shall return to section 286, which is concerned with the power of the Court of Session to make orders under Chapter 2 of Part 5, and to section 316(4), which defines property for the purposes of Part 5. Part 11 of POCA It is also relevant to note one of the provisions in Part 11 of POCA, which is concerned with co operation. Section 444 deals with external requests and orders. It allows provision to be made by Order in Council for a prohibition on dealing with property which is the subject of an external request, or for the realisation of property for the purpose of giving effect to an external order. An external request is a request by an overseas authority to prohibit dealing with property which may be needed to satisfy an external order which has been or may be made: section 447(1) and (7). An external order is an order made by an overseas court where property is found or believed to have been obtained as a result of or in connection with criminal conduct, and is for the recovery of specified property or a specified sum of money. Such an Order in Council may include provision which (subject to any specified modifications) corresponds to any provision of Part 2, 3 or 4 or Part 5, except Chapter 3, which concerns the recovery of cash in summary proceedings. Section 444 thus enables articles 11 and 13(1) of the Strasbourg Convention, and the corresponding provisions of the Vienna Convention, to be implemented by the United Kingdom. The Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (SI 2005/3181) was made under sections 444 and 459(2) of POCA. Part 5 of the Order concerns recovery orders, and contains articles corresponding to sections 286 and 316(4) of POCA: see articles 197 and 213(4) respectively. The Order was construed by the House of Lords in King v Director of the Serious Fraud Office [2009] UKHL 17; [2009] 1 WLR 718 as conferring jurisdiction upon the Crown Court to make a restraint order in response to an external request only where the request concerned property in England and Wales. The same territorial requirement was also held to apply to the seizure and enforcement provisions of Part 2 of the Order. Although the terms of the Order differ in some significant respects from the terms of POCA, the speech of Lord Phillips, with which the other members of the committee agreed, contains observations which are equally germane to the present case. In particular, Lord Phillips rejected the contention that an Order made under section 444 might have been intended to enable foreign countries to obtain worldwide orders from the British courts (para 37). His Lordship also observed that, although property was defined by section 447(4) of POCA as meaning property wherever situated, whether the word bore that meaning depended on the context in which the word was used. Thus, where the Order expressly or by implication referred to property in England and Wales, it necessarily referred only to property there situated (para 37). Section 316(4) It is necessary next to consider section 316(4), which defines property for the purposes of Part 5 as all property wherever situated. At first sight, that might be thought to entail that the power to make a recovery order extended to property anywhere in the world, provided that it had been obtained through unlawful conduct occurring anywhere in the world and was therefore recoverable property as defined in section 304(1). As I have explained, however, there are a number of factors which point away from that conclusion. To recap: (1) Part 5, unlike Parts 2, 3 and 4, makes no provision in respect of overseas jurisdictions; (2) Part 5, unlike Parts 2, 3 and 4, makes no provision for the proceeds of realisation of recoverable property to be applied in accordance with foreign law, as contemplated by article 5(5)(a) of the Vienna Convention and article 15 of the Strasbourg Convention; (3) recovery orders under Part 5, unlike confiscation and restraint orders under Parts 2, 3 and 4, appear on the face of the provisions (notably sections 266, 267, 269 and Schedule 7) to operate in rem; (4) orders taking effect in rem ordinarily apply only to property situated within the territorial jurisdiction of the court; (5) there is a presumption that Parliament does not intend to legislate in respect of property outside the United Kingdom, and in particular that legislation is not intended to authorise the seizure or confiscation of property situated outside the United Kingdom; (6) courts in the United Kingdom have no power to make effective orders purporting to transfer real rights of ownership of property situated outside the jurisdiction of the court; and (7) it is accepted that references to property in a number of other provisions of POCA, including provisions of Part 5, can refer only to property situated in the United Kingdom. Some of these points have greater force than others. Cumulatively, however, they provide compelling support for the conclusion that the ambit of recovery orders is intended to be confined to property located within the part of the United Kingdom where the court in question exercises jurisdiction. Subject to section 286, it appears therefore that, although property is defined so widely by section 316(4) that the power to make recovery orders under section 266 might be understood as extending to property located overseas, such an interpretation of section 266 would be mistaken: in the context of the section, the word property has to be understood as referring only to property situated within the territorial jurisdiction of the High Court or the Court of Session, as the case may be. The wide definition of property is nevertheless essential in the context of other provisions of Part 5. In particular, the tracing provisions in Part 5 have the consequence that a recovery order may be appropriate in respect of property located within the jurisdiction of the court which represents property unlawfully obtained elsewhere: see, for example, section 305. Civil jurisdiction in the Scottish courts Before coming finally to section 286, it is necessary to explain in outline the relevant aspects of Scots law in relation to jurisdiction, apart from POCA. I should emphasise that my purpose here is merely to explain matters in the most general terms, so as to provide some background against which to attempt to understand the effect of section 286. In most ordinary civil proceedings before the Scottish courts, jurisdiction is regulated by the rules contained in Schedule 8 to the Civil Jurisdiction and Judgments Act 1982, as amended. In the present context, it is convenient to begin with rule 5(1)(a), which confers upon the courts for the place where immovable property is situated exclusive jurisdiction in proceedings which have as their object rights in rem in immovable property (sic: the terms movable and immovable are derived from the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters rather than the Scots law of property, which distinguishes between heritable and moveable property. It is the latter terminology which is employed in section 316(4) of POCA). The exclusive jurisdiction of the forum rei is reinforced by rule 5(2), which precludes a Scottish court from exercising jurisdiction in a case where immovable property is situated outside Scotland and the court would have exclusive jurisdiction if the property were situated in Scotland. A similar rule applies to the allocation of jurisdiction within the United Kingdom: Schedule 4, rule 11(a)(i). Even before the enactment of the 1982 Act, that approach had long been established under the common law. For example, in Cathcart v Cathcart (1902) 12 SLT 182 Lord Low declined to grant a declarator that the pursuer was entitled to a liferent of land situated in England. He observed, at p 185: Real estate in England is beyond the jurisdiction of the Scotch courts Further, if decree of declarator in terms of the second conclusion was pronounced, this court would have no power to give practical effect to the right thereby declared. The pursuer would require to go to England to obtain his remedy. Would the English courts, according to the principles of international law, be bound to recognise and act upon the declarator of this court? I am of opinion that they would not I think that the answer would be that it was for the court of the country where the real estate was situated to say what was the result, as regards the rights of the parties [of the relevant events]. I am therefore of opinion that the question is one with which this court is not competent to deal. In relation to proceedings concerned with moveable property, Schedule 8 contains a number of relevant rules. Under rule 1, the general rule is that persons can be sued in Scotland if they are domiciled there. The concept of domicile is defined for this purpose on the basis of residence: section 41. Under rule 2, there are also a number of special grounds on which the Scottish courts may have jurisdiction. In particular, under rule 2(i) a person may be sued in Scotland in proceedings which are brought to assert, declare or determine proprietary or possessory interests, or rights of security, in or over movable property, or to obtain authority to dispose of movable property, if the property is situated in Scotland. There are in addition other rules which may be relevant to confer jurisdiction in particular circumstances. Broadly similar rules apply to the allocation of jurisdiction within the United Kingdom, under Schedule 4, rules 1 and 3(h)(ii). The Scottish courts may therefore have jurisdiction in proceedings concerned with the ownership of moveable property situated outside Scotland. In practice, however, as I have explained, the courts in Scotland, as in the other parts of the United Kingdom, would be unlikely to make an order in rem purporting to transfer or dispose of property in another state. Accordingly, summarising the matter broadly, proceedings concerned with rights in rem can ordinarily be brought in the Scottish courts in relation to heritable property only if the property is situated in Scotland. They can ordinarily be brought in relation to moveable property if the property is situated in Scotland or if the defender is domiciled in Scotland. They cannot otherwise ordinarily be brought, in the absence of particular circumstances in which other grounds of jurisdiction may arise (for example, under rule 2(h) of Schedule 8). There are a number of circumstances where jurisdiction is not governed by Schedules 4 or 8. In particular, those schedules do not affect the operation of any enactment which confers jurisdiction on a Scottish court in respect of a specific subject matter on specific grounds: sections 17(1) and 21(1)(a) of the 1982 Act. Section 286 of POCA is an example of such an enactment. Section 286 I can now turn at last to section 286 itself. It is headed Scope of powers (Scotland), and provides: (1) Orders under this Chapter may be made by the Court of Session in respect of a person wherever domiciled, resident or present. (2) Such an order may be made by the Court of Session in respect of moveable property wherever situated. (3) But such an order in respect of a person's moveable property may not be made by the Court of Session where (a) the person is not domiciled, resident or present in Scotland, and (b) the property is not situated in Scotland, unless the unlawful conduct took place in Scotland. The words this Chapter refer to Chapter 2 of Part 5 of POCA, which as I have explained is concerned with civil recovery. The orders which may be made by the Court of Session under Chapter 2 are recovery orders, prohibitory property orders, interim administration orders and consent orders (made under section 276). Since these orders can only be made in respect of property which is at least arguably recoverable (or associated property), it is the extent of the courts jurisdiction in relation to the power to make recovery orders which is of critical importance. Section 286 provides further support for the conclusion that the definition of property in section 316(4) does not have the effect of enabling a recovery order to be made under section 266 in respect of property anywhere in the world. If section 266, read with section 316(4), had that effect, the provision made by section 286(2) in respect of moveable property would be redundant, and the distinction implicitly drawn between heritable and moveable property would be inexplicable. Section 286(3) is also difficult to reconcile with such an interpretation, since it qualifies the jurisdiction conferred by section 286(2) in relation to moveable property. This supports the view that section 266 does not itself define the courts jurisdiction to make a recovery order, but confers a power which can be exercised in circumstances in which the court possesses jurisdiction, based upon some independent foundation. A distinction has to be drawn, that is to say, between the nature of the power conferred by section 266, on the one hand, and the jurisdiction of the court: a jurisdiction arising, in relation to the Court of Session, from section 286 and from the background rules of civil jurisdiction, so far as they are not implicitly displaced. If recovery orders operate in rem, and the jurisdiction of the Scottish courts to make orders of that character is not ordinarily conditional upon the holder of the property being domiciled, resident or present in Scotland, section 286(1) is as one would expect. It also enables the jurisdiction of the court to meet the requirements of article 5(4) of the Vienna Convention and article 13 of the Strasbourg Convention. The absence from section 286 of any provision in respect of heritable property is also as one would expect. As I have explained, one would not expect the court to have jurisdiction to make orders in rem in respect of heritable property outside Scotland. Since the court would not possess such a jurisdiction under the 1982 Act or under the common law, there is no necessity for POCA to alter that position. In relation to moveable property, on the other hand, the position is different. As I have explained, the ordinary rules of civil jurisdiction in Scotland enable the courts to exercise jurisdiction in relation to moveable property outside Scotland (including questions concerning proprietary rights in respect of such property), provided the defender is domiciled in Scotland or other requirements specified in the 1982 Act are met. At the same time, one would not expect the court to exercise a power to transfer or dispose of moveable property situated outside Scotland, in accordance with the principle explained in Pattni v Ali [2006] UKPC 51; [2007] 2 AC 85, or to purport to confiscate moveable property situated in another sovereign state, in accordance with the principles discussed in Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260 and in Government of the Republic of Spain v National Bank of Scotland 1939 SC 413. The width of the courts formal jurisdiction does not therefore entail that the court will exercise its powers to the limits of its jurisdiction, where for example such an exercise would be ineffective or would contravene recognized principles of international law. The jurisdiction conferred by section 286(2) and (3) in relation to moveable property differs in a number of respects from the courts ordinary jurisdiction: instead of the possible grounds of jurisdiction set out, in particular, in rules 1 and 2 of Schedule 8 to the 1982 Act, the apparent effect of section 286(2) and (3) is to confer jurisdiction upon the court, for the purposes of chapter 2 of Part 5 of POCA, where moveable property is situated in Scotland, and also where it is situated elsewhere and either (a) the holder of the property is domiciled, resident or present in Scotland, or (b) the unlawful conduct took place in Scotland. The rationale of such a wide jurisdiction is not obvious, given that the power conferred by section 266 to make a recovery order (and therefore the powers to make other orders in respect of property which is at least arguably recoverable) is more limited in scope, as I have explained. In the circumstances, counsel referred the court to the legislative history of the provision, and in particular to statements made in Parliament during the passage of the Bill. These statements, even if admissible as an aid to interpretation, do not however provide any clear explanation of the intention of section 286(2) and (3). They confirm that section 286 was intended to regulate the question of jurisdiction, and indicate that its effect was intended to be the same as was achieved for England and Wales and Northern Ireland by a combination of the provisions on property in section 316 and the general rules on the jurisdiction of the civil courts. One matter on which all parties to these proceedings are agreed, however, is that that is not the case: on any view, the position in England and Wales and Northern Ireland is not the same as that set out in section 286(2) and (3). It appears therefore to be possible that the drafting of section 286(2) and (3) may have reflected a misunderstanding. Since POCA deals with matters falling partly within the competence of the Scottish Parliament, proceedings also took place in that Parliament in accordance with the arrangements known colloquially as the Sewel convention: see Hansard (HL Debates), 21 July 1998, col 791. Section 286 was not however specifically considered, and neither the discussion in the Parliament nor the Sewel memorandum prepared by the Scottish Executive appears to shed any light on its intended effect. As Sir Winston Churchill once said in another context, it is a riddle, wrapped in a mystery, inside an enigma. The effect of section 286 is however not of critical importance in the present context. If section 266 is to be understood as referring to property within the territorial jurisdiction of the relevant court, for the reasons I have explained, then it follows that the power conferred by section 266 is consequently restricted to such property. The fact that the jurisdiction of the Court of Session, as regulated by section 286 for the purposes of chapter 2 of Part 5, may be wider than that of the High Court does not alter the meaning and effect of section 266 in relation to the High Court, which is the issue at the heart of the present appeal. If section 266 confers the same power upon courts in all parts of the United Kingdom, as it appears to do, then it may be that section 286 has equally little practical effect upon the ambit of recovery orders made by the Court of Session. That is not however an issue which need be, or ought to be, decided in the present case. SIR ANTHONY HUGHES I respectfully agree with Lord Phillips that both appeals must be allowed, and for the reasons which he gives. I add only some very brief words about the PFO appeal. For my part, if it were possible to construe the complex provisions of POCA in such a way as to admit of limited extraterritorial effect for Part 5, but only where there is a sufficient jurisdictional connection between a part of the UK and the criminal proceeds, I should have wished to do so. I am, however, reluctantly persuaded that this cannot be achieved by construction and would involve illegitimately re writing the statute. For the reasons explained by Hooper LJ, cited by Lord Phillips at para 72 above, it would make excellent sense for the English court to have jurisdiction to make a civil recovery order in relation to real or personal property in Spain bought with the profits of crime by an English criminal, or by someone who committed his offence in England and Wales. It will not always be possible to achieve removal of such proceeds by means of a post conviction confiscation order under Part 2; there may, for a number of reasons, be no conviction for example the criminal may be dead, or untriable because resident in a country from which no extradition is possible. It seems to me that the kind of jurisdictional links contemplated by section 286 for the limited case of moveable property in the case of Scottish courts could sensibly serve as a model for all property and for all UK courts: that is to say links (1) because the crime was committed here, (2) because the offender or holder of the property is domiciled, resident or present here, or (3) because the relevant property is here. Such jurisdiction would not, as it seems to me at least, be exorbitant, nor would it offend the sovereignty of other States. That, however, is not what the statute can be made to say. What cannot, as it seems to me, be the correct construction is that, as SOCA was obliged to submit, it has jurisdiction to seek a (mandatory) civil recovery order over property in China which is the product of a crime committed in China by an offender who has never left that country. LORD JUDGE AND LORD CLARKE We will explain briefly why we are unable to agree with the conclusions of the majority of the Court that the appeal in relation to the worldwide property freezing order (PFO) should be allowed. We agree that the Proceeds of Crime Act 2002 (the Act) is poorly drafted. Nevertheless its objective is clear and can be explained in uncomplicated terms. Those who engage in criminal or unlawful conduct, whether here or abroad, should be deprived of the property which is or which represents the proceeds of their crimes or unlawful conduct. Part 2 of the Act addresses confiscation orders which may be made following convictions recorded in England and Wales. For these purposes section 84(1) provides: Property is all property wherever situated and includes (a) money; (b) all forms of real or personal property; (c) things in action and other intangible or incorporeal property. For present purposes, there are two crucial features. First, the property extends to all property including all forms of real or personal property and it applies to all such property wherever in the world it is situated. It was not suggested in the course of argument that, where these words appear in Part 2, they should be given a limited meaning. They mean what they say, that is, wherever in the world the property (whatever form it may take) is situated. Given the ease with which professional criminals in particular can move their assets around the world, by section 74 the Act unsurprisingly makes provision for the enforcement of confiscation orders abroad. It is an elementary principle of statutory construction that legislation in this country which purports to have effect abroad requires to be expressed in unequivocal language. Sovereign states are sovereign. We do not interfere in the affairs of a sovereign country in order to enforce orders made here which impact on people living and property located abroad. Accordingly, the provisions relating to the enforcement abroad of a confiscation order made here are structured so as to give full recognition to these principles, and the structures created for these purposes have not been called into question. Part 5 of the Act is concerned with the recovery of the proceeds of unlawful conduct when there is no criminal conviction in this jurisdiction. It applies to conduct which is unlawful within the United Kingdom or conduct which would be criminal abroad and which would be recognised as criminal here. Among its other wide ranging effects, it provides the statutory process by which those convicted of crimes abroad (including citizens of the relevant country) may be deprived of the proceeds or profits which have found their way into this country. Where the statutory conditions are satisfied the court is required to make a civil recovery order: by contrast, the effect of the order is that the enforcement authority is enabled to take the appropriate steps to enforce it. For the purposes of a civil recovery order under Part 5, property is identified in identical terms to the property which may be made the subject of the confiscation processes in Part 2 of the Act. An almost identical definition of property to that in section 84(1) is contained in Parts 3, 4, 5, 6, 7, 8 and 11 of the Act. Section 316 is the general interpretation section for the purposes of Part 5. Section 316(2) provides that the following provisions apply for the purposes of Part 5. Those provisions include section 316(4), which provides: Property is all property wherever situated and includes (a) money, (b) all forms of property, real or personal, heritable or moveable, (c) things in action and other intangible or incorporeal property. It can be seen that the language is the same as that in section 84, save that it expressly includes language referable to Scottish property. In our judgment the expression all property wherever situated must have the same meaning in each of the sections in which it appears, including section 316(4). With respect to those who take a contrary view, it seems to us that the language unequivocally describes not only the whereabouts of the property encompassed within Part 5, but also the nature and type of property covered by it. This does not mean that absolutely every provision in the Act which refers to property must be taken as a reference to property wherever situated because it might be clear from the particular provision that it must be more limited. A good example is section 45(1) which is referred to in paras 14 and 35 above. It confers on a constable the power to seize property to prevent its removal from England and Wales. Since the power only arises in the case of property in England and Wales, it cannot refer to property wherever situated. Subject to such cases, the definition sections are of general effect. Until Mr James Eadie QC addressed the problems to which this appeal has given rise, we suspect that the extent of the control mechanisms built into the statutory processes had not been fully appreciated. However, as it seems to us, a civil recovery order in relation to property situated outside the jurisdiction of the United Kingdom is not designed to have extra territorial effect in the sense that it should operate so as to oblige a court or authority in a foreign country, or for that matter anyone living in that country, to obey the order. That would contravene the sovereignty principle. Indeed, if the enforcement authorities or the trustee for civil recovery were to barge into a foreign country demanding the return of property situated there on the basis of a civil recovery order made here, the response would almost certainly be decidedly cold, and ultimately ineffective. On the other hand, when properly informed that a court in this jurisdiction has made such an order, the authorities abroad would be likely to appreciate that there is or may be property within its jurisdiction which represents the proceeds of unlawful conduct and that, in accordance with their own procedures, this might, with advantage, be removed from the criminal, and dealt with in accordance with domestic principles within its own jurisdiction. In this way the criminal would be deprived of the proceeds and profits of crime or unlawful conduct. Notwithstanding the requirement on the court here to make a recovery order if satisfied that the necessary conditions are satisfied, we believe that control mechanisms have been created within Part 5 to ensure that the order may be made subject to appropriate conditions which would avoid any improper extra territorial effect or infringement of the principle of sovereignty. In the language of section 266(8) the order may address the manner in which the trustee for civil recovery may deal with any property vested by the order for the purpose of realising it. Section 267(5) acknowledges that the obligation on the trustee to maximise the amount payable to the enforcement authority must be realised only so far as practicable. The powers of the trustee under Schedule 7 extend to starting or continuing legal proceedings in relation to property, that is, property wherever situated. In our judgment this provides the trustee with the power to do so where the property is situated abroad. If so, any such proceedings would be governed by the legal structures which obtain in the relevant foreign country. Mr Eadie accepted in argument that the exercise of the functions of the trustee for civil recovery specified in section 267 of and Schedule 7 to the Act are subject to the powers of our court to impose conditions in relation to the recovery process which acknowledge the sovereignty principle and give effect to it. We agree. Some reliance was placed on section 269. However, in our opinion section 269 is directed only to the courts of England and Wales, Scotland or Northern Ireland as the case might be. It tells those courts which legal rights must take priority over a recovery order. These may include rights under provisions of foreign law, where those provisions of foreign law are applicable under English conflicts rules. However section 269 does not purport to tell foreign courts what rules they may or may not apply. It therefore respects the principle of sovereignty. Section 243 provides that the enforcement authority must serve the claim form on the respondent wherever domiciled, resident or present. The parties agreed that it was not necessary to obtain permission to serve the claim form out of the jurisdiction on the basis that this is a claim which the court has power to determine within CPR 6.33(3). We assume for present purposes (without deciding) that that is correct. The claim form must then be served in accordance with CPR 6.40, which includes safeguards and, at any rate in many cases, requires service in accordance with the local law. In short, in relation to property situated abroad, to which Part 5 applies, we believe that it is open to the court making a civil recovery order to direct that any attempt to enforce the order abroad should not be made, save and except through the legal processes which obtain in the country where the property is situated, or in accordance with the procedures which apply to the enforcement of a confiscation order abroad, or subject to any other appropriate conditions. Viewed in this way, Part 5 of the Act is not inconsistent with and does not contravene the sovereignty principle. We recognise that the Strasbourg Convention does not expressly authorise proceedings of this kind but there is nothing in it which prohibits them. There is in our opinion nothing in the scheme or language of the Act which supports the conclusion that Part 5 is limited to property within the jurisdiction. Indeed section 286 shows that it was not so restricted. Section 286 is part of a series of sections entitled Miscellaneous and is itself entitled Scope of powers (Scotland). It provides: (1) Orders under this Chapter may be made by the Court of Session in respect of a person wherever domiciled, resident or present. (2) Such an order may be made by the Court of Session in respect of moveable property wherever situated. (3) But such an order in respect of a persons moveable property may not be made by the Court of Session where (a) the person is not domiciled, resident or present in Scotland, and (b) the property is not situated in Scotland, unless the unlawful conduct took place in Scotland. The section thus provides for the making of a recovery order where the relevant person is not domiciled, resident or present in Scotland and where the property is not situated in Scotland. The view expressed by the majority is inconsistent with that section, which (whether or not it is an enigma) is part of the Act. It is true that the section does require that in such circumstances a recovery order can only be made where the unlawful conduct took place in Scotland but that is not relevant to the question which divides the court, which is whether Part 5 applies to property outside the jurisdiction. Section 286 also provides assistance on the true construction of section 316(4). The expression wherever domiciled, resident or present in section 286(1) plainly means wherever situated in the world and the expression in respect of moveable property wherever situated in section 286(2) equally plainly means wherever the moveable property is situated in the world. The contrary is not suggested. In our judgment, there is no escape from the conclusion that wherever situated in section 316(4) means the same. It follows that, if, as the majority say at para 44, the question raised by the PFO appeal is whether the totality of Part 5 relates exclusively to property within the United Kingdom, the question must be answered in the negative. That conclusion seems to us to be supported by the scheme of Part 5. The general purpose of Part 5 is set out in section 240, which is defined in section 240(1) as for the purposes of enabling the enforcement authority to recover, in civil proceedings before the High Court or Court of Session, property which is, or represents, property obtained through unlawful conduct. The majority recognise that the second reference to property in that subsection must be to property wherever situated because section 241(2) makes it clear that unlawful conduct includes conduct which takes place outside the United Kingdom provided that it is unlawful in the place where it occurs and would be unlawful if it took place in the United Kingdom. There is nothing in section 240(1) which supports the conclusion that property where it is first used is to have a different meaning from property in the same section. Indeed, read naturally, it has the same meaning. The section provides for a recovery order to recover property which is property obtained through unlawful conduct. Given that it is agreed that property obtained through unlawful conduct can be property outside the jurisdiction, it must follow that property which is such property can be property outside the jurisdiction. The plain effect of section 240(1) read together with the definition section in section 316(4), which by section 316(2) applies for the purposes of Part 5, is that both references to property are references to property wherever situated. So too, as is accepted, are the references to obtaining property by unlawful conduct in section 242. This conclusion does not depend upon section 286 but is supported by it because it provides a particular example of a case where a recovery order may be made in respect of property outside the jurisdiction. So far as moveable property is concerned, the position in Scotland is clear. Section 286 shows that it includes moveable property anywhere in the world. It does not however apply in England. The provisions which apply in England are not limited in any relevant respect. As already stated, the definitions of property as being wherever situated in sections 84(1) in Part 2 and section 316(4) in Part 5 are part of the central provisions of those Parts. Moreover, section 240(2) provides that the powers conferred by Part 5 are exercisable in relation to any property regardless of whether any proceedings have been brought for an offence in connection with the property. Section 266(1) provides that If in proceedings under this Chapter the court is satisfied that any property is recoverable, the court must make a recovery order. By section 304(1) property obtained through unlawful conduct is recoverable property. It follows that (subject to the exceptions in section 308), recoverable property is a very wide term. It thus appears to us that property in section 266(1) is the property defined in section 316(4), which is all property wherever situated in the world. It was submitted that, by reason of the principles of international sovereignty, property situated abroad must be excluded because of section 266(2), which provides that the recovery order must vest the recoverable property in the trustee for civil recovery. We have already expressed our view that those principles are not infringed merely by including foreign property in the order because the order would be subject to the local law or lex situs. The problem is said to arise from the use of the word vest in section 266(2). There are two reasons why in our view there is no such problem. The first is that the majority accept that the expression moveable property wherever situated in section 286(2) means wherever situated in the world. In cases falling outside the restriction imposed by section 286(3), the majority therefore accept that moveable property situated anywhere in the world may be made the subject of a recovery order. Indeed, it must be made the subject of a recovery order under section 266(1) if the other criteria are satisfied. It follows that the majority see no problem with the making of an order in Scottish proceedings which vests moveable property which is outside the jurisdiction in the trustee for civil recovery. This is no doubt because, as explained above, any such order must be subject to the provisions of the local law and may be subject to appropriate conditions under section 266(8). Moreover, under section 267(5) the trustees obligation to sell the property is expressly limited by what is practicable. If there are no problems with applying section 266(1) and (2) to moveable property in the case of orders made by the Scottish courts, it follows that there are no problems in applying them to moveable property in the case of orders made by the English courts. The only difference between the jurisdiction of the two courts, so far as moveable property is concerned, is that the Scottish courts cannot make an order if the restriction imposed by section 286(3) is satisfied, whereas the jurisdiction of the English courts is not limited in the same way. The second reason why the use of the word vest does not gives rise to a difficulty is that it is capable of operating in personam. Mr Eadie relies upon the similar use of the verb vests in section 306(1) of the Insolvency Act 1986, which provides that a bankrupts estate shall vest in the trustee immediately upon his appointment taking effect. He relies upon the decision of the Court of Appeal in Ashurst v Pollard [2001] Ch 595, which related to real property in Portugal which was owned by the bankrupt and his wife. Jonathan Parker LJ (with whom Kennedy and Potter LJJ agreed) said at para 11 that the vesting provisions of section 306 cannot effect a change in the Portuguese register of title, which continues to record Mr and Mrs Pollard as the joint owners of the property. Thus in those circumstances, as here, the mere making of a vesting order does not have the inevitable consequence of transferring the legal interest in (or legal title to) real property to the trustee in bankruptcy or (here) the trustee for civil recovery. We would accept Mr Eadies submission that the consequences of a vesting order in relation to property situate abroad depend upon the local law or lex situs. We recognise that there are differences between the Insolvency Act and the Act but in our opinion the Insolvency Act provides a valuable pointer to the correct conclusion under Part 5 of the Act, namely that, as Tomlinson LJ concisely put it in the Court of Appeal at para 168, vest is simply an ordinary English word which takes its meaning from its context and is not here used as a term of art which carries with it inevitable consequences as to the effective transfer of title. In these circumstances, given the fact that section 266 must be construed so that it does not offend against the principles of sovereignty in international law, we see no difficulty in applying it to orders relating to moveable property made by the English courts. What then of immoveable property? Again, we see no reason in either the language of the Act or the principles of international law to prohibit a recovery order in such a case. The effectiveness of such an order would simply be subject to the rules of the lex situs. The definition of property in sections 84(1) and 316(4) expressly applies to all forms of property including real property wherever situated. It thus applies on its face to real property outside the United Kingdom and, whatever the position in Scotland in the light of section 286(2), the Act gives the English courts jurisdiction to make a recovery order in respect of such real property. The provisions of Part 5 of the Act, at any rate in relation to proceedings in England and Wales, are in our view unequivocal. They plainly apply to all property, whether real or personal and wherever situated in the world. Moreover they reflect the purpose behind the Act, namely to deprive criminals of their ill gotten gains. We recognise that how effective the approach we favour will be depends upon the co operation of courts elsewhere. However, for the reasons we have given, we are firmly of the view that nothing we have said infringes or would infringe the sovereignty of other states or the principles of international law. We prefer the views of Mitting J at first instance and of Maurice Kay, Hooper and Tomlinson LJJ in the Court of Appeal to those of the majority. For these reasons we would dismiss the PFO appeal. As to the disclosure order (DO) appeal, we agree that the appeal should be allowed for the reasons given by Lord Phillips in para 94 above. There is nothing in section 357 or 358 to indicate that it was intended that a notice under a disclosure order could be given to a person outside the jurisdiction. The position under section 357 is not inconsistent with our analysis of Part 5. A core feature of our analysis of Part 5 is that recovery orders take effect in personam subject to the local law, or lex situs. In other words, they have no legal consequences outside the United Kingdom except those positively prescribed by local law. For this reason, recovery orders do not impinge upon the sovereignty of foreign states. By contrast, an information notice given to someone outside the United Kingdom has the potential to criminalise acts and omissions committed abroad by foreign citizens who are outside the jurisdiction of the United Kingdom courts. There is no scope for reading the relevant provisions of Part 8 as taking effect subject to the local law or lex situs. The statutory language is clear and unequivocal unless the recipient of an information notice has a reasonable excuse he is guilty of an offence if he fails to comply with an information notice. Further, Part 5 clearly contemplates service on persons anywhere in the world. Section 243(2) states that the claim form must be served on the respondent wherever domiciled, resident or present. If Parliament intended SOCA to have authority to give information notices anywhere in the world, one would expect to see an equivalent provision in Part 8. However Part 8 contains no such provision. Section 357(4) defines a disclosure order as an order authorising SOCA to give information notices to any person the appropriate officer considers has relevant information. There is nothing in this language to suggest that SOCAs power may be exercised extra territorially. In addition, paragraph 15 of Practice Direction Civil Recovery Proceedings states: Disclosure order 15.1 The application notice should normally name as respondents the persons on whom the appropriate officer intends to serve notices under the disclosure order sought. 15.2 A disclosure order must (1) give an indication of the nature of the investigation for the purposes of which the order is made; (2) set out the action which the order authorises the appropriate officer to take in accordance with section 357(4) of the Act; (3) contain a statement of (a) the offences relating to disclosure orders under section 359 of the Act; and (b) the right of any person affected by the order to apply to discharge or vary the order. 15.3 Where, pursuant to a disclosure order, the appropriate officer gives to any person a notice under section 357(4) of the Act, he must also at the same time serve on that person a copy of the disclosure order. Paragraph 15.3 suggests that the recipient of an information notice is not obliged to comply with the notice unless and until SOCA serves a copy of the disclosure order on him. Presumably, that service must take place in accordance with the CPR. However it is not at all clear by what mechanism under the CPR SOCA could serve a copy of a disclosure order on a person outside the United Kingdom. This reinforces the view that information notices can only be served on persons who are physically present within the United Kingdom. We agree that the appropriate relief is a declaration that the DO does not authorise sending information notices to persons who are outside the United Kingdom. |
This appeal raises a point of pure statutory construction relating to the manner in which election expenses are required to be calculated and declared. It is important to appreciate that the point is raised not, as it might in other circumstances have been, on an application for judicial review or a declaration as to the law, but as a preliminary question in a criminal prosecution. The defendants face charges of knowingly making false declarations in relation to election expenses, or aiding and abetting or encouraging or assisting such offences. The parties asked the judge to determine the point on a preparatory hearing pursuant to Part III of the Criminal Procedure and Investigations Act 1996 (the 1996 Act). The criminal trial, although technically begun by the preparatory hearing, has yet to take place, and no jury has yet been sworn. No one can yet know what the real issues will turn out to be at that trial. No one can yet know what the evidence will be, still less which facts will be disputed and which common ground. The present question of statutory construction may arise at the trial, or it may not. If it does arise, it is unknown at this stage what its impact may be on the trial. For this reason it is important that this judgment is directed to the pure question of law, and that as little as possible is said about what the allegations are or what the facts may turn out to be, lest there be risk that the jurys consideration of the case is affected. It is also for this reason that there are automatic statutory restrictions in the 1996 Act upon reporting of preparatory hearings and any appeals therefrom. This judgment is public and can be reported in the usual way. But reporting must not go beyond what is in this document together with the formal details permitted by statute: see the section on reporting restrictions in para 31 at the end of this judgment. The Certified Question The question of law certified by the Court of Appeal (Criminal Division) as a point of law of general public importance was as follows: Do property, goods, services or facilities transferred to or provided for the use or benefit of a candidate free of charge or at a discount (as identified in section 90C(1)(a) of the Representation of the People Act 1983 (as amended)) only fall to be declared as election expenses if they have been authorised by the candidate, his election agent or someone authorised by either or both of them? Whilst that question might also arise in other contexts connected with elections, in the present case it is raised by one of the realities of modern campaigning. Political parties are often national in organisation. At a general election, a national party may typically field candidates standing as adherents to the party in all or many of the constituencies in the country. At such an election, the legislation imposes separate limits on the expenditure which is permitted to the candidate locally and to the party nationally. Both the constituency candidate and the national party are required to submit returns setting out their expenditure, and demonstrating that it falls within the limits applied to them. But national party activity will typically amount to some support for the constituency candidates standing in its interests. Especially if the constituency is regarded by a party as marginal, the activities of the national party in the constituency may well be extensive. So also they may if the constituency candidate is a leading member of the national party, or for that matter if one of the competing candidates is a prominent member of another party. The question will arise when expenditure undertaken by the national party falls to be accounted for as candidate expenditure, and to be limited by the ceiling applied to constituency candidates, and when it should be returned by the national party and governed by the different limit applied to national parties. An illustration of the question is given by what was described by the judge as the battlebus issue. If the national party sends a liveried coach containing activists into key constituencies and they there campaign for the party and/or its candidates, do the expenses fall to be accounted for nationally or locally? That is by no means the only possible example of the problem, nor is it the only one which may be in issue in the proposed trial in the present case. Anyone familiar with modern election campaigns will appreciate that there may be many other situations where work undertaken by national parties potentially overlaps with, or arguably amounts to, the support of one or more local candidates. The certified question which this court is called upon to answer is likewise only one of a number of technical questions of electoral law which may bear upon this potential overlap. This judgment is, however, confined to that certified question. The legislation Since the 19th century, legislation has imposed limits upon a candidates election expenses. The current statute is the Representation of the People Act 1983 (RPA 1983). Some of the rules and concepts in that Act effectively date from Victorian times; others have been added by successive modern adjustments, and amendments have continued since 1983. Until 2000 there were no rules about national expenditure by political parties. They were introduced by the Political Parties, Elections and Referendums Act 2000 (PPERA 2000). That Act also made some amendments to RPA 1983. The two statutes adopt similar general schemes to control expenses. The principal (but not the only) controls are these. (i) They list, in Schedules to the Acts, the kinds of expenditure which count as declarable expenses (and some kinds which do not). (ii) They prescribe who may incur those expenses, and thus fix responsibility on identifiable persons. In the case of constituency expenses, those persons are the candidate, his agent, and others if authorised by either of them. In the case of party expenses, those persons are the party treasurer and deputy treasurer, or others if authorised by either. Similarly, the statutes prohibit payment of expenses by persons other than those specified. (iii) They impose financial limits on the expenses which may be incurred and paid. (iv) They require a specified person to make a return of the expenses incurred. In the case of the constituency, that person is the appointed election agent of the candidate. In the case of party expenditure, it is the party treasurer. Moreover, the returns must be accompanied by formal declarations of accuracy. Those must be made by the person making the return and, in the case of the constituency, also by the candidate. (v) Each of the statutes contains a provision including in the expenses which must be declared, and which must fall within the relevant limit, the cost of things which are supplied either free of charge or at a discount to the candidate or party as the case may be, where that cost would, if paid for by the candidate or party, be election expenses. These are sometimes referred to, although not in all the statutes, as notional expenditure. As will be seen, the certified question in this case asks about the relationship between the second and fifth of these controls. It is a feature of the legislation that the two categories of expenses, local and national, whether or not they may in practice overlap, are treated as mutually exclusive. When PPERA 2000 introduced controls over party expenditure it labelled it in section 72 campaign expenditure, and defined it as: (2) Campaign expenditure, in relation to a registered party, means (subject to subsection (7)) expenses incurred by or on behalf of the party which are expenses falling within Part I of Schedule 8 and so incurred for election purposes. The meaning of election purposes in this subsection is wide: it is defined thus in subsection (4): For election purposes, in relation to a registered party, means for the purpose of or in connection with (a) promoting or procuring electoral success for the party at any relevant election, that is to say, the return at any such election of candidates (i) standing in the name of the party, or (ii) included in a list of candidates submitted by the party in connection with the election; or (b) otherwise enhancing the standing of the party, or (i) (ii) of any such candidates, with the electorate in connection with future relevant elections (whether imminent or otherwise). It follows that if the definition stopped there, all party activity which has the purpose of enhancing the standing of any of its candidates would count as campaign expenditure. The mutual exclusion of party expenses and local candidate expenses is, however, achieved by subsection (7), to which the foregoing definition is expressly made subject. That provides (as amended by section 20 of, and paragraph 5(2)(a) of Schedule 6 to, the Recall of MPs Act 2015): Campaign expenditure does not include anything which (in accordance with any enactment) falls to be included in (a) a return as to election expenses in respect of a candidate or candidates at a particular election, or (b) . [not here relevant]. The principal debate in this appeal centres on two provisions of RPA 1983, sections 90ZA and 90C. As the numeration suggests, both are additions to the statute as originally enacted. Section 90C was added with effect from July 2001 by section 134(1) of PPERA 2000. Section 90ZA was inserted by section 27(2) the Electoral Administration Act 2006 and came into force in September 2006. Section 90ZA of RPA 1983 contains the current meaning of election expenses (ie, in relation to general elections, those incurred by constituency candidates). It provides: 90ZA Meaning of election expenses (1) In this Part of this Act election expenses in relation to a candidate at an election means (subject to subsection (2) below and section 90C below) any expenses incurred at any time in respect of any matter specified in Part 1 of Schedule 4A which is used for the purposes of the candidates election after the date when he becomes a candidate at the election. (2) No election expenses are to be regarded as incurred by virtue of subsection (1) above or section 90C below in respect of any matter specified in Part 2 of Schedule 4A. (3) In this section and in section 90C below, for the purposes of the candidates election means with a view to, or otherwise in connection with, promoting or procuring the candidate's election at the election. (4) For the purposes of this Part of this Act, election expenses are incurred by or on behalf of a candidate at an election if they are incurred (a) by the candidate or his election agent, or (b) by any person authorised by the candidate or his election agent to incur expenses. (5) [not here relevant] (6) In this Part and in Part 3 of this Act, any reference (in whatever terms) to promoting or procuring a candidates election at an election includes doing so by prejudicing the electoral prospects of another candidate at the election. (7) Schedule 4A has effect. [Note: this schedule specifies the kinds of expenditure which are categorised as election expenses.] [not here relevant]. (8) Section 90C of RPA 1983 contains provision for things supplied to a candidate either free of charge or at a discount. It provides (as amended by section 74(1) of, and paragraph 117 of Schedule 1 to, the Electoral Administration Act 2006): 90C Property, goods, services etc provided free of charge or at a discount (1) This section applies where, in the case of a candidate at an election (a) either (i) property or goods is or are transferred to the candidate or his election agent free of charge or at a discount of more than 10% of the market value of the property or goods, or (ii) property, goods, services or facilities is or are provided for the use or benefit of the candidate free of charge or at a discount of more than 10% of the commercial rate for the use of the property or for the provision of the goods, services or facilities, and (b) the property, goods, services or facilities is or are made use of by or on behalf of the candidate in circumstances such that, if any expenses were to be (or are) actually incurred by or on behalf of the candidate in respect of that use, they would be (or are) election expenses incurred by or on behalf of the candidate. (2) Where this section applies (a) an amount of election expenses determined in accordance with this section (the appropriate amount) shall be treated, for the purposes of this Part of this Act, as incurred by the candidate, and (b) declaration of that amount, unless that amount is not more than 50. the candidates election agent shall make a This subsection has effect subject to Part 2 of Schedule 4A to this Act. (3) Where subsection (1)(a)(i) above applies, appropriate amount is such proportion of either the the market value of the property or goods (where (a) the property or goods is or are transferred free of charge), or (b) the difference between the market value of the property or goods and the amount of expenses actually incurred by or on behalf of the candidate in respect of the property or goods (where the property or goods is or are transferred at a discount), as is reasonably attributable to the use made of the property or goods as mentioned in subsection (1)(b) above. (4) Where subsection (1)(a)(ii) above applies, the appropriate amount is such proportion of either the commercial rate for the use of the property or (a) the provision of the goods, services or facilities (where the property, goods, services or facilities is or are provided free of charge), or (b) the difference between that commercial rate and the amount of expenses actually incurred by or on behalf of the candidate in respect of the use of the property or the provision of the services or facilities (where the property, goods, services or facilities is or are provided at a discount), as is reasonably attributable to the use made of the property, goods, services or facilities as mentioned in subsection (1)(b) above. (5) Where the services of an employee are made available by his employer for the use or benefit of a candidate, then for the purposes of this section the commercial rate for the provision of those services shall be the amount of the remuneration and allowances payable to the employee by his employer in respect of the period for which his services are so made available (but shall not include any amount in respect of any contributions or other payments for which the employer is liable in respect of the employee). (6) In this section market value, in relation to any property or goods, means the price which might reasonably be expected to be paid for the property or goods on a sale in the open market; and paragraph 2(6)(a) of Schedule 2A to this Act shall apply with any necessary modifications for the purpose of determining, for the purposes of subsection (1) above, whether property or goods is or are transferred to a candidate or his election agent. There are further provisions in the statutes for other kinds of elections, including referendums, and also for expenditure at elections by those who are neither candidates nor political parties, such as pressure groups. The latter expenditure is called controlled expenditure. These provisions are, like those relating to constituency candidates and central parties, relatively complex. It is not necessary to refer to them in detail, but it is relevant to note that in several respects they adopt forms of control parallel to those outlined at para 6 above, including provisions for notional expenditure. Controlled expenditure, campaign expenditure and candidates election expenses are, once again, made mutually exclusive, each with the others, by section 87(1) of PPERA 2000. For each type of regulated expenditure, the statutes require a return. In the case of election expenses by a candidate, the duty to make the return falls on the candidates appointed election agent. Section 81(1) RPA 1983 (as amended by section 24 of, and paragraph 27 of Schedule 4 to, the Representation of the People Act 1985 and by section 138(1) of, and paragraph 7(2) of Schedule 18 to, PPERA 2000) provides: 81. Return as to election expenses (1) Within 35 days after the day on which the result of the election is declared, the election agent of every candidate at the election shall deliver to the appropriate officer a true return containing as respects that candidate a statement of all election expenses incurred by (a) or on behalf of the candidate; and a statement of all payments made by the election (b) agent together with all bills or receipts relating to the payments. The return must, by section 82(1) and (2), be accompanied by declarations by both the agent and the candidate that it is accurate. The potential consequences of failure to deliver an accurate return and declaration are serious. By section 82(6) knowingly to make a false declaration is the criminal offence of corrupt practice, whilst by section 84 simple failure to make a correct return or declaration is the offence of illegal practice. The former carries imprisonment and a fine, by section 168. The latter carries a fine, by section 169. Both have the further notable effect, by section 173, of disqualification from the House of Commons or other elective office, subject, in the case of specified excuses and proof of good faith, to the courts power to relieve of that consequence (section 86). The rival submissions The Crowns case is that campaigning activity undertaken in a constituency by the central national party may be free or discounted services within section 90C, and thus be accountable for by the candidate, whenever: they were made use of by or on behalf of the candidate (section it amounts to services provided for the use or benefit of the (i) candidate (section 90C(1)(a)(ii)); and (ii) 90C(1)(b)); and they were so made use of in circumstances such that if any expenses (iii) were to be actually incurred by or on behalf of the candidate in respect of that use, they would be election expenses incurred by or on behalf of the candidate (section 90C(1)(b)). If those three conditions are met, say the Crown, section 90C(2) applies, and the expenses are to be treated as incurred by the candidate and must be declared as such by his election agent. The defendants contend that such campaigning by the national party cannot amount to election expenses for which the candidate has to account unless he or his agent, or someone authorised by either of them, has authorised the expenditure. Authorisation is, say the defendants, a central feature, throughout the legislation, of responsibility for electioneering expenses. Section 90ZA(4) so provides for a candidates election expenses, and says plainly that such expenses are only incurred (and thus declarable) if they are incurred by the candidate, or his election agent, or someone else authorised by either of them. Say the defendants, provisions essentially mirroring section 90ZA(4) are to be found throughout the legislation and are applied to all the various forms of electioneering expenses, such as the partys campaign expenditure, the controlled expenditure of pressure groups, and referendum expenditure. Both parties also relied on consequentialist arguments supporting the construction for which they contended. The Crown suggested that unless its construction is adopted the evasion of controls on expenditure would be encouraged. It also submitted that its construction is consistent with a desire to maintain equivalence between the position of a candidate supported by a national party and an independent candidate who has no national organisation behind him. For their part, the defendants contended that unless authorisation is kept firmly at the centre of responsibility for declaring expenses, the task of an election agent would become impossible wherever the national party undertakes campaigning activity which in fact benefits the local candidate, but which he has not sought out, required or authorised; that would apply, say the defendants, in a great number of constituencies, if not in most. Analysis It is plainly correct, as Ms Montgomery QC contended for the defendants, that the concept of authorisation of expenses is frequently resorted to in the legislation. In applying the control which restricts those who may incur constituency election expenses, section 75 RPA 1983 does so by making it an offence to incur such expenses unless one is the candidate, his election agent, or a person authorised in writing by the election agent to do so. Similar provisions are to be found in the controls relating to party campaign expenses (section 75(1) PPERA 2000) and to controlled expenditure by recognised third parties (section 90 PPERA 2000). The same concept is employed in what the defendants contend is the crucial section relating to constituency election expenses, namely section 90ZA(4) RPA 1983. That, as has been seen, addresses the question of when election expenses are to be regarded for the purposes of the Act as incurred by or on behalf of a candidate. This question has to be addressed because in several places the Act attaches consequences when expenses have been incurred by or on behalf of a candidate. The duty to make a return under section 81 arises when expenses are thus incurred, but not otherwise. The monetary limit on expenses imposed by section 76(1) of RPA 1983 is similarly imposed in relation to expenses incurred by or on behalf of the candidate. And section 73(1) of RPA 1983, which prohibits the payment of election expenses otherwise than via the election agent, speaks once again of prohibiting the payment of expenses which are incurred by or on behalf of the candidate. What section 90ZA(4) undoubtedly does is to say that actual (as distinct from notional) constituency election expenses are only incurred by or on behalf of the candidate if they are incurred either by the candidate himself, or by his election agent, or by someone authorised by either of them. It is no doubt correct that the effect of section 90ZA(4) is that authorisation (by candidate, election agent or person authorised by either) is ordinarily a necessary feature of constituency election expenses falling within that section and thus within the rules about monetary limit (section 76) and payment (section 73). It is also correct that there are broadly similar provisions in PPERA 2000 employing the concept of authorisation in the equivalent contexts of party campaign expenses and third party controlled expenses when it comes to monetary limits and the prohibition of payment by other people. The critical question, however, is whether this concept of authorisation also governs the notional expenditure provision in section 90C of RPA 1983, and for that matter its equivalents in PPERA 2000 for party campaign expenses and third party controlled expenses. The certified question (see para 2 above) asks in terms whether the conditions set out in section 90ZA(4) apply to notional expenditure within section 90C. The defendants contend that they do. The Court of Appeal was persuaded that they were right. In the end this depends on the words of the statute. Section 90C asks, by subsections (1)(a) and (b), three questions about the expenditure it is considering. If those questions are answered yes, then by subsection (2) it stipulates that the expenditure shall be treated as incurred by the candidate for the purposes of the Act. That is a deeming provision. If the conditions are satisfied, the notional expenditure becomes by statute the same as if it had been actually incurred by the candidate, even though it has not actually been incurred by him. The three questions can be simplified for present purposes by expressing them in terms of services, but of course the same applies to goods, property or facilities. The questions posed by subsections (1)(a) and (b) are: 1. Were the services provided for the use or benefit of the candidate either free of charge or at a discount of more than 10% of commercial value? (subsection (1)(a)) 2. Were they made use of by or on behalf of the candidate? (subsection (1)(b)) and 3. If the services had actually been paid for (expenses actually incurred) by or on behalf of the candidate, would those expenses be election expenses incurred by or on his behalf (and thus subject to the various controls imposed by the Act)? (also subsection (1)(b)). There is no room in this sequence of conditions or questions for an additional requirement that the provision of the services must have been authorised by the candidate or his election agent, or by someone authorised by either of them. The test is a different one from that in section 90ZA(4) for expenses actually incurred. The test is use, by or on behalf of the candidate (although see para 25 below). This analysis is confirmed by the express provision in section 90ZA(1) that the definition of election expenses there provided is subject to section 90C. What section 90ZA(4) does is to stipulate when election expenses, defined as subject to section 90C, are incurred by or on behalf of the candidate. But section 90C(2) includes also as expenses incurred by the candidate those which satisfy the conditions of section 90C(1)(a) and (b). In short, rather than section 90C incorporating the words of section 90ZA(4), it provides an additional category of expenditure which has to be included within subparagraph (a) of that latter subsection that is to say as expenses notionally incurred by the candidate. There is nothing in the Act (or for that matter in the equivalent provisions of PPERA 2000) which necessitates departure from this natural reading of section 90C. The third condition/question is an essential part of the operation of section 90C. Unless the services (etc) fall within one of the categories of election expenses caught by the Act, and particularly by Schedule 4A (as inserted by section 27(5) of the Electoral Administration Act 2006), and unless payment by the candidate himself, if made, would amount to election expenses, section 90C simply does not bite. It is not, however, necessary to adopt the defendants construction of the Act in order for the third condition/question to have content. It would appear to be true that one consequence of the addition of section 90C to the Act is to qualify the effect of a modest exemption for small expenditure, always in the Act and now contained in section 75(1ZA) (as inserted by section 131(3) of PPERA 2000) and (1ZZB) (as inserted by section 25(3) of the Electoral Administration Act 2006). Those provisions exempt from the rule that unauthorised persons may not incur expenses in support of a candidate small payments (now not exceeding 700) made independently of any similar ones. The effect of section 90C would appear to be that, although by section 75 the payer of such small sums is not guilty of the offence of making an impermissible payment, nevertheless services (etc) provided by someone who spends such a sum upon them may count as notional expenditure which must be declared and counted towards the statutory limit if (but only if) the services are made use of by the candidate or on his behalf. Those are, however, not necessarily inconsistent provisions. It is no doubt true that in practice it is difficult to envisage the transfer of property or goods, also covered by the notional expenditure provisions of section 90C, occurring without the concurrence of the candidate. That may be relevant to the proper construction of the expression made use of by or on behalf of the candidate, or for that matter to whether any declaration made is knowingly false, but it cannot be a reason to import into any part of section 90C the wording of section 90ZA(4). The Court of Appeal drew attention to the second condition/question set out in para 18 above, posed by section 90C(1)(b). It drew attention to the fact that the subsection is satisfied when the services (etc) are made use of by anyone, on behalf of the candidate, and that it is not limited to use by the candidate or his election agent. It is, however, important to observe that section 90C(1)(b) is not satisfied merely by the services (etc) being for the benefit of the candidate. There is a plainly deliberate difference of expression between subsections (1)(a)(ii) and (1)(b). The services (etc) have, by (1)(a)(ii) to be provided for the use or benefit of the candidate (emphasis added). But their cost only counts as notional expenditure if they are made use of by or on behalf of the candidate: subsection (1)(b). Mr Straker QC, for the Crown, was at pains to submit that making use of the services (etc) involves some positive activity by the candidate or someone on his behalf. Ordinarily, one would also expect that it would involve conscious activity. It is not enough that the services enure for the benefit of the candidate unless he or someone on his behalf makes positive use of them. Care will have to be taken upon the question of who may be found to be acting on behalf of the candidate in making positive use of such services, but the problem of who acts on behalf of a candidate, and when, is not an unfamiliar one in election law. It does not seem likely that use by a campaigner would be held to be by or on behalf of a candidate who had positively refused to accept the benefit of the services (etc). There may, on some facts, be a difference between the critical requirement for use by or on behalf of the candidate and the suggested one of authorisation, but in many cases those factual issues may well be closely related. The legislation contains provisions also for regulating donations. In RPA 1983 they are found in section 71A (as inserted by section 130(2) of PPERA 2000) and Schedule 2A (as inserted by section 130(3) of, and Schedule 16 to, PPERA 2000). In summary, donations must be made to the candidate or election agent, and must not be accepted unless made by a permissible donor, as defined in section 54 PPERA 2000. The provision of free or discounted services may also amount to a donation see paragraph 2(1)(e) of Schedule 2A. The maker of a donation may commit an offence if he makes it to someone other than the candidate or agent. The agent must include in the return required by section 81 the details of any donation accepted either by him or the candidate: Schedule 2A paragraphs 10 12. No doubt, ordinarily at least, acceptance of a donation will involve the awareness of the recipient, in the same way as a transfer of property or goods to either of them would. It may well follow that the agent or candidate could not be said to be a secondary party to a donors offence of impermissible donation unless they knew of it, and perhaps that a donation of which neither is aware has not been accepted for the purpose of inclusion in the return. That, as above, may help to throw light on the meaning of the expression in section 90C(1)(b) made use of by or on behalf of the candidate. But it affords no reason for importing the terms of section 90ZA(4) into section 90C. Rather, the donation provisions are broadly consistent with the construction of section 90C here set out. It is not necessary, in order to give effect to the plain reading of the Act here set out, to have resort to the Crowns consequentialist arguments, which do not in any event have great substance. There appears to be no particular reason why this reading of section 90C can alone deter deliberate evasion of the spending limits by the acceptance of services (etc) provided free or at a discount. Deliberate evasion would equally be deterred on the construction advanced by the defendants. It may well be that the problem of potentially overlapping campaigning by a national party and its local candidates does not apply to independent candidates who lack a national party behind them. But that independents do not have a national party behind them is a simple fact of electoral life, and applies whatever is the correct construction of section 90C. Moreover, independent candidates may in any event be offered services (etc) from supporters other than a national party, and section 90C, whatever its correct construction, needs to and does apply to them also. The plain reading of the Act here set out cannot be displaced by possibly inconvenient or even newly recognised consequences. It may or may not be true that the notional expenditure provisions, including section 90C, were directed principally at evasion of expenses controls by candidates (or parties) who might arrange for unregulated persons to provide goods, property, services or facilities for them either free or at a discount. It may or may not be true that the application of these provisions to the undoubtedly imprecise question of when expenditure is party expenditure and when it is candidate expenditure was not anticipated. It seems, from the material provided to this court, that the Electoral Commissions helpful guidance documents issued over several years, whilst they certainly both address the question of apportionment of expenditure between party and candidate, and deal with the concept of free or discounted services, nowhere appear to alert readers to the possible link between them, nor to the application of the notional expenditure rules to what must sometimes be a difficult exercise of separating local from national expenditure. The potential difficulties for election agents, and for that matter for candidates, in knowing what must and must not be included in their returns, are indeed likely to be increased by the complications of national and local expenditure which in practice may overlap but by statute have to be mutually exclusive. The fact that they are mutually exclusive does not, as the defendants at one point submitted, mean that all expenditure defaults to constituency expenses. Indeed, it is because the two have to be separated, and if necessary maybe apportioned, that the task of the election agent is made more difficult. The point that the candidate and election agent risk the commission of criminal offences is well made. Criminal liability is no small matter even if regulatory statutes sometimes invoke it as if it were less significant than it is. But the more serious offence of knowingly making a false declaration is committed only when there is a dishonest state of mind, and the defendant knows that the declaration ought to include something which it does not: see the judgment of Lord Bingham of Cornhill CJ in R v Jones and Whicher [1999] 2 Cr App R 253, especially at 259B, which decision Mr Gordon QC, on behalf of the Electoral Commission intervening in the present case, took care to underline, and which the Crown has not suggested calls for any qualification. The strict liability offence is of course different, but the Act stipulates in section 86 for a specific power to relieve from sanctions where the offence has been committed despite good faith. The potential difficulties faced by agents are in any event more the consequence of the difficulty of separating national from local expenditure than of the terms of section 90C. Conclusion For the reasons set out above, this appeal must be allowed and the question which was certified by the Court of Appeal (para 2 above) must receive the answer no. The test for the operation of section 90C is the threefold one set out above (see para 18). Reporting restrictions the offences charged, as summarised in this judgment; the names of counsel and solicitors engaged in the appeal; the identity of the court(s) and the name of the judge(s); the names, ages, home addresses and occupations of the accused and (a) (b) witnesses; (c) (d) (e) whether for the purposes of the appeal representation was provided to either of the accused under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012; and (f) this judgment. Section 37 of the Criminal Procedure and Investigations Act 1996 imposes statutory reporting restrictions in relation to the hearing of interlocutory appeals such as the present. The objective is to ensure that the jurys consideration of the evidence and issues put before it is not at risk of being affected by prior reporting, for example of the details of the allegations or of discussion of possible issues. Those restrictions apply to the hearing of this appeal. The court is satisfied that there is no reason to modify them in the present case, except to permit the reporting of this judgment. Until the conclusion of the trial, nothing may be reported except the following: |
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